PotlatchDeltic Corporation Reports Fourth Quarter and Full Year 2022 Results

PotlatchDeltic Corporation (Nasdaq: PCH) today reported net income of $3.8 million, or $0.05 per diluted share, on revenues of $253.1 million for the quarter ended December 31, 2022. Excluding after tax special items consisting of CatchMark merger related expenses and an environmental charge, adjusted net income was $9.3 million, or $0.12 per diluted share for the fourth quarter of 2022. Net income was $39.2 million, or $0.58 per diluted share, on revenues of $248.4 million for the quarter ended December 31, 2021. Excluding a net loss on fire damage, adjusted net income was $39.9 million, or $0.59 per diluted share for the fourth quarter of 2021.

Net income for the full year 2022 was $333.9 million, or $4.58 per diluted share, on revenues of $1.3 billion. Excluding after tax special items consisting of a pension settlement charge, a gain on insurance recoveries, CatchMark merger related expenses and an environmental charge, adjusted net income was $350.0 million, or $4.80 per diluted share for 2022. Net income for the full year 2021 was $423.9 million, or $6.26 per diluted share, on revenues of $1.3 billion. Excluding a net gain on insurance recoveries, adjusted net income was $421.4 million, or $6.22 per diluted share for 2021.

2022 Highlights

• Generated Total Adjusted EBITDDA of $574.1 million and Total Adjusted EBITDDA margin of 43%
• Acquired CatchMark Timber Trust, Inc. adding nearly 350,000 acres of superior site index southern timberlands
• Also acquired 46,000 acres of well stocked timberlands in three bolt-on transactions
• Announced $131 million expansion and modernization of Waldo, Arkansas sawmill
• Rebuilt and restarted the large log line at the Ola, Arkansas sawmill
• Returned $208 million to shareholders through regular dividends and a Q4 special dividend
• Repurchased 1.2 million shares for $55 million, or $45 per share
• Maintained strong liquidity position of $643 million as of December 31, 2022

“Each of our businesses delivered exceptional results in 2022 leading to our second highest Total Adjusted EBITDDA on record and marking our third straight year of very strong financial performance,” said Eric Cremers, president and chief executive officer. “2022 was also a very active year for successfully deploying capital, including acquiring nearly 400,000 acres of high-quality timberland and committing to expand and modernize our Waldo, Arkansas sawmill. Additionally, we returned $263 million to shareholders in 2022, including $55 million of share repurchases and a $76 million special dividend. With our disciplined capital allocation strategy and our strong balance sheet and liquidity we are well positioned to continue increasing shareholder value,” stated Mr. Cremers.

Financial Highlights

(in millions, except per share data - unaudited)		Q4 2022				Q3 2022				Q4 2021
Revenues		$	253.1			$	306.7			$	248.4
Net income		$	3.8			$	46.0			$	39.2
Weighted average shares outstanding, diluted (in thousands)			80,578				71,632				67,974
Net income per diluted share		$	0.05			$	0.64			$	0.58
Adjusted Net Income		$	9.3			$	53.2			$	39.9
Adjusted Net Income Per Diluted Share		$	0.12			$	0.74			$	0.59
Total Adjusted EBITDDA		$	52.3			$	101.1			$	75.7
Dividends per share1		$	1.40			$	0.44			$	4.44
Net cash from operations		$	33.5			$	80.3			$	51.6
Cash and cash equivalents		$	343.8			$	484.0			$	296.2
1 The regular dividend was increased 2.3% to $0.45 per quarter in Q4 2022 and a special dividend of $0.95 and $4.00 per share was paid in Q4 2022 and 2021, respectively.

Business Performance: Q4 2022 vs. Q3 2022

Timberlands

Fourth Quarter 2022 Highlights

• Timberlands Adjusted EBITDDA decreased $13.9 million from Q3 2022
• Northern sawlog prices decreased 18% due primarily to lower indexed sawlog prices
• A seasonal decline in Southern harvest volumes was moderated by the first full quarter of CatchMark operations
• Southern sawlog prices increased 3%, reflecting the addition of strong CatchMark markets
• Higher log & haul costs were primarily due to inflationary pressures, including increased diesel costs

(in millions - unaudited)		Q4 2022				Q3 2022				$ Change
Timberlands Revenues		$	121.9			$	134.6			$	(12.7	)
Timberlands Adjusted EBITDDA		$	50.6			$	64.5			$	(13.9	)

Wood Products

Fourth Quarter 2022 Highlights

• Wood Products Adjusted EBITDDA decreased $28.9 million from Q3 2022
• Average lumber price decreased 17% to $473 per MBF in Q4 2022
• Lumber production declined in Q4 2022 leading to lower fixed cost absorption
• Log costs decreased primarily due to lower index pricing in Idaho
• Plywood shipments and price realizations declined on lower demand

(in millions - unaudited)		Q4 2022				Q3 2022				$ Change
Wood Products Revenues		$	156.8			$	193.4			$	(36.6	)
Wood Products Adjusted EBITDDA		$	2.4			$	31.3			$	(28.9	)

Real Estate

Fourth Quarter 2022 Highlights

• Real Estate Adjusted EBITDDA decreased $6.9 million from Q3 2022
• Sold 1,329 acres of rural land at an average price of $2,837 per acre
• Sold 24 residential lots at an average price of $132,000 per lot
• Sold 5 commercial acres at an average of $437,407 per acre

(in millions - unaudited)		Q4 2022				Q3 2022				$ Change
Real Estate Revenues		$	11.7			$	19.0			$	(7.3	)
Real Estate Adjusted EBITDDA		$	7.2			$	14.1			$	(6.9	)

Outlook

“While higher interest rates and their expected impact on housing starts are expected to create headwinds for our operating results in 2023, we continue to remain very bullish on long-term housing-related fundamentals that drive demand in our business. We are encouraged by the recent increase in lumber prices and improvement in housing affordability. During 2023, we expect to harvest 7.7 million tons in our Timberlands segment, ship around 1.1 billion board feet in lumber in our Wood Products segment and sell about 18,000 rural acres and 150 residential lots in our Real Estate segment,” stated Mr. Cremers.

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 income 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, January 31, 2023, 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 February 7, 2023, 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 nearly 2.2 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 and expenses; expected liquidity; the U.S. economic condition, including the housing market and long-term housing-related fundamentals; the success of the company’s business strategies; the strength of the timber markets associated with the merger with CatchMark Timber Trust, Inc.; the company’s capital allocation strategies; favorable capital structure and strong balance sheet; the company’s FY 2023 outlook relating to its timber harvest volumes, lumber shipment volumes and prices, and real estate sales; expected successful implementation of our Waldo, Arkansas sawmill modernization; and similar matters. Words such as “anticipate,” “assumes,” “believe,” “can,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “may,” “on track,” “plan,” “potential,” “predicting,” “project,” “schedule,” “seek,” “should,” “target,” “will,” 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 pandemic disease 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 shortages and disruptions; share price; the successful execution of the company’s strategic plans; the company’s ability and its contractors’ ability to implement the modernization plan for the Waldo sawmill; the company’s ability to meet expectations for the Ola sawmill’s new large log line; 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												Year Ended
		December 31,				September 30,				December 31,				December 31,
(in thousands, except per share amounts)		2022				2022				2021				2022				2021
Revenues		$	253,140			$	306,693			$	248,406			$	1,330,780			$	1,337,435
Costs and expenses:
Cost of goods sold			214,765				220,876				178,163				806,822				715,846
Selling, general and administrative expenses			20,922				18,878				18,650				76,506				73,432
CatchMark merger-related expenses			1,318				26,007				—				27,325				—
Environmental charge			5,550				—				—				5,550				—
(Gain) loss on fire damage			—				(24,913	)			1,033				(34,505	)			(3,361	)
			242,555				240,848				197,846				881,698				785,917
Operating income			10,585				65,845				50,560				449,082				551,518
Interest expense, net			(8,807	)			(8,280	)			(8,861	)			(27,400	)			(29,275	)
Pension settlement charge			—				—				—				(14,165	)			—
Non-operating pension and other postretirement costs			(2,592	)			(1,808	)			(3,271	)			(8,138	)			(13,227	)
Other			(66	)			(1	)			—				(67	)			—
(Loss) income before income taxes			(880	)			55,756				38,428				399,312				509,016
Income taxes			4,723				(9,801	)			754				(65,412	)			(85,156	)
Net income		$	3,843			$	45,955			$	39,182			$	333,900			$	423,860
Net income per share:
Basic		$	0.05			$	0.64			$	0.58			$	4.59			$	6.29
Diluted		$	0.05			$	0.64			$	0.58			$	4.58			$	6.26
Dividends per share1		$	1.40			$	0.44			$	4.44			$	2.72			$	5.67
Weighted-average shares outstanding (in thousands):										.
Basic			80,356				71,486				67,572				72,740				67,352
Diluted			80,578				71,632				67,974				72,922				67,719
1 The regular dividend was increased 2.3% to $0.45 per quarter in Q4 2022 and a special dividend of $0.95 and $4.00 per share was paid in Q4 2022 and 2021, respectively.

PotlatchDeltic Corporation
Condensed Consolidated Balance Sheets
Unaudited
		At December 31,
(in thousands, except per share amounts)		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	343,809			$	296,151
Customer receivables, net			22,813				31,028
Inventories, net			67,958				72,369
Other current assets			36,955				21,630
Total current assets			471,535				421,178
Property, plant and equipment, net			318,184				292,320
Investment in real estate held for development and sale			55,490				65,604
Timber and timberlands, net			2,508,372				1,682,671
Intangible assets, net			17,420				15,491
Other long-term assets			179,554				57,951
Total assets		$	3,550,555			$	2,535,215
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	94,861			$	78,209
Current portion of long-term debt			39,979				42,977
Current portion of pension and other postretirement employee benefits			4,926				4,993
Total current liabilities			139,766				126,179
Long-term debt			992,701				715,279
Pension and other postretirement employee benefits			77,396				83,674
Deferred tax liabilities, net			41,790				34,874
Other long-term obligations			35,749				49,076
Total liabilities			1,287,402				1,009,082
Commitments and contingencies
Stockholders’ equity:
Common stock, $1 par value			79,683				69,064
Additional paid-in capital			2,294,797				1,781,217
Accumulated deficit			(208,979	)			(280,910	)
Accumulated other comprehensive income (loss)			97,652				(43,238	)
Total stockholders’ equity			2,263,153				1,526,133
Total liabilities and stockholders' equity		$	3,550,555			$	2,535,215

PotlatchDeltic Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
		Three Months Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(in thousands)		2022				2022				2021				2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	3,843			$	45,955			$	39,182			$	333,900			$	423,860
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization			30,274				27,707				20,060				98,234				77,425
Basis of real estate sold			4,897				6,845				4,627				29,921				27,360
Change in deferred taxes			(3,898	)			730				(3,196	)			(5,257	)			25
Pension and other postretirement benefits			4,323				3,539				5,484				15,259				22,079
Pension settlement charge			—				—				—				14,165				—
Equity-based compensation expense			2,356				11,717				2,262				18,497				8,607
(Gain) loss on fire damage			—				(24,913	)			1,033				(34,505	)			(3,361	)
Other, net			(780	)			144				(270	)			(1,235	)			363
Change in working capital and operating-related activities, net			(4,660	)			(5,901	)			(13,117	)			9,411				(33,199	)
Real estate development expenditures			(1,116	)			(1,796	)			(2,795	)			(8,102	)			(9,229	)
Funding of pension and other postretirement employee benefits			(1,775	)			(1,026	)			(1,626	)			(5,065	)			(9,044	)
Proceeds from insurance recoveries			—				17,250				—				26,678				—
Net cash from operating activities			33,464				80,251				51,644				491,901				504,886
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment additions			(12,976	)			(7,223	)			(12,656	)			(56,976	)			(38,947	)
Timberlands reforestation and roads			(5,498	)			(3,832	)			(4,165	)			(17,718	)			(16,401	)
Acquisition of timber and timberlands			(14,029	)			(53,863	)			(17,616	)			(110,110	)			(20,066	)
Proceeds from property insurance			8,750				—				1,750				8,750				15,000
Cash acquired in CatchMark merger			—				23,571				—				23,571				—
Other, net			4,028				2,318				276				4,963				1,269
Net cash from investing activities			(19,725	)			(39,029	)			(32,411	)			(147,520	)			(59,145	)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to common stockholders			(111,555	)			(35,530	)			(305,779	)			(208,133	)			(388,241	)
Repurchase of common stock			(50,022	)			(371	)			—				(54,549	)			—
Proceeds from long-term debt			40,000				277,500				40,000				317,500				40,000
Repayment of long-term debt			(40,000	)			(300,000	)			(46,366	)			(343,000	)			(46,366	)
Other, net			(1,260	)			(4,026	)			(3,083	)			(7,380	)			(6,702	)
Net cash from financing activities			(162,837	)			(62,427	)			(315,228	)			(295,562	)			(401,309	)
Change in cash, cash equivalents and restricted cash			(149,098	)			(21,205	)			(295,995	)			48,819				44,432
Cash, cash equivalents and restricted cash at beginning of period			494,689				515,894				592,767				296,772				252,340
Cash, cash equivalents and restricted cash at end of period1		$	345,591			$	494,689			$	296,772			$	345,591			$	296,772
1 Includes $1.8 million, $10.7 million and $0.6 million at December 31, 2022, September 30, 2022 and December 31, 2021, respectively, intended to be reinvested in timber and timberlands and classified as restricted cash in Other long-term assets in the Condensed Consolidated Balance Sheets.

PotlatchDeltic Corporation
Segment Information
Unaudited
		Three months ended												Year Ended
		December 31,				September 30,				December 31,				December 31,
(in thousands)		2022				2022				2021				2022				2021
Revenues
Timberlands		$	121,871			$	134,576			$	86,772			$	485,590			$	449,447
Wood Products			156,805				193,431				174,158				912,612				988,888
Real Estate			11,682				19,008				14,005				91,491				63,813
			290,358				347,015				274,935				1,489,693				1,502,148
Intersegment Timberlands revenues			(37,218	)			(40,322	)			(26,529	)			(158,913	)			(164,713	)
Consolidated revenues		$	253,140			$	306,693			$	248,406			$	1,330,780			$	1,337,435
Adjusted EBITDDA1
Timberlands		$	50,567			$	64,482			$	41,804			$	249,373			$	262,944
Wood Products			2,442				31,258				37,204				290,907				393,858
Real Estate			7,178				14,140				10,007				73,258				47,457
Corporate			(13,189	)			(12,629	)			(12,365	)			(49,314	)			(47,393	)
Eliminations and adjustments			5,335				3,839				(932	)			9,931				(3,995	)
Total Adjusted EBITDDA			52,333				101,090				75,718				574,155				652,871
Interest expense, net2			(8,807	)			(8,280	)			(8,861	)			(27,400	)			(29,275	)
Depreciation, depletion and amortization			(29,862	)			(27,329	)			(19,477	)			(96,700	)			(75,633	)
Basis of real estate sold			(4,897	)			(6,845	)			(4,627	)			(29,921	)			(27,360	)
CatchMark merger-related expenses			(1,318	)			(26,007	)			—				(27,325	)			—
Environmental charge			(5,550	)			—				—				(5,550	)			—
Gain (loss) on fire damage			—				24,913				(1,033	)			34,505				3,361
Pension settlement charge			—				—				—				(14,165	)			—
Non-operating pension and other postretirement employee benefits			(2,592	)			(1,808	)			(3,271	)			(8,138	)			(13,227	)
(Loss) gain on fixed assets			(121	)			23				(21	)			(82	)			(1,721	)
Other			(66	)			(1	)			—				(67	)			—
(Loss) income before income taxes		$	(880	)		$	55,756			$	38,428			$	399,312			$	509,016
Depreciation, depletion and amortization
Timberlands		$	18,845			$	16,963			$	11,611			$	59,532			$	45,403
Wood Products			10,727				10,069				7,541				35,953				28,802
Real Estate			177				175				163				695				640
Corporate			113				122				162				520				788
			29,862				27,329				19,477				96,700				75,633
Bond discounts and deferred loan fees2			412				378				583				1,534				1,792
Total depreciation, depletion and amortization		$	30,274			$	27,707			$	20,060			$	98,234			$	77,425
Basis of real estate sold
Real Estate		$	4,899			$	6,845			$	4,630			$	29,932			$	27,381
Eliminations and adjustments			(2	)			—				(3	)			(11	)			(21	)
Total basis of real estate sold		$	4,897			$	6,845			$	4,627			$	29,921			$	27,360
1 Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA below.
2 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												Year ended
		December 31,				September 30,				December 31,				December 31,
(in thousands, except per share amounts)		2022				2022				2021				2022				2021
Adjusted EBITDDA
Net income (GAAP)		$	3,843			$	45,955			$	39,182			$	333,900			$	423,860
Interest, net			8,807				8,280				8,861				27,400				29,275
Income taxes			(4,723	)			9,801				(754	)			65,412				85,156
Depreciation, depletion and amortization			29,862				27,329				19,477				96,700				75,633
Basis of real estate sold			4,897				6,845				4,627				29,921				27,360
CatchMark merger-related expenses			1,318				26,007				—				27,325				—
(Gain) loss on fire damage			—				(24,913	)			1,033				(34,505	)			(3,361	)
Environmental charge			5,550				—				—				5,550				—
Pension settlement charge			—				—				—				14,165				—
Non-operating pension and other postretirement benefit costs			2,592				1,808				3,271				8,138				13,227
Loss (gain) on fixed assets			121				(23	)			21				82				1,721
Other			66				1				—				67				—
Total Adjusted EBITDDA		$	52,333			$	101,090			$	75,718			$	574,155			$	652,871
Adjusted Net Income
Net income (GAAP)		$	3,843			$	45,955			$	39,182			$	333,900			$	423,860
Special items after tax:
CatchMark merger-related expenses			1,318				25,823				—				27,140				—
(Gain) loss on fire damage			—				(18,559	)			748				(25,706	)			(2,504	)
Pension settlement charge			—				—				—				10,553				—
Environmental charge			4,135				—				—				4,135				—
Adjusted Net Income		$	9,296			$	53,219			$	39,930			$	350,022			$	421,356
Adjusted Net Income Per Diluted Share
Net income per diluted share (GAAP)		$	0.05			$	0.64			$	0.58			$	4.58			$	6.26
Special items after tax:
CatchMark merger-related expenses			0.02				0.36				—				0.37				—
(Gain) loss on fire damage			—				(0.26	)			0.01				(0.35	)			(0.04	)
Pension settlement charge			—				—				—				0.14				—
Environmental charge			0.05				—				—				0.06				—
Adjusted Net Income Per Diluted Share		$	0.12			$	0.74			$	0.59			$	4.80			$	6.22

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230130005621/en/

The PotlatchDeltic Corporation Stock at the time of publication of the news with a fall of -1,11 % to 44,36USD on Lang & Schwarz stock exchange (30. Januar 2023, 22:33 Uhr).