DELTIC TIMBER CORPORATIONCONSOLIDATED
FINANCIAL DATA SUMMARY
FOURTH QUARTER 2016 2015 Net sales $ 58,493,000
49,641,000 Net income 3,143,000 (128,000 ) Earnings
per common share Basic .26 (.01 ) Assuming dilution .26 (.01 )
Average common shares outstanding Basic 12,022,689
12,267,512 Assuming dilution 12,110,305 12,321,848
YEAR-TO-DATE 2016 2015 Net sales $ 219,363,000
193,851,000 Net income 9,245,000 2,654,000 Earnings
per common share Basic .76 .21 Assuming dilution .76 .21
Average common shares outstanding Basic 12,009,534 12,407,034
Assuming dilution 12,073,888 12,466,613
Deltic Timber Corporation (NYSE-DEL), a vertically integrated
natural resources company, today announced financial results for
the fourth quarter and full year of 2016.
Fourth Quarter 2016 Financial
Highlights
- Net sales totaled $58.5 million, up
17.8 percent from $49.7 million for the prior-year fourth
quarter.
- Net income was $3.1 million, or $.26
per diluted share, versus a net loss of $.1 million, or $(.01) per
diluted share, for the same period of 2015.
- Net cash provided by operating
activities was $15.3 million, compared to $6.1 million in the
fourth quarter of 2015.
Full-Year 2016 Financial
Highlights
- Net sales totaled $219.4 million, up
13.2 percent from $193.9 million for 2015.
- Net income was $9.2 million, an
increase of $6.5 million, or 42 percent, when compared to $2.7
million net income for full-year 2015.
- Net income per diluted share was $.76,
an increase of $.55 per share, when compared to net income per
diluted share for full-year 2015.
- Net cash provided by operating
activities was $43.6 million, an increase of $13.9 million from a
year ago.
The improved financial results for the fourth quarter of 2016
were primarily due to increased operating income in the Company’s
Manufacturing and Real Estate segments resulting from: 1) a higher
average sales price for both lumber and medium density fiberboard
(“MDF”), 2) increased sales volume of MDF, 3) improved operating
performance at the Company’s MDF plant, 4) the sale of two
commercial real estate sites totaling 23.15 acres, and 5) the sale
of 77 residential lots during the fourth quarter of 2016. These
improvements were partially offset by increased Corporate segment
general and administrative expense primarily related to the
retirement of the Company’s former President and CEO during the
quarter.
“With Deltic’s well positioned asset base and exceptional team,
we achieved another quarter of solid operating and financial
performance,” commented Mark Leland, Deltic’s Interim President and
Chief Executive Officer. “In addition, we are very pleased to have
separately announced today that John Enlow has been appointed
President and Chief Executive Officer of Deltic, effective March 8.
John has more than 25 years of experience in the natural resources
industry and we are confident he brings valuable expertise and
leadership skills to Deltic.”
Mr. Leland continued, “We achieved outstanding results in our
Real Estate Segment in the fourth quarter, which included closing
on the sale of two separate commercial real estate sites in the
Company’s Chenal Valley development and the sale of 77 residential
lots. We are pleased to see demand for our mid-market lots
remaining strong and we are currently developing additional lots
for sale as soon as late spring. In addition, we further
capitalized on the improved markets for lumber and MDF. We achieved
a 17 percent increase in average sales price for lumber sold
compared to the fourth quarter a year ago. The slightly higher
average sales price received for MDF sold during the fourth quarter
of 2016 was on top of a seven percent year-over-year increase in
MDF sales volume achieved in the fourth quarter of 2015. Del-Tin
Fiber has improved its operating performance, and we expect to see
even further improvement following the arrival and installation of
the plant’s new press chains, which we expect to occur in the third
quarter of this year.“The new small-log line at our Ola Mill is
complete and operating and we are working to process various mixes
of pine sawtimber and smallwood to identify the most efficient
blend of these raw materials for the mill.
“In the Woodlands segment, we not only achieved our planned
annual harvest volume of pine sawtimber, we also took advantage of
favorable logging conditions to harvest a small amount in excess of
our annual harvest plan from our south Arkansas timberland. While
markets for pine pulpwood remained soft, we were able to harvest
and sell an increased volume of this fiber, helping to maintain the
health of our forest.
“Finally, as part of our commitment to return value to our
shareholders, we repurchased 32,309 common shares for $1.9 million
during the fourth quarter, bringing our total repurchases for the
full year to 309,739 common shares for $17 million.”
Woodlands Segment
The Woodlands segment reported operating income of $4.2 million
for the fourth quarter of both 2016 and 2015. The pine sawtimber
harvest for the fourth quarter of 2016 was 179,158 tons, a 16
percent increase when compared to the 155,027 tons harvested in the
prior-year period, while the average pine sawtimber sales price was
$27 per ton in the fourth quarter of both 2016 and 2015.
The Company also harvested 115,962 tons of pine pulpwood, a 29
percent increase when compared to 90,128 tons harvested in fourth
quarter 2015. The average per-ton sales price for the pine pulpwood
harvested in the fourth quarter of 2016 was $8 per ton, compared to
$9 per ton a year ago. The increase in the harvest volume for
pine sawtimber and pulpwood was mainly due to timing of the annual
harvest, the mix of timber on the tracts harvested, and the benefit
of favorable logging conditions in the Company’s operating region;
combined with the impact of a planned increase in pine plantation
thinning activity. Oil and gas revenues, consisting of lease
rentals and net royalties, were $.4 million for the fourth quarter
of 2016 versus $.6 million in fourth quarter 2015. The decrease was
due to a lower average sales price for natural gas; a lower volume
of natural gas produced from the wells in which the Company has a
royalty interest; and a decrease in oil and gas lease rental
income, as the amortization period for previously received lease
rental payments expired with the acreage becoming held by
production. There were no sales of timberland during the 2016
fourth quarter, compared to 703 acres of non-strategic timberland
sold in the prior-year quarter, at an average sales price of $1,500
per acre.
Manufacturing Segment
The Company’s Manufacturing segment reported operating income of
$3.2 million for the fourth quarter of 2016, compared to an
operating loss of $.6 million for the same period a year ago. The
increase was due primarily to a higher average sales price for both
lumber and MDF, combined with an increased sales volume of MDF. In
addition, the Company’s MDF plant achieved an increase in
production uptime and reductions in its cost for raw materials and
operating expenses, which led to increased production volume and
lower per-unit manufacturing costs. During the quarter, the Company
sold 63.5 million board feet of lumber, compared to 67.5 million
board feet of lumber sold in the same quarter of 2015. The average
lumber sales price for the fourth quarter of 2016 of $360 per
thousand board feet was 17 percent higher when compared to $307 per
thousand board feet a year ago. MDF sales volume was 23.8 million
square feet, a seven percent increase from the 22.4 million square
feet sold during the fourth quarter of 2015. The average sales
price for MDF sold during the fourth quarter of 2016 was $550 per
thousand square feet, compared to $547 per thousand square feet in
the prior-year quarter.
Real Estate Segment
The Company’s Real Estate segment reported operating income of
$6.4 million in the fourth quarter of 2016, compared to $1.7
million for the same period of 2015. Residential sales totaled 77
lots, compared to 52 residential lots sold in fourth quarter 2015.
The average per-lot sales price in the fourth quarter of 2016 was
$82,600, compared to $101,700 per lot for fourth quarter 2015. The
decrease in the average sales price per lot was due to the mix of
lots sold during the respective periods. During the fourth quarter
of 2016, the Company also sold two commercial real estate sites,
totaling 23.15 acres, for a total of $5.4 million, or an average
per-acre sales price of $232,500; compared to no commercial real
estate acreage sales in the prior-year fourth quarter.
Corporate Segment General and
Administrative Expense, Interest Expense, and Income Tax
Expense
Corporate segment general and administrative expense was $8.1
million, compared to $3.9 million for the same period of 2015.
The $4.2 million increase was mainly due to costs related to the
retirement of the Company’s former President and CEO. Interest
expense was $2.3 million for the fourth quarter of both 2016 and
2015. Income tax expense in fourth quarter of 2016 was $.3 million,
compared to a $.5 million income tax benefit in the prior-year’s
fourth quarter. The increase was the result of higher pretax
income, partially offset by increases in permanent tax
benefits.
Full-Year 2016 Results
For full-year 2016, the pine sawtimber harvest level was 777,182
tons, compared to 755,417 tons harvested in 2015; while the
average pine sawtimber sales price in 2016 increased to $28 per
ton, from $27 per ton in 2015. The pine pulpwood harvest
volume was 508,482 tons in 2016, compared to 394,165 tons in
2015, with a $1 per ton decrease in the average sales price, to $8
per ton. The total increase in the harvest volume for pine
sawtimber and pulpwood was mainly due to the mix of timber on the
tracts harvested and a planned increase in pine plantation thinning
activity. In addition to these factors, the Company slightly
increased its harvest of pine sawtimber beyond the Company’s annual
harvest plan due to favorable logging conditions in the Company’s
operating region during the month of December. Oil and gas lease
rental and net royalty income totaled $1.6 million in 2016,
compared to $3.4 million in 2015, the decrease is due to lower
average sales prices and volumes, combined with lower lease rental
income as the acreage is held by production. Sales of non-strategic
timberland for the year of 2016 totaled 9 acres, with an average
sales price of $4,400 per acre, while the Company sold 763
acres in 2015 at a per-acre sales price of $1,500.
Lumber sales volume increased 12.8 million board feet, from
261.8 million board feet in 2015 to 274.6 million board feet in
2016, due to the combined benefit of recent capital projects at the
Company sawmills and additional production volume, as Deltic
adjusted sawmill operating hours to meet the market demand for
lumber. The average lumber sales price was $361 per thousand board
feet in 2016, an increase of nine percent when compared to $332 per
thousand board feet in 2015. The MDF sales volume increased 8.7
million square feet, or nine percent, from 94.8 million square feet
in 2015 to 103.6 million square feet in 2016. MDF production was
negatively impacted in 2015 by a fire in the press area of the
Company’s MDF plant. The average sales price for MDF in 2016 was
$555 per thousand square feet, compared to $561 per thousand square
feet in 2015.
Residential sales for full-year 2016 totaled 130 lots at an
average sales price of $81,500 per lot, compared to 100 lots at
$83,500 per lot for the prior year. The Company also sold three
commercial real estate sites in 2016, totaling 33.95 acres, at an
average per-acre sales price of $207,000. There were no commercial
acreage sales during 2015.
For full-year 2016, Corporate segment general and administrative
expense was $22.9 million, which compares to $17.3 million for the
year of 2015. The increase was mainly due to costs related to the
retirement of the Company’s former President and CEO. The Company’s
interest expense was $9.4 million during 2016 compared to interest
expense of $7.5 million for 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. For the year 2016, income tax expense was $3.3
million, compared to prior-year income tax expense of $1.1 million.
The increase was the result of higher pretax income, partially
offset by increases in permanent tax benefits.
Capital Expenditures
Capital expenditures were $11 million in fourth quarter 2016 and
$44.8 million for the year of 2016. Capital expenditures for the
corresponding periods of 2015 were $12.7 million and
$37.8 million, respectively. Timberland acquisition
expenditures were $.6 million in the fourth quarter of 2016 and
$1.8 million for the year of 2016. For the corresponding
periods of 2015, timberland acquisition expenditures were $.3
million and $.9 million, respectively.
Outlook
Regarding the outlook for the first quarter and full year of
2017, the Company currently anticipates the pine sawtimber harvest
to be 200,000 to 225,000 tons and 750,000 to 775,000 tons,
respectively, depending on weather conditions in Deltic’s operating
area. Finished lumber sales volume is estimated to be 65 to 75
million board feet for the first quarter of 2017 and 240 to 290
million board feet for full-year 2017. MDF sales volume for the
first quarter and year of 2017 is 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 at
5 to 10 lots and 120 to 140 lots for the first quarter and
full year of 2017, respectively. Commercial acreage within Chenal
Valley continues to receive interest, but due to the volatile
nature of commercial real estate transactions and significant
number of factors involved, it is difficult to anticipate future
closings.
Byrom L. Walker Appointed as Interim
Chief Financial Officer
Deltic also today announced that Byrom L. Walker has been
appointed Interim Chief Financial Officer, effective immediately.
Mr. Walker’s appointment follows the decision by the Board of
Directors to terminate Kenneth D. Mann as Chief Financial Officer.
The Company has initiated a search process to identify a permanent
Chief Financial Officer.
Mr. Walker has served as the Controller of Deltic since May,
2007. He has been with the Company for 11 years, having joined
Deltic in 2006 as Manager of Financial Reporting. Prior to joining
Deltic, Mr. Walker served as the Corporate Controller for Teris,
LLC, a division of Suez S.A. Mr. Walker received his BA degree,
with a major in accounting from Baylor University.
The termination of Mr. Mann was completed after the Board became
aware that he misappropriated certain Company assets for personal
use. This action is not related to the Company’s operating or
financial performance and is not expected to have a material impact
on Deltic’s previously issued financial statements. Deltic
currently intends to file its Annual Report on Form 10-K for the
year ended December 31, 2016 by the due date of March 16, 2017.
Forward-Looking
Statements
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 volumes
produced, 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.
Conference Call Details
As previously announced, Deltic has revised the scheduled start
time of its conference call to review its fourth quarter 2016
results to today at 7:30 a.m. Central Time. Interested parties may
participate in the call by dialing 1-800-708-4540 and referencing
participant passcode identification number 44184389. 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
Friday, March 3, 2017, by dialing 1-888-843-7419 and referencing
replay passcode identification number 44184389.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170227005439/en/
Deltic Investor RelationsD. Mark Leland,
870-881-6432ir@deltic.com
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