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POTLATCHDELTIC CORP (PCH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $275.0M and diluted EPS $0.09; revenue beat S&P consensus ($260.9M*) while EPS slightly missed ($0.10*) .
  • Total Adjusted EBITDDA was $52.0M with an 18.9% margin; Wood Products was the main headwind from soft lumber pricing and one-time costs, while Timberlands and Real Estate held up .
  • Management raised full‑year rural land sales guidance to 31,000 acres at ~$3,100/acre and guided Q3 total adjusted EBITDA “significantly higher” on improved Real Estate and Wood Products, despite Idaho sawlog index price headwinds .
  • Capital allocation was a clear catalyst: PCH repurchased 1.42M shares for $55.9M at $39/share in Q2 (largest quarter/year since REIT conversion), maintaining $395M liquidity and $30M authorization remaining .

What Went Well and What Went Wrong

What Went Well

  • Timberlands resilience and pricing: Northern sawlog prices increased on stronger cedar and seasonally lighter logs; Timberlands Adj. EBITDDA was $39.6M vs $34.1M in Q2’24 .
  • Real Estate strength: Sold 7,457 acres at $3,108/acre and 18 lots at ~$102k/lot; segment Adj. EBITDDA held at $22.7M quarter‑over‑quarter .
  • Share repurchases as value accretive: “With our stock trading at a significant discount to our estimated NAV… this was the company’s largest share repurchase volume within a single quarter or year since becoming a REIT” .

What Went Wrong

  • Wood Products profitability: Adj. EBITDDA fell to $1.7M (from $11.7M in Q1), pressured by 1% lower average lumber price ($450/MBF), a $3M inventory impairment, and ~$2.8M combined impacts from St. Maries upgrade and Waldo power issues .
  • Freight/supply chain: “Freight costs surged… shortage of commercial truck drivers stemming from… English language proficiency guidelines” contributed to Q2 headwinds .
  • Sequential timber cost dynamics: Forest management/roads costs seasonally increased and Southern harvest volumes decreased (lower stumpage sales), pressuring Timberlands sequentially .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$320.7 $268.3 $275.0
Net Income ($USD Millions)$13.7 $25.8 $7.4
Diluted EPS ($USD)$0.17 $0.33 $0.09
Total Adjusted EBITDDA ($USD Millions)$103.2 $63.4 $52.0
Total Adjusted EBITDDA Margin (%)32.2% 23.6% 18.9%
Dividends per Share ($USD)$0.45 $0.45 $0.45

Segment breakdown:

SegmentQ2 2024 Revenue ($MM)Q1 2025 Revenue ($MM)Q2 2025 Revenue ($MM)Q2 2024 Adj. EBITDDA ($MM)Q1 2025 Adj. EBITDDA ($MM)Q2 2025 Adj. EBITDDA ($MM)
Timberlands$98.8 $102.5 $101.7 $34.1 $42.4 $39.6
Wood Products$153.6 $164.6 $171.8 ($6.8) $11.6 $1.7
Real Estate$95.7 $27.6 $29.1 $89.6 $22.8 $22.7
Corporate & Elims———($11.8) ($13.4) ($12.0)
Total Adjusted EBITDDA———$103.2 $63.4 $52.0

KPIs and operational metrics:

KPIQ1 2025Q2 2025
Average Lumber Price ($/MBF)$454 $450
Lumber Shipments (MMBF)290 303
Rural Acres Sold7,043 @ $3,303/acre 7,457 @ $3,108/acre
Chenal Lots Sold11 @ $112,745/lot 18 @ $102,222/lot
Share Repurchases93,100 shares; $4.1M at $45 1,418,800 shares; $55.9M at $39
Liquidity$447M $395M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Lumber shipmentsQ2 2025 (prior) vs Q3 2025Q2: 300–310 MMBF Q3: 310–320 MMBF Raised sequential target
Avg. lumber price ($/MBF)Q2 2025 (quarter-to-date) vs Q3 2025 (quarter-to-date)Q2 QTD: ~$475/MBF on ~100 MMBF Q3 QTD: ~$410/MBF on ~100 MMBF; expect improvement later in Q3 Lower early-Q3; improving later
Idaho sawlog pricesQ3 2025—Down ~9% QoQ on index lag New headwind
Rural land salesQ3 2025~8,000 acres in Q2 ~15,000 acres at ~$3,100/acre Higher activity
Full-year rural acresFY 202526,000 acres (full-year plan) 31,000 acres; ~$3,100/acre Raised
Chenal Valley salesQ3 2025~20 lots in Q2 ~50 lots @ ~$140k/lot; 13 acres commercial @ ~$530k/acre Higher volumes/prices
Total Adjusted EBITDAQ3 2025Q2 expected lower vs Q1 “Significantly higher” vs Q2 Raised sequential outlook
CapEx (ex acquisitions)FY 2025$60–$65M $60–$65M (unchanged) Maintained
DividendQuarterly$0.45/share $0.45/share Maintained
DebtAug 2025 maturity—Refinance $100M; apply $75M swaps to lower borrowing cost Execution detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/duties on Canadian lumberDuties expected to rise to 25–40%; Section 232 potential; price floor thesis Combined duty rates “will rise significantly”; potential Section 232 tariffs on top; expect price support Intensifying policy focus; bullish for pricing
Supply chain/trucking—Freight costs surged from seasonal produce demand and driver English proficiency rules; improving recently Temporary headwind easing
Wood Products operationsWaldo ramp-up ahead of schedule, 30% cash cost reduction One-time impacts: St. Maries sawbox upgrade (accelerated), Waldo substation power quality issue; $3M inventory impairment One-time costs largely behind; Q3 recovery expected
Housing starts/R&RStable single‑family starts near ~1M; R&R subdued but improving in 2025 Starts ~1.3M SAAR; demand tepid; long-term fundamentals intact; R&R steady; big box takeaway solid Gradual improvement
Real Estate demandStrong rural sales; conservation premium; pipeline healthy 7,500 acres incl. conservation sale to TNC; pipeline strong; full-year acres raised Sustained strength
Natural Climate Solutions (NCS)Solar options ~35k acres, ~$400–475M NPV; lithium lease progress; carbon offsets under study Solar options targeted ~43k acres; one large 9k‑acre option >$100M NPV; lithium options expanding; CCS/carbon ongoing Expanding optionality
Capital allocationSlow/steady repurchases; ~$90–$82M authorization remaining Aggressive Q2 buybacks ($56M); $30M remaining; protect dividend/balance sheet first Accretive deployment at NAV discount

Management Commentary

  • “Our overall performance remains solid, primarily driven by our timberlands and our real estate segments.” — Eric Cremers .
  • “This was the company’s largest share repurchase volume within a single quarter or year since becoming a REIT back in 2006.” — Eric Cremers .
  • “We anticipate that our total adjusted EBITDA for the third quarter will be significantly higher than our second quarter results, driven by improved performance in both real estate and wood products.” — Wayne Wasechek .
  • “The average combined duty rate will rise significantly… likely result in higher lumber prices across various species.” — Eric Cremers .

Q&A Highlights

  • Lumber pricing path: Mgmt expects early‑Q3 pricing down ~9% vs Q2 but improving into late Q3 on higher duties/potential tariffs; EPS/lumber headwinds from Q2 one‑time costs should reverse in Q3 .
  • Operating cadence and inventories: Mills “run all out” to lower per‑unit costs; channel inventories lean despite some pre‑duty builds; industry operating rate upper‑70s% .
  • TRS expansion: Raising REIT TRS threshold to 25% viewed positively for potential wood products growth via mill projects/acquisitions .
  • Timberland M&A posture: Prefer buybacks over high‑priced timberland deals; opportunistic sales used to fund repurchases .
  • NCS pipeline: Solar options expected to reach ~43k acres by end of Q3, potentially ~51k by year‑end; lithium options increasing; CCS/carbon progressing .

Estimates Context

MetricQ2 2024Q1 2025Q2 2025
Revenue Consensus Mean ($MM)$305.0*$244.8*$260.9*
Revenue Actual ($MM)$320.7 $268.3 $275.0
Primary EPS Consensus Mean ($)$0.112*$0.174*$0.104*
Primary EPS Actual ($)$0.17 $0.33 $0.09
EBITDA Consensus Mean ($MM)$89.7*$52.0*$56.2*
EBITDA Actual ($MM, S&P definition)$46.9*$52.6*$39.9*

Values retrieved from S&P Global.*

Implications:

  • Q2’25 revenue beat consensus by ~$14.1M; EPS was a modest miss versus consensus, reflecting soft lumber pricing and one‑time costs in Wood Products (inventory impairment, St. Maries/Waldo issues) .
  • EBITDA (S&P definition) missed consensus; note company reports Total Adjusted EBITDDA ($52.0M) which includes real estate basis and other adjustments, differing from S&P’s standardized EBITDA .

Key Takeaways for Investors

  • Near‑term setup: Expect Q3 total adjusted EBITDA “significantly higher” as wood products headwinds reverse and Real Estate volume/pricing step up; watch early‑Q3 lumber price recovery as duties/countervailing finalize .
  • Capital allocation: Aggressive buybacks at NAV discount are a tailwind to per‑share metrics; dividend maintained; $30M authorization remains; refinancing $100M due in August using swaps to lower interest cost .
  • Timberlands steady; Real Estate strong: Rural land and conservation deals at premiums support cash generation; full‑year acres raised to 31k at ~$3,100/acre .
  • Pricing policy catalysts: Higher Canadian duties and potential Section 232 tariffs could lift domestic lumber prices; monitor timing and magnitude .
  • Operational execution: Waldo modernization complete; St. Maries upgrade behind; management targets 13% lower cash processing cost per thousand in Q3 vs Q2, supporting wood products margin recovery .
  • NCS optionality growing: Solar options (~43k acres by end Q3) and lithium leases add medium‑term value; limited near‑term earnings, but expanding pipeline/NAV .
  • Risk checks: Idaho sawlog index price down ~9% in Q3; freight/supply chain disruptions eased; macro housing affordability remains a watch item .