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POTLATCH CORPORATION - 1st QUARTER 2009 CONFERENCE CALL                 APRIL 28, 2009 I SPOKANE, WASHINGTON




 POTLATCH...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                          APRIL 28, 2009 I SPOKANE,...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                                   ...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                                   ...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                                   ...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                APRIL 28, 2009 I SP...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                          APRIL 28, 2009 I SPOKANE,...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                                   ...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                             APRIL 28, 2009 I SPOKA...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                       APRIL 28, 20...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                      APRIL 28, 2009 I SPOKANE, WAS...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                     APRIL 28, 2009 I SPOKANE, WASH...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                            APRIL 28, 2009 I SPOKANE, WASHINGTON


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POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                      APRIL 28, 200...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                                      APRIL 28, 200...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL                                               APRIL 28, 2009 I SPO...
POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL   APRIL 28, 2009 I SPOKANE, WASHINGTON




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Q1 2009 Earning Report of Potlatch Corp

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Transcript of "Q1 2009 Earning Report of Potlatch Corp"

  1. 1. POTLATCH CORPORATION - 1st QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON POTLATCH CORPORATION First Quarter 2009 Conference Call Supplemental Information Michael J. Covey Chairman, President and Chief Executive Officer Eric J. Cremers Vice President, Finance and Chief Financial Officer
  2. 2. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Forward-Looking Statements This presentation contains certain forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended, including without limitation statements about future company performance, direction of markets, facility shutdowns, log pricing, future harvest levels and their relation to log pricing trends, biomass opportunities, efforts to lower supply chain costs, demand for rural real estate, timberland values, efforts to minimize losses in our Wood Products segment, cash flows, prospects for each of our business segments, funds available for distribution (FAD), quarterly dividend levels, uses of proceeds from future land sales including debt repayment and funding of dividend payments, dividend policy, and liquidity. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in timberland values; changes in timber harvest levels on the company’s lands; changes in timber prices; changes in policy regarding governmental timber sales; changes in the United States and international economies; changes in the level of construction activity; changes in tariffs, quotas and trade agreements involving wood products; changes in demand for Potlatch’s products; changes in production and production capacity in the forest products industry; competitive pricing pressures for the company’s products; unanticipated manufacturing disruptions; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; changes in raw material and other costs; the ability to satisfy complex rules in order to remain qualified as a REIT; changes in tax laws that could reduce the benefits associated with REIT status; and other risks and uncertainties described from time to time in the company’s public filings with the Securities and Exchange Commission. The company does not undertake to update any forward-looking statements. 2
  3. 3. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON (Dollars in Thousands – Except Per – Share Amounts) First Quarter 2009 Summary (Unaudited) 1st Quarter 4th Quarter 1st Quarter 2009 2008 2008 Operating Income (Loss) Resource $ 10,846 $ 15,906 $ 17,195 Real Estate 41,512 298 16,651 Wood Products (11,183) (11,414) (6,450) Eliminations and adjustments 751 (908) 1,673 41,926 3,882 29,069 Corporate (10,819) (8,299) (12,994) Earnings (loss) from continuing operations before taxes 31,107 (4,417) 16,075 Income tax provision (benefit) 2,336 (10,256) (7,212) Earnings from continuing operations 28,771 5,839 23,287 plus: Interest expense, net of interest income 4,804 5,176 4,953 Income tax provision (benefit) 2,336 (10,256) (7,212) Depreciation, depletion & amortization (DD&A) 6,612 8,127 7,407 Basis of real estate sold 5,148 1,321 3,134 Earnings before interest expense, taxes, depreciation, depletion and amortization, and basis of real estate sold (EBITDDA) * $ 47,671 $ 10,207 $ 31,569 Funds from continuing operations $ 40,531 $ 15,287 $ 33,828 Discontinued operations: Gain (loss) on disposal of discontinued operations, net of tax $ - $ 26 $ (11,651) Loss from discontinued operations, net of tax (3,951) (10,214) (1,377) DD&A - 9,747 12,398 (3,951) (441) (630) Net earnings (loss) $ 24,820 $ (4,349) $ 10,259 Diluted earnings per common share from continuing operations $ 0.72 $ 0.15 $ 0.59 Funds from operations (FFO) * $ 36,580 $ 14,846 $ 33,198 Certain prior period amounts have been reclassified to conform to the current period presentation. 3 * Non-GAAP measure - See pages 14-16 for reconciliation to GAAP and definition.
  4. 4. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Northern Region - Volume and Pricing Pulpwood Sawlog Volume/Tons $/Ton Volume/Tons $/Ton 800,000 $100 250,000 $50 700,000 $90 200,000 $45 600,000 $80 500,000 150,000 $40 400,000 $70 100,000 $35 300,000 $60 200,000 50,000 $30 $50 100,000 0 $40 0 $25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2007 2008 2009 Volume Price Volume Price * Volumes include tonnage produced from company owned fee land, while pricing data includes revenue generated from both company owned fee land and non-fee stumpage purchased from third parties. 4
  5. 5. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Southern Region – Volume and Pricing Sawlog Pulpwood Volume/Tons $/Ton Volume/Tons $/Ton 250,000 $50 350,000 $60 300,000 200,000 $45 $55 250,000 150,000 $40 200,000 $50 150,000 100,000 $35 100,000 $45 50,000 $30 50,000 0 $25 0 $40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2009 2007 2008 2009 2008 Volume Price Volume Price * Volumes include tonnage produced from company owned fee land, while pricing data includes revenue generated from both company owned fee land and non-fee stumpage purchased from third parties. 5
  6. 6. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Potlatch Real Estate - Revenues Non-Strategic Timberland Rural Real Estate HBU/Development Conservation Easement $/Millions $50 $48.0 0.8 2.5 $45 $40 $35 $30 $25 $21.2 44.8 $20 5.2 $15.3 $15 1.8 $11.8 7.3 6.1 $8.6 $10 5.1 $6.5 1.1 0.8 $5 $3.7 $2.9 8.7 6.7 7.4 7.5 5.7 1.7 $0.3 1.5 $.04 2.0 1.4 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 6 Note: Q4 2008 Real Estate HBU revenues include a $250,000 building sale.
  7. 7. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Potlatch Real Estate – Acres Sold Non-Strategic Timberland Rural Real Estate HBU/Development Conservation Easement 30,009 30,000 29,018 432 2,026 1,852 890 3,957 24,474 25,000 890 4,222 20,000 15,000 27,551 23,209 10,000 19,362 7,473 6,876 284 2,265 5,176 5,000 327 327 7,189 2,001 1,757 4,611 4,849 493 460 59 1,508 1,297 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2007 7 Note: Q4 2008 ‘Acres Sold’ excludes building sale.
  8. 8. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Potlatch Real Estate - Sales Prices Per Acre Non-Strategic Timberland Rural Real Estate HBU/Development Conservation Easement $/Ac re $3,849 $3,804 4,000 3,500 $2,943 $2,796 3,000 $2,459 $2,251 $2,044 2,500 $1,910 $1,835 $1,624 $1,530 2,000 $1,450 $1,439 $1,214 $1,172 1,500 $1,038 $945 $687 1,000 $375 $383 500 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 8 Note: Q4 2008 ‘Sales Price per Acre’ excludes building sale.
  9. 9. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Lumber and Plywood/Particleboard - Sales Prices and Shipments Lumber Plywood / Particleboard Volum e (mbf) Price ($/unit) Volum e (msf) Price ($/unit) 300,000 500 50,000 400 350 250,000 400 40,000 300 200,000 250 300 30,000 150,000 200 200 20,000 150 100,000 100 100 10,000 50,000 50 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2008 2009 2007 Plywood Particleboard Volume Price Price Price 9
  10. 10. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Variance Analyses Increase (decrease) in Earnings from continuing operations before taxes (Dollars in Millions) (Unaudited) 1st Quarter 2009 1st Quarter 2009 vs. vs. 4th Quarter 2008 1st Quarter 2008 Resource ($5.1) ($6.4) Volume (2.3) (0.6) Price (8.8) (11.9) Costs and Other 6.0 6.1 Real Estate $41.2 $24.8 Wood products $0.2 ($4.7) Volume 0.6 1.5 Price (0.3) (4.8) Costs and other (0.1) (1.4) Eliminations $1.7 ($0.9) Corporate ($2.5) $2.2 Increase in earnings from continuing operations before taxes $35.5 $15.0 Certain prior period am ounts have been reclassified to conform to the current period presentation. 10
  11. 11. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Resource Volumes and Sales Prices/Unit (Unaudited) 1st Quarter 4th Quarter 1st Quarter 2009 2008 2008 Fee Volume (tons) Northern region Sawlog 412,659 517,641 494,815 Pulpwood 160,800 109,287 221,634 Stumpage 8,302 298 8,046 Total 581,761 627,226 724,495 Southern region Sawlog 212,561 300,460 167,819 Pulpwood 212,550 240,456 143,443 Stumpage - 4,927 5,059 Total 425,111 545,843 316,321 Sales Volume (tons) Northern region Sawlog 412,659 517,641 494,815 Pulpwood 160,800 109,287 221,634 Stumpage 8,302 298 8,046 Total 581,761 627,226 724,495 Southern region Sawlog 212,561 300,460 169,136 Pulpwood 212,550 240,456 143,443 Stumpage - 4,927 5,059 Total 425,111 545,843 317,638 Sales Prices/Unit ($ per ton) Northern region Sawlog $ 57 $ 72 $ 75 Pulpwood 37 36 36 Stumpage 12 12 23 Weighted Average $ 50 $ 65 $ 63 Southern region Sawlog $ 45 $ 48 $ 53 Pulpwood 32 34 37 Stumpage - 24 19 Weighted Average $ 39 $ 41 $ 45 11
  12. 12. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Wood Products Volumes and Sales Prices/Unit (Unaudited) 1st Quarter 4th Quarter 1st Quarter 2009 2008 2008 Shipment Information Lumber (m. bd. ft.) 116,030 117,245 131,895 Plywood (m. sq. ft., 3/8quot; basis) 18,096 21,175 41,921 Particleboard (m. sq. ft., 3/4quot; basis) 6,518 7,897 12,639 Sales Prices/Unit ($ per unit) Lumber (m. bd. ft.) 240 267 268 Plywood (m. sq. ft., 3/8quot; basis) 336 324 336 Particleboard (m. sq. ft., 3/4quot; basis) 376 360 350 12
  13. 13. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Tax Provision (Benefit) from Continuing Operations (Dollars in Thousands) (Unaudited) 1st Quarter 4th Quarter 1st Quarter 2009 2008 2008 Current year REIT, net $ 11,297 $ 313 $ 66 Current year TRS (8,961) (10,569) (7,278) Tax provision (benefit) from continuing operations 2,336 (10,256) (7,212) Discontinued operations: Clearwater Paper (10) (2,851) 1,227 Prescott Lumber (74) (404) (8,755) Other discontinued operations (2,519) (263) (1,504) Tax provision (benefit) from discontinued operations (2,603) (3,518) (9,032) Total tax provision (benefit) $ (267) $ (13,774) $ (16,244) 13
  14. 14. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Reconciliation of Non-GAAP Measures (Dollars in Thousands) (Unaudited) 1st Quarter 4th Quarter 1st Quarter 2009 2008 2008 Earnings before interest, taxes, depreciation, depletion and amortization (EBITDDA): GAAP net earnings (loss) $ 24,820 $ (4,349) $ 10,259 Interest expense, net of interest income 4,804 5,176 4,953 Income tax provision (benefit) 2,336 (10,256) (7,212) Depreciation, depletion and amortization 6,612 8,127 7,407 Basis of real estate sold 5,148 1,321 3,134 Loss from discontinued operations, net of tax 3,951 10,188 13,028 EBITDDA * $ 47,671 $ 10,207 $ 31,569 Certain prior period am ounts have been reclassified to conform to the current period presentation. * Non-GAAP measure - See page 16 for definition. 14
  15. 15. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Reconciliation of Non-GAAP Measures (Dollars in Thousands) (Unaudited) 1st Quarter 4th Quarter 1st Quarter 2009 2008 2008 Funds from Operations (FFO): GAAP net earnings (loss) $ 24,820 $ (4,349) $ 10,259 Depreciation, depletion and amortization from continuing operations 6,612 8,127 7,407 Basis of real estate sold 5,148 1,321 3,134 Loss from discontinued operations, net of tax 3,951 10,188 13,028 Funds from continuing operations $ 40,531 $ 15,287 $ 33,828 Loss from discontinued operations, net of tax (3,951) (10,188) (13,028) Depreciation, depletion and amortization from discontinued operations - 9,747 12,398 Funds from Operations * $ 36,580 $ 14,846 $ 33,198 Certain prior period am ounts have been reclassified to conform to the current period presentation. * Non-GAAP measure - See page 16 for definition. 15
  16. 16. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON Definitions of Non-GAAP Measures EBITDDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net earnings. EBITDDA, as we define it, is net earnings from continuing operations adjusted for net interest expense, provision (benefit) for income taxes, depreciation, depletion and amortization, and the basis of real estate sold. It should not be considered as an alternative to net earnings computed under GAAP. Funds from Operations (FFO) is a non-GAAP measure that is commonly used by REITs in the real estate industry. The most directly comparable GAAP measure is net earnings. FFO, as we define it, is presented as a supplemental financial measure. We do not use FFO as, nor should it be considered to be, an alternative to net earnings computed under GAAP as an indicator of our operating performance, or as an alternative to cash from operating activities computed under GAAP as an indicator of our ability to fund our cash needs. FFO, as we define it, may not be comparable with measures of similar titles reported by other companies. We define FFO as net earnings, plus depreciation, depletion and amortization and the basis of real estate sold from continuing operations minus the loss from discontinued operations, and plus depreciation, depletion and amortization from discontinued operations. Management believes that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for assets such as our manufacturing facilities and timberlands assumes that the value of such assets diminishes predictably over time. However, the values of our manufacturing facilities and timberlands have historically risen and fallen based on market conditions for the products we manufacture and for timber and timberlands. Management also considers the FFO measure in determining, among other things, quarterly and annual distribution rates to recommend to our board of directors, future levels of capital spending and debt repayment. We disclose this supplemental financial measure to enable investors to align their analysis and evaluation of our operating results along the same lines as management uses in planning and executing our business strategy. 16
  17. 17. POTLATCH CORPORATION - 1ST QUARTER 2009 CONFERENCE CALL APRIL 28, 2009 I SPOKANE, WASHINGTON 17

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