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What changed in LOUISIANA-PACIFIC CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LOUISIANA-PACIFIC CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+309 added−290 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-21)

Top changes in LOUISIANA-PACIFIC CORP's 2023 10-K

309 paragraphs added · 290 removed · 238 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+20 added−12 removed18 unchanged
Biggest changeAs of December 31, 2022, we employed approximately 4,300 team members, of which approximately 2,700, 800, and 900 were employed in the United States, Canada, and South America, respectively. Approximately 3,400 were employed at manufacturing facilities, and 1,300 team members were subject to collective bargaining agreements and/or national trade union agreements. Health, Safety, and Wellness.
Biggest changeApproximately 3,100 team members were employed at manufacturing facilities, and approximately 800 team members were subject to collective bargaining agreements and/or national trade union agreements. We are committed to working collaboratively with the unions that represent some of our employees. Health, Safety, and Wellness. We are committed to the health, safety, and wellness of our employees.
ITEM 1. Business GENERAL We are 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, reliability, and sustainability.
ITEM 1. Business GENERAL We are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide. Serving the new home construction, repair and remodeling, and outdoor structures markets, we have leveraged our expertise to become an industry leader known for innovation, quality, reliability, and sustainability.
Our Siding segment serves diverse end markets with a broad product offering, including LP ® SmartSide ® Trim & Siding, LP ® SmartSide ® ExpertFinish ® Trim & Siding, LP BuilderSeries ® Lap Siding, and Outdoor Building Solutions ® (collectively referred to as Siding Solutions).
Our Siding segment serves diverse end markets with a broad product offering, including LP ® SmartSide ® Trim & Siding, LP ® SmartSide ® ExpertFinish ® Trim & Siding, LP BuilderSeries ® Lap Siding, and LP ® Outdoor Building Solutions™ (collectively referred to as Siding Solutions).
We continue to improve the OEE of our manufacturing facilities. Our OEE programs have produced excellent returns and generated many best practices that have been applied across our manufacturing system. Given these initiatives and the strategic locations of many of our facilities, we believe that we are very competitive regarding average delivered cost.
We continue to improve the OEE of our manufacturing facilities. We believe our OEE programs have produced excellent returns and generated many best practices that have been applied across our manufacturing system. Given these initiatives and the strategic locations of many of our facilities, we believe that we are very competitive regarding average delivered cost.
Our provision for income taxes and the effective tax rate could be affected by numerous factors, including changes in applicable tax laws, interpretations of applicable tax laws, the amount and composition of pre-tax income in jurisdictions with differing tax rates, and the valuation of deferred tax assets.
Our provision for income taxes and our effective tax rate could be affected by numerous factors, including changes in applicable tax laws, interpretations of applicable tax laws, the amount and composition of pre-tax income in jurisdictions with differing tax rates, and the valuation of deferred tax assets.
We continuously evaluate strategic investments in assets, businesses, and technologies, as well as the performance of our businesses. We believe that our pursuit of these opportunities, if successful, could enable us to increase the size and scope of our businesses or joint ventures. Expand Internationally.
We continuously evaluate strategic investments in assets, businesses, and technologies, as well as investments that improve the performance of our businesses. We believe that our pursuit of these opportunities, if successful, could enable us to increase the size and scope of our businesses or joint ventures. Expand Internationally.
While a significant portion of our energy requirements are met at our plants by the energy produced from the conversion of wood waste, we also purchase electricity and natural gas. Energy prices have experienced significant volatility in recent years, particularly in deregulated markets.
While a significant portion of the energy requirements of our plants are met by the energy produced from the conversion of wood waste, we also purchase electricity and natural gas. Energy prices have experienced significant volatility in recent years, particularly in deregulated markets.
Our Siding Solutions products consist of a full line of engineered wood siding, trim, soffit, and fascia. These products offer superior protection against hail, wind, moisture, fungal decay, and termites compared to solid wood.
Our Siding Solutions products consist of a full line of engineered wood siding, trim, soffit, and fascia. As compared to solid wood, these products offer superior protection against hail, wind, moisture, fungal decay, and termites.
Additional information concerning tax matters is set forth under “Risk Factors – Legal and Regulatory Risk Factors - Regulatory and statutory changes applicable to us or our customers, including changes in effective tax rates or tax law, could adversely affect our financial condition and results of operations ” in Item 1A of this annual report on Form 10-K, and in Note 8 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
Additional information concerning tax matters is set forth under “Risk Factors – Legal and Regulatory Risk Factors - Regulatory and statutory changes applicable to us or our customers, including changes in effective tax rates or tax law, could adversely affect our financial condition and results of operations ” in Item 1A of this annual report on Form 10-K, and in "Note 8 - Income Taxes" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
Additional information concerning legal and regulatory matters is set forth under “Risk Factors – Legal and Regulatory Risk Factors” in Item 1A of this annual report on Form 10-K. We are subject to income taxes in the United States and foreign jurisdictions.
Additional information concerning legal and regulatory matters is set forth under “Risk Factors – Legal and Regulatory Risk Factors” in Item 1A of this annual report on Form 10-K. We are subject to income taxes and other corporate taxes in the United States and foreign jurisdictions.
In addition, certain environmental laws and regulations impose liability and responsibility on present and former owners, operators, or users of facilities and sites for contamination at such facilities and sites without regard to causation or knowledge of contamination. Compliance with environmental laws and regulations can significantly increase the costs of our operations.
In addition, certain environmental laws and regulations impose liability and responsibility on present and former owners, operators, or users of facilities and sites for contamination at such facilities and sites without regard to causation or knowledge of contamination. Compliance with environmental laws and regulations may significantly increase the costs of our operations.
STRATEGIC SOURCING We rely on various suppliers to furnish the raw materials and inputs used in the manufacturing of our products. To maximize our effectiveness in the marketplace, we have a central strategic sourcing group that consolidates purchases of certain materials and indirect items across business segments.
STRATEGIC SOURCING We rely on various suppliers to furnish the raw materials and inputs used in the manufacturing of our products. To maximize our effectiveness in the marketplace, we have a centralized strategic sourcing group that consolidates purchases of certain materials and indirect items across business segments.
Resin product costs are influenced by changes in the prices of raw materials used to produce resin, primarily petroleum products and energy, as well as competing demand for resin products. Currently, we purchase most of our resin from four major suppliers.
Resin product costs are influenced by changes in the prices of raw materials used to produce resin, primarily petroleum products and energy, as well as competing demand for resin products. Currently, we purchase most of our resin from five major suppliers.
Additional information concerning environmental matters is set forth under Item 3 "Legal Proceedings", and in Note 14 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. WORKFORCE AND EMPLOYEE RELATIONS Our employees are our most important asset, and they are integral to our ability to achieve our strategic objectives.
Additional information concerning environmental matters is set forth under Item 3 "Legal Proceedings", and in "Note 14 - Commitments and Contingencies" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. 9 WORKFORCE AND EMPLOYEE RELATIONS Our employees are our most important asset, and they are integral to our ability to achieve our strategic objectives.
Our specialty products, including Siding Solutions and Structural Solutions, generally compete based on product features, benefits, quality, sustainability, and availability. Our commodity OSB generally competes based on price, quality, and availability of products. OUR MANUFACTURING We operate manufacturing facilities throughout North and South America.
Our specialty products, including Siding Solutions and LP Structural Solutions, generally compete based on product features, benefits, quality, sustainability, and availability. Our commodity OSB products generally compete based on price, quality, and availability of products. OUR MANUFACTURING We operate manufacturing facilities throughout North America and South America.
In addition, we will make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act through our Internet website at http://www.lpcorp.com under the “Investor Relations” tab as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
In addition, we will make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act through our Internet website at http://www.lpcorp.com under the “For Investors” tab as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
The goal of the strategic sourcing group is to develop global strategies for a given component group, identify suppliers that meet our business requirements, and develop long-term relationships with these vendors.
The goal of the strategic sourcing group is to develop global strategies for a given component group, identify vendors and suppliers that meet our business requirements, and develop long-term relationships with those vendors and suppliers.
In some cases, plant closures can invoke more rigorous compliance requirements. Violations of environmental laws and regulations can subject us to additional costs and expenses, including defense costs and expenses and civil and criminal penalties.
In some cases, plant closures could invoke more rigorous compliance requirements. Violations of environmental laws and regulations could subject us to additional costs and expenses, including defense costs and expenses and civil and criminal penalties.
We are committed to the health, safety, and wellness of our employees. Safety is a core principle and key value at LP. We safeguard our people, projects, and reputation by maintaining a safety culture that strives to eliminate workplace incidents, risks, and hazards. Our innovative safety and health processes are at the forefront of everything we do.
Safety is a core principle and key value at LP. We safeguard our people, projects, and reputation by maintaining a safety culture that strives to eliminate workplace incidents, risks, and hazards. Our innovative safety and health processes are at the forefront of everything we do.
While subject to change, our current benefit programs may include, depending on country/region and employment position, stock awards granted pursuant to our stock award plans, awards granted under our annual cash incentive award plan, a 401(k) Plan or defined contribution plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family medical leave, paid parental leave (maternity, paternity, adoption), employee emergency support fund, tuition assistance, and scholarship programs.
While subject to change, our current benefit programs may include, depending on country/region and employment position, stock-based awards granted pursuant to our stock award plans, awards granted under our annual cash incentive award plan, a 401(k) plan or defined contribution plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family medical leave, paid parental leave (maternity, bonding, adoption, and surrogacy), an employee emergency support fund, tuition assistance, and scholarship programs.
We source all our wood fiber sustainably, as certified against the Sustainable Forestry Initiative ® (SFI ® ) and the Programme for the Endorsement of Forest Certification (PEFC ® ) standards. 7 In addition to wood fiber, we use significant quantities of various resins in our manufacturing processes.
We source all our wood fiber sustainably, as certified according to the standards of the Sustainable Forestry Initiative ® (SFI ® ) and the Programme for the Endorsement of Forest Certification (PEFC ® ). In addition to wood fiber, we use significant quantities of various resins in our manufacturing processes.
We believe that our investments in South America will help us continue to satisfy the growing demand for wood-based residential construction in this region. We believe that investments in this region can continue to be funded by cash generated by our South America operations.
We believe that our investments in South America will help us continue to satisfy the growing demand for wood-based residential construction in this region. We believe that investments in this region can continue to be funded by cash generated by our LPSA segment.
Our OSB segment manufactures and distributes OSB structural panel products, including our innovative value-added OSB portfolio known as LP Structural Solutions (which includes LP ® TechShield ® Radiant Barrier, LP WeatherLogic ® Air & Water Barrier, LP Legacy ® Premium Sub-Flooring, LP ® FlameBlock ® Fire-Rated Sheathing, LP NovaCore™ Thermal Insulated Sheathing, and LP ® TopNotch ® Sub-Flooring).
Our OSB segment manufactures and distributes OSB structural panel products, including the innovative value-added OSB product portfolio known as LP ® Structural Solutions (which includes LP TechShield ® Radiant Barrier, LP WeatherLogic ® Air & Water Barrier, LP Legacy ® Premium Sub-Flooring, LP NovaCore ® Thermal Insulated Sheathing, LP FlameBlock ® Fire-Rated Sheathing, and LP TopNotch ® 350 Durable Sub-Flooring).
One of the metrics that we carefully track is Total Incident Rate (TIR), a common industry measure of recordable incidents per 100 employees. We have established a targeted TIR of Diversity, Equity, and Inclusion.
One of the metrics that we carefully track is Total Incident Rate (TIR), a common industry measure of recordable incidents per 100 employees. We have established a targeted TIR of Inclusion and Belonging.
We consider the following items to be key performance indicators because LP’s management uses these metrics to evaluate our business and trends, measure our performance, and make strategic decisions, and we believe that the key performance indicators presented provide additional perspective and insights when analyzing our core operating performance.
We consider the following items to be key performance indicators for our business because LP’s management uses these metrics to evaluate our business and trends in our industry, measure our performance, and make strategic decisions. We believe that the key performance indicators presented may provide additional perspective and insights when analyzing our core operating performance.
OUR CUSTOMERS We seek to maintain a broad customer base and a balanced approach to national distribution through both wholesale and retail channels. In 2022, our top ten customers accounted for approximately 48% of our sales.
OUR CUSTOMERS We seek to maintain a broad customer base and a balanced approach to national distribution through both wholesale and retail channels. In 2023, our top ten customers accounted for approximately 50% of our sales.
Years Ended December 31, 2022 2021 Siding 76 % 73 % OSB 72 % 74 % South America 71 % 77 % AVAILABLE INFORMATION We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and from time to time, other documents with the SEC.
Years Ended December 31, 2023 2022 2021 Siding 77 % 76 % 73 % OSB 75 % 72 % 74 % LPSA 75 % 71 % 77 % 12 AVAILABLE INFORMATION We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and from time to time, other documents with the SEC.
Investments as a market leader in this region should allow us to capitalize on demand while diversifying our revenue mix and market cyclicality. OUR MARKETS Our sales and marketing efforts are primarily focused on traditional distribution, professional building products dealers, home centers, third-party wholesale buying groups, and end-users, particularly homeowners.
Investments as a market leader in this region should allow us to capitalize on demand while diversifying our revenue mix and market cyclicality. OUR MARKETS Our sales and marketing efforts are primarily focused on traditional distribution, professional building products dealers, home centers, third-party wholesale buying groups, and end users, particularly home builders, industrial manufacturers, and repair and remodel contractors.
We intend to continue to grow sales of our Structural Solutions portfolio as a percentage of our total production and to aggressively manage cost through (i) the efficiency with which we operate our manufacturing facilities (measured in Overall Equipment Effectiveness, or OEE), (ii) the efficiency with which we convert sustainably harvested wood fiber into our products, and (iii) our ongoing work to optimize logistics and reduce other costs.
We intend to continue to grow sales of our LP Structural Solutions portfolio as a percentage of our total production and to aggressively manage cost through (i) the efficiency with which we operate our manufacturing facilities (as measured by a widely used operational metric called Overall Equipment Effectiveness, or OEE), (ii) the efficiency with which we convert sustainably harvested wood fiber into our products, and (iii) our ongoing work to optimize logistics and reduce other costs.
The primary end-markets for timber harvested in North America are manufacturers who supply: (1) the housing market where it is used in the construction of new housing and the repair and remodeling of existing housing; (2) the pulp and paper market; (3) commercial and industrial markets; (4) export markets; and (5) emerging biomass energy production markets.
The primary end-markets for timber harvested in the United States and Canada are manufacturers who supply: (1) the housing market, where timber is used in the construction of new housing and the repair and remodeling of existing housing; (2) the pulp and paper market; (3) commercial and industrial markets; (4) export markets; and (5) emerging biomass energy production markets.
We have consistently grown our Siding segment above the underlying market growth rates, and this segment is less sensitive to new housing market cyclicality as over 50% of Siding Solutions demand comes from other markets, including sheds and repair and remodeling.
We have consistently grown our Siding segment above the underlying market growth rates, and this segment is less sensitive to new housing market cyclicality as over 50% of demand for our Siding Solutions comes from other markets, including off-site structure production and repair and remodeling.
Our principal customers include the following: • Wholesale distribution companies, which supply building materials to retailers on a regional, state, or local basis; 6 • Distributors, who provide building materials to smaller retailers, contractors, and others; • Building materials professional dealers that specialize in sales to professional builders, remodeling firms, and trade contractors that are involved in residential home construction and light commercial building; • Retail home centers that provide access to consumer markets with a broad selection of home improvement materials and increasingly serve professional builders, DIY remodelers, and trade contractors; and • Shed producers that design, construct, and distribute prefabricated residential and light commercial structures, including fully manufactured, modular, and panelized structures, for consumer and professional markets.
Our principal customers include the following: • Wholesale distribution companies, which supply building materials to retailers on a regional, state, or local basis; • Distributors, who provide building materials to smaller retailers, contractors, and others; • Building materials professional dealers that specialize in sales to professional builders, remodeling firms, and trade contractors that are involved in residential home construction and light commercial building; • Retail home centers that provide access to consumer markets with a broad selection of home improvement materials and increasingly serve professional builders, DIY remodelers, and trade contractors; and • Off-site structure producers that design, construct, and distribute prefabricated residential and light commercial structures, including fully manufactured, modular, and panelized structures, for consumer and professional markets. 7 OUR COMPETITORS / COMPETITION The building products industry is highly competitive.
Through our sales efforts, we target customers by distribution channel and focus on providing them with a broad array of traditional and specialty building products coupled with quality service. Our strategically located facilities in the U.S., Canada, Chile, and Brazil allow us to be closer to our customers and more responsive to their changing needs.
Through our sales efforts, we target customers by distribution channel and focus on providing them with a broad array of traditional and specialty building products coupled with quality service. Our facilities are strategically located in the U.S., Canada, Chile, and Brazil to allow us to maintain geographic proximity to our customers and to remain responsive to their changing needs.
To do so, we plan to increase the production capacity of these higher-margin, value-added products through the addition of new plants, additional conversion of existing OSB plants to Siding manufacturing plants, expansion of our capacity at existing Siding facilities, and expansion of our prefinished offerings.
To do so, we plan to increase the production capacity of these high-margin, value-added products through the addition of new plants, additional conversion of existing Oriented Strand Board plants to Siding manufacturing plants, expansion of our capacity at existing Siding facilities, and expansion of our prefinished capacity and offerings.
We embrace the diversity of our team members, customers, stakeholders, and consumers, including their unique backgrounds, experiences, thoughts, and talents, and are committed to continued efforts to increase diversity and foster an inclusive workplace. Everyone at LP is valued and appreciated for their distinct contributions to the growth and sustainability of our business.
We embrace the diversity of our team members, customers, stakeholders, and consumers, including their unique backgrounds, experiences, ideas, and talents, and are committed to continued efforts to foster an inclusive workplace. All LP team members are valued and appreciated for their distinct contributions to the growth and sustainability of our business.
We are headquartered in Nashville, Tennessee, and as of December 31, 2022, we operated 22 plants across the U.S., Canada, Chile, and Brazil.
We are headquartered in Nashville, Tennessee, and as of December 31, 2023, we operated 23 plants across the U.S., Canada, Chile, and Brazil.
Changes in global or regional climate conditions and current or future governmental responses to such changes at the international, U.S. federal, and state levels, such as regulating and/or taxing the production of carbon dioxide and other greenhouse gases to facilitate the reduction of emissions into the atmosphere, and/or the imposition of taxes or other incentives to produce and use “cleaner” energy, may increase energy costs, limit harvest levels, and impact our operations or our planned or future growth.
Changes in global or regional climate conditions and current or future governmental responses to such changes at the international level and U.S. federal and state levels, such as regulating and/or taxing the production of carbon dioxide and other greenhouse gases to facilitate the reduction of emissions into the atmosphere, requiring certain entities to disclose details about the emissions of greenhouse gases and/or the imposition of taxes or other incentives to produce and use “cleaner” energy, may increase energy costs, limit timber harvest levels, increase costs associated with disclosure related to greenhouse gases and impact our operations or our planned or future growth.
OUR BUSINESS STRATEGY Grow Our Siding Business. We believe that our leadership position in treated engineered wood siding allows us to benefit from demand growth, particularly as sustainable engineered wood continues to displace alternative siding materials such as vinyl, fiber cement, and other materials.
We believe that our leadership position in engineered wood siding allows us to benefit from demand growth, particularly as sustainable engineered wood products continue to displace alternative siding materials such as vinyl, fiber cement, and other materials.
OUR COMPETITORS / COMPETITION The building products industry is highly competitive. We compete internationally with several thousand forest and building products firms, ranging from very large, fully integrated firms to smaller enterprises that may manufacture a few items. We also compete less directly with firms that manufacture substitutes for wood building products.
We compete internationally with several thousand forest and building products firms, ranging from very large, fully integrated firms to smaller enterprises that may manufacture a few items. We also compete less directly with firms that manufacture substitutes for wood building products.
Our facilities utilize the best available manufacturing techniques based on the needs of our businesses, and we continuously work to improve efficiency and productivity, as measured by OEE. We currently operate 19 strategically located manufacturing and production facilities in the U.S. and Canada, 2 facilities in Chile, and 1 facility in Brazil.
Our facilities utilize the best available manufacturing techniques based on the needs of our business segments, and we work continuously to improve our operating efficiency and productivity, as measured by OEE. We currently operate 20 strategically located manufacturing and production facilities in the U.S. and Canada, two facilities in Chile, and one facility in Brazil.
In addition, information concerning our: (1) Net sales by business segment; (2) profit by business segment; (3) identifiable assets by segment; (4) depreciation and amortization by business segment; (5) capital expenditures by business segment; and (6) geographic segment information, is included in Note 18 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
In addition, information concerning our: (i) net sales by business segment; (ii) profit by business segment; (iii) identifiable assets by segment; (iv) depreciation and amortization by business segment; (v) capital expenditures by business segment; and (vi) geographic segment information, is included in "Note 18 - Segment Information" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
Year Ended December 31, 2022 Sales Volume Siding OSB South America Total Siding Solutions (MMSF) 1,797 — 33 1,830 OSB - Structural Solutions (MMSF) — 1,803 554 2,357 OSB - Commodity (MMSF) — 1,944 — 1,944 11 Year Ended December 31, 2021 Sales Volume Siding OSB South America Total Siding Solutions (MMSF) 1,621 — 46 1,667 OSB - Structural Solutions (MMSF) — 1,664 615 2,279 OSB - Commodity (MMSF) — 2,014 — 2,014 Year Ended December 31, 2020 Sales Volume Siding OSB South America Total Siding Solutions (MMSF) 1,393 — 36 1,429 OSB - Structural Solutions (MMSF) — 1,565 688 2,253 OSB - Commodity (MMSF) — 1,978 — 1,978 Overall Equipment Effectiveness Summary We measure OEE of each of our mills to track improvements in the utilization and productivity of our manufacturing assets.
Year Ended December 31, 2023 Sales Volume Siding OSB LPSA Total Siding Solutions (MMSF) 1,547 — 33 1,580 OSB - Structural Solutions (MMSF) — 1,559 502 2,061 OSB - Commodity (MMSF) — 1,512 — 1,512 Year Ended December 31, 2022 Sales Volume Siding OSB LPSA Total Siding Solutions (MMSF) 1,797 — 33 1,830 OSB - Structural Solutions (MMSF) — 1,803 554 2,357 OSB - Commodity (MMSF) — 1,944 — 1,944 Year Ended December 31, 2021 Sales Volume Siding OSB LPSA Total Siding Solutions (MMSF) 1,621 — 46 1,667 OSB - Structural Solutions (MMSF) — 1,664 615 2,279 OSB - Commodity (MMSF) — 2,014 — 2,014 Overall Equipment Effectiveness Summary We measure OEE of each of our mills to track improvements in the utilization and productivity of our manufacturing assets.
South America Our South America segment manufactures and distributes OSB structural panel and siding products in South America and certain export markets. This segment also distributes and sells related products to encourage the region’s transition to wood frame construction.
Our LPSA segment manufactures and distributes LP OSB structural panel and Siding Solutions products in South America and certain export markets. This segment also sells and distributes a variety of companion products to support the region’s transition to wood frame construction.
These key performance indicators should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, accounting principles generally accepted in the United States of America (U.S. GAAP) financial measures presented herein. These measures may not be comparable to similarly titled performance indicators used by other companies.
These key performance indicators should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with the financial measures that were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Our talent development programs provide employees with the resources they need to help achieve their career goals, build management skills, and lead the Company. Compensation and Benefits. We strive to provide competitive compensation and benefits programs to help meet the needs of our employees and to provide the proper incentives to attract, retain, and motivate them.
Our talent development programs provide employees with the resources they need to help achieve their career goals, build management skills, and lead the Company. 10 Compensation and Benefits. We strive to provide competitive compensation and benefits programs to help meet the needs of our employees and offer the flexibility, inclusivity, choice and protection necessary to retain top talent.
Other companies may present housing start data differently, and therefore, as presented by us, our housing start data may not be comparable to similarly titled indicators reported by other companies. 2022 2021 2020 Housing starts 1 : Single-Family 1,005 1,127 991 Multi-Family 550 474 389 1,555 1,601 1,380 1 Actual U.S. Housing starts data reported by U.S.
Other companies may present housing start data differently, and therefore, as presented by us, our housing start data may not be comparable to similarly titled indicators reported by other companies. Year Ended December 31, 2023 2022 2021 Housing starts 1 : Single-Family 945 1,005 1,127 Multi-Family 469 547 474 1,413 1,553 1,601 1 Actual U.S.
GOVERNMENT REGULATION Our operations are subject to the laws and regulations of the United States and multiple foreign jurisdictions. These regulations, which differ among jurisdictions, include those related to financial and other disclosures, accounting standards, corporate governance, intellectual property, tax, trade, antitrust, employment, immigration and travel regulations, privacy, and anti-corruption.
These laws and regulations, which differ among jurisdictions and are subject to change, include those related to financial and other disclosures, accounting standards, corporate governance, environmental policy, intellectual property, tax, trade, antitrust, labor and employment, immigration and travel, privacy, and anti-corruption, among others.
SEASONALITY Our business is subject to seasonal variances, with demand for many of our products tending to be higher during the building season, which generally occurs in the second and third quarters in North America and the fourth and first quarters in South America.
We attempt to mitigate our exposure to energy price changes through the selective use of long-term supply agreements. 8 SEASONALITY Our business is subject to seasonal variances, with demand for many of our products tending to be higher during the building season, which generally occurs in the second and third calendar quarters in North America and the fourth and first calendar quarters in South America.
We believe that long-term market trends and demographics suggest continued growth in demand for sustainable engineered wood siding in these markets, which we are well-positioned to meet. 5 During 2022, we completed the conversion of our OSB mill in Houlton, Maine to Siding Solutions, began the conversion of our OSB mill in Sagola, Michigan to Siding Solutions, and announced an expansion at the Houlton, Maine mill expected to begin sometime after Siding Solutions production begins at our Sagola, Michigan mill.
We believe that long-term market trends and demographics suggest continued growth in demand for sustainable engineered wood siding in these markets, which we believe we are well-positioned to meet. During 2023, we completed the conversion of our existing OSB mill in Sagola, Michigan into a Siding Solutions mill.
In addition, we offer employees the ability to customize benefit options to meet their needs and the needs of their families. 10 SEGMENT AND PRICE TREND DATA The following tables set forth for each of the last three years: (1) our sales volumes, (2) housing starts, and (3) OEE.
In addition, we offer employees the ability to customize benefit options to meet their individual needs and the needs of their families. SEGMENT AND PRICE TREND DATA The following tables present summary data for each of the last three years relating to: (i) housing starts within the United States, (ii) our sales volumes, and (iii) our OEE performance.
Census Bureau is based upon information published through February 16, 2023. Sales Volume Information Summary We monitor sales volumes for our products in our Siding, OSB, and South America segments, which we define as the number of units of our products sold within the applicable period.
Housing starts data, in thousands, reported by U.S. Census Bureau is based upon information published through January 18, 2024. 11 Sales Volume Information Summary We monitor sales volumes for our products in our Siding, OSB, and LPSA segments, which we define as the number of units of our products sold within the applicable period.
In addition, we occasionally undertake construction projects for environmental control equipment or incur other environmental costs that extend an asset’s useful life, improve its efficiency, and/or improve the property's marketability.
We are committed to complying with all applicable environmental laws and regulations and intend to devote significant management attention to such matters. In addition, we occasionally undertake construction projects for environmental control equipment or incur other environmental costs that extend an asset’s useful life, improve its efficiency, and/or improve the property's marketability.
Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this annual report on Form 10-K. 12
Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this annual report on Form 10-K. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following list sets forth information about our executive officers. All information is as of the date of the filing of this annual report on Form 10-K. W.
Our talent strategy is focused on attracting the best talent and recognizing and rewarding their performance while continually developing, engaging, and retaining our employees. We focus on the team member experience, removing barriers to engagement, further modernizing the human relations process, and continually improving the equity and effectiveness of all talent practices.
We are committed to recognizing and rewarding the contributions of our valued employees while continually working to develop, engage, and retain our workforce. We focus on the team member experience, removing barriers to engagement, further modernizing the human relations process, and continually improving the equity and effectiveness of all talent practices.
It should be noted that other companies may present OEE differently, and therefore, as presented by us, OEE may not be comparable to similarly titled measures reported by other companies.
It should be noted that other companies may present sales volume data differently, and therefore, as presented by us, sales volume data may not be comparable to similarly titled measures reported by other companies. We believe that sales volumes can be a useful measure for evaluating and understanding our business.
Because our manufacturing operations depend on significant amounts of energy and raw materials, these initiatives could have an adverse impact on our operations and profitability.
Because our manufacturing operations depend on significant amounts of energy and raw materials, these initiatives could have an adverse impact on our operations and profitability. Future legislation or regulatory activity in this area remains uncertain, as does the potential impact on our business and operations.
Evaluating sales volume by product type helps us identify and address changes in product demand, broad market factors that may affect our performance, and opportunities for future growth. It should be noted that other companies may present sales volumes differently, and therefore, as presented by us, sales volumes may not be comparable to similarly titled measures reported by other companies.
Evaluating sales volume by product type helps us identify and address changes in product demand, broad market factors that may affect our performance, and opportunities for future growth.
The LP ® SmartSide ® EPD demonstrates that the product stores more carbon than is released during its lifecycle, making it a carbon-negative exterior siding product. These products are used in new home construction, repair and remodeling projects, and outdoor structures such as sheds. We intend to continue growing Siding sales and increase the breadth of our Siding product offerings.
Our Siding Solutions products are used in new home construction, repair and remodeling projects, and outdoor structures such as sheds. We intend to continue growing sales in our Siding segment and to increase the breadth of our Siding Solutions product offerings.
We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop, and retain diverse talent at every level.
We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop, and retain diverse talent at every level. Our executive management team provides oversight of our programs, policies, and initiatives focusing on workforce inclusion and belonging, talent and development, and compensation and benefits.
Our customers are primarily home building, remodeling, retail, wholesale, and industrial businesses in the home building and outdoor structures sector. Since our founding in 1972, LP has been Building a Better World™ by helping customers construct beautiful, durable homes.
The principal customers for our building solutions are retailers, wholesalers, and home building and industrial businesses in North America and South America, with limited sales in Asia, Australia, and Europe. Since our founding in 1972, LP has been Building a Better World ™ by helping customers construct beautiful and durable homes.
This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Colombia, Argentina, and Paraguay. We believe that we are the leading producer of OSB and siding in South America and we are positioned to capitalize on the growing demand for wood-based residential construction in South America.
LP South America (LPSA) We believe that we are the leading producer of OSB and siding products in South America and that we are positioned to capitalize on the growing demand for materials used in wood-based residential construction in South America.
OSB serves many of the same uses as plywood, including roof decking, sidewall sheathing and floor underlayment, but less expensive and more sustainable.
Developed as a less expensive and more sustainable alternative to plywood, OSB is used as roof decking, sidewall sheathing and floor underlayment.
We believe that our products help customers address labor shortages because they are easy to work with and often combine multiple steps into a single product system. Our marketing efforts drive awareness and a greater understanding of our products’ potential with builders, repair and remodel contractors, industrial manufacturers, and major home improvement retailers.
We believe our marketing programs aim to drive awareness of our products and a greater understanding of our products’ specific features among builders, repair and remodel contractors, industrial manufacturers, and major home improvement retailers.
We will also continue to drive product innovation by utilizing our technological expertise in wood composites, overlays, chemical treatments, and durable and beautiful paints to better address the needs of our customers. Oriented Strand Board (OSB) OSB is a structural building panel product made from wood strands, arranged in layers, and bonded with resin and wax.
We will also seek to drive continued product innovation by utilizing our technological and engineering expertise in wood composites, overlays, chemical treatments, and durable and beautiful paints to better address the needs of our customers. In May 2023, we acquired an idle manufacturing facility in Wawa, Ontario, Canada from a third party for $80 million.
During the quarter ended March 31, 2022, we modified our OEE measure to use a best-in-class target across all LP sites. This modification allows us to optimize capital investments, focus maintenance and reliability improvements, and improve overall equipment efficiency.
We use a best-in-class target across all LP sites that allows us to optimize capital investments, focus maintenance and reliability improvements, and improve overall equipment efficiency. It should be noted that other companies may present OEE data differently, and therefore, as presented by us, OEE data may not be comparable to similarly titled measures reported by other companies.
Our executive management team provides oversight of our policies, programs, and initiatives focusing on workforce diversity, equity, and inclusion, talent and development, and compensation and benefits, and it is our policy to fully comply with all laws (domestic and foreign) applicable to equal employment opportunity and discrimination in the workplace. 9 Talent and Development.
It is our policy to fully comply with all laws (domestic and foreign) applicable to equal employment opportunity and discrimination in the workplace. Talent and Development. Our talent strategy is focused on cultivating a safe and supportive workplace that attracts and welcomes innovative, agile, diverse and resilient talent committed to value creation.
These strategies, objectives, and measures are the basis of our workforce management framework and are advanced through the following programs, policies, and initiatives: Labor Relations. We are committed to working collaboratively with the unions that represent some of our employees.
These strategies, objectives, and measures are the basis of our workforce management framework and are advanced through the following programs, policies, and initiatives: Labor Relations. As of December 31, 2023, we employed approximately 4,100 team members, comprising approximately 2,700 in the United States, 800 in Canada, and 600 in South America.
The table below summarizes the relative sizes of our business segments in 2022: Segment Net Sales (in millions) Percentage of 2022 Net Sales Siding $ 1,469 38 % Oriented Strand Board (OSB) 2,062 54 % South America 241 6 % Other 84 2 % Intersegment (2) — % $ 3,854 In March 2022, we sold our 50% equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc.
The table below summarizes the relative sizes of our business segments in 2023: Segment Net Sales (in millions) Percentage of 2023 Net Sales Siding $ 1,328 51 % Oriented Strand Board (OSB) 1,026 40 % LP South America (LPSA) 205 8 % Other 22 1 % $ 2,581 OUR BUSINESS SEGMENTS Siding We believe that we are the largest producer of engineered wood siding in North America.
Further, we released an environmental product declaration (EPD) in 2021 for our LP ® SmartSide ® products, which details the cradle-to-gate energy and materials required for producing LP ® SmartSide ® Lap, Panel and Trim in North America.
The LP SmartSide environmental product declarations (EPDs), which detail the cradle-to-grave energy and materials required to produce LP SmartSide Lap, Panel and Trim in North America, demonstrate that the product stores more carbon than is released during its lifecycle, making it a carbon-negative exterior siding product.
Removed
(Resolute), our joint venture partner, for $59 million. The joint ventures were comprised of Resolute-LP Engineered Wood Larouche Inc. in Larouche, Quebec, and Resolute-LP Engineered Wood St-Prime Limited Partnership in Saint-Prime, Quebec. The total net carrying value of our equity method investment at the date of sale was $19 million.
Added
We anticipate converting the Wawa manufacturing facility into an LP ® SmartSide ® Trim & Siding mill in the future according to the needs of our business.
Removed
We recognized a gain on the sale of $39 million during the year ended December 31, 2022, within Income from discontinued operations, net of income taxes in the Consolidated Statements of Income.
Added
We are evaluating project schedules and market demand to determine when we will begin related construction work. 5 Oriented Strand Board (OSB) OSB is a structural building panel product made from wood strands, arranged in layers, and bonded with resin and wax.
Removed
In August 2022, LP completed the sale of the Engineered Wood Products (EWP) segment assets to Pacific Woodtech Corporation, a Washington corporation, and Pacific Woodtech Canada Holdings Limited, a British Columbia limited company (collectively, the Purchaser) in exchange for the Purchaser’s payment to the Company of $217 million in gross cash proceeds after taking into account working capital adjustments.
Added
Our LP Structural Solutions products are engineered to provide a variety of features such as superior fire resistance, enhanced water and moisture protection and greater weight-bearing capacity.
Removed
Upon closing, the Company entered into the transition services agreement (TSA) with the Purchaser, pursuant to which the Company agreed to support the various activities of the EWP segment for a period not to exceed eight months.
Added
The LPSA segment carries out manufacturing operations in Chile and Brazil and operates sales offices in Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru. OUR BUSINESS STRATEGY Grow Our Siding Business.
Removed
We have classified the related assets and liabilities associated with the EWP segment as discontinued operations in our Consolidated Balance Sheets for prior periods presented. The results of our EWP segment have been presented as discontinued operations in our Consolidated Statements of Income for all periods presented.
Added
This conversion provided our business an additional 300 million square feet of Siding Solutions capacity. In 2023, we also completed the construction of our new ExpertFinish facility in Bath, New York, which added approximately 55 million square feet of ExpertFinish capacity. Additionally in 2023, we acquired an idle manufacturing facility in Wawa, Ontario, Canada.
Removed
See Note 6 – Discontinued Operations of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. 4 OUR BUSINESS SEGMENTS Siding We believe that we are the largest producer of engineered wood siding.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

93 edited+23 added−11 removed65 unchanged
Biggest changeThese risks include but are not limited to: • the effects of global economic uncertainty or recession, including the impact of the COVID-19 pandemic and the responses of governmental authorities thereto; • the ability to attract and retain key management and other personnel and develop effective succession plans; • pursuing growth through acquisitions, including the ability to identify acceptable acquisition candidates, finance and consummate acquisitions on favorable terms, and successfully integrate acquired assets or businesses; • compliance with a wide variety of health and safety laws and regulations and changes to such laws and regulations; • the exertion of influence over us, individually or collectively, by a few entities with concentrated ownership of our stock; • taxation by multiple jurisdictions and the impact of such taxation on the effective tax rate and the amount of taxes paid; • changes in tax laws and regulations; • new or modified legislation related to health care; • compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the potential impact of compliance failures; • failure to meet the expectations of investors, including as a result of factors beyond the control of an individual company; and • the impact of the military conflict between Russia and Ukraine on the global economy, energy supplies and raw materials.
Biggest changeThese risks include but are not limited to the following, in addition to the other risks described above: • the effects of global economic uncertainty or recession, including the impact of the COVID-19 pandemic and the responses of governmental authorities thereto; • compliance with a wide variety of health and safety laws and regulations and changes to such laws and regulations; • the exertion of influence over us, individually or collectively, by a few entities with concentrated ownership of our stock; • new or modified legislation related to health care; • compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the potential impact of compliance failures; and • failure to meet the expectations of investors, including as a result of factors beyond the control of an individual company. 25
If our suppliers or third parties we rely on for transportation are unable to comply with environmental laws and regulations, we may be unable to meet consumer demands at the same cost or in a timely fashion.
If our suppliers or the third parties we rely on for transportation are unable to comply with environmental laws and regulations, we may be unable to meet consumer demands at the same cost or in a timely fashion.
Product supply is influenced primarily by fluctuations in available manufacturing capacity. Demand is affected by the state of the economy in general and a variety of other factors, including the level of new residential construction activity and home repair and remodeling activity and changes in the availability and cost of mortgage financing.
Product supply is influenced primarily by fluctuations in available manufacturing capacity. Demand is affected by the state of the economy in general and a variety of other factors, including the level of new residential construction activity, home repair and remodeling activity and changes in the availability and cost of mortgage financing.
Although we have been able to largely recover raw material price increases in the Siding product prices, we are unable to determine to what extent, if any, we will be able to pass any future raw material cost increases through to our customers through product price increases.
Although we have been able to largely recover raw material price increases in the Siding product prices, we are unable to determine to what extent, if any, we will be able to pass any future Siding raw material cost increases through to our customers through product price increases.
A breach of the covenants or restrictions under our Credit Agreement or under the indenture governing our 2029 Senior Notes could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt.
A breach of the covenants or restrictions under our Credit Agreement or under the indenture governing our 2029 Senior Notes could result in an event of default under the applicable indebtedness. Such a default may allow our creditors to accelerate the related debt.
Therefore, a failure to maintain and increase builder and consumer acceptance of our OSB products could have a material adverse effect on our financial position, liquidity, results of operations, and cash flows. Intense competition in the building products industry could prevent us from increasing or sustaining our net sales and profitability. The markets for our products are highly competitive.
Therefore, a failure to maintain and increase builder and consumer acceptance of our OSB products could also have a material adverse effect on our financial position, liquidity, results of operations, and cash flows. Intense competition in the building products industry could prevent us from increasing or sustaining our net sales and profitability. The markets for our products are highly competitive.
In particular, a significant portion of the goods we manufacture and raw materials we use are transported by railroad or trucks, which are highly regulated. There may be labor unrest or disputes, including strikes and work stoppages, among workers at various transportation providers and in industries affecting the transportation industry, included those that are unionized, like the railroad industry.
In particular, a significant portion of the goods we manufacture and raw materials we use are transported by railroad or trucks, which are highly regulated. There may be labor unrest or disputes, including strikes and work stoppages, among workers at various transportation providers and in industries affecting the transportation industry, including those that are unionized, like the railroad industry.
If we are not in compliance with the FCPA and other anti-corruption laws or Trade Control Laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity.
If we or our intermediaries are not in compliance with the FCPA and other anti-corruption laws or Trade Control Laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient control measures to defend against these techniques.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or may be designed to remain dormant until a predetermined triggering event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient control measures to defend against these techniques.
Unfavorable changes in demographics, credit markets, consumer confidence, household incomes, inflation, housing affordability, or housing inventory levels and occupancy, or a weakening of the U.S. economy or of any regional or local economy, in which we operate could adversely affect consumer spending, result in decreased demand for our products, and adversely affect our business.
Unfavorable changes in demographics, credit markets, consumer confidence, household incomes, inflation, housing affordability, or housing inventory levels and occupancy rates, or a weakening of the U.S. economy or of any regional or local economy in which we operate, could adversely affect consumer spending, result in decreased demand for our products, and adversely affect our business.
Our failure to comply with applicable environmental laws and regulations and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or 18 requiring corrective measures, installation of pollution control equipment, or remedial actions, as well as reputational harm.
Our failure to comply with applicable environmental laws and regulations and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment, or remedial actions, as well as reputational harm.
The direct impact on us could include reduced revenues and write-offs of accounts receivable and could negatively impact our operating cash flow. While we currently cannot estimate what those effects will be, if they are severe, the indirect impact could include impairments of intangible assets and reduced liquidity, among others.
The direct impact on us could include reduced revenues and write-offs of accounts receivable and could negatively impact our cash flow. While we currently cannot estimate what those effects will be, if they are severe, the indirect impact could include impairments of intangible assets and reduced liquidity, among others.
As we ramp up manufacturing processes for newly introduced products, we may experience difficulties, including manufacturing disruptions, delays, or other complications, which could adversely impact our ability to serve our customers, our reputation, our costs of production, and, ultimately, our financial position, results of operations and cash flows.
Additionally, as we ramp up manufacturing processes for newly introduced products, we may experience difficulties, including manufacturing disruptions, delays, or other complications, which could adversely impact our ability to serve our customers, our reputation, our costs of production, and, ultimately, our financial position, results of operations and cash flows.
We may be required to expend additional resources to continue to enhance our security measures to investigate and remediate any security vulnerabilities. We cannot predict the degree of any impact that increased monitoring, assessing, or reporting of cybersecurity matters would have on operations, financial conditions and results.
We may be required to expend additional resources to continue to enhance our security measures necessary to investigate and remediate any security vulnerabilities. We cannot predict the degree of any impact that increased monitoring, assessing, or reporting of cybersecurity matters would have on operations, financial conditions and results.
In addition, an increase in transportation rates and oil and/or fuel surcharges could materially and adversely affect our sales and profitability. Our reliance on third-party wholesale distribution channels could impact our business. We offer our products directly and through a variety of third-party wholesale distributors and dealers.
In addition, an increase in transportation rates and oil and/or fuel surcharges could materially and adversely affect our sales and profitability. 14 Our reliance on third-party wholesale distribution channels could impact our business. We offer our products directly and through a variety of third-party wholesale distributors and dealers.
The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore, governments in the United States and several European and Asian countries have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
The global economy has been negatively impacted by the ongoing military conflict between Russia and Ukraine. Furthermore, governments in the United States and several European and Asian countries have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
The unpredictability and frequency of natural disasters such as hurricanes, earthquakes, hailstorms, wildfires, snow, ice storms, the spread of disease, and insect infestations could also affect the supply of raw materials or cause variations in their costs, or variations in transportation-related costs.
The unpredictability and frequency of natural disasters such as hurricanes, earthquakes, hailstorms, wildfires, snow, ice storms, the spread of disease, and insect infestations could affect the supply of raw materials or cause variations in their costs, or variations in transportation-related costs.
A breach in cybersecurity could result in manipulation and destruction of sensitive data, cause critical systems to malfunction, be damaged or shut down, and lead to disruption to our operations and production downtimes, potentially for lengthy periods of time.
A cybersecurity breach could result in manipulation and destruction of sensitive data, cause critical systems to malfunction, be damaged or shut down, and lead to disruption to our operations and production downtimes, potentially for lengthy periods.
Our Credit Agreement (as defined herein) and the indenture governing our 2029 Senior Notes (as defined herein) contain a number of restrictive covenants that impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including, among others, restrictions on our ability to incur indebtedness, grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all of our assets.
Our Credit Agreement (as defined herein) and the indenture governing our 2029 Senior Notes (as defined herein) contain a number of restrictive covenants that impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including, among others, restrictions on our ability to incur indebtedness, grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all of our assets.
Development of provincial forest lands, from which we obtain wood fiber, can be subject to constitutionally protected Indigenous treaty, Aboriginal title, or Aboriginal rights of recognized Indigenous groups in Canada.
Development of Canadian provincial forest lands, from which we obtain wood fiber, can be subject to constitutionally protected Indigenous treaty, Aboriginal title, or Aboriginal rights of recognized Indigenous groups in Canada.
In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. 21 As a result of these restrictions, we may be: • limited in how we conduct our business and grow in accordance with our strategy; • unable to raise additional debt or equity financing to operate during general economic or business downturns; or • unable to compete effectively or to take advantage of new business opportunities.
In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. 24 As a result of these restrictions, we may be: • limited in how we conduct our business and grow in accordance with our strategy; • unable to raise additional debt or equity financing to operate during general economic or business downturns; or • unable to compete effectively or to take advantage of new business opportunities.
Nonetheless, final or interim resolution of claims brought forward by provincial governments and Indigenous nations may result in additional restrictions on wood supply, potentially affecting operational costs and/or timber prices over the long term. LEGAL AND REGULATORY RISK FACTORS We are subject to significant environmental regulation and environmental compliance expenditures and liabilities.
Nonetheless, final or interim resolution of claims brought forward by Canadian provincial governments and Indigenous nations may result in additional restrictions on wood supply, potentially affecting our operational costs and/or timber prices over the long term. LEGAL AND REGULATORY RISK FACTORS We are subject to significant environmental regulation and environmental compliance expenditures and liabilities.
More detailed descriptions of our Credit Agreement, our Amended Credit Facility and the indenture governing our 2029 Senior Notes are included in filings made by us with the SEC, along with the documents themselves, copies of which are filed as exhibits to this annual report on Form 10-K and which provide the full text of these covenants.
More detailed descriptions of our Credit Agreement and the indenture governing our 2029 Senior Notes are included in filings made by us with the SEC, along with the documents themselves, copies of which are filed as exhibits to this annual report on Form 10-K and which provide the full text of these covenants.
Cybersecurity risks related to the technology used in our operations and other business processes, as well as security breaches of company, customer, employee, or vendor information, could adversely affect our business. We rely on various information technology systems to capture, process, store, and report data and interact with customers, vendors, and employees.
Cybersecurity risks related to the technology used in our operations and other business processes, as well as security breaches of Company, customer, consumer, employee, or vendor information, could adversely affect our business. We rely on various information technology systems to capture, process, store, and report data and interact with customers, consumers, vendors, and employees.
We conduct business in a number of jurisdictions that are geographically high-risk for corruption law violations, we participate in relationships with third parties whose actions could potentially subject us to liability under the FCPA or other anti-corruption laws, and the nature of our business involves interaction with foreign government officials.
We conduct business in a number of jurisdictions that are geographically high-risk for violations of anti-corruption laws, we participate in relationships with third parties whose actions could potentially subject us to liability under the FCPA or other anti-corruption laws, and the nature of our business involves interaction with government officials.
If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could be materially and adversely affected. 20 Warranty claims relating to our products and exceeding our warranty reserves could have a material adverse effect on our business. We have offered, and continue to offer, various warranties on our products.
If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could be materially and adversely affected. 23 Warranty claims relating to our products and exceeding our warranty reserves could have a material adverse effect on our business. We have offered, and continue to offer, various warranties on our products.
Given the rapidly changing nature of environmental laws and regulations, we cannot predict the impact such restrictions may have on operations.
Given the rapidly changing nature of environmental laws and regulations, we cannot predict the impact such restrictions may have on our operations.
Adverse changes in the financial or business condition of these wholesale distributors and dealers or our customers, including as a result of the impacts arising from global pandemics, supply chain disruptions, or inflation, could subject us to losses and affect our ability to bring our products to market.
Adverse changes in the financial or business condition of these wholesale distributors and dealers or our customers, including as a result of the impacts arising from global pandemics, geopolitical conflicts, supply chain disruptions, or inflation, could subject us to losses and affect our ability to bring our products to market.
We believe that we are in compliance in all material respects with existing climate-related regulations and such compliance has not had a material impact on our business; however, the costs of complying with increased regulations and transitioning to a lower-carbon economy may result in expenses that will materially impact our business.
We believe that we are in compliance in all material respects with existing climate-related regulations and such compliance has not had a material impact on our business; however, the costs of complying with increased regulations and transitioning to a lower-carbon economy may result in expenses that could materially impact our business.
Certain challenges we face in meeting our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this annual report on Form 10-K or our other filings with the SEC.
Certain challenges we face in meeting our ESG objectives are also captured within our ESG reporting contained on our website, which is not incorporated by reference into and does not form any part of this annual report on Form 10-K or our other filings with the SEC.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these examinations will not have a material adverse effect on our business, financial condition, and results of operations.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these examinations will not have a material adverse effect on our business, financial condition, and results of operations, or that our provision for income taxes will be sufficient.
Our suppliers and the third parties we rely on for transportation may also be impacted by increased ESG reporting requirements or transition related risks to a lower carbon economy, which may adversely impact their ability to provide us with goods and services.
Our suppliers and the third parties we rely on for transportation may also be impacted by increased ESG reporting requirements or risks associated with the transition to a lower carbon economy, which may adversely impact their ability to provide us with goods and services.
In areas where there are treaties, such as in Manitoba, where LP operates, provincial governments are required by law to consult with Indigenous nations regarding land use development projects including, forest management plans and operations. Provincial governments are actively engaged in consultations or negotiations with Indigenous groups.
In areas where there are treaties, such as in Manitoba, where LP operates, provincial governments are required by law to consult with Indigenous nations regarding land use development projects including, forest management plans and operations. 20 Canadian provincial governments are actively engaged in consultations or negotiations with Indigenous groups.
Department of Commerce’s Bureau of Industry and Security, the U.S. Department of Treasury’s Office of Foreign Assets Control, and various non-U.S. government entities, including applicable export control regulations, economic sanctions on countries, entities and other persons, customs requirements, currency exchange regulations and transfer pricing regulations (collectively, Trade Control Laws).
Department of Commerce’s Bureau of Industry and Security, the U.S. Department of Treasury’s Office of Foreign Assets Control, and various non-U.S. government entities, including applicable export control regulations, economic sanctions on countries, entities and other persons, customs requirements, anti-boycott regulations, currency exchange regulations and transfer pricing regulations (collectively, Trade Control Laws).
Our inability to pass increased costs through to our customers could have a material adverse effect on our financial condition, results of operations, and cash flows. In addition, supply disruptions in resin may impact our ability to produce our products or may cause production costs to increase.
Our inability to pass increased costs through to our customers could have a material adverse effect on our financial condition, results of operations, and cash flows. In addition, supply disruptions in resin or wood fiber may impact our ability to produce our products or may cause production costs to increase.
OSB product prices are largely driven by the ratio of overall OSB demand to capacity. Therefore, we are unable to determine to what extent, if any, we will be able to pass any future raw material cost increases through to our customers.
OSB product prices are largely driven by the ratio of overall OSB demand to industry capacity. Therefore, we are unable to determine to what extent, if any, we will be able to pass any future OSB raw material cost increases through to our customers through product price increases.
The effect of such tax law changes or regulations and interpretations, as well as any additional tax legislation in the U.S. or other jurisdictions in which we operate, could have a material adverse effect on our business, financial condition, and results of operations. 19 In addition, our products and markets are subject to extensive and complex local, state, federal, and foreign statutes, ordinances, rules, and regulations.
The effect of any other tax law changes or regulations and interpretations, as well as any additional tax legislation in the U.S. or other jurisdictions in which we operate, could have a material adverse effect on our business, financial condition, and results of operations. 22 In addition, our products and markets are subject to extensive and complex local, state, federal, and foreign statutes, ordinances, rules, and regulations.
Many of our competitors may have greater financial and other resources, greater product diversity, and better access to raw materials than we do, and certain of the mills operated by our competitors may be lower-cost producers than the mills operated by us.
Many of our competitors may have greater financial and other resources, greater product diversity, and better access to raw materials than we do, and certain of the mills operated by our competitors may be lower-cost producers than the mills we operate.
Pursuant to the Amended Credit Facility effective in November 2022, our senior indebtedness transitioned from bearing interest at a variable interest rate using a LIBOR benchmark to one that uses Term SOFR, a forward-looking term rate currently published by CME Group Benchmark Administration Limited (CBA) based upon the Secured Overnight Financing Rate (SOFR) as a benchmark rate.
Pursuant to the Amended Credit Facility effective in November 2022, our senior indebtedness transitioned from bearing interest at a variable interest rate using a London Interbank Offered Rate (LIBOR) benchmark to one that uses a Term SOFR Rate, a forward-looking term rate currently published by CME Group Benchmark Administration Limited (CBA) based upon the Secured Overnight Financing Rate (SOFR) as a benchmark rate.
During the year ended December 31, 2022, fire interruptions reduced production by less than 1%, but future fire or other operational interruptions could significantly curtail the production capacity of a facility for a period of time.
During the year ended December 31, 2023, fire interruptions reduced production by less than 1%, but future fire or other operational interruptions could significantly curtail the production capacity of a facility for a period of time.
Our inability to prevent information technology system disruptions or to mitigate the impact of such disruptions could have an adverse effect on us. 14 Because our intellectual property and other proprietary information may become compromised, we are subject to the risk that competitors could copy our products or processes.
Our inability to prevent information technology system disruptions or to mitigate the impact of such disruptions could have an adverse effect on our business. Because our intellectual property and other proprietary information may become compromised, we are subject to the risk that competitors could copy our products or processes.
The FCPA and these other laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making, offering or authorizing other prohibited payments or gifts, with corrupt intent, to foreign government officials or other persons to obtain or retain business or gain some other business advantage.
The FCPA and these other laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making, promising, offering or authorizing payments or gifts, with corrupt intent, to government officials or other persons to obtain or retain business or gain some other business advantage.
A payment default or an acceleration following an event of default under our Credit Agreement or our indenture for our 2029 Senior Notes could trigger an event of default under the other indebtedness obligation, as well as any other debt to which a cross-acceleration or cross-default provision applies, which could result in the principal of and the accrued and unpaid interest on all such debt becoming due and payable.
A payment default or an acceleration following an event of default under our Credit Agreement or our indenture governing our 2029 Senior Notes could trigger an event of default under the other indebtedness obligation, as well as any other debt to which a cross-acceleration or cross-default provision applies, which could result in the principal of and the accrued and unpaid interest on all such debt becoming due and payable ahead of schedule.
To safeguard our confidential information, we rely on employee, consultant, and vendor nondisclosure agreements and contractual provisions and a system of internal and technical safeguards to protect our proprietary information.
To safeguard our confidential information, we rely on employee, consultant, and vendor nondisclosure agreements and contractual provisions and a system of internal and technical safeguards.
As a publicly traded U.S. manufacturing company, we are subject to a variety of other risks, each of which could adversely affect our financial position, results of operations or cash flows, or the price of our common stock.
GENERAL RISK FACTORS We are subject to a variety of other risks as a publicly traded U.S. manufacturing company. As a publicly traded U.S. manufacturing company, we are subject to a variety of other risks, each of which could adversely affect our financial position, results of operations or cash flows, or the price of our common stock.
Network, system, and data breaches could result in misappropriation of sensitive data or operational disruptions, including interruption to systems availability and denial of access to and misuse of applications required by our customers to conduct business with us.
Network, system, and data breaches could result in misappropriation of trade secrets or sensitive data or operational disruptions, including interruption to systems availability and denial of access to, and misuse of, applications required by our customers and vendors to conduct business with us.
OSB accounted for about 57%, 65%, and 55% of our North American Net sales in 2022, 2021, and 2020, respectively, and we expect OSB sales to continue to account for a substantial portion of our revenues and profits in the future. The concentration of our business in the OSB market further increases our sensitivity to commodity pricing and price volatility.
OSB accounted for about 43%, 57%, and 65% of our North American net sales in 2023, 2022, and 2021, respectively, and we expect OSB sales to continue to account for a substantial portion of our revenues and profits in the future. The concentration of our business in the OSB market further increases our sensitivity to commodity pricing and price volatility.
From time to time, we announce certain aspirations and goals relevant to our priority ESG matters. We periodically publish information about our ESG priorities, strategies, goals, targets and progress on our corporate website and update our ESG reporting from time to time.
From time to time, we announce certain aspirations and goals relevant to our priority ESG matters. We periodically publish information about our ESG priorities, strategies, goals, targets and progress on our corporate website and in public filings and update our ESG reporting from time to time.
Our success depends, in part, on the proprietary nature of our technology, including non-patentable intellectual property, such as our process technology. To the extent that a competitor can reproduce or otherwise capitalize on our technology, it may be difficult, expensive, or impossible for us to obtain adequate legal or equitable relief.
Our success depends, in part, on the proprietary nature of our technology, including non-patentable intellectual property, such as our process technology. To the extent that a competitor can reproduce or otherwise capitalize on our technology, it may be difficult, expensive, or impossible for us to obtain adequate legal remedies or other recourse.
Unfavorable changes in single-family housing starts and increases interest rates on major renovations or new home construction for during the year ended December 31, 2022, negatively impacted our results of operations for the same period.
Unfavorable changes in single-family housing starts and increased interest rates on major renovations or new home construction during the year ended December 31, 2023, negatively impacted our results of operations for the same period.
FINANCIAL RISK FACTORS Rising inflation may adversely affect us by increasing costs of raw materials, labor, and other costs beyond what we can recover through price increases. Inflation can adversely affect us by increasing the costs of raw materials, labor, and other costs required to operate and grow our business.
FINANCIAL RISK FACTORS Inflation may adversely affect us by increasing costs of raw materials, labor, and other costs beyond what we can recover through price increases. Inflation can adversely affect us by increasing the costs of raw materials and labor, and other goods or services required to operate and grow our business.
SOFR is calculated differently from LIBOR and have inherent differences, which could give rise to uncertainties, including the limited historical data and volatility in the benchmark rates.
SOFR is calculated differently from LIBOR and has certain inherent differences from LIBOR, which could give rise to uncertainties, including the limited historical data and volatility in the benchmark rates.
We are subject to physical, operational, transitional, and financial risks associated with climate change and global, regional, and local weather conditions, as well as by legal, regulatory, and market responses to climate change.
We are subject to physical, operational, transitional, and financial risks associated with climate change and global, regional, and local weather conditions, and with legal, regulatory, and market responses to climate change.
Despite careful security and controls design, implementation, updating, and internal and independent third-party assessments, our information technology systems, and those of our third-party providers, could become subject to security breaches, cyber-attacks, ransomware attacks, employee misconduct, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.
Despite careful security and controls design, implementation, updating, and internal and independent third-party assessments, our information technology systems, and those of our third-party providers, could become subject to security breaches, cyber-attacks, ransomware attacks, employee misconduct, computer viruses, unauthorized access attempts, phishing, social engineering, misplaced or lost data, programming and/or human errors or other similar events.
We cannot assure that we will have sufficient resources available to satisfy the related costs and expenses associated with these matters or proceedings. The incurring of costs in excess of our contingency reserves could have a material adverse effect on our business, financial condition, and results of operations.
There is no assurance that we will have sufficient resources available to satisfy the related costs and expenses associated with these matters or proceedings. The incurring of costs in excess of our contingency reserves could have a material adverse effect on our business, financial condition, and results of operations.
Changes in any of these areas could result in additional compliance costs, seizures, confiscations, recall or monetary fines, any of which could prevent or inhibit the manufacture, distribution and sale of our products. We are also subject to periodic examination of our income tax returns by the Internal Revenue Service and other tax authorities.
Changes in any of these laws, rules, or regulations could result in additional compliance costs, seizures, confiscations, recalls or monetary fines, any of which could prevent or inhibit the manufacture, dis tribution and sale of our products. We are also subject to periodic examination of our income tax returns by the Internal Revenue Service and other tax authorities.
Many of the markets in which we sell our products are experiencing high levels of inflation, which may depress consumer demand for our products and reduce our profitability if we are unable to raise prices enough to keep up with increases in our costs.
Many of the markets in which we sell our products have experienced high levels of inflation in recent periods and may continue to experience high levels of inflation in the future, which may depress consumer demand for our products and reduce our profitability if we are unable to raise prices enough to keep up with increases in our costs.
Additionally, higher interest rates, high levels of unemployment, restrictive lending practices, heightened regulation, and increased foreclosures could have a material adverse effect on our financial position, results of operations, and cash flows. We have a high degree of product concentration in OSB.
Additionally, higher interest rates, higher levels of unemployment, restrictive lending practices, heightened regulation, and increased foreclosures could have a material adverse effect on our financial position, results of operations, and cash flows. 19 We have a high degree of product concentration in OSB, which is subject to commodity pricing and associated price volatility.
While we have voluntarily provided certain disclosures with respect to various ESG matters, including climate change, we cannot predict whether such disclosure will be considered sufficient by our stakeholders. Additionally, we cannot predict the degree of any impact related to increased monitoring, assessing, or reporting of ESG matters would have on operations, financial conditions and results.
While we have voluntarily provided certain disclosures with respect to various ESG matters, including climate change, we cannot predict whether such disclosures will be considered sufficient by our stakeholders or relevant governmental or nongovernmental authorities. Additionally, we cannot predict the extent to which any increased monitoring, assessing, or reporting of ESG matters may impact our operations, financial conditions and results.
We have referred, and may in the future refer, in our annual reports, quarterly reports, and other documents that we file with the SEC, to historical, forecasted, and other forward-looking information published by sources such as Random Lengths Publications, Inc. (Random Lengths) and the U.S. Census Bureau that we believe to be reliable.
We have referred to, and may in the future refer to, in our annual reports on Form 10-K, quarterly reports on Form 10-Q, and other documents that we file with, or furnish to, the SEC, historical, forecasted, and other forward-looking information published by sources such as the U.S. Census Bureau that we believe to be reliable.
Conversely, a decrease in product safety standards could reduce demand for our more modern products if less expensive alternatives that did not meet higher standards became available for use in that market. All or any of these changes could have a material adverse effect on our business, financial condition, and results of operations. We are subject to the U.S.
Conversely, a decrease in product safety standards could reduce demand for our more modern products if less expensive alternatives that do not meet higher standards were to become available for use in the affected geographical areas or product markets. All or any of these changes could have a material adverse effect on our business, financial condition, and results of operations.
One or more of our customers may experience financial difficulty, file for bankruptcy protection, or go out of business as a result of a global pandemic's current or future effects, which could result in an increase in customer financial difficulties that affect us.
One or more of our customers may experience financial difficulty, file for bankruptcy protection, or go out of business as a result of general market conditions or various other events, which could result in an increase in customer financial difficulties that affect us.
While we have security measures in place that are designed to protect customer and other sensitive information and the integrity of our information technology systems and prevent data loss and other security breaches, our security measures or those of our third-party service providers may not be sufficiently broad in scope to protect all relevant information, may not function as planned, or could be breached as a result of third-party action, employee or vendor error, malfeasance, or otherwise.
Theft of personal or other confidential data and sensitive proprietary information could also occur as a result of a cybersecurity breach, exposing us to costs and liabilities associated with privacy and data security laws in the jurisdictions in which we operate. 15 While we have security measures in place that are designed to protect customer and other sensitive information and the integrity of our information technology systems and prevent data loss and other security breaches, our security measures or those of our third-party service providers may not be sufficiently broad in scope to protect all relevant information, may not function as planned, or may be breached as a result of third-party action, employee or vendor error, malfeasance, or otherwise.
Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. 22 In addition to the risks discussed above, we are subject to a variety of other risks as a publicly traded U.S. manufacturing company.
Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.
Perceived failures or delays in meeting our ESG goals could adversely affect public perception of our business, employee morale or customer or stakeholder support, and may negatively impact our financial condition and results of operations.
Perceived failures or delays in meeting our ESG goals could adversely affect public perception of our business, employee morale or customer or stakeholder support, and may negatively impact our financial condition and results of operations. Our business, financial condition, and results of operations have been, and may again be, adversely affected by global pandemics or other health emergencies.
The housing market is sensitive to changes in economic conditions and other factors, such as the level of employment, access to labor, consumer confidence, consumer income, availability of financing, interest rate, and inflation levels, and growth of the gross domestic product.
The housing market is sensitive to changes in economic conditions and other factors, such as the level of employment, access to labor, consumer confidence, consumer income, availability of financing, prevailing interest rates and the cost of home mortgage financing, inflation levels, and growth of the gross domestic products in the countries in which we operate.
Foreign Corrupt Practices Act and other anti-corruption laws, as well as other international trade and regulatory laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition, and results of operations .
If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition, and results of operations . Our operations are subject to anti-corruption laws, including the U.S.
Our operations are subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (FCPA) and other anti-corruption laws that apply in countries where we do business.
Foreign Corrupt Practices Act (FCPA) and other anti-corruption laws that apply in countries where we do business.
If any of these or other factors were to render the conduct of our business in a particular country undesirable or impractical, our business, financial condition, or results of operations could be materially adversely affected.
If any of these or other factors were to render the conduct of our business in a particular country undesirable or impractical, our business, financial condition, or results of operations could be materially adversely affected. We may pursue acquisitions, divestitures, joint ventures, capital investments and other corporate strategic transactions from time to time.
Any such adverse changes could have a material adverse 13 effect on our business, financial position, liquidity, results of operations, and cash flows. Further, our ability to effectively manage inventory levels at wholesale distributor locations may be impaired under such arrangements, which could increase expenses associated with excess and obsolete inventory and negatively impact cash flows.
Further, our ability to effectively manage inventory levels at wholesale distributor locations may be impaired as a result of adverse changes in the financial or business condition of such wholesale distributors, which could increase expenses associated with excess and obsolete inventory and negatively impact our cash flows.
Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closures of facilities may trigger compliance requirements that are not applicable to operating facilities. Consequently, we cannot guarantee that existing or future circumstances or developments with respect to contamination will not require significant expenditures by us.
Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closures of facilities may trigger compliance requirements that are not applicable to operating facilities.
Our international operations and sourcing of materials could be harmed by a variety of factors, including: • recessionary trends in international markets; • legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including but not limited to export controls, import and customs trade restrictions, tariffs, and regulations related to global pandemics; • increases in transportation costs or transportation delays; • work stoppages and labor strikes; • fluctuations in exchange rates, particularly the value of the U.S. dollar relative to other currencies; and • political unrest, terrorism and economic instability.
Accordingly, we are subject to risks associated with potential disruption caused by changes in political, monetary, economic, and social environments, including civil and political unrest, terrorism, possible expropriation, local labor conditions (including labor disruptions or shortages), changes in laws, regulations, and policies of foreign governments and trade disputes with the United States (including tariffs), and compliance with U.S. laws affecting activities of U.S. companies abroad, including tax laws, economic sanctions and enforcement of contract and intellectual property rights. 16 Our international operations and sourcing of materials could be harmed by a variety of factors, including: • recessionary trends in international markets; • legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including but not limited to export controls, import and customs trade restrictions, tariffs, and regulations related to global pandemics; • increases in transportation costs or transportation delays; • work stoppages, unionization efforts and labor strikes; • fluctuations in currency exchange rates, particularly the value of the U.S. dollar relative to other currencies; and • social and political unrest, geopolitical and military conflicts, terrorism and economic instability.
However, any of our registered or unregistered intellectual property rights may be subject to challenge or possibly exploited by others in the industry, which could materially adversely affect our financial position, results of operations, cash flows, and competitive position. We manufacture our products internationally and are exposed to risks associated with doing business globally.
However, any of our registered or unregistered intellectual property rights may be subject to challenge or possibly exploited by our competitors or other third parties, which could materially adversely affect our financial position, results of operations, cash flows, and competitive position.
We manufacture our products in the United States, Canada, Chile, and Brazil and sell our products primarily in North and South America.
We manufacture our products in jurisdictions outside the United States and are exposed to risks associated with international business operations. We manufacture our products in the United States, Canada, Chile, and Brazil and sell our products primarily in North America and South America.
The extent to which global pandemics and/or other health emergencies would impact our business, financial condition, cash flows, and results of operations in the future is uncertain and will depend on numerous evolving factors beyond our control including, among other things, the duration and severity of the pandemic, actions taken to contain its spread and mitigate its effects, including vaccination programs or mandates, and the broader impacts on the country, the region's economy, and global trade.
The extent to which global pandemics and/or other health emergencies would impact our business, financial condition, cash flows, and results of operations in the future is uncertain and will depend on numerous evolving factors beyond our control.
Because our reporting currency is the U.S. dollar, our non-U.S. operations face the additional risk of fluctuating currency values and exchange rates. Such operations may also face hard currency shortages and controls on currency exchange. Changes in the value of foreign currencies (principally Canadian dollars, Brazilian reals, and Chilean pesos) could have an adverse effect on our results of operations.
Because our reporting currency is the U.S. dollar, our non-U.S. operations face the additional risk of fluctuating currency values and exchange rates. Such operations may also face hard currency shortages and controls on currency exchange.
As a result, our interest expense may increase, our ability to refinance some or all of our existing indebtedness may be affected, and our available cash flow may be adversely affected. Our defined benefit plan funding requirements or plan settlement expense could impact our financial results and cash flow.
As a result, our interest expense may increase, our ability to refinance some or all of our existing indebtedness may be affected, and our available cash flow may be adversely affected. Our cash, cash equivalents and investments could be adversely affected if the financial institutions in which we hold our cash, cash equivalents and investments fail.
Resin product costs are influenced by changes in the prices or availability of raw materials used to produce resins, primarily petroleum products, as well as demand for and availability of resin products and their chemical precursors. North American prices for wood fiber and resin products increased 16% and 36%, respectively, during the year ended December 31, 2022.
In addition to wood fiber, we also use a significant quantity of various resins in our manufacturing processes. Resin product costs are influenced by changes in the prices or availability of raw materials used to produce resins, primarily petroleum products, as well as demand for and availability of resin products and their chemical precursors.
Global pandemics and/or other health emergencies may have a material adverse effect on our business or our supply of raw materials, production, distribution channels, and customers, including business shutdowns or disruptions for an indefinite period of time, reduced operations, labor shortages and disruptions (including concerns and related impacts from any expanded vaccination requirements), restrictions on manufacturing or shipping products or reduced consumer demand.
Global pandemics and/or other health emergencies may have a material adverse effect on our business or our supply of raw materials, production, distribution channels, and customers, including business shutdowns or disruptions for an indefinite period of time, reduced operations, labor shortages and disruptions, restrictions on manufacturing or shipping products or reduced consumer demand. 18 The impact of new or ongoing military and geopolitical conflicts, including the conflict between Russia and Ukraine and the conflict in Israel and the surrounding areas, on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations.
Wood fiber supply could also be influenced by natural events, such as forest fires, severe weather conditions, insect epidemics, and other natural disasters, which may increase wood fiber costs, restrict access to wood fiber, or force production curtailments. In addition to wood fiber, we also use a significant quantity of various resins in our manufacturing processes.
Wood fiber supply could also be influenced by natural events, such as forest fires, ice storms, wind storms, hurricanes and other severe weather conditions, insect epidemics, plant and tree disease, changing temperature and precipitation patterns and other natural disasters and man-made causes, which may increase wood fiber costs, restrict access to wood fiber, or force production curtailments.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOSB 2 Siding OSB production facilities - 3/8” basis, million square feet Siding production facilities - 3/8” basis, million square feet Carthage, TX 500 Dawson Creek, British Columbia, Canada 1 300 Peace Valley, British Columbia, Canada 800 Newberry, MI 165 Hanceville, AL 420 Hayward, WI 1 475 Jasper, TX 475 Tomahawk, WI 245 Maniwaki, Quebec, Canada 650 Two Harbors, MN 235 Roxboro, NC 525 Swan Valley, Manitoba, Canada 1 380 Clarke County, AL 725 Houlton, ME 1,4 220 7 facilities 4,095 Sagola, MI 1,3 300 8 facilities 2,320 South America Siding finishing facilities 5 - 3/8” basis, million square feet OSB/Siding production facilities - 3/8” basis, million square feet Green Bay, WI 90 Panguipulli, Chile 300 Roaring River, NC 60 Lautaro, Chile 160 Granite City, IL 20 Ponta Grossa, Brazil 330 3 facilities 170 3 facilities 790 1 The Hayward, WI; Dawson Creek, British Columbia, Canada; Swan Valley, Manitoba, Canada; Houlton, ME; and Sagola, MI siding facilities can produce commodity OSB when market conditions warrant. 2 In addition to the OSB plants listed, we own a facility in Watkins, MN, which supports our Structural Solutions portfolio. 3 We ceased OSB production at our Sagola, MI facility in November 2022 to complete the conversion to Siding production.
Biggest changeOSB 2 Siding 3 OSB production facilities - 3/8” basis, million square feet Siding production facilities - 3/8” basis, million square feet Carthage, TX 500 Dawson Creek, British Columbia, Canada 1 300 Clarke County, AL 725 Hayward, WI 1 475 Hanceville, AL 420 Houlton, ME 1 220 Jasper, TX 475 Newberry, MI 165 Maniwaki, Quebec, Canada 650 Sagola, MI 1 300 Peace Valley, British Columbia, Canada 800 Swan Valley, Manitoba, Canada 1 380 Roxboro, NC 525 Tomahawk, WI 245 7 facilities 4,095 Two Harbors, MN 235 8 facilities 2,320 LPSA Siding finishing facilities - 3/8” basis, million square feet OSB/Siding production facilities - 3/8” basis, million square feet Bath, NY 55 Lautaro, Chile 160 Green Bay, WI 105 Panguipulli, Chile 300 Granite City, IL 4 25 Ponta Grossa, Brazil 330 Roaring River, NC 75 3 facilities 790 4 facilities 260 1 The Dawson Creek, British Columbia, Canada; Hayward, WI; Houlton, ME; Sagola, MI; and Swan Valley, Manitoba, Canada plants are used in the operations of our Siding segment but can also produce commodity OSB when market conditions warrant. 2 In addition to the OSB plants listed, we own a facility in Watkins, MN, which supports our LP Structural Solutions portfolio and a logging operation in Maniwaki, Ontario, Canada, which supports our OSB operations at that location. 3 In May 2023, we acquired an idle manufacturing facility in Wawa, Ontario, Canada.
Market conditions, fluctuations in log supply, environmental restrictions, and the nature of current orders may cause actual production rates and mixes to vary significantly from the production rates and mixes shown.
Information regarding operating production capacities is based on annual typical operating rates and normal production mixes under current market conditions, considering known constraints such as log supply. Market conditions, fluctuations in log supply, environmental restrictions, and the nature of current orders may cause actual production rates and mixes to vary significantly from the production rates and mixes shown.
ITEM 2. Properties Information regarding our principal facilities, all of which we own, and their production capacities is set forth in the following table. Information regarding current operating production capacities is based on annual typical operating rates and normal production mixes under current market conditions, considering known constraints such as log supply.
ITEM 2. Properties We lease office space from third parties for our corporate headquarters in Nashville, Tennessee and our LPSA segment headquarters in Santiago, Chile. Information regarding our principal manufacturing facilities, all of which we own, and their production capacities is set forth in the following table.
Removed
Siding operations are expected to begin production in 2023. 4 After Sagola, MI, the next Siding Solutions production capacity addition is expected to be an expansion of the Houlton, ME facility. 5 We are expanding our siding finishing capacity by constructing a facility in Bath, NY, which is expected to be finalized in 2023.
Added
We anticipate converting the Wawa manufacturing facility into an LP SmartSide Trim & Siding mill in the future. We are evaluating project schedules and market demand to determine when we would begin related construction work. 4 The Granite City, IL facility is scheduled for closure in 2024. 29
Removed
After the Bath, NY construction, we plan to expand finishing capacity through construction of new facility in Spokane, WA. The addition of these two facilities is expected to add a total of 190 million square feet of siding finishing capacity. 24

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased on the information currently available, management believes that any fines, penalties, or other costs or losses resulting from these matters should not have a material adverse effect on our financial position, results of operations, cash flows, or liquidity. OTHER PROCEEDINGS We are party to other legal proceedings in the ordinary course of business.
Biggest changeBased on the information currently available, management does not believe that any fines, penalties, or other costs or losses resulting from these matters could reasonably be expected to have a material adverse effect on our financial position, results of operations, cash flows, or liquidity. OTHER PROCEEDINGS We are party to other legal proceedings in the ordinary course of business.
However, as with any estimate, the uncertainty of predicting the outcomes of claims and litigation and environmental investigations and remediation efforts could cause actual costs to vary materially from current estimates. Due to various uncertainties, we cannot predict to what actual degree payments will exceed the recorded liabilities related to these matters.
However, as with any estimate, the uncertainty of predicting the outcomes of claims, litigation and environmental investigations and remediation efforts could cause actual costs to vary materially from current estimates. Due to various uncertainties, we cannot predict to what actual degree payments will exceed the recorded liabilities related to these matters.
For information regarding our financial statement reserves for the estimated costs of the environmental and legal matters referred to above, see Note 14 of the Notes to the Consolidated Financial Statements included in Item 8 in this annual report on Form 10-K.
For information regarding our financial statement reserves for the estimated costs of the environmental and legal matters referred to above, see "Note 14 - Commitments and Contingencies" of the Notes to the Consolidated Financial Statements included in Item 8 in this annual report on Form 10-K.
Based on the information currently available, we believe that the resolution of such proceedings should not have a material adverse effect on our financial position, results of operations, cash flows, or liquidity. CONTINGENCY RESERVES We maintain reserves for the estimated cost of the legal and environmental matters referred to above.
Based on the information currently available, we do not believe that the resolution of such proceedings could reasonably be expected to have a material adverse effect on our financial position, results of operations, cash flows, or liquidity. CONTINGENCY RESERVES We maintain reserves for the estimated cost of the legal and environmental matters referred to above.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDIVIDEND POLICY We paid quarterly cash dividends of $0.22 per share for each quarter of 2022. We paid quarterly cash dividends of $0.16 per share for the first and second quarters of 2021 and $0.18 per share for the third and fourth quarters of 2021.
Biggest changeDIVIDEND POLICY We paid quarterly cash dividends of $0.24 per share for each quarter of 2023. We paid quarterly cash dividends of $0.22 per share for each quarter of 2022.
LP may initiate, discontinue, or resume purchases of its common stock under the 2022 Share Repurchase Program in the open market, in block, and in privately negotiated transactions, including under Rule 10b5-1 plans, at times and in such amounts as management deems appropriate without prior notice, subject to market and business conditions, regulatory requirements, and other factors. 26 PERFORMANCE GRAPH The following graph compares the cumulative total return to investors, including dividends paid (assuming reinvestment of dividends) and appreciation or depreciation in stock price, from an investment in LP common stock for the period from December 31, 2017, through December 31, 2022, to the total cumulative return to investors from the Standard & Poor’s 500 Stock Index and Standard & Poor’s Building Products Index for the same period.
LP may initiate, discontinue, or resume purchases of its common stock under the 2022 Share Repurchase Program in the open market, in block, and in privately negotiated transactions, including under Rule 10b5-1 plans, at times and in such amounts as management deems appropriate without prior notice, subject to market and business conditions, regulatory requirements, and other factors. 31 PERFORMANCE GRAPH The following graph compares the cumulative total return to investors, including dividends paid (assuming reinvestment of dividends) and appreciation or depreciation in stock price, from an investment in LP common stock for the period from December 31, 2018 through December 31, 2023, to the total cumulative return to investors from the Standard & Poor’s 500 Stock Index and Standard & Poor’s Building Products Index for the same period.
We will continue to review our ability to pay cash dividends on an ongoing basis, and the payment of dividends in the future is subject to the discretion of LP’s Board of Directors depending upon, among other factors, our financial condition, and other general market and business conditions, and legal and contractual restrictions on the payment of dividends, including compliance with the terms of our Amended Credit Facility.
We will continue to review our ability to pay cash dividends on an ongoing basis, and the payment of dividends in the future is subject to the discretion of LP’s Board of Directors depending upon, among other factors, our financial condition, general market and business conditions, and legal and contractual restrictions on the payment of dividends, including compliance with the terms of our Credit Agreement.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of LP is listed on the New York Stock Exchange with the ticker symbol “LPX.” As of February 20, 2023, there were approximately 3,649 holders of record of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of LP is listed on the New York Stock Exchange with the ticker symbol “LPX.” As of February 12, 2024, there were approximately 3,456 holders of record of our common stock.
ISSUER PURCHASES OF EQUITY SECURITIES In May 2022, LP's Board of Directors authorized a share repurchase plan under which LP was authorized to repurchase shares of its common stock totaling up to $600 million (the 2022 Share Repurchase Program). No purchases were made under the 2022 Share Repurchase Program during the fourth quarter of 2022.
ISSUER PURCHASES OF EQUITY SECURITIES In May 2022, LP's Board of Directors authorized a share repurchase plan under which LP was authorized to repurchase shares of its common stock totaling up to $600 million (the 2022 Share Repurchase Program). No purchases were made under the 2022 Share Repurchase Program during the year ended December 31, 2023.
As of December 31, 2022, LP had used $400 million under the 2022 Share Repurchase Program.
As of December 31, 2023, LP had $200 million remaining under the 2022 Share Repurchase Program.
On February 17, 2023, we declared a quarterly dividend of $0.24 per share, payable on March 31, 2023, to stockholders of record as of the close of business on March 10, 2023.
On February 9, 2024, we declared a quarterly dividend of $0.26 per share, payable on March 8, 2024, to stockholders of record as of the close of business on February 23, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS have material limitations as performance measures because they exclude items that are actually incurred or experienced in connection with the operation of our business. 32 The following table presents significant items by operating segment and reconciles Net income to Adjusted EBITDA (dollar amounts in millions): Year ended December 31, 2022 2021 2020 Net income $ 1,083 $ 1,373 $ 497 Add (deduct): Net loss attributed to noncontrolling interest 3 4 2 Income from discontinued operations, net of income taxes (198) (71) (12) Income attributed to LP from continuing operations 888 1,306 487 Provision for income taxes 274 402 121 Depreciation and amortization 129 114 106 Stock-based compensation expense 19 16 11 Loss on impairment attributed to LP 1 5 15 Other operating credits and charges, net (16) (1) 7 Pension settlement charges 82 2 — Interest expense 11 14 19 Investment income (14) (1) (4) Loss on early debt extinguishment — 11 — Other non-operating items, not included above 15 9 (4) Adjusted EBITDA $ 1,389 $ 1,877 $ 757 Siding $ 339 $ 289 $ 246 OSB 1,034 1,531 519 South America 77 113 42 Other (23) (20) (19) Corporate (38) (36) (30) Total Adjusted EBITDA $ 1,389 $ 1,877 $ 757 33 The following table provides the reconciliation of net income to Adjusted Income (dollar amounts in millions, except earnings per share): Year ended December 31, 2022 2021 2020 Net income $ 1,083 $ 1,373 $ 497 Add (deduct): Net loss attributed to noncontrolling interest 3 4 2 Income from discontinued operations, net of income taxes (198) (71) (12) Income attributed to LP from continuing operations 888 1,306 487 Loss on impairment attributed to LP 1 5 15 Other operating credits and charges, net (16) (1) 7 Loss on early debt extinguishment — 11 — Pension settlement charges 82 2 — Reported tax provision 274 402 121 Adjusted income before tax 1,229 1,725 629 Normalized tax provision at 25% (307) (431) (157) Adjusted Income $ 922 $ 1,294 $ 472 Weighted average shares - diluted 78 98 112 Diluted income attributed to LP from continuing operations per share $ 11.34 $ 13.37 $ 4.35 Adjusted Diluted EPS $ 11.77 $ 13.24 $ 4.22 OUR OPERATING RESULTS Our results of operations for each of our segments are discussed below, as are results of operations for the “other” category, which comprises other products that are not individually significant.
Biggest changeWe did not revise prior years’ Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS amounts because there were no significant costs similar in nature to these items. 36 The following table presents significant items by operating segment and reconciles net income to Adjusted EBITDA (dollar amounts in millions): Year ended December 31, 2023 2022 2021 Net income $ 178 $ 1,083 $ 1,373 Add (deduct): Net loss attributed to non-controlling interest — 3 4 Income from discontinued operations, net of income taxes — (198) (71) Income attributed to LP from continuing operations $ 178 $ 888 $ 1,306 Provision for income taxes 74 274 402 Depreciation and amortization 119 129 114 Stock-based compensation expense 13 19 16 Loss on impairment attributed to LP 6 1 5 Other operating credits and charges, net 18 (16) (1) Business exit charges 32 — — Pension settlement charges 4 82 2 Interest expense 14 11 14 Investment income (18) (14) (1) Loss on early debt extinguishment — — 11 Other non-operating items 39 15 9 Adjusted EBITDA $ 478 $ 1,389 $ 1,877 Siding 269 339 289 OSB 220 1,034 1,531 LPSA 42 77 113 Other (17) (23) (20) General corporate and other expenses, net (36) (38) (36) Total Adjusted EBITDA $ 478 $ 1,389 $ 1,877 37 The following table provides the reconciliation of net income to Adjusted income (dollar amounts in millions, except earnings per share): Year ended December 31, 2023 2022 2021 Net income attributed to LP from continuing operations per share - diluted $ 2.46 $ 11.34 $ 13.37 Net income $ 178 $ 1,083 $ 1,373 Add (deduct): Net loss attributed to non-controlling interest — 3 4 Income from discontinued operations, net of income taxes — (198) (71) Income attributed to LP from continuing operations 178 888 1,306 Loss on impairment attributed to LP 6 1 5 Other operating credits and charges, net 18 (16) (1) Business exit charges 32 — — Loss on early debt extinguishment — — 11 Pension settlement charges 4 82 2 Reported tax provision 74 274 402 Adjusted income before tax 311 1,229 1,725 Normalized tax provision at 25% (78) (307) (431) Adjusted income $ 233 $ 922 $ 1,294 Diluted shares outstanding 72 78 98 Adjusted Diluted EPS $ 3.22 $ 11.77 $ 13.24 OUR OPERATING RESULTS Our results of operations for each of our segments are discussed below, as are results of operations for the “other” category, which comprises other products that are not individually significant.
During the year ended December 31, 2022, we used $900 million to repurchase shares of LP common stock ($500 million from the Second 2021 Share Repurchase Program and $400 million from the 2022 Share Repurchase Program). Additionally, we paid cash dividends of $69 million.
During the year ended December 31, 2022, we used $900 million to repurchase shares of LP common stock ($500 million from the Second 2021 Share Repurchase Program and $400 million from the 2022 Share Repurchase Program). Additionally, during the year ended December 31, 2022, we paid cash dividends of $69 million.
See Note 18 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K for further information regarding our segments.
See "Note 18 - Segment Information" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K for further information regarding our segments.
We also disclose income attributed to LP from continuing operations, excluding loss on impairment attributed to LP, product-line discontinuance charges, interest expense outside of normal operations, other operating credits and charges, net, loss on early debt extinguishment, gain (loss) on acquisition, and pension settlement charges, and adjusting for a normalized tax rate as Adjusted Income from continuing operations (Adjusted Income).
We also disclose income attributed to LP from continuing operations, excluding loss on impairment attributed to LP, business exit charges, product-line discontinuance charges, interest expense outside of normal operations, other operating credits and charges, net, loss on early debt extinguishment, gain (loss) on acquisition, and pension settlement charges, and adjusting for a normalized tax rate as Adjusted Income from continuing operations (Adjusted Income).
The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Credit Agreement, including the capitalization ratio covenant. As of December 31, 2022, we were in compliance with all covenants 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 Credit Agreement, including the capitalization ratio covenant. As of December 31, 2023, we were in compliance with all financial covenants under the Letter of Credit Facility.
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. Our manufacturing facilities are located in the U.S., Canada, Chile, and Brazil. To serve these markets, we operate in three segments: Siding, OSB, and South America.
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. Our manufacturing facilities are located in the U.S., Canada, Chile, and Brazil. To serve these markets, we operate in three segments: Siding, OSB, and LPSA.
In this annual report on Form 10-K, we disclose income attributed to LP from continuing operations before interest expense, provision for income taxes, depreciation and amortization, and exclude 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, pension settlement charges, and other non-operating items as Adjusted EBITDA from continuing operations (Adjusted EBITDA), which is a non-GAAP financial measure.
In this annual report on Form 10-K, we disclose income attributed to LP from continuing operations before interest expense, provision for income taxes, depreciation and amortization, and excluding stock-based compensation expense, loss on impairment attributed to LP, product-line discontinuance charges, business exit charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, pension settlement charges, and other non-operating items, as Adjusted EBITDA from continuing operations (Adjusted EBITDA), which is a non-GAAP financial measure.
Management’s Discussion and Analysis of Financial Condition and Results of Operations This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this annual report on Form 10-K, and with Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for our fiscal year ended December 31, 2021, filed with the SEC on February 22, 2022, which provides a discussion of our financial condition and results of operations for fiscal year 2021 compared to fiscal year 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this annual report on Form 10-K, and with Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for our fiscal year ended December 31, 2022, filed with the SEC on February 21, 2023, which provides a discussion of our financial condition and results of operations for fiscal year 2022 compared to fiscal year 2021.
As of December 31, 2022, we had no amounts 38 outstanding under the Amended Credit Facility. The Credit Agreement 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.
As of December 31, 2023, we had no amounts outstanding under the Amended Credit Facility. The Credit Agreement 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.
OTHER OPERATING CREDITS AND CHARGES, NET For a discussion of Other operating credits and charges, net, see Note 12 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
OTHER OPERATING CREDITS AND CHARGES, NET For a discussion of Other operating credits and charges, net, see "Note 12 - Other Operating and Non-Operating Income (Expense)" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
For additional information regarding the 2029 Senior Notes, please see Note 10 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
For additional information regarding the 2029 Senior Notes, please see "Note 10 - Long-Term Debt" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
PROSPECTIVE ACCOUNTING PRONOUNCEMENTS For a discussion of prospective accounting pronouncements, see Note 2 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. 40
PROSPECTIVE ACCOUNTING PRONOUNCEMENTS For a discussion of prospective accounting pronouncements, see "Note 2 - Present and Prospective Accounting Pronouncements" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
Contingency Reserves Contingency reserves, which represent an estimate of future cash needs for various contingencies (principally, environmental reserves), totaled $27 million at December 31, 2022, of which $1 million is estimated to be payable within one year of such date.
Contingency Reserves Contingency reserves, which represent an estimate of future cash needs for various contingencies (principally, environmental reserves), totaled $26 million at December 31, 2023, of which $1 million is estimated to be payable within one year of such date.
Any such repurchases may be commenced, suspended, discontinued, or resumed, and the method or methods of affecting any such repurchases may be changed at any time, or from time to time, without prior notice. 37 Operating Activities During 2022, we generated $1,144 million of cash from operations as compared to $1,484 million in 2021.
Any such repurchases may be commenced, suspended, discontinued, or resumed, and the method or methods of affecting any such repurchases may be changed at any time, or from time to time, without prior notice. Operating Activities During 2023, we generated $316 million of cash from operations as compared to $1,144 million in 2022.
The Credit Agreement amended and restated the Company’s existing credit facility dated as of June 27, 2019, as amended, in its entirety to, among other things, (i) reflect the release of the collateral that secures the indebtedness evidenced by the Credit Agreement as a result of the Company’s obtaining an Investment Grade rating on November 1, 2022 (which collateral may be reinstated from time to time in accordance with the terms of the Credit Agreement), (ii) extend the maturity date to November 29, 2028, (iii) make certain changes to effect a transition from the LIBOR interest rate benchmark to Term SOFR Rate (as defined in the Credit Agreement) and (iv) provide for certain other modifications (including modifications to certain basket and threshold levels in the negative covenants) as set forth in the Credit Agreement.
The Credit Agreement amended and restated the Amended and Restated Credit Agreement entered into by the Company and certain other parties dated as of June 27, 2019, as amended prior to the effectiveness of the Credit Agreement (as defined above), in its entirety to, among other things, (i) reflect the release of the collateral that secures the indebtedness evidenced by the Credit Agreement as a result of the Company’s obtaining an Investment Grade rating in November 2022 (which collateral may be reinstated from time to time in accordance with the terms of the Credit Agreement), (ii) extend the maturity date to November 29, 2028, (iii) make certain changes to effect a transition from the LIBOR interest rate benchmark to Term SOFR Rate (as defined in the Credit Agreement) and (iv) provide for certain other modifications (including modifications to certain basket and threshold levels in the negative covenants) as set forth in the Credit Agreement.
Adjusted EBITDA was $(23) million for 2022 as compared to $(20) million in 2021. 36 GENERAL CORPORATE AND OTHER EXPENSE, NET General corporate and other expenses primarily comprise corporate overhead unrelated to business activities such as wages and benefits, professional fees, insurance, and other expenses for corporate functions, including certain executive officers, public company activities, tax, internal audits, and other corporate functions.
Adjusted EBITDA was $(17) million for 2023 as compared to $(23) million in 2022. 40 GENERAL CORPORATE AND OTHER EXPENSE, NET General corporate and other expenses primarily comprise corporate overhead unrelated to business activities such as wages and benefits, professional fees, insurance, and other expenses for corporate functions, including certain executive officers, public company activities, tax, internal audits, and other corporate functions.
We expect to fund our short-term and long-term capital expenditures through cash on hand, cash generated from operations, and available borrowing under our Amended Credit Facility, as necessary. Financing Activities During 2022, cash used in financing activities was $982 million.
We expect to fund our short-term and long-term capital expenditures in 2024 through cash on hand, cash generated from operations, and available borrowing under our Amended Credit Facility, as necessary. Financing Activities During 2023, cash used in financing activities was $77 million.
NON-OPERATING INCOME (EXPENSE) For a discussion of non-operating income (expense), see Note 12 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. INCOME TAXES We recognized a tax provision of $274 million in 2022 compared to $402 million in 2021.
NON-OPERATING INCOME (EXPENSE) For a discussion of non-operating income (expense), see "Note 12 - Other Operating and Non-Operating Income (Expense)" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. INCOME TAXES We recognized a tax provision of $74 million in 2023 compared to $274 million in 2022.
Demand for Building Products Demand for our products correlates positively with new home construction and repair and remodeling activity in North America, which historically have been characterized by significant cyclicality. The U.S. Census Bureau reported on February 16, 2023, that 2022 actual single-family housing starts were 11% lower than those in 2021.
Demand for Building Products Demand for our products correlates positively with new home construction and repair and remodeling activity in North America, which historically have been characterized by significant cyclicality. The U.S. Census Bureau reported on January 18, 2024, that 2023 actual single-family housing starts were 6% lower than those in 2022.
As of December 31, 2022, we had other purchase obligations of $30 million, with $19 million payable within 12 months of such date. Off-Balance Sheet Arrangements As of December 31, 2022, we had standby letters of credit of $13 million outstanding related to collateral for environmental impact on owned properties, deposit for forestry license, and insurance collateral, including workers' compensation.
As of December 31, 2023, we had other purchase obligations of $43 million, with $21 million payable within 12 months of such date. Off-Balance Sheet Arrangements As of December 31, 2023, we had standby letters of credit of $14 million outstanding related to collateral for environmental impact on owned properties, deposit for forestry license, and insurance collateral, including workers' compensation.
Additionally, we have experienced increases in material prices, supply disruptions, and labor challenges, which we continue to address as we work to meet the demands of builders, remodelers, and homeowners worldwide. The potential effect of these factors on our future operational and financial performance is uncertain. As a result, our past performance may not be indicative of future results.
Additionally, we have experienced increases in material prices, supply disruptions, and labor challenges, which we continue to address as we work to meet the demands of builders, remodelers, and homeowners worldwide. The potential effect of these factors on our future operational and financial performance is uncertain.
OSB is manufactured using wood strands arranged in layers and bonded with resins. Significant cost inputs to produce OSB (including approximate breakdown percentages for 2022) were as follows: wood fiber (25%), resin and wax (23%), labor and burden (15%), utilities (5%), and other manufacturing costs (32%).
OSB is manufactured using wood strands arranged in layers and bonded with resins. Significant cost inputs to produce OSB (including approximate breakdown percentages for 2023) were as follows: wood fiber (26%), resin and wax (23%), labor and burden (18%), utilities (5%), and other manufacturing costs (28%).
The decrease in cash provided by operations was primarily related to lower income from operations. At December 31, 2022, and 2021, we had working capital of $148 million and $181 million, respectively. Investing Activities During 2022, net cash used for investing activities was $146 million as compared to $247 million in 2021.
The decrease in cash provided by operations was primarily related to lower net income and higher working capital. At December 31, 2023 and 2022, we had working capital of $296 million and $148 million, respectively. Investing Activities During 2023, net cash used for investing activities was $376 million as compared to $146 million in 2022.
As of December 31, 2022, we had fixed lease payment obligations of $63 million, with $8 million payable within 12 months of such date. Other Purchase Obligations Our other purchase obligations primarily consist of obligations related to information technology infrastructure.
As of December 31, 2023, we had fixed lease payment obligations of $34 million, with $7 million payable within 12 months of such date. 43 Other Purchase Obligations Our other purchase obligations primarily consist of obligations related to information technology infrastructure.
Capital expenditures for the year ended December 31, 2022 and 2021, were $414 million and $254 million, respectively, primarily related to siding conversion expenditures and growth and maintenance capital. Capital expenditures in 2023 are expected to be in the range of $385 million to $485 million.
Capital expenditures for the year ended December 31, 2023 and 2022, were $300 million and $414 million, respectively, primarily related to siding conversion expenditures and growth and maintenance capital. Capital expenditures in 2024 are expected to be in the range of $200 million to $220 million.
Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS are not substitutes for the U.S. GAAP measures of net income, income attributed to LP from continuing operations, and net income attributed to LP from continuing operations per diluted share or for any other U.S. GAAP measures of operating performance.
GAAP measures of Net income, Income attributed to LP from continuing operations, and Income attributed to LP from continuing operations per diluted share, or for any other U.S. GAAP measures of operating performance.
For 2022, the primary differences between the U.S. statutory rate of 21% and the effective rate relate to state income tax. We paid $320 million and $421 million of income taxes net of refunds in 2022 and 2021, respectively.
For 2022, the primary difference between the U.S. statutory rate of 21% and the effective tax rate relates to state income tax. We paid $65 million and $320 million of income taxes net of refunds in 2023 and 2022, respectively.
On November 2, 2021, LP's Board of Directors authorized a share repurchase plan under which LP may repurchase shares of its common stock totaling up to $500 million (the Second 2021 Share Repurchase Program).
During 2022, cash used in financing activities was $982 million. On November 2, 2021, LP's Board of Directors authorized a share repurchase plan under which LP may repurchase shares of its common stock totaling up to $500 million (the Second 2021 Share Repurchase Program).
The Credit Agreement also contains financial covenants that require us and our consolidated subsidiaries to have, as of the end of each fiscal quarter, a capitalization ratio ( i.e. , funded debt less unrestricted cash to total capitalization) of no more than 57.5%. As of December 31, 2022, we were in compliance with all financial covenants under the Credit Agreement.
The Credit Agreement also contains certain financial covenants that, among other things, require us and our consolidated subsidiaries to have, as of the end of each fiscal quarter, a capitalization ratio ( i.e. , funded debt less unrestricted cash to total capitalization) of no more than 57.5%.
The chart below, which is based on data published by U.S. Census Bureau, provides a graphical summary of new housing starts for single- and multi-family in the U.S., showing actual and rolling five- and ten-year averages for housing starts.
As a result, our past performance may not be indicative of future results. 33 The chart below, which is based on data published by U.S. Census Bureau, provides a graphical summary of new housing starts for single- and multi-family in the U.S., showing actual and rolling five- and ten-year averages for housing starts (in thousands).
In March 2020, LP entered into the Letter of Credit Facility, 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.
As of December 31, 2023, we were in compliance with all financial covenants under the Credit Agreement. In March 2020, LP entered into the Letter of Credit Facility, 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.
Segment Net sales and Adjusted EBITDA for this segment were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2022 2021 2022 - 2021 Net sales $ 1,469 $ 1,170 26 % Adjusted EBITDA 339 289 17 % 34 Net sales in this segment by product line were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2022 2021 2022 - 2021 Siding Solutions $ 1,463 $ 1,158 26 % Other 6 12 (43) % Total $ 1,469 $ 1,170 Percent changes in average net sales price and unit shipments were as follows: 2022 versus 2021 Average Selling Price Unit Shipments Siding Solutions 14 % 11 % List price increases and positive mix effects drove year-over-year increases in the average net selling price for year ended December 31, 2022.
Segment net sales and Adjusted EBITDA for this segment were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2023 2022 2023 - 2022 Net sales $ 1,328 $ 1,469 (10) % Adjusted EBITDA 269 339 (21) % Net sales in this segment by product line were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2023 2022 2023 - 2022 Siding Solutions $ 1,319 $ 1,463 (10) % Other 9 6 41 % Total $ 1,328 $ 1,469 38 Percent changes in average net sales price and unit shipments were as follows: 2023 versus 2022 Average Selling Price Unit Shipments Siding Solutions 5 % (14) % List price increases drove year-over-year increases in the average net selling price for 2023.
Supply and Demand for Siding Siding Solutions is a specialty building material and is subject to competition from various siding technologies, including vinyl, stucco, wood, fiber cement, brick, and others. We believe we are the largest manufacturer in the engineered wood siding market. The overall siding market is estimated to be a $15 billion industry.
Supply and Demand for Siding Our Siding Solutions products are specialty building materials and are subject to competition from various siding technologies, including vinyl, stucco, wood, fiber cement, brick, and others. We believe we are the largest manufacturer in the engineered wood siding market in North America and South America.
Repair and remodeling activity is difficult to reasonably measure, but many indications suggest that repair and remodeling activity is continuing to show resiliency. 28 Future economic conditions in the United States and the demand for homes are uncertain due to inflationary impacts on the economy, including interest rates, employment levels, consumer confidence, and financial markets, among other things.
Future economic conditions in the United States and the demand for homes are uncertain due to inflationary impacts on the economy, including interest rates, employment levels, consumer confidence, and financial markets, among other things.
We have consistently grown our Siding Solutions above the underlying market growth rates. Siding Solutions is generally less sensitive to new housing market cyclicality since roughly 60% of its demand comes from other markets, including sheds and repair and remodel.
The overall siding market is estimated to be a $17 billion industry. We have consistently grown our Siding segment above the underlying market growth rates. Our Siding segment is generally less sensitive to new housing market cyclicality since a majority of its demand comes from other markets, including off-site structure producers and repair and remodel.
The decrease in Adjusted EBITDA of $36 million reflect the impacts of the lower revenue and higher raw material costs. Other Our other products segment includes our off-site framing operation Entekra Holdings, LLC (Entekra), remaining timber and timberlands, and other minor products, services, and closed operations, which do not qualify as discontinued operations.
Other Our other products segment includes the off-site framing operation Entekra Holdings LLC (Entekra), remaining timber and timberlands, and other minor products, services, and closed operations, which do not qualify as discontinued operations.
During 2022, we received $268 million in proceeds from sales of assets, primarily associated with the sale of the EWP segment assets and the sale of our 50% equity interest in two joint ventures.
During 2023, we paid $80 million to acquire an idle manufacturing facility in Wawa, Ontario, Canada. During 2022, we received $268 million in proceeds from sales of assets, primarily associated with the sale of the Engineered Wood Products (EWP) segment assets and the sale of our 50% equity interest in two joint ventures.
However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. Customer Program Costs Our businesses routinely incur customer program costs to obtain favorable product placement, promote sales of products, and maintain competitive pricing.
However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.
See Note 6 – Discontinued Operations of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
See further discussion in “Note 7 - Business Exit Charges” of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
We cannot predict whether the prices of our OSB products will remain at current levels or increase or decrease in the future. 29 CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP.
This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Colombia, Argentina, and Paraguay.
The LPSA segment carries out manufacturing operations in Chile and Brazil and operates sales offices in Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru.
LEGAL AND ENVIRONMENTAL MATTERS For a discussion of legal and environmental matters involving us and the potential impact thereof on our financial position, results of operations, and cash flows, see Item 3 in this annual report on Form 10-K as well as Note 14 of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K.
LEGAL AND ENVIRONMENTAL MATTERS For a discussion of legal and environmental matters involving us and the potential impact thereof on our financial position, results of operations, and cash flows, see Item 3 in this annual report on Form 10-K as well as "Note 14 - Commitments and Contingencies" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual report on Form 10-K. 41 LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of liquidity are existing cash and investment balances, cash generated by our operations, and our ability to borrow under such credit facilities as we may have in effect from time to time.
In March 2021, we issued $350 million aggregate principal amount of the 2029 Senior Notes.
OTHER LIQUIDITY MATTERS 2029 Senior Notes In March 2021, we issued the 3.625% Senior notes due in 2029 in the aggregate principal amount of $350 million, which mature on March 15, 2029 (2029 Senior Notes).
We may also, from time to time, issue and sell equity, debt, or hybrid securities or engage in other capital market transactions. Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness, paying dividends, and making capital expenditures.
Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness, paying dividends, and making capital expenditures. We may also, from time to time, prepay or repurchase outstanding indebtedness or shares or acquire assets or businesses that are complementary to our operations.
Segment Net sales and Adjusted EBITDA for this segment were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2022 2021 2022 - 2021 Net sales $ 241 $ 265 (9) % Adjusted EBITDA 77 113 (32) % Net sales in this segment by product were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2022 2021 2022 - 2021 OSB -Structural Solutions $ 215 $ 227 (5) % Siding 23 33 (32) % Other 3 5 (36) % Total $ 241 $ 265 Percent changes in average net sales prices and unit shipments for 2022 compared to 2021 were as follows: 2022 versus 2021 Average Selling Price Unit Shipments OSB 5 % (10) % Siding (6) % (28) % South America Net sales decreased year-over-year by $24 million (or 9%), predominantly due to lower volumes of $29 million and unfavorable foreign currency movements of $31 million, partially offset by higher local prices of $37 million.
Segment net sales and Adjusted EBITDA for this segment were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2023 2022 2023 - 2022 Net sales $ 205 $ 241 (15) % Adjusted EBITDA 42 77 (46) % Net sales in this segment by product were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2023 2022 2023 - 2022 OSB - Structural Solutions $ 177 $ 215 (18) % Siding 24 23 6 % Other 4 3 4 % Total $ 205 $ 241 Percent changes in average net sales prices and unit shipments for 2023 compared to 2022 were as follows: 2023 versus 2022 Average Selling Price Unit Shipments OSB (9) % (9) % Siding 7 % (1) % LPSA net sales for full year 2023 decreased year-over-year by $36 million driven by lower OSB sales volumes and average selling prices.
Long-lived Assets Property, plant and equipment, and long-lived assets (including amortizable identifiable intangible assets) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, including but not limited to facility curtailments and asset abandonments.
The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates. 34 Long-lived Assets Property, plant and equipment, and long-lived assets (including amortizable identifiable intangible assets) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, including but not limited to facility curtailments and asset abandonments.
The Plan will be terminated in future periods after satisfaction of all regulatory requirements, which may result in additional funding. 31 NON-GAAP FINANCIAL MEASURES In evaluating our business, we utilize non-GAAP financial measures that fall within the meaning of SEC Regulation G and Regulation S-K Item 10(e), which we believe provide users of the financial information with additional meaningful comparison to prior reported results.
We do not offer a right of return for products shipped to the retailers’ stores from the distribution centers. 35 NON-GAAP FINANCIAL MEASURES In evaluating our business, we utilize non-GAAP financial measures that fall within the meaning of SEC Regulation G and Regulation S-K Item 10(e), which we believe provide users of the financial information with additional meaningful comparison to prior reported results.
CREDIT FACILITIES In November 2022, LP entered into a Second Amended and Restated Credit Agreement with American AgCredit, PCA, as administrative agent and sole lead arranger, and CoBank, ACB, as letter of credit issuer (the Credit Agreement), relating to its revolving credit facility (as amended, the Amended Credit Facility).
The remaining financing activities were primarily related to funds used to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans. 42 CREDIT FACILITIES In November 2022, LP entered into a Second Amended and Restated Credit Agreement with American AgCredit, PCA, as administrative agent and sole lead arranger, CoBank, ACB, as letter of credit issuer, and certain other lender parties (the Credit Agreement), relating to its revolving credit facility (as amended, the Amended Credit Facility).
The remaining financing activities are primarily related to funds used to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans. During 2021, cash used in financing activities was $1,388 million.
We paid cash dividends of $69 million and borrowed and subsequently repaid $80 million from our Amended Credit Facility during the year ended December 31, 2023. The remaining financing activities were primarily related to funds used to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.
Net sales decreased year-over-year by $12 million (or 12%) to $84 million primarily due to lower Entekra sales volumes.
Net sales decreased year-over-year by $61 million (or 73%) to $22 million primarily due to lower Entekra sales volumes as a result of the aforementioned shutdown.
Volume allowances are accrued based on our estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, merchandising support, and customer training. Although we believe we can reasonably estimate customer volumes and support and the related customer payments at interim periods, it is possible that actual results could be different from previously estimated amounts.
Although we believe we can reasonably estimate customer volumes and support and the related customer payments at interim periods, it is possible that actual results could be different from previously estimated amounts. At the end of each year, a significant portion of the actual volume and support activity is known.
As such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet those needs. We anticipate long-term cash uses may also include strategic acquisitions. On a long-term basis, we will continue to rely on our credit facility for any long-term funding not provided by operating cash flows.
We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet those needs. We anticipate long-term cash uses may also include strategic acquisitions.
OTHER LIQUIDITY MATTERS 2029 Senior Notes In March 2021, we issued the 2029 Senior Notes in the aggregate principal amount of $350 million, which mature on March 15, 2029. As of December 31, 2022, future interest payments associated with the 2029 Senior Notes totaled $83 million, with $13 million payable within 12 months of such date.
As of December 31, 2023, future interest payments associated with the 2029 Senior Notes totaled $70 million, with $13 million payable within 12 months of such date.
Segment Net sales and Adjusted EBITDA for this segment were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2022 2021 2022 - 2021 Net sales $ 2,062 $ 2,387 (14) % Adjusted EBITDA 1,034 1,531 (32) % Net sales in this segment by product line were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2022 2021 2022 - 2021 OSB - Structural Solutions $ 1,110 $ 1,152 (4) % OSB - Commodity 938 1,221 (23) % Other 14 14 (3) % Total $ 2,062 $ 2,387 35 Percent changes in average net sales prices and unit shipments were as follows: 2022 versus 2021 Average Selling Price Unit Shipments OSB - Structural Solutions (11) % 8 % OSB - Commodity (20) % (3) % OSB Net sales decreased year-over-year by $326 million (or 14%), including a $400 million decrease in OSB prices, partially offset by an increase in Structural Solutions sales volume.
Segment net sales and Adjusted EBITDA for this segment were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2023 2022 2023 - 2022 Net sales $ 1,026 $ 2,062 (50) % Adjusted EBITDA 220 1,034 (79) % Net sales in this segment by product line were as follows: Dollar amounts in millions Increase (decrease) Year Ended December 31, 2023 2022 2023 - 2022 OSB - Structural Solutions $ 565 $ 1,110 (49) % OSB - Commodity 446 938 (52) % Other 15 14 5 % Total $ 1,026 $ 2,062 Percent changes in average net sales prices and unit shipments were as follows: 2023 versus 2022 Average Selling Price Unit Shipments OSB - Structural Solutions (41) % (14) % OSB - Commodity (39) % (22) % Full year 2023 net sales decreased year-over-year by $1,036 million (or 50%) including a $793 million decrease in revenue due to lower average selling prices and a $217 million decrease in sales volumes, including $112 million of lower production volume from the conversion of the Sagola mill to siding production.
Adjusted EBITDA decreased by $497 million primarily due to the decrease in OSB prices and $79 million of raw material cost and wage inflation. South America Our South America segment manufactures and distributes OSB structural panel and siding products in South America and certain export markets.
Adjusted EBITDA decreased year-over-year by $814 million primarily due to the lower average selling prices. 39 LPSA Our LPSA segment manufactures and distributes LP OSB structural panel and Siding Solutions products in South America and certain export markets. This segment also sells and distributes a variety of companion products to support the region’s transition to wood frame construction.
The following discussion includes forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. 27 OVERVIEW General We are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide.
The following discussion includes forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. We encourage you to review the risks and uncertainties described in the sections titled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" above.
Product supply is influenced primarily by fluctuations in available manufacturing capacity and imports. The ratio of overall OSB demand to capacity generally drives price. During the three months ended December 31, 2022, OSB commodity prices have fallen with the decline in market demand for OSB commodity product.
Product supply is influenced primarily by fluctuations in available manufacturing capacity and imports. The ratio of overall OSB demand to capacity generally drives price. We cannot predict whether the prices of our OSB products will remain at current levels or increase or decrease in the future.
Income from discontinued operations, net of income taxes, increased year-over-year by $126 million to $198 million, or $2.52 per diluted share, primarily due to the $118 million gain on the sale of EWP assets and a $39 million gain on the sale of the equity interests in two joint ventures that produced I-joists, partially offset by a $27 million increase in income tax provision.
Net income decreased year-over-year by $905 million (or 84%) to $178 million ($2.46 per diluted share) primarily due to a decrease in Adjusted EBITDA (defined below) of $911 million (or 66%) and a decrease in income from discontinued operations, net of income taxes of $198 million, partially offset by a $200 million decrease in the provision for income taxes.
At the end of each year, a significant portion of the actual volume and support activity is known. Thus, we do not believe that a material change in the amounts recorded as customer program costs payable is likely.
Thus, we do not currently believe that a material change in the amounts recorded as customer program costs payable is reasonably likely. We had $37 million and $46 million accrued as customer rebates as of December 31, 2023 and 2022, respectively. We ship some of our products to customers' distribution centers on a consignment basis.
Removed
In March 2022, we sold our 50% equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc. (Resolute) for $59 million. The joint ventures were comprised of Resolute-LP Engineered Wood Larouche Inc. in Larouche, Quebec, and Resolute-LP Engineered Wood St-Prime Limited Partnership in Saint-Prime, Quebec.
Added
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. 32 OVERVIEW General We are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide.
Removed
The total net carrying value of our equity method investment at the date of sale was $19 million. We recognized a gain on the sale of $39 million during the year ended December 31, 2022, within Income from discontinued operations, net of income taxes in the Consolidated Statements of Income.
Added
In May 2023, we acquired an idle manufacturing facility in Wawa, Ontario, Canada from a third party for $80 million. We anticipate converting the Wawa manufacturing facility into an LP SmartSide Trim & Siding mill in the future according to the needs of our business.
Removed
In August 2022, LP completed the sale of the Engineered Wood Products (EWP) segment assets to P acific Woodtech Corporation, a Washington corporation, and Pacific Woodtech Canada Holdings Limited, a British Columbia limited company (collectively, the Purchaser) in exchange for the Purchaser’s payment to the Company of $217 million in gross cash proceeds after taking into account working capital adjustments.
Added
We are evaluating project schedules and market demand to determine when we will begin related construction work. Executive Summary Net sales for 2023 decreased year-over-year by $1,273 million (or 33%) to $2,581 million. OSB revenue decreased $1,036 million due to 40% lower prices and 18% lower volumes.
Removed
Upon closing, the Company entered into the transition services agreement (TSA) with the Purchaser, pursuant to which the Company agreed to support the various activities of the EWP segment for a period not to exceed eight months.
Added
Siding revenue decreased $141 million (or 10%), due to 14% lower volumes, partially offset by 5% higher prices. The LPSA segment and Other revenues decreased year-over-year by $36 million and $61 million, respectively.
Removed
We have classified the related assets and liabilities associated with the EWP segment as discontinued operations in our Consolidated Balance Sheets for prior periods presented. The results of our EWP segment have been presented as discontinued operations in our Consolidated Statements of Income for all periods presented.
Added
The decrease in Adjusted EBITDA includes a $793 million decrease in OSB selling prices, a decrease in OSB sales volumes of $87 million, and a decline in Siding sales volumes, net of increases in average selling prices, of $43 million. Adjusted EBITDA is a non-GAAP financial measure.
Removed
Executive Summary Net sales for 2022 decreased year-over-year by $61 million (or 2%), including a decrease in OSB prices of $400 million and a decrease in South America revenue of $24 million due to lower volumes and unfavorable currency movements, partially offset by Siding Solutions growth of $305 million (14% pricing, 11% volume) and an increase in OSB volume of $53 million.
Added
Please see “—Non-GAAP Financial Measures” below for more information about our use of non-GAAP financial measures in this annual report on Form 10-K and the reconciliation of Adjusted EBITDA to Net income.
Removed
Income attributed to LP from continuing operations decreased year-over-year by $418 million to $888 million, or $11.34 per diluted share, reflecting a $488 million drop in Adjusted EBITDA and non-cash pension settlement charges of $82 million, partially offset by $128 million lower income tax provisions.
Added
Actual multi-family housing starts in 2023 were about 14% lower than those in 2022. Repair and remodeling activity is difficult to reasonably measure, but many indications suggest that repair and remodeling activity is moderating and may have exhibited year-over-year declines.
Removed
Actual multi-family housing starts in 2022 were about 16% higher than those in 2021.
Added
Revenue Recognition, Including Customer Program Costs Revenue is recognized when obligations under the terms of a contract (e.g. , purchase orders) with our customers are satisfied; generally, this occurs with the transfer of control of our products to the customer at a point in time.
Removed
The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.
Added
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The shipping cost incurred by us to deliver products to our customers is recorded in Cost of sales. Our businesses routinely incur customer program costs to obtain favorable product placement, promote sales of products, and maintain competitive pricing.
Removed
We had $46 million and $31 million accrued as customer rebates as of December 31, 2022, and 2021, respectively. 30 Defined Benefit Pension Plans In November 2021, the Company initiated the termination of our frozen U.S. and Canadian defined benefit pension plans (collectively, the Plan).
Added
Volume allowances are accrued based on our estimates of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, merchandising support, and customer training.
Removed
Plan participants were provided the opportunity to receive their full accrued benefits from Plan assets by either electing immediate lump sum distributions or annuity contracts with a qualifying third-party annuity provider. During the year ended December 31, 2022, we contributed $5 million to fund the liquidation of the Plan.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+2 added−0 removed3 unchanged
Biggest changeWe historically have not entered into material commodity futures and swaps, although we may do so in the future. 41
Biggest changeWe historically have not entered into material commodity futures and swaps, although we may do so in the future. Interest Rate Risk We are exposed to market risk associated with changes in interest rates on our variable rate long-term debt. As of December 31, 2023, there were no outstanding borrowings under our Amended Credit Facility.
Some of our products are sold as commodities, and therefore sales prices fluctuate daily based on market factors over which we have little or no control. The most significant commodity product we sell is OSB.
Commodity Price Risk Some of our products are sold as commodities, and therefore sales prices fluctuate daily based on market factors over which we have little or no control. The most significant commodity product we sell is OSB.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Each of our international operations has transactional foreign currency exposures related to buying and selling in currencies other than the local currencies in which it operates. Exposures are primarily related to the U.S. dollar relative to the Canadian dollar, the Brazilian real, and the Chilean peso.
Foreign Currency Risk Each of our international operations has transactional foreign currency exposures related to buying and selling in currencies other than the local currencies in which it operates. Exposures are primarily related to the U.S. dollar relative to the Canadian dollar, the Brazilian real, the Chilean peso, and the Argentine Peso.
Added
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to fluctuations in foreign currency exchange rates, commodity prices and interest rates which could impact our results of operations and financial condition.
Added
We do not currently have any derivative or hedging arrangements, or other known exposures, to changes in interest rates. Based on our current amounts outstanding, a 100-basis point increase or decrease in market interest rates over a 12-month period would not result in a change to interest expense. 45

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