Potlatchdeltic corporation reports second quarter 2019 results
Spokane, wash.--(business wire)--potlatchdeltic corporation (nasdaq:pch) today reported net income of $17.1 million, or $0.25 per diluted share, on revenues of $215.6 million for the quarter ended june 30, 2019. second quarter 2019 highlights generated $49.0 million of total adjusted ebitdda and adjusted ebitdda margin of 23% repurchased 407,293 shares for $15.0 million, or $37 per share completed two large rural land sales, including 1,800 acres of former deltic timberlands for $11,000 per acre “our timberlands and real estate businesses continued to perform well during the quarter despite extremely wet weather and difficult operating conditions in the south while our wood products results declined significantly due to a 35% drop in lumber prices compared to one year ago,” said mike covey, chairman and chief executive officer. “our real estate business closed two large transactions in the quarter, including the sale of rural land in arkansas for $11,000 per acre. we returned $79 million to shareholders during the first half of the year in the form of dividends and share repurchases totaling $25 million. we continue to invest capital in our mills and are on pace to complete $40 million of improvements to expand capacity and increase grade recovery,” stated mr. covey. financial highlights ($ in millions, except per share data) q2 2019 q1 2019 q2 2018 revenues $ 215.6 $ 181.7 $ 268.2 net income $ 17.1 $ 6.6 $ 46.1 weighted average shares outstanding, diluted (in thousands) 67,713 67,916 63,316 net income per diluted share $ 0.25 $ 0.10 $ 0.73 adjusted net income $ 17.1 $ 5.3 $ 47.2 adjusted net income per diluted share $ 0.25 $ 0.08 $ 0.75 total adjusted ebitdda $ 49.0 $ 28.3 $ 94.2 distributions per share $ 0.40 $ 0.40 $ 0.40 net cash from operations $ 48.5 $ 19.1 $ 60.5 cash and cash equivalents $ 98.0 $ 104.8 $ 125.7 business performance: q2 2019 vs. q1 2019 timberlands second quarter 2019 highlights northern sawlog prices increased 8% due to higher lumber index pricing and seasonally lighter logs northern sawlog volumes decreased seasonally due to spring break-up southern sawlog and pulpwood prices increased as a result of continued wet weather and constrained log supply forest management costs increased seasonally ($ in millions) q2 2019 q1 2019 $ change timberlands revenues $ 66.9 $ 68.2 $ (1.3 ) timberlands adjusted ebitdda $ 26.1 $ 26.9 $ (0.8 ) wood products second quarter 2019 highlights average lumber price was $378 per mbf q2 2019, down slightly from q1 2019 lumber shipments increased 14% as a result of catch up from q1 2019 transportation and weather challenges three mills took downtime q2 2019 for planned maintenance and capital projects lumber inventory at end of q2 2019 was written down $7.4 million to net realizable value compared to $1.4 million q1 2019 ($ in millions) q2 2019 q1 2019 $ change wood products revenues $ 138.0 $ 132.3 $ 5.7 wood products adjusted ebitdda $ (2.0 ) $ 7.2 $ (9.2 ) real estate second quarter 2019 highlights sold 12,375 acres of rural real estate at an average price of $2,450 per acre, including a former deltic tract for $19.6 million sold 44 residential lots at an average of $85,000 per lot ($ in millions) q2 2019 q1 2019 $ change real estate revenues $ 36.4 $ 6.2 $ 30.2 real estate adjusted ebitdda $ 31.3 $ 2.7 $ 28.6 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 30, 2019, 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 investor resources link or by conference call at 1-877-823-6919 for u.s./canada and 1-647-689-5576 for international callers. participants will be asked to provide conference i.d. number 1146306. 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 6, 2019 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 1146306 to access the replay. about potlatchdeltic potlatchdeltic (nasdaq:pch) is a leading real estate investment trust (reit) that owns nearly 1.9 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 practices, is dedicated to long-term stewardship and sustainable management of its timber resources. 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 litigation reform act of 1995 as amended, including without limitation, our expectations regarding our stepped-up capital expenditure program, the u.s. housing market and repair and remodel market; lumber demand, pricing, revenues and q3 and q4 costs and expenses; q3 lumber shipments; 2019 lumber shipments; effects of announced curtailments and permanent closures of sawmills; expectation that shortfall in southern harvest will be made up in the second half of 2019; q3 2019 northern timber harvest and sawlog prices; q3 2019 southern harvest volumes and sawlog prices; q3 2019 northern and southern sawlog mix; 2019 harvest plan; wood products 2019 capital expenditures; total 2019 capital expenditures; real estate sales, pricing and cost basis; development real estate sales, pricing and land basis; the direction of our business markets; business conditions; q3 2019 adjusted ebitdda; q3 2019 interest expense; q3 2019 corporate expense; q3 2019 income tax; dividend payout ratio; and similar matters. 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 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; changes in interest rates; changes in the level of construction activity; changes in asia demand; changes in tariffs, quotas and trade agreements involving wood products; currency fluctuation; changes in demand for our products; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; restrictions on harvesting due to fire danger; changes in raw material, fuel and other costs; 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 income unaudited three months ended six months ended june 30, march 31, june 30, june 30, (in thousands, except per share amounts) 2019 2019 2018 2019 2018 revenues $ 215,581 $ 181,716 $ 268,233 $ 397,297 $ 468,130 costs and expenses: cost of goods sold 175,673 154,215 180,906 329,888 320,061 selling, general and administrative expenses 14,952 16,570 16,892 31,522 30,548 gain on sale of facility — (9,176 ) — (9,176 ) — deltic merger-related costs — — 1,018 — 20,273 190,625 161,609 198,816 352,234 370,882 operating income 24,956 20,107 69,417 45,063 97,248 interest expense, net (7,882 ) (5,464 ) (9,356 ) (13,346 ) (15,016 ) loss on extinguishment of debt — (5,512 ) — (5,512 ) — non-operating pension and other postretirement costs (889 ) (980 ) (1,908 ) (1,869 ) (3,765 ) income before income taxes 16,185 8,151 58,153 24,336 78,467 income tax benefit (expense) 952 (1,591 ) (12,005 ) (639 ) (17,722 ) net income $ 17,137 $ 6,560 $ 46,148 $ 23,697 $ 60,745 net income per share: basic $ 0.25 $ 0.10 $ 0.73 $ 0.35 $ 1.07 diluted $ 0.25 $ 0.10 $ 0.73 $ 0.35 $ 1.06 dividends per share $ 0.40 $ 0.40 $ 0.40 $ 0.80 $ 0.80 weighted-average shares outstanding (in thousands): basic 67,664 67,860 62,980 67,774 56,739 diluted 67,713 67,916 63,316 67,866 57,128 potlatchdeltic corporation condensed consolidated balance sheets unaudited (in thousands, except per share amounts) june 30, 2019 december 31, 2018 assets current assets: cash and cash equivalents $ 97,970 $ 76,639 customer receivables, net 24,479 21,405 inventories, net 54,121 60,805 other current assets 19,890 22,675 assets held for sale — 80,674 total current assets 196,460 262,198 property, plant and equipment, net 276,592 272,193 investment in real estate held for development and sale 79,238 79,537 timber and timberlands, net 1,655,853 1,672,815 intangible assets, net 17,439 17,828 other long-term assets 33,359 21,281 total assets $ 2,258,941 $ 2,325,852 liabilities and stockholders’ equity current liabilities: accounts payable and accrued liabilities $ 78,492 $ 60,993 current portion of long-term debt 39,988 39,973 current portion of pension and other postretirement employee benefits 5,997 5,997 liabilities held for sale — 29,321 total current liabilities 124,477 136,284 long-term debt 716,094 715,391 pension and other postretirement employee benefits 110,525 110,659 deferred tax liabilities, net 14,623 32,009 other long-term obligations 47,172 16,730 total liabilities 1,012,891 1,011,073 commitments and contingencies stockholders' equity: preferred stock, authorized 4,000 shares, no shares issued — — common stock, $1 par value, authorized 100,000 shares, issued 67,186 and 67,570 shares 67,186 67,570 additional paid-in capital 1,662,381 1,659,031 accumulated deficit (337,330 ) (282,391 ) accumulated other comprehensive loss (146,187 ) (129,431 ) total stockholders’ equity 1,246,050 1,314,779 total liabilities and stockholders' equity $ 2,258,941 $ 2,325,852 potlatchdeltic corporation condensed consolidated statements of cash flows unaudited for the three months ended for the six months ended (in thousands) june 30, 2019 march 31, 2019 june 30, 2018 june 30, 2019 june 30, 2018 cash flows from operating activities net income $ 17,137 $ 6,560 $ 46,148 $ 23,697 $ 60,745 adjustments: depreciation, depletion and amortization 17,137 16,274 21,605 33,411 34,240 basis of real estate sold 7,427 1,556 2,820 8,983 6,425 gain on sale of facility — (9,176 ) — (9,176 ) — loss on extinguishment of debt — 5,512 — 5,512 — change in deferred taxes (1,139 ) (16,099 ) 3,856 (17,238 ) 2,798 pension and other postretirement employee benefits 2,831 3,106 4,185 5,937 7,999 equity-based compensation expense 1,832 1,617 1,795 3,449 4,889 other, net (1,142 ) (786 ) (129 ) (1,928 ) (671 ) change in working capital and operating-related activities, net 8,507 13,983 (18,782 ) 22,490 (9,008 ) real estate development expenditures (2,715 ) (1,766 ) (1,057 ) (4,481 ) (1,665 ) funding of pension and other postretirement employee benefits (1,421 ) (1,714 ) — (3,135 ) (10,397 ) net cash provided by operating activities 48,454 19,067 60,441 67,521 95,355 cash flows from investing activities property, plant and equipment additions (11,742 ) (3,760 ) (7,741 ) (15,502 ) (11,373 ) timberlands reforestation and roads (3,948 ) (4,242 ) (4,259 ) (8,190 ) (7,119 ) acquisition of timber and timberlands (278 ) — (163 ) (278 ) (163 ) cash and cash equivalents acquired in merger — — — — 3,419 proceeds on sale of facility (1,252 ) 60,045 — 58,793 — other, net 303 130 299 433 531 net cash provided by (used in) investing activities (16,917 ) 52,173 (11,864 ) 35,256 (14,705 ) cash flows from financing activities distributions to common stockholders (26,881 ) (27,065 ) (25,101 ) (53,946 ) (50,203 ) proceeds from potlatch revolving line of credit — — — — 100,000 repayment of potlatch revolving line of credit — — — — (100,000 ) repayment of deltic revolving line of credit — — — — (106,000 ) proceeds from long-term debt — 150,000 — 150,000 100,000 repayment of long-term debt — (150,000 ) — (150,000 ) (14,250 ) premiums and fees on debt retirement — (4,865 ) — (4,865 ) — repurchase of common stock (15,015 ) (10,158 ) — (25,173 ) — other, net (51 ) (213 ) (97 ) (264 ) (4,935 ) net cash used in financing activities (41,947 ) (42,301 ) (25,198 ) (84,248 ) (75,388 ) change in cash, cash equivalents and restricted cash (10,410 ) 28,939 23,379 18,529 5,262 cash, cash equivalents and restricted cash, beginning 108,380 79,441 102,340 79,441 120,457 cash, cash equivalents and restricted cash, ending $ 97,970 $ 108,380 $ 125,719 $ 97,970 $ 125,719 potlatchdeltic corporation segment information unaudited for the three months ended six months ended june 30, march 31, june 30, june 30, (in thousands) 2019 2019 2018 2019 2018 revenues timberlands $ 66,881 $ 68,158 $ 92,511 $ 135,039 $ 169,017 wood products 138,030 132,306 193,585 270,336 333,400 real estate 36,432 6,164 16,431 42,596 26,986 241,343 206,628 302,527 447,971 529,403 intersegment timberlands revenues (25,762 ) (24,912 ) (34,294 ) (50,674 ) (61,273 ) consolidated revenues $ 215,581 $ 181,716 $ 268,233 $ 397,297 $ 468,130 adjusted ebitdda1 timberlands $ 26,131 $ 26,850 $ 43,691 $ 52,981 $ 81,388 wood products (2,071 ) 7,226 51,566 5,155 80,516 real estate 31,316 2,703 12,300 34,019 20,302 corporate (9,346 ) (10,654 ) (11,264 ) (20,000 ) (19,980 ) eliminations and adjustments 3,050 2,127 (2,085 ) 5,177 (3,286 ) total adjusted ebitdda 49,080 28,252 94,208 77,332 158,940 basis of real estate sold (7,427 ) (1,556 ) (2,820 ) (8,983 ) (6,425 ) depreciation, depletion and amortization (16,727 ) (15,797 ) (20,950 ) (32,524 ) (33,146 ) interest expense, net (7,882 ) (5,464 ) (9,356 ) (13,346 ) (15,016 ) loss on extinguishment of debt — (5,512 ) — (5,512 ) — non-operating pension and other postretirement employee benefits (889 ) (980 ) (1,908 ) (1,869 ) (3,765 ) gain (loss) on fixed assets 30 32 (3 ) 62 1 gain on sale of facility — 9,176 — 9,176 — inventory purchase price adjustment in cost of goods sold — — — — (1,849 ) deltic merger-related costs — — (1,018 ) — (20,273 ) income before income taxes $ 16,185 $ 8,151 $ 58,153 $ 24,336 $ 78,467 depreciation, depletion and amortization timberlands $ 10,469 $ 10,265 $ 14,598 $ 20,734 $ 23,244 wood products 5,861 5,042 6,069 10,903 9,423 real estate 147 209 77 356 117 corporate 250 281 206 531 362 16,727 15,797 20,950 32,524 33,146 bond discounts and deferred loan fees2 410 477 655 887 1,094 total depreciation, depletion and amortization $ 17,137 $ 16,274 $ 21,605 $ 33,411 $ 34,240 basis of real estate sold real estate $ 7,455 $ 1,588 $ 2,896 $ 9,043 $ 6,619 eliminations and adjustments (28 ) (32 ) (76 ) (60 ) (194 ) total basis of real estate sold $ 7,427 $ 1,556 $ 2,820 $ 8,983 $ 6,425 1 management uses adjusted ebitdda to evaluate company and segment performance. see the reconciliation of total adjusted ebitdda on page 8, reconciliations. 2 bond discounts and deferred loan fees are included in interest expense, net in the condensed consolidated statements of income. potlatchdeltic corporation reconciliations unaudited three months ended six months ended june 30, march 31, june 30, june 30, (in thousands, except per share amount) 2019 2019 2018 2019 2018 total adjusted ebitdda net income (gaap) $ 17,137 $ 6,560 $ 46,148 $ 23,697 $ 60,745 interest, net 7,882 5,464 9,356 13,346 15,016 income taxes (952 ) 1,591 12,005 639 17,722 depreciation, depletion and amortization 16,727 15,797 20,950 32,524 33,146 basis of real estate sold 7,427 1,556 2,820 8,983 6,425 loss on extinguishment of debt — 5,512 — 5,512 — non-operating pension and other postretirement benefit costs 889 980 1,908 1,869 3,765 deltic merger-related costs — — 1,018 — 20,273 gain on sale of facility — (9,176 ) — (9,176 ) — inventory purchase price adjustment in cost of goods sold — — — — 1,849 (gain) loss on fixed assets (30 ) (32 ) 3 (62 ) (1 ) total adjusted ebitdda $ 49,080 $ 28,252 $ 94,208 $ 77,332 $ 158,940 adjusted net income net income (gaap) $ 17,137 $ 6,560 $ 46,148 $ 23,697 $ 60,745 special items: loss on extinguishment of debt — 5,512 — 5,512 — gain on sale of facility, after tax — (6,790 ) — (6,790 ) — deltic merger-related costs — — 1,018 — 20,273 inventory purchase price adjustment in cost of goods sold, after tax — — — — 1,368 adjusted net income $ 17,137 $ 5,282 $ 47,166 $ 22,419 $ 82,386 adjusted net income per diluted share net income per diluted share (gaap) $ 0.25 $ 0.10 $ 0.73 $ 0.35 $ 1.06 special items: loss on extinguishment of debt — 0.08 — 0.08 — gain on sale of facility, after tax — (0.10 ) — (0.10 ) — deltic merger-related costs — — 0.02 — 0.36 inventory purchase price adjustment in cost of goods sold, after tax — — — — 0.02 adjusted net income per diluted share $ 0.25 $ 0.08 $ 0.75 $ 0.33 $ 1.44
