Potlatch Reports $24 Mln Profit in Q1
Wednesday, April 29, 2009
Press release from the issuing companySPOKANE, Wash. -- Potlatch Corporation today reported financial results for the first quarter ended March 31, 2009.
Q1 2009 Financial Summary
- Earnings from continuing operations for the quarter were $28.8 million, or $0.72 per diluted common share, compared to $23.3 million, or $0.59 per diluted common share for Q1 2008.
- Net earnings for the quarter, including discontinued operations, were $24.8 million, or $0.62 per diluted common share, compared to $10.3 million, or $0.26 per diluted common share for Q1 2008.
- Discontinued operations for both periods included the effects of the spin-off of the Clearwater Paper operations and the closure of our Prescott, Arkansas lumber mill.
- Q1 2009 discontinued operations results also included a pre-tax charge of $5.75 million for a tentative legal settlement related to the sale of our oriented strand board, or OSB, manufacturing facilities in 2004.
- Q1 2008 discontinued operations results also included a pre-tax charge of $2.7 million related to a settlement with the direct purchaser class in the OSB antitrust lawsuit.
- Cash provided by operating activities from continuing operations was $41.6 million for Q1 2009 compared to $13.5 million for Q1 2008.
“The Resource segment had lower earnings in Q1 2009, primarily due to decreased pricing in both the southern and northern regions and lower harvest levels in the northern region during the quarter,” said Michael J. Covey, chairman, president and chief executive officer. “Compared to Q1 2008, sawlog pricing was approximately 25 percent lower in the northern region and approximately 15 percent lower in the southern region, while pulpwood pricing increased slightly in the northern region and decreased 12 percent in the southern region.
“The Real Estate segment had excellent results in Q1 2009 compared to Q1 2008 primarily due to a large sale of land in Arkansas in January 2009.
“The Wood Products segment continued to experience extremely weak market conditions, with an operating loss of $11.2 million in Q1 2009 compared to a loss of $6.5 million in Q1 2008. Most of our wood products mills ran at reduced production levels since the beginning of this year as we took steps to mitigate losses. Since January, monthly results have improved and the operating loss has been cut in half with continued improvement expected,” concluded Covey.
Q1 2009 Business Performance
- Operating income for the segment was $10.8 million, compared to $17.2 million earned in Q1 2008.
- Fee harvest levels increased 34 percent in Q1 2009 compared to Q1 2008, primarily due to excellent logging conditions and stable demand from customers which allowed us to accelerate harvesting planned for later in the year.
- Sawlog pricing was lower by 15 percent, while pulpwood pricing was lower by 12 percent in Q1 2009 compared to Q1 2008.
- Fee harvest levels decreased 20 percent in Q1 2009 compared to Q1 2008 primarily to match log production with weaker demand caused by lumber mill curtailments.
- Sawlog pricing was lower by 25 percent, while pulpwood pricing increased 1 percent in Q1 2009 compared to Q1 2008.
- Operating income for the segment was $41.5 million in Q1 2009, compared to $16.7 million in Q1 2008.
- We sold approximately 24,500 acres of timberland in Arkansas in January 2009 for approximately $43.3 million, or $1,760 per acre. Other lands sales in Q1 2009 totaled approximately 5,500 acres at an overall average price of approximately $880 per acre.
- We sold approximately 23,500 acres of land in Minnesota in Q1 2008 at an average price of approximately $370 per acre. Other lands sales in Q1 2008 totaled approximately 5,500 acres at an average price of nearly $2,250 per acre.
- The segment reported an operating loss of $11.2 million for Q1 2009, compared to a loss of $6.5 million for Q1 2008.
- Lumber results were negatively impacted by the continued downturn in the housing market, resulting in lower net sales prices and shipments.
- Most of our mills were operating with reduced production schedules during Q1 2009.
During the first quarter, Potlatch paid a regular quarterly cash distribution on the company’s common stock of $0.51 per share.
“Looking ahead, the second quarter is our weakest of the year due to seasonal harvest curtailments in the Northern region caused by load weight restrictions on roads and spring breakup conditions that limit access to logging sites,” Covey said. “Harvest levels for the remainder of 2009 are dependent to a large degree on pricing and demand. A number of sawmills in Idaho have curtailed or closed due to weak lumber pricing, and it is uncertain when they will resume full operation. Regarding our Real Estate segment, demand and interest in non-strategic timberland and rural recreational real estate continues to be relatively stable, although the demand for HBU lands remains soft. We expect continued weakness from our Wood Products business through much of 2009, but we are starting to see improvement in monthly results and expect the mills to perform at cash breakeven levels during the second quarter.”
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