Good day and thank you for standing by. Welcome to the fourth quarter 2025 Louisiana Pacific Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's call is being recorded. I would now like to hand it over to your speaker, Aaron Hobart, Vice President, Investor Relations. Please go ahead.

Thank you for joining us from the International Builder Show in Orlando to discuss LP's financial results for the fourth quarter and full year of 2025, as well as our outlook for 2026. Hosting the call with me this morning are Jason Ringblum, Chief Executive Officer, and Alan Hockey, Chief of Questions, and then we will be available for follow-up calls and visits to... During this morning's call, we will refer to a presentation that has been posted to LP's IR webpage, which is investor.lpcorp.com. Our 8K filing, earnings press release, and other materials are all to remind you that today's discussion contains forward-looking statements and non-GAAP financials on Slides 2 and 3 of the earnings presentation. The appendix of that presentation also contains reconciliations that are further supplemented by this. Rather than reading those materials, I will incorporate them herein by reference. And with that, I'll turn the call over to Jason.

Thank you, Aaron, and thank you all for joining us. First of all, let me start by offering thanks and congratulations on behalf of the entire LP team to Brad Southern for a well-earned retirement after more than 25 years of transformative leadership at LP. It's truly an honor to be succeeding Brad as LP's next CEO, and I'm confident that LP has the right strategy and the right team to make a seamless transition. We remain fully committed to driving growth, gaining market share, delivering product and process innovation, and generating shareholder value in the years to come. 2025 was a difficult year for homebuilding and aspiring homeowners. policy uncertainty and deteriorating consumer confidence all contributed to affordability challenges housing starts decelerated throughout the year in fact single-family starts a key demand indicator for both siding and OSB we're down roughly 10% in the third quarter according to this unfortunately the Census Bureau has yet to publish fourth quarter housing data but I suspect when that data is available. Despite these challenges, LP grew the siding business by 8% landing margins, particularly in the fourth quarter, LP delivered $567 million in net sales, $50 million in EBITDA, and $0.03 in adjusted delivery. LP siding business showed resilience in a weakening market. For the full year, we achieved 4% higher net selling prices and 4% higher sales volumes. resulting in 8% revenue growth. This allowed us to deliver a 26% EBITDAO margin. Contributors to these results were growth in the shed segment, which reinforces the power of LP's diverse end-use applications, and expert finish, where not only has product innovation helped us expand the addressable market to reach new repair and remodel customers We'll describe in a few minutes, we have also seen significant margin improvement. 2025 saw a significant volume growth with our largest shed customers, particularly in the first. It's hard to be precise given the broad range of uses for SmartSide lap trim and panels, but we estimate that shed volumes were up slightly more than 20% year old. We estimate that product sold into new residential construction saw a volume decline by roughly one to three points, which significantly outpaced the decline in single-family starting. LP's repair and remodel sector was likely flat to up a point or two with impressive 18% growth. To be fair, Siding also enjoyed some geographic advantages in 2025. We had stronger market presence in the upper Midwest, where construction activity remained comparatively strong, and we were modestly insulated from softer markets in the southeast due to our lower market penetration in this. A recent market uncertainty is that dealers adopted a more cautious stance with regard This adjustment coincided with a volume allocation price that we now realize was somewhat larger than necessary. Unfortunately, the combined effect of these phenomena appears to have resulted in some pull forward at year end, leading to elevated channels indefinitely, and as Alan will detail in the guidance section, it has been a bit weaker than anticipated. OSB results track housing demand more closely as they generally do with commodity prices softening alongside housing. Unfortunately, at their trough, OSB prices adjusted for inflation to the lowest we've And while we did not break even for the quarter, we did overcome softness in the second half of the year to achieve a positive EBITDA. As you all know, we can't control OSB prices, so we focus our efforts instead on that. Speaking of strategic execution, the integration of LP under a chief commercial officer and chief operating officer structure rather than two business general managers is also beginning to show its value. The exciting go-to-market strategies has enabled unique sales synergy. Integrating operations has improved best practice sharing, uncovering opportunities. And OEE executed our capital investments efficiently and flexibly, adjusting in response to slowing demand and accelerating expert finish Michigan all LP earned. With that, I'll turn over the call to Alan Hockey for a more detailed review of LP's financial results for the quarter and the year, as well as a discussion of our outlook.

Thanks, Jason. Slide 7 of the presentation shows the fourth quarter year-over-year waterfall for siding. Revenue increased by 6% with prices, including mixed effects, up 8% on a 2% volume decline. And while these price increases added $24 million to sales in EBITDA year over year, some of that benefit came from volume rebate threshold. In the smallest volume decline, Expert Finish jumped 35%, while Prime Volumes fell by 5%. This creates a slight adverse mix effect with an EBITDA because Expert Finish still has a lower margin than primed products. Having said that, Expert Finish margins have improved by about 8 points year over year thanks to leverage on increased volume and manufacturing efficiencies. The only other items to note for siding in the fourth quarter chart are the absence of tariffs on the Expert Finish we're importing into Canada and the non-recurrence of last year's effects from production and cost timing due to the delayed maintenance project last fall as a result the EBITDA margin for the quarter was 25 percent up five points year over year for the full year on slide eight net sales were up eight percent evenly split between price and volume as jason said adding 131 million dollars to revenue and 91 million dollars to EBITDA selling the market expenses increased by about 11 million dollars while raw material cost to offset freight. SG&A increases, tariffs, and other factors totaled about $23 million. As a result, Siding finished 2025 with $444 million in EBITDA, which is $54 million higher than 2024, with a 1% point rise in the EBITDA margin to 26%. The OSB charts on pages 9 and 10 are dominated by price, as they so often are, sadly, this time to the negative. In the fourth quarter unfavorable supply demand dynamics resulted in multi-year price lows and volume reductions across the OSB portfolio. Now volume and price movements are harder to pass in OSB than they are in siding given its commodity nature and they combined for a year-over-year decrease of $129 million in revenue and $95 million in EBITDA. Given these headwinds the OSB operations team made the best of a very difficult market and found every opportunity for savings and efficiency their efforts and diligence allowed the segment to achieve seven million dollars of EBITDA for the year as detailed on slide so to summarize the financial results for the full year we had 2.7 billion dollars in net sales 436 million dollars of EBITDA and adjusted earnings per share of two dollars and sixty-five cents these are the net effect of siding growth and margin expansion as you can see on slide 11 we consistently executed our capital allocation strategy. The adjusted EBITDA of $436 million generated $382 million of operating cash flow, up to $42 million in cash taxes and a small increase in working capital. We invested $291 million in sustaining maintenance and growth capital, and this was about $25 million less than we anticipated spending on the last call, made possible by the deferral as some of the non-essential projects in OSB, as well as the decision to slow down capacity investments. We returned $139 million to investors through $78 million in quarterly dividends and $61 million in share repurchases. And at the year end, LP's cash balance was $292 million. And with an undrawn revolver of $750 million, LP has over $1 billion in liquidity. And just for the sake of housekeeping, we have $177 million of board authorization remaining to repurchase shares. Which finally brings us to guidance. LP's OSB guidance is algorithmic and relatively straightforward, so let me dispense with that Random length prices have climbed recently to levels that are near enough to OSB break even that should we extrapolate current prices for the full year, OSB results will be very similar to 2025. I should also note, just for sensitivity modeling purposes, that we currently anticipate LP's utilization rate for the OSB to be a few points below our longer-term average rate of 80. For the first quarter of 2026, LP's realization has lacked the rising market price, which is typical. So, assuming prices hold at current levels, OSB, but down the first quarter, should be a loss of between $25 and $30 million. dollars. Unlike OSB, our sign-in guidance is not algorithmic. Rather, it is informed in the near term by our order file and in the longer term by macroeconomic data and customer sentiment. As Jason said in his remarks, an acute lack of that data, particularly housing starts, added uncertainties to our planning for volume allocations following the announcement of our 2026 price increase last October. So, despite our best intentions, we overshot, resulting in some pull forward of demand from the first quarter of this year into the fourth quarter of last year, especially with our shed customers. Now, to be fair, it's difficult to precisely separate this impact from that of a severe winter storm that hit the southeast in late January, but suffice to say, as a result, our order file is weaker today and inventories are higher. So far in the first quarter, our order files contain significantly weaker shed activity than we experienced this time last year, with demand in their new residential construction and repair and remodel sectors roughly in line with the year-over-year decline in single-family housing starts but exacerbated by our current inventory position. We currently anticipate total volumes in the first quarter will be down 15 to 20 percent, with shed volumes down 25 to 30 percent and new res construction and R&R volumes down about 10 to 15 percent consistent with single family starts however we expect average selling prices in the first quarter to be up six to eight points as a result of list price increases and a positive mixed effect of ongoing expert finish this would result in a first quarter year year decline in net sales of 11 to 13 percent with the EBITDA margin coming in at between 23% and 25%. Now, given the exit rate from Q4 of last year, flat housing consensus for 2026 implies meaningful improvement after a difficult first quarter. So, presuming the consensus is correct, and the starts do indeed end the year flat to 2025, we would expect to see demand improve sequentially, especially as shed demand returns to prior year cadence as inventories normalize. As such, by the year-end, we would expect siding volumes to be down low single digits, selling prices to be up mid-single digits, and a result, net sales to be up low single digits for an EBITDA margin of around 25% to 26%. With regard to capital expenditures, consistent with the same general market assumptions I just mentioned, we currently anticipate investing about $400 million, split equally between sustaining maintenance and strategic growth. The spending will probably be back-end loaded, with about 60% of the investments occurring in the second half. Now, should the market demand environment diverge meaningfully, for better or worse, we have significant flexibility in our plans such that we could accelerate investments somewhat, or reduce them substantially. And as I said a moment ago, I'll certainly have the balance sheet to weather further market weakening or support accelerated investment. Facing a very uncertain market backdrop, rather than dwelling on what we do not know, LP's teams will focus on what we do now. LP SmartSide has consistently gained share with innovative products that expand the addressable market. That growth, coupled with the pricing power that comes with a premium specialty product, brings leverage and margin expansion. And while not linear, that growth has, over time, outperformed the underlying markets we serve. We are confident that these fundamentals remain intact and that we have a long runway ahead of us and the right strategy to guide us. And with that, we'll be happy to take a round of questions, after which we look forward to seeing you at LP's booth of the International Builders Show.

Thank you. As a reminder, to ask a question, you need to press star one one on your telephone and wait for a name to be announced. To withdraw your question, please press star one one again. Please name yourself to one question and one follow-up. In the interest of time, please sign by. We'll compile the community roster. One moment for our first question. Our first question on the cuffline of Matthew Bowley. From Barclays, your line is now open.

Hi, good morning. I'm Vanika Villachia on for Matt today. Thank you for taking my questions. And first off, Brad, congrats. And Jason, look forward to working with you. So first off, just wondering, with 1Q siding revenue guidance, it implies a step up through the rest of the year to get to that 1.7 billion guidance, maybe somewhere in the mid-single-digit range. And so I know you guys talked about shed normalizing. Is that kind of the main factor that you're looking at in the year-over-year comps or just any details around how you're thinking about the cadence of revenues? Okay. And then I'm curious on the affordability pressure today. Are you seeing any risk of maybe mixed down to vinyl or other siding materials that have a lower upfront cost? What are you hearing maybe from contractors and if there's any differences in the builder by channel, either Builder or R&R, if you're seeing differences in affordability there.

You know, meeting a price range that we offer with value there and with a relatively low share position, there's plenty of opportunities for us.

Thank you. One moment for our next question. Our next question comes from Keaton Mantora from BMO Capital Markets. Your line is open.

Good morning, and thanks for taking my question. Coming back to siding, Jason, can you talk a little bit about what you are seeing in terms of demand in your expert finished product? I saw volumes were pretty good in Q4. Are you still in allocation on that business? Any trends you can talk to?

Thanks, Kate. Appreciate the question. What I would say is, you know, macro trends remain in our favor here. Labor is tight. Labor is expensive. Homeowners expect a durable and resilient solution that comes with a warranty. So our value proposition for Expert Finish and Expert Finish Naturals really addresses all of those needs. And as a result, we're continuing to see this product category outperform in both new construction and repair remodel. In regards to the allocation question, we did come off allocation, I believe, February 1st, so a couple weeks ago, and that's really due to the OEE improvements that we were able to realize across our network.

We thought that we would have to wait until our new Green Bay facility came online in early Q2 of this year but through great work for us slightly in advance of understood that's helpful and then can you remind us on how you are thinking about additional capacity and siding last what you talked about sort of manumaki as being one of the options how should we think about the timeline on that and in the meantime how are you thinking about managing production in

I'll start with siding and just say our new 70 million foot line in Green Bay broader capacity expansion opportunities what I would say is we are continuing the detailed engineering work for future expert finish and primed capacity expansion projects and some of that capital spend is in the figures that Alan shared with you earlier obviously a little bit more back and loaded. But big picture, we want to be prepared to execute with projects that are essentially ready for plug and play when the timing's appropriate with a heavy bent towards being early versus late. And the second question, Keaton, I believe was around how we're OSB capacity, largely managing capacity. We're very pleased to see the nice rebound in prices that we've realized to begin the year, we've been able to additionally keep a healthy order file across our network. So it certainly feels more optimistic that supply and demand are a little bit more in balance than they have been for the majority of last year.

Thank you. One moment for our next question. Our next question will come from the line of George Staples from Bank of America Securities. Your line is open.

Hi, good morning, everyone. This is Brad Barton. I'm for George. And Jason, congrats on the new role. We look forward to working with you.

Thanks, Brad.

You know, just starting off, I know you touched a little bit on vinyl and, you know, affordability concerns and maybe some shifts there. But could you speak to more of the broad competitive environment that you're seeing inciting right now?

That as well. You know, right now, Obviously, with Starts checking up, the back half, it comes with its challenges. But again, we feel like in the new construction and repair-remodel segments in particular, we've got a relatively low share position and a very large field sales organization that's focused on winning new customers. And that doesn't stop in a softer market. and we believe there's plenty of those opportunities in front of us.

Great. Thanks. And just to follow up, you know, as you bring expert finish capacity online here, can you speak to how you'll have to ramp your marketing spend investments, you know, both in terms of the timeline and the magnitude maybe compared to the $11 million investments that you saw in 2025?

The addition of additional field sales resources to support the growth of experts. We did not put in any of that on pause as we experienced allocation back in October of last year. So those investments will continue going forward. And, again, we're very pleased with the growth. We're seeing an expert finish and excited to bring on one of our newest state-of-the-art lines in Green Bay, Wisconsin.

Great. Thanks for taking the questions. Thank you. One moment for our next question. Our next question will come from the line of Mark Ointraub from Seaport Research Partners. Your line is open.

Thank you. So, last year, you mentioned sheds up a little bit better than 20% by your best estimate, obviously slowed in the first quarter. Just wondering, what are you embedding for sheds for the full year in 26 versus 2025? And maybe to the extent that you have information on where would you say your shed business was relative last year, relative to, say, the last 10 years, or whatever you think would be an appropriate timeframe, given there's been lots of ups and downs with the pandemic, et cetera.

A bit of a lumpiness to our – and although inventories are higher than we anticipated, what we are hearing anecdotally from several of our largest shed fabricators is that underlying demand in the segment remains on a firm footing and trending very similarly to 2025 levels. So this positive news, also coupled with some new product innovations, specifically our everyday flooring series and SilverTech roofing that we launched to begin the year, we feel like we can get back to a normal trajectory pretty quickly once inventories are depleted throughout the first quarter of this year.

And so I'm just sorry, because you're up 20%, I think you suggested, last year. So was that just getting you to what you consider to be normalized, or was that substantially better than what you consider normalized to be?

Yeah, so last year came into – so we had an inventory bill And then obviously overshot the allocation to the 2026 price increase. So, you know, we feel like the underlying demand, again, is very stable in SHED. And with some of the new products that we've brought to market, we feel like there's growth opportunity in that segment, even though we own a relatively high share position.

Thank you. Thank you. One moment for our next question. Our next question comes from the line of Stephen Renzi from Thompson Research Group. Your line is open.

Thank you for taking my question. I wanted to start with higher siding EBITDA in the guidance and the breakeven OSB. Does that point to operating cash flow being somewhat near the 2025 results? And if that's so, the CapEx points to free cash flow being roughly break-even. Maybe you can talk to the assumptions there on free cash generation.

Not a lot. I can add to that. That's about right, yes. You nailed it.

Okay, sounds good. Appreciate that. And then wanted to think about if there's an expected case on the siding margin ramp through the year. Make sure I understand this. The last year or two, Q1 and Q2 EBITDA margin were in the same zone. Is it expected to be a steeper ramp upward going through 26?

So we had very strong Q1 and Q2s last year, hence the seasonality was tilted towards that first half. I'm sorry, the seasonality of the volume, huge leverage, the cadence of the EBITDA margin. And it's really, that's the leverage we get.

That's helpful.

Thank you. One moment for our next question. Our next question comes from the line of Kasia Trasky from TD Callen. Your line is open.

Hi there. It's Kasia. So I'm on the call for Sean Stewart from TD Callen. First question is around siding. Can you comment what kind of siding volume culture you're seeing from your HomeBuilder channel right now and just provide broader commentary about how any specific home builder relationships might be evolving sorry kasha you cut out a bit on the key wood sentence could you repeat the question hi can you hear me better now that's much better yes thank you okay great question was around siding i'm curious about any thoughts on what kind of siding volume culture you're seeing the channel build up notwithstanding from your homebuilder channel and then just if I need to provide any broader commentary about how any specific homebuilder relationships might be

evolving what I would say is from just speaking to the homebuilder very different different markets where depends depends on geography what I would say just in terms of where we're at with our relationships I mentioned earlier the the integration you know we are really focused on leveraging our full portfolio in the home builder segment, and we know we're a very relevant supplier to this market, and, you know, that strategy is allowing us to, you know, offer greater value, be more creative and responsive to our customers' needs. So, you know, we're still in the early stages, but we're very encouraged by the reception that we've received from, you know, builders.

Okay, thanks for that, Jason. and I just want to make sure I didn't mishear earlier, did you say that the inventory buildup in the channel right now, you expect that to unwind over the course of Q1, bringing us back to more of a normalized steady state in Q2?

Yeah, I'll shed a little bit of light on that. So we believe that the dealer channel, those closest to the builder, did not necessarily go fourth quarter. They're focused, you know, more on working capital. However, our two-step customers, which is the folks we transact with most, they took advantage of the allocation and advanced the price increase. And, you know, we see that in terms of their inventory reporting requirements looking backwards. So, based on what we see, roughly two to four weeks of inventory at the two-step level, we do believe that that can be consumed heading into Q2, just with the traditional or historical uplift in seasonal demand heading into the building season.

Okay, gotcha. That's helpful context. And the last one for me on OSB, the segment EBITDA margins of negative 29%, is that largely attributable to the low mill operating rates in Q4, which presumably would have had a significant impact on your overall mill cost structure? Or are there any lumpy items in there? And in particular, what I have in mind is any one-time inventory write-down, things of that nature.

Well, there is a – the only inventory write-down that occurs is a mark-to-market, nothing exceptional.

We did have a couple of reasonably large maintenance projects in the quarter that added a bit of expense, but I think it was mostly utilized.

Thank you. One moment for our next question. Our next question from Comfortline of Susan McClary from Goldman Sachs. Your line is open.

Thank you. Good morning, everyone. My first question is staying on OSB, can you talk a bit about how you're thinking of the outlook for demand? The builders have largely talked about their start this year being up low single digits. What does that imply in terms of the potential ramp for OSB in there? And then can you talk about your approach to capacity relative to that?

I would say our supply with customer demand, as I mentioned earlier, we've seen a nice rebound to begin the year, but we do feel like it's a supply-driven rebound. A couple of our competitors announced mill closures in Canada. There's also been some maintenance outages, scheduled downtime associated with the winter storm that I think is playing into the favorable pricing environment. So I do think looking forward that we'll need an improvement in demand to stay in balance as we head into Q&A that will carry through it.

Okay, that's helpful. And then maybe turning to the margin in the siding segment there, can you talk a bit about what you're seeing just in terms of input costs, freight, and how should we think about any startup costs that are associated with Green Bay and how that'll flow through as well?

Guidance for the full year siding, even $20 million of raw material inflation, so $20 million of raw materials plus, nothing, nothing.

Okay. Okay. Thanks for the color, guys.

Thank you. One moment for our next question. Our next question will come from the line. Kurt Inger from Davidson. Your line is open.

Great. Appreciate it. Jason, you had referenced the portfolio solutions approach.

I was just hoping maybe you could talk about a couple examples of how you're marketing that with the siding business and kind of the value add component. of that go-to-market strategy yeah I'll touch on that so really the the approach is to be but more specifically our siding business you know the the focus primarily is on the new construction segment to start with but we also see opportunities within the shed segment and repair remodel segment So, you know, we are in the early stages of BuilderWins, the result of this focus and there's a few more on the horizon that, you know, I do believe within MaterialWins that are a result of an enterprise approach to the segments we plan.

That's very helpful. And then just in terms of the outlook, I mean, it sounds like at least in Q1, R&R versus kind of the new resi pieces within siding we're performing similarly um is that how you kind of expect the whole shape of the year or or would you think that R&R could perhaps be a little bit more stable notwithstanding you know the weather here in the first month and a half you just talk a little bit about that please thank you you know definitely a rush shed um but you know shed is

That's obviously a challenge for us in Q1 as we work through the channel inventory situation. Where we need to see a rebound is in the new construction segment right now. Obviously, it's softer than it was this time last year. We are planning an improvement throughout.

Thanks, Jason.

Thank you. This concludes the question and answer session. And I would like to turn it back over to Aaron for closing remarks.

Thank you, everyone, for joining us to discuss LP's results. For those of you who are at IBS in Orlando, we'll look forward to seeing you in our booth later this afternoon and available for follow-up calls for those. Thanks, everyone. Stay safe, and we'll talk to you soon.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.