SPOKANE, Wash., April 26, 2017 (GLOBE NEWSWIRE) -- Potlatch Corporation (Nasdaq:PCH) today reported net income of $16.9 million, or $0.41 per diluted share, on revenues of $149.7 million for the quarter ended March 31, 2017. Net income was $0.2 million, or $0.00 per diluted share, on revenues of $127.9 million in the first quarter of 2016.
“Higher lumber prices continue to drive results in our Resource and Wood Products segments, resulting in strong first quarter earnings,” said Mike Covey, chairman and chief executive officer. “We were pleased with the preliminary countervailing duty announcement on Canadian lumber earlier this week and look forward to the antidumping announcement near the end of June. Record cedar log prices in Idaho contributed to our strong results as well as closing a land conservation sale for almost $2,600 per acre,” stated Mr. Covey.
Financial Highlights (in millions, except per share data)
| Q1 2017 | Q4 2016 | Q1 2016 | ||||||||||
| Revenues | $ | 149.7 | $ | 155.7 | $ | 127.9 | ||||||
| Net income | $ | 16.9 | $ | 14.4 | $ | 0.2 | ||||||
| Net income per diluted share | $ | 0.41 | $ | 0.35 | $ | — | ||||||
| Distribution per share | $ | 0.375 | $ | 0.375 | $ | 0.375 | ||||||
| Net cash from operations | $ | 41.9 | $ | 27.7 | $ | 28.9 | ||||||
| Cash and cash equivalents | $ | 101.7 | $ | 82.6 | $ | 7.8 | ||||||
Business Performance: Q1 2017 vs. Q4 2016
Resource
Resource’s operating income was $14.9 million on revenues of $51.8 million in the first quarter, compared to operating income of $22.7 million on revenues of $66.8 million in the fourth quarter of 2016. Harvest volumes were seasonally lower. A 3% increase in Northern sawlog prices was due largely to the strength of cedar sawlog prices. Southern sawlog prices decreased 9% primarily due to a seasonally lower mix of hardwood logs.
Wood Products
Wood Products earned $8.7 million on revenues of $95.6 million in the first quarter, compared to operating income of $8.3 million on revenues of $95.6 million in the fourth quarter of 2016. Average lumber prices were 7% higher in the first quarter compared to the fourth quarter while lumber shipments were 7% lower as a result of a scheduled boiler maintenance shutdown and capital project at the Warren, Arkansas sawmill.
Real Estate
Real Estate’s operating income was $8.6 million on revenues of $14.5 million in the first quarter, compared to operating income of $6.0 million on revenues of $8.7 million in the fourth quarter of 2016. A higher average sales price offset the effect of selling fewer acres.
Outlook
“Due to strong lumber demand and the favorable duty determination, we expect significantly improved operating results in our Wood Products segment in the second quarter. Due to seasonal harvest restrictions in Idaho we expect Resource income to decline due to lower harvest volumes. We are very pleased with the outlook for our three business segments and believe that our significant leverage to lumber pricing will translate into strong earnings for the balance of the year,” concluded Mr. Covey.
Conference Call Information
A live conference call and webcast will be held today, April 27, 2017, at 9:00 a.m. Pacific Time (12:00 p.m. 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 99765039. 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 May 2, 2017 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 99765039 to access the replay.
About Potlatch
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 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, our expectations regarding U.S. housing market recovery; 1.25 to 1.3 million housing units to be built in the U.S. in 2017; strong repair and remodel market; lumber demand, implementation of duties in the Canadian lumber trade case; future company performance; the direction of our business markets; business conditions, pricing, EBITDDA and earnings in our Resource, Wood Products and Real Estate segments; company earnings in the second quarter of 2017; improved wood products markets in the second quarter of 2017; harvest volumes in the second quarter of 2017 and for the full year; percentage of North and South harvest and sawlogs to be harvested in the North and the South in the second quarter of 2017; robust cedar sawlog market resulting in an increase in EBITDDA compared to 2016; increased lumber shipments in the second quarter of 2017 and for the year; real estate sales in the second quarter of 2017; corporate expenses and interest expense in the second quarter of 2017; tax rate for the second quarter of 2017 and full year; debt maturities; 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, the U.S. housing market, 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; availability of logging contractors; changes in the United States and international economies; changes in the level of construction activity; changes in Asia 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; changes in share price; 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, | ||||||||
| 2017 | 2016 | |||||||
| Revenues | $ | 149,681 | $ | 127,896 | ||||
| Costs and expenses: | ||||||||
| Cost of goods sold | 112,783 | 109,815 | ||||||
| Selling, general and administrative expenses | 12,989 | 13,009 | ||||||
| 125,772 | 122,824 | |||||||
| Operating income | 23,909 | 5,072 | ||||||
| Interest expense, net | (4,970 | ) | (6,025 | ) | ||||
| Income (loss) before income taxes | 18,939 | (953 | ) | |||||
| Income tax (provision) benefit | (2,018 | ) | 1,110 | |||||
| Net income | $ | 16,921 | $ | 157 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.41 | $ | — | ||||
| Diluted | $ | 0.41 | $ | — | ||||
| Dividends per share | $ | 0.375 | $ | 0.375 | ||||
| Weighted-average shares outstanding (in thousands): | ||||||||
| Basic | 40,778 | 40,875 | ||||||
| Diluted | 41,071 | 40,960 | ||||||
| Potlatch Corporation Condensed Consolidated Balance Sheets Unaudited (Dollars in thousands) | ||||||||
| March 31, 2017 | December 31, 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 101,664 | $ | 82,584 | ||||
| Receivables, net | 16,328 | 17,284 | ||||||
| Inventories | 45,347 | 52,622 | ||||||
| Other assets | 8,675 | 11,155 | ||||||
| Total current assets | 172,014 | 163,645 | ||||||
| Property, plant and equipment, net | 74,466 | 72,820 | ||||||
| Timber and timberlands, net | 637,319 | 641,856 | ||||||
| Deferred tax assets, net | 41,550 | 42,051 | ||||||
| Other assets | 7,322 | 7,309 | ||||||
| Total assets | $ | 932,671 | $ | 927,681 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 25,408 | $ | 11,032 | ||||
| Accounts payable and accrued liabilities | 44,209 | 43,710 | ||||||
| Current portion of pension and other postretirement employee benefits | 5,839 | 5,839 | ||||||
| Total current liabilities | 75,456 | 60,581 | ||||||
| Long-term debt | 558,510 | 572,956 | ||||||
| Pension and other postretirement employee benefits | 123,939 | 123,284 | ||||||
| Other long-term obligations | 15,504 | 14,586 | ||||||
| Total liabilities | 773,409 | 771,407 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, $1 par value | 40,608 | 40,519 | ||||||
| Additional paid-in capital | 355,174 | 355,274 | ||||||
| Accumulated deficit | (127,109 | ) | (128,775 | ) | ||||
| Accumulated other comprehensive loss | (109,411 | ) | (110,744 | ) | ||||
| Total stockholders’ equity | 159,262 | 156,274 | ||||||
| Total liabilities and stockholders' equity | $ | 932,671 | $ | 927,681 | ||||
| Potlatch Corporation Condensed Consolidated Statements of Cash Flows Unaudited (Dollars in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 16,921 | $ | 157 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation, depletion and amortization | 6,702 | 8,605 | ||||||
| Basis of real estate sold | 4,790 | 2,034 | ||||||
| Change in deferred taxes | (351 | ) | (1,110 | ) | ||||
| Employee benefit plans | 3,292 | 2,737 | ||||||
| Equity-based compensation expense | 1,157 | 954 | ||||||
| Other, net | (528 | ) | (531 | ) | ||||
| Change in working capital and operating-related activities, net | 9,966 | 16,047 | ||||||
| Net cash from operating activities | 41,949 | 28,893 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property, plant and equipment | (3,636 | ) | (932 | ) | ||||
| Timberlands reforestation and roads | (2,645 | ) | (2,242 | ) | ||||
| Other, net | (102 | ) | 116 | |||||
| Net cash from investing activities | (6,383 | ) | (3,058 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Dividends to common stockholders | (15,228 | ) | (15,258 | ) | ||||
| Repayment of revolving line of credit borrowings | — | (30,000 | ) | |||||
| Repayment of long-term debt | — | (5,000 | ) | |||||
| Proceeds from issuance of long-term debt | — | 27,500 | ||||||
| Change in book overdrafts | — | (2,836 | ) | |||||
| Other, net | (1,258 | ) | (342 | ) | ||||
| Net cash from financing activities | (16,486 | ) | (25,936 | ) | ||||
| Change in cash and cash equivalents | 19,080 | (101 | ) | |||||
| Cash and cash equivalents at beginning of period | 82,584 | 7,925 | ||||||
| Cash and cash equivalents at end of period | $ | 101,664 | $ | 7,824 | ||||
| Potlatch Corporation Segment Information Unaudited (Dollars in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenues: | ||||||||
| Resource | $ | 51,768 | $ | 48,710 | ||||
| Wood Products | 95,592 | 83,238 | ||||||
| Real Estate | 14,504 | 5,566 | ||||||
| 161,864 | 137,514 | |||||||
| Intersegment Resource revenues | (12,183 | ) | (9,618 | ) | ||||
| Total consolidated revenues | $ | 149,681 | $ | 127,896 | ||||
| Income (loss) before income taxes: | ||||||||
| Resource | $ | 14,929 | $ | 10,207 | ||||
| Wood Products | 8,684 | 956 | ||||||
| Real Estate | 8,643 | 2,075 | ||||||
| Eliminations and adjustments | 1,059 | 1,465 | ||||||
| 33,315 | 14,703 | |||||||
| Corporate | (9,406 | ) | (9,631 | ) | ||||
| Operating income | 23,909 | 5,072 | ||||||
| Interest expense, net | (4,970 | ) | (6,025 | ) | ||||
| Income (loss) before income taxes | $ | 18,939 | $ | (953 | ) | |||
| Depreciation, depletion and amortization: | ||||||||
| Resource | $ | 4,384 | $ | 6,128 | ||||
| Wood Products | 1,827 | 1,901 | ||||||
| Real Estate | 1 | 2 | ||||||
| 6,212 | 8,031 | |||||||
| Corporate | 117 | 208 | ||||||
| Bond discounts and deferred loan fees | 373 | 366 | ||||||
| Total depreciation, depletion and amortization | $ | 6,702 | $ | 8,605 | ||||
| Basis of real estate sold: | ||||||||
| Real Estate | $ | 4,809 | $ | 2,245 | ||||
| Eliminations and adjustments | (19 | ) | (211 | ) | ||||
| Total basis of real estate sold | $ | 4,790 | $ | 2,034 | ||||