Deltic Timber Corp. Reports Operating Results (10-Q)
Deltic Timber Corporation has a market cap of $841.1 million; its shares were traded at around $69.61 with a P/E ratio of 127.8 and P/S ratio of 6.9. The dividend yield of Deltic Timber Corporation stocks is 0.5%.
Highlight of Business Operations:The Company reported net income of $3.2 million for the third quarter of 2012, compared to $.8 million for the same period of 2011. The increase was due primarily to improved operating results for Deltics Mills segment, which reported operating income of $5.6 million, an improvement of $5.1 million over the third quarter of 2011. The Mills segment continued to benefit from an improved lumber market, which resulted in a $70 per thousand board feet (MBF) increase in the average lumber sales price along with an increase in lumber sales volume over last years third quarter. The Woodlands segment reported operating income of $4.7 million, a decrease of $1.4 million from the $6.1 million reported a year ago. This was primarily due to lower revenues from the harvest of pine sawtimber, decreased oil and gas royalty revenue, and reduced sales of non-strategic recreational-use hardwood bottomland acreage. The Real Estate segment had an operating loss of $.6 million compared to a loss of $1 million a year ago. The Corporate segments general and administrative expenses were $1.4 million higher in the current-year quarter than in the same period a year ago, which was mainly due to increased pension and post-retirement benefit obligations caused by lower interest rates and higher employee incentive plan expenses resulting from the improved financial results for 2012. Deltic owns a 50 percent interest in Del-Tin Fiber LLC (Del-Tin Fiber) and recorded equity in earnings of $.5 million in the current period, compared to breakeven results in the prior year period. The improvement was mainly due to a 10 percent higher average sales price for medium density fiberboard (MDF) sold.
In the third quarter of 2012, the pine sawtimber harvest was 175,515 tons, a decrease of 32,262 tons when compared to the 2011 third quarter harvest of 207,777 tons. This was a planned reduction in harvest for the third quarter after benefitting from favorable logging conditions in the first half of 2012 that had the Company slightly ahead of its 2012 sustainable-yield plan. The average sales price for pine sawtimber decreased slightly, to $21 per ton, from the 2011 third quarter per-ton price of $22. The third quarter of 2012s pine pulpwood harvest of 107,494 tons was a decrease of 21,680 tons from the third quarter of 2011. The average sales price for pine pulpwood was $8 per ton for both quarters. The Company sold 195 acres of non-strategic recreational-use hardwood bottomland at an average sales price of $2,042 per acre during the third quarter of 2012 compared to sales of 500 acres at an average price of $1,821 per acre for the same period of 2011. Hunting lease income was $.6 million for the third quarter of 2012 and $.5 million in the same period of 2011.
Operating income increased $2.9 million compared to the third quarter of 2011. The Woodlands segments operating income was $1.4 million less than the prior year primarily due to fewer tons of pine sawtimber harvested and a lower per-ton sales price, reduced oil and gas royalty revenues, and a decrease in the number of acres of non-strategic recreational-use hardwood bottomland sold. The Mills segments operating income improved $5.1 million in the current-year quarter due to a higher average sales price per MBF of lumber sold, and a lower per-unit manufacturing cost. The Real Estate segments results increased $.4 million, primarily due to increased sales of residential lots in 2012. Equity in earnings of Del-Tin Fiber increased by $.5 million and Corporate expense increased $1.4 million due to higher general and administrative expenses.
Net sales decreased $1.9 million in the third quarter of 2012 when compared to the 2011 third quarter. Sales of pine sawtimber decreased $.8 million due to a 16 percent, or 32,262 ton, decrease in the harvest volume of pine sawtimber in the current year quarter. In addition, the average sales price of $21 per ton was five percent less than in 2011s third quarter. Pine pulpwood sales revenue decreased $.2 million from the 2011 third quarter due to fewer tons harvested. Oil and gas royalty revenue decreased $.4 million in the third quarter for 2012 due to reduced natural gas production and lower prices for natural gas, which was partially offset by an increase in the number of producing wells. Sales of timberland decreased $.5 million mainly due to a decrease in the number of acres sold in the 2012 third quarter. Operating income was $4.7 million in the third quarter of 2012 compared to $6.1 million in the third quarter of 2011. This was due to the same factors that affected net sales, but was partially offset by reduced cost of fee timber harvested and cost of timberland sold.
Net sales in the third quarter of 2012 increased $5.3 million, or 24 percent, due to a higher average lumber sales price and an increased lumber sales volume. The average lumber sales price in the third quarter of 2012 increased 28 percent, or $70 per MBF, compared to the third quarter of 2011, and the lumber sales volume increased .4 million board feet. Operating income increased $5.1 million due to the same factors affecting net sales combined with lower raw material log cost and the benefit of improved operating efficiencies.
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