Potlatch Reports Third Quarter 2013 Results

SPOKANE, Wash., Oct. 22, 2013 (GLOBE NEWSWIRE) -- Potlatch Corporation (Nasdaq:PCH) today reported net income of $22.2 million, or $0.54 per diluted share, on revenues of $157.9 million for the quarter ended September 30, 2013. This compares to net income of $18.6 million, or $0.46 per diluted share, on revenues of $151.9 million in the third quarter of 2012. An after-tax charge of $0.7 million, or $0.02 per diluted share, was recorded in the third quarter related to environmental remediation at a Northern Idaho property. The corresponding second quarter charge was $1.2 million after taxes, or $0.03 per diluted share. Physical clean-up activities were completed at the site in the third quarter.

"We are very pleased with the strong third quarter operating results provided by each of our business segments," said Michael Covey, chairman and chief executive officer of Potlatch Corporation. "Our Resource segment's harvest volumes, revenues and earnings increased significantly in the third quarter, which is typically our seasonally strongest quarter of the year. While average lumber prices were lower than the second quarter, prices bottomed near the end of the second quarter and increased during the third quarter. Our lumber shipments have remained strong. Our Real Estate segment had another good quarter, completing 53 sales transactions. This is among the highest number of transactions that we have closed since the REIT conversion in 2006," concluded Mr. Covey.

Business Performance: Q3 2013 vs. Q2 2013

Resource

Resource's operating income was $25.4 million on revenues of $77.0 million in the third quarter, compared to operating income of $14.5 million on revenues of $45.3 million in the second quarter. The third quarter is typically our strongest seasonal quarter, particularly in Idaho, while the second quarter is typically our weakest seasonal quarter. Harvest volumes were 87% higher in the Northern region and 30% higher in the Southern region in the third quarter compared to the second quarter. Sawlog prices remain strong in Idaho and are flat in the South, excluding the effect of a slightly higher mix of hardwood sawlogs in the third quarter.

Wood Products

Wood Products' operating income was $11.3 million on revenues of $92.1 million in the third quarter, compared to operating income of $19.7 million on revenues of $95.0 million in the second quarter. Average lumber prices realized in the third quarter were 14 percent lower than the second quarter. After falling from a peak reached early in the second quarter, lumber prices started an upward trend in the third quarter and are higher than prices at the end of the second quarter. Lumber shipments were 14 percent higher in the third quarter.

Real Estate

Real Estate's operating income was $6.5 million on revenues of $8.9 million in the third quarter, compared to operating income of $4.1 million on revenues of $5.8 million in the second quarter. Activity continues to be strong. We closed a total of 53 real estate transactions in the third quarter compared to a record 65 transactions in the second quarter. The majority of the transactions were HBU and rural real estate sales in Minnesota.   

Outlook

"Each of our business segments will be influenced by normal seasonal factors in the fourth quarter as we close out a solid year. We expect our total 2013 harvest to be approximately 3.7 million tons. Log prices will likely decrease slightly in the fourth quarter due to seasonal factors, mix and timing. We expect performance of our Wood Products business to be comparable to the third quarter. Our Real Estate business remains strong as interest in rural recreational real estate continues to be solid, as witnessed by the number of sales transactions and acres sold in the last two quarters. As we look into 2014, we expect housing starts to continue to rise and anticipate firmer log and lumber prices ahead. We will provide an update on planned 2014 harvest levels during our fourth quarter earnings call in early 2014," concluded Mr. Covey.

Conference Call Information

A live conference call and webcast will be held today, October 22, 2013, at 9 a.m. Pacific Time (noon Eastern Time). Investors may access the webcast at www.potlatchcorp.com by clicking on the Investor Resources link or by conference call at 1-866-393-8403 for U.S./Canada and 1-706-679-7929 for international callers. Participants will be asked to provide conference I.D. number 68495721. Supplemental materials that will be discussed during the call are available on the website.   

A replay of the conference call will be available two hours following the call until October 29, 2013 by calling 1-800-585-8367 for U.S./Canada or 1-404-537-3406 for international callers. Callers must enter conference I.D. number 68495721 to access the replay.

About Potlatch

Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 million acres of timberland in Arkansas, Idaho and Minnesota. Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of its forest resources. The company also conducts a land sales and development business and operates wood products manufacturing facilities through its taxable REIT subsidiary. 

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended, including without limitation, statements about our expectations regarding future company performance, the direction of our business markets, the state of the domestic housing market, housing starts, business conditions in our Resource and Wood Products segments, our fourth quarter 2013 and total 2013 harvest levels, lumber and plywood pricing, sawlog and pulpwood pricing, performance of our Wood Products, Resource and Real Estate segments, the demand and interest in HBU and rural recreational real estate, and similar matters. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in timberland values; changes in timber harvest levels on the company's lands; changes in timber prices; changes in policy regarding governmental timber sales; changes in the United States and international economies; changes in the level of construction activity; changes in Chinese demand; changes in tariffs, quotas and trade agreements involving wood products; changes in demand for our products; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; changes in raw material, fuel and other costs; the ability to satisfy complex rules in order to remain qualified as a REIT; changes in tax laws that could reduce the benefits associated with REIT status; performance of agreements to purchase Idaho land; and other risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this press release and the company does not undertake to update any forward-looking statements.

CONTACT: (Investors)
         Eric Cremers
         509.835.1521
         
         (Media)
         Mark Benson
         509.835.1513