PotlatchDeltic Corporation Reports Third Quarter 2021 Results

Rhea-AI Summary

PotlatchDeltic Corporation (Nasdaq: PCH) reported a net income of $65.7 million, or $0.97 per diluted share, on revenues of $287.3 million for Q3 2021. Adjusted Net Income stood at $62.4 million, or $0.92 per diluted share, excluding insurance gains. Comparatively, Q3 2020 net income was $81.0 million. EBITDDA for the quarter was $107.2 million with a margin of 37%. Despite a decrease in lumber prices, the company expects favorable housing fundamentals and plans to issue a special dividend of $3 to $5 per share in December.

Positive

• Generated Total Adjusted EBITDDA of $107.2 million with a 37% margin.
• Expanded liquidity position to $972 million by the end of Q3 2021.
• Expecting a special dividend of $3 to $5 per share in December.

Negative

• Revenues decreased from $313 million in Q3 2020 to $287.3 million in Q3 2021.
• Adjusted EBITDDA fell significantly from $275 million in Q2 2021 to $107.2 million in Q3 2021.
• Average lumber price dropped 55% from Q2 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

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												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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211025005707/en/

(Investors)

Jerry Richards

509.835.1521

(Media)

Anna Torma

509.835.1558

Source: PotlatchDeltic Corporation

FAQ

What were PotlatchDeltic's Q3 2021 earnings results?

PotlatchDeltic reported a net income of $65.7 million, or $0.97 per diluted share for Q3 2021.

What was the revenue for PotlatchDeltic in Q3 2021?

PotlatchDeltic recorded revenues of $287.3 million for the third quarter of 2021.

What is PotlatchDeltic's outlook for Q4 2021?

The company anticipates continued increases in lumber prices and positive housing fundamentals.

When is PotlatchDeltic expected to pay a special dividend?

PotlatchDeltic expects to pay a special dividend in December, estimated between $3 and $5 per share.

How did PotlatchDeltic's EBITDDA change in Q3 2021?

The company reported Total Adjusted EBITDDA of $107.2 million, down from $275 million in Q2 2021.