Potlatch reports Q4 net income of US$13.7M compared with US$13.9M a year earlier on revenues down 2.3% to US$140.0M; CEO welcomes return of northern sawlog prices to pre-recession levels, notes highest full-year wood products earnings in almost 10 years
January 28, 2014
– Potlatch Corporation (PCH) today reported net income of $13.7 million, or $0.34 per diluted share, on revenues of $140.0 million for the quarter ended December 31, 2013. This compares to net income of $13.9 million, or $0.34 per diluted share, on revenues of $143.3 million in the fourth quarter of 2012.
Net income for the full year of 2013 was $70.6 million, or $1.73 per diluted share, on revenues of $570.3 million, which compares to net income of $42.6 million, or $1.05 per diluted share, on revenues of $525.1 million in 2012. After-tax charges of $2.4 million, or $0.06 per diluted share, were recorded in 2013 related to environmental remediation at a Northern Idaho property. No environmental charges were recorded in 2012.
"I am very pleased with our performance in 2013," said Michael Covey, chairman and chief executive officer of Potlatch Corporation. "Northern sawlog prices have returned to pre-recession levels, Wood Products earnings were higher than they have been for almost ten years, and our Real Estate segment closed the highest number of real estate transactions since our REIT conversion in 2006. This business strength gave our board the confidence to raise our dividend to $0.35 per share from $0.31 per share in the fourth quarter," concluded Mr. Covey.
(millions, except per-share data)
Net income per diluted share
Distribution per share
Net cash from operations
Cash and short-term investments at end of period
Business Performance: Q4 2013 vs. Q3 2013
Resource's operating income was $18.0 million on revenues of $61.0 million in the fourth quarter, compared to operating income of $25.4 million on revenues of $77.0 million in the third quarter. Harvest volumes were seasonally lower in both the Northern and Southern regions in the fourth quarter compared to the third quarter. Northern region average sawlog prices declined in the fourth quarter, which mirrored the decline in lumber prices in the third quarter, but remain strong. Southern region average sawlog prices also declined in the fourth quarter due to a lower mix of hardwood sawlog volume as compared to the third quarter.
Wood Products' operating income was $9.0 million on revenues of $87.4 million in the fourth quarter, compared to operating income of $11.3 million on revenues of $92.1 million in the third quarter. Average lumber prices realized in the fourth quarter were 3% higher than the third quarter, while lumber shipments were 6% lower. Third quarter lumber shipments were higher than normal as inventory that had built at the end of the second quarter was sold when the market regained its footing.
Real Estate's operating income was $4.6 million on revenues of $6.8 million in the fourth quarter, compared to operating income of $6.5 million on revenues of $8.9 million in the third quarter. Sales activity continued at a steady pace. A total of 41 real estate transactions closed in the fourth quarter compared to 53 transactions in the third quarter.
"We expect further increases in housing starts, which will continue to bolster the operating results of our Resource and Wood Products segments. We plan to harvest 3.8 million tons in 2014. Demand and prices in our wood basket in the South need to increase before considering a meaningful increase in our annual harvest. Our Real Estate business is expected to remain strong as interest in rural recreational real estate continues to be solid. Our year-end liquidity position is excellent, which provides financial flexibility," concluded Mr. Covey.
Conference Call Information
A live conference call and webcast will be held today, January 28, 2014, 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 27312896. 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, 2014 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 27312896 to access the replay.
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 million acres of timberland in Arkansas, Idaho and Minnesota. 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.