POTLATCHDELTIC CORP - FORM 8-K - EX-99.1 - PRESS RELEASE - April 22, 2015

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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 Corporation Reports First Quarter 2015 Results
SPOKANE, Wash - April 22, 2015 - Potlatch Corporation (Nasdaq: PCH) today reported net income of $5.7 million, or $0.14 per diluted share, on revenues of $134.1 million for the quarter ended March 31, 2015. Net income was $20.3 million, or $0.50 per diluted share, on revenues of $139.6 million in the first quarter of 2014.
"We are surprised and disappointed that lumber prices have fallen since the start of the year," said Mike Covey, chairman and chief executive officer. "We believe that the U.S. housing recovery will continue and that building activity will increase to at least 1.1 million starts this year as the weather improves. We expect lumber prices will recover and that we will post stronger results in the second half of the year," concluded Mr. Covey.
Financial Highlights
(millions, except per-share data)            
 
Q1 2015
 
Q4 2014
 
Q1 2014
Revenues
$
134.1

 
$
146.2

 
$
139.6

Net income
$
5.7

 
$
20.1

 
$
20.3

Net income per diluted share
$
0.14

 
$
0.49

 
$
0.5

Distribution per share
$
0.375

 
$
0.375

 
$
0.35

Net cash from operations
$
24.4

 
$
23.7

 
$
40.0

Cash and short-term investments at end of period
$
28.0

 
$
31.0

 
$
76.3




Business Performance: Q1 2015 vs. Q4 2014
Resource
Resource’s operating income was $15.0 million on revenues of $54.0 million in the first quarter, compared to operating income of $23.9 million on revenues of $69.2 million in the fourth quarter of 2014. Harvest volumes were seasonally lower in the Northern and Southern regions. Northern sawlog price realizations decreased 10% per ton in the quarter due to seasonal factors and lower log prices indexed to lumber prices. Southern pine sawlog prices were relatively flat compared to the fourth quarter. However, due to a lower mix of hardwood logs, average prices for total Southern sawlogs declined 13%.
Wood Products
Wood Products’ operating income was $3.5 million on revenues of $89.2 million in the first quarter, compared to operating income of $9.1 million on revenues of $88.7 million in the fourth quarter of 2014. Lumber shipments were down slightly and the average lumber price realized was 2% lower in the first quarter. The magnitude of the price decline was muted somewhat by a favorable shift to include cedar in the mix in the first quarter. Log costs also remained under pressure in the Lake States due to pulp mill demand in the region.
Real Estate
Real Estate’s operating income was $1.6 million on revenues of $3.1 million in the first quarter, compared to operating income of $1.6 million on revenues of $4.1 million in the fourth quarter of 2014. The margin increased in the first quarter due to mix.
Conference Call Information
A live conference call and webcast will be held today, April 22, 2015, 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 11029310. 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, 2015 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 11029310 to access the replay.
About Potlatch
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.6 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, 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; 2015 harvest levels; performance of our Wood Products, Resource and Real Estate segments in 2015; earnings growth; 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

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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; 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; 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,
 
 
2015
 
2014
Revenues
 
$
134,125

 
$
139,579

Costs and expenses:
 
 
 
 
Cost of goods sold
 
107,772

 
98,593

Selling, general and administrative expenses
 
12,326

 
9,677

 
 
120,098

 
108,270

Operating income
 
14,027

 
31,309

Interest expense, net
 
(8,069
)
 
(5,460
)
Income before income taxes
 
5,958

 
25,849

Income taxes
 
(302
)
 
(5,499
)
Net income
 
$
5,656

 
$
20,350

 
 
 
 
 
Net income per share:
 
 
 
 
Basic
 
$
0.14

 
$
0.50

Diluted
 
0.14

 
0.50

Distributions per share
 
$
0.375

 
$
0.35

Weighted-average shares outstanding (in thousands):
 
 
 
 
Basic
 
40,802

 
40,561

Diluted
 
40,885

 
40,682




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Potlatch Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands, except per-share amounts)
 

 
March 31, 
 2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash
$
9,144

 
$
4,644

Short-term investments
18,885

 
26,368

Receivables, net
13,065

 
9,928

Inventories
27,518

 
31,490

Deferred tax assets, net
6,168

 
6,168

Other assets
14,555

 
15,065

Total current assets
89,335

 
93,663

Property, plant and equipment, net
68,545

 
65,749

Timber and timberlands, net
825,584

 
828,420

Deferred tax assets, net
37,076

 
37,228

Other assets
10,606

 
10,361

Total assets
$
1,031,146

 
$
1,035,421

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current installments on long-term debt
$
27,498

 
$
22,870

Accounts payable and accrued liabilities
54,032

 
49,324

       Total current liabilities
81,530

 
72,194

Long-term debt
602,150

 
606,473

Liability for pension and other postretirement employee benefits
115,626

 
115,936

Other long-term obligations
14,849

 
15,752

Stockholders’ equity
216,991

 
225,066

Total liabilities and stockholders' equity
$
1,031,146

 
$
1,035,421

 
 
 
 
Shares outstanding (in thousands)
40,676

 
40,605

Working capital
$
7,805

 
$
21,469

Current ratio
1.1:1

 
1.3:1




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

 
Three Months Ended
 
March 31,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
5,656

 
$
20,350

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
8,504

 
6,104

Basis of real estate sold
408

 
4,622

Change in deferred taxes
(936
)
 
(164
)
Employee benefit plans
1,723

 
(178
)
Equity-based compensation expense
1,136

 
908

Other, net
(501
)
 
(581
)
Working capital and operating related activities
8,447

 
8,923

Net cash from operating activities
24,437

 
39,984

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Change in short-term investments
7,483

 
(14,699
)
Property, plant and equipment
(4,810
)
 
(2,168
)
Timberlands reforestation and roads
(2,734
)
 
(1,469
)
Other, net
309

 
108

Net cash from investing activities
248

 
(18,228
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Distributions to common stockholders
(15,253
)
 
(14,206
)
Employee tax withholdings on equity-based compensation
(1,407
)
 
(1,068
)
Change in book overdrafts
(3,551
)
 
(2,636
)
Other, net
26

 
(68
)
Net cash from financing activities
(20,185
)
 
(17,978
)
Change in cash
4,500

 
3,778

Cash at beginning of period
4,644

 
5,586

Cash at end of period
$
9,144

 
$
9,364









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Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
 
 
Three Months Ended
 
March 31,
 
2015
 
2014
Revenues:
 
 
 
Resource
$
53,955

 
$
51,905

Wood Products
89,233

 
87,804

Real Estate
3,111

 
14,439

 
146,299

 
154,148

Elimination of intersegment revenues - Resource
(12,174
)
 
(14,569
)
Total consolidated revenues
$
134,125

 
$
139,579

 
 
 
 
Operating income:
 
 
 
Resource
$
14,978

 
$
16,224

Wood Products
3,500

 
12,707

Real Estate
1,599

 
8,271

Eliminations and adjustments
2,975

 
842

 
23,052

 
38,044

Corporate
(9,025
)
 
(6,735
)
Operating income
14,027

 
31,309

Interest expense, net
(8,069
)
 
(5,460
)
Income before income taxes
$
5,958

 
$
25,849

 
 
 
 
Depreciation, depletion and amortization:1
 
 
 
Resource
$
6,254

 
$
3,916

Wood Products
1,576

 
1,529

Real Estate
15

 
15

 
7,845

 
5,460

Corporate
659

 
644

Total depreciation, depletion and amortization
$
8,504

 
$
6,104

 
 
 
 
Basis of real estate sold:
 
 
 
Real Estate
$
471

 
$
5,167

Eliminations and adjustments
(63
)
 
(545
)
Total basis of real estate sold
$
408

 
$
4,622

1
The presentation of depreciation, depletion, and amortization in Segment Information and the Condensed Consolidated Statements of Cash Flows includes amortization of bond discounts and deferred loan fees. Bond discounts and deferred loan fees are recorded in Interest expense, net in the Consolidated Statements of Income.


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