SPOKANE, Wash., Oct. 27, 2015 (GLOBE NEWSWIRE) — Potlatch Corporation (Nasdaq:PCH) today reported net income of $21.8 million, or $0.53 per diluted share, on revenues of $174.5 million for the quarter ended September 30, 2015. Net income was $33.2 million, or $0.81 per diluted share, on revenues of $177.2 million in the third quarter of 2014.
“While our consolidated results were up significantly in the third quarter relative to the second quarter due to seasonally higher harvest volumes, sequentially lower lumber prices provided a headwind,” said Mike Covey. “We are encouraged by increases in lumber prices the last few weeks and continued improvement in the U.S. housing market. Our Resource business continues to be a steady contributor of cash and the Minnesota rural recreational real estate market remains strong,” concluded Mr. Covey.
Financial Highlights
(millions, except per share data)
| Q3 2015 | Q2 2015 | Q3 2014 | |||||||||||
| Revenues | $ | 174.5 | $ | 128.7 | $ | 177.2 | |||||||
| Net income | $ | 21.8 | $ | 0.7 | $ | 33.2 | |||||||
| Net income per diluted share | $ | 0.53 | $ | 0.02 | $ | 0.81 | |||||||
| Distribution per share | $ | 0.375 | $ | 0.375 | $ | 0.35 | |||||||
| Net cash from operations | $ | 38.5 | $ | (7.7 | ) | $ | 39.2 | ||||||
| Cash and short-term investments at end of period | $ | 1.3 | $ | 10.6 | $ | 73.3 | |||||||
Business Performance: Q3 2015 vs. Q2 2015
Resource
Resource’s operating income was $36.4 million on revenues of $102.3 million in the third quarter, compared to operating income of $8.8 million on revenues of $44.1 million in the second quarter of 2015. Earnings increased due to seasonally higher harvest volumes. Prices realized for sawlogs in the South increased 15% primarily due to a seasonally higher mix of hardwood logs.
Wood Products
Wood Products lost $5.4 million on revenues of $82.9 million in the third quarter, compared to a loss of $2.0 million on revenues of $84.2 million in the second quarter of 2015. Average lumber prices were down 5% in the third quarter compared to the second quarter. Slightly higher lumber shipments partially offset the effect of lower lumber prices.
Real Estate
Real Estate’s operating income was $4.2 million on revenues of $7.8 million in the third quarter, compared to operating income of $8.5 million on revenues of $10.7 million in the second quarter of 2015. Second quarter results included the sale of two commercial sites. The Minnesota rural recreational real estate market remained strong in the third quarter.
Conference Call Information
A live conference call and webcast will be held today, October 27, 2015, at 9 a.m. Pacific Time (noon Eastern Time). Investors may access the webcast at www.potlatchcorp.com by clicking on the Investor Resources link or by conference call at 1-866-393-8403 for U.S./Canada and 1-706-679-7929 for international callers. Participants will be asked to provide conference I.D. number 52573706. Supplemental materials that will be discussed during the call are available on the website.
A replay of the conference call will be available two hours following the call until November 3, 2015 by calling 1-800-585-8367 for U.S./Canada or 1-404-537-3406 for international callers. Callers must enter conference I.D. number 52573706 to access the replay.
About Potlatch
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.6 million acres of timberland in Alabama, Arkansas, Idaho, Minnesota and Mississippi. Potlatch, a certified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of its forest resources. The company also conducts a land sales and development business and operates wood products manufacturing facilities through its taxable REIT subsidiary. More information about Potlatch can be found on the company’s website at www.potlatchcorp.com.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended, including without limitation, statements about our expectations regarding future company performance; the direction of our business markets; business conditions in our Resource and Wood Products segments; the U.S. housing market; lumber pricing; sawlog pricing; performance of our Wood Products, Resource and Real Estate segments in 2015; strength of Minnesota rural recreational real estate market; earnings growth; and similar matters. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in timberland values; changes in timber harvest levels on the company’s lands; changes in timber prices; changes in policy regarding governmental timber sales; changes in the United States and international economies; changes in the level of construction activity; changes in Chinese demand; changes in tariffs, quotas and trade agreements involving wood products; currency fluctuation; changes in demand for our products; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; restrictions on harvesting due to fire danger; changes in raw material, fuel and other costs; the ability to satisfy complex rules in order to remain qualified as a REIT; changes in tax laws that could reduce the benefits associated with REIT status; and other risks and uncertainties described from time to time in the company’s public filings with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this press release and the company does not undertake to update any forward-looking statements.
| Potlatch Corporation | |||||||||||||||
| Consolidated Statements of Income | |||||||||||||||
| Unaudited (Dollars in thousands, except per share amounts) | |||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Revenues | $ | 174,475 | $ | 177,215 | $ | 437,347 | $ | 460,713 | |||||||
| Costs and expenses: | |||||||||||||||
| Cost of goods sold | 136,072 | 121,574 | 353,285 | 322,016 | |||||||||||
| Selling, general and administrative expenses | 10,689 | 10,772 | 35,010 | 32,794 | |||||||||||
| 146,761 | 132,346 | 388,295 | 354,810 | ||||||||||||
| Operating income | 27,714 | 44,869 | 49,052 | 105,903 | |||||||||||
| Interest expense, net | (8,335 | ) | (5,506 | ) | (24,420 | ) | (16,475 | ) | |||||||
| Income before income taxes | 19,379 | 39,363 | 24,632 | 89,428 | |||||||||||
| Income tax benefit (provision) | 2,419 | (6,209 | ) | 3,533 | (19,654 | ) | |||||||||
| Net income | $ | 21,798 | $ | 33,154 | $ | 28,165 | $ | 69,774 | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.53 | $ | 0.81 | $ | 0.69 | $ | 1.71 | |||||||
| Diluted | $ | 0.53 | $ | 0.81 | $ | 0.69 | $ | 1.71 | |||||||
| Distributions per share | $ | 0.375 | $ | 0.35 | $ | 1.13 | $ | 1.05 | |||||||
| Weighted-average shares outstanding (in thousands): | |||||||||||||||
| Basic | 40,846 | 40,745 | 40,831 | 40,733 | |||||||||||
| Diluted | 40,985 | 40,889 | 40,967 | 40,861 | |||||||||||
| Potlatch Corporation | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| Unaudited (Dollars in thousands) | |||||||
| September 30, 2015 |
December 31, 2014 |
||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash | $ | 1,306 | $ | 4,644 | |||
| Short-term investments | 40 | 26,368 | |||||
| Receivables, net | 29,645 | 9,928 | |||||
| Inventories | 40,379 | 31,490 | |||||
| Deferred tax assets, net | 6,168 | 6,168 | |||||
| Other assets | 16,754 | 15,065 | |||||
| Total current assets | 94,292 | 93,663 | |||||
| Property, plant and equipment, net | 74,716 | 65,749 | |||||
| Timber and timberlands, net | 822,353 | 828,420 | |||||
| Deferred tax assets, net | 36,715 | 37,228 | |||||
| Other assets | 11,499 | 10,361 | |||||
| Total assets | $ | 1,039,575 | $ | 1,035,421 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 66,233 | $ | 49,324 | |||
| Current portion of long-term debt | 27,500 | 22,870 | |||||
| Total current liabilities | 93,733 | 72,194 | |||||
| Long-term debt | 602,675 | 606,473 | |||||
| Liability for pension and other postretirement employee benefits | 114,542 | 115,936 | |||||
| Other long-term obligations | 13,586 | 15,752 | |||||
| Stockholders’ equity | 215,039 | 225,066 | |||||
| Total liabilities and stockholders’ equity | $ | 1,039,575 | $ | 1,035,421 | |||
| Potlatch Corporation | |||||||
| Condensed Consolidated Statements of Cash Flows | |||||||
| Unaudited (Dollars in thousands) | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2015 | 2014 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 28,165 | $ | 69,774 | |||
| Adjustments to reconcile net income to net cash from operating activities: | |||||||
| Depreciation, depletion and amortization | 28,154 | 19,326 | |||||
| Basis of real estate sold | 3,389 | 7,289 | |||||
| Change in deferred taxes | (2,786 | ) | 1,127 | ||||
| Employee benefit plans | 4,774 | 616 | |||||
| Equity-based compensation expense | 3,589 | 3,058 | |||||
| Other, net | (675 | ) | (1,805 | ) | |||
| Funding of qualified pension plans | — | (3,550 | ) | ||||
| Working capital and operating related activities, net | (9,462 | ) | 11,829 | ||||
| Net cash from operating activities | 55,148 | 107,664 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Change in short-term investments | 26,328 | (12,793 | ) | ||||
| Transfer to company owned life insurance (COLI) | — | (25,476 | ) | ||||
| Property, plant and equipment | (16,240 | ) | (9,174 | ) | |||
| Timberlands reforestation and roads | (11,155 | ) | (7,840 | ) | |||
| Acquisition of timber and timberlands | (9,320 | ) | (3,143 | ) | |||
| Other, net | 644 | 1,126 | |||||
| Net cash from investing activities | (9,743 | ) | (57,300 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Distributions to common stockholders | (45,761 | ) | (42,621 | ) | |||
| Employee tax withholdings on equity-based compensation | (1,445 | ) | (1,092 | ) | |||
| Change in book overdrafts | (1,440 | ) | (2,919 | ) | |||
| Other, net | (97 | ) | (1,019 | ) | |||
| Net cash from financing activities | (48,743 | ) | (47,651 | ) | |||
| Change in cash | (3,338 | ) | 2,713 | ||||
| Cash at beginning of period | 4,644 | 5,586 | |||||
| Cash at end of period | $ | 1,306 | $ | 8,299 | |||
| Potlatch Corporation | |||||||||||||||
| Segment Information | |||||||||||||||
| Unaudited (Dollars in thousands) | |||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Revenues: | |||||||||||||||
| Resource | $ | 102,322 | $ | 91,919 | $ | 200,388 | $ | 183,336 | |||||||
| Wood Products | 82,868 | 99,213 | 256,292 | 287,589 | |||||||||||
| Real Estate | 7,828 | 6,176 | 21,684 | 36,352 | |||||||||||
| 193,018 | 197,308 | 478,364 | 507,277 | ||||||||||||
| Elimination of intersegment revenues – Resource | (18,543 | ) | (20,093 | ) | (41,017 | ) | (46,564 | ) | |||||||
| Total consolidated revenues | $ | 174,475 | $ | 177,215 | $ | 437,347 | $ | 460,713 | |||||||
| Operating income (loss): | |||||||||||||||
| Resource | $ | 36,389 | $ | 34,080 | $ | 60,164 | $ | 61,122 | |||||||
| Wood Products | (5,422 | ) | 15,743 | (3,875 | ) | 43,320 | |||||||||
| Real Estate | 4,234 | 4,646 | 14,354 | 25,295 | |||||||||||
| Eliminations and adjustments | (564 | ) | (1,994 | ) | 2,950 | (364 | ) | ||||||||
| 34,637 | 52,475 | 73,593 | 129,373 | ||||||||||||
| Corporate | (6,923 | ) | (7,606 | ) | (24,541 | ) | (23,470 | ) | |||||||
| Operating income | 27,714 | 44,869 | 49,052 | 105,903 | |||||||||||
| Interest expense, net | (8,335 | ) | (5,506 | ) | (24,420 | ) | (16,475 | ) | |||||||
| Income before income taxes | $ | 19,379 | $ | 39,363 | $ | 24,632 | $ | 89,428 | |||||||
| Depreciation, depletion and amortization:1 | |||||||||||||||
| Resource | $ | 10,262 | $ | 6,101 | $ | 21,313 | $ | 12,745 | |||||||
| Wood Products | 1,693 | 1,543 | 4,930 | 4,587 | |||||||||||
| Real Estate | 14 | 15 | 44 | 44 | |||||||||||
| 11,969 | 7,659 | 26,287 | 17,376 | ||||||||||||
| Corporate | 588 | 665 | 1,867 | 1,950 | |||||||||||
| Total depreciation, depletion and amortization | $ | 12,557 | $ | 8,324 | $ | 28,154 | $ | 19,326 | |||||||
| Basis of real estate sold: | |||||||||||||||
| Real Estate | $ | 2,450 | $ | 519 | $ | 3,631 | $ | 7,928 | |||||||
| Eliminations and adjustments | (69 | ) | (64 | ) | (242 | ) | (639 | ) | |||||||
| Total basis of real estate sold | $ | 2,381 | $ | 455 | $ | 3,389 | $ | 7,289 | |||||||
1 The presentation of depreciation, depletion and amortization in Segment Information and the Condensed Consolidated Statements of Cash Flows includes amortization of bond discounts and deferred loan fees. Bond discounts and deferred loan fees are recorded in Interest expense, net in the Consolidated Statements of Income.
CONTACT: Contact: (Investors) Jerry Richards 509.835.1521 (Media) Mark Benson 509.835.1513