PotlatchDeltic (PCH) Citi’s 30th Annual Global Property CEO Conference 2025 summary

Business overview and strategy

• Operates as a timber REIT with 2.1 million acres of timberland, seven mills, and a real estate segment including rural land sales and a master-planned community.

• Capital allocation focuses on strategic investments, share repurchases, and special dividends, with a recent $130 million investment in the Waldo sawmill.

• Maintains a strong balance sheet with investment-grade ratings and a debt-to-enterprise value ratio of about 20%.

• Pursues emerging opportunities in natural climate solutions, including solar farms, lithium deposits, and carbon offsets.

Lumber and timber market dynamics

• About 55% of earnings are tied to lumber prices, with significant leverage due to indexed log sales and mill operations.

• Lumber prices have risen $100 since July, boosting EBITDA by $150 million; outlook remains favorable due to underbuilt U.S. housing and strong repair/remodel demand.

• Recent price increases were supply-driven, with 10% of capacity removed; Canadian lumber faces rising duties, potentially reaching 25%-30% this fall.

• Additional tariffs could push total Canadian import costs to 50%-55%, straining Canadian mills and benefiting U.S. producers.

Regulatory and policy environment

• U.S.-Canadian lumber dispute centers on alleged Canadian subsidies, leading to fluctuating import duties recalculated annually.

• Current duty is 14%, rising to 25%-30% in fall 2024, with potential for further tariffs under new U.S. administration.

• Federal forest harvest increases are unlikely due to environmental opposition and logistical challenges; most new supply must come from private producers.