PCH - Earnings call 4 2023 | PotlatchDeltic Corporation

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Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Fourth Quarter 2023 Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Wayne Wasechek, Vice President and Chief Financial Officer, for opening remarks. proceed. may you Sir,

Wayne Wasechek

welcome Fourth and Conference XXXX Call. to morning Quarter PotlatchDeltic's Earnings Good

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

Eric Cremers

We reflects million That of pricing despite REIT this acquisitions adjusted since to accomplished everyone. We rural Well, level our identify timberland past a status reported fifth total premium values. and for created record XXXX. acres after and yesterday. to closed thank annual which a as accretive ability significant $XXX you, is monetize weak market our of lumber electing in a the highest EBITDA company have through that Good environment, on XXXX Wayne. EBITDA our relatively strength morning,

segment CatchMark with X.X XXXX. September volume adjusted also operations our we in million Our reflects record of million timberlands harvest that harvested generated our This volume. EBITDA full acquired tons, We a XXXX. $XXX of annual which is timberlands first in year

earlier piece from annual $XX enabling to synergies highlights of the Speaking CatchMark's insourcing completion management of XXXX, of the CAD merger. the us was timberlands of operational final the million in our the of process of realize our CatchMark, one in

annual feet contributed $XX in lumber, in of for of volume. X.X Our which board billion XXXX. We Wood the EBITDA a company established shipped shipment record just over new Products adjusted segment million

project its and plan safety another Wood year Our for of completed Products in year. strong successfully terms capital performance team had the

well modernize our our our plan, Arkansas underway increase mill's expand installation work project Site in and board first tie million significantly of equipment The costs. annual sawmill, remain the expected continue track phase of feet The well X XXXX. project we weeks mill capital project civil anticipated of will of to processing to end on approximately operate and continue later Waldo, QX. in the the existing during followed XX equipment, commence to in is cash with the the with reduced new by part project year completion before the and Speaking capacity to $XXX with to downtime the by of million mid will scheduled preparation the of

EBITDA segment Our Real year, $XX million. contributing of had a strong Estate adjusted

the an nearly business, XX,XXX On we at acre. acres of $X,XXX rural sold side the

taking had team year. of stratification a estate our XXXX to real Our in in-depth the CatchMark's of by advantage finish strong timberlands earlier

For of our acquired was CatchMark rural which attributable to located half XXXX, is markets. excellent in portfolio, performance real estate nearly business the

$XXX,XXX Chenal in business per community average lot master planned an development real Our of XXX XXXX. estate at lots price the sold in residential Valley

builders we We fourth absorption good of our but of also much signs the offerings We quarter. million offerings on an in in Chenal take-up our sales, for of lot lot of modest year, to in multiple in price resulting slowing $X at the the regional acre. $XXX,XXX in have closed started average commercial Valley per see had nearly over residential by on revenue

climate year. natural opportunities solutions made good this progress on also team Our

of the We are working final through project. certification on carbon our process the nearly timberland credit stages XX,XXX-Southern

in in the and year. sale coming second the the of begin to marketplace the expect months of We in the placement credits pre-marketing half efforts with

of inventory potential have and we strong pipeline developers in an Regarding of to shown contract. a option solar solar maintain signed options We interest continued QX under in solar and have opportunities, additional to deals. robust a additional our solar, up add solar

and we less of X% acreage million under reminder, sale worth a contract, options have As nearly $XXX timberland lease than present value of on our net representing ownership. land solar a basis,

additional We are potential optimistic climate focused solutions this growth on opportunities assessing in natural the about are and area.

may for our take will Although rural increase it timberland values. and fruit, these some to efforts demand that bear to believe for land an lead drive-up they time we in

That million allocation. average price returned share capital value. $XXX repurchases asset of shareholders at well $XX amount to below We XXXX. of our of per $XX to million Moving net cash estimated which is in an included share,

on authorization. We grow allocation capital to shareholder capital We $XXX time. remaining million have an over share repurchase disciplined evaluate and our continually all opportunities value allocation strategy our existing additional follow a of

portfolio course have acres and year, $XX in of our for through patient would strong high-quality that disciplined XX,XXX average Arkansas per has M&A shareholder just very that activity, we transaction. opportunities. lease or estate we surrounding about years, sale pursuing the are million solar remained real an Over only acre of stringent and land timberlands with we believe value. To acquired including that privately $X,XXX rural the very XX end, stocked acquired approximately meet timberland also a well one-on-one criteria or These negotiated opportunities age potential, increase

also with on to Our higher capital opportunities disciplined, approach capitalize applies identifying opportunistic timberland and valuations. nimble to allocation

the expected of these December, transaction young and our This swaps a customary average XXXX. At closing to of approximately to $XX trees. maturity transaction nature is rates of approximately an of had cash X.X% acre. $XXX utilizing and in of is for well weighted age maintained we into underlying and million. subject Timber debt years refinanced Forest sheet $XX interest cost close our forward the premium REITs. we Associates our or $X,XXX less total and debt than million the acres quarter significant million starting at balance given to agreement timberland Alabama XX,XXX an our In Investment second at value of timberlands and market entered Arkansas year, to is sell million below average is As plantation an This X the the have lowest of on in a at of with the existing end conditions we result, nondilutive of rate $XXX located with liquidity the

rates. Our a strong driver for typically rate continue amount residential multifamily consume by single-family while significant starts solid These to coupled homebuyers housing coming declining new over historically residential lumber low interest in existing resilient, level solid inventory have platform and recently the for home single-family rates U.S. while home have market remain purchase balance contracted, and us fueled versus fixed Shifting sector as housing factors, looking flexibility market, been new demand declines a provides second month, versus X with consecutive continues an has more a shareholder of to rate prospective predicting remain cuts of XX-year mortgage that help of a the to existing sale sheet to after hitting multi-family. home. economists trigger for with proportion challenges. continues affordability Xx would a headwind said, the for single-family eclipsed needed October, market, driven supply the into by Single-family spur environment. A million a and labor the value. are the demand. life construction FED growing XXXX, as points and as wood multiple new in single-family starts in liquidity further incremental to to higher housing consumer alleviate the starts confidence, basis X-decade housing the will interest some XXX the are an market, new important in over back interest breathing demand rates in ongoing Thankfully, elevated which into the affordability fallen high market momentum starts is many construction That

tailwinds stock to great of combination crisis, form underbuilding the on Our underlying fundamentals largely after financial outlook believe housing an favorable due positive. and longer-term of in millennials, to the We the market. provide remains will housing demographics of the shortage positive housing

continue U.S. to long-term starts affordable. year units homes housing become X average levels of We more expect once million that above per the will point to return

Repair homeowners to up and their a continue staying takeaway XX% with versus fixing the strong segment. rate sheets to Turning experience Remodel and this also environment. in home by balance remained homes has Anecdotally, higher year-over-year. moving interest strong Demand and our under to home new in consumer center backdrop existing steady, activity the we a backed up market up of

favorable. Looking at the longer-term fundamentals remain market horizon, to repair continue and model

portfolio by company on remain goals of of is positioned to investment-grade elevated environment the solid while supported challenging economic assets. which and high high and be the demand an and to delivered Our and aging an performed results well housing summary, strategic an substantial well remote made lumber financial and interest in evolution continuing optimism a deploying inflation sheet balance progress work a its We equity with capital. on disciplined rates, levels. In prices. PotlatchDeltic continues spite stock, year impacted in very high-quality home with

be our discuss results to shareholders over of fourth will disciplined capital returning We to remain Wayne turn acquisition will through stewards capital continue and capital investments our quarterly repurchase high-return program. I it and outlook. our prioritizing and and in our opportunities projects, share dividend to to to committed our quarter XXXX

Wayne Wasechek

prices establishing on of the from harvested volumes offset each fourth for EBITDA $XX fourth Idaho. X real Starting to timberlands lower in million part in decline lumber will EBITDA $XX was tons segment Eric. quarter. in harvest in The volume. slides. third the the quarter sawlog due record results. Information provide the adjusted segments to the $XX our for on quarter million you, with were EBITDA a X index our million is million in color rural lower prices, I quarter and Thank quarter. our in in declines displayed by team operating more was of The Slides $XX million seasonally Operationally, our our review harvest strong third decreased to primarily sales. estate timberlands Adjusted through segment's X Page X. quarter-over-quarter These compared lower quarter and fourth now fourth

that tons third in down in the tons Our million in seasonally sawlog is harvest was quarter. from XXX,XXX the XXX harvested fourth Idaho quarter. we This

our compared team prices sawlog achieving weather quarter. primarily and Favorable in South, level. In fourth to execution fourth sawlog The ton a harvest the prices Timberlands harvested on Idaho X.X quarter. XX% decline were by conditions the key index Our in third lower good the in sawlogs. Southern per reflects prices the lower were basis a quarter tons million for to we

Our hardwood third of a in prices The mix slightly were Wood higher X% the larger primarily driven higher quarter. the fourth compared segment, and diameter quarter was which The pricing. X $X sawlogs was value realizable Southern EBITDA to increase sawlog sawlog higher $X by on to million. third lumber Slides Compared of write-down the is prices to higher. and had million were adjusted to net quarter, negative charge lower the X inventories covered and Products lumber

feet board random on This XX% thousand Our per is lengths comparable lumber in framing the decrease or to quarter. realization basis. average percentage the lumber price decreased $XX price composite a

on quarter. EBITDA increased generated by The $XX quarter, $XX November in EBITDA in in lumber the realizations a adjusted Our the feet feet price XXX XXX in to December. estate acres were feet increased more Slides the X,XXX the to million average average shipments quarter segment's per and quarter. Shifting real the October, million rural $XXX and board was X lower in million fourth sales due fourth Lumber third in board board quarter. $XXX compared feet price to XX million the in board sequentially fourth sale to in XX. of at million from third $XXX

comparable where to and fourth the markets master Our stratified our are quarter. third quarter quarter. rural a sale real the testament quarter, residential generated earlier declined in real at million fourth compared robust this XXXX. commercial the by quarter. estate to nearly EBITDA a were fourth $X CatchMark in generated third in of in the price located which slightly in We plan average estate revenue, was XX performance Valley closed in the Chenal XX is community higher that lots the the the we quarter lots properties Also, to

Turning to capital structure, XX. Slide summarized on which is

We This December costs an portion still cash $XXX,XXX. refinanced on by of our in interest credits of balance forward which $XXX $XXX on forward To swaps which at will of as achieve amount approximately the $XX from starting cost million availability was We million undrawn well of to $XXX that patronage matured keep a of as revolver. debt low. outstanding below our our rate interest our total X.X% lenders. sheet rate our after interest Our million. includes we market help borrowing utilized lowers our million have us approximately annual notional deploy swaps, future liquidity rate

average shares our million As we at the previously price quarter fourth we an in quarter of highlighted of $XX call, in share. repurchased third the $XX per

high-level provide in presented Slide from plan approximately XXXX cash operations North flow are South. to on quarter, remaining the cash us statement. I comparable per million shares the XXXX. are of be $XXX Waldo, $XX XX% outlook expenditures in harvest the Capital the in with million to expenditures segment in full volumes XXX,XXX our fourth include includes $XX were aggregate. of first year, total which some details authorization. quarter The Arkansas XX. the our leaves real included the million repurchased timberland approximately repurchase in in our share also average $XXX or will expenditures, million the project. tons quarter modernization in to development with the For million fourth estate $XX X.X now comments. $XX in This These for volume planned an which of we share our at price million on in are Harvest relative We

prices the to We tons first sawlog first approximately in to South, quarter. the the fourth million compared X% X.X to expect harvest about we quarter. In decline in quarter Northern plan the

XXX incorporates at first the the cut seasonally Northern Arkansas the lumber, in board sawmill quarter, We expect This project. In due the sawlogs XXX and level which primarily feet of ship plan of board X.X effect seasonally to to modernization sawlog of million we in our We in to our include lower Southern ship fewer expected plan Waldo, lumber expansion to mix. to rates feet our impact shipments decrease XXXX. downtime modestly, million the for of sawmills. of prices billion hardwood

Our lumber quarter of feet is far million just on in fourth than thus the quarter first our average based XXX lumber slightly is price. price average This higher approximately lumber. board

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

of investment in discussed. approximately rural approximately acres forest Chenal Southern which acres residential lots we associates, includes XX,XXX XXX Eric Valley expect as We to expect sell XX,XXX sell to previously Also, land, to XXXX.

income, are first Additional quarter first Interest that the expense on lower quarter fourth and $X details estate in and $X is of real We approximately quarter be estimated in our estimate the is third balance slide. that year. will than based Farm payment we which amounts when estimated course in our expect receive XXXX the other annual approximately expense be quarters the the the quarters per because we are the these banks. Credit for to provided patronage Also, interest from over million second, lower net XXXX. cash of on million the of interest average

Turning to capital expenditures.

to Arkansas acquisitions. quarter. adjusted fewer to lumber quarter Arkansas We the timberland installments the the average in moderated to final already million overall fourth as are slightly million in an $XXX sawmill sawlog excluding is This our estate modernization for this the sales. the expectation project. completed million million rural year. to moderately we total includes and hand on mentioned, bolt-on close XXXX, expect expansion planning estimate acquisition will on spend That Overall, Also, $XX of use prices Eric for We attractive first $XXX higher $XX timberland successfully Waldo, cash be in by lower real we on relative transaction. EBITDA this approximately based

to continue demand fundamentals business. remain bullish We that industry on in drive our

long the lumber value continue are Our integrated leverage the like those call to fundamentals, now prepared remarks. Q&A. growing shareholder to prices would our open positioned term. That over operating and we I with well to Rob, are and model to aligned concludes

Operator

question America. of [Operator Staphos Instructions] Bank George Your the from first comes from line of

George Staphos

XQ. is from we just also that lower there we think the want else seasonality Is timberlands to versus comps? deck, sawlog be XQ question in to I you down shared expect purely mindful the make from that I had in in reduction I then all harvest other If we with looking sure towards and And is the the from both in relative should pricing -- XQ? XQ. that somewhat, the EBITDA lower that of tough sequentially look anything understood I first and Or detail that consideration should levels, us? I South harvest as guess resources I is XQ at slide guess, a have with is you've North

Wayne Wasechek

the first the it which Keep South. is a and the same thing second both spring on in we the quarter, Yes. the to quarter, And Wayne. also seasonal differences then -- seasonal just mind North, main This in definitely There's QX, -- is in drops seasonal Yes, and breakup, also the impacts driver. volume the but that as QX North well. in the in we there South. are have the the volume harvest side, that's

we're -- norms volume consistent looking side. are that seasonal harvest I the think to on it's volumes with

the a down. factors couple to you the pricing of One, look there. index side, On North, yes, is when you've pricing sawlog got

got have keep you that lag X-month You mind in there. a to

picking up December pricing February. through we're So from

So with logs. heavier seasonally that's impacting -- the combined North plus we have

the also less price that's It's down the mix. I the South, are flat. it's issue, really say hardwood mix in So Comparably, we decrease. driving have sawlogs bringing a generally -- mostly average prices the North. In for that would

George Staphos

that, appreciate Wayne. I

to prices are quarter a that of from a now? might pricing have charge you what it Wood or We can real right right an guarantees. still where first will won't current wouldn't will production lower. can unreasonable you you And So see obviously, expect. be? products Are inventory this given you no know be hopefully, what breakeven in be be timberlands We bit the from estate at better be now? see, loss where quarter. will know recognizing of levels at Or the lower. Given

Eric Cremers

No, is Eric. George, this

in out QX. them is expectation -- mills in profitable our one that Our every fact, of is

George Staphos

companies seasonality, lot there headwinds, quarter. of were last of that then lot product fourth you. question facing And a in were for I the a the wood things were pricing, Certainly, lower had

terms that elsewhere what different or the if of normalized project improving performance in weren't Potlatch seeing the from far. results quarter. we've things current next it in on there your the other year was aside in and that any so, and front things be we environment Nonetheless, a number considering demand you're pricing? in cost bracket bit And matter than sorts of in from no earnings Your the outlook your so terms of of that what a seen X? Are Waldo might

Eric Cremers

Yes.

then and you after so costs with units, I speak think in is we can you But -- are this year. George, start the so look if I log haul first business across expecting chime I'll Eric. Wayne timberlands, and think lower for me. the

seen have particularly region, in moderate, rates Northern up our We Idaho. in

So that the that will tailwind. of help favorable. products, is a provide outlook wood think In for bit we pricing little

the where and as XX, demand given of gosh, months. think the in industry First, the supply single-family. leave closures, dynamic almost, towards well. about the up Pacific we XX BC, And talked South. seen mill the also in We is in shift and board seeing the billion Northwest demand the we've past backdrop a down feet, you're closures X.X lot improving

going into QX come the the the is that's we of -- QX and and that see sale to be some also Real to I an the huge selling in sales see repair to favorable. And on year, growth see I again, Ridgewood lumpy. and the estate X.X% into and acres stability acquisition And that X% think year. bit IRR. if in yes, to in real remodel, weak. just that supply/demand always buyer FIA backdrop we're remodel, anyway imports repair is somewhere X% on I I rates we and going redeploying think, can comment fast. it capital of with little wouldn't We see to got We're between down interest but this IRR our that are and side, estate the is those real say going a less be European half be back

as So the that's going P&L to favorably impact well.

demand, in the our for So mind think the but backdrop lumber takes is that my is along big some and minor is picture way, business, the I really favorable. which puts

George Staphos

more I on project-specific meaningful So was going on, given what you where the I don't see, wood finish going see with up, coming so was capacity of question out, cost to structural outs just that's can really within with really question. that you where that or backdrop was that given sort front, and a

Eric Cremers

Yes. Yes.

but sawmill. project. year got Those of a line We've crane going a our trim really We're to just mill. to they're at we've our get X XX% sawmill take Warren Waldo sort in log not putting also in -- new to kind or So new projects got are it's completed. going our projects, a XX% at Warren IRR

offers constantly some for capital our our of the capital looking projects projects. Frankly, So in for us highest mills returns we're allocation.

but So and we're things, they're few constantly have a at projects to some take going time. do looking underway, we

Operator

line Citigroup. question next Your comes from Anthony from of the Pettinari

Anthony Pettinari

XQ related like When in question. wondering be? of hardwood Georgia, it you Can you a and from the log hardwood -- between would lumber or us expectations Southern logs, Can guess maybe any terms you dimensionalize sorry, maybe XQ, look the harvest impacted and mix. that your CatchMark? like then of seems for that at kind little that Or just of prices if percentage just bit? I remind seeing differential or sort region, what I'm of the in in just South a the Arkansas footprint you're prices trends And Alabama then Carolina,

Eric Cremers

Yes.

standpoint year dropped taking we've more economic in mills to with -- a stabilize Georgia, the quotas, there improve. delivery of markets that, the the and a the South markets markets. regional be more the that earlier on from the year, think And we I continuing year all little are timberland have throughout saw Carolina downtime, in to we side, with earlier in but in tensioned our prices seen tend

volume. to able we're a move So purely on volume standpoint,

pricing the think and progressed head through year we've as relatively been as we that's on flat QX. I standpoint, a into

as pricing But would may we'll tensioned take demand move a the more where where in that, lot the us more and do I demand pick see, Southeast a think Alabama, improve They're to as so not markets that's Mississippi, we increases time I see tensioned Now see baskets in when in we for think, price Arkansas of that those with historically there. pricing up, them. we've improves, in bigger wood in region. and little seen

Anthony Pettinari

it. Got

Eric Cremers

then And side... on the mix yes,

Sorry, go ahead.

Anthony Pettinari

hardwood The mix...

Eric Cremers

Yes, the Yes. hardwood mix.

hardwood the quarter. It's X% to up in -- probably a percentage mix of only here the XX% mean it's On the gone in maybe that's neighborhood. couple I points,

Anthony Pettinari

Got shifting it. then just gears. And

You I of talked year. project, second think, about, think, monetization I credit the of half the the in

Just wondering kind sort you you talk working could if marketers, that you of happen? can just to kind about are on to in activities sort be and the the order And that registries, anything of make the completed need share with of third parties or timeline of steps.

Eric Cremers

Yes.

we're into deep process So the now, Anthony.

projects. really out as And for in an the you real. prove math can demand a lengthy order for of kind if public, that And you out net first credits auditors of do not that's gamut how that timberland is will just The that a environment are carbon is zero will, the and imagine, in investing runs you the rather this step the high. of to it's And to for atmosphere. we're It sky in get process. the bring these

But in these to want folks, are by you third a have these consulting them So good monitored quality an reputation. party got have to credits, high got that's firms very you demand. independent if

we're so going And that process that's through. the

them the world, reputation credits to out that the going lined would large we I and great shortly the well the one [Weyer], after And credits process is entrenched get we've most have market, third sell which two carbon bid. quarter. to European around to value. of are that have they're is put where say, them And the our in in we think early by, to which verified, we're perhaps done expect up going We firms

they expect we to And comes after through. audit get credits the shortly so those monetize

And quarter so third in be the to probably that's going as well.

Operator

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

Ketan Mamtora

can bit of question, you a that curtailments about little U.S. capacity the First we've seen the some talk in

[sawmill] on are the surprised curtailments are U.S. side, that capacity South in the we seeing you

Arkansas from shutdown impact that, the basket your wood announcement? South related and recent to on any

Eric Cremers

the -- much surprised make Those That's I curtailments Arkansas. to wouldn't in modestly talks better Huttig, guessing a with I'm the mean really couldn't I fibers smaller may in close, over place tight cheap I South. No. the the lumber And great say in a at mill about about in some and because the competitive. BC be South. mills you you think That's these up one Florida. than Boise cost West that into recognize tougher Alabama, mill. Cascade, and like I think basket, wood specific in example, are a closed get down they for in not term, a whatnot, But of mill when wood That Fraser, Northwest. baskets, was West closed everybody the Fraser thing another have investment that's small same when look that long structures owners I'm the happened capital mills years Pacific relatively

second did some and not No, us? So Fraser at in the Huttig closed yes, impact I'm question, your not the South. To Mill mills that surprised, the of day answer I part guess, at the the end have all. of West

our Huttig. they One the competitors mill, were and near large block has a that of got to of timberland supplier primary

no So us. impact to

Ketan Mamtora

Understood.

small on of bit you M&A timberland Now you how pipeline then can little sort the talk the But kind of a general, does side, obviously, that's did pipeline look right bolt-on. of now? kind helpful. a And the about in

Eric Cremers

Yes. deal. perhaps I'd traded for frankly, and down they're interest timberland carbon more hands. And or, improve, something say come think for trades billion is a more tell like tight. billion $X.X housing bigger And and you to and rates holding typically to become waiting off the deals bigger I maybe importantly, think basically carbon lumber prices mainstream. maybe is having to year, each $X sellers, M&A market year, last hands really billion I maybe $X I'd of

especially been call. that -- European transaction it is I that for Hill to the an think said trees carbon and million $X.X we it's million reference I capital was bunch. an if for timberland Global, that's old at was one then for going years Oak look large those offset Campbell Sachs acre. forest you $XXX not $XXX a age in timberland million and buy $XXX $X,XXX look trees. the raised South We fund. carbon just And subsequently Goldman FIA, you'd sums of the TMO you Manulife having it a acre. Carbon have takeaways ultimately, it that bigger with pursue timber $X,XXX land. a for raised billion. the were, with JPMorgan it from bought think, Apple a acquired outcome. the of this X.X for I When at the acres raised for was had acres for bigger sold million raising XXX,XXX bought could was a and X.X South, FIA, carbon investor, own deal. in offsets. to What years average ago, They X a

holding market So because I to for waiting their think to push to for values. desperately then off a people that capital up home this for are to timberland look it waiting raised going and timberland get ultimately bringing is

Operator

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

Michael Roxland

just generate lower historically, single-digit high following George when question, margins. in were you I what you time understand was when help earlier. what's Wood Because you on to asking margins can Products? when volumes, there first look My Just of still mid-single price just digit, managed had to lower EBITDA with back me happening up respect periods

a So performance there your I'm on point that's impacting wood -- is from what something products? going just wondering vantage cost negatively in

Eric Cremers

the I have think, interest I is the And industry has the fourth think come a in And prices commodity this I see while in of you're lowest what did, rates, a meaningfully we've X, like and particularly Michael. XXXX, something whenever seen X% lumber its one read as peers than quarter mills past capacity I've back and bottom rock I going prices I'm not year out keep QX, happy their is in our day. and is into There up better I far, they're would our that. that sawmills certainly, it's point certainly subsequently, yes, industry of the margins to so about to to the running running the seen everybody or where over and higher say, down. moved year in where get happy levels, saw full I inflationary what only -- our report we the tries past the Well, costs with the demand mean If other collapse you negative, capacity environment is we utilization am plywood, going you at I dropped strip in it situation But in to minus peers. been, since dropped. utilization is were meaningfully. lumber

a I it's but much things is tough now, think get environment backdrop better. So for the to right

Michael Roxland

Got it.

only interesting made the when was minus strip X% the So that's that's margin -- lumber plywood, out actually, you minus quarter. actually comment is for -- an you

Eric Cremers

Correct.

Michael Roxland

accelerated? also just now that guess slower it. Chenal, XQ been relics builders Has good the of a XQ. been for have and seeing the that On those pretty Got are builders from the have them? mentioned some down, What I you reporting showing been 'XX. seeing you take-up have demand by large come pretty in rates in have strong

quarter. far reverse thus So I'm the if you've that in wondering seen

Wayne Wasechek

have did year. of we Yes, slowing Wayne. QX, to is there. modest signs this we the good when Michael, absorption through Yes, see of that's started most

now, looking outlook 'XX. XXXX think right level had as same have the about we at sales of we we're in I into as an

So the Little robust sheet broader single-family tools have market view national of same estate mind to not Chenal homebuilders coming balance of compared metropolitan offer we're are builders. regional as in the -- same kind one other mind, a keep real that heading Arkansas. or also residentials large Keep into I South. the this for incentives the And in additionally, compared with available builders. kind don't in to to Chenal, to areas market think smaller They is market out year Rock, we QX. of are It's in

X, builders homes, the So they homebuilders, instead national X sale might of large building homes and then like and X have build built maybe going spec as these completion. not anticipating many upon regional they're to

it. So I market of play those that dynamics kind think into

to I move given little be balance homebuilders they're a the more. that they're same So as rates that start not large think cautious going sheets until to

Michael Roxland

And more just strategic We'd last question. to question. one then get it. a of Got love

seen there, line with you in its own mill a closures, the problems so, Over a for [Aviva] number the months pulpwood. on closures structuring impact demand events lot or last and the XX we've have of of contending

[Aviva]. do with decline? I flow. with realize pulpwood How general, -- I this valuable in planning line demand harvest just cash facing in I'm about than that's your when the closures mill you So with closures, think nevertheless rotations, think cyclical your but helps about less your sawtimber, pulpwood

Wayne Wasechek

Yes. Certainly, that's an area we're focused on.

I volume think direct between kind price. and as announced And down mentioned with Eric impact to that closures, these earlier, you haven't then we of a had break us.

to continue a from move volume. perspective, we volume think I

customers, relationships certainly, alternative we a And strong volume from we have can it. large with our volume perspective, and with size then our scale, move move can especially customers. customers. also We our to

that that's pulpwood flat pricing impact from seen dynamic, been overall less pricing and on QX, think what environment. a has heading still. an relatively very creates into flat there And side closures, with I we've of the clearly kind yes, less demand, mill the on and demand

term. near think I So that's the

are opportunities -- different biomass I of utilize to with a pellets longer bioplastics And in opportunities. we're would to create in -- those active we're pulpwood. lot producers, think are very market what I longer-term some biofuels, biopower we term, there's producers, the -- will that about now, think from right discussions

demand investment will this do we bring and take bit a will that this South. but believe attention time, in baskets certain of wood more to the Now

Operator

next from McKellar Your the line from comes Matthew Capital of RBC Markets. question

Matthew McKellar

comment beyond South. development delivery development about project in able maybe project And thinking should on pace you or the like be first pipeline on the first Are from [indiscernible] we developing out looks to how what beyond comment of looking 'XX? in this your

Wayne Wasechek

Yes.

inventory. XX,XXX and built well years about So It's because this underway. project we've it excited under of We're acres. up have just pretty we carbon like do X credits first

to X.X first the is be million credits. sale close probably So to going

another But a We are outcome. first highest for be think a price outcome. right It's We've be carbon that could see eying well number value, suited And to value carbon carbon and we the project acres I price. the the those depends acres. a of for want We maybe how outlook in building the acres on for we're that XXX,XXX out. plays now, pipeline. think of our course, best this all it carbon going to got the

think So going a see we're acres timber. better to traditional prices about higher have versus more outcome for those go, we the carbon the

So we'll have to see develops. how that

Matthew McKellar

today for just more where then season? sense of one wood the channel What's here me. products inventory Okay. as sit levels for Great. your building And we into wrap

Wayne Wasechek

want what's the back don't are there run-up SPF, They come with cold that the there's is in rock-bottom with deliveries, -- just which we think down, carry job just-in-time past 'XX, U.S., weather to the dealers especially the think what's of lot and think no 'XX I a Pine why Southern couple saw inventories. shut sites that's and I carries just a is changed generally the I over want recently premium price here of is happened years were over across levels. They activity.

So dealers went lower to even levels.

think now where at So I at rock is bottom we're right levels. just

here. this So some hopefully, we'll warmer weather showing up, see with that's buying activity

Operator

[Operator Instructions]

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

Kurt Yinger

in or X-year could contributions harvest year but curious that you over anything provide that? age class levels the on know of past like plan disposition, from any you if that what XX,XXX-acre acreage you're any profile, just or EBITDA about a young the maybe details expecting terms maybe I and the talked

Wayne Wasechek

Yes.

which say, Alabama. that in was acres was XX% Arkansas, XX% XX,XXX So roughly split total

mentioned, I X trees old. years were than As the less

have next pine impact They're pulpwood kept the don't X.X old would -- those going no the years. given much at margin to for aged been traditional they profile think to have virtually virtually where and our I some a thinning plantation type years There have forestry. yellow Southern there's think but it. way they have trees, to XX XX would I along or we are, were in harvest prices XX,

And to is about maturity, tons for reach years. year those would trees the if XXX,XXX when you years. impact look X for about then impact to XX no virtually So XXX,XXX out per

impact year no then XX about really then per zero. it for to So XXX,XXX it's and to for tons years X drops and XXX,XXX years

that So trade-off that the Does here. was make sense?

Kurt Yinger

then talked makes And solar second sense. opportunities quarters that kind question, about for Yes, of a couple now. a the of we

around decent one sale had that. sized You

where of about in the pipeline Just whether really see from we terms curious you think some could the that? rubber of XXXX year these some the that sort the in hits with material more road and how and deals impacts you timing opportunity think of be

Eric Cremers

question, just here, Yes, another that's as a signed Kurt. up We Wayne solar deal get mentioned did great earlier.

has solar outlook Our The greater. for pipeline is been never big.

developer or now between decade. the German which solar big tripling you look about talking If a the Energy developer, NextEra everybody RWE, what at huge solar says, solar is of end a is and

got from supply negotiated a then and you've equipment. And with time a when first these the the together that's to -- the know chain meet put home option. a agreements. lines to utilities. into to know that you high-power that a that Now why they've offtake one is to They farm step need it to needs got certain got go They and agreement That process. enter complicated for you've you whatnot. But close you said, issues find the solar getting their got land them farm panels, developers, now to is of being takes an from find like, to which for attributes they've under China, very transmission coming go got

expect be a portfolio. in of it. our is to XXXX don't lot for farms of to work a solar lot the exercised I those Just year have options into goes going get

to the the that I the get going think trigger pull where But going those is view XXXX at starting we'll to great a is in give for year see But are think we things guidance 'XX. are year, our of be and we'll as developers us. then. end to I

Kurt Yinger

to Which those still kind the look you I would guess, primarily is to your in And would opposed might Or lease you or as fair be way, as it it. way across to and would the say entail. Got point guess, sell? that of economics I which that deals what preference agreements you? lean

Eric Cremers

happy those the of lease. if we stream. you, would We buy. But to CPI, some leases, acre, We to long-term price you what like developers to kind have prefer lease. that index back inflation, like that they definitely refuse And those certainly, seller we're $XX,XXX things Yes, be is are enter to there tell whatnot. what a I are to will an they of refuse given to into the have income

great way, our a lease. to either preference us, for it's outcome is So but

Operator

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

Mark Weintraub

follow-ups. of couple A

sort the first, there offtake. on the does find out equipment, we're of -- third. and second you Is then I order the needs permitting that then just you find first? that, process offtake kind to equipment And would since you that would Is a happen do to So solar happen? And talking take? normally imagine tend threw on of that things

Eric Cremers

getting answer not business, process. part the but of can't certainly Mark. think We're development is in I permit the that, a I Yes.

Mark Weintraub

you've So any Is options know stand in the might place on side? where window? got things do of it's if our permitting situations where on you that the first

Eric Cremers

fact, every that to happen the under the price. at having closer for mind they've they're What Yes. X their say, know they quiet they do don't write is end have They have I property tend And that let's stuff. to way, somebody when what is might under a and of right? get the a that now payments and years, they're in option It's they want years, lose with they be the to it option option year closer that permits. to where I with along as at to know they in little don't because check option, a all option pick get property been get higher under bear X else making a up.

In fact, that happened this past year.

for We at track, meaningfully went another put have found partner under option we and a the expire and higher price. one and they out the land

their as as typically to up of don't to what we That's what So is period, lined to to I how they have get you are. pressure and that's pull builds ducks the But end great the trigger. want option happens the plans [indiscernible]. get insight all think the it their when

Mark Weintraub

topic have a likely guys the on is anything and have you? less bit type do for of or we're such location factor since And obviously here, the enough. like you of about Weyerhaeuser bigger of side, both it which Fair Rayonier kind talked CCS fair and because on a carbon

Eric Cremers

Texas, projects for a in little us definitely opposed where given Weyerhaeuser it less we're has whatnot. factor in Well, underway may But as bit a but to Arkansas CCS, ground bigger No. be we down under And we're got in in Louisiana, area. certainly have really of over NDA, things would can't I talk we'll the coming them. come that on we to as quarters, expect about to a say lot there's But work more fruition. so of going have an at

Mark Weintraub

then about And you the the comment on in Okay. Wood made Products, Super. being profitable XQ.

the Just And EBITDA? prices going does probably would are expectation it, have that prices wanted that that operating laid to profit? that was lumber which in build be today? Was higher? Or clarify, you'd out you is but why where that

Eric Cremers

an would say No, of by driven think and a EBITDA it's I I Yes. yes, kind it's improved prices. number primarily lumber

Mark Weintraub

about on Okay. cash Waldo. I might reduction related half And significant before, how this I And you year? talked specifics then could. be much would And you And talked year? for then the -- maybe additional show how and then more to I that in guess -- about if in us costs next you've the one lumber, well, but still kind of think up much of the can remind

Eric Cremers

this at down on. feet like to Waldo I be And at our shipments work going We lose just Waldo say too going way Well, year. think because going have to we're of would I something million project. much are XX it's the

We'll they've expansions. at They've year. until it's expansions the QX million South. of going we're with that out contractor tight as done the surprisingly, expect group, it's the mills, to our XXX% of who's in it's 'XX up got to about you the for bid on And feet fourth documented. a then probably to pretty It's million number of not to start where those hit the And quartile in a with quartile out, get QX in where data of lot us to XX of in take million XX mill this, feet like in running this. project. going of this the to we've versus QX is is going And XX QX. to at really, million for XX by ramp shipments. year. expect eventually. QX So of mills got to to like just the year, and we're range to drop mill going and And you the see we going capacity. projects mill And year and first then curve the this only brownfield on start like QX know, well feet And it, on year into But we're fairly end a going benefits the the be QX be be to take sense give next XX%

be it's to get take going a out. but expect ironed fully we good So to to it improving, year

Mark Weintraub

at then X,XXX us a age the if low just And explained help maybe could you Okay. why price so bit, class. given you sold the lastly, was some land little

land about necessarily bought thinking at talking don't are type correspond discount to to age us at kind You those class of with yet sort X,XXX in of and been NAV, of it's $X,XXX how even more the buying same a you've big been numbers, you've NAV. $X,XXX, how time, back stock part, on type a most

you today? bit was $X,XXX and a that talk sort representative U.S. have ago, holding. about maybe where the you a of then years explained on about little be maybe an X you where $X,XXX class would average perspective Maybe the So talked Do age $X,XXX. timberland of

Eric Cremers

an in acre. age XX. force. acquisition characterize even was that or $XX made, force, I for a That That was XX,XXX Well, not I the we acres would tell you, average would age mature Arkansas the million X,XXX not

timberland to is That much unheard be privately way earn did and Deltic trees X project, when. did did transaction, we we pretty we like got we the negotiated was an that which we M&A with years. So privately X% X circles. CatchMark, transaction, pretty one-on-one of over to on return negotiated like just And a with we was because think like harvesting with those next will it a going back we're that Luter in much IRR

$X,XXX the think even-aged think think somewhere I brought today? where the do market, code. to I area, think but acre, second ZIP Mark, And I'd between the depending part that So upon I where are of $X,XXX to get. we it depends in track could an say sit, we it to individual question, do timberland probably If an upon might answer what values your I somewhere

Operator

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

Wayne Wasechek

for and concludes questions in Thank you your That your PotlatchDeltic. call. our interest

Operator

today's call. for Thank your This conference concludes participation. you

disconnect. now may You

PotlatchDeltic (PCH) 30 Jan 242023 Q4 Earnings call transcript