PotlatchDeltic Corporation Reports Second Quarter 2021 Results

·11 min read

SPOKANE, Wash., July 26, 2021--(BUSINESS WIRE)--PotlatchDeltic Corporation (Nasdaq: PCH) today reported net income of $187.9 million, or $2.77 per diluted share, on revenues of $447.5 million for the quarter ended June 30, 2021. Net income was $2.6 million, or $0.04 per diluted share, on revenues of $181.6 million for the quarter ended June 30, 2020.

Second Quarter 2021 Highlights

  • Generated record Total Adjusted EBITDDA of $275.0 million and Total Adjusted EBITDDA margin of 61%

  • Historic lumber prices drove record Wood Products Adjusted EBITDDA of $204.6 million

  • Record Timberlands Adjusted EBITDDA of $77.2 million propelled by higher Idaho sawlog prices

  • Extended strong liquidity position to $891 million as of Q2 2021

"Lumber prices continued their historic run in the second quarter, driving another quarter of record financial performance," said Eric Cremers, president and chief executive officer. "Our employees did a good job navigating operational challenges, including a fire at our Ola, Arkansas sawmill. While lumber prices have recently retreated from historic highs, overall fundamentals that drive our business remain favorable. We are very well positioned to continue growing shareholder value and execute on our disciplined capital allocation strategy, including paying a meaningful special dividend in the fourth quarter of 2021," stated Mr. Cremers.

Financial Highlights

($ in millions, except per share data)

Q2 2021

Q1 2021

Q2 2020

Revenues

$

447.5

$

354.2

$

181.6

Net income

$

187.9

$

131.1

$

2.6

Weighted average shares outstanding, diluted (in thousands)

67,732

67,607

67,359

Net income per diluted share

$

2.77

$

1.94

$

0.04

Total Adjusted EBITDDA

$

275.0

$

195.0

$

35.3

Dividends per share

$

0.41

$

0.41

$

0.40

Net cash from operations

$

171.4

$

169.9

$

39.8

Cash and cash equivalents

$

512.0

$

382.0

$

81.0

Business Performance: Q2 2021 vs. Q1 2021

Timberlands

Second Quarter 2021 Highlights

  • Timberlands Adjusted EBITDDA increased $9.3 million from Q1 2021 levels

  • Northern sawlog prices increased 38%

  • Northern harvest volumes decreased seasonally due to spring breakup

  • Southern harvest volumes were flat as wet conditions impacted operations

  • Forest management costs increased due to seasonally higher activities

($ in millions)

Q2 2021

Q1 2021

$ Change

Timberlands Revenues

$

121.2

$

111.9

$

9.3

Timberlands Adjusted EBITDDA

$

77.2

$

67.9

$

9.3

Wood Products

Second Quarter 2021 Highlights

  • Wood Products Adjusted EBITDDA increased $79.1 million from Q1 2021 levels

  • Average lumber price realizations increased 33% to $1,185 per MBF in Q2 2021

  • Lumber shipments were lower than expected due to lower home center demand, transportation challenges and the Ola sawmill fire

  • Log costs increased due to higher index pricing in Idaho

  • Plywood price realizations increased due to strong demand from industrial manufacturers

($ in millions)

Q2 2021

Q1 2021

$ Change

Wood Products Revenues

$

357.7

$

269.3

$

88.4

Wood Products Adjusted EBITDDA

$

204.6

$

125.5

$

79.1

Real Estate

Second Quarter 2021 Highlights

  • Real Estate Adjusted EBITDDA decreased $4.8 million due to seasonally lower lot sales and no commercial land sales

  • Sold 2,605 acres of rural land for $4,416/acre

  • Sold 19 residential lots at an average $91,000/lot

($ in millions)

Q2 2021

Q1 2021

$ Change

Real Estate Revenues

$

16.0

$

20.3

$

(4.3

)

Real Estate Adjusted EBITDDA

$

11.8

$

16.6

$

(4.8

)

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, July 27, 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 1-833-968-2227 for U.S./Canada and 1-778-560-2697 for international callers. Participants will be asked to provide conference I.D. number 9495212. 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 3, 2021 by calling 1-800-585-8367 for U.S./Canada or 1-416-621-4642 for international callers. Callers must enter conference I.D. number 9495212 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; Q3 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 developed lot; planned capital expenditures; number of seedlings planted; amount of greenhouse gas emitted; amount of CO2e sequestered; 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 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 (such as the Ola, Arkansas sawmill fire and fires 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

Six Months Ended

(in thousands, except per share amounts)

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Revenues

$

447,506

$

354,193

$

181,555

$

801,699

$

390,435

Costs and expenses:

Cost of goods sold

177,779

169,302

149,836

347,081

321,882

Selling, general and administrative expenses

19,512

16,758

16,811

36,270

31,018

197,291

186,060

166,647

383,351

352,900

Operating income

250,215

168,133

14,908

418,348

37,535

Interest expense, net

(8,199

)

(3,574

)

(8,339

)

(11,773

)

(12,037

)

Pension settlement charge

(42,988

)

Non-operating pension and other postretirement employee benefit costs

(3,271

)

(3,414

)

(3,478

)

(6,685

)

(7,113

)

Income (loss) before income taxes

238,745

161,145

3,091

399,890

(24,603

)

Income taxes

(50,840

)

(30,039

)

(453

)

(80,879

)

10,409

Net income (loss)

$

187,905

$

131,106

$

2,638

$

319,011

$

(14,194

)

Net income (loss) per share:

Basic

$

2.79

$

1.95

$

0.04

$

4.74

$

(0.21

)

Diluted

$

2.77

$

1.94

$

0.04

$

4.71

$

(0.21

)

Dividends per share

$

0.41

$

0.41

$

0.40

$

0.82

$

0.80

Weighted-average shares outstanding:

Basic

67,316

67,207

67,176

67,265

67,321

Diluted

67,732

67,607

67,359

67,664

67,321

PotlatchDeltic Corporation

Condensed Consolidated Balance Sheets

Unaudited

(in thousands, except per share amounts)

June 30, 2021

December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

512,030

$

252,340

Customer receivables, net

56,694

26,606

Inventories, net

73,074

62,036

Other current assets

24,475

16,136

Total current assets

666,273

357,118

Property, plant and equipment, net

291,550

288,544

Investment in real estate held for development and sale

66,553

72,355

Timber and timberlands, net

1,580,827

1,600,061

Intangible assets, net

15,880

16,270

Other long-term assets

61,715

46,717

Total assets

$

2,682,798

$

2,381,065

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

97,462

$

93,279

Current portion of long-term debt

42,991

39,981

Current portion of pension and other postretirement employee benefits

6,574

6,574

Total current liabilities

147,027

139,834

Long-term debt

714,870

717,366

Pension and other postretirement employee benefits

128,251

128,807

Deferred tax liabilities, net

22,191

17,740

Other long-term obligations

58,670

72,365

Total liabilities

1,071,009

1,076,112

Commitments and contingencies

Stockholders' equity:

Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,045 and 66,876 shares

67,045

66,876

Additional paid-in capital

1,678,661

1,674,576

Accumulated deficit

(51,670

)

(315,510

)

Accumulated other comprehensive loss

(82,247

)

(120,989

)

Total stockholders’ equity

1,611,789

1,304,953

Total liabilities and stockholders' equity

$

2,682,798

$

2,381,065

PotlatchDeltic Corporation

Condensed Consolidated Statements of Cash Flows

Unaudited

Three Months Ended

Six Months Ended

(in thousands)

June 30,
2021

March 31,
2021

June 30,
2020

June 30,
2021

June 30,

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$

187,905

$

131,106

$

2,638

$

319,011

$

(14,194

)

Adjustments:

Depreciation, depletion and amortization

17,432

18,399

18,171

35,831

37,215

Basis of real estate sold

7,213

8,823

2,693

16,036

9,191

Change in deferred taxes

(928

)

1,490

(1,466

)

562

(13,849

)

Pension and other postretirement employee benefits

5,484

5,627

5,765

11,111

11,833

Pension settlement charge

42,988

Equity-based compensation expense

2,140

1,930

1,980

4,070

3,865

Other, net

92

(387

)

(414

)

(295

)

(177

)

Change in working capital and operating-related activities, net

(43,867

)

6,713

13,840

(37,154

)

16,397

Real estate development expenditures

(1,684

)

(2,315

)

(2,109

)

(3,999

)

(2,487

)

Funding of pension and other postretirement employee benefits

(2,412

)

(1,421

)

(1,293

)

(3,833

)

(2,839

)

Net cash provided by operating activities

171,375

169,965

39,805

341,340

87,943

CASH FLOWS FROM INVESTING ACTIVITIES

Property, plant and equipment additions

(8,181

)

(7,762

)

(5,256

)

(15,943

)

(10,295

)

Timberlands reforestation and roads

(3,998

)

(3,956

)

(3,466

)

(7,954

)

(7,776

)

Acquisition of timber and timberlands

(2,192

)

(540

)

(2,192

)

(4,730

)

Proceeds on sale of facility

1,000

Other, net

446

189

608

635

2,113

...

Net cash used in investing activities

(13,925

)

(11,529

)

(8,654

)

(25,454

)

(19,688

)

CASH FLOWS FROM FINANCING ACTIVITIES

Distributions to common stockholders

(27,489

)

(27,484

)

(26,744

)

(54,973

)

(53,685

)

Repurchase of common stock

(3,009

)

(15,364

)

Other, net

(632

)

(591

)

(284

)

(1,223

)

(526

)

Net cash used in financing activities

(28,121

)

(28,075

)

(30,037

)

(56,196

)

(69,575

)

Change in cash, cash equivalents and restricted cash

129,329

130,361

1,114

259,690

(1,320

)

Cash, cash equivalents and restricted cash, beginning

382,701

252,340

81,820

252,340

84,254

Cash, cash equivalents and restricted cash, ending

$

512,030

$

382,701

$

82,934

$

512,030

$

82,934

PotlatchDeltic Corporation

Segment Information

Unaudited

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

(in thousands)

2021

2021

2020

2021

2020

Revenues

Timberlands

$

121,216

$

111,916

$

67,345

$

233,132

$

149,770

Wood Products

357,673

269,296

126,216

626,969

271,216

Real Estate

15,998

20,313

13,105

36,311

24,074

494,887

401,525

206,666

896,412

445,060

Intersegment Timberlands revenues

(47,381

)

(47,332

)

(25,111

)

(94,713

)

(54,625

)

Consolidated revenues

$

447,506

$

354,193

$

181,555

$

801,699

$

390,435

Adjusted EBITDDA1

Timberlands

$

77,259

$

67,858

$

25,659

$

145,117

$

60,641

Wood Products

204,533

125,555

10,907

330,088

24,136

Real Estate

11,788

16,593

9,256

28,381

16,596

Corporate

(12,822

)

(10,710

)

(10,534

)

(23,532

)

(19,206

)

Eliminations and adjustments

(5,774

)

(4,310

)

85

(10,084

)

777

Total Adjusted EBITDDA

274,984

194,986

35,373

469,970

82,944

Interest expense, net

(8,199

)

(3,574

)

(8,339

)

(11,773

)

(12,037

)

Depreciation, depletion and amortization

(17,029

)

(17,996

)

(17,765

)

(35,025

)

(36,403

)

Basis of real estate sold

(7,213

)

(8,823

)

(2,693

)

(16,036

)

(9,191

)

Pension settlement charge

(42,988

)

Non-operating pension and other postretirement employee benefits

(3,271

)

(3,414

)

(3,478

)

(6,685

)

(7,113

)

(Loss) gain on disposal of fixed assets

(527

)

(34

)

(7

)

(561

)

185

Income (loss) before income taxes

$

238,745

$

161,145

$

3,091

$

399,890

$

(24,603

)

Depreciation, depletion and amortization

Timberlands

$

10,482

$

11,417

$

11,566

$

21,899

$

24,157

Wood Products

6,179

6,203

5,798

12,382

11,428

Real Estate

160

155

156

315

316

Corporate

208

221

245

429

502

17,029

17,996

17,765

35,025

36,403

Bond discounts and deferred loan fees2

403

403

406

806

812

Total depreciation, depletion and amortization

$

17,432

$

18,399

$

18,171

$

35,831

$

37,215

Basis of real estate sold

Real Estate

$

7,219

$

8,829

$

3,212

$

16,048

$

9,716

Eliminations and adjustments

(6

)

(6

)

(519

)

(12

)

(525

)

Total basis of real estate sold

$

7,213

$

8,823

$

2,693

$

16,036

$

9,191

1

Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA on page 9, Reconciliations.

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

Six Months Ended

(in thousands, except per share amount)

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Total Adjusted EBITDDA

Net income (loss) (GAAP)

$

187,905

$

131,106

$

2,638

$

319,011

$

(14,194

)

Interest expense, net

8,199

3,574

8,339

11,773

12,037

Income taxes

50,840

30,039

453

80,879

(10,409

)

Depreciation, depletion and amortization

17,029

17,996

17,765

35,025

36,403

Basis of real estate sold

7,213

8,823

2,693

16,036

9,191

Pension settlement charge

42,988

Non-operating pension and other postretirement benefit costs

3,271

3,414

3,478

6,685

7,113

Loss (gain) on disposal of fixed assets

527

34

7

561

(185

)

Total Adjusted EBITDDA

$

274,984

$

194,986

$

35,373

$

469,970

$

82,944

Adjusted net income

Net income (loss) (GAAP)

$

187,905

$

131,106

$

2,638

$

319,011

$

(14,194

)

Pension settlement charge, after tax

31,811

Adjusted net income

$

187,905

$

131,106

$

2,638

$

319,011

$

17,617

Adjusted net income per diluted share

Net income (loss) per diluted share (GAAP)

$

2.77

$

1.94

$

0.04

$

4.71

$

(0.21

)

Pension settlement charge, after tax

0.47

Adjusted net income per diluted share

$

2.77

$

1.94

$

0.04

$

4.71

$

0.26

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005698/en/

Contacts

(Investors)
Jerry Richards
509.835.1521

(Media)
Anna Torma
509.835.1558

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