POTLATCHDELTIC CORP - FORM 8-K - EX-99.1 - PRESS RELEASE - January 28, 2015

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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 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)            
 
 
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)
 

 
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

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
0.49

 
$
0.34

 
$
2.21

 
$
1.74

Diluted
0.49

 
0.34

 
2.20

 
1.73

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)
 

 
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

Inventories
31,490

 
36,275

Deferred tax assets
6,168

 
7,724

Other assets
15,065

 
11,961

Total current assets
93,663

 
130,369

Property, plant and equipment, net
65,749

 
59,976

Timber and timberlands, net
828,420

 
455,871

Deferred tax assets
37,228

 
21,576

Other assets
10,361

 
12,738

Total assets
$
1,035,421

 
$
680,530

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

 
 
 
 
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)
 

 
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

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)
 
 
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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