SPOKANE, Wash., Apr 27, 2010 (BUSINESS WIRE) --Potlatch Corporation (NYSE:PCH) today reported financial results for the first quarter ended March 31, 2010.
"The year is off to a good start and we are seeing positive developments in both our Resource and Wood Products segments," said Michael Covey, chairman, president and chief executive officer of Potlatch Corporation. "Our Wood Products segment had quarterly operating income for the first time since the third quarter of 2008, as lumber prices and sales volumes both increased more than 25 percent in the first quarter of 2010 over the same period in 2009. In our Resource segment, the volume of sawlogs sold increased over the first quarter of last year. Furthermore, the price increases we are seeing in our Wood Products business have begun to roll over into log prices, so we expect continued improvement from our Resource business. Our Real Estate segment had another solid quarter, completing 31 land sales transactions that produced $3.4 million of revenues. In total, we generated $18.8 million of EBITDDA in the first quarter of 2010, which is a 44 percent increase over the fourth quarter of 2009," concluded Mr. Covey.
Q1 2010 FINANCIAL SUMMARY
Q1 2010 BUSINESS PERFORMANCE
During the first quarter, Potlatch paid a regular quarterly cash distribution on the company's common stock of $0.51 per share.
Health Care Reform Legislation
The Patient Protection and Affordable Care Act as amended by the Health Care and Reconciliation Act of 2010, enacted in March 2010, included a change in the deductibility of drug expenses reimbursed under the Medicare Part D retiree drug subsidy program beginning after 2012. As a result of this legislation, deferred taxes associated with our retiree health care liabilities based on prior law were required to be adjusted, resulting in a net charge to earnings in Q1 2010 of approximately $3.0 million.
"Looking ahead, we are optimistic based on our results for the first quarter and what we have experienced to-date in the second quarter. Demand for logs is improving in all regions, and prices look even better for the second quarter than they were in the first quarter. We expect our 2010 harvest to be approximately 4.0 to 4.4 million tons, above the 3.8 million tons we harvested in 2009. If the current improvements continue, our 2010 harvest may be at the upper end of the range, or potentially even higher. In our Wood Products business, we expect the cost-cutting measures made in 2009, combined with the strong price improvements and increased demand we have experienced in 2010, to continue to result in positive earnings in the second quarter. Regarding our Real Estate segment, demand and interest in non-strategic timberlands and rural recreational real estate continues to be relatively stable, although the demand for HBU lands remains relatively soft," concluded Mr. Covey.
EBITDDA is a non-GAAP measure defined and reconciled to GAAP in the attached financial schedules.
CONFERENCE CALL INFORMATION
A live webcast and conference call will be held today, April 27, 2010, at 8 a.m. Pacific time (11 a.m. Eastern). Those interested may access the webcast at http://ir.potlatchcorp.com and conference call by dialing 866-393-8403 for U.S./Canada and 706-679-7929 for international callers. Participants will be asked to provide conference I.D. number 62270036. Supplemental materials that we will discuss during the call are available on our website.
For those unable to participate in the call, an archived recording will be available through the Potlatch Corporation Web site at http://ir.potlatchcorp.com for approximately one year following the conference call. A telephone replay of the conference call will be available until May 4, 2010, by calling 800-642-1687 for U.S./Canada or 706-645-9291 for international callers and entering passcode number 62270036.
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.6 million acres of timberland in Arkansas, Idaho, Minnesota and Wisconsin. Potlatch, a verified 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.
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, direction of markets, developments and improvements in our Resource and Wood Products segments, demand and price levels for logs, our 2010 harvest levels, the future effects on earnings resulting from previous cost-cutting measures combined with price improvements and increased demand for wood products, and the demand and interest in non-strategic timberlands and rural recreational real estate and HBU lands. 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 tariffs, quotas and trade agreements involving wood products; 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 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.