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POTLATCHDELTIC CORP (PCH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue $258.1M and diluted EPS $0.07; Total Adjusted EBITDDA rose to $53.3M (20.7% margin) from $45.9M (18.0%) in Q3 on higher lumber prices and better mill costs, with Wood Products swinging to positive adjusted EBITDDA ($8.8M vs -$9.6M in Q3) .
  • Segment mix: Timberlands softened sequentially on seasonality (Adj. EBITDDA $34.0M vs $35.8M), Real Estate normalized after a strong Q3 (Adj. EBITDDA $19.4M vs $31.8M); average lumber price increased 11% to $445/MBF and shipments rose to 283 MMBF on Waldo ramp .
  • 2025 outlook: harvest ~7.4M tons (~80% South), lumber shipments ~1.2 BBF; Q1 lumber price to date ~$448/MBF; Q1 total adjusted EBITDA expected in line with Q4; 2025 capex $60–65M (excl. $6M Waldo closeout); net interest expense ~$2M in Q1 and ~$10M per quarter thereafter .
  • Capital allocation and NCS catalysts: 2024 buybacks $35M (avg. $41/sh); dividend maintained at $0.45; expanding solar options (35k acres; NPV >$400M) and executed a lithium/bromine lease on 900 acres in Arkansas post-quarter, signaling optionality beyond lumber cycles .

What Went Well and What Went Wrong

What Went Well

  • Waldo modernization ramp improved costs and output; Wood Products adjusted EBITDDA turned positive in Q4, aided by 11% higher price realizations to $445/MBF and 16 MMBF higher shipments vs Q3 .
  • Timberlands stability and pricing resilience: Idaho index sawlog prices rose 4% q/q; Southern pricing remained relatively stable despite abundant supply .
  • Strategic progress in Natural Climate Solutions (NCS): “By year-end, we had solar option contracts covering over 35,000 acres with an estimated net present value exceeding $400 million” and lithium lease negotiations were nearing completion (formalized Feb-5) .

What Went Wrong

  • Real Estate stepped down from Q3’s outsized quarter (one-off $57M land sale in Q2 flowed through comparatives), with Q4 adjusted EBITDDA $19.4M vs $31.8M in Q3 as volumes/mix normalized .
  • Higher interest expense y/y continued to weigh on GAAP earnings (Q4 net interest expense $10.9M) .
  • Lumber markets, while improving late in the year, remained subdued overall; management cited cautious buyer sentiment and ample supply, especially earlier in 2024 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$254.5 $255.1 $258.1
Net Income ($M)$(0.1) $3.3 $5.2
Diluted EPS ($)$0.00 $0.04 $0.07
Total Adjusted EBITDDA ($M)$40.7 $45.9 $53.3
Total Adjusted EBITDDA Margin (%)16.0% 18.0% 20.7%
Net Cash from Operations ($M)$41.8 $26.5 $45.4
Dividend/Share ($)$0.45 $0.45 $0.45

Segment revenue and Adjusted EBITDDA

SegmentQ4 2023 Revenue ($M)Q3 2024 Revenue ($M)Q4 2024 Revenue ($M)Q4 2023 Adj. EBITDDA ($M)Q3 2024 Adj. EBITDDA ($M)Q4 2024 Adj. EBITDDA ($M)
Timberlands$97.4 $105.1 $95.3 $33.3 $35.8 $34.0
Wood Products$150.1 $139.4 $160.3 $(6.5) $(9.6) $8.9
Real Estate$27.9 $38.7 $25.1 $21.9 $31.9 $19.4

Operational KPIs

KPIQ4 2023Q3 2024Q4 2024
Avg. Lumber Price ($/MBF)N/A$402 $445
Lumber Shipments (MMBF)N/A267 283
Rural Land Sold (acres)N/A6,548 @ $3,727/acre 5,919 @ $2,923/acre
Residential Lots Sold (units)N/A53 @ $204,851/lot 45 @ ~$101,400/lot
Idaho Harvest Volume (tons)N/A427k 345k
Southern Harvest Volume (tons)N/A1.5M 1.5M

Note: Segment revenues shown are before intersegment eliminations; consolidated revenue after eliminations is in the Financial Results table .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Lumber ShipmentsQ4 2024275–285 MMBF (Q3 call) Actual: 283 MMBF In line
Total Adjusted EBITDAQ4 2024“Comparable to Q3” (Q3 call) Actual: $53.3M vs $45.9M in Q3 Slightly above prior guide
Harvest VolumeFY 2025N/A~7.4M tons; ~80% South New
Lumber ShipmentsFY 2025N/A~1.2 BBF New
Lumber Price (to-date)Q1 2025N/A~$448/MBF on ~90 MMBF to date New
Timberlands (North) Sawlog PricesQ1 2025N/A~+5% q/q (cedar/index uplift) New
Southern Sawlog PricesQ1 2025N/ARelatively stable New
Rural Real EstateFY 2025N/A~26k acres; ~130 lots New
CapexFY 2025N/A$60–65M; excludes $6M Waldo closeout New
Net Interest ExpenseQ1 2025; Q2–Q4 2025N/A~$2M in Q1; ~$10M per quarter thereafter New
DividendNext PaymentPrior $0.45/qtr Declared $0.45 payable Mar 31, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Lumber pricing/demandQ2: markets at/near bottom; curtailments mounting; European imports rolling over . Q3: composite improving; floor supported by higher Canada duties ahead .Q4: price realizations up 11% q/q; mgmt sees upside risk with potential tariffs and higher Canadian duties (25–30%+) .Improving
Waldo modernizationQ2 completion targeted Q3; +85 MMBF capacity; -30% cash costs; +6% recovery; ~$25M mid-cycle EBITDA . Q3 ramp begun; costs to fall .Q4 ramp on track; more cost down in Q1, full run-rate by mid-2025 .Positive execution
NCS – SolarQ2: >27k acres options; NPV ~$300–340M YE target . Q3: >35k acres; NPV ~$400M; strong pipeline .Q4: >35k acres; plan to add 10–12k acres in 2025 to ~$575M NPV; options likely start exercising 2026–27 .Expanding pipeline
NCS – LithiumQ2/Q3: Negotiating subsurface leases; awaiting Arkansas royalty clarity .Q4: Lease “in coming weeks” (signed Feb-5 with TETRA on 900 acres); potential across 5–7k acres in higher-grade Smackover .Moving to execution
Carbon creditsQ2: redesign to Core Carbon Principles; longer timeline . Q3: quality focus; premium pricing expected .Q4: decision to prioritize high-integrity projects; no 2025 sales expected .Longer-dated
Macro/housingQ2: Fed cuts likely; starts could improve in 2025; R&R weak but structural supports intact . Q3: improving H2 prices; R&R still sluggish .Q4: cautious near-term; optimistic into spring; home center demand turning; comps for HD/LOW seen positive 1–2% in 2025 .Gradual improvement
Tariffs/dutiesQ3: Higher Canadian duties expected in 2025; raise price floor .Q4: Duties to rise to 25–30% (maybe more), potential additional tariffs; upside risk to lumber .Supportive tailwind

Management Commentary

  • “Later in the year, lumber markets became more balanced due to capacity curtailments… With a more balanced supply/demand dynamic, our 2025 outlook on lumber markets is cautiously optimistic” .
  • “Regarding the Waldo, Arkansas sawmill modernization and expansion ramp up, we are making excellent progress… increase annual capacity by 85 million board feet… recovery +6% and cash processing costs -30%… ~$25 million in incremental EBITDA annually at mid-cycle” .
  • “We plan to ship 1.2 billion board feet of lumber in 2025… average lumber price thus far in the first quarter is $448 per thousand board feet” .
  • On NCS: “By year-end, we had solar option contracts covering over 35,000 acres with an estimated net present value exceeding $400 million… We do not anticipate this opportunity to subside under the new U.S. administration” .
  • On capital allocation: “We purchased $8 million of our common stock in Q4… $35 million for the year… $90 million remaining under our repurchase program” .

Q&A Highlights

  • Harvest plan and land sales: 2025 harvest (~7.4M tons) reflects normal variability and portfolio optimization (e.g., conservation sale at ~3x TMV) .
  • Logs and costs: Mgmt expects relatively flat log costs in 2025, with a small Q1 benefit; Q4 saw ~$2M log-cost tailwind; unit manufacturing cost reductions to continue in Q1 as Waldo ramps .
  • Canadian duties/tariffs: Duties expected to rise (to 25–30%+), raising Canadian price floors; upside risk to lumber in 2025 even without new tariffs .
  • Solar and lithium timelines: Additional 10–12k acres of solar options in 2025; first options could exercise in 2026–27; lithium lease framework set with royalty rates pending Arkansas O&G Commission .
  • Home center/R&R: Early signs of improvement; mgmt cites positive 2025 comp forecasts for big box; stronger sell-through expected as affordability improves .

Estimates Context

  • Wall Street consensus (S&P Global/Capital IQ) for Q4 2024 was unavailable at the time of analysis due to provider limits; as a result, we cannot present beat/miss vs consensus for revenue or EPS at this time. We will update when access is restored.
  • What to expect in models: incorporate management’s explicit guideposts—FY25 shipments (~1.2 BBF), harvest (~7.4M tons), Q1 2025 lumber price to date ($448/MBF), Q1 2025 EBITDA in line with Q4, capex $60–65M (excl. $6M Waldo closeout), and quarterly cadence of net interest expense ($2M in Q1; ~$10M in Q2–Q4) .

Key Takeaways for Investors

  • Cycle turning: Sequential improvement in prices and costs, plus Waldo ramp, lifted consolidated adjusted EBITDDA margin to 20.7% in Q4; Wood Products is positioned to contribute more meaningfully if pricing strengthens further into 2025 .
  • Structural tailwinds: Higher Canadian duties and potential tariffs support a higher price floor; mgmt frames lumber price risk as skewed to the upside .
  • Visible 2025 cadence: Harvest plan, shipment target, and Q1 price to date provide clearer near-term guardrails; Q1 EBITDA guide “in line with Q4” reduces near-term downside risk .
  • Multi-year cost/volume lever: Waldo’s mid-2025 run-rate (+85 MMBF capacity; -30% unit costs) should enhance through-cycle margins and cash generation .
  • Real estate/NCS optionality: Rural land remains healthy; solar options pipeline expanding with potential lease conversions starting 2026–27; early lithium lease signed with further acreage potential—diversifying cash flows beyond lumber .
  • Capital returns intact: Dividend maintained at $0.45; buybacks continue with $90M remaining authorization, paced “slow and steady” to preserve flexibility .
  • Watch items: Interest expense step-up post-Q1; any delays in Waldo ramp; cadence of solar option conversions; Arkansas lithium royalty rate decisions impacting long-term value .

Citations:

  • Q4 press release/8-K details, segment data, and non-GAAP reconciliations .
  • Q4 call prepared remarks and guidance .
  • Q&A themes (harvest, costs, tariffs, solar/lithium, R&R) .
  • Prior quarters for trend context .
  • Dividend and lithium/bromine lease press releases .