PotlatchDeltic Corporation
11/07/2025 | Press release | Distributed by Public on 11/07/2025 13:41
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Information
This report contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, expectations regarding economic conditions, including interest rates; expected seasonal fluctuations in our business segments; expected effectiveness of our hedging instruments and swaps; amount of net earnings on cash flow hedges expected to be reclassified into earnings in the next 12 months; expected return on pension assets; future share repurchases and dividend payments; anticipated cash balances, cash flows from operations and expected liquidity; statements regarding our pending merger with Rayonier, Inc. (Rayonier); expectations regarding the development of solar option agreements, forest carbon credits, carbon sequestration and other natural climate solutions (NCS) markets and products and our position in the market for them; potential uses of our credit facility; expectations regarding debt obligations, interest payments, refinancing or paying off debt and compliance with our covenants under our financing agreements; maintenance of our investment grade credit rating; the timing of reflecting the impact of the One Big Beautiful Bill Act in our financial statements; expectations regarding the U.S. housing market and home repair and remodeling activity; the lumber and log markets and pricing; lumber shipment volumes; timber harvest volumes and timing; rural real estate and real estate development sales; sufficiency of cash and any necessary borrowings to meet future cash requirements; expected capital expenditures; expectations regarding our ability to capitalize on actions that governments and businesses are taking on climate change and their commitments towards reducing greenhouse gas emissions; and similar matters.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as anticipates, believe, can, continue, could, estimated, expects, forecasted, future, intend, long-term, may, ongoing, outlook, potential, tends, typically, will, or similar words or terminology. These forward-looking statements reflect our current views regarding future events based on estimates and assumptions and are therefore subject to known and unknown risks and uncertainties and are not guarantees of future performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to:
•
the effect of general economic conditions in the U.S. and international economies, including the impact of employment rates, interest rate levels, discount rates, housing starts, and the general availability of financing for home mortgages;
•
availability of labor and developable land;
•
changes in the level of residential and commercial construction and remodeling activity;
•
changes in U.S. tariff and trade policies and potential retaliatory actions by affected countries, and uncertainty regarding the timing and scope of such changes;
•
duties and trade agreements involving wood products;
•
changes in demand for our products and real estate;
•
changes in timber prices, harvest levels, and timberland values;
•
changes in silviculture, production and production capacity in the forest products industry;
•
reversal of government policy resulting in increased timber sales from government owned land, including opening federal lands to thinning and additional harvesting;
•
competitive pricing pressures for our products;
•
disruptions or inefficiencies in our supply chain and/or operations and unanticipated manufacturing disruptions;
•
collectability of amounts owed by customers;
•
the effect of weather, including floods, windstorms and hurricanes, on our harvesting, real estate and manufacturing activities;
•
the risk of loss from fire at our facilities and on our timberland;
•
the impact of pandemic disease or other human health threats, pest infestation, fungal disease, or other natural disasters;
•
changes in the cost or availability of shipping and transportation;
•
changes in principal expenses, continued elevated inflation and the extent to which such elevated inflation will continue and impact our principal expenses;
•
unforeseen environmental liabilities or expenditures;
•
changes in general and industry-specific environmental laws and regulations, and interpretations thereof by regulatory agencies;
•
changes in market incentives for emerging natural climate solutions opportunities, such as a carbon capture and storage, biofuels, lithium extraction, and solar and other alternative energy opportunities;
•
changes in standards and requirements governing carbon credit certification, and our ability to obtain and maintain such certifications;
•
changes in the rate or magnitude of climate change, whether actual or perceived, as well as the motivation of businesses and the general public to address it;
•
the effect of U.S. government shutdowns on government approvals, log sales, real estate transactions, permits, the economy generally, and other matters affecting our business;
•
the failure of third parties to exercise option contracts for the purchase or lease of land intended for planned solar projects; and
•
the failure to obtain necessary approvals of governmental authorities, our stockholders or Rayonier shareholders for the completion of our merger with Rayonier Inc.
For a discussion of some of the factors that may affect our business, results and prospects and a nonexclusive listing of forward-looking statements, refer to Cautionary Statement Regarding Forward-Looking Informationon page 1 and Risk Factorsin Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and Risk Factorsin Part II, Item 1A in this Quarterly Report on Form 10-Q. Investors should not interpret the disclosure of a risk to imply that the risk has not already materialized. Forward-looking statements contained in this report present our views only as of the date of this report. Except as required under applicable law, we do not intend to issue updates concerning any future revisions of our views to reflect events or circumstances occurring after the date of this report.
Our Company
We are a leading timberland REIT with ownership of 2.1 million acres of timberland. We also own six sawmills, an industrial grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. Our operations are organized into three business segments: Timberlands, Wood Products and Real Estate. Our Timberlands segment supplies our Wood Products segment a portion of its wood fiber needs. Intersegment revenues due to these sales are based on prevailing market prices and represent a significant portion of the Timberlands segment's total revenues. Our other segments generally do not generate intersegment revenues. In the discussion of our consolidated results of operations, our revenues and expenses are reported after elimination of intersegment revenues and expenses; however, in the Business Segment Resultsdiscussion below, each segment's results, as applicable, are presented prior to these eliminations.
Our business segments have been and will continue to be influenced by a variety of factors, including U.S. tariff and trade policies, the U.S. housing market (including mortgage interest rates, home building activity and repair and remodel activity) duties and trade agreements, changes in timber prices and in harvest levels from our timberlands, competition, timberland valuations, demand for our non-strategic timberland, lumber prices, weather conditions, disruptions or inefficiencies in our
supply chain including the availability of transportation, the efficiency and level of capacity utilization of our Wood Products manufacturing operations, changes in our principal expenses such as log costs, transportation costs, inflation, asset dispositions or acquisitions, impact of pandemics, fires at our Wood Product facilities or on our timberlands, other natural disasters, government regulation and enforcement actions, and other factors.
Some of the equipment, parts, and materials used in our operations are sourced from outside the United States. As a result, the imposition of tariffs on imported goods could lead to increased operating costs. Although our international sales are currently limited, the products manufactured by our Wood Products facilities are commodity-based and sensitive to global supply and demand fluctuations. Recent and ongoing U.S. trade policy actions have contributed to elevated macroeconomic uncertainty and reduced consumer confidence. These developments, along with potential retaliatory measures by other countries, as well as the outcomes of relevant executive orders and trade investigations, could influence supply and demand trends, increase our operating costs, and affect pricing for our products. While the long-term effects of these trade dynamics remain unclear, we are actively monitoring changes in the tariff environment. See Part II, Item 1A.Risk Factorsin our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 for a discussion regarding tariff-related risks.
Further, we believe global efforts to address climate change also present growth opportunities. As companies and governments pursue net-zero targets, we believe we are well positioned to provide products and services that support these goals through natural climate solutions offerings, including selling or leasing land for renewable energy projects such as solar power generation facilities, supplying biomass for green energy, participating in forest carbon offset and carbon capture and storage projects, and emerging technologies that allow wood fiber to be used in applications ranging from biofuels to bioplastics.
Non-GAAP Measures
To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), we present certain non-GAAP measures on a consolidated basis, including Total Adjusted EBITDDA and Cash Available for Distribution (CAD), which are defined and further explained and reconciled to the nearest GAAP measure in the Liquidity and Performance Measures section below. The presentation of these non-GAAP financial measures should be considered only as supplemental to, and is not intended to be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. Our definitions of these non-GAAP measures may differ from similarly titled measures and may not be comparable to other similarly titled non-GAAP measures presented by other companies due to potential inconsistencies in methods of calculation.
See Note 2: Segment Informationin the Notes to the Condensed Consolidated Financial Statementsfor information related to the use of Adjusted EBITDDA for our segments.
Business and Economic Trends Affecting Our Operations
The performance of our Timberlands, Wood Products, and Real Estate segments reflects the cyclical nature of the forest products and real estate industries. These cycles are influenced by seasonal weather patterns, macroeconomic conditions, and regional market dynamics, all of which continue to shape our operations and financial outcomes. Log and pulpwood sales volumes are typically lower in the first half of the year due to weather-related challenges. In the Southern U.S., winter rains limit access to logging sites, while in the Northern U.S., the spring thaw has a similar effect, reducing harvesting activity. As a result, the third quarter tends to be our Timberlands segment's most productive period.
Timber demand is closely tied to broader needs for lumber, pulp, paper, and packaging, and is especially sensitive to trends in U.S. home construction and renovation. Regional differences also play a role in market behavior. For example, log markets in Idaho remain relatively balanced, while parts of the Southern U.S. - historically oversupplied - are now experiencing tighter supply conditions driven by increased mill capacity. This shift underscores the growing strategic importance of the Southern region in the North American timber market.
Macroeconomic factors, including interest rates and housing trends, continue to impact our business. The U.S. Federal Reserve began cutting benchmark interest rates in late 2024, followed by additional 25 basis point reductions in September and October 2025. While not directly linked to short-term benchmark rates, the average 30-year fixed mortgage rate improved during the first nine months of 2025, ending September at approximately 6.3%, down 55 basis points from year-end 2024. Persistent economic uncertainty, inflationary pressures, fiscal concerns, and global trade tensions have contributed to housing affordability challenges and stagnant growth in new housing starts.
According to the most recent U.S. Census Bureau report, total privately-owned housing starts in August 2025 exceeded 1.3 million units (seasonally adjusted). Single-family starts averaged approximately 0.9 million units between March and August 2025, slightly below the trailing 12-month average. Authorized building permits for single-family homes also averaged nearly 0.9 million units, consistent with the trailing 12-month average.
Builder sentiment improved in October 2025, with the NAHB/Wells Fargo Housing Market Index rising five points from September to 37 - the highest level since April. This uptick may reflect cautious optimism, supported by easing mortgage rates and stronger forward-looking sales expectations. However, continued promotional pricing and persistent supply-side challenges suggest that recovery remains uneven. Elevated material costs, labor shortages, limited land availability, and economic policy uncertainty continue to weigh on the housing market.
The repair and remodel (R&R) sector - the largest driver of lumber demand - slowed in 2024 but is forecasted to grow through 2026. While discretionary remodel activity has softened, structural and maintenance-related demand remains resilient. Many homeowners are choosing to stay in place and reinvest in existing homes, supporting demand for treated lumber, sheathing, and panels. We remain optimistic about the long-term housing and R&R outlook, supported by structural undersupply, historically low inventory, strong demographic demand (particularly from millennials in their prime home-buying years), elevated home equity, aging housing stock, and a preference for upgrading existing homes.
In our Timberlands segment, a significant portion of Idaho sawlog prices are indexed on a one-month lag to lumber prices. In the third quarter of 2025, our average sawlog prices in the Northern region increased year-over-year, primarily due to higher average cedar prices and indexed lumber prices. In the Southern region, timber price realization remained consistent with the third quarter of 2024. Total harvest volume for the Timberlands segment was 1.9 million tons during the third quarter of 2025, which was slightly lower than the third quarter of 2024 primarily due to more Northern harvest activity in the first half of 2025 due to favorable operating conditions. Further, tepid market conditions in the South during the third quarter of 2025 led to production curtailment and extended downtime at mills in several Southern markets. We expect to harvest 1.7 to 1.8 million tons during the fourth quarter of 2025, with approximately 80% from the Southern region.
In our Wood Products segment, demand is seasonal, with typically lower activity in winter and stronger demand from spring through fall, consistent with typical construction cycles. The third quarter of 2025 experienced improved results year-over-year, driven by increased shipments, particularly from our Waldo, Arkansas sawmill. The Waldo facility completed its ramp-up in early 2025 following the completion of its expansion and modernization project (the Modernization Project) late in the second quarter of 2024. Division-wide, we expect to ship between 290 and 300 million board feet of lumber during the fourth quarter of 2025.
In the third quarter of 2025, our Real Estate segment benefited from two large rural land sales in Georgia and a 13-acre commercial sale in Chenal Valley. Development real estate sales occur year-round and are influenced by neighborhood offerings, infrastructure completion and contractor availability. We expect to sell approximately 5,000 rural acres and 46 residential lots in Chenal Valley during the fourth quarter of 2025.
Pending Merger with Rayonier
On October 13, 2025, we entered into a Merger Agreement with Rayonier and Merger Sub, pursuant to which PotlatchDeltic will merge with and into Merger Sub with Merger Sub continuing as the surviving entity and a direct wholly owned subsidiary of Rayonier. Under the terms of the Merger Agreement, at the Effective Time of the Merger, each PotlatchDeltic stockholder will receive 1.7339 shares of Rayonier common shares for each share of PotlatchDeltic common stock and cash in lieu of fractional shares at the Effective Time of the Merger, subject to certain adjustments, including with respect to the Rayonier Special Dividend. The Merger has been unanimously approved by both companies' boards of directors and remains subject to shareholder approvals, regulatory approvals, and other customary closing conditions. The transaction is expected to close in late first quarter or early second quarter of 2026. Refer to Note 13: Pending Merger with Rayonier Inc.in the Notes to the Condensed Consolidated Financial Statementsfor additional information. Additional details regarding the Merger Agreement are included as Exhibit 2.1 in the company's Current Report on Form 8-K filed with the SEC on October 14, 2025.
Consolidated Results
The following table sets forth changes in our Condensed Consolidated Statements of Operations. Our Business Segment Resultsprovide a more detailed discussion of our segments:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
||||||||||||||||||
|
Revenues |
$ |
314,179 |
$ |
255,131 |
$ |
59,048 |
$ |
857,424 |
$ |
803,929 |
$ |
53,495 |
||||||||||||
|
Costs and expenses: |
||||||||||||||||||||||||
|
Cost of goods sold |
257,130 |
227,556 |
29,574 |
716,867 |
722,189 |
(5,322 |
) |
|||||||||||||||||
|
Selling, general and administrative expenses |
20,088 |
20,403 |
(315 |
) |
61,750 |
61,882 |
(132 |
) |
||||||||||||||||
|
Merger-related expenses |
1,903 |
- |
1,903 |
1,903 |
- |
1,903 |
||||||||||||||||||
|
Environmental charge |
- |
- |
- |
490 |
- |
490 |
||||||||||||||||||
|
279,121 |
247,959 |
31,162 |
781,010 |
784,071 |
(3,061 |
) |
||||||||||||||||||
|
Operating income |
35,058 |
7,172 |
27,886 |
76,414 |
19,858 |
56,556 |
||||||||||||||||||
|
Interest expense, net |
(11,461 |
) |
(9,635 |
) |
(1,826 |
) |
(23,365 |
) |
(18,049 |
) |
(5,316 |
) |
||||||||||||
|
Non-operating pension and other postretirement employee benefits |
(351 |
) |
200 |
(551 |
) |
(1,053 |
) |
602 |
(1,655 |
) |
||||||||||||||
|
Other |
1,222 |
1,516 |
(294 |
) |
1,757 |
1,348 |
409 |
|||||||||||||||||
|
Income (loss) before income taxes |
24,468 |
(747 |
) |
25,215 |
53,753 |
3,759 |
49,994 |
|||||||||||||||||
|
Income taxes |
1,425 |
4,056 |
(2,631 |
) |
5,299 |
12,923 |
(7,624 |
) |
||||||||||||||||
|
Net income |
$ |
25,893 |
$ |
3,309 |
$ |
22,584 |
$ |
59,052 |
$ |
16,682 |
$ |
42,370 |
||||||||||||
|
Total Adjusted EBITDDA1 |
$ |
89,263 |
$ |
45,902 |
$ |
43,361 |
$ |
204,655 |
$ |
178,797 |
$ |
25,858 |
||||||||||||
|
1. |
See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income (loss), the closest comparable GAAP measure, for each of the periods presented. |
Third Quarter 2025 Compared with Third Quarter 2024
Revenues
Revenues for the third quarter of 2025 increased $59.0 million compared to the third quarter of 2024 due to increased lumber shipments, primarily from our Waldo, Arkansas facility, increased Northern sawlog prices, two large rural real estate sales in the Southern region in 2025, and a 13-acre commercial land sale in Chenal Valley. There were no similar large-scale rural real estate transactions or commercial acres sold in the third quarter of 2024. These increases were partially offset by lower harvest activity, primarily in the Southern region, and lower lumber prices.
Cost of goods sold
Cost of goods sold increased $29.6 million compared to the third quarter of 2024 largely due to increased fiber and manufacturing costs associated with higher lumber shipments in our Wood Products segment, along with increased rural real estate and commercial acres sold. These increases were partially offset by lower logging and hauling costs resulting from lower harvest activity.
Merger-related expenses
Merger-related expenses in the third quarter of 2025 were $1.9 million related to professional service fees associated with our pending merger with Rayonier.
Interest expense, net
Interest expense, net increased $1.8 million compared to the third quarter of 2024 primarily due to less interest income earned on lower average cash and cash equivalents held in interest bearing accounts.
Income taxes
Income taxes are primarily due to income or loss from our PotlatchDeltic taxable REIT subsidiaries (TRS). For the three months ended September 30, 2025, we recorded an income tax benefit of $1.4 million on TRS loss before tax of $5.9 million. For the three months ended September 30, 2024, we recorded an income tax benefit of $4.1 million on TRS loss before tax of $15.6 million.
Total Adjusted EBITDDA
Total Adjusted EBITDDA for the third quarter of 2025 increased $43.4 million compared to the same period in 2024 primarily due to more rural real estate and commercial development acreage sold and increased lumber shipments. These increases were partially offset by lower harvest volumes and slightly lower lumber prices. Refer to the Business Segment Resultsbelow for further discussions on activities for each of our segments. See Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented.
Year to Date 2025 Compared with Year to Date 2024
Revenues
Revenues for the first nine months of 2025 increased $53.5 million compared to the first nine months of 2024 due to higher average lumber prices, increased lumber shipments, primarily from our Waldo, Arkansas facility, and higher Northern sawlog prices. These increases were partially offset by lower Southern sawlog volume, fewer rural real estate acres sold as 2024 included a $56.7 million sale of 34,100 acres of rural timberland to Forest Investment Associates (FIA), and fewer premium residential lots sold in Chenal Valley.
Cost of goods sold
Cost of goods sold decreased $5.3 million compared to the first nine months of 2024, mainly due to fewer rural real estate acres sold and reduced logging and hauling costs in the Southern region from lower harvest activities. Further, the first half of 2024 also included additional depreciation on Waldo, Arkansas sawmill equipment that was removed upon completion of the Modernization Project in June 2024. These impacts were partially offset by increased fiber and manufacturing costs associated with higher lumber shipments, particularly at our Waldo, Arkansas sawmill.
Merger-related expenses
Merger-related expenses during the first nine months of 2025 were $1.9 million related to professional service fees associated with our pending merger with Rayonier.
Environmental charge
During the first quarter of 2025, we accrued an additional $0.5 million related to our voluntary participation as a non-federal sponsor in a sediment contamination remediation project in Minnesota. Refer to Note 1: Basis of Presentationin the Notes to Condensed Consolidated Financial Statementsfor additional information.
Interest expense, net
Interest expense, net increased $5.3 million compared to the first nine months of 2024 primarily due to less interest income earned on lower average cash and cash equivalents held in interest bearing accounts.
Income taxes
Income taxes are primarily due to income or loss from our TRS. For the nine months ended September 30, 2025, we recorded an income tax benefit of $5.3 million on TRS loss before tax of $22.8 million. For the nine months ended September 30, 2024, we recorded an income tax benefit of $12.9 million on TRS loss before tax of $51.1 million.
Total Adjusted EBITDDA
Total Adjusted EBITDDA for the first nine months of 2025 increased $25.9 million primarily due to higher lumber prices and shipments along with increased Northern sawlog prices. These increases were partially offset by lower Southern harvest volumes, fewer rural real estate acres sold, and fewer premium residential lot sales in Chenal Valley. Refer to the Business Segment Resultsbelow for further discussions on activities for each of our segments. See Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented.
Business Segment Results
Timberlands Segment
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
||||||||||||||||||
|
Revenues1 |
$ |
107,989 |
$ |
105,132 |
$ |
2,857 |
$ |
312,104 |
$ |
296,884 |
$ |
15,220 |
||||||||||||
|
Costs and expenses: |
||||||||||||||||||||||||
|
Logging and hauling |
53,038 |
56,829 |
(3,791 |
) |
152,544 |
157,158 |
(4,614 |
) |
||||||||||||||||
|
Other |
11,125 |
10,294 |
831 |
29,008 |
28,057 |
951 |
||||||||||||||||||
|
Selling, general and administrative expenses |
2,823 |
2,185 |
638 |
7,612 |
6,973 |
639 |
||||||||||||||||||
|
Timberlands Adjusted EBITDDA2 |
$ |
41,003 |
$ |
35,824 |
$ |
5,179 |
$ |
122,940 |
$ |
104,696 |
$ |
18,244 |
||||||||||||
|
1. |
Prior to elimination of intersegment fiber revenues of $29.3 million and $28.1 million for the three months ended September 30, 2025 and 2024, respectively, and $83.3 million and $80.1 million for the nine months ended September 30, 2025 and 2024, respectively. |
|
2. |
Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements. |
Timberlands Segment Statistics
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
Harvest Volumes (in tons) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
||||||||||||||||||
|
Northern region |
||||||||||||||||||||||||
|
Sawlog |
402,939 |
420,896 |
(17,957 |
) |
1,096,345 |
1,107,630 |
(11,285 |
) |
||||||||||||||||
|
Pulpwood |
7,704 |
5,964 |
1,740 |
42,430 |
13,716 |
28,714 |
||||||||||||||||||
|
Total |
410,643 |
426,860 |
(16,217 |
) |
1,138,775 |
1,121,346 |
17,429 |
|||||||||||||||||
|
Southern region |
||||||||||||||||||||||||
|
Sawlog |
613,720 |
668,557 |
(54,837 |
) |
1,939,141 |
2,052,287 |
(113,146 |
) |
||||||||||||||||
|
Pulpwood |
543,283 |
591,527 |
(48,244 |
) |
1,587,865 |
1,592,771 |
(4,906 |
) |
||||||||||||||||
|
Stumpage |
313,064 |
266,516 |
46,548 |
970,814 |
984,120 |
(13,306 |
) |
|||||||||||||||||
|
Total |
1,470,067 |
1,526,600 |
(56,533 |
) |
4,497,820 |
4,629,178 |
(131,358 |
) |
||||||||||||||||
|
Total harvest volume |
1,880,710 |
1,953,460 |
(72,750 |
) |
5,636,595 |
5,750,524 |
(113,929 |
) |
||||||||||||||||
|
Sales Price/Unit ($ per ton)1 |
||||||||||||||||||||||||
|
Northern region |
||||||||||||||||||||||||
|
Sawlog |
$ |
128 |
$ |
110 |
$ |
18 |
$ |
129 |
$ |
109 |
$ |
20 |
||||||||||||
|
Pulpwood |
$ |
49 |
$ |
39 |
$ |
10 |
$ |
52 |
$ |
37 |
$ |
15 |
||||||||||||
|
Southern region |
||||||||||||||||||||||||
|
Sawlog |
$ |
47 |
$ |
47 |
$ |
- |
$ |
46 |
$ |
47 |
$ |
(1 |
) |
|||||||||||
|
Pulpwood |
$ |
31 |
$ |
31 |
$ |
- |
$ |
31 |
31 |
$ |
- |
|||||||||||||
|
Stumpage |
$ |
16 |
$ |
15 |
$ |
1 |
$ |
14 |
$ |
16 |
$ |
(2 |
) |
|||||||||||
|
1. |
Sawlog and pulpwood sales prices are on a delivered basis, which includes logging and hauling costs. Stumpage sales provide our customers the right to harvest standing timber. As such, the customer contracts the logging and hauling and bears such costs. |
Timberlands Adjusted EBITDDA
The following table summarizes Timberlands Adjusted EBITDDA variances for the three and nine months ended September 30, 2025 compared with the three and nine months ended September 30, 2024:
|
(in thousands) |
Three Months |
Nine Months |
||||||
|
Timberlands Adjusted EBITDDA - prior year |
$ |
35,824 |
$ |
104,696 |
||||
|
Sales price and mix |
7,065 |
15,419 |
||||||
|
Harvest volume |
(1,607 |
) |
(924 |
) |
||||
|
Logging and hauling costs per unit |
266 |
2,691 |
||||||
|
Forest management, indirect and other |
(545 |
) |
1,058 |
|||||
|
Timberlands Adjusted EBITDDA - current year |
$ |
41,003 |
$ |
122,940 |
||||
Third Quarter 2025 Compared with Third Quarter 2024
Timberlands Adjusted EBITDDA for the third quarter of 2025 increased $5.2 million compared with the third quarter of 2024 primarily as a result of the following:
•
Sales Price and Mix: Sawlog prices in the Northern region rose by 16.4% to $128 per ton. This increase was driven by higher cedar sawlog prices and indexed sawlog prices in Idaho. Sawlog prices in the Southern region remained stable.
•
Harvest Volume:Northern sawlog harvest volume decreased 4.3% primarily due to favorable operating conditions in the first half of 2025 that allowed more logging and hauling activities earlier in the year than in 2024. Total Southern harvest volume declined 3.7% from the third quarter 2024, reflecting land sales in the region and more harvest volumes earlier in the year due to favorable operating conditions. These declines were partially offset by higher stumpage sales compared to the third quarter of 2024.
Year to Date 2025 Compared with Year to Date 2024
Timberlands Adjusted EBITDDA for the first nine months of 2025 increased $18.2 million compared with the first nine months of 2024 primarily as a result of the following:
•
Sales Price and Mix: Sawlog prices in the Northern region rose by 18.3%, to $129 per ton. This increase was driven by higher cedar sawlog prices and indexed sawlog prices in Idaho. Sawlog prices in the Southern region remained stable.
•
Harvest Volume:Total Northern harvest volume increased 1.6% compared to the first nine months of 2024 primarily due to higher pulpwood harvest. Total Southern region harvest volume for the first nine months of 2025 declined 2.8% compared to the first nine months of 2024 primarily due to recent land sales in the region.
•
Logging and Hauling Costs per Unit:Logging and hauling costs per delivered unit were lower, primarily due to lower hourly trucking rates and fuel costs.
•
Forest Management, Indirect and Other:Revenue from solar land lease options, third-party asset management fees, and carbon credit sales increased in 2025.
Wood Products Segment
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
||||||||||||||||||
|
Revenues |
$ |
165,881 |
$ |
139,412 |
$ |
26,469 |
$ |
502,345 |
$ |
441,589 |
$ |
60,756 |
||||||||||||
|
Costs and expenses1 |
||||||||||||||||||||||||
|
Fiber costs |
79,588 |
67,552 |
12,036 |
236,116 |
216,595 |
19,521 |
||||||||||||||||||
|
Freight, logging and hauling |
21,946 |
17,314 |
4,632 |
64,000 |
55,805 |
8,195 |
||||||||||||||||||
|
Manufacturing costs |
61,913 |
58,025 |
3,888 |
184,231 |
175,845 |
8,386 |
||||||||||||||||||
|
Finished goods inventory change |
1,994 |
2,883 |
(889 |
) |
(2,829 |
) |
(1,061 |
) |
(1,768 |
) |
||||||||||||||
|
Selling, general and administrative expenses |
2,826 |
3,127 |
(301 |
) |
9,678 |
10,656 |
(978 |
) |
||||||||||||||||
|
Other |
88 |
92 |
(4 |
) |
260 |
274 |
(14 |
) |
||||||||||||||||
|
Wood Products Adjusted EBITDDA2 |
$ |
(2,474 |
) |
$ |
(9,581 |
) |
$ |
7,107 |
$ |
10,889 |
$ |
(16,525 |
) |
$ |
27,414 |
|||||||||
|
1. |
Prior to elimination of intersegment fiber costs of $29.3 million and $28.1 million for the three months ended September 30, 2025 and 2024, respectively, and $83.3 million and $80.1 million for the nine months ended September 30, 2025 and 2024, respectively. |
|
2. |
Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements. |
Wood Products Segment Statistics
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
2025 |
2024 |
Change |
2025 |
2024 |
Change |
|||||||||||||||||||
|
Lumber shipments (MBF)1 |
332,724 |
267,263 |
65,461 |
925,449 |
824,061 |
101,388 |
||||||||||||||||||
|
Lumber sales prices ($ per MBF) |
$ |
396 |
$ |
402 |
$ |
(6 |
) |
$ |
432 |
$ |
419 |
$ |
13 |
|||||||||||
|
1. |
MBF stands for thousand board feet. |
Wood Products Adjusted EBITDDA
The following table summarizes Wood Products Adjusted EBITDDA variances for the three and nine months ended September 30, 2025 compared with the three and nine months ended September 30, 2024:
|
(in thousands) |
Three Months |
Nine Months |
||||||
|
Wood Products Adjusted EBITDDA - prior year |
$ |
(9,581 |
) |
$ |
(16,525 |
) |
||
|
Lumber: |
||||||||
|
Price |
(2,093 |
) |
10,539 |
|||||
|
Manufacturing costs per unit |
7,819 |
11,552 |
||||||
|
Log costs per unit |
3,260 |
6,603 |
||||||
|
Volume |
(1,689 |
) |
(997 |
) |
||||
|
Inventory charge |
(2,571 |
) |
(4,766 |
) |
||||
|
Residuals, panels and other |
2,381 |
4,483 |
||||||
|
Wood Products Adjusted EBITDDA - current year |
$ |
(2,474 |
) |
$ |
10,889 |
|||
Third Quarter 2025 Compared with Third Quarter 2024
Wood Products Adjusted EBITDDA for the third quarter of 2025 increased $7.1 million compared to the third quarter of 2024 primarily as a result of the following:
•
Lumber Price: Average lumber sales price declined slightly to $396 per MBF during the third quarter of 2025 from $402 per MBF during the third quarter of 2024.
•
Manufacturing Costs Per Unit: Manufacturing costs per unit were lower due to increased production, with the majority occurring at the Waldo, Arkansas sawmill, which completed its production ramp-up in the first quarter of 2025 following the completion of the Modernization Project in late second quarter 2024.
•
Log Costs Per Unit: Log costs per unit were lower primarily due to increased production recoveries at several of our sawmills, including the impact from the ramp-up at the Waldo, Arkansas sawmill, partially offset by higher log costs at our Idaho sawmill due to higher indexed pricing.
•
Inventory charge:Inventory during third quarter of 2025 was written down primarily due to lower spot lumber prices for inventory on hand at certain sawmills compared to the end of the third quarter of 2024.
•
Residual Sales, Panels and Other: Residual revenue increased compared to the same period in 2024, primarily due to higher production levels at our Waldo, Arkansas sawmill. In addition, administrative expenses declined, largely driven by lower employee-related costs.
Year to Date 2025 Compared with Year to Date 2024
Wood Products Adjusted EBITDDA for the first nine months of 2025 increased $27.4 million compared to the first nine months of 2024 primarily as a result of the following:
•
Lumber Price: Average lumber sales price increased to $432 per MBF during the first nine months of 2025 from $419 per MBF during the first nine months of 2024.
•
Manufacturing Costs Per Unit: Manufacturing costs per unit were lower primarily due to increased production, with the majority occurring at the Waldo, Arkansas sawmill.
•
Log Costs Per Unit: Log costs per unit were lower primarily due to increased production recoveries at several of our sawmills, including the impact from the ramp-up at the Waldo, Arkansas sawmill, partially offset by higher log costs at our Idaho sawmill due to higher indexed pricing.
•
Inventory charge:Inventory was written down at September 30, 2025 due to lower spot lumber prices for inventory on hand at certain sawmills compared to the end of the third quarter of 2024.
•
Residual Sales, Panels and Other: During the first nine months of 2025, residual revenue increased compared to the same period in 2024, primarily due to higher production levels at our Waldo, Arkansas sawmill. In addition, administrative expenses declined, largely driven by lower employee-related costs.
Real Estate Segment
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
||||||||||||||||||
|
Revenues |
$ |
69,582 |
$ |
38,701 |
$ |
30,881 |
$ |
126,269 |
$ |
145,540 |
$ |
(19,271 |
) |
|||||||||||
|
Costs and expenses |
||||||||||||||||||||||||
|
Cost of goods sold |
4,770 |
4,584 |
186 |
12,605 |
12,031 |
574 |
||||||||||||||||||
|
Selling, general and administrative expenses |
1,767 |
2,256 |
(489 |
) |
5,143 |
5,852 |
(709 |
) |
||||||||||||||||
|
Real Estate Adjusted EBITDDA1 |
$ |
63,045 |
$ |
31,861 |
$ |
31,184 |
$ |
108,521 |
$ |
127,657 |
$ |
(19,136 |
) |
|||||||||||
|
1. |
Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements. |
Real Estate Segment Statistics
|
Rural Real Estate |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
|
2025 |
2024 |
2025 |
2024 |
|||||||||||||
|
Acres sold |
15,636 |
6,548 |
30,136 |
51,470 |
||||||||||||
|
Average price per acre |
$ |
3,280 |
$ |
3,727 |
$ |
3,243 |
$ |
2,230 |
||||||||
|
Development Real Estate |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
|
2025 |
2024 |
2025 |
2024 |
|||||||||||||
|
Residential lots |
55 |
53 |
84 |
90 |
||||||||||||
|
Average price per lot |
$ |
138,938 |
$ |
204,851 |
$ |
127,640 |
$ |
168,850 |
||||||||
|
Commercial acres |
13 |
- |
13 |
12 |
||||||||||||
|
Average price per acre |
$ |
532,942 |
$ |
- |
$ |
532,942 |
$ |
492,746 |
||||||||
Real Estate Adjusted EBITDDA
The following table summarizes Real Estate Adjusted EBITDDA variances for the three and nine months ended September 30, 2025 compared with the three and nine months ended September 30, 2024:
|
(in thousands) |
Three Months |
Nine Months |
||||||
|
Real Estate Adjusted EBITDDA - prior year |
$ |
31,861 |
$ |
127,657 |
||||
|
Rural real estate sales |
27,011 |
(16,378 |
) |
|||||
|
Real estate development sales |
3,743 |
(3,268 |
) |
|||||
|
Selling, general and administrative expenses |
488 |
708 |
||||||
|
Other costs, net |
(58 |
) |
(198 |
) |
||||
|
Real Estate Adjusted EBITDDA - current year |
$ |
63,045 |
$ |
108,521 |
||||
Third Quarter 2025 Compared with Third Quarter 2024
Real Estate Adjusted EBITDDA for the third quarter of 2025 increased $31.2 million compared to the third quarter of 2024 primarily as a result of the following:
•
Rural Sales: Total rural real estate acres sold increased primarily due to two transactions in Georgia during the third quarter of 2025: a 6,500-acre conservation sale and a 6,300-acre recreation tract with younger aged timber. There were no similar size sales in the third quarter of 2024. Rural real estate results can significantly vary quarter to quarter based on geographic mix, weather-related access limitations, and transaction size and timing.
•
Development Sales: During the third quarter of 2025, we sold 55 residential lots at an average lot price of $138,938 compared to 53 lots at an average lot price of $204,851 during the third quarter of 2024. In addition, we sold 13 acres of commercial land in Chenal Valley for $532,942 per acre in the third quarter of 2025, compared to no commercial land sales in Chenal Valley during the third quarter of 2024. The average price per residential lot or commercial acre fluctuates based on a variety of factors, including size, location, and planned end use within the developments.
Year to Date 2025 Compared with Year to Date 2024
Real Estate Adjusted EBITDDA for the first nine months of 2025 decreased $19.1 million compared to the first nine months of 2024 primarily as a result of the following:
•
Rural Sales: Rural real estate sales in the first nine months of 2025 included a 2,000-acre conservation land sale in Arkansas along with the two larger rural real estate sales in Georgia. In comparison, the first nine months of 2024 included a 34,100-acre sale to FIA for $56.7 million and a 2,000-acre conservation land sale in Arkansas.
•
Development Sales: During the first nine months of 2025, we sold 84 residential lots at an average lot price of $127,640, compared to 90 residential lots at an average lot price of $168,500 during the first nine months of 2024. In addition, we sold 13 acres of commercial land in Chenal Valley for $532,972 per acre during the first nine months 2025 compared to 12 acres of commercial land for $492,746 per acre during the first nine months of 2024.
Liquidity and Capital Resources
Cash generated by our operations is highly dependent on the selling prices and volumes of our products and can vary from period to period. Changes in significant sources and uses of cash for the nine months ended September 30, 2025 and 2024 are presented by category as follows:
|
Nine Months Ended September 30, |
||||||||||||
|
(in thousands) |
2025 |
2024 |
Change |
|||||||||
|
Net cash from operating activities |
$ |
155,710 |
$ |
143,062 |
$ |
12,648 |
||||||
|
Net cash from investing activities |
$ |
(45,026 |
) |
$ |
(82,085 |
) |
$ |
37,059 |
||||
|
Net cash from financing activities |
$ |
(168,740 |
) |
$ |
(137,534 |
) |
$ |
(31,206 |
) |
|||
Net Cash Flows from Operating Activities
Net cash from operating activities increased $12.6 million in the first nine months of 2025 compared to the first nine months of 2024 primarily as a result of the following:
•
Cash received from customers increased $49.8 million. This was driven primarily by higher lumber prices and shipments, along with higher Northern sawlog prices. These increases were partially offset by lower Southern harvest volume and fewer rural real estate acres sold as 2024 included the 34,100-acre sale to FIA.
•
Cash payments increased $39.3 million primarily due to increased lumber production and increased neighborhood infrastructure development activity in Chenal Valley, partially offset by lower Southern logging and hauling activities and lower Northern hauling costs.
•
Cash from operating activities for the first nine months of 2025 includes reclassification of $20.9 million received from interest rate swaps that contain an other-than-insignificant financing element at inception as investing ($19.7 million) and financing ($1.2 million) activities. Cash from operating activities for first nine months of 2024 includes reclassification of $22.5 million received from interest rate swaps that contain an other-than-insignificant financing element at inception as investing ($20.9 million) and financing ($1.6 million) activities.
•
We received $2.9 million of income tax refunds in the first nine months of 2025, and no income tax refunds in the first nine months of 2024.
Net Cash Flows from Investing Activities
Changes in cash flows from investing activities were primarily a result of the following:
•
Cash expenditures for property, plant and equipment, timberlands reforestation and road construction projects during the first nine months of 2025 and 2024 were $39.9 million and $71.5 million, respectively. Cash expenditures during the first nine months of 2025 include the final close out payment of $6.6 million for the Waldo sawmill Modernization Project. Cash expenditures during the first nine months of 2024 included $38.0 million for the Waldo sawmill Modernization Project.
•
Cash expenditures for timberland acquisitions during the first nine months of 2025 and 2024 were $25.5 million and $32.3 million, respectively.
•
We received $19.7 million during the first nine months of 2025, compared to $20.9 million during the first nine months of 2024, from certain interest rate swaps that contained an other-than-insignificant financing element at inception, which are required to be classified in investing activities. Cash flows from these above-market interest rate swaps reduce our interest costs on the corresponding variable rate debt.
Net Cash Flows from Financing Activities
Changes in cash flows from financing activities were primarily a result of the following:
•
During the first nine months of 2025 and 2024, we repurchased 1,511,923 and 666,472 shares of our common stock, respectively, for a purchase price totaling $60.0 million and $27.4 million, respectively.
•
Dividend payments of $105.0 million during the first nine months of 2025 were lower compared to $106.9 million during the first nine months of 2024, as a result of fewer shares outstanding due to share repurchases.
Future Sources and Uses of Cash
At September 30, 2025, we had cash and cash equivalents of $88.8 million. We expect cash and cash equivalents on hand, cash generated from our operating activities, and available borrowing capacity under our Credit Agreement, if needed, to be adequate to meet our future cash requirements. At September 30, 2025, there were no significant changes in our cash commitments arising in the normal course of business under our known contractual and other obligations as described in our Annual Report on Form 10-K for the year ended December 31, 2024. Further, we believe our current liquidity level is sufficient to fund our business, including costs related to the proposed merger with Rayonier, and meet both our short-term (next 12 months) and reasonably foreseeable long-term requirements.
Capital Expenditures
We invest cash in maintenance and discretionary capital expenditures at our Wood Products facilities. We also invest cash in the reforestation of timberlands and construction of roads in our Timberlands operations and to develop land in our Real Estate development operations. We evaluate discretionary capital improvements based on an expected level of return on investments. We expect to spend approximately $60.0 million to $65.0 million for capital expenditures during 2025, not including the final closeout payment of $6.6 million for the Waldo sawmill Modernization Project made in the first quarter of 2025.
Share Repurchase Program
On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchase (the 2022 Repurchase Program). At September 30, 2025, we had remaining authorization of $30.0 million for future stock repurchases under the 2022 Repurchase Program. Shares under the 2022 Repurchase Program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, or through privately negotiated transactions. Subject to the terms of any trading plan, the 2022 Repurchase Program may be suspended, terminated or modified at any time for any reason.
Term Loans, Credit Agreement, and Interest Rate Swap Agreements
At September 30, 2025, our total outstanding long-term debt was $1.0 billion, all of which was drawn under an amended and restated credit agreement dated as of March 22, 2018 (Amended Term Loan Agreement) with our primary lender, AgWest Farm Credit, PCA (as successor in interest to Northwest Farm Credit Services, PCA). All interest rates on our outstanding long-term debt are variable-rate term loans with an associated interest rate swap that fixes the variable benchmark interest rate component. Of this amount, approximately $27.5 million was classified as current on our accompanying Condensed Consolidated Balance Sheets, consisting of a term loan that matures in February 2026. We are currently evaluating options to either refinance or pay off with cash on hand the $27.5 million term loan when it matures.
On August 27, 2025, we entered into the twelfth amendment to our Amended Term Loan Agreement, establishing a new unsecured multi-segment term loan facility (the New Term Loan) with a total commitment of up to $127.5 million, maturing on August 27, 2035. An initial draw of $100.0 million under the New Term Loan was used to refinance a $100.0 million term loan under the Amended Term Loan Agreement that matured on August 27, 2025. The remaining $27.5 million commitment under the New Term Loan agreement will be available on February 2, 2026, to refinance a variable-rate term loan maturing on that date if we choose to refinance the loan upon maturity. The New Term Loan bears interest at a rate equal to daily simple SOFR plus an applicable margin of 2.30% per annum. The agreement includes a cost-of-capital reset provision at the third, sixth, and ninth anniversaries of the refinance at the sole discretion of the lender.
In connection with refinancing the $100.0 million term loan under the New Term Loan agreement, we terminated our remaining $75.0 million forward-starting interest rate swap and transferred the value realized from its termination into a new interest rate swap to fix the rate on the $100.0 million drawn on the New Term Loan at 4.11%, including margin but before patronage credits from lenders. Following this transaction, we had no remaining forward-starting interest rate swaps.
We have a $300.0 million revolving line of credit with a syndicate of lenders, that matures February 14, 2027 (Amended Credit Agreement). Under the terms of the Amended Credit Agreement, the amount of available principal may be increased up to an additional $500.0 million. We may also utilize borrowings under the Amended Credit Agreement to, among other things, refinance existing indebtedness and provide funding for working capital requirements, capital projects, acquisitions, and other general corporate expenditures. At September 30, 2025, there were no borrowings under the revolving line of credit and approximately $0.6 million of the credit facility was utilized by outstanding letters of credit.
See Note 5: Debtand Note 6: Derivative Instrumentsin the Notes to the Condensed Consolidated Financial Statementsfor additional information on our debt, credit, and interest rate swap agreements.
Financial Covenants
The Amended Term Loan Agreement and Amended Credit Agreement (collectively referred to as the Financing Agreements) contain certain covenants that limit our ability and that of our subsidiaries to create liens, merge or consolidate, dispose of assets, incur indebtedness and guarantees, repurchase or redeem capital stock and indebtedness, make certain investments or acquisitions, enter into certain transactions with affiliates or change the nature of our business. The Financing Agreements also contain financial maintenance covenants including the maintenance of a minimum interest coverage ratio and a maximum leverage ratio as defined in the Financing Agreements. We are permitted to pay dividends to our stockholders under the terms of the Financing Agreements so long as we expect to remain in compliance with the financial maintenance covenants.
The following table presents the components and applicable limits of Total Asset Value (TAV), a component of the Leverage Ratio, at September 30, 2025:
|
(in thousands) |
||||
|
Estimated timberland fair value |
$ |
5,163,877 |
||
|
Wood Products manufacturing facilities book basis (limited to 10% of TAV) |
381,031 |
|||
|
Cash and cash equivalents |
88,773 |
|||
|
Other1 |
9,324 |
|||
|
Total Asset Value |
$ |
5,643,005 |
||
|
Includes, as applicable, Company Owned Life Insurance (limited to 5% of TAV), Construction in Progress (limited to 10% of TAV) and Investments in Affiliates (limited to 15% of TAV) as defined in the Financing Agreements. |
As of September 30, 2025, we were in compliance with all covenants under the Financing Agreements. The following table sets forth the financial covenants for the Financing Agreements and our status with respect to these covenants at September 30, 2025:
|
Covenant Requirement |
Actual |
|||||
|
Interest Coverage Ratio |
≥ |
3.00 to 1.00 |
7.9 |
|||
|
Leverage Ratio |
≤ |
40% |
19% |
|||
Credit Ratings
Two major debt rating agencies routinely evaluate our debt, and our cost of borrowing can increase or decrease depending on our credit rating. Both Moody's and S&P rate our debt as investment grade. There have been no changes in our credit rating during the nine months ended September 30, 2025.
Capital Structure
|
(in thousands) |
September 30, 2025 |
December 31, 2024 |
||||||
|
Long-term debt (including current portion) |
$ |
1,035,089 |
$ |
1,034,652 |
||||
|
Cash and cash equivalents |
(88,773 |
) |
(151,551 |
) |
||||
|
Net debt |
946,316 |
883,101 |
||||||
|
Market capitalization1 |
3,149,608 |
3,088,347 |
||||||
|
Enterprise value |
$ |
4,095,924 |
$ |
3,971,448 |
||||
|
Net debt to enterprise value |
23.1 |
% |
22.2 |
% |
||||
|
Dividend yield2 |
4.4 |
% |
4.6 |
% |
||||
|
Weighted-average cost of debt, after tax3 |
2.3 |
% |
2.3 |
% |
||||
|
1. |
Market capitalization is based on outstanding shares of 77.3 million and 78.7 million times closing share prices of $40.75 and $39.25 at September 30, 2025 and December 31, 2024, respectively. |
|
2. |
Dividend yield is based on annualized dividends per share of $1.80 and share prices of $40.75 and $39.25 at September 30, 2025 and December 31, 2024, respectively. |
|
3. |
Weighted-average cost of debt excludes amortization of deferred debt costs, credit facility fees and non-cash amortization related to redesignated forward swaps and includes estimated annual patronage credit on term loan debt. |
Liquidity and Performance Measures
The discussion below is presented to enhance the reader's understanding of our operating performance, and our ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures: Total Adjusted EBITDDA and Cash Available for Distribution (CAD). These measures are not defined by GAAP and the discussion of Total Adjusted EBITDDA and CAD is not intended to conflict with or change any of the GAAP disclosures described herein. These non-GAAP financial measures should be considered only as supplemental to, and are not intended to be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may not be the same as or comparable to other similarly titled non-GAAP financial measures presented by other companies due to potential inconsistencies in methods of calculation.
Total Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance and to allocate resources between segments. Total Adjusted EBITDDA removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis. Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors and other interested parties by facilitating the comparability of our ongoing operating results over the periods presented and the identification of trends in our underlying business. It also can be used to evaluate the operational performance of the assets under management and to compare our operating results against analyst financial models and against the operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.
We define EBITDDA as net income (loss) before interest expense, net, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses.
We reconcile Total Adjusted EBITDDA to net income (loss) for the consolidated company as it is the most comparable GAAP measure.
The following table provides a reconciliation of net income to Total Adjusted EBITDDA for the respective periods:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Net income |
$ |
25,893 |
$ |
3,309 |
$ |
59,052 |
$ |
16,682 |
||||||||
|
Interest expense, net |
11,461 |
9,635 |
23,365 |
18,049 |
||||||||||||
|
Income taxes |
(1,425 |
) |
(4,056 |
) |
(5,299 |
) |
(12,923 |
) |
||||||||
|
Depreciation, depletion and amortization |
26,046 |
25,487 |
77,820 |
85,150 |
||||||||||||
|
Basis of real estate sold |
26,022 |
12,905 |
47,370 |
73,522 |
||||||||||||
|
Merger-related expenses |
1,903 |
- |
1,903 |
- |
||||||||||||
|
Non-operating pension and other postretirement employee benefits |
351 |
(200 |
) |
1,053 |
(602 |
) |
||||||||||
|
Environmental charge |
- |
- |
490 |
- |
||||||||||||
|
Loss on disposal of assets |
234 |
338 |
658 |
267 |
||||||||||||
|
Other |
(1,222 |
) |
(1,516 |
) |
(1,757 |
) |
(1,348 |
) |
||||||||
|
Total Adjusted EBITDDA |
$ |
89,263 |
$ |
45,902 |
$ |
204,655 |
$ |
178,797 |
||||||||
We define CAD as cash from operating activities adjusted for capital spending for purchases of property, plant and equipment, timberlands reforestation and roads and timberland acquisitions not classified as strategic. Management believes CAD is a useful indicator of the company's overall liquidity, as it provides a measure of cash generated that is available for dividends to common stockholders (an important factor in maintaining our REIT status), repurchase of the company's common shares, debt repayment, acquisitions and other discretionary and nondiscretionary activities. Our definition of CAD is limited in that it does not solely represent residual cash flows available for discretionary expenditures since the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view CAD as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows. Our definition of CAD may be different from similarly titled measures reported by other companies, including those in our industry. CAD is not necessarily indicative of the CAD that may be generated in future periods.
The following table provides a reconciliation of net cash from operating activities to CAD:
|
Nine Months Ended September 30, |
Twelve Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Net cash from operating activities1, 2 |
$ |
155,710 |
$ |
143,062 |
$ |
201,118 |
$ |
184,865 |
||||||||
|
Capital expenditures3 |
(65,382 |
) |
(103,771 |
) |
(82,607 |
) |
(178,627 |
) |
||||||||
|
CAD |
$ |
90,328 |
$ |
39,291 |
$ |
118,511 |
$ |
6,238 |
||||||||
|
Net cash from investing activities4 |
$ |
(45,026 |
) |
$ |
(82,085 |
) |
$ |
(55,003 |
) |
$ |
(149,967 |
) |
||||
|
Net cash from financing activities |
$ |
(168,740 |
) |
$ |
(137,534 |
) |
$ |
(213,577 |
) |
$ |
(187,643 |
) |
||||
|
1. |
Net cash from operating activities for the nine and twelve months ended September 30, 2025, includes cash paid for real estate development expenditures of $8.8 million and $11.6 million, respectively. Net cash from operating activities for the nine and twelve months ended September 30, 2024, includes cash paid for real estate development expenditures of $5.3 million and $7.0 million, respectively. |
|
2. |
Net cash from operating activities for the nine and twelve months ended September 30, 2025, excludes $20.9 million and $28.1 million, respectively, of interest rate swap proceeds classified as investing and financing activities. Net cash from operating activities for the nine and twelve months ended September 30, 2024, excludes $22.5 million and $29.5 million, respectively, of interest rate swap proceeds classified as investing and financing activities. |
|
3. |
The nine and twelve months ended September 30, 2025, includes capital expenditures of $6.6 million related to the Waldo Modernization Project. The nine and twelve months ended September 30, 2024, includes capital expenditures of $38.0 million and $97.4 million, respectively, related to the Waldo Modernization Project. The nine months ended September 30, 2025 and 2024, includes the acquisition of non-strategic timber and timberland of $25.5 million and $32.3 million, respectively. The twelve months ended September 30, 2025 and 2024, includes the acquisition of non-strategic timber and timberland of $25.5 million and $32.5 million, respectively. |
|
4. |
Net cash from investing activities includes payment for capital expenditures and acquisition of non-strategic timber and timberlands, which is also included in our reconciliation of CAD. |
Critical Accounting Policies and Estimates
There have been no significant changes during 2025 to our critical accounting policies or estimates as presented in our 2024 Annual Report on Form 10-K.
PotlatchDeltic Corporation published this content on November 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 07, 2025 at 19:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]