Plum Creek Timber Co. Inc.
), a real estate investment trust (REIT) owning and managing
timberlands in the U.S., reported fiscal 2012 first quarter
earnings of $29 million or 18 cents per share, compared with $38
million or 23 cents in the year-earlier quarter. The year-over-year
decline in earnings was primarily due to lower operating income
from the Real Estate segment. The first quarter 2012 earnings
missed the Zacks Consensus Estimate by 5 cents.
Total revenues for the quarter were $337 million compared with
$275 million in the year-ago quarter. Total quarterly revenues
exceeded the Zacks Consensus Estimate of $330 million. Adjusted
EBITDA (earnings before interest, tax, depreciation, and
amortization) for the first quarter of 2012 was $139 million
compared to $100 million in the year-ago quarter.
The company witnessed significant fluctuations in revenue
generated across the geographical regions. With considerable
geographic diversity, Plum Creek was able to adjust its harvest
plans to capitalize on stronger markets and protect value in weaker
ones. Consequently, management was confident to meet its earnings
expectations for 2012.
By segment, the Northern Resources division reported an
operating profit of $6 million during the quarter compared with $7
million in the previous year, primarily due to a decline of sawlog
prices by $2 per ton - a 3% decrease on a year-over-year basis.
However, pulpwood prices were approximately 6% higher ($2 per ton)
in the reported quarter compared to first quarter of 2011 due to
strong hardwood pulpwood markets in the Northeast. Harvest volumes
were 124,000 tons during the quarter (up 13% on a year-over-year
In the Southern Resources segment, operating profit was $21
million compared to $19 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. Total harvest volumes
increased approximately 400,000 tons (up 14%) from the prior-year
period. Pulpwood prices during the reported quarter were similar to
the year-earlier quarter, although average sawlog prices were
approximately 2% lower on a year-over-year basis.
Operating Income in the Real Estate segment was $30 million
during the quarter on revenues of $100 million, compared with $38
million in the year-earlier quarter on revenues of $62 million. The
Manufacturing segment reported an operating profit of $4 million
during the quarter, which was similar to the year-ago quarter.
Plum Creek continued to sell large tracts of rural lands
including non-strategic timberlands to raise cash. During the
quarter, the company sold 4,400 acres of small, non-strategic
timberlands for $1,100 per acre and 70,000 acres of large,
non-strategic timberland at an average price of approximately
$1,200 per acre. The company also sold 4,000 acres of recreation
lands for approximately $2,150 per acre and 1,150 acres of
conservation lands at $1,560 per acre.
During the reported quarter, the company completed the purchase
of approximately 4.7 million tons of mature southern yellow pine
timber in the Gulf South region for $103 million. The acquisition
is expected to be accretive to earnings from the second year of the
transaction. During the quarter, Plum Creek generated $6 million of
operating cash flow compared with $76 million in the year-ago
period. At quarter-end, the company had cash and cash equivalents
of $273 million and total long-term debt of $1.5 billion.
Plum Creek obtained a new $700 million five-year revolving
credit facility during the quarter, replacing an existing $600
million revolving credit agreement. The new $700 million facility
is scheduled to mature in April 2017 and bears a lower interest
burden than the erstwhile revolving credit facility. The company
also obtained a new $450 million seven-year term loan agreement
that is scheduled to mature in April 2019.
Management remains overtly optimistic about a strong performance
in the current fiscal year. For full year 2012, Plum Creek expects
earnings in the range of $1.00 to $1.25 per share, while second
quarter earnings are expected to be in the range of 15 cents to 20
We maintain our 'Neutral' rating on Plum Creek. Plum Creek
currently has a Zacks #2 Rank that translates into a short-term
'Buy' rating. We also have a 'Neutral' recommendation and a Zacks
#3 Rank (short-term 'Hold' rating) for
), a competitor of Plum Creek.
PLUM CREEK TMBR (
): Free Stock Analysis Report
WEYERHAEUSER CO (
): Free Stock Analysis Report
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