PCH - Earnings call transcript Q1 2020 | PotlatchDeltic Corporation

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Operator

Good morning. My name is David and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic First Quarter 2020 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

in PotlatchDeltic's line. Good morning Mike Chairman us The Officer President three Chief and are quarter Cremers, dialing earnings Officer; Eric Chief conference of Covey, and first separately. Executive and and call. XXXX also to welcome Operating on are the

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 first call cover our for Mike then results will turn and outlook. comments. quarter to I'll our I now

Mike Covey

had to attention in especially activity protect Thank strong our and of I our due continue mid-March important pandemic you, pandemic. is to to how in response the health our outline first from where the compared was explaining each adjusting which business businesses, want to now safety minutes some safety and health of slowdown strong and to three COVID take as given very and company our and Jerry. market in business with Products a our results particular top both million All needs EBITDA time and few operationally It was came on employees financially. Wood the the quarter, focused we I'll customer plans began of almost our contend priority. stands XXXX. weekly our results QX conditions, which workforce. also forward-looking spend encouraging We results COVID in improved to the today, in to should the to operating significantly in $XX is QX the

change going position will defeat to forward America operations the a and how and as virus may comments few our about work. make continues progress I Finally, financial to returns

have in to an to understand full and that important our business we deemed conditions been issued that essential of market First where each allow. state at it’s businesses operate we capacity stay home plan orders every

many are of shift two we basis on operating good adding On locations we have sawmills at curtailed our and some operations Saint plywood we furniture Today the our vehicle all used industrial specialty in positive where a Maries, Idaho, at shut recreational our in of April April. down overtime is and demand forced XXth stay to plywood and the industries product and manufacture plant margins. boat, grade customers and orders we home in

expect return announcements. many definitive work these although there in been of to to have customers no May, early We

of will be anticipate week earliest. restart our when we which we the We XXth have the will at orders, plywood enough mill May

volume to continues tornadoes full the in business downtime numerous sawlog have the South nearly the of and of and do the the timberland XXth operate making anticipate back string of for at April not half related due and to capacity. quarter year. second our pulpwood back COVID the a powerful Our With to we in scaled some up mill on closures pandemic deliveries

price little is growth harvest levels. our defer relatively trees biological the can we the Sawlog expected future. quarter-over-quarter change of from with markets the capture Southern in Fortunately, and all pricing across flat QX

We on logging -- and since planned mid have mode as will we'll in February in Idaho a Xth. commence breakup been May spring

planned log All deliveries are expected Idaho in as to customers accept operating of are and QX. our

last stable prices similar to be harvest and year to to expect to expect year. continue We tons Northern total about and we X.X the volumes million for relatively log

Chenal the economy Valley XX% lumber Real through The impact our prices to sawlog an business Rock. downturn pegged certainly you indexing of formula. development our As Estate are in in Little about will know, deliveries most

Although in residential compared to XXX this XXXX, sales sell real to still year expect not we estate over commercial XXXX. lots we do XXX any expect lots in

Our and remain the great brokers for including $XX indicates of track land rural that cash consistent high. year, experience financial in remains is in estate our during which rural feedback interest the quarter, and liquidity, quarter recreational on our with a balance of we revolver. undrawn an of Arkansas the At Minnesota crisis. sales this should first the land end had million million Early $XXX real from

returned to During shareholders and in we share form $XX repurchases. dividends million of the QX

price During QX per we of purchased $XX million share. stock average at $XX.XX an of company

regarding concerns Having our at dividend. more a return trades when no stock to a deep our way share have repurchases fair to fund to shareholders that, cash said the ability value. discount We attractive may be to

for let's health minute the are at pandemic. we Now turn our safety how of a managing to challenges the full and businesses during capacity operating

and our have First, exposure work to teams crews date COVID to been outages. safely with no able

place the provisions and we in in have plans exposure COVID workplace. the event have in We

have of visitors physical added distancing screening it's vendors. practicable are We and frequency increased where the cleaning, and

who We on home and safety in encouraging for was group best Products can and record in everyone have is all of doing division, quarters from banned which our so, work the first meetings travel with the one quarter. Wood

asset quite good volume our that where timberland are a in it's million believe stable. I XX% of lies X.X our reminder value forward, acres and pricing Looking of

working or expected increased remained lumber are surprisingly demand requiring driving home many in home, weaker modestly home to in scaled beyond. has Wood projects remains have but forecasting to pricing be single the improvement our demand. harvest harvest in remodel and largest for especially strong, will Products and staying repair plans people grow back due trees With XXXX demand, the and available results, wildcard markets. continue from We

total going starts. seasonally, Having decline to we in and March single are to tumble a million X.X see still family said starts housing a starts in that, to XX% drop starts XX%

the We have be that figures April no doubt lower. will even

or XX% board XX the of the much industry range billion with capacity curtailments approximately of feet. announced However, has curtailed in

opportunities plans expenditures capital costs and to remainder scrubbing for our in reduce of to are the business We each XXXX. find divisions of

We cost third logging our unprecedented this savings contribute identified the be team fuel saved quarter. management in and or Capital a through Board as have the Reduced $X costs diesel key remains allocation that we manage significantly as period. effort already to the million can deferred. for focus will accelerates

I'll now Jerry over to back turn it quarter to the outlook. discuss our and

Jerry Richards

million. Mike. on each results. quarter of of more segments first than the the plan slides, first by exceeded Thank Page EBITDA XXXX you, realizations, our Lumber both quarter. reflected for to quarter now On operating of start our price X the that I'll mentioned the and total expected color harvest review is Mike provide volumes adjusted $XX and stronger

in Information on The fourth X harvested $XX the our displayed was Timberlands is to of through segment million compared in for tons XXX,XXX X. sawlogs We $XX first EBITDA the million Slides segment’s quarter quarter. North in the quarter. the first in adjusted

in offset a fourth quarter seasonally the XX% a quarter normal in we The lower that first prices fourth per mostly basis density on index compared were in it logs Northern higher quarter. the quarter, down from the than to is seasonal was tons prices. higher the negative of the by the ton increase effect first of X% harvested XXX,XXX this While is of XXXX. sawlog

million In tons. the X flat volumes South at our harvest about relatively quarter-over-quarter

sawlogs were lower prices of prices in a to Our the seasonally were the due hardwood mix. compared X% quarter Southern was fourth the lower to Pine flat first quarter. proportion decline sawlogs in sawlog quarter-over-quarter. The

Turning $XX Wood the of on X, Products was fourth and to Slides in EBITDA $XX higher than first adjusted the X million quarter million quarter.

quarter the increased Our X,XXX fourth $XXX in board in per board feet quarter. feet realization average from to the lumber X% per X,XXX price $XXX first

Lumber quarter. we of hours well production of operated XXX expected removing higher mills the feet March. in in million were over board shipments half second Our the despite time than

quarter inventories. normal lumber Our than mills with ended lower the

quarter. real acres first to quarter. adjusted segment’s offset lower partially An first were land million million in XX the in Valley compared no the there $XX sales, Slides $X the estate on Moving increase quarter rural in sales lot seasonally and was to commercial EBITDA sold in Chenal XX, the and fourth

This remains $XX includes to on and nearly are which our Slide amount Shifting items, of liquidity cash on which our total at million undrawn. financial $XXX summarized strong remains million. XX, revolver, availability

million $XX.XX As of refinance XXX,XXX all we debt in levels at January March, totaling Farm an forward through cover loans starting locked Credit we low XXXX of million. for term The Mike future the quarter rates $XX first historically In to spent $XXX share. using average repurchase swaps interest maturing swaps. in per mentioned, shares rate XXth

is expense lower is the will mature the debt at and refinanced income the taxes. Interest The become loans these planned will beginning net On refinances. cost rates a million approximately Annual tranche debt basis the be its staggered December. each savings existing swaps interest because maturity. points, December patronage on basis by approximately in $XXX,XXX scheduled of weighted in first XXXX will this debt when average effective XXX term of decline to reduce the of $XX rates

announced we As a million plan pension We of million with transferred and New pension after PotlatchDeltic’s funded York assets, The pension was funding in maintains for of Life. transaction our plan to secure March, non-cash risk. $XX taxes. participants pension obligations charge benefits financially $XXX reduces pension recognized settlement

$XX were million in first quarter. the expenditures Capital

expenditures in statement. estate in that Note cash capital amounts flow million cash We expenditures included these operations be to expect which from will real million XXXX. are in $XX our include development our $XX

the XX our We business in shift current conditions by presented have to estimate Slide revised COVID-XX. our is XXXX best outlook of which on reflect caused

to to We plan is The X due to the X.X expect million segment South. our harvest million our in Timberland XXXX. decline of tons curtailments approximately X.X relative million in in annual tons mill announced to

are lower due the breakup. quarter to quarter seasonally first North to Harvest the in compared spring volumes the second planned be to in

We heavier curtailments in due to due to quarter to should in to sawlog second quarter South Harvest volumes modestly of in the decline XXXX. primarily the seasonally the lower sequentially expect mill and second second prices quarter decrease logs are index prices. approximate expected and Northern

We prices comparable to to expect the sawlog be first quarter. Southern

of our estimated reduced XXXX. X.X board range billion have in downwards lumber billion X.X at shipment lumber feet We of to volume

price of lumber We will quarter. prices April quarter the lower estimate the approximately our quarter lower our is the lumber first $XX approximately lumber holding Our X% average in average than quarter that second than be and average rest lumber for prices price. steady first anticipate

an annual per at of $XX change board for price basis. in us EBITDA reminder, X,XXX on foot $XX equals approximately million lumber consolidated a As

million April second production a plan XXX of a mill million tornado shift in the at to we note, We quarter. to board power lumber Arkansas our related outage. feet to On Warren, of a due XXX week lost in caused

to to expect acres Estate, rural XXX Shifting and sell a XXXX. to in Chenal Valley XXX of Real to XX,XXX lots XX,XXX we land

provided the details are Additional real estate on slide.

We believe primarily will quarter fundamentals. of Overall, lower and first in prices EBITDA adjusted lumber the to industry are than we long-term decrease volumes. advantage be positioned we and estimate lower second seasonal total take storm that to quarter, current well harvest a weather to due favorable

to concludes that we'd our open call prepared So to now, remarks. Q&A. like David, the

Operator

[Operator Instructions].

John Your comes America question with from the line of Babcock Merrill Bank Lynch. first of

is line open. Your

John Babcock

on kind of guess wanted Good morning. on guess also Coast. the Good the and the harvest about generally you're I Overall, in on industry. to thinking I what's this afternoon just out just how going I start East and

pulled So has a side. you there? question, curtailments demand in the you about the overall seeing my like Wood bit, of from And Products the have back bit you are How your other are I but industry. talked it what like landowners the pulled much fair side guys that? back on from little pull harvest seems seems seeing overall mean it a out Obviously some on the harvest back you

Mike Covey

Mike that. and different traffic direct Eric of here on we’re let is answer kind this I lines and will John, since

Eric Cremers

morning. John. Hey, Good

that I imagine necessarily, is speak but So ours. landowners I to would doing comparable are their can't to what other situation

year by to curtailments situation now including So our operating three all many our mills, we've in area, for the pulp the harvest our down or mills is South. customers of shortfall plywood occur in XX of lumber South, our In and going OSB six seen mills.

XX,XXX deliveries. to So in of in about region amount per our week tons curtailments the total

do second quarter, XX% assumption all of that stay about for And if to you the sawlog down split the amounts XXX,XXX are that which to our and math entire mills pulpwood. on that, XX% So that's these going tons. is roughly

overhang normalize. things We into as we little expect QX, expect there move bit but then into we of to be get we to QX, as a

region. to going little a log particular the bit the would and depending expect of their to in lower like But region and going is have everybody mills dynamics So see competitiveness particular price their I upon differently harvest just volumes is it us. everybody

John Babcock

How the will about And then of question are of so or demand coming Okay. go in you you has trended the pretty remodel kind about through because thinking things. And on what side decent next where far? also that in month April demand my repair channel -- talked two? and seeing that

Mike Covey

Eric?

Eric Cremers

Yes.

So, John, correct. are you

market considerable seeing frankly market for demand are of and imagine, underlying influence lumber XX% of Overall about And as at -- quite XX% repair right now you demand the different and of us largest are about factors of lots And We fundamentals activity. of remodel in our R&R good R&R. for can it’s course strength segment segment. business. represents it's still the R&R

looking So near up favorable We've the something people are to from term of at checks is do. for R&R also because home maybe holding stimulus weather. government, had bored

near has held So there's R&R why lots up. of term reasons

record age house equity at the R&R the think to at United we in still years. XX States is term longer But U.S. going high. well. as now levels okay median Home is relatively around is in The be

think we R&R in reasons both near the and why in of up going the there's is term lots hold So long-term. to

John Babcock

Okay. And your lumber just much way quantify I overall decline of demand mean there on markets, then in in a April? seen how demand you've to a is

Mike Covey

Eric?

Eric Cremers

region. up varies that's course largely That very has and tell as weak about. you a and one they are those Western lumber a got or there. then a mills. market business turn Midwest, one for just The we held spot our talking stud got We've around has well tough is for the of us done it's mills, lot customers. in that we We all have the those John, running to would we mills now. Western because lumber bit. our prices Western lumber fairly by down. prices have right so in In come by SPF and well. to sell that quite come really with our sell to up down takeaway business their it a decent real have I customers answer held for there us Canadian mill and South compete repair/remodel Yes,

by lot a varies market segment. really it So,

year. lumber heard I America think which going XXX,XXX billion a reasonable down is this to told, all to if maybe do bit, knows, billion to you guess. X.X on And roughly starts coming million going X million, North I've down be seems demand little math housing be feet to across a who from X the perhaps board X.X

and that's and You get would spread the to billion I around billion board by of X expect evenly shortfall a pretty feet to around X that country market segment.

John Babcock

last this of is you just be allocation that before review on just I if authorization And now kind allocation. capital guess could priorities how on And also over. two then there? great? turn the your questions really of have share I left And of all, it kind that'd then first purchase out capital right Thanks. much you is

Mike Covey

to to the remainder? Jerry, speak you want

Jerry Richards

you Yes, bet.

$XX So, repurchase the bought million cumulatively under share worth stock. authorization, of current we

million $XX have we So left.

Mike Covey

at John, to stock this fair know own to are value, just to overarching price trading I And try $XX some about the and in buy $X,XXX capital best rather Timberlands Clearly $XX and deep a about We than certainly acquisition I'll make trees purchasing that's when a it's, flexible just market and stock allocation. an we our find don't the somewhere be is a comments market conditions an own change over nimble as can that plan. is our back to discount acre. at value whether through our

sidelines stock preference a the shareholders. on return as point, be strong this for to at to purchase to value our So own we'd acquisitions way with a

Operator

the with Your question James. Raymond next of Collin from comes line Mings

Your line open. is

Collin Mings

left picking First off up there allocation. kind where capital of question for just on John me,

you about preserving prepared at as like repurchases through to probably repurchases more to environment? again, focus pretty you're just you're versus clarify opposed Just thinking the on Maybe share the purchasing it on think committed the liquidity the elaborate at the share But moment. how to and far the restricted Again, as in current sounds in dividend. buying remarks, stock? just as back liquidity recognizing

Mike Covey

that? to to want speak you Jerry,

Jerry Richards

bet. you Yes,

of so, a business -- posed good a which there. way Collin, in question Certainly I and So the a COVID-XX in of balance the bit there's think uncertainty. terms creates is you pullback very in

position maintain we that important strong our it very strong. is So, liquidity and

it So that gives a going and confidence some provides forward also lot of flexibility. us

illustrate in that shares XX buy confidence, million to the So to first able we quarter. were

I bit that to So, feel try move we fair position. to balance, we'll a have of continue flexibility like of strike forward, lot but think as a appropriate we and our in confidence

Mike Covey

to I'll the first the that Collin, $XX is to just the enough end at more had add than the that, cash of million in business. we run quarter

an that us We not money the available, the certainly to to capital is will and have price purchase extent borrow surplus our but gives attractive. stock opportunity repurchase to if stock, the that we

Collin Mings

Understood. is liquidity opposed towards repurchases Understood. the incremental and point, now it. balance going a repurchases on acquisitions. as more to But point, that To striking your cash, Got forward. to again, favorable

on a Moving obviously, that, fluid, of the kind prepared Real you commented the and of Can just the kind the of kind have rule the recognizing anything the that? to little situation around that in pandemic? stability but recreational you on land remarks you elaborate more is Estate seen on bit activity, fall sales. the of maybe out pipeline yet of fall And

Mike Covey

Eric?

Eric Cremers

Collin. Hey, morning, good

interest we yes, of rural reasons we in think different a demand couple So, surprisingly are rural there why. regarding seeing are demand, and so strong

the This The its volatility asset. hard how land to it. a in acreage. market a relatively selling relatively aspect low cost. at land do and can affordable is that we're is is can look that appreciate point. and All it's First, have the you go value hold at It’s appreciate price rural you stock of

a can $XX,XXX. track rural nice for Somebody buy

of population desirable from thing. thing be density. definition that land is that's mentioning in worth away And other rural to pretty age this seems The by coronavirus, is a that

contracts in already QX, gotten So we our of place. for a have lot

acres the very acreage, I about rural and our -- already have And And planned small majority of contract. canceled. we of to that canceled vast got to XX thus right have we us, our selling our close. In QX on is think deals been almost plan contracts continue on far, we've on all contract selling now deals they've under under that fact,

outlook So, favorable. net-net, it looks very, is like very the

So similar rural to in demand to economic business Rural us for that the produce back crisis. remained realized also to going relatively for financial this it's optimistic we continue very great we be backdrop. is to the acres what And despite demand, continue high.

we're So business. our about very optimistic rural

Collin Mings

helpful. discussed in U.S. operations, the you've we lot wood a curtailments And you pulpwood detail timber the can baskets the pulpwood and in as But then on think maybe and/or again, seen. specifically in about pricing your That's demand just of mill touch you

some curtail there's marketplace. less of these Presumably, of South production. in sawmills the residuals

the that So thinking through to the on kind pulpwood of be your you're seeing would good perspective. get impact side

Mike Covey

as there. Yes, There's pulpwood little lower prices so look are ton earlier, mentioned We're or say at. pretty doubt you pressure a for the full true I'd pulpwood maybe of stable was almost state seeing for bit which us. of downward And regardless year. $X per slightly $X prices. there's no that's

though benefiting I possibly right have even hard secular now. can in decline, paper as are demand is you running think like they pulpwood, what's as probably machines tissue

So you've but factors are pulpwood stable. got prices there, net-net relatively some offsetting

Collin Mings

of to me you're around much on Idaho, be that and context financial one And there the much the detail recognizing plant plywood of is one pretty year. you in last seen But provide about any -- impact think how sort going probably the contributed as you've there to sensitive too just Okay. it here. profitability for that quantify to far? so way downtime Or last any

Mike Covey

Eric?

Eric Cremers

of the right some you is as amount Well, under yes, Collin, so plywood noted, now. pressure business

to three know were that us to -- operations own like had back returning it They are shift. again And we run don't going is for when know said weeks. mentioned, for We've It’s They shifts. was they're one manufacturers. build furniture was don't with what is know extend two They to mill. challenging As start manufacturers, work. these people going get curtailing that struggling to if They demand again, going going there, customers they an two if startup. to what up we're file be to boat weeks. they're are don't their hard we that RV that order finally running look reopen run very to and now we and our announced finding manufacturers, to to

very, us. volume are from customers our to tentative much So very commit to buying

and by that gradually that'll that that things I get our example, going as profitability And an definition want order from for we specifically it's to we we starting people maybe May, challenging a from But go for get -- for get reasons. weak. won't right demand. optimistic RV one. starting who to country to are to And now, better to back build heal dense we're plywood our strong vacation that the for say we as optimistic, and But we an said, are Now out for build get up industrial coronavirus, spur question, really file, break don’t to order business plywood being to away RV, population are business. we're -- don't out areas it's almost file as we as continues competitive it's specific into or your

Operator

Steve Your line Chercover comes next from question with D.A. Davidson. the

now Your line is open.

Steve Chercover

you because you're competition? QX besides than by the somehow are the downtime is it it sound situated anticipated taking than just tornadoes. on like what you you does was your imposed in better So were or lumber lower And really not exiting inventories

Mike Covey

Eric?

Eric Cremers

Yes.

generally Steve, There's think we that may think quartile or have benchmark we've that regularly be And we first mills. mills. always one mill. but calls mentioned an So in mix, speaking, even a this either I our on four prior is outlier not quartile we that but second one

it's those to quartile, in who to we're are close And the positioned going drops that to example. in and and the worst, mills fourth structures the it's XX% And a those the that you to frankly, has going drops seen capacity that curtail this, demand to worst have position we've So that have have example, got of of lumber not curtail. good if be first. like mills as Saint of mills are not is Maries like enough not industry, are cost to overtime pricing this prices We've lumber much the felt overtime across when XX% because look for it's the out mills those landscape to today. are as where running Western And of our mills, relatively need mill, the at a for we all speaking, run our group. of like a justify to we we mill. take at your consequently others. positioned downtime. struggle competitively to question, to see than are And I running overtime the weakest think that we our mills feel don't need But more answer And come

Steve Chercover

of your And a particularly therefore mills, are pine the up to vagaries Idaho mills of some commodity, the but South, most in susceptible more the boards, little lumber in of SSI the mills market? your less are

Eric Cremers

No.

really going particular here region market. although do or regional on So overlap upon there a dynamics different a are particular they depending

mill product. Dimensional really of kind our not in an So Idaho a a produces lumber R&R, dimensional Idaho lumber. DIY was in

SPF SPF compete we've challenging against about. the the against competing So of mill all getting Idaho, us collapsed. if collapsed, it's about competing in SPF. you particular. talked for it's And it's work and of other our producers Western inland as And that getting against benefit more all not And tailwind Western have DIY the it's just in they've to think Western prices

Western area demand curtailments where yet construction. for hasn't closed announced dropped, is State you've but for has a residential one Washington got market in ton of few also mills. consequently, of the one construction, construction. been States closed that's got There's there And You’ve

of So about our it it's worst mill the and the one now. the is all Saint supply at day. the Maries feeling end right that's But demand

Steve Chercover

Okay. particular plywood market might you're there. And that residential RVs file more boats put towards construction that's be realize sheeting? product switching order be together trying back and the for end that to for an the But plywood, geared to destined demand discretionary than I

Eric Cremers

Yes.

goes things big there's doubt purchases, they're down, takes come markets it's hit, like for demand or stock if no Yes, an or doubt, it's has, which There's consumer unemployment confidence you're boats, discretionary whether a declining RVs furniture. both going think and no to a I boat big and a it up. RV. see ticket house

Operator

RBC next Paul comes Markets. Your from line of question Capital Quinn the with

open. Your line is

Paul Quinn

that the if was your up got conservative, dial I more now bit following overall -- X% the end Just to timberland on at about than like QX call, more want on like on, that. it's just I you X of guidance I guidance starts at million. just sort it a looks a because a come at in it your And And of guidance cloudy I'm X%. and look starts down housing of environment where to given more forecasts quite very to bit down seems here, that it little have some the a looking it's see, and

tons. be trying going XXX,XXX you while reconcile tons. the you do I'm just like be about down It midpoint So I strong to how that think it's guess reconcile XXX,XXX and back -- would looks really to it was to Eric’s description

think trying to reconcile in as well, to your just all appears as Do guidance? hold it's things. I'm So up those you going it

Mike Covey

Eric, go ahead.

Eric Cremers

upon quarter that a how out. Yes, referenced was second all I so depending there's that mentioned Paul spillover into impact little be going plays just to XXX,XXX a this QX I tons effect and

conservative Arkansas that We is production nature. the we in to three in our vast are run the our thing One guidance. our that in being remind That's majority sawlog I'd of South. in you consumed sawmills State, like in the

stream that good revenue what three kind from doing. are So you of our business those have very will. And and into control sawmills visibility Southern we if P&L we that resource

in high very have those we sawmills. So confidence

a couple pullback There's demand. pulpwood. still bit in But little a of a and curtailments running of been lot down seen have pulpwood of there. net-net closures, We things consuming still are

like the going for got look is on So good pretty we've to year. the a rest handle business what of the

off further are going Now prices we and -- including bottom coming if to even think a start hit feel now, lumber like South, bets more up. have bottom. mills feel start hit we've own. which All happen, back plummet, curtailing, we if prices of like lumber right mills lot don't go we're that's the we for our But

Paul Quinn

the QX off basically that’s average, going at year? basically down hold for forecast X% that April balance the of do So you think lumber the prices

Eric Cremers

knows Yes, kind to bounce they we in pricing and what call who then I improved we talked our X of the as the estimates we're going have a think flat QX and back see actually is kind of perhaps the Camp of in of half we into think I year. about QX. get listened to X% into

similar I'm here plummeted very they're into X.X May housing the a share is that year. and have going I'm that just get we in sure quarter And think to range the although add the most -- when back have starts April think get although, to housing people I sorry, kind we going view. X.X, going fourth this to be of to weak, starts

going things aren't to So forever. stay depressed

Paul Quinn

just just a happened? tested worked where employees us And those if and you've if COVID could on that's summary instances, positive then around your of how you give itself,

Mike Covey

that is from in had certainly of for Paul, a this environment people work and test. Timberlands Mike. our of result our have it's any We whatever have not To our operate. absent knowledge we not caused reason, tests have a COVID operating mills but positive we in in kind how really changes positive

Paul Quinn

it Thanks Hope Wow, pretty keeps lucky. guys. up.

Mike Covey

surprising that not places. Well, we in rural very think it's operate I largely

people positive Timberland these counties are in operations, shows of COVID county have facilities You know data have or three where maybe one two many or the the had we results.

it's rural So areas. pretty

Operator

Capital comes Markets. line the Ketan Your from of Mamtora with next question BMO

open. Your line is

Ketan Mamtora

because for of little at in inventories at sort about still a but on there out much had have off last the of we of level, mill going buying sort to channel? weeks, It about the talk yet demand, just inventory inventories. channel come few of You've construction side, must activity maybe talked sort you of that the me seemed kind happening more lot starting can the of on. channel activity Maybe the least, lumber a wasn't

channel So color maybe sort any on of inventories?

Mike Covey

Eric?

Eric Cremers

Yes.

So Ketan, What know one it’s that is distribution to constantly lumber was on talking very a sales a answer, data folks the anecdotally ours challenging little as I are to say inventories will in customers. channel. you

in six until to you real eight low fast And they we've rather getting feedback what will inventories catch they're you into don't the they're customers for have to. when a happen not what lumber in kind market to real away they where like what bottomed. get And And so And want weeks, channel back fall last seeing. falling prices because or will had they step time buy deplete their and a the think tends knife. unless of to dealers lumber They'd that very to see distribution existing is falling have inventories levels. on

the that anecdotally, So can tell very levels at is what I our is view inventories low channel. that in you distribution are

Ketan Mamtora

sawlog and helpful year, Got half, part side. then large had strong pricing, to it. the first it Last the And switching on just we of sawlog timberland That's Southern pretty color. side especially in a was kind seeing of by And there out are we rains. driven pricing. Talk of uncertainty. this you about we've -- got there's are when lot terms solar of environment of in now kind what a

as back you out see You that prices. but year? see going mentioned how half the the the pricing to that that remains playing we for asking But do into guys to How downtime, as I'm you kind just is extent be continue it mills quarter-over-quarter. QX not weak. specific to Southern of could numbers, get take sawlog impact demand of flat relatively

Mike Covey

Eric?

Eric Cremers

Yes.

So, due inclement That prices to in largely activities rainfall Ketan, year, ran was limited up excessive sawlog XXXX. really including harvesting our of you're the last weather right, own.

$XX first down come pine quarter. the Southern prices saw in You for at about

kind these in good We're is conditions. hold. Our of expectation prices log in that haul

mill now decks. You're five inventory. weeks mills of their three Southern are with at two is who decks hold right, because to most log understand typical logs we knows levels might of mill logs inventories, and in worth their afraid mill running in really to days is everybody inventory low have right A

come tight $X XXXX. maybe running into very but has was, to where off ago. so, And years very are pricing we it But was or flat pine of where it's the half really of on have South the back down people stable, yellow the about was back move frankly, that it in ton to inventories. back Prices see We where Southern don't in And changing XX for it's So it been holding. as year. sawlogs. it's

Ketan Mamtora

mean, then And demand the and I you as of prices? of of come extent uncertainty the into duty around And back to that move a understanding My lumber duties. do the year. that half kind how move demand. and in out again, will all back down of half into weak to the come you But the lumber our this -- so remains plays has down if -- how lot it. terms year, you the that think impacts back on switching as Got the still duties And is of just of question a side.

Mike Covey

Eric?

Eric Cremers

so they from Those to roughly to where up you’re are today, Yes, duties around XX% right. lumber set fall which is XX%. are Ketan,

thing the are low cost now think They're structures this highest you is Canadian in around mills mills. the with ones speaking. the that of America, are if North cost taking competitiveness hardest environment the it the price that the right interesting the mills look generally I at

think order. in get I their need they duty So that P&L just to XX% back

going a So like we going to think not have mills all being uncompetitive on sudden they competitive extra big it's to pricing. an get of It's don't impact in are a XX% to their when go P&L. from

I think go money is going even, losing would way to from the characterize more I likely breaking to they're it. just

So we impact. big to think don't have a going it's

Ketan Mamtora

down, of if though, whole side? on the duties it impact, cost that Does kind I mean, the buffer of of industry? gives aspect a of some rationalization sort come them kind the

Eric Cremers

mills. high But no basis, There's cost down going duty will relatively to make relative help that still doubt mills be the a on more coming their they're competitive.

to changes So XX%. that whole we from duty don't going think the lot landscape a

Operator

Weintraub next with Mark Global. Seaport comes the from Your question of line

line is Your open.

Mark Weintraub

bit more do bottom that a First, a largely one that you a the mean little cost prices and follow was is likely hit or think where as I lumber of going certainly function they're you demand we that speak. indicated you just curve up expectation? up the is now where driven thought on supply

Mike Covey

Eric?

Eric Cremers

I may top XX% seen of announce announced curtailments. that Mark, X% We're so XX%. industry guessing another Yes, That’s that the we on be of would that curtailments. say, there's have

complete down is not which are was industry of they've it XX%, is R&R And for pre-coronavirus. near our a but in home forget, very higher segment, no you've center more seen you've here screaming come And XX% it's if shut the the orders So to product. term. don't there seen anything, are Meanwhile, halt. than market slowing, the doubt activity, customers construction

housing about, completely the starts at collapsed, equation the look think that your are into side back to side is easy and supply than it demand got consideration just is but demand take equation. it's strengthen why you It's holding to the of question more up? of So in probably things the R&R. But to

Mark Weintraub

buyback And temporarily the and realize Thanks. Timberland then how could And essentially uncertainty? wide side, helpful. continues is state any if strategy viable to moving color That's I consider timberlands affairs on Timberland of Timberland length the very a all but for your selling provide, at of some given frozen, the discount here, fast to M&A are a Okay. it time? things you any this has stock --

Mike Covey

Well, first. I’ll part take first the

of I rest think a of warehouse Rayonier large four sold smaller. been Mississippi. size Two of there's any been year. track have closed were this transactions those deals, in

pulled market that quiet. Most other that the have on properties were fairly So the or were of on pending been been it's hold. put

kind in to little as what think do point. liquidity market currently of very frozen at this So the And wait happens. investors is I that see market there's

financial sell recession, I the And at it prices it to the be to possible -- would crisis it market. discounted During in possible great do would today. down was imagine a timberland to

share idea considering. a takers. But liquidity to on be any pretty something support be market. back it'd I the be the the today in put to larger entertained Maybe not tough of that repurchase. gets that sell as think wouldn't worth have market, the doing We would just a There timberland

Operator

showing And over at the to back Richards. this I’ll there Jerry no I'm more questions. are turn time, call now

Jerry Richards

Okay. Thank you, David.

PotlatchDeltic. So I'd also appreciate everybody’s interest in

detailed you answer in this the safe stay yours model COVID and day environment. to available and of rest questions are the We hope

Operator

this gentlemen, you and Ladies for today's call. Thank conference concludes participating.

now disconnect. may You

PotlatchDeltic (PCH) 28 Apr 202020 Q1 Earnings call transcript