Deltic Timber Corporation (NYSE:DEL):
DELTIC TIMBER CORPORATION
CONSOLIDATED FINANCIAL DATA SUMMARY
 
 
FIRST QUARTER   2010   2009
 
 

Net sales
$ 31,935,000 22,862,000
 
Net income/(loss) 2,253,000 (1,174,000 )
 
Earnings/(loss) per common share
  Basic .18 (.09 )
Assuming dilution .18 (.09 )
 
Average shares outstanding 12,473,303 12,414,163

President and Chief Executive Officer, Ray C. Dillon, of Deltic Timber Corporation (NYSE:DEL) announced today preliminary net income for the first quarter of 2010 was $2.3 million, $.18 a share, compared to a loss of $1.2 million, $.09 a share, a year ago. The improved results were mainly attributable to the Company’s Mills segment, which capitalized on both an improved lumber market that existed during the quarter and on productivity and other efficiency improvements that have been achieved in its sawmills. Net cash provided by operating activities was $4.4 million for the first quarter of 2010, which compares to $.4 million a year ago.

Commenting on results, Mr. Dillon stated, “While the improved financial results for the quarter were largely due to a supply-side driven increase in lumber prices, they also reflect the efforts that we have made to place our lumber manufacturing operations in a position to be successful in all lumber market conditions. Many mills in the southeast portion of the U.S. found themselves without logs to operate during the quarter due to inclement weather conditions. However, we were actually able to increase the operating hours in our facilities quickly to match production levels with demand since we had an adequate supply of logs. This ability validates our vertical integration strategy, as we were able to use our diverse timberland base to supply stumpage to our sawmills to capitalize on this market opportunity. In addition, the benefits of the increased hourly productivity rates and other operating efficiency improvements that have been made in both of our mills were very evident this quarter.”

Operating income for Deltic’s Woodlands segment was $5.1 million in 2010’s first quarter, compared to $5.7 million for the same period of 2009. The Company harvested 146,488 tons of pine sawtimber in the current year’s first quarter, a decrease of 9,043 tons from the first quarter of 2009 of 155,531 tons due to wet weather conditions. The average per-ton sales price for pine sawtimber was $26 in the current period compared to $29 per ton a year ago. While the average sales price for the quarter decreased ten percent from a year ago, wet weather conditions that affected logging activities combined with increased demand for pine stumpage as a result of the improved lumber market have caused pine sawtimber prices to begin to move upward in Deltic’s operating region prior to the end of the first quarter.

The Company harvested 79,379 tons of pine pulpwood at an average price of $16 per ton in the first quarter of 2010 compared to 89,833 tons at an average price of $11 per ton for the same period of 2009. The price increase was the result of increased demand for fiber by area papermills, as they had entered 2010 with low chip inventories due to wet weather conditions that affected pulpwood logging. Oil and gas lease rental and net royalty income totaled $1.4 million during the first quarter of 2010 compared to $.9 million for the same quarter of 2009 as a result of an increase in the number of Fayetteville Shale gas wells in production from which Deltic received royalty payments. During 2010’s first quarter, the Company sold approximately 232 acres of recreational-use hardwood bottomland at an average sales price of $1,600 per acre versus approximately 277 acres at an average sales price of $1,500 per acre in the prior-year quarter.

Deltic’s Mills segment reported operating income of $2.5 million in the first quarter of 2010 compared to a loss of $3.6 million for the same period of 2009. During the current period, the average finished lumber sales price increased $76, to $310 per thousand board feet, which was an increase of 32 percent from the prior-year first quarter. Lumber sales volume of 63.7 million board feet in 2010’s first quarter increased 22 percent when compared to 52.3 million board feet in the first quarter a year ago, as the operating hours in the mills were increased to meet increased demand for lumber.

The Real Estate segment lost $.7 million in the first quarter of 2010, which compares to a loss of $1 million for the same period of 2009. Residential lot sales totaled six lots during the current period of 2010 at an average price of $129,600 per lot versus no lot sales in the same period a year ago. There were no sales of commercial real estate acreage in the first quarter of either year.

Corporate operating expense was $3.5 million in the first quarter of 2010, which compares to $2.9 million for the corresponding period of 2009. Deltic’s equity in earnings of Del-Tin Fiber was income of $.5 million for the current-year quarter compared to $.8 million for the same period of 2009. Income taxes in the current-year period were $1.1 million compared to essentially no income tax in the prior year, as the federal tax benefit related to 2009’s first quarter loss was essentially offset by a state tax provision.

Capital expenditures were $2.8 million for the first quarter of 2010, while expenditures for the same period of 2009 were $4.8 million.

Regarding the outlook for the second quarter and year of 2010, Mr. Dillon stated, “We currently anticipate the pine sawtimber harvest to be 140,000 to 150,000 tons and 525,000 to 575,000 tons, respectively. Finished lumber production and sales volumes are estimated at 65 to 75 million board feet for the second quarter and 240 to 260 million board feet for the year, depending upon market conditions. Residential lot sales are projected at 4 to 6 lots and 20 to 30 lots for the second quarter and year of 2010, respectively.”

Statements included herein that are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” within the meaning of the Federal Securities Laws. Such statements reflect the Company’s current expectations and involve certain risks and uncertainties. Actual results could differ materially from those included in such forward-looking statements. Factors that could cause such differences include, but are not limited to, the cyclical nature of the industry, changes in interest rates and general economic conditions, adverse weather, cost and availability of materials used to manufacture the Company’s products, and the other risk factors described from time to time in the reports and disclosure documents filed by the Company with the Securities and Exchange Commission.

Deltic will hold a conference call on Tuesday, April 20, 2010, at 2:00 p.m. Central Time to discuss first quarter 2010 earnings. Interested parties may participate in the call by dialing 1-866-713-8564 and referencing participant passcode identification number 50165760. The call will also be broadcast live over the Internet and can be accessed through the Investor Relations section of the Deltic website, at www.deltic.com . Online replays of the call will be available through the Deltic website, and a recording of the call will be available until Tuesday, April 27, 2010, by dialing 1-888-286-8010 and referencing replay passcode identification number 60932107.

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