PotlatchDeltic Posts Q2 Revenue Beat

Key Points

• - Revenue (GAAP) for Q2 2025 surpassed expectations, reaching $275.0 million versus the $260.95 million analyst estimate.

• - Non-GAAP EPS missed estimates at $0.09, below the $0.10 consensus and down from $0.17 in the second quarter of 2024.

• - Wood Products margins (non-GAAP) saw steep declines due to weaker lumber prices and increased costs, while the dividend was held steady at $0.45 per share.

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PotlatchDeltic (NASDAQ:PCH), a timberland real estate investment trust (REIT) and wood products manufacturer, released its second quarter 2025 results on July 28, 2025. The announcement showed mixed results: revenue of $275.0 million (GAAP) topped analyst estimates by about 5%, but Non-GAAP earnings per share came in at $0.09, falling short of the expected $0.10. Compared to Q2 2024, both profit and profitability metrics declined sharply, mainly due to weak lumber pricing and higher costs in the company’s core Wood Products segment. Bottom‑line pressure persisted, underlining the firm’s significant exposure to cyclical lumber prices.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Priorities

PotlatchDeltic (NASDAQ:PCH) operates as a timberland owner and manager, wood products manufacturer, and real estate developer. The company controls roughly 2.1 million acres of timberland across several states, focusing on sustainable forestry and manufacturing key wood construction materials, mainly lumber. Its business spans three operating segments: Timberlands (timber growth, harvest, and land management), Wood Products (lumber and panel manufacturing), and Real Estate (rural land and residential lot sales).

The company’s recent focus has centered around managing its leverage to commodity lumber prices, enhancing the sustainable productivity of its timberland holdings, executing strategic real estate sales, and advancing new environmental initiatives such as solar and lithium land options. Success factors for PotlatchDeltic include effective timberland stewardship, disciplined capital allocation, sustained cash flow from real asset sales, and responsiveness to trends in housing construction and repair markets.

Quarterly Highlights: Segment Results and Key Events

Revenue (GAAP) surpassed analyst expectations, but profit margins compressed sharply. Total Adjusted EBITDDA, which measures the company’s core earnings before interest, taxes, depreciation, depletion, amortization, and certain adjustments, fell to $52.0 million with a margin of 18.9% (non-GAAP). This is down from $103.2 million and a 32.2% margin in Q2 2024. The main driver was the Wood Products segment, which is highly exposed to swings in lumber prices.

In Wood Products, revenue rose sequentially to $171.8 million, but segment profitability dropped dramatically. Adjusted EBITDDA in Wood Products was just $1.7 million, notably lower than the $11.7 million achieved in Q1 2025, but a significant improvement from a loss in the prior year. The average lumber selling price fell 1% versus the prior quarter, landing at $450 per thousand board feet. Higher per-unit manufacturing costs, in part due to operational disruptions and rising log costs in Idaho, further ate into profit. Per-unit manufacturing cost was unfavorably impacted by $2.8 million from an equipment upgrade and a temporary third-party power supply issue, and the lumber inventory charge was $3.0 million higher compared to Q1 2025. Management previously indicated that Wood Products segment earnings would improve, but these anticipated gains did not materialize due to ongoing cost and price pressures.

The Timberlands segment remained a stable contributor. Revenues (GAAP) held steady at $101.7 million, close to the prior quarter, though Adjusted EBITDDA declined to $39.6 million. The company attributed this to increased seasonal management expenses and lighter log harvests in the South. However, higher realized prices for Northern sawlogs, especially cedar, provided some offset. The company continues to emphasize sustainable forestry practices, including reforestation and responsible harvest planning, to maintain long-term productivity and regulatory compliance.

The Real Estate segment delivered revenues of $29.1 million, and Adjusted EBITDDA for the Real Estate segment was unchanged from the previous quarter at $22.7 million. Activity included the sale of over 7,400 acres of rural land at an average price of $3,108 per acre, and 18 residential lots averaging $102,222 each. Management reports healthy demand from conservation, recreation, and residential buyers.

On the corporate side, capital allocation remained disciplined. The company repurchased about 1.42 million shares for $55.9 million at an average price of $39 per share. Liquidity remains strong, with $395 million available as of June 30, 2025. The dividend was maintained at $0.45 per share, marking another consecutive quarter at this level. The quarter also saw continued investment in sustainability initiatives, including options on 38,000 acres for solar development and a new lithium exploration lease, though management does not expect these projects to contribute meaningfully to earnings until next year at the earliest.

Looking Ahead: Management Outlook and Investor Focus

Management did not provide new quantitative guidance for the next quarter or for fiscal 2025 during the earnings release. The company reiterated its long-term optimism regarding demand for its products, pointing to structural drivers such as a persistent undersupply of U.S. housing, demographic shifts, and expectations for an eventual housing market recovery. Still, leaders noted continued uncertainty from lumber market dynamics and trade policies, especially as "soft demand" in lumber persists and input costs remain elevated.

In terms of investor focus, future performance will depend heavily on developments in lumber pricing, which remains the primary source of volatility for both revenue and profit. As the housing market recovers, especially if affordability constraints ease and new construction picks up, that could boost demand for wood products and improve segment margins. The company is also watching how quickly environmental projects, including solar and lithium leasing, may begin to produce additional revenue streams. The steady quarterly dividend continues as a key return to shareholders, with no change to rate or policy this quarter.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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