Potlatch Corporation Reports Second Quarter 2017 Results
July 24 2017 - 6:20PM
Potlatch Corporation (Nasdaq:PCH) today reported
net income of $24.3 million, or $0.59 per diluted share, on
revenues of $163.2 million for the quarter ended June 30, 2017. Net
loss was $31.3 million, or $0.77 per diluted share, on revenues of
$141.5 million in the second quarter of 2016. Excluding the
after-tax loss of $36.7 million on the sale of central Idaho timber
and timberlands, net income was $5.4 million, or $0.13 per diluted
share for the quarter ended June 30, 2016.
“The power of our leverage to lumber prices was
reflected in our strong financial performance in the second
quarter,” said Mike Covey, chairman and chief executive officer.
“Our Wood Products segment shipped a record volume of lumber for
the third time in four quarters, maximizing the benefit of robust
lumber prices. Lumber prices also lifted mixed sawlog prices in
Idaho and cedar sawlog prices remain at record levels,” stated Mr.
Covey.
Financial Highlights (in
millions, except per share data)
| |
|
Q2 2017 |
|
|
Q1 2017 |
|
|
Q2 2016 |
|
| Revenues |
|
$ |
163.2 |
|
|
$ |
149.7 |
|
|
$ |
141.5 |
|
| Net income |
|
$ |
24.3 |
|
|
$ |
16.9 |
|
|
$ |
(31.3 |
) |
| Net income per diluted
share |
|
$ |
0.59 |
|
|
$ |
0.41 |
|
|
$ |
(0.77 |
) |
| Distribution per
share |
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
0.375 |
|
| Net cash from
operations |
|
$ |
37.5 |
|
|
$ |
41.9 |
|
|
$ |
16.8 |
|
| Cash and cash
equivalents |
|
$ |
110.3 |
|
|
$ |
101.7 |
|
|
$ |
65.4 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Business Performance: Q2 2017 vs. Q1
2017
Resource
Resource’s operating income was $19.5 million on
revenues of $55.9 million in the second quarter, compared to
operating income of $14.9 million on revenues of $51.8 million in
the first quarter of 2017. Northern sawlog prices increased 26%
relative to the first quarter due primarily to the effect of higher
lumber prices on indexed sales agreements. Lower harvest volumes
due to spring break-up in Idaho and slightly lower Southern sawlog
prices partially offset the benefit of higher Northern sawlog
prices.
Wood Products
Wood Products earned $24.7 million on revenues of
$114.5 million in the second quarter, compared to operating income
of $8.7 million on revenues of $95.6 million in the first quarter
of 2017. Average lumber prices were 11% higher and shipments
increased 13% in the second quarter compared to the first
quarter.
Real Estate
Real Estate’s operating income was $5.8 million on
revenues of $8.1 million in the second quarter, compared to
operating income of $8.6 million on revenues of $14.5 million in
the first quarter of 2017. Fewer acres were sold at a lower average
sales price in the second quarter compared to the first
quarter.
Outlook
“Due to a seasonal increase in our harvest volumes,
we expect significantly improved operating results in our Resource
segment in the third quarter. We are very pleased with the outlook
for our three business segments and believe that our significant
leverage to lumber pricing will translate into strong earnings for
the balance of the year,” concluded Mr. Covey.
Reconciliation of Q2 2016 Earnings (in
millions, except per share data)
| |
|
Amount |
|
|
Per Share |
|
| Net income (loss) |
|
$ |
(31.3 |
) |
|
$ |
(0.77 |
) |
| Net loss on sale of
central Idaho timberland |
|
|
36.7 |
|
|
|
0.90 |
|
| Net income (loss), as
adjusted |
|
$ |
5.4 |
|
|
$ |
0.13 |
|
| |
|
|
|
|
|
|
|
|
Conference Call Information
A live conference call and webcast will be held
today, July 25, 2017, at 9:00 a.m. Pacific Time (12:00 p.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 callers. Participants will be
asked to provide conference I.D. number 47086081. 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 August 1, 2017 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
47086081 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 the U.S. housing market; strong repair and remodel
market; lumber demand and pricing; future company performance; the
direction of our business markets; business conditions, pricing,
EBITDDA and earnings in our Resource, Wood Products and Real Estate
segments; company earnings in the third quarter of 2017 and for the
full year; harvest volumes in the third quarter of 2017 and for the
full year; percentage of total harvest that will occur in the North
and South and the percentage of sawlogs to be harvested in the
North and the South in the third quarter of 2017; robust cedar
sawlog market resulting in an increase in EBITDDA compared to 2016;
lumber shipments in the third quarter of 2017 and for the year;
real estate sales in the third quarter of 2017; capital projects
and capital expenditures in 2017; corporate expenses and interest
expense in the third quarter of 2017; tax rate for the third
quarter of 2017 and full year; debt maturities; 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 and shipping capacity; changes
in the United States and international economies; changes in the
level of construction activity; changes in Asia 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 due to fire danger; changes in raw
material, fuel and other costs; changes in share price; 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 (Loss) |
| Unaudited |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
Six Months Ended
June 30, |
|
| (Dollars in
thousands, except per share amount) |
|
2017 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
| Revenues |
|
$ |
163,229 |
|
|
$ |
149,681 |
|
|
$ |
141,495 |
|
|
$ |
312,910 |
|
|
$ |
269,391 |
|
| Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of
goods sold |
|
|
111,556 |
|
|
|
112,783 |
|
|
|
113,377 |
|
|
|
224,339 |
|
|
|
223,192 |
|
| Selling,
general and administrative expenses |
|
|
14,165 |
|
|
|
12,989 |
|
|
|
13,824 |
|
|
|
27,154 |
|
|
|
26,833 |
|
| Gain on
lumber price swap |
|
|
(3,265 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,265 |
) |
|
|
— |
|
| Loss on
sale of central Idaho1 |
|
|
— |
|
|
|
— |
|
|
|
48,522 |
|
|
|
— |
|
|
|
48,522 |
|
| |
|
|
122,456 |
|
|
|
125,772 |
|
|
|
175,723 |
|
|
|
248,228 |
|
|
|
298,547 |
|
| Operating income
(loss) |
|
|
40,773 |
|
|
|
23,909 |
|
|
|
(34,228 |
) |
|
|
64,682 |
|
|
|
(29,156 |
) |
| Interest expense,
net |
|
|
(7,348 |
) |
|
|
(4,970 |
) |
|
|
(8,206 |
) |
|
|
(12,318 |
) |
|
|
(14,231 |
) |
| Income (loss) before
income taxes |
|
|
33,425 |
|
|
|
18,939 |
|
|
|
(42,434 |
) |
|
|
52,364 |
|
|
|
(43,387 |
) |
| Income tax (provision)
benefit |
|
|
(9,181 |
) |
|
|
(2,018 |
) |
|
|
11,196 |
|
|
|
(11,199 |
) |
|
|
12,306 |
|
| Net income (loss) |
|
$ |
24,244 |
|
|
$ |
16,921 |
|
|
$ |
(31,238 |
) |
|
$ |
41,165 |
|
|
$ |
(31,081 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.59 |
|
|
$ |
0.41 |
|
|
$ |
(0.77 |
) |
|
$ |
1.01 |
|
|
$ |
(0.76 |
) |
|
Diluted |
|
$ |
0.59 |
|
|
$ |
0.41 |
|
|
$ |
(0.77 |
) |
|
$ |
1.00 |
|
|
$ |
(0.76 |
) |
| Dividends per
share |
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
0.75 |
|
|
$ |
0.75 |
|
| (In
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
40,823 |
|
|
|
40,778 |
|
|
|
40,784 |
|
|
|
40,802 |
|
|
|
40,837 |
|
|
Diluted |
|
|
41,219 |
|
|
|
41,071 |
|
|
|
40,784 |
|
|
|
41,144 |
|
|
|
40,837 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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. |
|
|
| Potlatch Corporation |
| Condensed Consolidated Balance Sheets |
| Unaudited |
| |
|
|
|
|
|
|
| (Dollars in
thousands) |
|
June 30,
2017 |
|
|
December 31,
2016 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and
cash equivalents |
|
$ |
110,324 |
|
|
$ |
82,584 |
|
|
Receivables, net |
|
|
23,536 |
|
|
|
17,284 |
|
|
Inventories |
|
|
40,124 |
|
|
|
52,622 |
|
| Other
assets |
|
|
12,396 |
|
|
|
11,155 |
|
| Total
current assets |
|
|
186,380 |
|
|
|
163,645 |
|
| Property, plant and
equipment, net |
|
|
74,671 |
|
|
|
72,820 |
|
| Timber and timberlands,
net |
|
|
639,178 |
|
|
|
641,856 |
|
| Deferred tax assets,
net |
|
|
39,445 |
|
|
|
42,051 |
|
| Other assets |
|
|
7,100 |
|
|
|
7,309 |
|
|
Total assets |
|
$ |
946,774 |
|
|
$ |
927,681 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
|
|
| Current
portion of long-term debt |
|
$ |
20,349 |
|
|
$ |
11,032 |
|
| Accounts
payable and accrued liabilities |
|
|
53,130 |
|
|
|
43,710 |
|
| Current
portion of pension and other postretirement employee benefits |
|
|
5,839 |
|
|
|
5,839 |
|
| Total
current liabilities |
|
|
79,318 |
|
|
|
60,581 |
|
| Long-term debt |
|
|
558,853 |
|
|
|
572,956 |
|
| Pension and other
postretirement employee benefits |
|
|
123,745 |
|
|
|
123,284 |
|
| Other long-term
obligations |
|
|
14,529 |
|
|
|
14,586 |
|
| Total
liabilities |
|
|
776,445 |
|
|
|
771,407 |
|
| Commitments and
contingencies |
|
|
|
|
|
|
|
|
| Stockholders'
equity: |
|
|
|
|
|
|
|
|
| Common
stock, $1 par value |
|
|
40,610 |
|
|
|
40,519 |
|
|
Additional paid-in capital |
|
|
356,453 |
|
|
|
355,274 |
|
|
Accumulated deficit |
|
|
(118,120 |
) |
|
|
(128,775 |
) |
|
Accumulated other comprehensive loss |
|
|
(108,614 |
) |
|
|
(110,744 |
) |
| Total
stockholders’ equity |
|
|
170,329 |
|
|
|
156,274 |
|
|
Total liabilities and stockholders' equity |
|
$ |
946,774 |
|
|
$ |
927,681 |
|
|
|
|
|
|
|
|
|
|
|
| Potlatch Corporation |
| Condensed Consolidated Statements of Cash Flows |
| Unaudited |
| |
|
|
|
|
|
|
Six Months Ended
June 30, |
|
| (Dollars in
thousands) |
|
2017 |
|
|
2016 |
|
| CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
| Net
income |
|
$ |
41,165 |
|
|
$ |
(31,081 |
) |
|
Adjustments to reconcile net income to net cash from operating
activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
13,343 |
|
|
|
16,474 |
|
| Basis of
real estate sold |
|
|
5,772 |
|
|
|
5,421 |
|
| Change in
deferred taxes |
|
|
1,244 |
|
|
|
(6,784 |
) |
| Pension
and other postretirement employee benefits |
|
|
6,575 |
|
|
|
7,830 |
|
|
Equity-based compensation expense |
|
|
2,348 |
|
|
|
2,176 |
|
| Loss on
sale of central Idaho timber and timberlands |
|
|
— |
|
|
|
48,522 |
|
| Other,
net |
|
|
(983 |
) |
|
|
(1,280 |
) |
| Change in
working capital and operating-related activities, net |
|
|
9,919 |
|
|
|
4,383 |
|
| Net cash from operating
activities |
|
|
79,383 |
|
|
|
45,661 |
|
| CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Purchase
of property, plant and equipment |
|
|
(5,939 |
) |
|
|
(3,488 |
) |
|
Timberlands reforestation and roads |
|
|
(5,792 |
) |
|
|
(5,544 |
) |
|
Acquisition of timber and timberlands |
|
|
(3,132 |
) |
|
|
(1,161 |
) |
| Net
proceeds from sale of central Idaho timber and timberlands |
|
|
— |
|
|
|
111,460 |
|
| Other,
net |
|
|
(74 |
) |
|
|
109 |
|
| Net cash from investing
activities |
|
|
(14,937 |
) |
|
|
101,376 |
|
| CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Dividends
to common stockholders |
|
|
(30,457 |
) |
|
|
(30,453 |
) |
| Repayment
of revolving line of credit borrowings |
|
|
— |
|
|
|
(30,000 |
) |
| Repayment
of long-term debt |
|
|
(5,000 |
) |
|
|
(47,600 |
) |
| Proceeds
from issuance of long-term debt |
|
|
— |
|
|
|
27,500 |
|
|
Repurchase of common stock |
|
|
— |
|
|
|
(5,956 |
) |
| Other,
net |
|
|
(1,249 |
) |
|
|
(3,075 |
) |
| Net cash from financing
activities |
|
|
(36,706 |
) |
|
|
(89,584 |
) |
| Change in cash and cash
equivalents |
|
|
27,740 |
|
|
|
57,453 |
|
| Cash and cash
equivalents at beginning of period |
|
|
82,584 |
|
|
|
7,925 |
|
| Cash and cash
equivalents at end of period |
|
$ |
110,324 |
|
|
$ |
65,378 |
|
| |
|
|
|
|
|
|
|
|
| Potlatch Corporation |
| Segment Information |
| Unaudited |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
Six Months Ended
June 30, |
|
| (Dollars in
thousands) |
|
2017 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resource |
|
$ |
55,924 |
|
|
$ |
51,768 |
|
|
$ |
54,826 |
|
|
$ |
107,692 |
|
|
$ |
103,536 |
|
| Wood
Products |
|
|
114,529 |
|
|
|
95,592 |
|
|
|
90,924 |
|
|
|
210,121 |
|
|
|
174,162 |
|
| Real
Estate |
|
|
8,136 |
|
|
|
14,504 |
|
|
|
9,954 |
|
|
|
22,640 |
|
|
|
15,520 |
|
| |
|
|
178,589 |
|
|
|
161,864 |
|
|
|
155,704 |
|
|
|
340,453 |
|
|
|
293,218 |
|
|
Intersegment Resource revenues |
|
|
(15,360 |
) |
|
|
(12,183 |
) |
|
|
(14,209 |
) |
|
|
(27,543 |
) |
|
|
(23,827 |
) |
| Total consolidated
revenues |
|
$ |
163,229 |
|
|
$ |
149,681 |
|
|
$ |
141,495 |
|
|
$ |
312,910 |
|
|
$ |
269,391 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss)
before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resource |
|
$ |
19,520 |
|
|
$ |
14,929 |
|
|
$ |
15,672 |
|
|
$ |
34,449 |
|
|
$ |
25,879 |
|
| Wood
Products |
|
|
24,705 |
|
|
|
8,684 |
|
|
|
4,695 |
|
|
|
33,389 |
|
|
|
5,651 |
|
| Real
Estate |
|
|
5,725 |
|
|
|
8,643 |
|
|
|
(43,429 |
) |
|
|
14,368 |
|
|
|
(41,354 |
) |
|
Eliminations and adjustments |
|
|
1,053 |
|
|
|
1,059 |
|
|
|
(969 |
) |
|
|
2,112 |
|
|
|
496 |
|
|
|
|
|
51,003 |
|
|
|
33,315 |
|
|
|
(24,031 |
) |
|
|
84,318 |
|
|
|
(9,328 |
) |
|
Corporate |
|
|
(10,230 |
) |
|
|
(9,406 |
) |
|
|
(10,197 |
) |
|
|
(19,636 |
) |
|
|
(19,828 |
) |
| Operating income
(loss) |
|
|
40,773 |
|
|
|
23,909 |
|
|
|
(34,228 |
) |
|
|
64,682 |
|
|
|
(29,156 |
) |
| Interest expense,
net |
|
|
(7,348 |
) |
|
|
(4,970 |
) |
|
|
(8,206 |
) |
|
|
(12,318 |
) |
|
|
(14,231 |
) |
| Income (loss) before
income taxes |
|
$ |
33,425 |
|
|
$ |
18,939 |
|
|
$ |
(42,434 |
) |
|
$ |
52,364 |
|
|
$ |
(43,387 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation,
depletion and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resource |
|
$ |
4,274 |
|
|
$ |
4,384 |
|
|
$ |
5,387 |
|
|
$ |
8,658 |
|
|
$ |
11,515 |
|
| Wood
Products |
|
|
1,839 |
|
|
|
1,827 |
|
|
|
1,800 |
|
|
|
3,666 |
|
|
|
3,701 |
|
| Real
Estate |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
6,113 |
|
|
|
6,212 |
|
|
|
7,188 |
|
|
|
12,325 |
|
|
|
15,219 |
|
|
Corporate |
|
|
158 |
|
|
|
117 |
|
|
|
213 |
|
|
|
275 |
|
|
|
421 |
|
| Bond
discounts and deferred loan fees |
|
|
370 |
|
|
|
373 |
|
|
|
468 |
|
|
|
743 |
|
|
|
834 |
|
| Total depreciation,
depletion and amortization |
|
$ |
6,641 |
|
|
$ |
6,702 |
|
|
$ |
7,869 |
|
|
$ |
13,343 |
|
|
$ |
16,474 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basis of real
estate sold: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Real
Estate |
|
$ |
1,047 |
|
|
$ |
4,809 |
|
|
$ |
3,509 |
|
|
$ |
5,856 |
|
|
$ |
5,754 |
|
|
Eliminations and adjustments |
|
|
(65 |
) |
|
|
(19 |
) |
|
|
(122 |
) |
|
|
(84 |
) |
|
|
(333 |
) |
| Total basis of real
estate sold |
|
$ |
982 |
|
|
$ |
4,790 |
|
|
$ |
3,387 |
|
|
$ |
5,772 |
|
|
$ |
5,421 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
(Investors)
Jerry Richards
509.835.1521
(Media)
Mark Benson
509.835.1513