Potlatchdeltic corporation reports third quarter 2022 results
Spokane, wash.--(business wire)--potlatchdeltic corporation (nasdaq: pch) today reported net income of $46.0 million, or $0.64 per diluted share, on revenues of $306.7 million for the quarter ended september 30, 2022. excluding after tax special items consisting of a gain on insurance recoveries and catchmark merger related expenses, adjusted net income was $53.2 million, or $0.74 per diluted share for the third quarter of 2022. net income was $65.7 million, or $0.97 per diluted share, on revenues of $287.3 million for the quarter ended september 30, 2021. excluding an after-tax gain on insurance recoveries, adjusted net income was $62.4 million, or $0.92 per diluted share for the third quarter of 2021. third quarter 2022 highlights generated total adjusted ebitdda of $101.1 million and total adjusted ebitdda margin of 33% successfully completed our merger with catchmark creating a leading integrated timber reit used existing interest rate swaps to reduce the combined company's annual interest expense by $8.5 million, reducing our weighted average cost of debt from 3.1% to 2.4% achieved $15 million of catchmark cad synergies and now expect $21 million versus our $16 million target restarted the large log line at the ola, arkansas sawmill on schedule maintained strong liquidity position of $773 million as of september 30, 2022 “third quarter 2022 marked another important milestone in our company’s history as we successfully closed our merger with catchmark, further diversifying our timberland ownership into some of the strongest markets in the u.s. south,” said eric cremers, president and chief executive officer. “overall, we have acquired almost 500,000 acres of timberlands in the last year at relatively attractive prices, increasing our stable cash flows. all of our businesses continue to perform well and we generated total adjusted ebitdda of $101 million in the third quarter. our strong balance sheet and liquidity provide a high degree of flexibility as we navigate the current economic environment, along with the ability to continue growing shareholder value,” stated mr. cremers. financial highlights ($ in millions, except per share data) q3 2022 q2 2022 q3 2021 revenues $ 306.7 $ 359.6 $ 287.3 net income $ 46.0 $ 120.2 $ 65.7 weighted average shares outstanding, diluted (in thousands) 71,632 69,791 67,648 net income per diluted share $ 0.64 $ 1.72 $ 0.97 adjusted net income $ 53.2 $ 112.9 $ 62.4 adjusted net income per diluted share $ 0.74 $ 1.61 $ 0.92 total adjusted ebitdda $ 101.1 $ 175.1 $ 107.2 dividends per share $ 0.44 $ 0.44 $ 0.41 net cash from operations $ 80.3 $ 147.9 $ 111.9 cash and cash equivalents $ 484.0 $ 511.2 $ 592.8 business performance: q3 2022 vs. q2 2022 timberlands third quarter 2022 highlights timberlands adjusted ebitdda increased $6.6 million from q2 2022 northern and southern harvest volumes increased seasonally northern sawlog prices decreased 25% due largely to lower indexed sawlog prices southern sawlog prices were relatively flat higher log & haul costs were primarily driven by increased fuel costs and constrained capacity ($ in millions) q3 2022 q2 2022 $ change timberlands revenues $ 134.6 $ 105.5 $ 29.1 timberlands adjusted ebitdda $ 64.5 $ 57.9 $ 6.6 wood products third quarter 2022 highlights wood products adjusted ebitdda decreased $75.9 million from q2 2022 average lumber price decreased 34% to $572 per mbf in q3 2022 lumber production increased in q3 2022 leading to higher fixed cost absorption plywood shipments and price realizations declined on lower demand ($ in millions) q3 2022 q2 2022 $ change wood products revenues $ 193.4 $ 266.6 $ (73.2 ) wood products adjusted ebitdda $ 31.3 $ 107.2 $ (75.9 ) real estate third quarter 2022 highlights real estate adjusted ebitdda decreased $7.7 million from q2 2022 sold 1,622 acres of rural land at an average price of $3,811 per acre sold 48 residential lots at an average price of $78,344 per lot sold 35 commercial acres for $182,520 per acre ($ in millions) q3 2022 q2 2022 $ change real estate revenues $ 19.0 $ 26.7 $ (7.7 ) real estate adjusted ebitdda $ 14.1 $ 21.8 $ (7.7 ) 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, october 25, 2022, 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 november 1, 2022, 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; synergies expected to be realized following the merger with catchmark timber trust, inc.; expectations about the start-up of the ola, arkansas sawmill’s large log line; expectations regarding the weighted average cost of debt; business conditions and strategies; 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 the 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 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 disruptions; share price; the successful execution of the company’s strategic plans; the ability of the company and its contractors to successfully reach performance expectations of the new large log line at the ola, arkansas sawmill; 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 nine months ended september 30, june 30, september 30, september 30, september 30, (in thousands, except per share amounts) 2022 2022 2021 2022 2021 revenues $ 306,693 $ 359,597 $ 287,330 $ 1,077,640 $ 1,089,029 costs and expenses: cost of goods sold 220,876 191,334 190,602 592,057 537,683 selling, general and administrative expenses 18,878 20,412 18,512 55,584 54,782 catchmark merger-related expenses 26,007 — — 26,007 — gain on fire damage (24,913 ) (9,868 ) (4,394 ) (34,505 ) (4,394 ) 240,848 201,878 204,720 639,143 588,071 operating income 65,845 157,719 82,610 438,497 500,958 interest expense, net (8,280 ) (7,419 ) (8,641 ) (18,593 ) (20,414 ) pension settlement charge — — — (14,165 ) — non-operating pension and other postretirement employee benefit costs (1,808 ) (1,809 ) (3,271 ) (5,546 ) (9,956 ) other (1 ) — — (1 ) — income before income taxes 55,756 148,491 70,698 400,192 470,588 income taxes (9,801 ) (28,269 ) (5,031 ) (70,135 ) (85,910 ) net income $ 45,955 $ 120,222 $ 65,667 $ 330,057 $ 384,678 net income per share: basic $ 0.64 $ 1.73 $ 0.98 $ 4.70 $ 5.72 diluted $ 0.64 $ 1.72 $ 0.97 $ 4.69 $ 5.69 dividends per share $ 0.44 $ 0.44 $ 0.41 $ 1.32 $ 1.23 weighted-average shares outstanding: basic 71,486 69,580 67,315 70,171 67,275 diluted 71,632 69,791 67,648 70,308 67,588 potlatchdeltic corporation condensed consolidated balance sheets unaudited (in thousands, except per share amounts) september 30, 2022 december 31, 2021 assets current assets: cash and cash equivalents $ 484,018 $ 296,151 customer receivables, net 37,224 31,028 inventories, net 62,584 72,369 other current assets 41,551 21,630 total current assets 625,377 421,178 property, plant and equipment, net 319,232 292,320 investment in real estate held for development and sale 57,458 65,604 timber and timberlands, net 2,520,505 1,682,671 intangible assets, net 17,906 15,491 other long-term assets 184,310 57,951 total assets $ 3,724,788 $ 2,535,215 liabilities and stockholders’ equity current liabilities: accounts payable and accrued liabilities $ 111,607 $ 78,209 current portion of long-term debt 39,996 42,977 current portion of pension and other postretirement employee benefits 4,993 4,993 total current liabilities 156,596 126,179 long-term debt 992,507 715,279 pension and other postretirement employee benefits 92,990 83,674 deferred tax liabilities, net 38,469 34,874 other long-term obligations 38,807 49,076 total liabilities 1,319,369 1,009,082 commitments and contingencies stockholders' equity: common stock, $1 par value, authorized 100,000 shares, issued and outstanding 80,777 and 69,064 shares 80,777 69,064 additional paid-in capital 2,292,130 1,781,217 accumulated deficit (52,089 ) (280,910 ) accumulated other comprehensive income (loss) 84,601 (43,238 ) total stockholders’ equity 2,405,419 1,526,133 total liabilities and stockholders' equity $ 3,724,788 $ 2,535,215 potlatchdeltic corporation condensed consolidated statements of cash flows unaudited three months ended nine months ended (in thousands) september 30, 2022 june 30, 2022 september 30, 2021 september 30, 2022 september 30, 2021 cash flows from operating activities net income $ 45,955 $ 120,222 $ 65,667 $ 330,057 $ 384,678 adjustments to reconcile net income to net cash from operating activities: depreciation, depletion and amortization 27,707 20,379 21,534 67,960 57,365 basis of real estate sold 6,845 7,325 6,697 25,024 22,733 change in deferred taxes 730 34 2,659 (1,359 ) 3,221 pension and other postretirement employee benefits 3,539 3,540 5,484 10,936 16,595 pension settlement charge — — — 14,165 — equity-based compensation expense 11,717 2,368 2,275 16,141 6,345 gain on fire damage (24,913 ) (9,868 ) (4,394 ) (34,505 ) (4,394 ) other, net 144 (308 ) 928 (455 ) 633 change in working capital and operating-related activities, net (5,901 ) (1,236 ) 17,072 14,071 (20,082 ) real estate development expenditures (1,796 ) (3,029 ) (2,435 ) (6,986 ) (6,434 ) funding of pension and other postretirement employee benefits (1,026 ) (968 ) (3,585 ) (3,290 ) (7,418 ) proceeds from insurance recoveries 17,250 9,428 — 26,678 — net cash from operating activities 80,251 147,887 111,902 458,437 453,242 cash flows from investing activities property, plant and equipment additions (7,223 ) (24,211 ) (10,348 ) (44,000 ) (26,291 ) timberlands reforestation and roads (3,832 ) (3,740 ) (4,282 ) (12,220 ) (12,236 ) acquisition of timber and timberlands (53,863 ) (42,218 ) (258 ) (96,081 ) (2,450 ) proceeds from property insurance — — 13,250 — 13,250 cash acquired in catchmark merger 23,571 — — 23,571 — other, net 2,318 (1,475 ) 358 935 993 net cash from investing activities (39,029 ) (71,644 ) (1,280 ) (127,795 ) (26,734 ) cash flows from financing activities distributions to common stockholders (35,530 ) (30,524 ) (27,489 ) (96,578 ) (82,462 ) repurchase of common stock (371 ) (4,156 ) — (4,527 ) — proceeds from issuance of long-term debt 277,500 — — 277,500 — repayment of long-term debt (300,000 ) — — (303,000 ) — other, net (4,026 ) (1,023 ) (2,396 ) (6,120 ) (3,619 ) net cash from financing activities (62,427 ) (35,703 ) (29,885 ) (132,725 ) (86,081 ) change in cash, cash equivalents and restricted cash (21,205 ) 40,540 80,737 197,917 340,427 cash, cash equivalents and restricted cash, beginning 515,894 475,354 512,030 296,772 252,340 cash, cash equivalents and restricted cash, ending1 $ 494,689 $ 515,894 $ 592,767 $ 494,689 $ 592,767 1 includes $10.7 million and $4.7 million at september 30, 2022 and june 30, 2022, respectively, intended to be reinvested in timber and timberlands and classified as restricted cash in other long-term assets in the condensed consolidated balance sheets. potlatchdeltic corporation segment information unaudited three months ended nine months ended september 30, june 30, september 30, september 30, september 30, (in thousands) 2022 2022 2021 2022 2021 revenues timberlands $ 134,576 $ 105,486 $ 129,543 $ 363,719 $ 362,675 wood products 193,431 266,633 187,760 755,806 814,729 real estate 19,008 26,736 13,497 79,809 49,808 347,015 398,855 330,800 1,199,334 1,227,212 intersegment timberlands revenues (40,322 ) (39,258 ) (43,470 ) (121,694 ) (138,183 ) consolidated revenues $ 306,693 $ 359,597 $ 287,330 $ 1,077,640 $ 1,089,029 adjusted ebitdda1 timberlands $ 64,482 $ 57,890 $ 76,023 $ 198,806 $ 221,140 wood products 31,258 107,256 26,566 288,465 356,654 real estate 14,140 21,816 9,069 66,080 37,450 corporate (12,629 ) (13,912 ) (11,496 ) (36,125 ) (35,028 ) eliminations and adjustments 3,839 2,120 7,021 4,596 (3,063 ) total adjusted ebitdda 101,090 175,170 107,183 521,822 577,153 interest expense, net (8,280 ) (7,419 ) (8,641 ) (18,593 ) (20,414 ) depreciation, depletion and amortization (27,329 ) (20,007 ) (21,131 ) (66,838 ) (56,156 ) basis of real estate sold (6,845 ) (7,325 ) (6,697 ) (25,024 ) (22,733 ) catchmark merger-related expenses (26,007 ) — — (26,007 ) — gain on fire damage 24,913 9,868 4,394 34,505 4,394 pension settlement charge — — — (14,165 ) — non-operating pension and other postretirement employee benefits (1,808 ) (1,809 ) (3,271 ) (5,546 ) (9,956 ) gain (loss) on disposal of fixed assets 23 13 (1,139 ) 39 (1,700 ) other (1 ) — — (1 ) — income before income taxes $ 55,756 $ 148,491 $ 70,698 $ 400,192 $ 470,588 depreciation, depletion and amortization timberlands $ 16,963 $ 11,563 $ 11,893 $ 40,687 $ 33,792 wood products 10,069 8,136 8,879 25,226 21,261 real estate 175 173 162 518 477 corporate 122 135 197 407 626 27,329 20,007 21,131 66,838 56,156 bond discounts and deferred loan fees2 378 372 403 1,122 1,209 total depreciation, depletion and amortization $ 27,707 $ 20,379 $ 21,534 $ 67,960 $ 57,365 basis of real estate sold real estate $ 6,845 $ 7,328 $ 6,703 $ 25,033 $ 22,751 eliminations and adjustments — (3 ) (6 ) (9 ) (18 ) total basis of real estate sold $ 6,845 $ 7,325 $ 6,697 $ 25,024 $ 22,733 1 management uses adjusted ebitdda to evaluate company and segment performance. see the reconciliation of total adjusted ebitdda below. 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 nine months ended september 30, june 30, september 30, september 30, september 30, (in thousands, except per share amount) 2022 2022 2021 2022 2021 total adjusted ebitdda net income (gaap) $ 45,955 $ 120,222 $ 65,667 $ 330,057 $ 384,678 interest expense, net 8,280 7,419 8,641 18,593 20,414 income taxes 9,801 28,269 5,031 70,135 85,910 depreciation, depletion and amortization 27,329 20,007 21,131 66,838 56,156 basis of real estate sold 6,845 7,325 6,697 25,024 22,733 catchmark merger-related expenses 26,007 — — 26,007 — gain on fire damage (24,913 ) (9,868 ) (4,394 ) (34,505 ) (4,394 ) pension settlement charge — — — 14,165 — non-operating pension and other postretirement benefit costs 1,808 1,809 3,271 5,546 9,956 (gain) loss on disposal of fixed assets (23 ) (13 ) 1,139 (39 ) 1,700 other 1 — — 1 — total adjusted ebitdda $ 101,090 $ 175,170 $ 107,183 $ 521,822 $ 577,153 adjusted net income net income (gaap) $ 45,955 $ 120,222 $ 65,667 $ 330,057 $ 384,678 special items: catchmark merger-related expenses, after tax 25,823 — — 25,823 — gain on fire damage, after tax (18,559 ) (7,351 ) (3,252 ) (25,706 ) (3,252 ) pension settlement charge, after tax — — — 10,553 — adjusted net income $ 53,219 $ 112,871 $ 62,415 $ 340,727 $ 381,426 adjusted net income per diluted share net income per diluted share (gaap) $ 0.64 $ 1.72 $ 0.97 $ 4.69 $ 5.69 special items: catchmark merger-related expenses, after tax 0.36 — — 0.37 — gain on fire damage, after tax (0.26 ) (0.11 ) (0.05 ) (0.37 ) (0.05 ) pension settlement charge, after tax — — — 0.15 — adjusted net income per diluted share $ 0.74 $ 1.61 $ 0.92 $ 4.84 $ 5.64
