Exhibit 99.1
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| | |
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| | | Potlatch Corporation
601 W. First Ave., Suite 1600
Spokane, WA 99201
509.835.1500
www.potlatchcorp.com |
News Release
For immediate release:
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| | | |
| Contact: | (Investors) | (Media) | |
| | Jerry Richards | Mark Benson | |
| | 509.835.1521 | 509.835.1513 | |
Potlatch Corporation Reports Fourth Quarter and Full Year 2014 Results
SPOKANE, Wash - January 28, 2015 - Potlatch Corporation (Nasdaq: PCH) today reported net income of $20.1 million, or $0.49 per diluted share, on revenues of $146.2 million for the quarter ended December 31, 2014. Excluding transaction-related expenses of $0.4 million and nonrecurring tax benefits of $1.9 million, fourth quarter 2014 earnings were $18.6 million, or $0.45 per diluted share. Net income was $13.7 million, or $0.34 per diluted share, on revenues of $140.0 million in the fourth quarter of 2013.
Net income for the full year of 2014 was $89.9 million, or $2.20 per diluted share, on revenues of $607.0 million. This compares to net income of $70.6 million, or $1.73 per diluted share, on revenues of $570.3 million in 2013.
"We are pleased with our performance this year, including the fact that we grew both the company and the dividend," said Michael Covey, chairman and chief executive officer. "The addition of approximately 201,000 acres of high-quality timberlands in Alabama and Mississippi increases our geographic and market diversity in the South. We delivered solid financial results in 2014 and we expect 2015 to be another good year," concluded Mr. Covey.
Financial Highlights
(millions, except per-share data)
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| | | | | | | | | | | | |
| | | Q4 2014 | | Q3 2014 | | Q4 2013 |
| Revenues | | $ | 146.2 |
| | $ | 177.2 |
| | $ | 140.0 |
|
| Net income | | $ | 20.1 |
| | $ | 33.2 |
| | $ | 13.7 |
|
| Net income per diluted share | | $ | 0.49 |
| | $ | 0.81 |
| | $ | 0.34 |
|
| Distribution per share | | $ | 0.375 |
| | $ | 0.35 |
| | $ | 0.35 |
|
| Net cash from operations | | $ | 23.7 |
| | $ | 39.2 |
| | $ | 15.2 |
|
| Cash and short-term investments at end of period | | $ | 31.0 |
| | $ | 73.3 |
| | $ | 57.8 |
|
Business Performance: Q4 2014 vs. Q3 2014
Resource
Resource’s operating income was $23.9 million on revenues of $69.2 million in the fourth quarter, compared to operating income of $34.1 million on revenues of $91.9 million in the third quarter of 2014. Harvest volumes were seasonally lower in the Northern and Southern regions. Northern sawlog price realizations decreased 4% per ton in the quarter due primarily to seasonally higher moisture content, but were flat on a dimensional, or board foot, basis. Southern sawlog prices were 7% lower largely due to a lower mix of hardwood logs. Southern pine sawlog prices were flat compared to the third quarter.
Wood Products
Wood Products’ operating income was $9.1 million on revenues of $88.7 million in the fourth quarter, compared to operating income of $15.8 million on revenues of $99.2 million in the third quarter of 2014. Lumber shipments declined 9% due to fewer operating days in the quarter and the average lumber price realized was 4% lower in the fourth quarter. Log costs were also 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 $4.1 million in the fourth quarter, compared to operating income of $4.6 million on revenues of $6.2 million in the third quarter of 2014. The decline in earnings was due to the sale of fewer acres and mix.
Outlook
“We expect the recovery in the U.S. housing market to continue in 2015, which will translate into higher earnings in Resource and another strong year in Wood Products. We plan to increase our harvest to 4.5 million tons in 2015. We are not planning any large sales in our Real Estate segment and expect to sell approximately 20,000 acres this year. Our balance sheet is in good shape and a core part of our strategy remains growing the company over time,” concluded Mr. Covey.
Conference Call Information
A live conference call and webcast will be held today, January 28, 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 61675140. 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, 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 61675140 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 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. More information about Potlatch can be found on the company’s website at www.potlatch.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; 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)
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| | | | | | | | | | | | | | | |
| | Quarter Ended | | Twelve Months Ended |
| December 31, | | December 31, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Revenues | $ | 146,237 |
| | $ | 139,955 |
| | $ | 606,950 |
| | $ | 570,289 |
|
| Costs and expenses: | | | | | | | |
| Cost of goods sold | 107,773 |
| | 106,070 |
| | 429,789 |
| | 408,772 |
|
| Selling, general and administrative expenses | 11,861 |
| | 13,240 |
| | 44,655 |
| | 50,397 |
|
| Environmental remediation charge | — |
| | — |
| | — |
| | 3,522 |
|
| | 119,634 |
| | 119,310 |
| | 474,444 |
| | 462,691 |
|
| Operating income | 26,603 |
| | 20,645 |
| | 132,506 |
| | 107,598 |
|
| Interest expense, net | (6,434 | ) | | (5,573 | ) | | (22,909 | ) | | (23,132 | ) |
| Income before income taxes | 20,169 |
| | 15,072 |
| | 109,597 |
| | 84,466 |
|
| Income tax provision | (33 | ) | | (1,351 | ) | | (19,687 | ) | | (13,885 | ) |
| Net income | $ | 20,136 |
| | $ | 13,721 |
| | $ | 89,910 |
| | $ | 70,581 |
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| | | | | | | | |
| Net income per share: | | | | | | | |
| Basic | $ | 0.49 |
| | $ | 0.34 |
| | $ | 2.21 |
| | $ | 1.74 |
|
| Diluted | 0.49 |
| | 0.34 |
| | 2.20 |
| | 1.73 |
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| Cash distributions per share | $ | 0.375 |
| | $ | 0.35 |
| | $ | 1.425 |
| | $ | 1.28 |
|
| Weighted-average shares outstanding (in thousands): | | | | | | | |
| Basic | 40,764 |
| | 40,533 |
| | 40,749 |
| | 40,503 |
|
| Diluted | 40,927 |
| | 40,739 |
| | 40,894 |
| | 40,709 |
|
Potlatch Corporation
Consolidated Condensed Balance Sheets
Unaudited (Dollars in thousands, except per-share amounts)
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| | | | | | | |
| | December 31,
2014 | | December 31,
2013 |
| ASSETS | | | |
| Current assets: | | | |
| Cash | $ | 4,644 |
| | $ | 5,586 |
|
| Short-term investments | 26,368 |
| | 52,251 |
|
| Receivables, net | 9,928 |
| | 16,572 |
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| Inventories | 31,490 |
| | 36,275 |
|
| Deferred tax assets | 6,168 |
| | 7,724 |
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| Other assets | 15,065 |
| | 11,961 |
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| Total current assets | 93,663 |
| | 130,369 |
|
| Property, plant and equipment, net | 65,749 |
| | 59,976 |
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| Timber and timberlands, net | 828,420 |
| | 455,871 |
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| Deferred tax assets | 37,228 |
| | 21,576 |
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| Other assets | 10,361 |
| | 12,738 |
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| Total assets | $ | 1,035,421 |
| | $ | 680,530 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Current installments on long-term debt | $ | 22,870 |
| | $ | — |
|
| Current liability for pensions and other postretirement employee benefits | 6,260 |
| | 6,701 |
|
| Accounts payable and accrued liabilities | 43,064 |
| | 43,617 |
|
| Total current liabilities | 72,194 |
| | 50,318 |
|
| Long-term debt | 606,473 |
| | 320,092 |
|
| Liability for pensions and other postretirement employee benefits | 115,936 |
| | 83,619 |
|
| Other long-term obligations | 15,752 |
| | 22,353 |
|
| Total liabilities | 810,355 |
| | 476,382 |
|
| Stockholders’ equity | 225,066 |
| | 204,148 |
|
| Total liabilities and stockholders' equity | $ | 1,035,421 |
| | $ | 680,530 |
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| | | | |
| Shares outstanding (in thousands) | 40,605 |
| | 40,537 |
|
| Stockholders’ equity per common share | $ | 5.54 |
| | $ | 5.04 |
|
| Working capital | $ | 21,469 |
| | $ | 80,051 |
|
| Current ratio | 1.3 | :1 | | 2.6 | :1 |
Potlatch Corporation
Consolidated Condensed Statements of Cash Flows
Unaudited (Dollars in thousands)
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| | | | | | | |
| | Twelve Months Ended |
| | December 31, |
| | 2014 | | 2013 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 89,910 |
| | $ | 70,581 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, depletion and amortization | 26,749 |
| | 26,962 |
|
| Basis of real estate sold | 8,646 |
| | 2,904 |
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| Change in deferred taxes | (1,616 | ) | | (2,467 | ) |
| Employee benefit plans | 2,122 |
| | 7,561 |
|
| Equity-based compensation expense | 4,137 |
| | 4,377 |
|
| Other, net | (2,191 | ) | | (1,972 | ) |
| Funding of qualified pension plans | (3,550 | ) | | — |
|
| Working capital changes | 7,165 |
| | (17,694 | ) |
| Net cash from operating activities | 131,372 |
| | 90,252 |
|
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Change in short-term investments | 25,884 |
| | 10,826 |
|
| Transfer from company owned life insurance (COLI) | 28,870 |
| | — |
|
| Transfer to COLI | (25,515 | ) | | — |
|
| Property, plant and equipment | (13,261 | ) | | (10,280 | ) |
| Timberlands reforestation and timberland roads | (10,971 | ) | | (12,313 | ) |
| Acquisition of timber and timberlands | (388,952 | ) | | (1,060 | ) |
| Other, net | 1,262 |
| | 823 |
|
| Net cash from investing activities | (382,683 | ) | | (12,004 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Distributions to common stockholders | (57,848 | ) | | (51,868 | ) |
| Repayment of long-term debt | — |
| | (36,663 | ) |
| Proceeds from issuance of long-term debt | 310,000 |
| | — |
|
| Issuance of common stock | 398 |
| | 1,904 |
|
| Change in book overdrafts | 1,465 |
| | (955 | ) |
| Deferred financing costs | (2,388 | ) | | (25 | ) |
| Employee tax withholdings on vested performance share awards | (1,104 | ) | | (1,738 | ) |
| Other, net | (154 | ) | | (302 | ) |
| Net cash from financing activities | 250,369 |
| | (89,647 | ) |
| Increase (decrease) in cash | (942 | ) | | (11,399 | ) |
| Cash at beginning of period | 5,586 |
| | 16,985 |
|
| Cash at end of period | $ | 4,644 |
| | $ | 5,586 |
|
Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
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| | | | | | | | | | | | | | | |
| | Quarter Ended | | Twelve Months Ended |
| | December 31, | | December 31, |
| (Dollars in thousands) | 2014 | | 2013 | | 2014 | | 2013 |
| Revenues: | | | | | | | |
| Resource | $ | 69,245 |
| | $ | 60,974 |
| | $ | 252,581 |
| | $ | 238,228 |
|
| Wood Products | 88,650 |
| | 87,373 |
| | 376,239 |
| | 366,015 |
|
| Real Estate | 4,108 |
| | 6,848 |
| | 40,460 |
| | 26,160 |
|
| | 162,003 |
| | 155,195 |
| | 669,280 |
| | 630,403 |
|
| Intersegment revenues - Resource | (15,766 | ) | | (15,240 | ) | | (62,330 | ) | | (60,114 | ) |
| Total consolidated revenues | $ | 146,237 |
| | $ | 139,955 |
| | $ | 606,950 |
| | $ | 570,289 |
|
| | | | | | | | |
| Operating income: | | | | | | | |
| Resource | $ | 23,854 |
| | $ | 18,064 |
| | $ | 84,976 |
| | $ | 73,425 |
|
| Wood Products | 9,122 |
| | 8,938 |
| | 52,442 |
| | 58,892 |
|
| Real Estate | 1,650 |
| | 4,574 |
| | 26,945 |
| | 18,266 |
|
| Eliminations and adjustments | 174 |
| | (840 | ) | | (190 | ) | | (907 | ) |
| | 34,800 |
| | 30,736 |
| | 164,173 |
| | 149,676 |
|
| Corporate | (14,631 | ) | | (15,665 | ) | | (54,576 | ) | | (65,210 | ) |
| Income before income taxes | $ | 20,169 |
| | $ | 15,071 |
| | $ | 109,597 |
| | $ | 84,466 |
|
| | | | | | | | |
| Depreciation, depletion and amortization: | | | | | | | |
| Resource | $ | 5,102 |
| | $ | 4,583 |
| | $ | 17,847 |
| | $ | 18,103 |
|
| Wood Products | 1,589 |
| | 1,584 |
| | 6,176 |
| | 6,194 |
|
| Real Estate | 15 |
| | 14 |
| | 59 |
| | 56 |
|
| | 6,706 |
| | 6,181 |
| | 24,082 |
| | 24,353 |
|
| Corporate | 717 |
| | 710 |
| | 2,667 |
| | 2,609 |
|
| Total depreciation, depletion and amortization | $ | 7,423 |
| | $ | 6,891 |
| | $ | 26,749 |
| | $ | 26,962 |
|
| | | | | | | | |
| Basis of real estate sold - Real Estate | $ | 1,427 |
| | $ | 1,166 |
| | $ | 9,355 |
| | $ | 3,536 |
|
| Eliminations and adjustments | (70 | ) | | (207 | ) | | (709 | ) | | (632 | ) |
| Total basis of real estate sold - Real Estate | $ | 1,357 |
| | $ | 959 |
| | $ | 8,646 |
| | $ | 2,904 |
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