PotlatchDeltic (NASDAQ:PCH) Corporation reported an adjusted EBITDDA of $56 million in the third quarter of 2023, with notable improvements in its Wood Products segment. The company maintains a positive outlook on long-term housing fundamentals, despite challenges such as higher interest rates and declining consumer confidence.
Key takeaways from the earnings call:
- The Wood Products segment posted an adjusted EBITDDA of $15 million, influenced by higher lumber prices. The company shipped 276 million board feet of lumber during the quarter.
- The Timberlands segment reported an adjusted EBITDDA of $42 million, marking a record quarterly volume in the Southern Timberlands business.
- Adjusted EBITDDA for the Real Estate segment was $14 million, buoyed by strong demand for rural properties and residential lots.
- The company is actively exploring natural climate solution opportunities, including a carbon credit project.
- PotlatchDeltic plans to refinance $40 million of debt and has $602 million in total liquidity.
- The company has repurchased shares and plans to spend $135-140 million in capital expenditures.
PotlatchDeltic executives discussed the current state of the lumber market and future expectations during the earnings call. They noted that Canadian SPF imports likely decreased due to wildfires, leading to higher SPF prices. Despite some softness in the pulpwood market, they expect pulpwood prices to remain flat or slightly decrease.
The company anticipates a slight decrease in manufacturing costs for Q4 compared to Q3. Executives also highlighted that the housing market is expected to remain stable, with a slight increase in single-family construction next year. They also expect the repair and remodel (R&R) markets to remain strong or even increase slightly.
PotlatchDeltic is on schedule with its expansion project and does not plan to ramp up production faster. Higher costs in Q3 were attributed to factors such as logging in steeper terrains and longer haul distances.
Eric Cremers, a PotlatchDeltic executive, provided an update on the Waldo project, which is running ahead of schedule and expected to be completed by mid-next year. Cremers also discussed the company's capacity for share repurchases, stating that while the timberland M&A market is quiet, the company is open to opportunities that create shareholder value.
The company aims to sell around 1% of its rural land portfolio on an ongoing basis. The outlook for Chenal Valley lot sales in 2024 is uncertain, as it is early in the market, and more insights will be gained in the coming months. The company expects a slight reduction or softness in sales but maintains good pricing power.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.