PotlatchDeltic(US:PCH)2025-11-04 18:00Financial Data and Key Metrics Changes - Total adjusted EBITDA for Q3 2025 was $89 million, up from $52 million in Q2 2025, primarily driven by strong real estate activity [5][16] - Adjusted EBITDA for the timberland segment increased from $40 million in Q2 to $41 million in Q3 [16] - The wood products segment reported an EBITDA loss of $2 million in Q3, compared to a positive $2 million in Q2, due to lower lumber prices [8][18] Business Line Data and Key Metrics Changes - Timberlands harvested 1.9 million tons in Q3, with Idaho producing its highest quarterly volume of 411,000 tons [7][16] - The wood products segment shipped 333 million board feet in Q3, an increase of 30 million board feet from Q2 [8][18] - Real estate generated adjusted EBITDA of $63 million in Q3, up from $23 million in Q2, with significant sales in rural real estate [10][19] Market Data and Key Metrics Changes - Sawlog prices in Idaho declined by 5% per ton compared to Q2, while average southern sawlog prices increased by just over 1% [17] - The overall demand in the U.S. housing market remains constrained, but mortgage rates have fallen to 6.1%, improving affordability [13] - The repair and remodel market is experiencing muted activity due to economic uncertainty, but demand for home improvement is expected to remain stable [14] Company Strategy and Development Direction - The proposed merger with Rayonier is expected to create significant strategic and financial benefits, including increased scale and operational efficiencies [6][7] - The company is focused on expanding its natural climate solutions portfolio, including opportunities in solar and lithium development [11][12] - Capital allocation remains disciplined, with a focus on executing the strategic plan and maintaining a solid financial position [13][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term fundamentals driving demand in the industry, despite near-term headwinds [15] - Lumber prices are expected to stabilize, supported by a more balanced supply-demand dynamic [10][15] - The company anticipates a decline in total adjusted EBITDA in Q4 due to fewer rural real estate acres sold and seasonally lower harvest volumes [24] Other Important Information - The company repurchased $60 million of common stock in the first half of the year, but share repurchases will be limited prior to the merger closing [12] - The company maintains $388 million in liquidity, including $89 million in cash [21] Q&A Session Summary Question: Insights on pulpwood markets in the U.S. South - Management acknowledged recent mill closures affecting pulpwood prices but emphasized their scale and customer relationships allow them to maintain steady log takeaway [25][26] Question: Performance in wood products and cash margins - Management indicated that while there was a loss in wood products, operational execution was strong, and they expect prices to move slightly higher in Q4 [29][30] Question: Factors driving better-than-expected real estate performance - Management noted that larger conservation sales significantly contributed to the outperformance in real estate, with strong demand for rural properties [33] Question: Outlook for supply constraints and pricing - Management mentioned that curtailments in production are expected to support improved pricing in 2026, despite a slow period in Q4 [38][39] Question: Revenue from conservation sales - Management indicated that conservation sales contributed about 25% of total rural revenues, with prices up approximately 10% year-over-year [40][41]