Q3 2023 EARNINGS
October 31, 2023
FORWARD-LOOKING STATEMENTS & NON-GAAP MEASURES
FORWARD-LOOKING STATEMENTS
This presentation 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 U.S. economic condition; the success of the company's business strategies; the company's disciplined and opportunistic capital allocation strategies, including share repurchases and dividend expectations; maintaining the company's investment grade credit rating; favorable capital structure and strong balance sheet; the company's debt metrics and decision to repay or refinance maturing debt; interest rates and expenses; corporate expenses; pension expenses; taxes; Q4 and FY 2023 outlook; favorable long-term housing fundamentals, including expectations about mortgage rates, the housing market, repair and remodel market, and housing starts; lumber supply, demand and pricing; lumber shipment volumes; our ESG initiatives and goals; expected implementation of our Waldo, Arkansas sawmill modernization project on schedule, and corresponding increase in production capacity with reduction in cash processing costs; expected timber harvest volumes, sawlog and pulpwood mix, and pricing; rural real estate and development real estate demand and sales; land basis and average price per acre and per developed lot; potential for real estate solar energy deals to close; natural climate solutions opportunities, including potential carbon credit and fiber supply opportunities for pellet and biofuel projects; planned capital expenditures; business conditions; and similar matters. Words such as "anticipate," "believe," "continue," "estimate," "expect," "forecast," "initiative," "long term," "looking forward," "on track," "outlook," "plan," "potential," "schedule," "seek," "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 environmental laws and regulations; unforeseen environmental liabilities or expenditures; the impact of pandemic disease; 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 shortages and 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 sawmill; the company's ability to achieve its ESG initiatives and goals; 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.
NON-GAAP MEASURES
This presentation includes non-GAAP financial information. A reconciliation of those numbers to U.S. GAAP is included in this presentation, which is available on the company's website at www.PotlatchDeltic.com.
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KEY HIGHLIGHTS Q3 2023
STRATEGY
Leverage to lumber prices
- Mills & indexed Idaho logs
- Strategy aligned with fundamentals
- Provides discretionary capital
Timberlands provide stability
- >80% of gross asset value
- Sustainable management benefits society
- Supports sustainable, growing dividend
Real Estate captures incremental value
- Opportunistic rural land sales
- Chenal master-planned community
PERFORMANCE
Total Adjusted EBITDDA1
- $56.3MM
- 21.2% margin
Segment Adjusted EBITDDA
- Timberlands - $42.0MM
- 2MM tons harvested
- Wood Products - $15.1MM
- 276MMBF lumber shipped
- Real Estate - $14.2MM
- Sold:
- 3.3K rural acres
- 32 residential lots
- 1 commercial lot
Cash Available for Distribution (CAD)2
- $71.5MM
CAPITAL ALLOCATION
Return of cash
- $143MM annual dividend run rate
- Dividend yield of 4.0% 3
- $13.1MM share repurchase YTD ($45/share)
Capital expenditures4
- $52.3MM spent YTD
-
$135MM - $140MM planned 2023
• Includes $74MM in 2023 for Waldo sawmill
Strong liquidity position
- Investment grade rated
- $602MM of liquidity
- Net debt to enterprise value5 is 16.8%
OUR ESG COMMITMENT: ENVIRONMENTAL RESPONSIBILITY, SOCIAL RESPONSIBILITY & RESPONSIBLE GOVERNANCE 6
1 | Total Adjusted EBITDDA is a non-GAAP measure; see appendix for definition and reconciliation. Total Adjusted EBITDDA margin is Total Adjusted EBITDDA divided by revenues.
2 | Cash Available for Distribution (CAD) is for the trailing twelve months ended September 30, 2023. Includes $15.7MM of payments for timber and timberland acquisitions and $14.8MM of payments for the Waldo, Arkansas sawmill expansion. CAD is a non-GAAP measure; see appendix for definition and reconciliation.
3 | Based on closing stock price of $45.39 on September 29, 2023.
4 | Includes property, plant and equipment, Timberlands reforestation and roads, Real Estate development; excludes acquisition of timber and timberlands.
5 | Net debt to enterprise value is a non-GAAP measure; see appendix for definition. Based on closing stock price of $45.39 on September 29, 2023.
6 | ESG data as of December 31, 2022.
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CONSOLIDATED RESULTS
Q3 Total Adjusted EBITDDA of $56.3 million reflects higher lumber and indexed sawlog prices accompanied by seasonally higher harvest volumes and more rural real estate acres sold.
Total Adjusted EBITDDA - Q2 2023 to Q3 2023 Variance
Key Consolidated Highlights:
Total Adjusted EBITDDA increased $10.8 million from Q2 2023
Timberlands Adjusted EBITDDA increased primarily due to seasonally higher harvest volumes and increased Northern sawlog prices Wood Products Adjusted EBITDDA increased primarily due to higher lumber prices and lower log costs
Real Estate Adjusted EBITDDA increased due to higher rural land sales partially offset by fewer development real estate sales
Eliminations primarily reflect higher Idaho mill log inventories
Note: Total Adjusted EBITDDA is a non-GAAP measure. See appendix for definition and reconciliation.
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TI MBERLANDS RESULTS
Q3 2023 Timberlands Adjusted EBITDDA of $42.0 million reflects seasonally
higher harvest volumes and higher indexed Idaho sawlog prices.
Timberlands Adjusted EBITDDA - Q2 2023 to Q3 2023 Variance
Key Timberlands Highlights:
Timberlands Adjusted EBITDDA increased $12.6 million from Q2 2023
Northern and Southern harvest volumes increased seasonally
Northern sawlog prices increased 12% primarily due to higher indexed sawlog prices
Southern sawlog and pulpwood prices were stable
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TI MBERLANDS RESULTS
NORTHERN REGI ON
Northern Sawlog Pricing and Volume | Northern Pulpwood Pricing and Volume | |||||||||||||||||
$300 | 500 | $60 | ||||||||||||||||
$250 | 377 | 400 | $50 | $47 | ||||||||||||||
$200 | 300 | $40 | ||||||||||||||||
$30 | 7 | |||||||||||||||||
$150 | ||||||||||||||||||
PriceTon$/ | $100 | $129 | 200 | Volume:(thousands)Tons | Price:Ton$/ | $20 | Volume:(thousands)Tons | |||||||||||
$50 | 100 | $10 | ||||||||||||||||
Q1 Q2 Q3 Q4 Q1 Q2 Q3 | Q4 | Q1 | Q2 | Q3 | Q 1 | Q 2 Q 3 | Q 4 | Q 1 | Q 2 Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | |||||
2021 | 2022 | 2023 | 2 0 2 1 | 2 0 2 2 | 2 0 2 3 |
Northern Timberlands Adjusted EBITDDA ($ in millions) | Northern Timberlands - Key Results | |||||||||||||||||||||
$70 | ($ in millions except per ton amounts) | Q2 2023 | Q3 2023 | Change | ||||||||||||||||||
$60 | Revenues | $ | 37.6 | $ | 49.2 | $ | 11.6 | |||||||||||||||
$50 | Adjusted EBITDDA | $ | 10.6 | $ | 17.6 | $ | 7.0 | |||||||||||||||
$40 | Margin (%) | 28.2 | % | 35.8 | % | 7.6 | pts | |||||||||||||||
$30 | Sawlog harvest volume ('000 tons) | 319 | 377 | 58 | ||||||||||||||||||
$17.6 | Sawlog price ($ / ton) | $ | 115 | $ | 129 | $ | 14 | |||||||||||||||
$20 | ||||||||||||||||||||||
Pulpwood harvest volume ('000 tons) | 8 | 7 | (1) | |||||||||||||||||||
$10 | ||||||||||||||||||||||
Pulpwood price ($ / ton) | $ | 46 | $ | 47 | $ | 1 | ||||||||||||||||
Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 | ||||||||||||||||||||||
2 0 2 1 | 2 0 2 2 | 2 0 2 3 | ||||||||||||||||||||
Volumes include tonnage harvested from company-owned fee land, while pricing data includes revenue generated from both company-owned fee land and non-fee stumpage purchased from third parties.
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TI MBERLANDS RESULTS | |||||||||||||||||||||||||||||
SOUTHERN REGI ON | |||||||||||||||||||||||||||||
Southern Sawlog Pricing and Volume | Southern Pulpwood Pricing and Volume | ||||||||||||||||||||||||||||
661 | 700 | $35 | 559 | 700 | |||||||||||||||||||||||||
$50 | $31 | ||||||||||||||||||||||||||||
$Price/ Ton | $48 | 100 | TonsVolume:(thousands) | Price:$ / Ton | $30 | 600 | TonsVolume:(thousands) | ||||||||||||||||||||||
$10 | $5 | 100 | |||||||||||||||||||||||||||
600 | |||||||||||||||||||||||||||||
$40 | 500 | $25 | 500 | ||||||||||||||||||||||||||
$30 | 400 | $20 | 400 | ||||||||||||||||||||||||||
$20 | 300 | $15 | 300 | ||||||||||||||||||||||||||
200 | $10 | 200 | |||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||||||||||||||||||||||||
Southern Timberlands Adjusted EBITDDA ($ in millions) | Southern Timberlands - Key Results | ||||||||||||||||||||||||||||
$30 | $24.4 | ($ in millions except per ton amounts) | Q2 2023 | Q3 2023 | Change | ||||||||||||||||||||||||
Revenues | $ | 51.1 | $ | 60.6 | $ | 9.5 | |||||||||||||||||||||||
$25 | |||||||||||||||||||||||||||||
Adjusted EBITDDA | $ | 18.8 | $ | 24.4 | $ | 5.6 | |||||||||||||||||||||||
$20 | |||||||||||||||||||||||||||||
Margin (%) | 36.8 | % | 40.3 | % | 3.5 | pts | |||||||||||||||||||||||
$15 | Sawlog harvest volume ('000 tons) | 584 | 661 | 77 | |||||||||||||||||||||||||
$10 | Sawlog price ($ / ton) | $ | 48 | $ | 48 | $ | - | ||||||||||||||||||||||
$5 | Pulpwood harvest volume ('000 tons) | 480 | 559 | 79 | |||||||||||||||||||||||||
Pulpwood price ($ / ton) | $ | 31 | $ | 31 | $ | - | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Stumpage harvest volume ('000 tons) | 230 | 400 | 170 | |||||||||||||||
Stumpage price ($ / ton) | $ | 18 | $ | 18 | $ | - | |||||||||||||||||||||||
2021 | 2022 | 2023 | |||||||||||||||||||||||||||
Volumes include tonnage harvested from company-owned fee land, while pricing data includes revenue generated from both company-owned fee land and non-fee | 7 |
stumpage purchased from third parties. | |
W OOD PRODUCTS RESULTS
Wood Products Adjusted EBITDDA in Q3 2023 increased primarily due to
higher lumber prices and lower log costs.
Wood Products Adjusted EBITDDA - Q2 2023 to Q3 2023 Variance
Lumber
Key Wood Products Highlights:
Wood Products Adjusted EBITDDA increased $3.2 million from Q2 2023
Average lumber price increased 1% to $481 per MBF in Q3 2023
Per-unit log costs decreased on lower log costs and improved recoveries
Lumber inventory charge in Q3 2023 was $2.7 million lower compared to Q2 2023
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W OOD PRODUCTS | |||||||||||||||||||||||
RESULTS | |||||||||||||||||||||||
Lumber Pricing and Shipments | |||||||||||||||||||||||
$1,200 | 400 | ||||||||||||||||||||||
$1,000 | 276 | 350 | |||||||||||||||||||||
300 | |||||||||||||||||||||||
Price:$/ MBF | Shipments(MMBF) | ||||||||||||||||||||||
$800 | |||||||||||||||||||||||
250 | |||||||||||||||||||||||
$600 | 200 | ||||||||||||||||||||||
$400 | $481 | 150 | |||||||||||||||||||||
100 | |||||||||||||||||||||||
$200 | |||||||||||||||||||||||
50 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||
2021 | 2022 | 2023 | |||||||||||||||||||||
Wood Products Adjusted EBITDDA ($ in millions)
$200 | ||||||||||||||||||
$150 | ||||||||||||||||||
$100 | ||||||||||||||||||
$50 | $15.1 | |||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||
2021 | 2022 | 2023 |
Wood Products - Key Results
($ in millions except per MBF amounts) | Q2 2023 | Q3 2023 | Change | ||||||
Revenues | $ | 167.7 | $ | 165.1 | $ | (2.6) | |||
Adjusted EBITDDA | $ | 11.9 | $ | 15.1 | $ | 3.2 | |||
Margin (%) | 7.1 | % | 9.1 | % | 2.0 | pts | |||
Lumber shipment volume (MMBF) | 280 | 276 | (4) | ||||||
Lumber price ($ / MBF) | $ | 476 | $ | 481 | $ | 5 |
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REAL ESTATE RESULTS
Real Estate Adjusted EBITDDA increased in Q3 2023 due to more rural land sales partially offset by fewer residential and commercial sales in Chenal Valley.
Real Estate Adjusted EBITDDA - Q2 2023 to Q3 2023 Variance
Key Real Estate Highlights:
Real Estate Adjusted EBITDDA increased $2.0 million from Q2 2023
Real Estate - Rural: | Real Estate - Development: |
Sold 3,275 acres | Sold 32 residential lots |
Average price $3,546 / acre | Average price of $89,122 / lot |
Sold 1 commercial lot for $1.4 million, or $972,222 / acre |
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PotlatchDeltic Corporation published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 20:36:28 UTC.