GICS Sector : Real Estate
PotlatchDeltic (NASDAQ:PCH) is a leading Real Estate Investment Trust (REIT) that owns 1.8 million acres of timberlands in Alabama, Arkansas, Idaho, Louisiana, Minnesota 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. Show Full description
PotlatchDeltic reported total adjusted EBITDA of $89 million in the third quarter, driven by a strong performance in its real estate business, with both rural and development segments contributing significantly. The company's earnings per share (EPS) came in at $0.36, significantly beating estimates of $0.15. Revenue growth is expected to be around 2.4% next year according to analysts' estimates. The company's financial performance was also reflected in its Timberlands segment, which saw an increase in adjusted EBITDA from $40 million in the second quarter to $41 million in the third quarter.
Publication Date: Nov -08
The Timberlands segment delivered a harvest volume of 1.9 million tons, with Idaho producing its highest quarterly volume so far this year. The Wood Products business reported an EBITDA loss of $2 million, primarily driven by lower lumber prices, with average lumber price realization decreasing by $54 per thousand board feet. The Real Estate segment generated adjusted EBITDA of $63 million, driven by strong rural and development sales activity, including the sale of 15,600 acres at an average price of nearly $3,300 per acre.
The company expects total adjusted EBITDA in the fourth quarter to be lower than third-quarter results, mainly driven by fewer rural real estate acres sold and seasonally lower harvest volumes in Timberlands. Eric Cremers mentioned that lumber prices might increase by 2-4% in the fourth quarter and expects flat performance in the Wood Products business excluding price. The company's guidance is supported by its expectation of a combined company's greater scale and diversification, mitigating exposure to any one market.
With a P/E Ratio of 77.79, P/B Ratio of 1.69, and EV/EBITDA of 24.72, the company's valuation metrics indicate a premium pricing. The company's ROE and ROIC are at 2.08% and 2.54% respectively, indicating a relatively low return on equity and invested capital. The Net Debt / EBITDA ratio is at 5.77, indicating a moderate level of debt. The Dividend Yield is at 4.35%, which may be attractive to income-seeking investors.
Eric Cremers stated that the combined company with Rayonier will have greater scale and diversification, and that different regions react differently to events. He also mentioned that the company is trying to lower per-unit costs in their mills, and that lumber inventories in the channel are lean. Wayne Wasechek mentioned that there's strong demand for rural real estate for recreation and conservation purposes, and that the company is still bullish on solar despite concerns about government funding cuts.
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PotlatchDeltic's Wood Products segment growth of 1.8% is driven by increasing demand for lumber and panels in the repair and remodeling market, supported by a strong housing market and rising DIY activities. Additionally, the company's strategic focus on operational efficiency and cost reduction initiatives contribute to the segment's growth.
PotlatchDeltic Corporation's Timberlands segment growth of 1.5% is driven by increasing demand for lumber and wood products, fueled by a strong housing market and infrastructure development. Additionally, the company's strategic timberland acquisitions and sustainable forestry practices contribute to the growth, while favorable weather conditions and efficient harvesting operations also support the segment's expansion.
PotlatchDeltic Corporation's 2.2% growth in Real Estate is driven by increasing demand for timberlands, strategic land sales, and recreational properties. Additionally, the company's focus on rural land development and conservation efforts contribute to its growth. Furthermore, the rising trend of outdoor recreation and eco-tourism also boosts the demand for its properties.
The 1.2% growth in Other Intersegment from PotlatchDeltic Corporation is driven by increased timberland sales, higher prices for wood products, and a strong demand for lumber and panels. Additionally, the company's strategic acquisitions and divestitures have optimized its portfolio, leading to improved operational efficiencies and cost savings.
Harvested timber from sustainably managed forests, available in various species and grades
Rural and recreational properties for sale, including undeveloped land and improved properties
Manufactured wood products, including lumber, plywood, and engineered wood
Services for landowners, including forestry management, land sales, and recreational leasing
Leases for recreational activities such as hunting, fishing, and camping
The threat of substitutes for PotlatchDeltic Corporation is medium due to the availability of alternative products and services in the timber and real estate industries.
The bargaining power of customers for PotlatchDeltic Corporation is low due to the company's diversified customer base and lack of concentration in a single customer.
The bargaining power of suppliers for PotlatchDeltic Corporation is medium due to the availability of alternative suppliers in the timber and real estate industries.
The threat of new entrants for PotlatchDeltic Corporation is low due to the high barriers to entry in the timber and real estate industries, including the need for significant capital investment and regulatory approvals.
The intensity of rivalry for PotlatchDeltic Corporation is high due to the competitive nature of the timber and real estate industries, with many established players competing for market share.
| Value | |
|---|---|
| Debt Weight | 32.41% |
| Debt Cost | 3.95% |
| Equity Weight | 67.59% |
| Equity Cost | 9.90% |
| WACC | 7.97% |
| Leverage | 47.94% |
Value: 9.1
Growth: 4.4
Quality: 6.4
Yield: 10.0
Momentum: 3.5
Volatility: 5.7
1-Year Total Return ->
Value: 5.1
Growth: 5.4
Quality: 7.7
Yield: 9.0
Momentum: 3.0
Volatility: 8.7
1-Year Total Return ->
Value: 4.3
Growth: 4.6
Quality: 4.7
Yield: 10.0
Momentum: 5.0
Volatility: 6.0
1-Year Total Return ->
Value: 3.9
Growth: 6.9
Quality: 6.6
Yield: 3.0
Momentum: 2.0
Volatility: 8.7
1-Year Total Return ->
Value: 2.3
Growth: 2.1
Quality: 3.6
Yield: 9.0
Momentum: 4.0
Volatility: 8.3
1-Year Total Return ->
Value: 2.3
Growth: 3.0
Quality: 5.1
Yield: 8.0
Momentum: 2.0
Volatility: 8.3
1-Year Total Return ->