Potlatch Corporation Reports First Quarter 2015 Results

SPOKANE, Wash., April 22, 2015 (GLOBE NEWSWIRE) -- Potlatch Corporation (Nasdaq:PCH) today reported net income of $5.7 million, or $0.14 per diluted share, on revenues of $134.1 million for the quarter ended March 31, 2015. Net income was $20.3 million, or $0.50 per diluted share, on revenues of $139.6 million in the first quarter of 2014.

"We are surprised and disappointed that lumber prices have fallen since the start of the year," said Mike Covey, chairman and chief executive officer. "We believe that the U.S. housing recovery will continue and that building activity will increase to at least 1.1 million starts this year as the weather improves. We expect lumber prices will recover and that we will post stronger results in the second half of the year," concluded Mr. Covey.

Financial Highlights
(millions, except per-share data)
Q1 2015 Q4 2014 Q1 2014
Revenues $ 134.1 $ 146.2 $ 139.6
Net income $ 5.7 $ 20.1 $ 20.3
Net income per diluted share $ 0.14 $ 0.49 $ 0.5
Distribution per share $ 0.375 $ 0.375 $ 0.35
Net cash from operations $ 24.4 $ 23.7 $ 40.0
Cash and short-term investments at end of period $ 28.0 $ 31.0 $ 76.3

Business Performance: Q1 2015 vs. Q4 2014


Resource's operating income was $15.0 million on revenues of $54.0 million in the first quarter, compared to operating income of $23.9 million on revenues of $69.2 million in the fourth quarter of 2014. Harvest volumes were seasonally lower in the Northern and Southern regions. Northern sawlog price realizations decreased 10% per ton in the quarter due to seasonal factors and lower log prices indexed to lumber prices. Southern pine sawlog prices were relatively flat compared to the fourth quarter. However, due to a lower mix of hardwood logs, average prices for total Southern sawlogs declined 13%.

Wood Products

Wood Products' operating income was $3.5 million on revenues of $89.2 million in the first quarter, compared to operating income of $9.1 million on revenues of $88.7 million in the fourth quarter of 2014. Lumber shipments were down slightly and the average lumber price realized was 2% lower in the first quarter. The magnitude of the price decline was muted somewhat by a favorable shift to include cedar in the mix in the first quarter. Log costs also remained under pressure in the Lake States due to pulp mill demand in the region.

Real Estate

Real Estate's operating income was $1.6 million on revenues of $3.1 million in the first quarter, compared to operating income of $1.6 million on revenues of $4.1 million in the fourth quarter of 2014. The margin increased in the first quarter due to mix.

Conference Call Information

A live conference call and webcast will be held today, April 22, 2015, 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 11029310. 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 29, 2015 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 11029310 to access the replay.

About Potlatch

Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.6 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, 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; lumber pricing; sawlog pricing; 2015 harvest levels; performance of our Wood Products, Resource and Real Estate segments in 2015; earnings growth; 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 Chinese 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; 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; 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
March 31,
2015 2014
Revenues $ 134,125 $ 139,579
Costs and expenses:
Cost of goods sold 107,772 98,593
Selling, general and administrative expenses 12,326 9,677
120,098 108,270
Operating income 14,027 31,309
Interest expense, net (8,069) (5,460)
Income before income taxes 5,958 25,849
Income taxes (302) (5,499)
Net income $ 5,656 $ 20,350
Net income per share:
Basic $ 0.14 $ 0.50
Diluted 0.14 0.50
Distributions per share $ 0.375 $ 0.35
Weighted-average shares outstanding (in thousands):
Basic 40,802 40,561
Diluted 40,885 40,682
Potlatch Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands, except per-share amounts)
March 31,
December 31,
Current assets:
Cash $ 9,144 $ 4,644
Short-term investments 18,885 26,368
Receivables, net 13,065 9,928
Inventories 27,518 31,490
Deferred tax assets, net 6,168 6,168
Other assets 14,555 15,065
Total current assets 89,335 93,663
Property, plant and equipment, net 68,545 65,749
Timber and timberlands, net 825,584 828,420
Deferred tax assets, net 37,076 37,228
Other assets 10,606 10,361
Total assets $ 1,031,146 $ 1,035,421
Current liabilities:
Current installments on long-term debt $ 27,498 $ 22,870
Accounts payable and accrued liabilities 54,032 49,324
Total current liabilities 81,530 72,194
Long-term debt 602,150 606,473
Liability for pension and other postretirement employee benefits 115,626 115,936
Other long-term obligations 14,849 15,752
Stockholders' equity 216,991 225,066
Total liabilities and stockholders' equity $ 1,031,146 $ 1,035,421
Shares outstanding (in thousands) 40,676 40,605
Working capital $ 7,805 $ 21,469
Current ratio 1.1:1 1.3:1
Potlatch Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
Three Months Ended
March 31,
2015 2014
Net income $ 5,656 $ 20,350
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization 8,504 6,104
Basis of real estate sold 408 4,622
Change in deferred taxes (936) (164)
Employee benefit plans 1,723 (178)
Equity-based compensation expense 1,136 908
Other, net (501) (581)
Working capital and operating related activities 8,447 8,923
Net cash from operating activities 24,437 39,984
Change in short-term investments 7,483 (14,699)
Property, plant and equipment (4,810) (2,168)
Timberlands reforestation and roads (2,734) (1,469)
Other, net 309 108
Net cash from investing activities 248 (18,228)
Distributions to common stockholders (15,253) (14,206)
Employee tax withholdings on equity-based compensation (1,407) (1,068)
Change in book overdrafts (3,551) (2,636)
Other, net 26 (68)
Net cash from financing activities (20,185) (17,978)
Change in cash 4,500 3,778
Cash at beginning of period 4,644 5,586
Cash at end of period $ 9,144 $ 9,364
Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
Three Months Ended
March 31,
2015 2014
Resource $ 53,955 $ 51,905
Wood Products 89,233 87,804
Real Estate 3,111 14,439
146,299 154,148
Elimination of intersegment revenues - Resource (12,174) (14,569)
Total consolidated revenues $ 134,125 $ 139,579
Operating income:
Resource $ 14,978 $ 16,224
Wood Products 3,500 12,707
Real Estate 1,599 8,271
Eliminations and adjustments 2,975 842
23,052 38,044
Corporate (9,025) (6,735)
Operating income 14,027 31,309
Interest expense, net (8,069) (5,460)
Income before income taxes $ 5,958 $ 25,849
Depreciation, depletion and amortization:1
Resource $ 6,254 $ 3,916
Wood Products 1,576 1,529
Real Estate 15 15
7,845 5,460
Corporate 659 644
Total depreciation, depletion and amortization $ 8,504 $ 6,104
Basis of real estate sold:
Real Estate $ 471 $ 5,167
Eliminations and adjustments (63) (545)
Total basis of real estate sold $ 408 $ 4,622
1 The presentation of depreciation, depletion, and amortization in Segment Information and the Condensed Consolidated Statements of Cash Flows includes amortization of bond discounts and deferred loan fees. Bond discounts and deferred loan fees are recorded in Interest expense, net in the Consolidated Statements of Income.

CONTACT: (Investors) Jerry Richards 509.835.1521 (Media) Mark Benson 509.835.1513

Source:Potlatch Corporation