POULSBO, Wash.--(BUSINESS WIRE)--July 20, 2005--Pope Resources (Nasdaq:POPEZ) reported net income of $4.1 million, or 86 cents per diluted ownership unit, on revenues of $16.1 million for the second quarter ended June 30, 2005. This compares to net income of $4.0 million, or 87 cents per diluted ownership unit, on revenues of $11.9 million for the comparable period in 2004.
Net income for the six months ended June 30, 2005 totaled $8.7 million, or $1.83 per diluted ownership unit, on revenues of $32.8 million. Net income for the corresponding period in 2004 totaled $8.0 million, or $1.75 per diluted ownership unit, on revenues of $23.6 million.
Year-to-date earnings before interest, taxes, depreciation, depletion, and amortization (EBITDDA) were $17.9 million versus $12.6 million for the comparable period in 2004.
"Performance by each of our operating segments in 2005's second quarter built upon the positive momentum of the first quarter to produce strong year-to-date results," said David L. Nunes, President and CEO. "For the first six months of this year compared to the same period a year ago, log sales volumes for our Fee Timber segment increased nearly 20%, from 38 million board feet (MMBF) in 2004 to 45 MMBF in 2005. Comparing the same six-month periods, average log prices were up $49 per thousand board feet (MBF) this year over last, a 9% increase. Together, these two performance drivers contributed greatly to a 28% increase in year-to-date Fee Timber EBITDDA, which increased from $13.3 million in 2004 to $17.0 million in 2005. In contrast to this EBITDDA comparison, year-to-date operating income for our Fee Timber segment declined by 5%, from $10.5 million in 2004 to $10.0 million in 2005. This decline is due to the impact in the current year of log harvest volume coming from a recent acquisition that carries a significantly higher depletion expense as a result of establishing a separate depletion cost pool for that acquired timber."
"On the strength of a new management agreement, our Timberland Management & Consulting segment generated year-to-date operating income of $1.7 million, compared to an operating loss of $0.5 million in 2004. Additionally, our Real Estate segment has benefited by strong buyer interest in rural residential land and posted year-to-date 2005 operating income of $0.8 million, compared to income of $1.0 million for the comparable period in 2004, where last year's results were dominated by one large parcel sale."
The Partnership does not expect financial results for the first six months of 2005 to be duplicated in the last half of the year. Timber harvest volume in the first two quarters of 2005 represented 57% of the planned 2005 harvest of 79 MMBF. Similarly, as a result of strong market conditions, the Real Estate segment has completed nearly two-thirds of its planned development property sales in 2005 as of this midpoint in the year.
About Pope Resources
Pope Resources, a publicly traded limited partnership, and its subsidiaries Olympic Resource Management and Olympic Property Group, own or manage over 640,000 acres of timberland and development property in Washington and Oregon. In addition, we provide forestry consulting and timberland management services to third-party owners and managers of timberland in Washington, Oregon, and California. The company and its predecessor companies have owned and managed timberlands and development properties for more than 150 years. Additional information on the company can be found at www.orm.com. The contents of our website are not incorporated into this release or into our filings with the Securities and Exchange Commission.
This press release contains a number of projections and statements about our expected financial condition, operating results, business plans and objectives. These statements reflect management's estimates based on current goals and its expectations about future developments. Because these statements describe our goals, objectives, and anticipated performance, they are inherently uncertain, and some or all of these statements may not come to pass. Accordingly, they should not be interpreted as promises of future management actions or financial performance. Our future actions and actual performance will vary from current expectations and under various circumstances the results of these variations may be material and adverse. Some of the factors that may cause actual operating results and financial condition to fall short of expectations include factors that affect our ability to anticipate and respond adequately to fluctuations in the market prices for our products; environmental and land use regulations that limit our ability to harvest timber and develop property; labor, equipment and transportation costs that affect our net income; and economic conditions that affect consumer demand for our products and the prices we receive for them. Other factors are set forth in that part of our Annual Report on Form 10-K entitled "Management's Discussion & Analysis of Financial Condition and Results of Operation - Risks and Uncertainties." Other issues that may have an adverse and material impact on our business, operating results, and financial condition include those risks and uncertainties discussed in our other filings with the Securities and Exchange Commission. Forward-looking statements in this release are made only as of the date shown above, and we cannot undertake to update these statements.
Management considers earnings (net income or loss) before interest expense, income taxes, depreciation, depletion and amortization (EBITDDA) to be a relevant and meaningful indicator of liquidity and earnings performance commonly used by investors, financial analysts and others in evaluating companies in its industry and, as such, has provided this information in addition to the generally accepted accounting principle-based presentation of net income or loss and cash from operations. In that context, "depletion" refers to a measure of the cost of timber harvested.
Pope Resources, A Delaware
Limited Partnership
Unaudited
CONSOLIDATED STATEMENTS OF
OPERATIONS
(all amounts in $000's, except per
unit amounts)
Three months Six months ended
ended June 30, June 30,
2005 2004 2005 2004
Revenues $16,131 $11,888 $ 32,787 $ 23,620
Costs and expenses:
Cost of sales (7,410) (4,128) (15,214) (8,616)
Operating expenses (3,626) (2,987) (6,807) (5,483)
------- ------- -------- --------
Operating income 5,095 4,773 10,766 9,521
Interest, net (635) (776) (1,352) (1,526)
------- ------- -------- --------
Income before income taxes and
minority interest 4,460 3,997 9,414 7,995
Income tax provision (263) - (510) -
------- ------- -------- --------
Income before minority interest 4,197 3,997 8,904 7,995
Minority interest (128) - (229) -
------- ------- -------- --------
Net income $ 4,069 $ 3,997 $ 8,675 $ 7,995
======= ======= ======== ========
Average units outstanding -
Basic 4,596 4,520 4,578 4,520
======= ======= ======== ========
Average units outstanding -
Diluted 4,757 4,594 4,740 4,579
======= ======= ======== ========
Basic net income per unit $ 0.89 $ 0.88 $ 1.89 $ 1.77
======= ======= ======== ========
Diluted net income per unit $ 0.86 $ 0.87 $ 1.83 $ 1.75
======= ======= ======== ========
CONSOLIDATED
BALANCE SHEETS
(all amounts in
$000's)
June 30,
2005 2004
--------- --------
Assets:
Cash $ 1,574 $ 8,865
Short term investments 8,007 -
Other current assets 4,517 2,120
Roads and timber 57,977 53,801
Properties and equipment 26,981 25,633
Other assets 989 1,337
-------- -------
Total $100,045 $91,756
======== =======
Liabilities and partners' capital:
Current liabilities $ 3,976 $ 3,927
Long-term debt, excluding current portion 32,497 34,198
Other long-term liabilities 211 184
Total liabilities 36,684 38,309
Partners' capital 63,361 53,447
-------- -------
Total $100,045 $91,756
======== =======
RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended Six months ended June
June 30, 30,
2005 2004 2005 2004
Net income $ 4,069 $ 3,997 $ 8,675 $ 7,995
Added back:
Interest, net 635 776 1,352 1,526
Depletion 3,223 1,294 7,066 2,765
Depreciation and
amortization 167 174 319 342
Income tax expense 263 - 510 -
-------- -------- -------- --------
EBITDDA $ 8,357 $ 6,241 $ 17,922 $ 12,628
======== ======== ======== ========
RECONCILIATION BETWEEN CASH FROM OPERATIONS
AND EBITDDA
(all amounts in $000's)
Three months ended Six months ended June
June 30, 30,
2005 2004 2005 2004
Cash from operations $ 5,921 $ 7,272 $ 12,814 11,497
Added back:
Change in working
capital 734 2,727
Interest 635 776 1,352 1,526
Deferred profit 837 33 685 -
Income tax
provision 263 - 510 -
Other - - -
Less:
Change in working
capital - (1,834) - (315)
Deferred profit - - - (75)
Cost of land sold (32) - (166) (5)
Other (1) (6) - 0
-------- -------- -------- --------
EBITDDA $ 8,357 $ 6,241 $ 17,922 $ 12,628
======== ======== ======== ========
SEGMENT INFORMATION
(all amounts in $000's)
Three months ended Six months ended June
June 30, 30,
2005 2004 2005 2004
Revenues:
Fee Timber $ 13,220 $ 9,369 $ 26,883 $ 20,780
Timberland
Management &
Consulting (TM&C) 1,843 396 3,457 522
Real Estate 1,068 2,123 2,447 2,318
-------- -------- -------- --------
Total 16,131 11,888 32,787 23,620
EBITDDA:
Fee Timber 8,090 5,671 17,001 13,304
TM&C 847 (77) 1,710 (459)
Real Estate 330 1,279 1,001 1,061
General &
administrative (910) (632) (1,790) (1,278)
-------- -------- -------- --------
Total 8,357 6,241 17,922 12,628
Depreciation, depletion
and amortization:
Fee Timber 3,160 1,299 7,029 2,801
TM&C 27 22 48 44
Real Estate 138 61 174 84
General &
administrative 65 86 134 178
-------- -------- -------- --------
Total 3,390 1,468 7,385 3,107
Operating
income/(loss):
Fee Timber 4,930 4,372 9,972 10,503
TM&C 820 (99) 1,662 (503)
Real Estate 192 1,218 827 977
General &
administrative (847) (718) (1,695) (1,456)
-------- -------- -------- --------
Total $ 5,095 $ 4,773 $ 10,766 $ 9,521
======== ======== ======== ========
SELECTED STATISTICS
Three months ended Six months ended
30-Jun-05 30-Jun-04 30-Jun-05 30-Jun-04
Log sale volumes
(thousand board feet):
Export conifer 1,963 1,558 5,473 7,182
Domestic conifer 15,789 12,529 31,138 24,219
Pulp conifer 3,282 2,786 5,935 5,419
Hardwoods 1,329 682 2,817 1,087
-------- -------- -------- --------
Total 22,363 17,555 45,363 37,907
======== ======== ======== ========
Average price
realizations (per
thousand board feet):
Export conifer $ 691 $ 628 $ 672 $ 652
Domestic conifer 642 562 630 558
Pulp conifer 205 234 211 228
Hardwoods 557 582 594 573
Overall 577 517 578 529
Owned timber acres 115,103 117,251 115,103 117,251
Acres under management 527,316 5,316 527,316 5,316
Capital expenditures
($000's) $ 744 $ 1,104 $ 1,691 $ 10,434 (a)
Depletion ($000's) $ 3,223 $ 1,294 $ 7,066 $ 2,765
Depreciation ($000's) $ 167 $ 174 $ 319 $ 342
Debt to total
capitalization 35% 40% 35% 40%
(a) Includes $8.5 million timberland acquisition closed in January
2004.
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's except per unit data)
Q2 2005 vs. Q2 2004 Q2 2005 vs. Q1 2005
Per Basic Per Basic
Unit Unit
Total Outstanding Total Outstanding
Net income:
2nd Quarter 2005 $ 4,069 $ 0.89 $ 4,069 $ 0.89
1st Quarter 2005 4,606 1.01
2nd Quarter 2004 3,997 0.88
-------- -------- -------- ----------
Variance $ 72 $ 0.01 $ (537) $ (0.12)
Detail of earnings
variance:
Fee Timber
Log price
realizations (A) $ 1,342 $ 0.30 $ (67) $ (0.02)
Log volumes (B) 1,174 0.26 (784) (0.18)
Timberland sale
income - - - -
Depletion (1,855) (0.41) 716 0.16
Other Fee Timber (103) (0.02) 23 0.01
Timberland Management &
Consulting
Management fee
changes 962 0.21 - -
Other Timberland
Mgmnt & Consulting (43) (0.01) (22) (0.01)
Real Estate
Environmental
remediation
liability 187 0.04 (108) (0.02)
Land sales (1,118) (0.25) (241) (0.05)
Depletion (74) (0.02) (96) (0.02)
Other Real Estate (21) - 2 -
General &
administrative costs (129) (0.03) 1 -
Interest expense 92 0.02 27 0.01
Other (taxes, minority
int., interest inc.) (342) (0.08) 12 -
-------- -------- -------- --------
Total change in
earnings $ 72 $ 0.01 $ (537) $ (0.12)
======== ======== ======== ========
(A) Price variance calculated by extending the change in average
realized price by current period volume.
(B) Volume variance calculated by extending change in sales volume by
the average log sales price for the comparison period, less
variance in log production costs.
CONTACT: Pope Resources
Tom Ringo, 360-697-6626
Fax: 360-697-1156
SOURCE: Pope Resources
