Deltic announces preliminary third quarter 2017 results

Deltic Timber Corp., a natural resources company, announced that for the third quarter of 2017, net sales totaled $61.6 million, compared to $53.5 million for third quarter 2016. Net income was $2.5 million, or $.20 per diluted share, compared to net income of $1.5 million, or $.12 per diluted share, for the same period of 2016, according to a news release from Deltic.

The company also announced that it has entered into a merger agreement with Potlatch Corp. and Deltic participated in a joint conference call with Potlatch Monday. Therefore, the company will not hold the third quarter 2017 earnings conference call originally planned for 10 a.m. Central Time on Nov. 2.

Financial results for the third quarter of 2017 benefited from increased operating income in the Woodlands and Real Estate segments combined with lower corporate general and administrative expenses. The Manufacturing segment results were lower than third quarter 2016, due to planned maintenance at the Del-Tin Fiber medium density fiberboard plant to replace the press chains and a press belt. In addition, $2 million of debt was repaid on the company’s revolving credit facility during the third quarter of 2017.

In the Woodlands Segment in the third quarter the company sold 196,635 tons of pine sawtimber, 4 percent above third quarter 2016. Pine sawtimber prices averaged $28/ ton, unchanged from previous year quarter and the company sold 153,665 tons of pine pulpwood, 23 percent above third quarter 2016. Pine pulpwood prices averaged $7/ton, unchanged from previous year quarter.

Woodlands segment operating income increased in third quarter of 2017 compared to third quarter 2016 principally due to higher volumes of sawtimber and pulpwood sold, despite significant wet weather in July and August. The increase in volume sold was mainly due to timber deed sales. Net sales in the segment included $11.3 million for third quarter 2017, $9.0 million in third quarter 2016 and $10.2 million in second quarter 2017. Segment operating income included $5.4 million in third quarter 2017, $4.1 million in third quarter 2016 and $5.0 in second quarter 2017.

Third quarter 2017 highlights in the Manufacturing Segment include: sold 80.5 million board feet of lumber, 16 percent above Q3 2016; lumber prices averaged $15/ MBF lower than Q3 2016; sold 23.9 million square feet of MDF, 8 percent below Q3 2016; MDF prices decreased slightly compared to Q3 2016 and the company replaced press chains and press belt in MDF plant, improving production efficiency. Financial results for third quarter 2017 include segment net sales of $48.3 million in Q3 2017; $46.5 million in Q3 2016 and $45.5 million in Q2 2017. Segment operating income included $3.7 million in Q3 2017; $5.7 million in Q3 2016 and $4.0 million in Q2 2017.

Manufacturing segment operating income decreased in third quarter 2017 compared to third quarter 2016, principally as a result of higher operating expenses in lumber and MDF and lower average sales prices for lumber, partially offset by higher lumber sales volumes. The MDF plant’s operating results were adversely impacted in the third quarter 2017, compared to previous year quarter due to the planned downtime in August to replace press chains and a press belt. Since the outage, the plant has been running at over 90 percent up-time and producing in excess of 20 percent of higher margin thin board.

In the Real Estate Segment, third quarter highlights include: sold 72 residential lots compared to 25 lots in Q3 2016; residential lot sales prices averaged $63,000/lot, down 10 percent from Q3 2016, due to mix. Financial results in the segment include net sales of $6.2 million in Q3 2017; $3.3 million in Q3 2016 and $5.4 million in Q2 2017. Segment operating income (loss) included $1.0 million in Q3 2017; ($.2 million) Q3 2016 and $1.8 million in Q2 2017.

Real Estate segment operating income was higher in the third quarter of 2017 compared to third quarter 2016 due to increased residential lot sales, partially offset by lower average pricing per residential lot due to mix of lots sold. Lot sales reflect the closings of the company’s successful Wildwood smaller lot offerings. Due to favorable demand, additional lot offerings are planned in fourth quarter in Wildwood as well as in three neighborhoods in Chenal Valley.

Corporate segment general and administrative expense was $4.1 million, compared to $5.4 million for the same period of 2016. The decrease reflects lower salaries and incentive expense as well as the benefit of cost reduction initiatives. Income tax expense in the third quarter of 2017 was $1.6 million, compared to a $.9 million in the prior-year’s third quarter.

Capital expenditures were $8 million in the third quarter 2017 compared to $14.8 million for the third quarter 2016. There were timberland acquisition expenditures of $.4 million in the third quarter of 2017 compared to timberland acquisition expenditures of $.5 million during the same period of 2016.

Regarding the outlook for the fourth quarter and full year of 2017, Deltic officials currently anticipate the pine sawtimber harvest to be 275,000 to 300,000 tons and 885,000 to 910,000 tons, respectively, depending on weather conditions. Finished lumber sales volume is estimated to be 75 to 85 million board feet for the fourth quarter of 2017 and 295 to 305 million board feet for full-year 2017.

MDF sales volume for the fourth quarter and year of 2017 is forecast to be 20 to 30 million square feet and 95 to 105 million square feet, respectively. Actual sales volumes for both finished lumber and MDF are dependent upon market conditions. Residential lot sales are projected at 70 to 80 lots for the fourth quarter and 150 to 160 lots for full-year of 2017.

Deltic Timber Corp. 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, the company’s operations are located primarily in Arkansas and north Louisiana.