SPOKANE, Washington
,
July 31, 2023
(press release)
–
Second Quarter 2023 Highlights “Our second quarter 2023 results reflect solid performance across all of our business segments while navigating through an uncertain macroeconomic environment,” said Eric Cremers, president and chief executive officer. “We are encouraged by recent favorable housing data and the upward trend in lumber prices. Looking further ahead, we remain positive on long-term housing-related fundamentals that drive demand in our business. We are well positioned with a strong balance sheet and a portfolio of high-quality assets to grow shareholder value under a disciplined and opportunistic capital allocation strategy," stated Mr. Cremers. Financial Highlights ($ in millions, except per share data) Q2 2023 Q1 2023 Q2 2022 Revenues $ 246.1 $ 258.0 $ 359.6 Net income $ 22.3 $ 16.3 $ 120.2 Weighted average shares outstanding, diluted (in thousands) 80,416 80,167 69,791 Net income per diluted share $ 0.28 $ 0.20 $ 1.72 Adjusted Net Income $ 5.2 $ 18.5 $ 112.9 Adjusted Net Income per diluted share $ 0.06 $ 0.23 $ 1.61 Total Adjusted EBITDDA $ 45.5 $ 57.7 $ 175.1 Dividends per share1 $ 0.45 $ 0.45 $ 0.44 Net cash from operations $ 37.2 $ 39.1 $ 147.9 Cash and cash equivalents $ 331.2 $ 325.6 $ 511.2 The regular dividend was increased 2.3% to $0.45 per quarter in Q4 2022. Business Performance: Q2 2023 vs. Q1 2023 Timberlands Second Quarter 2023 Highlights ($ in millions) Q2 2023 Q1 2023 $ Change Timberlands Revenues $ 88.7 $ 115.2 $ (26.5 ) Timberlands Adjusted EBITDDA $ 29.4 $ 46.6 $ (17.2 ) Wood Products Second Quarter 2023 Highlights ($ in millions) Q2 2023 Q1 2023 $ Change Wood Products Revenues $ 167.7 $ 152.8 $ 14.9 Wood Products Adjusted EBITDDA $ 11.9 $ — $ 11.9 Real Estate Second Quarter 2023 Highlights ($ in millions) Q2 2023 Q1 2023 $ Change Real Estate Revenues $ 17.0 $ 23.9 $ (6.9 ) Real Estate Adjusted EBITDDA $ 12.2 $ 19.5 $ (7.3 ) 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. Total Adjusted EBITDDA margin is calculated as Total Adjusted EBITDDA divided by revenues. 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, August 1, 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 August 8, 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; long-term housing market fundamentals and lumber prices; disciplined and opportunistic capital allocation strategy; and similar matters. Words such as “looking ahead,” 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 Six Months Ended June 30, March 31, June 30, June 30, June 30, (in thousands, except per share amounts) 2023 2023 2022 2023 2022 Revenues $ 246,101 $ 257,962 $ 359,597 $ 504,063 $ 770,947 Costs and expenses: Cost of goods sold 215,063 224,350 191,334 439,413 371,181 Selling, general and administrative expenses 17,585 18,230 20,412 35,815 36,706 CatchMark merger-related expenses 244 2,209 — 2,453 — Gain on fire damage (23,110 ) — (9,868 ) (23,110 ) (9,592 ) 209,782 244,789 201,878 454,571 398,295 Operating income 36,319 13,173 157,719 49,492 372,652 Interest expense, net (7,613 ) (199 ) (7,419 ) (7,812 ) (10,313 ) Pension settlement charge — — — — (14,165 ) Non-operating pension and other postretirement employee benefit costs (229 ) (228 ) (1,809 ) (457 ) (3,738 ) Other 258 10 — 268 — Income before income taxes 28,735 12,756 148,491 41,491 344,436 Income taxes (6,429 ) 3,504 (28,269 ) (2,925 ) (60,334 ) Net income $ 22,306 $ 16,260 $ 120,222 $ 38,566 $ 284,102 Net income per share: Basic $ 0.28 $ 0.20 $ 1.73 $ 0.48 $ 4.09 Diluted $ 0.28 $ 0.20 $ 1.72 $ 0.48 $ 4.07 Dividends per share $ 0.45 $ 0.45 $ 0.44 $ 0.90 $ 0.88 Weighted-average shares outstanding: Basic 80,145 80,027 69,580 80,087 69,502 Diluted 80,416 80,167 69,791 80,297 69,731 PotlatchDeltic Corporation Condensed Consolidated Balance Sheets Unaudited (in thousands, except per share amounts) June 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 331,225 $ 343,809 Customer receivables, net 32,903 22,813 Inventories, net 70,663 67,958 Other current assets 57,877 36,955 Total current assets 492,668 471,535 Property, plant and equipment, net 306,978 318,184 Investment in real estate held for development and sale 55,059 55,490 Timber and timberlands, net 2,476,054 2,508,372 Intangible assets, net 16,530 17,420 Other long-term assets 175,062 179,554 Total assets $ 3,522,351 $ 3,550,555 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 96,093 $ 94,861 Current portion of long-term debt 39,990 39,979 Current portion of pension and other postretirement employee benefits 4,926 4,926 Total current liabilities 141,009 139,766 Long-term debt 993,275 992,701 Pension and other postretirement employee benefits 78,666 77,396 Deferred tax liabilities, net 39,624 41,790 Other long-term obligations 36,608 35,749 Total liabilities 1,289,182 1,287,402 Commitments and contingencies Stockholders' equity: Common stock, $1 par value, 200,000 and 100,000 shares authorized, and 79,911 and 79,683 shares issued and outstanding 79,911 79,683 Additional paid-in capital 2,298,593 2,294,797 Accumulated deficit (242,896 ) (208,979 ) Accumulated other comprehensive income 97,561 97,652 Total stockholders’ equity 2,233,169 2,263,153 Total liabilities and stockholders' equity $ 3,522,351 $ 3,550,555 PotlatchDeltic Corporation Condensed Consolidated Statements of Cash Flows Unaudited Three Months Ended Six Months Ended (in thousands) June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 June 30, 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 22,306 $ 16,260 $ 120,222 $ 38,566 $ 284,102 Adjustments to reconcile net income to net cash from operating activities: Depreciation, depletion and amortization 27,496 32,173 20,379 59,669 40,253 Basis of real estate sold 4,884 10,631 7,325 15,515 18,179 Change in deferred taxes (2,609 ) 394 34 (2,215 ) (2,089 ) Pension and other postretirement employee benefits 1,612 1,611 3,540 3,223 7,397 Pension settlement charge — — — — 14,165 Equity-based compensation expense 1,577 2,279 2,368 3,856 4,424 Gain on fire damage (23,110 ) — (9,868 ) (23,110 ) (9,592 ) Interest received under swaps with other-than-insignificant financing element (6,313 ) (5,454 ) — (11,767 ) — Other, net 1,911 1,945 (308 ) 3,856 (599 ) Change in working capital and operating-related activities, net 2,871 (17,205 ) (1,236 ) (14,334 ) 19,972 Real estate development expenditures (1,896 ) (2,408 ) (3,029 ) (4,304 ) (5,190 ) Funding of pension and other postretirement employee benefits (1,217 ) (1,087 ) (968 ) (2,304 ) (2,264 ) Proceeds from insurance recoveries 9,706 — 9,428 9,706 9,428 Net cash from operating activities 37,218 39,139 147,887 76,357 378,186 CASH FLOWS FROM INVESTING ACTIVITIES Property, plant and equipment additions (5,880 ) (4,255 ) (24,211 ) (10,135 ) (36,777 ) Timberlands reforestation and roads (4,596 ) (6,118 ) (3,740 ) (10,714 ) (8,388 ) Acquisition of timber and timberlands (1,621 ) — (42,218 ) (1,621 ) (42,218 ) Interest received under swaps with other-than-insignificant financing element 5,849 5,055 — 10,904 — Other, net 242 422 (1,475 ) 664 (1,383 ) Net cash from investing activities (6,006 ) (4,896 ) (71,644 ) (10,902 ) (88,766 ) CASH FLOWS FROM FINANCING ACTIVITIES Distributions to common stockholders (35,958 ) (35,962 ) (30,524 ) (71,920 ) (61,048 ) Repurchase of common stock (394 ) — (4,156 ) (394 ) (4,156 ) Repayment of long-term debt — — — — (3,000 ) Other, net (1,117 ) (838 ) (1,023 ) (1,955 ) (2,094 ) Net cash from financing activities (37,469 ) (36,800 ) (35,703 ) (74,269 ) (70,298 ) Change in cash, cash equivalents and restricted cash (6,257 ) (2,557 ) 40,540 (8,814 ) 219,122 Cash, cash equivalents and restricted cash, beginning 343,034 345,591 475,354 345,591 296,772 Cash, cash equivalents and restricted cash, ending1 $ 336,777 $ 343,034 $ 515,894 $ 336,777 $ 515,894 1 Includes $5.6 million, $17.4 million and $4.7 million at June 30, 2023, March 31, 2023 and June 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 Six Months Ended June 30, March 31, June 30, June 30, June 30, (in thousands) 2023 2023 2022 2023 2022 Revenues Timberlands $ 88,617 $ 115,238 $ 105,486 $ 203,855 $ 229,143 Wood Products 167,669 152,795 266,633 320,464 562,375 Real Estate 17,064 23,863 26,736 40,927 60,801 273,350 291,896 398,855 565,246 852,319 Intersegment Timberlands revenues (27,243 ) (33,934 ) (39,258 ) (61,177 ) (81,372 ) Other intersegment revenues (6 ) — — (6 ) — Consolidated revenues $ 246,101 $ 257,962 $ 359,597 $ 504,063 $ 770,947 Adjusted EBITDDA1 Timberlands $ 29,316 $ 46,639 $ 57,890 $ 75,955 $ 134,324 Wood Products 11,967 (31 ) 107,256 11,936 257,207 Real Estate 12,237 19,465 21,816 31,702 51,940 Corporate (10,521 ) (10,741 ) (13,912 ) (21,262 ) (23,496 ) Eliminations and adjustments 2,446 2,445 2,120 4,891 757 Total Adjusted EBITDDA 45,445 57,777 175,170 103,222 420,732 Interest expense, net2 (7,613 ) (199 ) (7,419 ) (7,812 ) (10,313 ) Depreciation, depletion and amortization (27,087 ) (31,764 ) (20,007 ) (58,851 ) (39,509 ) Basis of real estate sold (4,884 ) (10,631 ) (7,325 ) (15,515 ) (18,179 ) CatchMark merger-related expenses (244 ) (2,209 ) — (2,453 ) — Gain on fire damage 23,110 — 9,868 23,110 9,592 Pension settlement charge — — — — (14,165 ) Non-operating pension and other postretirement employee benefits (229 ) (228 ) (1,809 ) (457 ) (3,738 ) (Loss) gain on disposal of fixed assets (21 ) — 13 (21 ) 16 Other 258 10 — 268 — Income before income taxes $ 28,735 $ 12,756 $ 148,491 $ 41,491 $ 344,436 Depreciation, depletion and amortization Timberlands $ 15,895 $ 20,461 $ 11,563 $ 36,356 $ 23,724 Wood Products 10,948 11,035 8,136 21,983 15,157 Real Estate 121 156 173 277 343 Corporate 123 112 135 235 285 27,087 31,764 20,007 58,851 39,509 Bond discounts and deferred loan fees2 409 409 372 818 744 Total depreciation, depletion and amortization $ 27,496 $ 32,173 $ 20,379 $ 59,669 $ 40,253 Basis of real estate sold Real Estate $ 4,887 $ 10,631 $ 7,328 $ 15,518 $ 18,188 Eliminations and adjustments (3 ) — (3 ) (3 ) (9 ) Total basis of real estate sold $ 4,884 $ 10,631 $ 7,325 $ 15,515 $ 18,179 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 Six Months Ended June 30, March 31, June 30, June 30, June 30, (in thousands, except per share amount) 2023 2023 2022 2023 2022 Total Adjusted EBITDDA Net income (GAAP) $ 22,306 $ 16,260 $ 120,222 $ 38,566 $ 284,102 Interest expense, net 7,613 199 7,419 7,812 10,313 Income taxes 6,429 (3,504 ) 28,269 2,925 60,334 Depreciation, depletion and amortization 27,087 31,764 20,007 58,851 39,509 Basis of real estate sold 4,884 10,631 7,325 15,515 18,179 CatchMark merger-related expenses 244 2,209 — 2,453 — Gain on fire damage (23,110 ) — (9,868 ) (23,110 ) (9,592 ) Pension settlement charge — — — — 14,165 Non-operating pension and other postretirement benefit costs 229 228 1,809 457 3,738 Loss (gain) on disposal of fixed assets 21 — (13 ) 21 (16 ) Other (258 ) (10 ) — (268 ) — Total Adjusted EBITDDA $ 45,445 $ 57,777 $ 175,170 $ 103,222 $ 420,732 Adjusted Net Income Net income (GAAP) $ 22,306 $ 16,260 $ 120,222 $ 38,566 $ 284,102 Special items after tax: CatchMark merger-related expenses 244 2,209 — 2,453 — Gain on fire damage (17,333 ) — (7,351 ) (17,333 ) (7,146 ) Pension settlement charge — — — — 10,553 Adjusted Net Income $ 5,217 $ 18,469 $ 112,871 $ 23,686 $ 287,509 Adjusted Net Income Per Diluted Share Net income per diluted share (GAAP) $ 0.28 $ 0.20 $ 1.72 $ 0.48 $ 4.07 Special items after tax: CatchMark merger-related expenses — 0.03 — 0.03 — Gain on fire damage (0.22 ) — (0.11 ) (0.22 ) (0.10 ) Pension settlement charge — — — — 0.15 Adjusted Net Income Per Diluted Share $ 0.06 $ 0.23 $ 1.61 $ 0.29 $ 4.12 (Investors) (Media)
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Wayne Wasechek
509.835.1521
Anna Torma
509.835.1558
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