PotlatchDeltic(US:PCH)2023-04-25 19:02Financial Data and Key Metrics Changes - The company reported total adjusted EBITDA of $58 million for Q1 2023, an increase from $52 million in Q4 2022 [10] - Adjusted EBITDA for the Timberlands segment decreased from $51 million in Q4 2022 to $47 million in Q1 2023 [10] - The Wood Products segment's adjusted EBITDA declined from $2 million in Q4 2022 to breakeven in Q1 2023 [11] Business Line Data and Key Metrics Changes - The Timberlands segment harvested 2.1 million tons in Q1 2023, a company record, with adjusted EBITDA of $47 million [8] - The Wood Products segment had breakeven adjusted EBITDA, with lumber shipments increasing by 2% to 262 million board feet in Q1 2023 [11] - The Real Estate segment generated adjusted EBITDA of $19 million in Q1 2023, up from $7 million in Q4 2022, driven by increased rural land sales [24] Market Data and Key Metrics Changes - Southern sawlog prices were 3% lower in Q1 2023 compared to Q4 2022, while Idaho sawlog prices were 19% lower [10] - The average lumber price realization increased each month in Q1, reaching $453 per 1,000 board feet in March [11] - The company expects Northern sawlog prices to decline by 5% in Q2 2023 compared to Q1 [25] Company Strategy and Development Direction - The company aims to grow its regular dividend sustainably and increase stable cash flows through accretive acquisitions [9] - A $131 million project to modernize and expand the Waldo, Arkansas sawmill is underway, expected to increase annual capacity by 85 million board feet [7] - The company is exploring natural climate solutions, including a carbon credit project and potential solar land deals, with over $100 million in the pipeline [8] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term housing demand due to a fundamental shortage of housing stock and favorable demographics [22] - The company anticipates that U.S. housing starts will return to levels above the long-term average of 1.5 million units per year as mortgage rates ease [22] - Management noted that while Q2 adjusted EBITDA is expected to be lower due to seasonally lower harvest volumes, they are encouraged by recent improvements in lumber prices [25] Other Important Information - The company has $326 million in cash and total liquidity of $625 million, maintaining a low leverage ratio [9] - The company did not repurchase any shares in Q1 2023, with plans to do so only when shares trade at a significant discount [9] - The company is preparing its fourth annual ESG report, highlighting its commitment to environmental, social, and governance initiatives [9] Q&A Session Summary Question: Can you parse out Q1 price performance between legacy Southern lands and acquired CatchMark lands? - Management indicated that legacy markets are relatively flat year-over-year, while newer CatchMark markets experienced modest price declines [27] Question: How do you approach share repurchases in 2023 given market uncertainty? - Management stated they will repurchase shares opportunistically when trading at a significant discount to NAV, balancing this against other capital allocation options [41] Question: What are the mile markers for solar and carbon revenue opportunities? - Management mentioned that the solar deals are under option with developers, while the carbon project is exploratory and will take time to develop [17][55] Question: What is the outlook for home center demand and repair/remodel market? - Management expects stable demand in repair/remodel, with potential for new residential construction to pick up as housing starts rebound in 2024 [72] Question: What is driving the recent divergence in lumber prices across regions? - Management noted that Southern Pine is outperforming due to proximity to demand and a just-in-time delivery strategy, while Northern markets are affected by a long winter [50]