Deltic Timber Corporation (NYSE:DEL):
DELTIC
TIMBER CORPORATION CONSOLIDATED FINANCIAL DATA SUMMARY
FIRST QUARTER 2017 2016 Net sales $ 53,215,000
50,624,000 Net income 1,081,000 395,000 Earnings per
common share Basic .09 .03 Assuming dilution .09 .03 Average
shares outstanding 12,188,173 12,210,603
Deltic Timber Corporation (NYSE:DEL), a natural resources
company, today announced financial results for the first quarter of
2017.
First Quarter 2017 Financial
Highlights
- Net sales totaled $53.2 million, up
five percent from $50.6 million for the prior-year first
quarter.
- Net income was $1.1 million, or $.09
per diluted share, versus net income of $.4 million, or $.03 per
diluted share, for the same period of 2016.
- Income tax expense for the first
quarter of 2017 was $1.4 million, an effective tax rate of 57
percent, which reflects the discrete impact of the change in the
method of accounting for the tax effects of the vesting of
share-based compensation, which increased the effective tax rate by
20 percent in the quarter.
The improved financial results for the first quarter of 2017
were primarily due to increased operating income in the Company’s
Manufacturing segment resulting from a higher average sales price
for both lumber and medium density fiberboard (“MDF”), increased
lumber sales volume, and improved operating performance at the
Company’s MDF plant. In addition, interest expense was $1.1 million
less in the first quarter of 2017 than the same quarter of 2016 due
to a lower average interest rate, combined with a $.5 million
patronage refund from one of Deltic’s lenders that was accounted
for as a reduction to interest expense.
“Deltic continues to benefit from its well-positioned asset base
and solid team, which have allowed the Company to improve financial
performance over the prior year’s first quarter,” commented John D.
Enlow, Deltic’s President and Chief Executive Officer. “Our average
sales price for lumber sold increased 10 percent, along with
slightly higher sales volumes compared to the first quarter a year
ago. Stronger lumber demand and uncertainty over the Canada-U.S.
trade dispute and duties favorably impacted our markets. In
addition, improved operating metrics at our MDF plant lowered
per-unit costs for MDF when compared to last year’s first quarter.
As discussed last quarter, we anticipate the facility’s near-term
performance will be negatively impacted by worn press chains, which
are scheduled to be replaced in the third quarter of this year.
Currently in our Real Estate segment, we are developing new
residential lot offerings in our Chenal Valley and Wildwood
developments to fulfill demand, and expect to have a successful lot
offering in the Wildwood development during the second quarter of
2017. We are also encouraged by the increased interest in
commercial properties. The Company’s Woodlands segment increased
pine sawtimber harvest three percent to serve strengthening mill
demand. Pine chip-n-saw harvest volumes also increased 156 percent
over the first quarter of 2016 as the Company’s Ola Mill small-log
line began to utilize the most efficient blend of small-log
resources. The current quarter’s pine pulpwood harvest volume
decreased 56,921 tons mainly due to the first quarter 2016 timber
deed sales.
“Since my appointment as Deltic’s President and Chief Executive
Officer, my initial focus has been to evaluate the Company’s
assets, competitive position and market risks and opportunities
with a goal to develop a strategic vision that is laser focused on
achieving strong operational performance, driving shareholder value
and delivering best-in-class returns.”
Woodlands Segment
The Woodlands segment reported operating income of $5.2 million
for the first quarter of 2017, compared to $5.3 million for the
same period of 2016. The pine sawtimber harvest for the first
quarter of 2017 was 211,056 tons, a three percent increase when
compared to the 205,608 tons harvested in the prior-year period,
while the average pine sawtimber sales price was $28 per ton in the
first quarter of both 2017 and 2016. The Company also harvested
26,446 tons of pine chip-n-saw, a 16,118-ton increase when compared
to 10,328 tons harvested in first quarter of 2016. The average
per-ton sales price for the pine chip-n-saw harvested in the first
quarter of both 2016 and 2017 was $17 per ton. The pine pulpwood
volume sold during 2017’s first quarter was 93,021 tons, a 38
percent decrease when compared to 149,942 tons harvested in first
quarter of 2016. The average per-ton sales price for the pine
pulpwood harvested in the first quarter of 2017 was $9 per ton,
compared to $8 per ton a year ago. The decrease in the volume
of pine pulpwood sold was mainly due to softer pulpwood markets,
the mix of timber on the tracts harvested, and the lack of timber
deed sales when compared to 2016. Oil and gas revenues, consisting
of lease rentals and net royalties, were $.5 million for the first
quarter of 2017 versus $.4 million in first quarter 2016. The
increase was due to a higher average sales price for natural gas,
partially offset by 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 Deltic’s acreage becomes
held by production.
Manufacturing Segment
The Company’s Manufacturing segment reported operating income of
$4 million for the first quarter of 2017, compared to operating
income of $3.3 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 lumber. In
addition, the Company’s MDF plant achieved an increase in
production uptime and reductions in its raw material wood costs and
operating expenses, which led to lower per-unit manufacturing
costs. During the quarter, the Company sold 72.5 million board feet
of lumber, compared to 71.5 million board feet of lumber sold in
the same quarter of 2016. The average lumber sales price for the
first quarter of 2017 of $373 per thousand board feet was 10
percent higher when compared to $338 per thousand board feet a year
ago. MDF sales volume was 26 million square feet for the first
quarter of both 2017 and 2016. The average sales price for MDF sold
during the first quarter of 2017 was $553 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 an operating loss of
$.9 million in the first quarter of 2017, compared to an operating
loss of $.6 million for the same period of 2016. The Company sold
one residential lot in the current year’s first quarter, compared
to six residential lots sold in first quarter 2016. The average
per-lot sales price in the first quarter of 2017 was $51,900,
compared to $85,200 per lot for first quarter of 2016. The decrease
in the average sales price per lot was due to the mix of lots sold
during the respective periods. There were no commercial real estate
acreage sales in the first quarter of either year.
Corporate Segment General and
Administrative Expense, Interest Expense, and Income Tax
Expense
Corporate segment general and administrative expense was $4.5
million, compared to $4.7 million for the same period of 2016.
Interest expense in 2017’s first quarter was $1.6 million compared
to $2.7 million for the same period of 2016. The $1.1 million
decrease in interest expense was due to a lower average interest
rate combined with a $.5 million patronage refund from one of
Deltic’s lenders, which was accounted for as a reduction to
interest expense. Income tax expense in the first quarter of 2017
was $1.4 million, compared to a $.2 million income tax benefit in
the prior-year’s first quarter. The increase was the result of
higher pretax income and the implementation of ASU 2016-09, which
increased our effective income tax rate for the quarter by 20
percent.
Capital Expenditures
Capital expenditures were $7.8 million in the first quarter 2017
compared to $8.7 million for the first quarter of 2016. There were
no timberland acquisition expenditures in the first quarter of 2017
while the Company had timberland acquisition expenditures of $.1
million during the same period of 2016.
Outlook
Regarding the outlook for the second quarter and full year of
2017, the Company currently anticipates the pine sawtimber harvest
to be 200,000 to 230,000 tons and 765,000 to 790,000 tons,
respectively, depending on weather conditions in Deltic’s operating
area. Finished lumber sales volume is estimated to be 70 to 80
million board feet for the second quarter of 2017 and 290 to 315
million board feet for full-year 2017. MDF sales volume for the
second quarter and year of 2017 is forecast to be 20 to 30 million
square feet and 90 to 115 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 second 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.
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
Deltic will hold a conference call on Thursday, May 4, 2017, at
10:00 a.m. Central Time to discuss first quarter 2017 earnings.
Interested parties may participate in the call by dialing
1-800-708-4539 and referencing participant passcode identification
number 44757200. 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, May
11, 2017, by dialing 1-888-843-7419 and referencing replay passcode
identification number 44757200.
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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Deltic Timber CorporationAnna Torma,
870-881-6463ir@deltic.com
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