PCH - Earnings call transcript Q2 2022 | PotlatchDeltic Corporation

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Operator

Good morning. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the PotlatchDeltic’s Second Quarter 2022 Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After the like to [Operator now turn call Instructions] I'd to over Mr. Jerry Richards, remarks. opening Officer Financial Vice President and Chief for Sir, you may proceed.

Jerry Richards

quarter and David. to morning, you, conference everyone Thank PotlatchDeltic's Good second XXXX earnings call. welcome

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

Eric Cremers

is million PotlatchDeltic of market quarter. Thank closed total adjusted a in you, EBITDA This second second quarter second Jerry. after the We ever reported the $XXX highest reported yesterday. has EBITDA

our financial of lumber $XXX over seven eight last Those of the of the reflect have million quarters, to $X.X those EBITDA exceeded we Additionally, out eight EBITDA generated quarters. in our nearly has leverage strength results quarterly billion strategy.

wood second lumber, generated quarter. of products adjusted the of Speaking $XXX EBITDA in million

of thousand levels. $XXX prices exceeded attractive middle in per in a low we As reaching the expected, $X,XXX board lumber increased per June prices feet. random very are composite and moderated at every thousand feet from price the QX has when saw price since framing during high levels The quarter of lumber the extraordinarily week the length composite lumber board

in averages rest continues shipped well more second challenge. QX. We We the a than feet to above the remain lumber we quarter, board million long to year. expect feet was which be million for of significant lumber XX the term shipped XXX in of prices Transportation

QX. ships typically lumber Arkansas received mill, out rail our only railcars example, about which five by in its XX% For Warren, requested of XXX of

miraculously present Warren go Our virtually and safely. these truck of on team focus of working shift continue their to solve our to log beyond which and types to maintaining wood milestone. worked issues is Arkansas a Restarting top all sawmill continue business. above installed, priority. important the products sawmill while been challenges large to to to shipments line risk they equipment our Ola Transportation company The new at has an remains

of quarter during phase the our We start-up expect third target the wrap by the to the up end and the project year. to complete is

cash phase. Ola’s a rebuild log significantly it As completes after and will production the lower reminder, recovery start-up processing increased costs, improved volume

segment Our million in adjusted generated Timberland of second quarter. $XX the EBITDA

was advantage favorable lower harvest expectations. Our wet quarter decent to logging a the were Southern positive is note, unseasonably exceeded prices pause favorable one, and spring in South, timberlands log spring Sawlog due of forest team volumes year. which availability. in because, it generate this conditions break-up. for that after there Idaho Idaho reduce regions our On volumes in both weather fire June wet harvest strong notable took typical risk the remained was for to this should the

adjusted strong segment million. of with another Our EBITDA Real had Estate $XX quarter

our notable, Minnesota Minnesota side prices sell land Conservation of XX,XXX because business, long-term well On is for the closed to we value. of holdings rural than sale our acres. strategy this the Timberland the This more above sale completes comprised effectively

$XXX have last created value years approximately Over estimate million Minnesota shareholders. the we the course land of the for sales our XX of that

them. fast business. planned We sell as continue our and lot lots at create Residential our Chenal residential we development also to to of continue master in the Valley can levels rock strong see side demand remains as estate community in bottom our inventory team real

two also $XXX estate $X per commercial during acre. million or aggregate We real nearly quarter sales in the completed the for more

remains backdrop to that long-term the favorable. believe We housing fundamentals. Turning still

strong stock next estimated the their history who who at Specifically, still demographic desire be housing well Existing X the statistics. years. single-family remains is prime related the cohort United shortage still support were entered US construction, States several as and housing new to will housing in XX three the belief of as a average approximately and years on remodel largest homebuying have history a investment, residents. in that to in examples Those million years own residential have the over oldest remain exists. the the strong repair Millennials, units our

in have sidelines. pushed buyers starts Until perhaps modestly expectations the $X.X believe US many about While that must starts higher lower in believe negative we improve, homes, of that consumer confidence the expensive mortgage more economy rates to recent We at months. housing levels, decline rate. million we a about annual combination the remain acknowledge factors some and future, will optimistic potential run have housing settle we moderated the around

We from of also mix term. a construction family was number June. record well for the bodes million housing units construction the X.X demand the in units elevated In under units expect in The meantime, lumber away towards of a single near multifamily. under shift housing level

remote Migration to factors. that remodel healthy underlying usually and of of to In houses smaller have the housing market costly think repair builder given fundamentals demand be to and continue markets, of effect interest homebuyers rates builders in less mortgage higher we segment. factors remodel Shifting an on of in to repair affordability and and demand the The this other lumber favorable have effect remain and less addition, offset mitigate levers works, concessions higher examples rates. markets may are durability issues. will

to US, home, attractive home balance market at sheets if the strong, job in up shape. new very equity trade to cannot a a consumer or record option And is for is across remains Importantly, existing levels remodeling the are very afford great homeowners. you

remains center takeaway home Our pre-COVID levels. solid at

EBITDA Last Waldo, sawmill. will on expand project year The downtime which per will in of recently. been expect active the completion month, increase the we Project million board just XX% capacity will $XX to weeks by significantly mill a XXXX XX reduce we costs, in to project existing the cash a of result incremental to to mills and and base topic three project $XX processing Turning million IRR operate very end million announced merger, we year, Arkansas our tie We've with July million expect and equipment. continue was new to feet annual $XXX during The the The of filed SX case. May. has modernize are to a conduct The expected in the by successful to the CatchMark at the in bidder XX. on is growth. million continue total. to this three steps of vote of and late its transactions announced transaction Form we next strategic of statement the to a SX shareholder in merger be the the of financial lot in about Shifting excited there Timberland expected finalize the we been transaction. been progress benefits end QX since XXXX. bolt-on will for and aggregating CatchMark and close We've a the also registration $XXX

acres and our quarter. represent CatchMark closed XXX,XXX anticipate of closing The closed transaction May, increase we XX,XXX to Combined, in earlier third this an this nearly month ownership and with acres add and committed approximately dividend stable review growing sustainably. merger the typically The later bolt-on Increasing regular Mississippi so. the three transaction second or opportunity bolt-on first cash our bolt-on in We acquisitions Arkansas. in transactions this fourth the in provides the with Timberland We XX% quarter. to and regular remain the flows timberlands. the our CatchMark fee the dividend our doing transactions our continue Board year's

in our to Given dividend pay of first strong year. special this expect the half the we results year another

remainder the will our be we year. year, we amount for lower performance last depends While much the amount expect $X of paid special the the on than dividend the

and progresses We as will of better line sight. updates provide we have the year

returning to at At the our $XXX on our plan discuss with sheet under million per million. XXbX-X we plan. of Board the of at share shares $X recently repurchase end shareholders, the We our and we of our to balance our QX $XX repurchased $XXX next meeting. million regular share of Finally, of on strategy approximately cash had liquidity cash theme

provides of timber Our solid leverage remains the financial the platform growth. a continued REITs for strength our and lowest

ESG and we social our reporting, environmental, published governance May. in Annual report third Regarding

to seek to team favorable degree turn we outlook. plan mitigate ESC Our shareholder and provide balance second report in working my a responsibility is publish To very and strong spectrum. take to we it website change sheet legacy climate of discuss of currently on part fundamentals. full positioned ESG advantage carbon the to well our developing our remains of results section to liquidity ESG and industry a do continue PotlatchDeltic of Jerry are to climate PotlatchDeltic high wrap our I'll value. our fall. and a has across and committed to as our story a And quarter over our flexibility we strong up and now comments, maximize the

Jerry Richards

the plan harvest team higher quarter. tons and segment to second advantage it the was from prices in XXX,XXX the basis first conditions company's of of June history. to quarter, quarter first and breakup XXX,XXX compared to for and in due weather second in decline lower quarter now Starting reflects EBITDA operating indexed on sawlog the the Information decreased were of EBITDA review the second than the first second second color in is harvested line in generated X% The first harvest the adjusted each lighter profitable our harvest million quarter slides, ton took Northern tons our EBITDA $XX $XX of volume in per Thank a million sawlogs the quarter. volumes. in favorable provide in annual the with wet slide in compared seasonally quarter, most adjusted the on Timberland $XXX of prices prices North. I'll constrained logs. sawlog year-to-date eight. We in you, our prices through North increase is volume The million Eric. million displayed is while page harvest logging the first with amount quarter effect to primarily the the six was in quarter. in The on segments the $XXX in five we and lower higher was quarter, our Because in the second the our for EBITDA second in second unseasonably sawlogs results. Spring the quarter. of our lumber more segment's quarter-over-quarter quarter our sawlog that in

us Our lag, quarter lumber the prices which March. in include index first prices did allowed the quarter X prices dry index we take lower strong South, Southern team harvested the Relatively second reset And tons advantage and our means did of In June solid million demand. lumber prices. a by index conditions not prices peak in to include sawlog second on one-month execution Timberlands not quarter.

Southern compared evident not in the higher X% were slide second prices first the eight, it's to quarter. in our sawlog rounded While the prices quarter on

While that signs of the recent in remain our we expect prices the baskets. to Pine moderate Yellow Southern seen encouraged year, second we half the of by wood sawlog tensioning we've in

Moving in and slides the to in Products compared second quarter, EBITDA the million on nine $XXX was adjusted million Wood XX, first $XXX quarter. to

quarter. lumber length price price first the second the lower feet $X,XXX realizations random XX% was thousand quarter than the second board composite from lumber average framing the first $XXX feet By per decreased to thousand quarter Our per quarter. board the in in XX% in comparison,

shipping lag orders by time the closer we price. not a real between to experience reminder, indication composite, and is the booking a is which of As captured

Our the quarter. during lumber declined each prices month

board feet average increased May Our lumber XX in shipments $XXX feet $XXX April, thousand realizations board in $X,XXX from were first million feet feet and price quarter in second in quarter. XXX XXX to per board board million June. the million Lumber in the

declined of to second million effect quarter. The the and $XX the timing sequentially hard million adjusted Estate quarter, generated transactions. As result. rural achieve that XX. by issues first to in to on transportation mentioned, to worked and of team due slides EBITDA the compared mix XX segment's Shifting EBITDA sales Eric our Real to mitigate in $XX the was

nearly of results In second quarter for example, sale XX,XXX commercial for the transaction Conservation acres solar Rock, acre the acre sale lot average commercial over X,XXX community $XXX the closed quarter our $XXX per for Chenal sales of strong a Arkansas, the For farm. acre, per master-planned Little quarter. and at included real remain acre residential a Minnesota lots in we $X,XXX of second estate while just an two first in included per price Valley

are XX. Turning to summarized financial on items slide which

mature end interest $XX.X debt $X rate rate share June repurchases closing. repurchased merger with CatchMark's discussions July we XXX,XXX due million as cash, that net XXXX, $XXX of plan to of early debt million as at of call, quarter undrawn well This swaps at remaining XXbX-X to December to million our a revolver. at million of $XXX Note, refinance to increased discretionary includes to the at We liquidity X.X%. shares the at total to scheduled $XXX.X We Our amount of of largely million. the first availability million approximately been of refinance we've in in forward-starting the our on under at We $XX our X.XX% annual about pay which of will our and have expense to since refinance CatchMark. debt reduce for rate interest $XXX off precluded plan. we debt $XXX,XXX. plan locked from earnings million half end of patronage, March, CatchMark use approximately our mostly the plan CatchMark's fixed

We are once to is at prices CatchMark our declared our shares close XXbX-X after we we merger. increase We plan suspend and attractive forward to the statement to flexibility registration committed remain our required repurchase effective. look

December. expect special dividend pay We to another in

that cash expenditures it expenditures, second from included amount flow and lower the were on quarter, believe in that is year, paid of much Timberland our million this cash year's special statement in share in for than per we actual our amount real the will development excludes the in dependent performance Capital estate operations which rest While dividend $X we the XXXX. financial acquisitions. $XX includes are the be

$XXX on cash we the mentioned, high use third of were used in on or successful details in Arkansas in bidders aggregate. other Timberland Either We transaction three May. the million close million for to some XX. I cash acquisitions the comments, are in the level Mississippi now the bolt-on provide and $XX will million Eric quarter. outlook used to slide presented the As of to have two $XX plan close transactions first

North the to We our logging segment expect Harvest conditions any year. typically quarter million the third X.X the planned of the be in to seasonal quarter are as to third quarter. Timberlands million tons X.X harvest during has their peak in in at the best volumes

lumber in and to compared We to be sawlog to significantly and to Cedar myriad due the successfully expect plan Northern in million Xrd prices prices and We of South transportation our lower to harvest XXX volumes quarter. XXX rest feet In face. be quarter This the third sawlogs. assumes seasonally expect we to indexed that for of decline the ship higher continues quarter. sawlog prices million board second of the team to flat we to industry the a work challenges through the

This the far approximately lower thus average approximately lumber. $XXX than price lumber average in Our of second price. on board lumber quarter XXX second quarter our based feet million is is

quarter spot approximately our second lumber average than Our lumber price is lower $XXX price. also

of on an approximately consolidated basis. lumber $XX million Shifting As to a board per for equals EBITDA annual a foot reminder, in Estate. change Real $XX thousand price us

acres sell and of approximately in Chenal the lots X,XXX rural XX Valley land expect approximately quarter. residential We third to

Additional estate slide. details provided on real are the

for of the to a Our project by the last excluding in total month. Waldo estimate acquisitions. in $XX will XXXX, expansion we which expect That $XX that deposit million be planned capital estimate to $XX includes The million rebuild includes reimbursed $XX announced be to expenditures we Ola also approximately insurance. are monetization range million

This quarter. Waldo we quarter EBITDA lower modernization prices and Wood accelerated are being For on sawlog anticipate will be third and expansion project. assets increase in modeling total positive replaced our and adjusted remain with lumber estate we being based $X is lower to index for expectations will will said third that, in purposes, lumber fundamentals attractive levels. very continue Having at Products depreciation million the is our and Overall, That's quarter, because that quarterly approximately depreciation industry real activity. starting prices remain lower that be the the per confident on

We long to over growing the value are term. shareholder well positioned continue

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

Operator

from with Instructions] Capital our [Operator Mamtora take And Markets. question BMO you. first Ketan we'll Thank

line Your is open.

Ketan Mamtora

Hi, you. Eric. Jerry. Thank Hi,

Eric Cremers

morning. Good

Ketan Mamtora

talked way is First question, there drop, just volatility given on to decline third you magnitude the sawlog Northern to of we've a quarter, about Jerry, sort seen? think lumber in about the of prices prices maybe the significantly. that

Jerry Richards

certainly a in Ketan. results. QX. bet, you QX in Yeah, prices about are And that's went -- driving factor key up think QX that's when Idaho you versus -- But we sawlog actually

level And, high you had when versus the a QX XX% starting in happened time. composite lumber at that we're think QX we QX. since to went about prices obviously, So fairly down what's

probably right of sawlog the prices in feels us go range terms in to indexed for something are XX% So where going XX% to in QX.

Ketan Mamtora

talk right a And little can weather you then kind are this bit that the color bolt-on helpful. on bid? of That's Understood. doing about competitive parcels three you Maybe any transactions buying, now? a kind was you the off are

Eric Cremers

Yes.

is Ketan, So, this Eric.

around and XX, yeah, of about It's about XX $XXX Southern going $X,XXX which around On to they mentioned be of to or all our to typical told, going in million site of little million about tons average, South, going to talk that's frankly, of real They EBITDA, $X or to up in prepared about XX Mississippi so it combined. And average level million good. backyard, XX and And is about were discount was spent over rate. the we the about plan. three remarks, all XXX,XXX relatively generate, $XXX the years might relatively got told, right little bolt-on tons acquiring at Total $X stocking you price so. per per just pretty were incremental deals higher next X% pick they is add XX XXX,XXX So, I'll really in our total just the it's for XX is over old, over about noticed, million The is, discount we at acre acre. We done three process three All to harvest way average at high the rate, years. our year XX, than XX $XXX think the are million. it's tons in acres in index we Arkansas. per and EBITDA high as a we're as we deals. a our purchase XX,XXX

told, all XX were So multiple. about these at a deals done

transactions. Timberland REITs them. at at the look which That about at, in I traded really trade comparable typically kind all of these where three I times So I question? other range. about publicly XXXX feel We're look good your excited Timberland three deals. is answer up And of

Ketan Mamtora

Very appreciate I does. queue. It helpful jump really the in I'll color. And back it.

Operator

Next we'll D.A. go to Kurt Davidson. Yinger with

Your open. line is

Kurt Yinger

and Jerry. Eric Thanks good Great. morning, and

Eric Cremers

Good morning.

Kurt Yinger

the And levels harvest think tones, tons going you Southern mean, to that a CatchMark. be should at levels kind we have to forward. you've that reasonable looking closes, be, Southern Just next I million around Ola for X.X recent the expecting with looks assuming I could year? and it potentially And that come positive. just it north million harvest online, of of year, about numbers deal back year talked X done, is this guess, you're I in like deals next guess, suspect, comfortably then I

Eric Cremers

range. some as then per was you there nice merger guided I'll opportunities incremental -- one, -- it's sustainable has the year CatchMark well. in the when other X.X of as announced code, X.X mills noted, there other harvest Yeah. And right million ton because that harvest on we zip jump ton, And harvest been nice kind Kurt. that we in the some between

CatchMark. come call, XXXX specific our that's will after and of quarter when on our zip kind go expectations about through when So back our some have fourth then in call quarter the we And actually we'll color that's we third process. probably provide budgeting more set we earnings code, for

Kurt Yinger

home seeing talk seeing about above levels, That's channel of here inventory I also quarter dynamics? but that I of demand right. what levels pre-pandemic just in guess, fair. could Okay. squares of July being pricing of view still the the with underlying and in center those you cadence volumes and kind to and terms just you're early talked trends, I All what you over about, and channel how guess, guess, the And order your you're current then how

Eric Cremers

Yes.

So yeah, -- Kurt.

might solid off did the but be lumber kind segment, on very side, So of the takeaway over we prices the demand. reference solid. if segment very, rolling is a DIY real stimulating has in being little of to on there I drop been pro demand takeaway, suspect center home R&R front, is contractor the levels, no you in soft comparable still that will. pre-COVID

our is now. business So home center good right very

they there side, may be going significant to these even at other taken we they the with ran mortgage starts. up going is morning. -- drop-off, happening to a pause hear, here clearly saw here there [XX] homebuilders, the look on of to directly pulling don't this is XX-year a (ph) in there don't it pause a lately, pullback back. sell here So, what's and housing be was I a We treasury, rates, be a you are think but we’re kind

throughout mortgage into going files a expect just come order rates weeks. a to roll and Inventories next is we over rock here bottom -- get distribution at think little that bit of demand we channels out as going couple stretch to is remains got back. year levels.We've to we So

So really in it's still there is takeaway business not collapse, good completely business. is like lumber our

Kurt Yinger

Got it.

of thinking? one. color. think the you that I Jerry, then Southern comment just you expand a could last the over helpful maybe on -- that balance That's year. of prices just Okay. the made sawlog Can that, for I kind on the guess, my moderate the of what's driver And expectation

Jerry Richards

Good Southern key half. sawlog And sawlog we do moderate expect pine we other that me hear the flat be in to the is, expect And prices to did point you correctly pricing QX. back over bit Yeah. Kurt. question. a QX

in hardwood a QX. seasonal that provide into more color, dig on to So logs we when increase have and you some

about get a the X% South. it But signs probably window when very strong X% like expected flat an tensioning with -- means look on now, in and Southern pricing. is you due volumes, a per that continue you to they mix, effect which about sawlog about price. South seasonally other lower Pine positive probably think ton half when X% which in its Yellow it's continued saw size our of you QX, half in heavier need there's mix long-term, of Southern So to the chip sells seen to a two sawlog of the it's has see tensioning. I And you I in increase a years to we've peak mix, sawlog just and harvest X% step to what we're looks optimistic price still you it's are for see harvest X% negative, positive that is pricing back think, probably available. we of a when itself more through and is in increase, decrease by And about to row logs

become optimistic. to of be And South, to continues continue the into more to as we capacity positive think that's So going continue very story. we part to our a only come

Kurt Yinger

Right.

That over. Okay. And the sense. I it turn Well, all I'll color. makes appreciate

Operator

Research to go Weintraub with Partners. we'll Mark Seaport Next

Your now is line open.

Mark Weintraub

anything already are good for that you much seems curiosity? in -- you curious are the others bring the where in synergies you. versus I'm especially, or wood made -- Can there that they these along are you they baskets in transactions, way are transactions, you of -- in Thank on bolt-on are present. it

Eric Cremers

Well, use they manage backyard, are our and to these properties. still existing staff in our Mark, we

We of that strong in taking mean, taking we I to eventually mill will of was in place expansions just mill mission to that’s market is Mississippi, selling acres an use the [indiscernible] list expansion [indiscernible] there increased When demand at endless here, that prices. translate relationships Mississippi. going forest customers be will area. strong -- log in were place I higher relationships with, this look with. is we it's XX,XXX whether products we've And at contractors, to got look most have that you acreage

right they just So were three we logical were as buyer in for backyard. -- the literally these our properties

Mark Weintraub

us going does down then, the XQ noted, where third given as are versus how that a about least run be And average log they your have as you XQ? and of look talking through to to lumber costs as at to about that we're currently. Idaho, they What's prices going sort prices, So lumber so your where quarter, business? you are sense thinking happen we in likely averaged

Eric Cremers

there But Well, to from declining into consideration Mill benefit. million have benefit indexed take to prices, and course, million, a I will true you be lumber. $X our don't lower are the sawmills especially to that's back where told, All told, prices the Idaho, to of in log effects. the $X Mary's log timing probably all St. is going due know, to prices. perhaps the log

side of So there the the will be a lumber equation. to benefit

Mark Weintraub

so Thanks much. super. Okay,

Eric Cremers

Thanks.

Operator

Capital Markets. to with go we'll RBC Paul Next Quinn

line open. is now Your

Paul Quinn

guys. very Thanks morning much. Good Yeah.

on as ‘XX the expect to ‘XX in restart, that in Ola that you might well? we and pick up volume get production can is the Just be additional what's able there

Eric Cremers

Yes, so Paul.

to expect XX of million So this right we get year board Ola. feet out around around,

today about a at foot log volume some million running is expect we to when of in QX level production out then, per year. large log up. small line the recall, And line XX get it So starts

million rate. So per end running, at to feet run hope large When and year, year. have about by all accomplished will XXX which line large told, fully about million we line we’ll is the get the feet year XX of run that this log up log the

feet a expect this year. of step-up to year million could XXX versus we So see next

at to volumes. we've we production production looking Beyond always don't really and each happen mill, that can equipment with production every certainly, fought that, we'll just increase will modify us the for we're process allow it expect this of to improved to at volumes. other of have Ola rebuild. pieces because And looking But mills step our of that mills, I projects through the

Paul Quinn

Okay.

So large sorry, once the the -- down you start line? up you're log log shutting line, smaller

Eric Cremers

correct. That's

Paul Quinn

lumber on incremental $XX then million $XX And just Waldo, economics using of for that pricing million Okay. assumption to lot are for that? EDITDA the what

Eric Cremers

use Paul, $XXX it that, at that coincidentally going that's so we're at lumber typically feet, that level forward. as seven lumber per and the average. it you relatively out, our which year lower optimistic we as And we around case, turns of pencils the high thousand prices stayed out think end range see about probably board of it's Yes, at a if prices

Jerry Richards

Yeah.

this of which think North in kind on on nice the We haven't up $XXX a But cost production. high of pricing. American really of should range. about high right course we talked XX% is, provide got now a BC up And has floor in it structure BC, pretty lumber Paul. structure call, That cost $XXX, that

Paul Quinn

No, I because to July agree. X right well And over BC Yeah. [indiscernible] $XXX is now, see.

In you the million, with what's are terms Waldo, the mill? of doing what $XXX

Eric Cremers

Oh, is that few to the gosh. touching. going parts There not be we're mill of very

We will is yard primary I a new a will going production have kiln, the part going every of have log to be be system, process impacted. mean improved. new planer, virtually we breakdown is new to

Paul Quinn

seems acquisitions for much times. low did, And at multiple Timberland pieces? Is area on the Okay. just competition three in these pretty that XX.X you there then that the

Eric Cremers

timber say efficient the area, timber the reason Well, area. buying know. you've and you've in well a you I at we're TIMOs I'd other got to where that but REITs would particularly -- very very, it's got like good that Timberland, the in as like any are very, market, is

out. to that super a it's markets of there tight for these are are These like I going pricing tension. not wood -- tension baskets -- in don't markets with really where up that I little picking we're ton their really is So while for are suspect play maybe take a concept CatchMark to where

or cheapest But attention it's in South log they the Georgia So the Carolinas. Timberland and probably it these have great in in, much going as go acreage in over with not say, markets, may the are poised the prices capacity region. attracted incremental the were to a as but higher

in a do road it immediately the tension year two question want you of willing or a are it's happen in the goes So after let to down place. you or capacity

guess markets. I these for bit a less it's bidding little So would behind what's competitive probably

Paul Quinn

Good Okay, guys. that's luck, helpful. Thanks.

Eric Cremers

Thanks.

Operator

John Next go of Bank we'll to with Babcock America.

open. is Your line

John Babcock

my for questions. Thanks right. All taking

the talk there, you the Also, do just we about CatchMark guys are key wondering second the remember, should I on any milestones half mindful there's targeting quickly you Just be Could if just of deal. close update? there?

Jerry Richards

to so we're mean, milestones, key really with on track the shareholder And down statement registration comments finalizing really vote. in John, CatchMark QX. And we -- comments. the we're as progress, say, well close late the as Eric I'd think as said prepared on pleased the comes I SX, his to really, Yeah. in

John Babcock

baking about growth you're run housing of And I more you. multifamily just of X.X what's the mean, kind you and that? also over Thank outlook like are Jerry side. talk the for bit I expectations is a you're million driving on mean, - with how about Or of that and single-family the thinking perhaps John. then, Overall, that? you that? in starts A year, could own balance consensus sounds are Yeah. your Richards it just the looking side more driven? kind your ultimately little Yeah. if into

that maybe rates lowered something that. million we million, interest in come $X.X like $X.X increase our think sharp at in year we the Basically, have we've outlook. given seen here So, this will near-term I recently,

kind year, of a Next X.X at of a similar we're of looking kind number. kind

you've So and home million housing. got given is units. work at We X there pent-up under US it, tightening days sheets age are starts The trend, prices, the relatively by market. balance great past once for softness this inventory. year. high got still get is the getting in X XXXX, all million job could When home is from envision to driving a we up by built demand a And next shape. here starts But these cycle, to cohorts think strong X.X what's million back millennial about of little scarce that you Strong still we this levels. bit be level, consumer

You've all away. gone different that got they really these have not factors

from there the X% think of a just people bit. to X.X%, a volatility buy pull They've their in terms overnight they're And mortgage so trigger little levels rates. over shot moderate up to and I pause house. will starting seen when just up X% is the now much we've of

out treasury. rates We the also to You've tighten. really gap seen mortgage relative could think blow XX-year that

to weakness. next to going may I'm short the economic there So due from come the there's the inflation trying to reason things believe year, in to to say term, now here, be Fed be think control to early is aggressive I starting but there cuts read is Fed

near-term but they back think XXXX, So we taken out have up our we starts down, right go housing again. to are

John Babcock

mortgage with channels of broader throughout lumber? just rates, and rising in changes behavior the notable for And Okay. are seeing you any your buyers among the different

Eric Cremers

really track and hiccups can't to take be sell business projects, the would home and dealers right takeaway. and construction, new for sight we dealers be they those would to it. do you of to I of to selling could is, home centers the we are But the the R&R now We've could send it don't basically, we turnaround centers rest directly Well, not I there. for we still they tell the homebuilders, no, have it centers any solid selling home because and good we've sell home what line solid really is say away. seen And what we

two probably for weeks, order at are which Our files is typical us.

it away take of have homes I being lot right and goes we XXXX process something now now. The to are a back there the is opening the in they solid homes. into that, be order of remarks, said our So is backlogs that homebuilders are that to those constructed really in and think strong going which completing continues

business. that's hence, in take our So and we're what and lumber seeing need for the away,

John Babcock

but guiding clarity get it's to to wanted back not question. wanted significant, in that? What's to And some like the be there. look kind quick does bit little just I I you're up just corporate ask of It a a know half. driving

Eric Cremers

Yeah.

as our annual John performance So look the bonus, what so certainly our in -- well strong with accrual year. happened was and we've last corporate like when on what's at you rate did QX is, increased we up much

sole see bit. So here bump really as corporate to up a factor why you little that's the

John Babcock

Okay. Thank you.

Operator

Roxland we'll with Next to Mike go Truist.

open. is line Your

Mike Roxland

much. good quarter. very on Congrats Thanks Jerry and a Eric

Eric Cremers

you. Thank

Mike Roxland

as last mentioned be to a that relative One you the why dividend, call could year. -- quick wondering special lower just question, I special this dividend, year potentially lot it

and house that liquidity. dynamic had fact with you're think the due strong don't If to that are going pretty if much the and really you you fall to starts also housing comfortable whole

Jerry Richards

largely with to great did dividend was why we start a hold last And but more but a with year. I on cash think with there Mike. cap index special That’s who our REIT it's driven to were Really question, can the actually business company. the generating. excess it much the Yeah. the generating we by we out cash helpful prices, pay both on And is how so log turns cash was lumber in talk, as it it in in

distribute form So will, and we in have dividend of year. last cash to if the a hit the valve, special you release

buy you, we then where shares to with honest. prefer price to to with out today special stock is be paying So honest especially dividend would at in cash the be the

over focus component So it's for the that components a think to last were that the cash special as taxable importantly discretionary year valve on release REIT regular was excess dividend. important actually income dividend that and of Again, XX% Products, was it I Wood the well. generated and about

log prices are what's lower year-on-year. changed.? So Idaho this year, One,

REIT So factor. taxable be would one income. That Number there less is two.

in that last year really does this discretionary is Waldo, uses we dividend. this a has attractive about then and last of investing than regular strong as not converts dividend great might have talked other our been current year is, but Eric buying we as our a And of price dividend in versus shares year. to as increased dividend year. cash certainly more component component the what special mentioned, And with this have least, the some in what the it about special much And at bolt-ons including liquidity. regular payout Our that I think

pulling liquidity think And levers look discretionary a right year. forward continue there amount we value. component better significant So of growing with strong options the to this growth than special just here the in that putting shareholder is to we dividend recently,

Mike Roxland

the Great. you. Got Yeah. Thank color. you for

stock follow-up back these quick levels and there. more repurchases then to Would maybe share that fair see it one more with Just half? in -- that aggressive the respect share say repurchases be we around the should to hangs

Eric Cremers

goes think registration to out be as pretty statement soon. mentioned, going we're I when Jerry this of Well, here basically here market effective the blocked

So it's hard say to out. play is this how to going

our to Board, discussion revisit upcoming We that's our board an strategy our are and share meeting. NAV estimated repurchase at what going really drives with

want this So the get to one. I in Board on of front don't

Mike Roxland

appreciate I Got it. it.

this a I we're recall to for frame deferred, even it's Eecession assuming that but Great slowing is, during help to forecast trying in your tons what going than is one you happened XXX,XXX obviously, harvest -- you're even I'd thinking know during mass there, to the If and how question, one Just deferred decline, at but Potlatch is about what last Great I'm Recession. the in us harvest correctly, I'm at say environment? late that. just can of demand I a XXXX-XXXX. the the industry itself amount get harvest. head by relate more pre-Deltic trying housing to about

slowing -- really the I'm housing timber more down fact that US the market the you excess saying deal not inventory how there? aggressive overcome given you we're again, South the a haven't harvest particularly in with Now, that's But with headed. would respect deferrals, to

Jerry Richards

really question. Yeah. That's good good a really

why last reason for different cash cycle the the costs this a going is, think be it prices -- low, cycle had got I lot we variable cycle. last than lumber so And is mills. was to the below

some cuts production we point lower this really at whatever do production, to British one where This come is it Canada, cuts come. in housing That's curtail those up to going crazy due are demand going takes save going So In lumber to to happen happen place up need the cuts are you they're Columbia. due that in back cash. to to throttle think cost the and lower high starts, cycle production to structure.

lower other Europe. going from come to The is probably is imports place

spruce of exports lumber board when feet data, US. European in epidemic years beetle look high to in from, from no the detracted year was lumber to the here really prices the are were right at two, spruce ran exports. look incredibly roughly where they billion But do And number getting the come -- when lumber the that hit driven per the of hit number at virtually had prior exports you beetle then one. If X the those that by up XX prices the Central there Europe, now European that if US, we so exports, we're here you European US

So exports are as European think, well. to as moderate going moderate, these that I prices

demand So of getting question back log to what's in happen to going to South. your the

I in think can mills got favorable anytime the margin to to going margin. hard for of they South, be there as keep is which as plenty running you've

you hard as You're run your mills to as can. going

I don't So this. from see at our a to South harvest risk all the in volumes

Mike Roxland

Got the in luck in it. back Good jump quarter. queue. I'll the

Eric Cremers

Thanks.

Operator

Bank to And with America. go George next Staphos of we'll

Your now line open. is

George Staphos

double question to Hi Good sorry pick the but want day, Mike afternoon. Good for teaming that I and you. up here, asked guys. on that

of this inventory the ultimately the one So keep Southern disagree talked growth what's we recognizing negative right? that these Would South? will monolithic the growing markets, drain folks in you market. talk isn't for markets there are that view? turn with versus When but do standing in really expect You inventory for the expect that you about they And regional, tensioning -- and rest your about, decade.

Eric Cremers

really It Yeah, does. George. That's a great question.

where I a And a continue that in I to Arkansas I still whereas be sort in mode. a timber think of go do. But mode, Georgia areas, timber might might I've need you talk you is if as already and South guess standing across be is to to market drain growth Mississippi by market there's increase the four Carolina, drain probably it inventories I analysis as about to South would that and years, really slight the South that South those think be over seen on the another, that, whole the day know may can inventory don't the whole. You years expand. -- three

data really to it three years I've in that to seen wood the says rollover. -- yeah, dramatically from really very next vary the So does inventories and to it basket. wood But I does going peak timber think start are to four then basket

George Staphos

Okay. pick turn it question I'll John's and on And to over. I up want

directly selling new sales fall to not low. homebuilders, to saw of you're home year again, we recognizing kind today So two

XXX,XXX they're and enjoy in to difficulty about off just quick maybe like expecting people, only we're starts to rather what year. and is build got. are so their margins, What finding out having and to margins as not You're preserve hearing this drop builders be next they've expand to going labors that, perhaps they versus try year

think place As if X.X into in your to you the that how luck you the turn why do what real you and is Thanks then thought might mean about agree good plays and that disagree, and lumber premise, with that quarter. you harvest in guys maybe your a forecast and be?

Eric Cremers

really that at the record their question. their way, a either It's mean they homebuilders good to levels. the here here, can try got I which preserve Yeah. have two margins, by are margins options

So they've room got some keep to their give moving to want volume. if they

up decade, It over to this million short fundamental building last the there. back it -- out demand is think there back comes in the to under XX that's all pent US. goes I units

age You've buy. they to cohort, got millennial all want this

or want homebuilders I think they'd they margins. to they going on and have what to preserve do, high to make move want drop rather prices decision prices do here are volume a Obviously, to keep and it's that. going preserve thought margins, and heard looking to be at less to stimulate prices morning I that they're concessions demand. this say demand. say [indiscernible] if high lumber price them they haven't keep I the heard I

if plays that to we'll demand. just they for margins, see out. think how lumber have be I wait won't good preserve obviously it and But

George Staphos

I guys. Eric. care, appreciate thoughts, Take the

Eric Cremers

Thanks.

Operator

showing there time, call no And Jerry back over Richards. At are further questions. I'm will turn I Okay. to the this

Jerry Richards

you everyone our interest recap, were thank merger XXXX for lumber and our pending performance in first and shareholder providing updates our very on increasing forward value. the questions David, and with PotlatchDeltic. for to the To to of look of half leverage for your We you, strategy, results on Thank your our Okay. strong. CatchMark progress

Operator

This concludes call. today's conference

You may now disconnect

PotlatchDeltic (PCH) 26 Jul 222022 Q2 Earnings call transcript