Plum Creek Legacy News Releases
Plum Creek Timber Company, Inc. Reports Results for Second Quarter 2008
Jul 28, 2008
SEATTLE--(BUSINESS WIRE)--July 28, 2008--Plum Creek TimberCompany, Inc. (NYSE: PCL) today announced second quarter earnings of$31 million, or $0.18 per diluted share, on revenues of $376 million.These results include the effect of a $6 million after-tax ($10million pre-tax) impairment charge related to the company's lumbermanufacturing business. The impairment charge reduced net income by$0.04 per diluted share. Earnings for the second quarter of 2007 were$60 million, or $0.34 per diluted share, on revenues of $395 million.Results for the second quarter of 2007 include a $2 million after-taxgain on the sale of an industrial mineral asset. As a result, incomefrom continuing operations for the second quarter of 2007 was $58million, or $0.33 per diluted share.
Earnings for the first six months of 2008 were $69 million, or$0.40 per diluted share, on revenues of $739 million. Earnings for thefirst six months of 2007 were $105 million, or $0.59 per dilutedshare, on revenues of $764 million. Results for the first six monthsof 2007 included the gain from the industrial mineral asset salementioned above.
Cash provided by operating activities for the second quartertotaled $95 million. Cash provided by operating activities during thesecond quarter of 2007 totaled $73 million. The company ended thequarter with $125 million in cash and cash equivalents.
"Overall timber market conditions remained challenging during thesecond quarter. Our lower results so far this year reflect the weakerpricing environment for sawlogs, offset somewhat by attractivepulpwood markets," said Rick Holley, Plum Creek's president and chiefexecutive officer. "Rural land values held steady in most regions, andthe results for our Real Estate segment for the first six months of2008 matched those for the same period of 2007."
Review of Operations
The Northern Resources segment reported operating profit of $7million compared to $14 million during the same period of 2007. Duringthe second quarter, average sawlog prices were approximately 11percent lower than they were during the same period of 2007. Asplanned, the company reduced its sawlog harvest approximately 6percent when compared to the same period of 2007. Average pulpwoodprices were up 13 percent compared to the second quarter of 2007 whilepulpwood harvest levels were as planned, approximately 4 percent lowerthan the previous year's level.
Operating profit in the Southern Resources segment was $37million, down $4 million from the profit reported during the sameperiod of 2007. The company's Southern sawlog harvest volumes wereslightly lower than the volumes harvested during the same period of2007. Average sawlog prices were approximately 16 percent lower duringthe second quarter when compared to the same period of 2007. Thecompany increased its Southern pulpwood harvest approximately 17percent compared to the prior year in response to favorable pulpwooddemand and 11 percent higher pulpwood prices.
The Real Estate segment reported revenue of $57 million andoperating income of $35 million. Second quarter 2007 Real Estatesegment revenue was $71 million resulting in operating income of $47million. These differences in quarterly performance are due to thetransactional nature of the segment. Results for the first six monthsof 2008 were similar to the same period of 2007. During the secondquarter of 2008 the company sold approximately 26,000 acres of land.These sales included 13,200 acres of small, non-strategic lands ataverage prices of more than $1,250 per acre. Nearly 600 acres ofconservation properties sold at more than $1,550 per acre, andapproximately 11,800 acres of recreation property sold at an averageprice of more than $2,700 per acre. The sale of 700 acres ofdevelopment properties captured more than $9,600 per acre.
The Manufacturing segment reported an $11 million loss for thequarter, which included a non-cash $10 million pre-tax impairmentcharge of its lumber manufacturing operations. The impairment resultedfrom lower near-term cash flow expectations from the company's lumbermills as low levels of home construction have resulted in weak lumberdemand and cyclically low lumber prices. The segment reported anoperating profit of $2 million during the second quarter of 2007.Lumber sales volumes were 13 percent lower than the second quarter oflast year while prices were 8 percent lower. Plywood and MDF salesvolumes were 4 to 5 percent lower with plywood prices unchanged fromthe prior year and MDF prices up approximately 13 percent.
Outlook
The company's outlook for the year remains unchanged and thecompany expects to report income from continuing operations between$1.05 and $1.30 per share for the year. Third quarter earnings areexpected to be between $0.38 and $0.43 per share.
The Northern Resources segment harvest is expected to increaseduring the third quarter from the seasonally low second quarterlevels. In the South, the company expects to reduce its sawlog andpulpwood harvests from second quarter levels.
"We're maintaining our value discipline and exercising ouroperational flexibility during this cyclical downturn," Holleycontinued. "We plan to reduce our Southern sawlog harvests during thesecond half of the year, preserving the economic value of some of ourmost valuable trees. We will bring these trees to market whenconditions improve. As a result, we expect our full-year Southernsawlog harvest to be approximately 6 million tons, our lowest sawlogharvest in the region since 2001."
In the North, sawlog prices are expected to increase slightly asprices in the West have recovered somewhat from lower pricesexperienced late last year and early this year. In the South, thecompany expects sawlog market prices to hold steady, although thecompany's plan to defer the harvest of larger, more-valuable sawlogsis expected to reduce the company's reported price by $1 per ton.Average pulpwood prices are expected to hold at second quarter levelsin both the Northern and Southern Resources segments.
The company continues to expect Real Estate segment revenues forthe year to be between $320 million and $340 million. Of this amount,the sale of development properties is expected to be between $10million and $15 million. Third quarter revenues are expected to bebetween $110 million and $120 million.
The Manufacturing segment is expected to report breakeven resultsin the third quarter.
"While the housing downturn is deeper and longer than anyoneinitially anticipated, the value of the assets we manage is resilient.The long-term investment characteristics of timberlands continue toattract capital from a variety of investors seeking direct investmentin the asset class," Holley continued. "These equity buyers haveallocated capital and don't typically employ significant debtfinancing. As a result, interest in direct investment in timberlandsappear to be unaffected by liquidity concerns in the credit markets."
"We continue to generate good cash flow and are well positionedwith a strong balance sheet. We recognize the current challenges andare mindful of our opportunities when a recovery takes hold," Holleyconcluded. "We continue to adjust our activity to serve our mostattractive near-term markets while preserving our most valuable landand timber assets for these future opportunities."
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today, July 28, at 5 p.m.EDT (2 p.m. PDT). A live webcast of the conference call may beaccessed through Plum Creek's Web 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 time, 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 code23089985.
Supplemental financial information for Plum Creek operations,including statistical data, is available in the "Investors"information section of Plum Creek's Web site at www.plumcreek.com.
Plum Creek is the largest and most geographically diverse privatelandowner in the nation with approximately 8 million acres oftimberlands in major timber producing regions of the United States and10 wood products 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 ordisposition strategy, the market for and our ability to sell orexchange non-strategic timberlands and timberland properties that havehigher and better uses and various regulatory constraints. These andother risks, uncertainties and assumptions are detailed from time totime in our filings with the Securities and Exchange Commission underthe Securities Exchange Act of 1934, as amended, and the SecuritiesAct of 1933, 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) Six Months Ended ------------------------- June 30, June 30, 2008 2007 ------------- ---------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 393 $ 399 Real Estate 109 110 Manufacturing 226 244 Other 11 11 ------------- ---------- Total Revenues 739 764 ------------- ----------Costs and Expenses: Cost of Goods Sold: Timber 276 258 Real Estate 36 38 Manufacturing 240 236 Other 1 1 ------------- ---------- Total Cost of Goods Sold 553 533 Selling, General and Administrative 63 61 ------------- ---------- Total Costs and Expenses 616 594 ------------- ----------Other Operating Income (Expense), net 3 1 ------------- ----------Operating Income 126 171Interest Expense, net 70 71 ------------- ----------Income before Income Taxes 56 100Benefit for Income Taxes (13) (3) ------------- ----------Income From Continuing Operations 69 103Gain on Sale of Properties, net of tax - 2 ------------- ----------Net Income $ 69 $ 105 ============= ==========Per Share Amounts:Income From Continuing Operations per Share - Basic $ 0.40 $ 0.58 - Diluted $ 0.40 $ 0.58Net Income per Share - Basic $ 0.40 $ 0.59 - Diluted $ 0.40 $ 0.59Weighted Average Number of Shares Outstanding - Basic 171.4 176.4 - Diluted 171.8 176.8
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter Ended ----------------------------- June 30, June 30, 2008 2007 ---------------- ----------- (In Millions, Except Per Share Amounts)Revenues: Timber $ 192 $ 190 Real Estate 57 71 Manufacturing 121 129 Other 6 5 ---------------- ----------- Total Revenues 376 395 ---------------- -----------Costs and Expenses: Cost of Goods Sold: Timber 137 124 Real Estate 20 22 Manufacturing 128 123 Other 1 - ---------------- ----------- Total Cost of Goods Sold 286 269 Selling, General and Administrative 33 31 ---------------- ----------- Total Costs and Expenses 319 300 ---------------- -----------Other Operating Income (Expense), net - (1) ---------------- -----------Operating Income 57 94Interest Expense, net 34 35 ---------------- -----------Income before Income Taxes 23 59Provision (Benefit) for Income Taxes (8) 1 ---------------- -----------Income from Continuing Operations 31 58Gain on Sale of Properties, net of tax - 2 ---------------- -----------Net Income $ 31 $ 60 ================ ===========Per Share Amounts:Income from Continuing Operations per ShareNet Income per Share - Basic $ 0.18 $ 0.33Net Income per Share - Diluted $ 0.18 $ 0.33Net Income per Share - Basic $ 0.18 $ 0.34 - Diluted $ 0.18 $ 0.34Weighted Average Number of Shares Outstanding - Basic 171.1 175.7 - Diluted 171.6 176.1
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, December 31, 2008 2007 ----------- ------------ (In Millions, Except Per Share Amounts) ASSETSCurrent Assets: Cash and Cash Equivalents $ 125 $ 240 Accounts Receivable 44 33 Like-Kind Exchange Funds Held in Escrow 61 - Inventories 71 82 Deferred Tax Asset 7 7 Real Estate Development Properties 3 5 Assets Held for Sale 61 64 Other Current Assets 25 25 ----------- ------------ 397 456Timber and Timberlands, net 3,908 3,949Property, Plant and Equipment, net 182 202Investment in Grantor Trusts (at Fair Value) 25 27Other Assets 36 30 ----------- ------------ Total Assets $ 4,548 $ 4,664 =========== ============ LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt $ 150 $ 147 Accounts Payable 42 48 Interest Payable 27 29 Wages Payable 16 25 Taxes Payable 17 23 Deferred Revenue 22 13 Other Current Liabilities 19 18 ----------- ------------ 293 303Long-Term Debt 2,020 1,820Line of Credit 369 556Deferred Tax Liability 12 20Other Liabilities 76 64 ----------- ------------ Total Liabilities 2,770 2,763 ----------- ------------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) - 171.1 at June 30, 2008,and 172.3 at December 31, 2007 2 2Additional Paid-In Capital 2,208 2,204Retained Earnings 127 202Treasury Stock, at cost, Common Shares - 15.9 at June 30, 2008,and 14.6 at December 31, 2007 (560) (509)Accumulated Other Comprehensive Income 1 2 ----------- ------------ Total Stockholders' Equity 1,778 1,901 ----------- ------------ Total Liabilities and Stockholders' Equity $ 4,548 $ 4,664 =========== ============
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended -------------------- June 30, June 30, 2008 2007 ---------- -------- (In Millions)Cash Flows From Operating Activities:Net Income $ 69 $ 105Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (includes $10 Lumber Impairment Loss in 2008) 76 65 Basis of Real Estate Sold 22 23 Expenditures for Real Estate Development (5) (6) Deferred Income Taxes (8) (5) Gain on Sales of Properties and Other Assets (3) (2) Deferred Revenue from Long-Term Gas Leases (Net of Amortization) 18 - Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds (61) (58) Other Working Capital Changes (17) (14) Other 3 3 ---------- --------Net Cash Provided By Operating Activities 94 111 ---------- --------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland Acquisitions) (29) (33) Timberlands Acquired (1) (9) Other - 4 ---------- --------Net Cash Used In Investing Activities (30) (38) ---------- --------Cash Flows From Financing Activities: Dividends (144) (149) Borrowings on Line of Credit 755 1,596 Repayments on Line of Credit (942) (1,832) Proceeds from Issuance of Long-Term Debt 250 350 Principal Payments and Retirement of Long-Term Debt (47) (99) Proceeds from Stock Option Exercises 1 6 Acquisition of Treasury Stock (51) (111) Other (1) - ---------- --------Net Cash Used In Financing Activities (179) (239) ---------- --------Decrease In Cash and Cash Equivalents (115) (166) Cash and Cash Equivalents: Beginning of Period 240 273 ---------- -------- End of Period $ 125 $ 107 ========== ========
PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended -------------------------- June 30, June 30, 2008 2007 ------------ ------------ (In Millions)Cash Flows From Operating Activities:Net Income $ 31 $ 60Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization (includes $10 Lumber Impairment Loss in 2008) 43 32 Basis of Real Estate Sold 12 14 Expenditures for Real Estate Development (2) (4) Deferred Income Taxes (6) (2) Gain on Sale of Properties and Other Assets - (2) Deferred Revenue from Long-Term Gas Leases (Net of Amortization) 18 - Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds (30) (48) Other Working Capital Changes 22 17 Other 7 6 ------------ ------------Net Cash Provided By Operating Activities 95 73 ------------ ------------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland Acquisitions) (16) (22) Timberlands Acquired - (9) Proceeds from Sales of Properties and Other Assets - 2 ------------ ------------Net Cash Used In Investing Activities (16) (29) ------------ ------------Cash Flows From Financing Activities: Dividends (72) (74) Borrowings on Line of Credit 278 947 Repayments on Line of Credit (278) (1,255) Proceeds from Issuance of Long-Term Debt - 350 Principal Payments and Retirement of Long-Term Debt - (27) Proceeds from Stock Option Exercises 1 1 Acquisition of Treasury Stock - (89) Other (1) - ------------ ------------Net Cash Used In Financing Activities (72) (147) ------------ ------------Increase (Decrease) In Cash and Cash Equivalents 7 (103) Cash and Cash Equivalents: Beginning of Period 118 210 ------------ ------------ End of Period $ 125 $ 107 ============ ============
Click Here for 2nd Quarter 2008 Financial Supplement (in PDF)
CONTACT:
Plum Creek Timber Company, Inc.
Investors:
John Hobbs, 1-800-858-5347
or
Media:
Robin Keegan, 1-888-467-3751
SOURCE: Plum Creek Timber Company, Inc.