Exhibit 99.1
 | ||
| Potlatch Corporation 601 W. First Ave., Suite 1600 Spokane, WA 99201 509.835.1500 www.potlatchcorp.com | ||
News Release
For immediate release:
| Contact: | (Investors) | (Media) | |
| Jerry Richards | Mark Benson | ||
| 509.835.1521 | 509.835.1513 | ||
Potlatch Reports Fourth Quarter and Full Year 2013 Results
SPOKANE, Wash - January 28, 2014 - Potlatch Corporation (Nasdaq:PCH) today reported net income of $13.7 million, or $0.34 per diluted share, on revenues of $140.0 million for the quarter ended December 31, 2013. This compares to net income of $13.9 million, or $0.34 per diluted share, on revenues of $143.3 million in the fourth quarter of 2012.
Net income for the full year of 2013 was $70.6 million, or $1.73 per diluted share, on revenues of $570.3 million, which compares to net income of $42.6 million, or $1.05 per diluted share, on revenues of $525.1 million in 2012. After-tax charges of $2.4 million, or $0.06 per diluted share, were recorded in 2013 related to environmental remediation at a Northern Idaho property. No environmental charges were recorded in 2012.
“I am very pleased with our performance in 2013,” said Michael Covey, chairman and chief executive officer of Potlatch Corporation. “Northern sawlog prices have returned to pre-recession levels, Wood Products earnings were higher than they have been for almost ten years, and our Real Estate segment closed the highest number of real estate transactions since our REIT conversion in 2006. This business strength gave our board the confidence to raise our dividend to $0.35 per share from $0.31 per share in the fourth quarter,” concluded Mr. Covey.
Financial Highlights
(millions, except per-share data)
| Q4 2013 | Q3 2013 | Q4 2012 | ||||||||||
| Revenues | $ | 140.0 | $ | 157.9 | $ | 143.3 | ||||||
| Net income | $ | 13.7 | $ | 22.2 | $ | 13.9 | ||||||
| Net income per diluted share | $ | 0.34 | $ | 0.54 | $ | 0.34 | ||||||
| Distribution per share | $ | 0.35 | $ | 0.31 | $ | 0.31 | ||||||
| Net cash from operations | $ | 17.2 | $ | 33.6 | $ | 36.9 | ||||||
| Cash and short-term investments at end of period | $ | 57.8 | $ | 62.8 | $ | 80.1 | ||||||
Business Performance: Q4 2013 vs. Q3 2013
Resource
Resource’s operating income was $18.0 million on revenues of $61.0 million in the fourth quarter, compared to operating income of $25.4 million on revenues of $77.0 million in the third quarter. Harvest volumes were seasonally lower in both the Northern and Southern regions in the fourth quarter compared to the third quarter. Northern region average sawlog prices declined in the fourth quarter, which mirrored the decline in lumber prices in the third quarter, but remain strong. Southern region average sawlog prices also declined in the fourth quarter due to a lower mix of hardwood sawlog volume as compared to the third quarter.
Wood Products
Wood Products’ operating income was $9.0 million on revenues of $87.4 million in the fourth quarter, compared to operating income of $11.3 million on revenues of $92.1 million in the third quarter. Average lumber prices realized in the fourth quarter were 3% higher than the third quarter, while lumber shipments were 6% lower. Third quarter lumber shipments were higher than normal as inventory that had built at the end of the second quarter was sold when the market regained its footing.
Real Estate
Real Estate’s operating income was $4.6 million on revenues of $6.8 million in the fourth quarter, compared to operating income of $6.5 million on revenues of $8.9 million in the third quarter. Sales activity continued at a steady pace. A total of 41 real estate transactions closed in the fourth quarter compared to 53 transactions in the third quarter.
Outlook
“We expect further increases in housing starts, which will continue to bolster the operating results of our Resource and Wood Products segments. We plan to harvest 3.8 million tons in 2014. Demand and prices in our wood basket in the South need to increase before considering a meaningful increase in our annual harvest. Our Real Estate business is expected to remain
strong as interest in rural recreational real estate continues to be solid. Our year-end liquidity position is excellent, which provides financial flexibility,” concluded Mr. Covey.
Conference Call Information
A live conference call and webcast will be held today, January 28, 2014, 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 27312896. 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 February 4, 2014 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 27312896 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, anticipated operating results in our Resource and Wood Products segments, our estimated 2014 harvest levels, performance of our Real Estate segment, the demand and interest in real estate, our liquidity, 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; 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.
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Potlatch Corporation
Consolidated Statements of Income
Unaudited (Dollars in thousands, except per-share amounts)
| Quarter Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Revenues | $ | 139,955 | $ | 143,299 | $ | 570,289 | $ | 525,134 | |||||||
| Costs and expenses: | |||||||||||||||
| Cost of goods sold | 106,070 | 103,197 | 408,772 | 390,666 | |||||||||||
| Selling, general and administrative expenses | 13,240 | 13,425 | 50,397 | 49,419 | |||||||||||
| Environmental remediation charge | — | — | 3,522 | — | |||||||||||
| Asset impairment charge | — | 107 | — | 107 | |||||||||||
| 119,310 | 116,729 | 462,691 | 440,192 | ||||||||||||
| Operating income | 20,645 | 26,570 | 107,598 | 84,942 | |||||||||||
| Interest expense, net | (5,573 | ) | (6,496 | ) | (23,132 | ) | (25,539 | ) | |||||||
| Income before income taxes | 15,072 | 20,074 | 84,466 | 59,403 | |||||||||||
| Income tax provision | (1,351 | ) | (6,210 | ) | (13,885 | ) | (16,809 | ) | |||||||
| Net income | $ | 13,721 | $ | 13,864 | $ | 70,581 | $ | 42,594 | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.34 | $ | 0.34 | $ | 1.74 | $ | 1.06 | |||||||
| Diluted | 0.34 | 0.34 | 1.73 | 1.05 | |||||||||||
| Cash distributions per share | $ | 0.35 | $ | 0.31 | $ | 1.28 | $ | 1.24 | |||||||
| Weighted-average shares outstanding (in thousands): | |||||||||||||||
| Basic | 40,533 | 40,383 | 40,503 | 40,333 | |||||||||||
| Diluted | 40,739 | 40,630 | 40,709 | 40,553 | |||||||||||
Potlatch Corporation
Consolidated Condensed Balance Sheets
Unaudited (Dollars in thousands, except per-share amounts)
| December 31, 2013 | December 31, 2012 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash | $ | 5,586 | $ | 16,985 | |||
| Short-term investments | 52,251 | 63,077 | |||||
| Receivables, net | 16,786 | 10,668 | |||||
| Inventories | 36,275 | 28,928 | |||||
| Deferred tax assets | 7,724 | 10,507 | |||||
| Other assets | 11,961 | 7,932 | |||||
| Total current assets | 130,583 | 138,097 | |||||
| Property, plant and equipment, net | 59,976 | 58,050 | |||||
| Timber and timberlands, net | 455,871 | 464,467 | |||||
| Deferred tax assets | 21,576 | 43,292 | |||||
| Other assets | 12,738 | 14,991 | |||||
| Total assets | $ | 680,744 | $ | 718,897 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Current installments on long-term debt | $ | — | $ | 8,413 | |||
| Accounts payable and accrued liabilities | 50,532 | 55,174 | |||||
| Total current liabilities | 50,532 | 63,587 | |||||
| Long-term debt | 320,092 | 349,163 | |||||
| Liability for pensions and other postretirement employee benefits | 83,619 | 145,047 | |||||
| Other long-term obligations | 22,353 | 22,457 | |||||
| Total liabilities | 476,596 | 580,254 | |||||
| Stockholders’ equity | 204,148 | 138,643 | |||||
| Total liabilities and stockholders' equity | $ | 680,744 | $ | 718,897 | |||
| Shares outstanding (in thousands) | 40,537 | 40,389 | |||||
| Stockholders’ equity per common share | $ | 5.04 | $ | 3.43 | |||
| Working capital | $ | 80,051 | $ | 74,510 | |||
| Current ratio | 2.6 | :1 | 2.2 | :1 | |||
Potlatch Corporation
Consolidated Condensed Statements of Cash Flows
Unaudited (Dollars in thousands)
| Twelve Months Ended | |||||||
| December 31, | |||||||
| 2013 | 2012 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 70,581 | $ | 42,594 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation, depletion and amortization | 26,962 | 26,247 | |||||
| Basis of real estate sold | 2,904 | 5,048 | |||||
| Deferred income taxes | (2,467 | ) | 15,992 | ||||
| Gain on disposition of property, plant and equipment | (54 | ) | (8 | ) | |||
| Employee benefit plans | 7,561 | 4,317 | |||||
| Equity-based compensation expense | 4,377 | 4,067 | |||||
| Asset impairment | — | 107 | |||||
| Income tax benefit related to stock issued in conjunction with stock compensation plans | 71 | 525 | |||||
| Other, net | 11 | (25 | ) | ||||
| Funding of qualified pension plans | — | (21,630 | ) | ||||
| Working capital changes | (17,694 | ) | 2,747 | ||||
| Net cash from operating activities | 92,252 | 79,981 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Short-term investments | 10,826 | (88 | ) | ||||
| Proceeds from company owned life insurance (COLI) loan | — | 21,751 | |||||
| Additions to property, plant and equipment | (10,280 | ) | (5,636 | ) | |||
| Additions to timber and timberlands | (13,373 | ) | (23,552 | ) | |||
| Proceeds from disposition of property, plant and equipment | 213 | 71 | |||||
| Other, net | (1,390 | ) | (1,193 | ) | |||
| Net cash from investing activities | (14,004 | ) | (8,647 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Distributions to common stockholders | (51,868 | ) | (50,041 | ) | |||
| Repayment of long-term debt | (36,663 | ) | (21,662 | ) | |||
| Proceeds from issuance of long-term debt | — | 12,000 | |||||
| Issuance of common stock | 1,904 | 1,075 | |||||
| Change in book overdrafts | (955 | ) | 462 | ||||
| Deferred financing costs | (25 | ) | (2,148 | ) | |||
| Employee tax withholdings on equity-based compensation | (1,738 | ) | (1,714 | ) | |||
| Other, net | (302 | ) | (140 | ) | |||
| Net cash from financing activities | (89,647 | ) | (62,168 | ) | |||
| Increase (decrease) in cash | (11,399 | ) | 9,166 | ||||
| Cash at beginning of period | 16,985 | 7,819 | |||||
| Cash at end of period | $ | 5,586 | $ | 16,985 | |||
Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
| Quarter Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| (Dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
| Revenues: | |||||||||||||||
| Resource | $ | 60,974 | $ | 51,360 | $ | 238,228 | $ | 207,846 | |||||||
| Wood Products | 87,373 | 85,125 | 366,015 | 329,404 | |||||||||||
| Real Estate | 6,848 | 19,057 | 26,160 | 38,238 | |||||||||||
| 155,195 | 155,542 | 630,403 | 575,488 | ||||||||||||
| Intersegment revenues - Resource | (15,240 | ) | (12,243 | ) | (60,114 | ) | (50,354 | ) | |||||||
| Total consolidated revenues | $ | 139,955 | $ | 143,299 | $ | 570,289 | $ | 525,134 | |||||||
| Operating income: | |||||||||||||||
| Resource | $ | 18,064 | $ | 10,532 | $ | 73,425 | $ | 49,543 | |||||||
| Wood Products | 8,938 | 13,508 | 58,892 | 45,456 | |||||||||||
| Real Estate | 4,574 | 13,800 | 18,266 | 28,056 | |||||||||||
| Eliminations and adjustments | (840 | ) | (955 | ) | (907 | ) | (1,061 | ) | |||||||
| 30,736 | 36,885 | 149,676 | 121,994 | ||||||||||||
| Corporate | (15,664 | ) | (16,811 | ) | (65,210 | ) | (62,591 | ) | |||||||
| Income before income taxes | $ | 15,072 | $ | 20,074 | $ | 84,466 | $ | 59,403 | |||||||
| Depreciation, depletion and amortization: | |||||||||||||||
| Resource | $ | 4,583 | $ | 4,375 | $ | 18,103 | $ | 16,446 | |||||||
| Wood Products | 1,584 | 1,525 | 6,194 | 6,538 | |||||||||||
| Real Estate | 14 | 9 | 56 | 36 | |||||||||||
| 6,181 | 5,909 | 24,353 | 23,020 | ||||||||||||
| Corporate | 710 | 1,067 | 2,609 | 3,227 | |||||||||||
| Total depreciation, depletion and amortization | $ | 6,891 | $ | 6,976 | $ | 26,962 | $ | 26,247 | |||||||
| Basis of real estate sold - Real Estate | $ | 1,166 | $ | 3,607 | $ | 3,536 | $ | 5,413 | |||||||
| Eliminations and adjustments | (207 | ) | (182 | ) | (632 | ) | (365 | ) | |||||||
| Total basis of real estate sold - Real Estate | $ | 959 | $ | 3,425 | $ | 2,904 | $ | 5,048 | |||||||