UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2021

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-7107

 LOUISIANA-PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	93-0609074
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

414 Union Street, Suite 2000, Nashville, TN 37219

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (615) 986 - 5600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1 par value	LPX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No   o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐   No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 102,253,315 shares of Common Stock, $1 par value, outstanding as of April 30, 2021.

Except as otherwise specified and unless the context otherwise requires, references to "LP", the “Company”, “we”, “us”, and “our” refer to Louisiana-Pacific Corporation and its subsidiaries.

ABOUT FORWARD-LOOKING STATEMENTS

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their businesses and other matters as long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. This quarterly report on Form 10-Q contains, and other reports and documents we file with, or furnish to, the Securities and Exchange Commission (SEC) may contain, forward-looking statements. These statements are based upon the beliefs and assumptions of, and on information available to, our management.

The following statements are or may constitute forward-looking statements: (1) statements preceded by, followed by or that include words like “may,” “will,” “could,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” "project," “potential,” “continue,” "likely," or “future” or the negative or other variations thereof and (2) other statements regarding matters that are not historical facts, including without limitation, plans for product development, forecasts of future costs and expenditures, possible outcomes of legal proceedings, capacity expansion, and other growth initiatives and the adequacy of reserves for loss contingencies.

Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

•impacts from public health issues (including global pandemics, such as the ongoing COVID-19 pandemic) on the economy, demand for our products or our operations, including the actions and recommendations of governmental authorities to contain such public health issues;

•changes in governmental fiscal and monetary policies, including tariffs, and levels of employment;

•changes in general economic conditions, including impacts from the ongoing COVID-19 pandemic;

•changes in the cost and availability of capital;

•changes in the level of home construction and repair activity;

•changes in competitive conditions and prices for our products;

•changes in the relationship between supply of and demand for building products;

•changes in the financial or business conditions of third-party wholesale distributors and dealers;

•changes in the relationship between supply of and demand for raw materials, including wood fiber and resins, used in manufacturing our products;

•changes in the cost of and availability of energy, primarily natural gas, electricity, and diesel fuel;

•changes in the cost of and availability of transportation;

•impact of manufacturing our products internationally;

•difficulties in the launch or production ramp-up of newly introduced products;

•unplanned interruptions to our manufacturing operations, such as explosions, fires, inclement weather, natural disasters, accidents, equipment failures, labor disruptions, transportation interruptions, supply interruptions, public health issues (including pandemics and quarantines), riots, civil insurrection or social unrest, looting, protests, strikes and street demonstrations;

•changes in other significant operating expenses;

•changes in currency values and exchange rates between the U.S. dollar and other currencies, particularly the Canadian dollar, Brazilian real and Chilean peso;

•changes in, and compliance with, general and industry-specific laws and regulations, including environmental and health and safety laws and regulations, the U.S. Foreign Corrupt Practices Act and anti-bribery laws, laws related to our international business operations, and changes in building codes and standards;

•changes in tax laws, and interpretations thereof;

•changes in circumstances giving rise to environmental liabilities or expenditures;

•warranty costs exceeding our warranty reserves;

•challenge or exploitation of our intellectual property or other proprietary information by others in the industry;

•changes in the funding requirements of our defined benefit pension plans;

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•the resolution of existing and future product-related litigation and other legal proceedings;

•the amount and timing of any repurchases of our common stock and the payment of dividends on our common stock, which will depend on market and business conditions and other considerations; and

•acts of public authorities, war, civil unrest, natural disasters, fire, floods, earthquakes, inclement weather and other matters beyond our control.

In addition to the foregoing and any risks and uncertainties specifically identified in the text surrounding forward-looking statements, any statements in the reports and other documents filed by us with the SEC that warn of risks or uncertainties associated with future results, events, or circumstances identify important factors that could cause actual results, events, and circumstances to differ materially from those reflected in the forward-looking statements.

ABOUT THIRD-PARTY INFORMATION

In this quarterly report on Form 10-Q, we rely on and refer to information regarding industry data obtained from market research, publicly available information, industry publications, U.S. government sources, and other third parties. Although we believe the information is reliable, we cannot guarantee the accuracy or completeness of the information and have not independently verified it.

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PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

Condensed Consolidated Statements of Income

Dollar amounts in millions, except per share amounts

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Net sales	$	1,017	$	585
Cost of sales	(538)		(477)
Gross profit	479		108
Selling, general, and administrative expenses	(48)		(55)
Loss on impairment	—		(7)
Other operating credits and charges, net	—		(2)
Income from operations	431		44
Interest expense	(5)		(5)
Investment income	—		(2)
Other non-operating items	(10)		5
Income before income taxes	416		42
Provision for income taxes	(96)		(9)
Net income	$	320	$	33
Net loss attributed to noncontrolling interest	1		—
Net income attributed to LP	$	320	$	33
Basic net income per share of common stock:
Net income per share - basic	$	3.02	$	0.29
Diluted net income per share of common stock:
Net income per share - diluted	$	3.00	$	0.29
Average shares of common stock used to compute net income per share:
Basic	106		112
Diluted	107		113

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Statements of Comprehensive Income

Dollar amounts in millions

(Unaudited) 

	Three Months Ended March 31,
	2021		2020
Net income	$	320	33
Other comprehensive income, net of tax
Foreign currency translation adjustments	(7)		(23)
Amortization of pension and post-retirement prior service costs and net loss	—		1
Other comprehensive loss, net of tax	(6)		(22)
Comprehensive income	313		11
Comprehensive loss associated with noncontrolling interest	1		—
Comprehensive income attributed to LP	$	314	$	11

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Balance Sheets

Dollar amounts in millions

(Unaudited) 

	March 31, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	645	$	535
Receivables, net of allowance for doubtful accounts of $2 million at March 31, 2021, and December 31, 2020	264		184
Inventories	307		259
Prepaid expenses and other current assets	10		15
Total current assets	1,226		993
Timber and timberlands	63		52
Property, plant, and equipment, net	921		918
Operating lease assets	39		40
Goodwill and other intangible assets	45		46
Investments in and advances to affiliates	9		11
Restricted cash	13		—
Other assets	24		24
Deferred tax asset	2		3
Total assets	$	2,343	$	2,086
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities	$	262	$	267
Income tax payable	97		18
Current portion of contingency reserves	1		1
Total current liabilities	360		286
Long-term debt	346		348
Deferred income taxes	82		78
Non-current operating lease liabilities	30		32
Contingency reserves, excluding current portion	13		13
Other long-term liabilities	99		86
Total liabilities	930		842
Redeemable noncontrolling interest	9		10
Stockholders’ equity:
Common stock, $1 par value, 200,000,000 shares authorized; 121,153,436 and 104,234,125 shares issued and outstanding, respectively, as of March 31, 2021; and 123,547,974and 106,240,030 shares issued and outstanding, respectively, as of December 31, 2020	121		124
Additional paid-in capital	443		452
Retained earnings	1,390		1,206
Treasury stock, 16,919,311 shares and 17,307,944 shares, at cost as of March 31, 2021 and December 31, 2020, respectively	(393)		(397)
Accumulated comprehensive loss	(157)		(151)
Total stockholders’ equity	1,404		1,234
Total liabilities and stockholders’ equity	$	2,343	$	2,086

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Statements of Cash Flows

Dollar amounts in millions

(Unaudited) 

	Three Months Ended March 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	320	$	33
Adjustments to net income:
Depreciation and amortization	29		28
Loss on impairment	—		7
Deferred taxes	4		(4)
Loss on early debt extinguishment	11		—
Other adjustments, net	3		(5)
Changes in assets and liabilities (net of acquisitions and divestitures):
Receivables	(74)		(31)
Prepaid expenses and other current assets	3		(1)
Inventories	(50)		(36)
Accounts payable and accrued liabilities	(3)		(16)
Income taxes payable, net of receivables	71		16
Net cash provided by operating activities	314		(9)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions	(34)		(24)
Other investing activities	2		—
Net cash used in investing activities	(32)		(24)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing of long-term debt	350		350
Repayment of long-term debt, including redemption premium	(359)		—
Payment of cash dividends	(17)		(16)
Purchase of stock	(122)		—
Other financing activities	(10)		(5)
Net cash (used in) provided by financing activities	(158)		329
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2)		(3)
Net increase in cash, cash equivalents and restricted cash	122		293
Cash, cash equivalents, and restricted cash at beginning of period	535		195
Cash, cash equivalents, and restricted cash at end of period	$	658	$	488
Supplemental cash flow information:
Cash paid for income taxes, net of cash received	$	21	$	—
Cash paid for interest, net of cash received	$	9	$	10
Unpaid capital expenditures	$	14	$	7

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Statements of Stockholders' Equity

Dollar and share amounts in millions, except per share amounts

(Unaudited) 

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2020	124	$	124	17	$	(397)	$	452	$	1,206	$	(151)	$	1,234
Net income attributed to LP	—	—		—	—		—		320		—		320
Dividends paid ($0.16 per share)	—	—		—	—		—		(17)		—		(17)
Issuance of shares under stock plans	—	—		—	11		(11)		—		—		—
Taxes paid related to net settlement of stock-based awards	—	—		—	(6)		—		—		—		(6)
Purchase of stock	(2)	(2)		—	—		—		(120)		—		(122)
Compensation expense associated with stock-based compensation	—	—		—	—		1		—		—		1
Other comprehensive loss	—	—		—	—		—		—		(6)		(6)
Balance, March 31, 2021	121	$	121	17	$	(393)	$	443	$	1,390	$	(157)	$	1,404

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2019	130	$	130	18	$	(406)	$	454	$	966	$	(153)	$	991
Net income attributed to LP	—	—		—	—		—		33		—		33
Dividends paid ($0.145 per share)	—	—		—	—		—		(16)		—		(16)
Issuance of shares under stock plans	—	—		—	8		(8)		—		—		—
Taxes paid related to net settlement of stock-based awards	—	—		—	(4)		—		—		—		(4)
Compensation expense associated with stock-based compensation	—	—		—	—		2		—		—		2
Other comprehensive loss	—	—		—	—		—		—		(22)		(22)
Balance, March 31, 2020	130	$	130	18	$	(402)	$	448	$	983	$	(175)	$	984

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS AND BASIS FOR PRESENTATION

Nature of Operations

Louisiana-Pacific Corporation and our subsidiaries is a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide. We have leveraged our expertise serving the new home construction, repair and remodeling, and outdoor structures markets to become an industry leader known for innovation, quality, and reliability. In addition to our U.S. operations, the Company also maintains manufacturing facilities in Canada, Chile, and Brazil through foreign subsidiaries, and operates facilities through joint ventures. The principal customers for our building solutions are retailers, wholesalers, and homebuilding and industrial businesses in North America and South America, with limited sales to Asia, Australia, and Europe. References to "LP," "the Company," "we," "our," and "us" refer to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole.

Basis for Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature. These Condensed Consolidated Financial Statements and Notes hereto should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 18, 2021 (2020 Annual Report on Form 10-K). Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. All dollar amounts are shown in millions except per share.

Recently Adopted Accounting Policies

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the tax basis of goodwill. The Company adopted ASU 2019-12 effective as of January 1, 2021. There was no impact on our Condensed Consolidated Financial Statements upon adoption.

NOTE 2. REVENUE

The following table presents our reportable segment revenues, disaggregated by revenue source. We disaggregate revenue from contracts with customers into major product lines. We have determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

As noted in the segment reporting information in Note 18 below, our reportable segments are Siding, Oriented Strand Board (OSB), Engineered Wood Products (EWP), and South America.

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Three Months Ended March 31, 2021
By product type and family:	Siding		OSB		EWP		South America		Other		Inter-segment		Total
Value-add
SmartSide®	$	283	$	—	$	—	$	9	$	—	$	—	$	293
OSB - Structural Solutions	—		254		—		41		—		—		295
I-Joist	—		—		48		—		—		—		48
LVL	—		—		43		—		—		—		43
LSL	—		—		8		—		—		—		8
	284		254		100		50		—		—		687
Commodity
OSB - commodity	—		282		—		—		—		—		281
Plywood	—		—		13		—		—		—		13
	—		282		13		—		—		—		294
Other
Other products	1		3		11		3		18		—		36
	$	285	$	539	$	123	$	53	$	18	$	—	$	1,017

Three Months Ended March 31, 2020
By product type and family:	Siding		OSB		EWP		South America		Other		Inter-segment		Total
Value-add
SmartSide	$	191	$	—	$	—	$	3	$	—	$	—	$	194
Fiber siding	19		—		—		—		—		—		19
OSB - Structural Solutions	—		103		1		32		—		—		136
I-Joist	—		—		37		—		—		—		37
LVL	—		—		36		—		—		—		36
LSL	—		—		12		—		—		—		12
	210		103		86		35		—		—		434
Commodity
OSB - commodity	—		113		—		—		—		—		113
Plywood	—		—		6		—		—		—		6
	—		113		6		—		—		—		119
Other
CanExel siding	—		—		—		—		11		—		11
Other products	2		4		7		1		7		—		21
	$	212	$	220	$	99	$	36	$	18	$	—	$	585

Revenue is recognized when obligations under the terms of a contract (i.e., purchase orders) with our customers are satisfied; generally, this occurs with the transfer of control of our products at a point in time. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The shipping cost incurred by

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us to deliver products to our customers is recorded in cost of sales. The expected costs associated with our warranties continue to be recognized as an expense when the products are sold.

Our businesses routinely incur customer program costs to obtain favorable product placement, to promote sales of products, and to maintain competitive pricing. Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for as deductions from net sales at the time the program is initiated. These reductions from revenue are recorded at the time of sale or the implementation of the program based on management’s best estimates. Estimates are based on historical and projected experience for each type of program or customer. Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, and merchandising support. Management adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations).

We ship some of our products to customers' distribution centers on a consignment basis. We retain title to our products stored at the distribution centers. As our products are removed from the distribution centers by retailers and shipped to retailers’ stores, title passes from us to the retailers. At that time, we invoice the retailers and recognize revenue for these consignment transactions. We do not offer a right of return for products shipped to the retailers’ stores from the distribution

NOTE 3. EARNINGS PER SHARE

Basic earnings per share is based upon the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based upon the weighted-average number of shares of common stock outstanding, plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. This method requires that the effect of potentially dilutive common stock equivalents (stock options, stock-settled appreciation rights (SSARs), restricted stock units, and performance stock units) be excluded from the calculation of diluted earnings per share for the periods in which losses are reported because the effect is anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):

	Three Months Ended March 31,
	2021		2020
Net income attributed to LP
Weighted average common shares outstanding - basic	106		112
Dilutive effect of employee stock plans	1		1
Shares used for diluted earnings per share	107		113
Earnings per share:
Basic earnings	$	3.02	$	0.29
Diluted earnings	$	3.00	$	0.29

NOTE 4. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We are required to classify these financial assets and liabilities into two groups: (i) recurring—measured on a periodic basis, and (ii) non-recurring—measured on an as-needed basis.

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Trading securities consist of rabbi trust financial assets, which are recorded in other assets in our Condensed Consolidated Balance Sheets. The assets of the rabbi trust are invested in mutual funds and are reported at fair value based on active market quotations, which represent Level 1 inputs. The assets of the rabbi trust were $5 million at March 31, 2021, and December 31, 2020.

We estimated our 3.625% Senior Notes due in 2029 (2029 Senior Notes) to have a fair value of $342 million as of March 31, 2021, based upon market quotations. Our 2029 Senior Notes and other long-term debt are categorized as Level 1 in the U.S. GAAP fair value hierarchy. Fair values are based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates.

There were no outstanding amounts borrowed under our Amended Credit Facility as of March 31, 2021.

Carrying amounts reported on the balance sheet for cash and cash equivalents, accounts receivables, and accounts payable approximate fair value due to the short-term maturity of these items.

NOTE 5. RECEIVABLES

Receivables consisted of the following:

	March 31, 2021		December 31, 2020
Trade receivables	$	226	$	161
Income tax receivable	10		2
Other receivables	30		23
Allowance for doubtful accounts	(2)		(2)
Total	$	264	$	184

Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables as of March 31, 2021, and December 31, 2020, primarily consist of sales tax receivables, vendor rebates, a receivable associated with an affiliate, and other miscellaneous receivables.

NOTE 6. INVENTORIES

Inventories are valued at the lower of cost or net realizable value. Inventory cost includes materials, labor, and operating overhead. The major types of inventories are as follows (work in process is not material and is included in Semi-finished inventory below):

	March 31, 2021		December 31, 2020
Logs	$	73	$	49
Other raw materials	38		36
Semi-finished inventory	34		28
Finished products	162		146
Total	$	307	$	259

NOTE 7. GOODWILL AND OTHER INTANGIBLES

Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment by applying a fair value based test on an annual basis or more frequently, if circumstances indicate a potential impairment. The Company’s annual assessment date is October 1.

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Changes in goodwill and other intangible assets as of March 31, 2021, are provided in the following table:

	Timber licenses1		Goodwill		Developed Technology		Trademarks
Beginning balance December 31, 2020	$	34	$	25	$	19	$	3
Amortization	(1)		—		(1)		—
Ending balance March 31, 2021	$	33	$	25	$	18	$	2

1Timber licenses are included in Timber and timberlands on the Condensed Consolidated Balance Sheets.

NOTE 8. REDEEMABLE NONCONTROLLING INTEREST

Redeemable noncontrolling interest is interest in subsidiaries that is redeemable outside of our control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value or carrying value at the end of each reporting period. Net loss attributed to noncontrolling interest is recorded in the Condensed Consolidated Statements of Income. Any adjustments to the redemption value of redeemable noncontrolling interest are recognized in either net income or through accumulated paid-in capital, depending on the nature of the underlying security (preferred or common units).

The components of redeemable noncontrolling interest are as follows:

Beginning balance December 31, 2020	$	10
Net loss attributed to noncontrolling interest	(1)
Ending balance March 31, 2021	$	9

NOTE 9. LONG-TERM DEBT

The following table summarizes our outstanding debt:

	March 31, 2021		December 31, 2020
2029 Senior Notes	$	350	$	—
2024 Senior Notes	—		350
Amended Credit Facility	—		—
Financing leases	1		1
Unamortized debt costs	(4)		(2)
Total	346		348
Less: current portion	—		—
Long-term portion	$	346	$	348

Senior notes

In March 2021, we issued $350 million aggregate principal amount of the 3.625% Senior Notes, which mature March 15, 2029 (2029 Senior Notes). We may redeem the 2029 Senior Notes, in whole or in part, prior to March 15, 2024, at a redemption price equal to 100% of the principal amount thereof plus a “make-whole” premium set forth in the indenture governing our 2029 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. On or after March 15, 2024, we may, at our option on one or more occasions, redeem all or any portion of these notes at the redemption prices set forth in the indenture governing the 2029 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. The indenture governing the 2029

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Senior Notes contains certain covenants that, among other things, limit our ability to grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all of our assets. If we are subject to a "change of control," as defined in the indenture, we are required to offer to repurchase the 2029 Senior Notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to, but not including, the date of purchase. The indenture governing the 2029 Senior Notes contains customary events of default, including failure to make required payments on the 2029 Senior Notes, failure to comply with certain agreements or covenants contained in the indenture, failure to pay or acceleration of certain other indebtedness and certain events of bankruptcy and insolvency. An event of default in the indenture allows either the indenture trustee or the holders of at least 25% in aggregate principal amount of the then-outstanding 2029 Senior Notes to accelerate, or in certain cases, automatically causes the acceleration of, the amounts due under the 2029 Senior Notes.

In September 2016, LP issued $350 million aggregate principal amount Senior Notes due 2024 (2024 Senior Notes). In February 2021, LP delivered to holders of the 2024 Senior Notes a conditional notice of redemption to redeem on March 27, 2021 all of the 2024 Senior Notes outstanding at a redemption price of 102.438% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date. The redemption notice became irrevocable on March 11, 2021, and the 2024 Senior Notes were fully redeemed on March 27, 2021. In connection with this redemption, LP recorded an early debt extinguishment charge of $11 million, recorded within Other non-operating items on the Condensed Consolidated Statements of Income, which included $9 million of redemption premium and $2 million of unamortized debt costs associated with these notes.

Deferred debt costs are amortized over the life of the related debt using a straight-line basis which approximates the effective interest method. These costs are a direct deduction from the carrying amount related to the debt liability. If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired to other non-operating income (expense). During the three months ended March 31, 2021, $2 million of deferred debt costs were written off in association with the 2024 Senior Notes extinguishment, and we paid $4 million in debt issuance costs that will be deferred and amortized over the life of the 2029 Senior Notes.

Credit facility

In May 2020, we entered into two amendments to our revolving credit facility, dated as of June 27, 2019 (Credit Facility), with American AgCredit, PCA, as administrative agent and CoBank, ACB, as letter of credit issuer, (as amended, the Amended Credit Facility). The Amended Credit Facility provides for revolving credit facilities in the aggregate principal amount of up to $550 million, with a $60 million sub-limit for letters of credit. The initial $350 million revolving facility provided pursuant to the Credit Facility (Revolving A Loan) terminates, and all loans made thereunder become due, in June 2024. The incremental $200 million revolving facility provided pursuant to the Amended Credit Facility in May 2020 (Revolving B Loan) terminates, and all loans made thereunder become due in May 2023. LP has granted a security interest in substantially all of its personal property to secure the Amended Credit Facility, and certain of LP’s existing and future wholly-owned domestic subsidiaries may guaranty our obligations under the Amended Credit Facility and, subject to certain limited exceptions, provide security through a security interest in substantially all the personal property of these subsidiaries. There are no outstanding amounts borrowed under the Amended Credit Facility as of March 31, 2021.

Revolving borrowings under the Amended Credit Facility accrue interest, at our option, at either a “base rate” plus a margin of 0.875% to 2.000% for Revolving A Loans and 1.125% to 2.250% for Revolving B Loans or LIBOR plus a margin of 1.875% to 3.000% for Revolving A Loans and 2.125% to 3.250% for Revolving B Loans. The Amended Credit Facility also includes an unused commitment fee, due quarterly, ranging from 0.3% to 0.6% for both Revolving A Loans and Revolving B Loans. The applicable margins and fees within these ranges are based on our ratio of consolidated EBITDA to cash interest charges. The “base rate” is the highest of (i) the Federal funds rate plus 0.5%, (ii) the U.S. prime rate, and (iii) one-month LIBOR plus 1.0%.

The Amended Credit Facility contains various restrictive covenants and customary events of default, the occurrence of which could result in the acceleration of our obligation to repay the indebtedness outstanding thereunder. The Amended Credit Facility also contains financial covenants that require us and our consolidated subsidiaries to have, as of the end of each quarter, (i) a capitalization ratio (i.e., funded debt less unrestricted cash to total capitalization)

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of no more than 57.5% and (ii) a minimum consolidated net worth of at least $475 million plus 70% of consolidated net income after December 31, 2019, without a deduction for net losses.

In March 2020, LP entered into a letter of credit facility agreement (Letter of Credit Facility) with Bank of America, N.A., which provides for the funding of letters of credit up to an aggregate outstanding amount of $20 million, which may be secured by certain cash collateral of LP. The Letter of Credit Facility includes an unused commitment fee, due quarterly, ranging from 0.50% to 1.875% of the daily available amount to be drawn on each letter of credit issued under the Letter of Credit Facility. The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Amended Credit Facility, including capitalization ratio and minimum net worth covenants. As of March 31, 2021, we secured $13 million of outstanding letters of credit with cash collateral, included in Restricted cash in our Condensed Consolidated Balance Sheets.

As of March 31, 2021, we were in compliance with all financial covenants under the Amended Credit Facility.

NOTE 10. INCOME TAXES

For interim periods, we recognize income tax expense by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate, and the difference from the previously accrued year-to-date balance is adjusted to the current quarter. Changes in profitability estimates in various jurisdictions will impact our quarterly effective income tax rates.

The tax provision for income taxes for the three months ended March 31, 2021 and 2020, reflected an estimated annual tax rate of 25% and 26%, respectively, excluding discrete items discussed below. The total effective tax rate for the three months ended March 31, 2021, was 23% compared to 22% for the comparable period in 2020.

We recognized a net discrete tax benefit of $5 million and $2 million during the three months ended March 31, 2021 and 2020, respectively, with the most significant benefit related to excess tax benefits from stock-based compensation for both periods.

NOTE 11. STOCK-BASED COMPENSATION

We have stock award plans for key employees and directors, which provide for awards of stock options, SSARs, restricted stock, restricted stock units, and performance stock units are granted. In addition, we offer an employee stock purchase plan to employees.

During the three months ended March 31,2021, we granted awards of 200,065 restricted stock units and 121,749 performance stock units, at an average grant date fair value of $43.39 per share.

We recognized $1 million and $2 million in stock-based compensation expense for the three months ended March 31, 2021 and 2020, respectively. At March 31, 2021, there was $22 million of unrecognized stock-based compensation expense related to unvested performance stock units, restricted stock units, and SSARs attributable to future service that had not yet been recognized.

NOTE 12. COMMITMENTS AND CONTINGENCIES

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We maintain reserves for various contingent liabilities as follows:

	March 31, 2021		December 31, 2020
Environmental reserves	$	14	$	14
Other reserves	—		—
Total contingencies	14		14
Current portion (included in Accrued liabilities)	(1)		(1)
Long-term portion (included in Other long-term liabilities)	$	13	$	13

Estimates of our loss contingencies are based on various assumptions and judgments. Due to the numerous uncertainties and variables associated with these assumptions and judgments, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. We regularly monitor our estimated exposure to contingencies and, as additional information becomes known, may change our estimates significantly. While no estimate of the range of any such change can be made at this time, the amount that we may ultimately pay in connection with these matters could materially exceed, in either the near term or the longer term, the amounts accrued to date. Our estimates of our loss contingencies do not reflect potential future recoveries from insurance carriers except to the extent that recovery may, from time to time, be deemed probable as a result of an insurer’s agreement to payment terms.

Environmental Matters

We maintain a reserve for undiscounted estimated environmental loss contingencies. This reserve is primarily for estimated future costs of remediation of hazardous or toxic substances at numerous sites currently or previously owned by the Company. Our estimates of our environmental loss contingencies are based on various assumptions and judgments, the specific nature of which varies considering the particular facts and circumstances surrounding each environmental loss contingency. These estimates typically reflect assumptions and judgments as to the probable nature, magnitude and timing of the required investigation, remediation and/or monitoring activities and the probable cost of these activities, and in some cases reflect assumptions and judgments as to the obligation or willingness and ability of third parties to bear a proportionate or allocated share of the cost of these activities. Due to the numerous uncertainties and variables associated with these assumptions and judgments, and the effects of changes in governmental regulation and environmental technologies, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. We regularly monitor our estimated exposure to environmental loss contingencies and, as additional information becomes known, may change our estimates significantly. However, no estimate of the range of any such change can be made at this time.

Other Proceedings

From time to time, we and our subsidiaries are parties to certain legal proceedings. Based on the information currently available, management believes the resolution of such proceedings will not have a material adverse effect on our financial position, results of operations, cash flows, or liquidity.

NOTE 13. IMPAIRMENT OF LONG-LIVED ASSETS

We review the carrying values of our long-lived assets for potential impairments and believe we have adequate support for the carrying value of our long-lived assets. If demand and pricing for our products fall to levels significantly below cycle average demand and pricing, or should we decide to invest capital in alternative projects, or should changes occur related to our wood supply for our mills, it is possible that future impairment charges will be required. As of March 31, 2021, there were no indications of impairment.

We also review from time to time potential dispositions of various assets, considering current and anticipated economic and industry conditions, our strategic plan, and other relevant factors. Because a determination to dispose of particular assets can require management to make assumptions regarding the transaction structure of the

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disposition and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.

During the three months ended March 31, 2020, we recorded $5 million in pre-tax impairment charges primarily related to our fiber producing assets at a Siding facility. Additionally, we recorded $2 million in pre-tax impairment charges related to the reclassification of our East River facility as held-for-sale during the three months ended March 31, 2020.

NOTE 14. PRODUCT WARRANTIES

We offer warranties on the sale of most of our products and record an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The activity in warranty reserves for the three months ended March 31, 2021, and 2020, is summarized in the following table:

	Three Months Ended March 31,
	2021		2020
Beginning balance	$	8	$	8
Accrued to expense	—		1
Payments made	—		(1)
Total warranty reserves	8		8
Current portion of warranty reserves (included in Other current liabilities)	(2)		(2)
Long-term portion of warranty reserves (included in Other long-term liabilities)	$	6	$	6

We continue to monitor warranty and other claims associated with these products and believe as of March 31, 2021, that the warranty reserve balances associated with these matters are adequate to cover future warranty payments. However, it is possible that additional changes may be required in the future.

NOTE 15. DEFINED BENEFIT PENSION PLANS

The following table summarizes our net periodic pension cost for our defined benefit pension and postretirement plans during the three months ended March 31, 2021, and 2020:

	Three Months Ended March 31,
	2021		2020
Service cost	$	—	$	1
Other components of net periodic pension cost1:
Interest cost	2		3
Expected return on plan assets	(3)		(4)
Amortization of prior service cost	—		—
Amortization of net loss	1		1
Net periodic pension cost	$	1	$	1

1Other components of net periodic pension cost are included in Other non-operating items on our Condensed Consolidated Statements of Income.

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NOTE 16. ACCUMULATED COMPREHENSIVE INCOME (LOSS)

Other comprehensive income activity, net of tax, is provided in the following table for the three months ended March 31, 2021, and 2020:

	Three Months Ended March 31,
	2021		2020
Pension1
Balance at beginning of period	$	(81)	$	(89)
Amounts reclassified from accumulated other comprehensive loss to income 2	—		1
Total other comprehensive income	—		1
Balance at end of period	(81)		(88)
Translation Adjustments
Balance at beginning of period	(68)		(67)
Translation adjustments	(7)		(23)
Balance at end of period	(75)		(90)
Other
Balance at beginning of period	(2)		3
Unrealized gains on securities, net of reversals	—		—
Balance at end of period	(2)		3
Accumulated other comprehensive loss, end of period	$	(157)	$	(175)

1 Amounts are presented net of tax.

2 Amounts of actuarial loss and prior service cost are components of net periodic benefit cost.

NOTE 17. OTHER OPERATING AND NON-OPERATING INCOME

Other operating credits and charges, net

During the three months ended March 31, 2021, we recorded a gain of $1 million related to the sale of assets previously classified as held for sale, offset by other expenses including severance associated with certain reorganizations within the corporate office.

During the three months ended March 31, 2020, we recorded a charge of $2 million related to severance associated with certain reorganizations within the corporate office.

Other non-operating items

During the three months ended March 31, 2021, we recorded an early debt extinguishment charge of $11 million related to the redemption of our 2024 Senior Notes, offset by a foreign currency gain of $1 million.

During the three months ended March 31, 2020, we recorded a foreign currency gain of $6 million, offset by $1 million of net periodic pension cost.

NOTE 18. SELECTED SEGMENT DATA

We operate in four segments: Siding, OSB, EWP, and South America. Our business units have been aggregated into these four segments based upon the similarity of economic characteristics, customers, and distribution methods. Our results of operations are summarized below for each of these segments separately as well as for the “Other” category, which comprises other products that are not individually significant.

We evaluate the performance of our business segments based on net sales and Adjusted EBITDA. Accordingly, our chief operating decision maker evaluates performance and allocates resources based primarily on net sales and Adjusted EBITDA for our business segments. Adjusted EBITDA is a non-GAAP financial measure and is defined as income attributed to LP before interest expense, provision for income taxes, depreciation and amortization, and excludes stock-based compensation expense, loss on impairment attributed to LP, product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, and other non-operating items.

Information about our product segments is as follows:

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	Three Months Ended
	March 31,
	2021		2020
Net sales
Siding	$	285	$	212
OSB	539		220
EWP	123		99
South America	53		36
Other	18		18
Intersegment sales	—		—
Total sales	$	1,017	$	585
PROFIT BY SEGMENT
Net income	$	320	$	33
Add (deduct):
Net loss attributed to noncontrolling interest	1		—
Income attributed to LP	320		33
Provision for income taxes	96		9
Depreciation and amortization	29		28
Stock-based compensation expense	1		2
Loss on impairment attributed to LP	—		7
Other operating credits and charges, net	—		2