Deltic Timber Corporation of El Dorado recently announced that net income for the third quarter of 2014 was $6 million, 47 cents a share, compared to $5.9 million, 46 cents a share, in the third quarter of 2013.
The increase was due to improved financial results for Deltic’s Woodlands and Real Estate segments combined with the benefit of a lower effective income tax rate, partially offset by reduced operating income from the company’s Manufacturing segment as a result of maintenance-related expenses and downtime at its medium density fiberboard plant in El Dorado.
Net cash provided by operating activities was $10.3 million for the third quarter of 2014, compared to $13.7 million for 2013’s third quarter. For the first nine months of 2014, net income was $16.2 million, $1.28 a share. This compares to results for the first nine months of 2013 of $18.2 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 and 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 first nine months of 2013 was $23.9 million, $1.88 a share. Net cash provided by operating activities was $25.1 million for the nine-month period ended September 30, 2014 compared to $34 million for the first nine months of 2013.
“Deltic’s assets continued to produce solid financial results during the third quarter, as the company reported favorable net income to the third quarter of last year as well as the second quarter of 2014,” said President and Chief Executive Officer, Ray C. Dillon.
“Pine sawtimber stumpage prices are higher than a year ago, and we also capitalized on the opportunity to sell some non-strategically located timberland with higher and better use potential for an attractive per-acre price, benefitting Deltic’s Woodlands segment results for the period. While the increased stumpage prices resulted in increased cost for the logs used as raw material in our sawmills, they continued to generate strong mill margins,” Dillon said.
“At Del-Tin Fiber, we performed a scheduled maintenance outage during the quarter, as we continue to focus on improving productivity and plant uptime there. In our Real Estate segment, we had a successful lot offering in a new small-lot neighborhood that is very near to our Chenal Valley development, and we also continue to see increased interest in our commercial acreage there,” he said.
With the excess cash flows generated by Deltic’s businesses during the third quarter, the company repurchased 68,581 shares of the company’s common stock and repaid $5 million of the debt incurred to acquire timberland acreage earlier in 2014.”
The Woodlands segment’s operating income for the third quarter of 2014 was $5 million, an increase of $1.1 million when compared to operating income of $3.9 million for the same period of 2013.
During the current quarter, the company’s pine sawtimber harvest level was 153,930 tons, a four percent decrease from 2013’s third quarter harvest volume of 161,132 tons, due to timing. The average per-ton sales price for the pine sawtimber harvested during the third quarter of 2014 was $24 per ton, an increase of 14 percent when compared to 2013’s third quarter average sales price of $21 per ton.
Deltic’s pine pulpwood harvest volume during the third quarter of the current year was 87,755 tons compared to 96,519 tons in the third quarter of 2013. The average sales price for pine pulpwood during 2014’s third quarter was $8 per ton, $1 per ton higher when compared to the $7 per ton received during the same quarter a year ago. The decreased harvest volume of pine pulpwood was due to timing and the mix of timber inventory growing on the tracts harvested during the third quarter of 2014.
The Company’s Manufacturing segment reported operating income of $9.1 million during the third quarter of 2014 compared to $11.4 million during the same period of 2013. The decrease in operating income was primarily due to maintenance-related expenses and downtime at Del-Tin Fiber. During the third quarter, Del-Tin Fiber conducted its annual summer maintenance outage at its medium density fiberboard (“MDF”) plant, which impacted production volume, while incurring related maintenance expenses.
The average lumber sales price of $398 per thousand board feet was $17, or four percent, higher when compared to the average sales price of $381 per thousand board feet for lumber sold during the third quarter of 2013. The company sold 70.3 million board feet of lumber in 2014’s third quarter compared to 69.5 million board feet of lumber sold in the third quarter of 2013. The average sales price for MDF sold during the current quarter of 2014 of $583 per thousand square feet was $2 lower than the $585 per thousand square feet reported in the third quarter of 2013.
MDF sales volume in the third quarter of 2014 was 27.1 million square feet, a four percent decrease from the 28.2 million square feet sold during the third quarter of 2013.
The company will continue to monitor changes in both lumber and MDF markets and manage the operating hours at all of its facilities in order to match production with market demand.