On July 29, 2024, PotlatchDeltic Corp (PCH, Financial) released its 8-K filing for the second quarter of 2024. PotlatchDeltic Corp is a REIT that owns and manages forestland in Alabama, Arkansas, Idaho, Minnesota, and Mississippi. The company operates in three segments: timberlands, wood products, and real estate. The timberlands and wood products segments combined drive the majority of the company's revenue.
Performance Overview
For the quarter ended June 30, 2024, PotlatchDeltic Corp reported net income of $13.7 million, or $0.17 per diluted share, on revenues of $320.7 million. This compares to net income of $22.3 million, or $0.28 per diluted share, on revenues of $246.1 million for the same period in 2023. The reported earnings per share (EPS) of $0.17 matched the analyst estimate, while the revenue of $320.7 million surpassed the estimated $304.76 million.
Key Financial Achievements
PotlatchDeltic Corp achieved several notable financial milestones during the second quarter:
- Generated Total Adjusted EBITDDA of $103.2 million with a margin of 32%.
- Completed the sale of 34,100 acres of Southern timberlands for $57 million.
- Repurchased 610,000 shares for $25 million.
- Maintained strong liquidity of nearly $500 million as of June 30, 2024.
Segment Performance
Timberlands: Revenues for the Timberlands segment increased to $98.8 million from $93.0 million in Q1 2024. However, Adjusted EBITDDA decreased slightly by $0.5 million due to higher forest management costs.
Wood Products: The Wood Products segment saw revenues rise to $153.6 million from $148.6 million in Q1 2024. Despite this, Adjusted EBITDDA decreased by $6.7 million, primarily due to higher manufacturing costs linked to the Waldo sawmill expansion project.
Real Estate: The Real Estate segment experienced a significant increase in Adjusted EBITDDA, rising by $83.4 million from Q1 2024. This was driven by the sale of 43,121 acres of rural land, including the notable sale of 34,100 acres to Forest Investment Associates for $57 million.
Financial Statements and Metrics
| ($ in millions, except per share data) | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Revenues | $320.7 | $228.1 | $246.1 |
| Net income (loss) | $13.7 | $(0.3) | $22.3 |
| Net income (loss) per diluted share | $0.17 | $(0.00) | $0.28 |
| Total Adjusted EBITDDA | $103.2 | $29.7 | $45.5 |
| Total Adjusted EBITDDA Margin | 32.2% | 13.0% | 18.5% |
| Net cash from operations | $100.6 | $16.0 | $37.2 |
| Cash and cash equivalents | $199.7 | $180.2 | $331.2 |
Analysis and Commentary
Eric Cremers, President and CEO, commented,
“All of our business segments delivered solid operational execution in the second quarter in spite of languishing lumber markets and the current economic backdrop. Our Real Estate business generated strong rural sales activity that created high value transactions with significant premiums to timberland values, highlighted by the closing of our previously announced 34,100-acre timberland sale to Forest Investment Associates for $57 million. Additionally, our Wood Products business is diligently focused on the final phase of construction on our Waldo, Arkansas sawmill expansion and modernization project for completion in the third quarter. As for capital allocation, our strong balance sheet and liquidity continues to allow us the flexibility to execute on our disciplined and opportunistic strategy, which included $25 million of share repurchases during the quarter. Looking ahead, we continue to believe long-term underlying housing fundamentals remain favorable and are optimistic that lumber markets will gain renewed momentum as inflation and interest rates improve.”
PotlatchDeltic Corp's performance in Q2 2024 demonstrates resilience and strategic execution amid economic challenges. The company's ability to generate strong revenue and maintain liquidity positions it well for future growth, particularly as it completes key projects like the Waldo sawmill expansion. Investors will be keen to see how the company navigates the evolving market conditions and capitalizes on long-term housing fundamentals.
Explore the complete 8-K earnings release (here) from PotlatchDeltic Corp for further details.
