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PotlatchDeltic Corporation Reports First Quarter 2021 Results

04/26/21

SPOKANE, Wash.--(BUSINESS WIRE)-- PotlatchDeltic Corporation (Nasdaq:PCH) today reported net income of $131.1 million, or $1.94 per diluted share, on revenues of $354.2 million for the quarter ended March 31, 2021. Net loss was $16.8 million, or ($0.25) per diluted share, on revenues of $208.9 million for the quarter ended March 31, 2020. Excluding an after-tax pension settlement charge, adjusted net income was $15.0 million, or $0.22 per diluted share for the first quarter of 2020.

First Quarter 2021 Highlights

  • Generated record Total Adjusted EBITDDA of $195.0 million and Total Adjusted EBITDDA margin of 55%
  • Record Wood Products Adjusted EBITDDA of $125.5 million driven by historic lumber prices
  • Timberlands Adjusted EBITDDA was a record and due to leveraged Idaho lumber index pricing
  • Widened strong liquidity position to $761.1 million as of March 31, 2021

“2021 is off to an extraordinary start as our Wood Products and Timberlands businesses leveraged historic lumber prices to drive our third consecutive quarter of record financial performance,” said Eric Cremers, president and chief executive officer. “Our real estate business also delivered strong results by capitalizing on robust rural and development demand. We expect housing fundamentals and lumber demand will remain strong. Our strong liquidity and disciplined capital allocation strategy positions us to continue increasing shareholder value,” stated Mr. Cremers.

Financial Highlights

($ in millions, except per share data)

 

Q1 2021

 

 

Q4 2020

 

 

Q1 2020

 

Revenues

 

$

354.2

 

 

$

337.4

 

 

$

208.9

 

Net income (loss)

 

$

131.1

 

 

$

100.0

 

 

$

(16.8

)

Weighted average shares outstanding, diluted (in thousands)

 

 

67,607

 

 

 

67,607

 

 

 

67,478

 

Net income (loss) per diluted share

 

$

1.94

 

 

$

1.48

 

 

$

(0.25

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

$

131.1

 

 

$

100.0

 

 

$

15.0

 

Adjusted net income per diluted share

 

$

1.94

 

 

$

1.48

 

 

$

0.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted EBITDDA

 

$

195.0

 

 

$

163.9

 

 

$

47.6

 

Dividends per share

 

$

0.41

 

 

$

0.41

 

 

$

0.40

 

Net cash from operations

 

$

169.9

 

 

$

144.4

 

 

$

48.1

 

Cash and cash equivalents

 

$

382.0

 

 

$

252.3

 

 

$

79.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Performance: Q1 2021 vs. Q4 2020

Timberlands

First Quarter 2021 Highlights

  • Timberlands Adjusted EBITDDA increased $5.4 million from Q4 2020 levels
  • Increased Northern harvest volumes driven by favorable conditions while Southern volumes were seasonally lower
  • Northern sawlog prices slightly lower compared to record Q4 2020 prices
  • Southern sawlog prices decreased 1% due to seasonally lower hardwood volumes
  • Increased log & haul costs reflect higher Northern harvest volume mix
  • Forest management costs declined due to seasonally lower Northern activity

($ in millions)

 

Q1 2021

 

 

Q4 2020

 

 

$ Change

 

Timberlands Revenues

 

$

111.9

 

 

$

109.8

 

 

$

2.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timberlands Adjusted EBITDDA

 

$

67.9

 

 

$

62.5

 

 

$

5.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wood Products

First Quarter 2021 Highlights

  • Wood Products Adjusted EBITDDA increased $55.2 million from Q4 2020 levels
  • Average lumber price realizations increased 41% to $890 per MBF in Q1 2021
  • Log costs increased due to higher index pricing in Idaho
  • Lumber production was lower due to a winter storm and planned mill maintenance, negatively affecting fixed cost absorption

($ in millions)

 

Q1 2021

 

 

Q4 2020

 

 

$ Change

 

Wood Products Revenues

 

$

269.3

 

 

$

208.9

 

 

$

60.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wood Products Adjusted EBITDDA

 

$

125.5

 

 

$

70.3

 

 

$

55.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

First Quarter 2021 Highlights

  • Real Estate Adjusted EBITDDA decreased $39.9 million as Q4 2020 included Minnesota land sale for nearly $48 million
  • Sold 7,083 acres of rural land for $1,415/acre
  • Sold 51 residential lots at an average $99,000/lot
  • Sold 11 commercial acres for $277,000/acre

($ in millions)

 

Q1 2021

 

 

Q4 2020

 

 

$ Change

 

Real Estate Revenues

 

$

20.3

 

 

$

62.2

 

 

$

(41.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Adjusted EBITDDA

 

$

16.6

 

 

$

56.5

 

 

$

(39.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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, April 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 3825708. Supplemental materials that will be discussed during the call are available on the website.

A replay of the conference call will be available three hours following the call until May 5, 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 3825708 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 effects of COVID-19 on demand for our products and on our operations; 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; Q2 2021 outlook; the housing market and repair and remodel market; housing starts; lumber supply, demand and pricing; lumber shipment volumes; the effects of change in lumber prices on annual EBITDDA; 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; expected release of 2020 ESG Report; 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 the COVID-19 outbreak and anticipated recovery 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 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

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

(in thousands, except per share amounts)

 

2021

 

 

2020

 

 

2020

 

Revenues

 

$

354,193

 

 

$

337,449

 

 

$

208,880

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

169,302

 

 

 

183,860

 

 

 

172,046

 

Selling, general and administrative expenses

 

 

16,758

 

 

 

20,455

 

 

 

14,207

 

 

 

 

186,060

 

 

 

204,315

 

 

 

186,253

 

Operating income

 

 

168,133

 

 

 

133,134

 

 

 

22,627

 

Interest expense, net

 

 

(3,574

)

 

 

(8,869

)

 

 

(3,698

)

Pension settlement charge

 

 

 

 

 

 

 

 

(42,988

)

Non-operating pension and other postretirement employee benefit costs

 

 

(3,414

)

 

 

(3,556

)

 

 

(3,635

)

Income before income taxes

 

 

161,145

 

 

 

120,709

 

 

 

(27,694

)

Income taxes

 

 

(30,039

)

 

 

(20,692

)

 

 

10,862

 

Net income (loss)

 

$

131,106

 

 

$

100,017

 

 

$

(16,832

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.95

 

 

$

1.49

 

 

$

(0.25

)

Diluted

 

$

1.94

 

 

$

1.48

 

 

$

(0.25

)

Dividends per share

 

$

0.41

 

 

$

0.41

 

 

$

0.40

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

67,207

 

 

 

67,159

 

 

 

67,478

 

Diluted

 

 

67,607

 

 

 

67,607

 

 

 

67,478

 

PotlatchDeltic Corporation

Condensed Consolidated Balance Sheets

Unaudited

 

(in thousands, except per share amounts)

 

March 31, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

382,032

 

 

$

252,340

 

Customer receivables, net

 

 

41,920

 

 

 

26,606

 

Inventories, net

 

 

62,663

 

 

 

62,036

 

Other current assets

 

 

20,959

 

 

 

16,136

 

Total current assets

 

 

507,574

 

 

 

357,118

 

Property, plant and equipment, net

 

 

291,483

 

 

 

288,544

 

Investment in real estate held for development and sale

 

 

69,057

 

 

 

72,355

 

Timber and timberlands, net

 

 

1,587,593

 

 

 

1,600,061

 

Intangible assets, net

 

 

16,075

 

 

 

16,270

 

Other long-term assets

 

 

91,847

 

 

 

46,717

 

Total assets

 

$

2,563,629

 

 

$

2,381,065

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

114,849

 

 

$

93,279

 

Current portion of long-term debt

 

 

42,985

 

 

 

39,981

 

Current portion of pension and other postretirement employee benefits

 

 

6,574

 

 

 

6,574

 

Total current liabilities

 

 

164,408

 

 

 

139,834

 

Long-term debt

 

 

714,619

 

 

 

717,366

 

Pension and other postretirement employee benefits

 

 

129,025

 

 

 

128,807

 

Deferred tax liabilities, net

 

 

24,298

 

 

 

17,740

 

Other long-term obligations

 

 

53,730

 

 

 

72,365

 

Total liabilities

 

 

1,086,080

 

 

 

1,076,112

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,042 and 66,876 shares

 

 

67,042

 

 

 

66,876

 

Additional paid-in capital

 

 

1,676,421

 

 

 

1,674,576

 

Accumulated deficit

 

 

(211,985

)

 

 

(315,510

)

Accumulated other comprehensive loss

 

 

(53,929

)

 

 

(120,989

)

Total stockholders’ equity

 

 

1,477,549

 

 

 

1,304,953

 

Total liabilities and stockholders' equity

 

$

2,563,629

 

 

$

2,381,065

 

PotlatchDeltic Corporation

Condensed Consolidated Statements of Cash Flows

Unaudited

 

 

 

Three Months Ended

 

(in thousands)

 

March 31, 2021

 

 

December 31, 2020

 

 

March 31, 2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

131,106

 

 

$

100,017

 

 

$

(16,832

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

18,399

 

 

 

20,076

 

 

 

19,044

 

Basis of real estate sold

 

 

8,823

 

 

 

10,908

 

 

 

6,498

 

Change in deferred taxes

 

 

1,490

 

 

 

(223

)

 

 

(12,383

)

Pension and other postretirement employee benefits

 

 

5,627

 

 

 

5,916

 

 

 

6,068

 

Pension settlement charge

 

 

 

 

 

 

 

 

42,988

 

Equity-based compensation expense

 

 

1,930

 

 

 

2,135

 

 

 

1,885

 

Other, net

 

 

(387

)

 

 

(725

)

 

 

237

 

Change in working capital and operating-related activities, net

 

 

6,713

 

 

 

10,366

 

 

 

2,557

 

Real estate development expenditures

 

 

(2,315

)

 

 

(2,506

)

 

 

(378

)

Funding of pension and other postretirement employee benefits

 

 

(1,421

)

 

 

(1,546

)

 

 

(1,546

)

Net cash provided by operating activities

 

 

169,965

 

 

 

144,418

 

 

 

48,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment additions

 

 

(7,762

)

 

 

(8,027

)

 

 

(5,039

)

Timberlands reforestation and roads

 

 

(3,956

)

 

 

(3,889

)

 

 

(4,310

)

Acquisition of timber and timberlands

 

 

 

 

 

(2,120

)

 

 

(4,190

)

Proceeds on sale of facility

 

 

 

 

 

 

 

 

1,000

 

Other, net

 

 

189

 

 

 

108

 

 

 

1,505

 

Net cash used in investing activities

 

 

(11,529

)

 

 

(13,928

)

 

 

(11,034

)

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Distributions to common stockholders

 

 

(27,484

)

 

 

(27,419

)

 

 

(26,941

)

Repurchase of common stock

 

 

 

 

 

 

 

 

(12,355

)

Proceeds from long-term debt

 

 

 

 

 

46,000

 

 

 

 

Repayment of long-term debt

 

 

 

 

 

(46,000

)

 

 

 

Other, net

 

 

(591

)

 

 

(735

)

 

 

(242

)

Net cash used in financing activities

 

 

(28,075

)

 

 

(28,154

)

 

 

(39,538

)

Change in cash, cash equivalents and restricted cash

 

 

130,361

 

 

 

102,336

 

 

 

(2,434

)

Cash, cash equivalents and restricted cash, beginning

 

 

252,340

 

 

 

150,004

 

 

 

84,254

 

Cash, cash equivalents and restricted cash, ending

 

$

382,701

 

 

$

252,340

 

 

$

81,820

 

PotlatchDeltic Corporation

Segment Information

Unaudited

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

(in thousands)

 

2021

 

 

2020

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Timberlands

 

$

111,916

 

 

$

109,764

 

 

$

82,425

 

Wood Products

 

 

269,296

 

 

 

208,898

 

 

 

145,000

 

Real Estate

 

 

20,313

 

 

 

62,191

 

 

 

10,969

 

 

 

 

401,525

 

 

 

380,853

 

 

 

238,394

 

Intersegment Timberlands revenues

 

 

(47,332

)

 

 

(43,404

)

 

 

(29,514

)

Consolidated revenues

 

$

354,193

 

 

$

337,449

 

 

$

208,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDDA1

 

 

 

 

 

 

 

 

 

 

 

 

Timberlands

 

$

67,858

 

 

$

62,512

 

 

$

34,982

 

Wood Products

 

 

125,555

 

 

 

70,315

 

 

 

13,229

 

Real Estate

 

 

16,593

 

 

 

56,414

 

 

 

7,340

 

Corporate

 

 

(10,710

)

 

 

(13,884

)

 

 

(8,672

)

Eliminations and adjustments

 

 

(4,310

)

 

 

(11,459

)

 

 

692

 

Total Adjusted EBITDDA

 

 

194,986

 

 

 

163,898

 

 

 

47,571

 

Interest expense, net

 

 

(3,574

)

 

 

(8,869

)

 

 

(3,698

)

Depreciation, depletion and amortization

 

 

(17,996

)

 

 

(19,671

)

 

 

(18,638

)

Basis of real estate sold

 

 

(8,823

)

 

 

(10,908

)

 

 

(6,498

)

Pension settlement charge

 

 

 

 

 

 

 

 

(42,988

)

Non-operating pension and other postretirement employee benefits

 

 

(3,414

)

 

 

(3,556

)

 

 

(3,635

)

(Loss) gain on disposal of fixed assets

 

 

(34

)

 

 

(185

)

 

 

192

 

Income before income taxes

 

$

161,145

 

 

$

120,709

 

 

$

(27,694

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

 

 

 

 

 

 

 

 

 

 

Timberlands

 

$

11,417

 

 

$

13,069

 

 

$

12,591

 

Wood Products

 

 

6,203

 

 

 

6,200

 

 

 

5,630

 

Real Estate

 

 

155

 

 

 

155

 

 

 

160

 

Corporate

 

 

221

 

 

 

247

 

 

 

257

 

 

 

 

17,996

 

 

 

19,671

 

 

 

18,638

 

Bond discounts and deferred loan fees2

 

 

403

 

 

 

405

 

 

 

406

 

Total depreciation, depletion and amortization

 

$

18,399

 

 

$

20,076

 

 

$

19,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis of real estate sold

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

$

8,829

 

 

$

11,017

 

 

$

6,504

 

Eliminations and adjustments

 

 

(6

)

 

 

(109

)

 

 

(6

)

Total basis of real estate sold

 

$

8,823

 

 

$

10,908

 

 

$

6,498

 

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

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

(in thousands, except per share amount)

 

2021

 

 

2020

 

 

2020

 

Total Adjusted EBITDDA

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (GAAP)

 

$

131,106

 

 

$

100,017

 

 

$

(16,832

)

Interest expense, net

 

 

3,574

 

 

 

8,869

 

 

 

3,698

 

Income taxes

 

 

30,039

 

 

 

20,692

 

 

 

(10,862

)

Depreciation, depletion and amortization

 

 

17,996

 

 

 

19,671

 

 

 

18,638

 

Basis of real estate sold

 

 

8,823

 

 

 

10,908

 

 

 

6,498

 

Pension settlement charge

 

 

 

 

 

 

 

 

42,988

 

Non-operating pension and other postretirement benefit costs

 

 

3,414

 

 

 

3,556

 

 

 

3,635

 

Loss (gain) on disposal of fixed assets

 

 

34

 

 

 

185

 

 

 

(192

)

Total Adjusted EBITDDA

 

$

194,986

 

 

$

163,898

 

 

$

47,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (GAAP)

 

$

131,106

 

 

$

100,017

 

 

$

(16,832

)

Pension settlement charge, after tax

 

 

 

 

 

 

 

 

31,811

 

Adjusted net income

 

$

131,106

 

 

$

100,017

 

 

$

14,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income per diluted share

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per diluted share (GAAP)

 

$

1.94

 

 

$

1.48

 

 

$

(0.25

)

Pension settlement charge, after tax

 

 

 

 

 

 

 

 

0.47

 

Adjusted net income per diluted share

 

$

1.94

 

 

$

1.48

 

 

$

0.22

 

 

(Investors)
Jerry Richards
509.835.1521

(Media)
Anna Torma
509.835.1558

Source: PotlatchDeltic Corporation

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