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What changed in POTLATCHDELTIC CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of POTLATCHDELTIC CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+393 added−376 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)

Top changes in POTLATCHDELTIC CORP's 2023 10-K

393 paragraphs added · 376 removed · 303 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

211 edited+55 added−30 removed149 unchanged
Biggest changeAdditionally, in Idaho for both external and internal customers, we index the price of approximately 75% of our sawlogs sold to the price of lumber. Prices in our Southern region contracts are adjusted every three months based on prevailing market prices for logs. Typically, our log supply agreements are in place for one to five years.
Biggest changePrices in our Northern region contracts are adjusted periodically by species to prevailing market prices for logs, lumber, wood chips and other residuals. Additionally, for both external and internal customers, we index the price of approximately 75% of our Northern sawlogs sold to the price of lumber.
Logging contractors must be on an approved contractor list and receive annual training, and we require that all contractors implement applicable BMPs during forest management activities on our lands by following specific prescriptions for the tract being harvested and planting following final harvests.
Logging contractors must be on an approved contractor list and receive annual training, and we require that all contractors implement applicable BMPs during forest management activities on our lands by following specific prescriptions for the tract being harvested and for planting following final harvests.
Changes in global climate conditions could intensify one or more of these factors. Although damage from such natural causes usually is localized, affecting only a limited percentage of our timber, there can be no assurance that any damage affecting our timberlands will be limited.
Changes in global climate conditions could intensify one or more of these factors. Although damage from such natural causes is usually localized, affecting only a limited percentage of our timber, there can be no assurance that any damage affecting our timberlands will be limited.
Generally, these third-party operators indemnify us against any such liability, and we require that that they maintain liability insurance during the term of our lease with them.
Generally, these third-party operators indemnify us against any such liability, and we require that they maintain liability insurance during the term of our lease with them.
Any of these natural disasters could affect our timberlands, timber growth rates, productivity of our timberlands, our harvest operations or cause variations in the cost and supply of raw materials.
Any of these natural disasters could affect our timberlands, timber growth rates, productivity of our timberlands, or our harvest operations or cause variations in the cost and supply of raw materials.
Our capital projects typically are designed to enhance safety, extend the life of a facility, lower costs and improve efficiencies, increase capacity and comply with regulatory standards. Under the Clean Air Act and our site-specific Renewable Operating Permits, our Wood Products facilities closely monitor operating parameters and air emissions, including hazardous air pollutants to help minimize those emissions.
Our capital projects typically are designed to enhance safety, extend the life of a facility, lower costs and improve efficiencies, increase capacity and comply with regulatory standards. Under the Clean Air Act (CAA) and our site-specific Renewable Operating Permits, our Wood Products facilities closely monitor operating parameters and air emissions, including hazardous air pollutants to help minimize those emissions.
As is typical in the forest industry, we assume all risk of loss to the standing timber we own from fire and other hazards because insurance for such losses is either not available or is cost prohibitive. Consequently, a reduction in our timber inventory from such events could adversely affect our financial results and cash flows.
As is typical in the forest industry, we assume all risk of loss to the standing timber we own from fire and certain other hazards because insurance for such losses is either not available or is cost prohibitive. Consequently, a reduction in our timber inventory from such events could adversely affect our financial results and cash flows.
Discretionary capital expenditures in our mills are typically targeted to earn returns exceeding 15%. • Capturing incremental value of our real estate holdings. A portion of our timberland acreage is more valuable for other purposes, such as recreation, conservation, alternative energy facilities (such as new solar farms), residential or commercial development, or to other timberland or real estate investors.
Discretionary capital expenditures in our mills are typically targeted to earn returns exceeding 15%. • Capturing incremental value of our real estate holdings. A portion of our timberland acreage is more valuable for other purposes, such as recreation, conservation, alternative energy facilities (such as solar farms), residential or commercial development, or to other timberland or real estate investors.
Our commitment to human rights is embodied in our Human Rights Policy and supported by our Corporate Conduct and Ethics Code, Supplier Code of Conduct, Diversity, Equity, and Inclusion Policy, Forest Stewardship Policy, Environment, Health, and Safety Policy, and our other policies, standards, and practices. We respect Indigenous peoples and traditional livelihoods and value stakeholder engagement on these issues.
Our commitment to human rights is embodied in our Human Rights Policy and supported by our Corporate Conduct and Ethics Code, Supplier Code of Conduct, and Diversity, Equity, and Inclusion Policy, Forest Stewardship Policy, Environment, Health, and Safety Policy, among other policies, standards, and practices. We respect Indigenous peoples and traditional livelihoods and value stakeholder engagement on these issues.
Rural recreational land transactions provide an opportunity for neighboring landowners to increase their ownership, and also for both in-state and out-of-state buyers to find a place where they can get away to a rural home, or hunt, fish, hike and enjoy the outdoors. Responsible Manufacturing.
Rural recreational land transactions provide an opportunity for neighboring landowners to increase their ownership, and also for both in-state and out-of-state buyers to find a place where they can get away to a rural home, or hunt, fish, hike and enjoy the outdoors. Planet Responsible Manufacturing.
In addition, our Wood Products facilities are relatively capital intensive, which leads to high fixed costs and generally results in continued production as long as prices are sufficient to cover variable costs. These conditions have contributed to substantial price competition, particularly during periods of reduced demand.
In addition, our Wood Products facilities are capital intensive, which leads to high fixed costs and generally results in continued production as long as prices are sufficient to cover variable costs. These conditions have contributed to substantial price competition, particularly during periods of reduced demand.
In general, the definition includes two shifts per day for four days per week (10 hours per shifts) at each facility, which is consistent with industry-wide recognized measures. Production can exceed capacity due to efficiency gains and overtime.
In general, the definition includes two shifts per day for four days per week (10 hours per shift) at each facility, which is consistent with industry-wide recognized measures. Production can exceed capacity due to efficiency gains and overtime.
Our procurement foresters purchase wood fiber for our facilities from our timberlands or from private, state and federal sources. We are committed to producing wood products that meet both customer demand and quality as well as responsibly sourcing the raw materials.
Our procurement foresters purchase wood fiber for our facilities from our timberlands or from private, state and federal sources. We are committed to producing wood products that meet both customer demand and quality expectations as well as responsibly sourcing the raw materials.
Our certificate of incorporation and bylaws include, among other things, the following provisions: • a classified board of directors with three-year staggered terms; • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent and stockholders cannot call a special meeting except upon the written request of stockholders entitled to cast not less than a majority of all of the votes entitled to be cast at the meeting; • advance notice procedures for nominating candidates to our board of directors or presenting matters at stockholder meetings; • removal of directors only for cause; • allowing only our board of directors to fill vacancies on our board of directors; • in order to facilitate the preservation of our status as a REIT under the Internal Revenue Code, a prohibition on any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8% of our outstanding common or preferred stock, unless our board waives or modifies this ownership limitation; • unless approved by the vote of at least 80% of our outstanding shares, we may not engage in business combinations, including mergers, dispositions of assets, certain issuances of shares of stock and other specified transactions, with a person owning or controlling, directly or indirectly, 5% or more of the voting power of our outstanding common stock; and • supermajority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.
Our certificate of incorporation and bylaws include, among other things, the following provisions: • a classified board of directors with three-year staggered terms; • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent and stockholders cannot call a special meeting except upon the written request of stockholders entitled to cast not less than a majority of all of the votes entitled to be cast at the meeting; • advance notice procedures for nominating candidates to our board of directors or presenting matters at stockholder meetings; • removal of directors only for cause; • allowing only our board of directors to fill vacancies on our board of directors; • in order to facilitate the preservation of our status as a REIT under the Internal Revenue Code (IRC), a prohibition on any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8% of our outstanding common or preferred stock, unless our board waives or modifies this ownership limitation; 26 Table of Contents • unless approved by the vote of at least 80% of our outstanding shares, we may not engage in business combinations, including mergers, dispositions of assets, certain issuances of shares of stock and other specified transactions, with a person owning or controlling, directly or indirectly, 5% or more of the voting power of our outstanding common stock; and • supermajority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.
We are required to pay federal corporate income taxes on income generated from the operations of PotlatchDeltic’s taxable REIT subsidiaries (PotlatchDeltic TRS or TRS), which principally consists of our Wood Products manufacturing operations and certain real estate investments.
We are required to pay federal corporate income taxes on income generated from the operations of our taxable REIT subsidiaries (PotlatchDeltic TRS or TRS), which principally consists of our Wood Products manufacturing operations and certain real estate investments.
Timber growth rates and yield estimates are developed by forest biometricians and other experts using statistical measurements of tree samples on given property. These estimates are central to forecasting our anticipated timber harvests, revenues and expected cash flows.
Timber growth rates and yield estimates are developed by forest biometricians and other experts using statistical measurements of tree samples on a given property. These estimates are central to forecasting our anticipated timber harvests, revenues and expected cash flows.
Additionally, the need to rebuild or the desire to move away from certain areas following a natural disaster could affect the housing market, which may or may not be in the markets we sell our wood products.
Additionally, the need to rebuild or the desire to move away from certain areas following a natural disaster could affect the housing market, which may or may not be in the markets where we sell our wood products.
We also have incurred and could incur in the future substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting our operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations on properties we currently own or have owned in the past.
We also have incurred and could incur in the future substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting our operations or requiring installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations on properties we currently own or have owned in the past.
Our information technology systems and those of our third-party providers are vulnerable to a variety of disruptions, including but not limited to cyber-attacks, including from computer hackers, foreign governments and cyber terrorists; data breaches, malicious software programs (such as malware, viruses and ransomware); or other attacks including those using techniques that change frequently, may be disguised or difficult to detect; or designed to remain dormant until a triggering event, the process of upgrading or replacing software; an intentional or unintentional personnel action; a natural disaster or other catastrophic event; a hardware or software corruption, failure or error; a telecommunications or utility failure; system failures, a service provider failure or error; or any one or more other causes of a security breach, failure or disruption.
Our information technology systems and those of our third-party providers are vulnerable to a variety of disruptions, including but not limited to: cyber attacks, including from computer hackers, foreign governments and cyber terrorists; data breaches; malicious software programs (such as malware, viruses and ransomware); other attacks including those using techniques that change frequently, may be 29 Table of Contents disguised or difficult to detect, or designed to remain dormant until a triggering event; the process of upgrading or replacing software; an intentional or unintentional personnel action; a natural disaster or other catastrophic event; a hardware or software corruption, failure or error; a telecommunications or utility failure; system failures; a service provider failure or error; or any one or more other causes of a security breach, failure or disruption.
The market price of our common stock may be influenced by several factors, many of which are beyond our control, including those described herein under Risk Factors and the following: • actual or anticipated fluctuations in our operating results or our competitors’ operating results; • announcements by us or our competitors of capacity changes; • acquisitions or strategic investments; • our growth rate and our competitors’ growth rates; • the financial markets, interest rates and general economic conditions; • changes in stock market analyst recommendations regarding us or lack of analyst coverage of our common stock; • our competitors or the forest products industry; • failure to pay cash dividends or the amount of cash dividends paid; • sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of common stock; and • changes in accounting principles and changes in tax laws and regulations.
The market price of our common stock may be influenced by several factors, many of which are beyond our control, including those described herein under Risk Factors and the following: • actual or anticipated fluctuations in our operating results or our competitors’ operating results; • announcements by us or our competitors of capacity changes; 25 Table of Contents • acquisitions or strategic investments; • our growth rate and our competitors’ growth rates; • the financial markets, interest rates and general economic conditions; • changes in stock market analyst recommendations regarding us or lack of analyst coverage of our common stock; • our competitors or the forest products industry; • failure to pay cash dividends or the amount of cash dividends paid; • sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of common stock; and • changes in accounting principles and changes in tax laws and regulations.
Since sustainable harvest plans are based on projections of weather, timber growth rates, regulatory constraints and other assumptions, many of which are beyond our control, there can be no assurance that we will be able to harvest the volumes projected or the specific timber stands designated in our harvest plans. 6 Table of Contents The following table presents a summary of our total timber harvest by region during 2022.
Since sustainable harvest plans are based on projections of weather, timber growth rates, regulatory constraints and other assumptions, many of which are beyond our control, there can be no assurance that we will be able to harvest the volumes projected or the specific timber stands designated in our harvest plans. 6 Table of Contents The following table presents a summary of our total timber harvest by region during 2023.
We acknowledge the importance of the United Nations Sustainable Development Goals (SDGs) as part of a commonly agreed global ambition and support all seventeen SDGs and have identified SDG 6 (Clean water and sanitation), 8 (Decent work and economic growth), 12 (Responsible consumption and production), 13 (Climate action), 15 (Life on land), and 17 (Partnerships for the goals) as where we can make the largest impact.
We acknowledge the importance of the United Nations Sustainable Development Goals (SDGs) as part of a commonly agreed upon global ambition, support all seventeen SDGs, and have identified SDGs 6 (Clean water and sanitation), 8 (Decent work and economic growth), 12 (Responsible consumption and production), 13 (Climate action), 15 (Life on land), and 17 (Partnerships for the goals) as the goals where we can make the largest impact.
The majority of our real estate development projects are concentrated in a few markets. We have real estate development projects located in Central Arkansas, specifically, in and west of Little Rock, Arkansas and in Hot Springs, Arkansas.
The majority of our real estate development projects are concentrated in a few markets. We have real estate development projects located in Central Arkansas, specifically, in Little Rock, Arkansas and in Hot Springs, Arkansas.
Our board of directors, in its sole discretion, determines the actual amount of dividends to be made to stockholders based on consideration of a number of factors, including, but not limited to, our results of operations, cash flow and capital requirements, economic conditions in our industry and in the markets for our products, REIT requirements, borrowing capacity, debt covenant restrictions, timber prices, harvest levels on our timberlands, market demand for timberlands, including timberland properties we have identified as potentially having a higher and better use and future acquisitions and dispositions.
Our board of directors, in its sole discretion, determines the amount, timing and frequency of dividends to be made to stockholders based on consideration of a number of factors, including, but not limited to, our results of operations, cash flow and capital requirements, economic conditions in our industry and in the markets for our products, REIT requirements, borrowing capacity, debt covenant restrictions, timber prices, harvest levels on our timberlands, market demand for timberlands, including timberland properties we have identified as potentially having a higher and better use, and future acquisitions and dispositions.
Potential opportunities could include market opportunities arising from the increased use of innovative wood products, such as mass timber and policies and incentives that encourage greater use of wood-based products in buildings. Growth in carbon offset markets as sustainably managed forests are recognized as a natural climate solution could also provide opportunities.
Potential opportunities could include market opportunities arising from the increased use of innovative wood products, such as mass timber and policies and incentives that encourage greater use of wood-based products in buildings. Growth in carbon offset markets and bio-circular markets could also provide opportunities as sustainably managed forests are recognized as a natural climate solution.
We regularly review safety incidents, risk-identification reports and “near-miss” incidents and apply key learnings across our organization. Contractor safety is a focal point of our timberland safety program. Timber harvesting, road building and trucking contractors must meet stringent state and federal safety regulations and undergo annual industry specific and PotlatchDeltic safety training.
We regularly review safety incidents, risk-identification reports and “near-miss” incidents and apply key learning across our organization. Contractor safety is a focal point of our timberland safety program. Timber harvesting, road building and trucking contractors must meet stringent state and federal safety regulations and undergo annual industry-specific and PotlatchDeltic safety training.
We are, however, subject to corporate taxes on built-in gains (the excess of fair market value over tax basis on the merger date) on sales of former Deltic real property held by the REIT during the five years following the Deltic merger (until February 2023). The sale of standing timber is not subject to built-in gains tax.
We were, however, subject to corporate taxes on built-in gains (the excess of fair market value over tax basis on the merger date) on sales of former Deltic real property held by the REIT during the five years following the Deltic merger (until February 2023). The sale of standing timber is not subject to built-in gains tax.
A strike or other work stoppage, or our inability to renew collective bargaining agreements timely and on favorable terms, could adversely affect our financial results. Certain employees at one of our sawmills, representing 14% of our total workforce, are covered under a collective bargaining agreement that expires in 2023.
A strike or other work stoppage, or our inability to renew collective bargaining agreements timely and on favorable terms, could adversely affect our financial results. Certain employees at one of our sawmills, representing 14% of our total workforce, are covered under a collective bargaining agreement that expires in 2026.
The term of office of the officers of the company expires at the annual meeting of our board and each officer holds office until the officer’s successor is duly elected and qualified or until the earlier of the officer’s death, resignation, retirement, removal by the board or as otherwise provided in our bylaws. 17 Table of Contents ITEM 1A.
The term of office of the officers of the company expires at the annual meeting of our board and each officer holds office until the officer’s successor is duly appointed and qualified or until the earlier of the officer’s death, resignation, retirement, removal by the board or as otherwise provided in our bylaws. 17 Table of Contents ITEM 1A.
Future legislative regulations could also limit harvest levels for commercial timberland operators, which could in turn adversely affect our timberland operations as well as potentially lead to significant increases in capital investments and the cost of energy, wood fiber and other raw materials for our Wood Products facilities.
Future laws and regulations could also limit harvest levels for commercial timberland operators, which could in turn adversely affect our timberland operations as well as potentially lead to significant increases in capital investments and the cost of energy, wood fiber and other raw materials for our Wood Products facilities.
These and other rapidly changing laws, regulations, policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory agencies, create challenges for us, may alter the environment in which we do business, and may increase the ongoing costs of compliance.
These and other rapidly changing laws, regulations, policies and related interpretations, as well as increased auditing requirements and enforcement actions by various governmental and regulatory agencies, create challenges for us, may alter the environment in which we do business, and may increase the ongoing costs of compliance.
All seven of our facilities are certified to the SFI ® Fiber Sourcing Standard, which provides structure to how we, as an SFI ® Program Participant, purchase fiber from both certified and non-certified forestland. In 2022, 100% of the timber consumption at all our Wood Products facilities were SFI ® Fiber Sourcing certified.
All seven of our facilities are certified to the SFI ® Fiber Sourcing Standard, which provides structure to how we, as an SFI ® Program Participant, purchase fiber from both certified and non-certified forestland. In 2023, 100% of the timber consumption at all our Wood Products facilities were SFI ® Fiber Sourcing certified.
Real Estate Segment The activities of our Real Estate segment consist primarily of the sale of rural land and real estate development and subdivision activity. Rural real estate operations. We sell rural land that is not strategic to our core timberland operations, or that has higher values for recreational, conservation, commercial or residential purposes over time.
Real Estate Segment The activities of our Real Estate segment consist primarily of the sale of rural land and real estate development and subdivision activity. Rural real estate operations. We sell rural land that is not strategic to our core timberland operations, or that has higher values for recreational, conservation, commercial or residential purposes.
During 2022, the board of directors met five times, with all directors attending 100% of all meetings of the board and committees on which each director served. 13 Table of Contents Code of Ethics. Our Corporate Conduct and Ethics Code (Ethics Code) reaffirms our continuing commitment to act with integrity.
During 2023, the board of directors met five times, with all directors attending 100% of all meetings of the board and committees on which each director served. 13 Table of Contents Code of Ethics. Our Corporate Conduct and Ethics Code (Ethics Code) reaffirms our continuing commitment to act with integrity.
We continually assess the potential uses of our lands and manage them proactively for the highest value. We currently have identified approximately 90,000 acres of non-core timberland real estate that we intend to sell over time.
We continually assess the potential uses of our lands and manage them proactively for the highest value. We currently have identified approximately 158,000 acres of non-core timberland real estate that we intend to sell over time.
We cannot predict with certainty whether, when, in what forms, or with what effective dates, the tax laws applicable to us or our shareholders may be changed. To maintain our REIT qualification, we are generally required to distribute all our REIT taxable income to our shareholders.
We cannot predict with certainty whether, when, in what forms, or with what effective dates, the tax laws applicable to us or our stockholders may be changed. To maintain our REIT qualification, we are generally required to distribute all our REIT taxable income to our stockholders.
The limitations on our ability to reduce the value of our TRS means we have a higher risk than other REITs that we will not comply with the 20% TRS limit and fail to retain our REIT qualification in the future.
The limitations on our ability to reduce the value of our TRS means we have a higher risk than other REITs that we will not comply with the 20% gross assets limit and fail to retain our REIT qualification in the future.
Forest practice laws and regulations that affect present or future harvest and forest management activities in certain states include: • limits on the size of clearcuts, • requirements that some timber is left unharvested to protect water quality and fish and wildlife habitat, • regulations regarding construction and maintenance of forest roads, • rules requiring reforestation following timber harvests, and • various related permit programs.
Forest practice laws and regulations that affect present or future harvest and forest management activities in certain states include: • limits on the size of clearcuts, • requirements that some timber is left unharvested to protect water quality and fish and wildlife habitat, • regulations regarding construction and maintenance of forest roads, • definition of forest conversion and/or forest degradation, • rules requiring reforestation following timber harvests, and • various related permit programs.
Higher and prolonged levels of inflation could negatively impact our costs and we likely will not be able to fully pass the increased costs to customers. 18 Table of Contents The markets for our wood products are highly competitive and companies that have substantially greater financial resources than we do compete with us in each of our lines of business.
In addition to negatively impacting demand for our products, higher and prolonged levels of inflation could negatively impact our costs and we likely will not be able to fully pass the increased costs to customers. 18 Table of Contents The markets for our wood products are highly competitive and companies that have substantially greater financial resources than we do compete with us in each of our lines of business.
Cremers (age 59), has been a director since March 2013 and our President and Chief Executive Officer since January 2021. Mr. Cremers also served as President and Chief Operating Officer from March 2013 through December 2020, Chief Financial Officer from March 2013 through August 2013, and Executive Vice President and Chief Financial Officer from February 2012 to March 2013. Mr.
Cremers (age 60) has been a director since March 2013 and our President and Chief Executive Officer since January 2021. Mr. Cremers also served as President and Chief Operating Officer from March 2013 through December 2020, Chief Financial Officer from March 2013 through August 2013, and Executive Vice President and Chief Financial Officer from February 2012 to March 2013. Mr.
We review our compensation and benefit plans annually to help ensure that we are providing competitive, contemporary, and inclusive programs so we can attract and retain the best people and support the health and well-being of our employees and their families.
We review our compensation and benefit plans annually to help ensure that we are providing competitive, contemporary, and inclusive programs to attract and retain the best people and support the health and well-being of our employees and their families.
Further, from May to October, our agreements with both logging and silviculture contractors require them to have on site specific firefighting resources such as water, water pumps and hand tools. Fire is an important tool in forest management to remove post-logging woody debris known as slash and to help prepare sites for replanting.
Further, from May to October, our agreements with both logging and silviculture contractors require them to have on site specific firefighting resources such as water, water pumps and hand tools. Prescribed burning is an important tool in forest management to remove post-logging woody debris known as slash and to help prepare sites for replanting.
Our business is particularly dependent upon the health of the U.S. housing market, and specifically demand for new homes and home repair and remodeling which are subject to fluctuations due to changes in economic conditions, changes in employment levels, consumer confidence, financial markets, interest rates, credit availability (including homebuyers’ ability to qualify for mortgages), housing affordability, supply chain disruptions, availability of labor and developable land, inflation, population change, weather conditions and other factors.
Our business is particularly dependent upon the health of the U.S. housing market, and specifically demand for new homes and home repair and remodeling which are subject to fluctuations due to changes in economic conditions, changes in employment levels, consumer confidence, financial markets, interest rates, housing affordability, access to affordable mortgage financing and credit availability (including homebuyers’ ability to qualify for mortgages), supply chain disruptions, availability of labor and developable land, inflation, population change, weather conditions and other factors.
For example, although we do not sell into the Asian markets, Asian demand can indirectly impact pricing and supply in North American timber and lumber markets. In the U.S. South, most timberlands are privately owned.
For example, although we do not sell into overseas markets, overseas demand can indirectly impact pricing and supply in North American timber and lumber markets. In the U.S. South, most timberlands are privately owned.
In addition, future timber harvest levels may be affected by changes in estimates of long-term sustainable yield because of silvicultural advances, regulatory constraints and other factors beyond our control. 20 Table of Contents Our estimates of timber inventories and growth rates may be inaccurate and include risks inherent in calculating such estimates, which may impair our ability to realize expected revenues.
In addition, future timber harvest levels may be affected by changes in estimates of long-term sustainable yield because of silvicultural advances, regulatory constraints and other factors beyond our control. Our estimates of timber inventories and growth rates may be inaccurate and include risks inherent in calculating such estimates, which may impair our ability to realize expected revenues.
Legal Matters Legal matters, disputes and proceedings (collectively “legal matters”), if determined or concluded in a manner adverse to our interests, could have a material adverse effect on our financial condition. We are, from time to time, involved in legal matters, disputes and proceedings (legal matters).
Legal Matters Legal matters, disputes and proceedings, if determined or concluded in a manner adverse to our interests, could have a material adverse effect on our financial condition. We are, from time to time, involved in legal matters, disputes and proceedings (collectively, "legal matters").
Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, waste production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess and report.
Increasing governmental and societal attention to corporate responsibility matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, waste production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess and report.
Meaningful stakeholder engagement is also a critical part of our ESG strategy, promoting increased knowledge and awareness of ESG issues, inviting feedback on insights and trends, and nurturing trust and collaboration. Our engagement typically has three principal objectives: 1) to share information; 2) to promote meaningful dialogue; and 3) to build and maintain sustainable relationships.
Meaningful stakeholder engagement is also a critical part of our responsible governance strategy, promoting increased knowledge and awareness of issues, inviting feedback on insights and trends, and nurturing trust and collaboration. Our engagement typically has three principal objectives: 1) to share information; 2) to promote meaningful dialogue; and 3) to build and maintain sustainable relationships.
Although the CWA, ESA and related regulations have not had, and we do not expect in 2023 that they will have a material effect on our operations, they could do so in the future. Regulations affecting our manufacturing operations.
Although the CWA, ESA and related regulations have not had, and we do not expect in 2024 that they will have a material effect on our operations, they could do so in the future. Regulations affecting our manufacturing operations.
The project is expected to increase the sawmill’s annual capacity from 190 million board feet of dimensional lumber to approximately 275 million board feet and significantly reduce the sawmill’s operating costs. Our ongoing capital improvements provide increased productivity, enhanced employee safety, compliance with regulatory standards and environmental benefits. Wood Procurement.
The project is expected to increase the sawmill’s annual capacity from 190 million board feet of dimensional lumber to approximately 275 million board feet and significantly reduce the sawmill’s cash processing costs. Our ongoing capital improvements provide increased productivity, enhanced employee safety, and compliance with regulatory standards and environmental benefits. Wood Procurement.
These real estate operations are particularly vulnerable to economic downturns, weather or other adverse events that may occur in this specific region and to competition from nearby commercial and residential housing developments. Our results of operations may be affected by the cyclicality of the homebuilding and real estate industries.
These real estate development projects are particularly vulnerable to economic downturns, adverse weather conditions or other adverse events that may occur in this specific region and to competition from nearby commercial and residential housing developments. Our results of operations may be affected by the cyclicality of the homebuilding and real estate industries.
In some cases, all or a portion of any loss we experience in connection with any such legal matters will be covered by insurance; in other cases, any such losses will not be covered by insurance. Indebtedness and Capital Structure Risks Access to Capital We depend on external sources of capital for future growth.
In some cases, all or a portion of any loss we experience in connection with 24 Table of Contents any such legal matters will be covered by insurance; in other cases, any such losses will not be covered by insurance. Indebtedness and Capital Structure Risks Access to Capital We depend on external sources of capital for future growth.
Our ability to access such capital on favorable terms could be hampered by a number of factors, many of which are outside of our control, including a decline in general market conditions, decreased market liquidity, a downgrade to our public debt rating, increases in interest rates, an unfavorable market perception of our growth potential, a decrease in our current or estimated future earnings or a decrease in the market price of our common stock.
Our ability to access such capital on favorable terms could be hampered by a number of factors, many of which are outside of our control, including a decline in general market conditions, decreased market liquidity, a downgrade to our debt rating by third-party rating agencies, increases in interest rates, an unfavorable market perception of our growth potential, a decrease in our current or estimated future earnings or a decrease in the market price of our common stock.
Detailed harvest information for the year ended December 31, 2022 and 2021, by region and product is presented in Part II – Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . Wood Products Segment Operations. We are a top 10 softwood lumber manufacturer in the U.S. with 1.1 billion board feet of capacity.
Detailed harvest information for the years ended December 31, 2023 and 2022, by region and product is presented in Part II – Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . Wood Products Segment Operations. We are a top 10 softwood lumber manufacturer in the U.S. with 1.1 billion board feet of capacity.
Respect for human rights is a fundamental value of our company. We recognize that we have an important role in fostering human rights. We comply with applicable domestic human rights laws, and we are committed to respect and support internationally recognized human rights including those recognized in the U.N.
Respect for human rights is a fundamental value of our company. We recognize that we have an important role in fostering human rights. We comply with applicable domestic human rights laws, and we respect and support internationally recognized human rights including those recognized in the U.N.
These actions are contributing to British Columbia mill production curtailments, mill closures, a shift of Canadian softwood lumber production to the eastern provinces of Canada, and investment by Canadian producers in existing and new mills in the U.S. South. Timberlands Operations.
These events are contributing to British Columbia mill production curtailments, mill closures, a shift of Canadian softwood lumber production to the eastern provinces of Canada, and investment by both Canadian and U.S. producers in existing and new mills in the U.S. South. Timberlands Operations.
Information on our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report. 16 Table of Contents Information About Our Executive Officers As of February 10, 2023, information on our executive officers is as follows: Eric J.
Information on our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report. 16 Table of Contents Information About Our Executive Officers As of February 9, 2024, information on our executive officers is as follows: Eric J.
Because environmental regulations are constantly evolving, we will continue to incur costs to maintain compliance with those laws and our compliance costs could increase materially. In addition, surface water management regulations may present liabilities and are subject to change.
Because environmental regulations are constantly evolving, we will continue to incur costs to maintain compliance with those laws and our compliance costs could increase materially. In addition, air emissions, stormwater, and surface water management regulations may present liabilities and are subject to change.
On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchases (the 2022 Repurchase Program). Concurrently, the board of directors terminated the remaining repurchase authorization under the 2018 Repurchase Program.
On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchases (the 2022 Repurchase Program). Concurrently, the board of directors terminated the remaining repurchase authorization under a previous repurchase program.
By leveraging decades of management experience and by working closely with scientific research organizations, we manage our timberlands on a sustainable basis in compliance with internationally recognized forest management standards while considering how climate change could create potential risks and opportunities. Our environmental, health, safety and forest stewardship policies reinforce our timberlands management approach.
By leveraging decades of management experience and working closely with scientific research organizations, we manage our timberlands on a sustainable basis according to internationally recognized forest management standards while considering how climate change could create potential risks and opportunities. Our environmental, health, safety, and forest stewardship policies reinforce our timberlands management approach.
Michele L. Tyler (age 54), has served as Vice President, General Counsel and Corporate Secretary since August 2019. Prior to joining the company, Ms. Tyler served in legal roles with Vectrus, Inc. (NYSE: VEC), from January 2009 to January 2019, including as Senior Vice President, Chief Legal Officer, and Corporate Secretary from September 2014 to October 2018. Anna E.
Tyler (age 55) has served as Vice President, General Counsel and Corporate Secretary since August 2019. Prior to joining the company, Ms. Tyler served in legal roles with Vectrus, Inc. (NYSE: VEC), from January 2009 to January 2019, including as Senior Vice President, Chief Legal Officer, and Corporate Secretary from September 2014 to October 2018. Anna E.
It is the successor to the business of the original Potlatch Corporation, which was incorporated in Maine in 1903. On February 20, 2018, Deltic Timber Corporation (Deltic) merged into a wholly owned subsidiary of Potlatch. Following the merger, Potlatch changed its name to PotlatchDeltic Corporation.
It is the successor to the business of the original Potlatch Corporation, which was incorporated in Maine in 1903. In 2018, Deltic Timber Corporation (Deltic) merged into a wholly-owned subsidiary of Potlatch. Following the merger, Potlatch changed its name to PotlatchDeltic Corporation.
We manage our timberlands sustainably over the long-term using best management practices designed to optimize the balance among timber growth, prudent environmental management and current cash flow, in order to achieve increasing levels of sustainable yield over the long-term. The stability of our timberlands supports a sustainable and growing dividend. • Leverage to lumber prices.
We manage our timberlands sustainably over the long-term using best management practices designed to optimize the balance among timber growth, prudent environmental management and current cash flow, in order to achieve increasing levels of sustainable yield over the long-term. The stability of cash flows derived from our timberlands supports a sustainable dividend. • Leverage to lumber prices.
The critical elements of our acquisition strategy generally include acquiring properties that complement our existing land base, are cash flow accretive and have attractive timber or include non-core timberland uses such as recreational, conservation, commercial or residential purposes, and that we can sell over time.
The critical elements of our acquisition strategy generally include acquiring properties that complement our existing land base, are cash flow accretive and have attractive timber or include non-core timberland uses such as recreational, conservation, commercial, or residential purposes that we can sell over time. • Committed to corporate responsibility .
Individuals who have demonstrated a desire and ability to move to new leadership roles collaborate with their managers to document meaningful development plans designed to help ensure that their development remains on track. Diversity and Inclusion. Diversity and inclusion are a fundamental part of our values, and we are proud to be an equal opportunity employer.
Individuals who have demonstrated a desire and ability to move to new leadership roles collaborate with their managers to document meaningful development plans designed to help ensure that their development remains on track. Diversity and Inclusion. Diversity and inclusion are fundamental values at our company and we are proud to be an equal opportunity employer.
Our Timberlands business depends on the availability of third-party logging and hauling contractors. Our Wood Products business depends on third-party transportation providers, including railcar and truck transportation. Our timberlands are located primarily in rural areas where skilled logging and hauling labor availability may be limited.
Our Wood Products business depends on third-party transportation providers, including railcar and truck transportation. Our timberlands are located primarily in rural areas where skilled logging and hauling labor availability may be limited.
Environmental, Social, and Governance (ESG) Practices We deliver a range of sustainable economic, social, and environmental values for our stakeholders and strive to do our part to help the planet for future generations. Our mission is to grow and produce the resources that build a foundation for our lives and improve the communities where we live, work, and play.
Corporate Responsibility Practices We deliver a range of sustainable economic, social, and environmental values for our stakeholders and strive to do our part to help the planet for future generations. Our mission is to grow and produce the resources that build a foundation for our lives and improve the communities where we live, work, and play.
A strike or other work stoppage in the facilities of any of our major customers or suppliers could also have similar effects on us. ITEM 1B. UNRE SOLVED STAFF COMMENTS None.
A strike or other work stoppage in the facilities of any of our major customers or suppliers could also have similar effects on us. ITEM 1B. UNRE SOLVED STAFF COMMENTS None. 31 Table of Contents
Our Wood Products segment employs approximately 82% of our total workforce and is the only segment that includes an hourly workforce. Certain employees at one of our sawmills, representing approximately 14% of our total workforce, are covered under a collective bargaining agreement, which expires in 2023. Health and Safety.
Our Wood Products segment employs approximately 82% of our total workforce and is the only segment that includes an hourly workforce. Certain employees at one of our sawmills, representing approximately 14% of our total workforce, are covered under a collective bargaining agreement, which expires in 2026. Health and Safety. Our employees are our greatest assets.
Torma worked as Principal for Torma Research providing strategic consulting services, primarily to forest products companies, from January 2017 to April 2018. Robert L. Schwartz (age 50), has served as Vice President, Human Resources since May 2014 and as Director, Human Resources from February 2009 to April 2014.
Torma worked as Principal for Torma Research providing strategic consulting services, primarily to forest products companies, from January 2017 to April 2018. Robert L. Schwartz (age 51) has served as Vice President, Human Resources since May 2014 and as Director, Human Resources from February 2009 to April 2014. Glen F.
Whether in connection with managing our existing timberlands or assessing potential timberland acquisitions, we make and rely on important estimates of merchantable timber inventories. These include estimates of timber inventories that may be lawfully and economically harvested, timber growth rates and end-product yields.
Whether in connection with managing our existing timberlands or assessing potential timberland acquisitions, we make and rely on important estimates of merchantable timber inventories. These include estimates of timber inventories that may be lawfully and economically harvested, timber growth rates based on internal and industry studies, and end-product yields.
While we undertake continuous improvements to our manufacturing facilities to meet or exceed future applicable regulations, there can be no assurance that our commitments will be successful, that regulation in the future will not have a negative competitive impact or that economic returns will reflect our capital investments.
Likewise, while we undertake continuous improvements to our manufacturing facilities to meet or exceed future applicable legal requirements, there can be no assurance that our commitments will be successful, that regulation in the future will not have a negative competitive impact or that economic returns will reflect our capital investments.
Transition risks could include a carbon tax, a change in the methodology for biogenic emissions, as well as operational impacts such as changes in energy costs and regulatory impacts in environmental management. Social Responsibility Practices We strive to make PotlatchDeltic a workplace of excellence through our company culture, fair compensation, and comprehensive benefit options.
Transition risks could include a carbon tax, a change in the methodology for calculating biogenic emissions, as well as operational impacts such as changes in energy costs and regulatory impacts in environmental management. People We strive to make PotlatchDeltic a workplace of excellence through our company culture, fair compensation, and comprehensive benefit options.
ITEM 1. B USINESS General PotlatchDeltic Corporation, formerly known as Potlatch Corporation and also formerly known as Potlatch Holdings, Inc., was incorporated in Delaware in September 2005 to facilitate a restructuring to qualify for treatment as a real estate investment trust (REIT) for federal income tax purposes.
ITEM 1. B USINESS General PotlatchDeltic Corporation, formerly known as Potlatch Corporation and also formerly known as Potlatch Holdings, Inc., was incorporated in Delaware in September 2005 to facilitate a restructuring to qualify for treatment as a REIT for federal income tax purposes.
REITs are generally intended to be passive entities and can thus only engage in those activities permitted by the Internal Revenue Code, which for us generally include owning and managing a timberland portfolio, growing timber and selling standing timber.
REITs are generally intended to be passive entities and can thus only engage in those activities permitted by the IRC, which for us generally include owning and managing a timberland portfolio, growing timber and selling standing timber.
We believe in the importance of pay equity and we evaluate gender pay equity on an on-going basis and adjust wages as appropriate. At December 31, 2022, women represent 32% of our salaried workforce, 13% of our hourly workforce, and 18% of our total workforce.
We believe in the importance of pay equity and we evaluate gender pay equity on an on-going basis and adjust wages as appropriate. At December 31, 2023, women represent 32% of our salaried workforce, 13% of our hourly workforce, and 19% of our total workforce.
Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code to our operations, including satisfaction of certain asset, income, organizational, dividend, stockholder ownership and other requirements, on an ongoing basis.
Qualification as a REIT involves the application of highly technical and complex provisions of the IRC to our operations, including satisfaction of certain asset, income, organizational, dividend, stockholder ownership and other requirements, on an ongoing basis.
Therefore, we could be subject to the 100% prohibited transactions tax if such instances were to occur, which would adversely affect our cash flow and impair our ability to pay quarterly dividends. Our ability to pay dividends and service our indebtedness using cash generated through our taxable REIT subsidiary may be limited.
Therefore, we could be subject to the 100% prohibited transactions tax if such instances were to occur, which could adversely affect our cash flow and impair our ability to pay quarterly dividends. 28 Table of Contents Our ability to pay dividends and service our indebtedness using cash generated through our taxable REIT subsidiary may be limited.
Any of our manufacturing facilities or machines could unexpectedly cease to operate due to a number of events, including unscheduled maintenance outages, prolonged power failures, equipment failures, raw material shortages, equipment and maintenance part shortages, cyber-attacks, labor difficulties or labor availability due to quarantine requirements for those exposed to flu or viruses, such as COVID-19 and its variants, disruptions in the transportation infrastructure, such as roads, bridges, railroad tracks and tunnels, fire such as the fire at our Ola, Arkansas sawmill in June 2021, ice storms, floods, windstorms, tornadoes, hurricanes or other catastrophes, terrorism or threats of terrorism, governmental regulations and other operational problems.
Any of our manufacturing facilities or machines could unexpectedly cease to operate due to a number of events, some of which have occurred in the past, including unscheduled maintenance outages, prolonged power failures, equipment failures, raw material shortages, equipment and maintenance part shortages, cyber-events, labor difficulties or labor availability due to quarantine requirements for those exposed to flu or other viruses, disruptions in the transportation infrastructure, such as roads, bridges, railroad tracks and tunnels, fire such as the fire at our Ola, Arkansas sawmill in June 2021, ice storms, floods, windstorms, tornadoes, hurricanes or other catastrophes, terrorism or threats of terrorism, governmental regulations and other operational problems.
We also own an industrial grade plywood mill with 150 million square feet of capacity. We believe that competitiveness in the industry is largely based on individual mill efficiency and on the availability of competitively priced raw materials on a facility-by-facility basis, rather than on the number of mills operated.
We also own an industrial grade plywood mill with 150 million square feet of capacity. We compete based on product quality, customer service and price. We believe that competitiveness in the industry is largely based on individual mill efficiency and on the availability of competitively priced raw materials on a facility-by-facility basis, rather than on the number of mills operated.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWood Products Adjusted EBITDDA The following table summarizes Adjusted EBITDDA variances for the year ended December 31, 2022, compared with the year ended December 31, 2021: (in thousands) 2022 vs 2021 Adjusted EBITDDA - prior year $ 393,858 Lumber: Price (62,589 ) Manufacturing costs per unit (16,432 ) Log costs per unit (6,726 ) Volume (5,029 ) Inventory charge (3,937 ) Residuals, panels and other (8,238 ) Adjusted EBITDDA - current year $ 290,907 38 Table of Contents 2022 compared with 2021 Wood Products Adjusted EBITDDA for 2022 was $290.9 million, a decrease of $103.0 million compared to 2021 primarily due to the following: • Lumber Price: Average lumber sales prices decreased to $737 per MBF during 2022 compared to $795 per MBF during 2021. • Manufacturing Cost Per Unit: Higher manufacturing costs per unit was primarily a result of lost production at our Ola, Arkansas sawmill and inflationary price increases at each of our sawmills in areas such as energy and repair and maintenance. • Log Costs Per Unit: Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill and higher log and haul rates impacting our Lake States sawmills. • Lumber Volume: Lumber shipments decreased 16.5 million board feet during 2022 compared to 2021, primarily as a result of decreased shipments from our Ola, Arkansas sawmill following the fire in June 2021. • Inventory Charge: Inventory during 2022 was written down $3.9 million, primarily due to high indexed Idaho log costs and market price declines in December 2022.
Biggest changeWood Products Adjusted EBITDDA The following table summarizes Adjusted EBITDDA variances for the year ended December 31, 2023 compared with the year ended December 31, 2022: (in thousands) 2023 vs 2022 Adjusted EBITDDA - prior year $ 290,907 Lumber: Price (283,368 ) Log costs per unit 29,048 Manufacturing costs per unit 5,026 Volume 174 Inventory charge 4,259 Residuals, panels and other (25,559 ) Adjusted EBITDDA - current year $ 20,487 41 Table of Contents 2023 compared with 2022 Wood Products Adjusted EBITDDA for 2023 was $20.5 million, a decrease of $270.4 million compared to 2022 primarily due to the following: • Lumber Price: Average lumber sales prices decreased to $452 per MBF during 2023 compared to $737 per MBF during 2022. • Log Costs Per Unit: Log costs per unit were lower primarily as a result of lower indexed log costs at our Idaho sawmill and improved production recoveries at our Southern sawmills. • Manufacturing Cost Per Unit: Lower manufacturing cost per unit was primarily a result of increased production at our Ola, Arkansas sawmill which restarted late in the third quarter of 2022 after a fire in June 2021. • Inventory Charge: Inventory write-downs were lower at the end of 2023 due to lower log costs and established market pricing at the end of 2023 compared to 2022.
We have a $300.0 million revolving line of credit with a syndicate of lenders, providing loans for us through February 14, 2027. Under the terms of the Amended Credit Agreement, the amount of available principal may be increased up to an additional $500.0 million.
We have a $300.0 million revolving line of credit with a syndicate of lenders, providing loans for us through February 14, 2027 (Amended Credit Agreement). Under the terms of the Amended Credit Agreement, the amount of available principal may be increased up to an additional $500.0 million.
Liquidity and Performance Measures The discussion below is presented to enhance the reader’s understanding of our operating performance, ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures: Adjusted EBITDDA and Cash Available for Distribution (CAD).
Liquidity and Performance Measures The discussion below is presented to enhance the reader’s understanding of our operating performance, ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures: Total Adjusted EBITDDA and Cash Available for Distribution (CAD).
These measures are not defined by GAAP and the discussion of Adjusted EBITDDA and CAD is not intended to conflict with or change any of the GAAP disclosures described herein.
These measures are not defined by GAAP and the discussion of Total Adjusted EBITDDA and CAD is not intended to conflict with or change any of the GAAP disclosures described herein.
Non-GAAP Measures To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP measures on a consolidated basis, including Adjusted EBITDDA and Cash Available for Distribution (CAD), which are defined and further explained and reconciled to the nearest GAAP measure in the Liquidity and Performance Measures section below.
Non-GAAP Measures To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), we present certain non-GAAP measures on a consolidated basis, including Total Adjusted EBITDDA and Cash Available for Distribution (CAD), which are defined and further explained and reconciled to the nearest GAAP measure in the Liquidity and Performance Measures section below.
Item 1A. Risk Factors and Part II – Item 8. Financial Statements and Supplementary Data contained in this report. This section generally discusses the results of operations for 2022 compared to 2021.
Item 1A. Risk Factors and Part II – Item 8. Financial Statements and Supplementary Data contained in this report. This section generally discusses the results of operations for 2023 compared to 2022.
Our business segments have been and will continue to be influenced by a variety of other factors, including tariffs, quotas and trade agreements, changes in timber prices and in harvest levels from our timberlands, competition, timberland valuations, demand for our non-strategic timberland for higher and better use purposes, lumber prices, weather conditions, disruptions or inefficiencies in our supply chain including the availability of transportation, the efficiency and level of capacity utilization of our Wood Products manufacturing operations, changes in our principal expenses such as log costs, inflation, asset dispositions or acquisitions, impact of pandemics (such as COVID-19 and its variants), fires (such as the Ola, Arkansas sawmill fire and fires on our timberlands), other natural disasters and other factors.
Our business segments have been and will continue to be influenced by a variety of other factors, including tariffs, quotas and trade agreements, changes in timber prices and in harvest levels from our timberlands, competition, timberland valuations, demand for our non-strategic timberland for higher and better use purposes, lumber prices, weather conditions, disruptions or inefficiencies in our supply chain including the availability of transportation, the efficiency and level of capacity utilization of our Wood Products manufacturing operations, changes in our principal expenses such as log costs, inflation, asset dispositions or acquisitions, impact of pandemics (such as COVID-19 and its variants), fires at our mills and on our timberlands, other natural disasters and other factors.
Gain on fire damage During 2022, we recognized insurance recoveries of $35.4 million for fire damage and incurred $0.9 million of disposal costs at our Ola, Arkansas sawmill.
Gain on fire damage During 2023, we recognized insurance recoveries of $39.4 million for fire damage at our Ola, Arkansas sawmill. During 2022, we recognized $35.4 million of insurance recoveries and incurred $0.9 million of disposal costs for fire damage at our Ola, Arkansas sawmill.
The project is expected to increase the mill’s annual capacity from 190 million board feet of dimensional lumber to approximately 275 million board feet. The investment is also expected to reduce the mill’s operating costs significantly. The Waldo investment includes upgrades to the log yard and planer, a new saw line, and a new continuous dry kiln.
The project is expected to increase the mill’s annual capacity from 190 million board feet of dimensional lumber to approximately 275 million board feet. The investment is also expected to reduce the mill’s cash processing costs significantly. The Waldo investment includes upgrades to the log yard and planer, a new saw line, and a new continuous dry kiln.
For a discussion comparing our results of operations and liquidity and capital resources for the year ended December 31, 2021 to 2020, refer to this same section (Part II, Item 7) in our 2021 annual report on Form 10-K as filed with the SEC on February 17, 2022.
For a discussion comparing our results of operations and liquidity and capital resources for the year ended December 31, 2022 to 2021, refer to this same section (Part II, Item 7) in our 2022 annual report on Form 10-K as filed with the SEC on February 16, 2023.
See Note 2: Segment Information in the Notes to Consolidated Financial Statements . Timberlands Segment Statistics 2022 Year Ended December 31, vs.
See Note 2: Segment Information in the Notes to Consolidated Financial Statements . Timberlands Segment Statistics 2023 Year Ended December 31, vs.
At December 31, 2022, there were no borrowings under the revolving line of credit and approximately $0.9 million of the credit facility was utilized by outstanding letters of credit. See Note 9: Debt in the Notes to the Consolidated Financial Statements for additional information on our debt and credit agreements.
At December 31, 2023, there were no borrowings under the revolving line of credit and approximately $0.7 million of the revolving line of credit was utilized by outstanding letters of credit. See Note 9: Debt in the Notes to the Consolidated Financial Statements for additional information on our debt and credit agreements.
Long-Term Debt and Credit Agreement At December 31, 2022, our total outstanding net long-term debt was $1.0 billion. All interest rates on our outstanding long-term debt are fixed rates under fixed rate loans or variable rate loans with an associated interest rate swap that fixes the variable benchmark interest rate component.
Long-Term Debt and Credit Agreement At December 31, 2023, our total outstanding long-term debt was $1.0 billion. All interest rates on our outstanding long-term debt are fixed either under fixed-rate loans or variable-rate loans with an associated interest rate swap that fixes the variable benchmark interest rate component.
CatchMark merger-related expenses During 2022, merger-related expenses were $27.3 million. This included $7.5 million for severance benefits, $9.3 million for accelerated vesting of CatchMark equity awards that fully vested upon closing of the merger and were allocated to the post-merger period, and $8.1 million for tax gross-up payments to holders of CatchMark Timber Operating Partnership OP Units.
This included $7.5 million for severance benefits, $9.3 million for accelerated vesting of CatchMark equity awards that fully vested upon closing of the merger and were allocated to the post-merger period, and $8.1 million for tax gross-up payments to holders of CatchMark Timber Operating Partnership OP Units.
The table below sets forth the financial covenants for the Agreements and our status with respect to these covenants at December 31, 2022: Covenant Requirement Actual Interest Coverage Ratio ≥ 3.00 to 1.00 21.4 Leverage Ratio ≤ 40% 19% Credit Ratings Two major debt rating agencies routinely evaluate our debt and our cost of borrowing can increase or decrease depending on our credit rating.
The table below sets forth the financial covenants for the Agreements and our status with respect to these covenants at December 31, 2023: Covenant Requirement Actual Interest Coverage Ratio ≥ 3.00 to 1.00 10.2 Leverage Ratio ≤ 40% 19% Credit Ratings Two major debt rating agencies routinely evaluate our debt and our cost of borrowing can increase or decrease depending on our credit rating.
The year ended December 31, 2021 includes capital expenditures for the rebuild of the Ola, Arkansas sawmill of $7.3 million and excludes $15.0 million of insurance proceeds for property losses at the Ola sawmill. 3 Net cash from investing activities includes payments for capital expenditures, which is also included in our reconciliation of CAD. 45 Table of Contents Critical Accounting Policies and Estimates In preparing our Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations of the SEC, we make assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities.
The year ended December 31, 2022, includes capital expenditures for the rebuild of the Ola, Arkansas sawmill of $18.2 million and excludes $8.8 million of insurance proceeds for property losses at the Ola sawmill. 3 Net cash from investing activities includes payments for capital expenditures, which is also included in our reconciliation of CAD. 48 Table of Contents Critical Accounting Policies and Estimates In preparing our Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations of the SEC, we make assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities.
At December 31, 2022, we were in compliance with all covenants under the Agreements.
At December 31, 2023, we were in compliance with all covenants under the Agreements.
Pension expense for 2023 will be based on a 5.6% discount rate. Holding all other assumptions constant, a 25-basis point decrease in the discount rate would increase the total projected benefit obligation at December 31, 2022 by approximately $6.1 million and increase estimated pension expense for 2023 by approximately $0.1 million.
Pension expense for 2024 will be based on a 5.55% discount rate. Holding all other assumptions constant, a 25-basis point decrease in the discount rate would increase the total projected benefit obligation at December 31, 2023 by approximately $6.1 million and have a minimal impact on estimated pension expense for 2024.
We expect to spend a total of approximately $135 million to $145 million for capital expenditures during 2023, including capital expenditures for the Waldo sawmill expansion and modernization project discussed below. In June 2022, we announced a project to expand and modernize our Waldo, Arkansas sawmill.
We expect to spend a total of approximately $100 million to $110 million for capital expenditures during 2024, including capital expenditures for the Waldo sawmill expansion and modernization project discussed below. In June 2022, we announced a project to expand and modernize our Waldo, Arkansas sawmill.
Purchase obligations primarily include open purchase orders for goods or services, future payments due under timber cutting contracts, commitments for construction contracts, commitments to complete real estate development projects and commitments to acquire property and equipment in the next twelve months.
Purchase obligations primarily include open purchase orders for goods or services, future payments due under timber cutting contracts, commitments for construction contracts which include the Waldo, Arkansas sawmill project discussed below, commitments to complete real estate development projects and commitments to acquire property and equipment in the next twelve months.
Rural real estate sales vary period-to-period with the average price per acre fluctuating based on both the geographic area of the real estate and product mix. • Development Real Estate Sales: During 2022, we sold 181 residential lots at an average lot price of $111,545 compared with 159 lots at an average lot price of $85,986 during 2021.
Rural real estate sales vary period-to-period with the average price per acre fluctuating based on both the geographic area of the real estate and product mix. • Development Real Estate Sales: During 2023, we sold 128 residential lots at an average lot price of $104,241 compared with 181 lots at an average lot price of $111,545 during 2022.
Interest expense, net Interest expense, net decreased $1.9 million compared to 2021, primarily due to higher interest income earned on cash and cash equivalents as a result of higher short-term interest rates in the second half of the year, partially offset by increased interest expense associated with $277.5 million in long-term debt assumed and refinanced in connection with the CatchMark merger.
Interest expense, net Interest expense, net decreased $3.2 million compared to 2022 primarily due to higher interest income earned on cash and cash equivalents as a result of higher short-term interest rates, partially offset by increased interest expense associated with $277.5 million in long-term debt assumed and refinanced in connection with the CatchMark merger.
Our other segments generally do not generate intersegment revenues. In the discussion of our consolidated results of operations, our revenues and expenses are reported after elimination of intersegment revenues and expenses. In the Business Segment Results discussion below, each segment’s revenues and expenses, as applicable, are presented before elimination of intersegment revenues and expenses.
In the discussion of our consolidated results of operations, our revenues and expenses are reported after elimination of intersegment revenues and expenses. In the Business Segment Results discussion below, each segment’s revenues and expenses, as applicable, are presented before elimination of intersegment revenues and expenses.
Wood Products Segment 2022 Year Ended December 31, vs.
Wood Products Segment 2023 Year Ended December 31, vs.
Environmental charge During 2022, we recorded a $5.6 million charge related to a decision to voluntarily participate in a non-federal sponsored sediment contamination remediation project in Minnesota. See Note 18: Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information.
Environmental charge During 2022, we recorded a $5.6 million charge related to our voluntary participation as a non-federal sponsor in a sediment contamination remediation project in Minnesota. See Note 18: Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information.
Our Total Funded Indebtedness consists of long-term debt, including any current portion of long-term debt, finance lease liabilities, revolving line of credit borrowings and the amount outstanding under the letter of credit subfacility. 43 Table of Contents The following table presents the components and applicable limits of TAV at December 31, 2022: (in thousands) Estimated timberland fair value $ 4,848,633 Wood Products manufacturing facilities book basis (limited to 10% of TAV) 289,563 Cash and cash equivalents 343,809 Other 1 21,694 Total Asset Value $ 5,503,699 1 Includes, as applicable, Construction In Progress (limited to 10% of TAV), Company-Owned Life Insurance (limited to 5% of TAV) and Investments in Affiliates (limited to 15% TAV) as defined in the Agreements.
Our Total Funded Indebtedness consists of long-term debt, including any current portion of long-term debt, finance lease liabilities, revolving line of credit borrowings and the amount outstanding under the letter of credit subfacility. 46 Table of Contents The following table presents the components and applicable limits of TAV at December 31, 2023: (in thousands) Estimated timberland fair value $ 4,815,980 Wood Products manufacturing facilities book basis (limited to 10% of TAV) 271,147 Cash and cash equivalents 230,118 Other 1 96,406 Total Asset Value $ 5,413,651 1 Includes, as applicable, Construction In Progress (limited to 10% of TAV), Company-Owned Life Insurance (limited to 5% of TAV) and Investments in Affiliates (limited to 15% TAV) as defined in the Agreements.
We expect to harvest approximately 7.7 million tons during 2023, with approximately 79% of the volume in the southern region. 34 Table of Contents During the second quarter of 2021 we experienced a fire at our Ola, Arkansas sawmill. The damage was principally limited to the large log primary breakdown machine center.
We expect to harvest approximately 7.6 million tons during 2024, with approximately 80% of the volume in the Southern region. 37 Table of Contents During the second quarter of 2021, we experienced a fire at our Ola, Arkansas sawmill. The damage was principally limited to the large log primary breakdown machine center, which significantly impacted the sawmill’s lumber production.
See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented. 36 Table of Contents BUSINESS SEGMENT RESULTS Timberlands Segment 2022 Year Ended December 31, vs.
Refer to the Business Segment Results below for further discussions on activities for each of our segments. See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented. 39 Table of Contents BUSINESS SEGMENT RESULTS Timberlands Segment 2023 Year Ended December 31, vs.
We expect to sell approximately 18,000 acres of rural land and 150 residential development lots during 2023. Consolidated Results The following table sets forth year-over-year changes in items included in our Consolidated Statements of Operations . Our Business Segment Results provide a more detailed discussion of our segments. 2022 Year Ended December 31, vs.
Including this 34,000-acre disposition, we expect to sell approximately 51,000 rural acres, and 130 residential lots in Chenal Valley during 2024. Consolidated Results The following table sets forth year-over-year changes in items included in our Consolidated Statements of Operations . Our Business Segment Results provide a more detailed discussion of our segments. 2023 Year Ended December 31, vs.
In addition to increasing our quarterly dividend from $0.41 per share to $0.44 per share in the fourth quarter of 2021 and to $0.45 per share in the fourth quarter of 2022, our quarterly dividend also increased during 2022 for the issuance of approximately 13.4 million shares to complete the CatchMark and Loutre mergers in September 2022 and December 2021, respectively. • We repaid $25.5 million in net long-term debt during 2022, including $22.5 million assumed in the CatchMark merger.
In addition to increasing our quarterly dividend from $0.44 per share to $0.45 per share in the fourth quarter of 2022, our dividends paid also increased during 2023 due to the issuance of approximately 11.5 million shares to complete the CatchMark merger in September 2022. • During 2022, we repaid $25.5 million net in long-term debt, including $22.5 million assumed in the CatchMark merger. • During 2023 and 2022, we repurchased 0.5 million and 1.2 million shares, respectively for approximately $25.0 million and $54.5 million, respectively.
The following table provides a reconciliation of net income to Total Adjusted EBITDDA for the respective periods: Year Ended December 31, (in thousands) 2022 2021 Net income $ 333,900 $ 423,860 Interest expense, net 27,400 29,275 Income taxes 65,412 85,156 Depreciation, depletion and amortization 96,700 75,633 Basis of real estate sold 29,921 27,360 CatchMark merger-related expenses 27,325 — Environmental charge 5,550 — Gain on fire damage (34,505 ) (3,361 ) Pension settlement charge 14,165 — Non-operating pension and other postretirement benefit costs 8,138 13,227 Loss on fixed assets 82 1,721 Other 67 — Total Adjusted EBITDDA $ 574,155 $ 652,871 We define CAD as cash provided by operating activities adjusted for capital spending for purchases of property, plant and equipment, timberlands reforestation and roads, and timberland acquisitions not classified as strategic.
The following table provides a reconciliation of net income to Total Adjusted EBITDDA for the respective periods: Year Ended December 31, (in thousands) 2023 2022 Net income $ 62,101 $ 333,900 Interest expense, net 24,218 27,400 Income taxes (216 ) 65,412 Depreciation, depletion and amortization 119,518 96,700 Basis of real estate sold 31,392 29,921 CatchMark merger-related expenses 2,453 27,325 Environmental charge — 5,550 Gain on fire damage (39,436 ) (34,505 ) Pension settlement charge — 14,165 Non-operating pension and other postretirement benefit costs 914 8,138 Loss on fixed assets 557 82 Other (1,267 ) 67 Total Adjusted EBITDDA $ 200,234 $ 574,155 We define CAD as cash from operating activities adjusted for capital spending for purchases of property, plant and equipment, timberlands reforestation and roads and timberland acquisitions not classified as strategic.
See Note 2: Segment Information in the Notes to Consolidated Financial Statements . Wood Products Segment Statistics 2022 Year Ended December 31, vs. 2022 2021 2021 Lumber shipments (MBF) 1 1,009,748 1,026,289 (16,541 ) Lumber sales prices ($ per MBF) $ 737 $ 795 $ (58 ) 1 MBF stands for thousand board feet.
See Note 2: Segment Information in the Notes to Consolidated Financial Statements . Wood Products Segment Statistics 2023 Year Ended December 31, vs. 2023 2022 2022 Lumber shipments (MBF) 1 1,103,089 1,009,748 93,341 Lumber sales prices ($ per MBF) $ 452 $ 737 $ (285 ) 1 MBF stands for thousand board feet.
Capital Structure (in thousands) December 31, 2022 December 31, 2021 Long-term debt (including current portion) $ 1,032,680 $ 758,256 Cash and cash equivalents (343,809 ) (296,151 ) Net debt 688,871 462,105 Market capitalization 1 3,505,255 4,159,034 Enterprise value $ 4,194,126 $ 4,621,139 Net debt to enterprise value 16.4 % 10.0 % Dividend yield 2 4.1 % 2.9 % Weighted-average cost of debt, after tax 3 2.4 % 3.1 % 1 Market capitalization is based on outstanding shares of 79.7 million and 69.1 million times closing share price of $43.99 and $60.22 at December 30, 2022 and December 31, 2021, respectively. 2 Dividend yield is based on annualized dividends per share of $1.80 and $1.76 divided by share price of $43.99 and $60.22 at December 30, 2022 and December 31, 2021, respectively. 3 Weighted-average cost of debt excludes deferred debt costs and credit facility fees and includes estimated annual patronage credits from lenders on term loan debt.
Capital Structure (in thousands) December 31, 2023 December 31, 2022 Long-term debt (including current portion) $ 1,033,728 $ 1,032,680 Cash and cash equivalents (230,118 ) (343,809 ) Net debt 803,610 688,871 Market capitalization 1 3,896,822 3,505,255 Enterprise value $ 4,700,432 $ 4,194,126 Net debt to enterprise value 17.1 % 16.4 % Dividend yield 2 3.7 % 4.1 % Weighted-average cost of debt, after tax 3 2.3 % 2.4 % 1 Market capitalization is based on outstanding shares of 79.4 million and 79.7 million times closing share price of $49.10 and $43.99 at December 31, 2023 and December 31, 2022, respectively. 2 Dividend yield is based on annualized dividends per share of $1.80 divided by share price of $49.10 and $43.99 at December 31, 2023 and December 31, 2022, respectively. 3 Weighted-average cost of debt excludes deferred debt costs and revolving line of credit fees and includes estimated annual patronage credits from lenders on term loan debt.
See Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for further information on our accounting policies and new accounting pronouncements. 46 Table of Contents
See Note 15: Savings Plans, Pension Plans and Other Postretirement Employee Benefits in the Notes to Consolidated Financial Statements for additional information. See Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for further information on our accounting policies and new accounting pronouncements. 49 Table of Contents
Our Company Our operations are organized into three business segments: Timberlands, Wood Products and Real Estate. Our Timberlands segment supplies our Wood Products segment with a portion of its wood fiber needs. These intersegment revenues are based on prevailing market prices and represent a significant portion of the Timberlands segment’s total revenues.
Our Timberlands segment supplies our Wood Products segment with a portion of its wood fiber needs. These intersegment revenues are based on prevailing market prices and represent a significant portion of the Timberlands segment’s total revenues. Our other segments generally do not generate intersegment revenues.
While new housing starts have moderated during 2022, we believe long-term housing fundamentals remain favorable, due to a shortage of homes, lower than historical average existing inventory for sale, a large millennial demographic in their prime home-buying years, the continued remote work evolution, and an aging existing housing stock supporting repair and remodel demand.
Overall, we believe long-term underlying housing fundamentals remain favorable due to a shortage of homes, lower than historical-average existing inventory for sale, the remote work evolution, and a large millennial demographic in their prime home-buying years. The repair and remodel sector is the largest market segment for lumber demand.
The following table provides a reconciliation of net cash provided by operating activities to CAD: Year Ended December 31, (in thousands) 2022 2021 Net cash from operating activities 1 $ 491,901 $ 504,886 Capital expenditures 2 (184,804 ) (75,414 ) CAD $ 307,097 $ 429,472 Net cash from investing activities 3 $ (147,520 ) $ (59,145 ) Net cash from financing activities $ (295,562 ) $ (401,309 ) 1 Cash from operating activities for the year ended December 31, 2022, includes cash paid for CatchMark merger-related expenses and cash paid for real estate development expenditures of $17.8 million and $8.1 million, respectively.
The following table provides a reconciliation of net cash provided by operating activities to CAD: Year Ended December 31, (in thousands) 2023 2022 Net cash from operating activities 1 $ 159,111 $ 491,901 Capital expenditures 2 (121,613 ) (184,804 ) CAD $ 37,498 $ 307,097 Net cash from investing activities 3 $ (95,304 ) $ (147,520 ) Net cash from financing activities $ (171,710 ) $ (295,562 ) 1 Cash from operating activities for the year ended December 31, 2023, includes cash paid for CatchMark merger-related expenses and cash paid for real estate development expenditures of $0.9 million and $11.5 million, respectively.
The existing mill will continue to operate during the project and completion is expected by the end of 2024. We expect to spend approximately $131.0 million on the project, of which $12.2 million was spent in 2022 and approximately $74.0 million is expected to be spent in 2023.
The existing mill will continue to operate during the project and completion is expected by the end of 2024. We expect to spend approximately $131.0 million on the project, of which a total of $86.4 million has been spent through December 31, 2023, and $44.6 million is expected to be spent in 2024.
Net Cash Flows from Financing Activities Changes in cash flows from financing activities were primarily a result of the following: • We paid dividends of $208.1 million in 2022, including a special dividend totaling $75.7 million. In 2021, we paid dividends of $388.2 million, including a special dividend totaling $276.3 million.
Net Cash Flows from Financing Activities Changes in cash flows from financing activities were primarily a result of the following: • We paid dividends of $143.6 million during 2023 compared to $208.1 million in 2022. Dividend payments for 2022 include a special dividend totaling $75.7 million.
Non-operating pension and other postretirement benefit costs Non-operating pension and other postretirement benefit costs decreased $5.1 million compared to 2021. This decrease is primarily a result of an increase in the discount rate used to determine the benefit obligation partially offset by a decrease in expected return on plan assets.
Non-operating pension and other postretirement benefit costs Non-operating pension and other postretirement benefit costs decreased $7.2 million compared to 2022. This decrease is primarily due to an increase in the discount rate used to determine the benefit obligations and an increase in the expected return on plan assets for our qualified pension plan.
Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business, and the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.
Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors and other interested parties by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business, can be used to evaluate the operational performance of the assets under management, and the comparison of our operating results against analyst financial models and the operating results of other public companies that supplement their GAAP results with non-GAAP financial measures. 47 Table of Contents We define EBITDDA as net income before interest expense, net, income taxes, basis of real estate sold, depreciation, depletion and amortization.
Rural real estate dispositions and acquisitions can be adversely affected when access to any properties to be sold or considered for acquisition are limited due to adverse weather conditions. Development real estate sales at Chenal Valley occur throughout the year and can fluctuate based on lot availability, builder demand and market conditions.
Rural real estate dispositions and acquisitions can also be adversely affected when access to any properties to be sold or considered for acquisition is limited due to adverse weather conditions. Development real estate sales occur throughout the year and are dependent upon when our development of residential neighborhoods and commercial lots are substantially completed.
Net Cash Flows from Investing Activities Changes in cash flows from investing activities were primarily a result of the following: • We spent $74.7 million on capital expenditures for property, plant and equipment, timberlands reforestation and road construction projects during 2022 compared to $55.3 million during 2021.
Net Cash Flows from Investing Activities Changes in cash flows from investing activities were primarily a result of the following: • Cash expenditures for property, plant and equipment, timberlands reforestation and road construction projects during 2023 and 2022 was $119.8 million and $74.7 million, respectively, which includes capital expenditures for the Waldo, Arkansas sawmill expansion and modernization project of $74.2 million and $12.2 million, respectively.
Cash from operating activities for the year ended December 31, 2021, includes cash paid for real estate development expenditures of $9.2 million. 2 The year ended December 31, 2022, includes capital expenditures for the rebuild of the Ola, Arkansas sawmill of $18.2 million and $12.2 million for the Waldo, Arkansas sawmill expansion and modernization, and excludes $8.8 million of insurance proceeds for property losses at the Ola sawmill.
Cash from operating activities for the year ended December 31, 2022, includes cash paid for CatchMark merger-related expenses and cash paid for real estate development expenditures of $17.8 million and $8.1 million, respectively. 2 The years ended December 31, 2023 and 2022, includes Waldo, Arkansas sawmill expansion and modernization related capital expenditures of $74.2 million and $12.2 million, respectively.
Our material cash commitments arising in the normal course of business under our known contractual and other obligations as of December 31, 2022, primarily relate to purchase obligations, repayments of long-term debt and related interest, payments under operating and financing leases and pension and postretirement benefits.
We expect cash and cash equivalents and cash generated from operating activities, supplemented by borrowings under our credit agreement, if needed, to be adequate to meet our future cash requirements over the next twelve months. 44 Table of Contents Our material cash commitments arising in the normal course of business under our known contractual and other obligations as of December 31, 2023 primarily relate to purchase obligations, repayments of long-term debt and related interest, payments under operating and financing leases and pension and postretirement benefits.
Our Southern harvest volume of 4.9 million tons in 2022 was higher than 2021, primarily due to the addition of the CatchMark timberlands in mid-September, favorable harvest conditions and strong log demand.
Our total harvest volume of 7.7 million tons in 2023 was higher than 2022 primarily due to the addition of the CatchMark timberlands in September 2022.
Share Repurchase Program On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchases (the 2022 Repurchase Program). Concurrently, the board of directors terminated the remaining repurchase authorization under a repurchase program approved in August 2018.
Additionally, in January 2024, we acquired approximately 16,000 acres of timberlands in Arkansas for approximately $31.0 million. We funded the acquisition with cash on hand. Share Repurchase Program On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchases (the 2022 Repurchase Program).
(in thousands) 2022 2021 2021 Revenues $ 912,612 $ 988,888 $ (76,276 ) Costs and expenses 1 Fiber costs 322,487 310,842 11,645 Manufacturing costs 75,554 72,165 3,389 Freight, logging and hauling 214,338 201,167 13,171 Finished goods inventory change (3,606 ) 1,243 (4,849 ) Selling, general and administrative expenses 12,528 11,542 986 Other 404 (1,929 ) 2,333 Adjusted EBITDDA 2 $ 290,907 $ 393,858 $ (102,951 ) 1 Prior to elimination of intersegment fiber costs of $158.9 million and $164.7 million in 2022 and 2021, respectively. 2 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
(in thousands) 2023 2022 2022 Revenues $ 635,672 $ 912,612 $ (276,940 ) Costs and expenses 1 Fiber costs 299,511 322,487 (22,976 ) Manufacturing costs 220,645 214,338 6,307 Freight, logging and hauling 78,520 75,554 2,966 Finished goods inventory change 2,992 (3,606 ) 6,598 Selling, general and administrative expenses 13,139 12,528 611 Other 378 404 (26 ) Adjusted EBITDDA 2 $ 20,487 $ 290,907 $ (270,420 ) 1 Prior to elimination of intersegment fiber costs of $110.7 million and $158.9 million in 2023 and 2022, respectively. 2 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
At December 31, 2022, we had remaining authorization of $150.0 million for future stock repurchases under the 2022 Repurchase Program. The Repurchase Program may be suspended, terminated or modified at any time for any reason.
Concurrently, the board of directors terminated the remaining repurchase authorization under a previously authorized repurchase program. At December 31, 2023, we had remaining authorization of $125.0 million for future stock repurchases under the 2022 Repurchase Program.
We define EBITDDA as net income before interest expense, net, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses.
Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses. We reconcile Total Adjusted EBITDDA to net income for the consolidated company as it is the most comparable GAAP measure.
The operating results of our Timberlands, Wood Products and Real Estate business segments have been and will continue to be affected by the cyclical nature of the forest products industry.
See Note 2: Segment Information in the Notes to the Consolidated Financial Statements for information related to the use of segment Adjusted EBITDDA. 36 Table of Contents Business and Economic Conditions Affecting Our Operations The operating results of our Timberlands, Wood Products and Real Estate business segments have been and will continue to be affected by the cyclical nature of the forest products industry.
Real Estate Segment Statistics Rural Real Estate Year Ended December 31, 2022 2021 Acres sold 20,451 17,665 Average price per acre $ 2,349 $ 2,115 Development Real Estate Year Ended December 31, 2022 2021 Residential lots 181 159 Average price per lot $ 111,545 $ 85,986 Commercial acres 46 11 Average price per acre $ 289,722 $ 277,425 39 Table of Contents Real Estate Adjusted EBITDDA The following table summarizes Adjusted EBITDDA variances for the year ended December 31, 2022, compared with the year ended December 31, 2021: (in thousands) 2022 vs 2021 Adjusted EBITDDA - prior year $ 47,457 Rural real estate sales 10,671 Real estate development sales 15,479 Selling, general and administrative expenses 231 Other costs, net (580 ) Adjusted EBITDDA - current year $ 73,258 2022 compared with 2021 Real Estate Adjusted EBITDDA for 2022 was $73.3 million, an increase of $25.8 million compared with 2021 primarily due to the following: • Rural Real Estate Sales: The increase in rural real estate sales is primarily a result of a 1,760 acre sale in the South for $7,500 per acre to an energy provider for a planned commercial solar farm and a 10,700 acre timberland conservation sale in Minnesota in 2022, which were not matched by similarly sized land sales during 2021.
Real Estate Segment Statistics Rural Real Estate Year Ended December 31, 2023 2022 Acres sold 17,775 20,451 Average price per acre $ 3,068 $ 2,349 Development Real Estate Year Ended December 31, 2023 2022 Residential lots 128 181 Average price per lot $ 104,241 $ 111,545 Commercial acres 12 46 Average price per acre $ 572,614 $ 289,722 42 Table of Contents Real Estate Adjusted EBITDDA The following table summarizes Adjusted EBITDDA variances for the year ended December 31, 2023 compared with the year ended December 31, 2022: (in thousands) 2023 vs 2022 Adjusted EBITDDA - prior year $ 73,258 Rural real estate sales 7,426 Development real estate sales (12,248 ) Selling, general and administrative expenses (1,333 ) Other costs, net 672 Adjusted EBITDDA - current year $ 67,775 2023 compared with 2022 Real Estate Adjusted EBITDDA for 2023 was $67.8 million, a decrease of $5.5 million compared with 2022 primarily due to the following: • Rural Real Estate Sales: The increase in rural real estate sales is primarily a result of higher per acre sales realization in 2023 compared to 2022 generated from sales of CatchMark timberlands that were acquired in late 2022.
Changes in significant sources of cash for the years ended December 31, 2022 and 2021 are presented by category as follows: Year Ended December 31, (in thousands) 2022 2021 Change Net cash from operating activities $ 491,901 $ 504,886 $ (12,985 ) Net cash from investing activities $ (147,520 ) $ (59,145 ) $ (88,375 ) Net cash from financing activities $ (295,562 ) $ (401,309 ) $ 105,747 Net Cash Flows from Operating Activities Net cash from operating activities decreased $13.0 million in 2022 compared to 2021 primarily as a result of the following: • Cash received from customers increased $6.0 million primarily due to increased harvest and sawlog prices in the Southern region which benefited from increased demand, the addition of the CatchMark timberlands in mid-September 2022, and increased real estate rural land and development sales.
Changes in significant sources of cash for the years ended December 31, 2023 and 2022 are presented by category as follows: Year Ended December 31, (in thousands) 2023 2022 Change Net cash from operating activities $ 159,111 $ 491,901 $ (332,790 ) Net cash from investing activities $ (95,304 ) $ (147,520 ) $ 52,216 Net cash from financing activities $ (171,710 ) $ (295,562 ) $ 123,852 Net Cash Flows from Operating Activities Net cash from operating activities decreased $332.8 million in 2023 compared to 2022 primarily as a result of the following: • Cash received from customers decreased $314.0 million primarily due to lower lumber and Idaho sawlog prices and fewer development real estate sales in Chenal Valley.
(in thousands) 2022 2021 2021 Revenues 1 $ 485,590 $ 449,447 $ 36,143 Costs and expenses Logging and hauling 193,081 147,860 45,221 Other 35,432 31,302 4,130 Selling, general and administrative expenses 7,704 7,341 363 Adjusted EBITDDA 2 $ 249,373 $ 262,944 $ (13,571 ) 1 Prior to elimination of intersegment fiber revenues of $158.9 million and $164.7 million in 2022 and 2021, respectively. 2 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
(in thousands) 2023 2022 2022 Revenues 1 $ 411,077 $ 485,590 $ (74,513 ) Costs and expenses Logging and hauling 213,054 193,081 19,973 Other 38,261 35,432 2,829 Selling, general and administrative expenses 8,441 7,704 737 Adjusted EBITDDA 2 $ 151,321 $ 249,373 $ (98,052 ) 1 Prior to elimination of intersegment fiber revenues of $110.7 million and $158.9 million in 2023 and 2022, respectively. 2 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
Liquidity and Capital Resources Overview An important source of liquidity is cash generated from our operations, which is highly dependent on selling prices for our products, as described in Part I – Item. Business , and can vary from period to period.
The average price per lot or commercial acre fluctuates based on a variety of factors, including size, location and planned end use within the developments. Liquidity and Capital Resources Overview An important source of liquidity is cash generated from our operations, which is highly dependent on selling prices for our products, as described in Part I – Item 1.
These increases were partially offset by reduced vendor payments as a result of lower production at our Ola, Arkansas sawmill following the fire in June 2021. 40 Table of Contents • During 2022, we received $26.7 million in insurance proceeds primarily for business interruption as a result of the fire at our Ola, Arkansas sawmill. • Cash funding of our pension and other postretirement employee benefit plans decreased $4.0 million. • Cash paid for interest, net decreased $1.7 million primarily due to higher interest income earned on cash and cash equivalents as a result of higher short-term interest rates, partially offset by cash interest payments on debt assumed and refinanced in connection with the CatchMark merger in September 2022. • Net tax payments decreased $28.7 million as a result of lower taxable income generated from our TRS operations.
Cash paid for interest, net decreased primarily due to higher interest income earned on cash and cash equivalents as a result of higher short-term interest rates and increased patronage dividends from our lenders, partially offset by cash interest payments on debt assumed and refinanced in September 2022 in connection with the CatchMark merger. • Net tax payments decreased $51.5 million as a result of lower taxable income generated from our TRS operations in 2023.
During 2022, we completed the installation of new equipment at our fire damaged Ola, Arkansas sawmill. The large log line restarted in September 2022. The sawmill is expected to reach its full production rate of 150 million board feet by the end of the first quarter of 2023.
During 2022, we completed the installation of new equipment at our fire damaged Ola, Arkansas sawmill. The large log line restarted in September 2022. We finalized our insurance claim on the Ola, Arkansas sawmill with the insurance carriers in September 2023.
(in thousands) 2022 2021 2021 Revenues $ 1,330,780 $ 1,337,435 $ (6,655 ) Costs and expenses: Cost of goods sold 806,822 715,846 90,976 Selling, general and administrative expenses 76,506 73,432 3,074 CatchMark merger-related expenses 27,325 — 27,325 Environmental charge 5,550 — 5,550 Gain on fire damage (34,505 ) (3,361 ) (31,144 ) 881,698 785,917 95,781 Operating income 449,082 551,518 (102,436 ) Interest expense, net (27,400 ) (29,275 ) 1,875 Pension settlement charge (14,165 ) — (14,165 ) Non-operating pension and other postretirement benefit costs (8,138 ) (13,227 ) 5,089 Other (67 ) — (67 ) Income before income taxes 399,312 509,016 (109,704 ) Income taxes (65,412 ) (85,156 ) 19,744 Net income $ 333,900 $ 423,860 $ (89,960 ) Total Adjusted EBITDDA 1 $ 574,155 $ 652,871 $ (78,716 ) 1 See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the years presented. 2022 compared with 2021 Revenues Revenues of $1.3 billion were $6.7 million lower compared to 2021 primarily due to lower lumber prices and shipments and decreased Northern sawlog prices and harvest volumes.
(in thousands) 2023 2022 2022 Revenues $ 1,024,075 $ 1,330,780 $ (306,705 ) Costs and expenses: Cost of goods sold 899,578 806,822 92,756 Selling, general and administrative expenses 75,730 76,506 (776 ) CatchMark merger-related expenses 2,453 27,325 (24,872 ) Environmental charge — 5,550 (5,550 ) Gain on fire damage (39,436 ) (34,505 ) (4,931 ) 938,325 881,698 56,627 Operating income 85,750 449,082 (363,332 ) Interest expense, net (24,218 ) (27,400 ) 3,182 Pension settlement charge — (14,165 ) 14,165 Non-operating pension and other postretirement benefit costs (914 ) (8,138 ) 7,224 Other 1,267 (67 ) 1,334 Income before income taxes 61,885 399,312 (337,427 ) Income taxes 216 (65,412 ) 65,628 Net income $ 62,101 $ 333,900 $ (271,799 ) Total Adjusted EBITDDA 1 $ 200,234 $ 574,155 $ (373,921 ) 1 See Liquidity and Performance Measures for a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the years presented. 2023 compared with 2022 Revenues Revenues of $1.0 billion were $306.7 million lower compared to 2022 primarily due to declines in lumber and Northern sawlog prices and fewer development real estate sales in Chenal Valley.
Business and Economic Conditions Affecting Our Operations The demand for timber is directly affected by the underlying demand for lumber and other wood products, as well as by the demand for pulp, paper and packaging.
The demand for timber is directly affected by the underlying demand for lumber and other wood products, as well as by the demand for pulp, paper and packaging. Our Timberlands and Wood Products segments are impacted by both demand for new homes and home improvement and repair of existing homes in the United States.
At December 31, 2022, our purchase obligations were approximately $180.0 million, of which $111.0 million is expected to be paid in the next twelve months. Purchase obligations at December 31, 2022, include approximately $118.8 million for the modernization and expansion of our Waldo, Arkansas sawmill discussed below, of which approximately $74.0 million is expected to be paid during 2023.
At December 31, 2023, our purchase obligations were approximately $102.2 million, of which $75.3 million is expected to be paid in the next twelve months.
Additionally, we expect net interest payments on long-term debt, including the impact of any associated interest rate swaps and estimated patronage credits from lenders to be approximately $122.0 million over the term of the loans, of which approximately $26.5 million is expected to be paid in 2023. 41 Table of Contents For further detail on our debt, lease, and pension and other postretirement plans obligations and timing of expected future payments see Note 9: Debt , Note 13: Leases, and Note 15: Savings Plans, Pension Plans and Other Postretirement Employee Benefit Plans in the Notes to Consolidated Financial Statements .
Additionally, based on interest rates on our long-term debt at December 31, 2023, we expect net interest payments on long-term debt, including the impact of any associated interest rate swaps and estimated patronage credits from lenders, to be approximately $105.0 million over the term of the loans, of which approximately $25.0 million is expected to be paid in 2024.
We received $35.0 million and $15.0 million in insurance proceeds for the fire damage and business interruption at the sawmill for the year ended December 31, 2022, and 2021, respectively. We plan to finalize our insurance claim and we expect to receive the remaining insurance proceeds in 2023.
The total approved insurance claim, covering both property damage and business interruption, was $89.4 million, net of a $2.0 million deductible. We received $37.8 million and $35.0 million in insurance proceeds for the fire damage and business interruption at the sawmill during the year ended December 31, 2023, and 2022, respectively.
(in thousands) 2022 2021 2021 Revenues $ 91,491 $ 63,813 $ 27,678 Costs and expenses Costs of goods sold 13,500 11,180 2,320 Selling, general and administrative expenses 4,733 4,964 (231 ) Other — 212 (212 ) Adjusted EBITDDA 1 $ 73,258 $ 47,457 $ 25,801 1 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
(in thousands) 2023 2022 2022 Revenues $ 87,988 $ 91,491 $ (3,503 ) Costs and expenses Costs of goods sold 14,147 13,500 647 Selling, general and administrative expenses 6,066 4,733 1,333 Adjusted EBITDDA 1 $ 67,775 $ 73,258 $ (5,483 ) 1 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
The following table summarizes the historical tax characteristics of dividends to shareholders for the year ended December 31: (Amounts per share) 2022 2021 Capital gain dividends $ 2.72 $ 3.87 Qualified dividends — 0.18 Non-taxable return of capital — 1.62 Total dividends $ 2.72 $ 5.67 42 Table of Contents On February 10, 2023, the board of directors approved a quarterly cash dividend of $0.45 per share payable on March 31, 2023, to stockholders of record as of March 3, 2023.
The timing, manner, price and amount of repurchases will be determined according to the trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Trading Plan), and, subject to the terms of the Trading Plan, the 2022 Repurchase Program may be suspended, terminated or modified at any time for any reason. 45 Table of Contents Dividends to Shareholders The following table summarizes the historical tax characteristics of dividends to shareholders for the year ended December 31: (Amounts per share) 2023 2022 Capital gain dividends $ 1.31 $ 2.72 Non-taxable return of capital 0.49 — Total dividends $ 1.80 $ 2.72 On February 9, 2024, the board of directors approved a quarterly cash dividend of $0.45 per share payable on March 29, 2024, to stockholders of record as of March 8, 2024.
Income taxes Income taxes are primarily due to income from our TRS. For 2022, we recorded income tax expense of $65.4 million on TRS income before tax of $270.3 million, which included the $14.2 million pension settlement charge, the $34.5 million gain on fire damage and the $5.6 million environmental charge.
Income taxes Income taxes are primarily due to income from our TRS. For 2023, we recorded an income tax benefit of $0.2 million on TRS pre-tax income of $15.4 million as compared to income tax expense of $65.4 million on TRS pre-tax income of $270.3 million in 2022.
Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance and to allocate resources between segments, and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis.
Total Adjusted EBITDDA removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis.
Capital expenditures for 2022 include $12.2 million for the Waldo, Arkansas sawmill expansion and modernization project and $18.2 million for the reconstruction of our fire-damaged Ola, Arkansas sawmill, which is largely covered by insurance. • During 2022 we received insurance proceeds of $8.8 million for property losses as a result of the fire at our Ola, Arkansas sawmill compared to $15.0 million during 2021. • Cash expenditures for timberland acquisitions in 2022 was $110.1 million compared to $20.1 million in 2021.
Additionally, during 2023 and 2022, we spent $0.6 million and $18.2 million, respectively, for the reconstruction of our fire-damaged Ola, Arkansas sawmill, which was largely covered by insurance. • During 2023, we received insurance proceeds of $1.4 million for property losses as a result of the fire at our Ola, Arkansas sawmill compared to $8.8 million during 2022. • Cash expenditures for timberland acquisitions in 2023 was $1.8 million compared to $110.1 million in 2022, which included three bolt-on timberland acquisitions in the South aggregating to approximately 46,000 acres for $101.0 million. • We received $23.8 million during 2023 from certain interest rate swaps that contained an other-than-insignificant financing element at inception, which is required to be classified as an investing activity.
The sawmill is expected to reach its full production rate of 150 million board feet by the end of the first quarter of 2023. In our Wood Products segment, we shipped just over 1.0 billion board feet of lumber during 2022. Lumber shipments during 2022 were impacted by the Ola sawmill fire.
In our Wood Products segment, we shipped just over 1.1 billion board feet of lumber during 2023. Lumber shipments during 2023 benefited from the restart of the Ola sawmill in September 2022. For 2024, we expect to ship approximately 1.1 billion board feet of lumber.
No inventory was written down at the end of 2021. • Residual Sales, Panels and Other: Plywood price realizations were lower and manufacturing costs increased as a result of inflationary price increases during 2022 compared to 2021. Real Estate Segment 2022 Year Ended December 31, vs.
Inventory was written down $3.9 million during 2022, primarily due to high indexed Idaho log costs and market price declines in December 2022. • Residual Sales, Panels and Other: Plywood price realizations and shipments were lower compared to 2022 due to lower demand from industrial customers. Real Estate Segment 2023 Year Ended December 31, vs.
Timberlands Adjusted EBITDDA The following table summarizes Adjusted EBITDDA variances for the year ended December 31, 2022, compared with the year ended December 31, 2021: (in thousands) 2022 vs 2021 Adjusted EBITDDA - prior year $ 262,944 Harvest volume 15,407 Sales price and mix 1,706 Logging and hauling cost per unit (30,284 ) Forest management, indirect and other (400 ) Adjusted EBITDDA - current year $ 249,373 37 Table of Contents 2022 compared with 2021 Timberlands Adjusted EBITDDA for 2022 was $249.4 million, a decrease of $13.6 million compared to 2021 primarily due to the following: • Harvest Volume: We harvested 4.9 million tons in the Southern region during 2022, which was 26.2% higher than 2021, primarily due to harvest activity on the CatchMark timberlands acquired mid-September 2022, more favorable harvest conditions and increased stumpage sales.
Timberlands Adjusted EBITDDA The following table summarizes Adjusted EBITDDA variances for the year ended December 31, 2023 compared with the year ended December 31, 2022: (in thousands) 2023 vs 2022 Adjusted EBITDDA - prior year $ 249,373 Sales price and mix (98,925 ) Harvest volume 12,638 Logging and hauling cost per unit (10,539 ) Forest management, indirect and other (1,226 ) Adjusted EBITDDA - current year $ 151,321 40 Table of Contents 2023 compared with 2022 Timberlands Adjusted EBITDDA for 2023 was $151.3 million, a decrease of $98.1 million compared to 2022 primarily due to the following: • Sales Price and Mix: Sawlog prices in the Northern region decreased 35.7%, to $117 per ton, primarily due to the effect of lower indexed sawlog prices in Idaho.
In addition, we sold 46 acres of commercial land in Chenal Valley for $289,722 per acre during 2022 compared to 11 acres for $277,425 per acre during 2021. The average price per lot or commercial acre fluctuates based on a variety of factors including size, location and planned end use within the developments.
In addition, we sold 12 acres of commercial land in Chenal Valley for an average price of $572,614 per acre during 2023 compared to 46 acres for an average price of $289,722 per acre during 2022.
Our definitions of these non-GAAP measures may differ from similarly titled measures used by others.
Our definitions of these non-GAAP measures may differ from similarly titled measures and may not be comparable to other similarly titled measures presented by other companies due to potential inconsistencies in methods of calculation.
Harvest Volumes (in tons) 2022 2021 2021 Northern region Sawlog 1,576,758 1,592,474 (15,716 ) Pulpwood 39,882 33,134 6,748 Total 1,616,640 1,625,608 (8,968 ) Southern region Sawlog 2,198,782 1,834,141 364,641 Pulpwood 1,878,485 1,578,465 300,020 Stumpage 829,650 476,868 352,782 Total 4,906,917 3,889,474 1,017,443 Total harvest volume 6,523,557 5,515,082 1,008,475 Sales Price/Unit ($ per ton) Northern region 1 Sawlog $ 182 $ 188 $ (6 ) Pulpwood $ 51 $ 34 $ 17 Southern region 1 Sawlog $ 48 $ 46 $ 2 Pulpwood $ 32 $ 29 $ 3 Stumpage $ 17 $ 16 $ 1 1 Sawlog and pulpwood sales prices are on a delivered basis, which includes logging and hauling costs.
Harvest Volumes (in tons) 2023 2022 2022 Northern region Sawlog 1,495,144 1,576,758 (81,614 ) Pulpwood 26,802 39,882 (13,080 ) Total 1,521,946 1,616,640 (94,694 ) Southern region Sawlog 2,529,131 2,198,782 330,349 Pulpwood 2,150,703 1,878,485 272,218 Stumpage 1,487,415 829,650 657,765 Total 6,167,249 4,906,917 1,260,332 Total harvest volume 7,689,195 6,523,557 1,165,638 Sales Price/Unit ($ per ton) Northern region 1 Sawlog $ 117 $ 182 $ (65 ) Pulpwood $ 47 $ 51 $ (4 ) Southern region 1 Sawlog $ 48 $ 48 $ — Pulpwood $ 32 $ 32 $ — Stumpage $ 18 $ 17 $ 1 1 Sawlog and pulpwood sales prices are on a delivered basis, which includes logging and hauling costs.
Cost of goods sold Cost of goods sold increased $91.0 million compared to 2021 mainly due to higher manufacturing and log and haul costs primarily from inflationary price increases in areas such as diesel fuel, energy, and repair and maintenance, as well as increased Southern harvest volumes and rural and development real estate sales. 35 Table of Contents Selling, general and administrative expenses SG&A expenses increased $3.1 million compared to 2021, primarily due to inflationary price increases and incremental administrative activities following the CatchMark merger.
Cost of goods sold Cost of goods sold increased $92.8 million compared to 2022 driven mainly by higher manufacturing costs as a result of increased lumber shipments and higher logging and hauling costs from increased harvest volumes in the South, primarily due to a full year of harvest activities on timberlands acquired from our merger with CatchMark in September 2022. 38 Table of Contents Selling, general and administrative expenses Selling, general and administrative expenses decreased $0.8 million compared to 2022 primarily due to lower incentive compensation and pension costs, partially offset by inflationary price increases, increased professional service fees, and a full year of incremental administrative activities following the CatchMark merger in September 2022.
These non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. 33 Table of Contents Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance and allocating resources between segments, and that investors can use to evaluate the operational performance of the assets under management.
The presentation of these non-GAAP financial measures should be considered only as supplemental to, and are not intended to be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
The Ola, Arkansas sawmill fire that occurred in June 2021 had a larger effect on lumber shipments in 2022 than 2021. These decreases were partially offset by increased Southern harvest volumes and sawlog prices and increased rural and development real estate sales.
These decreases were partially offset by increased shipments primarily from our Ola, Arkansas sawmill that restarted late in the third quarter of 2022 after a fire in June 2021, and increased harvest activity primarily driven by the addition of the CatchMark timberlands in late 2022. • Cash payments increased $44.1 million due to increases in lumber production, primarily from our Ola sawmill and increased harvest activity.
Historically, most sales have taken place in the second half of the year as builders prepare for the following spring and summer traditional home building and buying season. The timing of development real estate sales can also be impacted by contractor availability needed to complete infrastructure and other improvements prior to bringing developed real estate to market.
The timing of these sales can also be impacted by contractor availability to complete the necessary infrastructure and other improvements.
We believe we are well positioned to help entities achieve these commitments through natural climate solutions, including forest carbon sequestration and carbon capture and storage activities.
We believe we are well positioned to help entities achieve these commitments through natural climate solutions, including forest carbon offsets, carbon capture and storage projects, selling or leasing timberlands to third parties for renewable energy projects such as solar for power generation facilities, selling pulpwood and sawmill residuals for green energy production, and other emerging technologies that allows wood fiber to be used in applications ranging from biofuels to bioplastics.
Removed
It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis. This measure should not be considered in isolation from and is not intended to represent an alternative to our results reported in accordance with GAAP.
Added
Our Company We are a leading timberland REIT with ownership of nearly 2.2 million acres of timberland. We also own six sawmills and an industrial grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. Our operations are organized into three business segments: Timberlands, Wood Products and Real Estate.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGA L PROCEEDINGS We believe there is no pending or threatened litigation that could have a material adverse effect on our financial position, results of operations or liquidity. ITEM 4. MINE SAFET Y DISCLOSURE Not applicable. 30 Table of Contents P ART II
Biggest changeITEM 3. LEGA L PROCEEDINGS We believe there is no pending or threatened litigation that could have a material adverse effect on our financial position, results of operations or liquidity. ITEM 4. MINE SAFET Y DISCLOSURE Not applicable. 33 Table of Contents P ART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShares under the 2022 Repurchase Program may be repurchased in open market transactions, and in 2022 were purchased pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, or through privately negotiated transactions. The 2022 Repurchase Program may be suspended, terminated or modified at any time for any reason.
Biggest changeThe 2022 Repurchase Program may be suspended, terminated or modified at any time for any reason. Shares under the 2022 Repurchase Program may be repurchased in open market transactions, pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Exchange Act), or through privately negotiated transactions.
We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability to account for repurchases that have not been cash settled. We retire shares upon repurchase. Any excess repurchase price over par is recorded in accumulated deficit. There were no unsettled repurchases at December 31, 2022 and 2021.
We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability to account for repurchases that have not been cash settled. We retire shares upon repurchase. Any excess repurchase price over par is recorded in accumulated deficit. There were no unsettled repurchases at December 31, 2023 and 2022.
The total stockholder return assumes $100 invested at December 31, 2017, with quarterly reinvestment of all dividends.
The total stockholder return assumes $100 invested at December 31, 2018, with quarterly reinvestment of all dividends.
ITEM 5. MARKET FOR REGIST RANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on The Nasdaq Global Select Market (NASDAQ) with the ticker symbol “PCH”. There were approximately 2,443 stockholders of record as of February 13, 2023. RECENT SALE OF UNREGISTERED SECURITIES None.
ITEM 5. MARKET FOR REGIST RANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on The Nasdaq Global Select Market (Nasdaq) with the ticker symbol “PCH”. There were approximately 2,284 stockholders of record as of February 12, 2024. RECENT SALE OF UNREGISTERED SECURITIES None.
The following table provides information with respect to purchases of common stock made by the company during the fourth quarter of 2022: Common Share Purchases Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan October 1 - October 31 — $ — — $ 200,000,000 November 1 - November 30 1,096,283 $ 45.61 1,096,283 $ 150,000,021 December 1 - December 31 — $ — — $ 150,000,021 Total Shares Purchased 1,096,283 $ 45.61 1,096,283 EQUITY COMPENSATION PLAN INFORMATION Information required by this item with respect to equity compensation plans is included under the caption “Equity Compensation Plan Information” in our definitive Proxy Statement to be filed with the SEC on or about March 28, 2023, and is incorporated herein by reference. 31 Table of Contents Company Stock Price Performance The following graph and table show a five-year comparison of cumulative total stockholder returns for our company, the NAREIT Equity Index, the Standard & Poor’s 500 Composite Index and a group of four companies that we refer to as our peer group index for the period ended December 31, 2022.
The following table provides information with respect to purchases of common stock made by the company during the fourth quarter of 2023: Common Share Purchases Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - October 31 264,366 $ 44.93 264,366 $ 125,000,061 November 1 - November 30 — $ — — $ 125,000,061 December 1 - December 31 — $ — — $ 125,000,061 Total 264,366 $ 44.93 264,366 $ 125,000,061 EQUITY COMPENSATION PLAN INFORMATION Information required by this item with respect to equity compensation plans is included under the caption “Equity Compensation Plan Information” in our definitive Proxy Statement to be filed with the SEC on or about March 28, 2024, and is incorporated herein by reference. 34 Table of Contents Company Stock Price Performance The following graph and table show a five-year comparison of cumulative total stockholder returns for our company, the NAREIT Equity Index, the Standard & Poor’s 500 Composite Index and a group of four companies that we refer to as our peer group index for the period ended December 31, 2023.
On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchases (the 2022 Repurchase Program). Concurrently, the board of directors terminated the remaining repurchase authorization under the 2018 Repurchase Program.
ISSUER PURCHASES OF EQUITY SECURITIES AND USE OF PROCEEDS On August 31, 2022, our board of directors authorized management to repurchase up to $200.0 million of our common stock with no set time limit for the repurchase (the 2022 Repurchase Program). Concurrently, the board of directors terminated the remaining repurchase authorization under a previously authorized repurchase program.
Our 2018 return includes the impact of the Deltic earnings and profits special distribution of approximately $3.54 per share. Our 2022 and 2021 returns include the impacts of special dividends of $0.95 per share and $4.00 per share, respectively. See Note 3: Earnings Per Share in the Notes to Consolidated Financial Statements for additional information.
Joe Co., UFP Industries and Weyerhaeuser Co. Returns are weighted based on market capitalizations as of the beginning of each year. Our 2022 and 2021 returns include the impacts of special dividends of $0.95 per share and $4.00 per share, respectively. See Note 3: Earnings Per Share in the Notes to Consolidated Financial Statements for additional information.
At December 31, 2018 2019 2020 2021 2022 PotlatchDeltic Corporation $ 74 $ 105 $ 125 $ 164 $ 127 NAREIT Equity Index $ 95 $ 120 $ 111 $ 158 $ 120 S&P 500 Composite Index $ 96 $ 126 $ 149 $ 192 $ 157 2022 Peer Group Index $ 69 $ 100 $ 114 $ 150 $ 123 Our peer group index for 2022 consists of Rayonier Inc., St.
At December 31, 2019 2020 2021 2022 2023 PotlatchDeltic Corporation $ 142 $ 169 $ 223 $ 173 $ 200 NAREIT Equity Index $ 126 $ 116 $ 166 $ 126 $ 143 S&P 500 Composite Index $ 131 $ 156 $ 200 $ 164 $ 207 2023 Peer Group Index $ 144 $ 165 $ 217 $ 177 $ 220 Our peer group index for 2023 consists of Rayonier Inc., St.
Removed
ISSUER PURCHASES OF EQUITY SECURITIES AND USE OF PROCEEDS On August 30, 2018, our board of directors authorized management to repurchase up to $100.0 million of common stock with no time limit set for the repurchase (the 2018 Repurchase Program).
Removed
Total shares repurchased under the 2018 Repurchase Program for the year ended December 31, 2022 was 103,010 for approximately $4.5 million (excluding transaction fees). We did not repurchase any shares under the 2018 Repurchase Program during the year ended December 31, 2021.
Removed
Total shares repurchased under the 2022 Repurchase Program for the year ended December 31, 2022, was 1,096,283 for approximately $50.0 million (excluding transaction fees). At December 31, 2022, we had remaining authorization of $150.0 million for future stock repurchases under the 2022 Repurchase Program.
Removed
Joe Co., UFP Industries and Weyerhaeuser Co. Returns are weighted based on market capitalizations as of the beginning of each year. Deltic has been excluded from our peer group index in the above table and graph for all years presented due to our merger in 2018.
Removed
ITEM 6. [R eserved] 32 Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeExpected Maturity Date (in thousands, except interest rates) 2023 2024 2025 2026 2027 Thereafter Total Fair Value Variable rate debt: Principal due $ — $ — $ — $ 27,500 $ 138,750 $ 554,750 $ 721,000 $ 721,000 Average interest rate — — — 5.87 % 5.35 % 5.17 % 5.23 % Fixed rate debt: Principal due $ 40,000 $ 175,735 $ 100,000 $ — $ — $ — $ 315,735 $ 305,234 Average interest rate 4.49 % 3.93 % 4.05 % — — — 4.04 % Interest rate swaps: Variable to fixed $ — $ — $ — $ 27,500 $ 138,750 $ 554,750 $ 721,000 $ 106,535 Average pay rate — — — 1.42 % 0.50 % 1.08 % 0.98 % Average receive rate — — — 3.67 % 3.35 % 3.19 % 3.24 % 47 Table of Contents
Biggest changeExpected Maturity Date (in thousands, except interest rates) 2024 2025 2026 2027 2028 Thereafter Total Fair Value Variable-rate debt: Principal due $ — $ — $ 27,500 $ 138,750 $ 100,000 $ 494,750 $ 761,000 $ 761,000 Average interest rate — — 6.31 % 5.79 % 5.75 % 5.69 % 5.74 % Fixed-rate debt: Principal due $ 175,735 $ 100,000 $ — $ — $ — $ — $ 275,735 $ 269,504 Average interest rate 3.93 % 4.05 % — — — — 3.98 % Interest rate swaps: Variable to fixed $ — $ — $ 27,500 $ 138,750 $ 100,000 $ 494,750 $ 761,000 $ 95,994 Average pay rate — — 1.42 % 0.50 % 2.79 % 0.73 % 0.99 % Average receive rate — — 4.11 % 3.79 % 3.75 % 3.69 % 3.73 % 50 Table of Contents
All market risk sensitive instruments were entered into for purposes other than trading purposes. We do not attempt to hedge our exposure to interest rate risk for our cash equivalents. The interest rates applied to borrowings under our credit facility adjust often and therefore react quickly to any movement in the general trend of market interest rates.
All market risk sensitive instruments were entered into for purposes other than trading purposes. We do not attempt to hedge our exposure to interest rate risk for our cash equivalents. The interest rates applied to borrowings under our revolving line of credit adjust often and therefore react quickly to any movement in the general trend of market interest rates.
At December 31, 2022, we had forward-starting interest rate swap contracts designated as cash flow hedges with an aggregated notional amount of $250.0 million associated with anticipated future refinancing of term loan debt maturing through January 2029 that require settlement on the maturity date.
At December 31, 2023, we had forward-starting interest rate swap contracts designated as cash flow hedges with an aggregated notional amount of $200.0 million associated with anticipated future refinancing of term loan debt maturing through January 2029 that require settlement on the maturity date.
ITEM 7A. QUANTITATIVE AN D QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our market risk exposure on financial instruments includes interest rate risk on our bank credit facility, term loans and interest rate swap agreements and forward-starting interest rate swap agreements.
ITEM 7A. QUANTITATIVE AN D QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our market risk exposure on financial instruments includes interest rate risk on our bank revolving line of credit, term loans and interest rate swap agreements and forward-starting interest rate swap agreements.
We do not attempt to mitigate the effects of short-term interest rate fluctuations on our credit facility borrowings through the use of derivative financial instruments. There were no borrowings under our credit facility at December 31, 2022. At December 31, 2022, we have interest rate swaps associated with $721.0 million of term loan debt.
We do not attempt to mitigate the effects of short-term interest rate fluctuations on our revolving line of credit borrowings through the use of derivative financial instruments. There were no borrowings under our revolving line of credit at December 31, 2023. At December 31, 2023, we have interest rate swaps associated with $761.0 million of term loan debt.

Other PCH 10-K year-over-year comparisons