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Deltic Timber Corporation
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NEWS RELEASE
 
210 EAST ELM STREET EL DORADO, AR 71730 NYSE: DEL

FOR RELEASE    IMMEDIATELY    
October 23, 2017            


Deltic Announces Preliminary Third Quarter 2017 Results

EL DORADO, AR - Deltic Timber Corporation (NYSE-DEL), a natural resources company, today announced financial results for the third quarter of 2017.

Third Quarter 2017 Highlights

•
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

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 ("MDF") plant to replace the press chains and a press belt. In addition, $2 million of debt was repaid on our revolving credit facility during the third quarter of 2017.


Woodlands Segment
Third Quarter 2017 Highlights
•
Sold 196,635 tons of pine sawtimber, 4% above Q3 2016
•
Pine sawtimber prices averaged $28/ton, unchanged from previous year quarter
•
Sold 153,665 tons of pine pulpwood, 23% above Q3 2016
•
Pine pulpwood prices averaged $7/ton, unchanged from previous year quarter






Woodlands Segment Financial Results

($ in millions)
 
Q3 2017
 
Q3 2016
 
Q2 2017
Segment net sales
 
$
11.3
 
 
9.0
 
 
10.2
 
Segment operating income
 
$
5.4
 
 
4.1
 
 
5.0
 

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.
 
Manufacturing Segment

Third Quarter 2017 Highlights
•
Sold 80.5 million board feet of lumber, 16% above Q3 2016
•
Lumber prices averaged $15/MBF lower than Q3 2016
•
Sold 23.9 million square feet of MDF, 8% below Q3 2016
•
MDF prices decreased slightly compared to Q3 2016
•
Replaced press chains and press belt in MDF plant, improving production efficiency

Manufacturing Segment Financial Results

($ in millions)
 
Q3 2017
 
Q3 2016
 
Q2 2017
Segment net sales
 
$
48.3
 
 
46.5
 
 
45.5
 
Segment operating income
 
$
3.7
 
 
5.7
 
 
4.0
 

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% uptime and producing in excess of 20% of higher margin thin board.









Real Estate Segment

Third Quarter 2017 Highlights

•
Sold 72 residential lots compared to 25 lots in Q3 2016
•
Residential lot sales prices averaged $63,000/lot, down 10% from Q3 2016, due to mix

Real Estate Segment Financial Results

($ in millions)
 
Q3 2017
 
Q3 2016
 
Q2 2017
Segment net sales
 
$
6.2
 
 
3.3

 
 
5.4
 
Segment operating income/(loss)
 
$
1.0
 
 
(.2
)
 
 
1.8
 

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 our 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, Interest Expense, and Income Tax Expense

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

Capital expenditures were $8 million in the third quarter 2017 compared to $14.8 million for the third quarter of 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.








Outlook

Regarding the outlook for the fourth quarter and full year of 2017, Deltic currently anticipates 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. Commercial acreage within Chenal Valley continues to receive increased interest, with negotiations currently surrounding several tracts. However, due to the volatile nature of commercial real estate transactions and significant number of factors involved, it is difficult to anticipate future closings.

Separately, Deltic announced earlier today that it has entered into a merger agreement with Potlatch Corporation. For more information regarding the agreement, please refer to the Form 8-K filed August 23, 2017, with the Securities and Exchange Commission.

Forward-Looking Statements

Statements included herein that are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” within the meaning of the federal securities laws. Such statements reflect the Company’s current expectations and involve certain risks and uncertainties. Actual results could differ materially from those included in such forward-looking statements. Factors that could cause such differences include, but are not limited to, the cyclical nature of the industry, changes in interest rates, credit availability, general economic conditions, adverse weather, cost and availability of materials used to manufacture the Company’s products, natural gas pricing and volumes produced, and the other risk factors described from time to time in the reports and disclosure documents filed by the Company with the Securities and Exchange Commission.










Conference Call

Deltic participated in a joint conference call with Potlatch earlier today, therefore the Company will not hold the third quarter 2017 earnings conference call originally planned for Thursday, November 2, 2017, at 10:00 a.m. Central Time.

Summary financial data and operating statistics for the third quarter of 2017 with comparisons to 2016 are contained in the attached tables.


About Deltic
Deltic Timber Corporation 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, Arkansas, the Company’s operations are located primarily in Arkansas and north Louisiana.

    
CONTACT:    
Anna Torma         
(870) 881-6463
ir@deltic.com
        

        
        
        
        
 




Deltic Timber Corporation
SEGMENT INFORMATION
(Preliminary and Unaudited)
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
 
 
September 30, 2017
 
September 30, 2016
 
 
 
 
Operating
 
 
 
Operating
 
 
 
 
Income/
 
 
 
Income/
 
 
Sales
 
(Loss)
 
Sales
 
(Loss)
 
 
 
 
 
 
 
 
 
Woodlands
$
11.3

 
5.4

 
9.0

 
4.1

Manufacturing
 
48.3

 
3.7

 
46.5

 
5.7

Real Estate
 
6.2

 
1.0

 
3.3

 
(0.2
)
Corporate
 
—

 
(4.1
)
 
—

 
(5.4
)
Eliminations
 
(4.2
)
 
.2

 
(5.3
)
 
.3

    Total net sales/operating income
$
61.6

 
6.2

 
53.5

 
4.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Nine Months Ended
 
 
September 30, 2017
 
September 30, 2016
 
 
 
 
Operating
 
 
 
Operating
 
 
 
 
Income/
 
 
 
Income/
 
 
Sales
 
(Loss)
 
Sales
 
(Loss)
 
 
 
 
 
 
 
 
 
Woodlands
$
32.4

 
15.6

 
29.0

 
13.8

Manufacturing
 
140.8

 
11.7

 
137.6

 
16.0

Real Estate
 
12.9

 
1.9

 
11.2

 
1.0

Corporate
 
—

 
(12.9
)
 
—

 
(14.8
)
Eliminations
 
(15.9
)
 
0.2

 
(16.9
)
 
—

    Total net sales/operating income
$
170.2

 
16.5

 
160.9

 
16.0






Deltic Timber Corporation
CONSOLIDATED STATEMENTS OF INCOME
(Preliminary and Unaudited)
(Thousands of dollars, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Net sales
$
61,656

 
53,541

 
170,224

 
160,870

 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
    Cost of sales
 
43,795

 
37,506

 
118,835

 
111,895

    Depreciation, amortization, and
 
 
 
 
 
 
 
 
      cost of fee timber harvested
 
6,412

 
5,911

 
19,244

 
17,402

    General and administrative expenses
 
5,188

 
5,562

 
15,658

 
15,566

        Total costs and expenses
 
55,395

 
48,979

 
153,737

 
144,863

 
 
 
 
 
 
 
 
 
        Operating income
 
6,261

 
4,562

 
16,487

 
16,007

 
 
 
 
 
 
 
 
 
Interest income
 
13

 
3

 
26

 
10

Interest and other debt expense, net
 
 
 
 
 
 
 
 
  of capitalized interest
 
(2,273
)
 
(2,256
)
 
(5,852
)
 
(7,133
)
Other income
 
85

 
88

 
309

 
220

 
 
 
 
 
 
 
 
 
Income before income taxes
 
4,086

 
2,397

 
10,970

 
9,104

 
 
 
 
 
 
 
 
 
Income tax expense
 
(1,584
)
 
(910
)
 
(4,671
)
 
(3,002
)
 
 
 
 
 
 
 
 
 
Net income
$
2,502

 
1,487

 
6,299

 
6,102

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share
 
 
 
 
 
 
 
 
    Basic
$
.21

 
.12

 
.52

 
.50

    Assuming dilution
$
.20

 
.12

 
.52

 
.50

 
 
 
 
 
 
 
 
 
Dividends per common share declared
$
—

 
.10

 
.30

 
.40

Dividends per common share paid
$
.10

 
.10

 
.30

 
.30

 
 
 
 
 
 
 
 
 
Weighted average common shares
 
 
 
 
 
 
 
 
    outstanding (thousands)
 
 
 
 
 
 
 
 
    Basic
 
12,071

 
11,991

 
12,068

 
12,005

    Assuming dilution
 
12,156

 
12,023

 
12,165

 
12,065






Deltic Timber Corporation
CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
(Thousands of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sept. 30,
 
Dec. 31,
 
 
 
 
 
 
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 Current assets
 
 
 
 
 
 
 
 
 
   Cash and cash equivalents
 
 
 
 
 
$
5,928

 
5,773

   Trade accounts receivable, net of allowance
 
 
 
 
12,976

 
8,667

   Inventories
 
 
 
 
 
 
11,014

 
12,228

   Prepaid expenses and other current assets
 
 
 
 
5,230

 
3,334

     Total current assets
 
 
 
 
 
 
35,148

 
30,002

 
 
 
 
 
 
 
 
 
 
 Investment in real estate held for development and sale
 
 
 
59,231

 
59,111

 Timber and timberlands - net
 
 
 
 
 
 
356,034

 
360,183

 Property, plant, and equipment - net
 
 
 
 
 
 
105,216

 
102,890

 Deferred charges and other assets
 
 
 
 
 
 
2,527

 
2,507

 
 
 
 
 
 
 
 
 
 
     Total assets
 
 
 
 
 
$
558,156

 
554,693

 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 Current liabilities
 
 
 
 
 
 
 
 
 
Trade accounts payable
 
 
 
 
 
$
8,166

 
8,583

Accrued taxes other than income taxes
 
 
 
 
 
 
3,505

 
2,052

Income tax payable
 
 
 
 
 
—

 
679

Deferred revenues and other accrued liabilities
 
 
 
 
 
 
8,801

 
8,508

     Total current liabilities
 
 
 
 
 
 
20,472

 
19,822

 
 
 
 
 
 
 
 
 
 
 Long-term debt
 
 
 
 
 
 
238,850

 
240,839

 Deferred tax liabilities - net
 
 
 
 
 
 
2,895

 
1,744

 Other noncurrent liabilities
 
 
 
 
 
 
40,541

 
41,095

 Commitments and contingencies
 
 
 
 
 
 
—

 
—

 Stockholders' equity
 
 
 
 
 
 
 
 
 
   Cummulative perferred stock
 
 
 
 
 
 
—

 
—

   Common stock, 12,813,879 shares issued
 
 
 
 
128

 
128

   Capital in excess of par value
 
 
 
 
 
 
90,631

 
89,090

   Retained earnings
 
 
 
 
 
 
208,988

 
206,344

   Treasury stock
 
 
 
 
 
 
(35,287
)
 
(34,816
)
   Accumulated other comprehensive loss
 
 
 
 
 
(9,062
)
 
(9,553
)
     Total stockholders' equity
 
 
 
 
 
 
255,398

 
251,193

 
 
 
 
 
 
 
 
 
 
     Total liabilities and stockholders' equity
 
 
 
 
$
558,156

 
554,693






Deltic Timber Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Preliminary and Unaudited)
(Thousands of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
 
September 30,
 
 
 
 
 
 
 
2017
 
2016
Operating activities
 
 
 
 
 
 
 
 
 
   Net income
 
 
 
 
 
$
6,299

 
6,102

   Adjustments to reconcile net income to
 
 
 
 
 
 
 
 
    net cash provided by operating activities:
 
 
 
 
 
 
 
      Depreciation, amortization, and cost of fee timber harvested
 
 
19,244

 
17,402

      Stock-based compensation expense
 
 
 
 
 
 
1,243

 
2,586

      Deferred income taxes
 
 
 
 
 
 
2,729

 
915

      Real estate development capital expenditures
 
 
 
 
(3,955
)
 
(4,204
)
      Real estate costs recovered upon sale
 
 
 
 
 
3,476

 
2,896

      Timberland costs recovered upon sale
 
 
 
 
 
18

 
6

      Net increase in liabilities for pension and other postretirement benefits
 
210

 
1,679

Net decrease in deferred compensation for stock-based liabilities
 
 
—

 
(551
)
      (Increase)/decrease in operating working capital other
 
 
 
 
 
 
 
        than cash and cash equivalents
 
 
 
 
 
 
(6,449
)
 
961

      Other - changes in assets and liabilities
 
 
 
 
463

 
497

         Net cash provided by operating activities
 
 
 
 
23,278

 
28,289

 
 
 
 
 
 
 
 
 
 
Investing activities
 
 
 
 
 
 
 
 
 
   Capital expenditures requiring cash, excluding real estate development
 
(17,395
)
 
(28,188
)
   Timberland acquisition expenditures requiring cash
 
 
 
 
(353
)
 
(1,207
)
   Net change in purchased stumpage inventory
 
 
 
 
630

 
(1,324
)
   Net change in funds held by trustee
 
 
 
 
 
 
—

 
1

   Other - net
 
 
 
 
 
 
406

 
308

         Net cash required by investing activities
 
 
 
 
(16,712
)
 
(30,410
)
 
 
 
 
 
 
 
 
 
 
Financing activities
 
 
 
 
 
 
 
 
 
   Proceeds from borrowings
 
 
 
 
 
 
6,000

 
26,000

   Repayments of notes payable and long-term debt
 
 
 
 
(8,000
)
 
(8,000
)
   Treasury stock purchases
 
 
 
 
 
 
(262
)
 
(15,174
)
   Common stock dividends paid
 
 
 
 
 
 
(3,656
)
 
(3,645
)
   Proceeds from stock option exercises
 
 
 
 
 
 
90

 
1,719

   Excess tax provisions from stock-based compensation expense
—

 
(156
)
   Other - net
 
 
 
 
 
 
(583
)
 
(1,023
)
         Net cash required by financing activities
 
 
 
 
(6,411
)
 
(279
)
 
 
 
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
 
 
 
 
155

 
(2,400
)
Cash and cash equivalents at January 1
 
 
 
 
 
 
5,773

 
5,429

 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at September 30
 
 
 
 
 
$
5,928

 
3,029






Deltic Timber Corporation
OTHER DATA
(Preliminary and Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 Three Months Ended
 
 
Nine Months Ended
 
 
September 30,
 
 
September 30,
(Thousands of dollars)
 
2017
 
2016
 
 
2017
 
2016
Capital expenditures
 
 
 
 
 
 
 
 
 
    Woodlands
$
368

 
647

 
 
2,596

 
2,861

    Manufacturing
 
5,913

 
11,908

 
 
15,161

 
26,563

    Real Estate (includes development
 
 
 
 
 
 
 
 
 
      expenditures)
 
1,670

 
2,180

 
 
4,174

 
4,268

    Corporate
 
—

 
—

 
 
162

 
65

        Total capital expenditures
$
7,951

 
14,735

 
 
22,093

 
33,757

 
 
 
 
 
 
 
 
 
 
Timberland acquisition expenditures
$
353

 
488

 
 
353

 
1,207

 
 
 
 
 
 
 
 
 
 
Woodlands
 
 
 
 
 
 
 
 
 
    Pine sawtimber harvested from
 
 
 
 
 
 
 
 
 
      fee lands - tons
 
196,635

 
188,643

 
 
608,859

 
598,024

    Pine sawtimber price - per ton
$
28

 
28

 
 
28

 
28

 
 
 
 
 
 
 
 
 
 
    Chip-n-saw pulpwood harvested from
 
 
 
 
 
 
 
 
 
       fee lands - tons
 
19,482

 
4,460

 
 
57,363

 
24,292

    Chip-n-saw pulpwood price - per ton
$
17

 
16

 
 
17

 
17

 
 
 
 
 
 
 
 
 
 
    Pine pulpwood harvested from
 
 
 
 
 
 
 
 
 
       fee lands - tons
 
153,665

 
124,662

 
 
369,406

 
368,228

    Pine pulpwood price - per ton
$
7

 
7

 
 
8

 
8

 
 
 
 
 
 
 
 
 
 
    Timberland sales - acres
 
0.08

 
—

 
 
27.96

 
8.84

    Timberland sales price - per acre
$
10,625

 
—

 
 
11,548

 
4,426

 
 
 
 
 
 
 
 
 
 
Manufacturing
 
 
 
 
 
 
 
 
 
    Finished lumber sales -
 
 
 
 
 
 
 
 
 
      thousands of board feet
 
80,455

 
69,636

 
 
219,894

 
211,106

    Finished lumber price -
 
 
 
 
 
 
 
 
 
      per thousand board feet
$
361

 
376

 
 
373

 
362

    Finished MDF sales - (3/4 inch basis)
 
 
 
 
 
 
 
 
 
      thousands of square feet
 
23,857

 
26,029

 
 
76,031

 
79,706

    Finished MDF price - (3/4 inch basis)
 
 
 
 
 
 
 
 
 
      per thousand square feet
$
560

 
561

 
 
556

 
556

 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
    Residential
 
 
 
 
 
 
 
 
 
        Lots sold
 
72

 
25

 
 
77

 
53

        Average sales price - per lot
$
63,000

 
70,000

 
 
63,000

 
80,000

 
 
 
 
 
 
 
 
 
 
    Commercial
 
 
 
 
 
 
 
 
 
        Acres sold
 
—

 
—

 
 
7.90

 
10.8

        Average sales price - per acre
$
—

 
—

 
 
392,000

 
152,000