PotlatchDeltic Corp. (Nasdaq: PCH) today reported net income of $39.2 million, or $0.58 per diluted share, on revenues of $248.4 million for the quarter ended December 31, 2021. Excluding a net loss on fire damage, adjusted net income was $39.9 million, or $0.59 per diluted share for the fourth quarter of 2021. Net income was $100.0 million, or $1.48 per diluted share, on revenues of $337.4 million for the quarter ended December 31, 2020.
Net income for the full year 2021 was $423.9 million, or $6.26 per diluted share, on revenues of $1.3 billion. Excluding a net gain on fire damage, adjusted net income was $421.4 million, or $6.22 per share for 2021. Net income for the full year 2020 was $166.8 million, or $2.47 per diluted share, on revenues of $1.0 billion. Excluding an after-tax pension settlement charge, adjusted net income was $198.6 million, or $2.94 per diluted share for 2020.
2021 Highlights
Generated record Total Adjusted EBITDDA of $652.9 million and Total Adjusted EBITDDA margin of 49%
Record Wood Products Adjusted EBITDDA of $393.9 million driven by historic lumber prices
Timberlands Adjusted EBITDDA of $262.9 million was a record level due to leveraged Idaho lumber indexed pricing
Acquired $134 million of high-quality timberlands
Returned $388 million to shareholders through regular dividends and a Q4 special dividend
Maintained strong liquidity position of $595 million as of December 31, 2021
"2021 was an extraordinary year, with our Wood Products and Timberlands businesses far exceeding last year's record performance," said Eric Cremers, president and chief executive officer. "Our leverage-to-lumber strategy capitalized on historic lumber prices and is well situated to continue to drive strong financial performance into 2022. Additionally, we returned $388 million to shareholders in 2021, including a special dividend in December, and are well positioned to continue growing shareholder value through our disciplined and opportunistic capital allocation strategy," stated Mr. Cremers.
Financial Highlights
(in millions, except per share data - unaudited)
Q4 2021
Q3 2021
Q4 2020
Revenues
$
248.4
$
287.3
$
337.4
Net income
$
39.2
$
65.7
$
100.0
Weighted average shares outstanding, diluted (in thousands)
67,974
67,648
67,607
Net income per diluted share
$
0.58
$
0.97
$
1.48
Adjusted net income
$
39.9
$
62.4
$
100.0
Adjusted net income per diluted share
$
0.59
$
0.92
$
1.48
Total Adjusted EBITDDA
$
75.7
$
107.2
$
163.9
Dividends per share1
$
4.44
$
0.41
$
0.41
Net cash from operations
$
51.6
$
111.9
$
144.4
Cash and cash equivalents
$
296.2
$
592.8
$
252.3
1The regular dividend was increased 7.3% to $0.44 per quarter and a special dividend of $4 per share was paid Q4 2021.
Business Performance: Q4 2021 vs. Q3 2021
Timberlands
Fourth Quarter 2021 Highlights
Timberlands Adjusted EBITDDA decreased $34.2 million from Q3 2021 levels
Northern sawlog price decreased 28% primarily due to lower indexed and cedar sawlog prices
Northern harvest volumes were seasonally lower
Forest management costs decreased seasonally
(in millions - unaudited)
Q4 2021
Q3 2021
$ Change
Segment Revenues
$
86.8
$
129.5
$
(42.7
)
Adjusted EBITDDA
$
41.8
$
76.0
$
(34.2
)
Wood Products
Fourth Quarter 2021 Highlights
Wood Products Adjusted EBITDDA increased $10.6 million from Q3 2021 levels
Average lumber price increased 6% to $563 per MBF in Q4 2021
Log costs decreased due to lower index pricing in Idaho
Plywood price declined from historic levels
(in millions - unaudited)
Q4 2021
Q3 2021
$ Change
Segment Revenues
$
174.2
$
187.8
$
(13.6
)
Adjusted EBITDDA
$
37.2
$
26.6
$
10.6
Real Estate
Fourth Quarter 2021 Highlights
Real Estate Adjusted EBITDDA increased $0.9 million from Q3 2021 levels
Reflects higher rural land sales, partially offset by lower residential lot sales
Sold 5,674 acres of rural land at an average price of $1,566/acre
Sold 37 residential lots at an average price of $71,757/lot
(in millions - unaudited)
Q4 2021
Q3 2021
$ Change
Segment Revenues
$
14.0
$
13.5
$
0.5
Adjusted EBITDDA
$
10.0
$
9.1
$
0.9
Outlook
"2022 is off to a great start with the recent surge in lumber prices benefitting both our Timberlands and Wood Products businesses. We expect housing-related fundamentals that drive demand in our business to remain favorable and we continue to expect lumber prices will remain higher than long-term averages. We continue to monitor the pandemic and the trend in mortgage rates and their impact on lumber demand and our business. During 2022, we expect to harvest approximately 6.1 million tons in our Timberlands segment, ship around 1 billion board feet in lumber, and sell about 13,500 rural acres and 165 residential lots in our Real Estate Segment," stated Mr. Cremers.
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 income 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, February 1, 2022, 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 1-888-510-2008 for U.S./Canada and 1-646-960-0306 for international callers. Participants will be asked to provide conference I.D. number 7281983. Supplemental materials that will be discussed during the call are available on the website.
A replay of the conference call will be available two hours following the call until February 8, 2022, by calling 1-800-770-2030 for U.S./Canada or 1-647-362-9199 for international callers. Callers must enter conference I.D. number 7281983 to access the replay.
About PotlatchDeltic
PotlatchDeltic (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns approximately 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 management, is committed to environmental and social responsibility and to responsible governance. 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 revenues, costs and expenses; favorable housing market fundamentals; lumber pricing; lumber shipment volumes; timber harvest volumes; rural real estate and development real estate sales; 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 the impact of COVID-19 and its variants, governmental responses to such outbreaks, and anticipated recovery from the pandemic 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 foreign 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 at our facilities and on our timberland 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.
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization
20,060
21,534
20,076
77,425
77,885
Basis of real estate sold
4,627
6,697
10,908
27,360
25,348
Change in deferred taxes
(3,196
)
2,659
(223
)
25
(14,610
)
Pension and other postretirement benefits
5,484
5,484
5,916
22,079
23,666
Pension settlement charge
-
-
-
-
42,988
Equity-based compensation expense
2,262
2,275
2,135
8,607
8,063
Net loss (gain) on fire damage
1,033
(4,394
)
-
(3,361
)
-
Other, net
(270
)
928
(725
)
363
(1,269
)
Change in working capital and operating-related activities, net
(13,117
)
17,072
10,366
(33,199
)
23,072
Real estate development expenditures
(2,795
)
(2,435
)
(2,506
)
(9,229
)
(6,706
)
Funding of pension and other postretirement employee benefits
(1,626
)
(3,585
)
(1,546
)
(9,044
)
(10,004
)
Net cash provided by operating activities
51,644
111,902
144,418
504,886
335,263
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment additions
(12,656
)
(10,348
)
(8,027
)
(38,947
)
(22,693
)
Timberlands reforestation and roads
(4,165
)
(4,282
)
(3,889
)
(16,401
)
(16,234
)
Acquisition of timber and timberlands
(17,616
)
(258
)
(2,120
)
(20,066
)
(6,858
)
Proceeds from property insurance recoveries
1,750
13,250
-
15,000
-
Other, net
276
358
108
1,269
3,593
Net cash used in investing activities
(32,411
)
(1,280
)
(13,928
)
(59,145
)
(42,192
)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to common stockholders
(305,779
)
(27,489
)
(27,419
)
(388,241
)
(107,853
)
Repurchase of common stock
-
-
-
-
(15,364
)
Proceeds from long-term debt
40,000
-
46,000
40,000
46,000
Repayment of long-term debt
(46,366
)
-
(46,000
)
(46,366
)
(46,000
)
Other, net
(3,083
)
(2,396
)
(735
)
(6,702
)
(1,768
)
Net cash used in financing activities
(315,228
)
(29,885
)
(28,154
)
(401,309
)
(124,985
)
Change in cash, cash equivalents and restricted cash
(295,995
)
80,737
102,336
44,432
168,086
Cash, cash equivalents and restricted cash at beginning of period
592,767
512,030
150,004
252,340
84,254
Cash, cash equivalents and restricted cash at end of period
$
296,772
$
592,767
$
252,340
$
296,772
$
252,340
Note: PotlatchDeltic issued 1.96 million shares of common stock and assumed debt of $6.6 million to acquire Loutre Land and Timber Company in December 2021. The debt was paid off after the transaction closed.