PCH - Earnings call transcript Q3 2021 | PotlatchDeltic Corporation

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Operator

Good morning. My name is Paula and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Third Quarter 2021 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 the now Mr. over to would call turn to I Richards, Financial Chief President for Jerry and Officer Vice opening remarks. proceed. Sir, may you

Jerry Richards

Thank and XXXX morning you, PotlatchDeltic's Paula. quarter third welcome earnings to call. conference Good

the on with please Officer. slides, Also, can then, statements. Eric forward-looking that the our a and the at quarter measures risks Executive these warning with comments, now will and I to call non-GAAP of note in the our third call our the results me Cremers, be website and reconciliation press cover associated for PotlatchDeltic's some call over on Joining This Please and statements. presentation filings found will turn SEC President our forward-looking www.potlatchdeltic.com. concerning in I'll contain statements the our outlook. Chief Eric review on is release,

Eric Cremers

you, Thank Jerry.

QX, $XXX EBITDA EBITDA was of Our million million in $XXX quarterly consolidated from QX. in our record down

was drop million. is Although excellent XXXX a we EBITDA price includes have significant amount the a highest QX quarterly in quarter our generated peaked experienced prices, EBITDA quarterly in began the That that XXXX. still To context, run lumber $XXX to for When statement we an company. provide prior at it that lumber

We appear price bottom are now encouraged a trends by recent prices have to are higher. lumber moving found as lumber during and QX

million generated $XX in the EBITDA segment of Products Wood Our quarter. third

this was August recordable segment's in our six the were incidents all Importantly, and evident of September. quarter. QX meals seven and on performance safety had during improving out mills zero focus incident-free

and injured the the ramping the our Ola, call, we up the XXth. damage end earnings to large was primary a line Arkansas we Nobody large on breakdown log at annual the June to last In year month fire discussed quarter's As until limited restarts. sawmill on and was on had meantime, of center. million next Demolition million a machine of log with complete and line and new by an will work profits We and restarted lost cover line mill basis scheduled above QX to along this replacement deductible. decided $X to QX. equipment. cost construction purchase log the restoring we operations to the log the small at the underway produce XX equipment are we in feet receive large expect of board approximately well we new is installation the anticipate Insurance

XXX to As a reminder, of Ola fire. prior the an had million feet capacity annual board

from is well we this business Our year. performing this record plywood exceptionally and profitability business to continue expect

prior ticket on is calls, items truck industrial-grade our in remains and discussed have strong. Demand used we big these trailers, plywood As furniture. very boats, for RVs,

EBITDA earned Our QX, of nearly $XX Timberland million the quarter. with of EBITDA million even segment in $XX record last

on the highest record. unique sawlog the Idaho per highlights price our created ton value sales industry. in $XXX average is second being Our This which by in are sawlogs the index of contracts,

weather quarters. third experienced the this second the sawlogs year, of managing operations. Our has million The being our risk losses constrained south, logging to resulting increase. than wet of unusually in extreme caused We pine planned. been quarter in winter southern volume has it and to first sawlogs lower shortage and the In price resulting Idaho our great in $X in summer, the weather resulted activity which did than less a team limited after this job being has salvage harvest fire

Our shortfall. southern mitigate the is harvest working to team hard

to plan continue fire. southern expect harvest to risk, to our annual that XXX,XXX the saw the harvest be we due approximately addition tons sawmill Ola weather-related below log will In our

Chenal see and real residential acreage. in expected. estate we Valley strong declined segment's for Our to as continue rural commercial in in the Demand interest EBITDA third good quarter and lots remains

real for up shaping fourth provide call, on strong color to will quarter earnings was year XXXX more be estate. the We another

at XX work equity, Labor housing view not very years Census the seasonally set Index that up composite above growing were lumber Turning pace board XXXX Random supply market Homebuilder Housing-related the September The of of $XXX the that lumber increased home housing of this end September rates, bottomed and of XX adjusted. thousand That in framing millennial U.S. the age under has Lengths late U.S. thousand shortage that the starts the high Bureau remains the $XXX segment. Furthermore, returned homes, as Seasonally near Day in robust. were The contracts higher market lumber to Long-term continued be and prices X.XX to U.S. healthy is X% prices fact last the govern XX well September. all it challenges higher August. are X.XX the board market reported to in sharply lumber and on in practice. that of construction, interest futures prices, underpin -- per weeks feet fundamentals Homebuilder the higher NAHM It to is Low latest stock, continues common demand appears a the with includes million than drive above million our strong at cohort remained to at eight lumber since is yesterday's multi-year there housing of and row confidence and levels for units repair takeaway price a levels construction single currently XXXX business that August large November at since spot reported per this and the our also remain average, and have Lumber our XXXX including is boom. were $XXX units XX% remodel and the price. now summer. in feet well average. units fundamentals multifamily composite contract positive which after or is month. figure chain than continue businesses demographic prices housing for adjusted $XXX close. remote in

remain pace govern supply Canada On a and and lumber U.S. Western labor across shortage will the long-term of the expect side, averages. of truck and also tight remain Western our availability market, continue historical capacity. drive Fiber a than prices costs, the favorable and supplier business higher we new equipment the bottlenecks constraints. that higher to structurally lumber drivers are Overall, that fundamentals

continue drive strategy situated is performance. strong financial leverage-to-lumber perfectly to to Our

Turning to to allocation, returning capital cash shareholders top a remains priority.

dividend We to $X expect a to pay per of special in $X share December.

evaluates year addition, Board our per annual currently quarter. is $X.XX share typically In the our dividend, which regular in fourth per

provides a platform acquisitions. Our mills we consider in additional our strong accretive as position financial and existing investments solid

our the We are interested in near acquiring current two areas. or a combination of operating Timberlands, mills,

Social, Governance Environmental, to and Turning reporting.

Climate business risks, responsibility Carbon reduction us gas across third to my is outlook. Jerry allocation and it to are shareholder ESG prudent greenhouse fundamentals and our the X third results and wrap-up We quarter committed greenhouse continue a and to strong value. PotlatchDeltic and as as governance. report liquidity annual and with We report in opportunities To and are PotlatchDeltic social in I we XXXX. evaluating focused well-aligned strategy and on industry our favorable responsible climate to our to comments, well discuss leader over sustainable management environmental will turn capital quantifying Scope increasing positions strategy and our opportunities. plan now later May is our gases, forest next first publish

Jerry Richards

in from In harvested to page displayed the X.XXX is harvested third sawlogs decline was price million higher sawlog constrained sawlog ton XXX,XXX quarter per to remains Timberland in the quarter. the in our by or was in the quarter. $XXX the the a of to you, quarter for quarter trucking Information quarter segment's $XX Starting quarter the in comparable wet in in EBITDA last slides $XXX that to third second down five was occurred tons EBITDA adjusted Timberlands compared XXX,XXX quarter. activity a sawlog weather, was there XXX,XXX ton are to average prices. second lower $XXX generated and Idaho in at $XX in by sawlogs decreased compared north approximately was the the seven. harvested seasonally Eric. XXXX second and largely record in in volume our XX% year. price highest the third we Note in we that the adjusted quarter. through quarterly record south, segment the with ton third have the EBITDA June. the tons Cedar harvest million We tons volume The to ever. in sequential Logging slides due third per Demand lumber second the Ola higher second robust shortage of for sawlogs Thank $XX million tons million the XX%. was sawmill fire in four, realized quarter. is is for $XXX Cedar the million our per due second to than Northern decreased prices The from The of EBITDA on the

were Our compared hardwoods southern X% higher sawlogs. mix believe the a higher log second of is sawlog which pine along due seasonally XX% we prices, prices The to quarter in weather-related third to higher quarter. shortages, increase the with sawlog includes

Products $XXX to third million second slides adjusted from Turning quarter in quarter. to on declined the Wood nine and eight the $XX EBITDA in million

the $X,XXX second look from our To feet thousand prices provide third board month. lumber to $XXX the board decreased in feet context, in realizations at average price quarter thousand it's per to lumber helpful Our by XX% quarter. per

and the We Random of both in file. by the in the shipments of $XXX third reported caused price timing customers lag our quarter. The lag Lengths to went in in month prices realizations the the spot XXX of million is to prices our driven in July timing September. length of $XXX board and lumber Our average The feet feet per by order effect lumber August $XXX board thousand shipped from to of shipments lumber September.

Arkansas overall been fire on Ola, our has reducing June not production. since earlier, a occurred XXth, our discussed Eric As sawmill operating

the did job rail a quarter. team and truck challenges in Our good transportation managing

the slides XX. Little in the sales quarter was in estate Moving $XX to second $X million residential sale Valley closings EBITDA lot to Rock, was increase plan offset community in on real land third Arkansas. in The Lower by in XX master quarter-over-quarter an compared million rural segment's Chenal partially quarter. our and

developed. It as includes our the financial of Shifting as more increase our which this Our they're million lot on demand as team at to liquidity inventory levels summarized dropping has strong million. cash hard to This lots are slide availability significantly. pace are to the selling which lots on increased being developing our as they items, increased been $XXX in revolver. has seasonal year has are lot residential at normal well to XX, unsold undrawn total inventory residential pace $XXX effectively amount resulted

cash. of dividend the use on number fourth Based did Eric $X repurchase of per share during million third pay are currently to $XXX quarter. $XXX we of million this the the $X quarter. to special to shares We planning would As a mentioned, outstanding, not shares any in

this a plan interest expenditures XXbX-X attractive As in rate. we the debt in shares beginning place, ability this will Timberland amount in December. have scheduled excludes and expense prices. million repurchase real reminder, operations the Note on and Annual locked are quarter. decline statement have refinance acquisitions. to mature in plan debt approximately development Capital at flow that December We which to in reflects of million commitment third to expenditures, $XX from XXXX in $XX our our interest estate our cash which and $XXX,XXX were included cash includes

amount of sawmill which covered by million to quarter also third The Ola, Arkansas rebuild expenditures insurance. the are $X capital includes

XXXX, be will excluding We sawmill that expenditures expect capital approximately acquisitions in and Ola $XX rebuild. including total million the our

to-date. initial now The received proceeds XX. have details outlook presented provide some million high comments. of level slide I'll on $XX We insurance are

several X.X Timberland Total than in harvest estimated million tons of X to shortfall tons our million to X.X million the quarter. segment in expect planned. fourth due tons is was to lower We for million The the to harvest year X.X the X.X factors.

to was sawmill. we have of approximately to that our sawlogs redirect tons delivered First, Arkansas Ola, XXX,XXX uneconomic it would

fall Second, of the wet mentioned, caused as this plan. earlier in persistent our south short Eric to weather harvest year has

mitigate to the of shortfall. team hard the working Our is amount

this on basis, to at margin lowered tonnage Third, and year than meet the as our no affected our is Idaho that will sawlogs is normal Idaho on but we size basis. Note due of to volume tons a extreme ratio by in plan current sawlogs. in it our The prices. heat of volume thousand the the drier harvest not board sawlog a feet have pulpwood virtually harvest

in south We be the in expect the the to sawlog prices and lower quarter. fourth north

that quarter our lumber fourth price $XXX feet lumber far $XXX Keep is mind price. the including average quarter, shipments up. thousand which third thus average per board was QX X% lower than average in pulled but orders feet book Our yet in approximately average thousand July not or the price our shipped for board per

million in equals an in approximately lumber We thousand XXX Shifting XX approximately $XX board consolidated foot a in sell of feet ship $XX lumber the change estate, As a quarter. million of real X,XXX annual acres the we approximately to million on land for to board per to to fourth basis. reminder, XXX us lots of and EBITDA quarter. Chenal fourth price Valley expect rural plan

on Additional estate real this are details provided slide.

We sawlog value integrated expect adjusted our fundamentals and industry decline in our long-term. model EBITDA will We're Paula, the due you. Q&A. lower tax Davidson. continue we now to Overall, we I'd bullish with anticipate in shareholder fourth in D.A. [Operator well-positioned rate we're over the and call quarter averages. a remarks. continue approximately to XX% question to fourth lumber open prepared harvest be comes total on sequentially first to seasonally from will long-term very volumes consolidated the the Thank above remain decline to like Kurt prices. concludes Instructions] Your expect of growing our Yinger That prices operating quarter. to

Kurt Yinger

good and Jerry. Thanks morning, Great. Eric and

Eric Cremers

Good morning.

Kurt Yinger

us terms the on estate off segment. there Valley? of, next pipeline starting estimated runway Can of in have terms guess, remaining where sales couple real kind you I stand in the you lot over you lot remind And Just in years? sales of the Chenal

Jerry Richards

of residential total that's currently. the kept community. X,XXX was Yes, started lots about provide left, if rate, are and just it supply, so XXXX morning, master background plan that at XXXX step And at there's Kurt. that overall X,XXX a about selling years we back it's I'll overall remaining of current in by rate Originally, same It acre terms the about at under Deltic. sales in and mean, and XX good probably had we're some lots,

Kurt Yinger

it. Got

the that. flexing pricing sound before, to one good terms in mill any as in as pretty old around XXXX? environment. a up other how levels Okay. on are there any some be was the same then And Thanks weather might issues harvest you still ahead, able look harvest, taken for ramp the obviously, And like of and thoughts that there challenges with tonnage you

Jerry Richards

Yes, great the to that other really us just the short that prepared that's only a a I closed certainly the Arkansas, certainly even go mean, product a harvest to more in fall And line factors in a think bit and didn't causing would talk out really year, mill when that about and comments, bleach supplied. back that's supplied hole this Kurt. I made you laid question, about and in I I mention well market we had the they're are was constraining the, southern you board pulpwood XXXX, if well GP items

that So, but able that that biggest aspect, is that certified but we wood our to team pulpwood continuing the if other -- their FSC contracts us helps our you're as there now, think well, and what move to move asked team down that do does the volume, certainly is a from about. and we're that's some we But would thing doubt flight challenge, planning our benefit some it's tons there's absent expect X issues, plan but and of fire, Ola of next pretty these meeting in I level no our about expect plan. sawmill year, sustainable job process I that's weather mind, our our team, usually do good is now, that in million in

Kurt Yinger

Got it.

through Jerry. there in kind wondering down I'm terms is items it elevated like were first quarter. in that the talk kind how then side? much fiber, of, seeing you couple of weighed cost there outside Thanks flowing then helpful. of of lag prices on Wood about that's you're some on the Okay, side? from looked Products pressures a And bit discrete sawlog QX And just And a the cost QX, Idaho manufacturing can and of other the

Jerry Richards

solid dynamic, this and, which to in complex an we're Yes, the logs million, basis, one Idaho to especially it's purchasing have pretty pricing $X.X it's I'll lag on means lumber in mill in like you a St. did run year, is have materials. indexed we a of first take going those Idaho, in of inventories. and you terms precipitous Mary's, certainly, our we when in like earlier lumber see had, see to it a to sitting the And uncommon, price charge which a not be in drop that's was is the

So, of think when what time it's depends I to building up year. mean not year. that. next you is see spring really log take the unusual And on break the about us doing we're we're a right pile now through lag to the

the to the building low of high are at other point break like coming up They're for spring point inventories their year. -- end. log So, the their out on

think there. other normal summer, inventories inventory So, when turn give I just probably were more other And say, the the than to would I'll for about you level question. this through to particular the for Eric, charge, context some then

Eric Cremers

Yes.

So, And kind Kurt, just question undoubtedly, moving the everywhere inflation meaningfully are tell turned. I where in cost costs of across Wood Products? we we would about company, your seeing are about you up entire

million our estimate X% per well of ago, year are that Products million tell year XX of that business. XX you million, in you XX%, Just up of our well. across XX%, about than is to and tires is we are to up XX%, probably oil a a examples which give normal other inflation. running up ago, I In business strapping Products And XX resin to as up X to Wood I'd sawblade a million XXX%. company, examples the XX%, lube were X are costs is year plywood XX And you higher few in is entire compared total, Wood in up million our million they can to is kind costs give above units

Kurt Yinger

that's cash. super And Okay, hundred special dollars some for just How of sizable quantification. transactions balance helpful are to million one, deploy kind M&A? of will the an And I even you in a willing work have, you think, last balances elevated that after looks it carry thinking the about yes, long how the like couple be to that. ability to would then to dividend, materialize? Thanks cash sheet

Jerry Richards

largely will I And by flows. It's allocation we want December the after more down two. rush Timberland is that's couple year going in the in dividend. can on far the I money opportunities that's to still chasing the Timberland process. special projects close that of conversations. that we think should really get increased Yes, to sustainable vetting But lots one so way capital cash love you And products one think next or that increase then I'm be at got right that balance sizable are quarter highest of have, year. your the on of for capital the the to but now. yes, be be the expect optimistic for M&A be even when wood driven it's heart would at the have paying M&A, still cash plan like is next M&A about found. a you, pretty potential to Board I We're we dividend. or anticipated year. next mills, to about of our the want to our going dividend never what aggressive we're question, year, thing we'll for tell course, of side, the with a the we out to primarily we our an these for end levers projects following guess spending all I path our get basis, we in the return look where the spending We to a

let to You play its process the normal course. want

buyer its create the our that to try especially it perspective, And you a time. if overpay. let take you'll the shareholder only judiciously process, tend and value to with you M&A and goal do If it do from rush to you thoughtfully, way is is

projects on balance we'll and an on hurry our sheet no of as take in or cash and thoughtful manner, with we're out We'll come our it. balance remaining we So, spend it into but let slow have needed to proposed sheet. the that time that

Kurt Yinger

Great.

sense. and good that Okay, the all make color here We appreciate QX guys. luck in

Jerry Richards

you. Thank

Eric Cremers

Thanks.

Operator

of Seaport question Partners. next Mark from Your Research comes Weintraub

Mark Weintraub

you. Thank

quarter-to-date, the on--? price Jerry, you or mentioned stay price average to where of Lengths' quarter First, the price for on were some could the where ballpark you lumber, Random is trajectories today be pricing average if would is, where it XXX the

Eric Cremers

me Mark, Yes, let a take that. at stab

than QX that But prices average. taken shipments the prices Our our a they're we on mentioned, early July and reminder, at June to-date, stretched included were in that order much, prices as QX lower lumber as to QX files, into our prices running in that based higher orders that full actually X% included mid-November. were quarterly than shipments in for about much

if July shipped our And at the back on really $XXX. mentioned, backed us. had the September the inventories of and transportation versus Jerry recall thousand home we at up end centers $XXX also you As pushed lumber for QX, per challenges

average. lot pulled of QX, expensive our So, up and shipped into a QX that got early lumber that

as down X% Now, look our QX if QX, kind But it a running we're mentioned, at get of from I spot X%, we currently averages. about standpoint, price into as than higher you we're quarter-to-date.

be flat R&R that to our end new or supply are at markets going slightly maybe relatively strong for demand to down end price keep thought or starting is here. is, going going now struggling demand that home on up So, the we the with a a There's rising prices the from sense into to But the our of construction counter of, is forward, comparing you, happens you're in that winter lumber trajectory year. of the it's the really And slows. of assumption I lumber is of environment of flattish macro get prices whether question months we're kind think to same that as what here of, the QX lot now. season follows But Lengths from kind that when support to QX to a and that end move the side of building are it's to year to the quarter. right factors Random to

Jerry Richards

as in file feet think Mark you will the quarter. and thousand piece estimating quarter-to-date price to million shipped priced feet jump you per about XXX out that QX pricing. we're that That XXX the million that of help with ship I'll of million order XXX inventory, board we modeling another about $XXX data includes represents So, for that

Mark Weintraub

very That's helpful. clear all and great. Okay,

lumber we Second, builder -- starting a prices in the a would had at again have back this if channel want earlier that Are going what the lumber I to seeing Is chain think I'm not after build in have or one I lumber. might available, to go make sure I'm the point? curious, have would up this or not? that you somebody home things year, I'm didn't and going inventory that to inventory of on happened be

Eric Cremers

No, if X are because go going think board I happening going there's you're are -- expected now, year. If be kind I housing building thinks right to every feet demand, of be thinking -- you major starts at But next inventory I look starts starts channel, might be Housing it lumber data. [indiscernible] econometric to forecasting was would mean, firm is to the I almost onto I expects in about flat this housing what's don't up billion something home year-over-year. Mark. compare here. then versus the you most year builder/dealer, inventories build on think I year-over-year a

be if have at of how that And that if hear in really -- -- production you you extra built production to starts when XXXX. interestingly, million the What's could that all XXXX feet board out very is lumber it's And that's increase? in possibly R&R. of through turning going And comparable of is at be? been early So, happening Well, side to say, driving that driving built? look Think to COVID the year-over-year? And are new and is demand equation, is homes to is went but starting got be the it's trucking builders going to the the with they've be year-over-year. and XXXX lumber. you issues boost demand roof. up are mills we're to can billion flat production to there's X lumber not have board think those be to of industry X supply say, of lumber the that -- And what's be host What's supply making And feet. built flat what you order it's production. on XX% the going got impacting year-over-year, going hit backlogs How first curtailment? and chain, because production and American mills be North that a lumber it labor, lumber challenging whole

So, with next pricing for a think supply is flat, backdrop the I here And demand going strong up? relatively environment pretty year.

Mark Weintraub

And Great. million Thank you. quick million. costs $XX up $XX mentioned then to two other ones. you One,

mentioned typical on $XX You magnitude $XX that was to million what the than does basis a more X%, percent order million translated to?

Eric Cremers

X%. X% be Might

Mark Weintraub

how the you Okay, is has timber you've great. critical on if that translate case compelling to is And to into a I that the well-positioned. that. you into -- your -- At likely then same done think potentially think it, argued there's dividend why what lastly, on to well the profitability much one time and regular shareholders? willingness returns a feed about How is a does or of is more something about legs that level higher at way you at driver a talked -- dividend, lumber capital that to the potentially think ongoing time, so either is to set dividend

Eric Cremers

Wood business. strong it business have It thinking. our strong likely it results industry No, have conditions, results but into as if I from from our mathematical definitely Products timberlands think not may We're to exercise, our we a be weighs well.

be our about So view terms how might positive I of kind our of think outlook. are just reinforces we it it what -- in

Mark Weintraub

a having of your terms share contemplated peers you the now of have And you with approach some investors more distribution? mathematical do as in that

Eric Cremers

a sure to looking we question not it our do That's I wouldn't year, dividend. years, exercise. it Yes. Certainly, gotten low has well this out component. Mark. -- the And over competitor model. times large turns we we're really right time. to that mathematical as over standpoint within statement as years, at at a be test it as our with really it's special pinned pure as over where to a well we've to a a have really towards regular thing certainly moving we moved as But And the dividend investing types cash to similar rules and said cash at and the it we're M&A, make dividend thing more advertise a we've have special a things. allocation right variable stay a as wouldn't that the stable as It's it's do that, really we cash that REIT part to those at flow this dividend of the want in look is to capital been to Eric, stream. from the more volatile needs been opportunistic get Erik year, reinforced grow this certainly, way a volatile, And morning, look it's mills we shares, streams And we've back. buying then sustainable, it the in and of base

makes math, ratio do Coincidentally, run put marker not time. So and payout the there. it look sure out at over we're sense to we that a our

the of we a with that to the math last special cash really that's publish which target, off not at do a we're you because longer not within a took looked shareholders kind If distributing of it is others that's and that's period well the mark our near time XX that's and are benchmark. the about at but where months, as dividend of XX% the as over range term of

Mark Weintraub

Appreciate you. it. Thank

Operator

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

Ketan Mamtora

in But come to prices and seeing Timber too good I just quarter-to-quarter. kind of curious morning. just if prices, around Thank Southern recognize kind want of and I you, don't I'm that move to you're much Southern Timber but of kind of you up QX prices. seeing and sort higher? structurally of better kind I obviously supply was signs real uptick quite are mean nicely prices any of going demand

Jerry Richards

It higher tip as part up But mix Yes. in pricing, point about did of South weather. other an shortages, crisis. shortages the or Southern been excess relatively comments, there been up prices When great flat in bit at of going fleeting. point, hardwood. really timber standing were of X% an caused bit in when a sawlog our fairly wet being relative wood -- wood been quarter-over-quarter life baskets. terms sawlog certainly to is To so that's has when this the covered the see of seasonally prices been sawlog our major conversation prepared basket. But capacity the up extraordinarily it's addition we still and each data, the see the solid mean, increase the they've a to do harvested in look since as South pine pine view I year prices we of were this far I a actually new reason given were has financial ongoing in in log certainly, what's there in to the we there's certainly But are our we pricing of sawlog by a when

well, as our structural on eye we So, although lot early, I call a too a think and have it's our that positive in that certainly there, view, there's Ketan. to shift, of signs

calling our in So time sawlog start of under pricing. I we belt think before structural need we more increase in terms victory

to in constructive we're the to we've meeting having with getting have been here way. said we we than South certainly that, the and been comments shareholders balance been over in Now summer, that closer our last think

day we it a to at we that is do a bit if XXXX? little out getting this there structural see finally we Is are it's when So starting shift further? it But certainly not point. closer think

Ketan Mamtora

the US better kind of supply-demand in next of of given five out Understood. balance? becomes do of more of two, South kind look you you That's of as years growing into a business, three, attractive sort think side the helpful. With that Timber getting sort timber backdrop, especially the kind

Eric Cremers

kind said, are environment. four, still of out to But turn. as get don't well. Jerry as the clearly absolutely, liquid. place But you going think from Yes. business years, in There's go to price US and activity our a year a of eventually favorable lot Ketan, think of flattish have They're Near-term, grow outlook sellers do Markets are an is we next in transaction standpoint we deep happen M&A prices to we south. do to think expect five in the there forget, we very the term. Yes, year South. the a couple that longer very we're

to So get a deal. into it tends priced

Jerry Richards

carbon add Ketan plays to opportunities cash and wind not in how at we've solar some as and other deals seeing, I timberlands. to streams we'll guess, and alternative And also certainly, that of jump gives out. as in, around underwrite us flow kind seen we of well. currently, But related see that that's part what other we're confidence that thing the credits, with I'll dialogue we're is more obviously, looking

Ketan Mamtora

turn very luck. Got over. Good it. helpful. That's I’ll it

Jerry Richards

Thank you.

Eric Cremers

Thank you.

Operator

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

John Babcock

dividend the Good the for the question. and rather was high a to morning, wide. good range The just relatively I seems guess I that wondering what's end? dividend low special to going drive be to just afternoon, first

Eric Cremers

John. yes, Well,

end the and board look early to the going for it collapse from really completely what's upon lumber to prices what's outlook it's recall, in whether we high drive, we it's is at going going meet just our next think That's to to low look at or QX. really how at going December, at it's you are QX year. QX, the and in can And to going I end. depends doing saw

the uncertainty be. We expected outlook We year. was some happen. to at Board happen lot to to going just a during there the the But it know that was was last when as point what of to when going met, didn't

agreed meeting, convey or So we at we came-up analysts. with the that's the this investors what range to Board to excuse at me, and and end to last

we get out and meet early the how December. have also have we this visibility in We But into to formalized now, visibility until quarter next going with the Board is better better won't play year. into

John Babcock

do XXbX-X much how still under repurchases? And you the share have Okay.

Jerry Richards

Yes.

the parameters XXbX-X. authorization, have of So $XX of haven't available. the under But share in just we repurchase million terms really we disclosed

John Babcock

how efficiencies like about you Ola guys of if provide sawmill, useful. color capacity with talk we And additional generally be And can grow the you're sort in that you've could would you but thinking the I as What also, know -- to that? of capacity expect? that the then are on just about forward? you your past, as about more any far kind have, Okay. ability of to high-return capacity with be associate get going the might equipment, some to sort going you talked new projects able to of any

Eric Cremers

going sawmill be Yes. when rebuild it's is to really done. Ola The good

costs down processing to cash the expect mill. about come We XX% per thousand at

Capacity is fewer improve going is We had that fire I or million about from employees going previously. because going we're XXX streamlined to to less. pre to will. And it's you the feet growth if XX% net purchasing with than XXX to a standpoint, compared Ola, recovery be board don't to, expect know, be what we more more feet productive, about down sawlog million XX more board equipment

with volumes prior kiln the so fire to environmental challenged the new XXX right the we're XXX a put well in level, stated that mill. on running as our that's level. up stacker, at around had put XXX kind We million board we to of So couple de-barker, going rebuild, to cetera, We chipping are away new a expect the slowly level, We stuck but been we may et at getting XXX up XXX, be recall, you up get up, a since sawmill for kind the push working getting still permit. of constraints the Well, we the against XXX feet. the in AND had cetera, et our and of of as million it Ola the level past were were to capacity around merger. to years volume

So really be. to good that's a place

forward, track I X% growing So that grow of we'll anywhere the to from forward, of production. that's to And for longer rate volume We've our run in volumes increases per end really record continue be good got X% year. at year going to low the I our -- to invest continue per term, the maybe going be the mills out expect to mills. a high end would imagine going

John Babcock

maybe of say. early you. too to Got And Okay. this is kind

think to anything How kind I I the or million are in mentioned you this year guess, inflation? $XX rather of up the $XX you labor on you terms next so? thinking about And million inflation of year. are over seeing the cost, are front

Jerry Richards

of terms front around Well, have get labor come on work country. we're applied. the XX not people put to I'm on in we going inflation We to historically, ad. people out And challenging might an -- we what's job opening. It's seeing the a get when to

about about and wages significantly are raising the people labor. and attract potential Walmart McDonald's apply. we're reading may the I'm They how these to Now companies three strikes other companies not at getting qualified. be reading large I'm all to that around country.

very next what's on We labor haven't but formalized am front. I our about plans happening the year, concerned

all that to purchased addition items business. we to In these other run our

growth fertilizer. XX% justify for an example, to going as year-over-year. up challenging is up when XX%. cost fertilizing Just costs are make our to really it Fertilizer young us to It's timber improve

way wage the across are it's it. expect So all well. find would kind All of as happening three units inflation it's its experiencing business going business. into to And I

John Babcock

you. Thank Okay.

Jerry Richards

Thanks.

Operator

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

Paul Quinn

Yes. very morning, guys. Thanks Good much.

million $XX Just Of Ola? CapEx rebuild. the the on Ola a how question sawmill budget, much is

Jerry Richards

expect $XX those $X So, Paul, to Ola. $X $XX million us extra soon million, we million, million, to is Of roughly that million of going an insurance the $XX reimburse perhaps.

Paul Quinn

XX is So XX be date will the X basically? insurance so plus insurance to to X,

Jerry Richards

Yes.

wouldn't add I So Paul. those,

take process the when sort think insurance to the next probably the XX will claim part months business of So you interruption about everything. better through and

And covered then million of million's asked $XX that cash not Ola $XX received $X That's been from if by It's and $XX that a have is buckets. you to the the reimbursement to received. you $XX we of million been the separately insurers. of $X million those we've already BI million will, two far, about in allocated, So combination has million equipment. and

Paul Quinn

is -- like -- contribution well. seems your your current XXX looking the pretty well? on as just criteria stable level, business I Or at dividend the is Board mean, from estate then increasing as just real just And they estate sustainable it Are around your I the real Okay. considering Timberland?

Eric Cremers

then real does most and secondarily, say, Yes, -- it's include would looks what entire Products then I I Timberlands. estate. up day, Board the flows. the I And is at company, estate for at mean, end But think roll the Wood of the real which the matters cash the

Paul Quinn

And dollar every about QX, asked $X the stumpage so on I last stumpage? the whippy. then in low $XX very very out just benchmark lastly, just there it in wondering ton just And why per was mean, seems this was seems but amount it to Okay. QX. mean, probably I in decade, just that I compared it's --

wondering Just it's why lower?

Jerry Richards

that's that Paul significantly, move and logging as number include time, doesn't around you Well, stumpage will one, a know hauling. and this

it, what's another, So call depends certainly pulpwood, ton. much would there's lower it mix than margin stumpage be. and on South, available, of in $XX, that's $XX it's But is -- the sales the to also a sawlog heavy which

Paul Quinn

guys. have. Okay. luck I Best That's of all

Eric Cremers

Great. Thanks.

Jerry Richards

Thanks.

Operator

Your of comes James. Raymond question from Buck Horne next

Buck Horne

Hey, thanks the time. for

the you some cost inflation might is outlook might you play out and British large faster? in capacity? out further here, cost Going the industry either in your Columbia the with? that's you're the capacity, supply going the thoughts inflation on. I'm think kind out is the production industry hurdles logistics think dealing do there. how well? across given seeing question marginal just you shake Do back Do what the whether at and do you producers of think Idaho to economy how to curtail it challenges and think this just marginal about curious it as Or Or lumber

Eric Cremers

per these they days. looking going hard spend at to here, Greenfield new items, Yes, trucking think back build West new you happened may it mill I to to inflationary America. what's West North these in new I noticed construction a that's Buck. Yet $XXX Greenfield harder Well, thousand harder $X,XXX roughly it's to issues. a here bought I really good paid a It's couple issues, transactions, a that capacity. M&A supply Fraser all these Fraser Mill, really labor thousand. was on And feet have mean issues, it's because these question Angelina build as observation, willing or per and the are board chain it's to mill thousand. do of of they're And $XXX $X,XXX mills a think saying, that reflect

to this sold the capacity per to at mills. Interfor to do in I'd think go with truly I thousand it's is that these to but four capital mills Interfor. Interfor people sold bet because I know, of we recall Greenfield -- And they over mills and and to I $XXX hard to can that want its capacity. observation are price it when is really transaction buy to opted starting probably sure the route it looked have? four other selling And up I and Or this said, GP, would GP those don't at other and look best to mills The wasn't do the have Greenfield four buy was want Well, go four GP mills they we America. we how selling it build just in new recognize, well, country is North I'm I

see supply the demand. higher don't What going it are prices because competitors out I I with keep to I struggle to know So shape see structurally of in of is is up terms that going market. to that.

even quartile And fourth a mill be probably a means, so think you strong going environment, I pricing got if you're competitive. to in that

Buck Horne

the you're And far just thoughts. kind seems discussions. you M&A on That's the color. like you. introduced Great. those great to some market. I pretty also be more into in market guys seems being curious, It now. timber line of There appreciate the engaged down that's are lot capital Thank a

regions acre competitive values how per kind offering there? Just you're of it capital what just of of in kind is is getting? kind and seeing And of curious recently new maybe what out your pricing-wise, terms in

Eric Cremers

you like the banks yield Yes, Central kept the are full a I a price really -- down where now. world the rates for many places right including around to right in now. world real starved is US negative the rates that, every competitive pretty Timberland got seems in. asset always It I would tell class. think deal has it's is has been have

If you is at XX relative think inflation about running. to year where is treasury where the

for to great timber to asset lots Will yield? to go different real investors a is do they where tend of reasons. And assets? real So turn get

we're than a seen XX the might don't at than XX guess there's you I lower probably where timber that discount have but chasing know you moment, been ago. tell to basis would I right capital rate. tell pushed points I would where we more exactly this before. ever I And So year I've down probably that has

So standpoint. the discount call a it say, fours in rate from high real

Buck Horne

right. Okay. All guys. Thanks, luck. That's Good helpful.

Eric Cremers

Thank you.

Jerry Richards

Thank you.

Operator

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

Jerry Richards

All you, follow-up your window, a you you day quarter. PotlatchDeltic right. certainly to Paula. we'll next interest to And Thank talk thank good Have and everybody, talk quarterly regular calls. and for available in for I'll the you, soon.

Operator

Thank event. Ladies for your and today's participation. concludes this you gentlemen,

You may disconnect. now

PotlatchDeltic (PCH) 26 Oct 212021 Q3 Earnings call transcript