PotlatchDeltic (PCH) Q2 2024 earnings summary

Executive summary

• Q2 2024 Adjusted EBITDA/EBITDDA reached $103.2 million, up $73 million sequentially, driven by strong rural real estate sales, including a $57 million Southern timberland transaction, despite weak lumber markets and higher manufacturing costs.

• Timberlands segment delivered $34.2 million in Adjusted EBITDA, with Idaho/Northern sawlog prices up 9% sequentially and Southern prices flat; segment remains the core asset, providing over 80% of gross asset value.

• Wood Products segment posted a $6.8–$7 million Adjusted EBITDA loss, impacted by historically low Southern Yellow Pine prices, lower average lumber prices, and higher processing costs during the Waldo sawmill modernization.

• Real Estate segment generated $89.6–$90 million in Adjusted EBITDA, highlighted by a 43,000-acre rural land sale and strong demand for rural and conservation land.

• Q2 2024 net income was $13.7 million ($0.17 per share) on revenues of $320.7 million, down from $22.3 million in Q2 2023, reflecting higher costs and the absence of prior year insurance gains.

Financial highlights

• Q2 2024 revenues were $320.7 million, up $74.6 million year-over-year, with H1 2024 revenues at $548.8 million.

• Q2 2024 Adjusted EBITDA/EBITDDA was $103.2 million (32% margin), up from $45.4 million in Q2 2023 and $30 million in Q1 2024.

• Timberlands Adjusted EBITDA was $34.2 million; Wood Products Adjusted EBITDA was $(6.8) million; Real Estate Adjusted EBITDA was $89.6 million.

• Liquidity stood just under $500 million, including $200 million in cash and an undrawn $300 million revolver.

• Dividend yield was 4.6% at June 28, 2024, with a $1.80/share annualized rate.

Outlook and guidance

• Q3 2024 Adjusted EBITDA/EBITDDA expected to be lower than Q2 due to reduced real estate activity.

• Q3 2024 timber harvest forecast: 1.9–2 million tons, with ~80% in the South; Northern sawlog prices expected to decline mid-single digits.

• Q3 2024 lumber shipments projected at 250–260 million board feet, reflecting downtime at Waldo sawmill; full-year shipment guidance unchanged at 1.1 billion board feet.

• Real Estate Q3 rural land sales expected at 6,600 acres; full-year rural land sales forecast at 55,000 acres at ~$2,200/acre.

• 2024 capital expenditures expected at $100–$110 million, including $44 million for Waldo sawmill expansion.