PotlatchDeltic Corporation (NASDAQ:PCH) Q1 2023 Results Conference Call April 25, 2023 12:00 PM ET

Company Participants

Wayne Wasechek - Interim VP and CFO

Eric Cremers - President and CEO

Conference Call Participants

Anthony Pettinari - Citi

Ketan Mamtora - BMO Capital Markets

Kurt Yinger - D.A. Davidson

Mark Weintraub - Seaport Research Partners

Paul Quinn - RBC Capital Markets

George Staphos - Bank of America

Mike Roxland - Truist Securities

Operator

Good morning. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic First Quarter 2023 Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, there will be a question-and-answer session [Operator Instructions].

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

Thank you, Lisa. Good morning. And welcome to PotlatchDeltic's first 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 Web site at www.potlatchdeltic.com. I will turn the call over to Eric for some comments, and then I will review our first quarter results and our outlook.

Eric Cremers

Thank you, Wayne. I'll start with a few comments about the press release we issued last week indicating that Jerry Richards is leaving the company to pursue another opportunity. It's with a larger company in a different industry. Jerry was our CFO for 10 years and did a terrific job. Our press release also stated that Wayne Wasechek, our current Principal Accounting Officer, is now our Interim CFO. Wayne has been with the company for five years, having joined us from Vail Resorts. Thankfully, we have a deep bench of talent in our finance and accounting departments. We have a search underway and envision filling the CFO position over the coming months.

Turning to the first quarter. We reported total adjusted EBITDA of $58 million after the market closed yesterday. Our Wood Products segment had breakeven adjusted EBITDA in the first quarter. Lumber prices found a bottom in January. We are encouraged by the upward trend in lumber prices as we head into a spring building season that has been delayed by winter weather in the Northern tier of the country. Also, I am pleased with the team's strong safety performance in the first quarter. As we have discussed on the last two calls, we successfully completed our Ola, Arkansas sawmill rebuild and restarted the large log line in the third quarter of 2022. While the start-up phase has taken a bit longer than we had anticipated, we are very happy with the new equipment. The mill's operating run rate has reached its expected annual capacity of 100 million board feet per year. As a reminder, Ola's rebuild significantly lowers the mill's cash cost structure. Last year, we announced a $131 million project to modernize and expand our Waldo, Arkansas sawmill. Activity is currently focused on site prep with the majority of equipment delivery and installation to come in 2024. The project will increase the mill's annual capacity by 85 million board feet and significantly reduce the mill's cash cost. 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. Project completion is expected by the end of 2024.