Potlatch Second Quarter Earnings Up Sharply
July 26, 2007 - Potlatch Corp. today reported financial results for the second quarter ended June 30, 2007.
- Second quarter earnings from continuing operations were $35.4 million, or $0.90 per diluted common share
- Earnings from continuing operations for the first half of 2007 were $40.8 million, or $1.04 per diluted common share
- Cash provided by operating activities from continuing operations was $73.1 million for the six months ended June 30, 2007
"Log pricing during the second quarter remained strong despite a persistent weakness in lumber pricing caused by the continued slump in U.S. housing starts," said Michael J. Covey, chairman, president and chief executive officer.
"During the second quarter, Potlatch made significant progress toward achieving its 2007 goal of selling 15,000-20,000 acres of non-strategic land. The company sold nearly 7,500 acres of non-core lands with revenue of $8.6 million. Although timing of real estate closings is difficult to forecast, the market for rural recreation property remains strong.
"In addition, second quarter results were augmented by exceptional results in the Pulp and Paperboard division, where we had record production and strong pricing. Market prices for pulp are as strong as they have been in the past 12 years.
"Finally, sales for all of Potlatch's Forest Stewardship Council (FSC) certified solid wood and paperboard products showed continued growth during the quarter."
Q2 2007 Financial Summary:
- Earnings from continuing operations were $35.4 million, or $0.90 per diluted common share, compared to $8.2 million or $0.21 per diluted common share for the second quarter 2006. Second quarter 2007 results included a one-time payment of $1.4 million for retroactive pay associated with the settlement of the union contracts for the company's pulp and paperboard and consumer products operations in Lewiston.
- Net earnings for the second quarter 2007 were $34.0 million, or $0.87 per diluted common share, compared to $2.4 million, or $0.06 per diluted common share, for the second quarter 2006. During the second quarter 2007, the company completed the sale of its hybrid poplar tree farm in Boardman, Oregon, to a private-equity tree farm investment fund for approximately $65 million in cash. Results for the hybrid poplar tree farm, which are included in net earnings and are classified as discontinued operations in the Statements of Operations and Comprehensive Income, were a net loss of $1.4 million for the second quarter 2007, compared to a net loss of $5.8 million in the second quarter 2006.
"Our performance in the first half of this year reinforces our conviction that we have the right strategy for Potlatch," remarked Mr. Covey. "Regardless of the business environment, we remain focused on our long-term goals of concentrating on our timberlands business and capitalizing on our real estate segment.
"We expect log pricing to remain firm in all regions. Lumber prices have increased by approximately 7 percent since the fourth quarter of 2006. We anticipate additional downward pressure on framing lumber in the third and fourth quarter, and anticipate cedar to remain firm. In addition, we anticipate paperboard markets to remain strong throughout the second half of the year, and we believe Potlatch is well positioned to capitalize on this strength with a continuation of exceptional production at both the Arkansas and Idaho paper mills. We expect tissue margins to remain under pressure due to high pulp costs anticipated for the balance of 2007."
Mr. Covey concluded, "We believe Potlatch is on target to achieve its 2007 goal of 15,000-20,000 acres in land sales by the end of this year, as interest and demand for rural recreational land property remains strong."
SOURCE: Potlatch Corp.