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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