January 29, 2024
(press release)
–
SPOKANE, Wash.--(BUSINESS WIRE)-- PotlatchDeltic Corporation (Nasdaq: PCH) today reported a net loss of $0.1 million, or $0.00 per diluted share, on revenues of $254.5 million for the quarter ended December 31, 2023. Net income was $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 for the full year 2023 was $62.1 million, or $0.77 per diluted share, on revenues of $1.0 billion. Excluding after tax special items consisting of a gain on insurance recoveries and CatchMark merger-related expenses, adjusted net income was $35.0 million, or $0.43 per diluted share, for 2023. 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 gain on insurance recoveries, CatchMark merger-related expenses, a pension settlement charge, and an environmental charge, adjusted net income was $350.0 million, or $4.80 per diluted share, for 2022. 2023 Highlights “Each of our business segments delivered solid operational and financial results in 2023,” said Eric Cremers, president and chief executive officer. “Our Timberlands and Wood Products businesses each achieved operational milestones amongst the backdrop of challenging market conditions, while our Real Estate segment generated significant value from the stratification of our CatchMark timberlands. Additionally, we returned $169 million to shareholders in 2023 through $144 million in quarterly dividends and $25 million of share repurchases. Looking forward to 2024, we recently entered into an agreement with Forest Investment Associates to sell approximately 34,000 acres of four-year average age Southern timberlands for approximately $58 million, or $1,700 an acre. The sale price is at a significant premium to our underlying timberland value and is non-dilutive given the young nature of these timberlands. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2024. Proceeds from this sale will further enhance our strong liquidity position and provide additional flexibility for our disciplined and opportunistic capital allocation strategy to continue to enhance shareholder value,” stated Mr. Cremers. Financial Highlights 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 A special dividend of $0.95 per share was paid in Q4 2022. Business Performance: Q4 2023 vs. Q3 2023 Timberlands Fourth Quarter 2023 Highlights Wood Products Fourth Quarter 2023 Highlights (in millions - unaudited) Q4 2023 Q3 2023 $ Change Wood Products Revenues $ 150.1 $ 165.1 $ (15.0 ) Wood Products Adjusted EBITDDA1 $ (6.5 ) $ 15.1 $ (21.6 ) 1 Refer to "Segment Information" below for additional information. Real Estate Fourth Quarter 2023 Highlights 1 Refer to "Segment Information" below for additional information. Outlook “While interest rates have recently moderated, housing affordability and the macroeconomic environment continue to remain a headwind for the broader housing market. Nonetheless, we maintain a very positive outlook on long-term housing-related fundamentals that drive growth in our business. During 2024, we expect to harvest 7.6 million tons in our Timberlands segment, ship 1.1 billion board feet of lumber in our Wood Products segment and sell about 51,000 rural acres, including the sale of approximately 34,000 acres in the South to Forest Investment Associates, and 130 residential lots in our Real Estate segment,” stated Mr. Cremers. 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, January 30, 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 February 7, 2024 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 practices, 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; expectations for harvest volumes, wood products shipments, and real estate sales in 2024; and similar matters. Words such as "expect," "long-term," "looking forward," "outlook," "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, 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 state and federal laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; pandemic disease; 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. 1 A special dividend of $0.95 per share was paid in Q4 2022. PotlatchDeltic Corporation Condensed Consolidated Balance Sheets Unaudited At December 31, (in thousands, except per share amounts) 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 230,118 $ 343,809 Customer receivables, net 21,892 22,813 Inventories, net 78,665 67,958 Other current assets 46,258 36,955 Total current assets 376,933 471,535 Property, plant and equipment, net 372,832 318,184 Investment in real estate held for development and sale 56,321 55,490 Timber and timberlands, net 2,440,398 2,508,372 Intangible assets, net 15,640 17,420 Other long-term assets 169,132 179,554 Total assets $ 3,431,256 $ 3,550,555 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 82,383 $ 94,861 Current portion of long-term debt 175,615 39,979 Current portion of pension and other postretirement employee benefits 4,535 4,926 Total current liabilities 262,533 139,766 Long-term debt 858,113 992,701 Pension and other postretirement employee benefits 67,856 77,396 Deferred tax liabilities, net 36,641 41,790 Other long-term obligations 35,015 35,749 Total liabilities 1,260,158 1,287,402 Commitments and contingencies Stockholders’ equity: Common stock, $1 par value, 200,000 and 100,000 shares authorized and 79,365 and 79,683 shares issued and outstanding 79,365 79,683 Additional paid-in capital 2,303,992 2,294,797 Accumulated deficit (315,291 ) (208,979 ) 103,032 97,652 Total stockholders’ equity 2,171,098 2,263,153 $ 3,431,256 $ 3,550,555 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) 2023 2023 2022 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (140 ) $ 23,675 $ 3,843 $ 62,101 $ 333,900 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation, depletion and amortization 30,827 30,658 30,274 121,154 98,234 Basis of real estate sold 9,768 6,109 4,897 31,392 29,921 Change in deferred taxes (3,702 ) (1,764 ) (3,898 ) (7,681 ) (5,257 ) Pension and other postretirement benefits 1,613 1,610 4,323 6,446 15,259 Pension settlement charge — — — — 14,165 Equity-based compensation expense 2,643 2,616 2,356 9,115 18,497 Gain on fire damage — (16,326 ) — (39,436 ) (34,505 ) Interest received under swaps with other-than-insignificant financing element (6,995 ) (6,884 ) (3,002 ) (25,646 ) (3,002 ) Other, net 646 1,792 2,222 6,294 1,767 Change in working capital and operating-related activities, net (2,081 ) (9,773 ) (4,660 ) (26,188 ) 9,411 Funding of pension and other postretirement employee benefits (1,160 ) 128 (1,775 ) (3,336 ) (5,065 ) 14,645 12,049 — 36,400 26,678 Net cash from operating activities 41,803 40,951 33,464 159,111 491,901 CASH FLOWS FROM INVESTING ACTIVITIES Property, plant and equipment additions (67,848 ) (17,933 ) (12,976 ) (95,916 ) (56,976 ) Timberlands reforestation and roads (6,850 ) (6,299 ) (5,498 ) (23,863 ) (17,718 ) Acquisition of timber and timberlands (158 ) (55 ) (14,029 ) (1,834 ) (110,110 ) Proceeds from property insurance — 1,356 8,750 1,356 8,750 Cash acquired in CatchMark merger — — — — 23,571 Interest received under swaps with other-than-insignificant financing element 6,478 6,375 2,798 23,757 2,798 Other, net 496 36 1,230 1,196 2,165 Net cash from investing activities (67,882 ) (16,520 ) (19,725 ) (95,304 ) (147,520 ) CASH FLOWS FROM FINANCING ACTIVITIES Distributions to common stockholders (35,715 ) (35,960 ) (111,555 ) (143,595 ) (208,133 ) Repurchase of common stock (13,605 ) (11,012 ) (50,022 ) (25,011 ) (54,549 ) Proceeds from long-term debt 40,000 — 40,000 40,000 317,500 Repayment of long-term debt (40,000 ) — (40,000 ) (40,000 ) (343,000 ) Other, net (789 ) (360 ) (1,260 ) (3,104 ) (7,380 ) Net cash from financing activities (50,109 ) (47,332 ) (162,837 ) (171,710 ) (295,562 ) Change in cash, cash equivalents and restricted cash (76,188 ) (22,901 ) (149,098 ) (107,903 ) 48,819 Cash, cash equivalents and restricted cash at beginning of period 313,876 336,777 494,689 345,591 296,772 Cash, cash equivalents and restricted cash at end of period1 $ 237,688 $ 313,876 $ 345,591 $ 237,688 $ 345,591 1 Includes $7.6 million, $11.1 million and $1.8 million at December 31, 2023, September 30, 2023 and December 31, 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 Year Ended December 31, September 30, December 31, December 31, (in thousands) 2023 2023 2022 2023 2022 Revenues Timberlands $ 97,414 $ 109,808 $ 121,871 $ 411,077 $ 485,590 Wood Products 150,100 165,108 156,805 635,672 912,612 Real Estate 27,909 19,152 11,682 87,988 91,491 275,423 294,068 290,358 1,134,737 1,489,693 Intersegment Timberlands revenues (20,920 ) (28,559 ) (37,218 ) (110,656 ) (158,913 ) Other intersegment revenues — — — (6 ) — Consolidated revenues $ 254,503 $ 265,509 $ 253,140 $ 1,024,075 $ 1,330,780 Adjusted EBITDDA1 Timberlands $ 33,304 $ 42,062 $ 50,567 $ 151,321 $ 249,373 Wood Products (6,488 ) 15,039 2,442 20,487 290,907 Real Estate 21,908 14,165 7,178 67,775 73,258 Corporate (12,448 ) (11,696 ) (13,189 ) (45,406 ) (49,314 ) Eliminations and adjustments 4,458 (3,292 ) 5,335 6,057 9,931 Total Adjusted EBITDDA 40,734 56,278 52,333 200,234 574,155 Interest expense, net2 (8,435 ) (7,971 ) (8,807 ) (24,218 ) (27,400 ) Depreciation, depletion and amortization (30,419 ) (30,248 ) (29,862 ) (119,518 ) (96,700 ) Basis of real estate sold (9,768 ) (6,109 ) (4,897 ) (31,392 ) (29,921 ) CatchMark merger-related expenses — — (1,318 ) (2,453 ) (27,325 ) Environmental charge — — (5,550 ) — (5,550 ) Gain on fire damage — 16,326 — 39,436 34,505 Pension settlement charge — — — — (14,165 ) Non-operating pension and other postretirement employee benefits (229 ) (228 ) (2,592 ) (914 ) (8,138 ) Loss on fixed assets (518 ) (18 ) (121 ) (557 ) (82 ) Other 629 370 (66 ) 1,267 (67 ) Income (loss) before income taxes $ (8,006 ) $ 28,400 $ (880 ) $ 61,885 $ 399,312 Depreciation, depletion and amortization Timberlands $ 19,386 $ 19,267 $ 18,845 $ 75,009 $ 59,532 Wood Products 10,783 10,740 10,727 43,506 35,953 Real Estate 129 120 177 526 695 Corporate 121 121 113 477 520 30,419 30,248 29,862 119,518 96,700 Bond discounts and deferred loan fees2 408 410 412 1,636 1,534 Total depreciation, depletion and amortization $ 30,827 $ 30,658 $ 30,274 $ 121,154 $ 98,234 Basis of real estate sold Real Estate $ 9,802 $ 6,111 $ 4,899 $ 31,431 $ 29,932 Eliminations and adjustments (34 ) (2 ) (2 ) (39 ) (11 ) Total basis of real estate sold $ 9,768 $ 6,109 $ 4,897 $ 31,392 $ 29,921 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 Year ended December 31, September 30, December 31, December 31, (in thousands, except per share amounts) 2023 2023 2022 2023 2022 Total Adjusted EBITDDA1 Net income (loss) (GAAP) $ (140 ) $ 23,675 $ 3,843 $ 62,101 $ 333,900 Interest, net 8,435 7,971 8,807 24,218 27,400 Income taxes (7,866 ) 4,725 (4,723 ) (216 ) 65,412 Depreciation, depletion and amortization 30,419 30,248 29,862 119,518 96,700 Basis of real estate sold 9,768 6,109 4,897 31,392 29,921 CatchMark merger-related expenses — — 1,318 2,453 27,325 Gain on fire damage — (16,326 ) — (39,436 ) (34,505 ) Environmental charge — — 5,550 — 5,550 Pension settlement charge — — — — 14,165 Non-operating pension and other postretirement benefit costs 229 228 2,592 914 8,138 Loss on fixed assets 518 18 121 557 82 Other (629 ) (370 ) 66 (1,267 ) 67 Total Adjusted EBITDDA $ 40,734 $ 56,278 $ 52,333 $ 200,234 $ 574,155 Adjusted Net Income (Loss)1 Net income (loss) (GAAP) $ (140 ) $ 23,675 $ 3,843 $ 62,101 $ 333,900 Special items after tax: CatchMark merger-related expenses — — 1,318 2,453 27,140 Gain on fire damage — (12,244 ) — (29,577 ) (25,706 ) Pension settlement charge — — — — 10,553 Environmental charge — — 4,135 — 4,135 Adjusted Net Income (Loss) $ (140 ) $ 11,431 $ 9,296 $ 34,977 $ 350,022 Adjusted Net Income (Loss) Per Diluted Share1 Net income (loss) per diluted share (GAAP) $ — $ 0.29 $ 0.05 $ 0.77 $ 4.58 Special items after tax: CatchMark merger-related expenses — — 0.02 0.03 0.37 Gain on fire damage — (0.15 ) — (0.37 ) (0.35 ) Pension settlement charge — — — — 0.14 Environmental charge — — 0.05 — 0.06 Adjusted Net Income (Loss) Per Diluted Share $ — $ 0.14 $ 0.12 $ 0.43 $ 4.80 1 See "Non-GAAP Measures" above for further details on management's use of these measures. Investors Media Source: PotlatchDeltic Corporation Multimedia Files:
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