April 22, 2014

Potlatch Reports First Quarter 2014 Results

SPOKANE, Wash., April 22, 2014 (GLOBE NEWSWIRE) -- Potlatch Corporation (Nasdaq:PCH) today reported net income of $20.3 million, or $0.50 per diluted share, on revenues of $139.6 million for the quarter ended March 31, 2014. This compares to net income of $15.5 million, or $0.38 per diluted share, on revenues of $139.3 million in the first quarter of 2013.

"Each of our business segments managed the effects of the harsh winter weather effectively and delivered solid results in the first quarter," said Michael Covey, chairman and chief executive officer of Potlatch Corporation. "We continue to believe housing starts will exceed 1 million in the U.S. this year and are seeing signs that the pace is picking up as we move into spring. As a result, we expect demand and prices for Idaho sawlogs and lumber to remain strong. We believe that Southern pine sawlog prices in our wood basket will recover over the longer term. Our real estate business continues to perform well and closed the first of two large transactions planned for this year in the first quarter. We continue to generate cash well in excess of our dividend and our strong liquidity provides a high degree of financial flexibility," concluded Mr. Covey.

Financial Highlights      
(millions, except per-share data)      
       
 Q1 2014Q4 2013Q1 2013
Revenues  $ 139.6  $ 140.0  $ 139.3
Net income  $ 20.3  $ 13.7  $ 15.5
Net income per diluted share  $ 0.50  $ 0.34  $ 0.38
Distribution per share  $ 0.35  $ 0.35  $ 0.31
Net cash from operations  $ 40.0  $ 15.2  $ 27.9
Cash and short-term investments at end of period  $ 76.3  $ 57.8  $ 59.7

Business Performance: Q1 2014 vs. Q4 2013

Resource

Resource's operating income was $16.2 million on revenues of $51.9 million in the first quarter, compared to operating income of $18.0 million on revenues of $61.0 million in the fourth quarter of 2013. Harvest volumes decreased seasonally in the Northern and Southern regions. Sawlog price realizations increased slightly in Idaho, consistent with higher lumber pricing in the fourth quarter. In the Southern region, sawlog price realizations declined primarily due to a lower mix of hardwood logs. Southern pine sawlog price realizations were flat.

Wood Products

Wood Products' operating income was $12.7 million on revenues of $87.8 million in the first quarter, compared to operating income of $9.0 million on revenues of $87.4 million in the fourth quarter of 2013. Average lumber prices realized in the first quarter were 7 percent higher than the fourth quarter of 2013, while lumber shipments were 5 percent lower due primarily to the effect of weather conditions on transportation. The delayed shipments will benefit second quarter results.

Real Estate

Real Estate's operating income was $8.3 million on revenues of $14.4 million in the first quarter, compared to operating income of $4.6 million on revenues of $6.8 million in the fourth quarter of 2013. First quarter included the sale of 11,000 acres of rural recreation property in Idaho for $11 million.

Conference Call Information

A live conference call and webcast will be held today, April 22, 2014, 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 15855277. 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, 2014 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 15855277 to access the replay.

About Potlatch

Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 million acres of timberland in Arkansas, Idaho and Minnesota. 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.

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, performance of our Wood Products, Resource and Real Estate segments, 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; 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; performance of agreements to purchase Idaho land; 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)
     
 Three Months Ended
March 31,
 20142013
Revenues  $ 139,579  $ 139,253
Costs and expenses:    
Cost of goods sold 98,593 98,299
Selling, general and administrative expenses 9,677 13,596
Environmental remediation charge 750
  108,270 112,645
Operating income 31,309 26,608
Interest expense, net (5,460) (6,336)
Income before income taxes 25,849 20,272
Income tax provision (5,499) (4,785)
Net income  $ 20,350  $ 15,487
     
Net income per share:    
Basic  $ 0.50  $ 0.38
Diluted 0.50 0.38
Distributions per share  $ 0.35  $ 0.31
Weighted-average shares outstanding (in thousands):    
Basic 40,561 40,436
Diluted 40,682 40,613
 
Potlatch Corporation
Consolidated Condensed Balance Sheets
Unaudited (Dollars in thousands, except per-share amounts)
     
 March 31, 
2014
December 31,
2013
ASSETS    
Current assets:    
Cash  $ 9,364  $ 5,586
Short-term investments 66,950 52,251
Receivables, net 12,593 16,572
Inventories 34,231 36,275
Deferred tax assets 7,724 7,724
Other assets 8,239 11,961
Total current assets 139,101 130,369
Property, plant and equipment, net 60,071 59,976
Timber and timberlands, net 451,109 455,871
Deferred tax assets 20,833 21,576
Other assets 12,766 12,738
   $ 683,880  $ 680,530
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current installments on long-term debt $ — $ —
Accounts payable and accrued liabilities 49,462 50,318
Total current liabilities 49,462 50,318
Long-term debt 320,014 320,092
Liability for pensions and other postretirement employee benefits 82,448 83,619
Other long-term obligations 20,658 22,353
Stockholders' equity 211,298 204,148
   $ 683,880  $ 680,530
     
Shares outstanding (in thousands) 40,589 40,537
Working capital $ 89,639 $ 80,051
Current ratio 2.8:1 2.6:1
 
Potlatch Corporation
Consolidated Condensed Statements of Cash Flows
Unaudited (Dollars in thousands)
   
 Three Months Ended
March 31,
 20142013
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income  $ 20,350  $ 15,487
Adjustments to reconcile net income to net cash from operating activities:    
Depreciation, depletion and amortization 6,104 6,867
Basis of real estate sold 4,622 457
Change in deferred taxes (164) 215
Employee benefit plans (178) 2,799
Equity-based compensation expense 908 1,072
Other, net (581) (41)
Working capital and operating related activities 8,923 1,078
Net cash from operating activities 39,984 27,934
CASH FLOWS FROM INVESTING ACTIVITIES    
Change in short-term investments (14,699) 7,639
Additions to property, plant and equipment (2,168) (2,321)
Additions to timber and timberlands (1,469) (2,311)
Other, net 108 (373)
Net cash from investing activities (18,228) 2,634
CASH FLOWS FROM FINANCING ACTIVITIES    
Distributions to common stockholders (14,206) (12,552)
Repayment of long-term debt (27,650)
Issuance of common stock 667
Employee tax withholdings on equity-based compensation (1,068) (1,685)
Change in book overdrafts (2,636) (2,030)
Other, net (68) (24)
Net cash from financing activities (17,978) (43,274)
Change in cash 3,778 (12,706)
Cash at beginning of period 5,586 16,985
Cash at end of period  $ 9,364  $ 4,279
 
Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
     
 Three Months Ended
March 31,
 20142013
Revenues:    
Resource  $ 51,905  $ 54,968
Real Estate 14,439 4,635
Wood Products 87,804 91,544
  154,148 151,147
Elimination of intersegment revenues - Resource (14,569) (11,894)
Total consolidated revenues  $139,579  $139,253
     
Operating income:    
Resource  $ 16,224  $ 15,525
Real Estate 8,271 3,083
Wood Products 12,707 18,910
Eliminations and adjustments 842 489
  38,044 38,007
Corporate (12,195) (17,735)
Income before income taxes  $ 25,849  $ 20,272
     
Depreciation, depletion and amortization:    
Resource  $ 3,916  $ 4,592
Real Estate 15 13
Wood Products 1,529 1,509
  5,460 6,114
Corporate 644 753
Total depreciation, depletion and amortization  $ 6,104  $ 6,867
     
Basis of real estate sold:    
Real Estate  $ 5,167  $ 616
Eliminations and adjustments (545) (159)
Total basis of real estate sold  $ 4,622  $ 457
CONTACT: (Investors)

         Jerry Richards

         509.835.1521

         

         (Media)

         Mark Benson

         509.835.1513


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