POTLATCHDELTIC CORP - FORM 8-K - EX-99.1 - PRESS RELEASE - October 27, 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 Third Quarter 2015 Results
SPOKANE, Wash - October 27, 2015 - Potlatch Corporation (Nasdaq: PCH) today reported net income of $21.8 million, or $0.53 per diluted share, on revenues of $174.5 million for the quarter ended September 30, 2015. Net income was $33.2 million, or $0.81 per diluted share, on revenues of $177.2 million in the third quarter of 2014.
"While our consolidated results were up significantly in the third quarter relative to the second quarter due to seasonally higher harvest volumes, sequentially lower lumber prices provided a headwind," said Mike Covey. "We are encouraged by increases in lumber prices the last few weeks and continued improvement in the U.S. housing market. Our Resource business continues to be a steady contributor of cash and the Minnesota rural recreational real estate market remains strong," concluded Mr. Covey.







Financial Highlights
(millions, except per share data)            
 
Q3 2015
 
Q2 2015
 
Q3 2014
Revenues
$
174.5

 
$
128.7

 
$
177.2

Net income
$
21.8

 
$
0.7

 
$
33.2

Net income per diluted share
$
0.53

 
$
0.02

 
$
0.81

Distribution per share
$
0.375

 
$
0.375

 
$
0.35

Net cash from operations
$
38.5

 
$
(7.7
)
 
$
39.2

Cash and short-term investments at end of period
$
1.3

 
$
10.6

 
$
73.3

Business Performance: Q3 2015 vs. Q2 2015
Resource
Resource’s operating income was $36.4 million on revenues of $102.3 million in the third quarter, compared to operating income of $8.8 million on revenues of $44.1 million in the second quarter of 2015. Earnings increased due to seasonally higher harvest volumes. Prices realized for sawlogs in the South increased 15% primarily due to a seasonally higher mix of hardwood logs.
Wood Products
Wood Products lost $5.4 million on revenues of $82.9 million in the third quarter, compared to a loss of $2.0 million on revenues of $84.2 million in the second quarter of 2015. Average lumber prices were down 5% in the third quarter compared to the second quarter. Slightly higher lumber shipments partially offset the effect of lower lumber prices.
Real Estate
Real Estate’s operating income was $4.2 million on revenues of $7.8 million in the third quarter, compared to operating income of $8.5 million on revenues of $10.7 million in the second quarter of 2015. Second quarter results included the sale of two commercial sites. The Minnesota rural recreational real estate market remained strong in the third quarter.


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Conference Call Information
A live conference call and webcast will be held today, October 27, 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. number 52573706. 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 November 3, 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 52573706 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; business conditions in our Resource and Wood Products segments; the U.S. housing market; lumber pricing; sawlog pricing; performance of our Wood Products, Resource and Real Estate segments in 2015; strength of Minnesota rural recreational real estate market; 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

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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; 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; 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)
 

 
Quarter Ended
 
Nine Months Ended
  
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Revenues
$
174,475

 
$
177,215

 
$
437,347

 
$
460,713

Costs and expenses:
 
 
 
 
 
 
 
Cost of goods sold
136,072

 
121,574

 
353,285

 
322,016

Selling, general and administrative expenses
10,689

 
10,772

 
35,010

 
32,794

 
146,761

 
132,346

 
388,295

 
354,810

Operating income
27,714

 
44,869

 
49,052

 
105,903

Interest expense, net
(8,335
)
 
(5,506
)
 
(24,420
)
 
(16,475
)
Income before income taxes
19,379

 
39,363

 
24,632

 
89,428

Income tax benefit (provision)
2,419

 
(6,209
)
 
3,533

 
(19,654
)
Net income
$
21,798

 
$
33,154

 
$
28,165

 
$
69,774

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
0.53

 
$
0.81

 
$
0.69

 
$
1.71

Diluted
$
0.53

 
$
0.81

 
$
0.69

 
$
1.71

Distributions per share
$
0.375

 
$
0.35

 
$
1.125

 
$
1.05

Weighted-average shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
40,846

 
40,745

 
40,831

 
40,733

Diluted
40,985

 
40,889

 
40,967

 
40,861




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Potlatch Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
 

 
September 30, 
 2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash
$
1,306

 
$
4,644

Short-term investments
40

 
26,368

Receivables, net
29,645

 
9,928

Inventories
40,379

 
31,490

Deferred tax assets, net
6,168

 
6,168

Other assets
16,754

 
15,065

Total current assets
94,292

 
93,663

Property, plant and equipment, net
74,716

 
65,749

Timber and timberlands, net
822,353

 
828,420

Deferred tax assets, net
36,715

 
37,228

Other assets
11,499

 
10,361

Total assets
$
1,039,575

 
$
1,035,421

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
66,233

 
$
49,324

Current portion of long-term debt
27,500

 
22,870

       Total current liabilities
93,733

 
72,194

Long-term debt
602,675

 
606,473

Liability for pension and other postretirement employee benefits
114,542

 
115,936

Other long-term obligations
13,586

 
15,752

Stockholders’ equity
215,039

 
225,066

Total liabilities and stockholders' equity
$
1,039,575

 
$
1,035,421




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

 
Nine Months Ended
 
September 30,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
28,165

 
$
69,774

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
28,154

 
19,326

Basis of real estate sold
3,389

 
7,289

Change in deferred taxes
(2,786
)
 
1,127

Employee benefit plans
4,774

 
616

Equity-based compensation expense
3,589

 
3,058

Other, net
(675
)
 
(1,805
)
Funding of qualified pension plans
—

 
(3,550
)
Working capital and operating related activities, net
(9,462
)
 
11,829

Net cash from operating activities
55,148

 
107,664

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Change in short-term investments
26,328

 
(12,793
)
Transfer to company owned life insurance (COLI)
—

 
(25,476
)
Property, plant and equipment
(16,240
)
 
(9,174
)
Timberlands reforestation and roads
(11,155
)
 
(7,840
)
Acquisition of timber and timberlands
(9,320
)
 
(3,143
)
Other, net
644

 
1,126

Net cash from investing activities
(9,743
)
 
(57,300
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Distributions to common stockholders
(45,761
)
 
(42,621
)
Employee tax withholdings on equity-based compensation
(1,445
)
 
(1,092
)
Change in book overdrafts
(1,440
)
 
(2,919
)
Other, net
(97
)
 
(1,019
)
Net cash from financing activities
(48,743
)
 
(47,651
)
Change in cash
(3,338
)
 
2,713

Cash at beginning of period
4,644

 
5,586

Cash at end of period
$
1,306

 
$
8,299









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Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
 
 
Quarter Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Resource
$
102,322

 
$
91,919

 
$
200,388

 
$
183,336

Wood Products
82,868

 
99,213

 
256,292

 
287,589

Real Estate
7,828

 
6,176

 
21,684

 
36,352

 
193,018

 
197,308

 
478,364

 
507,277

Elimination of intersegment revenues - Resource
(18,543
)
 
(20,093
)
 
(41,017
)
 
(46,564
)
Total consolidated revenues
$
174,475

 
$
177,215

 
$
437,347

 
$
460,713

 
 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
 
Resource
$
36,389

 
$
34,080

 
$
60,164

 
$
61,122

Wood Products
(5,422
)
 
15,743

 
(3,875
)
 
43,320

Real Estate
4,234

 
4,646

 
14,354

 
25,295

Eliminations and adjustments
(564
)
 
(1,994
)
 
2,950

 
(364
)
 
34,637

 
52,475

 
73,593

 
129,373

Corporate
(6,923
)
 
(7,606
)
 
(24,541
)
 
(23,470
)
Operating income
27,714

 
44,869

 
49,052

 
105,903

Interest expense, net
(8,335
)
 
(5,506
)
 
(24,420
)
 
(16,475
)
Income before income taxes
$
19,379

 
$
39,363

 
$
24,632

 
$
89,428

 
 
 
 
 
 
 
 
Depreciation, depletion and amortization:1
 
 
 
 
 
 
 
Resource
$
10,262

 
$
6,101

 
$
21,313

 
$
12,745

Wood Products
1,693

 
1,543

 
4,930

 
4,587

Real Estate
14

 
15

 
44

 
44

 
11,969

 
7,659

 
26,287

 
17,376

Corporate
588

 
665

 
1,867

 
1,950

Total depreciation, depletion and amortization
$
12,557

 
$
8,324

 
$
28,154

 
$
19,326

 
 
 
 
 
 
 
 
Basis of real estate sold:
 
 
 
 
 
 
 
Real Estate
$
2,450

 
$
519

 
$
3,631

 
$
7,928

Eliminations and adjustments
(69
)
 
(64
)
 
(242
)
 
(639
)
Total basis of real estate sold
$
2,381

 
$
455

 
$
3,389

 
$
7,289

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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POTLATCHDELTIC CORP Reports