SPOKANE, Wash., April 23, 2013 (GLOBE NEWSWIRE) -- Potlatch Corporation (Nasdaq:PCH) today reported financial results for the first quarter ended March 31, 2013. "We are off to a very strong start in 2013 as first quarter results exceeded our expectations," said Michael Covey, chairman and chief executive officer of Potlatch Corporation. "The strength in our Wood Products operations in 2012 carried over into 2013, as lumber prices continued to strengthen in the first quarter despite lower demand due to poor winter weather in much of the country. Last year we began to see the improvement in lumber prices begin to be reflected in higher log prices, and that trend continues today, particularly in the northern region of our Resource business. Because of the strength in sawlog prices in Idaho, we pulled forward a portion of our planned harvest from the second half of the year into the first quarter to take advantage of this pricing opportunity. In addition, the two land acquisitions we made in Arkansas in late 2012 increased our harvest levels slightly in our Southern region in the first quarter. Although sawlog prices in the South remained depressed in the first quarter, we are optimistic that pricing will improve. In our Real Estate segment, we are seeing increased demand for our rural and HBU real estate properties, which is leading to firmer pricing," concluded Mr. Covey. Q1 2013 Financial Summary
- Total consolidated revenues for Q1 2013 were $139.3 million, compared to $112.4 million in Q1 2012 and $143.3 million in Q4 2012.
- Net income for the quarter was $15.5 million, or $0.38 per diluted share, compared to $5.1 million, or $0.13 per diluted share in Q1 2012, and $13.9 million, or $0.34 per diluted share in Q4 2012.
- EBITDDA was $33.4 million for Q1 2013 compared to $18.3 million for Q1 2012 and $36.4 million in Q4 2012.
- Total fee harvest volume for Q1 2013 increased 21 percent over Q1 2012 and 13 percent over Q4 2012. Improved log prices in Idaho led us to pull forward a portion of the harvest planned for the second half of the year into the first quarter to take advantage of this pricing opportunity.
- Sawlog volume in Q1 2013 increased 34 percent and 1 percent over Q1 2012 and Q4 2012, respectively, due to the shift in harvest volume in Idaho mentioned above. Sawlog prices increased 14 percent in Q1 2013 over Q1 2012, primarily due to stronger demand and increased pricing for both cedar and mixed sawlogs. Sawlog prices increased 2 percent in Q1 2013 compared to Q4 2012.
- An oversupply of sawmill residuals and chips in the market contributed to Q1 2013 pulpwood prices 13 percent lower than the previous year, which led to a decision to minimize pulpwood production, resulting in a 25 percent volume decrease in Q1 2013 from Q1 2012.
- Pulpwood volume increased 128 percent in Q1 2013 compared to Q4 2012, as the first quarter is the seasonally highest production quarter in the Lake States. Also, there was additional pulp volume associated with the sawlog production in Idaho that was pulled forward into the first quarter from the second half of the year. Pulpwood prices increased only 1 percent overall due to decreased prices in the Lake States.
- Total fee harvest volume in Q1 2013 increased 18 percent and 7 percent over Q1 2012 and Q4 2012, respectively. The increases were a result of additional harvest volume provided by two land acquisitions made in late 2012, and included both sawlog and pulpwood production.
- Sawlog volume in Q1 2013 increased 4 percent and 9 percent over Q1 2012 and Q4 2012, respectively. Sawlog prices increased 5 percent in Q1 2013 over Q1 2012 due to the impact of unfavorable weather on logging and favorable lumber markets. Sawlog prices decreased 4 percent in Q1 2013 from Q4 2012 due to product mix as hardwood production decreased and smaller pine logs were included in the mix.
- Pulpwood volume in Q1 2013 increased 31 percent and 5 percent over Q1 2012 and Q4 2012, respectively. Pulpwood prices increased 9 percent and 3 percent, respectively, over the same periods due to stronger oriented strand board markets and increased hardwood demand. Unfavorable weather that affected logging in Q1 2013 was also a contributing factor to higher prices compared to Q1 2012.
- Lumber prices in Q1 2013 increased 35 percent and 15 percent over Q1 2012 and Q4 2012, respectively, due to strong demand for manufactured wood products.
- Lumber shipments in Q1 2013 decreased slightly from both Q1 2012 and Q4 2012.
CorporateCorporate expenses, excluding net cash interest expense, totaled $11.1 million in Q1 2013 compared to $8.3 million in Q1 2012 and $11.0 million in Q4 2012. The $2.8 million year-over-year increase was primarily due to mark-to-market adjustments related to deferred compensation plans. In Q1 2013, an additional $750,000 was accrued for environmental remediation at the Company's Avery Landing site in Idaho. Rating Agency Actions On April 2, Standard & Poor's upgraded Potlatch's corporate credit and senior unsecured ratings to 'BB+' from 'BB,' with a stable outlook. On April 22, Moody's upgraded Potlatch's debt rating to investment grade 'Baa3' from 'Ba1,' with a stable outlook. Balance Sheet Three debt issuances totaling $27.7 million were redeemed before their maturity dates during Q1 2013. These bonds had small call premiums and interest rates between 7.25 percent and 7.75 percent. These were paid with cash on hand. Another $9.0 million of debt will be redeemed during the second quarter. Potlatch finished the quarter with $59.7 million of cash and short-term investments on the balance sheet. Dividend Distribution During the first quarter, Potlatch paid a regular quarterly cash distribution on the company's stock of $0.31 per share. Outlook "We are very pleased with our first quarter results and have a very favorable outlook for the remainder of the year. We expect new housing starts to continue to climb and domestic home repair and remodel activities to increase as the economy continues to advance. We are continuing to see the improvement in lumber prices work its way into higher sawlog prices, which will contribute greatly to our Resource segment's income for the year. At this time, we still expect our 2013 harvest to be approximately 3.8 million tons. We believe sawlog prices will be significantly higher in the years ahead as demand improves, so we are continuing with our harvest deferral strategy of approximately 800,000 tons per year. In our Wood Products business, demand for manufactured wood products continues to support lumber and plywood prices. Our Real Estate business remains strong as interest in rural recreational real estate continues to be solid, and in fact we are seeing a slight price improvement trend in our recent real estate sales. Our balance sheet remains strong as evidenced by the recent S&P and Moody's upgrades, and after a $9.0 million early redemption of debt on June 1, 2013, we have no debt maturities until the end of 2015," concluded Mr. Covey.
Conference Call InformationA live conference call and webcast will be held today, April 23, 2013, 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 28567604. 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 April 30, 2013 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 28567604 to access the replay. About Potlatch Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 million acres of timberland in Arkansas, Idaho and Minnesota. Potlatch, a verified 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. 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, the state of the domestic housing market, housing starts, business conditions in our Resource and Wood Products segments, domestic repair and remodel activities, our 2013 harvest levels, lumber and plywood pricing, sawlog and pulpwood pricing, real estate pricing, performance of our Wood Products segment, the demand and interest in non-strategic timberlands, rural recreational real estate and HBU lands, debt redemption 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, 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 China demand; changes in tariffs, quotas and trade agreements involving wood products; 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; 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; performance of agreements to purchase Idaho land; 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.
|Potlatch Corporation Consolidated Statements of Income Unaudited (Dollars in thousands, except per-share amounts)|
|Three Months Ended|
|Revenues||$ 139,253||$ 112,384|
|Costs and expenses:|
|Cost of goods sold||98,299||88,975|
|Selling, general and administrative expenses||13,596||10,890|
|Environmental remediation charge||750||—|
|Interest expense, net||(6,336)||(6,486)|
|Income before income taxes||20,272||6,033|
|Income tax benefit||(4,785)||(982)|
|Net income||$ 15,487||$ 5,051|
|Net income per share:|
|Basic||$ 0.38||$ 0.13|
|Cash distributions per share||$ 0.31||$ 0.31|
|Weighted-average shares outstanding (in thousands):|
|Potlatch Corporation Consolidated Condensed Balance Sheets Unaudited (Dollars in thousands, except per-share amounts)|
|March 31, 2013||December 31, 2012|
|Cash||$ 4,279||$ 16,985|
|Deferred tax assets||10,507||10,507|
|Total current assets||122,926||138,097|
|Property, plant and equipment, net||58,333||58,050|
|Timber and timberlands, net||462,745||464,467|
|Deferred tax assets||41,702||43,292|
|$ 700,235||$ 718,897|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Current installments on long-term debt||$ 9,013||$ 8,413|
|Accounts payable and accrued liabilities||59,007||55,174|
|Total current liabilities||68,020||63,587|
|Liability for pensions and other postretirement employee benefits||143,638||145,047|
|Other long-term obligations||24,021||22,457|
|$ 700,235||$ 718,897|
|Shares outstanding (in thousands)||40,490||40,389|
|Stockholders' equity per common share||$ 3.55||$ 3.43|
|Working capital||$ 54,906||$ 74,510|
|Potlatch Corporation Consolidated Condensed Statements of Cash Flows Unaudited (Dollars in thousands)|
|Three Months Ended|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Net income||$ 15,487||$ 5,051|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation, depletion and amortization||6,867||5,788|
|Basis of real estate sold||457||444|
|Change in deferred taxes||215||915|
|Employee benefit plans||2,799||846|
|Equity-based compensation expense||1,072||947|
|Gain on disposition of property, plant and equipment||(41)||(2)|
|Funding of qualified pension plans||—||(21,630)|
|Working capital changes||1,078||9,313|
|Net cash provided by operating activities||27,934||1,672|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Decrease in short-term investments||7,639||15,834|
|Proceeds from COLI loan||—||21,751|
|Additions to property, plant and equipment||(2,321)||(989)|
|Additions to timber and timberlands||(2,311)||(2,140)|
|Proceeds from disposition of property, plant and equipment||50||2|
|Net cash provided by investing activities||2,634||34,212|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Distributions to common stockholders||(12,552)||(12,503)|
|Repayment of long-term debt||(27,650)||(16,500)|
|Issuance of common stock||667||63|
|Change in book overdrafts||(2,030)||(1,152)|
|Employee tax withholdings on equity-based compensation||(1,685)||(1,713)|
|Net cash used for financing activities||(43,274)||(31,826)|
|Increase (decrease) in cash||(12,706)||4,058|
|Cash at beginning of period||16,985||7,819|
|Cash at end of period||$ 4,279||$ 11,877|
|Certain 2012 amounts have been reclassified to conform to the 2013 presentation.|
|Potlatch Corporation Segment Information Unaudited (Dollars in thousands)|
|Three Months Ended|
|Resource||$ 54,968||$ 40,454|
|Intersegment revenues - Resource||(11,894)||(10,158)|
|Total consolidated revenues||$ 139,253||$ 112,384|
|Resource||$ 15,525||$ 8,669|
|Eliminations and adjustments||489||310|
|Income before income taxes||$ 20,272||$ 6,033|
|Depreciation, depletion and amortization:|
|Resource||$ 4,592||$ 3,218|
|Total depreciation, depletion and amortization||$ 6,867||$ 5,788|
|Basis of real estate sold - Real Estate||$ 616||$ 495|
|Eliminations and adjustments||(159)||(51)|
|Total basis of real estate sold - Real Estate||$ 457||$ 444|
|Potlatch Corporation EBITDDA* Unaudited (Dollars in thousands)|
|1st Quarter||4th Quarter||1st Quarter|
|GAAP net income||$ 15,487||$ 13,864||$ 5,051|
|Net cash interest expense||5,845||5,819||6,052|
|Income tax provision||4,785||6,210||982|
|Depreciation, depletion and amortization||6,867||6,976||5,788|
|Basis of real estate sold||616||3,607||495|
|Non-cash asset impairment and eliminations||(159)||(75)||(51)|
|EBITDDA||$ 33,441||$ 36,401||$ 18,317|
|*EBITDDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. EBITDDA, as we define it, is net income adjusted for net cash interest expense, provision for income taxes, depreciation, depletion and amortization, basis of real estate sold and non-cash asset impairment and eliminations.|
CONTACT: (Investors) Eric Cremers 509.835.1521 (Media) Mark Benson 509.835.1513