PotlatchDeltic Posts Strong First Quarter 2025 Results Despite Market Uncertainty
PotlatchDeltic, a leading real estate investment trust (REIT) in the United States, has reported strong first quarter 2025 results despite prevailing economic and trade policy uncertainties affecting the market. In its quarterly earnings conference call, the company announced total adjusted EBITDDA of $63 million for the period.
According to Eric Cremers, President and Chief Executive Officer, PotlatchDeltic's solid operational performance across all businesses was driven by strong execution by the company's teams, the resilience of its operations, and the positive effects of strategic investment in the Waldo, Arkansas sawmill. The company's Timberlands business achieved higher-than-planned harvest volumes during a typically slower season, benefiting from increased sawlog prices due to index saw law agreements and higher cedar prices driven by strong regional demand.
In its Wood Products business, lumber markets were dominated by tariff discussions throughout most of the first quarter. However, Canadian tariffs are currently on hold, and it remains to be seen how much of the run-up in SPF prices will unwind. Southern Yellow Pine markets did not experience near the pricing benefit as SPF but remained relatively firm during the quarter. Lumber markets continue to face tepid demand from end markets, but capacity curtailments announced last year have provided greater balance to supply and demand dynamics and helped support lumber prices.
PotlatchDeltic's President and Chief Executive Officer Eric Cremers further noted that pending regulatory actions related to Canadian duties and potential tariffs have provided support to pricing thus far this year. However, preliminary Canadian softwood lumber duty rates announced are set to increase from 14% to over 34%, more than double the current rates once finalized. Additionally, a Section 232 investigation has been initiated to determine the effects of imports of lumber and derivative products on national security.
The company's shipper volumes for lumber were up 10 million board feet over the upper range of its Q1 guidance, mainly driven by the Waldo, Arkansas sawmill. The ramp-up and performance of this mill have gone extremely well, with the company consistently achieving a run rate that matches its new targeted annual nameplate capacity of 275 million board feet per year.
PotlatchDeltic's modernization and expansion project at Waldo has significantly enhanced the competitiveness of the mill and is expected to generate approximately $25 million in incremental EBITDDA annually, assuming a mid-cycle sales environment. The company's strong first quarter results demonstrate its resilience despite market uncertainty and position it for continued success in the years ahead.
