Deltic Timber Corporation (NYSE:DEL):
 
 
DELTIC TIMBER CORPORATION
CONSOLIDATED FINANCIAL DATA SUMMARY
 
 
SECOND QUARTER           2010           2009
 
Net sales $ 38,937,000 29,121,000
 
Net income 5,593,000 972,000
 
Earnings per common share
Basic .45 .08
Assuming dilution .45 .08
 
Average common shares outstanding
Basic 12,367,969 12,318,597
Assuming dilution 12,414,907 12,391,252
 
 
 
 
YEAR-TO-DATE 2010 2009
 
Net sales $ 70,872,000 51,983,000
 
Net income/(loss) 7,846,000 (202,000 )
 
Earnings per common share
Basic .63 (.02 )
Assuming dilution .63 (.02 )
 
Average common shares outstanding
Basic 12,358,713 12,308,954
Assuming dilution 12,429,213 12,308,954
 
 

Deltic Timber Corporation (NYSE:DEL) announced today that net income for the second quarter of 2010 was $5.5 million, $.45 a share, compared to $1 million, $.08 a share, a year ago. The improvement was primarily due to significantly higher sales prices for lumber during the second quarter of 2010 and a sales volume increase to capitalize on the market improvement. Net cash provided by operating activities was $9.6 million for 2010’s second quarter, which compares to $5.1 million a year ago. For the first six months of 2010, net income totaled $7.8 million, $.63 a share, compared to a loss of $.2 million, $.02 a share, for the same period of 2009, and net cash provided by operating activities was $14 million compared to $5.5 million for the first half of 2009.

Commenting on the results, President and Chief Executive Officer, Ray C. Dillon, stated, “The economic leverage of Deltic’s ownership of efficient lumber manufacturing operations continued to be evident during the second quarter. Our sawmills not only protect the value of our core timberland assets, they also have the potential to generate outstanding income and cash flows for the Company whenever market conditions present opportunities. Although the lumber market has now softened from the peak that occurred during the second quarter, we will continue to emphasize hourly productivity rates and other operating efficiencies as we adjust operating hours in our facilities to match production levels with demand.”

The Woodlands segment earned $6.4 million in the second quarter of both 2010 and 2009. The pine sawtimber harvest level during the current period was 169,290 tons, an increase of 2,684 tons when compared to 166,606 tons harvested in the second quarter of 2009. The average per-ton sales price for pine sawtimber decreased seven percent to $28 per ton in the current-year second quarter versus $30 per ton for the same period of 2009. While the current period’s average sales price was below that of a year ago, pine sawtimber prices have been trending upward since the beginning of 2010. The Company’s pine pulpwood harvest for the second quarter of 2010 was 96,095 tons compared to 77,194 tons for the second quarter of 2009. The average per-ton sales price for pine pulpwood was $13 per ton in the current period versus $10 per ton a year ago. The increase in the pine pulpwood volume and the per-ton price is due to higher demand in the Company’s operating area combined with more favorable logging conditions. Oil and gas lease rental and net royalty income was $1.4 million for the second quarter of 2010 versus $.9 million for the same period of 2009. The improvement was mainly due to an increase in the number of “Fayetteville Shale” gas wells in production compared to a year ago. During 2010’s second quarter, Deltic sold approximately 520 acres of recreational-use hardwood bottomland at an average sales price of $2,100 per acre compared to approximately 724 acres at an average sales price of $2,100 per acre during the same period a year ago.

Deltic’s Mill segment reported operating income of $6.2 million during 2010’s second quarter compared to an operating loss of $1.9 million for the same quarter of 2009. The average lumber sales price was $345 per thousand board feet for the second quarter of 2010, which was a $105, or 44 percent, increase when compared to the same period a year ago. With the strong lumber market that existed for most of the second quarter of 2010, the Company operated additional hours in its sawmills and sold 69.8 million board feet during the current quarter, which was a six percent increase compared to 66 million board feet sold during 2009’s second quarter. Because of the historically volatile nature of the wood products market, Deltic will continue to evaluate market conditions and determine the operating hours needed to match production with market demand.

The Real Estate segment lost $.5 million in the second quarter of 2010, which compares to a $.4 million loss for the same period of 2009. There were four residential lot sales for the current period which was a one lot decrease from 2009’s second quarter. The average per-lot sales price was $48,200, a decrease of $5,200 when compared to the prior-year period’s average because of the mix of lots sold. There were no sales of commercial real estate acreage in the second quarter of either year.

Corporate operating expense was $4.4 million in the second quarter of 2010 versus $2.9 million for the corresponding quarter of 2009. The variance is due to increased general and administrative expenses for the current-period quarter, primarily employee incentive plan expenses, resulting from the improved financial results. Deltic’s equity in the earnings of Del-Tin Fiber was $2.2 million, which compares to $.8 million of equity in earnings for the second quarter of 2009. The improvement was due to increased demand in MDF resulting from an interruption in the supply of moldings from Chile caused by an earthquake there on February 27, 2010.

For the first six months of 2010, the pine sawtimber harvest level was 315,778 tons compared to 322,137 tons harvested during the same period of 2009. The average pine sawtimber price of $27 per ton decreased $2 per ton from the prior-year period. The finished lumber average sales price increased $90, or 38 percent, from $238 per thousand board feet in 2009 to $328 per thousand board feet in 2010. The lumber sales volume increased 15.1 million board feet from 118.4 million board feet in 2009 to 133.5 million board feet in 2010. Residential lot sales for the first half of 2010 totaled 10 lots at an average price of $97,000, which compares to five lots at $53,400 per lot for the corresponding period of 2009. There were no commercial acreage sales during the first six months of either year.

Capital expenditures were $3.3 million for the second quarter of 2010 and $6.1 million for the six months ended June 30, 2010. For the corresponding periods of 2009, capital expenditures totaled $2 million and $6.8 million, respectively.

Concerning the outlook for the third quarter and year of 2010, Mr. Dillon stated, “We currently anticipate the pine sawtimber harvest to be 165,000 to 175,000 tons and 550,000 to 600,000 tons, respectively. Finished lumber production and sales volumes are estimated at 65 to 75 million board feet for the third quarter and 240 to 260 million board feet for the year, depending on market conditions. Residential lot sales are projected at 2 to 5 and 20 to 30 lots for the third quarter and year of 2010, respectively. Deltic has already closed on the sale of approximately 19 acres of commercial real estate in Chenal Valley during the third quarter of 2010. Any further commercial real estate acreage sales during 2010 is difficult to estimate due to the many factors that are involved.”

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 Wednesday, July 28, 2010, at 10:00 a.m. Central Time to discuss second quarter 2010 earnings. Interested parties may participate in the call by dialing 1-866-713-8563 and referencing participant passcode identification number 44782057. 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 Wednesday, August 4, 2010, by dialing 1-888-286-8010 and referencing replay passcode identification number 70035598.

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