Plum Creek Reports Results for Fourth Quarter and Full Year 2014
Earnings for the fourth quarter of 2013 were
Earnings for the full year of 2014 were
Adjusted EBITDA, a non-GAAP measure of operating performance, for 2014 grew to
“A strong finish to 2014 capped off another good year for Plum Creek,” said
“During 2014, we sold
Summary of 2014 Results
The company reported
The company’s timber resource segments generated operating income of
In the Real Estate segment, the company reported revenue of
The company’s Manufacturing segment produced another year of strong earnings and cash flow. After adjusting for the impact of the MDF fire, the segment reported
Review of Quarterly Operations
The Northern Resources segment reported operating profit of
The Southern Resources segment reported fourth quarter operating profit of
Real Estate segment sales for the fourth quarter of 2014 of
The company also completed two large dispositions during the quarter, selling 15,185 acres of timberlands in
The balance of the quarter’s Real Estate segment results included the sale of 3,185 acres of recreation lands for
The Manufacturing segment reported operating profit of
Outlook
The company expects U.S. residential construction activity to grow at a measured pace during 2015, resulting in approximately 1.1 million housing starts.
“Strategic portfolio management and disciplined capital allocation will be key components of our strategy for shareholder value creation in 2015,” said Holley. “Operationally, we will continue to closely monitor our timber markets and will respond appropriately when local market dynamics support stronger pricing. Although timber prices improved in each of our operating regions during 2014, we continue to believe the improvements in the U.S. South represent only the early stages of recovery in the region. Pricing is expected to strengthen as housing starts move above the 1.2 million starts level.”
Harvest volumes and harvest mix are expected to be similar to 2014 as the company plans to harvest between 19 and 20 million tons of timber in the upcoming year.
During 2015, the company expects Real Estate segment sales to be between
First quarter Real Estate segment sales are expected to be between $100 and
Lumber, specialty plywood and MDF markets are expected to remain strong in 2015. Excluding any impacts from the 2014 MDF fire, Manufacturing segment earnings are expected to be similar to 2014’s results.
Third-party interest expense in 2015 is expected to be approximately $106 million, similar to 2014’s expense.
“We expect 2015 will be much like 2014 for Plum Creek,” continued Holley. “The company’s harvest plan for the coming year is largely unchanged from last year. Cash flow from operations should also be comparable to 2014. However, our 2015 earnings may be lower as land basis is expected to be about 5 percent higher in 2015. This increase in non-cash expense reduces our earnings per share by about
Reflecting all of these factors, the company expects 2015 net income to be between
"Our diversified and productive timberland portfolio has the company uniquely positioned to benefit as the housing and timber markets continue to recover. Disciplined capital allocation and focused asset management continue to be key elements of our value creation strategy,” concluded Holley.
Earnings Conference Call and Supplemental Information
Plum Creek will hold a conference call today,
Investors without Internet access should dial 1-800-572-9852 at least 10 minutes prior to the start of the call, referencing Plum Creek’s earnings conference call. Those wishing to access the call from outside
Supplemental financial information for Plum Creek operations, including statistical data and reconciliations to non-GAAP measures is available in the Investors section of Plum Creek’s website at www.plumcreek.com.
Plum Creek is among the largest and most geographically diverse private landowners in the nation with approximately 6.6 million acres of timberlands in 19 states. We also operate wood products mills in the Northwest. We manage our working forests using sustainable practices to benefit Plum Creek’s many stakeholders. Our employees work together to create shareholder value, serve as stewards of the environment, make wood products for everyday use, and build strong communities. Please visit www.plumcreek.com for the latest information about Plum Creek.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seek," "approximately," "intends," "plans," "estimates," or "anticipates," or the negative of those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the cyclical nature of the forest products industry, our ability to harvest our timber, our ability to execute our acquisition strategy, the market for and our ability to sell or exchange non-strategic timberlands and timberland properties that have higher and better uses, and various regulatory constraints. These and other risks, uncertainties and assumptions are detailed from time to time in our filings with the
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CONSOLIDATED STATEMENTS OF INCOME |
||||||||
(UNAUDITED) |
||||||||
(In Millions, Except Per Share Amounts) | Year Ended |
|||||||
2014 | 2013 | |||||||
REVENUES: | ||||||||
Timber | $ | 767 | $ | 669 | ||||
Real Estate | 289 | 286 | ||||||
Manufacturing | 368 | 362 | ||||||
Energy and Natural Resources | 34 | 23 | ||||||
Other | 18 | — | ||||||
Total Revenues | 1,476 | </td> | 1,340 | |||||
COSTS AND EXPENSES: | ||||||||
Cost of Goods Sold: | ||||||||
Timber | 555 | 495 | ||||||
Real Estate | 151 | 110 | ||||||
Manufacturing | 322 | 310 | ||||||
Energy and Natural Resources | 10 | 5 | ||||||
Other | 16 | — | ||||||
Total Cost of Goods Sold | 1,054 | 920 | ||||||
Selling, General and Administrative | 115 | 123 | ||||||
Total Costs and Expenses | 1,169 | 1,043 | ||||||
Other Operating Income (Expense), net | 15 | (2 | ) | |||||
Operating Income | 322 | 295 | ||||||
Earnings from Unconsolidated Entities | 66 | 63 | ||||||
Interest Expense, net: | ||||||||
Interest Expense (Debt Obligations to Unrelated Parties) | 108 | 83 | ||||||
Interest Expense (Note Payable to Timberland Venture) | 58 | 58 | ||||||
Total Interest Expense, net | 166 | 141 | ||||||
Loss on Extinguishment of Debt | — | (4 | ) | |||||
Income before Income Taxes | 222 | 213 | ||||||
Provision (Benefit) for Income Taxes | 8 | (1 | ) | |||||
Net Income | $ | 214 | $ | 214 | ||||
PER SHARE AMOUNTS: | ||||||||
Net Income per Share – Basic | $ | 1.21 | $ | 1.30 | ||||
Net Income per Share – Diluted | $ | 1.21 | $ | 1.30 | ||||
Weighted-Average Number of Shares Outstanding | ||||||||
– Basic | 176.7 | 164.6 | ||||||
– Diluted | 177.0 | 165.0 | ||||||
SUPPLEMENTAL INCOME STATEMENT INFORMATION: | ||||||||
Equity Earnings from Timberland Venture | $ | 63 | $ | 63 | ||||
Equity Earnings from |
3 | — | ||||||
Earnings from Unconsolidated Entities | $ | 66 | $ | 63 | ||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(UNAUDITED) | ||||||||
(In Millions, Except Per Share Amounts) | Quarter Ended |
|||||||
2014 | 2013 | |||||||
REVENUES: | ||||||||
Timber | $ | 204 | $ | 182 | ||||
Real Estate | 120 | 59 | ||||||
Manufacturing | 93 | 83 | ||||||
Energy and Natural Resources | 8 | 7 | ||||||
Other | 3 | — | ||||||
Total Revenues | 428 | 331 | ||||||
COSTS AND EXPENSES: | ||||||||
Cost of Goods Sold: | ||||||||
Timber | 148 | 131 | ||||||
Real Estate | 76 | 27 | ||||||
Manufacturing | 81 | 73 | ||||||
Energy and Natural Resources | 2 | 2 | ||||||
Other | 2 | — | ||||||
Total Cost of Goods Sold | 309 | 233 | ||||||
Selling, General and Administrative | 33 | 34 | ||||||
Total Costs and Expenses | 342 | 267 | ||||||
Other Operating Income (Expense), net | 6 | — | ||||||
Operating Income | 92 | 64 | ||||||
Earnings from Unconsolidated Entities | 22 | 16 | ||||||
Interest Expense, net: | ||||||||
Interest Expense (Debt Obligations to Unrelated Parties) | 27 | 22 | ||||||
Interest Expense (Note Payable to Timberland Venture) | 15 | 15 | ||||||
Total Interest Expense, net | 42 | 37 | ||||||
Loss on Extinguishment of Debt | — | (4 | ) | |||||
Income before Income Taxes | 72 | 39 | ||||||
Provision (Benefit) for Income Taxes | 4 | (1 | ) | |||||
Net Income | $ | 68 | $ | 40 | ||||
PER SHARE AMOUNTS: | ||||||||
Net Income per Share – Basic | $ | 0.39 | $ | 0.24 | ||||
Net Income per Share – Diluted | $ | <b>0.39 | $ | 0.24 | ||||
Weighted-Average Number of Shares Outstanding | ||||||||
– Basic | 175.9 | 170.0 | ||||||
– Diluted | 176.2 | 170.4 | ||||||
SUPPLEMENTAL INCOME STATEMENT INFORMATION: | ||||||||
Equity Earnings from Timberland Venture | $ | 15 | $ | 16 | ||||
Equity Earnings from |
7 | — | ||||||
Earnings from Unconsolidated Entities | $ | 22 | $ | 16 | ||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(UNAUDITED) | ||||||||
(In Millions, Except Per Share Amounts) |
2014 |
2013 |
||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and Cash Equivalents | $ | 92 | $ | 433 | ||||
Accounts Receivable | 38 | 29 | ||||||
Inventories | 61 | 55 | ||||||
Deferred Tax Asset | 6 | 9 | ||||||
Assets Held for Sale | 98 | 92 | ||||||
Other Current Assets | 15 | 15 | ||||||
310 | 633 | |||||||
Timber and Timberlands, net | 4,009 | 4,180 | ||||||
Minerals and Mineral Rights, net | 289 | 298 | ||||||
Property, Plant and Equipment, net | 120 | 118 | ||||||
217 | 211 | |||||||
126 | 139 | |||||||
Deferred Tax Asset | 23 | 17 | ||||||
Investment in Grantor Trusts (at Fair Value) | 48 | 45 | ||||||
Other Assets | 45 | 54 | ||||||
Total Assets | $ | 5,187 | $ | 5,695 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Current Portion of Long-Term Debt | $ | 439 | $ | — | ||||
Line of Credit | 95 | 467 | ||||||
Accounts Payable | 27 | 24 | ||||||
Interest Payable | 22 | 22 | ||||||
Wages Payable | 31 | 29 | ||||||
Taxes Payable | 10 | 10 | ||||||
Deferred Revenue | 23 | 26 | ||||||
Other Current Liabilities | 10 | 10 | ||||||
657 | 588 | |||||||
Long-Term Debt | 1,976 | 2,414 | ||||||
Note Payable to Timberland Venture | 783 | 783 | ||||||
Other Liabilities | 100 | 78 | ||||||
Total Liabilities | 3,516 | 3,863 | ||||||
Commitments and Contingencies | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred Stock, |
— | — | ||||||
Common Stock, |
2 | 2 | ||||||
2,955 | 2,942 | |||||||
Retained Earnings (Accumulated Deficit) | (271 | ) | (173 | ) | ||||
Treasury Stock, at Cost, Common Shares – 28.3 at |
(992 | ) | (940 | ) | ||||
Accumulated Other Comprehensive Income (Loss) | (23 | ) | 1 | |||||
Total Stockholders’ Equity | 1,671 | 1,832 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 5,187 | $ | 5,695 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(UNAUDITED) | ||||||||
Year Ended |
||||||||
(In Millions) | 2014 | 2013 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Income | $ | 214 | $ | 214 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: | ||||||||
Depreciation, Depletion and Amortization (Includes |
138 | 119 | ||||||
Basis of Real Estate Sold | 129 | 91 | ||||||
Earnings from Unconsolidated Entities | (66 | ) | (63 | ) | ||||
Distributions from Timberland Venture | 57 | 56 | ||||||
Distributions from |
2 | — | ||||||
Deferred Income Taxes | 4 | (3 | ) | |||||
Loss on Extinguishment of Debt | — | 4 | ||||||
Timber Deed Acquired | — | (18 | ) | |||||
Pension Plan Contributions | (9 | ) | — | |||||
Working Capital Changes | (11 | ) | (17 | ) | ||||
Other | (1 | ) | 21 | |||||
Net Cash Provided By (Used In) Operating Activities | 457 | 404 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital Expenditures, Excluding Timberland Acquisitions (Includes |
(89 | ) | (71 | ) | ||||
Timberlands Acquired | — | (81 | ) | |||||
Minerals and Mineral Rights Acquired | — | (156 | ) | |||||
Contributions to |
(9 | ) | — | |||||
Distributions from |
23 | — | ||||||
Insurance Recoveries (Property Damage) | 10 | — | ||||||
Payment for Acquisition of |
— | (221 | ) | |||||
Purchases of |
(1 | ) | — | |||||
Other | 1 | — | ||||||
Net Cash Provided By (Used In) Investing Activities | (65 | ) | (529 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Dividends | (312 | ) | (290 | ) | ||||
Borrowings on Line of Credit | 1,307 | 1,771 | ||||||
Repayments on Line of Credit | (1,679 | ) | (1,408 | ) | ||||
Debt Issuance Costs | — | (1 | ) | |||||
Principal Payments and Retirement of Long-Term Debt | — | (513 | ) | |||||
Proceeds from Stock Option Exercises | 3 | 37 | ||||||
Acquisition of Treasury Stock | (52 | ) | (2 | ) | ||||
Proceeds from Issuance of Common Stock, net | — | 607 | ||||||
Other | — | 1 | ||||||
Net Cash Provided By (Used In) Financing Activities | (733 | ) | 202 | |||||
Increase (Decrease) In Cash and Cash Equivalents | (341 | ) | 77 | |||||
Cash and Cash Equivalents: | ||||||||
Beginning of Period | 433 | 356 | ||||||
End of Period | $ | 92 | $ | 433 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES NOT REFLECTED ABOVE: | ||||||||
Issuance of Note Payable to MWV as Consideration for Timberland Assets
Acquired |
$ | — | $ | 860 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(UNAUDITED) | ||||||||
Quarter Ended |
||||||||
(In Millions) | 2014 | 2013 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Income | $ | 68 | $ | 40 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: | ||||||||
Depreciation, Depletion and Amortization | 37 | 33 | ||||||
Basis of Real Estate Sold | 69 | 22 | ||||||
Earnings from Unconsolidated Entities | (22 | ) | (16 | ) | ||||
Distributions from |
2 | — | ||||||
Deferred Income Taxes | 2 | (2 | ) | |||||
Loss on Extinguishment of Debt | — | 4 | ||||||
Pension Plan Contributions | (9 | ) | — | |||||
Working Capital Changes | (15 | ) | (5 | ) | ||||
Other | 3 | 8 | ||||||
Net Cash Provided By (Used In) Operating Activities | 135 | 84 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital Expenditures, Excluding Timberland Acquisitions (Includes |
(24 | ) | (20 | ) | ||||
Timberlands Acquired | — | (1 | ) | |||||
Distributions from |
18 | — | ||||||
Insurance Recoveries (Property Damage) | 7 | — | ||||||
Payment for Acquisition of |
— | (221 | ) | |||||
Purchases of |
(1 | ) | — | |||||
Other | 1 | — | ||||||
Net Cash Provided By (Used In) Investing Activities | 1 | (242 | ) | |||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Dividends | (78 | ) | (78 | ) | ||||
Borrowings on Line of Credit | 322 | 520 | ||||||
Repayments on Line of Credit | (379 | ) | (560 | ) | ||||
Debt Issuance Costs | — | (1 | ) | |||||
Principal Payments and Retirement of Long-Term Debt | — | (339 | ) | |||||
Proceeds from Stock Option Exercises | 1 | 2 | ||||||
Proceeds from Issuance of Common Stock | — | 607 | ||||||
Other | — | 1 | ||||||
Net Cash Provided By (Used In) Financing Activities | (134 | ) | 152 | |||||
Increase (Decrease) In Cash and Cash Equivalents | 2 | (6 | ) | |||||
Cash and Cash Equivalents: | ||||||||
Beginning of Period | 90 | 439 | ||||||
End of Period | $ | 92 | $ | 433 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES NOT REFLECTED ABOVE: | ||||||||
Issuance of Note Payable to MWV as Consideration for Timberland Assets
Acquired |
$ | — | $ | 860 | ||||
SEGMENT DATA | ||||||||
(UNAUDITED) | ||||||||
Year Ended |
||||||||
(In Millions) | 2014 | 2013 | ||||||
Revenues: | ||||||||
Northern Resources | $ | 264 | $ | 260 | ||||
Southern Resources | 531 | 435 | ||||||
Real Estate | 289 | 286 | ||||||
Manufacturing | 368 | 362 | ||||||
Energy and Natural Resources | 34 | 23 | ||||||
Other | 18 | — | ||||||
Eliminations | (28 | ) | (26 | ) | ||||
Total Revenues | $ | 1,476 | $ | 1,340 | ||||
Operating Income (Loss): | ||||||||
Northern Resources | $ | 44 | $ | 32 | ||||
Southern Resources | 137 | 108 | ||||||
Real Estate | 133 | 169 | ||||||
Manufacturing (A) | 49 | 43 | ||||||
Energy and Natural Resources (B) | 25 | 19 | ||||||
Other (C) | 2 | — | ||||||
Other Costs and Eliminations, net (D) | (65 | ) | (76 | ) | ||||
Total Operating Income | $ | 325 | $ | 295 | ||||
Adjusted EBITDA by Segment: (E) | ||||||||
Northern Resources | $ | 72 | $ | 62 | ||||
Southern Resources | 219 | 173 | ||||||
Real Estate | 263 | 261 | ||||||
Manufacturing | 65 | 59 | ||||||
Energy and Natural Resources | 33 | 22 | ||||||
Other | 17 | — | ||||||
Other Costs and Eliminations, net | (64 | ) | (75 | ) | ||||
Total | $ | 605 | $ | 502 | ||||
(A) During the second quarter of 2014, we experienced a fire at our MDF facility and recorded a
(B) During the fourth quarter of 2014, the company agreed to terminate a land lease for consideration of
(C) For Segment reporting, Equity Earnings from
(D) During 2013, the company recorded a loss of
(E) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities.
SEGMENT DATA | ||||||||
(UNAUDITED) | ||||||||
Quarter Ended |
||||||||
(In Millions) | 2014 | 2013 | ||||||
Revenues: | ||||||||
Northern Resources | $ | 66 | $ | 66 | ||||
Southern Resources | 145 | 122 | ||||||
Real Estate | 120 | 59 | ||||||
Manufacturing | 93 | 83 | ||||||
Energy and Natural Resources | 8 | 7 | ||||||
Other | 3 | — | ||||||
Eliminations | (7 | ) | (6 | ) | ||||
Total Revenues | $ | 428 | $ | 331 | ||||
Operating Income (Loss): | ||||||||
Northern Resources | $ | 10 | $ | 8 | ||||
Southern Resources | 38 | 34 | ||||||
Real Estate | 42 | 31 | ||||||
Manufacturing (A) | 14 | 8 | ||||||
Energy and Natural Resources (B) | 7 | 5 | ||||||
Other (C) | 7 | — | ||||||
Other Costs and Eliminations, net | (19 | ) | (22 | ) | ||||
Total Operating Income | $ | 99 | $ | 64 | ||||
Adjusted EBITDA by Segment: (D) | Northern Resources | $ | 17 | $ | 15 | |||
Southern Resources | 61 | 54 | ||||||
Real Estate | 111 | 53 | ||||||
Manufacturing | 18 | 12 | ||||||
Energy and Natural Resources | 9 | 6 | ||||||
Other | 19 | — | ||||||
Other Costs and Eliminations, net | (19 | ) | (22 | ) | ||||
Total | $ | 216 | $ | 118 | ||||
(A) During the second quarter of 2014, we experienced a fire at our MDF facility and recorded a
(B) During the fourth quarter of 2014, the company agreed to terminate a land lease for consideration of
(C) For Segment reporting, Equity Earnings from
(D) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities.
MEDIUM DENSITY FIBERBOARD ("MDF") FACILITY FIRE - OPERATING RESULTS IMPACT
(UNAUDITED)
On
2014 | ||||||||||||||||
(In Millions) | 2nd Qtr | 3rd Qtr | 4th Qtr | Total | ||||||||||||
Impacts on Operating Results: | ||||||||||||||||
Foregone MDF Income | $ | (4 | ) | $ | — | $ | — | $ | (4 | ) | ||||||
Business Interruption Recoveries(1) | $ | — | $ | — | $ | 3 | $ | 3 | ||||||||
Loss on Property, Plant and Equipment | $ | (2 | ) | $ | — | $ | — | $ | (2 | ) | ||||||
Property Insurance Recoveries (1) | $ | 4 | $ | 5 | $ | 1 | $ | 10 | ||||||||
Net Impact on Manufacturing Operating Income | $ | (2 | ) | $ | 5 | $ | 4 | $ | 7 | |||||||
Impact on Net Income | $ | (1 | ) | $ | 3 | $ | 2 | $ | 4 | |||||||
Impact on Diluted EPS | $ | (0.01 | ) | $ | 0.02 | $ | 0.01 | $ | 0.02 |
(1) The insurance recoveries reflect the impact of our cumulative
Reconciliation of GAAP Net Income to Adjusted Net Income Excluding
Items Related to the Acquisition of Timberland Assets from MWV
(Unaudited)
The following table reconciles the company's reported GAAP net income and earnings per diluted share (EPS) during the quarterly and twelve month periods ended
Year Ended |
Quarter Ended |
||||||||||||||
(In Millions, Except Per Share Amounts) | Dollars | Diluted EPS | Dollars | Diluted EPS | |||||||||||
Reported GAAP Net Income | $ | 214 | $ | 1.30 | $ | 40 | $ | 0.24 | |||||||
Loss Related to Forest Fires (A) | 4 | 0.02 | — | — | |||||||||||
MWV Acquisition Adjustments | |||||||||||||||
Loss on Extinguishment of Debt (B) | 4 | 0.03 | 4 | 0.02 | |||||||||||
Transaction Expenses (C) | 5 | 0.03 | 5 | 0.03 | |||||||||||
Increased Interest Expense, Net (D) | 3 | 0.02 | 3 | 0.02 | |||||||||||
Non-GAAP Adjusted Net Income and Per-Share Amounts (E) | $ | 230 | 1.39 | $ | 52 | $ | 0.31 |
(A) During the third quarter of 2013, the company's Northern Resources Segment recognized a
(B) Consists primarily of prepayment penalties and premiums related to early debt repayments reported as Loss on Extinguishment of Debt in the Consolidated Statements of Income.
(C) Includes closing costs and acquisition expenses reported in Selling, General and Administrative Expense in the Consolidated Statements of Income.
(D) Includes additional Interest Expense related to the
(E) Diluted per share amounts are computed independently for each caption presented. Therefore, the sum of the per share components from the table above may not equal the per share amount presented.
Segment Data - Adjusted EBITDA
Reconciliation of Operating Income and Net Cash
Provided by Operating Activities
(Unaudited)
We define Adjusted EBITDA as earnings from continuing operations, excluding Equity Earnings from the Timberland Venture, and before interest expense (including any gains or losses from extinguishment of debt), taxes, depreciation, depletion, amortization, and basis in real estate sold. In addition to including Equity Earnings from
We present Adjusted EBITDA as a supplemental performance measure because we believe it facilitates operating performance comparisons from period to period, and each business segment’s contribution to that performance, by eliminating non-cash charges to earnings, which can vary significantly by business segment. These non-cash charges include timber depletion, depreciation of fixed assets and the basis in lands sold. We also use Adjusted EBITDA as a supplemental liquidity measure because we believe it is useful in measuring our ability to generate cash. In addition, we believe Adjusted EBITDA is commonly used by investors, lenders and rating agencies to assess our financial performance.
A reconciliation of Adjusted EBITDA to net income and net cash from operating activities, the most directly comparable U.S. GAAP performance and liquidity measures, is provided in the following schedules:
Year Ended |
||||||||||||||||
Operating Income | Depreciation, Depletion and Amortization |
Basis of Real |
Adjusted EBITDA | |||||||||||||
By Segment (1) | ||||||||||||||||
Northern Resources | $ | 44 | $ | 28 | $ | — | $ | 72 | ||||||||
Southern Resources | 137 | 82 | — | 219 | ||||||||||||
Real Estate | 133 | 1 | 129 | 263 | ||||||||||||
Manufacturing | 49 | 16 | — | 65 | ||||||||||||
Energy and Natural Resources | 25 | 8 | — | 33 | ||||||||||||
Other | 2 | 2 | 13 | 17 | ||||||||||||
Other Costs and Eliminations | (67 | ) | 1 | — | (66 | ) | ||||||||||
Other Unallocated Operating Income (Expense), net | 2 | — | — | 2 | ||||||||||||
Total | $ | 325 | $ | 138 | $ | 142 | $ | 605 | ||||||||
Reconciliation to Net Income (2) | ||||||||||||||||
Equity Earnings from Timberland Venture | 63 | |||||||||||||||
Interest Expense | (166 | ) | ||||||||||||||
(Provision) Benefit for Income Taxes | (8 | ) | ||||||||||||||
Net Income | $ | 214 | ||||||||||||||
Reconciliation to Net Cash Provided By Operating Activities (1) | ||||||||||||||||
Net Cash Flows from Operations | $ | 457 | ||||||||||||||
Interest Expense | 166 | |||||||||||||||
Amortization of Debt Costs | (2 | ) | ||||||||||||||
Provision / (Benefit) for Income Taxes | 8 | |||||||||||||||
Distributions from Timberland Venture | (57 | ) | ||||||||||||||
Distributions from |
(2 | ) | ||||||||||||||
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from |
18 | |||||||||||||||
Deferred Income Taxes | (4 | ) | ||||||||||||||
Gain on Sale of Properties and Other Assets | — | |||||||||||||||
Timber Deed Acquired | — | |||||||||||||||
Pension Plan Contributions | 9 | |||||||||||||||
Working Capital Changes | 11 | |||||||||||||||
Other | 1 | |||||||||||||||
Adjusted EBITDA | $ | 605 | ||||||||||||||
(1) Includes Equity Earnings from
(2) Includes reconciling items not allocated to segments for financial reporting purposes.
Year Ended |
||||||||||||||||
Operating Income | Depreciation, Depletion and Amortization (1) |
Basis of Real |
Adjusted EBITDA | |||||||||||||
By Segment | ||||||||||||||||
Northern Resources | $ | 32 | $ | 30 | $ | — | $ | 62 | ||||||||
Southern Resources | 108 | 65 | — | 173 | ||||||||||||
Real Estate | 169 | 1 | 91 | 261 | ||||||||||||
Manufacturing | 43 | 16 | — | 59 | ||||||||||||
Energy and Natural Resources | 19 | 3 | — | 22 | ||||||||||||
Other | — | — | — | — | ||||||||||||
Other Costs and Eliminations | (73 | ) | 1 | — | (72 | ) | ||||||||||
Other Unallocated Operating Income (Expense), net | (3 | ) | — | — | (3 | ) | ||||||||||
Total | $ | 295 | $ | 116 | $ | 91 | $ | 502 | ||||||||
Reconciliation to Net Income (2) | ||||||||||||||||
Equity Earnings from Timberland Venture | 63 | |||||||||||||||
Interest Expense | (141 | ) | ||||||||||||||
Gain (Loss) on Extinguishment of Debt | (4 | ) | ||||||||||||||
(Provision) Benefit for Income Taxes | 1 | |||||||||||||||
Net Income | $ | 214 | ||||||||||||||
Reconciliation to Net Cash Provided By Operating Activities | ||||||||||||||||
Net Cash Flows from Operations | $ | 404 | ||||||||||||||
Interest Expense | 141 | |||||||||||||||
Amortization of Debt Costs | (3 | ) | ||||||||||||||
Provision / (Benefit) for Income Taxes | (1 | ) | ||||||||||||||
Distributions from Timberland Venture | (56 | ) | ||||||||||||||
Distributions from |
— | |||||||||||||||
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from |
— | |||||||||||||||
Deferred Income Taxes | 3 | |||||||||||||||
Gain on Sale of Properties and Other Assets | — | |||||||||||||||
Timber Deed Acquired | 18 | |||||||||||||||
Pension Plan Contributions | — | |||||||||||||||
Working Capital Changes | 17 | |||||||||||||||
Other | (21 | ) | ||||||||||||||
Adjusted EBITDA | $ | 502 | ||||||||||||||
(1) Includes a
(2) Includes reconciling items not allocated to segments for financial reporting purposes.
Quarter Ended |
||||||||||||||||
Operating Income | Depreciation, Depletion and Amortization |
Basis of Real |
Adjusted EBITDA | |||||||||||||
By Segment (1) | ||||||||||||||||
Northern Resources | $ | 10 | $ | 7 | $ | — | $ | 17 | ||||||||
Southern Resources | 38 | 23 | — | 61 | ||||||||||||
Real Estate | 42 | — | 69 | 111 | ||||||||||||
Manufacturing | 14 | 4 | — | |||||||||||||
Energy and Natural Resources | 7 | 2 | — | 9 | ||||||||||||
Other | 7 | 1 | 11 | 19 | ||||||||||||
Other Costs and Eliminations | (19 | ) | — | — | (19 | ) | ||||||||||
Other Unallocated Operating Income (Expense), net | — | — | — | — | ||||||||||||
Total | $ | 99 | $ | 37 | $ | 80 | $ | 216 | ||||||||
Reconciliation to Net Income (2) | ||||||||||||||||
Equity Earnings from Timberland Venture | 15 | |||||||||||||||
Interest Expense | (42 | ) | ||||||||||||||
(Provision) Benefit for Income Taxes | (4 | ) | ||||||||||||||
Net Income | $ | 68 | ||||||||||||||
Reconciliation to Net Cash Provided By Operating Activities (1) | ||||||||||||||||
Net Cash Flows from Operations | $ | 135 | ||||||||||||||
Interest Expense | 42 | |||||||||||||||
Amortization of Debt Costs | (1 | ) | ||||||||||||||
Provision / (Benefit) for Income Taxes | 4 | |||||||||||||||
Distributions from Timberland Venture | — | |||||||||||||||
Distributions from |
(2 | ) | ||||||||||||||
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from |
19 | |||||||||||||||
Deferred Income Taxes | (2 | ) | ||||||||||||||
Gain on Sale of Properties and Other Assets | — | |||||||||||||||
Timber Deed Acquired | — | |||||||||||||||
Pension Plan Contributions | 9 | |||||||||||||||
Working Capital Changes | 15 | |||||||||||||||
Other | (3 | ) | ||||||||||||||
Adjusted EBITDA | $ | 216 | ||||||||||||||
(1) Includes Equity Earnings from
(2) Includes reconciling items not allocated to segments for financial reporting purposes.
Quarter Ended |
||||||||||||||||
Operating Income | Depreciation, Depletion and Amortization |
Basis of Real |
Adjusted EBITDA | |||||||||||||
By Segment | ||||||||||||||||
$ | 8 | $ | 7 | $ | — | $ | 15 | |||||||||
Southern Resources | 34 | 20 | — | 54 | ||||||||||||
Real Estate | 31 | — | 22 | 53 | ||||||||||||
Manufacturing | 8 | 4 | — | 12 | ||||||||||||
Energy and Natural Resources | 5 | 1 | — | 6 | ||||||||||||
Other | — | — | — | — | ||||||||||||
Other Costs and Eliminations | (22 | ) | — | — | (22 | ) | ||||||||||
Other Unallocated Operating Income (Expense), net | — | — | — | — | ||||||||||||
Total | $ | 64 | $ | 32 | $ | 22 | $ | 118 | ||||||||
Reconciliation to Net Income (1) | ||||||||||||||||
Equity Earnings from Timberland Venture | 16 | |||||||||||||||
Interest Expense | (37 | ) | ||||||||||||||
Gain (Loss) on Extinguishment of Debt | (4 | ) | ||||||||||||||
(Provision) Benefit for Income Taxes | 1 | |||||||||||||||
Net Income | $ | 40 | ||||||||||||||
Reconciliation to Net Cash Provided By Operating Activities | ||||||||||||||||
Net Cash Flows from Operations | $ | 84 | ||||||||||||||
Interest Expense | 37 | |||||||||||||||
Amortization of Debt Costs | (1 | ) | ||||||||||||||
Provision / (Benefit) for Income Taxes | (1 | ) | ||||||||||||||
Distributions from Timberland Venture | — | |||||||||||||||
Distributions from |
— | |||||||||||||||
Equity Earnings, Depletion, Amortization, and Basis of Real Estate Sold from |
— | |||||||||||||||
Deferred Income Taxes | 2 | |||||||||||||||
Gain on Sale of Properties and Other Assets | — | |||||||||||||||
Timber Deed Acquired | — | |||||||||||||||
Pension Plan Contributions | — | |||||||||||||||
Working Capital Changes | 5 | |||||||||||||||
Other | (8 | ) | ||||||||||||||
Adjusted EBITDA | $ | 118 |
(1) Includes reconciling items not allocated to segments for financial reporting purposes.
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