Attached files
| file | filename |
|---|---|
| 8-K - 8-K - POTLATCHDELTIC CORP | pch-8k_20161021.htm |
Exhibit 99.1
|
|
|
|
|
Potlatch Corporation |
News Release
For immediate release:
|
Contact: |
(Investors) |
(Media) |
|
|
|
Jerry Richards |
Mark Benson |
|
|
|
509.835.1521 |
509.835.1513 |
|
Potlatch Corporation Reports Third Quarter 2016 Results
SPOKANE, Wash – October 21, 2016 - Potlatch Corporation (Nasdaq: PCH) today reported net income of $27.6 million, or $0.68 per diluted share, on revenues of $174.0 million for the quarter ended September 30, 2016. Net income was $21.8 million, or $0.53 per diluted share, on revenues of $174.5 million in the third quarter of 2015.
"All three of our business segments contributed to our solid third quarter results," said Mike Covey, chairman and chief executive officer. "Our Northern Resource log prices were very strong during the quarter, led by cedar sawlogs. Wood Products set a quarterly lumber production record and delivered its strongest earnings in two years. Real Estate continues to identify and close transactions that create value. We also refinanced $65.7 million of tax exempt bonds which reduced the interest rate from 6% to 2.75% and we did not repurchase any shares in the quarter. Our stock price increased 14% in the third quarter and is up 30% this year," stated Mr. Covey.
Financial Highlights (in millions, except per share data)
|
|
|
Q3 2016 |
|
|
Q2 2016 |
|
|
Q3 2015 |
|
|||
|
Revenues |
|
$ |
174.0 |
|
|
$ |
141.5 |
|
|
$ |
174.5 |
|
|
Net income (loss) |
|
$ |
27.6 |
|
|
$ |
(31.3 |
) |
|
$ |
21.8 |
|
|
Net income (loss) per diluted share |
|
$ |
0.68 |
|
|
$ |
(0.77 |
) |
|
$ |
0.53 |
|
|
Distribution per share |
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
Net cash from operations |
|
$ |
28.7 |
|
|
$ |
16.8 |
|
|
$ |
38.5 |
|
|
Cash and short-term investments at end of period |
|
$ |
72.9 |
|
|
$ |
65.4 |
|
|
$ |
1.3 |
|
1
Business Performance: Q3 2016 vs. Q2 2016
Resource
Resource’s operating income was $33.3 million on revenues of $85.8 million in the third quarter, compared to operating income of $15.7 million on revenues of $54.8 million in the second quarter of 2016. Harvest volumes increased 39% in the third quarter due to seasonally more favorable operating conditions. Northern sawlog prices were 13% higher in the third quarter. Prices realized for sawlogs in the South increased 14% primarily due to a seasonally higher mix of hardwood logs.
Wood Products
Wood Products earned $10.6 million on revenues of $97.6 million in the third quarter, compared to operating income of $4.7 million on revenues of $90.9 million in the second quarter of 2016. Average lumber prices were 5% higher and lumber shipments increased 3% in the third quarter compared to the second quarter.
Real Estate
Real Estate’s operating income was $5.9 million on revenues of $8.4 million in the third quarter, compared to operating income of $5.0 million on revenues of $10.0 million in the second quarter of 2016 excluding the central Idaho timberland sale. The sales mix was more heavily weighted to rural recreational real estate in the third quarter. The effect of a 14% increase in the number of acres sold and lower land basis compared to the second quarter, was partially offset by a lower average sales price.
Other
The following notable items also occurred during the third quarter:
|
|
• |
Potlatch refinanced $65.7 million of revenue bonds at a rate of 2.75%, which will reduce interest expense $2 million per year. The bonds previously carried a rate of 6.0%. The maturity date in 2024 remains unchanged. |
|
|
• |
No common shares were repurchased during the quarter. Potlatch repurchased 169,625 common shares at an average price of $35.08 per share during the second quarter. |
Conference Call Information
A live conference call and webcast will be held today, October 21, 2016, at 7:30 a.m. Pacific Time (10:30 a.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
2
callers. Participants will be asked to provide conference I.D. number 83949575. 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 October 28, 2016 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 83949575 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 future company performance; the direction of our business markets; business conditions in our Resource, Wood Products and Real Estate segments; harvest volumes in the North and South; stumpage sales; lumber pricing; lumber shipments; Wood Products EBITDDA; sawlog pricing in the North and South; pulpwood pricing; real estate sales; real estate pricing; land basis; performance of our Wood Products, Resource and Real Estate segments in 2016; share repurchase; capital expenditures; corporate expenses; interest expense; tax rate; earnings for the Fourth Quarter; 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 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
3
due to fire danger; changes in raw material, fuel and other costs; changes in share price; 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.
4
Potlatch Corporation
Consolidated Statements of Income (Loss)
Unaudited (Dollars in thousands, except per share amounts)
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||
|
Revenues |
|
$ |
174,027 |
|
|
$ |
174,475 |
|
|
$ |
443,418 |
|
|
$ |
437,347 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
122,132 |
|
|
|
136,072 |
|
|
|
345,324 |
|
|
|
353,285 |
|
|
Selling, general and administrative expenses |
|
|
12,901 |
|
|
|
10,689 |
|
|
|
39,734 |
|
|
|
35,010 |
|
|
Loss on sale of central Idaho timber and timberlands |
|
|
— |
|
|
|
— |
|
|
|
48,522 |
|
|
|
— |
|
|
|
|
|
135,033 |
|
|
|
146,761 |
|
|
|
433,580 |
|
|
|
388,295 |
|
|
Operating income |
|
|
38,994 |
|
|
|
27,714 |
|
|
|
9,838 |
|
|
|
49,052 |
|
|
Interest expense, net |
|
|
(7,786 |
) |
|
|
(8,335 |
) |
|
|
(22,017 |
) |
|
|
(24,420 |
) |
|
Income (loss) before income taxes |
|
|
31,208 |
|
|
|
19,379 |
|
|
|
(12,179 |
) |
|
|
24,632 |
|
|
Income tax (provision) benefit |
|
|
(3,562 |
) |
|
|
2,419 |
|
|
|
8,744 |
|
|
|
3,533 |
|
|
Net income (loss) |
|
$ |
27,646 |
|
|
$ |
21,798 |
|
|
$ |
(3,435 |
) |
|
$ |
28,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.68 |
|
|
$ |
0.53 |
|
|
$ |
(0.08 |
) |
|
$ |
0.69 |
|
|
Diluted |
|
$ |
0.68 |
|
|
$ |
0.53 |
|
|
$ |
(0.08 |
) |
|
$ |
0.69 |
|
|
Dividends per share |
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
1.125 |
|
|
$ |
1.125 |
|
|
Weighted-average shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
40,740 |
|
|
|
40,846 |
|
|
|
40,807 |
|
|
|
40,831 |
|
|
Diluted |
|
|
40,933 |
|
|
|
40,985 |
|
|
|
40,807 |
|
|
|
40,967 |
|
5
Potlatch Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
|
|
|
September 30, 2016 |
|
|
December 31, 2015 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
32,734 |
|
|
$ |
7,886 |
|
|
Short-term investments |
|
|
40,121 |
|
|
|
39 |
|
|
Receivables, net |
|
|
37,175 |
|
|
|
13,420 |
|
|
Inventories |
|
|
41,006 |
|
|
|
35,162 |
|
|
Other assets |
|
|
9,940 |
|
|
|
14,246 |
|
|
Total current assets |
|
|
160,976 |
|
|
|
70,753 |
|
|
Property, plant and equipment, net |
|
|
73,259 |
|
|
|
75,285 |
|
|
Timber and timberlands, net |
|
|
647,875 |
|
|
|
816,599 |
|
|
Deferred tax assets, net |
|
|
42,393 |
|
|
|
46,600 |
|
|
Other assets |
|
|
8,622 |
|
|
|
7,375 |
|
|
Total assets |
|
$ |
933,125 |
|
|
$ |
1,016,612 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Revolving line of credit borrowings |
|
$ |
— |
|
|
$ |
30,000 |
|
|
Current portion of long-term debt |
|
|
5,053 |
|
|
|
5,007 |
|
|
Accounts payable and accrued liabilities |
|
|
52,838 |
|
|
|
39,740 |
|
|
Current portion of pension and other postretirement employee benefits |
|
|
5,973 |
|
|
|
5,973 |
|
|
Total current liabilities |
|
|
63,864 |
|
|
|
80,720 |
|
|
Long-term debt |
|
|
580,317 |
|
|
|
598,874 |
|
|
Pension and other postretirement employee benefits |
|
|
118,679 |
|
|
|
119,369 |
|
|
Other long-term obligations |
|
|
14,502 |
|
|
|
13,913 |
|
|
Total liabilities |
|
|
777,362 |
|
|
|
812,876 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Common stock, $1 par value |
|
|
40,519 |
|
|
|
40,681 |
|
|
Additional paid-in capital |
|
|
353,702 |
|
|
|
350,541 |
|
|
Accumulated deficit |
|
|
(127,926 |
) |
|
|
(72,983 |
) |
|
Accumulated other comprehensive loss |
|
|
(110,532 |
) |
|
|
(114,503 |
) |
|
Total stockholders’ equity |
|
|
155,763 |
|
|
|
203,736 |
|
|
Total liabilities and stockholders' equity |
|
$ |
933,125 |
|
|
$ |
1,016,612 |
|
6
Potlatch Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2016 |
|
|
2015 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(3,435 |
) |
|
$ |
28,165 |
|
|
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
25,723 |
|
|
|
28,154 |
|
|
Basis of real estate sold |
|
|
6,686 |
|
|
|
3,389 |
|
|
Change in deferred taxes |
|
|
1,375 |
|
|
|
(2,786 |
) |
|
Employee benefit plans |
|
|
7,988 |
|
|
|
4,774 |
|
|
Equity-based compensation expense |
|
|
3,290 |
|
|
|
3,589 |
|
|
Loss on sale of central Idaho timber and timberlands |
|
|
48,522 |
|
|
|
— |
|
|
Other, net |
|
|
(1,141 |
) |
|
|
(675 |
) |
|
Change in working capital and operating-related activities, net |
|
|
(13,318 |
) |
|
|
(9,462 |
) |
|
Funding of qualified pension plans |
|
|
(1,300 |
) |
|
|
— |
|
|
Net cash from operating activities |
|
|
74,390 |
|
|
|
55,148 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Change in short-term investments |
|
|
(40,082 |
) |
|
|
26,328 |
|
|
Property, plant and equipment |
|
|
(4,262 |
) |
|
|
(16,240 |
) |
|
Timberlands reforestation and roads |
|
|
(10,421 |
) |
|
|
(11,155 |
) |
|
Acquisition of timber and timberlands |
|
|
(1,180 |
) |
|
|
(9,320 |
) |
|
Net proceeds from sale of central Idaho timber and timberlands |
|
|
111,460 |
|
|
|
— |
|
|
Other, net |
|
|
525 |
|
|
|
644 |
|
|
Net cash from investing activities |
|
|
56,040 |
|
|
|
(9,743 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Dividends to common stockholders |
|
|
(45,647 |
) |
|
|
(45,761 |
) |
|
Repayment of revolving line of credit borrowings |
|
|
(30,000 |
) |
|
|
— |
|
|
Repayment of long-term debt |
|
|
(113,335 |
) |
|
|
— |
|
|
Proceeds from issuance of long-term debt |
|
|
93,235 |
|
|
|
— |
|
|
Repurchase of common stock |
|
|
(5,956 |
) |
|
|
— |
|
|
Change in book overdrafts |
|
|
(2,836 |
) |
|
|
(1,440 |
) |
|
Other, net |
|
|
(1,043 |
) |
|
|
(1,542 |
) |
|
Net cash from financing activities |
|
|
(105,582 |
) |
|
|
(48,743 |
) |
|
Change in cash |
|
|
24,848 |
|
|
|
(3,338 |
) |
|
Cash at beginning of period |
|
|
7,886 |
|
|
|
4,644 |
|
|
Cash at end of period |
|
$ |
32,734 |
|
|
$ |
1,306 |
|
7
Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
(Dollars in thousands) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resource |
|
$ |
85,822 |
|
|
$ |
102,322 |
|
|
$ |
189,358 |
|
|
$ |
200,388 |
|
|
Wood Products |
|
|
97,620 |
|
|
|
82,868 |
|
|
|
271,782 |
|
|
|
256,292 |
|
|
Real Estate |
|
|
8,426 |
|
|
|
7,828 |
|
|
|
23,946 |
|
|
|
21,684 |
|
|
|
|
|
191,868 |
|
|
|
193,018 |
|
|
|
485,086 |
|
|
|
478,364 |
|
|
Intersegment Resource revenues |
|
|
(17,841 |
) |
|
|
(18,543 |
) |
|
|
(41,668 |
) |
|
|
(41,017 |
) |
|
Total consolidated revenues |
|
$ |
174,027 |
|
|
$ |
174,475 |
|
|
$ |
443,418 |
|
|
$ |
437,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resource |
|
$ |
33,303 |
|
|
$ |
36,389 |
|
|
$ |
59,182 |
|
|
$ |
60,164 |
|
|
Wood Products |
|
|
10,657 |
|
|
|
(5,422 |
) |
|
|
16,308 |
|
|
|
(3,875 |
) |
|
Real Estate1 |
|
|
5,885 |
|
|
|
4,234 |
|
|
|
(35,469 |
) |
|
|
14,354 |
|
|
Eliminations and adjustments |
|
|
(1,946 |
) |
|
|
(564 |
) |
|
|
(1,450 |
) |
|
|
2,950 |
|
|
|
|
|
47,899 |
|
|
|
34,637 |
|
|
|
38,571 |
|
|
|
73,593 |
|
|
Corporate |
|
|
(8,905 |
) |
|
|
(6,923 |
) |
|
|
(28,733 |
) |
|
|
(24,541 |
) |
|
Operating income |
|
|
38,994 |
|
|
|
27,714 |
|
|
|
9,838 |
|
|
|
49,052 |
|
|
Interest expense, net |
|
|
(7,786 |
) |
|
|
(8,335 |
) |
|
|
(22,017 |
) |
|
|
(24,420 |
) |
|
Income (loss) before income taxes |
|
$ |
31,208 |
|
|
$ |
19,379 |
|
|
$ |
(12,179 |
) |
|
$ |
24,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resource |
|
$ |
6,456 |
|
|
$ |
10,262 |
|
|
$ |
17,971 |
|
|
$ |
21,313 |
|
|
Wood Products |
|
|
1,837 |
|
|
|
1,693 |
|
|
|
5,538 |
|
|
|
4,930 |
|
|
Real Estate |
|
|
— |
|
|
|
14 |
|
|
|
3 |
|
|
|
44 |
|
|
|
|
|
8,293 |
|
|
|
11,969 |
|
|
|
23,512 |
|
|
|
26,287 |
|
|
Corporate |
|
|
187 |
|
|
|
219 |
|
|
|
608 |
|
|
|
754 |
|
|
Bond discounts and deferred loan fees |
|
|
769 |
|
|
|
369 |
|
|
|
1,603 |
|
|
|
1,113 |
|
|
Total depreciation, depletion and amortization |
|
$ |
9,249 |
|
|
$ |
12,557 |
|
|
$ |
25,723 |
|
|
$ |
28,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis of real estate sold: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
$ |
1,364 |
|
|
$ |
2,450 |
|
|
$ |
7,118 |
|
|
$ |
3,631 |
|
|
Eliminations and adjustments |
|
|
(99 |
) |
|
|
(69 |
) |
|
|
(432 |
) |
|
|
(242 |
) |
|
Total basis of real estate sold |
|
$ |
1,265 |
|
|
$ |
2,381 |
|
|
$ |
6,686 |
|
|
$ |
3,389 |
|
1 In the second quarter of 2016, we sold approximately 172,000 acres of timberlands located in central Idaho for $114 million at a loss of $48.5 million before taxes.
8