Potlatch Corporation Reports First Quarter 2015 Results
SPOKANE, Wash., April 22, 2015 (GLOBE NEWSWIRE) -- Potlatch Corp. (Nasdaq:PCH) today reported net income of $5.7 million, or $0.14 per diluted share, on revenues of $134.1 million for the quarter ended March 31, 2015. Net income was $20.3 million, or $0.50 per diluted share, on revenues of $139.6 million in the first quarter of 2014.
"We are surprised and disappointed that lumber prices have fallen since the start of the year," said Mike Covey, chairman and chief executive officer. "We believe that the U.S. housing recovery will continue and that building activity will increase to at least 1.1 million starts this year as the weather improves. We expect lumber prices will recover and that we will post stronger results in the second half of the year," concluded Mr. Covey.
| Financial Highlights | |||
| (millions, except per-share data) | |||
| Q1 2015 | Q4 2014 | Q1 2014 | |
| Revenues | $ 134.1 | $ 146.2 | $ 139.6 |
| Net income | $ 5.7 | $ 20.1 | $ 20.3 |
| Net income per diluted share | $ 0.14 | $ 0.49 | $ 0.5 |
| Distribution per share | $ 0.375 | $ 0.375 | $ 0.35 |
| Net cash from operations | $ 24.4 | $ 23.7 | $ 40.0 |
| Cash and short-term investments at end of period | $ 28.0 | $ 31.0 | $ 76.3 |
Business Performance: Q1 2015 vs. Q4 2014
Resource
Resource's operating income was $15.0 million on revenues of $54.0 million in the first quarter, compared to operating income of $23.9 million on revenues of $69.2 million in the fourth quarter of 2014. Harvest volumes were seasonally lower in the Northern and Southern regions. Northern sawlog price realizations decreased 10% per ton in the quarter due to seasonal factors and lower log prices indexed to lumber prices. Southern pine sawlog prices were relatively flat compared to the fourth quarter. However, due to a lower mix of hardwood logs, average prices for total Southern sawlogs declined 13%.
Wood Products
Wood Products' operating income was $3.5 million on revenues of $89.2 million in the first quarter, compared to operating income of $9.1 million on revenues of $88.7 million in the fourth quarter of 2014. Lumber shipments were down slightly and the average lumber price realized was 2% lower in the first quarter. The magnitude of the price decline was muted somewhat by a favorable shift to include cedar in the mix in the first quarter. Log costs also remained under pressure in the Lake States due to pulp mill demand in the region.
Real Estate
Real Estate's operating income was $1.6 million on revenues of $3.1 million in the first quarter, compared to operating income of $1.6 million on revenues of $4.1 million in the fourth quarter of 2014. The margin increased in the first quarter due to mix.
Conference Call Information
A live conference call and webcast will be held today, April 22, 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 11029310. 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 April 29, 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 11029310 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; the state of the domestic housing market; housing starts; business conditions in our Resource and Wood Products segments; lumber pricing; sawlog pricing; 2015 harvest levels; performance of our Wood Products, Resource and Real Estate segments in 2015; 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; 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 Corp. | ||
| Consolidated Statements of Income | ||
| Unaudited (Dollars in thousands, except per-share amounts) | ||
| Three Months Ended | ||
| March 31, | ||
| 2015 | 2014 | |
| Revenues | $ 134,125 | $ 139,579 |
| Costs and expenses: | ||
| Cost of goods sold | 107,772 | 98,593 |
| Selling, general and administrative expenses | 12,326 | 9,677 |
| 120,098 | 108,270 | |
| Operating income | 14,027 | 31,309 |
| Interest expense, net | (8,069) | (5,460) |
| Income before income taxes | 5,958 | 25,849 |
| Income taxes | (302) | (5,499) |
| Net income | $ 5,656 | $ 20,350 |
| Net income per share: | ||
| Basic | $ 0.14 | $ 0.50 |
| Diluted | 0.14 | 0.50 |
| Distributions per share | $ 0.375 | $ 0.35 |
| Weighted-average shares outstanding (in thousands): | ||
| Basic | 40,802 | 40,561 |
| Diluted | 40,885 | 40,682 |
| Potlatch Corp. | ||
| Condensed Consolidated Balance Sheets | ||
| Unaudited (Dollars in thousands, except per-share amounts) | ||
| March 31, 2015 | December 31, 2014 | |
| ASSETS | ||
| Current assets: | ||
| Cash | $ 9,144 | $ 4,644 |
| Short-term investments | 18,885 | 26,368 |
| Receivables, net | 13,065 | 9,928 |
| Inventories | 27,518 | 31,490 |
| Deferred tax assets, net | 6,168 | 6,168 |
| Other assets | 14,555 | 15,065 |
| Total current assets | 89,335 | 93,663 |
| Property, plant and equipment, net | 68,545 | 65,749 |
| Timber and timberlands, net | 825,584 | 828,420 |
| Deferred tax assets, net | 37,076 | 37,228 |
| Other assets | 10,606 | 10,361 |
| Total assets | $ 1,031,146 | $ 1,035,421 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Current installments on long-term debt | $ 27,498 | $ 22,870 |
| Accounts payable and accrued liabilities | 54,032 | 49,324 |
| Total current liabilities | 81,530 | 72,194 |
| Long-term debt | 602,150 | 606,473 |
| Liability for pension and other postretirement employee benefits | 115,626 | 115,936 |
| Other long-term obligations | 14,849 | 15,752 |
| Stockholders' equity | 216,991 | 225,066 |
| Total liabilities and stockholders' equity | $ 1,031,146 | $ 1,035,421 |
| Shares outstanding (in thousands) | 40,676 | 40,605 |
| Working capital | $ 7,805 | $ 21,469 |
| Current ratio | 1.1:1 | 1.3:1 |
| Potlatch Corp. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| Unaudited (Dollars in thousands) | ||
| Three Months Ended | ||
| March 31, | ||
| 2015 | 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net income | $ 5,656 | $ 20,350 |
| Adjustments to reconcile net income to net cash from operating activities: | ||
| Depreciation, depletion and amortization | 8,504 | 6,104 |
| Basis of real estate sold | 408 | 4,622 |
| Change in deferred taxes | (936) | (164) |
| Employee benefit plans | 1,723 | (178) |
| Equity-based compensation expense | 1,136 | 908 |
| Other, net | (501) | (581) |
| Working capital and operating related activities | 8,447 | 8,923 |
| Net cash from operating activities | 24,437 | 39,984 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Change in short-term investments | 7,483 | (14,699) |
| Property, plant and equipment | (4,810) | (2,168) |
| Timberlands reforestation and roads | (2,734) | (1,469) |
| Other, net | 309 | 108 |
| Net cash from investing activities | 248 | (18,228) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Distributions to common stockholders | (15,253) | (14,206) |
| Employee tax withholdings on equity-based compensation | (1,407) | (1,068) |
| Change in book overdrafts | (3,551) | (2,636) |
| Other, net | 26 | (68) |
| Net cash from financing activities | (20,185) | (17,978) |
| Change in cash | 4,500 | 3,778 |
| Cash at beginning of period | 4,644 | 5,586 |
| Cash at end of period | $ 9,144 | $ 9,364 |
| Potlatch Corp. | ||
| Segment Information | ||
| Unaudited (Dollars in thousands) | ||
| Three Months Ended | ||
| March 31, | ||
| 2015 | 2014 | |
| Revenues: | ||
| Resource | $ 53,955 | $ 51,905 |
| Wood Products | 89,233 | 87,804 |
| Real Estate | 3,111 | 14,439 |
| 146,299 | 154,148 | |
| Elimination of intersegment revenues - Resource | (12,174) | (14,569) |
| Total consolidated revenues | $ 134,125 | $ 139,579 |
| Operating income: | ||
| Resource | $ 14,978 | $ 16,224 |
| Wood Products | 3,500 | 12,707 |
| Real Estate | 1,599 | 8,271 |
| Eliminations and adjustments | 2,975 | 842 |
| 23,052 | 38,044 | |
| Corporate | (9,025) | (6,735) |
| Operating income | 14,027 | 31,309 |
| Interest expense, net | (8,069) | (5,460) |
| Income before income taxes | $ 5,958 | $ 25,849 |
| Depreciation, depletion and amortization:1 | ||
| Resource | $ 6,254 | $ 3,916 |
| Wood Products | 1,576 | 1,529 |
| Real Estate | 15 | 15 |
| 7,845 | 5,460 | |
| Corporate | 659 | 644 |
| Total depreciation, depletion and amortization | $ 8,504 | $ 6,104 |
| Basis of real estate sold: | ||
| Real Estate | $ 471 | $ 5,167 |
| Eliminations and adjustments | (63) | (545) |
| Total basis of real estate sold | $ 408 | $ 4,622 |
| 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: (Investors)
Jerry Richards
509.835.1521
(Media)
Mark Benson
509.835.1513
