PotlatchDeltic Corporation Reports Third Quarter 2021 Results

SPOKANE, WA - Oct. 25, 2021

SPOKANE, Wash.--(BUSINESS WIRE)-- PotlatchDeltic Corporation (Nasdaq: PCH) today reported net income of $65.7 million, or $0.97 per diluted share, on revenues of $287.3 million for the quarter ended September 30, 2021. Excluding a net gain on insurance recoveries, Adjusted Net Income was $62.4 million, or $0.92 per diluted share for the third quarter of 2021. Net income was $81.0 million, or $1.20 per diluted share, on revenues of $313.0 million for the quarter ended September 30, 2020.

Third Quarter 2021 Highlights

Generated Total Adjusted EBITDDA of $107.2 million and Total Adjusted EBITDDA margin of 37%
Lumber prices bottomed at a high level and have increased eight weeks in a row
Expanded strong liquidity position to $972 million as of Q3 2021

“While lumber prices declined in the third quarter, they bottomed at a high level and EBITDDA of $107 million was still an excellent quarter for the company,” said Eric Cremers, president and chief executive officer. "Looking ahead, lumber prices have continued to increase in the fourth quarter and the outlook on housing fundamentals that drive our business remains positive. Additionally, we continue to expect to pay a special dividend in December and estimate the amount will be $3 to $5 per share," stated Mr. Cremers.

Financial Highlights

($ in millions, except per share data)	Q3 2021		Q2 2021		Q3 2020
Revenues	$	287.3	$	447.5	$	313.0
Net income	$	65.7	$	187.9	$	81.0
Weighted average shares outstanding, diluted (in thousands)		67,648		67,732		67,528
Net income per diluted share	$	0.97	$	2.77	$	1.20

Adjusted Net Income	$	62.4	$	187.9	$	81.0
Adjusted Net Income Per Diluted Share	$	0.92	$	2.77	$	1.20

Total Adjusted EBITDDA	$	107.2	$	275.0	$	135.4
Dividends per share	$	0.41	$	0.41	$	0.40
Net cash from operations	$	111.9	$	171.4	$	102.9
Cash and cash equivalents	$	592.8	$	512.0	$	148.9

Business Performance: Q3 2021 vs. Q2 2021

Timberlands

Third Quarter 2021 Highlights

Timberlands Adjusted EBITDDA decreased $1.2 million from Q2 2021 record level
Northern and Southern harvest volumes increased seasonally
Northern sawlog prices decreased 22% from historically high prices
Southern sawlog prices increased 10% on wet weather constraining log supply and a higher mix of hardwood volume
Log and haul increased primarily driven by higher mix of Idaho harvest volumes

($ in millions)	Q3 2021		Q2 2021		$ Change
Timberlands Revenues	$	129.5	$	121.2	$	8.3

Timberlands Adjusted EBITDDA	$	76.0	$	77.2	$	(1.2	)

Wood Products

Third Quarter 2021 Highlights

Wood Products Adjusted EBITDDA decreased $178 million from Q2 2021 levels
Average lumber price was $533 per MBF in Q3 2021, 55% lower than Q2 2021 historic prices
Log costs increased due to higher index pricing in Idaho earlier in the year
Inventory at the end of Q3 2021 was written down $6.4 million due to high indexed Idaho log costs

($ in millions)	Q3 2021		Q2 2021		$ Change
Wood Products Revenues	$	187.8	$	357.7	$	(169.9	)

Wood Products Adjusted EBITDDA	$	26.6	$	204.6	$	(178.0	)

Real Estate

Third Quarter 2021 Highlights

Real Estate Adjusted EBITDDA decreased $2.7 million from Q2 levels
Reflects lower rural land sale closings, partially offset by an increase in residential lot sales
Sold 2,303 acres of rural land for $3,013/acre
Sold 52 residential lots at an average $81,923/lot

($ in millions)	Q3 2021		Q2 2021		$ Change
Real Estate Revenues	$	13.5	$	16.0	$	(2.5	)

Real Estate Adjusted EBITDDA	$	9.1	$	11.8	$	(2.7	)

Non-GAAP Measures

This press release includes certain non-GAAP financial measures, which management believes are useful to investors, securities analysts and other interested parties. These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP.

Management uses Adjusted EBITDDA to evaluate the performance of the company. This is a non-GAAP measure that represents EBITDDA before certain items that impact comparison of the performance of our business either period-over-period or with other businesses.

Adjusted Net Income and Adjusted Net Income Per Diluted Share are non-GAAP measures that represent GAAP net income and GAAP net earnings per diluted share before certain items that impact the ability of investors, securities analysts and other interested parties to compare the performance of our business, either period-over-period or with other businesses.

Reconciliations to GAAP are set forth in the accompanying schedules.

Conference Call Information

A live conference call and webcast will be held Tuesday, October 26, 2021, 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 website.

A replay of the conference call will be available two hours following the call until November 3, 2021 by calling 1-800-770-2030 for U.S./Canada or 1-647-362-9199 for international callers. Callers must enter conference I.D. number 7281983 to access the replay.

About PotlatchDeltic

PotlatchDeltic (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns approximately 1.8 million acres of timberlands in Alabama, Arkansas, Idaho, Louisiana, Minnesota and Mississippi. 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 and expenses; expected liquidity; the success of the company’s business strategies; the effect of the company’s debt refinancing and intent to refinance debt maturing in the future; the company’s capital allocation strategies, including share repurchases and dividend expectations; interest in accretive acquisitions; maintaining the company’s investment grade credit rating; favorable capital structure and strong balance sheet; interest rates and expenses; corporate expenses; pension expenses; taxes; Q4 and FY 2021 outlook; the housing market and repair and remodel market; housing starts; lumber supply, demand and pricing; lumber shipment volumes; the effects of changes in lumber prices on annual EBITDDA; estimated impact from the Ola, Arkansas sawmill fire and anticipated insurance coverage; expected sawlog demand and timber harvest volumes; sawlog mix and pricing; rural real estate and development real estate sales; land basis and average price per acre and per developed lot; planned capital expenditures; number of seedlings planted; amount of greenhouse gas emitted; amount of CO2e sequestered; safety performance; planned ESG and carbon reports; business conditions; and similar matters. Words such as “anticipate,” “expect,” “will,” “intend,” “plan,” “target,” “project,” “believe,” “seek,” “schedule,” “estimate,” “could,” “can,” “may,” 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, including the impact of COVID-19 and its variants, governmental responses to such outbreaks, and anticipated recovery from the pandemic on our business, suppliers, customers and employees; 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; the successful execution of the company’s strategic plans; the company’s ability to meet expectations; 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)	2021			2021			2020			2021			2020
Revenues	$	287,330		$	447,506		$	313,046		$	1,089,029		$	703,481
Costs and expenses:
Cost of goods sold		190,602			177,779			182,039			537,683			503,921
Selling, general and administrative expenses		18,512			19,512			21,046			54,782			52,064
Net gain on insurance recoveries		(4,394	)		—			—			(4,394	)		—
		204,720			197,291			203,085			588,071			555,985
Operating income		82,610			250,215			109,961			500,958			147,496
Interest expense, net		(8,641	)		(8,199	)		(8,557	)		(20,414	)		(20,594	)
Pension settlement charge		—			—			—			—			(42,988	)
Non-operating pension and other postretirement employee benefit costs		(3,271	)		(3,271	)		(3,557	)		(9,956	)		(10,670	)
Income before income taxes		70,698			238,745			97,847			470,588			73,244
Income taxes		(5,031	)		(50,840	)		(16,840	)		(85,910	)		(6,431	)
Net income	$	65,667		$	187,905		$	81,007		$	384,678		$	66,813

Net income per share:
Basic	$	0.98		$	2.79		$	1.21		$	5.72		$	0.99
Diluted	$	0.97		$	2.77		$	1.20		$	5.69		$	0.99
Dividends per share	$	0.41		$	0.41		$	0.40		$	1.23		$	1.20
Weighted-average shares outstanding:
Basic		67,315			67,316			67,149			67,275			67,263
Diluted		67,648			67,732			67,528			67,588			67,535

PotlatchDeltic Corporation Condensed Consolidated Balance Sheets Unaudited

(in thousands, except per share amounts)	September 30, 2021			December 31, 2020
*ASSETS*
Current assets:
Cash and cash equivalents	$	592,767		$	252,340
Customer receivables, net		27,789			26,606
Inventories, net		69,862			62,036
Other current assets		24,460			16,136
Total current assets		714,878			357,118
Property, plant and equipment, net		286,034			288,544
Investment in real estate held for development and sale		65,048			72,355
Timber and timberlands, net		1,572,475			1,600,061
Intangible assets, net		15,685			16,270
Other long-term assets		63,747			46,717
Total assets	$	2,717,867		$	2,381,065

*LIABILITIES AND STOCKHOLDERS’ EQUITY*
Current liabilities:
Accounts payable and accrued liabilities	$	87,819		$	93,279
Current portion of long-term debt		42,996			39,981
Current portion of pension and other postretirement employee benefits		6,574			6,574
Total current liabilities		137,389			139,834
Long-term debt		715,122			717,366
Pension and other postretirement employee benefits		126,154			128,807
Deferred tax liabilities, net		26,247			17,740
Other long-term obligations		52,849			72,365
Total liabilities		1,057,761			1,076,112
Commitments and contingencies
Stockholders’ equity:
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,100 and 66,876 shares		67,100			66,876
Additional paid-in capital		1,679,332			1,674,576
Accumulated deficit		(13,561	)		(315,510	)
Accumulated other comprehensive loss		(72,765	)		(120,989	)
Total stockholders’ equity		1,660,106			1,304,953
Total liabilities and stockholders’ equity	$	2,717,867		$	2,381,065

PotlatchDeltic Corporation Condensed Consolidated Statements of Cash Flows Unaudited

	Three Months Ended									Nine Months Ended
(in thousands)	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
*CASH FLOWS FROM OPERATING ACTIVITIES*
Net income	$	65,667		$	187,905		$	81,007		$	384,678		$	66,813
Adjustments:
Depreciation, depletion and amortization		21,534			17,432			20,594			57,365			57,809
Basis of real estate sold		6,697			7,213			5,249			22,733			14,440
Change in deferred taxes		2,659			(928	)		(538	)		3,221			(14,387	)
Pension and other postretirement employee benefits		5,484			5,484			5,917			16,595			17,750
Pension settlement charge		—			—			—			—			42,988
Equity-based compensation expense		2,275			2,140			2,063			6,345			5,928
Net gain on insurance recoveries		(4,394	)		—			—			(4,394	)
Other, net		928			92			(367	)		633			(544	)
Change in working capital and operating-related activities, net		17,072			(43,867	)		(3,691	)		(20,082	)		12,706
Real estate development expenditures		(2,435	)		(1,684	)		(1,713	)		(6,434	)		(4,200	)
Funding of pension and other postretirement employee benefits		(3,585	)		(2,412	)		(5,619	)		(7,418	)		(8,458	)
Net cash provided by operating activities		111,902			171,375			102,902			453,242			190,845

*CASH FLOWS FROM INVESTING ACTIVITIES*
Property, plant and equipment additions		(10,348	)		(8,181	)		(4,371	)		(26,291	)		(14,666	)
Timberlands reforestation and roads		(4,282	)		(3,998	)		(4,569	)		(12,236	)		(12,345	)
Acquisition of timber and timberlands		(258	)		(2,192	)		(8	)		(2,450	)		(4,738	)
Proceeds from insurance recoveries - property, plant & equipment		13,250			—			—			13,250			—
Other, net		358			446			371			993			3,484
Net cash used in investing activities		(1,280	)		(13,925	)		(8,577	)		(26,734	)		(28,265	)

*CASH FLOWS FROM FINANCING ACTIVITIES*
Distributions to common stockholders		(27,489	)		(27,489	)		(26,749	)		(82,462	)		(80,434	)
Repurchase of common stock		—			—			—			—			(15,364	)
Other, net		(2,396	)		(632	)		(506	)		(3,619	)		(1,032	)
Net cash used in financing activities		(29,885	)		(28,121	)		(27,255	)		(86,081	)		(96,830	)
Change in cash, cash equivalents and restricted cash		80,737			129,329			67,070			340,427			65,750
Cash, cash equivalents and restricted cash, beginning		512,030			382,701			82,934			252,340			84,254
Cash, cash equivalents and restricted cash, ending	$	592,767		$	512,030		$	150,004		$	592,767		$	150,004

PotlatchDeltic Corporation Segment Information Unaudited

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(in thousands)	2021			2021			2020			2021			2020
Revenues
Timberlands	$	129,543		$	121,216		$	116,985		$	362,675		$	266,755
Wood Products		187,760			357,673			218,291			814,729			489,507
Real Estate		13,497			15,998			18,151			49,808			42,225
		330,800			494,887			353,427			1,227,212			798,487
Intersegment Timberlands revenues		(43,470	)		(47,381	)		(40,381	)		(138,183	)		(95,006	)
Consolidated revenues	$	287,330		$	447,506		$	313,046		$	1,089,029		$	703,481

Adjusted EBITDDA1
Timberlands	$	76,023		$	77,259		$	59,649		$	221,140		$	120,290
Wood Products		26,566			204,533			81,644			356,654			105,780
Real Estate		9,069			11,788			13,466			37,450			30,062
Corporate		(11,496	)		(12,822	)		(15,361	)		(35,028	)		(34,567	)
Eliminations and adjustments		7,021			(5,774	)		(4,012	)		(3,063	)		(3,235	)
Total Adjusted EBITDDA		107,183			274,984			135,386			577,153			218,330
Interest expense, net		(8,641	)		(8,199	)		(8,557	)		(20,414	)		(20,594	)
Depreciation, depletion and amortization		(21,131	)		(17,029	)		(20,187	)		(56,156	)		(56,590	)
Basis of real estate sold		(6,697	)		(7,213	)		(5,249	)		(22,733	)		(14,440	)
Net gain on insurance recoveries		4,394			—			—			4,394			—
Pension settlement charge		—			—			—			—			(42,988	)
Non-operating pension and other postretirement employee benefits		(3,271	)		(3,271	)		(3,557	)		(9,956	)		(10,670	)
(Loss) gain on disposal of fixed assets		(1,139	)		(527	)		11			(1,700	)		196
Income before income taxes	$	70,698		$	238,745		$	97,847		$	470,588		$	73,244

Depreciation, depletion and amortization
Timberlands	$	11,893		$	10,482		$	13,821		$	33,792		$	37,978
Wood Products		8,879			6,179			5,983			21,261			17,411
Real Estate		162			160			149			477			465
Corporate		197			208			234			626			736
		21,131			17,029			20,187			56,156			56,590
Bond discounts and deferred loan fees2		403			403			407			1,209			1,219
Total depreciation, depletion and amortization	$	21,534		$	17,432		$	20,594		$	57,365		$	57,809

Basis of real estate sold
Real Estate	$	6,703		$	7,219		$	5,257		$	22,751		$	14,973
Eliminations and adjustments		(6	)		(6	)		(8	)		(18	)		(533	)
Total basis of real estate sold	$	6,697		$	7,213		$	5,249		$	22,733		$	14,440

Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA below.
Bond discounts and deferred loan fees are included in interest expense, net in the Condensed Consolidated Statements of Operations.

PotlatchDeltic Corporation Reconciliations Unaudited

	Three Months Ended								Nine Months Ended
	September 30,			June 30,		September 30,			September 30,			September 30,
(in thousands, except per share amount)	2021			2021		2020			2021			2020
Total Adjusted EBITDDA
Net income (GAAP)	$	65,667		$	187,905	$	81,007		$	384,678		$	66,813
Interest expense, net		8,641			8,199		8,557			20,414			20,594
Income taxes		5,031			50,840		16,840			85,910			6,431
Depreciation, depletion and amortization		21,131			17,029		20,187			56,156			56,590
Basis of real estate sold		6,697			7,213		5,249			22,733			14,440
Net gain on insurance recoveries		(4,394	)		—		—			(4,394	)		—
Pension settlement charge		—			—		—			—			42,988
Non-operating pension and other postretirement benefit costs		3,271			3,271		3,557			9,956			10,670
Loss (gain) on disposal of fixed assets		1,139			527		(11	)		1,700			(196	)
Total Adjusted EBITDDA	$	107,183		$	274,984	$	135,386		$	577,153		$	218,330

Adjusted Net Income
Net income (GAAP)	$	65,667		$	187,905	$	81,007		$	384,678		$	66,813
Special items:
Net gain on insurance recoveries, after tax		(3,252	)		—		—			(3,252	)		—
Pension settlement charge, after tax		—			—		—			—			31,811
Adjusted Net Income	$	62,415		$	187,905	$	81,007		$	381,426		$	98,624

Adjusted Net Income Per Diluted Share
Net income per diluted share (GAAP)	$	0.97		$	2.77	$	1.20		$	5.69		$	0.99
Special items:
Net gain on insurance recoveries, after tax		(0.05	)		—		—			(0.05	)		—
Pension settlement charge, after tax		—			—		—			—			0.47
Adjusted Net Income Per Diluted Share	$	0.92		$	2.77	$	1.20		$	5.64		$	1.46

(Investors)
Jerry Richards
509.835.1521

(Media)
Anna Torma
509.835.1558

Source: PotlatchDeltic Corporation

View original content: Businesswire

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REIT Profile

Potlatch Corporation
Symbol: PCH
CIK: 1338749
Exchange: NASDAQ
Founded: 1903 (121 years)
Type of REIT: Equity REIT
Listing Status: Public
Market Capitalization: Mid-Cap
REIT Sector: Timber

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Overall Score: 7.1 | See trend

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Last updated: 2024-07-05 12:57:01 PST