POTLATCHDELTIC CORP - FORM 8-K - EX-99.1 - EXHIBIT - April 22, 2014

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Exhibit 99.1
 
 
 
 
Potlatch Corporation
601 W. First Ave., Suite 1600
Spokane, WA 99201
509.835.1500
www.potlatchcorp.com
News Release
For immediate release:
Contact:
(Investors)
(Media)
 
 
Jerry Richards
Mark Benson
 
 
509.835.1521
509.835.1513
 


Potlatch Reports First Quarter 2014 Results

SPOKANE, Wash - April 22, 2014 - 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 2014
 
Q4 2013
 
Q1 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.

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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.

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Potlatch Corporation
Consolidated Statements of Income
Unaudited (Dollars in thousands, except per-share amounts)
 

 
 
Three Months Ended
  
 
March 31,
 
 
2014
 
2013
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




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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



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Potlatch Corporation
Consolidated Condensed Statements of Cash Flows
Unaudited (Dollars in thousands)
 

 
Three Months Ended
 
March 31,
 
2014
 
2013
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


Certain 2013 amounts have been reclassified to conform to the 2014 presentation.






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Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
 
 
Three Months Ended
 
March 31,
 
2014
 
2013
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
(6,735
)
 
(11,399
)
Operating income
31,309

 
26,608

Interest expense
(5,460
)
 
(6,336
)
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




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