Potlatchdeltic Corp (NASDAQ:PCH) Q2 2020 Earnings Conference Call - Final Transcript
Jul 28, 2020 • 12:00 pm ET
Good morning. My name is Megan, and I will be your conference operator today. At this time, I would like to welcome everyone to the PotlatchDeltic Second Quarter 2020 Conference Call. [Operator Instructions]
I would now like to turn the call over to Mr. Jerry Richards, Vice President and Chief Financial Officer for opening remarks. Sir, you may proceed.
Jerald W. Richards
Thank you. Megan. Good morning, everyone, and welcome to PotlatchDeltic's second quarter 2020 earnings conference call. With me in the room are Mike Covey, Chairman and Chief Executive Officer; and Eric Cremers, President and Chief Operating Officer.
This call will contain forward-looking statements. Please review the warning statements in our press release, on the presentation slides and in our filings with the SEC concerning the risks associated with these forward-looking statements. Also, please note that a reconciliation of non-GAAP measures can be found on our website at www.potlatchdeltic.com.
I'll now turn the call over to Mike for some comments, and then I will cover our second quarter results and our outlook.
Michael J. Covey
Thanks, Jerry, and good morning. What a difference a few months makes. In a very short period, lumber markets shifted from illiquidity to a historic run. It was not possible to accurately forecast the severity and duration of the effect of the COVID pandemic on our end markets earlier this spring. A massive destocking of lumber in the supply chain send a signal that led to significant curtailment of North American lumber manufacturing capacity to balance production with existing visible demand. As spring developed, it became clear that industry fundamentals not only remained strong, but it's strengthened.
Historically low mortgage rates, the millennial demographic cohort entering prime homebuying years and the old age of U.S. housing stock, all bode well for housing and repair and remodel demand, both of which lead to higher lumber sales. Additionally, a potential shift from urban to suburban living and continuation of working remotely maybe two ways that the COVID pandemic positively impacts housing demand.
The atypical early spring pullback in lumber production led to an acute shortage, which underpins the current historic run in lumber prices. It will likely take several months for lumber supply to catch up with demand, particularly given increasing housing unit construction, reports of transportation constraints, traditional holiday downtime and the potential effect of the late summer fire season, which is now upon us.
Turning to the quarter, we generated adjusted EBITDA of $35 million. Our employees did an excellent job managing through the constraints and challenges posed by the COVID pandemic. Our three business segments performed well during what is typically our seasonally lightest quarter. As we continue to face this pandemic, operating safely is our top priority and is a core value. As discussed on last quarter call, we have increased the frequency of cleaning, added physical distancing where it's practicable and are screening visitors and vendors. We also banned most travel and all group meetings, and most employees who can work from home continue to do so.