PCH - Earnings call transcript Q2 2019 | PotlatchDeltic Corporation

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Operator

Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Second Quarter 2019 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. you. Thank Instructions] [Operator

like Vice the Officer, President you remarks. now Mr. for over Jerry Sir, proceed. Richards, and may to would call turn to opening I Chief Financial

Jerry Richards

to Officer. you, and President PotlatchDeltic's our Thank Eric quarter With Mike Cremers, room earnings. and in XXXX good Chief Covey, and morning. Chairman second investor and and webcast Michelle, call covering the are Operating me Chief Welcome Executive Officer;

release, associated warning call the will the statements. forward-looking and of in can found our presentation please on This forward-looking non-GAAP press in Please review slides, be reconciliation Also on statements SEC, our the that concerning with contain filings website statements. our a www.potlatchdeltic.com. measures note with the these risks at

the and over some second call cover our for Mike then results will turn and outlook. comments quarter to I'll our I now

Mike Covey

morning, of adjusted the last XX% Thanks, quarter. We in quarter cash second second Jerry, elevated still our we the lumber of This of expenditures covered in lower amount prices quarter. everyone. during and was almost this, Despite and XX the of XX% XXXX, $XX the million operations the our decline good by months. generated reflective than mills dividend generated capital in with pace in EBITDDA the

XX% In to timberlands, were our harvest quarter lower compared the in volumes a year ago.

quarter. South in Also second Idaho last in As the wet customers shifted entered the region to to volume constrain our normal half spring call, log second higher discussed operations the breakup of weather than inventors. quarter's because the on some period the the of year, we in continued with

shift of second year. annual harvest the the of into deliveries the plan half Our intact remains with

longer expected. pine The sawlogs Southern has on wet than weather we lasted premium

one up Arkansas were period Second quarter ton to ago. were or or $X up X% per sawlog the ton nearly same and compared year quarter-over-quarter prices XX% $X per pine in

sell, than Yellow the were offset three consume at a by more As stronger our costs sawmills higher reminder, logs prices slightly Pine in wood we Southern because we sawmills. log our

we outlook Progress our project meet Products Wood Products the elevated however, did this not business. expectations; optimistic remain about plan. results continues on capital Wood for

We two a planned Pine or the projects five underway Yellow complete been sawmills resulted of at second green projects lumber and downtime kilns two with three continuous new that include recently completed, replacement Southern in quarter. auto in which dry new have major lumber grader, a kilns. a dry batch stacker new The have

projects of of at will The and be benefits expansion recovery. capacity grade largely these improved

plan Real of to segment under quarter. capital two in in million the land large sales this As just a spend $XX transactions we in XXXX. reminder, Estate had rural

X,XXX that and The call to we in that a on a last takedown X-year acres sold first agreement. represents discussed quarter's conservation second the was organization

in X,XXX almost completed, for the Timberlands acre. sale was XX of $XX,XXX Deltic been former approximately second has in the acres acre. timberlands for we've per Overall, an The months Arkansas Deltic of the $X,XXX acres merger since sold averaging little X,XXX

timberlands land We continue Arkansas. sales excited on opportunities the to legacy be rural about in

the and macroeconomic fundamentals. improvement are general Looking forward, housing indicators we encouraged by in

Although, housing orders homebuilders this the meaningfully. us reported increased downside new by has have on year, surprised recently

rates In and are to confidence levels housing returned strong, addition vacancy all-time affordable have remains more nearing builder rates lows. mortgage

felt some a until keep mind about X been lumber have the Lowes last such with remodel repair which Home increased has and the XXXX. to or big-box to board as in not benefit of the important on It positioned be our representing there closure Depot, billion curtailment is and these of on in side, recovery the lumber supply well estimates. announcements fourth year, another shipments full On that from effect positive by this note, relative number quarter of will PotlatchDeltic lumber all is On segment, retailers decisions Menards, to capacity prices. feet support year. business

Our remains plus at the million $XX to repurchase returned to XXX,XXX shares million flexibility an our half to of and shareholders per $XX dividend value. in of This We shareholder grow of average strong provides stock $XX the share. XXXX. balance price includes sheet the first

We have of current our repurchase utilized authorization. one quarter

significant continues our stock yielding trade discount X%. Our to net value to at over in a asset to addition

remain result, As a acquiring repurchases timberlands. in opportunistic share more attractive

our turn I'll quarter the and and take Jerry questions. now over we outlook to discuss it will then to

Jerry Richards

page is impairment four closed EBITDDA two second compared offset by was charge real EBITDDA with million inventory Thanks, costs sequential second to the adjusted Mike. in an and large in increase quarter. total to estate The $XX quarter higher in slides, Wood the due million first of primarily the that quarter, Products. Starting $XX.X in the in sales partially

million I'll is of results. EBITDDA our and on each now more quarter for operating Timberlands segment We displayed that on with million. segments in review XXX,XXX in X in the second our This the the $XX.X $XX.X second harvested second in color from seasonally provide we've Information quarter. harvested throughX. The sawlogs adjusted the was XXX,XXX segment's flat essentially the of first quarter's tons quarter, down North first quarter. the tons is slides

Northern quarter decrease sawlog first in seasonal on slightly of and logs. price of reflects density lumber the effect The a first in the prices prices higher the ton were the the quarter per quarter. second compared lagged higher X% basis increase to

South, second which to in operations in quarter. harvest hampered XXX,XXX short Turning first we we in weather harvested falling the tons that was volumes in tons our XXX,XXX over tons slightly down quarter. resulting plan Wet the the the harvested quarter, XXX,XXX from of the

the up make to expect year. shortfall the of half in second We

$X mills million of in in EBITDDA slides second which a Wood southern to X sawlog the of the inventories. higher had were shortage compared negative weather-related premium to first levels due the to covered X% will a log second sawlog is of quarter. reflects the short-term this We Southern trading segments, once quarter This logs. think quarter. half normal prices prices X, Products The XXXX rebuild adjusted increase revert Our pine on and

first down value to inventories higher. to to a cost and sawmills were $X the our quarter, projects. realizable capital million prices the maintenance per-unit Compared the slightly lumber both negatively to costs. do basis downtime results and in maintenance the on Three took production during Cash write third net unit increase segment's similar lumber for lower, per of fourth charge loss affected related not costs manufacturing planned on We the and or quarter a drag the quarters. expect was

we costs comments, timberlands our second mills moderate of Southern of with in half log for our to expect the year. the Consistent

Part was We due the board volume had extra less feet. Our to this board as of was lumber million been we is shifted feet quarter to but second at quarter, had of be an million lumber X recorded the shortfall of the timing. quarter. when increased end arrived than second which planned customer This shipments, will third shipments ship XX in at locations. lumber had that the

had also mills of in out We unplanned to some our production and time Southern lost other log downturn. some

to up still make lumber approximately shortfall feet ship We to shipping board of X.X and plan for billion the expect year. the

Real Estate second in the slides the to million adjusted was EBITDDA $XX.X segment's Turning XX, quarter. and on XX

$XXXXX we the sale per real mentioned, on including sales former for the quarter, As timberlands of acre. Deltic large Mike in two closed

repurchase quarter $XX we Shifting The ended the to XXX,XXX share. of $XX our average financial per slide the price cash. which quarter. million in on XX, are of with items, cash $XX was used million We summarized shares to of

basis. covered, the ratio LTM merger and that XX% of well an made pension remains about on sale dividend third XXXX, quarter in payout MDF the costs, Our Deltic contribution was excluding taxes we voluntary the on our

estate Capital expenditures, $XX.X statement. of development in amount expenditures were million cash which this million the included were quarter. second in from cash operations real Note in that our includes $X.X flow

the $XX be to million million expect to development total of for continue real that estate range expenditures, We including XXXX. capital $XX will in

some the be slide Harvest outlook are high quarter comments. The provide higher seasonally now quarter. third the presented to details compared North to I'll in second in are level volumes the XX. on expected

We to volume logs. slightly prices third the about seasonally on Northern higher in sawlog and due expect indexed to prices increase wider both quarter XX%

conditions. the quarter Harvest South volumes expected the third in significantly in increase assuming to dryer are

be sequentially. Southern prices expect to sawlog We flat

expect expect quarter. of lumber average lumber third million also board to XXX quarter quarter, third to second We flat ship million and to the in feet to be compared we prices the XXX

Real quarter on presented are XX. expectations slide our Estate third to for the Shifting

expect per acre. expectations call. sell $X,XXX the price approximately we sales of is Rural discussed acres for are to we that fourth the quarter XX,XXX now real For of an earnings estate to land development of average year, be the There on basis no estimated XX% rural to at XXXX of land changes the year. to XX%

Wood lower year. quarter earnings. on XX% estimate income of Regarding for that earnings is to the X% rate discussed This consolidated full XX% fourth taxes, the due down from call to the we we a Products

A Overall, and quarter to third than the the absence rural we seasonal harvest transactions increase offset slightly two expected quarter. in higher of volumes in second are adjusted closed quarter be EBITDDA. large expect higher second lumber we the to that EBITDDA shipments adjusted

Q&A. That concludes open I'd now to prepared our like call remarks. the to Michelle,

Operator

Collin Your James. from question first [Operator comes Instructions] Raymond from Mings

Your line is open.

Collin Mings

guys. morning Thanks. Good

Mike Covey

Good morning.

Eric Cremers

Good morning.

Collin Mings

me you've of recently. the fire and can harvest just, and from banned risk activity question First you campfires there looks potential discuss open It land on sort your like burning Idaho? in impact on

Eric Cremers

is Yeah, Collin. This Eric.

small We have fires. of had couple a

less up I far small three, acres more very plantation XX small this trees. a number one of had total all burned we've summer think or of type young so to

impact value whatsoever. no So, really

tell and drought where you greater. moderate. would got if West conditions fire overall some describe fire much in side, But rainfall the the as you risk we news, in like read drier conditions that is we because I much the in Idaho are them things June, there's

So we're there are other little shape that bit are a in here, stress. good more I a but think areas under generally pretty

Collin Mings

helpful That's Okay. detail.

reconcile kind some remarks. trying the and timberlands in of with prepared sticking the to comments Just of

quarter harvest were X.X year. this optimistic the I cost you million think at still cotton picking tons last

year-to-date out? to indicated that make prepared full to volume expect you some and some just just weather you Given But given just XQ factors volumes in do expect again the remarks year other XQ. shake of harvest where up

Eric Cremers

are XXX,XXX we we've to our and hit But QX we're harvest got There for be in got place the X plans and for us tons there expect QX a million ton X.X particularly targeting no challenge million in going to Yeah, team South, behind plan. to that is that good where the about we've doubt running range. a targets year. still we and are our down

Collin Mings

guidance then, for the Random completely touch the Lengths? been month but happening switching Okay. know, things fits and in quarter the of you Can XQ? tie on you here what's always that stands just in given where maybe Products. shipments to exactly currently, I to flat, relative And touch realization maybe where just lumber timing expecting one just you're into Wood with

Eric Cremers

two got months roughly Yes. maybe But in QX. QX we on I flat to quarter-to-date, down the prices the wound were, up say, just quarter. left for would still is finishing where finish where to touch. a expectation up about we're compared our quarter average We've

Our a We're encouraged the higher expectation to some higher seeing get is as move lumber. take orders those demand of things we start lot curtailment in into QX of hopefully, we for BC when announcements out and, we're the up from see effect by increasing that homebuilders.

hopefully, we higher get prices fourth into we So, quarter. as the see

Collin Mings

one just Appreciate I'll last Okay. one the it then turn over. detail there. And and

on Jerry, $XX thoughts just plans maturing any the Just balance debt the of and sheet, million -- for this that? around year updated

Jerry Richards

Yes.

said We end referring December more attractive in terms certainly have refinance off. that be curve, refinance flexibility rates, long to earlier gotten $XXX Collin, the even have obviously Board million of million to the Having whether matures either. And you're year. decision have pay that the is a or than do to, on to of this that, the what $XX it we will So X.

basis probably as here XX In down points we today XX-year fact, they're for about money. sit

particularly of say, on to needless So attractive, priorities looks a given we capital front. refinance allocation I other the think, have some

Collin Mings

you. I'll turn Thank Understood. Appreciate the color. all over. it

Jerry Richards

Thanks.

Operator

next comes Markets. Ketan BMO from Mamtora from Capital question The

line Your open. is

Ketan Mamtora

Good Hi. everyone. morning

reported guys drove First market Southern outperformed through log in strength? expectation what on about you saw that then, ease? the have prices kind Can along your broad what prices question, you you guys talk see move TimberMart-South. the or actually and prices of those as the will start started we as see lines quarter ease, into QX, to And you is to you

Eric Cremers

Yes.

starting we're Yellow We'll don't year. Pine are it to into So, QX. and ease by couple as we we kind in think of of back of that give half move see the, of is the prices $XX some a Southern different things here. of give going We to in of ton One range. back all we're prices kind up $XX, it, normalized QX the up sawlog call to

to log going be yes, In earlier little to we're large, a stumpage of response that bit by not TimberMart-South. deals inclusive and haul question, than is, are your TimberMart-South costs. always different and

that yet are whereas and what cut been future and cut is delivered is the wood what transactions there -- we quarter. delivered, also So and hasn't report in

So there's TimberMart-South. anomalies be going between us to always and small

Mike Covey

also I'd I'd market most was -- weather Ketan, that state in or Alabama that much Mississippi. the extraordinarily Mike, We change add Arkansas also wet the market. in all this is in of see impacted is probably South didn't by the

All in it was where many out were and of really conditions Arkansas, of logs. were logging many, mills poor

So that did I think elsewhere. we bigger Arkansas it's we jump expected a saw than in

Ketan Mamtora

Got how Mike. QX, does change South? hardwood we the move and And from Eric it. to Eric, helpful That's the as color, then, mix in QX

Eric Cremers

as move mix goes and up hardwood we into QX Well, QX. the

particularly from to you and year up we is this like we QX to QX balance, to less, harvest plans. We X% is in be wet are very in our really QX say, that, and a have expectation get or in hardwood to our year. QX, when X%, where X%, on hit little anywhere which, more production X% But need

Ketan Mamtora

Got it.

into South, in flat that higher does take Is for fair? in your So hardwood account QX mix. expectation that the being the

Eric Cremers

correct. that's Yes,

Ketan Mamtora

it. Got

Eric Cremers

that seeing higher is mix hardwood going offset Southern Pine. we're the Yellow that to of Some decline in

Ketan Mamtora

That's side, quantify in all QX, you capacity? lumber your And it. the that helpful. on projects did can the all how increased you that much lumber Got then,

Eric Cremers

project Well, an QX a not capacity in did project. grader. that expansion It was the we auto was

as a lumber it's automatically manually. grades the to So opposed that machine

and project. improvement yield great labor-reduction a is really that So

Ketan Mamtora

it. And Got one side. then see. last from my question just I

expenses does years? that out of rates We mortality that's kind are South the -- you all the seedlings accurate? of in hearing mean if if XXXX. planted in XXXX look and confirm reports of that you Have case higher we some seen higher next And of that as then were can actually the in the guys replanting if is it any couple

Eric Cremers

not that have Certainly, our would on it I heard I'm did expenses be of with of forward if any familiar any Ketan, going ground. on not happen Yes, our higher that replanting it but ground.

Ketan Mamtora

luck Understood. the Good That’s it. half Got the helpful. of back in very year.

Eric Cremers

Thanks.

Operator

from Merrill comes of Bank question from John next America Lynch. Babcock Your

open. is line Your

John Babcock

morning Good Hi. and afternoon.

wondering wanted if guess, the had to was Just start out, quantify you I tonnage you during could the from I downtime impact, quarter? the

Eric Cremers

sawmills -- are from talking you in or you... impact tonnage down about the The the

John Babcock

Yes, exactly.

the at Sorry, sawmills.

Eric Cremers

sure. under-shipped in Well, we for the quarter

million we went I feet. think up – XXX something

Our XXX. XXX plan to was

around But that was probably June, the XX make we is midpoint shortfalls have we days, question QX, logs, general those that than had -- like ran planned. conditions get feet. it XX warranted. had incremental longer installed of up project Usually What by when given interruptions in but can to you running particularly range. in plans into up have not really We overtime weak market we to your happening the million that capital overtime get in it lost get to was winds million get to of ran and to you when challenging us we answer market I power, we faced out operational to guess conditions we running

John Babcock

Got it.

to And -- so necessarily, in was there or not that play was essentially? there running of was just pull it really economic out there much catch-up kind to just -- confirm downtime

Eric Cremers

it if low at -- it given were logs. could saw inventory chosen make really incremental quarter took to a prices how produce up We given volume us sense run made prices didn't to But the not we to write-down had we No, you gotten harder. just in volume have have was we low for economic loss. the how could were

Mike Covey

market-related didn't the downtime we during quarter. take any John But

John Babcock

was quarter? wanted in lumber demand so seeing side, in of talk some I how question Thank next I far this you. is I could get mean so -- And orders if talked a And reports the you whether homebuilder you're about far also XQ? on Yes. wondering any the for sense then you to about but improvement

Eric Cremers

to found we're kind are rail quickly. dealer kind you pretty -- kind builder are capacity the field. our Industry limping bottom. which XX% wholesaler can in of in if it's the XX%, transportation a kind whether somewhere, there wood see a is range delivered issues you means in trucking, along I get be or of no utilization of and of or It's

sense low be is kind would other our environment. -- of hand-to-mouth inventories one on good hand of field that live but So is are the on can they this which news hand kind in

we capacity and demand So order files is a QX further in right that hope our this we're now. building into with with that really big homebuilders up out things will not improve. and frankly curtailments begin BC that pickup to our as in for QX these the seeing expectation get is announced But

John Babcock

just confirm for the And last full you if question. forecasting what land for real I wondering, the year then estate? you guys was just for basis could are

Mike Covey

Yes.

the So bear -- we land. with slides that in XX% to the for rural was for me of full me John, sales are XX% but here year let

John Babcock

all Okay. That’s you. I have. Thank

Operator

D.A. comes Chercover Davidson. Your from next from question Steven

Your line open. is

Steven Chercover

Thanks. Good everyone. morning,

thing just that low just take So reconcile will probably that relatively but I it curtailments through for perhaps the downtime field end wanted by first you lumber, work tension that you are also see believe its to market till one quarter you believe inventories quarter? actual for said way the fourth of Do snake you in the the and third to expect the said though. to

Eric Cremers

fourth Yes, kick and you'll those September really Steve I think they mean quarter it September. probably don't on start of announcements most curtailments October. to until I by in see the those closures and

are everything they've right October those But to opposite log market which rid September They're through time in got happening, in get should off is blown trying you will capacity think inventory. liquidating and are decks we to they're be capital. playing come right. trying frame the the and have that thing They working almost now you mills it, and liquidate BC up that So as their get and beneficial. their out of the exact

Steve Chercover

I could and what also is be how really understood I inventories, that reconciled that that a that's Yeah suppose but low field the with basically inventory they was regional just liquidating are wondering situation? I

Mike Covey

Yes.

Steve Chercover

Okay. unless side? switching QX I on another going we’re Well, that not massive gears rebid, correction, write-down the to a lumber just see we have inventory assume while

Jerry Richards

quarter. the inventory happens Yeah. are the market that a can't accounting something really it in I where forecast. write-downs, lower. that prices of to end comes the and are we be I Steve at happening our the think that given mean predict should or view position when conditions It's that's would improving that But odds of they

Mike Covey

our manufacturing And well. costs be in should third lower as quarter

Eric Cremers

to same, Yeah shipments fixed in much we I likelihood the we'll higher production a all write-down. have much had And costs. prices if if we not higher stay absorb have volumes, the -- think would

Steve Chercover

come curtailments end June underneath at lumber it, the When think interesting you to write-down announced it is put the because in were for bit many least of you a quarter? of of the kind of had that early that the

Jerry Richards

That's for Southern Western. true mill. not It's for

Steve Chercover

Got it.

that's difference. the Okay,

Eric Cremers

and them. of occurred at from prices be and low -- have very end it probably We or point come the had to that up we it in low and June having May quarter. to these happened Yeah, April do the the Steve It's this test write-down. had prices LCM wouldn't be just the

the we got That -- year. of the low burned for burdened So, of I got kind was lots too. other think by point manufacturers

Steve Chercover

it. Got

now switching gears. thought really, just I I have phenomenon. And am know I yeah, So, southern of more then it's should a

other it about the me if you its it makes the this, said and proximity than an or $XX,XXX land? I it or times think land five know for should this Deltic HBU I attribute to the but land southern to selling extraordinary like three merger, acre when Is Chenal Valley, timberlands since sound $X,XXX Forgive you're to value could average make more due stocking what levels Timberland.

Eric Cremers

$X,XXX average. program. Rock. are about merger Well, acre relatively the Steve, estate Those that didn't on to per acres Little proximate if you And talking go really an have back to Deltic here HBU aggressive we’re the is rural

And is off, not are major driving to This nonstrategic so that's far that's close timberlands So Metropolitan stuff what speak. area. that by I large relatively think value. and is to these

Mike Covey

not that to manage and are sides or extraordinary because land is it's XX that that It below timberland to uses, and from minutes rural that that average alternative recreation buying people Rock minutes it's with is stocked buy average want somebody hunting purposes. growing and whether it It's between poorly Downtown that's surprise. for drives fishing it's Little XX for or fairly

Steve Chercover

Okay.

garden it's HBU So although enhancing purposes, for as really all variety it's timberland? stratified just

Mike Covey

as $X,XXX between to would have continue not all XX,XXX an we west it's for to stratified we acre seven would times, felt timberland going five sell-through value that's it's that of we and do. characteristics, what Rock Little acres sell all but No, an -- it be somewhere and HBU of we it -- underlying felt land

Steve Chercover

of Great. there that review And or are but strategic the I a have ever if the was Valley portfolio, to family? Chenal any remain don't development, does your part in of glad know it core you

Mike Covey

real have homebuilders developing lots we our managing courses. core of never not That to is two selling estate in been to business. in development golf homes and residential lots build Well, and the to business terms

evaluated them think Having else and said somebody and ourselves not capital sense manage low to putting provide it or fairly that, And sell that it them whether and it's to attractive to recycle continues own and to and property risk sell returns. that develop it the we’re to manage continue into the we makes lots the adequate to or we've at it prices.

as it today. we business I a core So do think

Steve Chercover

Thank you.

Operator

comes Your Seaport next Global. question Mark from Weintraub from

Your line is open.

Mark Weintraub

you. Thank

so at of on so left? little understand west just those told guess up XX,XXX you I I year it little and over of Rock, point, you this following had assume a acres Is XX,XXX. got the of to I you XX,XXX right X,XXX First identified bit think said or acres you mentioned Little this a you that the lands

Eric Cremers

Yes.

of roughly Deltic. XXX,XXX that picked when what Of is and into are on XX,XXX to put so XX,XXX XX,XXX attribute acres, the put was forward. estate Mark timberlands, XX,XXX acres going value done to he XX,XXX that referred was bucket, those So real acres recreational was said from each put stratification into the up was going roughly a was into have HBU nonstrategic that Mike different we that the

have And we I X,XXX those -- closed, those fall we've sold the those excuse not acres since different -- three referenced. year-to-date me of into that just So different buckets sold but merger year-to-date, is acres. those

Mark Weintraub

Okay.

And so been it be XXXXX X,XXX the would the fair that in curiosity? bucket had that HBU

Eric Cremers

that Actually, was part the I of stratification. think not

that So was somebody us. approached actually

here So offer. and we would want thought from that made is us HBU and timberland approached standpoint they an nobody attractive us a very

So it kind surprised of us.

did So XX,XXX that we not come of acres referenced. I the out

Mark Weintraub

clearly, just that And make -- in the have Okay. more how much the sure would west the acre vicinity to of of understand Rock? be do how basically of stuff of I so acreage that parcel much X,XXX Little now -- you

Eric Cremers

in is XX,XXX Little Rock. west lot. a have It of maybe measured acres We of

Mark Weintraub

portion a that maybe -- then well it would And let Okay. of at be bit me differently. come a

long I or with mean got you you have sitting these are of that these reassessing early lands. surprise fashion potential judgment interest seen, an be with coming for been with you like in that? however you've to make optimistic a perhaps given the pleasant as somebody a up ownership here that now would properties So the

Eric Cremers

Yes.

surprised have very with opportunity I we pleasantly by think -- the that we've found estate real been here we Deltic.

but the closed deal to merger us These and didn't the year HBU it about real We took were and years shortly looking at our done, after get thinking restratifying. it acres surprised have even were are we think X.X acres always potential approached us. that one We yet.

will With willing after merger recognized there been hadn't all a that be highest previously. sudden, a a seller. of said, closed demand the There the that buyers because seller is the pent-up right willing

we're we are But seeing. and with what characterize puts say it, would to there's there. pleased So, I takes very

Mark Weintraub

Okay. first real of quickly. haven't original to come original the Shifting gears year. right the whole Is number, in had lot I million, believe might the that $XX half guidance million CapEx, still number spent On or lower? it the somewhat a been you $XX

Jerry Richards

right Mark. Yes is the the still number, original number

and $XX to million year. going it's the million $XX expect still we for be between So,

Mark Weintraub

sawlog higher the Okay. the Any of be indicated third magnitude the sense I any little chance additional help you of log you can get you Northern should that for index, know if a on quarter? bit pricing could provide? but

Eric Cremers

Yes.

the really favorably know, really to as be So are that issue. view you higher X% sawlog in to always prices for our improve there -- different change that move that QX Western There weight is lumber price. sawlogs. roughly QX roughly prices X% density prices think components of the drive to will X% two that to we there's quarter-over-quarter. That's lumber going increase And is going price

Mark Weintraub

it at Okay. that And might obviously quarter, pricing. of out happen more be be then coming optimistic would ago happened a lastly, least play had in you. retrospective interested as on just what you months last Great. Thank lumber think out? you the you would it of three lower had proved thought perspective many What us are to to significantly than where

Eric Cremers

is couple there's think disappointed a different Number year-to-date. housing there. of I factors one has

building the which amount houses we due first because half saw Now to excessive unprecedented? is year that builders of in rainfall affordable is that the that or of was

into you're Meritage Horton, back talking year. DR from new posting you're the or half rates that Lennar, Homes, behind over, about into and and mortgage of basis moving improved with XXX mean Pulte, the eight rolled it interest housing builders. We I due was KB orders back that's we these in and rainfall points seeing are market last months, really rates have to they are the starting to so to see sharply six and largely the quarters think us demand whether the MDC, now the come

demand half and think the with really rainfall for of with So, higher is we the housing prices. coupled of year kept coming hence in back, demand lack but rates the unprecedented lumber that down first

Mark Weintraub

not there a you than thought say playing would necessarily Thank inventory in a as or -- Was well role? is the you Okay. that was more had there channel you. significant

Eric Cremers

to sales to these live inventories hear the transportation inventories at remain with as their order as folks we inventories are think are dealers, what going going can they we we system about our to time in there system talked the files. builders in long Every These that are is levels. low hand-to-mouth they no low challenges relatively and are

run on And they're from with just inventory to here so going out. levels of low

Mark Weintraub

Okay. Thank you.

Mike Covey

been Mark concerns in marketplace side. crazy such the And been really with weather supply the on the hasn't year no events there worried it this about as supply has wildfires people or

what need hence phone So, to have just and people get pick the prices they flat. when up stayed unable

Mark Weintraub

you. Thank

Operator

question Chip Research. next from Vertical Dillon Your comes from

Your is line open.

Chip Dillon

Appreciate Jerry, very Mike the helpful. Good all morning. Yes. comments and

estate, looks million -- $XX being looking kind And year be it in that will real of it's lot question total. you million at to up First guide, like you around on the is the also sales inferred full going or in $XX if the quarter the the quarter it end on give what for you is or Slide could the how the in Is fourth third. third price basis the average have same fourth XX at vary quarter take it guidance as in all? like do

Mike Covey

lot quick QX be So, had And both remember mean that and think stay lot. kind of was I sales. should I guided real we XX,XXX basis around in it that in again, if should price, for per Chip, sales the XX% I average of around terms of for

Chip Dillon

right? third, which XX,XXX right. -- if be will All Okay I from down you got in And XX,XXX, said heard it. the you then

Mike Covey

Correct.

Chip Dillon

more hit million big Okay. was there the the and just XX or mean, know sale. you $XX you're XXs future, year into a this then looking to again guiding I in and going And low at came less I that range, to something

what that big, down of a and or million. noted per was $XX XXXX? million would think good I low be to of should placeholder be sort end $XX XXXX $XX you sale What it range expect? the almost for revert back you Should would it the that that million but exactly year how

Jerry Richards

Yes. you a too It's We fourth for typically XXXX. us, give when early give do quarter beyond Chip, the would guidance call. way to XXXX we

defer So, we'll to that.

Chip Dillon

Okay. in Products' And future those of about -- in thoughts stock put How point. area expansion there then a about mills. about see better lumber you Wood in an are recently your just saying you're Potlatch? a how and of felt Is you'd exited very years you I a have that of decent was amount timberlands we you -- are well-capitalized this MDF, -- terms the do CapEx recent footprint? expanding you that at business some any as but for clear know in investment have want to certainly your

Mike Covey

after guess Not No. the just we I quarter more-- had.

Chip Dillon

if talk also that well. the that a Is range going in to it in on you bit But as could stay answer. years? little XX% CapEx future Good about XX%,

Mike Covey

capacity mill to to infrastructure. to really that. merger, invest returns. a can No, one we that mills, in really return It of a play infrastructure that our mill. basis. with the Pine it percentage a We came the little good into continues had in modernizing the equipment Yellow and We mills of roll more year. to We to And point is have. over projects Waldo points we number add want our frankly continue to do We'll few an that the especially points will don't capacity bit a catch-up kind investments at provide higher each on bit. grow have this do, And of Southern on attractive Deltic a expand exceptionally standalone with output of capital any attractive mill a

Chip Dillon

assuming and million then Okay. And price? stock it should how know with quarter. thumb $XX me so that in then corporate let of in annually a that if is – forward finally, and again sort you're around what's sort And like third assume that, the worth about stock $XX go not in that? price to of how million to about number of then I of rule no we guiding change is think the good place moves expense

Jerry Richards

Yeah.

Chip noise. the year rate of a It price place have that So, clean a if doesn't a effect. without number, real will to that be of of in our of million run normal day's kind were $XX you a some before past. awards or will for in kind passed, big is million $XX changed used Stock in the equity-based years structure quarter we

it around might and see kind basis rounded bounce on So a the range, you it's slightly see not – corporate XX. you above between nine of in might

Chip Dillon

Okay. Thank you. All Got you. right.

Operator

Paul Capital Markets. from Quinn question next from The comes RBC

is Your line open.

Paul Quinn

much. very Good Thanks guys. Yeah. morning,

Jerry Richards

morning. Good

Mike Covey

Good morning

Paul Quinn

the – trying that Products was said CapEx only Wood taken like reiterated in, follow-up it grader side came downtime but it on looks auto Just a to half just the spend? that whether guidance, the year just the to $X.X that back this cost on understand CapEx the in understand one-timer expect QX. just you million trying that in am the or in rest I of with increase a of you've that's

Eric Cremers

Yeah.

to QX So the handful only QX. have with lose project going that that was QX and expect the in went in other projects those don't a are – that got production installed But any we installs. grader. in, do auto of in We

Paul Quinn

you not Okay. in Products interested Mike given growing quarter. that the I And the Wood commented business then, think too

on in you there appreciable you out mean, in had everybody business drop side what wondering, I of I out are Just quarter �� probably now? the you for kind seeing everybody in have kind mean seen M&A of ask right any sawmills are just the the whether difficulty.

drop for looking So mills? in you what seen people have a their are

Mike Covey

evidence times EBITDDA suspect substantiate to they in trade a We capacity down but trade market that. on or don't not I comment have EBITDDA able any to the at I is the if mills $XXX,XXX that to valuations six bit drag mean, anything. four on $XXX,XXX bring to we're going market be to to at

Paul Quinn

if just light. of And it marketplace years side, not timber flipping the Okay. couple are the like in seems three, then very Timberland of the to now amount that transactions over

the And you've is whether U.S.? that? between any Whether in different seen – you've Just different change change regions seen it does in in any it values?

Mike Covey

it, of part valuation hasn't the – gone down. has Well, certainly,

There's on as really are environment. doesn't really in to place XX,XXX in of selling couple very a numbers, had small fact, acre these lot that XX,XXX been the but the and chasing transactions aren't there's this range. much dollars taken West have one a South, strong market really, quiet. that the have In are been them just transactions lot the be to But are of There the some in It's for market. a in seem of strong. then that that there the been people

goes, valuation seemed as kind but holding to be of steady So she it's up.

Paul Quinn

Okay. And potential $XX then that refinance million, I the guess lastly saving? for Jerry that what's refinance the potential you if for

Jerry Richards

from I million mean, $X anywhere but are Yeah, you $X.X said, to million we could are that today's to quote, rate year. – a offer be going talking I Paul like

Paul Quinn

guys. That's I Thanks, had. Great. all Okay.

Jerry Richards

Thank you.

Operator

would Ketan from Mamtora from come question BMO Markets. next The Capital

open, is line Your

Ketan Mamtora

what you can are Just you I we seeing move Eric, If a up quarter half of remember last on. follow markets. cedar had provide correctly, the in you the the talked update as any into year? on about moving back pricing

Eric Cremers

Yes.

Ketan, In question. fact – good

like moving QX they are up and QX. starting being We feel We -- move prices in bottom are cedar are in fact it to up.

have or like get long year go higher. ways to they to they they We but we and where to were moving two ago, feel a bottomed do are

Ketan Mamtora

a way second to Is on where a quarter? even last there QX were prices year quantify Got it. to relative base

Eric Cremers

but out Ketan. of I'm just don't going off I know to produce my top dig data head. I that that can

Jerry Richards

That's one with follow Ketan. When up we can details. talk later I

Ketan Mamtora

fine. That's

can strong. then what last remodeling little about the that is we And Can you market? like the you suggesting about are is just you repair From market as and hearing probably seeing, some Okay. reports, a bit in seems market that how question. you are from what doing? not seeing It talk are talk different

Eric Cremers

Center largely studies I off own see Harvard's And we've -- about falling by it. here, that our for don't been feel and reports it those don't in Ketan been following I R&R frankly, Housing Joint we have anecdotally don't see I driven report. Yes. it, business markets

Our is roughly box up business X% year-over-year.

due look Depot have really their of introducing thing. others of for that R&R previously. kind that just good some proxies Lowe's Some at And market, and X% X% new of Home they to are Lennars up business are comps growing. which that the and we that products is if is to But just we

of really Ivy I Center Harvard's She for firm's Joint markets too. move that – the in does X% that, Joint report R&R and Housing over Studies just her view next good Zelman housing is studies her firm her she variety different a going challenges read up really to covering a -- year report. Harvard are job, to ways. view And X%

aligned not I'm we're sure that necessarily So with report. Harvard where

Ketan Mamtora

really that’s but it, Got it. back the of in appreciate really I year. Good half the helpful. luck

Eric Cremers

Thanks.

Operator

the closing remarks. time, call this now back I am to questions no showing I there are will the in queue. over more for Richards At Jerry turn

Jerry Richards

everybody I also And taking morning. you, a participate the interest Thank Michelle. time day. detailed want to to for this thank PotlatchDeltic any modeling and on questions right. in great available for everybody hope All your has call Be and

Operator

today's This you, conclude Thank conference everyone. call. will

disconnect. now may You

PotlatchDeltic (PCH) 30 Jul 192019 Q2 Earnings call transcript