Potlatch Reports First Quarter 2009 Results
SPOKANE, Wash.--(BUSINESS WIRE)--Apr. 28, 2009--
Potlatch Corporation (NYSE:PCH) today reported financial results
for the first quarter ended March 31, 2009.
Q1 2009 Financial Summary
Earnings from continuing operations for the quarter were $28.8
million, or $0.72 per diluted common share, compared to $23.3 million,
or $0.59 per diluted common share for Q1 2008.
- Net earnings for the quarter, including discontinued operations, were
$24.8 million, or $0.62 per diluted common share, compared to $10.3
million, or $0.26 per diluted common share for Q1 2008.
Discontinued operations for both periods included the effects of
the spin-off of the Clearwater Paper operations and the closure of
our Prescott, Arkansas lumber mill.
Q1 2009 discontinued operations results also included a pre-tax
charge of $5.75 million for a tentative legal settlement related
to the sale of our oriented strand board, or OSB, manufacturing
facilities in 2004.
Q1 2008 discontinued operations results also included a pre-tax
charge of $2.7 million related to a settlement with the direct
purchaser class in the OSB antitrust lawsuit.
Cash provided by operating activities from continuing operations was
$41.6 million for Q1 2009 compared to $13.5 million for Q1 2008.
“The Resource segment had lower earnings in Q1 2009, primarily due to
decreased pricing in both the southern and northern regions and lower
harvest levels in the northern region during the quarter,” said Michael
J. Covey, chairman, president and chief executive officer. “Compared to
Q1 2008, sawlog pricing was approximately 25 percent lower in the
northern region and approximately 15 percent lower in the southern
region, while pulpwood pricing increased slightly in the northern region
and decreased 12 percent in the southern region.
“The Real Estate segment had excellent results in Q1 2009 compared to Q1
2008 primarily due to a large sale of land in Arkansas in January 2009.
“The Wood Products segment continued to experience extremely weak market
conditions, with an operating loss of $11.2 million in Q1 2009 compared
to a loss of $6.5 million in Q1 2008. Most of our wood products mills
ran at reduced production levels since the beginning of this year as we
took steps to mitigate losses. Since January, monthly results have
improved and the operating loss has been cut in half with continued
improvement expected,” concluded Covey.
Q1 2009 Business Performance
Operating income for the segment was $10.8 million, compared to $17.2
million earned in Q1 2008.
Fee harvest levels increased 34 percent in Q1 2009 compared to Q1
2008, primarily due to excellent logging conditions and stable demand
from customers which allowed us to accelerate harvesting planned for
later in the year.
Sawlog pricing was lower by 15 percent, while pulpwood pricing was
lower by 12 percent in Q1 2009 compared to Q1 2008.
Fee harvest levels decreased 20 percent in Q1 2009 compared to Q1 2008
primarily to match log production with weaker demand caused by lumber
Sawlog pricing was lower by 25 percent, while pulpwood pricing
increased 1 percent in Q1 2009 compared to Q1 2008.
Operating income for the segment was $41.5 million in Q1 2009,
compared to $16.7 million in Q1 2008.
We sold approximately 24,500 acres of timberland in Arkansas in
January 2009 for approximately $43.3 million, or $1,760 per acre.
Other lands sales in Q1 2009 totaled approximately 5,500 acres at
an overall average price of approximately $880 per acre.
We sold approximately 23,500 acres of land in Minnesota in Q1 2008
at an average price of approximately $370 per acre. Other lands
sales in Q1 2008 totaled approximately 5,500 acres at an average
price of nearly $2,250 per acre.
The segment reported an operating loss of $11.2 million for Q1 2009,
compared to a loss of $6.5 million for Q1 2008.
Lumber results were negatively impacted by the continued downturn
in the housing market, resulting in lower net sales prices and
Most of our mills were operating with reduced production schedules
during Q1 2009.
During the first quarter, Potlatch paid a regular quarterly cash
distribution on the company’s common stock of $0.51 per share.
“Looking ahead, the second quarter is our weakest of the year due to
seasonal harvest curtailments in the Northern region caused by load
weight restrictions on roads and spring breakup conditions that limit
access to logging sites,” Covey said. “Harvest levels for the remainder
of 2009 are dependent to a large degree on pricing and demand. A number
of sawmills in Idaho have curtailed or closed due to weak lumber
pricing, and it is uncertain when they will resume full operation.
Regarding our Real Estate segment, demand and interest in non-strategic
timberland and rural recreational real estate continues to be relatively
stable, although the demand for HBU lands remains soft. We expect
continued weakness from our Wood Products business through much of 2009,
but we are starting to see improvement in monthly results and expect the
mills to perform at cash breakeven levels during the second quarter.”
Conference Call Information
A live webcast and conference call will be held today, April 28, 2009,
at 8 a.m. Pacific time (11 a.m. Eastern). Those interested may access
the webcast at www.potlatchcorp.com
and conference call by dialing 866-393-8403 for U.S./Canada and
973-638-3465 for international callers. Participants will be asked to
provide conference I.D. number 90566563. Supplemental materials
discussed during the call are available on our Web site.
For those unable to participate in the call, an archived recording will
be available through the Potlatch Corporation Web site at www.potlatchcorp.com
for approximately one year following the conference call. A telephone
replay of the conference call will be available until May 5, 2009, by
calling 800-642-1687 for U.S./Canada or 706-645-9291 for international
callers and entering passcode number 90566563.
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 future company
performance, direction of markets, facility shutdowns, log pricing,
future harvest levels, demand for real estate, lumber pricing and lumber
mill closures, and the results of efforts to minimize losses in our Wood
Products segment. 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 company does not undertake to update any forward-looking
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