Deltic Timber Corporation (NYSE:DEL):
DELTIC TIMBER CORPORATION CONSOLIDATED FINANCIAL DATA
SUMMARY SECOND QUARTER 2017 2016 Net
sales $
55,353,000
56,705,000
Net income
2,716,000
4,220,000
Earnings per common share Basic .22 .35 Assuming dilution
.22 .35 Average common shares outstanding Basic
12,070,593
11,974,508
Assuming dilution
12,110,512
12,032,271
YEAR-TO-DATE
2017
2016 Net sales $ 108,568,000 107,329,000 Net income
3,797,000 4,615,000 Earnings per common share Basic .31 .38
Assuming dilution .31 .38 Average common shares outstanding
Basic 12,066,071 12,012,476 Assuming dilution 12,120,875 12,077,587
Deltic Timber Corporation (NYSE:DEL), a natural resources
company, today announced financial results for the second quarter
of 2017.
Second Quarter 2017
Highlights
- Net sales totaled $55.4 million,
versus $56.8 million for second quarter 2016.
- Net income was $2.7 million, or $.22
per diluted share, versus net income of $4.2 million, or $.35 per
diluted share, for the same period of 2016.
Financial results for the second quarter of 2017 benefited from
increased operating income in Woodlands and lower corporate general
and administrative expenses. However, overall the quarter was lower
than the previous year due to reduced operating rates in
Manufacturing resulting from ongoing capital improvement and
maintenance projects. In addition, we repaid $6 million of debt on
our revolving credit facility during the second quarter of
2017.
“Deltic continues to make progress to sharpen our focus on
relentless execution and increase shareholder value,” commented
John D. Enlow, Deltic’s President and Chief Executive Officer. “The
Woodlands segment continued to see favorable sawlog demand and
benefited from increased pulpwood and chip-n-saw harvests, despite
the impact of wet weather conditions in our operating areas during
the quarter. Pricing across pulpwood and chip-n-saw grades remained
relatively stable, with modest increases in sawlog pricing compared
to the same quarter last year. In Manufacturing, our average sales
price for lumber sold increased five percent with continued
favorable demand. As expected, the medium density fiberboard
(“MDF”) plant continued to be adversely impacted during the second
quarter 2017 due to worn press chains, which are scheduled to be
replaced in August of this year. MDF demand remained strong, with
sales mix affected by less thin board production because of current
press operational constraints. In our Real Estate segment, we had
strong demand for the residential lot offering in our Wildwood
development with 69 lots placed under contract, and all are
scheduled to close by end of third quarter.
"We expect to have an additional 104 lots available at
various price points in the Chenal Valley and Wildwood developments
during the second half of 2017. We also sold a 7.9-acre commercial
site during the quarter and remain encouraged by increased interest
in our commercial properties.
“We made significant progress during the quarter evaluating
Deltic’s assets, competitive position, and market risks and
opportunities and are now assessing a comprehensive range of
strategic alternatives. We remain committed to developing and
communicating in a timely fashion a strategic direction that is
laser focused on achieving strong operational performance, driving
shareholder value and delivering best-in-class returns.”
Woodlands Segment
Second Quarter 2017 Highlights
- Harvested 201,168 tons of pine
sawtimber, 1% below Q2 2016
- Pine sawtimber prices averaged $28/ton,
$1/ton above previous year quarter
- Harvested 122,720 tons of pine
pulpwood, 31% above Q2 2016
- Pine pulpwood prices averaged $8 ton,
no change from previous year quarter
- Sold 20 acres timberland for
$15,000/acre versus 9 acres at $4,400/acre Q2 2016
Woodlands Segment Financial Results
($ in millions)
Q2 2017
Q2 2016 Q1 2017 Segment net sales 10.2 9.5
10.9 Segment operating income $ 5.0 4.4 5.2
Woodlands segment operating income increased in second quarter
of 2017 compared to second quarter 2016 principally due to $1/ton
higher average sawtimber prices, sale of 20 acres of higher and
better use timberland, and higher pulpwood harvests, partially
offset by modestly lower sawtimber volumes. Wet weather constrained
sawtimber harvests in key operating areas during the quarter while
market demand remained stable. The increase in volume of pine
pulpwood sold was mainly due to the mix of timber on the tracts
harvested, and timing of prior-year timber deed sales.
Manufacturing Segment
Second Quarter 2017 Highlights
- Sold 66.9 million board feet of lumber,
4% below Q2 2016
- Lumber prices averaged $17/MBF higher
than Q2 2016
- Sold 26.1 million square feet of MDF,
6% below Q2 2016
- MDF prices averaged $5/MSF lower than
Q2 2016 due to product mix
Manufacturing Segment Financial Results
($ in millions)
Q2 2017
Q2 2016 Q1 2017 Segment net sales $ 45.5 47.3
47.0 Segment operating income $ 4.0 7.0 4.0
Manufacturing segment operating income decreased in second
quarter 2017 compared to second quarter 2016, principally as a
result of higher operating expenses in lumber and MDF due to
increased downtime, lower lumber and MDF sales volumes, and lower
MDF prices due to less thin board mix, partially offset by higher
average prices for lumber. The Ola sawmill large log line
modernization was completed in May resulting in five weeks at
reduced run rates, with optimization efforts affecting production
for the remainder of the quarter. The Waldo sawmill also incurred
one week of scheduled downtime for upgrades to its primary
breakdown system. The MDF plant’s performance was unfavorably
impacted in the second quarter 2017 compared to previous year
quarter due to higher maintenance costs and operating expenses
caused by unscheduled maintenance downtime to perform press belt
and chain repairs necessary to maintain production until its
planned shutdown in August for press chain and a belt
replacement.
Real Estate Segment
Second Quarter 2017 Highlights
- Sold 4 residential lots compared to 22
lots in Q2 2016
- Residential lots averaged $65,000/lot,
down 28% from Q2 2016 due to mix
- Sold 7.9 acre commercial site for $3.1
million
- Placed 69 residential lots under
contract averaging $62,000/lot, expected to close by end of Q3
Real Estate Segment Financial Results
($ in millions)
Q2 2017
Q2 2016 Q1 2017 Segment net sales $ 5.4 5.7
1.3 Segment operating income/(loss) $ 1.8 1.8 (.9 )
Real Estate segment operating income was unchanged in the second
quarter of 2017 compared to second quarter 2016 due to higher
commercial acreage revenues, partially offset by fewer residential
lot sales with lower average pricing. The decrease in the average
sales price per lot was due to the mix of lots sold during the
respective periods.
Corporate Segment General and
Administrative Expense, Interest Expense, and Income Tax
Expense
Corporate segment general and administrative expense was $4.3
million, compared to $4.7 million for the same period of 2016.
Interest expense in 2017’s second quarter was $2 million compared
to $2.2 million for the same period of 2016. The decrease in
interest expense was primarily due to lower average interest rates.
In addition, during the second quarter of 2017 Deltic repaid $6
million of debt. Income tax expense in the second quarter of 2017
was $1.7 million, compared to a $1.9 million in the prior-year’s
second quarter.
Capital Expenditures
Capital expenditures were $6.3 million in the second quarter
2017 compared to $10.3 million for the second quarter of 2016.
There were no timberland acquisition expenditures in the second
quarter of 2017 compared to timberland acquisition expenditures of
$.6 million during the same period of 2016.
Outlook
Regarding the outlook for the third quarter and full year of
2017, Deltic currently anticipates the pine sawtimber harvest to be
260,000 to 280,000 tons and 765,000 to 790,000 tons, respectively,
depending on weather conditions. Finished lumber sales volume is
estimated to be 75 to 85 million board feet for the third quarter
of 2017 and 290 to 315 million board feet for full-year 2017. MDF
sales volume for the third quarter and year of 2017 is forecast to
be 15 to 25 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. MDF operating costs in third
quarter of 2017 are expected to be impacted by scheduled
maintenance downtime for replacement of press chains and a belt.
Residential lot sales are projected at 60 to 70 lots and 130
to 150 lots for the third quarter and full year of 2017,
respectively. Commercial acreage within Chenal Valley continues to
receive increased interest, with negotiations currently surrounding
several tracts. However, 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, August 3, 2017,
at 10:00 a.m. Central Time to discuss second quarter 2017 earnings.
Interested parties may participate in the call by dialing
1-800-446-1671 and referencing participant passcode identification
number 45260771. 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 17, 2017, by
dialing 1-888-843-7419 and referencing replay passcode
identification number 45260771.
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/20170802006558/en/
Deltic Timber CorporationAnna Torma,
870-881-6463ir@deltic.com
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