LOUISIANA-PACIFIC CORP

7. LEASES

Our lease portfolio consists primarily of real estate, mobile equipment at our manufacturing facilities, rail cars to transport our products, and a fleet of vehicles. We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

As most of our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease term for all our leases includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that we are reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

For each of the years ended December 31, 2025 and 2024, ourweighted average discount rate was 4%, and our weighted average remaining lease term wasfive years for operating leases.

Our operating leases are included in our Consolidated Balance Sheets and Consolidated Statements of Income as follows (dollar amounts in millions):

For the years ended December 31, 2025 and 2024, we incurred operating lease expenses of $9 million and $8 million, respectively, included within costs of sales and selling, general and administrative expenses. We made cash payments of $9 million and $7 million during the years ended December 31, 2025 and 2024, respectively, related to our operating leases. We further incurred operating lease expense of $2 million and $5 million related to short-term rent expense for the years ended December 31, 2025 and 2024, resp ectively.

We obtained right of use (ROU) assets in exchange for new operating lease liabilities of $5 million and $7 million for the years ended December 31, 2025 and 2024, respectively. We did not enter into any financing leases during 2025 or 2024.

The following table sets forth the minimum operating lease payments that are expected to be made in each of the years indicated (dollar amounts in millions):