PotlatchDeltic Corporation

10/28/2024 | Press release | Distributed by Public on 10/28/2024 14:19

PotlatchDeltic Corporation Reports Third Quarter 2024 Results

SPOKANE, Wash.--(BUSINESS WIRE)-- PotlatchDeltic Corporation (Nasdaq: PCH) today reported net income of $3.3 million, or $0.04 per diluted share, on revenues of $255.1 million for the quarter ended September 30, 2024. Net income was $23.7 million, or $0.29 per diluted share, on revenues of $265.5 million for the quarter ended September 30, 2023. Excluding an after-tax gain on insurance recoveries, adjusted net income was $11.4 million, or $0.14 per diluted share for the third quarter of 2023.

Third Quarter 2024 Highlights

  • Generated Total Adjusted EBITDDA of $45.9 million and Total Adjusted EBITDDA margin of 18%
  • Completed construction on the Waldo, Arkansas sawmill expansion and modernization project
  • Repurchased 57,000 shares for $2.4 million, or $42 per share
  • Maintained strong liquidity of $460 million as of September 30, 2024

"During the third quarter, our businesses delivered solid operational performance while navigating a challenging lumber market as well as the broader economic environment," said Eric Cremers, President and Chief Executive Officer. "Additionally, our Wood Products division achieved a significant milestone with the successful completion of the construction phase of our Waldo, Arkansas sawmill expansion and modernization project. We believe this strategic investment positions the Waldo mill to be a top quartile sawmill, enabling it to generate an additional $25 million of Adjusted EBITDDA annually under a mid-cycle sales environment once the mill reaches its new capacity output. As for capital allocation, we will continue to be disciplined stewards of our shareholders' capital and remain focused on returning capital to shareholders while prioritizing the long-term value for our shares. Looking forward, we believe that lumber markets are stabilizing as supply and demand in the industry continue to align. We are also optimistic that reductions in interest rates will serve as a catalyst, creating positive momentum in the housing and repair and remodel markets, thereby driving demand in our business," stated Mr. Cremers.

Financial Highlights

($ in millions, except per share data)

Q3 2024

Q2 2024

Q3 2023

Revenues

$

255.1

$

320.7

$

265.5

Net income

$

3.3

$

13.7

$

23.7

Weighted-average shares outstanding, diluted (in thousands)

79,277

79,741

80,379

Net income per diluted share

$

0.04

$

0.17

$

0.29

Adjusted Net Income 1

$

3.3

$

13.7

$

11.4

Adjusted Net Income Per Diluted Share 1

$

0.04

$

0.17

$

0.14

Total Adjusted EBITDDA 1

$

45.9

$

103.2

$

56.3

Total Adjusted EBITDDA Margin 1

18.0

%

32.2

%

21.2

%

Dividends per share

$

0.45

$

0.45

$

0.45

Net cash from operations

$

26.5

$

100.6

$

41.0

Cash and cash equivalents

$

161.1

$

199.7

$

302.8

1 Adjusted Net Income, Adjusted Net Income Per Diluted Share, Total Adjusted EBITDDA and Total Adjusted EBITDDA Margin are non-GAAP measures. Refer to "Non-GAAP Measures" and Non-GAAP Reconciliations below for more information and reconciliations to GAAP, where applicable.

Business Performance: Q3 2024 vs. Q2 2024

Timberlands

Third Quarter 2024 Highlights

  • Timberlands Adjusted EBITDDA increased $1.6 million from Q2 2024
  • Northern harvest volumes increased due to normal seasonality
  • Northern sawlog prices decreased primarily due to lower indexed sawlog prices
  • Southern sawlog and pulpwood prices were relatively stable

($ in millions)

Q3 2024

Q2 2024

$ Change

Timberlands Revenues

$

105.1

$

98.8

$

6.3

Timberlands Adjusted EBITDDA 1

$

35.8

$

34.2

$

1.6

1 Refer to Segment Information below for additional information.

Wood Products

Third Quarter 2024 Highlights

  • Wood Products Adjusted EBITDDA decreased $2.8 million from Q2 2024
  • Average lumber prices decreased 5% to $402 per thousand board feet (MBF) in Q3 2024
  • Higher per-unit manufacturing costs primarily due to lower production from planned downtime and restart at the Waldo sawmill related to the expansion and modernization project

($ in millions)

Q3 2024

Q2 2024

$ Change

Wood Products Revenues

$

139.4

$

153.6

$

(14.2

)

Wood Products Adjusted EBITDDA 1

$

(9.6

)

$

(6.8

)

$

(2.8

)

1 Refer to Segment Information below for additional information.

Real Estate

Third Quarter 2024 Highlights

  • Real Estate Adjusted EBITDDA decreased $57.8 million from Q2 2024, which included a $57 million rural timberland sale in the South
  • Sold 6,548 acres of rural land at an average price of $3,727 per acre
  • Sold 53 residential lots at an average price of $204,851 per lot

($ in millions)

Q3 2024

Q2 2024

$ Change

Real Estate Revenues

$

38.7

$

95.7

$

(57.0

)

Real Estate Adjusted EBITDDA 1

$

31.8

$

89.6

$

(57.8

)

1 Refer to Segment Information below for additional information.

Non-GAAP Measures

This press release includes certain financial measures that are not in accordance with accounting principles generally accepted in the United States (GAAP). Management believes that these non-GAAP measures, when read in conjunction with our GAAP financial statements, provide useful information to investors and other interested parties as described below. The presentation of these non-GAAP financial measures should be considered only as supplemental to, are not intended to be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may not be the same as or comparable to other similarly titled non-GAAP measures presented by other companies due to potential inconsistencies in methods of calculation.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Diluted Share are non-GAAP measures that represent GAAP net income (loss) and GAAP net income (loss) per diluted share before certain items, net of tax, that management believes impact the ability to compare the performance of our business, either period-over-period or with other businesses.

Total Adjusted EBITDDA and Total Adjusted EBITDDA Margin are non-GAAP measures that remove the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis and can be used to evaluate the operational performance of assets under management.

We define Total Adjusted EBITDDA Margin as Total Adjusted EBITDDA divided by Revenues.

Reconciliations of Total Adjusted EBITDDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Diluted Share to their most comparable GAAP measures are set forth in the accompanying "Non-GAAP Reconciliations" at the end of this release.

Conference Call Information

A live conference call and webcast will be held Tuesday, October 29, 2024, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time). Investors may access the webcast at www.potlatchdeltic.com by clicking on the Investors link or by conference call at 1-888-510-2008 for U.S./Canada and 1-646-960-0306 for international callers. Participants will be asked to provide conference I.D. number 7281983. Supplemental materials that will be discussed during the call are available on the above website.

A replay of the conference call will be available two hours following the call until November 5, 2024 by calling 1-800-770-2030 for U.S./Canada or 1-609-800-9909 for international callers. Callers must enter conference I.D. number 7281983 to access the replay.

About PotlatchDeltic

PotlatchDeltic Corporation (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns over 2.1 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi and South Carolina. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. PotlatchDeltic, a leader in sustainable forest management, is committed to environmental and social responsibility and to responsible governance. More information can be found at www.potlatchdeltic.com.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including without limitation, our expectations regarding the company's revenues, costs, expenses and liquidity; disciplined and opportunistic capital allocation strategy; expected incremental EBITDDA generation as a result of the recently completed Waldo, Arkansas sawmill expansion and modernization project; long-term housing fundamentals, interest rates, and demand for lumber; and similar matters. Words such as "believe," "will continue," "looking forward," and similar expressions are intended to identify such forward-looking statements. You should carefully read forward-looking statements, including statements that contain these words, because they discuss the future expectations or state other "forward-looking" information about PotlatchDeltic. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, many of which are beyond PotlatchDeltic's control, such as changes in the U.S. housing market; changes in timberland values; changes in timber harvest levels on the company's lands; changes in timber prices; changes in policy regarding governmental timber sales; availability of logging contractors and shipping capacity; changes in the United States and international economies and effects on our customers and suppliers; changes in interest rates; credit availability and homebuyers' ability to qualify for mortgages; availability of labor and developable land; changes in the level of construction and remodeling activity; changes in foreign demand; changes in tariffs, quotas and trade agreements involving wood products; currency fluctuation; changes in demand for our products and real estate; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; disruptions or inefficiencies in our supply chain and/or operations; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; fires at our facilities and on our timberland and other catastrophic events; restrictions on harvesting due to fire danger; changes in raw material, fuel and other costs; transportation disruptions; share price; our ability to achieve the expected increases in production capacity, reduction in cash processing costs, and recovery improvement following the ramp-up phase of our Waldo, Arkansas sawmill expansion and modernization project; our ability to participate in the natural climate solutions and forest carbon sequestration markets; the successful execution of the company's strategic plans and the other factors described in PotlatchDeltic's Annual Report on Form 10-K and in the company's other filings with the SEC. PotlatchDeltic assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, all of which speak only as of the date hereof.

PotlatchDeltic Corporation

Condensed Consolidated Statements of Operations

Unaudited

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(in thousands, except per share amounts)

2024

2024

2023

2024

2023

Revenues

$

255,131

$

320,671

$

265,509

$

803,929

$

769,572

Costs and expenses:

Cost of goods sold

227,556

282,473

226,303

722,189

665,716

Selling, general and administrative expenses

20,403

20,752

19,303

61,882

55,118

CatchMark merger-related expenses

-

-

-

-

2,453

Gain on fire damage

-

-

(16,326

)

-

(39,436

)

247,959

303,225

229,280

784,071

683,851

Operating income

7,172

17,446

36,229

19,858

85,721

Interest expense, net

(9,635

)

(8,696

)

(7,971

)

(18,049

)

(15,783

)

Non-operating pension and other postretirement employee benefits

200

201

(228

)

602

(685

)

Other

1,516

(23

)

370

1,348

638

Income (loss) before income taxes

(747

)

8,928

28,400

3,759

69,891

Income taxes

4,056

4,750

(4,725

)

12,923

(7,650

)

Net income

$

3,309

$

13,678

$

23,675

$

16,682

$

62,241

Net income per share:

Basic

$

0.04

$

0.17

$

0.30

$

0.21

$

0.78

Diluted

$

0.04

$

0.17

$

0.29

$

0.21

$

0.78

Dividends per share

$

0.45

$

0.45

$

0.45

$

1.35

$

1.35

Weighted-average shares outstanding:

Basic

79,173

79,627

80,132

79,494

80,102

Diluted

79,277

79,741

80,379

79,563

80,279

PotlatchDeltic Corporation

Condensed Consolidated Balance Sheets

Unaudited

(in thousands, except per share amounts)

September 30, 2024

December 31, 2023

ASSETS

Current assets:

Cash and cash equivalents

$

161,131

$

230,118

Customer receivables, net

29,550

21,892

Inventories, net

79,894

78,665

Other current assets

50,623

46,258

Total current assets

321,198

376,933

Property, plant and equipment, net

395,908

372,832

Investment in real estate held for development and sale

51,769

56,321

Timber and timberlands, net

2,375,157

2,440,398

Intangible assets, net

14,306

15,640

Other long-term assets

148,766

169,132

Total assets

$

3,307,104

$

3,431,256

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

90,290

$

82,383

Current portion of long-term debt

165,113

175,615

Current portion of pension and other postretirement employee benefits

4,535

4,535

Total current liabilities

259,938

262,533

Long-term debt

869,486

858,113

Pension and other postretirement employee benefits

64,902

67,856

Deferred tax liabilities, net

23,936

36,641

Other long-term obligations

36,817

35,015

Total liabilities

1,255,079

1,260,158

Commitments and contingencies

Stockholders' equity:

Common stock, $1 par value, 200,000 shares authorized, 78,862 and 79,365 shares issued and outstanding

78,862

79,365

Additional paid-in capital

2,312,586

2,303,992

Accumulated deficit

(432,589

)

(315,291

)

Accumulated other comprehensive income

93,166

103,032

Total stockholders' equity

2,052,025

2,171,098

Total liabilities and stockholders' equity

$

3,307,104

$

3,431,256

PotlatchDeltic Corporation

Condensed Consolidated Statements of Cash Flows

Unaudited

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(in thousands)

2024

2024

2023

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

3,309

$

13,678

$

23,675

$

16,682

$

62,241

Adjustments to reconcile net income to net cash from operating activities:

Depreciation, depletion and amortization

25,893

29,674

30,658

86,369

90,327

Basis of real estate sold

12,905

56,525

6,109

73,522

21,624

Change in deferred taxes

(3,057

)

(4,694

)

(1,764

)

(11,896

)

(3,979

)

Pension and other postretirement employee benefits

1,143

1,145

1,610

3,431

4,833

Equity-based compensation expense

2,946

2,962

2,616

8,468

6,472

Gain on fire damage

-

-

(16,326

)

-

(39,436

)

Interest received under swaps with other-than-insignificant financing element

(7,536

)

(7,509

)

(6,884

)

(22,503

)

(18,651

)

Other, net

1,641

2,351

1,792

6,953

5,648

Change in working capital and operating-related activities, net

(3,040

)

9,256

(9,773

)

(7,036

)

(24,107

)

Real estate development expenditures

(2,583

)

(1,587

)

(2,939

)

(5,305

)

(7,243

)

Funding of pension and other postretirement employee benefits

(5,168

)

(1,221

)

128

(7,303

)

(2,176

)

Proceeds from insurance recoveries

-

-

12,049

1,680

21,755

Net cash from operating activities

26,453

100,580

40,951

143,062

117,308

CASH FLOWS FROM INVESTING ACTIVITIES

Property, plant and equipment additions

(25,575

)

(21,608

)

(17,933

)

(52,178

)

(28,068

)

Timberlands reforestation and roads

(6,476

)

(4,940

)

(6,299

)

(19,290

)

(17,013

)

Acquisition of timber and timberlands

(822

)

(43

)

(55

)

(32,303

)

(1,676

)

Proceeds from property insurance

-

-

1,356

-

1,356

Interest received under swaps with other-than-insignificant financing element

7,010

6,986

6,375

20,934

17,279

Other, net

134

245

36

752

700

Net cash from investing activities

(25,729

)

(19,360

)

(16,520

)

(82,085

)

(27,422

)

CASH FLOWS FROM FINANCING ACTIVITIES

Distributions to common stockholders

(35,486

)

(35,677

)

(35,960

)

(106,942

)

(107,880

)

Repurchase of common stock

(3,508

)

(23,905

)

(11,012

)

(27,413

)

(11,406

)

Other, net

(943

)

(1,444

)

(360

)

(3,179

)

(2,315

)

Net cash from financing activities

(39,937

)

(61,026

)

(47,332

)

(137,534

)

(121,601

)

Change in cash, cash equivalents and restricted cash

(39,213

)

20,194

(22,901

)

(76,557

)

(31,715

)

Cash, cash equivalents and restricted cash, beginning

200,344

180,150

336,777

237,688

345,591

Cash, cash equivalents and restricted cash, ending 1

$

161,131

$

200,344

$

313,876

$

161,131

$

313,876

1

Includes $0, $0.7 million, and $11.1 million at September 30, 2024, June 30, 2024, and September 30, 2023, respectively, that were or are intended to be reinvested in timber and timberlands and classified as restricted cash in Other current and long-term assets in the Condensed Consolidated Balance Sheets.

PotlatchDeltic Corporation

Segment Information

Unaudited

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(in thousands)

2024

2024

2023

2024

2023

Revenues

Timberlands

$

105,132

$

98,802

$

109,808

$

296,884

$

313,663

Wood Products

139,412

153,579

165,108

441,589

485,572

Real Estate

38,701

95,732

19,152

145,540

60,079

283,245

348,113

294,068

884,013

859,314

Intersegment Timberlands revenues

(28,114

)

(27,442

)

(28,559

)

(80,084

)

(89,736

)

Other intersegment revenues

-

-

-

-

(6

)

Consolidated revenues

$

255,131

$

320,671

$

265,509

$

803,929

$

769,572

Adjusted EBITDDA 1

Timberlands

$

35,824

$

34,124

$

42,062

$

104,696

$

118,017

Wood Products

(9,581

)

(6,805

)

15,039

(16,525

)

26,975

Real Estate

31,861

89,568

14,165

127,657

45,867

Corporate

(12,203

)

(11,756

)

(11,696

)

(36,624

)

(32,958

)

Eliminations and adjustments

1

(1,958

)

(3,292

)

(407

)

1,599

Total Adjusted EBITDDA

45,902

103,173

56,278

178,797

159,500

Interest expense, net 2

(9,635

)

(8,696

)

(7,971

)

(18,049

)

(15,783

)

Depreciation, depletion and amortization

(25,487

)

(29,268

)

(30,248

)

(85,150

)

(89,099

)

Basis of real estate sold

(12,905

)

(56,525

)

(6,109

)

(73,522

)

(21,624

)

CatchMark merger-related expenses

-

-

-

-

(2,453

)

Gain on fire damage

-

-

16,326

-

39,436

Non-operating pension and other postretirement employee benefits

200

201

(228

)

602

(685

)

Gain (loss) on disposal of assets

(338

)

66

(18

)

(267

)

(39

)

Other

1,516

(23

)

370

1,348

638

Income (loss) before income taxes

$

(747

)

$

8,928

$

28,400

$

3,759

$

69,891

Depreciation, depletion and amortization

Timberlands

$

16,778

$

16,790

$

19,267

$

51,193

$

55,623

Wood Products

8,395

12,227

10,740

33,138

32,723

Real Estate

138

136

120

412

397

Corporate

176

115

121

407

356

25,487

29,268

30,248

85,150

89,099

Bond discounts and deferred loan fees 2

406

406

410

1,219

1,228

Total depreciation, depletion and amortization

$

25,893

$

29,674

$

30,658

$

86,369

$

90,327

Basis of real estate sold

Real Estate

$

12,908

$

56,528

$

6,111

$

73,530

$

21,629

Eliminations and adjustments

(3

)

(3

)

(2

)

(8

)

(5

)

Total basis of real estate sold

$

12,905

$

56,525

$

6,109

$

73,522

$

21,624

1

Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA in Non-GAAP Reconciliations .

2

Bond discounts, deferred loan fees, non-cash amortization related to redesignated forward swaps, and interest income are included in interest expense, net in the Condensed Consolidated Statements of Operations .

PotlatchDeltic Corporation

Non-GAAP Reconciliations

Unaudited

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(in thousands, except per share amounts)

2024

2024

2023

2024

2023

Total Adjusted EBITDDA 1

Net income (GAAP)

$

3,309

$

13,678

$

23,675

$

16,682

$

62,241

Interest expense, net

9,635

8,696

7,971

18,049

15,783

Income taxes

(4,056

)

(4,750

)

4,725

(12,923

)

7,650

Depreciation, depletion and amortization

25,487

29,268

30,248

85,150

89,099

Basis of real estate sold

12,905

56,525

6,109

73,522

21,624

CatchMark merger-related expenses

-

-

-

-

2,453

Gain on fire damage

-

-

(16,326

)

-

(39,436

)

Non-operating pension and other postretirement employee benefits

(200

)

(201

)

228

(602

)

685

(Gain) loss on disposal of assets

338

(66

)

18

267

39

Other

(1,516

)

23

(370

)

(1,348

)

(638

)

Total Adjusted EBITDDA

$

45,902

$

103,173

$

56,278

$

178,797

$

159,500

Adjusted Net Income 1

Net income (GAAP)

$

3,309

$

13,678

$

23,675

$

16,682

$

62,241

Special items after tax:

CatchMark merger-related expenses

-

-

-

-

2,453

Gain on fire damage

-

-

(12,244

)

-

(29,577

)

Adjusted Net Income

$

3,309

$

13,678

$

11,431

$

16,682

$

35,117

Adjusted Net Income Per Diluted Share 1

Net income per diluted share (GAAP)

$

0.04

$

0.17

$

0.29

$

0.21

$

0.78

Special items after tax:

CatchMark merger-related expenses

-

-

-

-

0.03

Gain on fire damage

-

-

(0.15

)

-

(0.37

)

Adjusted Net Income Per Diluted Share

$

0.04

$

0.17

$

0.14

$

0.21

$

0.44

1

See "Non-GAAP Measures" for further details on management's use of these measures.

Investors
Wayne Wasechek
509.835.1521

Media
Anna Torma
509.835.1558

Source: PotlatchDeltic Corporation