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Press release from Business Wire

Plum Creek Timber Company, Inc. Reports Results for Third Quarter 2012

Monday, October 29, 2012

Plum Creek Timber Company, Inc. Reports Results for Third Quarter 201216:04 EDT Monday, October 29, 2012 SEATTLE (Business Wire) -- Plum Creek Timber Company, Inc. (NYSE:PCL) today announced third quarter earnings of $59 million, or $0.36 per diluted share, on revenues of $354 million. Earnings for the third quarter of 2011 were $50 million, or $0.31 per diluted share, on revenues of $293 million. Earnings for the first nine months of 2012 were $124 million, or $0.76 per diluted share, on revenues of $985 million. Earnings for the first nine months of 2011 were $132 million, or $0.81 per diluted share, on revenues of $852 million. Adjusted EBITDA, a non-GAAP measure of operating performance, for the first nine months of 2012 was $380 million, up from $317 million in the same period of 2011. The company ended the quarter with $320 million in cash and cash equivalents. A reconciliation of adjusted EBITDA to net income and cash flow from operations is provided as an attachment to this release. “We had a good third quarter with earnings near the top of our guidance range,” said Rick Holley, Plum Creek's president and chief executive officer. “Demand for wood products continues to improve and that has translated into improved financial performance for our timber and manufacturing businesses. Combined, these business segments have grown operating income by $19 million and adjusted EBITDA by $36 million during the first nine months of the year. We continue to be on track to grow our adjusted EBITDA by approximately $50 million this year.” Review of Operations The Northern Resources segment reported operating income of $5 million for the quarter, down $2 million from the third quarter of 2011. The lower operating income was primarily the result of a $2 decline in average sawlog prices due to the decline in export log prices experienced over the past year. Average pulpwood prices of $42 per ton were unchanged when compared to the third quarter of 2011. Overall the third quarter's harvest was approximately 40,000 tons, or 4 percent, lower than the same period of 2011. Operating income in the Southern Resources segment was $23 million, an increase of $2 million from the $21 million reported during the third quarter of 2011. Sawlog prices were stable at $20 per ton and pulpwood prices of $10 per ton were $1 per ton higher than the prices reported for the third quarter of 2011. As planned, harvest volumes in 2012 were higher than those in 2011. The company continued to emphasize the harvest of pulpwood to capture relatively attractive values in these markets and preserve the value of larger diameter sawlogs. Pulpwood volumes were up 318,000 tons, or 17 percent, higher compared to the third quarter of 2011. The sawlog harvest was up 244,000 tons, or 19 percent, higher from 2011 levels. The Real Estate segment reported third quarter total revenue of $96 million and operating income of $54 million. Third quarter 2011 Real Estate segment revenue was $67 million and operating income was $46 million. The 2012 sales were anchored by the sale of approximately 100,000 acres of Wisconsin timberland for approximately $67 million. Smaller rural land sales across the company's holdings accounted for the $29 million balance of the quarter's revenue. Rural land prices remained stable with HBU/recreation parcels averaging $2,100 per acre. The Manufacturing segment reported $9 million of operating income for the third quarter, compared to the $3 million of operating income reported for the third quarter of 2011. Profit growth was driven by improving demand and prices for the company's plywood and medium density fiberboard (MDF) products. Sales volumes for plywood and MDF increased 18 percent and 43 percent respectively. Plywood prices increased 13 percent and MDF prices improved 5 percent during the same period. Average lumber prices increased 7 percent while lumber sales volume declined 8 percent compared to the third quarter of 2011. Outlook The company expects its full-year harvest to approximate 17.5 million tons, including approximately 700,000 tons from this year's timber deed acquisition. During the fourth quarter, the company expects to harvest approximately 1 million tons in its Northern Resources segment and approximately 3 million tons in its Southern Resources segment. Fourth quarter Real Estate segment sales are expected to be between $60 million and $80 million. In the fourth quarter, seasonally lower sales volumes are expected to reduce the Manufacturing segment's profitability compared to the third quarter. The company expects to report fourth quarter earnings between $0.25 and $0.30 per share. “Our operations continue to perform well and our operating flexibility allows us to respond quickly to our customers' needs as markets improve. We expect the results from our timber business to improve further in 2013 as the housing market and economy continue to strengthen,” continued Holley. “We are excited about the future, and look forward to 2013 with optimism. Disciplined capital allocation is just as important in a recovery as it is during a downturn. It remains our top priority at Plum Creek. We continually evaluate the best use of the cash we generate with the goals of delivering value to shareholders while growing the per-share value of the company over time,” concluded Holley. Earnings Conference Call and Supplemental Information Plum Creek will hold a conference call today, Oct. 29, at 5:00 p.m. ET (2:00 p.m. PT). A live webcast of the conference call may be accessed through Plum Creek's Internet site at www.plumcreek.com by clicking on the “Investors” link. Investors without Internet access should dial 1-800-572-9852 at least 10 minutes prior to the start of the call, referencing Plum Creek's earnings conference call. Those wishing to access the call from outside the United States and Canada should dial 1-706-645-9676, also referencing Plum Creek's earnings conference call. Replay of the call will be available for 48 hours after completion of the live call and can be accessed at 1-855-859-2056 or 1-404-537-3406 (international calls), using the code 21136768. Supplemental financial information for Plum Creek operations, including statistical data and reconciliations to non-GAAP measures is available in the Investors section of Plum Creek's website at www.plumcreek.com. Plum Creek is one of the largest landowners in the nation and the most geographically diverse, with approximately 6.4 million acres of timberlands in major timber producing regions of the United States and wood products manufacturing facilities in the Northwest. For more information, visit www.plumcreek.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seek," "approximately," "intends," "plans," "estimates," or "anticipates," or the negative of those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the cyclical nature of the forest products industry, our ability to harvest our timber, our ability to execute our acquisition strategy, the market for and our ability to sell or exchange non-strategic timberlands and timberland properties that have higher and better uses, and various regulatory constraints. These and other risks, uncertainties and assumptions are detailed from time to time in our filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as amended. It is likely that if one or more of the risks materializes, or if one or more assumptions prove to be incorrect, the current expectations of Plum Creek and its management will not be realized. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and neither Plum Creek nor its management undertakes any obligation to update or revise any forward-looking statements. PLUM CREEK TIMBER COMPANY, INC.CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED) (In Millions, Except Per Share Amounts)   Nine Months Ended September 30,2012   2011 REVENUES:   Timber $480 $ 421 Real Estate 243 208 Manufacturing 246 208 Other 16   15 Total Revenues 985   852   COSTS AND EXPENSES: Cost of Goods Sold: Timber 374 327 Real Estate 124 68 Manufacturing 217 190 Other 1   1 Total Cost of Goods Sold 716 586 Selling, General and Administrative 86   77 Total Costs and Expenses 802   663   Other Operating Income (Expense), net 1   3   Operating Income 184 192   Equity Earnings from Timberland Venture 42 44   Interest Expense, net: Interest Expense (Debt Obligations to Unrelated Parties) 61 61 Interest Expense (Note Payable to Timberland Venture) 43   43 Total Interest Expense, net 104 104   Income before Income Taxes 122 132   Provision (Benefit) for Income Taxes (2) —     Net Income $124   $ 132   PER SHARE AMOUNTS:   Net Income per Share – Basic $0.77 $ 0.81 Net Income per Share – Diluted $0.76 $ 0.81   Weighted-Average Number of Shares Outstanding – Basic 161.5 161.9 – Diluted 161.8 162.2   PLUM CREEK TIMBER COMPANY, INC.CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED) (In Millions, Except Per Share Amounts)   Quarter Ended September 30,   2012   2011 REVENUES:   Timber $168 $ 154 Real Estate 96 67 Manufacturing 85 67 Other 5   5   Total Revenues 354   293     COSTS AND EXPENSES: Cost of Goods Sold: Timber 130 119 Real Estate 40 19 Manufacturing 74 62 Other —   —   Total Cost of Goods Sold 244 200 Selling, General and Administrative 31   24   Total Costs and Expenses 275   224     Other Operating Income (Expense), net —   —     Operating Income 79 69   Equity Earnings from Timberland Venture 14 14   Interest Expense, net: Interest Expense (Debt Obligations to Unrelated Parties) 21 20 Interest Expense (Note Payable to Timberland Venture) 14   14   Total Interest Expense, net 35 34   Income before Income Taxes 58 49   Provision (Benefit) for Income Taxes (1) (1 )     Net Income $59   $ 50     PER SHARE AMOUNTS:   Net Income per Share – Basic $0.36 $ 0.31 Net Income per Share – Diluted $0.36 $ 0.31   Weighted-Average Number of Shares Outstanding – Basic 161.5 161.9 – Diluted 161.9 162.2   PLUM CREEK TIMBER COMPANY, INC.CONSOLIDATED BALANCE SHEETS(UNAUDITED) (In Millions, Except Per Share Amounts)   September 30, 2012   December 31,2011 ASSETS Current Assets: Cash and Cash Equivalents $320 $ 254 Accounts Receivable 39 28 Inventories 49 48 Deferred Tax Asset 6 6 Assets Held for Sale 44 103 Other Current Assets 14   15   472 454   Timber and Timberlands, net 3,423 3,377 Property, Plant and Equipment, net 128 138 Equity Investment in Timberland Venture 187 201 Deferred Tax Asset 18 17 Investment in Grantor Trusts (at Fair Value) 38 36 Other Assets 37   36   Total Assets $4,303   $ 4,259     LIABILITIES Current Liabilities: Current Portion of Long-Term Debt $176 $ 352 Line of Credit 351 348 Accounts Payable 29 25 Interest Payable 25 26 Wages Payable 19 20 Taxes Payable 16 9 Deferred Revenue 31 27 Other Current Liabilities 9   8   656 815   Long-Term Debt 1,567 1,290 Note Payable to Timberland Venture 783 783 Other Liabilities 98   108   Total Liabilities 3,104   2,996     Commitments and Contingencies   STOCKHOLDERS' EQUITY Preferred Stock, $0.01 Par Value, Authorized Shares – 75.0, Outstanding – None — — Common Stock, $0.01 Par Value, Authorized Shares – 300.6, Outstanding (net of Treasury Stock) – 161.6 at September 30, 2012 and 161.3 at December 31, 2011 2 2 Additional Paid-In Capital 2,273 2,261 Retained Earnings (Accumulated Deficit) (108) (28 ) Treasury Stock, at Cost, Common Shares – 26.9 at September 30, 2012 and 26.9 at December 31, 2011 (938) (937 ) Accumulated Other Comprehensive Income (Loss) (30) (35 ) Total Stockholders' Equity 1,199   1,263   Total Liabilities and Stockholders' Equity $4,303   $ 4,259     PLUM CREEK TIMBER COMPANY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)   Nine Months Ended September 30, (In Millions) 2012   2011 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $124 $ 132 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 87 70 Basis of Real Estate Sold 111 57 Equity Earnings from Timberland Venture (42) (44 ) Distributions from Timberland Venture 56 56 Deferred Income Taxes (1) 2 Deferred Revenue from Long-Term Gas Leases (Net of Amortization) (6) 14 Timber Deed Acquired (98) — Pension Plan Contributions (10) (3 ) Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds — — Other Working Capital Changes 5 — Other 11   10   Net Cash Provided By Operating Activities 237   294     CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (Excluding Timberland Acquisitions) (52) (43 ) Timberlands and Minerals Acquired (18) (88 ) Other (1) —   Net Cash Used In Investing Activities (71) (131 )   CASH FLOWS FROM FINANCING ACTIVITIES Dividends (204) (204 ) Borrowings on Line of Credit 1,712 1,097 Repayments on Line of Credit (1,709) (961 ) Proceeds from Issuance of Long-Term Debt 450 — Debt Issuance Costs (3) — Principal Payments and Retirement of Long-Term Debt (350) (49 ) Proceeds from Stock Option Exercises 5 9 Acquisition of Treasury Stock (1) (16 ) Net Cash Used In Financing Activities (100) (124 )   Increase (Decrease) In Cash and Cash Equivalents 66 39 Cash and Cash Equivalents: Beginning of Period 254 252     End of Period $320   $ 291     PLUM CREEK TIMBER COMPANY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)   Quarter Ended September 30, (In Millions) 2012   2011 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $59 $ 50 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization 31 26 Basis of Real Estate Sold 36 14 Equity Earnings from Timberland Venture (14) (14 ) Distributions from Timberland Venture 28 28 Deferred Income Taxes — (2 ) Deferred Revenue from Long-Term Gas Leases (Net of Amortization) (1) 2 Pension Plan Contributions (3) (3 ) Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds — 35 Other Working Capital Changes 7 (4 ) Other 5   5   Net Cash Provided By Operating Activities 148   137     CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (Excluding Timberland Acquisitions) (17) (15 ) Timberlands and Minerals Acquired (5) (76 ) Net Cash Used In Investing Activities (22) (91 )   CASH FLOWS FROM FINANCING ACTIVITIES Dividends (68) (68 ) Borrowings on Line of Credit 583 542 Repayments on Line of Credit (683) (467 ) Proceeds from Issuance of Long-Term Debt 450 — Debt Issuance Costs — — Principal Payments and Retirement of Long-Term Debt (350) — Proceeds from Stock Option Exercises 2 — Acquisition of Treasury Stock —   (15 ) Net Cash Used In Financing Activities (66) (8 )   Increase (Decrease) In Cash and Cash Equivalents 60 38 Cash and Cash Equivalents: Beginning of Period 260 253     End of Period $320   $ 291     PLUM CREEK TIMBER COMPANY, INC.SEGMENT DATA(UNAUDITED)   Nine Months Ended September 30, (In Millions) 2012   2011 Revenues: Northern Resources $185 $ 167 Southern Resources 312 266 Real Estate 243 208 Manufacturing 246 208 Other 16 15 Eliminations (17) (12 ) Total Revenues $985   $ 852     Operating Income (Loss): Northern Resources $15 $ 17 Southern Resources 66 55 Real Estate 113 134 Manufacturing 22 12 Other (A)14 16 Other Costs and Eliminations, net (46) (42 ) Total Operating Income $184   $ 192     Adjusted EBITDA by Segment: (B) Northern Resources $35 $ 36 Southern Resources 118 92 Real Estate 225 192 Manufacturing 33 22 Other 14 16 Other Costs and Eliminations, net (45) (41 ) Total $380   $ 317     (A) During the first nine months of 2011, the company received a payment of $2 million for the settlement of a dispute that related to certain mineral rights. This amount is reported as Other Operating Gain/(Loss) in our Other Segment and is included in Other Operating Income (Expense), net in the Consolidated Statements of Income. (B) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities. PLUM CREEK TIMBER COMPANY, INC.SEGMENT DATA(UNAUDITED)   Quarter Ended September 30, (In Millions) 2012   2011 Revenues: Northern Resources $65 $ 68 Southern Resources 110 93 Real Estate 96 67 Manufacturing 85 67 Other 5 5 Eliminations (7) (7 ) Total Revenues $354   $ 293     Operating Income (Loss): Northern Resources $5 $ 7 Southern Resources 23 21 Real Estate 54 46 Manufacturing 9 3 Other 5 5 Other Costs and Eliminations, net (17) (13 ) Total Operating Income $79   $ 69     Adjusted EBITDA by Segment: (A) Northern Resources $12 $ 14 Southern Resources 42 35 Real Estate 90 60 Manufacturing 13 7 Other 5 5 Other Costs and Eliminations, net (16) (13 ) Total $146   $ 108     (A) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities. Plum Creek Timber Company, IncSegment Data - Adjusted EBITDAReconciliation of Operating Income and Net CashProvided by Operating Activities(Unaudited) We define Adjusted EBITDA as earnings from continuing operations, excluding equity method earnings, and before interest, taxes, depreciation, depletion, amortization, and basis in lands sold. Adjusted EBITDA is not considered a measure of financial performance under U.S. generally accepted accounting principles (U.S. GAAP) and the items excluded from Adjusted EBITDA are significant components of our consolidated financial statements. We present Adjusted EBITDA as a supplemental performance measure because we believe it facilitates operating performance comparisons from period to period, and each business segment's contribution to that performance, by eliminating non-cash charges to earnings, which can vary significantly by business segment. These non-cash charges include timber depletion, depreciation of fixed assets and the basis in lands sold. We also use Adjusted EBITDA as a supplemental liquidity measure because we believe it is useful in measuring our ability to generate cash. In addition, we believe Adjusted EBITDA is commonly used by investors, lenders and rating agencies to assess our financial performance. A reconciliation of Adjusted EBITDA to net income and net cash from operating activities, the most directly comparable U.S. GAAP performance and liquidity measures, is provided in the following schedules:   Nine Months Ended September 30, 2012       Operating Income Depreciation, Depletion and Amortization Basis of Real Estate Sold Adjusted EBITDA By Segment Northern Resources $ 15 $ 20 $ — $ 35 Southern Resources 66 52 — 118 Real Estate 113 1 111 225 Manufacturing 22 11 — 33 Other 14 — — 14 Other Costs and Eliminations (47 ) 1 — (46 ) Other Unallocated Operating Income (Expense), net 1   —   —   1   Total $ 184   $ 85   $ 111   $ 380     Reconciliation to Net Income(1) Equity Earnings from Timberland Venture 42 Interest Expense (104 ) (Provision) Benefit for Income Taxes 2   Net Income $ 124     Reconciliation to Net Cash Provided By Operating Activities Net Cash Flows from Operations $ 237 Interest Expense 104 Amortization of Debt Costs (2 ) Provision / (Benefit) for Income Taxes (2 ) Distributions from Timberland Venture (56 ) Deferred Income Taxes 1 Gain on Sale of Properties and Other Assets — Deferred Revenue from Long-Term Gas Leases 6 Timber Deed Acquired 98 Pension Plan Contributions 10 Working Capital Changes (5 ) Other (11 ) Adjusted EBITDA $ 380   (1) Includes reconciling items not allocated to segments for financial reporting purposes.   Nine Months Ended September 30, 2011       Operating Income Depreciation, Depletion and Amortization Basis of Real Estate Sold Adjusted EBITDA By Segment Northern Resources $ 17 $ 19 $ — $ 36 Southern Resources 55 37 — 92 Real Estate 134 1 57 192 Manufacturing 12 10 — 22 Other 16 — — 16 Other Costs and Eliminations (43 ) 1 — (42 ) Other Unallocated Operating Income (Expense), net 1   —   —   1   Total $ 192   $ 68   $ 57   $ 317     Reconciliation to Net Income(1) Equity Earnings from Timberland Venture 44 Interest Expense (104 ) (Provision) Benefit for Income Taxes —   Net Income $ 132     Reconciliation to Net Cash Provided By Operating Activities Net Cash Flows from Operations $ 294 Interest Expense 104 Amortization of Debt Costs (2 ) Provision / (Benefit) for Income Taxes — Distributions from Timberland Venture (56 ) Deferred Income Taxes (2 ) Gain on Sale of Properties and Other Assets — Deferred Revenue from Long-Term Gas Leases (14 ) Timber Deed Acquired — Pension Plan Contributions 3 Working Capital Changes — Other (10 ) Adjusted EBITDA $ 317   (1) Includes reconciling items not allocated to segments for financial reporting purposes.   Quarter Ended September 30, 2012       Operating Income Depreciation, Depletion and Amortization Basis of Real Estate Sold Adjusted EBITDA By Segment Northern Resources $ 5 $ 7 $ — $ 12 Southern Resources 23 19 — 42 Real Estate 54 — 36 90 Manufacturing 9 4 — 13 Other 5 — — 5 Other Costs and Eliminations (17 ) 1 — (16 ) Other Unallocated Operating Income (Expense), net —   —   —   —   Total $ 79   $ 31   $ 36   $ 146     Reconciliation to Net Income(1) Equity Earnings from Timberland Venture 14 Interest Expense (35 ) (Provision) Benefit for Income Taxes 1   Net Income $ 59     Reconciliation to Net Cash Provided By Operating Activities Net Cash Flows from Operations $ 148 Interest Expense 35 Amortization of Debt Costs — Provision / (Benefit) for Income Taxes (1 ) Distributions from Timberland Venture (28 ) Deferred Income Taxes — Gain on Sale of Properties and Other Assets — Deferred Revenue from Long-Term Gas Leases 1 Timber Deed Acquired — Pension Plan Contributions 3 Working Capital Changes (7 ) Other (5 ) Adjusted EBITDA $ 146   (1) Includes reconciling items not allocated to segments for financial reporting purposes.   Quarter Ended September 30, 2011       Operating Income Depreciation, Depletion and Amortization Basis of Real Estate Sold Adjusted EBITDA By Segment Northern Resources $ 7 $ 7 $ — $ 14 Southern Resources 21 14 — 35 Real Estate 46 — 14 60 Manufacturing 3 4 — 7 Other 5 — — 5 Other Costs and Eliminations (13 ) — — (13 ) Other Unallocated Operating Income (Expense), net —   —   —   —   Total $ 69   $ 25   $ 14   $ 108     Reconciliation to Net Income(1) Equity Earnings from Timberland Venture 14 Interest Expense (34 ) (Provision) Benefit for Income Taxes 1   Net Income $ 50     Reconciliation to Net Cash Provided By Operating Activities Net Cash Flows from Operations $ 137 Interest Expense 34 Amortization of Debt Costs (1 ) Provision / (Benefit) for Income Taxes (1 ) Distributions from Timberland Venture (28 ) Deferred Income Taxes 2 Gain on Sale of Properties and Other Assets — Deferred Revenue from Long-Term Gas Leases (2 ) Timber Deed Acquired — Pension Plan Contributions 3 Working Capital Changes (31 ) Other (5 ) Adjusted EBITDA $ 108   (1) Includes reconciling items not allocated to segments for financial reporting purposes. Plum Creek Timber Company, Inc.Investors: John Hobbs 1-800-858-5347Media: Kathy Budinick 1-888-467-3751