PotlatchDeltic Corporation (NASDAQ:PCH) today reported net income of $120.2 million, or $1.72 per diluted share, on revenues of $359.6 million for the quarter ended June 30, 2022. Excluding an after-tax gain on insurance recoveries, adjusted net income was $112.9 million, or $1.61 per diluted share for the second quarter of 2022. Net income was $187.9 million, or $2.77 per diluted share, on revenues of $447.5 million for the quarter ended June 30, 2021.

Second Quarter 2022 Highlights

Generated Total Adjusted EBITDDA of $175.1 million and Total Adjusted EBITDDA margin of 49%
Entered into definitive merger agreement with CatchMark to create leading integrated timber REIT
Announced $131 million expansion and modernization of Waldo, Arkansas sawmill
Closed or pending timberland bolt-on acquisitions were $101 million
Widened strong liquidity position to $810 million as of June 30, 2022

"Our second quarter 2022 financial results reflect strong performance across all of our businesses," said Eric Cremers, president and chief executive officer. "We continue to capitalize on attractive lumber prices, which we expect to remain higher than long-term averages for the rest of 2022. Key recent accomplishments include the announcement of our pending merger with CatchMark, a decision to spend $131 million to modernize and expand our Waldo, Arkansas sawmill, and returning cash of $35 million to shareholders, including $5 million of share repurchases. I am very excited about our growth opportunities and we are well-positioned with our strong balance sheet and liquidity to deliver exceptional shareholder value over the long-term," stated Mr. Cremers.

Financial Highlights

($ in millions, except per share data)	Q2 2022		Q1 2022		Q2 2021
Revenues	$	359.6	$	411.4	$	447.5
Net income	$	120.2	$	163.9	$	187.9
Weighted average shares outstanding, diluted (in thousands)		69,791		69,623		67,732
Net income per diluted share	$	1.72	$	2.35	$	2.77

Adjusted Net Income	$	112.9	$	174.6	$	187.9
Adjusted Net Income Per Diluted Share	$	1.61	$	2.50	$	2.77

Total Adjusted EBITDDA	$	175.1	$	245.6	$	275.0
Dividends per share	$	0.44	$	0.44	$	0.41
Net cash from operations	$	147.9	$	230.3	$	171.4
Cash and cash equivalents	$	511.2	$	470.9	$	512.0

Business Performance: Q2 2022 vs. Q1 2022

Timberlands

Second Quarter 2022 Highlights

Timberlands Adjusted EBITDDA decreased $18.5 million from Q1 2022
Northern harvest volumes decreased due to spring break-up and unseasonably wet weather in June
Northern sawlog prices increased 7.5% primarily due to higher indexed sawlog prices and seasonally lighter logs
Southern sawlog harvest volumes were slightly lower and saw log prices were relatively flat
Higher log & haul costs were primarily driven by increased fuel costs
Forest management costs increased due to seasonally higher activities

($ in millions)	Q2 2022		Q1 2022		$ Change
Timberlands Revenues	$	105.5	$	123.7	$	(18.2	)

Timberlands Adjusted EBITDDA	$	57.9	$	76.4	$	(18.5	)

Wood Products

Second Quarter 2022 Highlights

Wood Products Adjusted EBITDDA decreased $42.8 million from Q1 2022
Average lumber price decreased 20% to $865 per MBF in Q2 2022
Log costs increased primarily due to higher indexed pricing in Idaho
Lumber shipments increased 9% to 254 MMBF in Q2 2022

($ in millions)	Q2 2022		Q1 2022		$ Change
Wood Products Revenues	$	266.6	$	295.7	$	(29.1	)

Wood Products Adjusted EBITDDA	$	107.2	$	150.0	$	(42.8	)

Real Estate

Second Quarter 2022 Highlights

Real Estate Adjusted EBITDDA decreased $8.3 million from Q1 2022
Sold 12,749 acres of rural land at an average price of $1,290 / acre
Sold 45 residential lots at an average price of $134,373 / lot
Sold 3 commercial acres for $685,713 / acre

($ in millions)	Q2 2022		Q1 2022		$ Change
Real Estate Revenues	$	26.7	$	34.1	$	(7.4	)

Real Estate Adjusted EBITDDA	$	21.8	$	30.1	$	(8.3	)

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 income 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, July 26, 2022, 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 Investors link or by conference call at 1-888-510-2008 for U.S./Canada and 1-646-960-0306 for international callers. Participants will be asked to provide conference I.D. number 7281983. 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 August 2, 2022, by calling 1-800-770-2030 for U.S./Canada or 1-647-362-9199 for international callers. Callers must enter conference I.D. number 7281983 to access the replay.

About PotlatchDeltic

PotlatchDeltic (NASDAQ:PCH) is a leading Real Estate Investment Trust (REIT) that owns approximately 1.8 million acres of timberlands in Alabama, Arkansas, Idaho, Louisiana 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 management, is committed to environmental and social responsibility and to responsible governance. 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 Securities Litigation Reform Act of 1995 as amended, including without limitation, our expectations regarding the company's revenues, costs and expenses; favorable housing market fundamentals and demand for lumber and lumber prices; disciplined capital allocation strategy; pending merger transaction with CatchMark Timber Trust, Inc., modernization of the Waldo, Arkansas sawmill, business conditions and strategies; and similar matters. Words such as "anticipate," "expect," "will," "intend," "plan," "target," "project," "believe," "seek," "schedule," "estimate," "could," "can," "may," and similar expressions are intended to identify such forward-looking statements. 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 impact of COVID-19 and its variants, governmental responses to such outbreaks, and anticipated recovery from the pandemic on our business, suppliers, customers and employees; changes in 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 and effects on our customers and suppliers; changes in interest rates; credit availability and homebuyers' ability to qualify for mortgages; availability of labor and developable land; changes in the level of construction and remodeling activity; changes in foreign demand; changes in tariffs, quotas and trade agreements involving wood products; currency fluctuation; changes in demand for our products and real estate; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; disruptions or inefficiencies in our supply chain and/or operations; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; fires at our facilities and on our timberland and other catastrophic events; restrictions on harvesting due to fire danger; changes in raw material, fuel and other costs; transportation disruptions; share price; the successful execution of the company's strategic plans; the failure of CatchMark's shareholders to approve the merger transaction, or the occurrence of any event, change, or other circumstance that could give rise to a termination of the definitive agreement relating to the proposed merger transaction, the company's ability and its contractors' ability to implement the modernization plan for the Waldo, Arkansas sawmill, 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 Operations Unaudited

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(in thousands, except per share amounts)	2022			2022			2021			2022			2021
Revenues	$	359,597		$	411,350		$	447,506		$	770,947		$	801,699
Costs and expenses:
Cost of goods sold		191,334			179,847			177,779			371,181			347,081
Selling, general and administrative expenses		20,412			16,294			19,512			36,706			36,270
(Gain) loss on fire damage		(9,868	)		276			—			(9,592	)		—
		201,878			196,417			197,291			398,295			383,351
Operating income		157,719			214,933			250,215			372,652			418,348
Interest expense, net		(7,419	)		(2,894	)		(8,199	)		(10,313	)		(11,773	)
Pension settlement charge		—			(14,165	)		—			(14,165	)		—
Non-operating pension and other postretirement employee benefit costs		(1,809	)		(1,929	)		(3,271	)		(3,738	)		(6,685	)
Income before income taxes		148,491			195,945			238,745			344,436			399,890
Income taxes		(28,269	)		(32,065	)		(50,840	)		(60,334	)		(80,879	)
Net income	$	120,222		$	163,880		$	187,905		$	284,102		$	319,011

Net income per share:
Basic	$	1.73		$	2.36		$	2.79		$	4.09		$	4.74
Diluted	$	1.72		$	2.35		$	2.77		$	4.07		$	4.71
Dividends per share	$	0.44		$	0.44		$	0.41		$	0.88		$	0.82
Weighted-average shares outstanding:
Basic		69,580			69,419			67,316			69,502			67,265
Diluted		69,791			69,623			67,732			69,731			67,664


PotlatchDeltic Corporation Condensed Consolidated Balance Sheet Unaudited

(in thousands, except per share amounts)	June 30, 2022			December 31, 2021
*ASSETS*
Current assets:
Cash and cash equivalents	$	511,157		$	296,151
Customer receivables, net		43,989			31,028
Inventories, net		64,247			72,369
Other current assets		31,833			21,630
Total current assets		651,226			421,178
Property, plant and equipment, net		314,840			292,320
Investment in real estate held for development and sale		60,143			65,604
Timber and timberlands, net		1,704,256			1,682,671
Intangible assets, net		15,101			15,491
Other long-term assets		126,353			57,951
Total assets	$	2,871,919		$	2,535,215

*LIABILITIES AND STOCKHOLDERS' EQUITY*
Current liabilities:
Accounts payable and accrued liabilities	$	110,184		$	78,209
Current portion of long-term debt		39,989			42,977
Current portion of pension and other postretirement employee benefits		4,993			4,993
Total current liabilities		155,166			126,179
Long-term debt		715,748			715,279
Pension and other postretirement employee benefits		91,703			83,674
Deferred tax liabilities, net		40,725			34,874
Other long-term obligations		25,026			49,076
Total liabilities		1,028,368			1,009,082
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 69,280 and 69,064 shares		69,280			69,064
Additional paid-in capital		1,785,383			1,781,217
Accumulated deficit		(62,074	)		(280,910	)
Accumulated other comprehensive income (loss)		50,962			(43,238	)
Total stockholders' equity		1,843,551			1,526,133
Total liabilities and stockholders' equity	$	2,871,919		$	2,535,215


PotlatchDeltic Corporation Condensed Consolidated Statements of Cash Flows Unaudited

	Three Months Ended									Six Months Ended
(in thousands)	June 30, 2022			March 31, 2022			June 30, 2021			June 30, 2022			June 30, 2021
*CASH FLOWS FROM OPERATING ACTIVITIES*
Net income	$	120,222		$	163,880		$	187,905		$	284,102		$	319,011
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization		20,379			19,874			17,432			40,253			35,831
Basis of real estate sold		7,325			10,854			7,213			18,179			16,036
Change in deferred taxes		34			(2,123	)		(928	)		(2,089	)		562
Pension and other postretirement employee benefits		3,540			3,857			5,484			7,397			11,111
Pension settlement charge		—			14,165			—			14,165			—
Equity-based compensation expense		2,368			2,056			2,140			4,424			4,070
(Gain) loss on fire damage		(9,868	)		276			—			(9,592	)		—
Other, net		(308	)		(291	)		92			(599	)		(295	)
Change in working capital and operating-related activities, net		(1,236	)		21,208			(43,867	)		19,972			(37,154	)
Real estate development expenditures		(3,029	)		(2,161	)		(1,684	)		(5,190	)		(3,999	)
Funding of pension and other postretirement employee benefits		(968	)		(1,296	)		(2,412	)		(2,264	)		(3,833	)
Proceeds from insurance recoveries		9,428			—			—			9,428			—
Net cash from operating activities		147,887			230,299			171,375			378,186			341,340

*CASH FLOWS FROM INVESTING ACTIVITIES*
Property, plant and equipment additions		(24,211	)		(12,566	)		(8,181	)		(36,777	)		(15,943	)
Timberlands reforestation and roads		(3,740	)		(4,648	)		(3,998	)		(8,388	)		(7,954	)
Acquisition of timber and timberlands		(42,218	)		—			(2,192	)		(42,218	)		(2,192	)
Other, net		(1,475	)		92			446			(1,383	)		635
Net cash from investing activities		(71,644	)		(17,122	)		(13,925	)		(88,766	)		(25,454	)

*CASH FLOWS FROM FINANCING ACTIVITIES*
Distributions to common stockholders		(30,524	)		(30,524	)		(27,489	)		(61,048	)		(54,973	)
Repurchase of common stock		(4,156	)		—			—			(4,156	)		—
Repayment of long-term debt		—			(3,000	)		—			(3,000	)		—
Other, net		(1,023	)		(1,071	)		(632	)		(2,094	)		(1,223	)
Net cash from financing activities		(35,703	)		(34,595	)		(28,121	)		(70,298	)		(56,196	)
Change in cash, cash equivalents and restricted cash		40,540			178,582			129,329			219,122			259,690
Cash, cash equivalents and restricted cash, beginning		475,354			296,772			382,701			296,772			252,340
Cash, cash equivalents and restricted cash, ending	$	515,894		$	475,354		$	512,030		$	515,894		$	512,030


PotlatchDeltic Corporation Segment Information Unaudited

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(in thousands)	2022			2022			2021			2022			2021
Revenues
Timberlands	$	105,486		$	123,657		$	121,216		$	229,143		$	233,132
Wood Products		266,633			295,742			357,673			562,375			626,969
Real Estate		26,736			34,065			15,998			60,801			36,311
		398,855			453,464			494,887			852,319			896,412
Intersegment Timberlands revenues		(39,258	)		(42,114	)		(47,381	)		(81,372	)		(94,713	)
Consolidated revenues	$	359,597		$	411,350		$	447,506		$	770,947		$	801,699

Adjusted EBITDDA¹
Timberlands	$	57,890		$	76,434		$	77,259		$	134,324		$	145,117
Wood Products		107,256			149,951			204,533			257,207			330,088
Real Estate		21,816			30,124			11,788			51,940			28,381
Corporate		(13,912	)		(9,584	)		(12,822	)		(23,496	)		(23,532	)
Eliminations and adjustments		2,120			(1,363	)		(5,774	)		757			(10,084	)
Total Adjusted EBITDDA		175,170			245,562			274,984			420,732			469,970
Interest expense, net		(7,419	)		(2,894	)		(8,199	)		(10,313	)		(11,773	)
Depreciation, depletion and amortization		(20,007	)		(19,502	)		(17,029	)		(39,509	)		(35,025	)
Basis of real estate sold		(7,325	)		(10,854	)		(7,213	)		(18,179	)		(16,036	)
Gain (loss) on fire damage		9,868			(276	)		—			9,592			—
Pension settlement charge		—			(14,165	)		—			(14,165	)		—
Non-operating pension and other postretirement employee benefits		(1,809	)		(1,929	)		(3,271	)		(3,738	)		(6,685	)
Gain (loss) on disposal of fixed assets		13			3			(527	)		16			(561	)
Income before income taxes	$	148,491		$	195,945		$	238,745		$	344,436		$	399,890

Depreciation, depletion and amortization
Timberlands	$	11,563		$	12,161		$	10,482		$	23,724		$	21,899
Wood Products		8,136			7,021			6,179			15,157			12,382
Real Estate		173			170			160			343			315
Corporate		135			150			208			285			429
		20,007			19,502			17,029			39,509			35,025
Bond discounts and deferred loan fees²		372			372			403			744			806
Total depreciation, depletion and amortization	$	20,379		$	19,874		$	17,432		$	40,253		$	35,831

Basis of real estate sold
Real Estate	$	7,328		$	10,860		$	7,219		$	18,188		$	16,048
Eliminations and adjustments		(3	)		(6	)		(6	)		(9	)		(12	)
Total basis of real estate sold	$	7,325		$	10,854		$	7,213		$	18,179		$	16,036

¹ Management uses Adjusted EBITDDA to evaluate company and segment performance. See the reconciliation of Total Adjusted EBITDDA below.
² Bond discounts and deferred loan fees are included in interest expense, net in the Condensed Consolidated Statements of Operations.


PotlatchDeltic Corporation Reconciliations Unaudited

	Three Months Ended								Six Months Ended
	June 30,			March 31,			June 30,		June 30,			June 30,
(in thousands, except per share amount)	2022			2022			2021		2022			2021
Total Adjusted EBITDDA
Net income (GAAP)	$	120,222		$	163,880		$	187,905	$	284,102		$	319,011
Interest expense, net		7,419			2,894			8,199		10,313			11,773
Income taxes		28,269			32,065			50,840		60,334			80,879
Depreciation, depletion and amortization		20,007			19,502			17,029		39,509			35,025
Basis of real estate sold		7,325			10,854			7,213		18,179			16,036
(Gain) loss on fire damage		(9,868	)		276			—		(9,592	)		—
Pension settlement charge		—			14,165			—		14,165			—
Non-operating pension and other postretirement benefit costs		1,809			1,929			3,271		3,738			6,685
(Gain) loss on disposal of fixed assets		(13	)		(3	)		527		(16	)		561
Total Adjusted EBITDDA	$	175,170		$	245,562		$	274,984	$	420,732		$	469,970

Adjusted Net Income
Net income (GAAP)	$	120,222		$	163,880		$	187,905	$	284,102		$	319,011
Special items:
(Gain) loss on fire damage, after tax		(7,351	)		205			—		(7,146	)		—
Pension settlement charge, after tax		—			10,553			—		10,553			—
Adjusted net income	$	112,871		$	174,638		$	187,905	$	287,509		$	319,011

Adjusted Net Income Per Diluted Share
Net income per diluted share (GAAP)	$	1.72		$	2.35		$	2.77	$	4.07		$	4.71
Special items:
(Gain) loss on fire damage, after tax		(0.11	)		—			—		(0.10	)		—
Pension settlement charge, after tax		—			0.15			—		0.15			—
Adjusted net income per diluted share	$	1.61		$	2.50		$	2.77	$	4.12		$	4.71

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