PotlatchDeltic Corporation PCH today reported net income of $6.6 million, or $0.10 per diluted share, on revenues of $181.7 million for the quarter ended March 31, 2019. Excluding after-tax special items consisting of a gain on the sale of the legacy Deltic MDF facility and a loss on the extinguishment of debt, adjusted net income was $5.3 million, or $0.08 per diluted share for the first quarter of 2019.
First Quarter 2019 Highlights
- Generated $28.3 million of Total Adjusted EBITDDA
- Closed the sale of legacy Deltic MDF facility for $92 million, generating $43 million in cash, after taxes
- Refinanced $150.0 million of 7.5% debt, reducing annual interest expense run rate by over $5 million
- Repurchased 278,947 shares for $10.2 million
"Our first quarter results reflect seasonally lower activity and challenging operating conditions," said Mike Covey, chairman and chief executive officer. "We continue to expect improvement in lumber prices as the building season gets underway in earnest. Meanwhile, our balance sheet remains strong and provides the flexibility to drive shareholder value," stated Mr. Covey.
Financial Highlights
| ($ in millions, except per share data) | Q1 2019 | Q4 2018 | Q1 2018 | |||||||||
| Revenues | $ | 181.7 | $ | 217.3 | $ | 199.9 | ||||||
| Net income | $ | 6.6 | $ | 1.8 | $ | 14.6 | ||||||
| Weighted average shares outstanding, diluted (in thousands) | 67,916 | 68,110 | 50,786 | |||||||||
| Net income per diluted share | $ | 0.10 | $ | 0.03 | $ | 0.29 | ||||||
| Adjusted net income | $ | 5.3 | $ | 2.7 | $ | 35.2 | ||||||
| Adjusted net income per diluted share | $ | 0.08 | $ | 0.04 | $ | 0.69 | ||||||
| Total Adjusted EBITDDA | $ | 28.3 | $ | 36.4 | $ | 64.7 | ||||||
| Distributions per share | $ | 0.40 | $ | 3.94 | $ | 0.40 | ||||||
| Net cash from operations | $ | 19.1 | $ | 30.5 | $ | 34.9 | ||||||
| Cash and cash equivalents | $ | 104.8 | $ | 76.6 | $ | 102.3 | ||||||
Consolidated results include Deltic Timber beginning February 21, 2018. The financial statements included within this release do not include Deltic Timber's financial results for any period prior to the merger date.
Business Performance: Q1 2019 vs. Q4 2018
Resource
First Quarter 2019 Highlights
- Northern sawlog prices decreased 9% due to lower lumber index pricing and seasonally heavier logs
- Northern sawlog volumes decreased seasonally
- Southern sawlog and pulpwood prices increased due to constrained log supply as a result of wet weather
| ($ in millions) | Q1 2019 | Q4 2018 |
$ Change |
||||||||||
| Resource Revenues | $ | 68.2 | $ | 74.5 | $ | (6.3 | ) | ||||||
| Resource Adjusted EBITDDA | $ | 26.9 | $ | 29.8 | $ | (2.9 | ) | ||||||
Wood Products
First Quarter 2019 Highlights
- Lumber price realizations increased approximately 4% to $380 per MBF in Q1 2019
- Lumber shipments declined 10% due to operational and transportation issues
| ($ in millions) | Q1 2019 | Q4 2018 |
$ Change |
||||||||||
| Wood Products Revenues | $ | 132.3 | $ | 148.5 | $ | (16.2 | ) | ||||||
| Wood Products Adjusted EBITDDA | $ | 7.2 | $ | 3.6 | $ | 3.6 | |||||||
Real Estate
First Quarter 2019 Highlights
- Sold 2,342 acres of rural real estate at an average price of $1,801 per acre
- Sold 7 residential lots at an average of $96,129 per lot
- Q4 2018 included a commercial real estate sale and 67 residential lots
| ($ in millions) | Q1 2019 | Q4 2018 |
$ Change |
||||||||||
| Real Estate Revenues | $ | 6.2 | $ | 16.4 | $ | (10.2 | ) | ||||||
| Real Estate Adjusted EBITDDA | $ | 2.7 | $ | 12.6 | $ | (9.9 | ) | ||||||
Non-GAAP Measures
This press release includes certain non-GAAP financial measures, which management believes are useful to investors, securities analysts and other interested parties. These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP.
Management uses Adjusted EBITDDA to evaluate the performance of the company. This is a non-GAAP measure that represents EBITDDA before certain items that impact comparison of the performance of our business either period-over-period or with other businesses.
Adjusted Net Income and Adjusted Net Income Per Diluted Share are non-GAAP measures that represent GAAP net income and GAAP net earnings per diluted share before certain items that impact the ability of investors, securities analysts and other interested parties to compare the performance of our business, either period-over-period or with other businesses.
Reconciliations to GAAP are set forth in the accompanying schedules.
Conference Call Information
A live conference call and webcast will be held Tuesday, April 30, 2019, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time). Investors may access the webcast at www.potlatchdeltic.com by clicking on the Investor Resources link or by conference call at 1-877-823-6919 for U.S./Canada and 1-647-689-5576 for international callers. Participants will be asked to provide conference I.D. number 6367747. Supplemental materials that will be discussed during the call are available on the website.
A replay of the conference call will be available two hours following the call until May 7, 2019 by calling 1-800-585-8367 for U.S./Canada or 1-416-621-4642 for international callers. Callers must enter conference I.D. number 6367747 to access the replay.
About PotlatchDeltic
PotlatchDeltic PCH is a leading Real Estate Investment Trust (REIT) that owns nearly 1.9 million acres of timberlands in Alabama, Arkansas, Idaho, Louisiana, Minnesota and Mississippi. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. PotlatchDeltic, a leader in sustainable forest practices, is dedicated to long-term stewardship and sustainable management of its timber resources. More information can be found at www.potlatchdeltic.com.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended, including without limitation, our expectations regarding the U.S. housing market; strong repair and remodel market; lumber demand and pricing; 2019 lumber shipments; effect on annual adjusted EBITDDA of $10 per thousand board foot change in price; Northern and Southern log and pulpwood sales and pricing; Q2 2019 timber harvest; real estate sales and cost basis; the direction of our business markets; business conditions; Reduction of interest expense as a result of Farm Credit patronage; 2019 capital expenditures; Q2 2019 interest expense; Q2 2019 corporate expense; Q2 2019 income tax; dividend payout ratio; and similar matters. You should carefully read forward-looking statements, including statements that contain these words, because they discuss the future expectations or state other "forward-looking" information about PotlatchDeltic. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, many of which are beyond PotlatchDeltic's control, including the U.S. housing market; changes in timberland values; changes in timber harvest levels on the company's lands; changes in timber prices; changes in policy regarding governmental timber sales; availability of logging contractors and shipping capacity; changes in the United States and international economies; changes in interest rates; changes in the level of construction activity; changes in Asia demand; changes in tariffs, quotas and trade agreements involving wood products; currency fluctuation; changes in demand for our products; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; restrictions on harvesting due to fire danger; changes in raw material, fuel and other costs; share price; the successful execution of the company's strategic plans; the company's ability to meet expectations; and the other factors described in PotlatchDeltic's Annual Report on Form 10-K and in the company's other filings with the SEC. PotlatchDeltic assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, all of which speak only as of the date hereof.
| PotlatchDeltic Corporation | |||||||||||||||
| Condensed Consolidated Statements of Income | |||||||||||||||
| Unaudited | |||||||||||||||
|
|
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| Three Months Ended | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| (in thousands, except per share amounts) | 2019 | 2018 | 2018 | ||||||||||||
| Revenues | $ | 181,716 | $ | 217,250 | $ | 199,897 | |||||||||
| Costs and expenses: | |||||||||||||||
| Cost of goods sold | 154,215 | 192,000 | 139,155 | ||||||||||||
| Selling, general and administrative expenses | 16,570 | 14,412 | 13,656 | ||||||||||||
| Gain on sale of facility | (9,176 | ) | — | — | |||||||||||
| Deltic merger-related costs | — | 874 | 19,255 | ||||||||||||
| 161,609 | 207,286 | 172,066 | |||||||||||||
| Operating income | 20,107 | 9,964 | 27,831 | ||||||||||||
| Interest expense, net | (5,464 | ) | (10,102 | ) | (5,660 | ) | |||||||||
| Loss on extinguishment of debt | (5,512 | ) | — | — | |||||||||||
| Non-operating pension and other postretirement costs | (980 | ) | (1,941 | ) | (1,857 | ) | |||||||||
| Income (loss) before income taxes | 8,151 | (2,079 | ) | 20,314 | |||||||||||
| Income taxes | (1,591 | ) | 3,878 | (5,717 | ) | ||||||||||
| Net income | $ | 6,560 | $ | 1,799 | $ | 14,597 | |||||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.10 | $ | 0.03 | $ | 0.29 | |||||||||
| Diluted | $ | 0.10 | $ | 0.03 | $ | 0.29 | |||||||||
| Dividends per share | $ | 0.40 | $ | 0.40 | $ | 0.40 | |||||||||
| Special distribution per share1 | $ | — | $ | 3.54 | $ | — | |||||||||
| Weighted-average shares outstanding (in thousands): | |||||||||||||||
| Basic | 67,860 | 65,486 | 50,425 | ||||||||||||
| Diluted | 67,916 | 68,110 | 50,786 | ||||||||||||
|
1 |
Deltic earnings and profit special distribution of $222 million, paid on November 15, 2018. | ||
| PotlatchDeltic Corporation | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| Unaudited | ||||||||||
| (in thousands, except share amounts) | March 31, 2019 | December 31, 2018 | ||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 104,787 | $ | 76,639 | ||||||
| Customer receivables, net | 18,009 | 21,405 | ||||||||
| Inventories, net | 62,408 | 60,805 | ||||||||
| Other current assets | 18,625 | 22,675 | ||||||||
| Assets held for sale | — | 80,674 | ||||||||
| Total current assets | 203,829 | 262,198 | ||||||||
| Property, plant and equipment, net | 273,118 | 272,193 | ||||||||
| Investment in real estate held for development and sale | 80,675 | 79,537 | ||||||||
| Timber and timberlands, net | 1,666,168 | 1,672,815 | ||||||||
| Intangible assets, net | 17,634 | 17,828 | ||||||||
| Other long-term assets | 31,790 | 21,281 | ||||||||
| Total assets | $ | 2,273,214 | $ | 2,325,852 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 72,565 | $ | 60,993 | ||||||
| Current portion of long-term debt | 39,981 | 39,973 | ||||||||
| Current portion of pension and other postretirement employee benefits | 5,997 | 5,997 | ||||||||
| Liabilities held for sale | — | 29,321 | ||||||||
| Total current liabilities | 118,543 | 136,284 | ||||||||
| Long-term debt | 715,837 | 715,391 | ||||||||
| Pension and other postretirement employee benefits | 110,476 | 110,659 | ||||||||
| Deferred tax liabilities, net | 15,956 | 32,009 | ||||||||
| Other long-term obligations | 34,016 | 16,730 | ||||||||
| Total liabilities | 994,828 | 1,011,073 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, authorized 4,000 shares, no shares issued | — | — | ||||||||
| Common stock, $1 par value, authorized 100,000 shares, issued 67,588 and 67,570 shares | 67,588 | 67,570 | ||||||||
| Additional paid-in capital | 1,660,450 | 1,659,031 | ||||||||
| Accumulated deficit | (312,874 | ) | (282,391 | ) | ||||||
| Accumulated other comprehensive loss | (136,778 | ) | (129,431 | ) | ||||||
| Total stockholders' equity | 1,278,386 | 1,314,779 | ||||||||
| Total liabilities and stockholders' equity | $ | 2,273,214 | $ | 2,325,852 | ||||||
| PotlatchDeltic Corporation | |||||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||||
| Unaudited | |||||||||||||||
|
|
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| For the three months ended | |||||||||||||||
| (in thousands) | March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
| Net income | $ | 6,560 | $ | 1,799 | $ | 14,597 | |||||||||
| Adjustments: | |||||||||||||||
| Depreciation, depletion and amortization | 16,274 | 19,476 | 12,635 | ||||||||||||
| Basis of real estate sold | 1,556 | 6,025 | 3,605 | ||||||||||||
| Gain on sale of facility | (9,176 | ) | — | — | |||||||||||
| Loss on extinguishment of debt | 5,512 | — | — | ||||||||||||
| Change in deferred taxes | (16,099 | ) | (1,718 | ) | (1,058 | ) | |||||||||
| Pension and other postretirement employee benefits | 3,106 | 4,222 | 3,814 | ||||||||||||
| Equity-based compensation expense | 1,617 | 1,688 | 3,279 | ||||||||||||
| Other, net | (786 | ) | — | (542 | ) | ||||||||||
| Change in working capital and operating-related activities, net | 13,983 | 2,621 | 8,394 | ||||||||||||
| Real estate development expenditures | (1,766 | ) | (1,968 | ) | (608 | ) | |||||||||
| Funding of pension and other postretirement employee benefits | (1,714 | ) | (1,620 | ) | (9,202 | ) | |||||||||
| Net cash provided by operating activities | 19,067 | 30,525 | 34,914 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
| Property, plant and equipment additions | (3,760 | ) | (11,384 | ) | (3,632 | ) | |||||||||
| Timberlands reforestation and roads | (4,242 | ) | (4,914 | ) | (2,860 | ) | |||||||||
| Acquisition of timber and timberlands | — | (4,712 | ) | — | |||||||||||
| Cash and cash equivalents acquired in merger | — | — | 3,419 | ||||||||||||
| Proceeds on sale of facility | 60,045 | — | — | ||||||||||||
| Other, net | 130 | 153 | 232 | ||||||||||||
| Net cash provided by (used in) investing activities | 52,173 | (20,857 | ) | (2,841 | ) | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
| Distributions to common stockholders1 | (27,065 | ) | (71,462 | ) | (25,102 | ) | |||||||||
| Proceeds from Potlatch revolving line of credit | — | — | 100,000 | ||||||||||||
| Repayment of Potlatch revolving line of credit | — | — | (100,000 | ) | |||||||||||
| Repayment of Deltic revolving line of credit | — | — | (106,000 | ) | |||||||||||
| Proceeds from long-term debt | 150,000 | — | 100,000 | ||||||||||||
| Repayment of long-term debt | (150,000 | ) | — | (14,250 | ) | ||||||||||
| Premiums and fees on debt retirement | (4,865 | ) | — | — | |||||||||||
| Repurchase of common stock | (10,158 | ) | — | — | |||||||||||
| Other, net | (213 | ) | (8 | ) | (4,838 | ) | |||||||||
| Net cash used in financing activities | (42,301 | ) | (71,470 | ) | (50,190 | ) | |||||||||
| Change in cash, cash equivalents and restricted cash | 28,939 | (61,802 | ) | (18,117 | ) | ||||||||||
| Cash, cash equivalents and restricted cash, beginning | 79,441 | 141,243 | 120,457 | ||||||||||||
| Cash, cash equivalents and restricted cash, ending | $ | 108,380 | $ | 79,441 | $ | 102,340 | |||||||||
| 1 | A special distribution of $222 million was paid on November 15, 2018, representing the accumulated earnings and profits of Deltic Timber Corporation. $44.4 million of the special distribution was paid in cash, while the remaining balance was paid in shares of PotlatchDeltic's common stock. | ||
| PotlatchDeltic Corporation | |||||||||||||||
| Segment Information | |||||||||||||||
| Unaudited | |||||||||||||||
| For the three months ended | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| (in thousands) | 2019 | 2018 | 2018 | ||||||||||||
| Revenues | |||||||||||||||
| Resource | $ | 68,158 | $ | 74,512 | $ | 76,506 | |||||||||
| Wood Products | 132,306 | 148,506 | 139,815 | ||||||||||||
| Real Estate | 6,164 | 16,347 | 10,555 | ||||||||||||
| 206,628 | 239,365 | 226,876 | |||||||||||||
| Intersegment Resource revenues | (24,912 | ) | (22,115 | ) | (26,979 | ) | |||||||||
| Consolidated revenues | $ | 181,716 | $ | 217,250 | $ | 199,897 | |||||||||
| Adjusted EBITDDA1 | |||||||||||||||
| Resource | $ | 26,850 | $ | 29,766 | $ | 37,697 | |||||||||
| Wood Products | 7,226 | 3,621 | 28,950 | ||||||||||||
| Real Estate | 2,703 | 12,535 | 8,002 | ||||||||||||
| Corporate | (10,654 | ) | (8,816 | ) | (8,716 | ) | |||||||||
| Eliminations and adjustments | 2,127 | (663 | ) | (1,201 | ) | ||||||||||
| Total Adjusted EBITDDA | 28,252 | 36,443 | 64,732 | ||||||||||||
| Basis of real estate sold | (1,556 | ) | (6,025 | ) | (3,605 | ) | |||||||||
| Depreciation, depletion and amortization | (15,797 | ) | (18,866 | ) | (12,196 | ) | |||||||||
| Interest expense, net | (5,464 | ) | (10,102 | ) | (5,660 | ) | |||||||||
| Loss on extinguishment of debt | (5,512 | ) | — | — | |||||||||||
| Non-operating pension and other postretirement employee benefits | (980 | ) | (1,941 | ) | (1,857 | ) | |||||||||
| Gain (loss) on fixed assets | 32 | (714 | ) | 4 | |||||||||||
| Gain on sale of facility | 9,176 | — | — | ||||||||||||
| Inventory purchase price adjustment in cost of goods sold | — | — | (1,849 | ) | |||||||||||
| Deltic merger-related costs | — | (874 | ) | (19,255 | ) | ||||||||||
| Income before income taxes | $ | 8,151 | $ | (2,079 | ) | $ | 20,314 | ||||||||
| Depreciation, depletion and amortization | |||||||||||||||
| Resource | $ | 10,265 | $ | 12,227 | $ | 8,646 | |||||||||
| Wood Products | 5,042 | 6,166 | 3,354 | ||||||||||||
| Real Estate | 209 | 220 | 40 | ||||||||||||
| Corporate | 281 | 253 | 156 | ||||||||||||
| 15,797 | 18,866 | 12,196 | |||||||||||||
| Bond discounts and deferred loan fees2 | 477 | 610 | 439 | ||||||||||||
| Total depreciation, depletion and amortization | $ | 16,274 | $ | 19,476 | $ | 12,635 | |||||||||
| Basis of real estate sold | |||||||||||||||
| Real Estate | $ | 1,588 | $ | 6,068 | $ | 3,723 | |||||||||
| Eliminations and adjustments | (32 | ) | (43 | ) | (118 | ) | |||||||||
| Total basis of real estate sold | $ | 1,556 | $ | 6,025 | $ | 3,605 | |||||||||
|
1 |
Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA on page 8, Reconciliations. |
||
|
2 |
Bond discounts and deferred loan fees are included in interest expense, net in the Condensed Consolidated Statements of Income. |
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| PotlatchDeltic Corporation | |||||||||||||||
| Reconciliations | |||||||||||||||
| Unaudited | |||||||||||||||
| For the three months ended | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| (in thousands, except per share amount) | 2019 | 2018 | 2018 | ||||||||||||
| Total Adjusted EBITDDA | |||||||||||||||
| Net income (GAAP) | $ | 6,560 | $ | 1,799 | $ | 14,597 | |||||||||
| Interest, net | 5,464 | 10,102 | 5,660 | ||||||||||||
| Income taxes | 1,591 | (3,878 | ) | 5,717 | |||||||||||
| Depreciation, depletion and amortization | 15,797 | 18,866 | 12,196 | ||||||||||||
| Basis of real estate sold | 1,556 | 6,025 | 3,605 | ||||||||||||
| Loss on extinguishment of debt | 5,512 | — | — | ||||||||||||
| Non-operating pension and other postretirement benefit costs | 980 | 1,941 | 1,857 | ||||||||||||
| Deltic merger-related costs | — | 874 | 19,255 | ||||||||||||
| Gain on sale of facility | (9,176 | ) | — | — | |||||||||||
| Inventory purchase price adjustment in cost of goods sold | — | — | 1,849 | ||||||||||||
| (Gain) loss on fixed assets | (32 | ) | 714 | (4 | ) | ||||||||||
| Total Adjusted EBITDDA | $ | 28,252 | $ | 36,443 | $ | 64,732 | |||||||||
| Adjusted net income | |||||||||||||||
| Net income (GAAP) | $ | 6,560 | $ | 1,799 | $ | 14,597 | |||||||||
| Special items: | |||||||||||||||
| Loss on extinguishment of debt | 5,512 | — | — | ||||||||||||
| Gain on sale of facility, after tax | (6,790 | ) | — | — | |||||||||||
| Deltic merger-related costs | — | 874 | 19,255 | ||||||||||||
| Inventory purchase price adjustment in cost of goods sold, after tax | — | — | 1,368 | ||||||||||||
| Adjusted net income | $ | 5,282 | $ | 2,673 | $ | 35,220 | |||||||||
| Adjusted net income per diluted share | |||||||||||||||
| Net income per diluted share (GAAP) | 0.10 | 0.03 | 0.29 | ||||||||||||
| Special items: | |||||||||||||||
| Loss on extinguishment of debt | 0.08 | — | — | ||||||||||||
| Gain on sale of facility, after tax | (0.10 | ) | — | — | |||||||||||
| Deltic merger-related costs | — | 0.01 | 0.38 | ||||||||||||
| Inventory purchase price adjustment in cost of goods sold, after tax | — | — | 0.02 | ||||||||||||
| Adjusted net income per diluted share | $ | 0.08 | $ | 0.04 | $ | 0.69 | |||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190429005799/en/
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