PotlatchDeltic Corporation (NASDAQ:PCH) Q2 2023 Earnings Conference Call August 1, 2023 12:00 PM ET

Company Participants

Wayne Wasechek - Interim VP and CFO

Eric Cremers - President and CEO

Conference Call Participants

George Staphos - Bank of America

Ketan Mamtora - BMO

Michael Roxland - Truist Securities

Kurt Yinger - D.A. Davidson

Mark Weintraub - Seaport Research Partners

Paul Quinn - RBC Capital Markets

Buck Horne - Raymond James

Operator

Good morning. My name is Henry, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Second Quarter 2023 Conference Call. [Operator Instructions] Thank you.

I would now like to turn the call over to Mr. Wayne Wasechek, Interim Vice President and Chief Financial Officer for opening remarks. Sir, you may proceed.

Wayne Wasechek

Good morning, and welcome to PotlatchDeltic's second quarter 2023 earnings conference call. Joining me on the call is Eric Cremers, PotlatchDeltic's President and Chief Executive Officer.

This call will contain forward-looking statements. Please review the warning statements in our press release, on the presentation slides and in our filings with the SEC regarding the risks associated with these forward-looking statements. Also, please note that a reconciliation of non-GAAP measures can be found on our website at www.potlatchdeltic.com.

I will turn the call over to Eric for some comments, and then I will review our second quarter results and outlook.

Eric Cremers

Thank you, Wayne

Looking at our second quarter, we reported total adjusted EBITDDA of $46 million after the market closed yesterday. Our Wood Products segment adjusted EBITDDA was $12 million in the second quarter compared to breakeven results in the first quarter. Higher lumber prices were the primary driver of the improved results.

We have seen a steady uptick in the composite lumber price since mid-June, driven by several factors, including favorable housing data, wildfires in Canada, falling European lumber imports and additional capacity constraints from mill closures and curtailments, particularly in British Columbia. We continue to expect that lumber prices will remain above long-term averages. We shipped 280 million board feet of lumber in the second quarter, which was 18 million feet more than we shipped in Q1 and 26 million feet more than we shipped in Q2 of last year.

In June of 2022, we announced a $131 million project to modernize and expand our Waldo, Arkansas sawmill. Project activity is currently focused on site prep and engineering and the project remains on track to be completed by the end of 2024. The project will increase the mill's annual capacity by 85 million board feet and significantly reduce the mill's cash costs. The existing mill will continue to operate during the project with approximately three weeks of downtime expected in 2024 to tie in the new equipment.