Potlatch Corporation (NASDAQ:PCH) Q4 2014 Earnings Conference Call - Final Transcript
Jan 28, 2015 • 12:00 pm ET
Good morning. My name is Bonnie, and I will be your conference operator today. At this time I would like to welcome everyone to the Potlatch Fourth Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)
Thank you. I would now like to turn the call over to Mr. Jerry Richards, Vice President and Chief Financial Officer, for opening remarks. Sir, you may proceed.
Thank you, Bonnie and good morning. Welcome to Potlatch's investor call and webcast covering our fourth quarter 2014 earnings. With me in the room are Mike Covey, Chairman and CEO and Eric Cremers, President and COO. (Forward-Looking Cautionary Statements)
I will now turn the call over to Mike for some comments and then I will cover our fourth quarter results and outlook.
Thank you, Jerry. In 2014, we delivered solid financial results, raised our dividend, completed a strategic acquisition and preserved our investment grade debt rating by most measures, 2014 was a very good year and we expect to continue our strong performance in 2015. The company grew meaningfully with the acquisition of approximately 201,000 acres in Alabama and Mississippi. The addition of these high-quality timberlands significantly expands our geographic and market diversity in the south. Since our last earnings call, our Board raised the quarterly dividend by 7% to $1.50 per share on an annual basis. This is the second dividend increase in a little over a year for a total increase of 20% since December of 2013.
During 2014 we generated over a $130 million in cash from operations. We invested $24 million in capital expenditures and paid almost $58 million in dividends. As the housing recovery and the economic recovery continue to take shape, Potlatch will benefit from our high degree of leverage to the U.S. housing market. We are the ninth largest lumber producer in the U.S. with approximately 675 million board feet of lumber production and an additional 150 million square feet of plywood production.
Although the housing recovery will take time, we have enjoyed a period of relatively strong and stable lumber prices and strong log prices in the West. In 2015, we expect about 1.1 million total housing starts and anticipate the lumber prices and log prices will be modestly higher than 2014 with some bumps along the way due to weather, inventory levels, currency and other factors.
We plan to harvest 4.5 million tons in 2015, which is an 800,000 ton increase over our annual harvest volume in the last few years. This increase will be driven by our recent acquisition in Alabama and Mississippi. Jerry will provide more detail about the mix of our 2015 harvest plan in his remarks.
Our harvest strategy remains the same as what we have described since becoming a REIT in 2006. We manage our timberlands on a sustainable basis while maximizing net present value over the long term. Generally we attempt to