PotlatchDeltic Corporation Reports Third Quarter 2023 Results

PotlatchDeltic Corporation (Nasdaq: PCH) today reported net income of $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. Net income was $46.0 million, or $0.64 per diluted share, on revenues of $306.7 million for the quarter ended September 30, 2022. Excluding an after-tax gain on insurance recoveries and CatchMark merger-related expenses, adjusted net income was $53.2 million, or $0.74 per diluted share, for the third quarter of 2022.

Third Quarter 2023 Highlights

• Generated Total Adjusted EBITDDA of $56.3 million and Total Adjusted EBITDDA margin of 21.2%
• Repurchased 283,000 shares for $12.7 million, or $45 per share
• Maintained strong liquidity position of $602 million as of September 30, 2023

“Our third quarter 2023 results reflect improved financial performance across all of our business segments,” said Eric Cremers, president and chief executive officer. “Each of our teams delivered solid results amid the backdrop of higher interest rates and an uncertain macroeconomic environment. During the third quarter, we continued to focus on strategically deploying our capital including returning $49 million to shareholders in the form of dividends and share repurchases. We remain positive on long-term housing-related fundamentals that drive demand in our business. Our balance sheet and liquidity remains strong, providing flexibility to navigate the current economic environment and grow shareholder value over the long-term," stated Mr. Cremers.

Financial Highlights

($ in millions, except per share data)		Q3 2023				Q2 2023				Q3 2022
Revenues		$	265.5			$	246.1			$	306.7
Net income		$	23.7			$	22.3			$	46.0
Weighted average shares outstanding, diluted (in thousands)			80,379				80,416				71,623
Net income per diluted share		$	0.29			$	0.28			$	0.64
Adjusted Net Income1		$	11.4			$	5.2			$	53.2
Adjusted Net Income per diluted share1		$	0.14			$	0.06			$	0.74
Total Adjusted EBITDDA1		$	56.3			$	45.5			$	101.1
Total Adjusted EBITDDA Margin1			21.2	%			18.5	%			33.0	%
Dividends per share2		$	0.45			$	0.45			$	0.44
Net cash from operations		$	41.0			$	37.2			$	80.3
Cash and cash equivalents		$	302.8			$	331.2			$	484.0
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.
2 The regular dividend was increased 2.3% to $0.45 per quarter in Q4 2022.

Business Performance: Q3 2023 vs. Q2 2023

Timberlands

Third Quarter 2023 Highlights

• Timberlands Adjusted EBITDDA increased $12.6 million from Q2 2023
• Northern and Southern harvest volumes increased seasonally
• Northern sawlog prices increased 12% primarily due to higher indexed sawlog prices
• Southern sawlog and pulpwood prices were stable

($ in millions)		Q3 2023				Q2 2023				$ Change
Timberlands Revenues		$	109.8			$	88.7			$	21.1
Timberlands Adjusted EBITDDA1		$	42.0			$	29.4			$	12.6
1 Refer to "Segment Information" below for additional information.

Wood Products

Third Quarter 2023 Highlights

• Wood Products Adjusted EBITDDA increased $3.2 million from Q2 2023
• Average lumber price increased 1% to $481 per MBF, or thousand board feet, in Q3 2023
• Per-unit log costs decreased on lower log costs and improved recoveries

($ in millions)		Q3 2023				Q2 2023				$ Change
Wood Products Revenues		$	165.1			$	167.7			$	(2.6	)
Wood Products Adjusted EBITDDA1		$	15.1			$	11.9			$	3.2
1 Refer to "Segment Information" below for additional information.

Real Estate

Third Quarter 2023 Highlights

• Real Estate Adjusted EBITDDA increased $2.0 million from Q2 2023
• Sold 3,275 acres of rural land at an average price of $3,546 / acre
• Sold 32 residential lots at an average price of $89,122 / lot
• Sold 1 commercial lot for $1.4 million, or $972,222 / acre

($ in millions)		Q3 2023				Q2 2023				$ Change
Real Estate Revenues		$	19.2			$	17.0			$	2.2
Real Estate Adjusted EBITDDA1		$	14.2			$	12.2			$	2.0
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 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, 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 and Adjusted Net Income 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 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 above website.

A replay of the conference call will be available two hours following the call until November 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 Corporation (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; long-term housing market fundamentals; disciplined and opportunistic capital allocation strategy; and similar matters. Words such as “over the long term,” 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; 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)	2023				2023						2022				2023				2022
Revenues	$	265,509			$	246,101					$	306,693			$	769,572			$	1,077,640
Costs and expenses:
Cost of goods sold		226,303				215,063						220,876				665,716				592,057
Selling, general and administrative expenses		19,303				17,585						18,878				55,118				55,584
CatchMark merger-related expenses		—				244						26,007				2,453				26,007
Gain on fire damage		(16,326	)			(23,110	)					(24,913	)			(39,436	)			(34,505	)
		229,280				209,782						240,848				683,851				639,143
Operating income		36,229				36,319						65,845				85,721				438,497
Interest expense, net		(7,971	)			(7,613	)					(8,280	)			(15,783	)			(18,593	)
Pension settlement charge		—				—						—				—				(14,165	)
Non-operating pension and other postretirement employee benefit costs		(228	)			(229	)					(1,808	)			(685	)			(5,546	)
Other		370				258						(1	)			638				(1	)
Income before income taxes		28,400				28,735						55,756				69,891				400,192
Income taxes		(4,725	)			(6,429	)					(9,801	)			(7,650	)			(70,135	)
Net income	$	23,675			$	22,306					$	45,955			$	62,241			$	330,057
Net income per share:
Basic	$	0.30			$	0.28					$	0.64			$	0.78			$	4.70
Diluted	$	0.29			$	0.28					$	0.64			$	0.78			$	4.69
Dividends per share	$	0.45			$	0.45					$	0.44			$	1.35			$	1.32
Weighted-average shares outstanding:
Basic		80,132				80,145						71,486				80,102				70,171
Diluted		80,379				80,416						71,632				80,279				70,308

PotlatchDeltic Corporation Condensed Consolidated Balance Sheets Unaudited
(in thousands, except per share amounts)		September 30, 2023				December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	302,799			$	343,809
Customer receivables, net			30,762				22,813
Inventories, net			82,537				67,958
Other current assets			56,606				36,955
Total current assets			472,704				471,535
Property, plant and equipment, net			334,350				318,184
Investment in real estate held for development and sale			55,928				55,490
Timber and timberlands, net			2,459,508				2,508,372
Intangible assets, net			16,085				17,420
Other long-term assets			209,703				179,554
Total assets		$	3,548,278			$	3,550,555
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	115,334			$	94,861
Current portion of long-term debt			39,996				39,979
Current portion of pension and other postretirement employee benefits			4,926				4,926
Total current liabilities			160,256				139,766
Long-term debt			993,562				992,701
Pension and other postretirement employee benefits			80,581				77,396
Deferred tax liabilities, net			38,419				41,790
Other long-term obligations			36,363				35,749
Total liabilities			1,309,181				1,287,402
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value, 200,000 and 100,000 shares authorized and 79,628 and 79,683 shares issued and outstanding			79,628				79,683
Additional paid-in capital			2,301,301				2,294,797
Accumulated deficit			(267,725	)			(208,979	)
Accumulated other comprehensive income			125,893				97,652
Total stockholders’ equity			2,239,097				2,263,153
Total liabilities and stockholders' equity		$	3,548,278			$	3,550,555

PotlatchDeltic Corporation Condensed Consolidated Statements of Cash Flows Unaudited
	Three Months Ended												Nine Months Ended
(in thousands)	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	23,675			$	22,306			$	45,955			$	62,241			$	330,057
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization		30,658				27,496				27,707				90,327				67,960
Basis of real estate sold		6,109				4,884				6,845				21,624				25,024
Change in deferred taxes		(1,764	)			(2,609	)			730				(3,979	)			(1,359	)
Pension and other postretirement employee benefits		1,610				1,612				3,539				4,833				10,936
Pension settlement charge		—				—				—				—				14,165
Equity-based compensation expense		2,616				1,577				11,717				6,472				16,141
Gain on fire damage		(16,326	)			(23,110	)			(24,913	)			(39,436	)			(34,505	)
Interest received under swaps with other-than-insignificant financing element		(6,884	)			(6,313	)			—				(18,651	)			—
Other, net		1,792				1,911				144				5,648				(455	)
Change in working capital and operating-related activities, net		(9,773	)			2,871				(5,901	)			(24,107	)			14,071
Real estate development expenditures		(2,939	)			(1,896	)			(1,796	)			(7,243	)			(6,986	)
Funding of pension and other postretirement employee benefits		128				(1,217	)			(1,026	)			(2,176	)			(3,290	)
Proceeds from insurance recoveries		12,049				9,706				17,250				21,755				26,678
Net cash from operating activities		40,951				37,218				80,251				117,308				458,437
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment additions		(17,933	)			(5,880	)			(7,223	)			(28,068	)			(44,000	)
Timberlands reforestation and roads		(6,299	)			(4,596	)			(3,832	)			(17,013	)			(12,220	)
Acquisition of timber and timberlands		(55	)			(1,621	)			(53,863	)			(1,676	)			(96,081	)
Proceeds from property insurance		1,356				—				—				1,356				—
Cash acquired in CatchMark merger		—				—				23,571				—				23,571
Interest received under swaps with other-than-insignificant financing element		6,375				5,849				—				17,279				—
Other, net		36				242				2,318				700				935
Net cash from investing activities		(16,520	)			(6,006	)			(39,029	)			(27,422	)			(127,795	)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to common stockholders		(35,960	)			(35,958	)			(35,530	)			(107,880	)			(96,578	)
Repurchase of common stock		(11,012	)			(394	)			(371	)			(11,406	)			(4,527	)
Proceeds from issuance of long-term debt		—				—				277,500				—				277,500
Repayment of long-term debt		—				—				(300,000	)			—				(303,000	)
Other, net		(360	)			(1,117	)			(4,026	)			(2,315	)			(6,120	)
Net cash from financing activities		(47,332	)			(37,469	)			(62,427	)			(121,601	)			(132,725	)
Change in cash, cash equivalents and restricted cash		(22,901	)			(6,257	)			(21,205	)			(31,715	)			197,917
Cash, cash equivalents and restricted cash, beginning		336,777				343,034				515,894				345,591				296,772
Cash, cash equivalents and restricted cash, ending1	$	313,876			$	336,777			$	494,689			$	313,876			$	494,689
1 Includes $11.1 million, $5.6 million and $10.7 million at September 30, 2023, June 30, 2023 and September 30, 2022, 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)	2023				2023				2022				2023				2022
Revenues
Timberlands	$	109,808			$	88,617			$	134,576			$	313,663			$	363,719
Wood Products		165,108				167,669				193,431				485,572				755,806
Real Estate		19,152				17,064				19,008				60,079				79,809
		294,068				273,350				347,015				859,314				1,199,334
Intersegment Timberlands revenues		(28,559	)			(27,243	)			(40,322	)			(89,736	)			(121,694	)
Other intersegment revenues		—				(6	)			—				(6	)			—
Consolidated revenues	$	265,509			$	246,101			$	306,693			$	769,572			$	1,077,640
Adjusted EBITDDA1
Timberlands	$	42,062			$	29,316			$	64,482			$	118,017			$	198,806
Wood Products		15,039				11,967				31,258				26,975				288,465
Real Estate		14,165				12,237				14,140				45,867				66,080
Corporate		(11,696	)			(10,521	)			(12,629	)			(32,958	)			(36,125	)
Eliminations and adjustments		(3,292	)			2,446				3,839				1,599				4,596
Total Adjusted EBITDDA		56,278				45,445				101,090				159,500				521,822
Interest expense, net2		(7,971	)			(7,613	)			(8,280	)			(15,783	)			(18,593	)
Depreciation, depletion and amortization		(30,248	)			(27,087	)			(27,329	)			(89,099	)			(66,838	)
Basis of real estate sold		(6,109	)			(4,884	)			(6,845	)			(21,624	)			(25,024	)
CatchMark merger-related expenses		—				(244	)			(26,007	)			(2,453	)			(26,007	)
Gain on fire damage		16,326				23,110				24,913				39,436				34,505
Pension settlement charge		—				—				—				—				(14,165	)
Non-operating pension and other postretirement employee benefits		(228	)			(229	)			(1,808	)			(685	)			(5,546	)
(Loss) gain on disposal of fixed assets		(18	)			(21	)			23				(39	)			39
Other		370				258				(1	)			638				(1	)
Income before income taxes	$	28,400			$	28,735			$	55,756			$	69,891			$	400,192
Depreciation, depletion and amortization
Timberlands	$	19,267			$	15,895			$	16,963			$	55,623			$	40,687
Wood Products		10,740				10,948				10,069				32,723				25,226
Real Estate		120				121				175				397				518
Corporate		121				123				122				356				407
		30,248				27,087				27,329				89,099				66,838
Bond discounts and deferred loan fees2		410				409				378				1,228				1,122
Total depreciation, depletion and amortization	$	30,658			$	27,496			$	27,707			$	90,327			$	67,960
Basis of real estate sold
Real Estate	$	6,111			$	4,887			$	6,845			$	21,629			$	25,033
Eliminations and adjustments		(2	)			(3	)			—				(5	)			(9	)
Total basis of real estate sold	$	6,109			$	4,884			$	6,845			$	21,624			$	25,024
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 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 amount)		2023				2023				2022				2023				2022
Total Adjusted EBITDDA1
Net income (GAAP)		$	23,675			$	22,306			$	45,955			$	62,241			$	330,057
Interest expense, net			7,971				7,613				8,280				15,783				18,593
Income taxes			4,725				6,429				9,801				7,650				70,135
Depreciation, depletion and amortization			30,248				27,087				27,329				89,099				66,838
Basis of real estate sold			6,109				4,884				6,845				21,624				25,024
CatchMark merger-related expenses			—				244				26,007				2,453				26,007
Gain on fire damage			(16,326	)			(23,110	)			(24,913	)			(39,436	)			(34,505	)
Pension settlement charge			—				—				—				—				14,165
Non-operating pension and other postretirement benefit costs			228				229				1,808				685				5,546
Loss (gain) on disposal of fixed assets			18				21				(23	)			39				(39	)
Other			(370	)			(258	)			1				(638	)			1
Total Adjusted EBITDDA		$	56,278			$	45,445			$	101,090			$	159,500			$	521,822
Adjusted Net Income1
Net income (GAAP)		$	23,675			$	22,306			$	45,955			$	62,241			$	330,057
Special items after tax:
CatchMark merger-related expenses			—				244				25,823				2,453				25,823
Gain on fire damage			(12,244	)			(17,333	)			(18,559	)			(29,577	)			(25,706	)
Pension settlement charge			—				—				—				—				10,553
Adjusted Net Income		$	11,431			$	5,217			$	53,219			$	35,117			$	340,727
Adjusted Net Income Per Diluted Share1
Net income per diluted share (GAAP)		$	0.29			$	0.28			$	0.64			$	0.78			$	4.69
Special items after tax:
CatchMark merger-related expenses			—				—				0.36				0.03				0.37
Gain on fire damage			(0.15	)			(0.22	)			(0.26	)			(0.37	)			(0.37	)
Pension settlement charge			—				—				—				—				0.15
Adjusted Net Income Per Diluted Share		$	0.14			$	0.06			$	0.74			$	0.44			$	4.84
1 See "Non-GAAP Measures" above for further details on management's use of these measures.

 

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The PotlatchDeltic Corporation Stock at the time of publication of the news with a raise of +0,24 % to 42,64USD on Nasdaq stock exchange (30. Oktober 2023, 21:01 Uhr).