PotlatchDeltic Corporation (Nasdaq: PCH) today reported net
income of $16.3 million, or $0.20 per diluted share, on revenues of
$258.0 million for the quarter ended March 31, 2023. Excluding
CatchMark merger-related expenses, adjusted net income was $18.5
million, or $0.23 per diluted share for the first quarter of 2023.
Net income was $163.9 million, or $2.35 per diluted share, on
revenues of $411.4 million for the quarter ended March 31, 2022.
Excluding after tax special items consisting of a non-cash pension
settlement charge and a loss on fire damage, adjusted net income
was $174.6 million, or $2.50 per diluted share for the first
quarter of 2022.
First Quarter 2023 Highlights
- Generated Total Adjusted EBITDDA of $57.7 million and Total
Adjusted EBITDDA margin of 22%
- Timberlands set quarterly harvest volume record of 2.1 million
tons
- Completed insourcing timberlands management for legacy
CatchMark operations
- Maintained strong liquidity position of $625 million as of
March 31, 2023
“Our Timberlands and Real Estate businesses had strong
operational performance during the quarter, offsetting weakness in
Wood Products,” said Eric Cremers, president and chief executive
officer. “During the quarter our Timberlands business did an
outstanding job and produced our highest quarterly harvest volume
on record, and our Real Estate business experienced strong rural
real estate sales activity, including a sizable conservation land
sale in Alabama. As we head into the spring building season we are
encouraged by the recent upward trend in lumber prices and we
continue to remain optimistic on long-term housing-related
fundamentals that drive demand in our business. Our strong balance
sheet and commitment to a disciplined capital allocation strategy
position us to continue to grow shareholder value," stated Mr.
Cremers.
Financial Highlights
($ in millions, except per share
data)
Q1 2023
Q4 2022
Q1 2022
Revenues
$
258.0
$
253.1
$
411.4
Net income
$
16.3
$
3.8
$
163.9
Weighted average shares outstanding,
diluted (in thousands)
80,167
80,578
69,623
Net income per diluted share
$
0.20
$
0.05
$
2.35
Adjusted Net Income
$
18.5
$
9.3
$
174.6
Adjusted Net Income per diluted share
$
0.23
$
0.12
$
2.50
Total Adjusted EBITDDA
$
57.7
$
52.3
$
245.6
Dividends per share1
$
0.45
$
1.40
$
0.44
Net cash from operations
$
39.1
$
33.5
$
230.3
Cash and cash equivalents
$
325.6
$
343.8
$
470.9
1 The regular dividend was increased 2.3%
to $0.45 per quarter in Q4 2022 and a special dividend of $0.95 was
paid in Q4 2022.
Business Performance: Q1 2023 vs. Q4 2022
Timberlands
First Quarter 2023 Highlights
- Timberlands Adjusted EBITDDA decreased $4.0 million from Q4
2022
- Northern sawlog prices decreased 19% primarily due to lower
indexed sawlog prices and seasonally heavier sawlogs
- Total harvest of 2.1 million tons exceeded plan driven by
favorable harvest conditions
- Southern sawlog prices decreased 3% primarily due to seasonally
lower hardwood volumes and pine sawlog prices
- Forest management costs decreased due to seasonally lower
activities and insourcing of timberlands management on legacy
CatchMark operations
($ in millions)
Q1 2023
Q4 2022
$ Change
Timberlands Revenues
$
115.2
$
121.9
$
(6.7
)
Timberlands Adjusted EBITDDA
$
46.6
$
50.6
$
(4.0
)
Wood Products
First Quarter 2023 Highlights
- Wood Products Adjusted EBITDDA decreased $2.4 million from Q4
2022
- Average lumber price decreased 8% to $435 per MBF in Q1
2023
- Lumber production increased in Q1 2023 leading to higher fixed
cost absorption
- Log costs decreased primarily due to lower indexed pricing in
Idaho
- Increased plywood shipments were partially offset by lower
price realizations
($ in millions)
Q1 2023
Q4 2022
$ Change
Wood Products Revenues
$
152.8
$
156.8
$
(4.0
)
Wood Products Adjusted EBITDDA
$
—
$
2.4
$
(2.4
)
Real Estate
First Quarter 2023 Highlights
- Real Estate Adjusted EBITDDA increased $12.3 million from Q4
2022
- Sold 6,939 acres of rural land at an average price of $2,568 /
acre
- Sold 24 residential lots at an average price of $116,429 /
lot
($ in millions)
Q1 2023
Q4 2022
$ Change
Real Estate Revenues
$
23.9
$
11.7
$
12.2
Real Estate Adjusted EBITDDA
$
19.5
$
7.2
$
12.3
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.
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, April
25, 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 May 2, 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 capital
allocation strategy; 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, 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 and its contractors’ ability
to implement the modernization plan for the Waldo, Arkansas
sawmill, 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
March 31,
December 31,
March 31,
(in thousands, except per share
amounts)
2023
2022
2022
Revenues
$
257,962
$
253,140
$
411,350
Costs and expenses:
Cost of goods sold
224,350
214,765
179,847
Selling, general and administrative
expenses
18,230
20,922
16,294
CatchMark merger-related expenses
2,209
1,318
—
Environmental charge
—
5,550
—
Loss on fire damage
—
—
276
244,789
242,555
196,417
Operating income
13,173
10,585
214,933
Interest expense, net
(199
)
(8,807
)
(2,894
)
Pension settlement charge
—
—
(14,165
)
Non-operating pension and other
postretirement employee benefit costs
(228
)
(2,592
)
(1,929
)
Other
10
(66
)
—
Income (loss) before income taxes
12,756
(880
)
195,945
Income taxes
3,504
4,723
(32,065
)
Net income
$
16,260
$
3,843
$
163,880
Net income per share:
Basic
$
0.20
$
0.05
$
2.36
Diluted
$
0.20
$
0.05
$
2.35
Dividends per share1
$
0.45
$
1.40
$
0.44
Weighted-average shares outstanding:
Basic
80,027
80,356
69,419
Diluted
80,167
80,578
69,623
1 The regular dividend was increased 2.3%
to $0.45 per quarter in Q4 2022 and a special dividend of $0.95 was
paid in Q4 2022.
PotlatchDeltic Corporation
Condensed Consolidated Balance
Sheets
Unaudited
(in thousands, except per share
amounts)
March 31,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
325,632
$
343,809
Customer receivables, net
29,565
22,813
Inventories, net
66,189
67,958
Other current assets
44,698
36,955
Total current assets
466,084
471,535
Property, plant and equipment, net
312,791
318,184
Investment in real estate held for
development and sale
54,945
55,490
Timber and timberlands, net
2,488,956
2,508,372
Intangible assets, net
16,975
17,420
Other long-term assets
160,019
179,554
Total assets
$
3,499,770
$
3,550,555
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
78,268
$
94,861
Current portion of long-term debt
39,985
39,979
Current portion of pension and other
postretirement employee benefits
4,926
4,926
Total current liabilities
123,179
139,766
Long-term debt
992,988
992,701
Pension and other postretirement employee
benefits
78,096
77,396
Deferred tax liabilities, net
41,756
41,790
Other long-term obligations
35,488
35,749
Total liabilities
1,271,507
1,287,402
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value, authorized
100,000 shares, issued and outstanding 79,916 and 79,683 shares
79,916
79,683
Additional paid-in capital
2,296,927
2,294,797
Accumulated deficit
(228,766
)
(208,979
)
Accumulated other comprehensive income
80,186
97,652
Total stockholders’ equity
2,228,263
2,263,153
Total liabilities and stockholders'
equity
$
3,499,770
$
3,550,555
PotlatchDeltic Corporation
Condensed Consolidated Statements
of Cash Flows
Unaudited
Three Months Ended
(in thousands)
March 31,
December 31,
March 31,
2023
2022
2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income
$
16,260
$
3,843
$
163,880
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation, depletion and
amortization
32,173
30,274
19,874
Basis of real estate sold
10,631
4,897
10,854
Change in deferred taxes
394
(3,898
)
(2,123
)
Pension and other postretirement employee
benefits
1,611
4,323
3,857
Pension settlement charge
—
—
14,165
Equity-based compensation expense
2,279
2,356
2,056
Loss on fire damage
—
—
276
Other, net
(3,509
)
(780
)
(291
)
Change in working capital and
operating-related activities, net
(17,205
)
(4,660
)
21,208
Real estate development expenditures
(2,408
)
(1,116
)
(2,161
)
Funding of pension and other
postretirement employee benefits
(1,087
)
(1,775
)
(1,296
)
Net cash from operating activities
39,139
33,464
230,299
CASH FLOWS FROM INVESTING
ACTIVITIES
Property, plant and equipment
additions
(4,255
)
(12,976
)
(12,566
)
Timberlands reforestation and roads
(6,118
)
(5,498
)
(4,648
)
Acquisition of timber and timberlands
—
(14,029
)
—
Proceeds from property insurance
—
8,750
—
Interest received under swaps with
other-than-insignificant financing element
5,055
2,798
—
Other, net
422
1,230
92
Net cash from investing activities
(4,896
)
(19,725
)
(17,122
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Distributions to common stockholders
(35,962
)
(111,555
)
(30,524
)
Repurchase of common stock
—
(50,022
)
—
Proceeds from issuance of long-term
debt
—
40,000
—
Repayment of long-term debt
—
(40,000
)
(3,000
)
Other, net
(838
)
(1,260
)
(1,071
)
Net cash from financing activities
(36,800
)
(162,837
)
(34,595
)
Change in cash, cash equivalents and
restricted cash
(2,557
)
(149,098
)
178,582
Cash, cash equivalents and restricted
cash, beginning
345,591
494,689
296,772
Cash, cash equivalents and restricted
cash, ending1
$
343,034
$
345,591
$
475,354
1 Includes $17.4 million, $1.8 million and
$4.4 million at March 31, 2023, December 31, 2022 and March 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
March 31,
December 31,
March 31,
(in thousands)
2023
2022
2022
Revenues
Timberlands
$
115,238
$
121,871
$
123,657
Wood Products
152,795
156,805
295,742
Real Estate
23,863
11,682
34,065
291,896
290,358
453,464
Intersegment Timberlands revenues
(33,934
)
(37,218
)
(42,114
)
Consolidated revenues
$
257,962
$
253,140
$
411,350
Adjusted EBITDDA1
Timberlands
$
46,639
$
50,567
$
76,434
Wood Products
(31
)
2,442
149,951
Real Estate
19,465
7,178
30,124
Corporate
(10,741
)
(13,189
)
(9,584
)
Eliminations and adjustments
2,445
5,335
(1,363
)
Total Adjusted EBITDDA
57,777
52,333
245,562
Interest expense, net2
(199
)
(8,807
)
(2,894
)
Depreciation, depletion and
amortization
(31,764
)
(29,862
)
(19,502
)
Basis of real estate sold
(10,631
)
(4,897
)
(10,854
)
CatchMark merger-related expenses
(2,209
)
(1,318
)
—
Environmental charge
—
(5,550
)
—
Loss on fire damage
—
—
(276
)
Pension settlement charge
—
—
(14,165
)
Non-operating pension and other
postretirement employee benefits
(228
)
(2,592
)
(1,929
)
Gain (loss) on disposal of fixed
assets
—
(121
)
3
Other
10
(66
)
—
Income before income taxes
$
12,756
$
(880
)
$
195,945
Depreciation, depletion and
amortization
Timberlands
$
20,461
$
18,845
$
12,161
Wood Products
11,035
10,727
7,021
Real Estate
156
177
170
Corporate
112
113
150
31,764
29,862
19,502
Bond discounts and deferred loan fees2
409
412
372
Total depreciation, depletion and
amortization
$
32,173
$
30,274
$
19,874
Basis of real estate sold
Real Estate
$
10,631
$
4,899
$
10,860
Eliminations and adjustments
—
(2
)
(6
)
Total basis of real estate sold
$
10,631
$
4,897
$
10,854
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
March 31,
December 31,
March 31,
(in thousands, except per share
amount)
2023
2022
2022
Total Adjusted EBITDDA
Net income (GAAP)
$
16,260
$
3,843
$
163,880
Interest expense, net
199
8,807
2,894
Income taxes
(3,504
)
(4,723
)
32,065
Depreciation, depletion and
amortization
31,764
29,862
19,502
Basis of real estate sold
10,631
4,897
10,854
CatchMark merger-related expenses
2,209
1,318
—
Loss on fire damage
—
—
276
Environmental charge
—
5,550
—
Pension settlement charge
—
—
14,165
Non-operating pension and other
postretirement benefit costs
228
2,592
1,929
Loss (gain) on disposal of fixed
assets
—
121
(3
)
Other
(10
)
66
—
Total Adjusted EBITDDA
$
57,777
$
52,333
$
245,562
Adjusted Net Income
Net income (GAAP)
$
16,260
$
3,843
$
163,880
Special items after tax:
CatchMark merger-related expenses
2,209
1,318
—
Loss on fire damage
—
—
205
Pension settlement charge
—
—
10,553
Environmental charge
—
4,135
—
Adjusted Net Income
$
18,469
$
9,296
$
174,638
Adjusted Net Income Per Diluted
Share
Net income per diluted share (GAAP)
$
0.20
$
0.05
$
2.35
Special items after tax:
CatchMark merger-related expenses
0.03
0.02
—
Pension settlement charge
—
—
0.15
Environmental charge
—
0.05
—
Adjusted Net Income Per Diluted Share
$
0.23
$
0.12
$
2.50
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005779/en/
(Investors) Wayne Wasechek 509.835.1521
(Media) Anna Torma 509.835.1558
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