Potlatch Corporation (NASDAQ:PCH) Q4 2015 Earnings Conference Call - Final Transcript

Jan 26, 2016 • 12:00 pm ET


Potlatch Corporation (NASDAQ:PCH) Q4 2015 Earnings Conference Call - Final Transcript


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Good morning. My name is Angie and I will be your conference operator today. At this time, I would like to welcome everyone for the Potlatch Fourth Quarter 2015 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, please proceed.

Jerry Richards

Thank you, Angie, and good morning. Welcome to Potlatch's investor call and webcast, covering our fourth quarter 2015 earnings. With me in the room are Mike Covey, Chairman and Chief Executive Officer, and Eric Cremers, President and Chief Operating Officer.

This call will contain forward looking statements. Please review the warning statements in our press release on the presentation slides and in our filings with the SEC concerning the risks associated with these forward-looking statements. Also, please note that segment information, as well as a reconciliation of non-GAAP measures can be found on our website at www.potlatchcorp.com.

I will now turn the call over to Mike for some comments and then I will cover our fourth quarter results and outlook.

Mike Covey

Thanks, Jerry, and good morning. In most respects, we are glad to put 2015 behind us. Although our Resource and Real Estate segments performed well on 2015, the results from our Wood Product segment were extremely disappointing and a major reason our stock fell 28% last year. Lumber prices were hurt principally by a strengthening US dollar, which has gained 43% against the loading since January of 2013. To a lesser degree, weaker demand from China and a modest growth in the US housing market also put pressure on lumber prices.

As a result, our average lumber price realization dropped $56 per 1,000 board feet and EBITDA for the Wood Product segment dropped $56 million year-over-year. We are encouraged that our Wood Product segment returned deposit of EBITDA in the fourth quarter of 2015. Resource remains a steady contributor and a significant source of cash to support our dividend. The segment generated over $100 million of EBITDA for the second year a row in spite of the fact that saw log prices remained low in the south and rolled over slightly in the north in 2015. Real Estate also performed well in 2015, opportunistic sales of commercial property resulted in the segment generating more cash than planned.

I'll now touch based on progress on our strategic initiatives. We successfully integrated the 200,000 acres of timberland that we acquired in Alabama and Mississippi at the end of 2014. We entered into new customer relationships and hired log and haul contractors as part of establishing a business in two new states. The new properties met our performance goals for the year and were accretive to FAD per share. We also completed four large capital projects and spent a total of $18 million of our capital in our Wood Product segment