Deltic Timber Corporation of El Dorado has announced that net income for the second quarter of 2014 was $5.3 million, 42 cents a share.
This compares to results for the second quarter of 2013 of $5.5 million before consideration of non-recurring gains that resulted from the acquisition of the remaining 50 percent ownership interest in the Del-Tin Fiber medium density fiberboard plant in April 2013.
The figure also reflects an involuntary conversion of assets in the company’s Manufacturing segment.
Inclusive of these gains that totaled $5.7 million, net of income taxes, reported net income for the second quarter of 2013 was $11.2 million, 89 cents a share. Net cash provided by operating activities was $11.1 million for 2014’s second quarter, compared to $11.3 million in the second quarter of 2013.
For the first six months of 2014, net income was $10.2 million, 80 cents a share, compared to $18 million, inclusive of non-recurring gains of $5.7 million, or $1.42 a share for the first six months of 2013.
Net cash provided by operating activities was $14.8 million for the first half of 2014 compared to $20.3 million for the same period of 2013.
Commenting on the results, President and Chief Executive Officer, Ray C. Dillon, said, “As the harsh winter conditions that existed during the first quarter subsided, new home construction activity improved. With this, Deltic benefitted from increased sales volumes for both lumber and medium density fiberboard compared to the second quarter of 2013. During the second quarter, we also began to see prices for pine sawtimber increase, resulting in improved operating income produced from our core Woodlands segment.
“While these rising stumpage prices resulted in increased cost for the logs used as raw material by our sawmills, the company’s Manufacturing segment continued to generate solid financial results. Our Real Estate segment accomplished the sale of a 1.72-acre commercial site in Chenal Valley during the quarter for $500,900 per acre, and we are seeing interest in other commercial properties from additional potential buyers.
“During the quarter, we also accomplished an acquisition of 7,140 acres of timberland in the Ola Region located approximately 60 miles south of the Ola Mill. When combined with the 64,443-acres acquisition which is approximately 35 miles south of the Ola Mill that was accomplished in the first quarter, we have now acquired 71,583 acres in the Ola Region this year,” Dillon said.
The Woodlands segment reported operating income of $5.3 million for the second quarter of 2014, compared to $4.9 million in 2013’s second quarter. The pine sawtimber harvest in the second quarter of 2014 was 170,737 tons, which compares to the 159,897 tons harvested during the second quarter of 2013.
The average per-ton sales price for pine sawtimber in 2014’s second quarter was $25, a 14 percent increase from the $22 per ton received during the second quarter of 2013.
In the second quarter of 2014, Deltic harvested 123,707 tons of pine pulpwood, an increase of 53 percent when compared to 2013’s second quarter harvest of 80,920 tons. The average per-ton sales price received for pine pulpwood was $8 for the second quarters of both 2014 and 2013. The increased harvest volumes for pine sawtimber and pulpwood were due to timing and the mix of timber inventory growing on the tracts harvested.
The Manufacturing segment reported operating income of $8.7 million for the second quarter of 2014, which compares to $10.2 million in 2013’s second quarter. The decrease was mainly due to a combination of a higher cost for the logs used as raw material in Deltic’s sawmills in Waldo and Ola, and a higher per-unit cost for the medium density fiberboard (“MDF”) produced during the quarter due to maintenance-related downtime at Del-Tin Fiber in El Dorado.
In addition, the Manufacturing segment benefitted from a $.8 million gain on an involuntary conversion of assets in 2013’s second quarter.
The average lumber sales price was $393 per thousand board feet in the second quarter of 2014, a two percent decrease from the $399 per thousand board feet reported in the second quarter of 2013. During the second quarter of 2014, the company sold 65 million board feet, an 18 percent increase when compared to the second quarter of 2013’s sales of 55 million board feet.
The average sales price for MDF for 2014’s second quarter was $583 per thousand square feet, which compares to an average sales price of $582 per thousand square feet sold in the second quarter of 2013. For the second quarter of 2014, Deltic sold 31.1 million square feet of MDF, a 12 percent increase when compared to 2013’s second quarter MDF sales of 27.8 million square feet. During the second quarter, Deltic continued to manage the number of operating hours in its manufacturing facilities to match its production of both lumber and MDF with market demand. For the first six months of 2014, the pine sawtimber harvest was 380,285 tons compared to 340,966 tons during the same period of 2013, while the average pine sawtimber sales price of $24 per ton increased $1 per ton from the prior-year period. The pine pulpwood harvest for the first six months of 2014 was 232,716 tons, at an average price of $8 per ton, compared to 177,930 tons at an average price of $9 per ton in the first six months of 2013.
The average sales price for lumber decreased four percent, from $400 per thousand board feet in 2013 to $386 per thousand board feet in 2014. Lumber sales volume increased two percent, from 126.2 million board feet in 2013 to 129.3 million board feet in 2014. The average sales price for MDF increased from $577 per thousand square feet in 2013, to $580 per thousand square feet in 2014. MDF sales volume increased to 59.6 million square feet in 2014 from 56.9 million square feet in 2013
Concerning the outlook for the third quarter and year of 2014, Dillon said, “We currently anticipate the pine sawtimber harvest to be 160,000 to 170,000 and 575,000 to 625,000 tons, respectively. Finished lumber production and sales volume are estimated at 65 to 75 million board feet for the third quarter and 260 to 280 million board feet for the year. MDF sales volumes for the third quarter and year of 2014 are forecast to be 25 to 35 million square feet and 110 to 130 million square feet, respectively. Actual sales volumes for both finished lumber and MDF are dependent upon market conditions.”