Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports a 71 Percent Increase in Third Quarter Earnings
Oct 25, 2004
SEATTLE--(BUSINESS WIRE)--Oct. 25, 2004--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced third quarter earnings of $77million, or $0.42 per diluted share, on revenues of $363 million.Earnings for the third quarter of 2003 were $45 million, or $0.25 perdiluted share, on revenues of $290 million. Third quarter 2003earnings included a $4 million expense, or $0.02 per diluted share,related to fire losses experienced in Montana in 2003. Earnings forthe first nine months of 2004 were $289 million, or $1.57 per dilutedshare, on revenues of $1.2 billion. Earnings for the first nine monthsof 2003 were $136 million, or $0.74 per diluted share, on revenues of$881 million.
Cash provided by operating activities in the third quarter totaled$120 million. Cash provided by operating activities in the same periodof 2003 was $109 million. Cash provided by operating activities in thefirst nine months of 2004 totaled $517 million and includedapproximately $129 million from the sale of large, non-strategictimberlands. Cash provided by operating activities in the first ninemonths of 2003 totaled $299 million and included approximately $13million from the sale of large, non-strategic timberlands. The companyended the third quarter with $363 million in cash and cashequivalents.
"During the third quarter, Plum Creek continued to perform well.Each business segment successfully executed strategies to help achievelong-term value creation for the company, and each reported improvedresults compared to the last quarter as well as the third quarter oflast year," said Rick Holley, president and chief executive officer."The company continues to benefit from strengthened demand from ourcustomers who produce pulp, paper and solid wood products."
Review of Operations
The Northern Resources segment reported operating profit of $27million for the third quarter, nearly doubling the $14 million profitreported for the same period of 2003. Continued strong demand from thehousing and industrial sectors kept operating rates high at sawmillsthroughout the Northern Resources segment. Contractor shortages inMaine and tight log supplies in the west forced mills to accept higherprices to ensure adequate log supplies. As a result, sawlog prices inthe Northern Resources segment continued to increase and were 18percent higher compared to the third quarter of 2003. The Mainecontractor shortages continued to limit pulpwood availability andcustomers found it difficult to secure raw material to serve improvingpulp and paper demand. As a result, pulpwood prices were 19 percenthigher in the third quarter of 2004 compared to the same period of2003.
Operating profit in the Southern Resources segment for the thirdquarter was $52 million, up $2 million compared to the same period of2003. Earnings were up due to a 7 percent increase in harvest volumesprimarily related to good pulpwood demand.
Southern sawlog demand during the third quarter of 2004 wasstronger than the same period of 2003. Despite an active hurricaneseason, timber was generally accessible in many regions of the Southfor most of the quarter. Good accessibility during most of the quartermoderated upward pressure on log prices. As a result, Southern sawlogprices have increased approximately 5 percent compared to the thirdquarter of 2003. Pulpwood demand remained strong during the quarterand Southern pulpwood customers maintained adequate log inventoriesfor most of the quarter resulting in a slight decline in pulpwoodprices compared to the third quarter of 2003.
The Real Estate segment reported third quarter revenue of $42million compared to $28 million in the third quarter of 2003. Gainsfrom these sales were approximately $26 million and $18 millionrespectively. Land sales during 2004 are higher than they were in 2003as the company executes its strategy of capturing higher values fortimberlands with recreation, conservation and development uses. Thesegment results include a mixture of conservation and higher andbetter use land sales.
The Manufacturing segment reported operating profit of $23million, up approximately $25 million, from the $2 million lossreported for the third quarter of 2003. Continued strong housingactivity and improved industrial demand for wood products led tohigher prices for each of the company's manufactured products. Plywoodprices were up 42 percent compared to last year's third quarter, whilelumber prices were 30 percent higher. Improved manufacturingefficiency and sales of a higher valued product mix contributed tobetter financial performance of the company's medium densityfiberboard (MDF) operations. A combination of stronger MDF markets andproduct mix upgrades resulted in a 21 percent increase in MDF pricerealizations when compared to the third quarter of 2003.
Outlook
Sawlog demand in the Northern Resources segment is expected toremain good as mills build log inventories in anticipation of springbreakup. However, the pace of mills' log procurement activity shouldmoderate as a consequence of lower lumber and plywood prices. Thiscould result in a modest correction in Northern sawlog prices duringthe fourth quarter. Contractor capacity in Maine has recentlyimproved, reducing the upward pressure on log prices in that region.As a result, northern pulpwood prices should hold steady during thequarter.
In the Southern Resources segment, the hurricane seasontemporarily reduced timber accessibility in certain areas late in thethird quarter and early in the fourth quarter. However, timberaccessibility has quickly improved and limited the opportunity to takeadvantage of high spot-market prices.
The company did not experience any material damage to timberlandsfrom these hurricanes. Some timberland owners experienced widespreaddamage, particularly in Alabama and the Florida panhandle. Plum Creekdoes not have significant ownership in these markets and does notexpect salvaged wood from these regions to have a meaningful orlasting impact on markets where Plum Creek operates.
During the early part of the fourth quarter, sawmill customers inthe Southern Resources segment are rebuilding log decks depleted as aresult of the hurricanes. Most pulp and paper mills have adequate loginventories. Pulpwood prices in the Southern Resources segment areexpected to hold steady at the third quarter price levels. Most lumbermills' inventories are below target levels and Southern sawlogcustomers have become more optimistic about future businessconditions. Some have recently shown a willingness to pay more forlogs in several markets. The company expects sawlog prices in theSouthern Resources segment to hold firm or improve modestly from thirdquarter levels.
Harvest volume in the Northern Resources segment during the fourthquarter should approximate the third quarter level, while the SouthernResources segment harvest is expected to be slightly lower than itsthird quarter harvest. In past quarters, some customers deferredharvest under long-term fiber supply agreements to buy lower-priced,spot market logs. As a result, the total 2004 harvest is likely to beat the lower end of the 18.5 to 19.0 million-ton range.
The company expects Real Estate segment revenues for the fourthquarter to approach $20 million. These results could be higher if morelarge, non-strategic timberlands are sold during the quarter.
Earnings for the Manufacturing segment are expected to decline asprices for lumber and plywood correct from the exceptionally stronglevels of the second and third quarters. MDF prices are expected todecline modestly, a typical seasonal pattern. Sales volumes for eachproduct should also be seasonally lower during the fourth quarter.
The company expects earnings for the fourth quarter to be between$0.28 and $0.33 per share.
"Plum Creek is continuing to execute on its goal of long-termvalue creation," said Rick Holley. "Disciplined capital allocation isat the center of our strategy. During the first nine months of thisyear, the company has acted to add meaningful value to ourshareholders' investment. We've disposed of non-strategic timberlandsthat did not fit the long-term plan of the company. The company hasalso captured nearly $68 million, beyond our estimates of underlyingtimberland value, from the sale of timberland for recreation,development or conservation uses.
"As a result of successful execution of our strategies, werecently increased our dividend approximately 3 percent as a signalthat our actions will continue to grow sustainable cash flow and addto the intrinsic value of the company.
"We will pursue our strategies with discipline and patience withthe ultimate goal of growing the per share value of the company."
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, October 25, 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 hours after completionof the live call and can be accessed at 1-800-642-1687 or1-706-645-9291 (international calls), using the code 8904738.
Supplemental financial information for Plum Creek operations,including statistical data, is available in the "Investors" section ofPlum Creek's website at www.plumcreek.com.
Plum Creek is one of the largest land and timber owners in thenation, with approximately 8 million acres of timberlands in majortimber producing regions of the United States and 10 wood productsmanufacturing 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) Nine Months Ended ---------------------------- September 30, September 30, 2004 2003 ------------- ------------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 513 $ 473 Real Estate 280 108 Manufacturing 396 292 Other 12 8 ------------- ------------- Total Revenues 1,201 881 ------------- -------------Costs and Expenses: Cost of Goods Sold: Timber 269 248 Real Estate 140 65 Manufacturing 332 294 Other 3 3 ------------- ------------- Total Cost of Goods Sold 744 610 Selling, General and Administrative 62 56 ------------- ------------- Total Costs and Expenses 806 666Gain on Sale of Other Assets 5 - ------------- -------------Operating Income 400 215Interest Expense, net 84 86 ------------- -------------Income before Income Taxes 316 129Benefit (Provision) for Income Taxes (27) 7 ------------- -------------Net Income $ 289 $ 136 ============= =============Net Income per Share - Basic $ 1.57 $ 0.74 ============= =============Net Income per Share - Diluted $ 1.57 $ 0.74 ============= =============Weighted average number of Shares outstanding - Basic 183.3 183.4 ------------- -------------Weighted average number of Shares outstanding - Diluted 184.1 184.0 ------------- ------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended ----------------------------- September 30, September 30, 2004 2003 ------------- ------------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 178 $ 158 Real Estate 42 28 Manufacturing 140 101 Other 3 3 ------------- ------------- Total Revenues 363 290 ------------- -------------Costs and Expenses: Cost of Goods Sold: Timber 96 88 Real Estate 16 10 Manufacturing 114 99 Other - 1 ------------- ------------- Total Cost of Goods Sold 226 198 Selling, General and Administrative 22 20 ------------- ------------- Total Costs and Expenses 248 218 ------------- -------------Operating Income 115 72Interest Expense, net 28 29 ------------- -------------Income before Income Taxes 87 43Benefit (Provision) for Income Taxes (10) 2 ------------- -------------Net Income $ 77 $ 45 ============= =============Net Income per Share - Basic $ 0.42 $ 0.25 ============= =============Net Income per Share - Diluted $ 0.42 $ 0.25 ============= =============Weighted average number of Shares outstanding - Basic 183.5 183.0 ------------- -------------Weighted average number of Shares outstanding - Diluted 184.2 183.7 ------------- ------------- PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, 2004 2003 ------------- ------------ (In Millions, Except Per Share Amounts) ASSETSCurrent Assets: Cash and Cash Equivalents $ 363 $ 260 Restricted Advance from Customer 15 3 Accounts Receivable 44 34 Inventories 61 54 Investment in Grantor Trust 12 13 Deferred Tax Asset 11 11 Other Current Assets 31 30 ------------- ------------ 537 405Timber and Timberlands - Net 3,578 3,674Property, Plant and Equipment - Net 265 303Other Assets 7 5 ------------- ------------ Total Assets $ 4,387 $ 4,387 ============= ============ LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 32 $ 33 Accounts Payable 26 27 Interest Payable 36 28 Wages Payable 21 23 Taxes Payable 34 15 Deferred Revenue 31 16 Liabilities Associated with Grantor Trust 12 13 Other Current Liabilities 20 13 ------------- ------------ 212 168Long-Term Debt 1,407 1,437Lines of Credit 466 594Deferred Tax Liability 49 37Other Liabilities 26 32 ------------- ------------ Total Liabilities 2,160 2,268 ------------- ------------Commitments and Contingencies STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75.0, outstanding - none - -Common Stock, $0.01 par value, authorized shares - 300.0, issued (including Treasury Stock) - 185.6 at September 30, 2004 and 185.1 at December 31, 2003 2 2Additional Paid-In Capital 2,163 2,150Retained Earnings 104 9Treasury Stock, at cost, Common shares - 2.0 (43) (43)Other Equity 1 1 ------------- ------------ Total Stockholders' Equity 2,227 2,119 ------------- ------------ Total Liabilities and Stockholders' Equity $ 4,387 $ 4,387 ============= ============ PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended ---------------------------- September 30, September 30, 2004 2003 ------------- ------------- (In Millions)Cash Flows From Operating Activities:Net Income $ 289 $ 136Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $4 Loss Related to Forest Fires in 2003) 78 79 Basis of Real Estate Sold (Includes Impairment Losses of $20 in 2004 and $9 in 2003) 127 57 Deferred Income Taxes 12 (8) Gain on Sale of Other Assets (5) - Working Capital Changes 16 33 Other - 2 ------------- -------------Net Cash Provided By Operating Activities 517 299 ------------- -------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (49) (60) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds, Net) (45) (59) Proceeds from Sale of Other Assets 27 - ------------- -------------Net Cash Used In Investing Activities (67) (119) ------------- -------------Cash Flows From Financing Activities: Dividends (194) (193) Borrowings of Long-term Debt and Lines of Credit 1,671 1,664 Repayments of Long-term Debt and Lines of Credit (1,833) (1,574) Proceeds from Stock Option Exercises 9 1 Acquisition of Treasury Stock - (43) ------------- -------------Net Cash Used In Financing Activities (347) (145) ------------- -------------Increase In Cash and Cash Equivalents 103 35Cash and Cash Equivalents: Beginning of Period 260 246 ------------- ------------- End of Period $ 363 $ 281 ============= ============= PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended ---------------------------- September 30, September 30, 2004 2003 ------------- ------------- (In Millions)Cash Flows From Operating Activities:Net Income $ 77 $ 45Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (Includes $4 Loss Related to Forest Fires in 2003) 27 28 Basis of Real Estate Sold (Includes Impairment Losses of $1 in 2004) 13 8 Deferred Income Taxes - (3) Working Capital Changes - 28 Other 3 3 ------------- -------------Net Cash Provided By Operating Activities 120 109 ------------- -------------Cash Flows From Investing Activities: Property Additions (Excluding Timberland Acquisitions) (17) (22) Timberlands Acquired (Including Tax- Deferred Exchange Proceeds, Net) (6) (42) ------------- -------------Net Cash Used In Investing Activities (23) (64) ------------- -------------Cash Flows From Financing Activities: Dividends (66) (64) Borrowings of Long-term Debt and Lines of Credit 444 386 Repayments of Long-term Debt and Lines of Credit (446) (330) Proceeds from Stock Option Exercises 6 1 ------------- -------------Net Cash Used In Financing Activities (62) (7) ------------- -------------Increase In Cash and Cash Equivalents 35 38Cash and Cash Equivalents: Beginning of Period 328 243 ------------- ------------- End of Period $ 363 $ 281 ============= =============
Click Here for 3rd Quarter 2004 Financial Supplements (in PDF)
CONTACT: Plum Creek Timber Company, Inc.
Investors - John Hobbs, 800-858-5347
Media - Kathy Budinick, 206-467-3620
SOURCE: Plum Creek Timber Company, Inc.