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| 8-K - 8-K - DELTIC TIMBER CORP | a09_30x2017form8k.htm |
Deltic Timber Corporation |  | NEWS RELEASE | 210 EAST ELM STREET EL DORADO, AR 71730 NYSE: DEL | |
FOR RELEASE IMMEDIATELY
October 23, 2017
Deltic Announces Preliminary Third Quarter 2017 Results
EL DORADO, AR - Deltic Timber Corporation (NYSE-DEL), a natural resources company, today announced financial results for the third quarter of 2017.
Third Quarter 2017 Highlights
• | Net sales totaled $61.6 million, compared to $53.5 million for third quarter 2016 |
• | Net income was $2.5 million, or $.20 per diluted share, compared to net income of $1.5 million, or $.12 per diluted share, for the same period of 2016 |
Financial results for the third quarter of 2017 benefited from increased operating income in the Woodlands and Real Estate segments combined with lower corporate general and administrative expenses. The Manufacturing segment results were lower than third quarter 2016 due to planned maintenance at the Del-Tin Fiber medium density fiberboard ("MDF") plant to replace the press chains and a press belt. In addition, $2 million of debt was repaid on our revolving credit facility during the third quarter of 2017.
Woodlands Segment
Third Quarter 2017 Highlights
• | Sold 196,635 tons of pine sawtimber, 4% above Q3 2016 |
• | Pine sawtimber prices averaged $28/ton, unchanged from previous year quarter |
• | Sold 153,665 tons of pine pulpwood, 23% above Q3 2016 |
• | Pine pulpwood prices averaged $7/ton, unchanged from previous year quarter |
Woodlands Segment Financial Results
($ in millions) | Q3 2017 | Q3 2016 | Q2 2017 | |||||||
Segment net sales | $ | 11.3 | 9.0 | 10.2 | ||||||
Segment operating income | $ | 5.4 | 4.1 | 5.0 | ||||||
Woodlands segment operating income increased in third quarter of 2017 compared to third quarter 2016 principally due to higher volumes of sawtimber and pulpwood sold, despite significant wet weather in July and August. The increase in volume sold was mainly due to timber deed sales.
Manufacturing Segment
Third Quarter 2017 Highlights
• | Sold 80.5 million board feet of lumber, 16% above Q3 2016 |
• | Lumber prices averaged $15/MBF lower than Q3 2016 |
• | Sold 23.9 million square feet of MDF, 8% below Q3 2016 |
• | MDF prices decreased slightly compared to Q3 2016 |
• | Replaced press chains and press belt in MDF plant, improving production efficiency |
Manufacturing Segment Financial Results
($ in millions) | Q3 2017 | Q3 2016 | Q2 2017 | |||||||
Segment net sales | $ | 48.3 | 46.5 | 45.5 | ||||||
Segment operating income | $ | 3.7 | 5.7 | 4.0 | ||||||
Manufacturing segment operating income decreased in third quarter 2017 compared to third quarter 2016, principally as a result of higher operating expenses in lumber and MDF and lower average sales prices for lumber, partially offset by higher lumber sales volumes. The MDF plant’s operating results were adversely impacted in the third quarter 2017 compared to previous year quarter due to the planned downtime in August to replace press chains and a press belt. Since the outage, the plant has been running at over 90% uptime and producing in excess of 20% of higher margin thin board.
Real Estate Segment
Third Quarter 2017 Highlights
• | Sold 72 residential lots compared to 25 lots in Q3 2016 |
• | Residential lot sales prices averaged $63,000/lot, down 10% from Q3 2016, due to mix |
Real Estate Segment Financial Results
($ in millions) | Q3 2017 | Q3 2016 | Q2 2017 | ||||||||
Segment net sales | $ | 6.2 | 3.3 | 5.4 | |||||||
Segment operating income/(loss) | $ | 1.0 | (.2 | ) | 1.8 | ||||||
Real Estate segment operating income was higher in the third quarter of 2017 compared to third quarter 2016 due to increased residential lot sales, partially offset by lower average pricing per residential lot due to mix of lots sold. Lot sales reflect the closings of our successful Wildwood smaller lot offerings. Due to favorable demand, additional lot offerings are planned in fourth quarter in Wildwood as well as in three neighborhoods in Chenal Valley.
Corporate Segment General and Administrative Expense, Interest Expense, and Income Tax Expense
Corporate segment general and administrative expense was $4.1 million, compared to $5.4 million for the same period of 2016. The decrease reflects lower salaries and incentive expense as well as the benefit of cost reduction initiatives. Income tax expense in the third quarter of 2017 was $1.6 million, compared to a $.9 million in the prior-year’s third quarter.
Capital Expenditures
Capital expenditures were $8 million in the third quarter 2017 compared to $14.8 million for the third quarter of 2016. There were timberland acquisition expenditures of $.4 million in the third quarter of 2017 compared to timberland acquisition expenditures of $.5 million during the same period of 2016.
Outlook
Regarding the outlook for the fourth quarter and full year of 2017, Deltic currently anticipates the pine sawtimber harvest to be 275,000 to 300,000 tons and 885,000 to 910,000 tons, respectively, depending on weather conditions. Finished lumber sales volume is estimated to be 75 to 85 million board feet for the fourth quarter of 2017 and 295 to 305 million board feet for full-year 2017. MDF sales volume for the fourth quarter and year of 2017 is forecast to be 20 to 30 million square feet and 95 to 105 million square feet, respectively. Actual sales volumes for both finished lumber and MDF are dependent upon market conditions. Residential lot sales are projected at 70 to 80 lots for the fourth quarter and 150 to 160 lots for full-year of 2017. Commercial acreage within Chenal Valley continues to receive increased interest, with negotiations currently surrounding several tracts. However, due to the volatile nature of commercial real estate transactions and significant number of factors involved, it is difficult to anticipate future closings.
Separately, Deltic announced earlier today that it has entered into a merger agreement with Potlatch Corporation. For more information regarding the agreement, please refer to the Form 8-K filed August 23, 2017, with the Securities and Exchange Commission.
Forward-Looking Statements
Statements included herein that are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” within the meaning of the federal securities laws. Such statements reflect the Company’s current expectations and involve certain risks and uncertainties. Actual results could differ materially from those included in such forward-looking statements. Factors that could cause such differences include, but are not limited to, the cyclical nature of the industry, changes in interest rates, credit availability, general economic conditions, adverse weather, cost and availability of materials used to manufacture the Company’s products, natural gas pricing and volumes produced, and the other risk factors described from time to time in the reports and disclosure documents filed by the Company with the Securities and Exchange Commission.
Conference Call
Deltic participated in a joint conference call with Potlatch earlier today, therefore the Company will not hold the third quarter 2017 earnings conference call originally planned for Thursday, November 2, 2017, at 10:00 a.m. Central Time.
Summary financial data and operating statistics for the third quarter of 2017 with comparisons to 2016 are contained in the attached tables.
About Deltic
Deltic Timber Corporation is a natural resources company focused on the efficient and environmentally responsible management of its land holdings. The Company owns approximately 530,000 acres of timberland, operates two sawmills and a medium density fiberboard plant, and is engaged in real estate development. Headquartered in El Dorado, Arkansas, the Company’s operations are located primarily in Arkansas and north Louisiana.
CONTACT:
Anna Torma
(870) 881-6463
ir@deltic.com
Deltic Timber Corporation | ||||||||||||
SEGMENT INFORMATION | ||||||||||||
(Preliminary and Unaudited) | ||||||||||||
(Millions of dollars) | ||||||||||||
Three Months Ended | Three Months Ended | |||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||
Operating | Operating | |||||||||||
Income/ | Income/ | |||||||||||
Sales | (Loss) | Sales | (Loss) | |||||||||
Woodlands | $ | 11.3 | 5.4 | 9.0 | 4.1 | |||||||
Manufacturing | 48.3 | 3.7 | 46.5 | 5.7 | ||||||||
Real Estate | 6.2 | 1.0 | 3.3 | (0.2 | ) | |||||||
Corporate | — | (4.1 | ) | — | (5.4 | ) | ||||||
Eliminations | (4.2 | ) | .2 | (5.3 | ) | .3 | ||||||
Total net sales/operating income | $ | 61.6 | 6.2 | 53.5 | 4.5 | |||||||
Nine Months Ended | Nine Months Ended | |||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||
Operating | Operating | |||||||||||
Income/ | Income/ | |||||||||||
Sales | (Loss) | Sales | (Loss) | |||||||||
Woodlands | $ | 32.4 | 15.6 | 29.0 | 13.8 | |||||||
Manufacturing | 140.8 | 11.7 | 137.6 | 16.0 | ||||||||
Real Estate | 12.9 | 1.9 | 11.2 | 1.0 | ||||||||
Corporate | — | (12.9 | ) | — | (14.8 | ) | ||||||
Eliminations | (15.9 | ) | 0.2 | (16.9 | ) | — | ||||||
Total net sales/operating income | $ | 170.2 | 16.5 | 160.9 | 16.0 | |||||||
Deltic Timber Corporation | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(Preliminary and Unaudited) | ||||||||||||
(Thousands of dollars, except per share amounts) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Net sales | $ | 61,656 | 53,541 | 170,224 | 160,870 | |||||||
Costs and expenses | ||||||||||||
Cost of sales | 43,795 | 37,506 | 118,835 | 111,895 | ||||||||
Depreciation, amortization, and | ||||||||||||
cost of fee timber harvested | 6,412 | 5,911 | 19,244 | 17,402 | ||||||||
General and administrative expenses | 5,188 | 5,562 | 15,658 | 15,566 | ||||||||
Total costs and expenses | 55,395 | 48,979 | 153,737 | 144,863 | ||||||||
Operating income | 6,261 | 4,562 | 16,487 | 16,007 | ||||||||
Interest income | 13 | 3 | 26 | 10 | ||||||||
Interest and other debt expense, net | ||||||||||||
of capitalized interest | (2,273 | ) | (2,256 | ) | (5,852 | ) | (7,133 | ) | ||||
Other income | 85 | 88 | 309 | 220 | ||||||||
Income before income taxes | 4,086 | 2,397 | 10,970 | 9,104 | ||||||||
Income tax expense | (1,584 | ) | (910 | ) | (4,671 | ) | (3,002 | ) | ||||
Net income | $ | 2,502 | 1,487 | 6,299 | 6,102 | |||||||
Earnings per common share | ||||||||||||
Basic | $ | .21 | .12 | .52 | .50 | |||||||
Assuming dilution | $ | .20 | .12 | .52 | .50 | |||||||
Dividends per common share declared | $ | — | .10 | .30 | .40 | |||||||
Dividends per common share paid | $ | .10 | .10 | .30 | .30 | |||||||
Weighted average common shares | ||||||||||||
outstanding (thousands) | ||||||||||||
Basic | 12,071 | 11,991 | 12,068 | 12,005 | ||||||||
Assuming dilution | 12,156 | 12,023 | 12,165 | 12,065 | ||||||||
Deltic Timber Corporation | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
(Preliminary and Unaudited) | |||||||||||
(Thousands of dollars) | |||||||||||
Sept. 30, | Dec. 31, | ||||||||||
2017 | 2016 | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 5,928 | 5,773 | ||||||||
Trade accounts receivable, net of allowance | 12,976 | 8,667 | |||||||||
Inventories | 11,014 | 12,228 | |||||||||
Prepaid expenses and other current assets | 5,230 | 3,334 | |||||||||
Total current assets | 35,148 | 30,002 | |||||||||
Investment in real estate held for development and sale | 59,231 | 59,111 | |||||||||
Timber and timberlands - net | 356,034 | 360,183 | |||||||||
Property, plant, and equipment - net | 105,216 | 102,890 | |||||||||
Deferred charges and other assets | 2,527 | 2,507 | |||||||||
Total assets | $ | 558,156 | 554,693 | ||||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities | |||||||||||
Trade accounts payable | $ | 8,166 | 8,583 | ||||||||
Accrued taxes other than income taxes | 3,505 | 2,052 | |||||||||
Income tax payable | — | 679 | |||||||||
Deferred revenues and other accrued liabilities | 8,801 | 8,508 | |||||||||
Total current liabilities | 20,472 | 19,822 | |||||||||
Long-term debt | 238,850 | 240,839 | |||||||||
Deferred tax liabilities - net | 2,895 | 1,744 | |||||||||
Other noncurrent liabilities | 40,541 | 41,095 | |||||||||
Commitments and contingencies | — | — | |||||||||
Stockholders' equity | |||||||||||
Cummulative perferred stock | — | — | |||||||||
Common stock, 12,813,879 shares issued | 128 | 128 | |||||||||
Capital in excess of par value | 90,631 | 89,090 | |||||||||
Retained earnings | 208,988 | 206,344 | |||||||||
Treasury stock | (35,287 | ) | (34,816 | ) | |||||||
Accumulated other comprehensive loss | (9,062 | ) | (9,553 | ) | |||||||
Total stockholders' equity | 255,398 | 251,193 | |||||||||
Total liabilities and stockholders' equity | $ | 558,156 | 554,693 | ||||||||
Deltic Timber Corporation | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(Preliminary and Unaudited) | |||||||||||
(Thousands of dollars) | |||||||||||
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2017 | 2016 | ||||||||||
Operating activities | |||||||||||
Net income | $ | 6,299 | 6,102 | ||||||||
Adjustments to reconcile net income to | |||||||||||
net cash provided by operating activities: | |||||||||||
Depreciation, amortization, and cost of fee timber harvested | 19,244 | 17,402 | |||||||||
Stock-based compensation expense | 1,243 | 2,586 | |||||||||
Deferred income taxes | 2,729 | 915 | |||||||||
Real estate development capital expenditures | (3,955 | ) | (4,204 | ) | |||||||
Real estate costs recovered upon sale | 3,476 | 2,896 | |||||||||
Timberland costs recovered upon sale | 18 | 6 | |||||||||
Net increase in liabilities for pension and other postretirement benefits | 210 | 1,679 | |||||||||
Net decrease in deferred compensation for stock-based liabilities | — | (551 | ) | ||||||||
(Increase)/decrease in operating working capital other | |||||||||||
than cash and cash equivalents | (6,449 | ) | 961 | ||||||||
Other - changes in assets and liabilities | 463 | 497 | |||||||||
Net cash provided by operating activities | 23,278 | 28,289 | |||||||||
Investing activities | |||||||||||
Capital expenditures requiring cash, excluding real estate development | (17,395 | ) | (28,188 | ) | |||||||
Timberland acquisition expenditures requiring cash | (353 | ) | (1,207 | ) | |||||||
Net change in purchased stumpage inventory | 630 | (1,324 | ) | ||||||||
Net change in funds held by trustee | — | 1 | |||||||||
Other - net | 406 | 308 | |||||||||
Net cash required by investing activities | (16,712 | ) | (30,410 | ) | |||||||
Financing activities | |||||||||||
Proceeds from borrowings | 6,000 | 26,000 | |||||||||
Repayments of notes payable and long-term debt | (8,000 | ) | (8,000 | ) | |||||||
Treasury stock purchases | (262 | ) | (15,174 | ) | |||||||
Common stock dividends paid | (3,656 | ) | (3,645 | ) | |||||||
Proceeds from stock option exercises | 90 | 1,719 | |||||||||
Excess tax provisions from stock-based compensation expense | — | (156 | ) | ||||||||
Other - net | (583 | ) | (1,023 | ) | |||||||
Net cash required by financing activities | (6,411 | ) | (279 | ) | |||||||
Net decrease in cash and cash equivalents | 155 | (2,400 | ) | ||||||||
Cash and cash equivalents at January 1 | 5,773 | 5,429 | |||||||||
Cash and cash equivalents at September 30 | $ | 5,928 | 3,029 | ||||||||
Deltic Timber Corporation | |||||||||||||
OTHER DATA | |||||||||||||
(Preliminary and Unaudited) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
(Thousands of dollars) | 2017 | 2016 | 2017 | 2016 | |||||||||
Capital expenditures | |||||||||||||
Woodlands | $ | 368 | 647 | 2,596 | 2,861 | ||||||||
Manufacturing | 5,913 | 11,908 | 15,161 | 26,563 | |||||||||
Real Estate (includes development | |||||||||||||
expenditures) | 1,670 | 2,180 | 4,174 | 4,268 | |||||||||
Corporate | — | — | 162 | 65 | |||||||||
Total capital expenditures | $ | 7,951 | 14,735 | 22,093 | 33,757 | ||||||||
Timberland acquisition expenditures | $ | 353 | 488 | 353 | 1,207 | ||||||||
Woodlands | |||||||||||||
Pine sawtimber harvested from | |||||||||||||
fee lands - tons | 196,635 | 188,643 | 608,859 | 598,024 | |||||||||
Pine sawtimber price - per ton | $ | 28 | 28 | 28 | 28 | ||||||||
Chip-n-saw pulpwood harvested from | |||||||||||||
fee lands - tons | 19,482 | 4,460 | 57,363 | 24,292 | |||||||||
Chip-n-saw pulpwood price - per ton | $ | 17 | 16 | 17 | 17 | ||||||||
Pine pulpwood harvested from | |||||||||||||
fee lands - tons | 153,665 | 124,662 | 369,406 | 368,228 | |||||||||
Pine pulpwood price - per ton | $ | 7 | 7 | 8 | 8 | ||||||||
Timberland sales - acres | 0.08 | — | 27.96 | 8.84 | |||||||||
Timberland sales price - per acre | $ | 10,625 | — | 11,548 | 4,426 | ||||||||
Manufacturing | |||||||||||||
Finished lumber sales - | |||||||||||||
thousands of board feet | 80,455 | 69,636 | 219,894 | 211,106 | |||||||||
Finished lumber price - | |||||||||||||
per thousand board feet | $ | 361 | 376 | 373 | 362 | ||||||||
Finished MDF sales - (3/4 inch basis) | |||||||||||||
thousands of square feet | 23,857 | 26,029 | 76,031 | 79,706 | |||||||||
Finished MDF price - (3/4 inch basis) | |||||||||||||
per thousand square feet | $ | 560 | 561 | 556 | 556 | ||||||||
Real Estate | |||||||||||||
Residential | |||||||||||||
Lots sold | 72 | 25 | 77 | 53 | |||||||||
Average sales price - per lot | $ | 63,000 | 70,000 | 63,000 | 80,000 | ||||||||
Commercial | |||||||||||||
Acres sold | — | — | 7.90 | 10.8 | |||||||||
Average sales price - per acre | $ | — | — | 392,000 | 152,000 | ||||||||