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10/27/15
Potlatch Corporation Reports Third Quarter 2015 Results

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 sold136,072  121,574  353,285  322,016 
Selling, general and administrative expenses10,689  10,772  35,010  32,794 
 146,761  132,346  388,295  354,810 
Operating income27,714  44,869  49,052  105,903 
Interest expense, net(8,335) (5,506) (24,420) (16,475)
Income before income taxes19,379  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):       
Basic40,846  40,745  40,831  40,733 
Diluted40,985  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 investments40  26,368 
Receivables, net29,645  9,928 
Inventories40,379  31,490 
Deferred tax assets, net6,168  6,168 
Other assets16,754  15,065 
Total current assets94,292  93,663 
Property, plant and equipment, net74,716  65,749 
Timber and timberlands, net822,353  828,420 
Deferred tax assets, net36,715  37,228 
Other assets11,499  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 debt27,500  22,870 
Total current liabilities93,733  72,194 
Long-term debt602,675  606,473 
Liability for pension and other postretirement employee benefits114,542  115,936 
Other long-term obligations13,586  15,752 
Stockholders' equity215,039  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 amortization28,154  19,326 
Basis of real estate sold3,389  7,289 
Change in deferred taxes(2,786) 1,127 
Employee benefit plans4,774  616 
Equity-based compensation expense3,589  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 activities55,148  107,664 
CASH FLOWS FROM INVESTING ACTIVITIES   
Change in short-term investments26,328  (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, net644  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 period4,644  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 Products82,868  99,213  256,292  287,589 
Real Estate7,828  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 Estate4,234  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 income27,714  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 Products1,693  1,543  4,930  4,587 
Real Estate14  15  44  44 
 11,969  7,659  26,287  17,376 
Corporate588  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:	

(Investors)
Jerry Richards 
509.835.1521

(Media)
Mark Benson
509.835.1513