Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for First Quarter 2007
Apr 23, 2007
Cash provided by operating activities for the first quarter was$38 million after investing $31 million in working capital and placing$10 million in accounts for 1031 like-kind-exchange of real estateproperties. The company ended the quarter with $210 million in cashand cash equivalents.
"Our results are consistent with our expectations, reflectingsofter timber markets compared to the first quarter last year," saidRick Holley, president and chief executive officer. "Clearly thedecline in housing starts from an annual rate of over 2 million startsduring the first quarter of last year to an annual rate closer to 1.5million starts this year has led to lower lumber and sawlog demand.While commodity lumber prices are approximately 24 percent lower thanthe first quarter of last year, our average sawlog prices are downapproximately 7 to 8 percent in most markets as timber prices aretypically less volatile.
"While the near-term housing outlook remains unsettled, we believethat the underlying demographics of the nation speak to very healthydemand for new homes and wood products over the coming decade. Timbermarkets were fairly stable compared to the fourth quarter of 2006 andrural land markets remain attractive. These are exactly the marketconditions that require patience and focus on execution to maximizeresults while continuing to grow the long-term value of our assets."
Review of Operations
The Northern Resources segment reported operating profit of $19million during the first quarter compared to $35 million during thesame period of 2006, reflecting lower sawlog prices and harvestvolumes. Over the past year, average sawlog prices in the segmentdeclined approximately 8 percent from relatively high levelsexperienced early in 2006. The company reduced its sawlog harvestduring the first quarter of 2007, particularly in Oregon where someharvests were deferred rather than sold into temporarily weak markets.In contrast, the company increased harvest levels during the firstquarter of 2006 to capture attractive log prices that prevailed atthat time. As a result, the segment's sawlog harvest was 17 percentlower for the first quarter of 2007 than the first quarter of 2006.Average pulpwood prices were unchanged compared to the first quarterof 2006 while pulpwood harvests were approximately 7 percent higher.
Operating profit in the Southern Resources segment was $46million, down $4 million, compared to the same period of 2006. Averagesawlog stumpage prices were approximately 11 percent lower than thosein the first quarter of 2006 due to a combination of the lower-valuedmix and reduced sawlog demand. Sawlog prices were down 7 to 8 percentin most areas while the mix differences resulted from a plannedincrease in the proportion of smaller-diameter sawlogs harvested. Asexpected, the company reduced its sawlog harvest in certain marketsresulting in a 4 percent decline in the sawlog harvest during thefirst quarter compared to the prior year. Pulpwood markets improvedover the past year and remained attractive during the first quarter.Average pulpwood prices were approximately 11 percent higher duringthe first quarter when compared to the same period of 2006. As aresult, the company increased its Southern pulpwood harvest 19 percentcompared to the first quarter of 2006.
The Real Estate segment reported revenue of $39 million andoperating income of $21 million from the sale of approximately 16,600acres of land. Rural land values remained firm and per-acre pricesfrom these sales compared favorably with sales prices achieved during2006. First quarter 2006 Real Estate segment revenue was $61 millionand resulted in income of $44 million from the sale of approximately21,800 acres of land and an $8 million conservation easement. Thelower first quarter results are due to differences in the timing ofland sales. The company expects higher revenues and cash flow fromthis segment during 2007 compared to 2006.
The Manufacturing segment reported a $1 million loss, down fromthe $8 million profit during the first quarter of 2006, reflectinglower sales volumes and lower lumber and plywood prices. Whilebenchmark grades of lumber and structural panels experienced 24 and 28percent price declines, respectively, over the past year, thecompany's focus on specialty and industrial markets resulted in lowerprice volatility. The company's lumber prices were approximately 16percent lower than the first quarter of 2006, its plywood prices wereapproximately 12 percent lower and its medium density fiberboardprices increased approximately 10 percent compared to the firstquarter of 2006.
Share Repurchase
During the quarter the company repurchased approximately 576,000shares of common stock at an average price of $37.85 per share. As ofMarch 31, 2007, the company had 176.8 million shares of common stockoutstanding and $72 million remaining in its current share repurchaseauthorization.
Outlook
Harvest levels in the North are expected to decline from firstquarter levels. Harvests are typically at their lowest during thesecond quarter of the year as thawing spring weather restrictsharvesting activities in the Northern Resources segment. The Southernsawlog harvest is expected to be similar to the first quarter's levelwhile the company plans to reduce its Southern pulpwood harvestmodestly as several pulp and paper customers have scheduled annualmaintenance downtime during the coming quarter.
Demand for rural properties remains good and the company continuesto expect Real Estate segment revenues for the year to be between $330million and $350 million. Of this amount, between $30 and $40 millionis projected to come from the sale of entitled properties on a smallportion of the company's high-value real estate. Second quarterrevenues for the segment are expected to be between $75 million and$85 million.
The Manufacturing segment is expected to report a modest profitduring the second quarter as it benefits from seasonally strongerproduct demand for lumber, industrial plywood and MDF products.
Second quarter earnings are expected to be between $0.30 and $0.35per share. For the year the company continues to expect income fromcontinuing operations between $1.40 and $1.60 per share.
"As we execute our strategies for long-term value creation,disciplined capital allocation remains our most important priority. Wecontinually evaluate the best use of the cash we generate with thegoals of delivering immediate value to shareholders while growing theper-share value of the company over time," concluded Holley.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, April 23, at 5:00p.m. EDT (2:00 p.m. PDT). A live webcast of the conference call may beaccessed through Plum Creek's Internet site at www.plumcreek.com byclicking on the "Investors" link.
Investors without internet access should dial 1-800-572-9852 atleast 10 minutes prior to the start, referencing Plum Creek'searnings. Those wishing to access the call from outside the UnitedStates/Canada should dial 1-706-645-9676, also referencing PlumCreek's earnings. Replay of the call will be available for 48 hoursafter completion of the live call and can be accessed at1-800-642-1687 or 1-706-645-9291 (international calls), using the code7940179.
Supplemental financial information for Plum Creek operations,including statistical data, is available in the "Investors"information section of Plum Creek's website at www.plumcreek.com.
Plum Creek is the largest and most geographically diverse privatelandowner in the nation, with more than 8 million acres of timberlandsin major timber producing regions of the United States and 10 woodproducts manufacturing facilities in the Northwest.
Forward-Looking Statements
This press release contains forward-looking statements within themeaning of the Private Litigation Reform Act of 1995 as amended. Someof these forward-looking statements can be identified by the use offorward-looking words such as "believes," "expects," "may," "will,""should," "seek," "approximately," "intends," "plans," "estimates," or"anticipates," or the negative of those words or other comparableterminology. The accuracy of such statements is subject to a number ofrisks, uncertainties and assumptions including, but not limited to,the cyclical nature of the forest products industry, our ability toharvest our timber, our ability to execute our acquisition strategy,the market for and our ability to sell or exchange non-strategictimberlands and timberland properties that have higher and betteruses, and various regulatory constraints. These and other risks,uncertainties and assumptions are detailed from time to time in ourfilings with the Securities and Exchange Commission under theSecurities Exchange Act of 1934, as amended, and the Securities Act of1933, as amended. It is likely that if one or more of the risksmaterializes, or if one or more assumptions prove to be incorrect, thecurrent expectations of Plum Creek and its management will not berealized. Forward-looking statements are not guarantees ofperformance, and speak only as of the date made, and neither PlumCreek nor its management undertakes any obligation to update or reviseany forward-looking statements.
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended ------------------------ March 31, March 31, 2007 2006 ----------- ----------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 209 $ 214 Real Estate 39 61 Manufacturing 115 134 Other 6 5 ----------- ----------- Total Revenues 369 414 ----------- -----------Costs and Expenses: Cost of Goods Sold: Timber 134 121 Real Estate 17 16 Manufacturing 113 123 Other 1 1 ----------- ----------- Total Cost of Goods Sold 265 261 Selling, General and Administrative 29 28 ----------- ----------- Total Costs and Expenses 294 289 ----------- -----------Other Operating Income (Expense), net 2 2 ----------- -----------Operating Income 77 127Interest Expense, net 36 31 ----------- -----------Income before Income Taxes 41 96Provision (Benefit) for Income Taxes (4) 4 ----------- -----------Income From Continuing Operations 45 92Cumulative Effect of Accounting Change, net of tax - 2 ----------- -----------Net Income $ 45 $ 94 =========== ===========Income From Continuing Operations per Share - Basic $ 0.26 $ 0.50 - Diluted $ 0.25 $ 0.50Net Income per Share - Basic $ 0.26 $ 0.51 - Diluted $ 0.25 $ 0.51Weighted Average Number of Shares Outstanding - Basic 177.1 184.2 - Diluted 177.5 184.7
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, 2007 2006 ------------ ------------ (In Millions, Except Per Share Amounts) ASSETSCurrent Assets: Cash and Cash Equivalents $ 210 $ 273 Restricted Advance from Customer - 4 Accounts Receivable 44 40 Like-Kind Exchange Funds Held in Escrow 10 - Inventories 86 83 Deferred Tax Asset 7 7 Real Estate Development Properties 5 3 Assets Held for Sale 84 82 Other Current Assets 20 21 ------------ ------------ 466 513Timber and Timberlands - Net 3,850 3,876Property, Plant and Equipment - Net 210 216Investment in Grantor Trusts 25 28Other Assets 29 28 ------------ ------------ Total Assets $ 4,580 $ 4,661 ============ ============ LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 100 $ 125 Accounts Payable 36 42 Interest Payable 40 30 Wages Payable 12 27 Taxes Payable 16 24 Deferred Revenue 8 17 Other Current Liabilities 15 16 ------------ ------------ 227 281Long-Term Debt 1,570 1,617Lines of Credit 653 581Deferred Tax Liability 22 25Other Liabilities 64 68 ------------ ------------ Total Liabilities 2,536 2,572 ------------ ------------Commitments and Contingencies STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75.0, outstanding - none - -Common Stock, $0.01 par value, authorized shares - 300.6, outstanding (net of Treasury Stock) - 176.8 at March 31, 2007, and 177.1 at December 31, 2006 2 2Additional Paid-In Capital 2,197 2,190Retained Earnings 184 214Treasury Stock, at cost, Common Shares - 10.1 at March 31, 2007, (329) (307) and 9.5 at December 31, 2006Accumulated Other Comprehensive Income (Loss) (10) (10) ------------ ------------ Total Stockholders' Equity 2,044 2,089 ------------ ------------ Total Liabilities and Stockholders' Equity $ 4,580 $ 4,661 ============ ============
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended ------------------- March 31, March 31, 2007 2006 --------- --------- (In Millions)Cash Flows From Operating Activities:Net Income $ 45 $ 94Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 33 31 Basis of Real Estate Sold 9 10 Deferred Income Taxes (3) 1 Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds (10) 29 Other Working Capital Changes (31) (20) Expenditures for Real Estate Development (2) - Other (3) (5) --------- ---------Net Cash Provided By Operating Activities 38 140 --------- ---------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland Acquisitions) (11) (17) Other 2 - --------- ---------Net Cash Used In Investing Activities (9) (17) --------- ---------Cash Flows From Financing Activities: Dividends (75) (74) Borrowings on Line of Credit 649 663 Repayments on Line of Credit (577) (663) Principal Payments and Retirement of Long- Term Debt (72) - Proceeds from Stock Option Exercises 5 2 Acquisition of Treasury Stock (22) - Other - (1) --------- ---------Net Cash Used In Financing Activities (92) (73) --------- ---------Increase (Decrease) In Cash and Cash Equivalents (63) 50 Cash and Cash Equivalents: Beginning of Period 273 369 --------- --------- End of Period $ 210 $ 419 ========= =========
Click Here for 1st Quarter 2007 Financial Supplements (in PDF)
SOURCE: Plum Creek Timber Company, Inc.
Plum Creek Timber Company, Inc.
Investors:
John Hobbs, 800-858-5347
or
Media:
Kathy Budinick, 888-467-3751