POTLATCHDELTIC CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

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, expectations
regarding economic conditions, including interest rates and our ability to
offset the impact of inflation, expected seasonal fluctuations in our business
segments, expected effectiveness of our hedging instruments and swaps; expected
return on pension assets; anticipated share repurchases and dividend payments;
anticipated cash balances, cash flows from operations and expected liquidity;
potential uses of our credit facility; the expected impact from the Ola,
Arkansas sawmill fire, anticipated insurance coverage, and expected timing to
complete reconstruction and installation activities and return to full
operation; expectations regarding debt obligations, interest payments and debt
refinancing; expectations regarding the market transition away from LIBOR and
our ability to identify a suitable replacement rate; maintenance of our
investment grade credit rating; expectations regarding the U.S. housing market
and home repair and remodeling activity; the lumber and log markets and pricing;
lumber shipment volumes; timber harvest volumes; rural real estate and
residential and commercial real estate development sales; sufficiency of cash to
meet operating requirements; expected 2022 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. The realization of our expectations and the accuracy of our
assumptions are subject to a number of risks and uncertainties that could cause
actual results to differ materially from those described in the forward-looking
statements. These risks and uncertainties include, but are not limited to:

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 shipping and transportation;

changes in principal expenses;

recent increases in inflation and the extent to which such increases will
continue;

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.

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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, 2021. 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.

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

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 Measures
section 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.

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Our definition of EBITDDA and Adjusted EBITDDA may be different from similarly
titled measures reported by other companies. We define EBITDDA as net income
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.

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. In April 2022, the
U.S. Census Bureau reported housing starts for March 2022 were 1.8 million on a
seasonally adjusted annual basis, which was up 3.9% from March 2021. In April
2022, the National Association of Home Builders (NAHB) reported the NAHB/Wells
Fargo Housing Market Index (HMI) was at 77. While the HMI continues to indicate
homebuilder confidence in the market for newly built single-family homes remains
strong, the HMI has experienced four straight months of decline and is the
lowest level since last summer. The repair and remodel sector, which has
experienced steady growth during the pandemic-driven home improvement movement
that began in early 2020, is expected to return to a more stable growth rate in
2022.

Overall, housing fundamentals remain strong, driven by a shortage of homes, low
existing inventory for sale, a large millennial demographic entering their prime
home-buying years, interest rates remaining below long-term historical averages,
the continued remote work evolution, high home equity levels and an aging
existing housing stock supporting repair and remodel demand. These fundamentals
are key drivers for our business, and we continue to expect that lumber prices
will remain structurally higher than long-term historical averages due to
continued lumber demand and tight supply. Rising construction costs, a
persistently tight labor pool, supply chain challenges and consumer concerns
about rising mortgage rates could negatively impact the pace of housing starts
and repair and remodel projects.

Inflation has impacted our business, especially for fuel, energy and repair and
maintenance costs, although we believe there are offsetting impacts including
wood product prices and our timberland's effectiveness as an inflation hedge.
Over the last twelve months, the Consumer Price Index (all items) increased by
8.5 percent before seasonal adjustments, while the Producer Price Index (final
demand) increased by 11.2 percent on an unadjusted basis. Additionally,
transportation challenges rising from shortage of truck and railcar availability
linger in certain markets. These transportation issues could lead to higher
freight costs and shipping challenges through the foreseeable future.

In our Timberlands segment, sawlog prices benefitted from Idaho sawlog prices
being indexed on a four-week lag to lumber prices, continued strong Northern
cedar sawlog prices, increased demand for Southern pine sawlogs and a higher mix
of prime sawlogs harvested on recently acquired timberlands. Our Southern
harvest volume of 1.1 million tons in the first quarter of 2022 was higher than
the first quarter of 2021, primarily due to favorable harvest conditions. We
expect to harvest between 1.1 and 1.3 million tons during the second quarter,
with approximately 73% of the volume in the Southern region. For 2022, we expect
to harvest approximately 6.1 million tons, with approximately 70% of the volume
in the Southern region.

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
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 third quarter
of 2022 and complete the start-up phase by early 2023.

For the first quarter of 2022 our Wood Products segment benefited from increased
price realizations. Lumber shipments continue to be impacted by the Ola sawmill
fire. We shipped approximately 233 million board feet of lumber during the first
quarter of 2022 and expect to ship between 250 and 260 million board feet of
lumber during the second quarter of 2022. For 2022, we expect to ship
approximately 1.0 billion board feet of lumber. This estimate reflects the
expected timing of the start-up of the large-log line at our Ola, Arkansas
sawmill.

Our Real Estate segment first quarter 2022 results reflect strong Chenal Valley
development sales and higher rural land sales prices. We expect to sell
approximately 12,000 acres of rural land and 40 residential lots during the
second quarter of 2022. For 2022, we expect to sell approximately 20,000 acres
of rural land and 165 residential lots.



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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,
(in thousands)                            2022              2021             Change
Revenues                              $     411,350     $     354,193     $      57,157
Costs and expenses:
Cost of goods sold                          179,847           169,302            10,545
Selling, general and administrative
expenses                                     16,294            16,758              (464 )
Net loss on fire damage                         276                 -               276
                                            196,417           186,060            10,357
Operating income                            214,933           168,133            46,800
Interest expense, net                        (2,894 )          (3,574 )             680
Pension settlement charge                   (14,165 )               -           (14,165 )
Non-operating pension and other
postretirement benefit costs                 (1,929 )          (3,414 )           1,485
Income before income taxes                  195,945           161,145            34,800
Income taxes                                (32,065 )         (30,039 )          (2,026 )
Net income                            $     163,880     $     131,106     $      32,774
Total Adjusted EBITDDA1               $     245,562     $     194,986     $      50,576


1 See Liquidity and Performance Measures for a reconciliation of Total Adjusted

EBITDDA to net income, the closest comparable GAAP measure, for each of the

periods presented.

First Quarter 2022 Compared with First Quarter 2021

Revenues


Revenues were $411.4 million, an increase of $57.2 million compared with the
first quarter of 2021 primarily due to higher lumber and sawlog prices,
increased harvest volumes in the Southern region and a 1,760-acre rural land
sale in the South for $7,500 per acre to an energy provider for a planned
commercial solar farm. These increases were partially offset by lower lumber
shipments in the first quarter of 2022, which was impacted by the loss of
production at our Ola, Arkansas sawmill following a fire in June 2021.

Cost of goods sold


Cost of goods sold increased $10.5 million compared with the first quarter of
2021 primarily due to higher manufacturing and log and haul costs from
inflationary price increases in areas such as diesel fuel, energy and repair and
maintenance.

Pension settlement charge

In March 2022 we transferred $75.6 million of our qualified pension plan (the
Plan) assets to an insurance company for the purchase of a group annuity
contract. In connection with this transaction, we recorded a non-cash pretax
settlement charge of $14.2 million.

Income taxes


Income taxes are primarily due to income from our PotlatchDeltic taxable REIT
subsidiaries (TRS). For the three months ended March 31, 2022, we recorded
income tax expense of $32.1 million on TRS income before tax of $127.3 million,
which included the $14.2 million pension settlement charge. For the three months
ended March 31, 2021, we recorded an income tax expense of $30.0 million on TRS
income before tax of $115.8 million.

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Total Adjusted EBITDDA

Total Adjusted EBITDDA for the first quarter of 2022 increased $50.6 million
compared to the first quarter of 2021. The increase in Total Adjusted EBITDDA
was primarily driven by higher lumber and sawlog prices, increased harvest
volumes in the Southern region and the 1,760-acre rural land sale in the South.
These increases were partially offset by lower lumber shipments and higher
manufacturing and log and haul costs. Refer to the Business Segment Results
below for further discussions on activities for each of our segments. See
Liquidity and Performance Measures for a reconciliation of Total Adjusted
EBITDDA to net income, the closest comparable GAAP measure, for each of the
periods presented.

Business Segment Results

Timberlands Segment

                                                   Three Months Ended March 31,
(in thousands)                                    2022          2021         Change
Revenues1                                      $  123,657     $ 111,916     $ 11,741
Costs and expenses:
Logging and hauling                                40,082        36,468        3,614
Other                                               5,403         5,888         (485 )
Selling, general and administrative expenses        1,738         1,702     

36

 Timberlands Adjusted EBITDDA2                 $   76,434     $  67,858     

$ 8,576

1 Prior to elimination of intersegment fiber revenues of $42.1 million and $47.3

million for the three months ended March 31, 2022 and 2021, 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.

Timberlands Segment Statistics

                                      Three Months Ended March 31,
Harvest Volumes (in tons)          2022            2021          Change
Northern region
Sawlog                              385,290         427,255       (41,965 )
Pulpwood                              8,259          13,884        (5,625 )
Total                               393,549         441,139       (47,590 )

Southern region
Sawlog                              490,093         508,073       (17,980 )
Pulpwood                            379,651         326,429        53,222
Stumpage                            196,513          58,413       138,100
Total                             1,066,257         892,915       173,342

Total harvest volume              1,459,806       1,334,054       125,752

Sales Price/Unit ($ per ton)1
Northern region
Sawlog                          $       212     $       178     $      34
Pulpwood                        $        47     $        36     $      11

Southern region
Sawlog                          $        48     $        44     $       4
Pulpwood                        $        31     $        28     $       3
Stumpage                        $        17     $        13     $       4


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.




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Timberlands Adjusted EBITDDA

The following table summarizes Timberlands Adjusted EBITDDA variances for the
three months ended March 31, 2022, compared with the three months ended March
31, 2021:

(in thousands)                                 Three Months
Adjusted EBITDDA - prior year                 $       67,858
Sales price and mix                                   10,205
Harvest volume                                         1,388
Logging and hauling costs per unit                    (3,968 )
Forest management, indirect and other                    951

Timberlands Adjusted EBITDDA – current year $ 76,434

First Quarter 2022 Compared with First Quarter 2021

Timberlands Adjusted EBITDDA for the first quarter of 2022 increased $8.6
million
compared with the same period in 2021, primarily as a result of the
following:

Sales Price and Mix: Sawlog prices in the Northern region increased 19.1%, to
$212 per ton, primarily from the effect of higher lumber price realizations on
indexed sawlogs and increased cedar log prices in Idaho. Southern sawlog prices
increased 9.1%, to $48 per ton, compared to the first quarter of 2021, as a
result of a higher mix of prime grade sawlogs harvested on recently acquired
timberlands and strong demand.

Harvest Volume: We harvested 1.1 million tons in the Southern region during the
first quarter of 2022, which was 19.4% higher than the first quarter of 2021,
primarily due to a severe winter storm that impacted harvest conditions in 2021.
In the Northern region hauling conditions were favorable throughout the first
quarter of 2021 as compared to the first quarter of 2022, where hauling
conditions were more seasonally limited, resulting in a 10.8% decrease in
harvest volume.

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

Wood Products Segment

                                                   Three Months Ended March 31,
(in thousands)                                    2022          2021         Change
Revenues                                       $  295,742     $ 269,296     $ 26,446
Costs and expenses1
Fiber costs                                        77,673        79,469       (1,796 )
Freight, logging and hauling                       18,367        18,197          170
Manufacturing costs                                50,793        47,602        3,191
Finished goods inventory change                    (4,579 )      (4,019 )       (560 )
Selling, general and administrative expenses        3,408         2,522     

886

Other                                                 129           (30 )   

159

Wood Products Adjusted EBITDDA2                $  149,951     $ 125,555     

$ 24,396

1 Prior to elimination of intersegment fiber costs of $42.1 million and $47.3

million for the three months ended March 31, 2022 and 2021, 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 March 31,
                                    2022          2021         Change
Lumber shipments (MBF)1             233,188       258,069       (24,881 )

Lumber sales prices ($ per MBF) $ 1,075 $ 890 $ 185

1 MBF stands for thousand board feet.

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Wood Products Adjusted EBITDDA


The following table summarizes Wood Products Adjusted EBITDDA variances for the
three months ended March 31, 2022, compared with the three months ended March
31, 2021:

(in thousands)                                   Three Months
Wood Products Adjusted EBITDDA - prior year     $      125,555
Lumber:
Price                                                   41,212
Volume                                                 (11,195 )
Manufacturing costs per unit                            (7,081 )
Log costs per unit                                      (2,305 )
Residuals, panels and other                              3,765

Wood Products Adjusted EBITDDA – current year $ 149,951

First Quarter 2022 Compared with First Quarter 2021

Wood Products Adjusted EBITDDA for the first quarter of 2022 increased $24.4
million
compared with the same period in 2021, primarily as a result of the
following:

Lumber Price: Average lumber sales prices increased to $1,075 per MBF during the
first quarter of 2022 compared to $890 during the first quarter of 2021.

Lumber Volume: Lumber shipments decreased 24.9 million board feet during the
first quarter of 2022 compared to the first quarter of 2021, primarily as a
result of decreased shipments from 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 inflationary price increases in areas such as energy and repair and
maintenance.

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

Residual Sales, Panels and Other: The first quarter of 2022 benefitted from
increased plywood price realizations and shipments due to strong demand and
product mix.

Real Estate Segment

                                                   Three Months Ended March 31,
(in thousands)                                    2022           2021        Change
Revenues                                       $   34,065      $ 20,313     $ 13,752
Costs and expenses
Costs of goods sold                                 2,879         2,468          411

Selling, general and administrative expenses 1,062 1,252

    (190 )
Real Estate Adjusted EBITDDA1                  $   30,124      $ 16,593     $ 13,531


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.




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Real Estate Segment Statistics

Rural Real Estate          Three Months Ended March 31,
                             2022                2021
Acres sold                       4,751               7,083
Average price per acre   $       4,556       $       1,415



Development Real Estate      Three Months Ended March 31,
                               2022                 2021
Residential lots                      64                   51
Average price per lot     $      112,725       $       98,629

Commercial acres                       3                   11
Average price per acre    $      917,236       $      277,425

Real Estate Adjusted EBITDDA


The following table summarizes Real Estate Adjusted EBITDDA variances for the
three months ended March 31, 2022 compared with the three months ended March 31,
2021:


(in thousands)                                  Three Months

Real Estate Adjusted EBITDDA – prior year $ 16,593
Rural real estate sales

                                11,812
Real estate development sales                           1,940
Selling, general and administrative expenses              190
Other costs, net                                         (411 )

Real Estate Adjusted EBITDDA – current year $ 30,124

First Quarter 2022 Compared with First Quarter 2021


Real Estate Adjusted EBITDDA for the first quarter of 2022 was $30.1 million, an
increase of $13.5 million compared with the first quarter of 2021, primarily as
a result of the following:

Rural Sales: The increase in rural real estate sales is primarily a result of a
1,760-acre sale in the South for $7,500 per acre in the first quarter of 2022 to
an energy provider for a planned commercial solar farm, which was not matched by
a similarly-sized sale during the first quarter of 2021. 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 2022, we sold 64 residential lots
at an average lot price of $112,725 compared to 51 lots at an average lot price
of $98,629 during the first quarter of 2021. In addition, we sold 3 acres of
commercial land in Chenal Valley for $917,236 per acre compared to 11 acres of
commercial land in Chenal Valley for $277,425 per acre in the first quarter of
2021. The average price per lot or acre fluctuates based on a variety of factors
including size and location within the development.



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Liquidity and Capital Resources


Cash generated by our operations is highly dependent on selling prices of our
products and can vary from period to period. Changes in significant sources and
uses of cash for the three months ended March 31, 2022 and 2021 are presented by
category as follows:

                                         Three Months Ended March 31,
(in thousands)                          2022          2021         Change

Net cash from operating activities $ 230,299 $ 169,965 $ 60,334
Net cash from investing activities $ (17,122 ) $ (11,529 ) $ (5,593 )
Net cash from financing activities $ (34,595 ) $ (28,075 ) $ (6,520 )

Net Cash Flows from Operating Activities

Net cash from operating activities increased $60.3 million in the first quarter
of 2022, compared to the first quarter of 2021 primarily as a result of the
following:

Cash received from customers increased $63.4 million primarily due to higher
average lumber and sawlog prices, increased Southern harvest volumes and the
1,760-acre rural land sale in the South. These increases were partially offset
by lower Northern harvest volumes and reduced shipments at our Ola, Arkansas
sawmill following the fire in June 2021.

Cash payments increased $4.8 million due to inflationary cost increases in areas
such as diesel fuel, energy and repair and maintenance in our manufacturing and
harvest operations. These increases were partially offset by reduced vendor
payments as a result of lower production at our Ola, Arkansas sawmill following
the fire in June 2021 and lower harvest activities in the Northern region.

Net Cash Flows from Investing Activities

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

We spent $17.2 million on capital expenditures for property, plant and
equipment, timberlands reforestation and road construction projects during the
first quarter of 2022 compared to $11.7 million 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 $30.5 million in the first quarter of 2022 compared to
$27.5 million in the first quarter of 2021.

We repaid $3.0 million in long-term debt during the first quarter of 2022 and
had no similar payment in the first quarter of 2021.

Future Sources and Uses of Cash


At March 31, 2022, we had cash and cash equivalents of $470.9 million. We expect
cash and cash equivalents generated from our operating activities, supplemented
by borrowings under our credit agreement, if needed, to be adequate to meet our
future cash requirements. At March 31, 2022, there were no significant changes
in our cash commitments arising in the normal course of business under our known
contractual and other obligations as described in our Annual Report on Form 10-K
for the year ended December 31, 2021.

Capital Expenditures


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 expect to
spend a total of approximately $70 to $75 million for capital expenditures
during 2022.

Our 2022 planned capital spend includes approximately $15 million of capital
expenditures for the reconstruction of our fire-damaged Ola sawmill, which is
largely covered by insurance. We expect to install the new large-log line in the
third quarter of 2022 and complete the start-up phase by early 2023. A
determination regarding the extent of downtime and costs to repair the Ola
sawmill is on-going 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 based on when we receive proceeds from our insurance
carriers.

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Share Repurchase Program

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, 2022, we had remaining authorization of $59.5
million for future stock repurchases under the Repurchase Program. The timing,
manner, price and amount of repurchases will be determined according to the
trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange
Act of 1934 (the Trading Plan), and, subject to the terms of the Trading Plan,
the Repurchase Program may be suspended, terminated or modified at any time for
any reason.
Long-Term Debt and Credit Agreement

At March 31, 2022, our total outstanding net long-term debt was $755.5 million.
We expect to refinance a $40.0 million term loan expiring in December 2022 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 fixes the variable benchmark interest rate component.

We have a $300.0 million revolving line of credit with a syndicate of lenders
that matures February 14, 2027. Under the terms of the Amended Credit Agreement,
the amount of available principal may be increased up to an additional $500.0
million. We may also utilize borrowings under the Amended Credit Agreement to,
among other things, refinance existing indebtedness and provide funding for
working capital requirements, capital projects, acquisitions, and other general
corporate expenditures. At March 31, 2022, there were no borrowings under the
revolving line of credit and approximately $1.0 million of the credit facility
was utilized by outstanding letters of credit.

Our credit agreement, variable rate term loans with $403.5 million in principal
and our 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 US Dollar LIBOR will no longer be published
after June 30, 2023. The market transition away from LIBOR to an alternative
reference rate is complex. While we expect LIBOR to be available in
substantially its current form until at least through June 30, 2023, it is
possible that LIBOR will become unavailable prior to that point. We continue to
evaluate and monitor market developments regarding the alternative rates, will
work with our lenders and counterparties to identify a suitable replacement
rate, and may amend certain debt and interest rate derivative agreements to
accommodate those rates.

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.

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The following table presents the components and applicable limits of Total Asset
Value (TAV), a component of the Leverage Ratio, at March 31, 2022:


(in thousands)
Estimated timberland fair value                                    $    

3,974,991

Wood Products manufacturing facilities book basis (limited to
10% of TAV)

283,361

Cash and cash equivalents                                                 

470,918

Company owned life insurance (COLI) (limited to 5% of TAV)                  4,002
Total Asset Value1                                                 $    4,733,272


1 TAV also includes, as applicable, Construction in Progress (limited to 10% of

TAV) and Investments in Affiliates (limited to 15% TAV) as defined in the

Agreements.

At March 31, 2022, 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, 2022:


                                                       Actual at
                            Covenant Requirement     March 31, 2022
Interest coverage ratio    ?       3.00 to 1.00           24.5
Leverage ratio             ?           40%                16%



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

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 as investment grade.

Capital Structure


(in thousands)                                March 31, 2022       December 31, 2021
Long-term debt (including current portion)   $        755,482     $           758,256
Cash and cash equivalents                            (470,918 )              (296,151 )
Net debt                                              284,564                 462,105
Market capitalization1                              3,657,986               4,159,034
Enterprise value                             $      3,942,550     $         4,621,139

Net debt to enterprise value                              7.2 %                  10.0 %
Dividend yield2                                           3.3 %                   2.9 %
Weighted-average cost of debt, after tax3                 3.1 %                   3.1 %



1 Market capitalization is based on outstanding shares of 69.4 million and 67.0

million times closing share prices of $52.73 and $60.22 as of March 31, 2022,

and December 31, 2021, respectively.
2 Dividend yield is based on annualized dividends per share of $1.76 and share

prices of $52.73 and $60.22 as of March 31, 2022, and December 31, 2021,

respectively.

3 Weighted-average cost of debt excludes deferred debt costs and credit facility

fees and includes estimated annual patronage credit on term loan debt.

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 the operating results of
other public companies that supplement their GAAP results with non-GAAP
financial measures.

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Our definition of EBITDDA may be different from similarly titled measures
reported by other companies. We define EBITDDA as net income 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 for the consolidated company
as it is the most comparable GAAP measure.

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

                                                       Three Months Ended March 31,
(in thousands)                                          2022                  2021
Net income                                         $       163,880       $       131,106
Interest expense, net                                        2,894                 3,574
Income taxes                                                32,065                30,039
Depreciation, depletion and amortization                    19,502                17,996
Basis of real estate sold                                   10,854                 8,823
Net loss on fire damage                                        276                     -
Pension settlement charge                                   14,165                     -
Non-operating pension and other postretirement
benefit costs                                                1,929          

3,414

(Gain) loss on disposal of fixed assets                         (3 )                  34
Total Adjusted EBITDDA                             $       245,562       $       194,986



We define CAD as cash from operating activities adjusted for capital spending
for purchases of property, plant and equipment, timberlands reforestation and
roads and timberland acquisitions not classified as strategic. 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.

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


                                   Three Months Ended March 31,             Twelve Months Ended March 31,
(in thousands)                       2022                 2021               2022                  2021
Net cash from operating
activities1                     $      230,299       $      169,965     $       565,220       $       457,090
Capital expenditures2                  (17,214 )            (11,718 )           (80,910 )             (43,964 )
CAD                             $      213,085       $      158,247     $       484,310       $       413,126
Net cash from investing
activities3                     $      (17,122 )     $      (11,529 )   $       (64,738 )     $       (42,688 )
Net cash from financing
activities                      $      (34,595 )     $      (28,075 )   $      (407,829 )     $      (113,521 )



1 Net cash from operating activities for the three months ended March 31, 2022

and 2021 includes cash paid for real estate development expenditures of $2.2

million and $2.3 million, respectively. Net cash from operating activities for

the twelve months ended March 31, 2022 and 2021 includes cash paid for real

estate development expenditures of $8.8 million and $8.6 million,

respectively.

2 The three and twelve months ended March 31, 2022 includes fire related capital

expenditures for the Ola, Arkansas sawmill of $5.1 million and $12.4 million,

respectively, and excludes of $0 and $15.0 million, respectively, of insurance

proceeds for the Ola, Arkansas sawmill property losses.
3 Net cash from investing activities includes payment for capital expenditures

  and acquisition of non-strategic timber and timberlands, which is also
  included in our reconciliation of CAD.


Critical Accounting Policies and Estimates


In March 2022, we transferred $75.6 million of our qualified pension plan (the
Plan) assets to an insurance company for the purchase of a group annuity
contract. This transaction triggered a remeasurement of the Plan's assets and
liabilities. We updated the discount rate used to measure our projected benefit
obligation for the Plan as of March 31, 2022. All other pension assumptions
remain unchanged. See Note 11: Pension and Other Postretirement Employee
Benefits for further information on the pension settlement and change to the
projected benefit obligation. There have been no other significant changes
during 2022 to our critical accounting policies or estimates as presented in our
2021 Annual Report on Form 10-K.

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