☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ��☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange act).

The number of shares of common stock of the registrant outstanding as of July ~~28, 2021~~26, 2022 was ~~67,045,316.~~69,271,822.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the amounts shown in the Condensed Consolidated Statements of Cash Flows.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTE 2. SEGMENT INFORMATION

Our operations are organized into 3 reportable segments: Timberlands, Wood Products and Real Estate. Management activities in the Timberlands segment include planting and harvesting trees and building and maintaining roads. The Timberlands segment also generates revenues from non-timber resources such as hunting leases, recreation permits and leases, mineral rights contracts, oil and gas royalties and carbon sequestration. The Wood Products segment manufactures and markets lumber and plywood. Activities in the Real Estate segment include our rural timberland-holdings sales program, master planned community development and a country club.

Our Timberlands segment supplies our Wood Products segment with a portion of its wood fiber needs. These intersegment revenues are based on prevailing market prices and typically represent a sizeable portion of the Timberlands segment’s total revenues. Our other segments generally do not generate intersegment revenues. These intercompany transactions are eliminated in consolidation.

The reportable segments follow the same accounting policies used for our Condensed Consolidated Financial Statements, with the exception of the valuation of inventories, which are reported using the average cost method for purposes of reporting segment results.

The following table presents our revenues by major product:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Timberlands
Northern region
Sawlogs	$	86,773		$	30,638		$	162,954		$	72,045		$	62,930		$	86,773		$	144,434		$	162,954
Pulpwood		197			1,236			696			2,671			587			197			979			696
Stumpage		—			—			—			316
Other		235			292			535			595			213			235			516			535
Total Northern revenues		87,205			32,166			164,185			75,627			63,730			87,205			145,929			164,185

Southern region
Sawlogs		21,013			21,205			43,429			45,144			24,365			21,013			47,746			43,429
Pulpwood		10,163			10,872			19,324			22,073			12,221			10,163			23,848			19,324
Stumpage		271			817			1,035			1,646			2,108			271			5,466			1,035
Other		2,564			2,285			5,159			5,280			3,062			2,564			6,154			5,159
Total Southern revenues		34,011			35,179			68,947			74,143			41,756			34,011			83,214			68,947

Total Timberlands revenues		121,216			67,345			233,132			149,770			105,486			121,216			229,143			233,132

Wood Products
Lumber		308,480			102,793			538,162			214,732			219,924			308,480			470,688			538,162
Residuals and Panels		49,193			23,423			88,807			56,484			46,709			49,193			91,687			88,807
Total Wood Products revenues		357,673			126,216			626,969			271,216			266,633			357,673			562,375			626,969

Real Estate
Rural real estate		11,505			9,879			21,530			17,171			16,440			11,505			38,086			21,530
Development real estate		1,774			1,672			9,827			3,964			7,946			1,774			18,224			9,827
Other		2,719			1,554			4,954			2,939			2,350			2,719			4,491			4,954
Total Real Estate revenues		15,998			13,105			36,311			24,074			26,736			15,998			60,801			36,311

Total segment revenues		494,887			206,666			896,412			445,060			398,855			494,887			852,319			896,412
Intersegment Timberlands revenues¹		(47,381	)		(25,111	)		(94,713	)		(54,625	)		(39,258	)		(47,381	)		(81,372	)		(94,713	)
Total consolidated revenues	$	447,506		$	181,555		$	801,699		$	390,435		$	359,597		$	447,506		$	770,947		$	801,699


¹	Intersegment revenues represent logs sold by our Timberlands segment to our Wood Products segment.

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Management ~~primarily evaluates~~uses Adjusted EBITDDA to evaluate the operating performance and effectiveness of ~~its~~operating strategies of our segments and ~~allocates~~allocation of resources to ~~them based upon Adjusted EBITDDA.~~them. EBITDDA is calculated as net income ~~(loss)~~ before interest expense, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses. ~~Management uses Adjusted EBITDDA to compare the operating performance of our segments on a consistent basis and to evaluate the performance and effectiveness of each segment’s operating strategies.~~ Our calculation of Adjusted EBITDDA may not be comparable to that reported by other companies.

The following table summarizes information for each of the company’s reportable segments and includes a reconciliation of Total Adjusted EBITDDA to income ~~(loss)~~ before income taxes. Corporate information is included to reconcile segment data to the Condensed Consolidated Financial Statements.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Adjusted EBITDDA:
Timberlands	$	77,259		$	25,659		$	145,117		$	60,641		$	57,890		$	77,259		$	134,324		$	145,117
Wood Products		204,533			10,907			330,088			24,136			107,256			204,533			257,207			330,088
Real Estate		11,788			9,256			28,381			16,596			21,816			11,788			51,940			28,381
Corporate		(12,822	)		(10,534	)		(23,532	)		(19,206	)		(13,912	)		(12,822	)		(23,496	)		(23,532	)
Eliminations and adjustments		(5,774	)		85			(10,084	)		777			2,120			(5,774	)		757			(10,084	)
Total Adjusted EBITDDA		274,984			35,373			469,970			82,944			175,170			274,984			420,732			469,970
Interest expense, net¹		(8,199	)		(8,339	)		(11,773	)		(12,037	)		(7,419	)		(8,199	)		(10,313	)		(11,773	)
Depreciation, depletion and amortization		(17,029	)		(17,765	)		(35,025	)		(36,403	)		(20,007	)		(17,029	)		(39,509	)		(35,025	)
Basis of real estate sold		(7,213	)		(2,693	)		(16,036	)		(9,191	)		(7,325	)		(7,213	)		(18,179	)		(16,036	)
Gain on fire damage														9,868			0			9,592			0
Pension settlement charge		—			—			—			(42,988	)		0			0			(14,165	)		0
Non-operating pension and other postretirement employee benefits		(3,271	)		(3,478	)		(6,685	)		(7,113	)		(1,809	)		(3,271	)		(3,738	)		(6,685	)
(Loss) gain on disposal of fixed assets		(527	)		(7	)		(561	)		185
Income (loss) before income taxes	$	238,745		$	3,091		$	399,890		$	(24,603	)
Gain (loss) on disposal of fixed assets														13			(527	)		16			(561	)
Income before income taxes													$	148,491		$	238,745		$	344,436		$	399,890

Depreciation, depletion and amortization:
Timberlands	$	10,482		$	11,566		$	21,899		$	24,157		$	11,563		$	10,482		$	23,724		$	21,899
Wood Products		6,179			5,798			12,382			11,428			8,136			6,179			15,157			12,382
Real Estate		160			156			315			316			173			160			343			315
Corporate		208			245			429			502			135			208			285			429
		17,029			17,765			35,025			36,403			20,007			17,029			39,509			35,025
Bond discounts and deferred loan fees¹		403			406			806			812			372			403			744			806
Total depreciation, depletion and amortization	$	17,432		$	18,171		$	35,831		$	37,215		$	20,379		$	17,432		$	40,253		$	35,831

Basis of real estate sold:
Real Estate	$	7,219		$	3,212		$	16,048		$	9,716		$	7,328		$	7,219		$	18,188		$	16,048
Eliminations and adjustments		(6	)		(519	)		(12	)		(525	)		(3	)		(6	)		(9	)		(12	)
Total basis of real estate sold	$	7,213		$	2,693		$	16,036		$	9,191		$	7,325		$	7,213		$	18,179		$	16,036


¹	Bond discounts and deferred loan fees are reported within interest expense, net on the Condensed Consolidated Statements of Operations.

1112

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NOTE 3. EARNINGS PER SHARE

The following table reconciles the number of shares used in calculating basic and diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Basic weighted-average shares outstanding		67,316		67,176		67,265		67,321		69,580		67,316		69,502		67,265
Incremental shares due to:
Performance shares		355		153		343		—		152		355		154		343
Restricted stock units		61		30		56		—		59		61		75		56
Diluted weighted-average shares outstanding		67,732		67,359		67,664		67,321		69,791		67,732		69,731		67,664

For stock-based awards, the dilutive effect is calculated using the treasury stock method. Under this method, the dilutive effect is computed as if the awards were exercised at the beginning of the period (or at time of issuance, if later) and assumes the related proceeds were used to repurchase common stock at the average market price during the period. Related proceeds include future compensation cost associated with the stock award.

For the three and six months ended June 30, ~~2021,~~2022, there were approximately ~~75,000~~98,000 and 78,000 stock-based awards, respectively, that were excluded from the calculation of diluted earnings per share as they were anti-dilutive. For the three and six months ended June 30, ~~2020,~~2021, there were approximately ~~39,000~~75,000 and ~~490,000~~78,000 stock-based awards, respectively, that were excluded from the calculation of diluted earnings per share ~~because~~as they were anti-dilutive. Anti-dilutive stock-based awards could be dilutive in future periods.

Share Repurchase Program

On August 30, 2018, our board of directors authorized management to repurchase up to ~~$100.0~~$100.0 million of common stock with no time limit set for the repurchase (the Repurchase Program). Shares may be repurchased under the Repurchase Program ~~may be repurchased~~ in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Trading Plan). The timing, manner, price and amount of repurchases will be determined according to, and subject to, the terms of the Trading Plan, and, subject to the terms of the Trading Plan, the Repurchase Program may be suspended, terminated or modified at any time for any reason.

During the three and six months ended June 30, 2022, we repurchased 94,566 shares of our common stock at a total consideration of $4.2 million. We did 0t0t repurchase any shares during the six months ended June 30, 2021. During the three and six months ended June 30, 2020, we repurchased 88,933 and 489,850 shares of common stock (at a total consideration of $3.0 million and $15.4 million), respectively under the Repurchase Program, all of which were made in open-market transactions. At June 30, ~~2021,~~2022, we had remaining authorization of ~~$59.5~~$55.3 million for future stock repurchases under the Repurchase Program.

We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability to account for repurchases that have not been cash settled. We retire shares upon repurchase. Any excess repurchase price over par is recorded in accumulated deficit.

~~Table of Contents~~

NOTE 4. CERTAIN BALANCE SHEET COMPONENTS

Inventories

~~Inventories~~


(in thousands)	June 30, 2022			December 31, 2021
Logs	$	25,613		$	41,199
Lumber, panels and veneer		40,207			34,528
Materials and supplies		19,565			17,780
Total inventories		85,385			93,507
Less: LIFO reserve		(21,138	)		(21,138	)
Total inventories, net	$	64,247		$	72,369

(in thousands)

June 30, 2021

December 31, 2020

Logs

$
32,379

$
31,210

Lumber, panels and veneer

42,595

34,136

Materials and supplies

16,349

14,939

Total inventories

91,323

80,285

Less: LIFO reserve

(18,249
)

(18,249
)
Total inventories, net

$
73,074

$
62,036

Property, plant and equipment


(in thousands)	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
Property, plant and equipment	$	523,105		$	517,711		$	569,447		$	532,324
Less: accumulated depreciation		(231,555	)		(229,167	)		(254,607	)		(240,004	)
Total property, plant and equipment, net	$	291,550		$	288,544		$	314,840		$	292,320

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Ola, Arkansas sawmill fire

On June 13, 2021, a fire occurred at our Ola, Arkansas sawmill. There were no injuries or environmental issues from the fire. The damage was principally limited to the large log primary breakdown area of the mill. The planer mill, kiln, and shipping department were not affected. We have adequate property damage and business interruption insurance and expect to be reimbursed for both property damage and business interruption losses by our insurance carriers, subject to an applicable deductible, under which we filed a claim with the insurance carriers. ~~Based~~Insurance recoveries are recorded when deemed probable and reasonably estimable.

Damaged and obsolete fixed asset write-offs, disposal costs, insurance recoveries for the Ola, Arkansas sawmill fire and gain on ~~our initial~~fire damage ~~assessment,~~consists of the ~~property destroyed had a net book value of $2.1 million, which was written off~~following:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Fixed asset write-offs	$	0		$	2,108		$	0		$	2,108
Disposal costs		132			0			836			0
Total fixed asset loss on disposal		132			2,108			836			2,108

Insurance recoveries		(10,000	)		(2,108	)		(10,000	)		(2,108	)
Gain on fire damage at Ola		(9,868	)		0			(9,164	)		0

Insurance recoveries on timberlands fire damage		0			0			(428	)		0
Gain on fire damage	$	(9,868	)	$	0		$	(9,592	)	$	0

Timber and ~~recognized as a loss during~~timberlands


(in thousands)	June 30, 2022		December 31, 2021
Timber and timberlands	$	1,619,559	$	1,597,011
Logging roads		84,697		85,660
Total timber and timberlands, net	$	1,704,256	$	1,682,671

During the ~~second quarter of 2021. At~~six months ended June 30, ~~2021,~~2022, we ~~also recorded a receivable from~~were the ~~insurance carriers~~successful bidder for three bolt-on timberland transactions, aggregating approximately $101 million, covering approximately 46,000 acres in Mississippi and a corresponding gain on insurance recoveries of $2.1 million for the book value of the destroyed property as we expect to recover these losses under our insurance policy. As we further assess the damage, it is possible that additional losses and associated insurance recoveries may be recorded. A determination regarding downtime and costs to repair the Ola sawmill will be made once the extent of damage and repair options are fully assessed.

~~Timber and timberlands~~

Arkansas.

(in thousands)

June 30, 2021

December 31, 2020

Timber and timberlands

$
1,498,413

$
1,516,788

Logging roads

82,414

83,273

Total timber and timberlands, net

$
1,580,827

$
1,600,061

Accounts payable and accrued liabilities


(in thousands)	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Income taxes payable					$	23,361	$	1,134
Accrued payroll and benefits	$	23,480	$	29,675		23,717		28,944
Accounts payable		21,272		9,724		13,898		12,749
Deferred revenue¹		13,678		8,789		13,328		8,392
Other accrued taxes						7,187		5,714
Accrued interest		6,403		6,485		5,965		6,046
Income taxes payable		4,493		14,755
Operating lease liabilities		3,437		4,304
Other accrued taxes		7,385		6,025
Other current liabilities		17,314		13,522		22,728		15,230
Total accounts payable and accrued liabilities	$	97,462	$	93,279	$	110,184	$	78,209

Deferred revenue predominately relates to hunting and other access rights on our timberlands, payments received for lumber shipments where control of goods ~~have~~has not transferred, ~~member related~~member-related activities at an owned country club and certain post-close obligations for real estate sales. These contract liabilities are recognized over the term of the contracts, which is typically twelve months or less, except for country club initiation fees which are recognized over the average life of club membership.

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NOTE 5. DEBT

At June 30, ~~2021,~~2022, our total outstanding long-term debt included ~~$693.5~~$693.5 million of term loans under our Second Amended and Restated Term Loan Agreement (Amended Term Loan Agreement) with our primary ~~lender, of which $40.0~~lender. Included in the Amended Term Loan Agreement is a $40.0 million ~~matures~~term loan that we expect to refinance upon its maturity in December ~~2021.~~2022. Certain borrowings under the Amended Term Loan Agreement are at variable rates of one or three-month LIBOR plus a spread between ~~1.85%~~1.68% and ~~2.10%~~2.10%. We have entered into interest rate swaps for these variable rate term loans to fix the interest rate. See Note: 6 Derivative Instruments for additional information.

At June 30, ~~2021,~~2022, there were no borrowings under our ~~$380.0~~$300.0 million revolving line of credit and approximately ~~$1.0~~$1.0 million of our revolving line of credit was utilized for outstanding letters of credit. As provided in the revolving line of credit agreement, borrowings may be increased by up to an additional ~~$420.0~~$500.0 million. The revolving line of credit agreement also includes a sublimit of ~~$75.0~~$75.0 million for the issuance of standby letters of credit and a sublimit of ~~$25.0~~$25.0 million for swing line loans. Usage under either or both subfacilities reduces availability under the revolving line of credit. We may utilize borrowings under the credit facility to, among other things, refinance existing indebtedness and provide funding for working capital requirements, capital projects, acquisitions and other general corporate expenditures.

We were in compliance with all debt and credit agreement covenants at June 30, ~~2021.~~2022.

NOTE 6. DERIVATIVE INSTRUMENTS

From time to time, we enter into derivative financial instruments to manage certain cash flow and fair value risks.

Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges. As of June 30, ~~2021,~~2022, we have interest rate swaps associated with ~~$403.5~~$403.5 million of term loan debt. These swaps are cash flow hedges that convert variable rates ranging from ~~three-month~~one-month and ~~one-month~~three-month LIBOR plus ~~1.85%~~1.68% to ~~2.10%~~2.10%, to fixed rates ranging from ~~3.04%~~3.04% to ~~4.77%~~4.75%. Our cash flow hedges are expected to be highly effective in achieving offsetting cash flows attributable to the hedged interest rate risk through the term of the hedges. At June 30, ~~2021,~~2022, the amount of net ~~losses~~gains expected to be reclassified into earnings in the next 12 months is approximately ~~$8.3~~$4.5 million. However, this expected amount to be reclassified into earnings is subject to volatility as the ultimate amount recognized in earnings is based on the LIBOR rate at the time of net swap cash payments.

~~We also hold $607.5~~As of June 30, 2022, we have $567.5 million of forward starting interest rate swaps designated as cash flow hedges. These forward starting interest rate swaps effectively hedge the variability in future benchmark interest payments attributable to changes in interest rates on ~~$607.5~~$567.5 million of future debt refinances through January 2029 by converting the benchmark interest rates to fixed interest rates. In addition, the cash flow hedges for future debt refinances require settlement on the stated maturity date. ~~At June 30, 2021, we have recorded derivative assets of $37.2 million associated with these forward starting interest rate swaps.~~

The ~~following table presents the~~ gross fair values of derivative instruments on our Condensed Consolidated Balance Sheets: are as follows:


			Asset Derivatives					Liability Derivatives						Asset Derivatives					Liability Derivatives
(in thousands)		Location	June 30, 2021		December 31, 2020		Location	June 30, 2021		December 31, 2020			Location	June 30, 2022		December 31, 2021		Location	June 30, 2022		December 31, 2021
Derivatives designated in cash flow hedging relationships:	Derivatives designated in cash flow hedging relationships:											Derivatives designated in cash flow hedging relationships:
Interest rate contracts		Other assets, current¹	$	1,685	$	63	Accounts payable and accrued liabilities¹	$	470	$	1,010		Other assets, current1	$	6,739	$	2,191	Accounts payable and accrued liabilities1	$	0	$	0
Interest rate contracts		Other assets, non-current		36,743		18,466	Other long-term obligations		30,743		45,100		Other assets, non-current		93,570		31,306	Other long-term obligations		0		24,060
			$	38,428	$	18,529		$	31,213	$	46,110			$	100,309	$	33,497		$	0	$	24,060


¹	Derivative instruments that mature within one year, as a whole, are classified as current.

~~Table of Contents~~

The following table details the effect of derivatives on our Condensed Consolidated Statements of Operations:


			Three Months Ended June 30,						Six Months Ended June 30,								Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		Location	2021			2020			2021			2020				Location	2022			2021			2022			2021
Derivatives designated in cash flow hedging relationships:	Derivatives designated in cash flow hedging relationships:														Derivatives designated in cash flow hedging relationships:
Interest rate contracts
Income (loss) recognized in other comprehensive income (loss), net of tax			$	(33,444	)	$	(3,669	)	$	28,431		$	(43,032	)			$	41,118		$	(33,444	)	$	82,361		$	28,431
Amounts reclassified from accumulated other comprehensive loss, net of tax¹		Interest expense	$	(2,281	)	$	(1,822	)	$	(4,513	)	$	(2,660	)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax1																Interest expense	$	(1,411	)	$	(2,281	)	$	(3,444	)	$	(4,513	)

Interest expense, net			$	8,199		$	8,339		$	11,773		$	12,037				$	7,419		$	8,199		$	10,313		$	11,773

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¹	Realized gains and losses on interest rate contracts consist of net cash received or paid and interest accruals on the interest rate swaps during the periods. Net cash received or paid is included in the supplemental cash flow information within interest, net of amounts capitalized in the Condensed Consolidated Statements of Cash Flows.

NOTE 7. FAIR VALUE MEASUREMENTS

The following table presents the estimated fair values of our financial instruments:


	June 30, 2021						December 31, 2020						June 30, 2022						December 31, 2021
(in thousands)	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value
Derivative assets related to interest rate swaps (Level 2)	$	38,428		$	38,428		$	18,529		$	18,529		$	100,309		$	100,309		$	33,497		$	33,497
Derivative liabilities related to interest rate swaps (Level 2)	$	(31,213	)	$	(31,213	)	$	(46,110	)	$	(46,110	)	$	0		$	0		$	(24,060	)	$	(24,060	)

Long-term debt, including current portion (Level 2):
Term loans	$	(690,794	)	$	(710,863	)	$	(690,469	)	$	(716,631	)	$	(691,444	)	$	(690,240	)	$	(691,119	)	$	(705,135	)
Revenue bonds		(65,735	)		(70,034	)		(65,735	)		(67,885	)		(65,735	)		(65,166	)		(65,735	)		(69,278	)
Medium-term notes		(3,000	)		(3,100	)		(3,000	)		(3,545	)		0			0			(3,000	)		(3,007	)
Total long-term debt¹	$	(759,529	)	$	(783,997	)	$	(759,204	)	$	(788,061	)	$	(757,179	)	$	(755,406	)	$	(759,854	)	$	(777,420	)

Company owned life insurance asset (COLI) (Level 3)	$	3,667		$	3,667		$	3,328		$	3,328		$	4,259		$	4,259		$	3,923		$	3,923


¹	The carrying amount of long-term debt includes principal and unamortized discounts.

The fair value of interest rate swaps are determined using a discounted cash flow analysis, based on third party sources, on the expected cash flows of each derivative. The analysis reflects the contractual terms of the derivatives, including the period to maturity and uses observable market-based inputs, including interest rate forward curves.

The fair value of our long-term debt is estimated based upon quoted market prices for similar debt issues or estimated based on average market prices for comparable debt when there is no quoted market price.

The contract value of our company owned life insurance is based on the amount at which it could be redeemed and, accordingly, approximates fair value.

We believe that our other financial instruments, including cash and cash equivalents, restricted cash, receivables and payables have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments.

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NOTE 8. EQUITY-BASED COMPENSATION

On May 2, 2022, our stockholders approved the PotlatchDeltic Corporation Amended and Restated 2019 Long-Term Incentive Plan to increase the number of shares available for issuance by 1.4 million shares. At June 30, ~~2021,~~2022, approximately ~~1.0~~2.1 million shares are available for future use under our long-term incentive plans.

Share-based compensation activity during the six months ended June 30, ~~2021~~2022 included the following:


(Shares in thousands)	Granted		Vested		Forfeited		Granted		Vested		Forfeited
Performance Share Awards (PSAs)		88,128		—		1,450		92,490		0		971
Restricted Stock Units (RSUs)		46,997		23,599		1,484		37,824		13,627		1,323

Approximately ~~0.1~~0.3 million shares of common stock were issued to employees during the six months ended June 30, ~~2021~~2022 as a result of PSA and RSU vesting during ~~2020~~2021 and ~~2021.~~2022.

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The following table details equity-based compensation expense and the related income tax benefit:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Equity-based compensation expense:
Performance share awards	$	1,372	$	1,243	$	2,596	$	2,401	$	1,518	$	1,372	$	2,816	$	2,596
Restricted stock units		727		718		1,392		1,426		801		727		1,510		1,392
Deferred compensation stock equivalent units expense		41		19		82		38		49		41		98		82
Total equity-based compensation expense	$	2,140	$	1,980	$	4,070	$	3,865	$	2,368	$	2,140	$	4,424	$	4,070

Total tax benefit recognized for equity-based expense	$	107	$	93	$	196	$	176	$	119	$	107	$	219	$	196

Performance Share Awards

The weighted average grant date fair value of PSAs granted in ~~2021~~2022 was ~~$69.72~~$76.18 per share. PSAs granted under the stock incentive plans have a three-year performance period and shares are issued at the end of the period if the performance measures are met. The number of shares actually issued, as a percentage of the amount subject to the PSA, could range from 0%0% to ~~200%~~200%. PSAs granted under the stock incentive plans do not have voting rights unless and until shares are issued upon settlement. If shares are issued at the end of the performance measurement period, the recipients will receive dividend equivalents in the form of additional shares at the time of payment equal to the dividends that would have been paid on the shares earned had the recipients owned the shares during the three-year period. Therefore, the shares are not considered participating securities.

The following table presents the key inputs used in the Monte Carlo simulation to calculate the fair value of the performance share awards granted in ~~2021:~~2022:


Stock price as of valuation date	$	53.53		$	55.02
Risk-free rate		0.18	%		1.79	%
Expected volatility		45.56	%		45.69	%
Expected dividend yield¹		—			0
Expected term (years)		3.00			3.00

1 Full dividend reinvestment assumed.

¹	~~Full dividend reinvestment assumed.~~

Restricted Stock Units

The weighted average fair value of all RSUs granted during the six months ended June 30, ~~2021~~2022 was ~~$55.67~~$54.47 per share. The fair value of RSUs granted equaled our common share price on the date of grant factoring in any required post-vesting holding periods. The ~~terms~~RSU awards granted accrue dividend equivalents based on dividends paid during the RSU vesting period. Recipients will receive dividend equivalents in the form of additional shares of common stock at the ~~awards state that~~date the vested RSUs are settled. Any forfeited RSUs will ~~vest in a given time period of one to three years. The vesting provisions for RSUs granted in 2021 were consistent with prior year grants.~~not receive dividends. Therefore, the shares are not considered participating securities.

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NOTE 9. INCOME TAXES

As a REIT, we generally are not subject to federal and state corporate income taxes on income from investments in real estate, including our timberlands, that we distribute to our shareholders. We conduct certain activities through our PotlatchDeltic taxable REIT subsidiaries (TRS) which are subject to corporate level federal and state income taxes. These activities are principally comprised of our wood products manufacturing operations and certain real estate investments. Therefore, income tax expense or benefit is primarily due to pre-tax book income or loss of the TRS, as well as permanent book versus tax differences.

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NOTE 10. LEASES

We lease certain equipment, office space and land. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The following table presents supplemental balance sheet information related to lease assets and liabilities:


(in thousands)	Classification	June 30, 2021		December 31, 2020		Classification	June 30, 2022		December 31, 2021
Assets
Operating lease assets	Other long-term assets	$	8,854	$	11,081	Other long-term assets	$	8,142	$	8,514
Finance lease assets¹	Property, plant and equipment, net		9,077		7,206	Property, plant and equipment, net		11,070		10,663
Total lease assets		$	17,931	$	18,287		$	19,212	$	19,177

Liabilities
Current:
Operating lease liabilities	Accounts payable and accrued liabilities	$	3,437	$	4,304	Accounts payable and accrued liabilities	$	2,682	$	3,021
Finance lease liabilities	Accounts payable and accrued liabilities		2,861		2,202	Accounts payable and accrued liabilities		4,336		3,577
Noncurrent:
Operating lease liabilities	Other long-term obligations		5,475		6,835	Other long-term obligations		5,551		5,598
Finance lease liabilities	Other long-term obligations		6,140		4,914	Other long-term obligations		6,622		6,972
Total lease liabilities		$	17,913	$	18,255		$	19,191	$	19,168


¹	Finance lease assets are presented net of accumulated amortization of ~~$2.9~~$6.5 million and ~~$1.7~~$4.5 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The following table presents the components of lease expense:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Operating lease costs¹	$	1,285	$	1,414	$	2,613	$	2,839	$	881	$	1,285	$	1,828	$	2,613
Finance lease costs:
Amortization of leased assets		633	260			1,222	473			995		633		1,924		1,222
Interest on lease liabilities		51	32			102	59			69		51		136		102
Net lease costs	$	1,969	$	1,706	$	3,937	$	3,371	$	1,945	$	1,969	$	3,888	$	3,937


¹	Excludes short-term leases and variable lease costs, which are immaterial.

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The following table presents supplemental cash flow information related to leases:


	Six Months Ended June 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,822	$	2,590
Operating cash flows for finance leases	$	136	$	102
Financing cash flows for finance leases	$	1,961	$	1,208
Leased assets exchanged for new lease liabilities:
Operating leases	$	1,279	$	213
Finance leases	$	2,331	$	3,093

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Six Months Ended June 30,

(in thousands)

2021

2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

$
2,590

$
2,884

Operating cash flows for finance leases

$
102

$
59

Financing cash flows for finance leases

$
1,208

$
489

Leased assets exchanged for new lease liabilities:

Operating leases

$
213

$
248

Finance leases

$
3,093

$
2,558

NOTE 11. PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS

In March 2022, we transferred $75.6 million of our qualified pension plan (the Plan) assets to an insurance company for the purchase of a group annuity contract. As a result of the transaction, the insurance company assumed responsibility for annuity administration and benefit payments to select retirees and terminated vested participants, with 0 change to participants' pension benefits. We recorded a non-cash pretax settlement charge of $14.2 million as a result of accelerating the recognition of actuarial losses included in Accumulated Other Comprehensive Income (Loss) that would have been recognized in future periods.

The settlement triggered a remeasurement of the Plan's assets and liabilities. We updated the discount rate used to measure our projected benefit obligation for the Plan as of March 31, 2022, and to calculate the related net periodic benefit cost for the remainder of 2022 to 3.95% from 3.00%. All other pension assumptions remain unchanged. The net effect of the remeasurement was a $6.2 million reduction in the funded status of the Plan, primarily driven by lower returns on Plan assets.

The following table details the components of net periodic cost (benefit) of our pension plans and other postretirement employee benefits (OPEB):


	Three Months Ended June 30,												Three Months Ended June 30,
	Pension						OPEB						Pension						OPEB
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Service cost	$	2,045		$	2,176		$	168		$	112		$	1,652		$	2,045		$	79		$	168
Interest cost		2,633			2,568			317			376			2,611			2,633			229			317
Expected return on plan assets		(3,525	)		(3,151	)		—			—			(2,258	)		(3,525	)		0			0
Amortization of prior service cost (credit)		21			28			(298	)		(319	)		18			21			156			(298	)
Amortization of actuarial loss		3,578			3,559			545			417
Amortization of actuarial loss (gain)														1,148			3,578			(95	)		545
Total net periodic cost	$	4,752		$	5,180		$	732		$	586		$	3,171		$	4,752		$	369		$	732

	Six Months Ended June 30,												Six Months Ended June 30,
	Pension						OPEB						Pension						OPEB
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Service cost	$	4,090		$	4,466		$	336		$	254		$	3,501		$	4,090		$	158		$	336
Interest cost		5,266			6,132			634			751			5,423			5,266			458			634
Expected return on plan assets		(7,050	)		(7,737	)		—			—			(5,403	)		(7,050	)		0			0
Amortization of prior service cost (credit)		42			56			(596	)		(638	)		36			42			312			(596	)
Amortization of actuarial loss		7,299			7,713			1,090			836
Amortization of actuarial loss (gain)														3,102			7,299			(190	)		1,090
Net periodic cost before pension settlement charge		9,647			10,630			1,464			1,203			6,659			9,647			738			1,464
Pension settlement charge		—			42,988			—			—			14,165			0			0			0
Net periodic cost	$	9,647		$	53,618		$	1,464		$	1,203		$	20,824		$	9,647		$	738		$	1,464

During the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, funding of pension and other postretirement employee benefit plans was ~~$3.8~~$2.3 million and ~~$2.8~~$3.8 million, respectively.

~~Pension Annuitization~~

In February 2020, we purchased a group annuity contract from an insurance company to transfer $101.1 million of our outstanding pension benefit obligation related to our qualified pension plans to the insurance company. This transaction was funded with plan assets. As a result of the transaction, the insurance company assumed responsibility for annuity administration and benefit payments to select retirees, with 0 change to their monthly retirement benefit payment amounts. The settlement triggered a remeasurement of plan assets and liabilities resulting in a reduction in the funded status of our qualified pension plans of approximately $26.2 million during the first quarter of 2020. In connection with this transaction we recorded a non-cash pretax settlement charge of $43.0 million during the first quarter of 2020 in non-operating expense, net, as a result of accelerating the recognition of actuarial losses included in accumulated other comprehensive loss that would have been recognized in future periods.

1819

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NOTE 12. COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

The following table details changes in amounts included in our ~~accumulated other comprehensive loss (AOCL)~~Accumulated Other Comprehensive Income (Loss) (AOCI) by component on our Condensed Consolidated Balance Sheets, net of tax:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Pension Plans
Balance at beginning of period	$	76,255		$	101,524		$	79,025		$	117,028		$	42,144		$	76,255		$	49,579		$	79,025
Amounts arising during the period		—			—			—			19,402
Net loss arising during the period														0			0			4,587			0
Effect of pension settlement		—			—			—			(31,811	)		0			0			(10,553	)		0
Amounts reclassified from AOCL to earnings		(2,663	)		(2,654	)		(5,433	)		(5,749	)
Amounts reclassified from AOCI to earnings														(870	)		(2,663	)		(2,339	)		(5,433	)
Balance at end of period	$	73,592		$	98,870		$	73,592		$	98,870			41,274			73,592			41,274			73,592
Other Postretirement Benefit Plans
Balance at beginning of period	$	14,600		$	10,257		$	14,783		$	10,331			1,745			14,600			1,790			14,783
Amounts reclassified from AOCL to earnings		(182	)		(73	)		(365	)		(147	)
Amounts reclassified from AOCI to earnings														(45	)		(182	)		(90	)		(365	)
Balance at end of period	$	14,418		$	10,184		$	14,418		$	10,184			1,700			14,418			1,700			14,418
Cash Flow Hedges
Balance at beginning of period	$	(36,926	)	$	58,525		$	27,181		$	20,000			(51,407	)		(36,926	)		(8,131	)		27,181
Amounts arising during the period		33,444			3,669			(28,431	)		43,032			(41,118	)		33,444			(82,361	)		(28,431	)
Amounts reclassified from AOCL to earnings		(2,281	)		(1,822	)		(4,513	)		(2,660	)
Amounts reclassified from AOCI to earnings														(1,411	)		(2,281	)		(3,444	)		(4,513	)
Balance at end of period	$	(5,763	)	$	60,372		$	(5,763	)	$	60,372			(93,936	)		(5,763	)		(93,936	)		(5,763	)
Accumulated other comprehensive loss, end of period	$	82,247		$	169,426		$	82,247		$	169,426
Accumulated other comprehensive (income) loss, end of period													$	(50,962	)	$	82,247		$	(50,962	)	$	82,247

See Note 11: Pension and Other Postretirement Employee Benefits and Note 6: Derivative Instruments for additional information.

NOTE 13. PENDING MERGER WITH CATCHMARK

19On May 29, 2022, we entered into an Agreement and Plan of Merger (merger agreement) with CatchMark Timber Trust, Inc. (CatchMark) and CatchMark Timber Operating Partnership, LP (the Partnership), pursuant to which CatchMark and the Partnership will merge into a wholly-owned subsidiary of PotlatchDeltic, with the subsidiary continuing as the surviving company. Under the terms of the merger agreement, CatchMark stockholders and the holders of common partnership units of the Partnership (Partnership OP Units) will have the right to receive 0.230 shares of PotlatchDeltic common stock for each share of CatchMark common stock and for each Partnership OP Unit and cash in lieu of fractional shares at the effective time of the merger. CatchMark owns approximately 350,000 acres of superior site index timberlands located in Alabama, Georgia and South Carolina.

Because the exchange ratio was fixed at the time of the merger agreement and the market value of our common stock will continue to fluctuate, the total value of the consideration exchanged will not be determinable until the closing date. The number of shares to be issued with respect to CatchMark stock awards will not be determinable until the closing of the transaction.

We estimate that approximately 11.4 million shares of our common stock will be issued to CatchMark stockholders and Partnership OP Unit holders in the merger based on the 0.230 exchange ratio.

The merger agreement has been approved by both companies' boards of directors. The closing of the merger is subject to approval by the stockholders of CatchMark and other conditions specified in the merger agreement. The merger is expected to close in the third quarter of 2022.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Information

This report contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, expectations regarding economic conditions, including interest rates and our ability to offset the impact of inflation; expected seasonal fluctuations in our business segments; expected effectiveness of our hedging instruments and swaps; ~~amount of net losses~~expected return on ~~cash flow hedges expected to be reclassified into earnings in the next 12 months; expected tax payments;~~pension assets; anticipated share repurchases and regular and special dividend payments; anticipated cash balances, cash flows from operations and expected liquidity; potential uses of our credit facility; ~~expected debt refinancing; expectations regarding~~ the ~~U.S. housing market, the lumber and log markets, lumber shipment volumes, and~~expected impact from the Ola, Arkansas sawmill fire, ~~and~~ anticipated insurance coverage, and expected timing to complete reconstruction and installation activities and return to full operation; the pending merger with CatchMark Timber Trust, Inc. (CatchMark); expectations regarding debt obligations, interest payments and debt refinancing; expectations regarding the market transition away from LIBOR and our ability to identify a suitable replacement rate; maintenance of our investment grade credit rating; expectations regarding the U.S. housing market and home repair and remodeling activity; the lumber and log markets and pricing; lumber shipment volumes; timber harvest ~~volumes, and~~volumes; rural real estate and residential and commercial real estate development sales; sufficiency of cash and any necessary borrowings to meet operating requirements; expected ~~2021~~2022 capital expenditures; costs associated with the expansion and modernization of our Waldo, Arkansas sawmill, the expected completion of the project, and expected increases in productivity resulting from the project; anticipated closing of bolt-on timberland transactions; and similar matters. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as expects, may, could, should, will, believes, anticipates, estimates, projects, intends, plans, targets or approximately, or similar words or terminology. These forward-looking statements reflect our current views regarding future events based on estimates and assumptions and are therefore subject to known and unknown risks and uncertainties and are not guarantees of future performance. ~~Our~~The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results ~~of operations could~~to differ materially from ~~our historical results or~~ those ~~expressed or implied by~~described in the forward-looking ~~statements contained in this report. Important factors that could cause or contribute to such differences~~statements. These risks and uncertainties include, but are not limited to:

•

the effect of general economic conditions, including employment rates, interest rate levels, discount rates, housing starts and the general availability of financing for home mortgages;

•

availability of labor and developable land;

•

changes in the level of residential and commercial construction and remodeling activity;

•

changes in tariffs, quotas and trade agreements involving wood products;

•

changes in demand for our products and real estate;

•

changes in timber prices and timberland values;

•

changes in silviculture, production and production capacity in the forest products industry;

•

competitive pricing pressures for our products;

•

disruptions or inefficiencies in our supply chain and/or operations and unanticipated manufacturing disruptions;

•

the effect of weather on our harvesting and manufacturing activities;

•

the risk of loss from fire (such as the Ola, Arkansas sawmill fire and fires on our timberland), floods, windstorms, hurricanes, pest infestation or other natural disasters;

•

changes in the cost or availability of shipping and transportation;

•

changes in principal expenses;

•

recent increases in inflation and the extent to which such increases will continue;

•

unforeseen environmental liabilities or expenditures;

•

changes in general and industry-specific environmental laws and regulations, and interpretations thereof by regulatory agencies;

•

impact of the ~~following:~~coronavirus (COVID-19 and its variants) outbreaks, governmental responses to such outbreaks, and anticipated recovery from the pandemic on our business, suppliers, consumers, customers and employees;

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•

our ability to close the pending merger with CatchMark and our ability to successfully realize the expected benefits from the merger; and

•

our ability and our contractors' ability to implement the modernization plan for the Waldo, Arkansas sawmill.

•

~~the effect of general economic conditions, including employment rates, interest rate levels, discount rates, housing starts and the general availability of financing for home mortgages;~~

•

~~availability of labor and developable land;~~

•

~~changes in the level of residential and commercial construction and remodeling activity;~~

•

~~changes in tariffs, quotas and trade agreements involving wood products;~~

•

~~changes in demand for our products and real estate;~~

•

~~changes in timber prices and timberland values;~~

•

~~changes in silviculture, production and production capacity in the forest products industry;~~

•

~~competitive pricing pressures for our products;~~

•

~~unanticipated manufacturing disruptions;~~

•

~~the effect of weather on our harvesting and manufacturing activities;~~

•

~~the risk of loss from fire (such as the Ola, Arkansas sawmill fire and fires on our timberland), floods, windstorms, hurricanes, pest infestation or other natural disasters;~~

•

~~changes in the cost or availability of transportation;~~

•

~~changes in principle expenses;~~

•

impact of the coronavirus (COVID-19 and its variants) outbreaks, governmental responses to such outbreaks, and anticipated recovery from the pandemic on our business, suppliers, consumers, customers and employees; and

•

~~disruptions or inefficiencies in our supply chain and/or operations.~~

For a discussion of some of the factors that may affect our business, results and prospects and a nonexclusive listing of forward-looking statements, refer to Cautionary Statement Regarding Forward-Looking Information on page 1, ~~and~~ Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021 and Risk Factors in Part II, Item 1A of this Form 10-Q. Investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.

Forward-looking statements contained in this report present our views only as of the date of this report. Except as required under applicable law, we do not intend to issue updates concerning any future revisions of our views to reflect events or circumstances occurring after the date of this report.

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Our Company

We are a leading timberland REIT with ownership of approximately 1.8 million acres of timberland. We also own six sawmills and an industrial grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program.

Our operations are organized into three business segments: Timberlands, Wood Products and Real Estate. Our Timberlands segment supplies our Wood Products segment with a portion of its wood fiber needs. These intersegment revenues are based on prevailing market prices and typically represent a sizeable portion of the Timberlands segment’s total revenues. Our other segments generally do not generate intersegment revenues. In the discussion of our consolidated results of operations, our revenues and expenses are reported after elimination of intersegment revenues and expenses. In the Business Segment Results discussion below, each segment’s revenues and expenses, as applicable, are presented before elimination of intersegment revenues and expenses.

The operating results of our Timberlands, Wood Products and Real Estate business segments have been and will continue to be affected by the cyclical nature of the forest products industry. Log and pulpwood sales volumes in our Timberlands segment are typically lower in the first half of each year as winter rains in the Southern region and spring thaw in the Northern region limit timber harvesting operations due to softened roadbeds and wet logging conditions that restrict access to logging sites. The third quarter is typically our Timberlands segment's strongest production quarter. Demand for our manufactured wood products typically decreases in the winter months when construction activity is slower, while demand typically increases during the spring, summer and fall when construction activity is generally higher. Rural real estate dispositions and acquisitions can be adversely affected when access to any properties to be sold or considered for acquisition are limited due to adverse weather conditions. Development real estate sales at Chenal Valley occur throughout the year, though historically most sales take place in the second half of the year as builders prepare for the following year's spring and summer traditional home building and buying season. The timing of development real estate sales can also be impacted by contractor availability needed to complete infrastructure and other improvements prior to bringing developed real estate to market.

Additionally, our business segments have been and will continue to be influenced by a variety of other factors, including tariffs, quotas and trade agreements, changes in timber prices and in harvest levels from our timberlands, competition, timberland valuations, demand for our non-strategic timberland for higher and better use purposes, lumber prices, weather conditions, disruptions or inefficiencies in our supply chain including the availability of transportation, the efficiency and level of capacity utilization of our Wood Products manufacturing operations, changes in our principal expenses such as log costs, inflation, asset dispositions or acquisitions, impact of pandemics (such as COVID-19 and its variants), fires (such as the Ola, Arkansas sawmill fire and fires on our timberlands), other natural disasters and other factors.

Non-GAAP Measures

To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), we present certain non-GAAP measures on a consolidated basis, including Adjusted EBITDDA and Cash Available for Distribution (CAD), which are defined and further explained and reconciled to the nearest GAAP measure in the Liquidity and Performance Measures section below. Our definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to and not a substitute for, financial information prepared in accordance with GAAP.

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Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance and allocating resources between segments, and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis. This measure should not be considered in isolation from and is not intended to represent an alternative to, our results reported in accordance with GAAP. Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business and the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.

Our definition of EBITDDA and Adjusted EBITDDA may be different from similarly titled measures reported by other companies. We define EBITDDA as net income ~~(loss)~~ before interest expense, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses. See Note 2: Segment Information in the Notes to the Condensed Consolidated Financial Statements for information related to the use of segment Adjusted EBITDDA.

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Business and Economic Trends Affecting Our Operations

The demand for timber is directly affected by the underlying demand for lumber and other wood-products, as well as by the demand for pulp, paper and packaging. Our Timberlands and Wood Products segments are impacted by demand for new homes in the United States and by repair and remodeling ~~activity.~~activity, both of which were very strong up until recently. Higher interest rates and inflation have caused consumer confidence and the pace of housing starts to decline the last couple of months. In July 2022, the National Association of Home Builders (NAHB) reported the NAHB/Wells Fargo Housing Market Index (HMI) was at 55, the seventh straight month of decline and the lowest reading since May 2020. The repair and remodel sector, which has experienced growth during the pandemic-driven home improvement movement that began in early 2020, is expected to continue to grow, but at a slower rate. Rising construction costs, a persistently tight labor pool, supply chain challenges and consumer concerns about rising mortgage rates could negatively impact the pace of housing starts and repair and remodel projects.

~~Housing~~Despite some negative factors that have resulted in housing starts moderating in recent months, we believe housing fundamentals remain ~~stronger than any point since the Great Financial Crisis driven by demand~~favorable, due to a shortage of homes, low existing inventory for ~~new single-family homes, historically low mortgage rates,~~sale, a ~~shift from urban to suburban living, millennials entering~~large millennial demographic in their prime home-buying years, ~~scarce re-sale housing inventory~~interest rates remaining below long-term historical averages, the continued remote work evolution, and an aging existing housing stock supporting repair and remodel demand. These fundamentals are key drivers for our business, and we continue to expect that lumber prices will remain structurally higher than long-term historical averages for the rest of 2022.

Inflation has impacted our business, especially for fuel, energy and repair and maintenance costs, although we believe there are offsetting impacts including wood product prices. Over the last twelve months, the Consumer Price Index (all items) increased by 9.1 percent before seasonal adjustments, while the Producer Price Index (final demand) increased by 11.3 percent on an unadjusted basis. Additionally, transportation challenges rising from shortage of truck and railcar availability linger in certain markets. These transportation issues could lead to higher freight costs and shipping challenges through the foreseeable future.

In ~~July 2021, the U.S. Census Bureau reported housing starts~~our Timberlands segment, sawlogs pricing benefitted from demand for ~~June 2021 in excess of 1.6 million in the U.S.~~Southern pine sawlogs. Idaho sawlog prices continue to benefit from being indexed on a ~~seasonally adjusted annual basis, including single-family new home construction starts~~four-week lag to lumber prices. Our Southern harvest volume of ~~nearly 1.2~~1.0 million ~~an increase of 28% from June of 2020. We expect housing fundamentals to remain strong~~tons in the second ~~half~~quarter of ~~2021.~~ 2022 was higher than the second quarter of 2021, primarily due to favorable harvest conditions. We expect to harvest between 1.7 and 1.9 million tons during the third quarter of 2022, with approximately 65% of the volume in the Southern region. For 2022, we expect to harvest approximately 6.1 million tons, with approximately 70% of the volume in the Southern region.

During the second quarter of 2021 we experienced a fire at our Ola, Arkansas sawmill. The damage was principally limited to the large log primary breakdown machine center. The planer mill, kiln, and shipping department were not affected. We have adequate property damage and business interruption insurance, subject to an applicable ~~deductible, under which~~deductible. The new equipment has been installed. We expect to wrap up the project in the third quarter and we ~~filed a claim with~~are targeting to complete the ~~insurance carriers. A determination regarding downtime and costs to repair~~start-up phase by the ~~Ola sawmill will be made once~~end of the ~~extent of damage and repair options are fully assessed.~~year.

In our Wood Products segment, lumber ~~prices continued on a historic pace and established new records before beginning~~shipments continue to ~~retreat in~~be impacted by the ~~latter part of the second quarter. We expect lumber prices to remain relatively strong in the second half of 2021.~~Ola sawmill fire. We shipped ~~260~~approximately 254 million board feet of lumber during the second quarter of ~~2021. Lumber shipments in~~2022 and expect to ship between 250 and 265 million board feet of lumber during the ~~second~~third quarter ~~were impacted by lower home center demand, transportation challenges at several~~ of ~~our sawmills and the Ola sawmill fire.~~ We2022. For 2022, we expect to ship approximately 1.0 ~~to 1.1~~ billion board feet of ~~lumber in 2021.~~

In our Timberlands segment, Northern sawlog prices benefitted from Idaho sawlogs prices being indexed to higher lumber prices and strong cedar sawlog prices, while Southern pine sawlog prices remained stable. Our harvest volumelumber. This estimate reflects the expected timing of ~~1.2 million tons during~~ the ~~second quarter~~start-up of ~~2021 was lower than~~ the ~~second quarter of 2020 primarily due to wet weather in the Southern region. We reduced our harvest plan as a result of downtime~~large-log line at our Ola, ~~sawmill to 5.6 to 5.7 million tons during 2021.~~Arkansas sawmill.

Our Real Estate segment results were driven by the strength in our rural and development sales demand during the first half of 2021, which we expect to continue during the second half of the year. We expect to sell approximately 20,000 acres of rural land and 150 residential development lots during 2021.23

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Our Real Estate segment benefitted from strong Chenal Valley residential lot and commercial acre sales in the second quarter of 2022, and a 10,700 acre rural land sale in Minnesota to a conservation entity that effectively completed our long-term strategy to sell our Minnesota land holdings. We expect to sell approximately 3,000 acres of rural land and 45 residential lots during the third quarter of 2022. For 2022, we expect to sell approximately 22,000 acres of rural land and 180 residential lots.

CatchMark Merger

On May 29, 2022, we entered into an Agreement and Plan of Merger (merger agreement) with CatchMark Timber Trust, Inc. (CatchMark) and CatchMark Timber Operating Partnership, LP (the Partnership), pursuant to which CatchMark and the Partnership will merge into a wholly-owned subsidiary of PotlatchDeltic, with the subsidiary continuing as the surviving company. Under the terms of the merger agreement, CatchMark stockholders and the holders of common partnership units of the Partnership (Partnership OP Units) will have the right to receive 0.230 shares of PotlatchDeltic common stock for each share of CatchMark common stock and for each Partnership OP Unit and cash in lieu of fractional shares at the effective time of the merger. CatchMark owns approximately 350,000 acres of superior site index timberlands located in Alabama, Georgia and South Carolina.

The exchange ratio is fixed and will not be adjusted to reflect changes in our stock price. We estimate that approximately 11.4 million shares of our common stock will be issued to CatchMark stockholders and Partnership OP Unit holders in the merger based on the 0.230 exchange ratio. The closing of the merger is subject to approval by the stockholders of CatchMark and other conditions specified in the merger agreement. The merger is expected to close in the third quarter of 2022.

Consolidated Results

The following table sets forth changes in our Condensed Consolidated Statements of Operations. Our Business Segment Results provide a more detailed discussion of our segments:


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2021			2020			Change			2021			2020			Change			2022			2021			Change			2022			2021			Change
Revenues	$	447,506		$	181,555		$	265,951		$	801,699		$	390,435		$	411,264		$	359,597		$	447,506		$	(87,909	)	$	770,947		$	801,699		$	(30,752	)
Costs and expenses:
Cost of goods sold		177,779			149,836			27,943			347,081			321,882			25,199			191,334			177,779			13,555			371,181			347,081			24,100
Selling, general and administrative expenses		19,512			16,811			2,701			36,270			31,018			5,252			20,412			19,512			900			36,706			36,270			436
Gain on fire damage																				(9,868	)		—			(9,868	)		(9,592	)		—			(9,592	)
		197,291			166,647			30,644			383,351			352,900			30,451			201,878			197,291			4,587			398,295			383,351			14,944
Operating income		250,215			14,908			235,307			418,348			37,535			380,813			157,719			250,215			(92,496	)		372,652			418,348			(45,696	)
Interest expense, net		(8,199	)		(8,339	)		140			(11,773	)		(12,037	)		264			(7,419	)		(8,199	)		780			(10,313	)		(11,773	)		1,460
Pension settlement charge		—			—			—			—			(42,988	)		42,988			—			—			—			(14,165	)		—			(14,165	)
Non-operating pension and other postretirement benefit costs		(3,271	)		(3,478	)		207			(6,685	)		(7,113	)		428			(1,809	)		(3,271	)		1,462			(3,738	)		(6,685	)		2,947
Income (loss) before income taxes		238,745			3,091			235,654			399,890			(24,603	)		424,493
Income before income taxes																				148,491			238,745			(90,254	)		344,436			399,890			(55,454	)
Income taxes		(50,840	)		(453	)		(50,387	)		(80,879	)		10,409			(91,288	)		(28,269	)		(50,840	)		22,571			(60,334	)		(80,879	)		20,545
Net income (loss)	$	187,905		$	2,638		$	185,267		$	319,011		$	(14,194	)	$	333,205
Net income																			$	120,222		$	187,905		$	(67,683	)	$	284,102		$	319,011		$	(34,909	)
Total Adjusted EBITDDA¹	$	274,984		$	35,373		$	239,611		$	469,970		$	82,944		$	387,026		$	175,170		$	274,984		$	(99,814	)	$	420,732		$	469,970		$	(49,238	)


¹	See Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, ~~(loss),~~ the closest comparable GAAP measure, for each of the periods presented.

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Second Quarter ~~2021~~2022 Compared with Second Quarter ~~2020~~2021

Revenues

Revenues were ~~$447.5~~$359.6 million, ~~an increase~~a decrease of ~~$266.0~~$87.9 million compared with the second quarter of ~~2020~~2021 primarily due to ~~historically high~~lower lumber prices and ~~Idaho~~shipments and decreased Northern harvest volume and sawlog prices. ~~Additionally,~~Lumber shipments in the second quarter of ~~2020 included~~2022 were impacted by the ~~impact~~loss of ~~a temporary curtailment and reduced operating posture~~production at our ~~industrial plywood facility~~Ola, Arkansas sawmill following a fire in ~~response to COVID-19 market conditions.~~June 2021. These decreases were partially offset by higher harvest volumes and sawlog prices in the Southern region and increases in development real estate sales and rural acres sold.

Cost of goods sold

Cost of goods sold increased ~~$27.9~~$13.6 million compared with the second quarter of ~~2020 primarily~~2021 mainly due to higher manufacturing and log and ~~manufacturing~~haul costs primarily from inflationary price increases in areas such as diesel fuel, energy, and repair and maintenance.

Gain on fire damage

In June 2021, a fire occurred at our ~~Wood Products segment. Additionally,~~Ola, Arkansas sawmill. During the second quarter of ~~2020 included the impact~~2022, we recognized insurance recoveries of ~~the temporary curtailment~~$10.0 million and ~~reduced operating posture at our industrial plywood facility.~~

~~Selling, general and administrative expenses~~

~~Selling, general and administrative expenses increased $2.7 million compared with the second quarter~~disposal costs of ~~2020 primarily as a result of higher incentive compensation related to strong company performance, partially offset by mark-to-market adjustments for deferred incentive compensation plans.~~$0.1 million.

Income taxes

Income taxes are primarily due to income from our PotlatchDeltic taxable REIT subsidiaries (TRS). For the ~~second quarter~~three months ended June 30, 2022, we recorded income tax expense of $28.3 million on TRS income before tax of $110.9 million. For the three months ended June 30, 2021, we recorded income tax expense of $50.8 million ~~as our TRS’s income before tax was $195.4 million driven primarily by historically high lumber prices.~~ ~~For the second quarter of 2020, we recorded an income tax expense of approximately $0.5 million primarily as a result of the TRS’s~~on TRS income before tax of ~~$1.5~~$195.4 million.

Total Adjusted EBITDDA

Total Adjusted EBITDDA for the second quarter of ~~2021 increased $239.6~~2022 decreased $99.8 million compared to the second quarter of ~~2020. The increase in Total Adjusted EBITDDA was driven~~2021 primarily due to lower lumber prices and shipment volumes and higher manufacturing and log and haul costs. These decreases were partially offset by ~~historically high lumber~~increased rural and ~~Idaho sawlog prices.~~development real estate sales. Refer to the Business Segment Results below for further discussions on activities for each of our segments. See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income, ~~(loss),~~ the closest comparable GAAP measure, for each of the periods presented.

~~Table of Contents~~

Year to Date ~~2021~~2022 Compared with Year to Date ~~2020~~2021

Revenues

Revenues were ~~$801.7~~$770.9 million, ~~an increase~~a decrease of ~~$411.3~~$30.8 million compared with the first half of ~~2020~~2021 primarily due to ~~historically high~~lower lumber prices and ~~Idaho sawlog prices. Additionally,~~shipments and decreased Northern harvest volumes. Lumber shipments in the first half of ~~2020 includes~~2022 were impacted by the ~~impact~~loss of ~~the temporary curtailment and reduced operating posture~~production at our ~~industrial plywood facility.~~Ola, Arkansas sawmill following a fire in June 2021. These decreases were partially offset by higher harvest volumes and sawlog prices in the Southern region and increases in development real estate sales and rural acres sold.

Cost of goods sold

Cost of goods sold increased ~~$25.2~~$24.1 million compared with the first half of ~~2020 primarily~~2021 mainly due to higher manufacturing and log and ~~manufacturing~~haul costs primarily from inflationary price increases in areas such as diesel fuel, energy, and repair and maintenance.

Gain on fire damage

In June 2021, a fire occurred at our ~~Wood Products segment. Additionally,~~Ola, Arkansas sawmill. During the first half of ~~2020 includes~~2022, we recognized insurance recoveries of $10.4 million for Ola and timberlands fire damage and incurred $0.8 million of disposal costs at the ~~impact of the temporary curtailment and reduced operating posture at our industrial plywood facility.~~Ola mill.

~~Selling, general and administrative expenses~~

Selling, general and administrative expenses increased $5.3 million compared with the first half of 2020 primarily as a result of higher incentive compensation related to strong company performance and mark-to-market adjustments for deferred incentive compensation plans.

Pension settlement charge

In ~~February 2020,~~March 2022 we ~~purchased~~transferred $75.6 million of our qualified pension plan (the Plan) assets to an insurance company for the purchase of a group annuity ~~contract from an insurance company to transfer $101.1 million of our outstanding pension benefit obligation related to our qualified pension plans. This transaction was funded with plan assets.~~contract. In connection with this transaction, we recorded a non-cash pretax settlement charge of ~~$43.0~~$14.2 million.

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Non-operating pension and other postretirement benefit costs

Non-operating pension and other postretirement benefit costs decreased $2.9 million compared to the first half of 2021. This decrease is primarily a result of an increase in the ~~first quarter of 2020.~~discount rate used to determine the benefit obligation partially offset by a decrease in expected return on plan assets.

Income taxes

Income taxes are primarily due to income from our TRS. For the six months ended June 30, ~~2021,~~2022, we recorded income tax expense of ~~$80.9~~$60.3 million ~~as our TRS’s~~on TRS income before tax ~~was $311.2~~of $238.2 million, ~~driven primarily by historically high lumber prices.~~ which included the $14.2 million pension settlement charge. For the six months ended June 30, ~~2020,~~2021, we recorded an income tax ~~benefit~~expense of ~~$10.4~~$80.9 million ~~primarily as a result of the TRS’s loss~~on TRS income before tax of ~~$41.3 million, which included the $43.0 million pension settlement charge.~~ $311.2 million.

Total Adjusted EBITDDA

Total Adjusted EBITDDA for the first half of ~~2021 increased $387.0~~2022 decreased $49.2 million compared to the first half of ~~2020. The increase~~2021 primarily due to lower lumber prices and shipments and higher manufacturing and log and haul costs. These decreases were partially offset by higher harvest activity and sawlog prices in ~~Total Adjusted EBITDDA was driven primarily by historically high lumber~~the Southern region and ~~Idaho sawlog prices.~~increases in development real estate sales and rural acres sold. Refer to the Business Segment Results below for further discussions on activities for each of our segments. See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income, ~~(loss),~~ the closest comparable GAAP measure, for each of the periods presented.

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Business Segment Results

Timberlands Segment


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,							Six Months Ended June 30,
(in thousands)	2021		2020		Change		2021		2020		Change			2022		2021		Change			2022		2021		Change
Revenues¹	$	121,216	$	67,345	$	53,871	$	233,132	$	149,770	$	83,362		$	105,486	$	121,216	$	(15,730	)	$	229,143	$	233,132	$	(3,989	)
Costs and expenses:
Logging and hauling		33,303		31,655		1,648		69,771		70,259		(488	)		37,123		33,303		3,820			77,205		69,771		7,434
Other		8,796		8,277		519		14,684		15,568		(884	)		8,658		8,796		(138	)		14,061		14,684		(623	)
Selling, general and administrative expenses		1,858		1,754		104		3,560		3,302		258			1,815		1,858		(43	)		3,553		3,560		(7	)
Timberlands Adjusted EBITDDA²	$	77,259	$	25,659	$	51,600	$	145,117	$	60,641	$	84,476		$	57,890	$	77,259	$	(19,369	)	$	134,324	$	145,117	$	(10,793	)


¹	Prior to elimination of intersegment fiber revenues of ~~$47.4~~$39.3 million and ~~$25.1~~$47.4 million ~~for the~~ for the three months ended June 30, 2022 and 2021, and ~~2020,~~$81.4 million and $94.7 ~~million and $54.6~~ million for the six months ended June 30, 2022 and 2021, ~~and 2020,~~ respectively.

²	Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements.

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Timberlands Segment Statistics


	Three Months Ended June 30,							Six Months Ended June 30,							Three Months Ended June 30,							Six Months Ended June 30,
Harvest Volumes (in tons)	2021		2020		Change			2021		2020		Change			2022		2021		Change			2022		2021		Change
Northern region
Sawlog		353,792		302,917		50,875			781,047		736,787		44,260			276,347		353,792		(77,445	)		661,637		781,047		(119,410	)
Pulpwood		6,813		31,463		(24,650	)		20,697		69,264		(48,567	)		11,383		6,813		4,570			19,642		20,697		(1,055	)
Stumpage		—		—		—			—		23,178		(23,178	)
Total		360,605		334,380		26,225			801,744		829,229		(27,485	)		287,730		360,605		(72,875	)		681,279		801,744		(120,465	)

Southern region
Sawlog		480,193		490,754		(10,561	)		988,266		1,039,221		(50,955	)		507,679		480,193		27,486			997,772		988,266		9,506
Pulpwood		352,005		372,234		(20,229	)		678,434		739,333		(60,899	)		376,843		352,005		24,838			756,494		678,434		78,060
Stumpage		43,352		100,231		(56,879	)		101,765		190,468		(88,703	)		117,618		43,352		74,266			314,131		101,765		212,366
Total		875,550		963,219		(87,669	)		1,768,465		1,969,022		(200,557	)		1,002,140		875,550		126,590			2,068,397		1,768,465		299,932

Total harvest volume		1,236,155		1,297,599		(61,444	)		2,570,209		2,798,251		(228,042	)		1,289,870		1,236,155		53,715			2,749,676		2,570,209		179,467

Sales Price/Unit ($ per ton)¹
Northern region
Sawlog	$	245	$	101	$	144		$	209	$	98	$	111		$	228	$	245	$	(17	)	$	218	$	209	$	9
Pulpwood	$	29	$	39	$	(10	)	$	34	$	39	$	(5	)	$	52	$	29	$	23		$	50	$	34	$	16
Stumpage	$	—	$	—	$	—		$	—	$	14	$	(14	)

Southern region
Sawlog	$	44	$	43	$	1		$	44	$	43	$	1		$	48	$	44	$	4		$	48	$	44	$	4
Pulpwood	$	29	$	29	$	—		$	28	$	30	$	(2	)	$	32	$	29	$	3		$	32	$	28	$	4
Stumpage	$	6	$	8	$	(2	)	$	10	$	9	$	1		$	18	$	6	$	12		$	17	$	10	$	7


¹	Sawlog and pulpwood sales prices are on a delivered basis, which includes logging and hauling costs. Stumpage sales provide our customers the right to harvest standing timber. As such, the customer contracts the logging and hauling and bears such costs.

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Timberlands Adjusted EBITDDA

The following table summarizes Timberlands Adjusted EBITDDA variances for the three and six months ended June 30, ~~2021~~2022, compared with the three and six months ended June 30, ~~2020:~~2021:

(in thousands)

Three Months

Six Months

Timberlands 2020 Adjusted EBITDDA

$
25,659

$
60,641

Sales price and mix

54,302

90,950

Harvest volume

(532
)

(4,251
)
Other revenue

222

(182
)
Logging and hauling costs per unit

(1,771
)

(2,669
)
Forest management

(853
)

65

Administrative, indirect and overhead costs

232

563

Timberlands 2021 Adjusted EBITDDA

$
77,259

$
145,117


(in thousands)	Three Months			Six Months
Timberlands Adjusted EBITDDA - prior year	$	77,259		$	145,117
Sales price and mix		(2,334	)		13,720
Harvest volume		(11,956	)		(15,463	)
Logging and hauling costs per unit		(5,735	)		(10,656	)
Forest management, indirect and other		656			1,606
Timberlands Adjusted EBITDDA - current year	$	57,890		$	134,324

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Second Quarter ~~2021~~2022 Compared with Second Quarter ~~2020~~2021

Timberlands Adjusted EBITDDA for the second quarter of ~~2021 increased $51.6~~2022 decreased $19.4 million compared with the ~~same period in 2020,~~second quarter of 2021, primarily as a result of the following:

•

Sales Price and Mix: Sawlog prices in the Northern region decreased 6.9%, to $228 per ton, primarily from the effect of lower lumber price realizations on indexed sawlogs in Idaho. Southern sawlog prices increased 9.1%, to $48 per ton, compared to the second quarter of 2021, primarily as a result of stronger demand.

•

Harvest Volume: In the Northern region hauling conditions were favorable in the second quarter of 2021 as compared to the second quarter of 2022, where hauling conditions were impacted by unseasonably wet weather in June 2022, resulting in a 20.2% decrease in harvest volume. We harvested 1.0 million tons in the Southern region during the second quarter of 2022, which was 14.5% higher than the second quarter of 2021, primarily due to favorable harvest conditions and increased stumpage sales.

•

Logging and Hauling Cost per Unit: Log and hauling costs per unit were higher primarily due to increased diesel costs.

•

~~Sales Price and Mix:~~ Sawlog prices in the Northern region increased 142.6%, to $245 per ton primarily from the effect of higher realizations on indexed sawlogs and an increase in cedar log prices in Idaho. Southern sawlog prices remained consistent with the second quarter of 2020.

•

~~Harvest Volume:~~ We harvested 0.9 million tons in the Southern region during the second quarter of 2021, which was 9.1% lower than the second quarter of 2020 primarily due to wet weather impacting harvesting conditions. This decrease was partly offset by higher harvest volumes in the Northern region during the second quarter of 2021 as a result of favorable harvest conditions and strong sawlog demand.

•

~~Logging and Hauling Cost per Unit:~~ ~~Log and hauling costs were higher primarily because of increased diesel costs and longer haul distances.~~

Year to Date ~~2021~~2022 Compared with Year to Date ~~2020~~2021

Timberlands Adjusted EBITDDA for the first half of ~~2021 increased $84.5~~2022 decreased $10.8 million compared ~~with~~to the ~~same period in 2020,~~first half of 2021, primarily as a result of the following:

•

~~Sales Price and Mix:~~ Sawlog prices in the Northern region increased 113.3%, to $209 per ton primarily from the effect of higher lumber price realizations on indexed sawlogs and an increase in cedar log prices in Idaho. Southern sawlog prices remained consistent with the first half of 2020.

•

Sales Price and Mix: Sawlog prices in the Northern region increased 4.3%, to $218 per ton, primarily from the effect of high lumber price realizations on indexed sawlogs in Idaho. Southern sawlog prices increased 9.1%, to $48 per ton, compared to the first half of 2021, primarily as a result of stronger demand.

•

~~Harvest Volume:~~ We harvested 1.8 million tons in the Southern region during the first half of 2021, which was 10.2% lower than the first half of 2020 primarily due to adverse weather conditions impacting harvest volumes. Sawlog harvest volume in the Northern region increased during the first half of 2021 as a result of favorable harvest conditions and strong sawlog demand.

•

Harvest Volume: In the Northern region hauling conditions were more favorable in the first half of 2021 as compared to the first half of 2022 resulting in a 15.0% decrease in harvest volume. We harvested 2.1 million tons in the Southern region during the first half of 2022, which was 17.0% higher than the first half of 2021, primarily due to favorable harvest conditions and increased stumpage sales.

•

Logging and Hauling Cost per Unit: Log and hauling costs per unit were higher primarily due to increased diesel costs.•

~~Logging and Hauling Cost per Unit:~~ ~~Log and hauling costs were higher primarily as a result of increased diesel costs and a higher mix of more expensive Idaho logging.~~

~~Table of Contents~~

Wood Products Segment


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2021			2020			Change			2021			2020			Change			2022			2021			Change			2022			2021			Change
Revenues	$	357,673		$	126,216		$	231,457		$	626,969		$	271,216		$	355,753		$	266,633		$	357,673		$	(91,040	)	$	562,375		$	626,969		$	(64,594	)
Costs and expenses¹
Fiber costs		87,621			58,950			28,671			167,090			123,962			43,128			88,915			87,621			1,294			166,588			167,090			(502	)
Freight, logging and hauling		20,266			13,522			6,744			38,463			30,924			7,539			19,606			20,266			(660	)		37,973			38,463			(490	)
Manufacturing costs		51,617			41,951			9,666			99,219			86,955			12,264			55,573			51,617			3,956			106,366			99,219			7,147
Finished goods inventory change		(8,572	)		(1,898	)		(6,674	)		(12,591	)		(7	)		(12,584	)		(7,952	)		(8,572	)		620			(12,531	)		(12,591	)		60
Selling, general and administrative expenses		2,948			2,779			169			5,470			5,050			420			3,110			2,948			162			6,518			5,470			1,048
Other		(740	)		5			(745	)		(770	)		196			(966	)		125			(740	)		865			254			(770	)		1,024
Wood Products Adjusted EBITDDA²	$	204,533		$	10,907		$	193,626		$	330,088		$	24,136		$	305,952		$	107,256		$	204,533		$	(97,277	)	$	257,207		$	330,088		$	(72,881	)


¹	Prior to elimination of intersegment fiber costs of ~~$47.4~~$39.3 million and ~~$25.1~~$47.4 million for the three months ended June 30, 2022 and 2021, and ~~2020,~~$81.4 million and $94.7 ~~million and $54.6~~ million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

²	Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements.

Table of Contents

Wood Products Segment Statistics


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,							Six Months Ended June 30,
	2021		2020		Change		2021		2020		Change			2022		2021		Change			2022		2021		Change
Lumber shipments (MBF)¹		260,311		249,239		11,072		518,380		532,206		(13,826	)		254,225		260,311		(6,086	)		487,413		518,380		(30,967	)
Lumber sales prices ($ per MBF)	$	1,185	$	412	$	773	$	1,038	$	404	$	634		$	865	$	1,185	$	(320	)	$	966	$	1,038	$	(72	)


¹	MBF stands for thousand board feet.

Wood Products Adjusted EBITDDA

The following table summarizes Wood Products Adjusted EBITDDA variances for the three and six months ended June 30, ~~2021~~2022, compared with the three and six months ended June 30, ~~2020:~~2021:


(in thousands)	Three Months			Six Months			Three Months			Six Months
Wood Products 2020 Adjusted EBITDDA	$	10,907		$	24,136
Wood Products Adjusted EBITDDA - prior year							$	204,533		$	330,088
Lumber:
Price		193,996			325,037			(83,228	)		(39,431	)
Volume		4,106			(186	)		(3,420	)		(17,103	)
Manufacturing costs per unit		(4,152	)		(7,130	)		(4,716	)		(11,953	)
Log costs per unit		(12,203	)		(23,585	)		(4,889	)		(7,184	)
Residuals, panels and other		11,879			11,816			(1,024	)		2,790
Wood Products 2021 Adjusted EBITDDA	$	204,533		$	330,088

Wood Products Adjusted EBITDDA - current year							$	107,256		$	257,207

Second Quarter ~~2021~~2022 Compared with Second Quarter ~~2020~~2021

Wood Products Adjusted EBITDDA for the second quarter of ~~2021 increased $193.6~~2022 decreased $97.3 million compared with the ~~same period in 2020,~~second quarter of 2021, primarily as a result of the following:

•

~~Lumber Price:~~ ~~Average lumber sales prices increased to $1,185 per MBF during the second quarter of 2021 as a result of the historic run in lumber prices compared with $412 per MBF during the second quarter of 2020.~~

•

Lumber Price: Average lumber sales prices decreased to $865 per MBF during the second quarter of 2022 compared to $1,185 per MBF during the second quarter of 2021.

•

~~Lumber Volume:~~ Lumber shipments increased 11.1 million board feet during the second quarter of 2021 compared to 2020 driven by stronger demand compared to the prior year which was impacted by the early stages of the COVID-19 pandemic.

•

Lumber Volume: Lumber shipments decreased 6.1 million board feet during the second quarter of 2022 compared to the second quarter of 2021, primarily as a result of decreased shipments from our Ola, Arkansas sawmill following the fire in June 2021.

•

Manufacturing Cost Per Unit: Higher manufacturing costs per unit quarter over quarter was primarily a result of lost production at our Ola, Arkansas sawmill and inflationary price increases in areas such as energy and repair and maintenance.

•

Log Costs Per Unit: Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.

27Year to Date 2022 Compared with Year to Date 2021

Wood Products Adjusted EBITDDA for the first half of 2022 decreased $72.9 million compared with the first half of 2021, primarily as a result of the following:

•

Lumber Price: Average lumber sales prices decreased to $966 per MBF during the first half of 2022 compared to $1,038 per MBF during the first half of 2021.

•

Lumber Volume: Lumber shipments decreased 31.0 million board feet during the first half of 2022 compared to the first half of 2021, primarily as a result of decreased shipments from our Ola, Arkansas sawmill following the fire in June 2021.

•

Manufacturing Cost Per Unit: Higher manufacturing costs per unit was primarily a result of lost production at our Ola, Arkansas sawmill and inflationary price increases in areas such as energy and repair and maintenance.

•

Log Costs Per Unit: Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.

•

Residual Sales, Panels and Other: Increased plywood price realizations and shipments due to strong demand and product mix early in the year benefitted the first half of 2022.

Table of Contents

•

~~Manufacturing Cost Per Unit:~~ Higher manufacturing costs per unit quarter over quarter was a result of increased repairs and maintenance and a fire at our Ola sawmill resulting in lost production and shipments during the second quarter of 2021.

•

~~Log Costs Per Unit:~~ ~~Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.~~

•

~~Residual Sales, Panels and Other:~~ The second quarter of 2021 benefitted from increased plywood prices and shipments compared to the second quarter of 2020 which included a temporary production curtailment and reduced operating posture at our industrial plywood facility.

~~Year to Date 2021 Compared with Year to Date 2020~~

•

~~Lumber Price:~~ ~~Average lumber sales prices increased during the first half of 2021 to $1,038 per MBF compared with $404 per MBF during the first half of 2020.~~

•

~~Manufacturing Cost Per Unit:~~ Higher manufacturing costs per unit was primarily a result of week-long shutdowns at our Southern mills from a severe winter storm, lost production at our Ola sawmill following a fire and extended planned downtime for maintenance at one of our sawmills during the first half of 2021.

•

~~Log Costs Per Unit:~~ ~~Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.~~

•

~~Residual Sales, Panels and Other:~~ The first half of 2021 benefitted from increased plywood prices and shipments compared to the second quarter of 2020 which included a temporary production curtailment and reduced operating posture at our industrial plywood facility.

Real Estate Segment


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,							Six Months Ended June 30,
(in thousands)	2021		2020		Change		2021		2020		Change		2022		2021		Change			2022		2021		Change
Revenues	$	15,998	$	13,105	$	2,893	$	36,311	$	24,074	$	12,237	$	26,736	$	15,998	$	10,738		$	60,801	$	36,311	$	24,490
Costs and expenses
Costs of goods sold		2,881		2,610		271		5,349		5,041		308		3,831		2,881		950			6,710		5,349		1,361
Selling, general and administrative expenses		1,329		1,239		90		2,581		2,437		144		1,089		1,329		(240	)		2,151		2,581		(430	)
Real Estate Adjusted EBITDDA¹	$	11,788	$	9,256	$	2,532	$	28,381	$	16,596	$	11,785	$	21,816	$	11,788	$	10,028		$	51,940	$	28,381	$	23,559


¹	Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements.

Real Estate Segment Statistics


Rural Real Estate	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Acres sold		2,605		5,537		9,688		9,976		12,749		2,605		17,500		9,688
Average price per acre	$	4,416	$	1,784	$	2,222	$	1,721	$	1,290	$	4,416	$	2,176	$	2,222

Development Real Estate

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Residential lots

19

17

70

40

Average price per lot

$
90,874

$
97,059

$
96,524

$
98,550

Commercial acres

—

—

11

—

Average price per acre

$
—

$
—

$
277,425

$
—

~~Table of Contents~~


Development Real Estate	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Residential lots		45		19		109		70
Average price per lot	$	134,373	$	90,874	$	121,662	$	96,524

Commercial acres		3		—		6		11
Average price per acre	$	685,713	$	—	$	815,993	$	277,425

Real Estate Adjusted EBITDDA

The following table summarizes Real Estate Adjusted EBITDDA variances for the three and six months ended June 30, ~~2021~~2022 compared with the three and six months ended June 30, ~~2020:~~2021:

(in thousands)

Three Months

Six Months

Real Estate 2020 Adjusted EBITDDA

$
9,256

$
16,596

Rural sales

1,627

4,370

Development sales

1,265

7,866

Other, net

(360
)

(451
)
Real Estate 2021 Adjusted EBITDDA

$
11,788

$
28,381


(in thousands)	Three Months			Six Months
Real Estate Adjusted EBITDDA - prior year	$	11,788		$	28,381
Rural real estate sales		4,733			16,545
Real estate development sales		6,005			7,945
Selling, general and administrative expenses		241			430
Other costs, net		(951	)		(1,361	)
Real Estate Adjusted EBITDDA - current year	$	21,816		$	51,940

Second Quarter ~~2021~~2022 Compared with Second Quarter ~~2020~~2021

Real Estate Adjusted EBITDDA for the second quarter of ~~2021~~2022 was ~~$11.8~~$21.8 million, an increase of ~~$2.5~~$10.0 million compared with the second quarter of ~~2020~~2021, primarily as a result of the following:

•

Rural Sales: Rural real estate sales in the second quarter of 2022 included a 10,700 acre timberland sale in Minnesota to a conservation entity representing its final option under a multi-year option arrangement. There were no comparable size land sales during the second quarter of 2021. Rural real estate sales can vary quarter-to-quarter with the average price per acre fluctuating based on both the geographic area of the real estate and product mix.

•

Development Sales: During the second quarter of 2022, we sold 45 residential lots at an average lot price of $134,373 compared to 19 lots at an average lot price of $90,874 during the second quarter of 2021. In addition, we sold 3 acres of commercial land in Chenal Valley for $685,713 per acre during the second quarter of 2022. The average price per lot or acre fluctuates based on a variety of factors including size and location within the development.

Table of Contents

•

~~Rural Sales:~~ The increase in rural real estate sales reflected an attractive price on a conservation land sale outside Little Rock, Arkansas during the second quarter of 2021, which more than offset the sale of fewer acres. Rural real estate sales can vary quarter-to-quarter with the average price per acre fluctuating based on both the geographic area of the real estate and product mix.

•

~~Development Sales:~~ ~~During the second quarter of 2021, we sold 19 residential lots at an average lot price of $90,874 compared to 17 lots at an average lot price of $97,059 during the second quarter of 2020.The average price per lot or acre fluctuates based on a variety of factors including location within the developments.~~

Year to Date ~~2021~~2022 Compared with Year to Date ~~2020~~2021

Real Estate Adjusted EBITDDA for the first half of ~~2021~~2022 was ~~$28.4~~$51.9 million, an increase of ~~$11.8~~$23.6 million compared with the first half of ~~2020~~2021, primarily as a result of the following:

•

Rural Sales: The increase in rural real estate sales is primarily a result of a 1,760 acre sale in the South for $7,500 per acre in the first quarter of 2022 to an energy provider for a planned commercial solar farm and the 10,700 acre timberland sale in Minnesota in the second quarter of 2022, which were not matched by similarly-sized land sale during the first half of 2021.

•

Development Sales: During the first half of 2022, we sold 109 residential lots at an average lot price of $121,662 compared to 70 lots at an average lot price of $96,524 during the first half of 2021. In addition, we sold 6 acres of commercial land in Chenal Valley for $815,993 per acre compared to 11 acres of commercial land in Chenal Valley for $277,425 per acre in the first half of 2021.

•

~~Rural Sales:~~ The increase in rural real estate sales was primarily due to a mix of sales from different states, as well as an attractive price on a conservation land sale outside Little Rock, Arkansas during the first half of 2021.

•

~~Development Sales:~~ ~~During the first half of 2021, we sold 70 residential lots at an average lot price of $96,524 compared to 40 lots at an average lot price of $98,550 in the first half of 2020.In addition, we sold 11 acres of commercial land in Chenal Valley for $277,425 per acre in the first half of 2021 compared to no commercial acres sold in the first half of 2020.~~

~~Table of Contents~~

Liquidity and Capital Resources

Cash generated by our operations is highly dependent on selling prices of our products and can vary from period to period. Changes in significant sources and uses of cash for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 are presented by ~~categories~~category as follows:

Six Months Ended June 30,

(in thousands)

2021

2020

Change

Net cash provided by operating activities

$
341,340

$
87,943

$
253,397

Net cash used in investing activities

$
(25,454
)

$
(19,688
)

$
(5,766
)
Net cash used in financing activities

$
(56,196
)

$
(69,575
)

$
13,379


	Six Months Ended June 30,
(in thousands)	2022			2021			Change
Net cash from operating activities	$	378,186		$	341,340		$	36,846
Net cash from investing activities	$	(88,766	)	$	(25,454	)	$	(63,312	)
Net cash from financing activities	$	(70,298	)	$	(56,196	)	$	(14,102	)

Net Cash Flows from Operating Activities

Net cash ~~provided by~~from operating activities increased ~~$253.4~~$36.8 million in the first half of 2022, compared to the first half of ~~2020. Changes~~2021 primarily as a result of the following:

•

Cash received from customers decreased $13.6 million primarily due to lower average lumber prices and reduced lumber shipments at our Ola, Arkansas sawmill following the fire in ~~cash provided~~June 2021. These decreases were partially offset by ~~operating~~increased harvest volume and sawlog prices in the Southern region, increased residential lot sales, and increased rural land sales, including a 1,760 acre rural land sale in the South and a 10,700 acre timberland sale in Minnesota.

•

Cash payments increased $12.0 million due to inflationary cost increases in areas such as diesel fuel, energy and repair and maintenance in our manufacturing and harvest operations. These increases were partially offset by reduced vendor payments as a result of lower production at our Ola, Arkansas sawmill following the fire in June 2021 and lower harvest activities ~~was impacted by~~in the ~~following:~~

Northern region.

•

During the first half of 2022, we received $9.4 million in insurance proceeds as a result of the fire at our Ola, Arkansas sawmill and timberlands fire damage.

•

Net tax payments decreased $50.4 million as a result of lower taxable income generated from our TRS operations.

•

Cash received from customers increased $391.6 million primarily due to historically high lumber and Idaho sawlog prices and increased rural and development real estate sales. In addition, the first half of 2020 was impacted by the temporary curtailment of our industrial plywood mill during the second quarter of 2020.

•

Cash payments increased $49.1 million due to vendor payments on higher log and manufacturing costs in our Wood Products segment and employee incentive compensation payouts related to strong 2020 company performance. Additionally, the first half of 2020 experienced reduced vendor payments stemming from the curtailment of our industrial plywood mill during the second quarter of 2020.

•

~~Net tax payments increased $89.1 million as a result of higher taxable income generated from our TRS operations.~~

Net Cash Flows from Investing Activities

Changes in cash flows from investing activities were primarily a result of the following:

•

We spent $45.2 million on capital expenditures for property, plant and equipment, timberlands reforestation and road construction projects during the first half of 2022 compared to $23.9 million during the first half of 2021. Capital expenditures in 2022 includes $12.2 million for the Waldo, Arkansas sawmill expansion and modernization project.

•

Cash expenditures for timberland acquisitions during the first half of 2022 was $42.2 million compared to $2.2 million during the first half of 2021.

•

We spent $23.9 million on capital expenditures for property, plant and equipment, timberlands reforestation and road construction projects during the first half of 2021 compared to $18.1 million during the first half of 2020.

•

~~During the first half of 2021 we spent $2.2 million on timberland acquisitions compared to $4.7 million during the first half of 2020.~~

Net Cash Flows from Financing Activities

Changes in cash flows from financing activities were primarily a result of the following:

•

~~We paid dividends of $55.0 million in the first half of 2021 compared to $53.7 million in the first half of 2020.~~

•

We paid dividends of $61.0 million during the first half of 2022 compared to $55.0 million during the first half of 2021.

•

~~We did not repurchase any of our common stock during the first half of 2021 compared to 489,850 shares repurchased totaling $15.4 million during the first half of 2020.~~

~~Future Sources and Uses of Cash~~

We invest cash in maintenance and discretionary capital expenditures at our Wood Products facilities. We also invest cash in the reforestation of timberlands and construction of roads in our Timberlands operations and to develop land in our Real Estate development operations. We evaluate discretionary capital improvements based on an expected level of return on investment. We currently expect to spend a total of approximately $60.0 million for capital expenditures during 2021.

~~Planned capital expenditures noted above exclude any capital expenditures associated with the reconstruction of our fire damaged Ola sawmill, which we expect will largely be covered by insurance.~~ ~~A determination regarding downtime and costs to repair the Ola sawmill will be made once the extent of damage and repair options are fully assessed.~~ 31We have adequate property damage and business interruption insurance, subject to an applicable deductible, under which we have filed claims with our insurance carriers. The timing of expenditures incurred for repairs and economic losses is expected to vary from when we receive proceeds from our insurance carriers.

Table of Contents

•

We repaid $3.0 million in long-term debt during the first half of 2022 and had no similar payment in the first half of 2021.

•

During the first half of 2022 we repurchased 94,566 shares of our common stock totaling $4.2 million compared to no shares repurchased during the first half of 2021.

Future Sources and Uses of Cash

At June 30, 2022, we had cash and cash equivalents of $511.2 million. We expect cash and cash equivalents on hand, generated from our operating activities, and supplemented by borrowings under our credit agreement, if needed, to be adequate to meet our future cash requirements.

At June 30, 2022, there were no significant changes in our cash commitments arising in the normal course of business, except as noted below, under our known contractual and other obligations as described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Returning cash to shareholders through a secure regular dividend and opportunistic share repurchases is an important and durable part of our disciplined capital allocation strategy. Our board of directors, in its sole discretion, determines the actual amount of dividends to be made to stockholders based on consideration of a number of factors, including, but not limited to, our results of operations, cash flow and capital requirements, economic conditions in our industry and in the markets for our products, borrowing capacity, debt covenant restrictions, future acquisitions and dispositions, and REIT requirements. Generally, a REIT must distribute its taxable income each year and there is a 20% limit on the value of our TRS, including cash, that can be retained. Our strong financial performance ~~driven by record lumber and indexed sawlog prices, has generated~~during the first half of 2022, continues to generate large cash balances in both our REIT and TRS. ~~As a result,~~Based on our strong results in the first half of the year, we expect to ~~distribute~~pay a ~~significant~~ special dividend to stockholders in December 2022.

Capital Expenditures

We invest cash in maintenance and discretionary capital expenditures at our Wood Products facilities. We also invest cash in the ~~fourth~~reforestation of timberlands and construction of roads in our Timberlands operations and to develop land in our Real Estate development operations. We evaluate discretionary capital improvements based on an expected level of return on investment. We expect to spend a total of approximately $85 to $90 million for capital expenditures during 2022.

In June 2022, we announced a project to expand and modernize our Waldo, Arkansas sawmill. The project is expected to increase the mill’s annual capacity from 190 million board feet of dimensional lumber to approximately 275 million board feet. The investment is also expected to reduce the mill’s operating costs significantly. The Waldo investment includes upgrades to the log yard and planer, a new saw line, and a new continuous dry kiln. The existing mill will continue to operate during the project and completion is expected by the end of 2024. We expect to spend approximately $131.0 million on the project, including a $12 million deposit paid in 2022.

Our 2022 planned capital spend also includes approximately $15.0 million of capital expenditures for the reconstruction of our fire-damaged Ola sawmill, which is largely covered by insurance. The new equipment has been installed. We expect to wrap up the project in the third quarter of ~~2021~~2022 and are targeting to ~~maintain compliance with REIT requirements.~~complete the start-up phase by the end of 2022. We have adequate property damage and business interruption insurance, subject to an applicable deductible. The timing of expenditures incurred for the sawmill rebuild and economic losses is expected to vary based on when we receive proceeds from our insurance carriers.

Timberland Acquisitions

During the six months ended June 30, 2022, we were the successful bidder on three bolt-on timberland transactions, aggregating approximately $101 million, covering approximately 46,000 acres in Mississippi and Arkansas. We are ~~unable~~using cash to ~~provide an estimate at this time.~~ pay for the acquisitions.

Share Repurchase Program

On August 30, 2018, the board of directors authorized the repurchase of up to $100.0 million of common stock with no time limit set for the repurchase (the Repurchase Program). At June 30, ~~2021,~~2022, we had remaining authorization of ~~$59.5~~$55.3 million for future stock ~~repurchase~~repurchases under the Repurchase Program. The timing, manner, price and amount of repurchases will be determined according to ~~and subject to,~~ the ~~terms~~trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Trading ~~Plan,~~Plan), and, subject to the terms of the Trading Plan, the Repurchase Program may be suspended, terminated or modified at any time for any reason.

~~Capital Structure~~32

Table of Contents

(in thousands)

June 30, 2021

December 31, 2020

Long-term debt (including current portion)

$
757,861

$
757,347

Cash and cash equivalents

(512,030
)

(252,340
)
Net debt

245,831

505,007

Market capitalization¹

3,563,442

3,345,138

Enterprise value

$
3,809,273

$
3,850,145

Net debt to enterprise value

6.5
%

13.1
%
Dividend yield²

3.1
%

3.3
%
Weighted-average cost of debt, after tax³

3.2
%

3.2
%

Long-Term Debt and Credit Agreement

At June 30, 2022, our total outstanding net long-term debt was $755.7 million. We expect to refinance a $40.0 million term loan expiring in December 2022 at maturity, which is covered by a forward starting interest rate swap that hedges the variability in future benchmark interest payments attributable to changes in interest rates. All interest rates on our outstanding long-term debt are fixed rates under fixed rate loans or variable rate loans with an associated interest rate swap that fixes the variable benchmark interest rate component.

We have a $300.0 million revolving line of credit with a syndicate of lenders that matures February 14, 2027. Under the terms of the Amended Credit Agreement, the amount of available principal may be increased up to an additional $500.0 million. We may also utilize borrowings under the Amended Credit Agreement to, among other things, refinance existing indebtedness and provide funding for working capital requirements, capital projects, acquisitions, and other general corporate expenditures. At June 30, 2022, there were no borrowings under the revolving line of credit and approximately $1.0 million of the credit facility was utilized by outstanding letters of credit.

Our credit agreement, variable rate term loans with $403.5 million in principal and our interest rate derivative agreements have an interest rate tied to LIBOR. On March 5, 2021, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that the US Dollar LIBOR will no longer be published after June 30, 2023. The market transition away from LIBOR to an alternative reference rate is complex. While we expect LIBOR to be available in substantially its current form until at least through June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. We continue to evaluate and monitor market developments regarding the alternative rates, will work with our lenders and counterparties to identify a suitable replacement rate, and may amend certain debt and interest rate derivative agreements to accommodate those rates.

CatchMark has outstanding term loans of $300.0 million. We intend to refinance $277.5 million of CatchMark’s outstanding long-term debt and repay the remaining $22.5 million with cash on hand, effective with the close of the CatchMark merger. Additionally, we plan to dedesignate and restructure $277.5 million of our forward starting interest rate swaps to hedge the variability in future benchmark interest payments attributable to changes on $277.5 million of CatchMark debt.

Financial Covenants

The Amended Term Loan Agreement and Amended Credit Agreement (collectively referred to as the Agreements) contain certain covenants that limit our ability and that of our subsidiaries to create liens, merge or consolidate, dispose of assets, incur indebtedness and guarantees, repurchase or redeem capital stock and indebtedness, make certain investments or acquisitions, enter into certain transactions with affiliates or change the nature of our business. The Agreements also contain financial maintenance covenants including the maintenance of a minimum interest coverage ratio and a maximum leverage ratio. We are permitted to pay dividends to our stockholders under the terms of the Agreements so long as we expect to remain in compliance with the financial maintenance covenants.

The following table presents the components and applicable limits of Total Asset Value (TAV), a component of the Leverage Ratio, at June 30, 2022:


(in thousands)
Estimated timberland fair value	$	4,010,593
Wood Products manufacturing facilities book basis (limited to 10% of TAV)		300,744
Cash and cash equivalents		511,157
Company owned life insurance (COLI) (limited to 5% of TAV)		4,259
Total Asset Value1	$	4,826,753


¹	TAV also includes, as applicable, Construction in Progress (limited to 10% of TAV) and Investments in Affiliates (limited to 15% TAV) as defined in the Agreements.

At June 30, 2022, we were in compliance with all covenants under the Agreements. The following table sets forth the financial covenants for the Agreements and our status with respect to these covenants at June 30, 2022:

SeeNote 5: Debt in the Notes to the Condensed Consolidated Financial Statements for additional information on our debt and credit agreements.

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Credit Ratings

Two major debt rating agencies routinely evaluate our debt, and our cost of borrowing can increase or decrease depending on our credit rating. Both Moody’s and S&P rate our debt as investment grade.

Capital Structure


(in thousands)	June 30, 2022			December 31, 2021
Long-term debt (including current portion)	$	755,737		$	758,256
Cash and cash equivalents		(511,157	)		(296,151	)
Net debt		244,580			462,105
Market capitalization1		3,061,483			4,159,034
Enterprise value	$	3,306,063		$	4,621,139

Net debt to enterprise value		7.4	%		10.0	%
Dividend yield2		4.0	%		2.9	%
Weighted-average cost of debt, after tax3		3.1	%		3.1	%


1	Market capitalization is based on outstanding shares of ~~67.0~~69.3 million and ~~66.9~~69.1 million times closing share prices of ~~$53.15~~$44.19 and ~~$50.02~~$60.22 as of June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

²	Dividend yield is based on annualized dividends per share of ~~$1.64~~$1.76 and share prices of ~~$53.15~~$44.19 and ~~$50.02~~$60.22 as of June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

³	Weighted-average cost of debt excludes deferred debt costs and credit facility fees and includes estimated annual patronage credit on term loan debt.

Liquidity and Performance Measures

The discussion below is presented to enhance the reader’s understanding of our operating performance, ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures: Adjusted EBITDDA and Cash Available for Distribution (CAD). These measures are not defined by GAAP and the discussion of Adjusted EBITDDA and CAD is not intended to conflict with or change any of the GAAP disclosures described herein.

Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance and to allocate resources between segments, and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis. This measure should not be considered in isolation from and is not intended to represent an alternative to our results reported in accordance with GAAP. Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business, and the comparison of our operating results against analyst financial models and the operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.

Our definition of EBITDDA may be different from similarly titled measures reported by other companies. We define EBITDDA as net income ~~(loss)~~ before interest expense, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses.

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We reconcile Total Adjusted EBITDDA to net income ~~(loss)~~ for the consolidated company as it is the most comparable GAAP measure.

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The following table provides a reconciliation of net income ~~(loss)~~ to Total Adjusted EBITDDA for the respective periods:


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020			2022			2021		2022			2021
Net income (loss)	$	187,905	$	2,638	$	319,011	$	(14,194	)
Net income										$	120,222		$	187,905	$	284,102		$	319,011
Interest expense, net		8,199		8,339		11,773		12,037			7,419			8,199		10,313			11,773
Income taxes		50,840		453		80,879		(10,409	)		28,269			50,840		60,334			80,879
Depreciation, depletion and amortization		17,029		17,765		35,025		36,403			20,007			17,029		39,509			35,025
Basis of real estate sold		7,213		2,693		16,036		9,191			7,325			7,213		18,179			16,036
Gain on fire damage											(9,868	)		—		(9,592	)		—
Pension settlement charge		—		—		—		42,988			—			—		14,165			—
Non-operating pension and other postretirement benefit costs		3,271		3,478		6,685		7,113			1,809			3,271		3,738			6,685
Loss (gain) on disposal of fixed assets		527		7		561		(185	)
(Gain) loss on disposal of fixed assets											(13	)		527		(16	)		561
Total Adjusted EBITDDA	$	274,984	$	35,373	$	469,970	$	82,944		$	175,170		$	274,984	$	420,732		$	469,970

We define CAD as cash ~~provided by~~from operating activities adjusted for capital spending for purchases of property, plant and equipment, timberlands reforestation and roads and timberland acquisitions not classified as strategic. Management believes CAD is a useful indicator of the company’s overall liquidity, as it provides a measure of cash generated that is available for dividends to common stockholders (an important factor in maintaining our REIT status), repurchase of the company’s common shares, debt repayment, acquisitions and other discretionary and nondiscretionary activities. Our definition of CAD is limited in that it does not solely represent residual cash flows available for discretionary expenditures since the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view CAD as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows. Our definition of CAD may be different from similarly titled measures reported by other companies, including those in our industry. CAD is not necessarily indicative of the CAD that may be generated in future periods.

The following table provides a reconciliation of cash ~~provided by~~from operating activities to CAD:

Six Months Ended June 30,

Twelve Months Ended June 30,

(in thousands)

2021

2020

2021

2020

Net cash provided by operating activities¹

$
341,340

$
87,943

$
588,660

$
159,490

Capital expenditures

(26,089
)

(22,801
)

(49,073
)

(56,305
)
CAD

$
315,251

$
65,142

$
539,587

$
103,185

Net cash used in investing activities²

$
(25,454
)

$
(19,688
)

$
(47,959
)

$
(50,427
)
Net cash used in financing activities

$
(56,196
)

$
(69,575
)

$
(111,605
)

$
(124,099
)


	Six Months Ended June 30,						Twelve Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Net cash from operating activities1	$	378,186		$	341,340		$	541,732		$	588,660
Capital expenditures2		(87,383	)		(26,089	)		(136,708	)		(49,073	)
CAD	$	290,803		$	315,251		$	405,024		$	539,587
Net cash from investing activities3	$	(88,766	)	$	(25,454	)	$	(122,457	)	$	(47,959	)
Net cash from financing activities	$	(70,298	)	$	(56,196	)	$	(415,411	)	$	(111,605	)

Net cash ~~provided by~~from operating activities for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 includes cash paid for real estate development expenditures of ~~$4.0~~$5.2 million and ~~$2.5~~$4.0 million, respectively. Net cash ~~provided by~~from operating activities for the twelve months ended June 30, ~~2021~~2022 and ~~2020~~2021 includes cash paid for real estate development expenditures of $10.4 million and $8.2 million, ~~and $5.3 million,~~ respectively.

²	The six and twelve months ended June 30, 2022 includes fire related capital expenditures for the Ola, Arkansas sawmill of $9.2 million and $14.8 million, respectively, and excludes $0 and $15.0 million, respectively, of insurance proceeds for the Ola, Arkansas sawmill property losses.
3	Net cash ~~used in~~from investing activities includes payment for capital expenditures and acquisition of non-strategic timber and timberlands, which is also included in our reconciliation of CAD.

~~Sources of Financing~~

~~Long-Term Debt and Credit Agreements~~

At June 30, 2021, our total outstanding net long-term debt was $757.9 million, of which $40.0 million matures in December 2021. We expect to refinance the $40.0 million term loan debt at maturity which is covered by a forward starting interest rate swap that hedges the variability in future benchmark interest payments attributable to changes in interest rates. All interest rates on our outstanding long-term debt are fixed rates under fixed rate loans or variable rate loans with an associated interest rate swap that fix the variable benchmark interest rate component.

A number of our debt instruments and associated interest rate derivative agreements have an interest rate tied to LIBOR. On March 5, 2021, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that the USD LIBOR will no longer be published after June 30, 2023. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rate Committee, a steering committee comprised of large U.S. financial institutions, is recommending

~~Table of Contents~~

replacing LIBOR with the Secured Overnight Financing Rate (SOFR). While we expect LIBOR to be available in substantially its current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. We are monitoring the developments regarding the alternative rates, will work with our lenders and counterparties to identify a suitable replacement rate and may amend certain debt and interest rate derivative agreements to accommodate those rates if the contract does not already specify a replacement rate. However, at this time, we are not able to predict whether SOFR will become a widely accepted benchmark in place of LIBOR, or what the impact of such possible transition to SOFR may be on our financial condition.

~~Financial Covenants~~

~~At June 30, 2021, we were in compliance with all covenants under the Agreements.~~ ~~The following table sets forth the financial covenants for the Agreements and our status with respect to these covenants at June 30, 2021:~~

Covenant Requirement

Actual at
June 30, 2021

Interest coverage ratio

≥

3.00 to 1.00

26.13

Leverage ratio

≤

40%

19%

~~SeeNote 5: Debt~~ ~~in the~~ ~~Notes to the Condensed Consolidated Financial Statements~~ ~~for additional information on our debt and credit agreements.~~

~~Contractual Obligations~~

~~There have been no material changes to our contractual obligations during the six months ended June 30, 2021 outside the ordinary course of business.~~

~~Credit Ratings~~

~~Two major debt rating agencies routinely evaluate our debt and our cost of borrowing can increase or decrease depending on our credit rating. Both Moody’s and S&P rate our debt investment grade.~~

~~Off-Balance Sheet Arrangements~~

~~We currently are not a party to off-balance sheet arrangements that would require disclosure under this section.~~

Critical Accounting Policies and Estimates

In March 2022, we transferred $75.6 million of our qualified pension plan (the Plan) assets to an insurance company for the purchase of a group annuity contract. This transaction triggered a remeasurement of the Plan's assets and liabilities. We updated the discount rate used to measure our projected benefit obligation for the Plan as of March 31, 2022. All other pension assumptions remain unchanged. See Note 11: Pension and Other Postretirement Employee Benefits for further information on the pension settlement and change to the projected benefit obligation. There have been no other significant changes during ~~2021~~2022 to our critical accounting policies or estimates as presented in our ~~2020~~2021 Annual Report on Form 10-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk exposure on financial instruments includes interest rate risk on our bank credit facility, term loans and interest rate swap agreements and forward starting interest rate swap agreements. We are exposed to interest rate volatility on existing variable rate debt instruments and future incurrences of fixed or variable rate debt, which exposure primarily relates to movements in various interest rates. We use interest rate swaps and forward starting swaps to hedge our exposure to the

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impact of interest rate changes on existing debt and future debt issuances, respectively. All market risk sensitive instruments were entered into for purposes other than trading purposes.

For quantitative and qualitative disclosures about market risk, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our annual report on Form 10-K for the year ended December 31, ~~2020.~~2021. Our exposures to market risk have not changed materially since December 31, ~~2020.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We conducted an evaluation (pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act)), under the supervision and with the participation of management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of June 30, ~~2021.~~2022. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, the CEO and CFO have concluded that these disclosure controls and procedures were effective as of June 30, ~~2021.~~2022.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Internal Control over Financial Reporting

No changes occurred in our internal control over financial reporting during the ~~three~~six months ended June 30, ~~2021~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We believe there is no pending or threatened litigation that could have a material adverse effect on our financial position, operations or liquidity.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors previously disclosed in Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, except the following:

Our Pending Merger With CatchMark Timber Trust

On May 29, 2022, we entered into an Agreement and Plan of Merger (merger agreement) with CatchMark Timber Trust, Inc. (CatchMark) and CatchMark Timber Operating Partnership, LP (the Partnership), pursuant to which CatchMark and the Partnership will merge into a wholly-owned subsidiary of PotlatchDeltic, with the subsidiary continuing as the surviving corporation. If the merger is not completed, our businesses may be adversely affected and we may be subject to various risks without realizing any of the benefits of having the merger completed, including negative reactions from the financial markets or from our customers, suppliers or employees. In addition, we may be subject to litigation related to failing to complete the merger or enforcement proceedings to perform our obligations under the merger agreement.

A delay in completing the merger, which is subject to a number of conditions, some of which are outside our control, may reduce or eliminate the expected benefits from the merger.

The merger is subject to a number of conditions, some of which are beyond our control, that could prevent, delay or otherwise materially adversely affect the completion of the transaction. We cannot predict whether and when the conditions will be satisfied. Furthermore, the requirement to obtain the required CatchMark stockholder approval could delay the completion of the merger for a significant period of time or prevent the transaction from occurring. A delay in completing the merger could cause the combined company not to realize some or all of the synergies and other benefits that it expects to achieve if the merger is successfully completed within its expected time frame. The merger agreement contains certain restrictions on the conduct of the parties’ business. If the merger is delayed, these restrictions could adversely affect our ability to execute business strategies or pursue attractive business opportunities. In addition, a delay could cause management to focus on completion of the merger instead of on other opportunities that could be beneficial to the company.

The merger will involve substantial costs, and the combined company may be unable to successfully integrate the businesses of the two companies and realize the anticipated benefits of the merger.

We have incurred and expect to continue to incur substantial costs, fees and expenses relating directly to the merger and the issuance of our shares in connection with the merger, including fees and expenses payable to financial and other professional advisors, SEC filing fees, printing and mailing costs and other transaction-related costs, fees and expenses. We expect to incur substantial expenses in connection with formulating and implementing integration plans, including facilities and systems consolidation costs, employment-related costs, and a cash gross-up payment, subject to a cap, to the holders of Partnership OP Units to satisfy income tax liabilities associated with receiving shares of our common stock as consideration in connection with the merger if elected by us.

Expenses related to integration are by their nature difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from the realization of economies of scale and cost savings and synergies related to the integration of the businesses. These integration expenses likely will result in significant charges against earnings following the completion of the merger, but the amount and timing of such charges are uncertain.

The merger involves the combination of two independently operated public companies. The merger will require management to devote significant attention and resources to integrating business practices and operations. The combined company may fail to realize some or all of the anticipated benefits of the merger if the integration process takes longer than expected or is costlier than expected.

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Uncertainty associated with the merger may adversely affect our business and operations.

Uncertainties associated with the merger could cause some customers, suppliers, or other entities with whom we have a business relationship to delay or defer decisions, which could negatively impact our revenues, earnings, and cash flows, as well as the market price of our common stock, regardless of whether the merger is completed. In addition, customers or suppliers may cease doing business with us or the combined company in anticipation of or following the merger or may change the terms and conditions upon which they are willing to continue to do business. In addition, current or prospective competitors may seek to take advantage of potential uncertainty or disruption resulting from the merger to interfere with relationships with customers, suppliers, or employees.

The market price and trading volume of our common stock may be volatile in the future as a result of the merger.

The market price of our common stock may decline in the future as a result of the merger for a number of reasons, including our inability to successfully integrate the two companies or our failure to achieve the perceived benefits of the merger, including financial results, as rapidly as or to the extent anticipated by financial or industry analysts. Failure to successfully integrate the two companies could negatively impact our revenues, earnings and cash flows, and could materially adversely affect our ability to pay dividends at historical levels, or at all.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert management’s attention and resources, which could have a material adverse effect on our cash flows, our ability to execute our business strategy and our ability to make distributions to our stockholders.

The merger may not be accretive and may cause dilution to our cash available for distribution, which may negatively affect the market price of shares of our common stock.

The merger is expected to deliver accretion to our cash available for distribution in the first full year after the merger is completed, including cost synergies and excluding integration and restructuring activities. This expectation is based on preliminary estimates which may materially change, including the currently expected timing of the closing of the merger or the failure to realize all of the benefits anticipated from the merger. We could also encounter additional transaction-related costs or other factors such as a delay in the closing of the merger or the failure to realize all of the benefits anticipated from the merger. Any of these factors could cause dilution to our cash available for distribution or decrease or delay the expected accretive effect of the merger and cause a decrease in the market price of our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

On August 30, 2018, our board of directors authorized management to repurchase up to $100.0 million of common stock with no time limit set for the repurchase (the Repurchase Program). Shares under the Repurchase Program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Trading Plan). The timing, manner, price and amount of repurchases will be determined according to, and subject to, the terms of the Trading Plan, and, subject to the terms of the Trading Plan, the Repurchase Program may be suspended, terminated or modified at any time for any reason.

~~There were no shares repurchased during~~During the ~~second quarter of 2021 under the Repurchase Program. At~~six months ended June 30, ~~2021,~~2022, we ~~had remaining authorization~~repurchased 94,566 shares of ~~$59.5~~our common stock at a total consideration of $4.2 million ~~for future stock repurchases~~(including transaction costs) under the Repurchase Program. Transaction costs are not counted against authorized funds. All common stock purchases ~~are~~were made in open-market transactions. We did not repurchase any shares during the six months ended June 30, 2021. At June 30, 2022, we had remaining authorization of $55.3 million for future stock repurchases under the Repurchase Program.

The following table provides information with respect to purchases of common stock made by the company during the second quarter of 2022:


Common Share Purchases	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan
April 1 - April 30		—	$	—		—	$	59,496,899
May 1 - May 31		—	$	—		—	$	59,496,899
June 1 - June 30		94,566	$	43.92		94,566	$	55,343,272
Total		94,566				94,566

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ITEM 6. EXHIBITS


EXHIBIT NUMBER	DESCRIPTION
(2)(a)*	Agreement and Plan of Merger, dated as of May 29, 2022, by and among PotlatchDeltic Corporation, Horizon Merger Sub 2022, LLC, CatchMark Timber Trust, Inc. and CatchMark Timber Operating Partnership, L.P., filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Registrant on May 31, 2022.
(3)(a)*	Third Restated Certificate of Incorporation of the Registrant, effective February 20, 2018, filed as Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant on February 21, 2018.
(3)(b)*	Bylaws of the Registrant, as amended through February 18, 2009, filed as Exhibit (3)(b) to the Current Report on Form 8-K filed by the Registrant on February 20, 2009.
(4)	See Exhibits (3)(a) and (3)(b). The registrant undertakes to furnish to the Commission, upon request, any instrument defining the rights of holders of long-term debt.
~~10(a)~~(10)(a)*	~~Summary of~~ PotlatchDeltic Corporation ~~Non-Employee Director Compensation, effective~~Amended and Restated 2019 Long-Term Incentive Plan, filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on May ~~6, 2021.~~4, 2022.
(10)(b)*	Engineering, Procurement and Construction Agreement, dated as of June 3, 2022, between PotlatchDeltic Manufacturing, LLC and BID Group Construction US Inc., filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on June 6, 2022.
(31)	Rule 13a-14(a)/15d-14(a) Certifications.
(32)	Furnished statements of the Chief Executive Officer and Chief Financial Officer under 18 U.S.C. Section 1350.
(101)	The following financial information from PotlatchDeltic Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, ~~2021,~~2022, filed on July ~~30, 2021~~29, 2022 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) theCondensed Consolidated Statements of Operationsfor the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months and six months ended June 30, 2021 and 2020, (iii) the Condensed Consolidated Balance Sheets at June 30, 2021 and December 31, 2020, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020, (v) the Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021, (iii) the Condensed Consolidated Balance Sheets at June 30, 2022 and ~~2020~~December 31, 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021, (v) the Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021 and (vi) the Notes to Condensed Consolidated Financial ~~Statements.~~Statements.
(104)	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

* Incorporated by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PotlatchDeltic Corporation
		(Registrant)

		By	/s/ WAYNE WASECHEK
			Wayne Wasechek
			Corporate Controller (Duly Authorized; Principal Accounting Officer)


Date:	July ~~30, 2021~~29, 2022

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601 West First Avenue, Suite 1600
Spokane, Washington	99201
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock ($1 par value)	PCH	Nasdaq Global Select Market

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2021			2020
Net income (loss)	$	187,905		$	2,638		$	319,011		$	(14,194	)
Other comprehensive income (loss), net of tax:
Pension and other postretirement employee benefits:
Net loss arising during the period, net of tax benefit of $0, $0, $0, and $6,817		—			—			—			(19,402	)
Effect of pension settlement, net of tax benefit of $0, $0, $0 and $11,177		—			—			—			31,811
Amortization of prior service credit included in net income (loss), net of tax benefit of $72, $75, $145 and $152		(205	)		(215	)		(409	)		(430	)
Amortization of actuarial loss included in net income (loss), net of tax expense of $1,073, $1,034, $2,182, and $2,223		3,050			2,942			6,207			6,326
Cash flow hedges, net of tax expense (benefit) of $(2,179), $4, $1,853 and $(1,806)		(31,163	)		(1,847	)		32,944			(40,372	)
Other comprehensive income (loss), net of tax		(28,318	)		880			38,742			(22,067	)
Comprehensive income (loss)	$	159,587		$	3,518		$	357,753		$	(36,261	)


	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2022		2021			2022			2021
Net income	$	120,222	$	187,905		$	284,102		$	319,011
Other comprehensive income (loss):
Pension and other postretirement employee benefits:
Net loss arising during the period, net of tax benefit of $0, $0, $1,570 and $0		0		0			(4,587	)		0
Effect of pension settlement, net of tax expense of $0, $0, $3,612 and $0		0		0			10,553			0
Amortization of actuarial loss included in net income, net of tax expense of $267, $1,073, $742 and $2,182		786		3,050			2,170			6,207
Amortization of prior service cost (credit) included in net income, net of tax expense (benefit) of $45, $(72), $89 and $(145)		129		(205	)		259			(409	)
Cash flow hedges, net of tax expense (benefit) of $2,817, $(2,179), $5,066 and $1,853		42,529		(31,163	)		85,805			32,944
Other comprehensive income (loss), net of tax		43,444		(28,318	)		94,200			38,742
Comprehensive income	$	163,666	$	159,587		$	378,302		$	357,753


(in thousands, except per share amounts)	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	512,030		$	252,340		$	511,157		$	296,151
Customer receivables, net		56,694			26,606			43,989			31,028
Inventories, net		73,074			62,036			64,247			72,369
Other current assets		24,475			16,136			31,833			21,630
Total current assets		666,273			357,118			651,226			421,178
Property, plant and equipment, net		291,550			288,544			314,840			292,320
Investment in real estate held for development and sale		66,553			72,355			60,143			65,604
Timber and timberlands, net		1,580,827			1,600,061			1,704,256			1,682,671
Intangible assets, net		15,880			16,270			15,101			15,491
Other long-term assets		61,715			46,717			126,353			57,951
Total assets	$	2,682,798		$	2,381,065		$	2,871,919		$	2,535,215

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	97,462		$	93,279		$	110,184		$	78,209
Current portion of long-term debt		42,991			39,981			39,989			42,977
Current portion of pension and other postretirement employee benefits		6,574			6,574			4,993			4,993
Total current liabilities		147,027			139,834			155,166			126,179
Long-term debt		714,870			717,366			715,748			715,279
Pension and other postretirement employee benefits		128,251			128,807			91,703			83,674
Deferred tax liabilities, net		22,191			17,740			40,725			34,874
Other long-term obligations		58,670			72,365			25,026			49,076
Total liabilities		1,071,009			1,076,112			1,028,368			1,009,082
Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized 4,000 shares, 0 shares issued		—			—			—			—
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,045 and 66,876 shares		67,045			66,876
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 69,280 and 69,064 shares								69,280			69,064
Additional paid-in capital		1,678,661			1,674,576			1,785,383			1,781,217
Accumulated deficit		(51,670	)		(315,510	)		(62,074	)		(280,910	)
Accumulated other comprehensive loss		(82,247	)		(120,989	)
Accumulated other comprehensive income (loss)								50,962			(43,238	)
Total stockholders’ equity		1,611,789			1,304,953			1,843,551			1,526,133
Total liabilities and stockholders' equity	$	2,682,798		$	2,381,065		$	2,871,919		$	2,535,215


Large Accelerated Filer	☒	Accelerated Filer	☐	Non-accelerated Filer	☐
Smaller Reporting Company	☐	☐	Emerging Growth Company	☐	☐



			Page Number
PART I. - FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations	23
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~	34
	Condensed Consolidated Balance Sheets	45
	Condensed Consolidated Statements of Cash Flows	56
	Condensed Consolidated Statements of Stockholders’ Equity	78
	Index for the Notes to Condensed Consolidated Financial Statements	89
	Notes to Condensed Consolidated Financial Statements	910
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2021
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3435
ITEM 4.	Controls and Procedures	3436

PART II. - OTHER INFORMATION
ITEM 1.	Legal Proceedings	3537
ITEM 1A.	Risk Factors	3537
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3538
ITEM 6.	Exhibits	3539

SIGNATURE		3640


(in thousands)	June 30, 2021		June 30, 2020		June 30, 2022		June 30, 2021
Cash and cash equivalents	$	512,030	$	80,987	$	511,157	$	512,030
Restricted cash included in other long-term assets¹		—		1,947		4,737		0
Total cash, cash equivalents, and restricted cash	$	512,030	$	82,934	$	515,894	$	512,030


¹	Amounts included in restricted cash represent proceeds held by a qualified intermediary that are intended to be reinvested in timber and timberlands.

	Common Stock				Additional Paid-			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
(in thousands, except per share amounts)	Shares		Amount		in Capital			Deficit			Loss			Equity
Balance, December 31, 2020		66,876	$	66,876	$	1,674,576		$	(315,510	)	$	(120,989	)	$	1,304,953
Net income		—		—		—			131,106			—			131,106
Shares issued for stock compensation		166		166		(166	)		—			—			—
Equity-based compensation expense		—		—		1,930			—			—			1,930
Pension plans and OPEB obligations		—		—		—			—			2,953			2,953
Cash flow hedges		—		—		—			—			64,107			64,107
Dividends on common stock, $0.41 per share		—		—		—			(27,484	)		—			(27,484	)
Other transactions, net		—		—		81			(97	)		—			(16	)
Balance, March 31, 2021		67,042	$	67,042	$	1,676,421		$	(211,985	)	$	(53,929	)	$	1,477,549
Net income		—		—		—			187,905			—			187,905
Shares issued for stock compensation		3		3		(3	)		—			—			—
Equity-based compensation expense		—		—		2,140			—			—			2,140
Pension plans and OPEB obligations		—		—		—			—			2,845			2,845
Cash flow hedges		—		—		—			—			(31,163	)		(31,163	)
Dividends on common stock, $0.41 per share		—		—		—			(27,489	)		—			(27,489	)
Other transactions, net		—		—		103			(101	)		—			2
Balance, June 30, 2021		67,045	$	67,045	$	1,678,661		$	(51,670	)	$	(82,247	)	$	1,611,789



Note 1: Basis of Presentation	910
Note 2: Segment Information	1011
Note 3: Earnings Per Share	1213
Note 4: Certain Balance Sheet Components	13
Note 5: Debt	1415
Note 6: Derivative Instruments	1415
Note 7: Fair Value Measurements	1516
Note 8: Equity-Based Compensation	16
Note 9: Income Taxes	17
Note 10: Leases	1718
Note 11: Pension and Other Postretirement Employee Benefits	1819
Note 12: Components of Accumulated Other Comprehensive ~~Loss~~Income (Loss)	1920
Note 13: Pending Merger With CatchMark	20

	Covenant Requirement		Actual at June 30, 2021
Interest coverage ratio	≥	3.00 to 1.00	26.13
Leverage ratio	≤	40%	19%

Covenant Requirement

Actual at
June 30, 2022

Interest coverage ratio

3.00 to 1.00

Leverage ratio