Plum Creek Timber Company Inc.
) has once again reported impressive results for first-quarter
2013. The company's earnings per share reached 35 cents,
comfortably surpassing the Zacks Consensus Estimate of 32 cents
and well ahead of the year-ago quarter earnings of 18 cents. Net
income for the quarter nearly doubled to $56 million from $29
million reported in the prior-year quarter.
The better-than-expected results at this real estate investment
trust (REIT) were driven by increasing demand for wood products
stemming from a recovery in the residential construction market.
The company has registered a decent performance across its
Plum Creek is aiming to increase its non-real estate adjusted
EBITDA by $50 million this year. In this regard, it has already
reported growth of $12 million in the first quarter.
Total revenue inched up nearly 1% year over year to $340 million
and exceeded the Zacks Consensus Estimate of $335 million.
However, adjusted EBITDA (earnings before interest, tax,
depreciation and amortization) came in at $128 million, down 7.9%
year over year.
- This segment reported operating profit of $11 million during
the quarter, which was well ahead of $6 million recorded in the
year-ago period. Results reflect a rise in prices of sawlogs (15%
year over year), driven by increased production at West Coast
lumber mills to meet a recovering domestic demand. Pulpwood
prices also registered a rise (2% from the prior-year period)
attributable to solid hardwood pulpwood demand in the Northeast.
Overall, harvest volumes remain nearly unchanged year over year.
- This segment booked an operating profit of $24 million, which
surged 14.3% year over year, reflecting improved pricing for both
sawlog (up 6% year over year) and pulpwood (up 14%). However,
overall, harvest volumes fell around 2.3% year over year.
- This segment generated operating profit of $45 million, up
50.0% from the prior-year quarter. Results reflect the
disposition of 36,000 acres of large, non-strategic timberlands
in Texas and Okla. for around $1,475 per acre. Moreover, the
company vended about 5,700 acres of small, non-strategic
timberlands at an average price of around $1,230 per acre and
7,600 acres of HBU/recreation lands for approximately $2,015 per
- This segment posted an operating profit of $10 million in the
quarter, which more than doubled from $4 million earned in the
year-ago quarter. Results reflect increased prices of lumber,
plywood, and medium density fiberboard compared to the prior-year
Balance Sheet Position
Plum Creek ended the quarter with $296 million in cash and cash
equivalents compared with $356 million at the prior-quarter end.
However, total long-term debt remains unchanged at $1.8 billion
compared to the prior quarter-end.
Management at Plum Creek remains optimistic about an upbeat
performance in 2013. For full-year 2013, the company expects
earnings to range within $1.25 - $1.50 per share. For
second-quarter 2013, earnings are projected to be in the range of
20 cents - 25 cents per share.
Total harvest volume is expected to be mostly unchanged in 2013
(between 17.5 and 18.0 million tons of timber compared with 17.9
million ton in 2012). During the second quarter, though the
Southern harvest is projected to be similar to the first-quarter
level, Northern Resources segment's harvest levels are
anticipated to fall to the lowest levels in 2013 as a result of
the thawing spring weather conditions.
Full-year 2013 Real Estate segment sales is projected to range
from $250 million - $300 million, while second-quarter sales are
expected to come between $45 million - $50 million. Moreover,
increasing product demand and continued solid pricing levels for
its industrial plywood, MDF, and lumber products are expected to
lead to an improvement in the earnings of the Manufacturing
We are encouraged with Plum Creek's impressive results in the
reported quarter and believe that its diversified timber and land
base enable it to benefit from large economies of scale.
Its deal with Drax and
Vulcan Materials Company
) will auger well for its top line. In addition, the upsurge in
demographic trends driving housing markets and demand for real
estate properties across the country provides a strong backdrop
for the company to demonstrate its solid financial performance in
Plum Creek currently has a Zacks Rank #1 (Strong Buy). A number
of companies that are also performing well and are worth a look
Simon Property Group Inc.
Acadia Realty Trust
), both carrying a Zacks Rank #2 (Buy).
ACADIA RLTY TR (AKR): Free Stock Analysis
PLUM CREEK TMBR (PCL): Free Stock Analysis
SIMON PROPERTY (SPG): Free Stock Analysis
VULCAN MATLS CO (VMC): Free Stock Analysis
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