- Earnings call transcript Q3 2022

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Operator

Good morning. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic's Third Quarter 2022 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 Lisa. quarter third welcome earnings to call. conference Good

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

Eric Cremers

total quarter adjusted yesterday. million. quarters exceeded third reported EBITDA market $XXX that has after the We Jerry. makes our you, That last million closed $XXX out the eight of nine EBITDA of quarterly Thank

another the having are really of with quarters. EBITDA three We first million year through strong $XXX

Our of financial our results strategy. lumber reflect leverage to the strength

feet modestly row. over to weeks XX thousand of feet. also Products stabilized per has Wood attractive quarter. $XX last million than board lower but futures weeks EBITDA thousand segment's back board the are price as last was a and after Lumber $XXX couple third increased expected, were declining prices composite per has The are in quarter still Lumber above levels. they in at the adjusted Our $XXX

underway feet capacity we trucks large successfully than availability completed of is run third that schedule in the line on million but million was The the board Transportation rate on basis of expect which we will to its expected log third the the averages. as sawmill end improved XXX in more our risk quarter, railcars We a board million restarted by annual significant QX. start-up continue We third Arkansas lumber shipped above planned. the phase to shipped the reach feet and and when was mill XXX XX lumber of the quarter. has in considerably. entered and is prices remain Ola, long-term feet We of rebuild a XXXX quarter

As rebuild lowers and the log recovery. costs its improves cash Ola's mill's processing a also significantly reminder

Our million adjusted quarter. EBITDA of generated Timberlands the third segment in $XX

Our take but Southern expectations. continued Timberlands were volumes addition conditions Timberlands that in another resulting this to higher our our business. quarter, harvest and contractor of advantage of of our availability log for fourth plan due team primarily seasonally Notably, logging a set CatchMark's favorable our in provide will fell strong boost team harvest harvest record Idaho exceeded the Southern quarterly Timberlands short volumes The quarter. issues. to demand,

hard address in the to Idaho fourth the shortfall Our in team quarter. to working harvest they issues plan reduce place a have is and the

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

to have On the $XXXX community Chenal at development acres sold remains The offerings. strong. on business good lot our rural side of levels side remains nearly X,XXX and Valley we our low an the estate of business, continue in at master-planned lot Residential real inventory we our take-up acre.

million million sales in quarters closed We in a have averaged in sales $XX row That we of also far completed $X $XXX,XXX thus is Chenal, this per over quarter commercial commercial acre. three the revenue total resulting that which land in year.

U.S. There demographics housing history. the and the of of great under-building favorable fundamental that backdrop cohort believe is the shortage stock who favorable the to crisis continue we housing, long-term. after financial due in demographic combination largely to a of largest is millennials, are form the over to the Turning in

the above X.X number construction elevated per result September. as In under levels demand, in of housing at elevated in units in housing demand role the into to soon prices we beginning X.X starts of should units mid-XXXX. pace of rates mortgage return declining. demand supports an the cycle units increase affordable. U.S. time, long-term meantime, million could has lumber will that the take homes a expect also the U.S. housing turn key it easing Fed's While average in to in the units a Acknowledging home played in rapid housing become year, more under to in Lower construction remains as near-term. increase demand level slowing once million The aggressive

issues. ways have to In buyers addition home affordability respond and builders to

repair a in of the strong job a across homeowners, favorable fact work homes country or mix for and attractive the more are For stay concessions homes a fundamentals significantly or and their of product oldest sheets than the be stock possibility largest consumer Existing U.S., reasons. costly balance that segment and lumber are that average to average. of market is mean the new the for remains much homes to to remodel, amenities to for are Higher years rates to in great parts equity likely example, Remodeling is older in because smaller move more very underlying homes a examples. to typically shift of older option the market home a opened existing builder homes. remain the XX continue fewer smaller the shape. remote on for in people, less lot the at mortgage housing the This Shifting of history levels U.S. people given statistic variety record on need repairs. demand important, other

Leading prices. of lumber of given imply X.X% a the increase in Both X% lumber next Activity to National increase R&R of in X% report to higher is QX spending in XXXX. volume forecasting XXXX and less spending R&R Homebuilders The in much grow. addition, a remodel forecasts Harvard's still an rates forecast healthy Indicator and year. higher X% a expect other of XXXX Remodeling repair have R&R be demand but growth In increase effect year-over-year in will on lower remodel in than attractive usually Association segment spending [indiscernible] factors. The and interest continue repair

center remain customer and strong we and segment. demand lumber takeaway in home repair remains the optimistic about remodel market Our

September. on Turning the XXth the to CatchMark, merger of closed

financial be the about benefits by strategic and transaction. excited to the continue We provided

communicated, While target operated expect two log we synergies of we going the the only the of swaps our realizations when harvest more than is $X.X which a run interest $XX allowed with to savings. on million. the as synergies million by price rate Integration we rate we of interest versus of the in we at two for and companies May end anticipated, interest The CAD weeks rates were rise already of CAD faster increase $XX the company's in $XX pleased very provide now color to to that interest us volumes. the value combined sharp annually. led quarter, Jerry higher will the in achieved we due planned. have the savings than million reduce achieve transaction million Also, announced interest to Timberlands significant

three earlier As last aggregating our XX,XXX transactions million this discussed this the quarter's and earnings month. In $XXX in three on these in year, bidder call, total transactions total. last bolt-on Arkansas and we transactions of closed to acres the timberland Mississippi successful approximately the ownership earlier on were add

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

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

in our special We will review with the Board dividend December.

our returning a very to shareholders, million August. we current of forward believe program theme and look $XXX the opening early at one price the repurchasing from is new share today. our On to in in attractive, cash November, trading Board We week repurchase stock approved level window

growing to bolt-on transactions our merger opportunity regular committed remain our flows with the continue doing to sustainably increasing the timberland stable cash we Finally, and dividend CatchMark so. the provides

of the with million. quarter. steep our discount analysis. review regular will liquidity given of the repurchase to sheet deploying our of Board typically QX, cash million to factor have $XXX the capital into At said, end that shares in the the balance we relative $XXX dividend We on attractiveness nearly and estimated the of our NAV fourth Now, current

growth. Our strength low for leverage and financial continued solid provides a our remains platform

we our September. and third ESG first Regarding May report governance reporting, and in social, environmental, in annual our published carbon climate and report

our team responsibility positioned value. as we flexibility committed well and of very provide liquidity part across our continue and a are has section remains our the working PotlatchDeltic change of Our shareholder ESG climate wrap-up full legacy PotlatchDeltic balance mitigate currently a of our to is ESG To my and on comments, to story strong ESG do to and high maximize strong degree developing website. sheet spectrum. we a seek

is While relatively that strong is doubt couple will there of new given R&R years. the next over issues, weakening is residential remain spending view no construction that our affordability

over to results outlook. to downturn relatively third construction In short-lived. will be our I now it prove may and addition, to turn housing quarter discuss our the Jerry

Jerry Richards

The five quarter. the page segment Thank the from more provide million you, I'll due with Timberlands was third million $XXX $XX EBITDDA on on through decline to our of third EBITDDA $XX was The of quarter quarter-over-quarter primarily our each slides EBITDDA results. is now quarter Information in slides. quarter. adjusted displayed second third operating for million to prices. segment's six color in lower our Eric. in lumber and review segments Adjusted in eight. increased Starting the the

the from quarter harvest the tons in Our tons increased the sawlog in second XXX,XXX XXX,XXX North in to quarter. third

spring breakup wet weather and harvest June. quarter by Our second in was unseasonably constrained

and typically highest is the of results in primarily dry harvest in that, logging short the third quarter fell volume Our weather to quarter, log our conditions. quarterly third availability the more in said Having harvest issues. as favorable due contractor haul plan

and possible is prices lower per reflects Northern The were the third compared issues prices team quarter through the they as basis sawlog the quarter. quarter. fourth harvest working second to Northern Our primarily decline sawlogs. sawlog much lower as prices shortfall to have plan a up in on those ton of indexed for XX% a the in in make

execution harvested reset the index which compared the prices Timberlands lumber to In prices index the tons us the and to quarter team in second quarter. April on higher tons continue one million million prices to allowed in May. our sawlog third we lag much Southern advantage in dry demand. second take of conditions and quarter a means South, Relatively reflect solid one-month strong X.X by Our

second results compared by The a not was rounded our sawlogs. the slide the Southern higher markets quarter. two CatchMark's in apparent third increase were the driven X% mix in volume higher quarter weeks to sawlog seasonally on hardwood it's eight, of prices stronger from While of and southern

call, prices we in we anticipated our As milder discussed due and decline legacy proved earnings in in quarter third basis. modestly be our than to The year-over-year to operations a Yellow the on wood availability. Pine prices higher on sawlog baskets increased sawlog quarter's log expected last Southern decline pine legacy to remain

EBITDDA Adjusted the the from XX. to and to third $XX $XXX quarter. million quarter declined million in Moving on in Products Wood slides nine second

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

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

declining prices before XX% quarter lumber for flat Our September. were in much the third of about

board Our board feet average the second XX in XXX third XXX shipments in feet board quarter, to million were $XXX quarter. price the lumber $XXX in feet thousand per in feet and in September. million August realizations board Lumber July, million $XXX increased from

due to issues to mix generated segment's real to mitigate and by third second quarter. XX. team EBITDDA achieve was that in transactions. the Our in to estate rural $XX the Shifting million on to EBITDDA and sales result. The $XX Slides compared quarter transportation million adjusted worked the sequentially, XX of timing declined hard

results acres example, X,XXX at of acre third quarter acre in sale Minnesota consisted while included second per For of over quarter total. a transaction, conservation XX,XXX the $XXX the just only

of Arkansas, lots, third in solid value a strong I sales the quarter. the last real shareholders. average remained culminated EBITDDA estate $XXX generated XX master long-term of referenced the remains sale sale Chenal we quarter strategy and lots two sale with lot $XXX,XXX it as million is state closed Minnesota meaningful planned of our Business the community acre in in $X Rock price more in reminder, third for we the an As quarter. that Little of for a million Residential per in in Valley, as approximately that third sold the commercial created

sale commercial $XXX,XXX one year, We have this per of at an closed for least price every acre. quarter average

Turning summarized Slide financial which to items, are on XX.

million revolver. as $XXX our undrawn mature of plan We cash, the debt was in liquidity includes total million. Our XXXX. to million refinance amount This scheduled $XXX December $XX as of availability on well to

about interest on We which million the We of patronage starting CatchMark's interest our to approximately in have swaps, the debt, $XXX.X used to forward annual merger our net CatchMark's million locked the of of half basis CatchMark used expense in refinance off rate $XXX,XXX. debt, closed XXX lower refinance of X.X% when had remaining reduce cash $XX.X interest resulting fixed debt. pay a at approximately $XXX million this points rate debt and rate, of will September. of of rate we

savings target synergy of interest XXbX-X declared We of precluded share reopening We also We've was May. repurchasing We million. by savings $X.X company's is Overall, defective. rate since our our over swaps statement earnings rate due that the CatchMark by interest our interest we PotlatchDeltic use look when when first million we cost forward X.X% required aggregate, term annual on rate run our interest to debt attractive our In amount interest applied the to prices were and communicated largely a the the discretionary our than and to call, the and combined to reduced higher quarter reduce at registration committed the suspend CAD refinance window amount merger swaps outstanding from to November. expected loan, we average X.X%. to shares weighted points. of XXX from August SEC rules. reduced CatchMark's in That last basis $XXX trading early in our the significantly repurchases CatchMark plan remain been

pay special to another December. dividend in expect We

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

we mentioned, aggregate. $XXX and We outlook the transactions the were presented Mississippi on As cash three for The close three three year, Arkansas in Eric the on I'll to million all last transactions XX. now in $XX high-level timberland in close acquisitions comments. of including bidders the details earlier provide this are bolt-on October. use Slide successful million to some

comparable harvest fourth third higher planned are in Harvest our We to million volumes Timberlands reduce than typical harvest expect the the to to X.X the segment as the X.X quarter. is fourth in for the in million to tons North quarter. third our This to shortfall. working quarter be quarter, team is

This to expect We X.X CatchMark sawlog plan includes we tons harvest fourth to XX% about total quarter. sawlogs tons quarter. in Northern, in of in XXX,XXX the pulpwood the fourth and acres. South, prices million volume from approximately the the decline In

fourth in on to This of quarter. sawlog of prices primarily board ship plan sawmill southern due our remains increase higher CatchMark's a Southern XXX track. expect the Ola the feet startup to markets. lumber Arkansas We million that XXX We to modestly, mix to million stronger assumes

is XXX price lumber quarter our is average lumber third than far the in board feet XX% based This approximately million thus of on price. Our average lower quarter lumber. approximately fourth

lumber is Our quarter recently. prices than lower lumber spot XX% our and price average started approximately price firming third our

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

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

Additional details slide. provided estate the are real on

and announced growing Overall, estimate expansion includes over shareholder XXXX in $XX rebuild, Waldo project we the we We're to This adjusted the attractive Having quarter also lumber estimate insurance. million approximately due total index Our are to that will we the value includes be expect deposit expect million remain reimbursed sawlog lumber that, to in for long-term. of fourth to expenditures by continue June. million acquisitions. total said the positioned for lower be $XX million in The modernization range prices which levels. will prices. the our in capital Ola EBITDDA at well be excluding lower $XX planned $XX

to Lisa, I'd up concludes like So prepared now the remarks. open Question-and-Answer to call Q&A. that Session our

Operator

Mark from [Operator line first of Instructions] Seaport question with Weintraub Your comes the Global.

Mark Weintraub

about have about to thinking deployment, capital going talked a you're you're special As so dividend. you

talked at. where You stock for appetite the repurchase with it's share about an

or You've we you of acquisitions. part next done still what And in ranges on focus understanding that are? a Is then balance likely lookout? Are deployment target on what number other should type still of tying in all of the XX your it months? the comfortability and sheet capital type together, metrics six,

Eric Cremers

our $XXX you're that but is that tell getting to the opinion little successful this appetite also through try And year, with Mark, million bit CatchMark, timberland with grow our I'd we or Eric. to in the company So, XX,XXX this we've to spent acres -- the is What continue we and been just bolt-ons. want not you Yeah, market is right timberland is so on a overheated. acquisitions.

For two competed We in lost tracks. different these deals. recently we here example,

And attracted And was lost XX.X in in as went EBITDDA. We We lost we other rate to those one we end low Both Alabama. We bidders. pack were this of Georgia. to XX.X them well. went to was of of discount transactions the the times the middle of in range. One were went times of nearly EBITDDA. one We we both told the them. our

for go, range. that that's XX, given And So XX, XX max to are current we're our timberland. the discount people that of rate times means paying EBITDDA going north

at creates point grow we value. is think try to very and There we timberland which longer it a attractive down compete take asset So to we'll we M&A continue shareholder and it's because to like class. a while no to continue will

And strong we cash have pivot have we're into going allocation priorities. our And today, is here share. believe sheet balance we're here We're our I don't -- around going analyst is. NAV as NAV we other average to at we're sheet, with on up with to trading pivot in mind, have a share. that below balance people sit coincidentally, the what estimated our a our our capital to dramatically $XX so And $XX to know

fair it us buy some -- to And a in along it all said seems to for waiting presents We've honestly, when this it's at where in Today for us stock it's happening time. depressed, been a like fantastic our step and time not to money put time. our and to so start guess it's what? shares about is. And well depressed for we've that's opportunity when buy mouth just value. to and today. step it's want week we And We from going

let answer sheet. question I'm half? to balance the your But that Jerry the on answer So first going on second question does

Mark Weintraub

you. Thank super. that's Yes,

Jerry Richards

Yes.

maintain that range. a EBITDDA is to with, our and to forward. one. times in So EBITDDA maintain metric key leverage, picking we Mark, the to a our rating find manage I and well agencies our would of the talk terms in our is overall metrics the balance question, us past or which part and up shift I at having to mean to sheet under change of ourselves we X.X the of sheet. as that in strength served kind has monitor how really we reminder, flexibility given high X Today, and credit say a going on leverage no that balance expect plan that we posture And continue that and level, we

long-term to minimum sheet. million cash, past, through balance we've should have which X.X about be talked cash in bit like -- to cycle, the and And So, of on times goal the of X In a some we opportunistic having again there. emphasize a flexibility I $XXX really to a of a flexibility. the of have remains here, range. lot that But

no So, change there.

Mark Weintraub

when the helpful. over That's And to that's talking X cycle. kind times, super. very you're about Okay, X.X obviously, of

So, you level. necessarily presumably look extremely current can't at high -- the at which we been EBITDA, is have

into think what of fair? a terms internally using in So, that translates about you gross Is different you're presumably number. numbers that when

Jerry Richards

of testing when even -- low we're the X maintain debt a We of to point because Mark. we I in and stress a X.X to at perspective, times modeling on kind point. spot look want is levels really low that under That kind cycle range that target, at

Mark Weintraub

you. Thank Okay.

Operator

line Your Davidson. next Kurt of D.A. with Yinger comes the question from

Kurt Yinger

and good Thanks, Great. morning, everyone.

Jerry Richards

morning. Good

Kurt Yinger

well wanted on the Just some three discretionary start the way maybe any markets, in thinking might you could any prepared versus as stability what deployment on Eric, the as in special but of range is share touched help a you're it there with quantify dividend. repurchases here you opportunities? a And the in that us lumber and to quarters capital I look other or books out component remarks, how bit like, mean about

Jerry Richards

Yes.

actually is I'll This Jerry. one So, Kurt. take that

this this share dividend as quarters, in. the going is play special paid had prepared last I terms $X of lower. special a we've least -- the feels it's we position where important. In in year's dividend number mentioned like stepping of And back, last factors said, we comments, reminder that a And group couple it think first of for we the really foremost, at a there's year. per And and but be significantly to a

must a and current of repurchases just little I'll I between place. the new Eric at times authorization think point trade. four repurchases million and we share get bit repurchase back that I have that the of the prepared a discount deviating here, in And we we $XXX mentioned put question, share attractiveness in the the share comments, to the priority and

Our window reopens November X.

on last per back given at $X When I last we're you mentioned Eric the about a special the share XX% degree that to XX% $XX shift excess share have dividend to that mean So, on I paid to discount share degree the quarter's in today. kind purging REIT discretion. capital makes a trading go the of can versus of to taxable we And call, as a protect that That is around again but that to to special that. component dividend year in us that subsidiary, the a the sense trade talks included all we from status XXXX, a repurchases but world reminder, we discretionary we also this by December we to special the our from REIT primarily there $XX overall, cash discretionary top. today. is component the

the So, for think of the probably goes clearly year, amount down other when And priorities you amount year-over-year that parts, into regular have you shares set Idaho have of needed a dividend. special Payout, year-over-year prices, are grown regular and potentially issued cash back CatchMark special XX% about Lumber bucket. that the $XX dividend REIT over dividend effectively so example, full about out going would is sawlog down with dividend. in subsidiary. we allocation that shifts that have the dollars well. into for that to purge really Again, shifted. as been reduce -- up that's of taxable just the to we prices when million capital step we've that's also And the for moving merger, kind the

December we $X the sit this We'll the with just to share like, it. those just benchmarks. hard all year. when in exactly number it's bit under share down pin in for probably the to a give some it's feels down review early per maybe $X per So, range, Board reasons, it But

Kurt Yinger

it. Got

now. then, we're $XXX Okay. the -- very sawlog northern in and for of you've there about guess, project all I used And That's prices helpful. terms Waldo

$XXX if per the Northern So reasonable Is in mean assumption. we of you were will to and something timing use with I point? I But there's use guess, a thousand the ton kind that log some $XXX But starting variability kind a of, sawlogs, of just ZIP for code that. density. indexing

Jerald Richards

and reasonable case a to clarify assuming is Yes. talking the I'm that's Kurt, And XXXX I its guess proxy. if you're that entirety in

Kurt Yinger

inventories slight Wood own And timing it. expected lastly, factor decline on early at QX, I any in than Is maybe just the a the in at part even sequential given less a log and built Products mill? product of a were the in lower costs And the in maybe Idaho Got QX bit Idaho in the thoughts wood but realizations. year? when around then that least costs benefit benefits Okay. were the side sawlog next from around your

Jerry Richards

lot Yes. think when Kurt gets about gets say, built your torn about you it really And I It's processing really earlier seasonality third prices spot were that question been mill much it on. the there's been higher when deck a the premise it even lumber and the of prices the purchased and And all the down. has behind would year index -- log in around the when high-priced and logs the bit in when a relief. is log complex certainly has timing. quarter of

kind averaging log building down. torn up log and of here. is that deck the kind of in takes start As place that We'll for deck preparation spring break

In fact works down the the and that's in well already road.

into deck. So you're that averaging lower-priced logs log

you get think you your XXXX. more standpoint you'll new rate price to expectation is about run from log probably So little bit model as in a as a relief see you'll cost move in Idaho QX into a then and

Kurt Yinger

helpful. and it color That’s superful I’ll Got over. it. the turn Appreciate you. Thank

Jerry Richards

Thanks.

Operator

question Your comes America Securities. Bank of George from line of Staphos the next with

George Staphos

quarters get the in Hi, plans? contractors and be How fourth Hi, are Eric. production much. Jerry. be you very to on harvest If you more Northern could question your availability expect give great. able more more to for Good Thanks you here. would you? that How what a contractor are do quarter? and color bit Quick

Jerry Richards

been what You like isn't this issues. two really feels so there with is really the we or ago a And year Jerry, think when -- lot out. ages had a George. availability experienced tight contract capacity of like of way over surge about time about feels hear also workforce bit mean migration a I contractors. the as labor in haul log-in the much it you there's markets starts bet. we when It in -- It contractor feels South and

in, working I kind replenishing in of, that the So a that folks space. think challenge there's are

start surge capacity. with pretty So a you tight

that top that contractors environment. a does a parts on a once layer job kind and capacity when sudden breakdowns surge the tight behind a And team of effect. caught good it delays then things hard it's and it without ripple starts But then issues time to like you equipment get impossible to Our of up. spare have and frankly really of managing in supply-chain over really and quite critical getting you have all it's get

and So what the of team that's forefront a the came wrestling QX. to was bit in

Now that of in have and contractors. quality long-term as that good do player to deep because a helps manage relationships with through we some in certainly terms do large Idaho what you

end some relationships just effectively need land kind if little plan focus against it's the, we wet QX managing sure when make freeze out short ground. So the said those about if team the I up. in year-to-date that to can't middle in terms really XXXXXX XXX,XXX of do just dry that up and think of about having we'd tons the things it for up about that leveraging I in weather needs here of half tons of, be we We're the color or a either Idaho we'll the this in our so and weather get think on harvest and and in make shortfall end holds short. -- year? probably about But we got to holds, where

is the in flip side we're Now ahead South. obviously running well

year. we start what volume expected harvest a up at the had standpoint of versus we're from overall the So actually

George Staphos

as do it from but wouldn't aside mean come there is does incentives there's be bit doing incremental be mean, would terms availabilities? any just well, the thoughts leveraging in sort of little But involved maybe the well. on lower I they might your in that couple a of more on as when those other margin harvests capital that much of to that, on quick imagine even a in you relationships, to offer that I production

Jerry Richards

costs terms & story when is you the in diesel. cost, year about log So this really haul mean think I of big

You on the rates up. the that But probably log step of are something XX% increase our certainly & of explains cost. back haul in order XX%

Now, having said of the gone that, and in South premise as there's up that fairness the true in North. and your which question of the rates both well because is that's in have tightness

Eric Cremers

XXX,XXX we or All at we add what more do is doubt. in QX XXX,XXX to just would we and still was XXX,XXX George did of bit the tons we're fourth to little I But for no And us, what And sawlogs in targeting of in tons do to nearly pulpwood. got really you quarter QX a less QX. need maybe is QX. challenge a look when

we typically earlier our We them just we do of same the all log QX. in to in And It's in So is, decks QX some year. build into thing. QX. slipped that typically the build that year got do this

George Staphos

makes one that's One of sort sense. bigger great. that kind question though. Eric, of No picture a quick

we tend fourth look you expect and XXXX $XXX,XXX into $XXX So at that remain How that drop once will then, board it we roughly comes repair per to and of sources understand evolve board and the remodel shouldn't and you activity guys buys first -- all it home and the the think but we why? with purchases Do at recognizing about so in starts you thousand fourth quartile luck British cyclically? as -- to quartile, to somebody point. on kind remodel, and a And Thanks starts year. bit that Columbia over do happens after think that tend that the to given so on year quarter. in starts setting expect feet to -- and I feet from per declined and or in remodeling pretty the shouldn't good hangs expect the a Do housing and we project that level repair think that? person the home it's stout remodel hard a say housing next that But it much XXXX. intuitively repair your you being

Eric Cremers

George. Thanks Yeah.

on the XX% in It's with standpoint. the a down next it's British just a is are Pacific couple issues to over if coming lumber frankly increasingly don't Northwest. year years. British you it and harvest going whole question going not lot. quartile next The know North America Columbia. will, are where side volumes over roughly the two. from Columbia think or West cost kind curve how And cost I to of the that's We over So on change evolve your there the structural fourth of

stress mill And you're to mills overnight. -- all it's seeing not these curtailments now But BC frankly to up for going closures it's So some particular. happen are in going not sure. in right

$XXX to it things. likes mills employees go. of nobody be lots let two, $XXX year stays has from zip -- in me maybe or the where now for it code. will up ask and is I next And cost think that in that do not you pulp and XX be? are If going I years that sawmill It think to segment. the curve People But streams and close quartile disrupts $XXX and pulp residual implications fourth mills for

changes think next So over the I or the two. don't year roster materially

remodel, regard to yeah, right. sure, Now with you're and repair

trapped have is or As an typically when oh, to into I going that feel of a buys alone go living and somebody can't down lack house home we in tendency. think a a That they a that R&R. let's I new that word down remodel new think they because house. to effect to this just buy in will more are then for move better house say, of tend is kind R&R existing house new house don't for people a expenditures afford push bought. But come sales a brand-new

it think kind more be houses to tends older existing will. you if I more, of

So yeah, doubt. no there's

record all hand one shape. spending. But downward R&R pressure strong new sales out on the laid consumer other in great that I sheets job home fewer balance the equity we some think put between factors market, home levels, will On are

new coming the residential I down. to going think outweigh be are factors those starts that all fact

George Staphos

really an But I And lower point existing remodel. stock your of on Yeah. home the repair the home say of to age having is effect feeling and … about trending more sales, trapped meant

Eric Cremers

Yeah.

George Staphos

you, is turn as important over. I'll it Thank on well. guys. …and so

Eric Cremers

George. Thanks, Great.

Operator

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

Ketan Mamtora

the talk channel little side? as you can Pro a on Eric, side, bit well you. the in inventories lumber about, Thank Retail as both on

Eric Cremers

we Yes, is I mills our up And center above they levels. really pre-pandemic at from takeaway, can low they're Once that anecdotal understanding talk to and it's just folks. about our at them track leave in to them it's customers, go home closely. pick general, don't evidence Ketan. We they talking that really or levels. And the

you in strong. solid are the the business especially DIY as from So relatively our is is R&R our will, remains to But that home low, And our demand is strength, of inventories that opposed side. rock if coming center right pro-contractor now. that uptick most side that sense very channels and throughout is the view

Ketan Mamtora

Got upon it. you can on And revenue? helpful. terms as talk well. that you -- the touch of Eric estate If that the portfolio, about alternative can then, you be helpful of have That's maybe would on switching real to solar touch the in streams CatchMark opportunity side,

Jerry Richards

You bet.

So, I'll one This Ketan. take is that Jerry.

of real terms this of having deal. In reasons CatchMark really one we're estate why about that's completed many opportunities, excited

and of laid large we our is announcement centers kind land a May, in in out in southern of As some holdings. had our our different in proximate we've what than back legacy our population CatchMark's lot acres to slides rest that's of

itself, creates So, that lot think, of by opportunities. we a

close same The our kinds with opportunities and close other other Deltic, [ph], thing deal knowledge And did which I thing CatchMark's was solar first footprint December. those once attractive. deal, very -- that and the Certainly, the in this first as trend same of with the the is, the Luter we seen see quarter thing did closed, we we we've the we year last to is earlier we well. we share and will

team It months and every process one to actually acres. expertise portfolio. will As of to before estate nine go sell that those and the off teams, real we then. not take knowledge, to through go and we six go a going our we're is mean CatchMark our stratify doesn't and land whole through kind we It really our probably take that underway. we through it of And

We will.

But kind the back fourth an provide and we're that's beyond under historically? to we surface process. the was complete gauge doing really quarter, acres stay So, and opportunity in start is CatchMark update expect come that In We'll of magnitude that fact, tuned. probably of where what X,XXX above just stratification for example, as what here. and we

Ketan Mamtora

break That's way the question. just Okay. And other sustainable completion, with CatchMark the that of the South? can then between right one if sort think North and to about and you harvest helpful. is What

Jerry Richards

Yes.

midst. a got of bolt-on next I go terms timberland the of going moving -- parts sustainable part we've the of also got in the mean in back harvest long-term as obviously, So I of transactions. year with process. mean lot harvest, not And year. that for we're we our throes CatchMark million our forward budget plans $XXX And of recalibrate we this and in just one We've

take, Again, number probably with then, finish and X But we'll actual we information. we that be here fourth bit to -- process it historical if quarter once it's but release So, were or tons. I And probably come you've the will a tons, step around guidance give Idaho. above back, million that depend provide we'll the when will upon back rate run X seen in million earnings.

or We so the from to be going a subtracted Idaho, South. haven't added delta is in

Ketan Mamtora

turn Got Good it, that’s I’ll over. luck. helpful. it and

Jerry Richards

Thanks.

Eric Cremers

Thanks.

Operator

of comes line with from the Your Truist next Mike Roxland Securities. question

Mike Roxland

appreciate you Jerry taking Eric, Thanks, questions. the

question, just CatchMark. on First was

is Just level. aggressive transaction? the acquisition, and interactions you've that company, has certain my I industry background digest some that from time harnessing there with to with the CatchMark their been, not had the Now into anything going somewhat you historically with expecting were the think

look as that and if you've that or out. are maybe through weren't there just had there's closed really one So worked look it more to things carefully, now bit, is anything things you've did two whether the anything off little expecting, that could things haven't I'm And that time a but wondering you at transaction? be

Eric Cremers

and about are when in spot X.X for right I into we a future, with remarks, eight the the who years. then merger, It comes in we mentioned honest next, would we'll this it no, or we years get prepared I you out in our -- announced million Mike, volumes harvest the X.X like million I coming the And don't would will to knows this talked XXX,XXX tons say, of on. be -- dip for nine as couple back. so be tons you

next to four surprise, real and Pricing is The they disappointed about, has we where talked markets. really we're our expectations. the pricing say met only merger timber with our much refinance CatchMark's recall, only is this frankly, gone up would not kind And to in if will. model, I opportunities have Jerry inventory. three years have increase before. -- were don't compared of our I as hit for So you It's the

CatchMark's than say, team assets the estate got thought been how got pleasantly urban would stratification. are so to believe we but good. to the to to We'll no, out. surprised real going what time no, major estate we've their better believe have to see very I I too, But far. real I've go metropolitan to give of be with stratification is being opportunity Colombia their whatnot, initially So we closer through But, kind would estate ground Atlanta, real plays the areas

Mike Roxland

[ph]. just And on question you. last is lumber order price Got

a quarter in I just happened mentioned what's think last of you it new restructuring couple at they [indiscernible]? at given Have all weeks. shorted

Eric Cremers

under just is get before. No. kind we fine. equation, pressure. all haven't, in ZIP Yes, the in back two-week to still traditional kind housing the R&R of They really the side of to think goes sure at hanging I one- said code issue. is of it that. levels. Affordability what Mike. I the starts They're there think We But are And an

are may So each canceling two other those I think be out.

Mike Roxland

it. Got much. very Thanks

Eric Cremers

Thanks,

Operator

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

Paul Quinn

Yes, thanks Good guys. morning, for that.

Eric Cremers

morning. Good

Paul Quinn

like I'm Just that? why a seems strong seeing it therefore, remaining rising interest timberland rates sounds despite and you couple of question discount markets. on timberland is like and a It lost prices rates deals,

Eric Cremers

it's think class priced honestly I number resource. that think, get valuation timber scarce this inflation, models. carbon hedge the of people these some love notion starting one, asset a Paul, is against to into I

I'll We on our into projects. we haven't explicitly But yet. working model, some carbon you, priced it tell are

future, be that a would our surprised, statement item cash point flow not some So in there's in in the time says line at I carbon. if

Apple. are of referring a -- IKEA XXX,XXX And Timberland. to I'm of has interesting Southern now IKEA. I is these kind I to other buyers on has to showing now thing, is nearly retailer this up non-traditional know increasingly that, think IKEA, the I'm furniture tracks. acres referring is bid don't

the you is it's Pacific and just at the class BC these and coming one not also nontraditional the in the buyers. most deals action but with what's asset I think from happening. other are attractive, And the increasingly and Northwest also So of look in South putting up is that's carbon harvests where -- down, happening

Paul Quinn

And the in specifically some be that, thinking carbon, what's about, we framework on for value then how right. should going you to pencil wanted monetize or we if All carbon? to are

Eric Cremers

might ground, at like the I And attractive number see I even what game, out. two, not to sawlog talking say, would plantation-style don't how you early it's monetizing not of a Well, hardwood maybe of some stage But super stages, plays stand remotely value But with hardwood early but tell soon me one. outpace will for example, that it where too some of the that be. we'll carbon tracks for values are They're parties, it's because we're about this you, at number very values values. different carbon highly close. there couple forestry, compete could maybe that tell to this are stages, a

Paul Quinn

then just high to for are What XXXX at switching And Okay. estate expectations in real over portfolio? level. your that a

Jerry Richards

the historically, I done. like and we've essentially XX,XXX-acre mean we'll XXXX. Paul. Minnesota, release we've back be I rural certainly and provide So, couple our as of -- range. QX in I that But appreciate we'll mentioned attempt, last to because, in is been said, guidance in lower on the That's come quarters going

lot of little in somewhere a XXX our half, And placeholder So, I range. for average XXX, in residential don't rate at has half decent run point. XX,XXX it's lot this if is the all sales a that then, know more than been

Now, some but 'XX a and to relative at look still strength we premature it'd -- and market, that say repeat we'll the see little a be obviously But year. this in have XXX forward level. at XXX-lot to we're

Paul Quinn

Okay. Thanks guys. much helpful. That’s very

Jerry Richards

you. Thank

Operator

turn now Richards. are At more the over Jerry there this Q&A am no I time, to showing of questions. End back I'll call

Jerry Richards

providing strong. progress And results our in very We the thanks your our Lisa. increasing your our forward PotlatchDeltic. for year-to-date XXXX performance integration our All to you, lumber questions and right. leverage look shareholder of strategy, CatchMark to updates on on and value. recap, To are everybody interest Thank at

Operator

This today's conference. concludes

disconnect. now may You

PotlatchDeltic (PCH) 25 Oct 222022 Q3 Earnings call transcript