Potlatch Corporation Reports Second Quarter 2017 Results
25.07.2017 | GlobeNewswire
SPOKANE, Wash., July 24, 2017 (GLOBE NEWSWIRE) -- Potlatch Corp. (Nasdaq:PCH) today reported net income of $24.3 million, or $0.59 per diluted share, on revenues of $163.2 million for the quarter ended June 30, 2017. Net loss was $31.3 million, or $0.77 per diluted share, on revenues of $141.5 million in the second quarter of 2016. Excluding the after-tax loss of $36.7 million on the sale of central Idaho timber and timberlands, net income was $5.4 million, or $0.13 per diluted share for the quarter ended June 30, 2016.
“The power of our leverage to lumber prices was reflected in our strong financial performance in the second quarter,” said Mike Covey, chairman and chief executive officer. “Our Wood Products segment shipped a record volume of lumber for the third time in four quarters, maximizing the benefit of robust lumber prices. Lumber prices also lifted mixed sawlog prices in Idaho and cedar sawlog prices remain at record levels,” stated Mr. Covey.
Financial Highlights (in millions, except per share data)
| Q2 2017 | Q1 2017 | Q2 2016 | ||||||||||
| Revenues | $ | 163.2 | $ | 149.7 | $ | 141.5 | ||||||
| Net income | $ | 24.3 | $ | 16.9 | $ | (31.3 | ) | |||||
| Net income per diluted share | $ | 0.59 | $ | 0.41 | $ | (0.77 | ) | |||||
| Distribution per share | $ | 0.375 | $ | 0.375 | $ | 0.375 | ||||||
| Net cash from operations | $ | 37.5 | $ | 41.9 | $ | 16.8 | ||||||
| Cash and cash equivalents | $ | 110.3 | $ | 101.7 | $ | 65.4 | ||||||
Business Performance: Q2 2017 vs. Q1 2017
Resource
Resource’s operating income was $19.5 million on revenues of $55.9 million in the second quarter, compared to operating income of $14.9 million on revenues of $51.8 million in the first quarter of 2017. Northern sawlog prices increased 26% relative to the first quarter due primarily to the effect of higher lumber prices on indexed sales agreements. Lower harvest volumes due to spring break-up in Idaho and slightly lower Southern sawlog prices partially offset the benefit of higher Northern sawlog prices.
Wood Products
Wood Products earned $24.7 million on revenues of $114.5 million in the second quarter, compared to operating income of $8.7 million on revenues of $95.6 million in the first quarter of 2017. Average lumber prices were 11% higher and shipments increased 13% in the second quarter compared to the first quarter.
Real Estate
Real Estate’s operating income was $5.8 million on revenues of $8.1 million in the second quarter, compared to operating income of $8.6 million on revenues of $14.5 million in the first quarter of 2017. Fewer acres were sold at a lower average sales price in the second quarter compared to the first quarter.
Outlook
“Due to a seasonal increase in our harvest volumes, we expect significantly improved operating results in our Resource segment in the third quarter. We are very pleased with the outlook for our three business segments and believe that our significant leverage to lumber pricing will translate into strong earnings for the balance of the year,” concluded Mr. Covey.
Reconciliation of Q2 2016 Earnings (in millions, except per share data)
| Amount | Per Share | |||||||
| Net income (loss) | $ | (31.3 | ) | $ | (0.77 | ) | ||
| Net loss on sale of central Idaho timberland | 36.7 | 0.90 | ||||||
| Net income (loss), as adjusted | $ | 5.4 | $ | 0.13 | ||||
Conference Call Information
A live conference call and webcast will be held today, July 25, 2017, at 9:00 a.m. Pacific Time (12:00 p.m. 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 47086081. 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 August 1, 2017 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 47086081 to access the replay.
About Potlatch
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 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, our expectations regarding the U.S. housing market; strong repair and remodel market; lumber demand and pricing; future company performance; the direction of our business markets; business conditions, pricing, EBITDDA and earnings in our Resource, Wood Products and Real Estate segments; company earnings in the third quarter of 2017 and for the full year; harvest volumes in the third quarter of 2017 and for the full year; percentage of total harvest that will occur in the North and South and the percentage of sawlogs to be harvested in the North and the South in the third quarter of 2017; robust cedar sawlog market resulting in an increase in EBITDDA compared to 2016; lumber shipments in the third quarter of 2017 and for the year; real estate sales in the third quarter of 2017; capital projects and capital expenditures in 2017; corporate expenses and interest expense in the third quarter of 2017; tax rate for the third quarter of 2017 and full year; debt maturities; 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, the U.S. housing market, 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; availability of logging contractors and shipping capacity; changes in the United States and international economies; changes in the level of construction activity; changes in Asia 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; changes in share price; 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 Corp. | ||||||||||||||||||||
| Consolidated Statements of Income (Loss) | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | June 30, | Six Months Ended June 30, | |||||||||||||||||
| (Dollars in thousands, except per share amount) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Revenues | $ | 163,229 | $ | 149,681 | $ | 141,495 | $ | 312,910 | $ | 269,391 | ||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Cost of goods sold | 111,556 | 112,783 | 113,377 | 224,339 | 223,192 | |||||||||||||||
| Selling, general and administrative expenses | 14,165 | 12,989 | 13,824 | 27,154 | 26,833 | |||||||||||||||
| Gain on lumber price swap | (3,265 | ) | — | — | (3,265 | ) | — | |||||||||||||
| Loss on sale of central Idaho1 | — | — | 48,522 | — | 48,522 | |||||||||||||||
| 122,456 | 125,772 | 175,723 | 248,228 | 298,547 | ||||||||||||||||
| Operating income (loss) | 40,773 | 23,909 | (34,228 | ) | 64,682 | (29,156 | ) | |||||||||||||
| Interest expense, net | (7,348 | ) | (4,970 | ) | (8,206 | ) | (12,318 | ) | (14,231 | ) | ||||||||||
| Income (loss) before income taxes | 33,425 | 18,939 | (42,434 | ) | 52,364 | (43,387 | ) | |||||||||||||
| Income tax (provision) benefit | (9,181 | ) | (2,018 | ) | 11,196 | (11,199 | ) | 12,306 | ||||||||||||
| Net income (loss) | $ | 24,244 | $ | 16,921 | $ | (31,238 | ) | $ | 41,165 | $ | (31,081 | ) | ||||||||
| Net income (loss) per share: | ||||||||||||||||||||
| Basic | $ | 0.59 | $ | 0.41 | $ | (0.77 | ) | $ | 1.01 | $ | (0.76 | ) | ||||||||
| Diluted | $ | 0.59 | $ | 0.41 | $ | (0.77 | ) | $ | 1.00 | $ | (0.76 | ) | ||||||||
| Dividends per share | $ | 0.375 | $ | 0.375 | $ | 0.375 | $ | 0.75 | $ | 0.75 | ||||||||||
| (In thousands) | ||||||||||||||||||||
| Weighted-average shares outstanding: | ||||||||||||||||||||
| Basic | 40,823 | 40,778 | 40,784 | 40,802 | 40,837 | |||||||||||||||
| Diluted | 41,219 | 41,071 | 40,784 | 41,144 | 40,837 | |||||||||||||||
| 1 In the second quarter of 2016, we sold approximately 172,000 acres of timberlands located in central Idaho for $114 million at a loss of $48.5 million before taxes. | ||||||||||||||||||||
| Potlatch Corp. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| Unaudited | ||||||||
| (Dollars in thousands) | June 30, 2017 | December 31, 2016 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 110,324 | $ | 82,584 | ||||
| Receivables, net | 23,536 | 17,284 | ||||||
| Inventories | 40,124 | 52,622 | ||||||
| Other assets | 12,396 | 11,155 | ||||||
| Total current assets | 186,380 | 163,645 | ||||||
| Property, plant and equipment, net | 74,671 | 72,820 | ||||||
| Timber and timberlands, net | 639,178 | 641,856 | ||||||
| Deferred tax assets, net | 39,445 | 42,051 | ||||||
| Other assets | 7,100 | 7,309 | ||||||
| Total assets | $ | 946,774 | $ | 927,681 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 20,349 | $ | 11,032 | ||||
| Accounts payable and accrued liabilities | 53,130 | 43,710 | ||||||
| Current portion of pension and other postretirement employee benefits | 5,839 | 5,839 | ||||||
| Total current liabilities | 79,318 | 60,581 | ||||||
| Long-term debt | 558,853 | 572,956 | ||||||
| Pension and other postretirement employee benefits | 123,745 | 123,284 | ||||||
| Other long-term obligations | 14,529 | 14,586 | ||||||
| Total liabilities | 776,445 | 771,407 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, $1 par value | 40,610 | 40,519 | ||||||
| Additional paid-in capital | 356,453 | 355,274 | ||||||
| Accumulated deficit | (118,120 | ) | (128,775 | ) | ||||
| Accumulated other comprehensive loss | (108,614 | ) | (110,744 | ) | ||||
| Total stockholders’ equity | 170,329 | 156,274 | ||||||
| Total liabilities and stockholders' equity | $ | 946,774 | $ | 927,681 | ||||
| Potlatch Corp. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| Unaudited | ||||||||
| Six Months Ended June 30, | ||||||||
| (Dollars in thousands) | 2017 | 2016 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 41,165 | $ | (31,081 | ) | |||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation, depletion and amortization | 13,343 | 16,474 | ||||||
| Basis of real estate sold | 5,772 | 5,421 | ||||||
| Change in deferred taxes | 1,244 | (6,784 | ) | |||||
| Pension and other postretirement employee benefits | 6,575 | 7,830 | ||||||
| Equity-based compensation expense | 2,348 | 2,176 | ||||||
| Loss on sale of central Idaho timber and timberlands | — | 48,522 | ||||||
| Other, net | (983 | ) | (1,280 | ) | ||||
| Change in working capital and operating-related activities, net | 9,919 | 4,383 | ||||||
| Net cash from operating activities | 79,383 | 45,661 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property, plant and equipment | (5,939 | ) | (3,488 | ) | ||||
| Timberlands reforestation and roads | (5,792 | ) | (5,544 | ) | ||||
| Acquisition of timber and timberlands | (3,132 | ) | (1,161 | ) | ||||
| Net proceeds from sale of central Idaho timber and timberlands | — | 111,460 | ||||||
| Other, net | (74 | ) | 109 | |||||
| Net cash from investing activities | (14,937 | ) | 101,376 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Dividends to common stockholders | (30,457 | ) | (30,453 | ) | ||||
| Repayment of revolving line of credit borrowings | — | (30,000 | ) | |||||
| Repayment of long-term debt | (5,000 | ) | (47,600 | ) | ||||
| Proceeds from issuance of long-term debt | — | 27,500 | ||||||
| Repurchase of common stock | — | (5,956 | ) | |||||
| Other, net | (1,249 | ) | (3,075 | ) | ||||
| Net cash from financing activities | (36,706 | ) | (89,584 | ) | ||||
| Change in cash and cash equivalents | 27,740 | 57,453 | ||||||
| Cash and cash equivalents at beginning of period | 82,584 | 7,925 | ||||||
| Cash and cash equivalents at end of period | $ | 110,324 | $ | 65,378 | ||||
| Potlatch Corp. | ||||||||||||||||||||
| Segment Information | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | June 30, | Six Months Ended June 30, | |||||||||||||||||
| (Dollars in thousands) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Revenues: | ||||||||||||||||||||
| Resource | $ | 55,924 | $ | 51,768 | $ | 54,826 | $ | 107,692 | $ | 103,536 | ||||||||||
| Wood Products | 114,529 | 95,592 | 90,924 | 210,121 | 174,162 | |||||||||||||||
| Real Estate | 8,136 | 14,504 | 9,954 | 22,640 | 15,520 | |||||||||||||||
| 178,589 | 161,864 | 155,704 | 340,453 | 293,218 | ||||||||||||||||
| Intersegment Resource revenues | (15,360 | ) | (12,183 | ) | (14,209 | ) | (27,543 | ) | (23,827 | ) | ||||||||||
| Total consolidated revenues | $ | 163,229 | $ | 149,681 | $ | 141,495 | $ | 312,910 | $ | 269,391 | ||||||||||
| Income (loss) before income taxes: | ||||||||||||||||||||
| Resource | $ | 19,520 | $ | 14,929 | $ | 15,672 | $ | 34,449 | $ | 25,879 | ||||||||||
| Wood Products | 24,705 | 8,684 | 4,695 | 33,389 | 5,651 | |||||||||||||||
| Real Estate | 5,725 | 8,643 | (43,429 | ) | 14,368 | (41,354 | ) | |||||||||||||
| Eliminations and adjustments | 1,053 | 1,059 | (969 | ) | 2,112 | 496 | ||||||||||||||
| 51,003 | 33,315 | (24,031 | ) | 84,318 | (9,328 | ) | ||||||||||||||
| Corporate | (10,230 | ) | (9,406 | ) | (10,197 | ) | (19,636 | ) | (19,828 | ) | ||||||||||
| Operating income (loss) | 40,773 | 23,909 | (34,228 | ) | 64,682 | (29,156 | ) | |||||||||||||
| Interest expense, net | (7,348 | ) | (4,970 | ) | (8,206 | ) | (12,318 | ) | (14,231 | ) | ||||||||||
| Income (loss) before income taxes | $ | 33,425 | $ | 18,939 | $ | (42,434 | ) | $ | 52,364 | $ | (43,387 | ) | ||||||||
| Depreciation, depletion and amortization: | ||||||||||||||||||||
| Resource | $ | 4,274 | $ | 4,384 | $ | 5,387 | $ | 8,658 | $ | 11,515 | ||||||||||
| Wood Products | 1,839 | 1,827 | 1,800 | 3,666 | 3,701 | |||||||||||||||
| Real Estate | — | 1 | 1 | 1 | 3 | |||||||||||||||
| 6,113 | 6,212 | 7,188 | 12,325 | 15,219 | ||||||||||||||||
| Corporate | 158 | 117 | 213 | 275 | 421 | |||||||||||||||
| Bond discounts and deferred loan fees | 370 | 373 | 468 | 743 | 834 | |||||||||||||||
| Total depreciation, depletion and amortization | $ | 6,641 | $ | 6,702 | $ | 7,869 | $ | 13,343 | $ | 16,474 | ||||||||||
| Basis of real estate sold: | ||||||||||||||||||||
| Real Estate | $ | 1,047 | $ | 4,809 | $ | 3,509 | $ | 5,856 | $ | 5,754 | ||||||||||
| Eliminations and adjustments | (65 | ) | (19 | ) | (122 | ) | (84 | ) | (333 | ) | ||||||||||
| Total basis of real estate sold | $ | 982 | $ | 4,790 | $ | 3,387 | $ | 5,772 | $ | 5,421 | ||||||||||
Contact:
(Investors)
Jerry Richards
509.835.1521
(Media)
Mark Benson
509.835.1513