PCH - Earnings call transcript Q3 2019 | PotlatchDeltic Corporation

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Operator

Good morning. My name is Lindsay and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Third 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. Instructions]. [Operator

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

Jerry Richards

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

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

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

Mike Covey

morning. Thanks, Jerry, and good

adjusted We reflects persisted is business. than about XX% lower EBITDDA than outlook Having shipping million wood quarter. quarter longer third XXXX modestly improved records. $XX EBITDDA results production third This generated that in have almost the said lumber remain quarterly quarter, the prices expected. of adjusted and of We our the optimistic any products in this weak segment this and that, for set of and us lumber the

kilns St. recently dry remains kiln at on continuous new of replacement completed sawmill. five finished Maries, We our project capital two installation Idaho batch sawmill well. new and products Wood kilns a as track to elevated own complete our plan of dry with Arkansas its at

at stacker rest a the sawmill. of include for green Notable Arkansas and spur expanded rail Waldo, year our projects the

in improved we this spend benefits realization. of capital and reminder, projects capacity million are segment $XX just grade a under the to these of primary in expanded plan XXXX; As

the track October Idaho meet Spring volume in of of Timberlands, this entered mentioned that higher expect with than the because the breakout for inventories. year customers we the Log our we our shifted through full-year. prior half on and to are region normal harvest the volume log on we year In Idaho some calls period second deliveries to

our By of harvest in Arkansas, operating we to have ability sawlog the increase to corner short the the double Arkansas line log Mississippi pine Southern to areas caused constrained was our fall low mill first land the harvest particularly now contrast, to and The volumes Rainfall year, year. levels Delta. our prices half Southeastern in this supply the resulting in normal restricted close shortages we which of sawlogs expect of to highs. XX-year where

non-industrial quarter, of operating and log now resulted prices in overwhelming are on planned mill high improved ultimately to normal the to As the supply back an to decks limited full. an inventories. of log harvest and decline advantage third response sawlog seen logging conditions we in to have year, catch-up attractive prices. by our landowners pine the led We've was mill given shortage the contractors This now for there acute take opportunities

is situation Arkansas. with and this unique this that unprecedented to in rainfall believe We year the

levels We to return expect normal higher harvest our levels in XXXX. to

our positive prices offset lower the EBITDDA. sawlog have the a Southern Southern higher effect volumes year expected On this harvest note, of on than Timberland's

Deltic adjusted strong done segment pace EBITDDA Timberlands. on Real rural executing particularly exceed This good sales land the and identifying has segment by Estate to from been is million. and on Legacy approximately sourced performance a year $XX has job this planned its

new starts. A XXXX translating year by increase single higher is Spring by housing building meaningful continue market we this to approach in Looking orders expect we and be U.S. improve fundamentals, as we family forward, housing lumber homebuilders to into season. reported encouraged prices earlier the

has starts units. U.S. times were starts unit. lumber family September was evidence This level single unit where permits XX% approximately at important that as is increased increased highest or row building starts. the multifamily second above Further sentiment orders strong the a month a housing new XXXX. family the three row level improving third is large XXX,XXX four as are single for Homebuilder have about months in above in the uses current new And since a of early include reported quarter. homebuilders

level of level to have has a normal housing recessions. current The typical that recovered starts only in been U.S.

under built cohort just who Millennials the the We as expect Buying exacerbated starting units. are are largest be prime enter Home situation demographic that to will the

not fourth because until be through XXXX to PotlatchDeltic it time from lumber of estimated to for the curtailment of is several takes affected would quarter these or shipments lumber the their capacity are have over has inventories. the It decisions to these been supply. our well-positioned the recovery X feet in felt that of effect which in closure lumber prices. be work log on aggregate. announcements, middles Turning to full There been view board billion benefit

sheet first of the in value. any months did Our shares to quarter. third remains the We provides $XXX the nine flexibility shareholders XXXX. balance to shareholder and million in returned grow strong purchase We not

which trade we our the first the XX% we of year. repurchase average above a asset to the still price price While at value, discount half shares stock net is at in

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

Jerry Richards

Mike. Thanks

fact in the by acres third total X third quarter. of The in the estate with increase compared harvest land fewer quarter. is adjusted seasonally EBITDDA primarily that million due $XX slides, sequential quarter Starting rural EBITDDA higher lumber the real $XX partially higher was of the in in volumes second and to sold offset to Page the million shipments,

segments This tons the displayed harvested was quarter. results. compared through now tons third up more quarter. XXX,XXX EBITDDA we to Information our third the of adjusted color will seasonally for is second Timberland quarter. X each sawlogs segment’s million and harvested from review I our in third The million the in north segment second X. on was Slides the quarter in provide the in $XX We the operating of quarter in $XX.X XXX,XXX that on

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

In our in the touched shortfall. our tons catch-up the constrained X that South, million than harvest Mike we quarter third the than half mill higher in inventories The quarter to harvest on planned. ability on first lower log was normal the

increased resulted supply $X in prices year. million into months effect the carried of positive pine peak and their much at weather as wet third first as adjusted quarter a logs. for on have the The sawlog Our of the elevated prices XX% constrained EBITDA as extraordinarily nine the

fourth the Southern pine dropped sawlog back to longer-term averages prices have entering quarter.

on second which effect and relative Slides $X.X on was per of quarter. adjusted Products the log to Wood in margins. EBITDDA to improved a is million X X, basis weaker Lower in million $X.X third the resulted offset quarter. and manufacturing Turning improvement lumber of an prices, unit This costs the than more

of the our and track segments approximately mentioned, ship Mike As quarter. board in Wood billion full-year. production X.X to Product for third the lumber feet set shipping on We're lumber records

compared EBITDDA adjusted third Real the quarter. to in the quarter to second Estate Slides $XX.X $XX.X segment’s on Turning in million million was XX, and XX the

million commercial acre. the As of sale in quarter, of The for a we the two Chenal per $X closed Former closed rural $XX,XXX the Deltic in segment sale Valley reminder, large sales including current property Timberlands quarter. last

loan will million financial XX, to term We cash. November are refinance to XXXX in Slide fourth effectively quarter items $XX the plan the in Shifting on mature $XX the which loan summarized and the quarter. mature scheduled have locked new with ended we we million The rate. of to

the be to savings relative variable Interest loan. term rate modest will on the existing

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

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

I'll quarter Harvest are the compared the are presented seasonally XX. the volumes quarter. to be lower Slide to outlook third in comments; on details high now provide fourth the in some north expected level

Northern decrease sawlog quarter in seasonally the heavier primarily logs. modestly expect We fourth to prices to due

higher the not enough annual the plan. than be the harvest to our volumes to be fourth relative While the in up shortfall South quarter, will quarter it in make to third anticipated are

short result, a we Southern plan this normal As tons and believe of that year, higher return will to more XXX,XXX fall harvest XXXX. about volumes in levels

be We comprised to about expect pulpwood. the shortfall XX% and sawlogs of XX%

lower a slightly sawlog be quarter to We mix and seasonally sawlogs. of prices in prices hardwood prime due expect Southern sawlog the lower fourth to lower

XXX in lumber compared ship We be to the expect board to quarter average prices quarter. third million to and the quarter approximately of lumber feet fourth fourth flat

approximately adjusted X,XXX Chenal will lower and activity. in of quarter. estimate quarter in to the Estate, wrap expected estate Overall, a up strong land volumes lower a year selling real fourth Real EBITDDA and to Valley to third segment Shifting fourth decrease by than sales due that harvest rural seasonal is lots quarter total the we be XX acres

I the now open like prepared would our concludes Q&A. remarks. to to Lindsay, That call

Operator

[Operator Instructions].

from Our with Bank of John Merrill first Lynch. Babcock question comes America

is now Your line open.

John Babcock

Hey, good morning - afternoon.

the the next kind some year? the how Just half impact volumes the out from Potlatch’s harvest of also third carryover in over want the and out quarter happened pullback couple what quarters start you're to plans for in as does looking obviously first of

Jerry Richards

that plan guidance that we is Well, in the is that over we supplemental the and established next already that quarters, put couple QX our materials for of out. have

that Mike plan Next somewhere year, our in million is for tons current zip X, our year, acreage harvest in comments, code. per as X mentioned, his X.X, roughly

yet We year. plan for have developed our not operating formal next

be but plan to operating to get numbers, that want to don't expect I back year. So that to committed those next we

John Babcock

of it you. wondering kind bit And like the little you drove what bit a an thank uptick during sounds I some guess, prices, the that? little And just also then of sawlog the market, for lower you I on next, while quarter, period see or up a for was saw kind Okay, kind of prices there is new of around you of roaming come ticking that kind time? sawlog Southern start do this expected suppliers potential level any a to of into

Jerry Richards

talk different to the is South. and prices reasons our we here. north, in X% about the in rise sawlog north region. two the in One northern clearly is saw one there is Yes, the So a

to that Some prices, higher was random due the lumber quarter-over-quarter. up X% lengths was of

And north. factor. a weight the prices then role our we sawlog So that played in the have also higher in

Our logs on basis, volume ton and is QX same even a are move a will drier the in up are so per than ton on pricing though basis, the in QX, per they favorably.

So sawlog about of in prices. overall the X% X% contributed northern change that

the QX compared X% was year. hardwood to different in in This to going this South. It's we QX. X% of little just the South in get QX hardwoods mix more year So a bit our in

we Mike And in south. So had weather QX, back did the were onward also that rolled positive prices uplift and really to sawlog and prices QX have mentioned, strong gotten since But down, effect, that as into provide QX. more and over levels. to normal continued wet in spillover they they

$XX, Yellow So that the we're down ton now $XX for back helpful? pine. Is to Southern a

John Babcock

or or the this into specific? the kind think question and was point, mill And Yes, on things. next then is balance? I first supply more mentioned, that is curtailments side foresee getting that at board of of America number lumber all, that is of North confirm of billion market do was do is more that kind you X really question region guess you next then actually. that was across demand further And just the feet you that just

Jerry Richards

that Well, a down. not the on lot there's but And number also so of in mills really the kind far. X that's BC from is happened have it's there's it's up that just BC side billion of is closed west -- the

GP or think a Simpson three of no companies curtailments. had those reported issue. I closures mill all Swanson, have

that seen idle, You've to the in mill Conifex down, I is the GP Carolina in they're South think Rex mill Lumber just South. also the pullback announced idling. over is going a

than of feet the total some that and all probably number permanently as is X, it is board really is some is billion of it could high higher two, So curtailed. closed just X.X be as

John Babcock

curtailments mill further of here? kind for expectation from an And Okay.

Jerry Richards

say all pricing. it's it Yes, depends to hard on

industry out. washed already I worst the in think have mills the

really As to expect I'm languish. could hearing are prices Who would right move Canada happen prices up, less curtailment. now. rumors knows I that something But there. mills continue Eastern suffering in good

happens going just depends what it pricing really to So forward. on

John Babcock

under you then if And before of inventories turn could on last lumber great. chain Okay, kind comment -- the over, just question inventories it Thanks. I to grade?

Jerry Richards

place the couple fact lumber ourselves. don't of so we ago, inventory, it's highlight are to weeks with anecdotal, wood inventories, It's a low levels call of seem Yes, operating they see pundit live had webinar, I can particularly the that they delivered hear what throughout reports, environment, we short phone pretty we our a track channel. what in when levels this know very in from FDA them on found to Customers notice. low get have lumber don't customers, way inventories and a

industry that low So be of posture operating they've inventories. is may with a just the learned more run permanent

Operator

next from Ketan BMO Our Markets. Mamtora question Capital comes with

Your line is open. now

Ketan Mamtora

Good you. everyone. Thank afternoon,

we outbreak seeing more you signs of Europe? seeing First are lumber seeing some are question Europe on beetle are you parts that of U.S. coming into the from this -- more in

Jerry Richards

they other Ketan No, like from Central about down Europe. imports year-to-date, think those X%. are you I X%, I've countries into lot in Canada, U.S., frankly, if at a the issue heard And the think look beetle I than

the of the not in the be data. in would this some So wide overall it's but we're industry it's up it U.S. heard like shores. may not that I've up flood anecdotally, Northeast, showing certainly showing a seeing hit

Mike Covey

is, wood parts it of in both lot evidence flowing there's Asia. to think is particularly the of But a world I that other

Jerry Richards

Yes, particularly China.

Ketan Mamtora

seems what Got [indiscernible] Southern grades a pressure. okay. driving wider Yellow grades do mean mean under I What not I pressure, also, then Pine think lumber, but the is lot have is some wider more that? driving you it these come a it's is turning have under grades of it, lot been of And come that? to like

Jerry Richards

say, I'm sorry, wider did you -- which

Ketan Mamtora

grades. Wider

Jerry Richards

the wides is right that a Southern wides under things. so were kind in out. a is Yes, pressure region different Ketan lot of that and yes, it's of rain moved One now couple --

to more So now to tend elevation bigger produce stands trees, be they lower line accessible, those are tend the wides.

come will. So first they back meaningful won't South ready then the market a mix when back of until next the wides. from has increased their number you're begin you But season, also say quarter They treaters number a off getting of seasonally deck overall building one, the in for kind at the purchases. of into year year two, time to way if where

So it's a is it just -- lot weakness. of seasonal just

Ketan Mamtora

And helpful. as just the that's then lot markets, to come it, well. they've pressure a Got turning hardwood under of lumber

for you Now, talk you opportunities implications you whether it remind and mix. sort you about are creates of can kind hardwood what seeing of And if much owners just hardwood have guys just me any guys? for you can timber your how of kind and in

Mike Covey

lot hardwood lumber China. has lumber Well, yes, business so the hardwood, and a boat pressure the a hardwood on was that lot a come previously of on of to

have So lumber those tariffs really hardwood gotten exports. a number on

is X% a X% hardwood overall know volume, mix range. going this than Southern our it be Our year to kind lower in be, be of who might to would normally like normally of is the knows it roughly harvest I that's XX%

So is once will exports certainly for less hardwood. is think will and demand But issue prices not we continue tariff resolved, the good those firm-up.

Ketan Mamtora

markets? side Got kind seeing from in And my Timberland one activity the last just of of terms in you're it. then what

Mike Covey

year, this quiet XX,XXX but XX,XXX are a in be seems of it's Most a volume. no or timber, been the we steady to held line TMOs relatively price lot can kind sales the change see. acre from of Prices not Michigan range. year. the REITs executed landowners activity from but size of other up and or have what lot a transaction, large it's been than Ketan, private to by warehouses not things Well, with small to There

Operator

Raymond Our next James. question Mings from Collin with comes

is Your line now open.

Collin Mings

for just factors your relative just actually maybe segment, Wood XQ. First you question can the commentary to stand and positive the going of lumber with just realizations expect quarter-to-date kind to for trying your to update dynamics where to expand more reconcile I'm the here? supply/demand us Maybe bit of pricing. you flat guidance me on Products back on some just a outlook leading slide that little on

Jerry Richards

is Collin very Yes, two. so where modestly a down we're percent quarter-to-date, slightly, are or at we

timbers, grade bit seasonal is like factors economy not product timbers, more pressure. Things is working have under fair mix weakness of Our are to in now. a skewed right that we

So kind quarter-to-date. we're slightly down of

starting flat just to the things firm couple week feels like in does things talking up It is us or so, to better. the are sales expectation here feel percent. are to like force. Our maybe to a even getting It last

but crosscurrents maybe a little bit feels getting taking it bottomed like here things to there's place just So have better.

Mike Covey

prices would information that Collin, very just largely that have and lumber skewed which Southern And participated also, not I about add are in headline of Yellow has party towards the Pine SPF, quite strong, been kind much.

Jerry Richards

is a to lot disconnect you're XX between than that markets higher XX to which other to of futures, futures, what that add Collin hearing a big bucks there's where is which thing about today. cash big, the lumber are are Well,

are in December future, whether wood to be time -- those January it's into or or point a Now, a at delivered futures at February. the

have to either going going come to So, cash are something's come prices down or to got prices are futures happen, have to to up.

Mike Covey

especially know Pine to of be. The used is to thing of Yellow kind company Southern we going other that since than merger is more Collin a we're the forward;

it to used So more us matters than to. it

Collin Mings

helpful all very that’s Okay, guys. color there

segment of Just have again formal ago non-maintenance efficient. about mills lot any for update your thinking going cost months XXXX at relative lowering and you structure years providing to kind you're and just Wood given of last into XX Products But juncture. sticking spent Products obviously, more maybe capital the your clearly just couple pricing on now this over a making kind the us recognizing reset of on with aren’t the further how you Wood guidance just

the going get relative thinking to that to couple years? a you're trying just forward, of So how about sense last of

Jerry Richards

in have year. next Products, I we're projects put Collin our you couple yet can for they're going to not -- put at us. Maries we're early new are first And new year. it's order operation a a St. stacker be highlighted and going also We're so Wood Those meaningful of half do in for next pieces sawmill. our of to delivered of equipment on at sawmill. we Yes, our Holder a to plan on generating in done debarking

premature because just we're I us those, don't to comment two really to it's for So beyond those committed know.

Mike Covey

The we've our pointed about with I think capital we in uptick better lumber a dry business. should year, trends that look production next of at And we kilns. see X%. one which production work more here thing encouraged range lot Wood positive year, are to will more be is those this meaningful capacity it's today, done And a year, the I sit for probably the our so X% in next as of markets we for we think Collin Products

Collin Mings

there earlier as an Helpful allocation well. Timberland of then kind maybe And question sticking the and just capital just on on following-up with market.

stock just bolt-on out maybe on start was that disconnect where here pretty the for update the to was to us there clearly best shares, acquisitions compared between the Mike, Just adamant given year. price the opportunity you're to appetite the just repurchase your XQ, a about the that been NAV transaction but again shares in to the whole? market on maybe talk acquisitions, just quieter there any as you a point a obviously the just little maybe it's didn't year buy more appetite bit for

Mike Covey

seen we up shares. the stock have of since We year our purchased when think the I first nice XX% movement on a price, half

what buying relative first in our Timberlands -- our half has attractiveness price the the to stock was the year. So of of improved

attractive repurchase in think months we So more is returned capital last it attractive bolt-on think not XX deals, a we've We've lot so. always stock in they're it as was. the even opportunity. been shareholders and as about or I now And probably as the to of interested small opportunistically

the plan. our and did $XX complete to the purge repurchase, of pension Both in dividend merger. form we a E&P the to We contributed million stock the

powder dry where year. the the we bolt-on the here I sit So in half today, think acquisitions higher than priorities as we some left. stack it's been would And of rise still first in have of

Jerry Richards

it it’s million, of And came in purchased deal, not XX/XX million, Collin states, around was our rate we $X benefits. with but tax one it's with that just it’s to just It of consummated land, recently highlight discount operating a area. X.X%. our It a its transaction a in big $X Southern

we M&A activity. look earn can we'll for on our returns that So outsized opportunities where like

Operator

question with from next comes Our Research. Vertical Chip Dillon

now is line Your open.

Chip Dillon

with morning, could do out about Hi, market sales XXXX the year estate update next to year and unfold? the and And segment. you And next all for and Thank had those have think if we how year. have look on sales the and modeling the do left? a good blocks think and planned assume as you My more afternoon. could still that year in than we you see obviously we to through real us think secondly, And separate on this with question land you how details. flow you How number about will earlier year ended you has main decent XXXX then, of the note, for should you that we a if after? up

Mike Covey

about sales. lumpy. will said I going since We've of lot Timberland premium underlying merger, that what for merger, Well Chip has roughly its Eric acres be the a the and and part year and an first we a that talk to that's kind we're is, the obviously take going can to XX,XXX land attractive sell since value really, to to the prior

higher, from where but expect a change today. lower, that Some in sit years to be are I any be we going will don't some slightly bit

diligence. kind has we the gems of real rural been that a more sale One opportunity and land suitable at what higher larger did with than prices acres our are the Deltic expected, due of out merger when of we

about think to Chenal. will encouraged I we're So I let sales Eric speak lot that. and the

Eric Cremers

Yes.

Chenal size on so community recall as sold. X,XXX of X,XXX So Of the X,XXX, development lots. Chip regarding may you total lot have with master been plan sales,

sell going Chenal. we're about to about in lots we remaining. a typical In X,XXX So XXX have year, yet

for pricing math, see time had sure be Chenal; to there's what just recessionary I'm demand be will there we'll year is ahead XX a where business. about for year simple that of and low-end XX, So the But and you be is would of year in of strong of there the when our optimistic periods do going kind periods it's that if coming planned about the time we type lots on that. we're of in of runway.

Mike Covey

land There's total but nice think exactly continue to is, that's also we'll in get very be commercial Chenal of kind sure we I residential in there XXX acres or the so. area rooftops what going that put demand space to, Valley go the plot just is Not Valley established going more lumpy so of retail to hand-in-hand. course. of Chenal But as commercial more on that'll a and

Eric Cremers

mean that so that price Yes, acreage, although there's really That to commercial similar business at lumpy, shifts has I acres residential, start, sticker the nice remaining. it. it's there's XXX it XXX acres and commercial a to about

So $XXX,XXX that in that's acre. Chenal acres commercial for million QX generated was the $X six so in that in per we

And very is I business. for Chenal Mike a going going are that assure pipeline, it's is in to got more you, demand that land built more increase like and said, commercial gets lumpy the the the more we've out, -- but commercial to there's can deals more,

Chip Dillon

on the is that kind for property, what XXX,XXX or of what who's lands? kind what's or shopping And that, for in of going retail -- on that buying type those of -- malls

Jerry Richards

Rock, Yes, restaurants, school, to there’s above of manufacturer, Little Arkansas. in hotels, runs mean, was there’s place -- kind church, multifamily this the banks, and is the the a all it’s it’s live gamut. I a it's a its it there

Chip Dillon

you, got you. Got

concerned either timber you ones shut And just sales that any effort. note, little Are just mills separate Okay, -- that's super are to down your about bit coming that are on follow-up have the been helpful. that starting there a about back impact new the or then about private Arkansas, then out? where see in in up prices, next that kind you guess owners as I if concerned you year in another are jump guys a let's or you say two? And side situation could Southern crowd the you another of a note,

Jerry Richards

what happened That frankly So the did little a that's a the gate year into really, in guard. really out. place yes, surprised XXs. caught wood, off that, mean prices of to because We come of lot was in landowner stimulated hardwoods I a a wood QX non-industrial very were really what normally dries by get private to bit is us after when up market. QX unusual, when spike low happened -- time we

contractor prices I I But to QX pine Southern $XX, back that capacity already this where $XX logs ton expect high. Southern really I the back in so kind expect And Pine of in they mean, were pre-XXXX to were, to happen seeing again. things were we're down Yellow not was Yellow go to range. to us because where available prices normal. don't

see I Conifex mill And question earlier the is up wouldn't your think that's regarding the again, if on the there's down They startups there, it dramatically in change start going nothing prices. equation, Eldorado mill that I again. now. horizon to could up see back you big But in a did right move back start sawlog

Chip Dillon

Okay, great.

Mike Covey

mill got We've Southern The construction at Talladega Alabama. GP area where companies Westervelt started one in we got Alabama. new in the have a and got the most is optimism a Chip under

be the that is that little to going the market rest than South sooner. of a So tighter

Chip Dillon

Okay. right? And Alabama, Southern that’s

Mike Covey

Westervelt more GP Southwest and Northeastern the the Alabama for Talladega is of Alabama. corner is Well in location the Thomasville

Operator

question with Global. comes Mark Our Weintraub Seaport next from

open. now is line Your

Mark Weintraub

you. Thank

was strength the like largely the getting or been you Were you it's Estate because have anticipated? better pricing were it of where strong. looks quite forward on question business than actually First also you Real would selling

Jerry Richards

mining XXXX. came us that No, a particular to I in there. mean, had that And know just in these in naturally large was Minnesota, we company are since together buy mining transaction, deals this $X we the had million were option selling sale a particular quarter. where an third with company I that transaction land don't from forward. One that

progressed, as to fruition show to $XXX,XXX, trade conservation year more X,XXX to acres. those And per needed $XXX,XXX project paying have been acres about that the to they've optimistic to us they ground. state and their the and buy getting to have And they're project coming more to mining option their has

this So of was came matter was unusual there. there just naturally it really was a together and regarding nothing timing, nothing

Mark Weintraub

originally misunderstood that initial Okay, in I anticipated. sold noted had part Was than the misinterpreting was the in that? was you'd your that thought as you strong. was market I maybe acreage because I part that comments higher thought I

Jerry Richards

in definitely think QX for selling acres together came we is planning were strong. No, I in acres these just rural and on the QX, market it

stock be But business QX a got transaction pretty levels; got confidence we market consumer in low You at QX. high. is in very levels is in the strong. and high to plan unemployment execute did you've the The generally general executed at

Mark Weintraub

surprise Okay, much region farmer had wood as to much up you. to back as gone the question Southern that market to came just came Was there to sawlogs that pricing in for so was responded third the or it on stronger in wood And quarter? the thank coming that pricing? this that the out was that you that

Jerry Richards

of very rain started it think the it first of year was think mean, QX, into bit both. Arkansas, actually we in continued I I but on half blue the Storm July. a Tropical little and I the through

for So led log unprecedented to was higher And unprecedented prices. a prices. rainfall storm just perfect it

elevation harvest I think we we market. ground. were of gatewood higher gatewood on were a was to what ground, And was surprised it at our by trying than the that on to quickly amount that came

at water, that property lower So Southeast whereas go of contractors could not because could higher in the Southwest, relatively was elevation a go Arkansas, elevation land was work gatewood contractors speaking work. on onto that our corner

Mark Weintraub

one thing sawlogs in lastly, is guys Okay. South. then of a And are important to you buyer it’s net the obviously recognize

in on your et to ways between profitability Southern the it mix spread affect is are sawlog where we or by drive time where about is in impact period? that see just really -- lumber Does that cetera. that's your overall a going Now pricing is, pricing or a -- region shifts when profitability given and in where

Mike Covey

or and and week-to-week made the more The flows one but ebbs kind mix and prices, that's spread of between feature month-to-month attractive. which still point important the latter. that the you is is latter the It’s log lumber

Operator

Our next question with comes from Paul Capital RBC Markets. Quinn

line is Your open. now

Paul Quinn

here we Thanks should or I billion good kind on morning very much. guess the on $X.X XXXX? afternoon that congratulations Is board modeling what Wood of record number? to Good or be a I production Products, lumber in start foot for you guys. guess

Eric Cremers

earlier. Yes, No, it’s alluded so Mike it Paul, think Eric. I to

get the next we in record say it's I good volumes guidance another production X% the is early, about our and X% making. in X% out I of to back increase have on giving We track although year, think we're certainly of suggests our a And mills. yet math not envelope would year, every that, got higher that here

Paul Quinn

then would And put terms in a of of done to do got how what the more of thumb given next margin improvement, you you've intend the Okay. margin on and that year? CapEx in that this much year you've CapEx sort be rule

Eric Cremers

lowest would a the all reiterate we've question XX% capital from for highest projects, develop a is in mills, I'm is of to to I returns Well, that's IRR, XX%. difficult projects we've the answer that got at our piece year. one plans next paper, really that one done our looking anywhere large the

quick are four projects three, paybacks these of with all them. year So kind attached to

Paul Quinn

you feel the Then estate, real number current Estate I'm but a shifting years to Okay. is about question, just on in going the Real glomming and next just do how of strong strength over forward? just prior guess the I just sustainable

Eric Cremers

I sell, as Yes, thousand But the acreage year. given being about and to XXX too around got acres we said, we a sell to far hard a right intend Mike everybody It’s XX,XXX corner. that that talks recession some rural about we out, predict acres, do. still

Chenal, good XX at of of commercial that a I at So logs got years XX runway acres that's years acres. XX left at plenty those Chenal got left of worth current a we've well. to Chenal logs XX-year pace we’ve our worth or And is with talked and as about

if don't anytime except estate a real there's So soon, down I recession. really see slowing

Operator

Our from with D.A. Yinger comes Kurt next Davidson. question

is open. now line Your

Kurt Yinger

Yes. everyone. Good morning,

versus we to to Just how you then where there, creep to And capacity? to put work of capacity come in you keep need growing annual really Wood over how capital that that a the do on if compare need base were about does Products, about to capital expect think think the to XXXX? kind

Mike Covey

spending plans the There's projects plan mills. a company. merger of that were Well, was There the elevated at We capital our first, pent-up no number Deltic. which second that doubt had to in with our I'll capital take us capital XXXX. question And those elevate for is completed caused just an plans. XXXX

come down to developing plans to So yet, in haven't ultimately capital down. finished come XXXX we expect I it's our think would going although do that I plans

as So as your can, run capacity. projects variable And long have industry we continue other attractive as margin. sense question capacity. good way do That's it's as was the in long we as We to expand returns makes find to hard regarding as our it. most the with mills, people it margin, variable you where can

our answer Does are attractive we we hard -- continue we projects. on think as assuming as mills can plans push question to your our can, find to I that capacity? So

Kurt Yinger

lastly, And or EBITDDA target about just it there color helpful? a versus any but you maybe different That's approach going a different be how really this year then, is absolutely. be to guys from range perhaps way, do leverage an in think helpful. you Yes, would obviously, XXXX perspective

Jerry Richards

You bet, Kurt.

So this is Jerry Richards.

And within leverage, look is four as would a typically times, target. XXXX terms certainly that leverage what still in we conservative around of talk we're balance I at that lower we So of with the as target EBITDDA describe target. about EBITDDA, of somewhere kind a even

Operator

time, no I’m call will back are to this turn showing there now more Richards. Jerry I questions. the At over

Jerry Richards

day, All for detailed a you, participation in right, and be has in and of appreciate the rest everybody's questions your I'll certainly Lindsay, hope the good the available call. modeling the and interest everybody day. thank PotlatchDeltic

Operator

call. today's concludes This conference

may You now disconnect.

PotlatchDeltic (PCH) 29 Oct 192019 Q3 Earnings call transcript