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Potlatch Corporation Reports First Quarter 2017 Results

SPOKANE, Wash., April 26, 2017 (GLOBE NEWSWIRE) -- Potlatch Corporation (Nasdaq:PCH) today reported net income of $16.9 million, or $0.41 per diluted share, on revenues of $149.7 million for the quarter ended March 31, 2017. Net income was $0.2 million, or $0.00 per diluted share, on revenues of $127.9 million in the first quarter of 2016.

“Higher lumber prices continue to drive results in our Resource and Wood Products segments, resulting in strong first quarter earnings,” said Mike Covey, chairman and chief executive officer. “We were pleased with the preliminary countervailing duty announcement on Canadian lumber earlier this week and look forward to the antidumping announcement near the end of June. Record cedar log prices in Idaho contributed to our strong results as well as closing a land conservation sale for almost $2,600 per acre,” stated Mr. Covey.

Financial Highlights (in millions, except per share data)

Q1 2017 Q4 2016 Q1 2016
Revenues $149.7 $155.7 $127.9
Net income $16.9 $14.4 $0.2
Net income per diluted share $0.41 $0.35 $
Distribution per share $0.375 $0.375 $0.375
Net cash from operations $41.9 $27.7 $28.9
Cash and cash equivalents $101.7 $82.6 $7.8

Business Performance: Q1 2017 vs. Q4 2016

Resource

Resource’s operating income was $14.9 million on revenues of $51.8 million in the first quarter, compared to operating income of $22.7 million on revenues of $66.8 million in the fourth quarter of 2016. Harvest volumes were seasonally lower. A 3% increase in Northern sawlog prices was due largely to the strength of cedar sawlog prices. Southern sawlog prices decreased 9% primarily due to a seasonally lower mix of hardwood logs.

Wood Products

Wood Products earned $8.7 million on revenues of $95.6 million in the first quarter, compared to operating income of $8.3 million on revenues of $95.6 million in the fourth quarter of 2016. Average lumber prices were 7% higher in the first quarter compared to the fourth quarter while lumber shipments were 7% lower as a result of a scheduled boiler maintenance shutdown and capital project at the Warren, Arkansas sawmill.

Real Estate

Real Estate’s operating income was $8.6 million on revenues of $14.5 million in the first quarter, compared to operating income of $6.0 million on revenues of $8.7 million in the fourth quarter of 2016. A higher average sales price offset the effect of selling fewer acres.

Outlook

“Due to strong lumber demand and the favorable duty determination, we expect significantly improved operating results in our Wood Products segment in the second quarter. Due to seasonal harvest restrictions in Idaho we expect Resource income to decline due to lower harvest volumes. 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.

Conference Call Information

A live conference call and webcast will be held today, April 27, 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 99765039. 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 May 2, 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 99765039 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 U.S. housing market recovery; 1.25 to 1.3 million housing units to be built in the U.S. in 2017; strong repair and remodel market; lumber demand, implementation of duties in the Canadian lumber trade case; 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 second quarter of 2017; improved wood products markets in the second quarter of 2017; harvest volumes in the second quarter of 2017 and for the full year; percentage of North and South harvest and sawlogs to be harvested in the North and the South in the second quarter of 2017; robust cedar sawlog market resulting in an increase in EBITDDA compared to 2016; increased lumber shipments in the second quarter of 2017 and for the year; real estate sales in the second quarter of 2017; corporate expenses and interest expense in the second quarter of 2017; tax rate for the second 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; 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
Unaudited (Dollars in thousands, except per share amounts)
Three Months Ended March 31,
2017 2016
Revenues $149,681 $127,896
Costs and expenses:
Cost of goods sold 112,783 109,815
Selling, general and administrative expenses 12,989 13,009
125,772 122,824
Operating income 23,909 5,072
Interest expense, net (4,970) (6,025)
Income (loss) before income taxes 18,939 (953)
Income tax (provision) benefit (2,018) 1,110
Net income $16,921 $157
Net income per share:
Basic $0.41 $
Diluted $0.41 $
Dividends per share $0.375 $0.375
Weighted-average shares outstanding (in thousands):
Basic 40,778 40,875
Diluted 41,071 40,960


Potlatch Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
March 31, 2017 December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents $101,664 $82,584
Receivables, net 16,328 17,284
Inventories 45,347 52,622
Other assets 8,675 11,155
Total current assets 172,014 163,645
Property, plant and equipment, net 74,466 72,820
Timber and timberlands, net 637,319 641,856
Deferred tax assets, net 41,550 42,051
Other assets 7,322 7,309
Total assets $932,671 $927,681
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Current portion of long-term debt $25,408 $11,032
Accounts payable and accrued liabilities 44,209 43,710
Current portion of pension and other postretirement employee benefits 5,839 5,839
Total current liabilities 75,456 60,581
Long-term debt 558,510 572,956
Pension and other postretirement employee benefits 123,939 123,284
Other long-term obligations 15,504 14,586
Total liabilities 773,409 771,407
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value 40,608 40,519
Additional paid-in capital 355,174 355,274
Accumulated deficit (127,109) (128,775)
Accumulated other comprehensive loss (109,411) (110,744)
Total stockholders’ equity 159,262 156,274
Total liabilities and stockholders' equity $932,671 $927,681

Potlatch Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
Three Months Ended March 31,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $16,921 $157
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization 6,702 8,605
Basis of real estate sold 4,790 2,034
Change in deferred taxes (351) (1,110)
Employee benefit plans 3,292 2,737
Equity-based compensation expense 1,157 954
Other, net (528) (531)
Change in working capital and operating-related activities, net 9,966 16,047
Net cash from operating activities 41,949 28,893
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (3,636) (932)
Timberlands reforestation and roads (2,645) (2,242)
Other, net (102) 116
Net cash from investing activities (6,383) (3,058)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to common stockholders (15,228) (15,258)
Repayment of revolving line of credit borrowings (30,000)
Repayment of long-term debt (5,000)
Proceeds from issuance of long-term debt 27,500
Change in book overdrafts (2,836)
Other, net (1,258) (342)
Net cash from financing activities (16,486) (25,936)
Change in cash and cash equivalents 19,080 (101)
Cash and cash equivalents at beginning of period 82,584 7,925
Cash and cash equivalents at end of period $101,664 $7,824


Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
Three Months Ended March 31,
2017 2016
Revenues:
Resource $51,768 $48,710
Wood Products 95,592 83,238
Real Estate 14,504 5,566
161,864 137,514
Intersegment Resource revenues (12,183) (9,618)
Total consolidated revenues $149,681 $127,896
Income (loss) before income taxes:
Resource $14,929 $10,207
Wood Products 8,684 956
Real Estate 8,643 2,075
Eliminations and adjustments 1,059 1,465
33,315 14,703
Corporate (9,406) (9,631)
Operating income 23,909 5,072
Interest expense, net (4,970) (6,025)
Income (loss) before income taxes $18,939 $(953)
Depreciation, depletion and amortization:
Resource $4,384 $6,128
Wood Products 1,827 1,901
Real Estate 1 2
6,212 8,031
Corporate 117 208
Bond discounts and deferred loan fees 373 366
Total depreciation, depletion and amortization $6,702 $8,605
Basis of real estate sold:
Real Estate $4,809 $2,245
Eliminations and adjustments (19) (211)
Total basis of real estate sold $4,790 $2,034

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

Source:Potlatch Corporation