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Pope Resources (NASDAQ:POPE) reported net income attributable to unitholders of $3.7 million, or $0.82 per diluted ownership unit, on revenue of $17.7 million for the quarter ended March 31, 2011. This compares to net income attributable to unitholders of $451,000, or $0.10 per diluted ownership unit, on revenue of $6.0 million for the comparable period in 2010.
Cash provided by operations for the quarter ended March 31, 2011 was $7.6 million, compared to $846,000 for the first quarter of 2010.
“On the strength of surging demand from China for logs and lumber, we enjoyed our strongest quarterly performance in over three years,” said David L. Nunes, President and CEO. “This welcome dynamic, especially in the face of continued softness in U.S. housing starts, resulted in a 28% lift in our average realized log price for the first quarter of 2011 relative to the same period last year. Our harvest deferrals over the past few years and an ample supply of previously permitted harvest units allowed us to capitalize on these market conditions by front-loading our planned 2011 harvest into the first quarter, which resulted in a 162% increase in our year-over-year harvest volume.”
Our decision to front-load harvest in 2011 to take advantage of strong log prices helped propel first quarter Fee Timber operating income to a three-fold increase, from $2.3 million in 2010 to $7.1 million in 2011. The primary driver for these improved results was higher harvest volumes, which increased from 12 million board feet (MMBF) in 2010 to 30 MMBF in 2011.
Our timber fund properties carry a higher proportion of inventory in whitewood species than is the case with the Partnership’s properties. With more harvest in the current quarter from our timber funds, the overall species mix changed from 78% Douglas-fir and 4% whitewoods in the first quarter of 2010 to 63% Douglas-fir and 21% whitewoods in the first quarter of 2011. Generally speaking, a heavier mix of whitewoods would lead to downward pressure on average log realizations, but surging log demand from China and Korea that was largely indifferent as to species kept prices from falling.