☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange act).

The number of shares of common stock of the registrant outstanding as of ~~April 28,~~October 27, 2021 was ~~67,042,259.~~67,100,706.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the amounts shown in the Condensed Consolidated Statements of Cash Flows.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTE 2. SEGMENT INFORMATION

Our operations are organized into 3 reportable segments: Timberlands, Wood Products and Real Estate. Management activities in the Timberlands segment include planting and harvesting trees and building and maintaining roads. The Timberlands segment also generates revenues from non-timber resources such as hunting leases, recreation permits and leases, mineral rights contracts, oil and gas royalties and carbon sequestration. The Wood Products segment manufactures and markets lumber and plywood. Activities in the Real Estate segment include our rural timberland-holdings sales program, master planned community development and a country club.

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 typically represent a sizeable portion of the Timberlands segment’s total revenues. Our other segments generally do not generate intersegment revenues. These intercompany transactions are eliminated in consolidation.

The reportable segments follow the same accounting policies used for our Condensed Consolidated Financial Statements, with the exception of the valuation of inventories, which are reported using the average cost method for purposes of reporting segment results.

The following table ~~represents~~presents our revenues by major product:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020			2021			2020
Timberlands
Northern region
Sawlogs	$	76,181		$	41,407		$	88,244		$	72,815		$	251,198		$	144,860
Pulpwood		499			1,435			119			1,243			815			3,914
Stumpage		—			316			—			—			—			316
Other		300			303			205			855			740			1,450
Total Northern revenues		76,980			43,461			88,568			74,913			252,753			150,540

Southern region
Sawlogs		22,416			23,939			22,191			25,462			65,620			70,606
Pulpwood		9,161			11,201			13,843			13,413			33,167			35,486
Stumpage		764			829			2,275			770			3,310			2,416
Other		2,595			2,995			2,666			2,427			7,825			7,707
Total Southern revenues		34,936			38,964			40,975			42,072			109,922			116,215

Total Timberlands revenues		111,916			82,425			129,543			116,985			362,675			266,755

Wood Products
Lumber		229,682			111,939			141,255			185,558			679,417			400,290
Residuals and Panels		39,614			33,061			46,505			32,733			135,312			89,217
Total Wood Products revenues		269,296			145,000			187,760			218,291			814,729			489,507

Real Estate
Rural real estate		10,025			7,292			6,939			13,284			28,469			30,455
Development real estate		8,053			2,292			4,260			2,157			14,087			6,121
Other		2,235			1,385			2,298			2,710			7,252			5,649
Total Real Estate revenues		20,313			10,969			13,497			18,151			49,808			42,225

Total segment revenues		401,525			238,394			330,800			353,427			1,227,212			798,487
Intersegment Timberlands revenues¹		(47,332	)		(29,514	)		(43,470	)		(40,381	)		(138,183	)		(95,006	)
Total consolidated revenues	$	354,193		$	208,880		$	287,330		$	313,046		$	1,089,029		$	703,481


¹	Intersegment revenues represent logs sold by our Timberlands segment to our Wood Products segment.

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Management primarily evaluates the performance of its segments and allocates resources to them based upon Adjusted EBITDDA. EBITDDA is calculated as net income ~~(loss)~~ before interest expense, 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. Management uses Adjusted EBITDDA to compare the operating performance of our segments on a consistent basis and to evaluate the performance and effectiveness of each segment’s ~~operational~~operating strategies. Our calculation of Adjusted EBITDDA may not be comparable to that reported by other companies.

The following table summarizes information for each of the company’s reportable segments and includes a reconciliation of Total Adjusted EBITDDA to income ~~(loss)~~ before income taxes. Corporate information is included to reconcile segment data to the Condensed Consolidated Financial Statements.


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020			2021			2020
Adjusted EBITDDA:
Timberlands	$	67,858		$	34,982		$	76,023		$	59,649		$	221,140		$	120,290
Wood Products		125,555			13,229			26,566			81,644			356,654			105,780
Real Estate		16,593			7,340			9,069			13,466			37,450			30,062
Corporate		(10,710	)		(8,672	)		(11,496	)		(15,361	)		(35,028	)		(34,567	)
Eliminations and adjustments		(4,310	)		692			7,021			(4,012	)		(3,063	)		(3,235	)
Total Adjusted EBITDDA		194,986			47,571			107,183			135,386			577,153			218,330
Interest expense, net¹		(3,574	)		(3,698	)		(8,641	)		(8,557	)		(20,414	)		(20,594	)
Depreciation, depletion and amortization		(17,996	)		(18,638	)		(21,131	)		(20,187	)		(56,156	)		(56,590	)
Basis of real estate sold		(8,823	)		(6,498	)		(6,697	)		(5,249	)		(22,733	)		(14,440	)
Net gain on insurance recoveries								4,394			—			4,394			—
Pension settlement charge		—			(42,988	)		—			—			—			(42,988	)
Non-operating pension and other postretirement employee benefits		(3,414	)		(3,635	)		(3,271	)		(3,557	)		(9,956	)		(10,670	)
(Loss) gain on disposal of fixed assets		(34	)		192			(1,139	)		11			(1,700	)		196
Income (loss) before income taxes	$	161,145		$	(27,694	)

Income before income taxes							$	70,698		$	97,847		$	470,588		$	73,244
Depreciation, depletion and amortization:
Timberlands	$	11,417		$	12,591		$	11,893		$	13,821		$	33,792		$	37,978
Wood Products		6,203			5,630			8,879			5,983			21,261			17,411
Real Estate		155			160			162			149			477			465
Corporate		221			257			197			234			626			736
		17,996			18,638			21,131			20,187			56,156			56,590
Bond discounts and deferred loan fees¹		403			406			403			407			1,209			1,219
Total depreciation, depletion and amortization	$	18,399		$	19,044		$	21,534		$	20,594		$	57,365		$	57,809

Basis of real estate sold:
Real Estate	$	8,829		$	6,504		$	6,703		$	5,257		$	22,751		$	14,973
Eliminations and adjustments		(6	)		(6	)		(6	)		(8	)		(18	)		(533	)
Total basis of real estate sold	$	8,823		$	6,498		$	6,697		$	5,249		$	22,733		$	14,440


¹	Bond discounts and deferred loan fees are reported within interest expense, net on the Condensed Consolidated Statements of Operations.

1112

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NOTE 3. EARNINGS PER SHARE

The following table reconciles the number of shares used in calculating basic and diluted earnings per share:


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2021		2020
Basic weighted-average shares outstanding		67,207		67,478		67,315		67,149		67,275		67,263
Incremental shares due to:
Performance shares		326		—		272		320		257		238
Restricted stock units		74		—		61		59		56		34
Diluted weighted-average shares outstanding		67,607		67,478		67,648		67,528		67,588		67,535

For stock-based awards, the dilutive effect is calculated using the treasury stock method. Under this method, the dilutive effect is computed as if the awards were exercised at the beginning of the period (or at time of issuance, if later) and assumes the related proceeds were used to repurchase common stock at the average market price during the period. Related proceeds include future compensation cost associated with the stock award.

For the three and nine months ended ~~March 31,~~September 30, 2021, there were approximately 101,000and88,000 stock-based awards, respectively, that were excluded from the calculation of diluted earnings per share as they were anti-dilutive. For the three and nine months ended September 30, 2020, there were approximately ~~63,000~~0 and ~~317,000~~47,000 stock-based awards, respectively, that were excluded from the calculation of diluted earnings per share because they were anti-dilutive. Anti-dilutive stock-based awards could be dilutive in future periods.

Share Repurchase Program

On August 30, 2018, our board of directors authorized management to repurchase up to ~~$100.0~~$100.0 million of common stock with no time limit set for the repurchase (the Repurchase Program). Shares under the Repurchase Program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Trading Plan). The timing, manner, price and amount of repurchases will be determined according to, and subject to, the terms of the Trading Plan, and, subject to the terms of the Trading Plan, the Repurchase Program may be suspended, terminated or modified at any time for any reason.

We did 0t0t repurchase any shares during the ~~three~~nine months ended ~~March 31,~~September 30, 2021. ~~During~~NaN shares were repurchased during the three months ended ~~March 31,~~September 30, 2020. During the nine months ended September 30, 2020, we repurchased ~~400,917~~489,850 shares of common stock at a total consideration of ~~$12.4~~$15.4 million under the Repurchase Program, all of which were made in open-market transactions. At ~~March 31,~~September 30, 2021, we had remaining authorization of ~~$59.5~~$59.5 million for future stock repurchases under the Repurchase Program.

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.

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NOTE 4. CERTAIN BALANCE SHEET COMPONENTS

Inventories

~~Inventories~~


(in thousands)	September 30, 2021			December 31, 2020
Logs	$	34,980		$	31,210
Lumber, panels and veneer		35,716			34,136
Materials and supplies		17,415			14,939
Total inventories		88,111			80,285
Less: LIFO reserve		(18,249	)		(18,249	)
Total inventories, net	$	69,862		$	62,036

(in thousands)

March 31, 2021

December 31, 2020

Logs

$
28,396

$
31,210

Lumber, panels and veneer

36,543

34,136

Materials and supplies

15,973

14,939

Total inventories

80,912

80,285

Less: LIFO reserve

(18,249
)

(18,249
)
Total inventories, net

$
62,663

$
62,036

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Property, plant and equipment


(in thousands)	September 30, 2021			December 31, 2020
Property, plant and equipment	$	521,271		$	517,711
Less: accumulated depreciation		(235,237	)		(229,167	)
Total property, plant and equipment, net	$	286,034		$	288,544

Ola Arkansas sawmill fire


(in thousands)	Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
Fixed asset write-offs	$	(7,436	)	$	(9,544	)
Disposal costs		(1,061	)		(1,061	)
Total fixed asset loss on disposal		(8,498	)		(10,606	)

Insurance recoveries		12,892			15,000
Net gain on insurance recoveries	$	4,394		$	4,394

On June 13, 2021, a fire occurred at our Ola, Arkansas sawmill. There were no injuries or environmental issues from the fire. The damage was principally limited to the large log primary breakdown area of the mill. The planer mill, kiln, and shipping department were not affected. We have adequate property damage and business interruption insurance, subject to an applicable deductible. Based on our initial damage assessment, we wrote-off $2.1 million of net book value for property initially identified as destroyed and recognized a corresponding $2.1 million of insurance recoveries at June 30, 2021.

During the quarter ended September 30, 2021, we were able to fully access the sawmill, further assess the damage and solidify a reconstruction plan for the sawmill. As a result, during the three months ended September 30, 2021, we wrote-off an additional $1.1 million of damaged equipment and $6.3 million of obsolete equipment due to the reconstruction plan and incurred approximately $1.1 million of disposal costs. Additionally, we recorded $12.9 million of insurance recoveries during the quarter ended September 30, 2021, resulting in the recognition of a $4.4 million net gain on insurance recoveries for the three and nine months ended September 30, 2021. NaN business interruption recoveries were recorded during the three or nine months ended September 30, 2021 as discussions with the insurance carriers are ongoing. Business interruption recoveries will be recorded when deemed probable and reasonably estimable.

(in thousands)

March 31, 2021

December 31, 2020

Property, plant and equipment

$
520,524

$
517,711

Less: accumulated depreciation

(229,041
)

(229,167
)
Total property, plant and equipment, net

$
291,483

$
288,544

Timber and timberlands


(in thousands)	September 30, 2021		December 31, 2020
Timber and timberlands	$	1,488,727	$	1,516,788
Logging roads		83,748		83,273
Total timber and timberlands, net	$	1,572,475	$	1,600,061

(in thousands)

March 31, 2021

December 31, 2020

Timber and timberlands

$
1,505,150

$
1,516,788

Logging roads

82,443

83,273

Total timber and timberlands, net

$
1,587,593

$
1,600,061

Accounts payable and accrued liabilities


(in thousands)	March 31, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Accrued payroll and benefits	$	20,972	$	29,675	$	26,266	$	29,675
Accounts payable		15,495		9,724		15,795		9,724
Deferred revenue1						9,806		8,789
Other accrued taxes						8,957		6,025
Income taxes payable						6,778		14,755
Accrued interest		5,024		6,485		5,040		6,485
Deferred revenue¹		7,233		8,789
Operating lease liabilities		3,848		4,304
Income taxes payable		42,286		14,755
Other accrued taxes		7,522		6,025
Other current liabilities		12,469		13,522		15,177		17,826
Total accounts payable and accrued liabilities	$	114,849	$	93,279	$	87,819	$	93,279

Deferred revenue predominately relates to hunting and other access rights on our timberlands, payments received for lumber shipments where control of goods have not transferred, member related activities at an owned country club and certain post-close obligations for real estate sales. These contract liabilities are recognized over the term of the contracts, which is typically twelve months or less, except for country club initiation fees which are recognized over the average life of club membership.

We were in compliance with all debt and credit agreement covenants at ~~March 31,~~September 30, 2021.

NOTE 6. DERIVATIVE INSTRUMENTS

From time to time, we enter into derivative financial instruments to manage certain cash flow and fair value risks.

Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges. As of ~~March 31,~~September 30, 2021, we have interest rate swaps associated with ~~$403.5~~$403.5 million of term loan debt. These swaps are cash flow hedges that convert variable rates ranging from three-month and one-month LIBOR plus ~~1.85%~~1.85% to ~~2.15%~~2.10%, to fixed rates ranging from ~~3.04%~~3.04% to ~~4.82%~~4.77%. Our cash flow hedges are expected to be highly effective in achieving offsetting cash flows attributable to the hedged interest rate risk through the term of the hedges. At ~~March 31,~~September 30, 2021, the amount of net losses expected to be reclassified into earnings in the next 12 months is approximately ~~$8.7~~$8.0 million. However, this expected amount to be reclassified into earnings is subject to volatility as the ultimate amount recognized in earnings is based on the LIBOR rate at the time of net swap cash payments.

We also hold ~~$607.5~~$607.5 million of forward starting interest rate swaps designated as cash flow hedges. These forward starting interest rate swaps effectively hedge the variability in future benchmark interest payments attributable to changes in interest rates on ~~$607.5~~$607.5 million of future debt refinances through January 2029 by converting the benchmark interest rates to fixed interest rates. In addition, the ~~cashflow~~cash flow hedges for future debt refinances require settlement on the stated maturity date. At ~~March 31,~~September 30, 2021, we have recorded derivative assets of ~~$64.6~~$40.8 million associated with these forward starting interest rate swaps.

The following table presents the gross fair values of derivative instruments on our Condensed Consolidated Balance Sheets:


			Asset Derivatives					Liability Derivatives						Asset Derivatives					Liability Derivatives
(in thousands)		Location	March 31, 2021		December 31, 2020		Location	March 31, 2021		December 31, 2020			Location	September 30, 2021		December 31, 2020		Location	September 30, 2021		December 31, 2020
Derivatives designated in cash flow hedging relationships:	Derivatives designated in cash flow hedging relationships:											Derivatives designated in cash flow hedging relationships:
Interest rate contracts		Other assets, current¹	$	3,227	$	63	Accounts payable and accrued liabilities¹	$	737	$	1,010		Other assets, current1	$	1,890	$	63	Accounts payable and accrued liabilities1	$	189	$	1,010
Interest rate contracts		Other assets, non-current		64,543		18,466	Other long-term obligations		26,475		45,100		Other assets, non-current		40,480		18,466	Other long-term obligations		27,933		45,100
			$	67,770	$	18,529		$	27,212	$	46,110			$	42,370	$	18,529		$	28,122	$	46,110


¹	Derivative instruments that mature within one year, as a whole, are classified as current.

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The following table details the effect of derivatives on our Condensed Consolidated Statements of Operations:


			Three Months Ended March 31,								Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)		Location	2021			2020				Location	2021			2020			2021			2020
Derivatives designated in cash flow hedging relationships:	Derivatives designated in cash flow hedging relationships:								Derivatives designated in cash flow hedging relationships:
Interest rate contracts
Income (loss) recognized in other comprehensive income (loss), net of tax			$	61,875		$	(39,363	)
Income (loss) recognized in other comprehensive income, net of tax											$	4,310		$	8,920		$	32,741		$	(34,112	)
Amounts reclassified from accumulated other comprehensive loss, net of tax¹		Interest expense	$	(2,232	)	$	(838	)		Interest expense	$	(2,326	)	$	(2,412	)	$	(6,839	)	$	(5,072	)

Interest expense, net			$	3,574		$	3,698				$	8,641		$	8,557		$	20,414		$	20,594


¹	Realized losses on interest rate contracts consist of net cash received or paid and interest accruals on the interest rate swaps during the periods. Net cash received or paid is included in the supplemental cash flow information within interest, net of amounts capitalized in the Condensed Consolidated Statements of Cash Flows.

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NOTE 7. FAIR VALUE MEASUREMENTS

The following table presents the estimated fair values of our financial instruments:


	March 31, 2021						December 31, 2020						September 30, 2021						December 31, 2020
(in thousands)	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value
Derivative assets related to interest rate swaps (Level 2)	$	67,770		$	67,770		$	18,529		$	18,529		$	42,370		$	42,370		$	18,529		$	18,529
Derivative liabilities related to interest rate swaps (Level 2)	$	(27,212	)	$	(27,212	)	$	(46,110	)	$	(46,110	)	$	(28,122	)	$	(28,122	)	$	(46,110	)	$	(46,110	)

Long-term debt, including current portion (Level 2):
Term loans	$	(690,632	)	$	(712,473	)	$	(690,469	)	$	(716,631	)	$	(690,957	)	$	(709,351	)	$	(690,469	)	$	(716,631	)
Revenue bonds		(65,735	)		(67,957	)		(65,735	)		(67,885	)		(65,735	)		(69,508	)		(65,735	)		(67,885	)
Medium-term notes		(3,000	)		(3,143	)		(3,000	)		(3,545	)		(3,000	)		(3,050	)		(3,000	)		(3,545	)
Total long-term debt¹	$	(759,367	)	$	(783,573	)	$	(759,204	)	$	(788,061	)	$	(759,692	)	$	(781,909	)	$	(759,204	)	$	(788,061	)

Company owned life insurance asset (COLI) (Level 3)	$	3,540		$	3,540		$	3,328		$	3,328		$	3,857		$	3,857		$	3,328		$	3,328


¹	The carrying amount of long-term debt includes principal and unamortized discounts.

The fair value of interest rate swaps are determined using a discounted cash flow analysis on the expected cash flows of each derivative. The analysis reflects the contractual terms of the derivatives, including the period to maturity and uses observable market-based inputs, including interest rate forward curves.

The fair value of our long-term debt is estimated based upon quoted market prices for similar debt issues or estimated based on average market prices for comparable debt when there is no quoted market price.

The contract value of our company owned life insurance is based on the amount at which it could be redeemed and, accordingly, approximates fair value.

We believe that our other financial instruments, including cash and cash equivalents, receivables and payables have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments.

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NOTE 8. EQUITY-BASED COMPENSATION

At ~~March 31,~~September 30, 2021, approximately 1.0 million shares are available for future use under our long-term incentive plans.

Share-based compensation activity during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 included the following:


(Shares in thousands)	Granted		Vested		Forfeited		Granted		Vested		Forfeited
Performance Share Awards (PSAs)		88,128		—		1,450		88,128		—		1,450
Restricted Stock Units (RSUs)		32,870		—		1,484		65,607		24,599		1,484

Approximately 0.1 million shares of common stock were issued to employees during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 as a result of PSA and RSU vesting ~~in 2020.~~during 2020 and 2021.

~~Table~~Issuance of ~~Contents~~RSUs awarded to certain directors, officers and employees may be deferred at the individual's election. All deferred RSUs are credited with dividend equivalents. During the nine months ended September 30, 2021, approximately 0.1 million shares of common stock were issued for employees and directors where issuance had been deferred.

The following table details equity-based compensation expense and the related income tax benefit:


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2021		2020
Equity-based compensation expense:
Performance share awards	$	1,224	$	1,158	$	1,416	$	1,315	$	4,012	$	3,716
Restricted stock units		665		708		805		729		2,197		2,155
Deferred compensation stock equivalent units expense		41		19		54		19		136		57
Total equity-based compensation expense	$	1,930	$	1,885	$	2,275	$	2,063	$	6,345	$	5,928

Total tax benefit recognized for equity-based expense	$	89	$	83	$	125	$	97	$	321	$	273

Performance Share Awards

The weighted average grant date fair value of PSAs granted in 2021 was ~~$69.72~~$69.72 per share. PSAs granted under the stock incentive plans have a three-year performance period and shares are issued at the end of the period if the performance measures are met. The number of shares actually issued, as a percentage of the amount subject to the PSA, could range from 0%0% to ~~200%~~200%. PSAs granted under the stock incentive plans do not have voting rights unless and until shares are issued upon settlement. If shares are issued at the end of the performance measurement period, the recipients will receive dividend equivalents in the form of additional shares at the time of payment equal to the dividends that would have been paid on the shares earned had the recipients owned the shares during the three-year period. Therefore, the shares are not considered participating securities.

The following table presents the key inputs used in the Monte Carlo simulation to calculate the fair value of the performance share awards granted in 2021:


Stock price as of valuation date	$	53.53
Risk-free rate		0.18	%
Expected volatility		45.56	%
Expected dividend yield1		—
Expected term (years)		3.00


1	Full dividend reinvestment assumed.

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¹~~Full dividend reinvestment assumed.~~

Restricted Stock Units

The weighted average fair value of all RSUs granted during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was ~~$53.51~~$54.53 per share. The fair value of RSUs granted equaled our common share price on the date of grant factoring in any required post-vesting holding periods. The RSU awards granted accrue dividend equivalents based on dividends paid during the RSU vesting period. The dividend equivalents will be converted into additional RSUs that vest in the same manner as the underlying RSU to which they relate. The terms of the awards state that the RSUs will vest in a given time period of one to ~~three years.~~four years. The vesting provisions for RSUs granted in 2021 were consistent with prior year grants.

NOTE 9. INCOME TAXES

As a REIT, we generally are not subject to federal and state corporate income taxes on income from investments in real estate, including our timberlands, that we distribute to our shareholders. We conduct certain activities through our PotlatchDeltic taxable REIT subsidiaries (TRS) which are subject to corporate level federal and state income taxes. These activities are principally comprised of our wood products manufacturing operations and certain real estate investments. Therefore, income tax expense or benefit is primarily due to pre-tax book income or loss of the TRS, as well as permanent book versus tax differences.

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NOTE 10. LEASES

We lease certain equipment, office space and land. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The following table presents supplemental balance sheet information related to lease assets and liabilities:


(in thousands)	Classification	March 31, 2021		December 31, 2020		Classification	September 30, 2021		December 31, 2020
Assets
Operating lease assets	Other long-term assets	$	9,922	$	11,081	Other long-term assets	$	7,790	$	11,081
Finance lease assets¹	Property, plant and equipment, net		7,419		7,206	Property, plant and equipment, net		9,166		7,206
Total lease assets		$	17,341	$	18,287		$	16,956	$	18,287

Liabilities
Current:
Operating lease liabilities	Accounts payable and accrued liabilities	$	3,848	$	4,304	Accounts payable and accrued liabilities	$	2,988	$	4,304
Finance lease liabilities	Accounts payable and accrued liabilities		2,363		2,202	Accounts payable and accrued liabilities		3,004		2,202
Noncurrent:
Operating lease liabilities	Other long-term obligations		6,101		6,835	Other long-term obligations		4,873		6,835
Finance lease liabilities	Other long-term obligations		4,977		4,914	Other long-term obligations		6,066		4,914
Total lease liabilities		$	17,289	$	18,255		$	16,931	$	18,255


¹	Finance lease assets are presented net of accumulated amortization of ~~$2.3~~$3.7 million and ~~$1.7~~$1.7 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, ~~respectively~~respectively..

The following table presents the components of lease expense:


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2021		2020
Operating lease costs¹	$	1,328	$	1,425	$	1,156	$	1,413	$	3,769	$	4,252
Finance lease costs:
Amortization of leased assets		589	213			741		432		1,963		905
Interest on lease liabilities		51	27			60		44		162		103
Net lease costs	$	1,968	$	1,665	$	1,957	$	1,889	$	5,894	$	5,260


¹	Excludes short-term leases and variable lease costs, which are immaterial.

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The following table presents supplemental cash flow information related to leases:


	Nine Months Ended September 30,
(in thousands)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	3,723	$	4,244
Operating cash flows for finance leases	$	162	$	103
Financing cash flows for finance leases	$	1,963	$	968
Leased assets exchanged for new lease liabilities:
Operating leases	$	213	$	255
Finance leases	$	3,916	$	5,630

Three Months Ended March 31,

(in thousands)

2021

2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

$
1,368

$
1,506

Operating cash flows for finance leases

$
51

$
27

Financing cash flows for finance leases

$
577

$
215

Leased assets exchanged for new lease liabilities:

Operating leases

$
124

$
38

Finance leases

$
801

$
1,517

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NOTE 11. PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS

The following table details the components of net periodic cost (benefit) of our pension plans and other postretirement employee benefits (OPEB):


													Three Months Ended September 30,
													Pension						OPEB
(in thousands)													2021			2020			2021			2020
Service cost													$	2,045		$	2,233		$	168		$	127
Interest cost														2,633			3,066			317			376
Expected return on plan assets														(3,525	)		(3,869	)		—			—
Amortization of prior service cost (credit)														21			29			(298	)		(319	)
Amortization of actuarial loss														3,578			3,856			545			418
Total net periodic cost													$	4,752		$	5,315		$	732		$	602

	Three Months Ended March 31,												Nine Months Ended September 30,
	Pension						OPEB						Pension						OPEB
(in thousands)	2021			2020			2021			2020			2021			2020			2021			2020
Service cost	$	2,045		$	2,290		$	168		$	143		$	6,135		$	6,699		$	504		$	381
Interest cost		2,633			3,564			317			375			7,899			9,198			951			1,127
Expected return on plan assets		(3,525	)		(4,586	)		—			—			(10,575	)		(11,606	)		—			—
Amortization of prior service cost (credit)		21			28			(298	)		(319	)		63			85			(894	)		(957	)
Amortization of actuarial loss		3,721			4,154			545			419			10,877			11,569			1,635			1,254
Net periodic cost before pension settlement charge		4,895			5,450			732			618			14,399			15,945			2,196			1,805
Pension settlement charge		—			42,988			—			—			—			42,988			—			—
Net periodic cost	$	4,895		$	48,438		$	732		$	618		$	14,399		$	58,933		$	2,196		$	1,805

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, funding of pension and other postretirement employee benefit plans was ~~$1.4~~$7.4 million and ~~$1.5~~$8.5 million, respectively.

Pension Annuitization

In February 2020, we purchased a group annuity contract from an insurance company to transfer ~~$101.1~~$101.1 million of our outstanding pension benefit obligation related to our qualified pension plans to the insurance company. This transaction was funded with plan assets. As a result of the transaction, the insurance company assumed responsibility for annuity administration and benefit payments to select retirees, with 0 change to their monthly retirement benefit payment amounts. The settlement triggered a remeasurement of plan assets and liabilities resulting in a reduction in the funded status of our qualified pension plans of approximately ~~$26.2~~$26.2 million during the first quarter of 2020. In connection with this transaction, we recorded a non-cash pretax settlement charge of ~~$43.0~~$43.0 million during the first quarter of 2020 in non-operating expense, net, as a result of accelerating the recognition of actuarial losses included in ~~Accumulated Other Comprehensive Loss~~accumulated other comprehensive loss that would have been recognized in future periods.

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NOTE 12. COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table details changes in amounts included in our accumulated other comprehensive loss (AOCL) by component on our Condensed Consolidated Balance Sheets, net of tax:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020			2021			2020
Pension Plans
Balance at beginning of period	$	79,025		$	117,028		$	73,592		$	98,870		$	79,025		$	117,028
Amounts arising during the period		—			19,402			—			—			—			19,402
Effect of pension settlement		—			(31,811	)		—			—			—			(31,811	)
Amounts reclassified from AOCL to earnings		(2,770	)		(3,095	)		(2,664	)		(2,874	)		(8,097	)		(8,623	)
Balance at end of period	$	76,255		$	101,524		$	70,928		$	95,996		$	70,928		$	95,996
Other Postretirement Benefit Plans
Balance at beginning of period	$	14,783		$	10,331		$	14,418		$	10,184		$	14,783		$	10,331
Amounts reclassified from AOCL to earnings		(183	)		(74	)		(182	)		(74	)		(547	)		(221	)
Balance at end of period	$	14,600		$	10,257		$	14,236		$	10,110		$	14,236		$	10,110
Cash Flow Hedges
Balance at beginning of period	$	27,181		$	20,000		$	(5,763	)	$	60,372		$	27,181		$	20,000
Amounts arising during the period		(61,875	)		39,363			(4,310	)		(8,920	)		(32,741	)		34,112
Amounts reclassified from AOCL to earnings		(2,232	)		(838	)		(2,326	)		(2,412	)		(6,839	)		(5,072	)
Balance at end of period	$	(36,926	)	$	58,525		$	(12,399	)	$	49,040		$	(12,399	)	$	49,040
Accumulated other comprehensive loss, end of period	$	53,929		$	170,306		$	72,765		$	155,146		$	72,765		$	155,146

See Note 11: Pension and Other Postretirement Employee Benefits and Note 6: Derivative Instruments for additional information.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Information

This report contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, expected ~~impacts of COVID-19 on our business; expected~~ effectiveness of our hedging instruments and swaps; expected return on pension assets; required contributions to pension plans; recognition of compensation costs relating to our performance share awards (PSAs) and restricted stock units (RSUs); expected amortization of unrecognized compensation cost of PSAs and RSUs; amount of net losses on cash flow hedges expected to be reclassified into earnings in the next 12 months; expected tax ~~payments and deferrals;~~payments; anticipated share repurchases and dividend payments; ~~anticipated cash balances, cash flows from operations and~~ expected ~~liquidity;~~interest rates; potential uses of ~~and estimated payments under~~ our credit facility; expected debt refinancing; expectations regarding the U.S. housing market, ~~home repair and remodeling activity,~~ the lumber and log markets, lumber shipment volumes ~~sawlog demand, percent of log sales by log supply agreements;~~and pricing; impact from the Ola, Arkansas sawmill fire and anticipated insurance coverage; timber harvest volumes ~~sawlog mix~~ and ~~pricing,~~pricing; rural real estate and residential and commercial real estate development ~~sales, and the average price per acre and developed lot; sufficiency of cash to meet operating requirements;~~sales; expected 2021 capital expenditures; and similar matters. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as expects, may, could, should, will, believes, anticipates, estimates, projects, intends, plans, targets or approximately, or similar words or terminology. These forward-looking statements reflect our current views regarding future events based on estimates and assumptions and are therefore subject to known and unknown risks and uncertainties and are not guarantees of future performance. Our actual results of operations could differ materially from our historical results or those expressed or implied by forward-looking statements contained in this report. Important factors that could cause or contribute to such differences include, but are not limited to, the following:

•

the effect of general economic conditions, including employment rates, interest rate levels, discount rates, housing starts and the general availability of financing for home mortgages;

•

availability of labor and developable land;

•

changes in the level of residential and commercial construction and remodeling activity;

•

changes in tariffs, quotas and trade agreements involving wood products;

•

changes in demand for our products and real estate;

•

changes in timber prices and timberland values;

•

changes in silviculture, production and production capacity in the forest products industry;

•

competitive pricing pressures for our products;

•

unanticipated manufacturing disruptions;

•

the effect of weather on our harvesting and manufacturing activities;

•

the risk of loss from fire (such as the Ola, Arkansas sawmill fire and fires on our timberland), floods, windstorms, hurricanes, pest infestation or other natural disasters;

•

changes in the cost or availability of transportation;

•

changes in principle expenses;

•

unforeseen environmental liabilities or expenditures;

•

changes in general and industry-specific environmental laws and regulations, and interpretations thereof by regulatory agencies;

•

impact of the coronavirus (COVID-19 and its variants) outbreaks, governmental responses to such outbreaks, and anticipated recovery from the pandemic on our business, suppliers, consumers, customers and employees; and

•

disruptions or inefficiencies in our supply chain and/or operations.

•

~~the effect of general economic conditions, including employment rates, interest rate levels, discount rates, housing starts and the general availability of financing for home mortgages;~~

•

~~availability of labor and developable land;~~

•

~~changes in the level of residential and commercial construction and remodeling activity;~~

•

~~changes in tariffs, quotas and trade agreements involving wood products;~~

•

~~changes in demand for our products and real estate;~~

•

~~changes in timber prices and timberland values;~~

•

~~changes in silviculture, production and production capacity in the forest products industry;~~

•

~~competitive pricing pressures for our products;~~

•

~~unanticipated manufacturing disruptions;~~

•

~~the effect of weather on our harvesting and manufacturing activities;~~

•

~~the risk of loss from fire, floods, windstorms, hurricanes, pest infestation or other natural disasters;~~

•

~~changes in the cost or availability of transportation;~~

•

~~changes in principle expenses;~~

•

~~impact of the coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers and employees; and~~

•

~~disruptions or inefficiencies in our supply chain and/or operations.~~

For a discussion of some of the factors that may affect our business, results and prospects and a nonexclusive listing of forward-looking statements, refer to Cautionary Statement Regarding Forward-Looking Information on page 1 and Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020. Investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.

Forward-looking statements contained in this report present our views only as of the date of this report. Except as required under applicable law, we do not intend to issue updates concerning any future revisions of our views to reflect events or circumstances occurring after the date of this report.

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Our Company

We are a leading timberland REIT with ownership of approximately 1.8 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. 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 typically represent a sizeable portion of the Timberlands segment’s total revenues. 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.

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. Log and pulpwood sales volumes in our Timberlands segment are typically lower in the first half of each year as winter rains in the Southern region and spring thaw in the Northern region limit timber harvesting operations due to softened roadbeds and wet logging conditions that restrict access to logging sites. The third quarter is typically our Timberlands segment's strongest production quarter. Demand for our manufactured wood products typically decreases in the winter months when construction activity is slower, while demand typically increases during the spring, summer and fall when construction activity is generally higher. 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, though historically most sales take place in the second half of the year as builders prepare for the following spring and summer traditional home building and buying season.

Additionally, 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, asset dispositions or acquisitions, impact of pandemics (such as ~~COVID-19)~~COVID-19 and its variants), fires (such as the Ola, Arkansas sawmill fire and fires on our timberlands), other natural disasters and other factors.

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 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 Measuressection below. Our definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to and not a substitute for, financial information prepared in accordance with GAAP.

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. 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. 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.

Our definition of EBITDDA and Adjusted EBITDDA may be different from similarly titled measures reported by other companies. We define EBITDDA as net income ~~(loss)~~ before interest expense, 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. See Note 2: Segment Information in the Notes to the Condensed Consolidated Financial Statements for information related to the use of segment Adjusted EBITDDA.

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Business and Economic Trends 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. Our Timberlands and Wood Products segments are impacted by demand for new homes in the United States and by repair and remodeling activity.

H~~ousing~~In October 2021, the U.S. Census Bureau reported U.S. housing starts for September 2021 were 1.56 million units on a seasonally adjusted basis, an increase of 7.4% from September of 2020 and near the 2021 average. We believe supply chain challenges continue to moderate the pace of starts and have resulted in variable month-to-month housing start statistics. Homebuilder confidence remains very strong with the NAHB Homebuilder Index at 80 in October 2021. Housing fundamentals remain ~~stronger than at any point since the Great Financial Crisis~~strong driven by ~~the demand for new single-family homes, historically~~ low ~~mortgage~~interest rates, a ~~shift from urban to suburban living, millennials~~shortage of homes, large millennial demographic entering their prime home-buying years, ~~scarce re-sale housing inventory~~remote work evolution and an aging existing housing stock supporting repair and remodel demand. ~~In March~~Overall, the fundamentals that drive our business remain favorable and we continue to expect that lumber prices will remain structurally higher than long-term historical averages.

During the second quarter of 2021 we experienced a fire at our Ola, Arkansas sawmill, which had an annual capacity of 150 million board feet prior to the ~~U.S. Census Bureau reported housing starts of 1.7 million~~fire. The damage was principally limited to the large log primary breakdown machine center. The planer mill, kiln, and shipping department were not affected. We have adequate property damage and business interruption insurance, subject to an applicable deductible, and have begun the reconstruction process at the sawmill. We expect to install the new large-log line in the ~~U.S. on a seasonally adjusted annual basis, including single-family new home construction starts~~third quarter of ~~1.2 million, an increase of over 40% from March of 2020.~~ 2022.~~While the U.S. economy continues to navigate challenges from COVID-19, we believe housing fundamentals, a key factor driving the strong lumber demand and pricing, will remain strong.~~

In our Wood Products segment, we shipped ~~258~~265 million board feet of lumber during the ~~first~~third quarter of 2021. Lumber ~~production was~~shipments in the third quarter were impacted by lower ~~during~~home center takeaway, the ~~quarter stemming from extended planned downtime for maintenance~~Ola sawmill fire, and COVID-19 related absences hampering startup at one of our sawmills ~~and~~following a severe winter storm that led to week-long shutdowns in our Southern mills. Lumber prices remained elevated throughout the first quarter of 2021 and established new records as we entered the spring building season. With buyers’ lumber inventories estimated to be at the low end of their historic range, combined with strong housing fundamentals, we believe lumber prices will continue to rise in the second quarter compared to first quarter levels. capital project installation. We ~~plan~~expect to ship ~~275~~approximately 240 to ~~285~~250 million board feet of lumber during the ~~second quarter.~~fourth quarter of 2021.

In our Timberlands segment, Northern sawlog prices benefitted from Idaho sawlogs ~~prices~~ being indexed to lumber prices ~~while~~and continued strong cedar sawlog prices. Southern ~~pine~~ sawlog prices ~~remained stable.~~increased as wet weather led to log supply constraints. Our harvest volume of ~~1.3~~1.5 million tons during the ~~first~~third quarter of 2021 was lower than the ~~first~~third quarter of 2020 primarily due to ~~a severe winter storm impacting harvest conditions~~ the closure of the Ola sawmill along with wet weather in the Southern region. ~~Further, several Southern pulpwood mills experienced extended downtime as a result~~In the Northern region we shifted harvest activity to the first half of ~~the winter storm which decreased the~~2021 due to market demand ~~for pulpwood in the region.~~and favorable conditions. We expect total harvest volumes to ~~harvest~~be between ~~1.1 and~~ 1.3 to 1.5 million tons during the ~~second~~fourth quarter of 2021, with approximately 70% of the volume in the Southern region. Additionally, approximately 75% of our Idaho sawlog deliveries in the second quarter, which will be at a seasonally low level, will continue to benefit from being indexed to historically high lumber prices on an approximate four-week lag.2021.

Our Real Estate segment ~~benefitted from robust rural and development demand during~~results for the first ~~quarter of 2021. For the second quarter~~nine months of 2021 wewere driven by strong development sales demand and an increased per acre price realization from rural land sales. We expect to sell approximately ~~2,500~~4,500 acres of rural land and 15approximately 35 residential development ~~lots.~~lots during the fourth quarter of 2021.

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Consolidated Results

The following table sets forth changes in our Condensed Consolidated Statements of Operations. Our Business Segment Results provide a more detailed discussion of our segments:


	Three Months Ended March 31,									Three Months Ended September 30,									Nine Months Ended September 30,
(in thousands)	2021			2020			Change			2021			2020			Change			2021			2020			Change
Revenues	$	354,193		$	208,880		$	145,313		$	287,330		$	313,046		$	(25,716	)	$	1,089,029		$	703,481		$	385,548
Costs and expenses:
Cost of goods sold		169,302			172,046			(2,744	)		190,602			182,039			8,563			537,683			503,921			33,762
Selling, general and administrative expenses		16,758			14,207			2,551			18,512			21,046			(2,534	)		54,782			52,064			2,718
Net gain on insurance recoveries											(4,394	)		—			(4,394	)		(4,394	)		—			(4,394	)
		186,060			186,253			(193	)		204,720			203,085			1,635			588,071			555,985			32,086
Operating income		168,133			22,627			145,506			82,610			109,961			(27,351	)		500,958			147,496			353,462
Interest expense, net		(3,574	)		(3,698	)		124			(8,641	)		(8,557	)		(84	)		(20,414	)		(20,594	)		180
Pension settlement charge		—			(42,988	)		42,988			—			—			—			—			(42,988	)		42,988
Non-operating pension and other postretirement benefit costs		(3,414	)		(3,635	)		221			(3,271	)		(3,557	)		286			(9,956	)		(10,670	)		714
Income (loss) before income taxes		161,145			(27,694	)		188,839
Income before income taxes											70,698			97,847			(27,149	)		470,588			73,244			397,344
Income taxes		(30,039	)		10,862			(40,901	)		(5,031	)		(16,840	)		11,809			(85,910	)		(6,431	)		(79,479	)
Net income (loss)	$	131,106		$	(16,832	)	$	147,938
Net income										$	65,667		$	81,007		$	(15,340	)	$	384,678		$	66,813		$	317,865
Total Adjusted EBITDDA¹	$	194,986		$	47,571		$	147,415		$	107,183		$	135,386		$	(28,203	)	$	577,153		$	218,330		$	358,823


¹	See Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, ~~(loss),~~ the closest comparable GAAP measure, for each of the periods presented.

~~First~~

Third Quarter 2021 Compared with ~~First~~Third Quarter 2020

~~Revenues~~

Revenues

Revenues were ~~$354.2~~$287.3 million, ~~an increase~~a decrease of ~~$145.3~~$25.7 million compared with the first quarter of 2020 primarily due to historically high lumber prices, increased Idaho sawlog prices and increased rural and development real estate sales. These increases more than offset lower harvest volumes and lower lumber shipments in the first quarter of 2021.

~~Cost of goods sold~~

~~Cost of goods sold decreased $2.7 million compared with the first~~third quarter of 2020 primarily due to lower harvest volumes and lower lumber ~~shipments.~~shipments and prices. Lumber shipments were impacted primarily as a result of lower home center takeaway in the third quarter of 2021 and the loss of production at our Ola, Arkansas sawmill following a fire in June 2021. These decreases were partially offset by higher sawlog prices.

Cost of goods sold

Cost of goods sold increased ~~repairs~~$8.6 million compared with the third quarter of 2020 primarily due to higher log and ~~maintenance at~~manufacturing costs on lower lumber shipments in our Wood Products ~~facilities and increased rural and development real estate sales.~~segment, partially offset by lower harvest volumes.

Selling, general and administrative expenses

Selling, general and administrative expenses ~~increased $2.6~~decreased $2.5 million compared with the ~~first~~third quarter of 2020 primarily as a result of ~~mark-to-market adjustments for deferred~~a year-to-date adjustment to incentive compensation ~~plans~~in the third quarter of 2020 to reflect strong 2020 company performance.

Net gain on insurance recoveries

In June 2021, a fire occurred at our Ola, Arkansas sawmill. During the third quarter of 2021, we recorded an $8.5 million charge for the write-off of damaged and obsolete equipment and disposal costs. Additionally, we recognized insurance recoveries of $12.9 million for these property losses and costs, resulting in a $4.4 million net gain on insurance recoveries.

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Income taxes

Income taxes are primarily due to income from our PotlatchDeltic taxable REIT subsidiaries (TRS). For the third quarter of 2021, we recorded income tax expense of $5.0 million on TRS income before tax of $18.2 million. For the third quarter of 2020, we recorded an income tax expense of approximately $16.8 million on TRS income before tax of $65.2 million.

Total Adjusted EBITDDA

Total Adjusted EBITDDA for the third quarter of 2021 decreased $28.2 million compared to the third quarter of 2020. The decrease in Total Adjusted EBITDDA was primarily driven by lower harvest volumes and lumber shipments and prices, partially offset by higher ~~incentive compensation~~sawlog prices. Refer to the Business Segment Results below for further discussions on activities for each of our segments. See Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented.

Year to Date 2021 Compared with Year to Date 2020

Revenues

Revenues were $1.1 billion, an increase of $385.5 million compared with the first nine months of 2020, primarily due to historically high lumber and Idaho sawlog prices in 2021. These increases were partially offset by lower lumber shipments as a result of lower home center takeaway in the third quarter of 2021 and the loss of production at our Ola, Arkansas sawmill following a fire in June 2021. Additionally, the first nine months of 2020 includes the impact of the temporary curtailment and reduced operating posture at our industrial plywood facility.

Cost of goods sold

Cost of goods sold increased $33.8 million compared with the first nine months of 2020, primarily due to higher log and manufacturing costs on lower lumber shipments in our Wood Products segment. Additionally, the first nine months of 2020 includes the impact of the temporary curtailment and reduced operating posture at our industrial plywood facility.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $2.7 million compared with the first nine months of 2020, primarily as a result of increased employee related ~~to strong company performance.~~costs, including travel and information technology services.

Net gain on insurance recoveries

In June 2021, a fire occurred at our Ola, Arkansas sawmill. For the first nine months of 2021, we recorded a $10.6 million charge for the write-off of damaged and obsolete equipment and disposal costs. Additionally, we recognized insurance recoveries of $15.0 million for these property losses and costs, resulting in a $4.4 million net gain on insurance recoveries.

Pension settlement charge

In February 2020, we purchased a group annuity contract from an insurance company to transfer $101.1 million of our outstanding pension benefit obligation related to our qualified pension plans. This transaction was funded with plan assets. In connection with this transaction, we recorded a non-cash pretax settlement charge of $43.0 million in ~~the first quarter~~2020.

Table of ~~2020.~~Contents

Income taxes

Income taxes are primarily due to income from our ~~PotlatchDeltic taxable REIT subsidiaries (TRS).~~TRS. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we recorded income tax expense of ~~$30.0~~$85.9 million ~~as our TRS’s~~on TRS income before tax ~~was $115.8~~of $329.4 million ~~driven~~ primarily bydue to historically high lumber prices. For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we recorded an income tax ~~benefit~~expense of ~~approximately $10.9~~$6.4 million ~~primarily as a result of the TRS’s loss~~on TRS income before tax of ~~$42.8~~$23.9 million, which ~~was mainly as a result of~~included the $43.0 million pension settlement charge.

~~Table of Contents~~

Total Adjusted EBITDDA

Total Adjusted EBITDDA for the first ~~quarter~~nine months of 2021 increased ~~$147.4~~$358.8 million compared to the first ~~quarter~~nine months of 2020. The increase in Total Adjusted EBITDDA was ~~driven~~ primarily bydue to historically high lumber ~~prices, increased~~and Idaho sawlog ~~prices and increased rural and development real estate sales.~~prices. 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, ~~(loss),~~ the closest comparable GAAP measure, for each of the periods presented.

~~Table of Contents~~

Business Segment Results

Timberlands Segment


	Three Months Ended March 31,							Three Months Ended September 30,							Nine Months Ended September 30,
(in thousands)	2021		2020		Change			2021		2020		Change			2021		2020		Change
Revenues¹	$	111,916	$	82,425	$	29,491		$	129,543	$	116,985	$	12,558		$	362,675	$	266,755	$	95,920
Costs and expenses:
Logging and hauling		36,468		38,604		(2,136	)		42,397		47,158		(4,761	)		112,168		117,417		(5,249	)
Other		5,888		7,291		(1,403	)		9,108		8,539		569			23,792		24,107		(315	)
Selling, general and administrative expenses		1,702		1,548		154			2,015		1,639		376			5,575		4,941		634
Timberlands Adjusted EBITDDA²	$	67,858	$	34,982	$	32,876		$	76,023	$	59,649	$	16,374		$	221,140	$	120,290	$	100,850


¹	Prior to elimination of intersegment fiber revenues of ~~$47.3~~$43.5 million and ~~$29.5~~$40.4 million for the ~~first quarter of~~three months ended September 30, 2021 and 2020, and $138.2 million and $95.0 million for the nine months ended September 30, 2021 and 2020, respectively.

²	Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements.

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Timberlands Segment Statistics


	Three Months Ended March 31,							Three Months Ended September 30,							Nine Months Ended September 30,
Harvest Volumes (in tons)	2021		2020		Change			2021		2020		Change			2021		2020		Change
Northern region
Sawlog		427,255		433,870		(6,615	)		462,492		554,845		(92,353	)		1,243,539		1,291,632		(48,093	)
Pulpwood		13,884		37,801		(23,917	)		4,039		29,910		(25,871	)		24,736		99,174		(74,438	)
Stumpage		—		23,178		(23,178	)		—		—		—			—		23,178		(23,178	)
Total		441,139		494,849		(53,710	)		466,531		584,755		(118,224	)		1,268,275		1,413,984		(145,709	)

Southern region
Sawlog		508,073		548,467		(40,394	)		460,840		577,975		(117,135	)		1,449,106		1,617,196		(168,090	)
Pulpwood		326,429		367,099		(40,670	)		467,138		462,571		4,567			1,145,572		1,201,904		(56,332	)
Stumpage		58,413		90,237		(31,824	)		109,469		65,085		44,384			211,234		255,553		(44,319	)
Total		892,915		1,005,803		(112,888	)		1,037,447		1,105,631		(68,184	)		2,805,912		3,074,653		(268,741	)

Total harvest volume		1,334,054		1,500,652		(166,598	)		1,503,978		1,690,386		(186,408	)		4,074,187		4,488,637		(414,450	)

Sales Price/Unit ($ per ton)¹
Northern region
Sawlog	$	178	$	95	$	83		$	191	$	131	$	60		$	202	$	112	$	90
Pulpwood	$	36	$	38	$	(2	)	$	30	$	42	$	(12	)	$	33	$	39	$	(6	)
Stumpage	$	—	$	14	$	(14	)	$	—	$	—	$	—		$	—	$	14	$	(14	)

Southern region
Sawlog	$	44	$	44	$	—		$	48	$	44	$	4		$	45	$	44	$	1
Pulpwood	$	28	$	31	$	(3	)	$	30	$	29	$	1		$	29	$	30	$	(1	)
Stumpage	$	13	$	9	$	4		$	21	$	12	$	9		$	16	$	9	$	7


¹	Sawlog and pulpwood sales prices are on a delivered basis, which includes logging and hauling costs. Stumpage sales provide our customers the right to harvest standing timber. As such, the customer contracts the logging and hauling and bears such costs.

~~Table of Contents~~

Timberlands Adjusted EBITDDA

The following table summarizes Timberlands Adjusted EBITDDA variances for the three and nine months ended ~~March 31,~~September 30, 2021, compared with the three and nine months ended ~~March 31,~~September 30, 2020:


(in thousands)	Three Months			Three Months			Nine Months
Timberlands 2020 Adjusted EBITDDA	$	34,982		$	59,649		$	120,290
Sales price and mix		36,723			28,281			118,178
Harvest volume		(3,725	)		(8,615	)		(11,990	)
Other revenue		(403	)		(411	)		(592	)
Logging and hauling costs per unit		(967	)		(1,936	)		(4,427	)
Forest management		918			(644	)		(580	)
Administrative, indirect and overhead costs		330			(301	)		261
Timberlands 2021 Adjusted EBITDDA	$	67,858		$	76,023		$	221,140

~~First~~

Third Quarter 2021 Compared with ~~First~~Third Quarter 2020

Timberlands Adjusted EBITDDA for the ~~first~~third quarter of 2021 increased ~~$32.9~~$16.4 million compared with the same period in 2020, primarily as a result of the following:

•

Sales Price and Mix: Sawlog prices in the Northern region increased 45.8%, to $191 per ton, primarily from the effect of higher realizations on indexed sawlogs and an increase in cedar log prices. Southern sawlog prices increased 9.1% to $48 per ton, compared to the third quarter of 2020, as wet weather led to log supply constraints.

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

Harvest Volume: We harvested 1.0 million tons in the Southern region during the third quarter of 2021, which was 6.2% lower than the third quarter of 2020, primarily due to wet weather impacting harvest conditions and harvest deferrals as a result of the fire at the Ola, Arkansas sawmill. Harvest volumes in the Northern region decreased 20.2% compared to the third quarter of 2020 primarily as favorable harvest conditions and strong sawlog demand in Idaho accelerated harvest activities to the first half of 2021. Additionally, extreme heat led to lighter logs in Idaho on a tonnage basis and pulpwood volumes were reduced in 2021.



Logging and Hauling Cost per Unit: Log and hauling costs per unit were higher primarily due to increased diesel costs and longer haul distances.

Year to Date 2021 Compared with Year to Date 2020

Timberlands Adjusted EBITDDA for the first nine months of 2021 increased $100.9 million compared with the same period in 2020, primarily as a result of the following:



Sales Price and Mix: Sawlog prices in the Northern region increased 80.4%, to $202 per ton primarily from the effect of higher price realizations on indexed sawlogs and an increase in cedar log prices. Southern sawlog prices remained consistent with the first nine months of 2020.



Harvest Volume: We harvested 2.8 million tons in the Southern region during the first nine months of 2021, which was 8.7% lower than the first nine months of 2020, primarily due to adverse weather conditions impacting logging activities and harvest deferrals as a result of the fire at the Ola, Arkansas sawmill. Sawlog harvest volumes in the Northern region decreased as extreme heat led to lighter logs on a tonnage basis along with a planned reduction in pulpwood volumes in 2021.



Logging and Hauling Cost per Unit: Log and hauling costs were higher primarily due to increased diesel costs and a higher mix of more expensive Idaho logging.

~~Sales Price and Mix:~~ Sawlog prices in the Northern region increased 87.4%, to $178 per ton primarily from the effect of higher lumber price realizations on indexed sawlogs and an increase in cedar log prices in Idaho. Southern sawlog prices remained consistent with the first quarter of 2020.

•

~~Harvest Volume:~~ We harvested 0.9 million tons in the Southern region during the first quarter of 2021, which was 11.2% lower than the first quarter of 2020 primarily due to a severe winter storm that impacted harvest conditions and reduced pulpwood demand ~~from temporary pulpwood mill shutdowns. Harvest volumes in the Northern region decreased 10.9% during the first quarter of 2021 due primarily to the sale of 72,440 timberland acres in Minnesota in the fourth quarter of 2020.~~

Wood Products Segment

Three Months Ended March 31,

(in thousands)

2021

2020

Change

Revenues

$
269,296

$
145,000

$
124,296

Costs and expenses¹

Fiber costs

79,469

65,012

14,457

Freight, logging and hauling

18,197

17,402

795

Manufacturing costs

47,602

45,004

2,598

Finished goods inventory change

(4,019
)

1,891

(5,910
)
Selling, general and administrative expenses

2,522

2,271

251

Other

(30
)

191

(221
)
Wood Products Adjusted EBITDDA²

$
125,555

$
13,229

$
112,326


	Three Months Ended September 30,									Nine Months Ended September 30,
(in thousands)	2021			2020			Change			2021			2020			Change
Revenues	$	187,760		$	218,291		$	(30,531	)	$	814,729		$	489,507		$	325,222
Costs and expenses1
Fiber costs		75,629			72,239			3,390			242,719			196,201			46,518
Freight, logging and hauling		17,760			17,677			83			56,223			48,601			7,622
Manufacturing costs		52,976			45,893			7,083			152,195			132,848			19,347
Finished goods inventory change		12,681			(1,595	)		14,276			90			(1,602	)		1,692
Selling, general and administrative expenses		3,288			2,433			855			8,758			7,483			1,275
Other		(1,140	)		—			(1,140	)		(1,910	)		196			(2,106	)
Wood Products Adjusted EBITDDA2	$	26,566		$	81,644		$	(55,078	)	$	356,654		$	105,780		$	250,874


¹	Prior to elimination of intersegment fiber costs of ~~$47.3~~$43.5 million and ~~$29.5~~$40.4 million for the ~~first quarter of~~three months ended September 30, 2021 and 2020, and $138.2 million and $95.0 million for the nine months ended September 30, 2021 and 2020, respectively.

²	Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements.

Wood Products Segment Statistics


	Three Months Ended September 30,							Nine Months Ended September 30,
	2021		2020		Change			2021		2020		Change
Lumber shipments (MBF)1		264,855		291,391		(26,536	)		783,235		823,597		(40,362	)
Lumber sales prices ($ per MBF)	$	533	$	637	$	(104	)	$	867	$	486	$	381


1	MBF stands for thousand board feet.

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~~Wood Products Segment Statistics~~

Three Months Ended March 31,

2021

2020

Change

Lumber shipments (MBF)¹

258,069

282,967

(24,898
)
Lumber sales prices ($ per MBF)

$
890

$
396

$
494

¹	~~MBF stands for thousand board feet.~~

Wood Products Adjusted EBITDDA

The following table summarizes Wood Products Adjusted EBITDDA variances for the three and nine months ended ~~March 31,~~September 30, 2021, compared with the three and nine months ended ~~March 31,~~September 30, 2020:


(in thousands)	Three Months			Three Months			Nine Months
Wood Products 2020 Adjusted EBITDDA	$	13,229		$	81,644		$	105,780
Lumber:
Price		126,614			(30,697	)		292,697
Volume		(507	)		(5,259	)		(3,818	)
Manufacturing costs per unit		(3,118	)		(6,522	)		(13,743	)
Log costs per unit		(11,494	)		(16,378	)		(39,856	)
Inventory charge		895			(6,437	)		(6,437	)
Residuals, panels and other		(64	)		10,215			22,031
Wood Products 2021 Adjusted EBITDDA	$	125,555		$	26,566		$	356,654

~~First~~Third Quarter 2021 Compared with ~~First~~Third Quarter 2020

Wood Products Adjusted EBITDDA for the ~~first~~third quarter of 2021 ~~increased $112.3~~decreased $55.1 million compared with the same period in 2020, primarily as a result of the following:

•

Lumber Price: Average lumber sales prices decreased to $533 per MBF during the third quarter of 2021 compared to $637 during the third quarter of 2020. The third quarter of 2020 was early in the lumber price run that ultimately peaked in May 2021, and lumber prices declined significantly beginning in the second quarter of 2021.



Lumber Volume: Lumber shipments decreased 26.5 million board feet during the third quarter of 2021 compared to the third quarter of 2020 as a result of lower home center takeaway and lost production and shipments at our Ola, Arkansas sawmill following the fire in June 2021.



Manufacturing Cost Per Unit: Higher manufacturing costs per unit quarter over quarter was primarily a result of lost production at our Ola, Arkansas sawmill and COVID-19 related absences hampering startup at one of our sawmills following a capital project installation.



Log Costs Per Unit: Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.



Inventory Charge: Inventory at the end of the third quarter of 2021 was written down $6.4 million due to high indexed Idaho log costs.



Residual Sales, Panels and Other: The third quarter of 2021 benefitted from increased plywood price realization due to strong demand from industrial manufacturers, which more than offset lower residual sales.

Year to Date 2021 Compared with Year to Date 2020

Wood Products Adjusted EBITDDA for the first nine months of 2021 increased $250.9 million compared with the same period in 2020, primarily as a result of the following:



Lumber Price: Average lumber sales prices increased during the first nine months of 2021 to $867 per MBF compared with $486 per MBF during the first nine months of 2020.



Manufacturing Cost Per Unit: Higher manufacturing costs per unit was primarily a result of week-long shutdowns at our Southern mills from a severe winter storm in the first quarter of 2021, lost production at our Ola, Arkansas sawmill following the fire in June 2021 and extended planned downtime for maintenance and capital projects at two of our sawmills.



Log Costs Per Unit: Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.



Inventory Charge: Inventory at the end of the third quarter of 2021 was written down $6.4 million due to high indexed Idaho log costs.

Table of Contents



Residual Sales, Panels and Other: The first nine months of 2021 benefitted from increased plywood prices and shipments compared to the first nine months of 2020, which included a temporary production curtailment and reduced operating posture at our industrial plywood facility.

~~Lumber Price:~~ ~~Average lumber sales prices increased to $890 per MBF during the first quarter of 2021 as a result of the historic run in lumber prices compared with $396 per MBF during the first quarter of 2020.~~

•

~~Manufacturing Cost Per Unit:~~ Higher manufacturing costs per unit quarter over quarter was primarily a result of week-long shutdowns at our Southern mills from a severe winter storm, extended planned downtime for maintenance at one of our sawmills and labor related constraints.

•

~~Log Costs Per Unit:~~ ~~Log costs per unit were higher as a result of increased indexed log costs at our Idaho mills.~~

Real Estate Segment


	Three Months Ended March 31,						Three Months Ended September 30,							Nine Months Ended September 30,
(in thousands)	2021		2020		Change		2021		2020		Change			2021		2020		Change
Revenues	$	20,313	$	10,969	$	9,344	$	13,497	$	18,151	$	(4,654	)	$	49,808	$	42,225	$	7,583
Costs and expenses
Costs of goods sold		2,468		2,431		37		3,263		3,554		(291	)		8,612		8,595		17
Selling, general and administrative expenses		1,252		1,198		54		1,165		1,131		34			3,746		3,568		178
Real Estate Adjusted EBITDDA¹	$	16,593	$	7,340	$	9,253	$	9,069	$	13,466	$	(4,397	)	$	37,450	$	30,062	$	7,388


¹	Management uses Adjusted EBITDDA to evaluate the performance of the segment. See Note 2: Segment Information in the Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

Real Estate Segment Statistics


Rural Real Estate	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Acres sold		7,083		4,439		2,303		11,048		11,991		21,024
Average price per acre	$	1,415	$	1,643	$	3,013	$	1,202	$	2,374	$	1,449


Development Real Estate	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Residential lots		51		23		52		26		122		66
Average price per lot	$	98,629	$	99,652	$	81,923	$	82,573	$	90,301	$	92,256

Commercial acres		11		—		—		—		11		—
Average price per acre	$	277,425	$	—	$	—	$	—	$	277,425	$	—

Real Estate Adjusted EBITDDA

The following table summarizes Real Estate Adjusted EBITDDA variances for the three and nine months ended ~~March 31,~~September 30, 2021 compared with the three and nine months ended ~~March 31,~~September 30, 2020:


(in thousands)	Three Months			Three Months			Nine Months
Real Estate 2020 Adjusted EBITDDA	$	7,340		$	13,466		$	30,062
Rural sales		2,743			(6,345	)		(1,975	)
Development sales		6,601			1,691			9,557
Other, net		(91	)		257			(194	)
Real Estate 2021 Adjusted EBITDDA	$	16,593		$	9,069		$	37,450

~~First~~Third Quarter 2021 Compared with ~~First~~Third Quarter 2020

Real Estate Adjusted EBITDDA for the ~~first~~third quarter of 2021 was ~~$16.6~~$9.1 million, ~~an increase~~a decrease of ~~$9.3~~$4.4 million compared with the ~~first~~third quarter of 2020 as a result of the following:

•

~~Rural Sales:~~ ~~The increase in rural real estate sales was primarily a result of~~ ~~more acres sold in Minnesota compared to 2020.~~ ~~Rural real estate sales can vary quarter-to-quarter with the average price per acre fluctuating based on both the geographic area of the real estate and product mix.~~



Rural Sales: The decrease in rural real estate sales is primarily a result of fewer acres sold as compared to the third quarter of 2020, which included the sale of approximately 8,100 acres of non-strategic timberlands in Minnesota to a conservation entity. Rural real estate sales can vary quarter-to-quarter with the average price per acre fluctuating based on both the geographic area of the real estate and product mix.

•

~~Development Sales:~~ ~~During the first quarter of 2021, we sold 51 residential lots at an average lot price of $98,629 compared to 23 lots at an average lot price of $99,652 during the first quarter of 2020.In addition, we sold 11 acres of commercial land in Chenal Valley for $277,425 per acre compared to no commercial acres sold in the first quarter of 2020.~~ ~~The average price per lot or acre fluctuates based on a variety of factors including location within the developments.~~



Development Sales: During the third quarter of 2021, we sold 52 residential lots at an average lot price of $81,923 compared to 26 lots at an average lot price of $82,573 during the third quarter of 2020. The average price per lot or acre fluctuates based on a variety of factors including size and location of lots within the developments.

Table of Contents

Year to Date 2021 Compared with Year to Date 2020

Real Estate Adjusted EBITDDA for the first nine months of 2021 was $37.5 million, an increase of $7.4 million compared with the first nine months of 2020 as a result of the following:



Rural Sales: The decrease in rural real estate sales was because the first nine months of 2020 included an 8,100 acre conservation land sale in Minnesota and there were no similar size land sales during the first nine months of 2021.



Development Sales: During the first nine months of 2021, we sold 122 residential lots at an average lot price of $90,301 compared to 66 lots at an average lot price of $92,256 in the first nine months of 2020.In addition, we sold 11 acres of commercial land in Chenal Valley for $277,425 per acre in the first nine months of 2021 compared to no commercial acres sold in the first nine months of 2020.

Liquidity and Capital Resources

Changes in significant sources and uses of cash for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 are presented by categories as follows:


	Nine Months Ended September 30,
(in thousands)	2021			2020			Change
Net cash provided by operating activities	$	453,242		$	190,845		$	262,397
Net cash used in investing activities	$	(26,734	)	$	(28,265	)	$	1,531
Net cash used in financing activities	$	(86,081	)	$	(96,830	)	$	10,749

Three Months Ended March 31,

(in thousands)

2021

2020

Net cash provided by operating activities

$
169,965

$
48,138

Net cash used in investing activities

$
(11,529
)

$
(11,034
)
Net cash used in financing activities

$
(28,075
)

$
(39,538
)

Net Cash Flows from Operating Activities

Net cash provided by operating activities increased ~~$121.8~~$262.4 million compared to the first ~~quarter~~nine months of 2020. Changes in cash provided by operating activities was impacted by the following:



Cash received from customers increased $420.3 million primarily due to historically high average lumber and Idaho sawlog prices during the first nine months of 2021. These increases were partially offset by the reduced shipments at our Ola, Arkansas sawmill following the fire in June 2021. In addition, the first nine months of 2020 was impacted by the temporary curtailment of our industrial plywood mill during the second quarter of 2020.



Cash payments increased $72.3 million due to vendor payments on higher log, manufacturing and freight costs in our Wood Products segment and employee incentive compensation payouts related to strong 2020 company performance. Additionally, the first nine months of 2020 experienced reduced vendor payments stemming from the curtailment of our industrial plywood mill during the second quarter of 2020.



Net tax payments increased $87.0 million as a result of higher taxable income generated from our TRS operations.

•

~~Cash received from customers increased $139.2 million primarily due to historically high lumber prices and increased rural and development real estate sales.~~

•

Cash payments increased $17.0 million due to employee incentive compensation payouts related to strong 2020 company performance, increased repairs and maintenance at our Wood Products facilities and real estate development expenditures at Chenal Valley.

Net Cash Flows from Investing Activities

Changes in cash flows from investing activities were primarily a result of the following:



We spent $38.5 million on capital expenditures for property, plant and equipment, timberlands reforestation and road construction projects during the first nine months of 2021 compared to $27.0 million during the first nine of 2020.



During the first nine months of 2021 we spent $2.5 million on timberland acquisitions compared to $4.7 million during the first nine months of 2020.



During the third quarter of 2021, we received initial insurance proceeds of $13.3 million for property losses as a result of the fire at our Ola, Arkansas sawmill.

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•

We spent $11.7 million on capital expenditures for property, plant and equipment, timberlands reforestation and road construction projects during the first quarter of 2021 compared to $9.3 million during the first quarter of 2020.

•

~~During the first quarter of 2020 we spent $4.2 million on timberland acquisitions. We did not purchase any timberlands during the first quarter of 2021.~~

Net Cash Flows from Financing Activities

Changes in cash flows from financing activities were primarily a result of the following:



We paid dividends of $82.5 million in the first nine months of 2021 compared to $80.4 million in the first nine months of 2020.



We did not repurchase any of our common stock during the first nine months of 2021 compared to 489,850 shares repurchased totaling $15.4 million during the first nine months of 2020.

•

~~We paid dividends of $27.5 million in the first quarter of 2021 compared to $26.9 million in the first quarter of 2020.~~

•

~~We did not repurchase any of our common stock during the first quarter of 2021 compared to 400,917 shares repurchased totaling $12.4 million during the first quarter of 2020.~~

Future Sources and Uses of Cash

We invest cash in maintenance and discretionary capital expenditures at our Wood Products facilities. We also invest cash in the reforestation of timberlands and construction of roads in our Timberlands operations and to develop land in our Real Estate development operations. We evaluate discretionary capital improvements based on an expected level of return on investment. We currently expect to spend a total of approximately ~~$55.0 to $60.0~~$70.0 million for capital ~~expenditures~~projects during 2021.

Our 2021 planned capital spend includes approximately $7.0 million of capital expenditures for the reconstruction of our fire damaged Ola sawmill, which is largely covered by insurance. A determination regarding downtime and costs to repair the Ola sawmill will be made as the reconstruction progresses. We have adequate property damage and business interruption insurance, subject to an applicable deductible. The timing of expenditures incurred for the sawmill rebuild and economic losses is expected to vary from when we receive proceeds from our insurance carriers.

Returning cash to shareholders through a secure regular dividend and opportunistic share repurchases is an important and durable part of our disciplined capital allocation strategy. 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, borrowing capacity, debt covenant restrictions, future acquisitions and dispositions, and REIT requirements. Generally, a REIT must distribute its taxable income each year and there is a 20% limit on the value of our TRS, including cash, that can be retained. Our strong financial performance, driven by record lumber and indexed sawlog prices during 2021, has generated large cash balances in both our REIT and TRS. As a result, we expect to pay a special dividend of $3 to $5 per share, or approximately $200.0 million to $335.0 million in aggregate, to stockholders in December 2021. In addition, our board will evaluate our regular annual dividend, which is currently $1.64 per share, in the fourth quarter of 2021.

On August 30, 2018, the board of directors authorized the repurchase of up to $100.0 million of common stock with no time limit set for the repurchase (the Repurchase Program). At ~~March 31,~~September 30, 2021, we had remaining authorization of $59.5 million for future stock repurchase under the Repurchase Program. The timing, manner, price and amount of repurchases will be determined according to, and subject to, the terms of the Trading Plan, and, subject to the terms of the Trading Plan, the Repurchase Program may be suspended, terminated or modified at any time for any reason.

~~Table of Contents~~

Capital Structure


(in thousands)	March 31, 2021			December 31, 2020			September 30, 2021			December 31, 2020
Long-term debt (including current portion)	$	757,604		$	757,347		$	758,118		$	757,347
Cash and cash equivalents		(382,032	)		(252,340	)		(592,767	)		(252,340	)
Net debt		375,572			505,007			165,351			505,007
Market capitalization¹		3,547,863			3,345,138			3,461,018			3,345,138
Enterprise value	$	3,923,435		$	3,850,145		$	3,626,369		$	3,850,145

Net debt to enterprise value		9.6	%		13.1	%		4.6	%		13.1	%
Dividend yield²		3.1	%		3.3	%		3.2	%		3.3	%
Weighted-average cost of debt, after tax³		3.2	%		3.2	%		3.2	%		3.2	%


¹	Market capitalization is based on outstanding shares of ~~67.0~~67.1 million and 66.9 million times closing share prices of ~~$52.92~~$51.58 and $50.02 as of ~~March 31,~~September 30, 2021, and December 31, 2020, respectively.

²	Dividend yield is based on annualized dividends per share of $1.64 and share prices of ~~$52.92~~$51.58 and $50.02 as of ~~March 31,~~September 30, 2021, and December 31, 2020, respectively.

³	Weighted-average cost of debt excludes deferred debt costs and credit facility fees and includes estimated annual patronage credit on term loan debt.

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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). 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.

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. 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. 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.

Our definition of EBITDDA may be different from similarly titled measures reported by other companies. We define EBITDDA as net income ~~(loss)~~ before interest expense, 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.

We reconcile Total Adjusted EBITDDA to net income ~~(loss)~~ for the consolidated company as it is the most comparable GAAP measure.

The following table provides a reconciliation of net income ~~(loss)~~ to Total Adjusted EBITDDA for the respective periods:


	Three Months Ended March 31,					Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021		2020			2021			2020			2021			2020
Net income (loss)	$	131,106	$	(16,832	)
Net income						$	65,667		$	81,007		$	384,678		$	66,813
Interest expense, net		3,574		3,698			8,641			8,557			20,414			20,594
Income taxes		30,039		(10,862	)		5,031			16,840			85,910			6,431
Depreciation, depletion and amortization		17,996		18,638			21,131			20,187			56,156			56,590
Basis of real estate sold		8,823		6,498			6,697			5,249			22,733			14,440
Net gain on insurance recoveries							(4,394	)		—			(4,394	)		—
Pension settlement charge		—		42,988			—			—			—			42,988
Non-operating pension and other postretirement benefit costs		3,414		3,635			3,271			3,557			9,956			10,670
Loss (gain) on disposal of fixed assets		34		(192	)		1,139			(11	)		1,700			(196	)
Total Adjusted EBITDDA	$	194,986	$	47,571		$	107,183		$	135,386		$	577,153		$	218,330

~~Table of Contents~~

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. Management believes CAD is a useful indicator of the company’s overall liquidity, as it provides a measure of cash generated that is available for dividends to common stockholders (an important factor in maintaining our REIT status), repurchase of the company’s common shares, debt repayment, acquisitions and other discretionary and nondiscretionary activities. Our definition of CAD is limited in that it does not solely represent residual cash flows available for discretionary expenditures since the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view CAD as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows. Our definition of CAD may be different from similarly titled measures reported by other companies, including those in our industry. CAD is not necessarily indicative of the CAD that may be generated in future periods.

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The following table provides a reconciliation of cash provided by operating activities to CAD:


	Three Months Ended March 31,						Twelve Months Ended March 31,						Nine Months Ended September 30,						Twelve Months Ended September 30,
(in thousands)	2021			2020			2021			2020			2021			2020			2021			2020
Net cash provided by operating activities¹	$	169,965		$	48,138		$	457,090		$	168,139		$	453,242		$	190,845		$	597,660		$	224,486
Capital expenditures		(11,718	)		(13,539	)		(43,964	)		(63,011	)
Capital expenditures2														(40,977	)		(31,749	)		(55,013	)		(50,080	)
CAD	$	158,247		$	34,599		$	413,126		$	105,128		$	412,265		$	159,096		$	542,647		$	174,406
Net cash used in investing activities²	$	(11,529	)	$	(11,034	)	$	(42,688	)	$	(58,690	)
Net cash used in investing activities3													$	(26,734	)	$	(28,265	)	$	(41,026	)	$	(45,935	)
Net cash used in financing activities	$	(28,075	)	$	(39,538	)	$	(113,521	)	$	(136,009	)	$	(86,081	)	$	(96,830	)	$	(114,205	)	$	(124,337	)

Net cash provided by operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 includes cash paid for real estate development expenditures of ~~$2.3~~$6.4 million and ~~$0.4~~$4.2 million, respectively. Net cash provided by operating activities for the twelve months ended ~~March 31,~~September 30, 2021 and 2020 includes cash paid for real estate development expenditures of ~~$8.6~~$8.9 million and ~~$5.9~~$5.7 million, respectively.

²	Includes capital expenditures for the rebuild of the Ola, Arkansas sawmill of $5.0 million and excludes $13.3 million of insurance proceeds for the Ola, Arkansas sawmill property losses for the nine and twelve months ended September 30, 2021.
3	Net cash used in investing activities includes payment for capital expenditures and acquisition of non-strategic timber and timberlands, which is also included in our reconciliation of CAD.

Sources of Financing

Long-Term Debt and Credit Agreements

At ~~March 31,~~September 30, 2021, our total outstanding net long-term debt was ~~$757.0 million, of which $40.0 million matures in December 2021.~~$758.1 million. We expect to refinance ~~the~~a $40.0 million term loan ~~debt~~expiring in December 2021 at maturity, which is covered by a forward starting interest rate swap that hedges the variability in future benchmark interest payments attributable to changes in interest rates. 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 ~~fix~~fixes the variable benchmark interest rate component.

A number of our debt instruments and associated interest rate derivative agreements have an interest rate tied to LIBOR. On March 5, 2021, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that the USD LIBOR will no longer be published after June 30, 2023. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rate Committee, a steering committee comprised of large U.S. financial institutions, ~~is recommending~~has recommended replacing LIBOR with the Secured Overnight ~~Finance~~Financing Rate (SOFR). While we expect LIBOR to be available in substantially its current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. We are monitoring the developments regarding the alternative rates, will work with our lenders and ~~counter parties~~counterparties to identify a suitable replacement rate and may amend certain debt and interest rate derivative agreements to accommodate those rates if the contract does not already specify a replacement rate. However, at this time, we are not able to predict whether SOFR will become a widely accepted benchmark in place of LIBOR, or what the impact of such possible transition to ~~SOFR~~alternative rates may be on our financial condition.

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Financial Covenants

The Amended Term Loan Agreement and Amended Credit Agreement (collectively referred to as the Agreements) contain certain covenants that limit our ability and that of our subsidiaries to create liens, merge or consolidate, dispose of assets, incur indebtedness and guarantees, repurchase or redeem capital stock and indebtedness, make certain investments or acquisitions, enter into certain transactions with affiliates or change the nature of our business. The Agreements also contain financial maintenance covenants including the maintenance of a minimum interest coverage ratio and a maximum leverage ratio. We are permitted to pay dividends to our stockholders under the terms of the Agreements so long as we expect to remain in compliance with the financial maintenance covenants.

~~Table of Contents~~

At ~~March 31,~~September 30, 2021, we were in compliance with all covenants under the Agreements. The following table sets forth the financial covenants for the Agreements and our status with respect to these covenants at ~~March 31,~~September 30, 2021:

Covenant Requirement

Actual at

March 31, 2021

Covenant Requirement

Actual at
September 30, 2021

Interest coverage ratio

≥

3.00 to 1.00

17.84

≥

3.00 to 1.00

25.22

Leverage ratio

≤

40%

20%

≤

40%

19%

See Note 5: Debtin the Notes to the Condensed Consolidated Financial Statements for additional information on our debt and credit agreements.

Contractual Obligations

There have been no material changes to our contractual obligations during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 outside the ordinary course of business.

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. Both Moody’s and S&P rate our debt investment grade.

Off-Balance Sheet Arrangements

We currently are not a party to off-balance sheet arrangements that would require disclosure under this section.

Critical Accounting Policies and Estimates

There have been no significant changes during 2021 to our critical accounting policies presented in our 2020 Annual Report on Form 10-K.

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ITEM 3. QUANTITATIVE AND 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. We are exposed to interest rate volatility on existing variable rate debt instruments and future incurrences of fixed or variable rate debt, which exposure primarily relates to movements in various interest rates. We use interest rate swaps and forward starting swaps to hedge our exposure to the impact of interest rate changes on existing debt and future debt issuances, respectively. All market risk sensitive instruments were entered into for purposes other than trading purposes.

For quantitative and qualitative disclosures about market risk, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our annual report on Form 10-K for the year ended December 31, 2020. Our exposures to market risk have not changed materially since December 31, 2020.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We conducted an evaluation (pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act)), under the supervision and with the participation of management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of ~~March 31,~~September 30, 2021. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, the CEO and CFO have concluded that these disclosure controls and procedures were effective as of ~~March 31,~~September 30, 2021.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Internal Control over Financial Reporting

No changes occurred in our internal control over financial reporting during the three months ended ~~March 31,~~September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We believe there is no pending or threatened litigation that could have a material adverse effect on our financial position, operations or liquidity.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors previously disclosed in Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

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 Repurchase Program). Shares under the Repurchase Program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the Trading Plan). The timing, manner, price and amount of repurchases will be determined according to, and subject to, the terms of the Trading Plan, and, subject to the terms of the Trading Plan, the Repurchase Program may be suspended, terminated or modified at any time for any reason.

There were no shares repurchased during the ~~first~~third quarter of 2021 under the Repurchase Program. At ~~March 31,~~September 30, 2021, we had remaining authorization of $59.5 million for future stock repurchases under the Repurchase Program. Transaction costs are not counted against authorized funds. All common stock purchases are made in open-market transactions.

ITEM 6. EXHIBITS


EXHIBIT NUMBER	DESCRIPTION
(3)(a)*	Third Restated Certificate of Incorporation of the Registrant, effective February 20, 2018, filed as Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant on February 21, 2018.
(3)(b)*	Bylaws of the Registrant, as amended through February 18, 2009, filed as Exhibit (3)(b) to the Current Report on Form 8-K filed by the Registrant on February 20, 2009.
(4)	See Exhibits (3)(a) and (3)(b). The registrant undertakes to furnish to the Commission, upon request, any instrument defining the rights of holders of long-term debt.
(31)	Rule 13a-14(a)/15d-14(a) Certifications.
(32)	Furnished statements of the Chief Executive Officer and Chief Financial Officer under 18 U.S.C. Section 1350.
(101)	The following financial information from PotlatchDeltic Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2021, filed on ~~April 30,~~October 29, 2021 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, (ii) the Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three months and nine months ended ~~March 31,~~September 30, 2021 and 2020, (iii) the Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2021 and December 31, 2020, (iv) the Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, (v) the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 and (vi) the Notes to Condensed Consolidated Financial Statements.
(104)	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

* Incorporated by reference.

3337

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PotlatchDeltic Corporation
		(Registrant)

		By	/s/ WAYNE WASECHEK
			Wayne Wasechek
			Corporate Controller (Duly Authorized; Principal Accounting Officer)


Date:	~~April 30,~~October 29, 2021

3438


601 West First Avenue, Suite 1600
Spokane, Washington	99201
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock ($1 par value)	PCH	Nasdaq Global Select Market

	Three Months Ended March 31,
(in thousands)	2021			2020
Net income (loss)	$	131,106		$	(16,832	)
Other comprehensive income (loss), net of tax:
Pension and other postretirement employee benefits:
Net loss arising during the period, net of tax benefit of $0 and $6,817		—			(19,402	)
Effect of pension settlement, net of tax benefit of $0 and $11,177		—			31,811
Amortization of prior service credit included in net income (loss), net of tax benefit of $73 and $76		(204	)		(215	)
Amortization of actuarial loss included in net income (loss), net of tax expense of $1,109 and $1,189		3,157			3,384
Cash flow hedges, net of tax expense (benefit) of $4,031 and $(1,810)		64,107			(38,525	)
Other comprehensive income (loss), net of tax		67,060			(22,947	)
Comprehensive income (loss)	$	198,166		$	(39,779	)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020
Net income	$	65,667		$	81,007		$	384,678		$	66,813
Other comprehensive income (loss), net of tax:
Pension and other postretirement employee benefits:
Net loss arising during the period, net of tax benefit of $0, $0, $0 and $6,817		0			0			0			(19,402	)
Effect of pension settlement, net of tax benefit of $0, $0, $0 and $11,177		0			0			0			31,811
Amortization of prior service credit included in net income, net of tax benefit of $73, $75, $217 and $227		(204	)		(215	)		(614	)		(645	)
Amortization of actuarial loss included in net income, net of tax expense of $1,073, $1,111, $3,254, and $3,334		3,050			3,163			9,258			9,489
Cash flow hedges, net of tax expense (benefit) of $397, $763, $2,249 and $(1,043)		6,636			11,332			39,580			(29,040	)
Other comprehensive income (loss), net of tax		9,482			14,280			48,224			(7,787	)
Comprehensive income	$	75,149		$	95,287		$	432,902		$	59,026


(in thousands, except per share amounts)	March 31, 2021			December 31, 2020			September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	382,032		$	252,340		$	592,767		$	252,340
Customer receivables, net		41,920			26,606			27,789			26,606
Inventories, net		62,663			62,036			69,862			62,036
Other current assets		20,959			16,136			24,460			16,136
Total current assets		507,574			357,118			714,878			357,118
Property, plant and equipment, net		291,483			288,544			286,034			288,544
Investment in real estate held for development and sale		69,057			72,355			65,048			72,355
Timber and timberlands, net		1,587,593			1,600,061			1,572,475			1,600,061
Intangible assets, net		16,075			16,270			15,685			16,270
Other long-term assets		91,847			46,717			63,747			46,717
Total assets	$	2,563,629		$	2,381,065		$	2,717,867		$	2,381,065

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	114,849		$	93,279		$	87,819		$	93,279
Current portion of long-term debt		42,985			39,981			42,996			39,981
Current portion of pension and other postretirement employee benefits		6,574			6,574			6,574			6,574
Total current liabilities		164,408			139,834			137,389			139,834
Long-term debt		714,619			717,366			715,122			717,366
Pension and other postretirement employee benefits		129,025			128,807			126,154			128,807
Deferred tax liabilities, net		24,298			17,740			26,247			17,740
Other long-term obligations		53,730			72,365			52,849			72,365
Total liabilities		1,086,080			1,076,112			1,057,761			1,076,112
Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized 4,000 shares, 0 shares issued		—			—			—			—
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,042 and 66,876 shares		67,042			66,876
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,100 and 66,876 shares								67,100			66,876
Additional paid-in capital		1,676,421			1,674,576			1,679,332			1,674,576
Accumulated deficit		(211,985	)		(315,510	)		(13,561	)		(315,510	)
Accumulated other comprehensive loss		(53,929	)		(120,989	)		(72,765	)		(120,989	)
Total stockholders’ equity		1,477,549			1,304,953			1,660,106			1,304,953
Total liabilities and stockholders' equity	$	2,563,629		$	2,381,065		$	2,717,867		$	2,381,065


Large Accelerated Filer	☒	Accelerated Filer	☐	Non-accelerated Filer	☐
Smaller Reporting Company	☐	☐	Emerging Growth Company	☐	☐



		Page Number
PART I. - FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations	23
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~	34
	Condensed Consolidated Balance Sheets	45
	Condensed Consolidated Statements of Cash Flows	56
	Condensed Consolidated Statements of Stockholders’ Equity	78
	Index for the Notes to Condensed Consolidated Financial Statements	89
	Notes to Condensed Consolidated Financial Statements	910
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1921
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3236
ITEM 4.	Controls and Procedures	3236

PART II. - OTHER INFORMATION
ITEM 1.	Legal Proceedings	3337
ITEM 1A.	Risk Factors	3337
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3337
ITEM 6.	Exhibits	3337

SIGNATURE		3438


(in thousands)	March 31, 2021		March 31, 2020		September 30, 2021		September 30, 2020
Cash and cash equivalents	$	382,032	$	79,484	$	592,767	$	148,919
Restricted cash included in other long-term assets¹		669		2,336		—		1,085
Total cash, cash equivalents, and restricted cash	$	382,701	$	81,820	$	592,767	$	150,004


¹	Amounts included in restricted cash represent proceeds held by a qualified intermediary that are intended to be reinvested in timber and timberlands.

	Common Stock				Additional Paid-			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
(in thousands, except per share amounts)	Shares		Amount		in Capital			Deficit			Loss			Equity
Balance, December 31, 2020		66,876	$	66,876	$	1,674,576		$	(315,510	)	$	(120,989	)	$	1,304,953
Net income		—		—		—			131,106			—			131,106
Shares issued for stock compensation		166		166		(166	)		—			—			—
Equity-based compensation expense		—		—		1,930			—			—			1,930
Pension plans and OPEB obligations		—		—		—			—			2,953			2,953
Cash flow hedges		—		—		—			—			64,107			64,107
Dividends on common stock, $0.41 per share		—		—		—			(27,484	)		—			(27,484	)
Other transactions, net		—		—		81			(97	)		—			(16	)
Balance, March 31, 2021		67,042	$	67,042	$	1,676,421		$	(211,985	)	$	(53,929	)	$	1,477,549



Note 1: Basis of Presentation	910
Note 2: Segment Information	1011
Note 3: Earnings Per Share	1213
Note 4: Certain Balance Sheet Components	13
Note 5: Debt	1315
Note 6: Derivative Instruments	1415
Note 7: Fair Value Measurements	1516
Note 8: Equity-Based Compensation	1517
Note 9: Income Taxes	1618
Note 10: Leases	1718
Note 11: Pension and Other Postretirement Employee Benefits	1819
Note 12: Components of Accumulated Other Comprehensive Loss	1820