PotlatchDeltic Corporation Reports Second Quarter 2020 Results
PotlatchDeltic Corporation (Nasdaq:PCH) today reported net income of $2.6 million, or $0.04 per diluted share, on revenues of $181.6 million for the quarter ended June 30, 2020. Net income was $17.1 million, or $0.25 per diluted share, on revenues of $215.6 million for the quarter ended June 30, 2019.
Second Quarter 2020 Highlights
Generated $35.3 million of Total Adjusted EBITDDA and Total Adjusted EBITDDA margin of 19% Announced agreement to sell ~72,000 acres in Minnesota for ~$48 million Maintained strong liquidity of $460 million as of Q2 2020"Our employees did an excellent job managing through the constraints and challenges imposed by the COVID pandemic and our three business segments performed well during what is typically our seasonally lightest quarter,” said Mike Covey, chairman and chief executive officer. "Lumber markets are in the midst of a historic run and we are focused on safely meeting customer demand. Cash generated from operations, along with proceeds from the Minnesota transaction that we announced in the second quarter, will further enhance our strong liquidity and provide additional flexibility to maximize shareholder value," stated Mr. Covey.
Financial Highlights
($ in millions, except per share data)
Q2 2020
Q1 2020
Q2 2019
Revenues
$
181.6
$
208.9
$
215.6
Net income (loss)
$
2.6
$
(16.8
)
$
17.1
Weighted average shares outstanding, diluted (in thousands)
67,359
67,478
67,713
Net income (loss) per diluted share
$
0.04
$
(0.25
)
$
0.25
Adjusted net income
$
2.6
$
15.0
$
17.1
Adjusted net income per diluted share
$
0.04
$
0.22
$
0.25
Total Adjusted EBITDDA
$
35.3
$
47.6
$
49.0
Dividends per share
$
0.40
$
0.40
$
0.40
Net cash from operations
$
39.8
$
48.1
$
48.5
Cash and cash equivalents
$
81.0
$
79.5
$
98.0
Business Performance: Q2 2020 vs. Q1 2020
Timberlands
Second Quarter 2020 Highlights
Timberlands Adjusted EBITDDA decreased $9.4 million from Q1 2020 levels Northern sawlog volumes decreased seasonally during spring breakup Northern sawlog prices slightly higher due to seasonally lighter logs and slightly higher index pricing Southern harvest volumes decreased because of customer mill curtailments Southern sawlog prices were slightly lower due to weaker demand($ in millions)
Q2 2020
Q1 2020
$ Change
Timberlands Revenues
$
67.3
$
82.4
$
(15.1
)
Timberlands Adjusted EBITDDA
$
25.6
$
35.0
$
(9.4
)
Wood Products
Second Quarter 2020 Highlights
Wood Products Adjusted EBITDDA decreased $2.3 million from Q1 2020 levels Average lumber price was $412 per MBF Q2 2020, 4% higher than Q1 2020 Lumber shipments decreased 12% in Q2 2020 driven by lower production hours Wood Products results were also negatively impacted by Q2 2020 temporary plywood mill curtailment and reduced operating posture($ in millions)
Q2 2020
Q1 2020
$ Change
Wood Products Revenues
$
126.2
$
145.0
$
(18.8
)
Wood Products Adjusted EBITDDA
$
10.9
$
13.2
$
(2.3
)
Real Estate
Second Quarter 2020 Highlights
Real Estate Adjusted EBITDDA increased $2.0 million from Q1 2020 levels Sold 17 residential lots at an average $97,000/lot in Q2 2020 Sold 5,537 acres of rural land for $1,784/acre($ in millions)
Q2 2020
Q1 2020
$ Change
Real Estate Revenues
$
13.0
$
11.0
$
2.0
Real Estate Adjusted EBITDDA
$
9.3
$
7.3
$
2.0
Non-GAAP Measures
This press release includes certain non-GAAP financial measures, which management believes are useful to investors, securities analysts and other interested parties. These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP.
Management uses Adjusted EBITDDA to evaluate the performance of the company. This is a non-GAAP measure that represents EBITDDA before certain items that impact comparison of the performance of our business either period-over-period or with other businesses.
Adjusted Net Income and Adjusted Net Income Per Diluted Share are non-GAAP measures that represent GAAP net income and GAAP net earnings per diluted share before certain items that impact the ability of investors, securities analysts and other interested parties to compare the performance of our business, either period-over-period or with other businesses.
Reconciliations to GAAP are set forth in the accompanying schedules.
Conference Call Information
A live conference call and webcast will be held Tuesday, July 28, 2020, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time). Investors may access the webcast at www.potlatchdeltic.com by clicking on the Investors link or by conference call at 1-833-968-2227 for U.S./Canada and 1-778-560-2697 for international callers. Participants will be asked to provide conference I.D. number 4488976. Supplemental materials that will be discussed during the call are available on the website.
A replay of the conference call will be available three hours following the call until August 4, 2020 by calling 1-800-585-8367 for U.S./Canada or 1-416-621-4642 for international callers. Callers must enter conference I.D. number 4488976 to access the replay.
About PotlatchDeltic
PotlatchDeltic (NASDAQ:PCH) is a leading Real Estate Investment Trust (REIT) that owns nearly 1.8 million acres of timberlands in Alabama, Arkansas, Idaho, Louisiana, Minnesota and Mississippi. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. PotlatchDeltic, a leader in sustainable forest practices, is dedicated to long-term stewardship and sustainable management of its timber resources. More information can be found at www.potlatchdeltic.com.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including without limitation, our expectations regarding the company’s current and expected liquidity; ability to manage the effects of COVID-19 on demand for our products and on our ability to continue operations; the success of the company’s business strategies; the company’s intent to refinance debt maturing in 2020 and beyond; maintaining the company’s investment grade credit rating; favorable capital structure and strong balance sheet; interest rates and expenses; corporate expenses; pension expenses; taxes; third quarter 2020 outlook; U.S. housing market and repair and remodel market; U.S. housing starts; lumber demand and pricing; revenues, costs and expenses; lumber shipment volumes; expected sawlog demand and timber harvest volumes; sawlog mix and pricing; rural real estate and residential real estate development sales, including the closing of the sale of approximately 72,000 rural acres in the fourth quarter of 2020, and average price per acre and developed lot; planned capital expenditures in 2020; business conditions; and similar matters. Words such as “anticipate,” “expect,” “will,” “intend,” “plan,” “target,” “project,” “believe,” “seek,” “schedule,” “estimate,” “could,” “can,” “may,” and similar expressions are intended to identify such forward-looking statements. You should carefully read forward-looking statements, including statements that contain these words, because they discuss the future expectations or state other “forward-looking” information about PotlatchDeltic. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, many of which are beyond PotlatchDeltic’s control, including impact of the recent coronavirus (COVID-19) outbreak on our business, suppliers, customers and employees; changes in the U.S. housing market; changes in timberland values; changes in timber harvest levels on the company's lands; changes in timber prices; changes in policy regarding governmental timber sales; availability of logging contractors and shipping capacity; changes in the United States and international economies and effects on our customers and suppliers; changes in interest rates; credit availability and homebuyers’ ability to qualify for mortgages; availability of labor and developable land; changes in the level of construction and remodeling activity; changes in Asia demand; changes in tariffs, quotas and trade agreements involving wood products; currency fluctuation; changes in demand for our products and real estate; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; disruptions or inefficiencies in our supply chain and/or operations; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; fires and other catastrophic events; restrictions on harvesting due to fire danger; changes in raw material, fuel and other costs; transportation disruptions; share price; the successful execution of the company’s strategic plans; the company’s ability to meet expectations; and the other factors described in PotlatchDeltic’s Annual Report on Form 10-K and in the company’s other filings with the SEC. PotlatchDeltic assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, all of which speak only as of the date hereof.
PotlatchDeltic Corporation
Condensed Consolidated Statements of Operations
Unaudited
Three Months Ended
Six Months Ended
(in thousands, except per share amounts)
June 30,
March 31,
June 30,
June 30,
2020
2020
2019
2020
2019
Revenues
$
181,555
$
208,880
$
215,581
$
390,435
$
397,297
Costs and expenses:
Cost of goods sold
149,836
172,046
175,673
321,882
329,888
Selling, general and administrative expenses
16,811
14,207
14,952
31,018
31,522
Gain on sale of facility
—
—
—
—
(9,176
)
166,647
186,253
190,625
352,900
352,234
Operating income
14,908
22,627
24,956
37,535
45,063
Interest expense, net
(8,339
)
(3,698
)
(7,882
)
(12,037
)
(13,346
)
Loss on extinguishment of debt
—
—
—
—
(5,512
)
Pension settlement charge
—
(42,988
)
—
(42,988
)
—
Non-operating pension and other postretirement employee benefit costs
(3,478
)
(3,635
)
(889
)
(7,113
)
(1,869
)
Income (loss) before income taxes
3,091
(27,694
)
16,185
(24,603
)
24,336
Income taxes
(453
)
10,862
952
10,409
(639
)
Net income (loss)
$
2,638
$
(16,832
)
$
17,137
$
(14,194
)
$
23,697
Net income (loss) per share:
Basic
$
0.04
$
(0.25
)
$
0.25
$
(0.21
)
$
0.35
Diluted
$
0.04
$
(0.25
)
$
0.25
$
(0.21
)
$
0.35
Dividends per share
$
0.40
$
0.40
$
0.40
$
0.80
$
0.80
Weighted-average shares outstanding:
Basic
67,176
67,478
67,664
67,321
67,774
Diluted
67,359
67,478
67,713
67,321
67,866
PotlatchDeltic Corporation
Condensed Consolidated Balance Sheets
Unaudited
(in thousands, except per share amounts)
June 30, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
80,987
$
83,310
Customer receivables, net
24,588
14,167
Inventories, net
52,215
65,781
Other current assets
22,107
20,183
Total current assets
179,897
183,441
Property, plant and equipment, net
286,169
286,383
Investment in real estate held for development and sale
73,541
74,233
Timber and timberlands, net
1,618,975
1,638,663
Intangible assets, net
16,660
17,049
Other long-term assets
29,928
35,290
Total assets
$
2,205,170
$
2,235,059
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
75,937
$
60,577
Current portion of long-term debt
45,988
45,974
Current portion of pension and other postretirement employee benefits
6,701
6,701
Total current liabilities
128,626
113,252
Long-term debt
711,001
710,495
Pension and other postretirement employee benefits
142,708
115,463
Deferred tax liabilities, net
10,942
20,165
Other long-term obligations
86,417
48,853
Total liabilities
1,079,694
1,008,228
Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized 4,000 shares, no shares issued
—
—
Common stock, $1 par value, authorized 100,000 shares, issued 66,871 and 67,221 shares
66,871
67,221
Additional paid-in capital
1,670,184
1,666,299
Accumulated deficit
(442,153
)
(359,330
)
Accumulated other comprehensive loss
(169,426
)
(147,359
)
Total stockholders’ equity
1,125,476
1,226,831
Total liabilities and stockholders' equity
$
2,205,170
$
2,235,059
PotlatchDeltic Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
Three Months Ended
Six Months Ended
(in thousands)
June 30,
2020
March 31,
2020
June 30,
2019
June 30,
2020
June 30,
2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
$
2,638
$
(16,832
)
$
17,137
$
(14,194
)
$
23,697
Adjustments:
Depreciation, depletion and amortization
18,171
19,044
17,137
37,215
33,411
Basis of real estate sold
2,693
6,498
7,427
9,191
8,983
Gain on sale of facility
—
—
—
—
(9,176
)
Loss on extinguishment of debt
—
—
—
—
5,512
Change in deferred taxes
(1,466
)
(12,383
)
(1,139
)
(13,849
)
(17,238
)
Pension and other postretirement employee benefits
5,765
6,068
2,831
11,833
5,937
Pension settlement charge
—
42,988
—
42,988
—
Equity-based compensation expense
1,980
1,885
1,832
3,865
3,449
Other, net
(414
)
237
(1,142
)
(177
)
(1,928
)
Change in working capital and operating-related activities, net
13,840
2,557
8,507
16,397
22,490
Real estate development expenditures
(2,109
)
(378
)
(2,715
)
(2,487
)
(4,481
)
Funding of pension and other postretirement employee benefits
(1,293
)
(1,546
)
(1,421
)
(2,839
)
(3,135
)
Net cash provided by operating activities
39,805
48,138
48,454
87,943
67,521
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment additions
(5,256
)
(5,039
)
(11,742
)
(10,295
)
(15,502
)
Timberlands reforestation and roads
(3,466
)
(4,310
)
(3,948
)
(7,776
)
(8,190
)
Acquisition of timber and timberlands
(540
)
(4,190
)
(278
)
(4,730
)
(278
)
Proceeds on sale of facility
—
1,000
(1,252
)
1,000
58,793
Other, net
608
1,505
303
2,113
433
Net cash (used in) provided by investing activities
(8,654
)
(11,034
)
(16,917
)
(19,688
)
35,256
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to common stockholders
(26,744
)
(26,941
)
(26,881
)
(53,685
)
(53,946
)
Repurchase of common stock
(3,009
)
(12,355
)
(15,015
)
(15,364
)
(25,173
)
Proceeds from issuance of long-term debt
—
—
—
—
150,000
Repayment of long-term debt
—
—
—
—
(150,000
)
Premiums and fees on debt retirement
—
—
—
—
(4,865
)
Other, net
(284
)
(242
)
(51
)
(526
)
(264
)
Net cash used in financing activities
(30,037
)
(39,538
)
(41,947
)
(69,575
)
(84,248
)
Change in cash, cash equivalents and restricted cash
1,114
(2,434
)
(10,410
)
(1,320
)
18,529
Cash, cash equivalents and restricted cash, beginning
81,820
84,254
108,380
84,254
79,441
Cash, cash equivalents and restricted cash, ending
$
82,934
$
81,820
$
97,970
$
82,934
$
97,970
PotlatchDeltic Corporation
Segment Information
Unaudited
Three Months Ended
Six Months Ended
(in thousands)
June 30,
March 31,
June 30,
June 30,
2020
2020
2019
2020
2019
Revenues
Timberlands
$
67,345
$
82,425
$
66,881
$
149,770
$
135,039
Wood Products
126,216
145,000
138,030
271,216
270,336
Real Estate
13,105
10,969
36,432
24,074
42,596
206,666
238,394
241,343
445,060
447,971
Intersegment Timberlands revenues
(25,111
)
(29,514
)
(25,762
)
(54,625
)
(50,674
)
Consolidated revenues
$
181,555
$
208,880
$
215,581
$
390,435
$
397,297
Adjusted EBITDDA1
Timberlands
$
25,659
$
34,982
$
26,131
$
60,641
$
52,981
Wood Products
10,907
13,229
(2,071
)
24,136
5,155
Real Estate
9,256
7,340
31,316
16,596
34,019
Corporate
(10,534
)
(8,672
)
(9,346
)
(19,206
)
(20,000
)
Eliminations and adjustments
85
692
3,050
777
5,177
Total Adjusted EBITDDA
35,373
47,571
49,080
82,944
77,332
Basis of real estate sold
(2,693
)
(6,498
)
(7,427
)
(9,191
)
(8,983
)
Depreciation, depletion and amortization
(17,765
)
(18,638
)
(16,727
)
(36,403
)
(32,524
)
Interest expense, net
(8,339
)
(3,698
)
(7,882
)
(12,037
)
(13,346
)
Loss on extinguishment of debt
—
—
—
—
(5,512
)
Pension settlement charge
—
(42,988
)
—
(42,988
)
—
Non-operating pension and other postretirement employee benefits
(3,478
)
(3,635
)
(889
)
(7,113
)
(1,869
)
Gain (loss) on disposal of fixed assets
(7
)
192
30
185
62
Gain on sale of facility
—
—
—
—
9,176
Income (loss) before income taxes
$
3,091
$
(27,694
)
$
16,185
$
(24,603
)
$
24,336
Depreciation, depletion and amortization
Timberlands
$
11,566
$
12,591
$
10,469
$
24,157
$
20,734
Wood Products
5,798
5,630
5,861
11,428
10,903
Real Estate
156
160
147
316
356
Corporate
245
257
250
502
531
17,765
18,638
16,727
36,403
32,524
Bond discounts and deferred loan fees2
406
406
410
812
887
Total depreciation, depletion and amortization
$
18,171
$
19,044
$
17,137
$
37,215
$
33,411
Basis of real estate sold
Real Estate
$
3,212
$
6,504
$
7,455
$
9,716
$
9,043
Eliminations and adjustments
(519
)
(6
)
(28
)
(525
)
(60
)
Total basis of real estate sold
$
2,693
$
6,498
$
7,427
$
9,191
$
8,983
1
Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA on page 8, Reconciliations.
2
Bond discounts and deferred loan fees are included in interest expense, net in the Condensed Consolidated Statements of Operations.
PotlatchDeltic Corporation
Reconciliations
Unaudited
Three Months Ended
Six Months Ended
(in thousands, except per share amount)
June 30,
March 31,
June 30,
June 30,
2020
2020
2019
2020
2019
Total Adjusted EBITDDA
Net income (loss) (GAAP)
$
2,638
$
(16,832
)
$
17,137
$
(14,194
)
$
23,697
Interest expense, net
8,339
3,698
7,882
12,037
13,346
Income taxes
453
(10,862
)
(952
)
(10,409
)
639
Depreciation, depletion and amortization
17,765
18,638
16,727
36,403
32,524
Basis of real estate sold
2,693
6,498
7,427
9,191
8,983
Loss on extinguishment of debt
—
—
—
—
5,512
Pension settlement charge
—
42,988
—
42,988
—
Non-operating pension and other postretirement benefit costs
3,478
3,635
889
7,113
1,869
Gain on sale of facility
—
—
—
—
(9,176
)
(Gain) loss on disposal of fixed assets
7
(192
)
(30
)
(185
)
(62
)
Total Adjusted EBITDDA
$
35,373
$
47,571
$
49,080
$
82,944
$
77,332
Adjusted net income
Net income (loss) (GAAP)
$
2,638
$
(16,832
)
$
17,137
$
(14,194
)
$
23,697
Special items:
Loss on extinguishment of debt
—
—
—
—
5,512
Pension settlement charge, after tax
—
31,811
—
31,811
—
Gain on sale of facility, after tax
—
—
—
—
(6,790
)
Adjusted net income
$
2,638
$
14,979
$
17,137
$
17,617
$
22,419
Adjusted net income per diluted share
Net income (loss) per diluted share (GAAP)
$
0.04
$
(0.25
)
$
0.25
$
(0.21
)
$
0.35
Special items:
Loss on extinguishment of debt
—
—
—
—
0.08
Pension settlement charge, after tax
—
0.47
—
0.47
—
Gain on sale of facility, after tax
—
—
—
—
(0.10
)
Adjusted net income per diluted share
$
0.04
$
0.22
$
0.25
$
0.26
$
0.33
View source version on businesswire.com: https://www.businesswire.com/news/home/20200727005671/en/