PCH - PotlatchDeltic Corporation Reports Fourth Quarter and Full Year 2022 Results

PotlatchDeltic Corporation (Nasdaq: PCH) today reported net income of $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 was $39.2 million, or $0.58 per diluted share, on revenues of $248.4 million for the quarter ended December 31, 2021. Excluding a net loss on fire damage, adjusted net income was $39.9 million, or $0.59 per diluted share for the fourth quarter of 2021.

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 a pension settlement charge, a gain on insurance recoveries, CatchMark merger related expenses and an environmental charge, adjusted net income was $350.0 million, or $4.80 per diluted share for 2022. Net income for the full year 2021 was $423.9 million, or $6.26 per diluted share, on revenues of $1.3 billion. Excluding a net gain on insurance recoveries, adjusted net income was $421.4 million, or $6.22 per diluted share for 2021.

2022 Highlights

• Generated Total Adjusted EBITDDA of $574.1 million and Total Adjusted EBITDDA margin of 43%
• Acquired CatchMark Timber Trust, Inc. adding nearly 350,000 acres of superior site index southern timberlands
• Also acquired 46,000 acres of well stocked timberlands in three bolt-on transactions
• Announced $131 million expansion and modernization of Waldo, Arkansas sawmill
• Rebuilt and restarted the large log line at the Ola, Arkansas sawmill
• Returned $208 million to shareholders through regular dividends and a Q4 special dividend
• Repurchased 1.2 million shares for $55 million, or $45 per share
• Maintained strong liquidity position of $643 million as of December 31, 2022

“Each of our businesses delivered exceptional results in 2022 leading to our second highest Total Adjusted EBITDDA on record and marking our third straight year of very strong financial performance,” said Eric Cremers, president and chief executive officer. “2022 was also a very active year for successfully deploying capital, including acquiring nearly 400,000 acres of high-quality timberland and committing to expand and modernize our Waldo, Arkansas sawmill. Additionally, we returned $263 million to shareholders in 2022, including $55 million of share repurchases and a $76 million special dividend. With our disciplined capital allocation strategy and our strong balance sheet and liquidity we are well positioned to continue increasing shareholder value,” stated Mr. Cremers.

Financial Highlights

Business Performance: Q4 2022 vs. Q3 2022

Timberlands

Fourth Quarter 2022 Highlights

• Timberlands Adjusted EBITDDA decreased $13.9 million from Q3 2022
• Northern sawlog prices decreased 18% due primarily to lower indexed sawlog prices
• A seasonal decline in Southern harvest volumes was moderated by the first full quarter of CatchMark operations
• Southern sawlog prices increased 3%, reflecting the addition of strong CatchMark markets
• Higher log & haul costs were primarily due to inflationary pressures, including increased diesel costs

Wood Products

Fourth Quarter 2022 Highlights

• Wood Products Adjusted EBITDDA decreased $28.9 million from Q3 2022
• Average lumber price decreased 17% to $473 per MBF in Q4 2022
• Lumber production declined in Q4 2022 leading to lower fixed cost absorption
• Log costs decreased primarily due to lower index pricing in Idaho
• Plywood shipments and price realizations declined on lower demand

Real Estate

Fourth Quarter 2022 Highlights

• Real Estate Adjusted EBITDDA decreased $6.9 million from Q3 2022
• Sold 1,329 acres of rural land at an average price of $2,837 per acre
• Sold 24 residential lots at an average price of $132,000 per lot
• Sold 5 commercial acres at an average of $437,407 per acre

Outlook

“While higher interest rates and their expected impact on housing starts are expected to create headwinds for our operating results in 2023, we continue to remain very bullish on long-term housing-related fundamentals that drive demand in our business. We are encouraged by the recent increase in lumber prices and improvement in housing affordability. During 2023, we expect to harvest 7.7 million tons in our Timberlands segment, ship around 1.1 billion board feet in lumber in our Wood Products segment and sell about 18,000 rural acres and 150 residential lots in our Real Estate segment,” stated Mr. Cremers.

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, January 31, 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 February 7, 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; expected liquidity; the U.S. economic condition, including the housing market and long-term housing-related fundamentals; the success of the company’s business strategies; the strength of the timber markets associated with the merger with CatchMark Timber Trust, Inc.; the company’s capital allocation strategies; favorable capital structure and strong balance sheet; the company’s FY 2023 outlook relating to its timber harvest volumes, lumber shipment volumes and prices, and real estate sales; expected successful implementation of our Waldo, Arkansas sawmill modernization; and similar matters. Words such as “anticipate,” “assumes,” “believe,” “can,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “may,” “on track,” “plan,” “potential,” “predicting,” “project,” “schedule,” “seek,” “should,” “target,” “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, including the impact of pandemic disease 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 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 meet expectations for the Ola sawmill’s new large log line; 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.