• Total Adjusted EBITDA (2024): $232 million.
• Timberlands Adjusted EBITDA (2024): $139 million.
• Wood Products Adjusted EBITDA (2024): Loss of $8 million; $9 million in Q4.
• Real Estate Adjusted EBITDA (2024): $147 million.
• Fourth Quarter Adjusted EBITDA: $53 million.
• Timberlands Harvest Volume (2024): 7.6 million tons.
• Lumber Shipments (2024): Over 1.1 billion board feet.
• Real Estate Sales (2024): Sold over 57,000 acres at $2,300 per acre.
• Residential Lots Sold (2024): 135 lots at $146,000 per lot.
• Cash Dividends Paid (2024): $142 million.
• Share Repurchases (2024): $35 million, averaging $41 per share.
• Fourth Quarter Lumber Price Realization: $445 per thousand board feet.
• Fourth Quarter Lumber Shipments: 283 million board feet.
• Fourth Quarter Real Estate Sales: 5,900 acres at $2,900 per acre.
• Liquidity at Year-End: $451 million.
• Capital Expenditures (Q4 2024): $20 million.

• Warning! GuruFocus has detected 7 Warning Signs with PCH.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• PotlatchDeltic Corp (NASDAQ:PCH) reported a total adjusted EBITDA of $232 million for 2024, reflecting strong performance in its real estate business and stability in timberlands operations.
• The company achieved a record annual shipment volume of over 1.1 billion board feet of logs, despite downtime for sawmill modernization.
• The Waldo sawmill modernization and expansion project is on track, expected to increase annual capacity by 85 million board feet and generate $25 million in incremental EBITDA annually.
• The real estate segment contributed $147 million in adjusted EBITDA, with strong demand for rural properties and successful sales in the Chenal Valley community.
• PotlatchDeltic Corp (NASDAQ:PCH) made significant progress in its Natural Climate Solutions initiatives, doubling solar options under contract with an estimated net present value exceeding $400 million.

Negative Points

• The wood products segment faced challenges with a loss of $8 million in adjusted EBITDA for 2024 due to a weak lumber pricing environment.
• Cautious buyer sentiment, ample lumber supply, and soft demand in end markets exerted downward pressure on lumber markets throughout the year.
• The multifamily homebuilding segment remains weak due to an oversupply of units and restrictive construction financing, limiting starts.
• The repair and remodel segment has been subdued, particularly in the DIY sector, due to cautious consumer sentiment and higher financing costs.
• PotlatchDeltic Corp (NASDAQ:PCH) anticipates no significant contribution from Natural Climate Solutions profit pools in 2025, with major benefits expected in later years.

Q & A Highlights

Q: Why is PotlatchDeltic planning to harvest only about 7.4 million tons in 2025, given the improving market conditions? A: Wayne Wasechek, Vice President and CFO, explained that the planned harvest volume is due to normal variability and land sales activities. The company aims to maintain a sustainable harvest profile, and recent land sales, such as a conservation land sale at a premium, have influenced the 2025 outlook.

Q: Are there any significant changes in demand for softwood pulpwood due to current cellulose market conditions? A: Wayne Wasechek noted that while there are fluctuations in hardwood pricing, the demand for softwood pulpwood remains steady. Market conditions vary by region, with some areas experiencing elevated mill inventories and others seeing increased pricing.

Q: Why is PotlatchDeltic cautious with its share repurchase strategy despite trading below NAV? A: Eric Cremers, President and CEO, emphasized a slow and steady approach to capital allocation. The company prefers to maintain flexibility for future opportunities, acknowledging that market conditions could change, affecting stock prices and potential investment opportunities.

Q: What is the outlook for unit cost reductions at the Waldo sawmill as it ramps up? A: Eric Cremers indicated that there is room for further cost reductions in Q1 2025, with expectations of additional savings as the sawmill becomes fully operational by Q2. The company anticipates a couple of million dollars in cost reductions in Q1.

Q: How does PotlatchDeltic view the timberland M&A market, and what is its appetite for larger deals? A: Eric Cremers stated that the timberland M&A market is currently quiet, with sellers holding off due to various market conditions. PotlatchDeltic is open to larger deals but will only pursue acquisitions that create shareholder value and meet their cost of capital requirements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.