Deltic Timber Corporation (NYSE:DEL):
DELTIC
TIMBER CORPORATION CONSOLIDATED FINANCIAL DATA SUMMARY
FIRST QUARTER 2016 2015 Net sales $ 50,624,000
48,379,000 Net income 395,000 1,913,000 Earnings per
common share Basic .03 .15 Assuming dilution .03 .15 Average
shares outstanding 12,210,603 12,598,692
President and Chief Executive Officer, Ray C. Dillon, of Deltic
Timber Corporation (NYSE:DEL) announced today that preliminary net
income for the first quarter of 2016 was $.4 million, $.03 a share,
compared to net income of $1.9 million, $.15 a share, for the first
quarter of 2015. The decrease was mainly due to weak markets for
wood products, combined with decreased oil and gas-related income
and increased expenses for the cost of fee timber harvested and
interest expense, due to borrowings used to fund capital projects
and share repurchases. Partially offsetting the impact of these
unfavorable items was a benefit due to the decrease in Deltic’s
effective income tax rate for the current year’s first quarter as a
result of the Company’s income from timber harvesting activities
being taxed at a capital gains tax rate for 2016 provided by the
TREE Act. Net cash provided by the Company’s operating activities
for the first quarter of 2016 was $2.8 million, compared to $9.2
million a year ago.
Commenting on the results, Mr. Dillon, stated, “While the weak
markets for wood products that existed in 2015 continued throughout
the first quarter of 2016, Deltic’s operations generated positive
financial results for the period. In the Woodlands segment, pine
stumpage prices increased, as area sawmills paid more for the logs
they needed for their operations, while oil and gas-related income
continued to decrease due to low natural gas prices. These low
prices have eliminated new drilling activity in the Fayetteville
Shale Play area. Our sawmills were able to run additional hours, as
we sold more lumber and maintained our market share of increased
lumber consumption during the quarter. Operating performance at
Del-Tin Fiber improved, and the plant produced operating income for
the quarter. In our Real Estate segment, we sold more lots than we
did in the first quarter of last year, and we also had a good
response to our first offering of new lots in 2016, as all of the
27 lots offered in a neighborhood in our Chenal Valley development
were put under contract by builders.
“For 2016, Deltic’s financial results will benefit from the
passage of the Consolidated Appropriations Act, which enacted the
capital gains treatment for income from timber harvesting activity
component of the TREE Act for C-corporations, such as Deltic. In
addition, we repurchased an additional 277,430 shares of Deltic
stock during the first quarter, as we continued to increase the
number of timberland acres owned by shareholders per outstanding
share.”
The Woodlands segment generated operating income of $5.3 million
for the first quarter of 2016, compared to $6.5 million for the
same period of 2015. The Company harvested 205,608 tons of pine
sawtimber during the current period of 2016, an 11 percent decrease
from the 231,534 tons harvested in the corresponding quarter of
2015. The average per-ton sales price for pine sawtimber in 2016’s
first quarter was $28, an eight percent increase from $26 per ton
during the first quarter of 2015. The decrease in the volume of
pine sawtimber harvested was mainly due to timing and weather
conditions in the Company’s operating area during the current-year
quarter. Pine pulpwood harvested in the first quarter of 2016
totaled 160,270 tons, a 75 percent increase from the 91,673 tons
harvested for the same period in 2015. The average per-ton sales
price for pine pulpwood was $9 for the current period of 2016,
compared to $10 per-ton for 2015’s first quarter. The
quarter-over-quarter increase in harvest volume was mainly due to
additional pine pulpwood sold under prepaid timber deeds in the
2016 period and the mix of products growing on the tracts
harvested. The Company continues to harvest the timber growing on
its timberlands on a sustainable-yield basis. Oil and gas lease
rental and net royalty income totaled $.4 million for the current
period of 2016 compared to $1.2 million during the same quarter of
2015. The decrease was primarily due to a lower average sales price
for the natural gas produced during the current year and a
decreased volume of gas produced from the wells in which the
Company has a royalty interest. During the current-year quarter,
there were no timberland sales, compared to first quarter 2015
sales of 20 acres of non-strategic recreational-use hardwood
bottomland at an average price of $1,900 per acre.
Deltic’s Manufacturing segment produced operating income of $3.3
million for the first quarter of 2016, compared to $3.5 million in
2015’s first quarter. Included in the financial results for the
first quarter of 2015 was a $1.7 million deductible cost incurred
by the Company related to both property insurance and business
interruption insurance claims as a result of a fire at the MDF
facility on March 10, 2015. During the first quarter of 2016, the
Company sold 71.5 million board feet of lumber, an increase of 17
percent when compared to sales of 61.3 million board feet in 2015’s
first quarter, as the Company increased lumber production to match
market consumption. The average lumber sales price was $338 per
thousand board feet in the first quarter of 2016, a six percent
decrease from the $358 per thousand board feet received for the
first quarter of 2015. The medium density fiberboard (“MDF”) sales
volume for the first quarter of 2016 was 26 million square feet, a
two percent decrease from the 26.4 million square feet sold during
the first quarter of 2015. The average sales price for MDF sold
during 2016’s first quarter was $547 per thousand square feet,
which compares to $573 per thousand square feet reported in the
first quarter of 2015. The Company monitors market conditions for
both lumber and MDF and will manage the operating hours at all of
its facilities in order to continue matching production to market
demand.
The Company’s Real Estate segment reported an operating loss of
$.6 million for the first quarter of 2016, compared to an operating
loss of $.8 million for the same period of 2015. Residential lot
sales totaled 6 lots in 2016’s first quarter versus 2 lots in the
first quarter of 2015. Due to the mix of lots sold, the current
quarter’s average per-lot sales price was $85,200, an increase of
$34,000 per lot when compared to first quarter 2015’s average
per-lot sales price of $51,200. There were no commercial real
estate acreage sales in the first quarter of either year.
Corporate operating expense was $4.7 million in the first
quarter of 2016, which compares to $4.6 million for the
corresponding quarter of 2015. Interest expense in the first
quarter of 2016 was $2.7 million, compared to $1.6 million in
2015’s first quarter. The increase was due to borrowings to fund
capital expenditures and share repurchases, combined with a higher
weighted-average interest rate for the Company’s outstanding debt.
Income tax expense for the first quarter of 2016 was $.2 million,
compared to $1.1 million in the prior year’s first quarter. The
decrease was mainly due to lower pretax income for the first
quarter of 2016, combined with a decreased effective income tax
rate caused by the benefit of the timber harvested being taxed at a
capital gains rate for the 2016 period.
Capital expenditures were $8.7 million in 2016’s first quarter
compared to $5.7 million for the corresponding period of 2015.
Timberland acquisition expenditures were $.1 million in the first
quarter of 2016 and 2015, respectively.
Regarding the outlook for the second quarter and year of 2016,
Mr. Dillon stated, “We currently anticipate the pine sawtimber
harvest to be 200,000 to 225,000 tons and 725,000 to 765,000 tons,
respectively. Finished lumber sales volumes are anticipated to be
65 to 75 million board feet for the second quarter and 265 to 285
million board feet for the year. MDF sales volumes for the second
quarter and year of 2016 are estimated to be 25 to 35 million
square feet and 110 to 130 million square feet, respectively.
Actual sales volumes for both finished lumber and MDF are dependent
upon market conditions. Residential lot sales are estimated at 5 to
10 lots and 90 to 120 lots for the second quarter and year of 2016,
respectively. Due to the volatile nature of commercial real estate
transactions and the significant number of factors related to any
sale it is difficult to anticipate future closings. The Company
continues to receive interest from potential buyers for its
commercial acreage in Chenal Valley.”
Statements included herein that are not historical in nature are
intended to be, and are hereby identified as, “forward-looking
statements” within the meaning of the federal securities laws. Such
statements reflect the Company’s current expectations and involve
certain risks and uncertainties. Actual results could differ
materially from those included in such forward-looking statements.
Factors that could cause such differences include, but are not
limited to, the cyclical nature of the industry, changes in
interest rates, credit availability, general economic conditions,
adverse weather, cost and availability of materials used to
manufacture the Company’s products, natural gas pricing, and the
other risk factors described from time to time in the reports and
disclosure documents filed by the Company with the Securities and
Exchange Commission.
Deltic will hold a conference call on Tuesday, April 26, 2016,
at 10:00 a.m. Central Time to discuss first quarter 2016 earnings.
Interested parties may participate in the call by dialing
1-866-713-8563 and referencing participant passcode identification
number 27120812. The call will also be broadcast live over the
Internet and can be accessed through the Investor Relations section
of the Deltic website, at www.deltic.com. Online replays of
the call will be available through the Deltic website, and a
recording of the call will be available until Tuesday, May 3, 2016,
by dialing 1-888-286-8010 and referencing replay passcode
identification number 46465231.
About Deltic
Deltic Timber Corporation is a natural resources company focused
on the efficient and environmentally responsible management of its
land holdings. The Company owns approximately 530,000 acres of
timberland, operates two sawmills and a medium density fiberboard
plant, and is engaged in real estate development. Headquartered in
El Dorado, Arkansas, the Company’s operations are located primarily
in Arkansas and north Louisiana.
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version on businesswire.com: http://www.businesswire.com/news/home/20160425006335/en/
Deltic Timber CorporationKenneth D. Mann, 870-881-6432Vice
President of Finance and Administration and CFO
Deltic Timber (NYSE:DEL)
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