Deltic Timber Corporation (NYSE:DEL):
DELTIC TIMBER CORPORATION CONSOLIDATED FINANCIAL DATA
SUMMARY
THIRD QUARTER 2016 2015 Net sales $ 53,541,000 50,150,000
Net income 1,487,000 38,000 Earnings per common share
Basic .12 - Assuming dilution .12 - Average common shares
outstanding Basic 11,990,556 12,438,507 Assuming dilution
12,023,406 12,490,883 YEAR-TO-DATE 2016
2015 Net sales $ 160,870,000 144,210,000 Net income
6,102,000 2,782,000 Earnings per common share Basic .50 .22
Assuming dilution .50 .22 Average common shares outstanding
Basic 12,005,116 12,454,052 Assuming dilution 12,064,582 12,512,165
Deltic Timber Corporation (NYSE:DEL) announced today that net
income for the third quarter of 2016 was $1.5 million, $.12 a
share, compared to net income of $.1 million for the third quarter
of 2015. The improved results were primarily due to increased
operating income from Deltic’s Manufacturing segment, resulting
from an increased average sales price for lumber, combined with a
lower per-unit manufacturing cost for the medium density fiberboard
(“MDF”) sold during the third quarter of 2016; partially offset by
increased Corporate general and administrative expense for
incentive plan cost and professional fees. For the first nine
months of 2016, net income was $6.1 million, $.50 a share, compared
to net income of $2.8 million, $.22 a share for the first nine
months of 2015. Net cash provided by operating activities for
2016’s third quarter was $8.3 million, compared to $9 million
in the third quarter of 2015. For the nine months ended September
30, 2016, net cash provided by operating activities was $28.3
million compared to $23.6 million for the first nine months of
2015.
Commenting on the results, “Deltic delivered another solid
quarter of operating and financial results driven by its
exceptional asset base and people,” said interim President and
Chief Executive Officer, D. Mark Leland. “We continued to
capitalize on an improved lumber market while maintaining our
market share. Average sales price on lumber sales in the
Manufacturing segment was 17 percent higher when compared to this
time last year. In addition, both operating and financial
performance at our MDF plant continued to improve as a result of
our team’s successful efforts to reduce unscheduled downtime and
associated unplanned maintenance expense. Progress continues on the
new small-log line at our Ola Mill and it is expected to be
operational in December, allowing us to optimize smallwood
harvested in our plantation thinning operations. We harvested more
pine sawtimber during the third quarter and are on track to
achieving our annual harvest plan in the Woodlands segment. Even
though the pine pulpwood harvest increased 41%, prices have
softened. In our Real Estate segment, we continued to close on the
sale of new lots developed in 2016. On October 19, we offered 45
lots for sale in Chenal Valley and they were all put under contract
with builders, and are scheduled to close before year-end. We are
currently developing additional lots in our Wildwood Place
development, and plan to offer them for sale either later this year
or early in 2017.”
The Woodlands segment reported operating income of $4.1 million
for the third quarter of 2016, compared to $4.5 million in 2015’s
third quarter. The pine sawtimber harvest in the third quarter of
2016 was 188,643 tons, a five percent increase from the 179,376
tons harvested during the third quarter of 2015. The average
per-ton sales price for pine sawtimber in 2016’s third quarter was
$28, a four percent increase from the $27 per ton received during
the third quarter of 2015. During the third quarter of 2016, Deltic
harvested 129,122 tons of pine pulpwood, a 41 percent increase when
compared to 2015’s third quarter harvest of 91,905 tons. The
average per-ton sales price received for the pine pulpwood
harvested in the third quarter of 2016 was $7, a decrease of 22
percent when compared to $9 per ton for the third quarter of 2015.
The total increase in the harvest volume for pine sawtimber and
pulpwood was mainly due to the timing of Deltic’s annual harvest
plan, the mix of timber on the tracts that were being harvested,
ongoing pine plantation thinning activity, and good logging
conditions in the Company’s operating region. Oil and gas lease
rental and royalty income totaled $.4 million in the third quarter
of 2016 versus $.7 million for the same period of 2015. The
decrease was primarily due 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 gas
wells and a lack of new drilling activity due to the low natural
gas prices. During the current quarter, Deltic had no sales of
timberland, compared to sales of 2 acres of non-strategic
timberland at an average sales price of $4,300 per acre in 2015’s
third quarter.
The Manufacturing segment reported operating income of $5.7
million for the third quarter of 2016, compared to $2 million in
2015’s third quarter. The increase was primarily due to a higher
average sales price for lumber, partially offset by the impact of
an increased cost for the logs used as raw material in Deltic’s
sawmills that resulted from rising pine sawtimber prices. MDF
operations experienced reduced unscheduled maintenance downtime and
related unplanned maintenance expenses during the third quarter of
2016, resulting in a lower average per-unit manufacturing cost for
the MDF produced. During the third quarter of 2016, the Company’s
sawmills sold 69.6 million board feet of lumber, compared to sales
of 71.2 million board feet during the third quarter of 2015. The
average lumber sales price was $376 per thousand board feet in the
third quarter of 2016, a 17 percent increase from the $321 per
thousand board feet reported in the third quarter of 2015. In the
third quarter of 2016, Deltic sold 26 million square feet of MDF, a
two percent increase when compared to sales of 25.5 million square
feet in the third quarter of 2015. The average sales price of MDF
during 2016’s third quarter was $561 per thousand square feet,
compared to the average sales price of $557 per thousand square
feet sold in the third quarter of 2015. During the current-year
third quarter, the Company continued to manage the number of
operating hours in its manufacturing facilities in its ongoing
effort to match production of both lumber and MDF with market
demand, and will continue to do so in future periods.
The Real Estate segment reported an operating loss of $.2
million for the third quarter of both 2016 and 2015. There were 25
residential lots sold in the third quarter of 2016 versus 34 lots
sold in 2015’s third quarter. Due to the mix of residential lots
sold, the current quarter’s average per-lot sales price was $70,000
compared to an average sales price of $62,700 per lot in the third
quarter of 2015. There were no sales of commercial acreage during
either 2016’s or 2015’s third quarter.
Corporate operating expense was $5.4 million in the third
quarter of 2016 compared to $3.7 million for the third quarter
of 2015. The increase was due to higher general and administrative
expenses, primarily incentive plan expenses and professional fees.
Interest expense was $2.2 million in the third quarter of 2016
compared to $1.9 million in the third quarter of 2015. The increase
was mainly due to a higher debt level resulting from borrowings
during the fourth quarter of 2015 and the first quarter of 2016 to
fund both a portion of capital expenditures and share repurchases,
combined with the impact of a higher weighted-average interest rate
on the debt outstanding. Income tax expense in 2016’s third quarter
was $.9 million for the period compared to $.1 million in the
prior-year’s third quarter. The increase was the result of higher
pretax income, partially offset by a benefit of a lower effective
income tax rate due to gains from timber harvesting activity being
taxed at a capital gains rate for the year of 2016.
Capital expenditures were $14.8 million in 2016’s third quarter
and $33.8 million for the first nine months of 2016. Capital
expenditures for the corresponding periods of 2015 were $11.1
million and $25.1 million, respectively. There were timberland
acquisition expenditures of $.5 million in the third quarter of
2016, while there were $1.2 million of such expenditures in the
first nine months of 2016. For the corresponding periods of 2015,
there were no timberland acquisition expenditures and $.6 million,
respectively.
For the first nine months of 2016, the pine sawtimber harvest
was 598,024 tons compared to 600,390 tons during the same period of
2015, while the average pine sawtimber sales price of $28 per ton
increased $1 per ton from the prior-year period. The pine pulpwood
harvest for the first nine months of 2016 increased 29 percent, to
392,520 tons, when compared to 304,037 tons in the first nine
months of 2015. The average sales price for pine pulpwood sold in
the first nine months of 2016 was $8 per ton, compared to $10 per
ton in the prior year. Oil and gas lease rental and royalty income
were $1.1 million in the first nine months of 2016 versus $2.8
million in the first nine months of 2015. Sales of timberland for
2016’s first nine months totaled 9 acres at an average sales price
of $4,400 per acre, while in the same period of 2015 Deltic sold 60
acres for an average per-acre sales price of $2,400. Lumber sales
volume increased nine percent, from 194.4 million board feet
in 2015 to 211.1 million board feet in the first nine months of
2016, while the average sales price for lumber increased six
percent, from $341 per thousand board feet in 2015 to $362 per
thousand board feet for the first nine months of 2016. MDF sales
volume was 79.7 million square feet in 2016’s first nine months, a
10 percent increase from 72.4 million square feet sold in the same
period of 2015, while the average sales price for MDF decreased
from $565 per thousand square feet for the first nine months of
2015 to $556 per thousand square feet for the same period in 2016.
During the first quarter of 2015, there was a fire at the Company’s
MDF plant that caused production downtime at the MDF facility and
resulted in a decreased sales volume for the first nine months of
2015. Residential lot sales for the first nine months of 2016
totaled 53 lots at an average sales price per lot of $79,900,
compared to 48 lots at $63,900 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 nine months of 2016 while
there were no commercial acreage sales in the first nine months of
2015.
Concerning the outlook for the fourth quarter and year of 2016,
Mr. Leland stated, “We currently anticipate the pine sawtimber
harvest to be 135,000 to 165,000 tons and 733,000 to 763,000 tons,
respectively. Finished lumber production and sales volume are
estimated at 65 to 75 million board feet for the fourth quarter and
276 to 286 million board feet for the year. MDF sales volumes for
the fourth quarter and year of 2016 are forecast to be 20 to 30
million square feet and 100 to 110 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 50 to 70 lots and 103 to 123 lots for the fourth
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. The financial results for the fourth
quarter of 2016 will also include a one-time, pretax expense of
approximately $3 million related to the recent retirement of Ray C.
Dillon as Deltic’s President and CEO, inclusive of the cash payment
made to him upon his retirement and of the financial impact of
vesting the equity grants previously awarded to him.”
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, October 27,
2016, at 11:30 a.m. Central Time to discuss third quarter 2016
earnings. Interested parties may participate in the call by dialing
1-888-771-4371 and referencing participant passcode identification
number 43540386. 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,
November 3, 2016, by dialing 1-888-243-7419 and referencing replay
passcode identification number 43540386.
Summary financial data and operating statistics for the third
quarter of 2016 and nine months ended September 30, 2016 with
comparisons to 2015 are contained in the attached tables.
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/20161026006682/en/
Deltic Timber CorporationKenneth D. Mann, 870-881-6432Vice
President of Finance and Administration and CFO
Deltic Timber (NYSE:DEL)
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