Plum Creek Reports Results for First Quarter 2014

  Plum Creek Reports Results for First Quarter 2014  Business Wire  SEATTLE -- April 28, 2014  Plum Creek Timber Company, Inc. (NYSE: PCL) today announced first quarter earnings of $30 million, or $0.17 per diluted share, on revenues of $317 million. Earnings for the first quarter of 2013 were $56 million, or $0.35 per diluted share, on revenues of $340 million.  Adjusted EBITDA, a non-GAAP measure of operating performance, for the first quarter of 2014 was $93 million and was $128 million for the same period of 2013. A reconciliation of adjusted EBITDA to net income and cash flow from operations is provided as an attachment to this release.  “We’re pleased with the results of the first quarter of 2014,” said Rick Holley, Chief Executive Officer. “Results from our timber resources segment continue to grow with higher log prices and additional harvest volumes from our recently acquired timberlands. Earnings were in line with our initial expectations despite difficult weather conditions that hampered both log deliveries in the South and production and shipments from our Manufacturing facilities. As expected, first quarter’s income was lower than last year. This was solely the result of a large non-strategic timberland sale that contributed 21 cents to earnings per share in the first quarter of 2013.  “The timberlands and other assets we acquired from MeadWestvaco in December 2013 have been integrated into our portfolio and contributed $4 million in operating income and $9 million to adjusted EBITDA during the first quarter. As harvests increase and real estate activity grows, we expect greater contributions from these assets during the remainder of the year. We expect the acquisition to be cash accretive on a per share basis in 2014.  “We are on track to achieve our goal of growing Plum Creek’s non-real estate adjusted EBITDA by more than $80 million this year,” said Rick Holley, chief executive officer.  Review of Quarterly Operations  The Northern Resources segment reported operating profit of $16 million during the first quarter, a $5 million improvement over the first quarter of 2013. Sawlog prices increased $9 per ton, more than 11 percent, compared to the first quarter of 2013 driven by strong demand from both export markets and domestic lumber mills. Pulpwood markets in the Northeast and the Lake States remained attractive with stable pricing over the past year. Total Northern segment harvest volume was similar to the first quarter 2013’s harvest level.  Operating profit in the Southern Resources segment was $31 million, up $7 million from the $24 million reported for the first quarter of 2013 due to increased harvest volumes and higher log prices. The recently acquired lands in the South drove a 16 percent increase in harvest volumes for both sawlogs and pulpwood. Average sawlog prices have increased more than $1 per ton, or approximately 6 percent over the past year. Pulpwood prices have also increased and are up approximately 7 percent compared to the first quarter of 2013.  The Real Estate segment reported first quarter revenue of $23 million and operating income of $12 million. First quarter 2013 revenue was $78 million and operating income was $45 million. The 2013 results included a $53 million sale of large non-strategic timberlands. During the first quarter of 2014 the company sold approximately 3,000 acres of small, non-strategic timberlands at an average price of approximately $1,325 per acre, 4,000 acres of HBU/recreation lands for approximately $2,200 per acre and about 3,400 acres of conservation lands at $1,685 per acre. The quarter also benefitted from the sale of a $4 million conservation easement placed on approximately 10,000 acres in New Hampshire.  The Manufacturing segment reported operating income of $9 million, slightly lower than the $10 million reported in the first quarter of 2013. Plywood sales volumes were 17 percent lower compared to the first quarter of 2013. Severe weather limited log deliveries, reduced production levels at our mills, and hampered shipments to our customers. Lumber sales volumes increased 24 percent versus the prior year due to the re-start of production at the company’s Evergreen sawmill in April 2013. Lumber and plywood prices were similar to the first quarter of 2013, while MDF prices increased 6 percent over the past year.  Operating income from the Energy and Natural Resource segment was $6 million, up $1 million over the first quarter of 2013. Earnings growth was the result of incremental construction material and coal royalties from 2013 acquisitions, which are performing as expected.  Outlook  The company expects to harvest between 20 and 21 million tons of timber this year. During the second quarter, harvest levels in the Northern Resources segment are expected to seasonally decline to their lowest level of the year as thawing spring weather restricts harvesting activities. Southern Resources harvest volumes will expand in the second quarter, following a weather constrained first quarter.  Full-year Real Estate segment sales are expected to be between $240 million and $280million, while second quarter Real Estate segment sales are expected to be between $60 million and $80 million.  Earnings for the Manufacturing segment are expected to grow during the remainder of the year with seasonal recovery in demand and continued strong prices for our industrial plywood, MDF and lumber products.  Reflecting all of these factors, the company expects 2014 income to be between $1.30 and $1.50 and second quarter income between $0.27 and $0.32 per share.  “The year is off to a good start despite the severe weather conditions during the first quarter. We expect the strengthening fundamentals in our core timber business will support strong sawlog prices in the West and to drive ongoing sawlog price recovery in the US South,” continued Holley. “Our sawmill customers in the South are making significant capital investments to expand their lumber production. We expect sawlog demand and prices will benefit from these investments as they come online. Additionally, pulpwood prices should grow as several new Southern pellet mills begin operations in the second half of the year.  “Plum Creek has a tremendous asset base and we are committed to achieving the best value for every tree and every acre we own through our comprehensive approach to timber and land management. We maintain our disciplined approach to capital allocation and continually evaluate the best use of the cash we generate with the goal of growing the per-share value of the company,” concluded Holley.  Earnings Conference Call and Supplemental Information  Plum Creek will hold a conference call today, Apr. 28, 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 website 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 27971678.  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 among the largest and most geographically diverse private landowners in the nation with approximately 6.7 million acres of timberlands in forest ecosystems across the northern and southeastern United States. We also operate wood products mills in the Northwest. As the company celebrates its 25^th anniversary as a publicly traded corporation, we continue to manage our working forests and lands using sustainable practices to benefit Plum Creek’s many stakeholders. Our talented employees work together to create shareholder value, serve as stewards of the environment, make wood products for everyday use, and build strong communities. Please visit www.plumcreek.com for the latest information about Plum Creek.  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)                Quarter Ended March 31,                                                        2014           2013 REVENUES: Timber                                                 $  192         $  170 Real Estate                                            23             78 Manufacturing                                          90             86 Energy and Natural Resources                           9              6 Other                                                  3             — Total Revenues                                         317           340                                                                        COSTS AND EXPENSES: Cost of Goods Sold: Timber                                                 138            124 Real Estate                                            10             30 Manufacturing                                          79             75 Energy and Natural Resources                           2              1 Other                                                  3             — Total Cost of Goods Sold                               232            230 Selling, General and Administrative                    29            32 Total Costs and Expenses                               261           262                                                                        Other Operating Income (Expense), net                  1             —                                                                        Operating Income                                       57             78                                                                        Equity Earnings from Timberland Venture                15             14 Equity Loss from Real Estate Development Ventures      (1       )     —                                                                        Interest Expense, net: Interest Expense (Debt Obligations to Unrelated        27             21 Parties) Interest Expense (Note Payable to Timberland           14            14 Venture) Total Interest Expense, net                            41             35                                                                        Income before Income Taxes                             30             57                                                                        Provision (Benefit) for Income Taxes                   —              1                                                                       Net Income                                             $  30         $  56                                                                        PER SHARE AMOUNTS:                                                                        Net Income per Share – Basic                           $  0.17        $  0.35 Net Income per Share – Diluted                         $  0.17        $  0.35                                                                        Weighted-Average Number of Shares Outstanding – Basic                                                177.0          162.3 – Diluted                                              177.3          162.8                                                                         PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)                                                                                                                       March 31,   December 31, (In Millions, Except Per Share Amounts)                                                       2014        2013 ASSETS Current Assets: Cash and Cash Equivalents                             $ 104       $  433 Accounts Receivable                                   44          29 Inventories                                           57          55 Deferred Tax Asset                                    7           9 Assets Held for Sale                                  77          92 Other Current Assets                                  13         15                                                               302         633                                                                    Timber and Timberlands, net                           4,179       4,180 Minerals and Mineral Rights, net                      296         298 Property, Plant and Equipment, net                    115         118 Equity Investment in Timberland Venture               198         211 Equity Investment in Real Estate Development          142         139 Ventures Deferred Tax Asset                                    19          17 Investment in Grantor Trusts (at Fair Value)          46          45 Other Assets                                          57         54         Total Assets                                          $ 5,354    $  5,695                                                                      LIABILITIES Current Liabilities: Current Portion of Long-Term Debt                     $ —         $  — Line of Credit                                        180         467 Accounts Payable                                      32          24 Interest Payable                                      30          22 Wages Payable                                         10          29 Taxes Payable                                         11          10 Deferred Revenue                                      18          26 Other Current Liabilities                             10         10                                                               291         588                                                                    Long-Term Debt                                        2,414       2,414 Note Payable to Timberland Venture                    783         783 Other Liabilities                                     78         78         Total Liabilities                                     3,566      3,863                                                                         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) – 177.1    2           2 at March 31, 2014 and 177.0 at December 31, 2013 Additional Paid-In Capital                            2,947       2,942 Retained Earnings (Accumulated Deficit)               (221    )   (173      ) Treasury Stock, at Cost, Common Shares – 27.0 at      (942    )   (940      ) March 31, 2014 and 27.0 at December 31, 2013 Accumulated Other Comprehensive Income (Loss)         2          1          Total Stockholders’ Equity                            1,788      1,832      Total Liabilities and Stockholders’ Equity            $ 5,354    $  5,695                                                                                 PLUM CREEK TIMBER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                                                                                                          Quarter Ended March 31, (In Millions)                                          2014          2013 CASH FLOWS FROM OPERATING ACTIVITIES Net Income                                             $  30         $  56 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation, Depletion and Amortization               32            26 Basis of Real Estate Sold                              6             25 Equity Earnings from Timberland Venture                (15     )     (14     ) Distributions from Timberland Venture                  28            27 Equity Loss from Real Estate Development Ventures      1             — Deferred Income Taxes                                  —             1 Deferred Revenue from Long-Term Gas Leases (Net of     (2      )     (3      ) Amortization) Timber Deed Acquired                                   —             (18     ) Working Capital Changes Impacting Cash Flow: Like-Kind Exchange Funds                               —             (53     ) Other Working Capital Changes                          (24     )     (52     ) Other                                                  1            6        Net Cash Provided By (Used In) Operating Activities    57           1                                                                              CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (Excluding Timberland             (16     )     (14     ) Acquisitions) Timberlands Acquired                                   —             (2      ) Contribution to Real Estate Development Ventures       (4      )     —        Net Cash Provided By (Used In) Investing Activities    (20     )     (16     )                                                                       CASH FLOWS FROM FINANCING ACTIVITIES Dividends                                              (78     )     (68     ) Borrowings on Line of Credit                           283           291 Repayments on Line of Credit                           (570    )     (117    ) Principal Payments and Retirement of Long-Term Debt    —             (174    ) Proceeds from Stock Option Exercises                   1             25 Acquisition of Treasury Stock                          (2      )     (2      ) Net Cash Provided By (Used In) Financing Activities    (366    )     (45     )                                                                       Increase (Decrease) In Cash and Cash Equivalents       (329    )     (60     ) Cash and Cash Equivalents: Beginning of Period                                    433           356                                                                      End of Period                                          $  104       $  296                                                                                  PLUM CREEK TIMBER COMPANY, INC. SEGMENT DATA (UNAUDITED)                                                                                           Quarter Ended March 31, (In Millions)                      2014                      2013 Revenues: Northern Resources                 $     77                  $     74 Southern Resources                 123                       104 Real Estate                        23                        78 Manufacturing                      90                        86 Energy and Natural Resources       9                         6 Other                              3                         — Eliminations                       (8            )           (8           ) Total Revenues                     $     317                $     340                                                                   Operating Income (Loss): ^(A) Northern Resources                 $     16                  $     11 Southern Resources                 31                        24 Real Estate                        12                        45 Manufacturing                      9                         10 Energy and Natural Resources       6                         5 Other                              (1            )           — Other Costs and                    (17           )           (17          ) Eliminations, net Total Operating Income             $     56                 $     78                                                                    Adjusted EBITDA by Segment: ^(B) Northern Resources                 $     24                  $     18 Southern Resources                 49                        38 Real Estate                        18                        70 Manufacturing                      12                        14 Energy and Natural Resources       8                         5 Other                              (1            )           — Other Costs and                    (17           )           (17          ) Eliminations, net Total                              $     93                 $     128                                                                                (A) For Segment reporting, Equity Loss from Real Estate Development Ventures of $1 million is included in Operating Income (Loss) for the Other Segment.  (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 - Adjusted EBITDA Reconciliation of Operating Income and Net Cash Provided by Operating Activities (Unaudited)  We define Adjusted EBITDA as earnings from continuing operations, excluding Equity Earnings from the Timberland Venture, and before interest expense (including any gains or losses from extinguishment of debt), taxes, depreciation,  depletion, amortization, and basis in real estate sold. In addition to including Equity Earnings from Real Estate Development Ventures in Adjusted EBITDA, we also include, as an add back to Operating Income for the Other Segment, our proportional share of depreciation, depletion, amortization, and basis in real estate sold from this equity method investment. 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 real estate 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:                                                                                       Quarter Ended March 31, 2014                                                                                                              Depreciation,       Basis of                      Operating                            Real        Adjusted                                       Depletion and                      Income                               Estate      EBITDA                                       Amortization        Sold By Segment ^(1) Northern             $   16           $     8             $  —        $  24 Resources Southern             31               18                  —           49 Resources Real Estate          12               —                   6           18 Manufacturing        9                3                   —           12 Energy and Natural              6                2                   —           8 Resources Other                (1       )       —                   —           (1     ) Other Costs and      1                —                   —           1 Eliminations Other Unallocated          (18      )       —                  —          (18    ) Operating Income (Expense), net Total                $   56          $     31           $  6       $  93                                                                          Reconciliation to Net Income ^(2) Equity Earnings from Timberland      15 Venture Interest Expense     (41      ) (Provision) Benefit for          —         Income Taxes Net Income           $   30                                                                           Reconciliation to Net Cash Provided By Operating Activities ^(1) Net Cash Flows                                                        $  57 from Operations Interest Expense                                                      41 Amortization of                                                       (1     ) Debt Costs Provision / (Benefit) for                                                         — Income Taxes Distributions from Timberland                                                       (28    ) Venture Equity Earnings, Depletion and Basis of Real Estate Sold from                                                      (1     ) Real Estate Development Ventures Deferred Income                                                       — Taxes Gain on Sale of Properties and                                                        — Other Assets Deferred Revenue from Long-Term                                                        2 Gas Leases Timber Deed                                                           — Acquired Pension Plan                                                          — Contributions Working Capital                                                       24 Changes Other                                                                 (1     ) Adjusted EBITDA                                                       $  93                                                                                 (1) Includes Equity Loss from Real Estate Development Ventures ($1 million) in Operating Income for the Other Segment, along with our proportional share of depreciation, depletion, amortization ($0), and basis in real estate sold ($0) from this equity method investment.  (2) Includes reconciling items not allocated to segments for financial reporting purposes.                            Quarter Ended March 31, 2013                                                                                                          Depreciation,                           Operating                   Basis of Real   Adjusted                                       Depletion and                           Income                      Estate Sold     EBITDA                                       Amortization By Segment Northern Resources        $  11       $    7          $    —          $  18 Southern Resources        24          14              —               38 Real Estate               45          —               25              70 Manufacturing             10          4               —               14 Energy and Natural        5           —               —               5 Resources Other                     —           —               —               — Other Costs and           (17    )    —               —               (17    ) Eliminations Other Unallocated Operating Income          —          —              —              —       (Expense), net Total                     $  78      $    25        $    25        $  128                                                                         Reconciliation to Net Income ^(1) Equity Earnings from      14 Timberland Venture Interest Expense          (35    ) (Provision) Benefit for   (1     ) Income Taxes Net Income                $  56                                                                          Reconciliation to Net Cash Provided By Operating Activities Net Cash Flows from                                                   $  1 Operations Interest Expense                                                      35 Amortization of Debt                                                  (1     ) Costs Provision / (Benefit)                                                 1 for Income Taxes Distributions from                                                    (27    ) Timberland Venture Equity Earnings, Depletion and Basis of Real Estate Sold from                                                 — Real Estate Development Ventures Deferred Income Taxes                                                 (1     ) Gain on Sale of Properties and Other                                                  — Assets Deferred Revenue from                                                 3 Long-Term Gas Leases Timber Deed Acquired                                                  18 Pension Plan                                                          — Contributions Working Capital Changes                                               105 Other                                                                 (6     ) Adjusted EBITDA                                                       $  128                                                                                (1) Includes reconciling items not allocated to segments for financial reporting purposes.  Contact:  Plum Creek Timber Company, Inc. Investors: John Hobbs, 1-800-858-5347 or Media: Kathy Budinick, 1-888-467-3751  
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