Deltic Timber Corp. (DEL, Financial) filed Quarterly Report for the period ended 2009-06-30.
Deltic Timber Corporation is a natural resources company engaged primarily in the growing and harvesting of timber. In addition to their timber operations Deltic is engaged in the manufacture and marketing of lumber and in real estate development projects. Deltic Timber Corp. has a market cap of $555.3 million; its shares were traded at around $44.72 with a P/E ratio of 127.8 and P/S ratio of 4.3. The dividend yield of Deltic Timber Corp. stocks is 0.7%. Deltic Timber Corp. had an annual average earning growth of 1.6% over the past 10 years. GuruFocus rated Deltic Timber Corp. the business predictability rank of 2-star.
For the second quarter of 2009, the pine sawtimber harvest level increased 23,415 tons to 166,606 tons compared to the second quarter of 2008s harvest level of 143,191 tons. The increase is due largely to favorable weather conditions versus the first quarter of 2009 and to timing of the harvest. Since Deltic manages its timberlands on a sustainable-yield basis the Company plans to keep 2009s total pine sawtimber harvest volume near the estimated growth volume level of approximately 575,000 tons. The average sales price for pine sawtimber was $30 per ton in the second quarter of 2009, a 14 percent decrease from the second quarter of 2008. The decrease is a result of lower demand due to curtailments and closures of sawmills in Deltics operating region. The Company harvested 77,194 tons of pine pulpwood during the second quarter of 2009, a decrease of 12,424 tons from the same period in 2008. The average sales price was $10 per ton, a 33 percent decrease from $15 per ton for the second quarter of 2008. Lower pulpwood prices and volume are due to decreased demand for fiber by area papermills. The Company sold approximately 724 acres of non-strategic hardwood bottomland at an average sales price of $2,100 per acre, which provided a net margin of $1.2 million during the second quarter of 2009. This compares to sales of approximately 971 acres at an average sales price of $2,300 per acre, yielding a net margin of $1.8 million for the same period of 2008. The Woodlands segment reported hunting lease income of $.5 million in the second quarter of 2009 and 2008. Because of the low historical cost basis for its timber and timberlands, the Woodlands segment is generating positive margins on current sales activities and management does not expect this to change in the future.
requests within the currently defined boundary of the Fayetteville Shale Play, although future leasing will probably not be significant within the boundary currently defined by the Arkansas Oil and Gas Commission. The ultimate benefit to Deltic from these mineral leases remains speculative and unknown to the Company and is contingent on the successful extraction and sale of natural gas from this area. Deltics gas royalties from the defined Fayetteville Shale Play area were approximately $92,000 per month during the second quarter of 2009 compared to $119,000 per month during the second quarter of 2008, reflecting a 65 percent decrease in average gas prices, though volumes were 148 percent greater. Total oil and gas royalty income, including the gas royalty income from the Fayetteville Shale Play, was $.4 million and $.3 million for the second quarter of 2009 and 2008, respectively, due to increased production in other areas. Oil and gas lease rental income was $.5 million for the second quarter of 2009 and $.4 million in 2008.
Even though the Mills segments second quarter of 2009 showed a quarter-over-quarter improvement from the first quarter of 2009, it operates in a weaker market than in 2008. As a result, the second quarter of 2009 had a loss of $1.9 million versus a loss of $.6 million in the same period of 2008. The average sales price was $240 per MBF in the second quarter of 2009, a 17 percent decrease from the average sales price of $289 per MBF for the same quarter of 2008. Lumber sales were 66.1 million board feet in the current period of 2009, a decrease when compared to 70.2 million board feet for the same period of 2008, as the Company reduced operating hours to balance production with demand. In addition, the Company expects the historical volatility of lumber prices to continue in the future as the forest products industry tries to balance production with demand. At current production levels, over half of the logs supplied to Company sawmills will come from its strategically located fee timberlands.
Operating income decreased $2 million. The Woodlands segment decreased $1 million mainly because of a lower pine pulpwood harvest volume and average per-ton sales price and reduced margins from sales of recreational-use hardwood bottomland. The Mills segments operating income decreased $1.3 million due to a lower per-unit average sales price and reduced production volume, partially offset by lower log cost and operating efficiencies. The $.3 million benefit from intercompany eliminations is due to the same reasons affecting net income.
Operating income decreased $2.9 million. The Woodlands segment decreased $3.7 million in-part because of a lower per-ton average price for pine sawtimber, lower harvest volume and per-ton sales price for pine pulpwood, and lower margin from sales of recreational-use hardwood bottomland, partially offset by increases in oil and gas lease rental and royalty income, income from well-site damages, and reduced depletion expense. The Mills segment declined $.5 million mainly because of a lower average unit sales price, which was partially offset by lower log costs and improved operating efficiencies. Real Estate operating loss increased $.5 million primarily as a result of fewer residential lot sales and lower operating income from Chenal Country Club. Corporate operating expense decreased $.7 million due to lower general and administrative expenses. The eliminations benefit of $1.1 million is due to the same reason affecting net income.
Read the The complete ReportDEL is in the portfolios of John Keeley of Keeley Fund Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Deltic Timber Corporation is a natural resources company engaged primarily in the growing and harvesting of timber. In addition to their timber operations Deltic is engaged in the manufacture and marketing of lumber and in real estate development projects. Deltic Timber Corp. has a market cap of $555.3 million; its shares were traded at around $44.72 with a P/E ratio of 127.8 and P/S ratio of 4.3. The dividend yield of Deltic Timber Corp. stocks is 0.7%. Deltic Timber Corp. had an annual average earning growth of 1.6% over the past 10 years. GuruFocus rated Deltic Timber Corp. the business predictability rank of 2-star.
Highlight of Business Operations:
The Company recorded net income of $1 million for the second quarter of 2009, compared to income of $2.5 million for the same period of 2008. The Woodlands segment maintained its core operation position, providing operating income of $6.4 million during the second quarter of 2009. Deltics Real Estate and Mills segments both reported operating losses in the second quarter of 2009. The Real Estate segment recorded a loss of $.4 million in the current-year quarter compared to a loss of $.3 million for the corresponding period of 2008. The higher loss was due to fewer lot sales and lower operating income from Chenal Country Club in the 2009 period. The Companys Mills segment recorded an operating loss of $1.9 million in the second quarter of 2009, which compares to a loss of $.6 million in the second quarter of 2008, a result of lower average lumber prices and sales volume due to weak demand. Deltic owns a 50 percent interest in Del-Tin Fiber L.L.C. and recorded related equity income of $.8 million for the second quarter of 2009, an increase from $.7 million for the same quarter of 2008.For the second quarter of 2009, the pine sawtimber harvest level increased 23,415 tons to 166,606 tons compared to the second quarter of 2008s harvest level of 143,191 tons. The increase is due largely to favorable weather conditions versus the first quarter of 2009 and to timing of the harvest. Since Deltic manages its timberlands on a sustainable-yield basis the Company plans to keep 2009s total pine sawtimber harvest volume near the estimated growth volume level of approximately 575,000 tons. The average sales price for pine sawtimber was $30 per ton in the second quarter of 2009, a 14 percent decrease from the second quarter of 2008. The decrease is a result of lower demand due to curtailments and closures of sawmills in Deltics operating region. The Company harvested 77,194 tons of pine pulpwood during the second quarter of 2009, a decrease of 12,424 tons from the same period in 2008. The average sales price was $10 per ton, a 33 percent decrease from $15 per ton for the second quarter of 2008. Lower pulpwood prices and volume are due to decreased demand for fiber by area papermills. The Company sold approximately 724 acres of non-strategic hardwood bottomland at an average sales price of $2,100 per acre, which provided a net margin of $1.2 million during the second quarter of 2009. This compares to sales of approximately 971 acres at an average sales price of $2,300 per acre, yielding a net margin of $1.8 million for the same period of 2008. The Woodlands segment reported hunting lease income of $.5 million in the second quarter of 2009 and 2008. Because of the low historical cost basis for its timber and timberlands, the Woodlands segment is generating positive margins on current sales activities and management does not expect this to change in the future.
requests within the currently defined boundary of the Fayetteville Shale Play, although future leasing will probably not be significant within the boundary currently defined by the Arkansas Oil and Gas Commission. The ultimate benefit to Deltic from these mineral leases remains speculative and unknown to the Company and is contingent on the successful extraction and sale of natural gas from this area. Deltics gas royalties from the defined Fayetteville Shale Play area were approximately $92,000 per month during the second quarter of 2009 compared to $119,000 per month during the second quarter of 2008, reflecting a 65 percent decrease in average gas prices, though volumes were 148 percent greater. Total oil and gas royalty income, including the gas royalty income from the Fayetteville Shale Play, was $.4 million and $.3 million for the second quarter of 2009 and 2008, respectively, due to increased production in other areas. Oil and gas lease rental income was $.5 million for the second quarter of 2009 and $.4 million in 2008.
Even though the Mills segments second quarter of 2009 showed a quarter-over-quarter improvement from the first quarter of 2009, it operates in a weaker market than in 2008. As a result, the second quarter of 2009 had a loss of $1.9 million versus a loss of $.6 million in the same period of 2008. The average sales price was $240 per MBF in the second quarter of 2009, a 17 percent decrease from the average sales price of $289 per MBF for the same quarter of 2008. Lumber sales were 66.1 million board feet in the current period of 2009, a decrease when compared to 70.2 million board feet for the same period of 2008, as the Company reduced operating hours to balance production with demand. In addition, the Company expects the historical volatility of lumber prices to continue in the future as the forest products industry tries to balance production with demand. At current production levels, over half of the logs supplied to Company sawmills will come from its strategically located fee timberlands.
Operating income decreased $2 million. The Woodlands segment decreased $1 million mainly because of a lower pine pulpwood harvest volume and average per-ton sales price and reduced margins from sales of recreational-use hardwood bottomland. The Mills segments operating income decreased $1.3 million due to a lower per-unit average sales price and reduced production volume, partially offset by lower log cost and operating efficiencies. The $.3 million benefit from intercompany eliminations is due to the same reasons affecting net income.
Operating income decreased $2.9 million. The Woodlands segment decreased $3.7 million in-part because of a lower per-ton average price for pine sawtimber, lower harvest volume and per-ton sales price for pine pulpwood, and lower margin from sales of recreational-use hardwood bottomland, partially offset by increases in oil and gas lease rental and royalty income, income from well-site damages, and reduced depletion expense. The Mills segment declined $.5 million mainly because of a lower average unit sales price, which was partially offset by lower log costs and improved operating efficiencies. Real Estate operating loss increased $.5 million primarily as a result of fewer residential lot sales and lower operating income from Chenal Country Club. Corporate operating expense decreased $.7 million due to lower general and administrative expenses. The eliminations benefit of $1.1 million is due to the same reason affecting net income.
Read the The complete ReportDEL is in the portfolios of John Keeley of Keeley Fund Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
