Plum Creek Timber Co. Inc.
), a real estate investment trust (REIT) owning and managing
timberlands in the U.S., reported earnings of $59 million or 36
cents per share in the third quarter of 2012, compared with $50
million or 31 cents in the year-earlier quarter.
PLUM CREEK TMBR (PCL): Free Stock Analysis
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The year-over-year increase in earnings was primarily due to
higher demand for wood products during the reported quarter,
resulting in improved performance by the timber and manufacturing
businesses. The third quarter 2012 earnings were in line with the
Zacks Consensus Estimate.
Total revenues for the quarter were $354 million compared with
$293 million in the year-ago quarter. Total quarterly revenues
exceeded the Zacks Consensus Estimate of $343 million. Adjusted
EBITDA (earnings before interest, tax, depreciation and
amortization) for the third quarter of 2012 was $146 million
compared to $108 million in the year-ago period.
By segment, the Northern Resources division reported an operating
profit of $5 million during the quarter compared with $7 million
in the previous year, primarily due to a dip in average sawlog
prices. Average pulpwood prices, however, remained relatively
flat at $42 per ton. Overall harvest volume decreased
approximately 40,000 tons (4%) year over year.
In the Southern Resources segment, operating profit was $23
million compared to $21 million in the year-ago quarter. The
year-over-year rise in profit was attributable to higher harvest
volumes due to strong demand of pulpwood, and higher sawlog and
pulpwood prices (approximately $1 per ton each). Pulpwood volumes
increased 318,000 tons (up 17%) from the prior-year period, while
that of sawlog surged by 244,000 tons (up 19%).
Operating Income in the Real Estate segment was $54 million
during the quarter on revenues of $96 million, compared with $46
million in the year-earlier quarter on revenues of $67 million.
The year-over-year spike in revenues and operating income was
mostly due to the sale of 100,000 acres of Wisconsin timberland
for $67 million. The Manufacturing segment reported an operating
profit of $9 million during the quarter, compared with $3 million
in the year-ago quarter.
During the reported quarter, Plum Creek generated $148 million of
operating cash flow compared with $137 million in the year-ago
period. At quarter-end, the company had cash and cash equivalents
of $320 million and total long-term debt of $1.6 billion.
Management remains overtly optimistic about an upbeat performance
in the remainder of the year as well as in 2013. Housing starts
are expected to be up 25% in 2012, and increase from 750,000
starts in the current year to 900,000 in 2013. For fourth
quarter, earnings are expected to be in the range of 25 cents to
We maintain our Outperform rating on Plum Creek. Plum Creek
currently has a Zacks #2 Rank that translates into a short-term
Buy rating. However, we have a Neutral recommendation and a Zacks
#1 Rank (short-term Strong Buy rating) for
), a competitor of Plum Creek.