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 Second Quarter 2015 Results
SPOKANE, Wash - July 28, 2015 - Potlatch Corporation (Nasdaq: PCH) today reported net income of $711,000, or $0.02 per diluted share, on revenues of $128.7 million for the quarter ended June 30, 2015. Net income was $16.3 million, or $0.40 per diluted share, on revenues of $143.9 million in the second quarter of 2014.
"Our earnings were pressured in the second quarter as a result of the slide in lumber prices over the first five months of the year and seasonally light harvest volumes," said Mike Covey, chairman and chief executive officer. "While it took a bit longer than expected, we were pleased to see the sharp recovery in lumber prices late in the quarter. In the second half of the year, we expect higher lumber prices, along with seasonally higher harvest levels and continued strength in the Minnesota rural recreation real estate market to result in much stronger earnings," concluded Mr. Covey.
Financial Highlights
(millions, except per share data)
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| | | | | | | | | | | |
| | Q2 2015 | | Q1 2015 | | Q2 2014 |
| Revenues | $ | 128.7 |
| | $ | 134.1 |
| | $ | 143.9 |
|
| Net income | $ | 0.7 |
| | $ | 5.7 |
| | $ | 16.3 |
|
| Net income per diluted share | $ | 0.02 |
| | $ | 0.14 |
| | $ | 0.40 |
|
| Distribution per share | $ | 0.375 |
| | $ | 0.375 |
| | $ | 0.35 |
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| Net cash from operations | $ | (7.7 | ) | | $ | 24.4 |
| | $ | 28.4 |
|
| Cash and short-term investments at end of period | $ | 10.6 |
| | $ | 28.0 |
| | $ | 83.2 |
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Business Performance: Q2 2015 vs. Q1 2015
Resource
Resource’s operating income was $8.8 million on revenues of $44.1 million in the second quarter, compared to operating income of $15.0 million on revenues of $54.0 million in the first quarter of 2015. Earnings declined due to seasonally lower harvest volumes in the Northern region as a result of spring break up. The effect of lower volumes was partially offset by higher prices for cedar logs in the North and slightly higher Southern pine sawlog and pulpwood prices due to unusually wet weather, which constrained supply in Arkansas.
Wood Products
Wood Products lost $2.0 million on revenues of $84.2 million in the second quarter, compared to operating income of $3.5 million on revenues of $89.2 million in the first quarter of 2015. Lumber shipments were down slightly and the average lumber price realized was 9% lower in the second quarter. Log costs also remained high in the Lake States due to pulp mill demand in the region.
Real Estate
Real Estate’s operating income was $8.5 million on revenues of $10.7 million in the second quarter, compared to operating income of $1.6 million on revenues of $3.1 million in the first quarter of 2015. The increase in earnings in the second quarter was due to the sale of two commercial sites and a record number of quarterly transactions driven by strength in the Minnesota rural recreational real estate market.
Conference Call Information
A live conference call and webcast will be held today, July 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 75501784. 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 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 75501784 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; business conditions in our Resource and Wood Products segments; lumber pricing; sawlog pricing; 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; restrictions on harvesting due to fire danger; 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 | | Six Months Ended |
| June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Revenues | $ | 128,747 |
| | $ | 143,919 |
| | $ | 262,872 |
| | $ | 283,498 |
|
| Costs and expenses: | | | | | | | |
| Cost of goods sold | 109,441 |
| | 101,849 |
| | 217,213 |
| | 200,442 |
|
| Selling, general and administrative expenses | 11,995 |
| | 12,345 |
| | 24,321 |
| | 22,022 |
|
| | 121,436 |
| | 114,194 |
| | 241,534 |
| | 222,464 |
|
| Operating income | 7,311 |
| | 29,725 |
| | 21,338 |
| | 61,034 |
|
| Interest expense, net | (8,016 | ) | | (5,509 | ) | | (16,085 | ) | | (10,969 | ) |
| Income (loss) before income taxes | (705 | ) | | 24,216 |
| | 5,253 |
| | 50,065 |
|
| Income taxes | 1,416 |
| | (7,946 | ) | | 1,114 |
| | (13,445 | ) |
| Net income | $ | 711 |
| | $ | 16,270 |
| | $ | 6,367 |
| | $ | 36,620 |
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| | | | | | | | |
| Net income per share: | | | | | | | |
| Basic | $ | 0.02 |
| | $ | 0.40 |
| | $ | 0.16 |
| | $ | 0.90 |
|
| Diluted | $ | 0.02 |
| | $ | 0.40 |
| | $ | 0.16 |
| | $ | 0.90 |
|
| Distributions per share | $ | 0.375 |
| | $ | 0.35 |
| | $ | 0.75 |
| | $ | 0.70 |
|
| Weighted-average shares outstanding (in thousands): | | | | | | | |
| Basic | 40,843 |
| | 40,741 |
| | 40,822 |
| | 40,726 |
|
| Diluted | 40,963 |
| | 40,850 |
| | 40,933 |
| | 40,833 |
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Potlatch Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
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| | | | | | | |
| | June 30,
2015 | | December 31,
2014 |
| ASSETS | | | |
| Current assets: | | | |
| Cash | $ | 8,783 |
| | $ | 4,644 |
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| Short-term investments | 1,831 |
| | 26,368 |
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| Receivables, net | 18,055 |
| | 9,928 |
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| Inventories | 41,124 |
| | 31,490 |
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| Deferred tax assets, net | 6,168 |
| | 6,168 |
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| Other assets | 14,335 |
| | 15,065 |
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| Total current assets | 90,296 |
| | 93,663 |
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| Property, plant and equipment, net | 73,766 |
| | 65,749 |
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| Timber and timberlands, net | 824,587 |
| | 828,420 |
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| Deferred tax assets, net | 36,794 |
| | 37,228 |
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| Other assets | 14,809 |
| | 10,361 |
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| Total assets | $ | 1,040,252 |
| | $ | 1,035,421 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable and accrued liabilities | $ | 61,531 |
| | $ | 49,324 |
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| Current portion of long-term debt | 27,500 |
| | 22,870 |
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| Revolving line of credit borrowings | 15,000 |
| | — |
|
| Total current liabilities | 104,031 |
| | 72,194 |
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| Long-term debt | 601,759 |
| | 606,473 |
|
| Liability for pension and other postretirement employee benefits | 115,127 |
| | 115,936 |
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| Other long-term obligations | 14,043 |
| | 15,752 |
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| Stockholders’ equity | 205,292 |
| | 225,066 |
|
| Total liabilities and stockholders' equity | $ | 1,040,252 |
| | $ | 1,035,421 |
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Potlatch Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
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| | | | | | | |
| | Six Months Ended |
| | June 30, |
| | 2015 | | 2014 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 6,367 |
| | $ | 36,620 |
|
| Adjustments to reconcile net income to net cash from operating activities: | | | |
| Depreciation, depletion and amortization | 15,597 |
| | 11,002 |
|
| Basis of real estate sold | 1,008 |
| | 6,834 |
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| Change in deferred taxes | (1,707 | ) | | 536 |
|
| Employee benefit plans | 3,166 |
| | (267 | ) |
| Equity-based compensation expense | 2,259 |
| | 2,032 |
|
| Other, net | (5,496 | ) | | (1,161 | ) |
| Working capital and operating related activities, net | (4,538 | ) | | 12,836 |
|
| Net cash from operating activities | 16,656 |
| | 68,432 |
|
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Change in short-term investments | 24,537 |
| | (21,665 | ) |
| Property, plant and equipment | (12,248 | ) | | (6,508 | ) |
| Timberlands reforestation and roads | (6,004 | ) | | (5,887 | ) |
| Other, net | 433 |
| | 334 |
|
| Net cash from investing activities | 6,718 |
| | (33,726 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Distributions to common stockholders | (30,507 | ) | | (28,413 | ) |
| Revolving line of credit borrowings | 15,000 |
| | — |
|
| Employee tax withholdings on equity-based compensation | (1,445 | ) | | (1,079 | ) |
| Change in book overdrafts | (2,246 | ) | | (1,424 | ) |
| Other, net | (37 | ) | | (124 | ) |
| Net cash from financing activities | (19,235 | ) | | (31,040 | ) |
| Change in cash | 4,139 |
| | 3,666 |
|
| Cash at beginning of period | 4,644 |
| | 5,586 |
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| Cash at end of period | $ | 8,783 |
| | $ | 9,252 |
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Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
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| | | | | | | | | | | | | | | |
| | Quarter Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Revenues: | | | | | | | |
| Resource | $ | 44,111 |
| | $ | 39,512 |
| | $ | 98,066 |
| | $ | 91,417 |
|
| Wood Products | 84,191 |
| | 100,572 |
| | 173,424 |
| | 188,376 |
|
| Real Estate | 10,745 |
| | 15,737 |
| | 13,856 |
| | 30,176 |
|
| | 139,047 |
| | 155,821 |
| | 285,346 |
| | 309,969 |
|
| Elimination of intersegment revenues - Resource | (10,300 | ) | | (11,902 | ) | | (22,474 | ) | | (26,471 | ) |
| Total consolidated revenues | $ | 128,747 |
| | $ | 143,919 |
| | $ | 262,872 |
| | $ | 283,498 |
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| | | | | | | | |
| Operating income (loss): | | | | | | | |
| Resource | $ | 8,797 |
| | $ | 10,818 |
| | $ | 23,775 |
| | $ | 27,042 |
|
| Wood Products | (1,953 | ) | | 14,870 |
| | 1,547 |
| | 27,577 |
|
| Real Estate | 8,521 |
| | 12,378 |
| | 10,120 |
| | 20,649 |
|
| Eliminations and adjustments | 539 |
| | 788 |
| | 3,514 |
| | 1,630 |
|
| | 15,904 |
| | 38,854 |
| | 38,956 |
| | 76,898 |
|
| Corporate | (8,593 | ) | | (9,129 | ) | | (17,618 | ) | | (15,864 | ) |
| Operating income | 7,311 |
| | 29,725 |
| | 21,338 |
| | 61,034 |
|
| Interest expense, net | (8,016 | ) | | (5,509 | ) | | (16,085 | ) | | (10,969 | ) |
| Income (loss) before income taxes | $ | (705 | ) | | $ | 24,216 |
| | $ | 5,253 |
| | $ | 50,065 |
|
| | | | | | | | |
Depreciation, depletion and amortization:1 | | | | | | | |
| Resource | $ | 4,797 |
| | $ | 2,728 |
| | $ | 11,051 |
| | $ | 6,644 |
|
| Wood Products | 1,661 |
| | 1,515 |
| | 3,237 |
| | 3,044 |
|
| Real Estate | 15 |
| | 14 |
| | 30 |
| | 29 |
|
| | 6,473 |
| | 4,257 |
| | 14,318 |
| | 9,717 |
|
| Corporate | 620 |
| | 641 |
| | 1,279 |
| | 1,285 |
|
| Total depreciation, depletion and amortization | $ | 7,093 |
| | $ | 4,898 |
| | $ | 15,597 |
| | $ | 11,002 |
|
| | | | | | | | |
| Basis of real estate sold: | | | | | | | |
| Real Estate | $ | 710 |
| | $ | 2,242 |
| | $ | 1,181 |
| | $ | 7,409 |
|
| Eliminations and adjustments | (110 | ) | | (30 | ) | | (173 | ) | | (575 | ) |
| Total basis of real estate sold | $ | 600 |
| | $ | 2,212 |
| | $ | 1,008 |
| | $ | 6,834 |
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