POTLATCHDELTIC CORP - FORM 8-K - EX-99.1 - PRESS RELEASE - July 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 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)            
 
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

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

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.

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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

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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.








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Potlatch Corporation
Consolidated Statements of Income
Unaudited (Dollars in thousands, except per share amounts)
 

 
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

 
 
 
 
 
 
 
 
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)
 

 
June 30, 
 2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash
$
8,783

 
$
4,644

Short-term investments
1,831

 
26,368

Receivables, net
18,055

 
9,928

Inventories
41,124

 
31,490

Deferred tax assets, net
6,168

 
6,168

Other assets
14,335

 
15,065

Total current assets
90,296

 
93,663

Property, plant and equipment, net
73,766

 
65,749

Timber and timberlands, net
824,587

 
828,420

Deferred tax assets, net
36,794

 
37,228

Other assets
14,809

 
10,361

Total assets
$
1,040,252

 
$
1,035,421

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
61,531

 
$
49,324

Current portion of long-term debt
27,500

 
22,870

Revolving line of credit borrowings
15,000

 
—

       Total current liabilities
104,031

 
72,194

Long-term debt
601,759

 
606,473

Liability for pension and other postretirement employee benefits
115,127

 
115,936

Other long-term obligations
14,043

 
15,752

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)
 

 
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

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

Cash at end of period
$
8,783

 
$
9,252









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Potlatch Corporation
Segment Information
Unaudited (Dollars in thousands)
 
 
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

 
 
 
 
 
 
 
 
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

1
The presentation of depreciation, depletion and amortization in Segment Information and the Condensed Consolidated Statements of Cash Flows includes amortization of bond discounts and deferred loan fees. Bond discounts and deferred loan fees are recorded in Interest expense, net in the Consolidated Statements of Income.


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POTLATCHDELTIC CORP Reports