Deltic Timber Corporation (NYSE:DEL):
DELTIC TIMBER CORPORATION CONSOLIDATED FINANCIAL DATA
SUMMARY SECOND QUARTER 2016
2015 Net sales $ 56,705,000 45,681,000
Net income 4,220,000 831,000 Earnings per common
share Basic .35 .07 Assuming dilution .35 .07 Average common
shares outstanding Basic 11,974,508 12,470,781 Assuming dilution
12,032,271 12,520,948 YEAR-TO-DATE 2016
2015 Net sales $ 107,329,000 94,060,000 Net income
4,615,000 2,744,000 Earnings per common share Basic .38 .22
Assuming dilution .38 .22 Average common shares outstanding
Basic 12,012,476 12,461,953 Assuming dilution 12,077,587 12,517,896
Deltic Timber Corporation (NYSE:DEL) announced today that net
income for the second quarter of 2016 was $4.2 million, $.35 a
share, which compares to results for the second quarter of 2015 of
$.8 million, $.07 a share. The increase was primarily due to
increased operating income from the Company’s Manufacturing and
Real Estate segments, mainly the result of an improved lumber
market combined with increased residential lot sales and the
benefit of a commercial real estate acreage sale. Net cash provided
by operating activities was $17.2 million for 2016’s second
quarter, compared to $5.4 million in the second quarter of 2015.
For the first six months of 2016, net income was $4.6 million, $.38
a share, compared to net income of $2.7 million, $.22 a share for
the first six months of 2015. Net cash provided by operating
activities for the first half of 2016 was $20 million, compared to
$14.6 million for the same period of 2015.
Commenting on the results, President and Chief Executive
Officer, Ray C. Dillon, stated, “The Company’s financial
performance for the second quarter is indicative of the potential
income and cash flow that Deltic’s excellent group of operating
assets can produce, even when markets are only marginally
favorable. In the Woodlands segment, we continue to achieve a
sustainable harvest volume of our pine sawtimber; however, pine
pulpwood markets remain weak. Our investment in a new small-log
line at our Ola Mill, that will be operational in October, will
allow us to better utilize smallwood from our forest-maintenance
thinning activity in our sawmill. In the Manufacturing segment, we
saw an improvement in the lumber market during the quarter,
allowing us to run additional hours and sell more lumber at a
higher average sales price, while maintaining our market share and
balancing supply with demand. Both operating and financial
performance at our MDF plant continue to improve, and the plant
generated increased operating income and cash flow from the first
quarter of 2016. In our Real Estate segment, we closed the sale of
several of the lots that were offered during the first quarter of
2016 in a neighborhood in our Chenal Valley development, resulting
in sales of 22 lots during the second quarter at an attractive
average sales price per lot. We also closed on the sale of a
10.8-acre commercial real estate site during the quarter,
indicating the increased interest in our mix of properties in
Chenal Valley that are zoned for commercial development.
“Deltic’s financial results also continue to benefit from the
capital gains treatment for income from our timber harvesting
activity due to a provision of the TREE Act that applies to
C-corporations, such as Deltic, thus reducing the Company’s
effective income tax rate for 2016. We are also benefiting from the
bonus depreciation deduction that is available to us due to the
capital investments we are making in our manufacturing
facilities.”
The Woodlands segment reported operating income of $4.4 million
for the second quarter of 2016, compared to $4.9 million in 2015’s
second quarter, primarily due to decreased oil and gas-related
income. The pine sawtimber harvest in the second quarter of 2016
was 203,773 tons, an eight percent increase from the 189,480 tons
harvested during the second quarter of 2015. The average per-ton
sales price for pine sawtimber was $27 per ton for the second
quarter of both 2016 and 2015. The increase in the volume of pine
sawtimber harvested was due to the timing of harvesting the
Company’s 2016 planned annual volume. In the second quarter of
2016, Deltic harvested 103,128 tons of pine pulpwood, a 14 percent
decrease when compared to 2015’s second quarter harvest of 120,459
tons. The average per-ton sales price received for pine pulpwood in
the second quarter of 2016 was $9, compared to $10 per ton for the
second quarter of 2015. The decrease in the pine pulpwood volume
and average per-ton sales price was due to softer markets for
pulpwood in the Company’s operating area during the quarter. Oil
and gas lease rental and net royalty income totaled $.3 million in
the second quarter of 2016 versus $.8 million for the same period
of 2015. The decrease was due primarily to lower natural gas prices
received for the Company’s royalty share of gas production combined
with the impact of declining natural gas production from aging
existing wells and a lack of new drilling activity due to the low
gas prices. During the current quarter, Deltic sold 9 acres of
non-strategic timberland at an average per-acre price of $4,400,
compared to sales of 38 acres in 2015’s second quarter at an
average sales price of $2,500 per acre.
The Manufacturing segment reported operating income of $7
million for the second quarter of 2016, compared to $3.5 million in
2015’s second quarter. The increase was mainly due to an increased
sales volume and a higher average sales price for lumber, as market
conditions in 2016’s second quarter were improved from the prior
year’s second quarter. During the second quarter of 2016, the
Company’s sawmill operations sold 69.9 million board feet, a 13
percent increase when compared to sales in the second quarter of
2015 of 61.9 million board feet. The average lumber sales price was
$371 per thousand board feet in the second quarter of 2016, a seven
percent increase from the $347 per thousand board feet reported in
the second quarter of 2015. For the second quarter of 2016, the
Company sold 27.7 million square feet of MDF, a 35 percent increase
when compared to 2015’s second quarter MDF sales of 20.5 million
square feet. The increase was mainly due to fire-related production
downtime at the MDF plant during 2015’s first and second quarter
that affected the volume that the plant had available to sell. The
average sales price for MDF for 2016’s second quarter was $561 per
thousand square feet, a slight decrease when compared to an average
sales price of $565 per thousand square feet sold in the second
quarter of 2015. Because the Company’s Manufacturing segment
operates in commodity-based markets, it continually monitors the
number of operating hours in its manufacturing facilities to match
its production of both lumber and MDF with market demand.
The Real Estate segment reported operating income of $1.8
million in the second quarter of 2016, compared to an operating
loss of $.3 million for the same period of 2015. During 2016’s
second quarter, Deltic sold a 10.8-acre commercial real estate site
for $1,647,000, or $152,500 per acre, while there were no sales of
commercial real estate in the corresponding period of 2015. During
the second quarter of 2016, there were sales of 22 residential lots
for an average sales price of $90,100 per lot. This compares to
sales of 12 residential lots for an average sales price of $69,500
per lot during the second quarter of 2015. The average sales price
of residential lots sold increased $20,600 per lot in 2016’s second
quarter when compared to the same period in 2015, due to the mix of
residential lots sold.
Corporate operating expense was $4.7 million in the second
quarter of 2016, compared to $5.1 million for the second
quarter of 2015, due to a decrease in Deltic’s general and
administrative expense. Interest expense was $2.2 million in the
second quarter of 2016 compared to $1.7 million in the second
quarter of 2015. The increase was mainly due to borrowings during
the fourth quarter of 2015 and the first quarter of 2016 resulting
from increased expenditures related to capital projects and share
repurchases, combined with the impact of a higher weighted-average
interest rate on the debt outstanding. Income tax expense in 2016’s
second quarter was $1.9 million compared to $.4 million in the
prior year’s second quarter. The increase was primarily the result
of higher pretax income, partially offset by the benefit of a lower
effective income tax rate due to the gains from timber harvesting
activity being taxed at a capital gains rate for the year of
2016.
Capital expenditures were $10.3 million in 2016’s second quarter
and $19 million for the first six months of 2016. Capital
expenditures for the corresponding periods of 2015 were $8.3
million and $14 million, respectively. Timberland acquisition
expenditures were $.6 million in the second quarter of 2016 and $.7
million for the first six months of 2016. For the corresponding
periods of 2015, timberland acquisition expenditures totaled $.5
million and $.6 million, respectively.
For the first six months of 2016, the pine sawtimber harvest was
409,381 tons, at an average price of $28 per ton, compared to
421,014 tons during the same period of 2015, at an average price of
$27 per ton. The pine pulpwood harvest for the first six months of
2016 was 263,398 tons, at an average price of $9 per ton, compared
to 212,132 tons at an average price of $10 per ton in the first six
months of 2015. Oil and gas lease rental and net royalty income was
$.8 million in the first six months of 2016 versus $2 million
in the first six months of 2015. Sales of timberland for 2016’s
first six months totaled 9 acres, with an average sales price of
$4,400 per acre, while in the same period of 2015, Deltic sold 58
acres for a per-acre sales price of $2,300. Lumber sales volume
increased 15 percent to 141.5 million board feet in 2016, while
lumber sales were 123.2 million board feet in 2015. The average
sales price for lumber increased slightly in the first six months
of 2016, to $354 per thousand board feet, compared to $352 per
thousand board feet in 2015. MDF sales volume increased to 53.7
million square feet in 2016, a 14 percent increase from 47 million
square feet sold in 2015. A fire at the Company’s MDF plant that
occurred during the first quarter of 2015 caused production
downtime at the MDF facility and resulted in a decreased sales
volume for the first half of 2015. The average sales price for MDF
decreased three percent to $554 per thousand square feet in 2016,
compared to $569 per thousand square feet in 2015. Residential lot
sales for the first half of 2016 totaled 28 lots at an average
sales price per lot of $89,000, compared to 14 lots at an average
sales price $66,900 per lot for the same period of 2015. The
Company sold 10.8 acres of commercial real estate at an average of
$152,500 per acre during the first six months of 2016 while there
were no commercial acreage sales in the first six months of
2015.
Concerning the outlook for the third quarter and year of 2016,
Mr. Dillon stated, “We currently anticipate the pine sawtimber
harvest to be 220,000 to 250,000 tons and 725,000 to 765,000 tons,
respectively. Finished lumber production and sales volume are
estimated at 60 to 70 million board feet for the third quarter and
265 to 285 million board feet for the year. MDF sales volumes for
the third quarter and year of 2016 are forecast to be 25 to 35
million square feet and 100 to 120 million square feet,
respectively. Actual sales volumes for both finished lumber and MDF
are dependent upon market conditions. Residential lot sales are
projected to be 20 to 30 lots and 90 to 120 lots for the third
quarter and year of 2016, respectively. Commercial acreage within
Chenal Valley continues to receive interest from potential buyers,
even so it is difficult for the Company to predict the timing of
closings of any commercial real estate transactions due to their
highly uncertain nature, volatility, and the significant number of
factors related to any sale.”
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 Thursday, July 28, 2016,
at 10:00 a.m. Central Time to discuss second quarter 2016 earnings.
Interested parties may participate in the call by dialing
1-888-771-4371 and referencing participant passcode identification
number 42935543. 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 Thursday,
August 4, 2016, by dialing 1-888-843-7419 and referencing replay
passcode identification number 42935543.
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/20160727006450/en/
Deltic Timber CorporationKenneth D. Mann, 870-881-6432Vice
President of Finance and Administration and CFO
Deltic Timber (NYSE:DEL)
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