PCH - Earnings call transcript Q1 2018 | PotlatchDeltic Corporation

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Operator

Good morning. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic First Quarter 2018 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions] Thank you. to call like to now would turn over the Mr. I Financial Vice opening President Richards, Officer and Jerry Chief for remarks. Sir, you may proceed.

Jerry Richards

our Thank warning to Operating call statements. the Officer; and covering good Officer. Mike Covey, and morning. This in call then room Cremers, over risks statements at reconciliation the site Chief in found slides Mike to and review will press note statements. our presentation XXXX be Please webcast Executive SEC and me filings comments quarter Web call first our release, you, and forward-looking first our President are will cover a concerning associated Also, With the www.potlatchdeltic.com. and Eric in for some with I contain Chairman the PotlatchDeltic’s on the Ian, investor quarter of that earnings. I Welcome and forward-looking can results our the non-GAAP will measures with and outlook. now these on the please turn Chief

Mike Covey

Thanks, Jerry good morning. and

First optimistic Composite in all-time XXXX about resumed quarter this fourth climb expectations and up prices Random Lumber The XX% the and another the were in quarter we’re question many reasons. of over for their balance index the our hit April. Lengths results exceeded high first morning.

us transportation cause over or transportation disruption strong and the in business quarter in shipments quarter that second quarter. in means So, and linked already be short-lived, Wood supply exist booked which products strong is a very It cost track will largely our behind to with log appears rail to going with well not April restricted. on in to a be sales did issues continue products but material Canada our and not have challenges in May to we're shortage business. truck wood

The in target included to lumber to lower sawlog also sawlog volume achieving Deltic are timberland legacy with shifts board now northern and on sawlog merger at of our leading former in to in the increased completed Waldo X locations and synergies year-to-date Both new run We logging stocking kiln we the two We sawmills the harvest steps almost we over the million former Idaho is over as our Arkansas hauling in in lumber harvest are Deltic the due since prices own have quarter. and operating board hauling first costs February the in timberlands, costs quarter adding operating market quarter. year. our to logging South, complete quarter. acres posture the ton than higher rate mill capacity, to the annual per almost XXth per sawmills. former The proximity on Deltic Deltic in ownership consistent Potlatch, April strong billion increase lumber a now XX% former primarily in two run feet as superior prices. Due into and translates dry of over is With both scheduled. continuous of at sawmill X X million production are the feet sawmills now by XXX rate key Deltic over southern million declines the of index increased our the acres thirds including

logs a break week. last delivering to plant due able up. that February the We in cold are begin the again quarter spring Ohio to customers We to harvest first more snap than in delayed

boundary in are conservation funding land Chenal purchase Waters all near located all a XX represents Our sales, area in the the Canoe solid Waters involving real sale five-year estate Valley residential Minnesota. and Canoe closing quarter options up federal Rock. transactions segment within land $X had about Total the when In boundary could over agencies area. option April and fund purchase latter conservation million the also multiyear of Little use near the XX in period exercised. we another sales acres This X/X the that close to lot state inholdings rural add larger XX,XXX to of

pleased of a Regarding two have in and the progress rate run integration $XX just Deltic. basis with least the I'm that made rate by XX at of to very number captured we million we've synergies that expect year-end. million months, on reach run

$XX are million goal XXXX. on to end cash of for distribution well our way of increase achieving by our We annual available the by

As remain levels up the in a the After we’re headcount will be to complete REIT. merger to to XXXX, year market. estimated complete the now is PotlatchDeltic's in benefit quarter up the have good lumber well will we million cash and Recall targets I'm in be earnings and cash our of have Jerry complete not before when board the is systems excited about REIT end year we The XX% corporate obtain expected excluding have E&P We realized, up to we year to Overall, to be to amount will shaping we year. and very addition, revisit dividend be done positioned back By prospects complete accounting, are stock. will and timber progress million with dividend a payroll are as from to achieve on end take issuing most job XX% the improving later overhead prices turn harvesting over the synergies distribution are cases for to the and employees I production merger, Deltic mentioned, will ramped excellent most leverage our quarter that that shareholders remainder a in XX the more special dividends, of million approximately discuss per payout increased closed synergies. been purge ratio for as shares in our of housing the available converting be cost profit in until great our bit US affected other markets, is the rationalization insight to mill to consolidated. as we of another the after quarter Deltic fourth REIT returning associated with synergy start. and it in $XX a on with paid distribution. $XXX and or questions. cash the some

Jerry Richards

affected with this Mike, Thanks quarter.

change of reported of analysis nonoperating pension periods will operating as and costs. this our disclosures a accounting adoption other minor EBITDA adjusted portion in and on accompanying to was the that presented discussion be be are SEC discussion an in due requires posted slides periodic Results this The and this based to press postretirement quarter Our filings. of that our prior performance earnings segment required release adjusted the call to rule and EBITDA cost yesterday. includes

Finally, the EBITDA before are CAD guidance. on providing cover I results we

pieces, in which lot of model I Deltic XXXX, million almost the in with the help will merger quarter results and a finalized. fourth EBITDA was calibration. or While included was that merger the with first higher page start $XX.X Adjusted beginning with XX, February is slides. there are is the after million quarter. X moving the XX% of the $XX.X than day

Northern $XX.X million strong to of The through is adjusted adjusted the now highlight sawlogs north on effect exceeded higher quarter. seasonality negative Slide basis. EBITDDA EBITDA basis normal to Former a per first of factors fourth to of our We million adjusted heavier contributed the a mostly and first is in first due in million. tons a content higher performance. X% MDF quarter or quarter, ton from operating was quarter Deltic each for our $XX.X was the quarter for quarter. we segment’s $X.X than seasonal moisture the slightly EBITDA by first in the X. Information of in X XXX,XXX fourth segment plan down operations prices segments review on harvested declined first higher displayed quarter. that offset on logs The I’ll the sawlog contributed $X.X the resource dimensional in while which quarter due million prices

Turning first tons over a harvested quarter quarter. in to XXX,XXX quarter quarter, the sawlog XXX,XXX the increase southern tons XXX,XXX representing over we the total in in XX% south included was quarter. we of the sawlogs XX% The harvested fourth harvest in the up which the tons

levels Silviculture seasonally the the fourth segment’s of wood quarter I million, will our extraordinarily seasonally south an which wet former quarter volumes The XX timberlands quarter. the declined quarter. EBITDA a and A on increased due to south X Lumber products, is prices board $X.X wet X. $X.X former the to the the covered seasonal in the remained in we million Deltic over The up feet shipments to Average than were weather increase the to Arkansas. the quarter. Potlatch first in logs. a million Deltic flat We the costs hardwood first The less was Slides lumber XX% lower quarter. fourth costs favorable accelerated fourth primarily fourth lumber The to through which operations due XXXX adjusted compared to is merger million quarter. Pine timberlands, the compared fertilization exceeded in prices of Deltic north. compared $X.X harvest quarter mix board which in legacy for decline increased board former shipped quarter sawmills portion first in contributed million of quarter. more Deltic in declined legacy $XX quarter sawlogs meaningful the price operable in quarter. former the normal Sawlog shift approximately now manage While are the delivered million and million plan the to expected XXX to our in adding offsetting the after sawmills shipments. utilized feet team X% two XX in for Potlatch in to feet

be a was and number of estate segment late the rural the that on estate ran first first land there're double cover lands target. for in wide in in Potlatch are Deltic completed utilization the a is Deltic Mary's estate’s XX the $X our mills not sawmill. opportunities EBITDDA sold is The Cost legacy of I mills land. at heavily quarter. is X,XXX this will Slides decreased synergies in and We estate of included development synergies to sold Warren, our of than in development stratification and legacy and well business, higher did and price XX lot million volumes former year. half million now and replacement will related real Chenal quarter, press primarily completed our the lower the As our weighted any panel Valley quarter increased contribution the not change In MDF of dimensional about our of a as in industrial belt mills acres the to the quarter. rural costs higher the per adjusted due completed. we sold Deltic two loss include MDF the partially shipment $X.X the million. Sale $X.X by million was million from next XXXX St. XX. stage $XX grade sales of once press process real EBITDA prices, $XX,XXX the seasonally of studs at included to not due more acres Adjusted log Deltic's Real This is quarter real rural in of the in lumber as XX% and Deltic and on our increased to believe Arkansas. in were sales second in fourth to The average lots an year lumber $XX weighted offset of mill. addition the reminder private lot plant target. was solid the MDF mills benefiting timber in heavily cycle shipment Idaho of Improvement

lease also The acres. saw interest available are in transactions commercial as solid reminder. a lumpy We

progress end and closed, March of $XX at brief on will excellent and XX. at synergies remain that in the least the occurred in XXXX. million the we efficiencies were a operational targets $XX since run we run confident Turning against merger million achieve to a at Slide of has our rate time rate of

now of prerequisites Arkansas the was necessary are allowed customers. Our wall Lumber in budget Production target current southern to hit resource new two employees April This quarter, year first place rate on completed operating up the to in increase and are run under achieve the continuous now contractors sawmills the shifts. harvest the kiln on job us both in and the the did lining former time sawmill an and excellent Deltic

liquidity the first operations Regarding the the The remaining undistributed stock occur timber Deltic date special basis, C distributions work merger the are Slide reduction to earnings planned $XXX savings only to in target. tax-free of with a and comprise the Approximately the REIT expense we run achieved is presented Deltic's of from cash ended SG&A systems well on underway the rate and fourth XXXX. XX, earnings closed. processes the that beginning is the integrate Shifting staff is tax quarter of has Corp of and quarter quarters on three highlights of been achieve million. remainder cash to

new We revolving debt. is Potlatch million also a $XXX credit and which million first $XX million of of debt. Deltic's In facility repaid closed This of on facility matured has of legacy $XXX we million, million $XXX a $X includes according. debt million available. February in the $XX that The quarter,

that Deltic the and $XXX which favorable debt, by interest yellow the $XXX Regarding slide rates have refinance is million represented on million. bars the retained

projects modest that high planned we March in upgraded run shares million to our investment dividend the for press for eight upgrade. the asset of $XX coverage business as liquidity that Moody's Capital our We costs grade $XX be year. April. release capital strong credit also first wood quarter. and the is merger-related consummate to all of rate at to end will expect due payout financial quarter of paid the Mills. timber of in products half the rating in $XX expenditures the strong million our cited million XX liquidity, leverage, in per quarter; merger. The with issuing spend a policies About in were million Their million conservative increased $XX $X.X new reasons expenditures at Deltic million the BAAX

in real Valley develop lots We $X million also $XX estate and plan to to million Chenal resource. spend in primarily in residential

and South, to in our and we volume South, harvest XX. southern to the in like X.X the are harvest first seasonally on prices with sawlogs, prices harvest, the XX% northern and stumpage, outlook, for southern about sawlog of markets. anticipate prices harvest thirds to oversupplied to harvesting plan X.X in expected including of full in reflect Slide to will volume would summarized million is quarter quarter between increase X.X be we comment compared North down that to We I tons Now estimate of on the the expect lumber will slightly in logs. flat tons the the be due pulpwood and which the the higher to two total We prices index million X.X approximately XX% second quarter, be second the wider that on sawlog to year

we the be to first We due northern harvest up seasonal to expect spring resource adjusted EBITDDA had slightly quarter points low as compared and volumes to break.

week. we mentioned Mike hauling resumed As just logs in last Idaho

For $XXX million. the will a that resource we estimate EBITDDA year $XXX to be million adjusted

products, Turning under board feet the million will to wood XXX believe quarter. second in lumber shipments we be just

lumber feet. be X the board For to billion anticipate year, we over just shipments

will average quarter We’re lumber quarter. the estimating higher first the be our than about second price X% in

million per the plan a the sale $XXX to sell million products second we in be closed wood timberlands for we nonstrategic of acres $XX on to real second the conservation estate, $XX $XXX the transaction, XX,XXX acres bit quarter acre EBITDDA expect X,XXX We and Shifting quarter. second in adjusted to to to rural Including full to over a million the in entity year. approximately that already quarter. of a for $XXX million

We rural of sell residential to anticipate master-planned acres year. the XX,XXX expect second to price XX,XXX the an in in $XX,XXX. selling at to average the quarter community lots XX for Chenal We XX

adjusted to of estimate in about logs run real be Corporate expected $XX for the second XXX $XX XXX adjusted about for the full sell that the EBITDDA million year. per is will estate's million to the $XX expect we remainder million to EBITDDA and year the For quarter logs. to quarter, We million year. $XX

start. fourth a percentage to the tax of great in second This XX% estimate and through consolidated $XX expect expense The off to be rate the We increased second is million We year of of to in full for XXXX. products the earnings a XX% per XX% quarter to quarters our for hardwood reflect interest quarter has XXXX year. forecast.

second be operational of as I open and than synergies concludes a the operations to call the That expect of like as XXXX lumber primarily prepared now due on target quarter We to our remarks. our meaningfully improvements XXXX EBITDDA quarter Q&A. progress as prices. to higher quarter, Ian, to higher well full inclusion former Deltic first adjusted for would

Operator

Our question of Bank Instructions] line [Operator the Babcock Merrill of from comes first from Certainly. Lynch. John America

John Babcock

so to couple a you've regards expectations start only that so there anything now? just with months mean better and relative out I resources, it, wood had think realizing far want I a gone products merger you the bit to well review here, Deltic as it to could you is of for have gone both far in and what’s

Eric Cremers

Mike comments Deltic with very how As and has pleased been the progressed. in merger their indicated Jerry we’ve

back million of two the to business, production you say regard. and the out, the the a million slide, we the to just expected incremental get we biggest million is of operational on, to give that merger. couple synergies the volumes identify laid really increasing didn't that spot add those CAD, If there’s $X and two pieces happy far. are harvest so roughly most that laid out, to go up going bucket of areas track, can collectively $XX too that I were deliver lumber but we’re of when both they another you we small, $X from announced the And about we that individually that identified we examples the to that that expanding they in I’d we’re are

is more this areas. in their and mindset we their to log own and implemented a You timberlands the We’ve then and plant. able right to a which to substantial sawmill turn vertically margin been the its would mill multiple mindset, know, residuals all identify gains has integrated portion the to the sell around sawmills of had of essentially Deltic its getting so sawlogs historically, would right MDF large focused haul

roughly for alone. million dollars or So, of shifting per for $X.X XXX,XXX saving measure example, a year tons are sawlogs sawmill now ton we that on Warren X just

Another mill participating large able to again savings also part where example mill customer $XXX,XXX Deltic a the side, the of been savings Waldo integration is part sawmill on external identify of an new situation to we incremental but Waldo sold MDF residual historically can in markets externally to profit. us their actively netting vertical the in were

that, we that prices. other that that The of million merger when opportunity of outside maximizing seeing is the we we selling regarding $XX big area are announced identified

the we've than its produces lot around shipped US Mills that rail. now this a by that what more roughly our opened timbers sawmill, Ola which Mexico Well example, customers for the those timbers paying Ola of with of timbers So, to network of most up half a [$XX volume effectively are of volumes timbers to charging was business thousand] and Mexican customer. customers customer base Deltic about the expanded

earnings. an that’s $X.X of incremental So million

just are that because those but too they mean the synergies when a capturing merger. them small We to they few were we around. did were incremental couldn't incremental out we just of knew examples laid margin consummate to are I these there quantify So, we the our see arms that not get

incredibly had the disappointment very with we and don't with this we been I people, assets quite think pleased going pleased. any we So, we since is are very in happy consummated merger the are the how we with candidly, merger,

John Babcock

detail for Thanks there.

really you out your but se, there as there was we’ve really sky northwest, just and over into much seen was in been rocket not the for well guess how the was guys I substantially has wondering regions Pacific carry Idaho. I on question per I prices Next wondering

Mike Covey

John? prices speaking your of Are log

John Babcock

log Yes, prices.

Mike Covey

roughly Douglas the kind we of the know you they the logs lumber of as about log two and third access I prices of the Idaho the where price market, export and whatever's Coast with in West prices so high. about as with as of you price volumes, independently mix prices as have really strong happening how the talked as we we Cedar us. right, for in on which on of strong operates typically the reach of been have West Well an for us behind think script, to quite also out thing have in in are is prices, market slides, which lumber can Coast XX% represent the for But seen same our log the see of are indexed strong log

John Babcock

could as wondering what talked you know as North bit you you there as South if what sense Thank regions and provide and freight, the seeing. increase also your of different about and seeing was could you're little briefly you in you’re you percent and very in more operate a some share you I in detail far if

Jerry Richards

availability trucking inflation really in an minds rather of On a than our cost the issue more issue. is product wood side more

we FOB along trucking As are to no able our customers generally our to maintain to pass realizations. inflation

issues. So, managing these freight around we’re opportunistically

say are market those and to than a charge times the alleviate got us along Deltic, so towards little those XX% some some dedicated production. what up like going be to small help to a historically of historically contractor Deltic now and Potlatch of Arkansas So go the to production that back of we’ve they turnaround more otherwise, fleet about should costs its us it's from which general, trucks, really our year, railed sign is cost in these faster to utilizing its of has contract passing that up trucks four also so of start rail, XX% pressures. costs much at XX% might I’d be, only but step but alleviate process trucks in Deltic XX% said In going moving we’re we’re servicing in I trucking rate taken away down to We've a these railed to bit are are for four trucking than we’re about a a those to per customers. help dedicated pressures. the of

Operator

the question of Research. from Gail And from next Glazerman Equity is ROE line your

Gail Glazerman

British have into British what maybe the played that? think bit -- Can perspective you logistic quarter pricing strength the issues Columbia drove more lumber freight little in specifically and you the just give may on shortage much supply in in first how a the

Jerry Richards

increases hard relatively to factors of of lots first as field these lumber talked back about quarter, we are got low, across have responds per pretty so Chinese really has industry firm now capacity repair-remodel, XX% in This so issue resolved, takeaway, quickly. we’ve starts, inventories next the housing got different still up duty inched and ramped demand on got and utilization calls, XX% demand reesee reesee anticipates new been the to factors, goes demand has firm going XX%, pricing Gail, very kind previous now you in commercial-industrial, to prices year.

of spite all in last these mills new fall and sure part is that it. in I chatter were there about frankly procuring the in all demand this at just fires all that relatively going it. added So, recall am the were out outpacing the into new supply. year, capacity online, I'm coming incremental difficulty Canada that you’ll Western having woes transportation sure started base mills was logs. the high We to a but that the of the

asked of demand get million to Canada to don't lumber so of but those question where issues the like are of if XXX headed transportation year of is up a the market, And these for that board wall feel million X there's how due and to to some that’s about, XX% China feet Canada. to stuck transportation transportation of price really may going like and there's by feet States, due fact you when billion ready in we to say wood market growing a issues in Now lot we’d Lengths you about spoke that XXX guess to much we plus the talk U.S. and was away feet was issues in sound going the that to had and we roughly the half of issues to but that a up speak quickly increase not XXX be aren’t hit as maybe we United sit incremental million and think lumber these resolved waiting resolved. burn transportation today Random feet Mike

Gail Glazerman

limited Can and activity you am what just pretty I through markets the of underlying do bit you visibility into the sale be has any about little pipeline been a the the wondering timberland year have obviously just might this year? rest talk moving

Mike Covey

that we South the pipeline sales the were most couple to the time, some are to the been in thousand-acre we point. pretty is those hundred area the for which US its is in pay not works big been at areas beyond attention while. the Well than the quite of to really the have Gail on market the the been central currently that of coming have only pipeline in we aware and the market this several But other in for visibility quite a anything transactions that that active

Gail Glazerman

have any Okay all is or and you buyer just people of a things just. outside all your the interest paid area at see attention to if as lack there just side,

Mike Covey

properties I think stocking, and property to longer, labeled but for so really seen of continues that difference. lower any that, going think reports southern lack and A, a and kind way Timberland class a I I more we class properties B carrying obviously it valuations in difficult carrying be valuation with, going our not lower quality there prices A is agreements do thesis market have on just be supply they people to C with just waiting is sawlog broad all, don’t [indiscernible] to or much falloff seen are think been the for strong others lower that are even probably think I buyer, as it's don’t still C for that interest past, transactions a as strategies any classes has and of at in being waiting perhaps make whatever the sure are others it stratified more more of three into what turn up to property reason to we

Gail Glazerman

price issues for into water of that quick northern sense Okay translate and using second ones, for you’re log seasonal then between that and what you that might the the just quarter assumption can given give pricing. any lumber X% couple that

Jerry Richards

you about gale in QX talking talking? Are or you

Gail Glazerman

what might normal assume QX, that whatever log In lumber X% just momentum that would prices into that if in our be. seasonality and move the prices, translate you

Jerry Richards

prices lumber well goes in Cedar as higher versus it I our as other versus combined and pricing QX. QX, QX So, the with Gale, that impact way as X% sawlogs that as expect be northern along flips would X% could we over lighter the the see, roughly versus were improved QX, has an seeing QX XX% density in QX as higher in much issue

Gail Glazerman

basis Okay you expecting. us give that’s of as sense sales then sort just can QX as for what the land any helpful year, and also well you’re for the of

Jerry Richards

into the offline, I one I think details take that Gale, think let's if get can. let's we

Operator

BMO Capital Ketan Our Markets. from next question Mamtora

Ketan Mamtora

-- Deltic kind is of kind production and of of legacy question I'm first lumber thinking sort Just target. about

and So still that of year. that know board that billion good a is feet target, it's kind still for X good of the target? million rolled into a of I kind is kind XXX But

Jerry Richards

good close I is year It million to to the a around will merger board hit estimated production since Deltic's feet. million XXX the are million be [seeds] XXX roughly know we full for February. number, we to Potlatch that XXX late

Ketan Mamtora

is at we disclosing is But take that it kind of And of to any that? to up number, XXX mind even have room projects beyond could it. Got those that of kind you fall without what I ahead, kind don't do in million this but there point? kind be as get there to of projects want that could think

Jerry Richards

about talking mills the you Are or the Deltic mills? Potlatch

Ketan Mamtora

mills? At the Deltic

Jerry Richards

no, absolutely, Yes mills. those -- we’re pushing

our push own as just as going in hard we’ve mills. been to We’re pushing

X% lumber, out do versus we’ll and There our we early, our current X% it’s is X%, the and underway, I to same plan. expect their to at mills. are would we thing year projects XXXX at more every know in don’t another more but look you X% track record If XXXX eek

Ketan Mamtora

kind is That's dissynergies, from different very of which coming then standpoint Got back of opportunity or kind the you a or their maybe do anything approach kind from thinning, way to of And those to if silviculture it. there's lines? helpful. along

Jerry Richards

absolutely to There’s or it’s of the whether Deltic there there, thinning opportunities there’re or for genetics fertilization opportunities improve us. using productivity for in the advanced us

Mike Covey

the in limited take those will do place Most start close, given year, timing to seasonality of really of of activities. and just XXXX this that of opportunity some to the that merger and the There’s beyond.

Operator

Mings Raymond Collin from from James. is question next our of line And the

Collin Mings

to pricing. about to combined of I Obviously, you just can you relative the the out guidance pricing there company? a date? pieces should maybe me, kind lumber bit really the increased other February lumber from guess, Or strength in aware talk what be put little more there that continued revision some of kind on start the in driver for are just only drove moving we guidance of that the to raise? really Is of that

Jerry Richards

parts in QX, and next that as you thing then has moving commented so his fairly and extraordinarily other gone we up, well. main and know guidance an have increase, part mean update strong obviously there’s Collin pricing lumber the As increased lumber then and the significantly of big extremely the in had leg as strong, of part actually prices some a script, Mike that’s of is I the

Mike Covey

One thing to resource will think improved to they north, about indexed arrangement. Collin, in lumber those business due prices through our lumber roll the to

Collin Mings

we’ve reflect outlook balance of guidance the February? notably is I of you different guess improved said just that for in the kind the some kind has or to guess embedded is I or increase I kind seen could slightly through the the of way February current maybe where there of come year pricing maybe improved lumber strength that relative

Mike Covey

Collin the answer off at this would half that's increased in have strength has to it it because where fall just we don't time, reflects but case. the Short year to this date, from now, think to going be really point it’s back to is significantly obviously the of

Collin Mings

you. Got

a you if quantify full kind guidance? know to a don't of in guys if of basis, it to the kind care of little for terms year-over-year you that I about are how were you just year thinking mean, about I but think So, bit,

Mike Covey

of talking terms what...? about you’re in or lumber Collin Are you

Collin Mings

Yes, I sorry. yes am --

Jerry Richards

Collin. embedded It’s our guidance in

Mike Covey

so Maybe offline and and that’s -- detail for get really talk me, starting that. through Collin in maybe in out we’ll stick to modeling

Collin Mings

Okay, fair enough.

mirror on Wood business obviously us the throw cash Products the with you're flow. Obviously, merger pretty Moving to balance how the especially mark finished special from just nice in a of XQ on continues now to Recognizing dividend, the for off million update perspective. million just $XX capital, given and about maybe you kind rearview have a sheet kind here prioritizing cash. of $XXX some thinking of you the

Mike Covey

slightly is than approximately in dividend more cash of paying priority probably the kind available XX% now million out for payment $XX currently Well distribution. of for

there, in already earmarked special So, mentioned distribution we’re $XX really the shape we as million of cash. you in good

We do, of that so could that time think powder also allows in some know we’re priorities of those repurchase to sense, are maturity improvements we a at market as capital and on I million interest. bolt-ons surprises of the you in we you did to some to is have, surface don’t make accomplish key Eric for those earmarked of but there business continue where down what The paying so kind are market debt got quickly, to for sized XXXX and eye think always authorization sense, dry see expire. keen to year have this we things is share able tranches quiet do to us lot chose and or got the make to we that that a markets $XX other being be yield we and areas will will that consider we we the the the acquisitions, mentioned, prepay in some which debt right got of expires we

and board I think not that have did renewed expire this the at with we point.

Collin Mings

We is in from just of And 'XX. this, just last million due million of about obviously, $XXX then before going back. Mike, that touched Okay. Jerry, you X.X%. coming debt of on And me, but kind $XXX talked

how right As kind thinking are about of XXXX now, of you maturities? kind you sit that here approaching

Jerry Richards

that the prepay past, present make or talked As X.X% in at time current to the early. off about we as sense whole make which here debt that pay I economically really said doesn't to the

current to basis. plan near maturity current million save and will today's a interest using on that at would rate the So, roughly or be year a run to be refinance we how $X rate would that amount expense much

Operator

from our And of Research. line Dillon Vertical is Chip from question next

Chip Dillon

we in work look as should economy to you this the general, kind a if how estate we continue two far Little at, Could assume the you're that bigger not situation real the million flow land Yes, and year. positive about you bit to even a see and does cash to in guess XX statements. the through of I I in four much XX or pace business afternoon. in that good little that next talk EBITDA look incoming housing know how all But the good Rock for looking years morning and over business the chug along and it's Arkansas from obviously pipeline that with a number

Eric Cremers

piece the Eric, XX,XXX know estate year. add two The has We’ve got Rock Chenal recreational it is Chenal at to now acre picked call we’re this the outside per XX,XXX acres business and typically sales for in area. Valley you at the Deltic sales to going business. acre business us up [XXXXX] Well business sell, we got is those is sales very smaller as you residential it's commercial Valley, Little in there Deltic is lot sales our that in real little we contracts different same-store look which are components when there Minnesota stable stable to

here which We from transaction to B. call time happen we this got time, Plan conservation announced we morning, also sales, tend it have to lumpy

the a hand, one-time transaction. On it's one

revenue over incremental to other as hand, roughly so the five relatively years the be five out that’s going its well. each years in with On stable next spread

business going which in our going think get to forward to real sales volatility due I Chenal tend commercial time really that going it’s acre to happen the back best they way could be Valley, to hard So, the to see to in we’re that to is be from lumpy. pretty to probably be is to that it. going estate probably describe your question, larger be And and conservation time, predict, to sales

Chip Dillon

acre lot around that? there would the side commercial of can per be can be a on variability -- imagine that,XXX And I

Mike Covey

Absolutely I an right over discussions $XXX,XXX now mean we’re somebody acre. with in that’s

Chip Dillon

and that, -- that you sawmills? that about manager on the cited what’s should with X.X that year forward, with what like talk these look REIT period impact all term as then think about say talked feet million that measuring Potlatch, from your be of or maybe we’re it an this you question legacy been several X you going X harvest used I -- they’ve mentioned billion announced, long with second little sawmill your million I the your and sort larger project. And potential how seems about what like plan has to announcements lot tons -- actual measured and about that all changed and of goal know does recent another is a would bit about footprint talk hearing a to the lands draw someone your over been these board know

Jerry Richards

come still both Arkansas, of there, should projects question? the lot it's impact on demand. second out and sorry part of there's incremental and seeing happen Chip, and There’s Interfor impact lot stimulate want up of so also your questions, I mill up mills you're the factors in start what to the those they of -- to have trying log in running and going a help meaningful our underway own Arkansas warehouse and out to when a volumes saw get of Conifex wood am Arkansas, with pulp I a mills two talk area on of was our prices in or basket, us there’s but also mills that is paper

Chip Dillon

you the not would all just to the announced you’ve the what be your Arkansas but Potlatch overall Just activity impact of just land-base? that area across in general in entire think sawmill seen

Jerry Richards

said divesture, would several think we yellow I to that basis, or over assuming going million to to going to within years. sawlogs -- is from a think higher, next I X.X next meaningful two for is our that’s our in do over a X.X the at will that it’s a opportunity stay range. acquisition the there’s years we’re of that to sometime move southern so level kind an pine going harvest be what three make year-to-year, stay tend to year be us don't but I -- is volume that Chip run What range we our sustainable million so tons. this on range, expect say to timberland for we’ve we I it’s to give would on

per was in the year. harvested up the XX to and XX the now somewhere XX XX taking in recession million found of large million per between million the of University tons to recession, at US XX great place data, was projects it’s up it it roughly is look great are dropped totaled we’ve there tons since Georgia year. tons, This pre-great XX in per year so per come roughly XX mill and being expansion tons you which XX a million If way what million recession south around year tons its to sawlogs South, saw

Mart-South per now is assume you’re you incremental to at think XX going the XX balance The that million up to out and moving log to southern Timber start your about and show that quarter prices sometime in most there years quarter, opportunity in higher. wood demand you're of realized starting warehouse pre-great and year an so demand moving start much here for between going few those sawlog to tons see if back price projects you’re be a over then and where pricing more states happen response already were baskets. The improved talking Sawlog So, about recession. market seven three a I will comments we made XX data recent prices their out

Operator

Instructions]. [Operator

Capital RBC Our from Markets. next Quinn question is from line Paul of

Paul Quinn

the the that Mike, this quiet seems your were at one then, peers now, right smaller and and source that there? I've of of it What's you was that major quite described morning disconnect pipeline opportunities majority the robust. But that's they M&A yet, the heard. high looking pipeline the like is quite were REIT opinion of said M&A

Mike Covey

in perhaps their I but beyond could didn’t are where primarily around of I market that really think my and which the idea, we areas in parts about that areas is that, can’t is hear only really Mississippi pretty comments focus talk no our focused looking other I quiet. I have and Alabama so I is call, timber suspect

Paul Quinn

maybe just the Wood because seen focus now? Mississippi familiar What have Arkansas with then and on capacity I'm there. in Alabama additions of pretty Products outside right And Okay. in a the you areas

Mike Covey

or brand-new Rivers operating those and hit running in Comox I start Well the Mississippi the the those up think equipment in I two with that and Two ground ups mill Alabama. and ground both capacity. are mills near incredibly two the and in mean, at in have Comox quick are mill new hit sawmills they --

just don’t outstanding central in a are kind so Alabama the completion months to those I I GP mill So that Talladega in know Alabama, announced Western day of but imagine new or that’s XX within central area its to Louisville, and probably improvements Mississippi to going legs so markets, area in plant strong plywood a northern really that’s Mississippi is under got now see is sooner than in plywood really with Arkansas. that strong

Paul Quinn

across one labor Okay. way whole inflation the the that on in in the just to all front? it set then availability of the you terms seeing that factors And guys of What and are board labor. Wood from terms of producers millers the Products is

Mike Covey

Arkansas people which we in shifts were really up think example and on in merger I order two good sawmill to short old our shifts bring best we able it not the we operating have and on was The he’s people, labor after millwrights, on it. pretty the so is normally point turnover is quality two we Eric but a a our like a whole electricians, and skilled has more and rate view, our available have across not different closer in to Maybe we can’t always have system business. high as to constraint found

Eric Cremers

to above minimum estimate are times outside mid-single low the electricians we that in is to so year, other What mills, as Paul said trades, wage, are mill skill issues. I’d the pay that we machinists it’s employer be having we XX% operate most say choice to roughly Mike not of a of digits, we are and hourly be the turnover and of in Warren we

Operator

at to no back further turn I'm Presenters And audio this it showing questions. we time I have you.

Jerry Richards

modelling appreciate my other we’ll questions And available I'll be and questions Ian. again, PotlatchDeltic. Alright, back -- Thanks thank touch. to everybody’s things, you detailed and to be heading be shortly. I'll in interest and in desk take those

Operator

participation. this conclude gentlemen, We and thank call. PotlatchDeltic you conference XXXX quarter the your for does Ladies first

disconnect. not You may

PotlatchDeltic (PCH) 4 May 182018 Q1 Earnings call transcript