PCL, which was a pure-play timberlands company, was a fine inflation hedge. On the other hand, WY (which acquired PCL in an all-stock deal in 2015) is no such thing. In 1Q22, only 15% of WY’s EBITDA came from its timberlands segment. The remaining 85% of 1Q22 EBITDA came from: lumber and other manufactured wood products (77%); and real-estate/energy (7%).
For the trailing four quarters (i.e. 2Q21-1Q22), the EBITDA breakdown was essentially the same as in 1Q22: timberlands 16%; lumber and manufactured wood products (77%); and real-estate/energy (7%).
All told, WY is a essentially a taxable manufacturing company that is structured as an REIT at the parent-company level. As such, it’s more of a bet on the US housing market than a timber-based inflation hedge.
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