PotlatchDeltic(US:PCH)2025-08-01 16:15PART I - FINANCIAL INFORMATION Item 1. Financial Statements The company's net income and total assets decreased in Q2 2025, while net cash from operations also declined for the first half of the year Condensed Consolidated Statements of Operations Quarterly revenue and net income declined year-over-year, though net income for the first six months of 2025 more than doubled | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $274,985 | $320,671 | $543,245 | $548,798 | | Operating income | $13,846 | $17,446 | $41,356 | $12,686 | | Net income | $7,354 | $13,678 | $33,159 | $13,373 | | Diluted EPS | $0.09 | $0.17 | $0.42 | $0.17 | | Dividends per share | $0.45 | $0.45 | $0.90 | $0.90 | Condensed Consolidated Balance Sheets Total assets decreased from year-end 2024, driven by a reduction in cash and cash equivalents, while total liabilities remained stable | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $258,854 | $299,130 | | Total assets | $3,184,703 | $3,305,443 | | Total current liabilities | $229,050 | $200,278 | | Long-term debt | $907,786 | $935,100 | | Total liabilities | $1,262,776 | $1,267,773 | | Total stockholders' equity | $1,921,927 | $2,037,670 | Condensed Consolidated Statements of Cash Flows Net cash from operations decreased in the first half of 2025, while cash used in financing activities increased due to stock repurchases | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $90,050 | $116,609 | | Net cash from investing activities | $(13,362) | $(56,356) | | Net cash from financing activities | $(132,369) | $(97,597) | | Change in cash | $(55,681) | $(37,344) | | Cash at end of period | $96,044 | $200,344 | - Key financing activities in the first six months of 2025 included $70.2 million in distributions to stockholders and $60.0 million in common stock repurchases16 Note 2: Segment Information A sharp decline in Real Estate revenue and profitability drove down total segment results in Q2 2025 compared to the prior year Revenues by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Timberlands | $101,664 | $98,802 | $204,115 | $191,752 | | Wood Products | $171,819 | $153,579 | $336,464 | $302,177 | | Real Estate | $29,096 | $95,732 | $56,687 | $106,839 | Segment Adjusted EBITDDA (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Timberlands | $39,566 | $34,124 | $81,937 | $68,872 | | Wood Products | $1,723 | $(6,805) | $13,363 | $(6,944) | | Real Estate | $22,720 | $89,568 | $45,476 | $95,796 | - Capital expenditures for the first six months of 2025 totaled $33.2 million, a decrease from $42.1 million in the same period of 2024, with the Wood Products segment seeing the largest reduction50 Note 5: Debt The company maintained approximately $1.0 billion in term loan debt and had an undrawn $300.0 million revolving credit facility - Total outstanding debt under the Amended Term Loan Agreement was approximately $1.0 billion as of June 30, 202560 - The company has a $300.0 million revolving line of credit maturing in February 2027, with no borrowings outstanding as of June 30, 202561 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Lower real estate sales drove a Q2 revenue decline, but improved Wood Products performance boosted operating income for the first half of 2025 Business and Economic Trends Affecting Our Operations Elevated mortgage rates are moderating new home construction, but long-term housing demand fundamentals remain strong - Elevated mortgage rates, averaging approximately 6.8% in the first half of 2025, have contributed to housing affordability challenges and a moderation in new home construction and remodeling activity98 - Single-family housing starts averaged approximately 0.9 million units in Q2 2025 (seasonally adjusted), slightly below Q1 2025 levels99 - The company remains optimistic about the long-term housing outlook, citing structural undersupply, low inventory, and strong demographic demand from millennials100 Consolidated Results A large 2024 timberland sale created a difficult comparison for Q2 2025 revenues, though operating income for the first half of 2025 grew significantly - The Q2 2025 revenue decrease of $45.7 million was primarily due to a large $56.7 million rural timberland sale that occurred in Q2 2024, which was not repeated in 2025106 - For the first six months of 2025, operating income increased significantly to $41.4 million from $12.7 million in the prior year, while Total Adjusted EBITDDA decreased to $115.4 million from $132.9 million105116 Business Segment Results Stronger pricing drove improved performance in Timberlands and Wood Products, but was overshadowed by a sharp drop in Real Estate earnings Timberlands Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDDA | $39.6M | $34.1M | +$5.5M | | Northern Sawlog Price/ton | $136 | $113 | +$23 | | Total Harvest Volume (tons) | 1.82M | 1.87M | -53.6k | Wood Products Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDDA | $1.7M | $(6.8)M | +$8.5M | | Lumber Shipments (MBF) | 302,915 | 285,650 | +17,265 | | Lumber Sales Price/MBF | $450 | $423 | +$27 | Real Estate Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDDA | $22.7M | $89.6M | -$66.9M | | Rural Acres Sold | 7,457 | 43,121 | -35,664 | | Commercial Acres Sold | 0 | 12 | -12 | Liquidity and Capital Resources The company increased share repurchases in H1 2025 while managing a decrease in operating cash flow and projecting lower capital expenditures - During the first half of 2025, the company repurchased 1,511,923 shares of its common stock for $60.0 million, a significant increase from the $25.0 million repurchased in the first half of 2024136 - The company expects to spend approximately $60.0 million to $65.0 million for capital expenditures during 2025138 - As of June 30, 2025, the company had $30.0 million remaining under its $200.0 million share repurchase authorization from 2022139 Non-GAAP Reconciliations (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $33,159 | $13,373 | | Total Adjusted EBITDDA | $115,392 | $132,895 | | Net cash from operating activities | $90,050 | $116,609 | | Cash Available for Distribution (CAD) | $62,590 | $45,711 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk profile, primarily from interest rate exposure on its debt, has not materially changed since year-end 2024 - The company's exposures to market risk, mainly interest rate risk on debt, have not materially changed since year-end 2024159 Item 4. Controls and Procedures Management affirmed the effectiveness of disclosure controls and procedures, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025160 - No material changes to internal control over financial reporting occurred during the second quarter of 2025162 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company faces no pending litigation expected to have a material adverse effect on its financial condition or operations - There is no pending or threatened litigation expected to have a material adverse effect on the company163 Item 1A. Risk Factors No material changes to the company's previously disclosed risk factors were reported during the quarter - No material changes in risk factors were reported compared to previous filings165 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased approximately $55.9 million of its common stock in Q2 2025, leaving $30.0 million authorized for future buybacks Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 105,000 | $39.87 | | May 2025 | 1,313,823 | $39.33 | | June 2025 | 0 | $0.00 | | Total Q2 | 1,418,823 | $39.37 | - At the end of Q2 2025, $30.0 million remained available for future stock repurchases under the existing program167 Item 5. Other Information No company officers or directors altered their pre-arranged stock trading plans during the second quarter of 2025 - No officers or directors made changes to their Rule 10b5-1 trading plans during Q2 2025168 Item 6. Exhibits This section lists all exhibits filed with the quarterly report, including officer certifications and interactive financial data