PotlatchDeltic Corporation Stock Price: Quote, Forecast, Splits & News (PCH)

Perplexity Finance

PCH

PotlatchDeltic Corporation

PCH

NASDAQ

Market Closed

Tuesday, May 20, 2025

$40.01

-$0.36

0.89%

At close: May 19, 8:00:01 PM UTC

$40.01

$0.00

After hours: 8:20:00 PM UTC

Change

-$0.36

0.89%

Financial Profile

Prev Close

$40.37

Market Cap

$3.14B

Day Range

$39.69 - $40.15

Open

$39.86

P/E Ratio

63.5

52W Range

$36.82 - $48.12

24H Volume

$13.43M

Dividend Yield

4.50%

EPS

0.63

Earnings

Report Date

—

Rev Estimate

—

Avg 1d Change

—

Report Period

Q1 2025

EPS Estimate

—

Implied Move 1d

—

Transcript

9m 35s

My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic First Quarter twenty twenty five Conference Call.

9m 44s

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. Wayne Wacek, Vice President and Chief Financial Officer for opening remarks. Sir, you may proceed. Good morning. And welcome to PotlatchDeltic's First Quarter twenty twenty five earnings conference call. Joining me on the call is Eric Kramers, PotlatchDeltic's President and Chief Executive Officer This call will contain forward looking statements. Please review the cautionary statements in our press release on the presentation slides and in our filings with the SEC regarding the risks associated with these forward looking statements. Also, please note that a reconciliation of non GAAP measures can be found in the appendix to the presentation slides and on our website at www.potlatchdeltic.com. I'll turn the call over to Eric for some comments. And then review our first quarter results and our outlook. Thank you, Wayne, good morning, everyone. Thanks for joining us. Following the market close yesterday, we reported total adjusted EBITDA of $63,000,000 for the first quarter. I'm pleased with our solid operational performance across all businesses despite the prevailing economic and trade policy uncertainties affecting the market.

11m 25s

Our financial performance improved compared to the fourth quarter in all three of our business units demonstrating strong execution by our teams, the resilience of our operations and the positive effects of our strategic investment in the Waldo, Arkansas sawmill. Starting with Timberlands, our teams in Idaho in this South did a great job of producing higher than planned harvest volumes during what is typically a seasonally slower period. This incremental volume was particularly advantageous in Idaho as we benefited from an increase in sawlog prices due to our index sawlog agreements. Coupled with higher cedar prices driven by strong regional demand. In our Wood Products business, lumber markets were dominated by tariff discussions throughout most of the first quarter, The Random Lengths Western SPF composite price rose by $60 during the quarter in anticipation of Canadian tariffs. As the tariff deadlines loomed, buyers refrained from building inventory to hedge their positions. Preferring instead to continue to purchase for near term needs. With Canadian lumber tariffs currently on hold, it remains to be seen how much of this run up of SPF prices in Q1 will unwind. Conversely, Southern Yellow Pine markets did not experience near the pricing benefit as SPF, Nonetheless, Southern Pine lumber markets were more active and prices remained relatively firm during the quarter.

12m 58s

Lumber markets continue to face relatively tepid demand from end markets, That said, the capacity curtailments announced last year continued to impact the market providing greater balance to supply and demand dynamics and helping support lumber prices. Additionally, pending regulatory actions related to Canadian duties and potential tariffs have provided support to pricing thus far this year. And that should continue as we move to the second half of the year. Canadian 25% of U. S. Demand were recently spared from reciprocal tariffs.

13m 39s

However, there are already well established softwood lumber duties on imported Canadian lumber which are adjusted annually. Preliminary Canadian softwood lumber duty rates that will take effect later this year were announced and they are higher than current levels. The preliminary quote all others rate is set to increase from 14% to over 34% more than double the current rates once finalized. Furthermore, on March 1, the Secretary of Commerce initiated a Section two thirty two investigation to determine the effects of imports of lumber and derivative products on national security. Commerce will evaluate the extent to which U. S. Production can meet domestic demand and the feasibility of increasing domestic timber and lumber capacity. The findings of this investigation could lead to the implementation of tariffs on all lumber imports into The U. S. And would be incremental to the already established Canadian softwood lumber duties. During Q1, we shipped two ninety million board feet of lumber which was 10,000,000 board feet over the upper range of our Q1 guidance. This over performance to plan was mainly driven by our Waldo, Arkansas sawmill. The ramp up and performance of this mill has gone extremely well. In fact, by March, we were consistently achieving a run rate that matches its new targeted annual nameplate capacity of two seventy five million board feet per year.

15m 12s

By hitting the mill's targeted key production metrics, including improvement in recovery rates and a 30% reduction in cash processing costs we have now completed the ramp up phase of the project three months ahead of schedule. This modernization and expansion project at Waldo has significantly enhanced the competitiveness of the mill and is expected to generate approximately $25,000,000 in incremental EBITDA annually assuming a mid cycle sales environment. Moving on to our 7,000 acres in the first quarter including several larger transactions which contributed to achieving notable premiums to Timberland value. Steady demand is expected to persist as buyers seek hard assets like rural land against an environment of significant volatility volatility and many other asset classes. Now turning to our natural climate solution initiatives, Solar continues to be very active. Since the end of twenty twenty four, we have expanded our acres under solar option contract by an additional 3,000 acres. This increases our total acreage under option to 38,000 with an estimated net present value of around $475,000,000 In recent conversations with solar developers, they continue to view their solar projects as viable and are therefore proceeding with their plans. Another promising NCS opportunity for us is in lithium, as a portion of our property in Southwestern Arkansas has potential for lithium development.

16m 55s

We began our first step in potentially monetizing our land for lithium development this year by granting exclusive rights to a lithium developer to conduct brine exploration and production on approximately 900 surface acres in Lafayette County, Arkansas. The lease anticipates an initial five year term for planning, engineering and construction before potential production begins. Additionally, we are actively engaged in discussions on executing another large mineral rights lease in Southwestern Arkansas. Regarding forest carbon offsets, we are in the process of developing an improved forest management carbon offset project aimed at storing carbon in our forest, which we believe will generate cash flows that exceed our business as usual baseline. At this stage, we are currently conducting feasible feasibility studies with reputable project developers that focus on potential projects in our southern timberlands. Due to the complexity and care required to develop a high quality carbon project, we would target to bring a meaningful project to market sometime in the next eighteen to twenty four months. In addition, we continue to pursue a range of other longer term natural climate solution opportunities, including carbon capture and storage, and new markets for biomass such as bioenergy and sustainable aviation fuel.

18m 15s

For CCS, we are exploring projects for development in a block of our timberlands in Northern Louisiana, that would support CO2 storage for potentially new emitting facilities in the region. We believe initiatives like these will ultimately increase demand for our rural land. Likely driving timberland values significantly higher. Shifting to our capital allocation strategy, we maintain a balanced and disciplined approach, especially given current lumber markets and the uncertainty surrounding the broader economy. Our stock continues to trade at a significant discount to our estimated net value in addition to yielding over 4.5%. As a result, repurchases remain more attractive than acquiring timberlands or other capital allocation options. In the first quarter, we purchased $4,000,000 of our common stock through our 10b5-one program at an average price of $45 per share. And we have bought another $4,000,000 at $40 per share so far this quarter. Our solid financial position coupled with our liquidity profile allows us to continue being opportunistic with capital deployment as we move through the year. Turning our attention to The U. S. Housing market. Overall macroeconomic conditions continue to constrain consumer confidence and challenge affordability leading to low buyer urgency in both new and existing home sale markets.

19m 39s

While large U. S. Homebuilders have pointed to a slower start to the spring selling season, annualized U. S. Housing starts are stable, averaging nearly 1,400,000 units. Single family homebuilding starts remained resilient near the 1,000,000 unit level as the larger public homebuilders continue to offer rate buy down incentives to drive home sales. The multifamily homebuilding segment remains challenging due to the restrictive construction financing and an oversupply of units which continued to be digested in the market. Existing homes, inventory has risen, but sales remain on pace with last year's low level as interest rates continue to be elevated and existing homeowners wanting to move are continuing to choose to stay in their current homes, due to the lock in effect of their low mortgage rates.

20m 28s

Despite the current state of the housing market, the key drivers of inherent housing demand remain positive. These longer term structural tailwinds include the massive undersupply of homes, a substantial demographic shift as millennials transition to homeownership, and strong household formations. We believe that once the constraints on housing affordability ease, this will serve as a catalyst for upward momentum in lumber demand. Now shifting to the repair to model sector, the level of activity so far this year has remained relatively stable. On the one hand, underlying demand continues to be held back by several near term challenges, including falling consumer confidence and elevated financing costs for discretionary home improvement projects. However, leading R and R pundits predict modest gains in repair and remodel as we move through the year. And big box retail centers are forecasting slight growth in comparable store sales. For our own home center business, we have strong takeaway and we expect this trend to continue. Additionally, the factors influencing demand for R and R remain intact. Including an aging housing stock with a median age over 40 years historically high home equity levels and the enduring trend of people working from home. To close out my comments, while the near term may be volatile and uncertain, we have a favorable view of long term fundamentals in our industry.

21m 51s

Lumber prices have made a strong run since last summer in what has been a flat demand environment. And our view is that once markets settle down, demand will return And as demand returns, pricing should improve as well. Combined with our strong balance sheet and excellent capital allocation track record, we are well positioned to deliver long term value to our shareholders. Now turn it over to Wayne to discuss our first quarter results. As well as our outlook. You, Eric.

22m 23s

Starting from Page four, of the slides, total adjusted EBITDA increased $10,000,000 rising from $53,000,000 in the fourth quarter to $63,000,000 in the first quarter.

22m 37s

This sequential quarter over quarter increase is attributed to improved performance across all our business segments. Particularly Timberlands, which benefited from higher sawlog prices in Idaho and increased harvest volumes in both Idaho and the South. I will now review each of our operating segments and provide more details on our first quarter results. Information regarding our Timberland segment is presented on slides five through seven. The segment's adjusted EBITDA increased from $34,000,000 in the fourth quarter to $42,000,000 in the first quarter. Driven by higher harvest volumes increased Idaho sawlog prices and seasonally lower forest management costs. The first quarter's overall harvest volume exceeded our plan for Q1 marking a good head start to 2025. In Idaho, we delivered 368,000 tons in the first quarter, taking advantage of favorable logging and hauling conditions. And adequate contractor availability. Sawlog prices increased by 9% per ton compared to the fourth quarter due to higher index and cedar sawlog prices combined with a slightly higher mix of cedar. Lower seasonal spending on forest management and roads also favorably impacted results. In the South, we harvested 1,600,000 tons in the first quarter. Slightly above our fourth quarter harvest volume and exceeding our Q1 plan by almost 170,000 tons.

24m 17s

Favorable weather and better than anticipated demand for stumpage sales let us start the year ahead of schedule. In the first quarter, our Southern sawlog prices decreased by just over 2.5% compared to the fourth quarter. This decline in price was mainly attributed to a shift in product mix.

24m 36s

Including a higher mix of smaller diameter sawlogs and a lower volume of hardwood sawlogs. Now I will turn to Wood Products. Which is shown on Slides eight and nine. Adjusted EBITDA increased from $9,000,000 in the fourth quarter to $12,000,000 in the first quarter. The increase was driven by slightly higher average lumber prices somewhat offset by higher log costs Idaho. Our average lumber price realization increased $9 or 2% from $445 per 1,000 board feet in the fourth quarter to $454 per 1,000 board feet in the first quarter. Comparatively, the Random Lengths framing lumber composite average price was about 6% higher in the first quarter compared to the fourth quarter. Note that our regional mix and product mix differs from the composite and there's also a timing difference between our sales and the composite. Lumber shipments increased by 7,000,000 board feet rising from two eighty three million board feet in the fourth quarter to two ninety million board feet in the first quarter. This increase in shipment volume was primarily a result of the Waldo sawmill reaching its targeted production levels following the completion of our modernization and expansion project. Shifting to real estate on Slides ten and eleven.

26m 9s

The segment generated adjusted EBITDA of $23,000,000 in the first quarter compared to $19,000,000 in the fourth quarter. In our real estate rural real estate business, sold over 7,000 acres at an average of $3,300 per acre during the first quarter. Our first quarter results include three significant rural real estate sales including a conservation land sale in Georgia, for over $7,000,000 at approximately $3,300 an acre. We continue to leverage strong demand for rural real estate, across all buyer segments, but particularly for conservation outcomes and recreational purposes. In the Chenal Valley development side of our real estate business, 11 residential lots were sold an average price of $113,000 per lot in the first quarter. These sales were in line with our expectations due to the level of inventory available. Turning to our capital structure, summarized on Slide 12. At the end of Q1, we had $447,000,000 in liquidity. Including $147,000,000 of cash on our balance sheet as well as availability on our undrawn revolver. Net interest expense was approximately $2,000,000 in the first quarter which is the lowest level for the year since we received the vast majority of our annual patronage payments from the farm credit banks during this quarter.

27m 43s

We have $100,000,000 of debt maturing in August, which we plan to refinance We also have available $75,000,000 of notional forward starting interest rate swaps. The lower borrowing cost for this debt refinancing. As Eric mentioned, we have been actively repurchasing our shares as our stock continues to trade at a significant discount to net asset value. Thus far, this year, we have spent $8,000,000 on share repurchases having bought back 188,000 shares an average of $42 per share under our 10b5-one plan. We have $82,000,000 remaining on our $200,000,000 repurchase authorization.

28m 32s

Capital expenditures totaled $23,000,000 in the first quarter. This amount includes real estate development expenditures, which are included in cash from operations and our cash flow statement. For the full year, we continue to anticipate CapEx spend of 60,000,000 to $65,000,000 which excludes the final closeout payment of $6,000,000 for the Waldo Sawmill project that we made in Q1 and any potential timberland acquisitions. I will now provide some high level outlook comments. The details are presented on Slide 13. In our Timberland segment, we plan to harvest between one point six million and one point seven million tons in the second quarter with approximately 82% of the volume coming from the South. Harvest volumes in the North expected to be seasonally lower in the second quarter compared to the first quarter due to the anticipated spring breakup. Also, Northern sawlog prices are expected to remain mostly flat. In the South, we plan to harvest 1,400,000 tons in the second quarter and we expect our Southern sawlog pricing to remain relatively stable as well. We plan to ship 300 to three ten million board feet of lumber in the second quarter. With Waldo now operating at full capacity, achieving this shipment level will set a new quarterly record.

30m

Our average lumber price thus far in the second quarter $475 per thousand board fee, which is roughly 5% higher compared to our average lumber price in the first quarter. This is based on approximately 100,000,000 board feet of lumber. Shifting to real estate. Expect to sell approximately 8,000 acres of rural land and roughly 20 Chenal Valley residential lots in the second quarter. Further details regarding real estate.

30m 28s

Can be found on the slide. Overall, we estimate second quarter total adjusted EBITDA will be lower compared to our first quarter results due to seasonally lower harvest volume and higher forest management costs. That concludes our prepared remarks. [indiscernible] Would now like to open the call to questions.

30m 50s

You. We will now begin the question and answer session. Your first question comes from the line of Ketan Mamtora from BMO. Your line is open. Good morning and thanks for taking my question. Great. Maybe start with you talk a little bit about, you know, the demand trends that you are seeing both in the new energy channel and the r and r channel as we move through April know, as you pointed out, you know, it it seems like things have gotten off to a slow start. But I'm curious you know, what you're hearing from a from the from your customers as we move to the busiest time of the year.

31m 39s

Yeah, Ketan. This is this is Eric. The way I would describe the current market environment for lumber is that things are decent. I do believe it is a little bit of a tale of two cities right now. I believe the South is on firmer footing than the North. And in fact, I would tell you that right now prices are I don't know $10 to $20 per thousand board feet higher than what the latest random lengths print is for the various Southern species and dimensions. And I would tell you that the North is actually is selling a bit below the latest random lengths print. The South has been on pretty much an upward trajectory since the start of the year with pre directivity, very, very solid. And then if I had to had to speculate as to why it's a tale of two cities, think it's because demand is different between the North and the South. I think it really has more to do with 4% above above the prior year. We are getting into the slower summer months If I had to guess, I think you'll see a little bit of a pullback here over the next month or two.

33m 9s

We've already seen random lengths pullback, I don't know, 3% or so from the peak. But I think as you get out and I don't know if it's going to be in July or August or September, But at some point, the expectation, those duties going higher is going to compel people to start building inventories. And like I said, I don't know which month it's going to happen, but it's going to happen. So the price risk is clearly to the upside in the back half of the year.

33m 33s

But we are in a relatively flat demand environment. Just look at housing starts, we're stuck at 1.4. R and R markets I think are a little bit better than new residential construction. But even that, we're talking about modest demand improvement. So that's kind of how I see the backdrop here. But I do think the price risk is to the upside.

33m 59s

Understood. And Eric, just curious, you know, you talked about, you know, maybe in the North folks buying in at of tariffs. As we sit here today, how would you characterize channel inventories?

34m 14s

Well, I, you know, I think we're we're relatively low levels. The industry has learned to operate at relatively low levels over the years. People don't like holding inventory speculating on where price are going to be headed. And also we're in a relatively high interest rate environment. So there are carrying costs to holding high inventory levels. So I think the industry is running at a relatively low level of inventories with the exception of maybe some of northern species there may still be a little bit of inventory hangover from the potential for inventory building due to tariff concern.

34m 54s

Understood. And Vane, one for you. In terms of second quarter Northern Falloff price realization, My understanding is generally going from q one to q two, see a pretty meaningful improvement just from the density component. Is that getting offset offset by, you know, of the recent declines we've seen in some of the northern species in lumber? Or is there anything else that's going on?

35m 24s

Yeah. Ketan, you're right. There is the positive effect of weight in the second quarter, but that's being our our forecast is that's offset by lower pricing Now keep in mind that with spring breakup, you know, we'll start moving logs here in the month of May. There's nothing in April. So and then the first that that those shipments in those deliveries in May will have April pricing. So with we've seen a little bit of rollover in Northern pricing in April, so that's that's what's the that effect is is what we're anticipating.

36m 3s

Got it. That's helpful. I'll jump back in the queue. Good luck.

36m 7s

Thanks.

36m 9s

Your next question comes from the line of Anthony Pettinari from Citi.

36m 16s

Good morning.

36m 18s

Good morning. Just following up on Keaton's question, When tariffs were announced on Liberation Day, we didn't get Canadian lumber tariffs, but we did get kind of very high tariffs on kind of everything else. When when Liberation Day happened, did you see a significant change in your order book? Or did your kind of dealer customers, did they communicate kind of a big change in their demand or maybe even on the real estate side? I'm just kind of curious like what impact that event happened or what would've what that what that did. To end consumer demand, if anything?

37m 2s

I don't really know that it changed end consumer demand a whole lot, Anthony. There were some I'm sure some folks were speculating that there were going to be Canadian tariffs on imported Canadian lumber. And when it didn't happen, all of a sudden people had inventory that they had had to let come back down again. But I think most of the market never really anticipated a huge inventory. Now the $2.32 tariff is still hanging out there, and I do actually think there's going to be a tariff for lumber this fall. It's anybody's guess as to what that might be. But back to your question, I that it really changed a whole lot other than there may have been some advanced ordering for SPF or SPF corollary species like Hemp Fir, Doug Fir there may have been some people out buying in advance of Liberation Day. And then that had to be unwound. But I don't think that the effect was huge. Okay. That's helpful. And then when we do go from, I guess, 15% to 34%, 35%, do you think Canadian lumber volumes into The U. S. Basically get shut down? Are they maybe able to absorb some of those costs?

38m 23s

Or not pass those on the end consumer? Like what actually happens to Canadian volumes when we get up to like a 34%, 35% duty when, I guess, when you think about history. Yes. Think it's going to be a little bit of both. I think there are going to be some competitors I mean, you're West Fraser and you've got mills in Canada and you got mills in the South, you can absorb some of that higher duty and keep operating. If you're a smaller independent operator and you've got one mill in Canada, and you're disadvantaged with expensive logs, it's going to be a world of hurt. I do expect there to be more mill closures or curtailments up in Canada as we get into the fall with these higher duties. I mean, a 34% duty is pretty it's pretty onerous.

39m 11s

Got it. Got it. That's helpful. I'll get back in the queue.

39m 15s

Thanks. Thanks.

39m 17s

Your next question comes from the line of George Staphos from Bank of America. Your line is open.

39m 24s

Hi, everyone. Good morning. Thanks for the details. Recognizing that we're not at mid cycle pricing yet in lumber, we think Waldo's actual contribution was on a year on year basis to the EBITDA in the Wood Products segment. Any sense that you could relate to us? Well, what I'd say so far, George, is that it's not where we want it to be. It's not because the mill is not running well. The mill is running exceptionally well. I think the real issue right now is pricing. And that mill generally runs wider dimensions, not narrow dimensions. And this spring in the South that was relatively dry logs were accessible. And so we didn't get the price run up in wide this spring that we would normally get. So I'm not we've had one quarter where pricing isn't exactly where I'd like it to be. But I do have an expectation for higher prices as the year progresses. And I especially have a higher price expectation for next year, as I think starts are going to come back and R and R is going to be on firmer footing next year. So I have no doubt Waldo is going to grow into its pro form a.

40m 44s

Not quite there yet, but it's getting there. Okay. I appreciate that, Eric. Switching gears a little bit. I mean, you had a reasonably constructive quarter in real estate. I think you noted that overall prices went up. But from our vantage point, looking at some of the trade periodicals, it looks like activity in the South, in particular, has been a little bit sluggish.

41m 8s

I don't I don't think there's been a meaningful change in you know, pricing per acre. Now if you agree with that, what do you think is happening? And if you have a different view things, you know, please, you know, relay what you're seeing in the Southern markets recognizing you know, it's not a monolithic market. They're gonna be you know, different regional trends. How how would you paint that picture for us? Yeah, George. This is Wayne. I think I'd start with looking at our rural real estate business typically smaller transactions, again, that market seeing strong demand. [indiscernible] our guidance is 26,000 acres this year. So still still strong environment We've seen that in Q1. We're forecasting another 8,000 acres in q two. So the pipeline looks strong there. Demand is strong from conservation to recreational. But those tend to be smaller sales relatively speaking. Now if you're kind of referring to the broader M and A environment, with larger transactions, 10,000 plus acres, yes, we're still seeing there's a lot of buyers for those tracks And the demand and the pricing lower discount rates, yeah, that's it's still a healthy market. So we're it's still very strong from an m and a standpoint Now there's not a lot of acres and transactions coming to market.

42m 39s

But, you know, the ones that do that are quality tracks yeah, we're seeing a lot of lot buyers for those or a lot of I guess, bidders ultimately for those tracks. Do you anticipate there'll be a little bit more activity in the larger transactions at some point? If so, what would be the catalyst from what where you say just rates coming down or is there something else that would be, you know, a driver for you from what you see? I think rates could influence it. I've but also maybe more clarity on where NCS plays out think some sellers are waiting to you know, waiting for for a little more clarity or the ability to monetize more of the NCS opportunities? I think that could once that picks up, you could see more properties coming into market. I think that's a big big factor.

43m 33s

Okay.

43m 35s

Last two for me, and I'll turn it over. Can you talk maybe you mentioned I'd missed it why you saw more mix for smaller analogs in the South? What was driving that? Recognizing ultimately, you have to be opportunistic in your markets whatever you have, you have.

43m 52s

And then just as we think about 2Q and the guidance, and we appreciate that that color that you provide, You know, we have maybe not the pricing you want, but we do have Wallow coming up. We do have pricing in wood and lumber up. Although, I know you said that's maybe pulling back a bit. How would you have us think about at least directionally the segment EBITDA trends 2Q versus 1Q? Should we expect that wood is up given that backup or might it also be lower for whatever reason? So mix in the South and sort of the EBITDA bridge whatever you can relay there for 2Q, and I'll turn it over. Thank you. Yes. So George, on your mix question, that's just a function of really just wet weather So when it's wetter in the South for us, especially in the Gulf South, we can't get as deep into the woods where larger logs are at. So we stick closer to the roads where that tends to be more chip and saw and that chip and saw sells for a lower price point. So again, that's just a kind of weather driven and you know, a reflection of that.

45m

I would say from a a pricing is stable by product. So, again, it's really mix driven.

45m 6s

On the thinking overall from a guidance standpoint, yeah, we're as we said in the prepared remarks, on a about a third of our shipment volume, forecasted shipment volume for the quarter were up 5% on a pricing standpoint. How much of that holds for the rest of the quarter? Yeah. That's hard to say. I mean, random lengths has come down a bit. But still, you know, we're up 5% quarter to date. You know, how much of that will roll through on what products But still, we think we're kind of at that level where we've come in at at q two or, you know, even a bit higher. [indiscernible] I appreciate it. Thank you, Wayne.

45m 49s

I'll turn it Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Line is open.

46m

Thank you. Just actually first wanted to follow-up on this lumber pricing in the second quarter. In the slide, you have it flat. Is so are you when you provide that guidance of expecting EBITDA to be lower than Q1, is that assuming that you give back the 5% through the balance of the quarter and so that lumber prices are flat Yes. So Mark, you know, we're up 5%, spot in quarter to date in lumber. We're indicating flattish prices for Q2. Now is it up 3%? Is it up 4%?

46m 38s

Is it down one I think our expectation is for it to be kind of where it's at. Maybe a little soft. We've seen random lengths rollover 3% from the peak so it could come down a little bit. I wouldn't read too much into us saying that lumber prices are going be flat. It'll be in that zip code. We are expecting our wood products business to have higher earnings in the second quarter than the first quarter. Timberlands is where we expect earnings to come down, and we expect it to come down through normal seasonality. So that's where the drag on the P and L going to be in Q2. It's not going be in Wood Products.

47m 17s

Right. Although I guess I was trying to because I would have thought wood products would be up. And if you have prices up three to four or 5%, it actually would be up you know, a decent amount. And so I'm really trying to get a sense as to how much you think Timberlands are going to be down that you'd kind of say even if prices are up 3% to 5% that you're expecting 2Q to be clearly lower than 1Q. So that sort of was the angle that I'll trying to get a sense of Any help there? Maybe quantifying?

47m 52s

On the Timberland side, lower seasonal volume, pricing relatively flat in both regions. The other thing I would highlight is just normal seasonality from our forest management costs and roads. And that will from Q1 to Q2, that's that's about an additional almost $4,000,000 So that's the other flip from q one to q two that's lowering results on Timberlands compared to Q1.

48m 23s

Got you. That's helpful. Thank you. And then maybe first one other follow-up on Lemmer's You had mentioned, Eric, you had mentioned that you're you thought that, there would be tariffs from the Section two thirty two investigations. I'm just curious, is there kind of what sort of the thought process behind that I just feel like I hear a lot of noise from the administration around lumber. And it's not just lumber, it's automobiles, aluminum, steel, The fact that it was singled out to be one of the industries under investigation. The fact that The U. S. Does have ample supplies of timber the fact that it's well known that Canada basically subsidizes its lumber producers I don't I can't predict what the future hold marks. I just look at the anecdotes that I read in the paper and you know, the back chatter that I hear, and, it's just what what my gut tells me is that there could very well be a tariff. There may not be, but who knows?

49m 29s

Got you. I just didn't I don't know if they were engaging either industry groups or companies that are involved. But it that's is that happening to you? Or understanding? Well, yeah. The I mean, the yeah. The Department of Commerce is talking to all sorts of people trying to figure out where to go with this. Okay.

49m 46s

Gotcha. But oh, okay. Fair enough. And then, [indiscernible] you did buy back some more stock. Your balance sheet is still strong. Stock price is even lower. What's sort of a comfortable level of cash for you to have on the balance sheet?

50m 5s

Well, I think historically we've talked about having $100,000,000 of cash on the balance sheet This is sort of a safety net, if you will. So I mean that's kind of how we're thinking about it. I'm not happy where the stock is at. I'm surprised we're executing extremely well right now across the business units. I think like I said earlier pricing risk is to the upside. And certainly share repurchases it's moved to the top of the capital allocation toolkit here. So we'll see where things go from here.

50m 42s

Great. Appreciate all the thoughts. Thank you. Your next question from the line of Buck Horne from Raymond James. Your line is open.

50m 52s

Hey, thanks. Good morning. I wanted to go back to the solar and lithium opportunities you guys are seeing a lot more progress with. And maybe if you could just help you know, help us understand the potential time line for when some of those option contracts would convert to more meaningful royalty revenues or would we see, a more meaningful financial contribution as those things move to full operational capability.

51m 21s

Yeah. For us, Buck, we don't foresee one of these deals closing this year that we currently have under option. I think there's a strong likelihood next year that we would see one or two start to fall and those option periods are anywhere from three to five years. So that that period is now starting to come to the tail end of those option cycles.

51m 47s

I would note that I think developers want to move forward. I think there's a lot of strong demand there. I think one of the one of the challenges that we hear is just from the regulatory agencies. You know, they're backed up approving projects, which you know, that stretches out the process. But yeah, I think with that, you know, we stay in close contact with all of our developers. Developers and where they're at in the process and how it's progressing. And like I said, we think one or two will start to fall next year and then kind of the dominoes from after that.

52m 23s

So Gotcha. Gotcha. That's very helpful. Thank you. And then switching to a little bit on the lumber side of the equation. Thinking about the potential for these duties and tariffs hitting various you know, Canadian species of wood, spruce, you know, that the home building in the c usually is reliant on. Wondering if you're hearing of any talk about homebuilders trying to switch speed species or or maybe get up to speed on using more yellow pine in their operation? Ahead of potential duties increases? Are you hearing or getting any increased interest from builders looking to get up to speed on using Yellow Pine in their operation?

53m 8s

Yes, Buck. That substitution has been taking place over the past several years as U. S. Southern Yellow Pine production has really grown. We are hearing about it more and more and I think it's just going going to continue to grow as we move forward. Okay.

53m 25s

Is it any noticeable acceleration or change in that recently?

53m 30s

I would say we're hearing a little bit more chatter about it, for sure. You know, I can't I can't quantify it for you. I can just say that I am I am hearing about it more and more.

53m 42s

Okay.

53m 45s

Thanks.

53m 47s

Your next question comes from the line of Matthew MacKellar from RBC Capital Markets. Your line is open.

53m 54s

Thanks for taking my questions.

53m 55s

Just a couple of quick ones for me. First, I think you mentioned higher cedar log prices in Idaho couple of times in your opening remarks. You maybe just provide a bit of color on what you're seeing in cedar markets? And then second, if we do see meaningful Section two thirty two tariffs of wood products, what would be your view on the likely impact of timberland valuations over the medium term?

54m 20s

Yeah. Matt, this is Wayne. Regarding Cedar, I I don't know That's really our view is more of a kind of market specific what we're seeing in our region. Our customers I think have been short on Cedar and that's really been a regional a regional mix and regional demand, which is driving prices up for us. So we've capitalized on that with our customers specifically in the in the regions that we and the customers that we service. Matt, I'll take the second one on your question regarding the $232,000,000 impact. On Timberland valuations. It's really hard to speculate what that impact is going to be until we until we know more. Like how big is the tariff number one. And then number two, how long is that tariff going to last? I think I've read in some places that the Canadians are going to turn to try to settle this dispute very quickly. And if that's the case, then I would say it's going to have little to no on Timberland valuations. But if they dig their heels in, and the tariff goes on for an extended period of time then I would say it could have could have a meaningful impact on timberland valuation.

55m 35s

So it's just really hard to speculate where we wind up with all of this.

55m 41s

Okay. Thanks very much for the color.

55m 43s

I'll turn it back.

55m 46s

Your next question comes from the line of Mike from Truist Securities. Your line is open.

55m 52s

Thanks, Eric and Wayne for taking my questions and congrats on the quarter. Thanks, Greg.

55m 59s

Just my first question, I wanna go back to the your Southern sawlog and pulpwood harvest. Obviously, they queued it out for exceeded your earnings guidance. I think, Wayne, you mentioned favorable weather as being a contributor. Some of the harvest related to salvage wood from hurricane Helena as well? I mean, just trying to get a sense as to, like, what really happened that drove the huge outperformance in terms of harvest volumes for Southern sawlogs and and pulpwood in one camp? Yeah. Like, for us, salvage, we don't we have very little impact from hurricane Helene for us. That more coastal in the South. We're more South Central. So for us, not big impact. And not a driver of over performance for the quarter. Look, it was both in Idaho, so we took advantage of you know, favorable hauling conditions, log in hauling conditions in Idaho to outperform a little bit there. In the South, again, weather, we could move volume. Also, just we have a estimate baked in of you know, what we think stumpage will be. It's a little bit stronger demand in stumpage in the first quarter. Now that does change our overall forecast and what will sell for stumpage for the year, but it was just a little bit higher.

57m 21s

Some of our customers wanted to get ahead of that. To begin the year. So stumpage is up a little bit more than we anticipated.

57m 30s

Got it. Okay.

57m 31s

No. That's that's that's helpful, Wayne. Thank you. In terms of, NTS, Eric, you mentioned, obviously, is doing very well. You have the 35,000 acres under solar option. You've identified another 30 to 35,000 acres You mentioned that last quarter. When you look at your portfolio in the U. S. House, how much of your acreage do you think it ultimately will be stratified for solar?

57m 55s

As we sit here today, it's in the low 70,000 acre kind of range. But I think one of the things that it's hard hard to know is these are the obvious sites, the 70% to 75,000 acres that I'm referring to.

58m 13s

Do the economics of solar get to the point where you can go a little bit farther with your solar farm from the grid. Today, developers are demanding sites that are virtually right below the high voltage power lines. But I could see the costs or the the P and L benefit to solar, I could see it growing over time as technology improves. And that could drive the developers to look a little bit further away from being right below those high voltage power lines and substations and transformers and whatnot. And under that scenario, you could we could have a whole bunch more acres that could be a applicable to solar. So that 70,000 to 75,000 acres that we referred to, that's the obvious stuff.

59m 1s

Today.

59m 3s

But there could be more acres on top of that, but we'll just have to see how the industry develops.

59m 10s

Got you. And any timeline for the 70,000 in terms of how do you think about how how it deploys, you know, over time?

59m 18s

Yeah. You know, it's it's really hard it's really hard to know. It's it's it feels like it's taking longer than any of us would would like.

59m 26s

We had a conversation with a developer the other day about what is taking so long.

59m 31s

And their response was, look, there is just a huge bottleneck of projects that these grid operators have to evaluate. Our system is called MISO, acronym MISO, and it controls electricity for 15 states, the Midwestern part of The United States. That's the one that we deal with primarily. And what I would tell you is that this solar developer that we spoke with, the note they sent me was that the queue process for the projects, it's very long, it's very tedious and it's very disorganized. And this operator, this MISO operator, they to do a utility study for each and every one of these projects that they look at. And each and every one of these projects, study takes about two years to get complete. And think about all the projects that they have been inundated with over the past couple of years, and think about what's going on with electricity demand in The U. S. And where that demand is MISO is just they've got their hands full trying to figure all this out. So I think to summarize, this is taking a lot longer than any of us would like.

1h 41s

But I don't think that means that the projects get canceled. I just think it means that it gets stretched out a little bit. Got it. That's really helpful, Mark. And then just one quick one. In terms of the number. Obviously, you could just 10,000,000 more than the higher end of your previous range. You also mentioned, Eric, that lumber demand is tepid. So how do you reconcile producing more with the comment that demand is not there. And I understand you want to get it rolling up and running. To capacity, but can you just tell us what we can do? Like, help me understand clearly what happened with respect to lumber demand for your own order book relative to your production with the incremental production of 10,000,000 worth feet?

1h 1m 22s

Yes. Well, first of all, million board feet in the grand scheme of 50,000,000 board foot market is a whole lot. So I'm going to be forcing a higher cost competitor fourth quartile mill to produce 10,000,000 feet less, all things equal. But when I say demand is tepid, that doesn't mean that it's falling. It just means it's not growing rapidly. I do actually think lumber markets in The U. S. Are going to grow this year, not by a lot, by, I don't know, 5,000,000,000, zero seven five billion board feet. I don't think it's by and large going to come from new residential construction. I think it's mostly going to come from R and R projects. The R and R market is hanging in there. We talked about treater demand earlier. The other thing I read an interesting statistic the other day and that is that R and R searches on Google are up 25% year over year. Now it's hard to that doesn't directly translate into 25% higher lumber demand obviously for R and R projects. But it shows that peak R and R period that the country experienced back in COVID that's long in the rearview mirror.

1h 2m 29s

And where we sit today with low existing home sales, and tons of home equity having been built up in the country people want to do R and R projects, and it's slowly but surely starting to happen. So we'll have no trouble finding a home for that 10,000,000 board feet, I guess is a long short of it. No, got it. Makes a ton of sense. And thanks for the color, and good luck in 2Q. Thanks. Thanks.

1h 2m 55s

At this time, I'm showing there are no more I'll now turn the call back over to Wayne Wacek.

1h 3m 2s

Thank you, everyone, for joining us this morning and your continued interest in PotlatchDeltic. Have a great day.

1h 3m 8s

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Key Insights

PotlatchDeltic reported Q1 2025 adjusted EBITDA of $63M, up $10M sequentially, with improved performance across all business units, driven by higher harvest volumes, increased sawlog prices in Idaho, and strong execution at the Waldo, Arkansas sawmill, which completed its ramp-up three months ahead of schedule and is expected to generate ~$25M in incremental annual EBITDA at mid-cycle sales.
Lumber markets were influenced by tariff discussions, with Southern Yellow Pine prices remaining firm and the Waldo sawmill achieving record production; Q1 lumber shipments reached 290M board feet, exceeding guidance, and Q2 shipments are expected to set a new record at 300–310M board feet. Q2 average lumber price to date is $475/MBF, about 5% higher than Q1.
Real estate segment generated $23M in adjusted EBITDA in Q1, selling over 7,000 acres at an average of $3,300/acre, with strong demand for rural and conservation land. Q2 guidance includes sales of ~8,000 acres and ~20 residential lots.
The company continues to advance natural climate solutions (NCS), expanding solar option contracts to 38,000 acres (NPV ~$475M), initiating lithium exploration on 900 acres, and progressing on forest carbon offset projects targeting market launch in 18–24 months. Additional NCS opportunities include carbon capture/storage and bioenergy.
For Q2 2025, management expects total adjusted EBITDA to be lower than Q1 due to seasonally lower harvest volumes and higher forest management costs in Timberlands, despite higher expected earnings in Wood Products. Full-year CapEx is projected at $60–65M (excluding Waldo closeout and acquisitions). The company remains focused on share repurchases given the stock’s discount to NAV and maintains a strong liquidity position with $447M at quarter-end.

Recent Transcripts

Q1 EBITDA rose to $63M, driven by strong timberlands, Waldo sawmill ramp, and real estate sales.

2024 EBITDA reached $232M, driven by real estate and timberland stability amid lumber market recovery.

Record 1.1B board feet

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$1B	$1.3B	$1.3B	$1B	$1.1B
Cost of Revenue	$688M	$716M	$807M	$900M	$946M
Gross Profit	$353M	$622M	$524M	$124M	$116M
Gross Profit %	34%	46%	39%	12%	11%
R&D Expenses	$0.19	$0.38	$0.3	$0	$0

2020

2021

2022

2023

2024

Revenue

$1B

$1.3B

$1B

$1.1B

Cost of Revenue

$688M

$716M

$807M

$900M

$946M

Gross Profit

$353M

$622M

$524M

$124M

$116M

Gross Profit %

34%

46%

39%

12%

11%

R&D Expenses

$0.19

$0.38

$0.3

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$167M	$424M	$334M	$62M	$0
Dep. & Amort.	$170M	$127M	$98M	$0	$0
Def. Tax	-$15M	$25K	-$5.3M	-$9.3M	$0
Stock Comp.	$8.1M	$8.6M	$18M	$9.1M	$0
Chg. in WC	$23M	-$33M	$9.4M	-$26M	-$1M

2020

2021

2022

2023

2024

Net Income

$167M

$424M

$334M

$62M

Dep. & Amort.

$170M

$127M

$98M

Def. Tax

-$15M

$25K

-$5.3M

-$9.3M

Stock Comp.

$8.1M

$8.6M

$18M

$9.1M

Chg. in WC

$23M

-$33M

$9.4M

-$26M

-$1M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$252M	$296M	$344M	$230M	$152M
ST Investments	$0	$2.2M	$0	$0	$0
Cash & ST Inv.	$252M	$296M	$344M	$230M	$152M
Receivables	$27M	$31M	$23M	$29M	$26M
Inventory	$62M	$72M	$68M	$100M	$108M

2020

2021

2022

2023

2024

Cash

$252M

$296M

$344M

$230M

$152M

ST Investments

$2.2M

Cash & ST Inv.

$252M

$296M

$344M

$230M

$152M

Receivables

$27M

$31M

$23M

$29M

$26M

Inventory

$62M

$72M

$68M

$100M

$108M

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. Reported revenue and EPS data from Earnings powered by FinChat.io. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice.

Market Cap: $3.1B
IPO Date: 3/17/80
CEO: Mr. Eric J. Cremers
Fulltime Employees: 1.4K
Sector: Real Estate
Industry: REIT - Specialty
Country: US
Exchange: NASDAQ Global Select

Peers

Farmland Partners Inc.

Gaming and Leisure Properties, Inc.

Gladstone Land Corporation

Watchlist

Earnings

Report Date

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Rev Estimate

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Avg 1d Change

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Report Period

Q1 2025

EPS Estimate

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Implied Move 1d

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Transcript

9m 35s

My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic First Quarter twenty twenty five Conference Call.

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Starting from Page four, of the slides, total adjusted EBITDA increased $10,000,000 rising from $53,000,000 in the fourth quarter to $63,000,000 in the first quarter.

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33m 59s

Understood. And Eric, just curious, you know, you talked about, you know, maybe in the North folks buying in at of tariffs. As we sit here today, how would you characterize channel inventories?

34m 14s

34m 54s

35m 24s

36m 3s

Got it. That's helpful. I'll jump back in the queue. Good luck.

36m 7s

Thanks.

36m 9s

Your next question comes from the line of Anthony Pettinari from Citi.

36m 16s

Good morning.

36m 18s

37m 2s

38m 23s

39m 11s

Got it. Got it. That's helpful. I'll get back in the queue.

39m 15s

Thanks. Thanks.

39m 17s

Your next question comes from the line of George Staphos from Bank of America. Your line is open.

39m 24s

40m 44s

41m 8s

42m 39s

43m 33s

Okay.

43m 35s

43m 52s

45m

I would say from a a pricing is stable by product. So, again, it's really mix driven.

45m 6s

45m 49s

I'll turn it Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Line is open.

46m

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50m 42s

Great. Appreciate all the thoughts. Thank you. Your next question from the line of Buck Horne from Raymond James. Your line is open.

50m 52s

51m 21s

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52m 23s

53m 8s

53m 25s

Is it any noticeable acceleration or change in that recently?

53m 30s

I would say we're hearing a little bit more chatter about it, for sure. You know, I can't I can't quantify it for you. I can just say that I am I am hearing about it more and more.

53m 42s

Okay.

53m 45s

Thanks.

53m 47s

Your next question comes from the line of Matthew MacKellar from RBC Capital Markets. Your line is open.

53m 54s

Thanks for taking my questions.

53m 55s

54m 20s

55m 35s

So it's just really hard to speculate where we wind up with all of this.

55m 41s

Okay. Thanks very much for the color.

55m 43s

I'll turn it back.

55m 46s

Your next question comes from the line of Mike from Truist Securities. Your line is open.

55m 52s

Thanks, Eric and Wayne for taking my questions and congrats on the quarter. Thanks, Greg.

55m 59s

57m 21s

Some of our customers wanted to get ahead of that. To begin the year. So stumpage is up a little bit more than we anticipated.

57m 30s

Got it. Okay.

57m 31s

57m 55s

58m 13s

59m 1s

Today.

59m 3s

But there could be more acres on top of that, but we'll just have to see how the industry develops.

59m 10s

Got you. And any timeline for the 70,000 in terms of how do you think about how how it deploys, you know, over time?

59m 18s

Yeah. You know, it's it's really hard it's really hard to know. It's it's it feels like it's taking longer than any of us would would like.

59m 26s

We had a conversation with a developer the other day about what is taking so long.

59m 31s

1h 41s

1h 1m 22s

1h 2m 29s

1h 2m 55s

At this time, I'm showing there are no more I'll now turn the call back over to Wayne Wacek.

1h 3m 2s

Thank you, everyone, for joining us this morning and your continued interest in PotlatchDeltic. Have a great day.

1h 3m 8s

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Key Insights

PotlatchDeltic reported Q1 2025 adjusted EBITDA of $63M, up $10M sequentially, with improved performance across all business units, driven by higher harvest volumes, increased sawlog prices in Idaho, and strong execution at the Waldo, Arkansas sawmill, which completed its ramp-up three months ahead of schedule and is expected to generate ~$25M in incremental annual EBITDA at mid-cycle sales.
Lumber markets were influenced by tariff discussions, with Southern Yellow Pine prices remaining firm and the Waldo sawmill achieving record production; Q1 lumber shipments reached 290M board feet, exceeding guidance, and Q2 shipments are expected to set a new record at 300–310M board feet. Q2 average lumber price to date is $475/MBF, about 5% higher than Q1.
Real estate segment generated $23M in adjusted EBITDA in Q1, selling over 7,000 acres at an average of $3,300/acre, with strong demand for rural and conservation land. Q2 guidance includes sales of ~8,000 acres and ~20 residential lots.
The company continues to advance natural climate solutions (NCS), expanding solar option contracts to 38,000 acres (NPV ~$475M), initiating lithium exploration on 900 acres, and progressing on forest carbon offset projects targeting market launch in 18–24 months. Additional NCS opportunities include carbon capture/storage and bioenergy.
For Q2 2025, management expects total adjusted EBITDA to be lower than Q1 due to seasonally lower harvest volumes and higher forest management costs in Timberlands, despite higher expected earnings in Wood Products. Full-year CapEx is projected at $60–65M (excluding Waldo closeout and acquisitions). The company remains focused on share repurchases given the stock’s discount to NAV and maintains a strong liquidity position with $447M at quarter-end.

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Balance Sheet

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