Deltic Timber reports small 4Q loss, declining full-year profits

Deltic Timber Corp. reported a fourth quarter net loss of $128,000 compared to a $3.479 million profit one year ago. The El Dorado-based timber and real estate firm also reported lower full year net income of $2.7 million, down from $19.7 million in the prior year period.

Sales for the fourth quarter were $49.64 million compared to $55.07 million a year ago. For the full fiscal year 2015, Deltic’s sales topped $193.85 million, down 14.7% from the previous year.

Deltic officials said “weak markets for wood products” were the primary driver for the fall-off.

“Deltic’s assets produced essentially break-even results for the fourth quarter despite an extremely difficult operating environment for wood products manufacturers during 2015. While the number of housing starts in the United States was slightly higher than in the previous year, strengthening of the dollar and a slowing Chinese economy led to decreased exports of both timber and lumber to Asian markets from West Coast producers, causing more of the lumber produced in the U.S. to remain here,” said Deltic Timber CEO Ray Dillon.

“The resulting lumber oversupply condition was exacerbated as lumber producers ramped up production during 2015 in anticipation of a stronger recovery in the housing market than the actual modest increase in single family home starts generated. In addition, a portion of Canadian lumber production that had been going to China was diverted to the U.S. with the expiration of the Softwood Lumber Agreement in October,” he said.

Dillon said the imbalance in supply and demand for lumber led Deltic to focus its efforts in four key areas in 2015:
• Deltic increased the harvest of pine sawtimber from its land holdings by 21%, “benefitting, as planned, from recent timberland acquisitions”;
• Deltic harvested 394,165 tons of pine pulpwood, performing critical forest maintenance to help ensure desired sawtimber growth rates;
• Deltic invested in projects in its manufacturing facilities, increasing the sawmills’ hourly lumber production rate, improving critical operating metrics in its medium density fiberboard plant, and improving efficiencies in all facilities; and
• Deltic developed and offered for sale 105 new residential lots in two real estate developments, resulting in the sale of 100 lots for the year.

The company also allocated $15.2 million of capital to an approved share repurchase program during 2015, buying back 2% of the shares outstanding and effectively increasing the number of timberland acres owned per share for current shareholders.

Deltic Timber shares (NYSE: DEL) closed trading Wednesday at $57.94 per share. The company’s stock has traded between $50.84 and $70.29 per share during the last 52 weeks.