Q4 2021 Potlatchdeltic Corp Earnings Call
Good morning, My name is Emma and I will be your conference operator today at this time I would like to welcome everyone to the Potlatch Delta fourth quarter 2021 that conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key thank you.
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.
Thank you Emma and good morning, everyone and welcome to Potlatch <unk> fourth quarter 2021 earnings Conference call.
Joining me on the call is Eric Cremers, <unk>, President and Chief Executive 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 Dot Potlatch Delta Dot com.
I'll now turn the call over to Eric for some comments and then I will cover our fourth quarter results and our outlook.
Thank you Jerry.
Starting with our results full year adjusted EBITDA of $653 million shattered the record we set just last year.
That performance is a tribute to and would not be possible without the performance resilience flexibility and continued focus of our employees in year two of the pandemic.
Our wood products segment generated a record $394 million of adjusted EBITDA in 2021.
Put that in context, what products earn more in 2021, then the entire company did in 2020 and consolidated 2020 EBITDA was a company record at the time.
On the operational front, we shipped just over 1 billion board feet of lumber, we completed virtually all of our capital projects on time and under budget and our employee safety performance was outstanding key safety milestones achieved during the year included two year anniversaries without recordable injuries at our Bemidji and our Waldo sawmill.
<unk> three months during the year, where all of our mills were incident free and also a record low injury severity rate for the year.
Still we were disappointed about the fire at our Ola, Arkansas sawmill in 2021.
Thankfully nobody was injured and property damage and loss profits are covered by insurance.
Starting the large log line in OLED in the third quarter of 2022 was a top company priority.
Furthermore, once the mill restarts, it will have significantly lower cash processing costs and higher production volumes than before.
Our timberlands segment generated record adjusted EBITDA of $263 million in 2021, despite our harvest volume falling short of our 6 million ton plan.
Indexed Idaho saw log prices hit record levels during the year, which more than offset the effect of all our related harvest deferrals in the south and a decline in low margin pulpwood shipments in Idaho.
Our real estate segment generated adjusted EBITDA of $48 million in 2021 on the rural side of the business. We sold approximately 18000 acres at just over $2100 per acre.
Our rural sales team continues to do an excellent job of identifying opportunities that create value.
On the development side of our real estate business, we sold 159 residential lots in our <unk> Valley Master planned community in little rock and we completed a commercial sale during the year.
<unk> sales are off to a strong start in 2022, which is a tribute to our teams focus on creating inventory to meet strong residential lot demand.
Turning to capital allocation, we distributed $388 million of cash to shareholders in 2021 equal to 90% of our cash available for distribution for the year.
Paid a $4 per share special dividend in December .
We also increased the regular dividend seven 3% in the fourth quarter to $1 76 per share on an annual basis.
We remain committed to growing the regular dividend sustainably.
The large fourth quarter dividend increase reflects both bullishness in our business and the successful completion of accretive timberland acquisitions.
Speaking of Timberland acquisitions, we closed four bolt on deals in the south in the fourth quarter for an aggregate consideration of $131 million. The largest transaction was a tax free merger with lunar land in timber company, whereby we acquired just over 51000 acres of high.
High quality, well stocked timberlands in southern Arkansas, and Northern Louisiana for 196 million shares and the assumption of $6 $6 million of debt.
The lunar timberlands are a highly attractive addition to our portfolio.
Average stocking levels of approximately 90 tons per acre and in average timber age greater than 40 years are both well above the norm tip.
Typical metrics, where southern timberlands are roughly 45 tons per acre and an average age of timber of 14 to 15 years, assuming a 30 year growing cycle and even age management.
We expect to realize average annual EBITDA of $8 $5 million over the first 10 years of ownership, providing an appealing cash yield.
We had liquidity of nearly $600 million at the end of 2021 after paying the special dividend. Our leverage also remains the lowest of the timber Reits Despite our large special dividend.
Our financial strength provides a solid platform for continued growth as we consider additional accretive acquisitions and investments in our existing mills.
I will now provide some thoughts on our expectations for 2022.
<unk> transportation challenges and Covid absenteeism stressed a supply chain that has had difficulty consistently meeting lumber demand over the last two years.
As a result lumber prices increased back above $1000 per thousand board feet as reported by random lengths we.
We do not believe prices at this level are sustainable and we expect lumber prices to moderate as we move through 2022.
Having said that we continue to believe average lumber prices for the full year there'll be structurally higher than long term averages due to exceptional lumber demand and tight supply.
Housing fundamentals remain robust U S housing starts increased to one 7 million units on a seasonally adjusted basis and building permits were nearly $1 9 million units in December .
Statistics were notable milestones and represent a strong finish to a strong year.
A shortage of homes and the large millennial demographic cohort continue to underpin our view that housing should be set up for a multi year boom.
We are monitoring rising mortgage rates given their effect on housing affordability.
Homebuyers and builders have levers to offset affordability issues caused by higher rates migration to less costly housing markets given the durability of remote work builder concessions and smaller houses are examples of factors that may mitigate the effect of higher mortgage rates.
Interestingly Freddie Mac released a forecast just last week predicting at the single family housing market will remain stable in 2022.
They expect that higher mortgage rates will moderate the pace of home price increases and that the entry level homes segment will remain tight due to a shortage of homes for sale.
We expect continued growth in the repair and remodel segment in 2022, and the last week Risi published an expectation that R&R spend will increase 3% in 2022 and the Harvard Joint Center for housing study is predicting 17% growth.
Factors supporting growth in the repair and remodel segment include high levels of home equity the work from home trend and the age of U S housing stock, which is now 42 years on average.
Regarding environmental social and governance reporting we plan to publish our third annual ESG report in May.
We are also developing a full ESG section of our website and we plan to publish a carbon and climate report in September .
<unk> has a strong ESG story and we are committed to do our part to mitigate climate change and continue our legacy of responsibility across the ESG spectrum.
To wrap up my comments Potlatch Delta is very well positioned to take advantage of favorable industry fundamentals and our strong balance sheet and liquidity provide a high degree of flexibility as we seek to maximize shareholder value.
I will now turn it over to Gerry to discuss fourth quarter results and our outlook.
Thank you Eric.
Starting with page four of the slides adjusted EBITDA decreased from $107 million in the third quarter to $76 million in the fourth quarter.
The decline largely reflects the effect of lower index, Idaho saw log prices and seasonally lower harvest volumes in the fourth quarter.
I'll now review each of our operating segments and provide more color on the fourth quarter results.
Information for our Timberland segment is displayed on slides five through seven.
The segment's adjusted EBITDA was $42 million in the fourth quarter compared to $76 million in the third quarter.
We harvested 349000 tons of <unk> in the north in the fourth quarter. This is down seasonally from the 462000 tons that we harvested in the third quarter.
Northern <unk> prices were 28% lower on a per ton basis in the fourth quarter compared to the third quarter.
The decrease in saw log prices reflects lower prices for indexed and cedar saw logs as well as seasonally heavier logs.
Because our index prices reset on a one month lag the higher lumber prices that occurred in December wont be reflected in our solid prices until the first quarter.
In the South we harvest at just under $1 1 million tons in the fourth quarter.
This volume was 4% higher than the third quarter as our southern Timberlands team worked hard to minimize the amount of our harvest shortfall for the year.
Our southern saw log prices were 2% lower in the fourth quarter compared to the third quarter.
As discussed on last quarter's call, we expected pine saw log prices to moderate once conditions dried out and saw log mill.
It's al.
Mill <unk>.
Saw mill log inventories returned to more normal levels sorry.
Turning to wood products on slides eight and nine adjusted EBITDA was $37 million in the fourth quarter compared to $27 million in the third quarter.
Our average lumber price realization increased 6% from $533 per thousand board feet in the third quarter to $563 per thousand board feet in the fourth quarter.
Our price increase was comparable to the random lengths framing lumber composite on a percentage basis. When the composite has shifted to account for the length of our order files.
Our lumber prices increased each month during the fourth quarter.
Our average lumber price realizations per 1000 board feet were $487 in October $570 in November and $639 in December .
Lumber shipments decreased from 265 million board feet in the third quarter to 243 million board feet in the fourth quarter.
Covid absenteeism was a drag on production.
Our plywood business performed exceptionally well in 2021 and delivered record profitability the.
The negative residuals on panels variance on page eight of the slides primarily reflects a decline in plywood prices after peaking at an all time high in the third quarter.
Moving to real estate on slides 10, and 11. This segment's adjusted EBITDA was $10 million in the fourth quarter up slightly from $9 million in the third quarter.
Higher rural land sales closings slightly exceeded fewer residential lot sales and our Chanel Valley Master planned community in little Rock, Arkansas.
Shifting to financial items, which are summarized on slide 12, our total liquidity remains strong at nearly 600 million. This amount includes $296 million of cash as well as availability on our undrawn revolver.
Speaking of our revolver in December we extended its maturity to February 14th 2027.
We also reduced the size of the facility to $300 million, given our strong balance sheet and plentiful available capital.
We refinanced $40 million of debt scheduled to mature in December of 2021, reducing our annual interest expense approximately $700000.
We also repaid the $6 6 million of debt, we assumed in our lunar merger in December and $3 million of medium term notes at maturity in January .
We did not repurchase any shares during the fourth quarter. As a reminder, we have a <unk> one plan in place this reflects our ability and commitment to repurchase our shares at attractive prices.
Capital expenditures were $19 6 million in the fourth quarter.
Note that the amount I just mentioned includes real estate development expenditures, which are included in cash from operations and our cash flow statement.
And excludes the timberland acquisitions that Eric discussed.
We also recorded a favorable income tax adjustment of approximately $5 million in the fourth quarter, mostly to reflect lower state income taxes.
I will now provide some high level outlook comments. The details are presented on slide 13.
We expect to harvest about $6 1 million tonnes in our timberlands segment in 2022 with approximately 70% of the volume in the south.
We expect our annual harvest volume run rate will increase to six two to six 4 million tonnes. After our Ola, Arkansas sawmill startup curve is behind us sometime in 2023.
Harvest volumes in the north are planned to be comparable in the first quarter relative to the fourth quarter.
We expect northern solid prices to increase significantly in the first quarter, reflecting higher lumber index prices.
Harvest volumes and solid prices in the south are expected to decrease seasonally in the first quarter.
With solid price decline is due primarily to seasonally fewer hardwood saw logs in the mix.
We plan to ship just over 1 billion board feet of lumber in 2022.
In the first quarter, we plan to ship 230 to 240 million board feet of lumber.
Our estimates reflect uncertainty associated with pandemic related absenteeism.
Yeah.
Our average lumber price, thus far in the first quarter, including orders booked but not yet shipped is approximately 70% higher than our average fourth quarter lumber price.
Our current lumber prices are approximately 90% higher than our average fourth quarter price.
As a reminder, a $10 per thousand board foot change in lumber price equals approximately $12 million of consolidated EBITDA for us on an annual basis.
Shifting to real estate, we expect to sell approximately 13500 acres of rural land and approximately 165 should all valley residential lots in 2022.
Additional real estate details are provided on the slide.
We estimate that interest expense will be $3 million in the first quarter and just over $8 million per quarter for the second third and fourth quarters of 2022.
Interest expense is lower in the first quarter because that is when we receive our annual patronage payment from the farm credit banks.
Our total capital expenditures are planned to be in the range of 70% to $75 million in 2022, excluding acquisitions.
That estimate includes approximately $15 million to rebuild over which we expect will be reimbursed by insurance.
Overall, we expect to start 2022 with a very strong first quarter we.
We anticipate total adjusted EBITDA for the first quarter will be a bit more than double fourth quarter's level due primarily to higher lumber and index saw log prices.
We remain bullish on industry fundamentals, despite rising interest rates.
Our integrated operating model and leverage to lumber prices are aligned with those fundamentals and we are well positioned to continue to growing shareholder value.
That concludes our prepared remarks, Emma I'd now like to open the call to Q&A.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Your first question today comes from Kurt Yinger with D. A Davidson your line is now open.
Great, Thanks, and good morning, Eric and Jerry.
Hi, Good morning, I just wanted to good morning, I wanted to start off on plywood Jerry you touched on the negative impact from lower prices kind of flushing through there realizing what youre, making is a bit different than commodity is there anything we should be mindful of as we think about prices potentially recovering there like we've seen.
<unk> kind of on the commodity side.
Yes, Kurt so so our plywood prices did decline in the fourth quarter considerably.
Interestingly enough that was about a one quarter lag to whats happen to lumber prices. If you think about lumber prices Q2 to Q3, there was a pretty significant drop in that quarter. Our plywood prices held up in Q3, largely because our order files were pretty long.
And as we got into Q4 prices prices reset as demand softened a little bit.
I think the worst of it is behind us.
And our expectation is things are going to be relatively flat from here as we look out through through 2022.
Got it okay.
That's helpful.
And then.
You talked about kind of the longer term outlook in terms of end market trends, but hoping you could just talk a little bit about what youre seeing in terms of order trends on the lumber side from the big box retailers any way to think about that in terms of how it's trending versus last year and any concerns around inventory levels and that.
Panel or indications of maybe sticker shock starting to slow consumption at all.
Yes, Kurt so so R&R it paused last year Q2, and Q3, you know prices got up to 600 Bucks a thousand and then the market rebounded in Q4.
We expect as we said in our opening remarks, we expect growth in R&R to continue.
For us home centered takeaway it picked up during Q4.
And it's still a solid business for us here in Q1, there's lots of reasons why R&R activity is going to stay strong we've talked about a limited supply of new homes people won't expand living space include outdoor areas record home equity levels strong labor market.
The median age of houses is 42 years all of these all these factors are going to work together to help support.
The R&R business, what I would tell you specific to our business and I don't want to get too down in the weeds for competitive reasons, but I would tell you that our home center demand today is currently outpacing our expectations and we think thats driven both by the DIY as well as the pro contractor segments of R&R. So the way I'd characterize it.
As we we have a program with the home centers to deliver a certain volume of lumber.
Each week, each quarter and what I would tell you is that they've come to us and they have asked for incremental lumber supply here early in 2022.
And there are obviously gearing up for the spring summer.
R&R season.
From our point of view the R&R market the home center market, it's very strong.
Got it okay, well that's good to hear and then just.
Just lastly on I guess, the three other bolt on southern Timberland transactions that you touched on it any color. There you could give us in terms of acreage and I guess geography in valuation.
Well, yes, so so they're relatively small they were all down in the south.
They were three of them two of them more than two of them are in Arkansas, and one of them was over and in Mississippi.
They were in.
Gosh $2000, an acre kind of range on average very attractive well stocked tracks.
And our average real IRR over the course of the year, which would include those four deals in Q4 was around five 4%, which is well above our cost of capital for our timberlands business. So we were quite enthusiastic several of those deals by the way, we're kind of one off negotiated transactions.
And if you look at our track record that's kind of how we like to acquire timberland, we don't like the big <unk>.
Highly competitive broad auctions, all the excess returns tend to get bid away.
We like finding these little niche one off deals where.
The competitive bidding intensity is relatively low and that's what we got in the fourth quarter.
Got it okay, well I appreciate all the color and good luck here in the new year.
Thanks.
Your next question comes from the line of Paul Quinn with RBC capital markets. Your line is now open.
Yes, thanks, very much going guys.
Good morning.
Just wanted to get to work.
Information on the all of fire and the insurance proceeds.
What the extent the insurance cover is there any business interruption insurance and then when do you expect the mill to be back up and what's the new production capacity of the mill.
Yes, so I'll take the first part of that Paul in terms of insurance coverage. So insurance coverage is good we have coverage of both the property damage as well as business interruption.
With a minor deductible around $1 million for the deductible.
And what we have over time is a bit of a mismatch in terms of one week incur expenses or capital expenditures, certainly we had business interruption.
Losses last year, and we got to go through the business interruption piece of that coverage, but.
We'll come out very well financially at the end of the day and in the comments here.
Capex to rebuild all was about $15 million.
This year 2022, and that's fully covered by insurance, we've kind of taken our lumps for the for the small deductible and or in the process of sorting through the business interruption. So throughout the year, you'll probably continue to see some.
Some noise both on the positive at this point perspective in terms of recoveries and we will continue to call that out as a special items as it occurs and then I'll pass it over to Eric for the second part of the question. Yes. So good morning, Paul. So so yes in terms of startup we're going to take delivery of that new large log line kind of in the July August timeframe.
We're having regular interaction with vendor and equipment is on track and demolition has been completed at the site and there is there is a structural steel going in as we speak. So we're confident in that July August kind of a timeframe. So what I what I would tell you is that when we get done with with getting through the hiccups that inevitably come from.
Starting up a piece of equipment like this the mill is going to be really competitive.
We think recovery is going to be roughly 10% improved over the pre fire OLED. We think our processing costs are going to be about 15% lower than the pre fire Ola and we're going to get about 25 million feet of incremental production. So up in the 150 million foot per year kind of range. So we think the mill's competitive.
And this is really going to kind of improve kind of once it's once it's up and running.
Okay, and then just over on real estate I mean, just.
Just like that a lot.
Sales values in Q4 versus the outlook.
What.
Why the why the expectation of higher pricing on the lot sales.
I think better losses as the market moving up significantly.
It's a great question Paul.
Actually it's a combination of both to be honest with you, but the primary answer is and I'll start with this piece of it.
It is really mix usually is the primary factor. So there were a lot of more entry level type home lots that were sold in the fourth quarter and what we have in the mix for the first quarter is more of the premium lots if you will.
And what we do is we release a kind of a community by community. So you can see that mix swing quarter over quarter.
We also did increase prices around 10%.
Last year and continue to increase prices for lot just because demand has been so strong.
I guess the other interesting is I'm talking about strong demand for loss.
When you look at we released or made a 139 lots available in the second half of last year all of those sold or are under contract and just last week. We released 26 lots in another community again some of these nicer more premium lots that are referred to as to why the average price is higher all 26 are now spoke.
And for US so we our team quite honestly can't develop lots fast enough and demand has just been extraordinarily strong in.
In that project, yes, and on that on that note Paul we'd expected of those 26 lots, we had expected 14 of them to sell.
And instead as Jerry said all 26, so that gives you any indication about how the builders are thinking about 2022.
I think that's a really good real time indication.
Okay, and Thats, great and anti silver on the timberland side.
Expectation for four acquisitions in 'twenty two do you see any change at all in the marketplace and are you still focused.
So.
Yes, I would.
We'd love to find something to do up in the inland region. Paul It's just very little comes to market here.
So we're almost forced to go look to the south for growth.
The south is big it's deep it's liquid.
So that's kind of where the timberland M&A game is played these days and what I would say is there are there are a number of deals that are that are in the pipeline.
And I would tell you that it's unbelievably competitive right now chasing.
Chasing chasing timberland deals.
Discount rates are at rock bottom levels and people are being very aggressive both both rights as.
As well as T. Most.
So we'll see if things change, but it's a really competitive market right now for timberland.
So the expectation for higher interest rates.
Through hikes.
Hikes in the fed Hasnt really come back to higher discount rates at this point yet.
No I don't I don't think so Neal the other way to look at it there's a lot of talk about people investing in real assets. These days.
<unk> historically has been a pretty good inflation hedge.
And if you believe in wood baskets, starting to starting to tighten.
You can offset interest rate increases with increased log prices to offset.
Those potentially higher discount rates, so people people and they buy timberland, they really buy it for the long term not for what's happening to interest rates today or tomorrow or next year, even it's really a long term play.
But I will tell you that it is more competitive than ever.
Okay, and maybe one bonus question because you brought it up just just on tightening timber market, especially in the South do you expect those.
Those those saw log prices to move up materially anytime soon or what's your expectation of price increases tiers here so on the losses.
Yes, it's a great question Paul.
At our southern saw log price realizations last year 2021 was up 4% compared to 2020, so certainly.
What weather and log shortages that mills played a role.
I think it's still a bit early in our mind as to whether there is kind of a broader testing that that's occurring.
We do see that in the future.
I think we're on the right trend and passes as mill capacity continues to get added or expanded in the U S. South now having said that we are forecasting.
Next year 2022 versus 2021 that solid pricing probably moves up another 2%. So we're quite optimistic.
It's hard to say beyond kind of local wood baskets and mix.
Whether like I said things are turned in the south which is really the broader question you're asking.
Alright, Thats all I had best of luck guys. Thanks, Greg.
Great. Thanks. Thanks.
Your next question comes from the line of Keaton Ventura with BMO capital markets. Your line is now open.
Thank you and good afternoon.
First question I was just curious kind of what we've seen this big rally in lumber prices.
I'm, usually very non demand is seasonally slow, but what do you think sort of either two or three sort of key drivers is it more driven by.
The absenteeism that youre seeing at the MS inability really produced produce lumber or is it that demand actually has continued to remain strong in all the different sort of end market.
Yes, keeping the way I would characterize it is it's out it's a function of both really we've seen demand remained pretty strong here is despite the fact that we're in the in the winter months R&R.
R&R remains strong housing starts figures had been pretty strong. So demand has been strong and then so if you look at the supply side equation, certainly COVID-19 has impacted production and shipment volumes, we think it cost us $10 million Cedar shipments in the fourth quarter, we think it's going to cost us another 5 million feet here in Q1.
It's an issue the whole industry is grappling with and when you combine that with the issues that <unk> has had with the flooding.
And the all the transportation issues up there trying to get lumber out of BC down to down to the U S. Renal BC is 15% to 20% of North American supply I.
I think that is that has helped conspire to raise prices as well, but I think you've got to think about this in terms of.
Diminishing amount of spare capacity, that's in the lumber producing industry.
If you take a look at the longer term and longer term just like a five year trend, we've seen north American capacity grow roughly 2 billion board feet. Despite all the stock you hear about all these new mills and all of these expansions you add it all up net net <unk> seen roughly 3 million feet come out of Canada and <unk> seen.
$4 5 billion feet here in the U S. But over that same five year stretch you've seen north American consumption grow by roughly 8 billion board feet. So capacity utilization is getting tighter and tighter in the industry and anytime there is a hiccup in the supply chain, whether it's BC floods or it's COVID-19 absent.
Theism, it's going to force prices higher so I think this is just a.
The situation in the industry finds itself in after a decade of under building in the U S.
There wasn't a whole lot of free cash flow floating around the industry for people to go invest in their mills.
So now we're left with demand is coming in really strong and there just isn't the supply to meet it.
So it's a it's really both the supply and a demand issue.
Got it that's helpful perspective, and then switching tool.
Our capex plans for 2022 outside of <unk>.
All of that we discussed earlier can you talk about maybe a couple of key projects that are going on <unk> for this year.
Yes. So we've got we've got two extra projects that are going into Ola. Besides the rebuild project, we're putting in a new tremor optimization piece of equipment. We're also putting in a log simulator.
That's about $4 million of capital and 32% kind of IRR on those projects.
We thought as long as we're rebuilding Ola can we get all this opportunity with that mill to really get it in.
Fighting shape, we thought why not enhance the performance of the mill will those two projects. We've also got a an interesting project out in our our plywood mill.
This is about a $4 $5 million project with roughly.
<unk>, 40% IRR.
It's an automated patch line.
So right now you've got 10 to 15 people that do patch repair for plywood as it moves down the assembly line.
This new automatic patch equipment that were installing it is not only going to remove roughly 12 employees from the mill, which labor is hard to get so thats helpful.
We're also going to cut chemical usage about $1 $7 million per year. So.
So that project is going to going to wrap up here in Q1, and Q2 will be off to the races.
So we're really looking forward to getting that behind us as well and then we're also investing some capital frankly for projects that aren't going to happen this year necessarily because of the vendor lead times or throughout into the into next year. We've got two projects at our Gwinn mill that look really attractive to us. So we're going to we're going to start work on those projects.
Here this year as well one is a major upgrade in the others.
The trim sort line replacement project, so a lot of things in the hopper, but our focus candidly. This year is really the the Ola sawmill rebuilds.
Got it.
Brendan.
Real estate you mentioned.
Development is Chanel Valley development side, but even on the rural side it seems like.
There's quite a bit of activity and interest for Q1, youre talking about sort of over $4000 in.
In our price per acre that seems like a very healthy number.
Yes, that's correct and then I would just start by saying overall demand for rural has been really strong as well.
A combination of factors.
Some of it is just the rural recreation and people in a pandemic window wanting space in prioritizing that even more than than prior to the pandemic, but the other thing I'll touch on is when you think about.
Our team always finds kind of new market opportunities. So always thinking about what is what is the next way to kind of create value.
And one of the things that I'll throw in the mix as you know it was about $50 million of solar projects.
Our team is looking at.
And this is blocking this can be longer term and it's not necessarily I'm not talking Q1, specifically or.
But those would be instances, where most likely we would sell the land after harvesting it and sell it at a really attractive price. So overall give me some examples as to certain segments of that market have just been really strong and they continue to evolve over time.
As you see in the Q1 price per acre, obviously, we have one or more really attractive deals that we are anticipating and look forward to providing color in April assuming we can pull those over the finish line.
Yes, I'd just add to what Gary was saying interestingly enough. We've spoken about this looter deal.
Down in South, Arkansas, and North Louisiana.
<unk> had a history of really not selling much much land.
<unk> kind of kept it for themselves.
And since we've acquired Luder.
And made the announcement, we've now fielded a dozen inbound phone calls people interested in trying to buy some rural acreage from us So theres pent up demand out there for some of those tracks and we're not going to rush into any deals we like to take our time stratify, our acreage and really be conscious about what we're going to sell and what kind of premium.
We're going to get.
But I think that kind of gives you an indication of what we like to do after we do a meaningful timberland acquisition, we stratify, we stratify and then we extract.
Those those acres that have got really high world demand potential price potential and wheat, and we sell them off but we're seeing as Jerry said no slowdown in rural demand.
Got it that's very helpful and just one quick one from me on Cedar prices, how you're starting to see those stabilize or are they still under pressure so far in Q1.
Yes.
It's still a bit under pressure would be the short answer cadence.
But the decline has not been as significant and the other thing Thats important is there is still trading at really attractive prices relative to history. So even though we've come off.
Kind of a record peak if you will.
Still we're still very happy with kind of prices are trading at today.
Got it that's very helpful lifetime into orbit.
Thank you.
Thank you.
Your next question comes from the line of job John Babcock with Bank of America. Your line is now open.
Hi, Thanks and.
Thanks for taking my questions starting out did you make any comments on where you expect EBITDA come out at all for the quarter.
Yes in the prepared comments John at the very end I kind of touched on and said that we expect Q1 EBITDA consolidated for the company to probably be a bit more than double Q4 is our current estimate obviously key.
Key moving part is lumber pricing prices, which made a strong move in on a spot basis provided color that theyre up 90% compared to our fourth quarter average, but it also feels like there's a chance they might've hit hit hit a peak and it depends on kind of how the rest of the quarter plays out.
Okay.
Got you I just want to clarify that.
And then the next part just on <unk>. It sounds like you guys expect that to start up in the <unk> <unk>, sorry, not <unk> to July August timeframe.
How should we think about the ramp up of that.
It's a little early to try to be giving that kind of kind of guidance. John I mean, I think our plan is to get to fully operational by January one 2023.
These these these startups are always challenging.
Kinks get worked out in the system, but I think you can draw.
Align starting August one.
Zero production for the large log line.
And then it's going to linearly get to hopefully get to a 150 million feet by January one.
Might be just a simple way to look at it and think about it.
Okay, and Capex is going to be a little bit elevated this year. How would you have us think about the longer term capex profile I think in the past, we've had $40 million to $45 million annually baked in.
It sounds like about 15.
$15 million or so is all of course, plus or minus a couple million for other investments. So how would you have us kind of think about that.
Well I would I would say that our timberlands capex is relatively stable around $117 million a year or.
Our real estate Capex, it really just depends on our ability to produce locks.
That runs who knows $10 million to $12 million a year.
And then and then its wood products and for Us wood products.
It's really driven by discretionary investments.
What extent do we see high return projects that we feel really good about it.
It varies from year to year.
I think this year it is elevated because of the <unk> spend and I think you've got to back out that $15 million of insurance proceeds that we're going to get reimbursed.
But I think a normal run rate would be in the $25 million to $30 million kind of range.
Going forward had there had there not been in Hulu.
Okay. Thank you that's all I have.
Yes.
At this time I'm showing there are no more questions I'll now turn the call back over to Jerry Richards.
Alright, thank you.
Okay.
To reiterate we expect to start 2022 with a really strong quarter as you heard on the <unk>.
Q&A.
Lease double what we just generated in the fourth quarter.
Housing fundamentals and repairing remark remodel market fundamentals remained really strong we're well positioned and.
I have a really strong balance sheet to continue to grow.
The company and grow shareholder value over time, so thanks for your interest and certainly available to answer detailed modeling questions Russell.
Thank you.
This concludes today's conference call. Thank you for attending you may now disconnect.
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Yes.
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Okay.