PotlatchDeltic Corporation (PCH) on Q2 2021 Results - Earnings Call Transcript
Operator: Good morning. My name is May and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Second Quarter 2021 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. . Thank you. I would now like to turn the call over to Mr. Jerry Richards, Vice President and Chief Financial Officer for opening remarks. Sir, you may proceed. Jerry Richards: All right. Thank you, May, and good morning and welcome to PotlatchDeltic's second quarter 2021 earnings conference call. Joining me on the call is Eric Cremers, PotlatchDeltic's President and Chief Executive Officer. Eric Cremers: Thank you, Jerry. Lumber prices continued their historic run in the second quarter, driving another quarter of record financial performance for the company. Our consolidated EBITDA was $275 million in Q2, which is our fourth consecutive quarter record financial performance. Our Wood Products segment generated $205 million of EBITDA in the second quarter. To provide context, this amount exceeded Wood Products EBITDA for full-year 2020, which was an annual record itself. As previously announced, we had a fire at our Ola, Arkansas sawmill on June 13th. Fortunately, nobody was injured and the damage was limited to just the large log primary breakdown machine center. Insurance will cover the cost of restoring operations at the mill, along with lost profits above a $2 million deductible. Our team is actively working on demolition and equipment replacement options. Although, we have not yet finalized our plans, we are working on restarting the large log line as soon as possible, potentially in late Q1 of next year. It is premature to commit to that schedule as we have not yet finalized the purchase of a replacement line. As a reminder, Ola had an annual capacity of 150 million board feet prior to the fire. Our plywood business continues to perform exceptionally well, and we expect record profitability from this business this year. As we have discussed on prior calls, our industrial grade plywood is used in big ticket boats, RVs, truck trailers, and furniture. Demand for these items remains very strong. Our Timberland segment earned record EBITDA of $77 million in the second quarter, despite Idaho harvest volumes being at their seasonal low point due to spring breakup. Our average sawlog price of $245 per ton in Idaho highlights the value being created by our indexed sawlog sales contracts, which are unique in the industry. Our Idaho team did a great job exceeding the harvest plan in the first half of the year, realizing attractive sawlog prices, and reducing the risk of not meeting our annual harvest plan because of high fire danger. Jerry Richards: Thank you, Eric. Starting with Page 4 of the slides, our adjusted EBITDA increased from $195 million in the first quarter to $275 million in the second quarter. This is our fourth quarterly EBITDA record in a row and we have generated $769 million of EBITDA over the last 12 months. The effect of higher lumber prices more than offset seasonally lower harvest volumes in the second quarter. Information for our Timberland segment is displayed on Slides 5 through 7. The segment's adjusted EBITDA increased from $68 million in the first quarter to $77 million in the second quarter. Our team leveraged good logging conditions and strong markets to harvest 354,000 tons of sawlogs in the north in the second quarter. This volume is seasonally lower than the 427,000 tons that we harvested in the first quarter due to typical Spring breakup. Northern sawlog prices increased from $178 per ton in the first quarter to a record $245 per ton in the second quarter or 38%. Lumber indexed and Cedar sawlogs have both experienced healthy price increases. In the South, we harvested 876,000 tons in the second quarter compared to 893,000 tons in the first quarter. Logging activity was constrained by wet weather. Our Southern sawlog prices were flat sequentially. Turning to Wood Products on Slides 8 and 9, adjusted EBITDA increased from $126 million in the first quarter to $205 million in the second quarter. This is another quarterly EBITDA record for the segment. Our average lumber price realizations increased 33% from $890 per 1,000 board feet in the first quarter to $1,185 per 1,000 board feet in the second quarter. To provide context, it's helpful to look at our lumber prices by month. Our average lumber price realizations per 1,000 board feet increased from $1,045 in April to $1,218 in May, and finally to $1,280 in June. We shipped 216 million board feet of lumber in the second quarter. While this was approximately 7% below our expectations, our team did a good job managing a drop in home center demand after Memorial Day and truck and rail transportation challenges to limit the shortfall. Also, as Eric discussed earlier, our Ola Arkansas sawmill has not been operating since the fire occurred on June 13th, reducing our production. Operator: . Your first question comes from the line of Ketan Mamtora with BMO Capital Markets. Your line is open. Ketan Mamtora: Thank you. And congrats on a very strong second quarter, Eric and Jerry. First question on capital allocation, maybe to start with and I recognizing that you don't want to jump in front of the board on special dividends. Can you give us some sense of what is the right way to think about the framework around sort of the level of special dividends? Do you think about it in terms of cash flow for the year? Should we be thinking about it in terms of leverage? Any color there will be helpful. Jerry Richards: Yes. That's probably a really good place to start. Ketan, this is Jerry. I'm sure that's topical for a lot of folks, including a lot of shareholders. First off, we have a site class problem where our leverage to lumber prices has really generated a lot of value this year. And fortunately, a lot of that value is going to be shared with shareholders in the form of a special dividend. And we do expect that the amount that will be paid out will be significant and we've also have described it in presentations this last quarter as multiples of the regular dividend, which is currently a $1.64 a share. And to set the stage what really drives again, it goes back to the value we're creating through the indexed log arrangement in Idaho, as well as the strong lumber prices that are coming through our lumber business. And as a REIT, we can only retain so much cash. I mean, we have the benefit usually to retain a fair amount, but the earnings have been so high this year that we have to distribute that to maintain our REIT status, which we will never jeopardize that and certainly our destinies within our control here. So nobody should be worried that we're in danger of breaching those requirements. In terms of the amount, there's a lot of moving parts. With key one being what is -- what are the lumber prices for the rest of the year? And there’s a lot of complexities given that's REIT requirement driven. There’s a lot of complexities, a lot of variables, we are in the process of looking through and discussing with our Board. So unfortunately at this point, I can't give much more guidance or color or sideboards other than it will be significant. It will be in the fourth quarter. Eric Cremers: And Ketan, I'll just add one comment to what Jerry just said. There's a lot of volatility right now in our earnings stream, particularly in Wood Products, as you might imagine, given the change in lumber prices. And just a month or two ago, we had a Wood Products forecast for the year earnings that was roughly $200 million for the year higher than where we think we're going to end up now. So think about that $200 million spread across 70 million shares more or less, the amount of volatility in that earnings stream and therefore that dividend is enormous. So we're going to wait until we get to the end of the year to decide what the appropriate special dividend is. Ketan Mamtora: No, that's absolutely fair and I appreciate the color and the context there. Now, switching to the other side of capital allocation around M&A, can you talk about sort of what is your pipeline looking like and where do you see the most opportunities at the moment. I know it's -- if you look at sort of both on the Timberland side both Timberland and sawmills, I'm just curious kind of how the pipeline looks right now? Eric Cremers: Yes. There is a number of deals that we're currently looking at and we're currently working on. I don't like to get down into the specifics of these deals for competitive reasons. But what I would tell you and what I do think is interesting is that we -- we've been competing for these deals and on three recent ones; we were actually the high bid. And yet the seller changed their minds and decided to not transact, even though we were the high bid, in one case, we hit the number that they were looking for. And they just changed their minds and walked away from the deal. So I think Timberland M&A is picking up. It's getting interesting. People are seeing timber mark South data. They're seeing $1,500, $1,600 lumber, and they're getting excited. And so the bid ask spread may still be wide between buyers and sellers. But we continue to kick the tires on deals. And in fact, we did won a Mississippi this last quarter was 1,100 acres. It was an 11% IRR. So it created a lot of shareholder value for us. But we're not going to chase deals and overpay. We're only going to do deals that create shareholder value, just like that one that we closed in Q2. Ketan Mamtora: Got it. That's really helpful. I'll turn it over and jump back in the queue. Good luck in the back half of the year. Eric Cremers: Thanks. Operator: Your next question comes from the line of John Babcock of Bank of America. Your line is open. John Babcock: Hey and thank you for taking my questions. I guess just starting out, can you talk about, I know you mentioned, a little bit about what you're seeing in the market right now, in terms of lumber. Just want to get a sense for how demand is right now, relative to last, say probably just a two weeks ago, particularly at home centers, it sounds like that was where some of the weakness in demand that has been just kind of curious that's picked up. And then also what you're broadly seen from builders, if there's been any change in the trend there, any kind of data you can provide around that or at least commentary would be useful? Eric Cremers: Yes. So on the home center demand question, yes, when prices got up to $1,600 bucks or so, a month or two ago, essentially there was a buyer strike. It looks like to us DIY demand just dried up. And probably some of that might've just been due to people spending time on leisure activities in the summertime. It could have been that COVID was now in the rear view mirror. People would go out and travel and go to movies and restaurants and whatnot. But there was a real buyer strike that happened a month or two ago, and so demand just ground to a halt, virtually no takeaway. And we have started to see demand pickup from the home centers. It's not where it was a year ago. But it is increasing. So our view is that nobody wanted to get caught with a lot of $1,600 lumber on the balance sheet. And so they stopped buying. They let prices have now drifted lower. And now we're seeing demand come back because of the risk is off for the home centers. So we feel like demand is coming back. And now that we're getting into the fall, we're going to start to see R&R activity pick up again, as you know, as people return from summer vacation and whatnot. What I tell you on the housing start side is, I don't know that I've ever been this optimistic regarding the outlook for housing. It is just incredible. If you look at what the homebuilders, the public company homebuilders have been saying with recent earnings releases, whether D.R. Horton, Lennar, Pulte this morning, I could just go on and on about the very favorable things they're talking about in terms of exceptional demand out there. Now they're struggling to produce those housing units, because of shortages and supply chain issues. But there is just an unbelievable amount of demand. And if you look at what a lot of the pundits are saying, like FEA, for example, thinks that we're going to new housing starts, they're going to keep marching higher up to 1.8 million units per year over the next four or five years. So just really favorable demand outlook on the housing start side. John Babcock: Okay. And then just following up on that, particularly as it pertains to the home centers, I mean, it sounds like they were essentially trying to work through some of the higher priced inventory. Can you talk about to some actually extent that you have any color on this really how much might be left for them to virtual on that front. Also how should we think about when prices might come lower on that side at the home centers? I know that you're not directly in that business. And so it might be difficult to predict, but just trying to get a sense for that because that that ultimately may come into play in terms of overall no longer demand. Eric Cremers: Yes, it's really hard for us to know exactly where home center inventory and demand is, but what I'd tell you is that because they went on buyer's strike and there still is takeaway at the home centers. Their inventories have got to be really lean right now. And like I said, with these prices coming down to $600 bucks or so they're starting to step back into the market and replenish inventories. So I don't know, that's -- we don't have --we don't have direct insight into what the home centers doing just kind of anecdotal. John Babcock: Yes, that's fair. And then just last question, before I turn it over, I just want to get a quick sense on lumber and sawlog pricing and how we should think about how that rolls through results over the next quarter or two particularly just given the volatility in lumber pricing. So if you could just talk about the lag and kind of some of the color also you provided in the past that would be useful. Jerry Richards: Yes. I'll take that one, John. This is Jerry. So in terms of the lag is a reminder for the group, it's about a four-week lag in terms of lumber price resets. So when I talked in the script about lumber prices for us were down 50% so far in the third quarter compared to the second quarter average. You do have to lag that when you think about indexed sawlog pricing, again that's about a four-week lag. The other thing that's in the mix is Cedar, which typically sells four three and sometimes 4 times the value of mix sawlog. So we certainly have Cedar continue to be relatively strong and certainly not going to come off at the same level. And then the last thing I'll give you is actually in the prepared comments, Hey, I had kind of guided that we think third quarter Northern sawlog pricing is probably approximately the same as Q1 of 2021. So that that really should help you all dial-in at least what were our expectations are. Operator: Your next question comes from the line of Paul Quinn of RBC Capital. Your line is open. Paul Quinn: Maybe I'll start with the fire at Ola. Just, I know you got the $2 million deductible, how bad was the fire like, is that a -- is that a $20 million insurance claim. Maybe you could give us some context for it? Eric Cremers: Yes. So as we said in our opening remarks, I mean the fire, thankfully nobody was hurt. Thankfully the whole mill didn't burn to the ground. It was really just one machine center that got damaged. Now, unfortunately it is a very important machine center. The primary large log breakdown line that's an integral component to running your sawmill. And obviously those -- those machine centers are in very high demand right now from the equipment vendors. So we're trying to find a new line. We've identified a really good used one. And we've been in discussions with all the vendors about buying a new one. We'll see how the discussions play out, but I'm optimistic that we will wind up getting the -- the used one, which is it's been gently used so to speak. And we will wind up paying a premium. It’s probably; if I had to guess it's in the $15 million kind of range now insurance is going to cover that purchase. And there will be demolition and install costs, which again will be covered by insurance. It's hard to know what the full extent of our claim is going to be because from a business interruption standpoint, it's really dependent upon what happens to lumber prices. But we will be protected. Our P&L will be protected as if that Ola sawmill was up and running from a business interruption standpoint. So right now, I'd say it’s $15 million for that machinery. It's probably another $5 million to relocate it and install it and then it's plus a business interruption. Paul Quinn: Okay. And then just some equipment providers themselves, yes, my understanding is that they've got long lead order files two-years-plus. And so I suspect that wasn’t a option. How are you able to source a used one? And is it a working -- is it working right now in the sawmill or is it idle? Eric Cremers: Well, so two different things there. One is on the new equipment side, we can get one as early as middle of next year. So it's not two-year lead times for that that particular piece of equipment. So we could get a new one by the -- who knows late second or third quarter of next year. The used one, it's about eight to nine years old. It's at a idle sawmill today, so it’s not being run. It’s roughly been sitting idle for, I don't know, two to three years. It's very well maintained. That piece of machinery is still sold today by the vendor, which is a leading vendor in the industry. In fact, if we had to go out and buy a new one today, that's the exact piece of equipment we would buy. Now there've been modifications to that thing since it was originally sold software and whatnot, but we will make all those changes prior to implementing and installing that that piece of equipment. So from our view, it's as good as new. Paul Quinn: Okay. So I'm still -- like it doesn't sound like there’s a huge difference between you bring it up this used one and maybe the end of Q1 2022 and a new one in probably Q3 of 2022. So and insurance is covering the issue. Why would you go used versus new? Eric Cremers: Well, because we think that the used is basically as good as a new. We're going to do diligence on that piece of equipment. We're going to have the original vendor go in and inspect it. And we've been assured by them that this is as good as new. So in our mind there really is no difference. And we would just soon get that mill back up and running as soon as we can. When you have a mill down, your people tend to scatter. And we've talked about this on prior calls how challenging it is for the industry right now to get skilled labor. We don't want our people to scatter. We want them to stay at that mill. We want them to work. The longer we delayed that startup, the harder it's going to be for us to retain those people. Paul Quinn: Okay. That's a very good point. Okay. So maybe just turning to lumber, just on, I'd like the monthly breakdown in pricing, what is your July average price to-date? Eric Cremers: July average forecast is $720 bucks. Paul Quinn: Okay. Eric Cremers: Now remember order file -- so if I'll remember order files, we're always selling stuff out into the future. So some of that $720 captures those high prices that were -- we were still seeing back in June. Paul Quinn: Yes. I understand the lag. Okay. And then just you highlighted how strong the plywood market is that a meaningful pickup? Is that like a 5% annual run rate this year? Or is it more meaningful than that? Eric Cremers: I would -- I would say, we don't like for competitive reasons. We don't like to breakout the results of our plywood business. But just like with lumber, the earnings in that business, it's multiples of what it would be in a normal year. Paul Quinn: Okay. That's helpful. Thanks very much, guys. Best of luck. Eric Cremers: Thanks, Paul. Operator: Your next question comes from the line of Kurt Yinger of D.A. Davidson. Your line is open. Kurt Yinger: Hey, just starting off on the harvest outlook, I guess first, what should we be expecting in terms of normalized Idaho harvest levels going forward? And secondly, as we think about 2022 weather and demand permitting, is that roughly six million ton harvest level that originally outlined for this year a reasonable starting point? Jerry Richards: Yes, so Kurt I'll take that and this is Jerry. In terms of -- I'll start with the back part of your question, because I think it tees up the answer well, which is six million still is our normal runway, when you think about our Idaho and our Southern harvest, six million tons give or take is about the sustainable level, we were harvesting roughly the same amount that's growing each year. There's some moving parts this year in the harvest. Unfortunately, first half, Eric had touched on in his comments that our Ola, Timberlands district, our Ola sawmill, was a key outlet for the purchaser of a lot of the sawlogs that are produced in that region. So, we think part of the reason why the harvest guidance for the year has come down from the six million tons is we think we're going to be 200,000 tons short in that district for -- because of the Ola fire this year. So that harvest volume would be deferred, continue to grow fortunately, and it'll be delivered in future years. The other thing that's happening here, is in Idaho, certainly we have prioritized delivering sawlogs. So when we have logging contractor availability, we're going to push it to the sawlogs just to make sure that we can deliver into the strong markets. And pulpwood becomes less of a priority. So when you look at kind of the volumes so far this year, pretty anemic on the pulpwood side in Idaho, but as you recall, that's pretty low margin business to start with. And like I said, we've really shifted the logging capacity. So, the other explanation as to why we're short, 5.7 million tons versus a 6 million is there's probably 100,000 tons on the pulpwood in Idaho, at the end of the day, it's just a little margin stuff to at being there so. Eric Cremers: Well, especially when you think about all the sawmill residuals that are being produced or have been produced here over the last few quarters, it's really put downward pressure on pulpwood prices to where's like Jerry said, there's low or no margin in producing that stuff. Kurt Yinger: Got it, okay. That makes a lot of sense. And I guess just sticking on the log side; it looked like that was a modest headwind versus last quarter. But could you remind us how to think about the lag of those fiber costs in Idaho? Is that something you'd expect to get more pressure from in Q3 as you absorb Q2 pricing? Eric Cremers: Yes, just to clarify your question, are you thinking in terms of wood products purchase of logs, Kurt? Kurt Yinger: Correct. Eric Cremers: Okay. So that lag that I talked about earlier, it's about a four week lag in terms of a price reset. So, again, we saw or expect Northern sawlog pricing to come down, call it 25%, if you just take the marker, which is Q3 probably looks very similar to Q1 in terms of realization. I will tell you get some price relief, going forward in the St. Mary's Mill complex in terms of the indexed sawlogs, but probably not as fast as you're seeing the repairs -- as you're seeing the lumber price realizations come down. Kurt Yinger: Okay, got it. All right. So it's the same, I guess the pricing is going through the Timberland segment. That makes sense. Okay, and then I'm just curious if you could talk about with all this volatility, whether you're seeing any change in the approach to inventory or buying from your distributor customers and ultimately how you think that may impact the market going forward. You spoke to the psychology impact there. Is that something that you think will just be another factor kind of lending itself to more big swings going forward? Eric Cremers: Yes, there is a huge psychology impact from lumber purchasers. When prices get to really high levels, people start to get really nervous. They don't want to get stuck with a lot of inventory as you can imagine on their balance sheet. And so they'll stop buying but they want to meet end customer demand. So they tend to buy lumber, ship directly from mills via truck and not like rail where it takes a month or something. So the psychology is huge. We got to those high prices, buyers want really lean inventories and then prices collapsed especially as DIY wasn't showing up at the home centers to buy inventory. So now the situation is prices have really come down and the home centers have got really lean inventories. We think as we get into the fall, and people return from vacations and whatnot, we do think there's going to be a pickup in the DIY and the R&R segments. And demand is going to come back and the home centers are going to have to replenish inventories, and we think that's going to provide, some support for pricing here in the third and fourth quarters. So psychology is a large part of what happens here. Kurt Yinger: Right, great. Okay, great. Well, appreciate all the color and good luck here in the back half guys. Eric Cremers: Thanks Kurt. Operator: Your next question comes from the line of Mark Weintraub of Seaport Research Partners. Your line is open. Mark Weintraub: Thank you. So it's kind of interesting, as you were referencing the fact that your pulpwood prices and profitability is very low for the reasons you noted themselves. And then at the same time, we've been reading about how there's been some increase in pulpwood costs, because of weather, et cetera. I guess it sort of really brings to the forefront that maybe there are regional differences that go on in the South certainly from time-to-time. So trying to get a sense, I know that you sell a lot of logs, and you also buy a lot of logs in the South as a starting point. Are you basically selling and buying in the same wood baskets? Or do you have exposures in some wood baskets, where you're selling more, and you're buying more in others within the South? Eric Cremers: I guess to start with Mark, the reference -- my reference to weaker pulpwood prices was Idaho specific big picture. We're seeing pretty stable sawlog prices and pulpwood prices in our Southern wood baskets, kind of flies in the face of Timber-Mart South Report that came out recently, which on a simple average basis indicate that sawlog pricing at 13%. And like some people got excited that maybe the sawlog price recovery is here. Our view is it's not. A couple of things that I will share is one we think that Timber-Mart South data well it's good to have it out there, it's probably based on a thin set of transactions. For example, we don't submit information that's included in that database. And we are second largest Timberland owner in the state of Arkansas. So there's a big part of the data that's not in there. And like I said, we see typically a little bit of lift from time-to-time, as there's a new large, a mill is either brought up in the Greenfield fashion or there's an expansion, we see what weather premiums, usually it might be a $0.01 or $0.02, and then it seems like every time up to this point, it's going to settle back down into this long-term norm, which for us is probably around this $44, $45 per ton on a delivered basis sawlog. So I think, our view is, one got to be cautious with the data. We have a lot of data that we look at in our wood baskets, and it's been pretty stable to this point in any, like I said, premium has been short-lived, and things have kind of settled into the long-term average norm. Mark Weintraub: Okay, that's helpful. And so just to clarify, and so you think that would sort of not putting on the spot show feel in the different regions, but would those -- that comments be really specific to just where you have a presence? Or do you think that's a fair description for the U.S. South overall? Eric Cremers: Yes, I can only speak to our wood baskets, Mark. I mean, that's where we have fairly deep data. And we just, we don't have direct exposure to the other Southern wood basket. So my comments are PotlatchDeltic experience specific. Mark Weintraub: Okay. And shifting gears just back to the capital allocation and thanks for the color on the special being multiples for the regular dividend that's helpful in sort of framing. You also -- I think Eric also mentioned, or maybe if you Jerry, that you'll also be relooking at the kind of the regular dividend as well. Last year you had for the first time in quite a while, given a relatively small bump what would sort of be the -- what would be sort of the determinants the drivers that would lead you to your conclusions on what's appropriate now? I mean, it seems like you'll have maybe a bit more cash on the balance sheet, but a bunch of it's going to be paid out in the special. So what was sort of the thought process that would make it -- make sense for the pushing that up this year, or is it sort of just more of this like inflationary type of small increases that one should expect from time to time? Eric Cremers: Yes. So Mark, our dividend, we -- any changes we make to it, any increases that we make, we need to be convinced. We need to have conviction. That is -- it is sustainable first and foremost. I think as you know, our Idaho indexed sawlog contracts are unique in the industry and they are trading at tremendous amount of cash at these current sawlog prices, even though they come down or they're coming down, still creating an enormous amount of cash for us. Given that our view is that lumber prices are going to remain relatively high over the next several years, especially given this backdrop that BC needs roughly $600 lumber to get to break-even. Our sense is that cash flows are going to remain relatively strong in our Timberland business, especially as it relates to Idaho. So I would just say that we're well-positioned for our Board to consider increasing that base dividend beyond our current $1.64 per share. But that's decided in December of each year. Mark Weintraub: Okay. That makes a lot of sense. The -- I guess on that point on the cash cost in BC being so high -- have -- you mentioned also that there were some curtailment like I think Canfor is that -- what I mean -- are we seeing anything in BC or anywhere else related to the -- this higher cash costs that sort of reinforce that conviction that those higher wood cost there are going to help create a floor or is that still kind of a yet to be seen? Eric Cremers: Well, Canfor is the only one that come out and publicly state that they're curtailing. But we are hearing lots of rumors. And we have customers that we know are curtailing and cutting back hours. They may not be making a public announcement about it, but it's happening behind the scenes. As it relates to BC, what I would say is that those log decks that those mills have right now are from logs that have been purchased in the prior quarter too. So there's still relatively low cost logs. But they're facing real headwinds as we get into Q3 and Q4 when those log prices reset. So the -- I think the clock is ticking is kind of how I would word it. Operator: At this time, I'm showing there are no more questions. I'll turn the back -- call back over to Jerry Richards. Jerry Richards: All right. Thank you, May, and certainly appreciate everybody's interest in PotlatchDeltic. I am available for the follow-up detailed modeling questions the rest of the day and we'll talk to you next quarter if not sooner. Eric Cremers: Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
PotlatchDeltic Corporation (NASDAQ:PCH) Surpasses Earnings Estimates
- PotlatchDeltic Corporation (NASDAQ:PCH) reported an EPS of $0.066, beating the estimated loss.
- The company's revenue for the quarter was $258.1 million, exceeding expectations.
- Net income for the full year 2024 was $21.9 million, with revenues reaching $1.1 billion.
PotlatchDeltic Corporation (NASDAQ:PCH), a leading real estate investment trust (REIT) specializing in timberland and wood products, has recently outperformed market expectations. The company, which operates extensively in the United States, has shown a remarkable ability to compete with other timberland REITs such as Weyerhaeuser and Rayonier.
On January 27, 2025, PCH announced an earnings per share (EPS) of $0.066, surpassing the anticipated loss of $0.03. This performance indicates a significant turnaround from the previous year's results. The company's revenue for the quarter was approximately $258.1 million, also exceeding the estimated $240.5 million. For the quarter ending December 31, 2024, PCH reported a net income of $5.2 million, or $0.07 per diluted share, showcasing a substantial improvement from the same quarter in 2023, where it experienced a net loss.
For the entirety of 2024, PCH achieved a net income of $21.9 million, or $0.28 per diluted share, with total revenues reaching $1.1 billion. This marks a decrease compared to the previous year, where the company reported higher net income and revenues. However, the adjusted net income for 2023 was $35.0 million, or $0.43 per diluted share, excluding special items.
In 2024, PCH generated a total adjusted EBITDDA of $232.1 million, with a margin of 22%. The company also completed significant expansion and modernization of its sawmill in Waldo, Arkansas, and successfully sold 34,100 acres of Southern timberlands. The quarterly operating income was reported at $13.33 million, with an EBITDA of $13.33 million. The income before tax was $4.43 million, and PCH recorded an income tax benefit of $766,000, further highlighting its financial resilience and strategic growth initiatives.
PotlatchDeltic Corporation (NASDAQ:PCH) Surpasses Earnings Estimates
- PotlatchDeltic Corporation (NASDAQ:PCH) reported an EPS of $0.066, beating the estimated loss.
- The company's revenue for the quarter was $258.1 million, exceeding expectations.
- Net income for the full year 2024 was $21.9 million, with revenues reaching $1.1 billion.
PotlatchDeltic Corporation (NASDAQ:PCH), a leading real estate investment trust (REIT) specializing in timberland and wood products, has recently outperformed market expectations. The company, which operates extensively in the United States, has shown a remarkable ability to compete with other timberland REITs such as Weyerhaeuser and Rayonier.
On January 27, 2025, PCH announced an earnings per share (EPS) of $0.066, surpassing the anticipated loss of $0.03. This performance indicates a significant turnaround from the previous year's results. The company's revenue for the quarter was approximately $258.1 million, also exceeding the estimated $240.5 million. For the quarter ending December 31, 2024, PCH reported a net income of $5.2 million, or $0.07 per diluted share, showcasing a substantial improvement from the same quarter in 2023, where it experienced a net loss.
For the entirety of 2024, PCH achieved a net income of $21.9 million, or $0.28 per diluted share, with total revenues reaching $1.1 billion. This marks a decrease compared to the previous year, where the company reported higher net income and revenues. However, the adjusted net income for 2023 was $35.0 million, or $0.43 per diluted share, excluding special items.
In 2024, PCH generated a total adjusted EBITDDA of $232.1 million, with a margin of 22%. The company also completed significant expansion and modernization of its sawmill in Waldo, Arkansas, and successfully sold 34,100 acres of Southern timberlands. The quarterly operating income was reported at $13.33 million, with an EBITDA of $13.33 million. The income before tax was $4.43 million, and PCH recorded an income tax benefit of $766,000, further highlighting its financial resilience and strategic growth initiatives.
PotlatchDeltic Corporation (NASDAQ:PCH) Earnings Preview
- Upcoming Earnings: PotlatchDeltic Corporation is set to release its quarterly earnings with an estimated EPS of -$0.03 and revenue of $240.45 million.
- Performance Trends: Despite exceeding estimates in the previous quarter, PCH faces challenges in maintaining year-over-year growth.
- Financial Metrics: PCH shows a high valuation with a P/E ratio of 199.63 and a price-to-sales ratio of 3.10.
PotlatchDeltic Corporation (NASDAQ:PCH) is a real estate investment trust (REIT) that focuses on timberland and wood products. The company operates in the United States, managing timberlands and manufacturing wood products. PCH competes with other timberland REITs and wood product manufacturers. On January 27, 2025, PCH is set to release its quarterly earnings, with Wall Street estimating an earnings per share (EPS) of -$0.03 and revenue of approximately $240.45 million.
The upcoming earnings announcement will reflect seasonal trends and increased costs. In the previous quarter, PCH's adjusted earnings and revenues exceeded the Zacks Consensus Estimate by 200% and 6.6%, respectively. However, these figures declined by 71.4% and 4.1% compared to the same period last year. This indicates that while PCH has shown strong performance against estimates, it faces challenges in maintaining year-over-year growth.
Over the past four quarters, PCH has surpassed earnings expectations twice, met them once, and missed once, with an average surprise of 50%. Recently, the Zacks Consensus Estimate for adjusted EPS improved from a projected loss of $0.05 to a break-even point, aligning with the results from the same quarter last year. This suggests that analysts have adjusted their expectations based on PCH's recent performance trends.
PCH's financial metrics reveal a high valuation relative to its earnings, with a trailing twelve months (TTM) price-to-earnings (P/E) ratio of approximately 199.63. The price-to-sales ratio stands at about 3.10, indicating that investors are willing to pay $3.10 for every dollar of sales. The enterprise value to sales ratio is 3.93, reflecting the company's total valuation in relation to its sales.
The company's debt-to-equity ratio of 0.50 suggests a moderate level of debt compared to its equity, while the current ratio of 1.24 indicates a reasonable level of liquidity to cover short-term liabilities. Despite a low earnings yield of 0.50%, PCH's enterprise value to operating cash flow ratio of 21.73 may imply a premium valuation based on cash flow generation.
PotlatchDeltic Corporation (NASDAQ:PCH) Earnings Preview
- Upcoming Earnings: PotlatchDeltic Corporation is set to release its quarterly earnings with an estimated EPS of -$0.03 and revenue of $240.45 million.
- Performance Trends: Despite exceeding estimates in the previous quarter, PCH faces challenges in maintaining year-over-year growth.
- Financial Metrics: PCH shows a high valuation with a P/E ratio of 199.63 and a price-to-sales ratio of 3.10.
PotlatchDeltic Corporation (NASDAQ:PCH) is a real estate investment trust (REIT) that focuses on timberland and wood products. The company operates in the United States, managing timberlands and manufacturing wood products. PCH competes with other timberland REITs and wood product manufacturers. On January 27, 2025, PCH is set to release its quarterly earnings, with Wall Street estimating an earnings per share (EPS) of -$0.03 and revenue of approximately $240.45 million.
The upcoming earnings announcement will reflect seasonal trends and increased costs. In the previous quarter, PCH's adjusted earnings and revenues exceeded the Zacks Consensus Estimate by 200% and 6.6%, respectively. However, these figures declined by 71.4% and 4.1% compared to the same period last year. This indicates that while PCH has shown strong performance against estimates, it faces challenges in maintaining year-over-year growth.
Over the past four quarters, PCH has surpassed earnings expectations twice, met them once, and missed once, with an average surprise of 50%. Recently, the Zacks Consensus Estimate for adjusted EPS improved from a projected loss of $0.05 to a break-even point, aligning with the results from the same quarter last year. This suggests that analysts have adjusted their expectations based on PCH's recent performance trends.
PCH's financial metrics reveal a high valuation relative to its earnings, with a trailing twelve months (TTM) price-to-earnings (P/E) ratio of approximately 199.63. The price-to-sales ratio stands at about 3.10, indicating that investors are willing to pay $3.10 for every dollar of sales. The enterprise value to sales ratio is 3.93, reflecting the company's total valuation in relation to its sales.
The company's debt-to-equity ratio of 0.50 suggests a moderate level of debt compared to its equity, while the current ratio of 1.24 indicates a reasonable level of liquidity to cover short-term liabilities. Despite a low earnings yield of 0.50%, PCH's enterprise value to operating cash flow ratio of 21.73 may imply a premium valuation based on cash flow generation.
BofA Upgrades Potlatch to Buy, Shares Rise 4%
PotlatchDeltic (NASDAQ:PCH) shares rose more than 4% intra-day today after BofA Securities analysts upgraded the company to Buy from Neutral, raising the price target to $51 from $49.
The analysts pointed to PotlatchDeltic's over 20% underperformance year-to-date as a key factor in the upgrade, noting that while near-term fundamental catalysts may be limited, the stock offers more than 20% upside potential. The analysts highlighted that lumber prices, which have been at a cyclical low, present an opportunity for future growth. Factors such as industry capacity cuts, tariffs, and cost-curve support could lead to a rebound in lumber pricing, which directly benefits PotlatchDeltic's results. The analysts noted that for every $50 per thousand board feet (mbf) increase in lumber prices, PotlatchDeltic’s EBITDA could rise by approximately 25%, which would also positively impact timber pricing in regions like Idaho, where prices are tied to lumber trends.
Additionally, PotlatchDeltic is expected to see improved lumber margins due to its favorable cost structure, particularly following the expansion of its Waldo mill, which is projected to add about 85 million board feet of capacity. This gives the company a stronger competitive position in the lumber market moving forward.
BofA Upgrades Potlatch to Buy, Shares Rise 4%
PotlatchDeltic (NASDAQ:PCH) shares rose more than 4% intra-day today after BofA Securities analysts upgraded the company to Buy from Neutral, raising the price target to $51 from $49.
The analysts pointed to PotlatchDeltic's over 20% underperformance year-to-date as a key factor in the upgrade, noting that while near-term fundamental catalysts may be limited, the stock offers more than 20% upside potential. The analysts highlighted that lumber prices, which have been at a cyclical low, present an opportunity for future growth. Factors such as industry capacity cuts, tariffs, and cost-curve support could lead to a rebound in lumber pricing, which directly benefits PotlatchDeltic's results. The analysts noted that for every $50 per thousand board feet (mbf) increase in lumber prices, PotlatchDeltic’s EBITDA could rise by approximately 25%, which would also positively impact timber pricing in regions like Idaho, where prices are tied to lumber trends.
Additionally, PotlatchDeltic is expected to see improved lumber margins due to its favorable cost structure, particularly following the expansion of its Waldo mill, which is projected to add about 85 million board feet of capacity. This gives the company a stronger competitive position in the lumber market moving forward.
