Deltic Timber Corp. (DEL, Financial) filed Quarterly Report for the period ended 2009-03-31.
Deltic Timber Corporation is a natural resources company engaged primarily in the growing and harvesting of timber. In addition to their timber operations Deltic is engaged in the manufacture and marketing of lumber and in real estate development projects. Deltic Timber Corp. has a market cap of $482 million; its shares were traded at around $38.78 with a P/E ratio of 110.8 and P/S ratio of 3.7. The dividend yield of Deltic Timber Corp. stocks is 0.7%. Deltic Timber Corp. had an annual average earning growth of 1.6% over the past 10 years. GuruFocus rated Deltic Timber Corp. the business predictability rank of 2-star.
For the first quarter of 2009, pine sawtimber harvest levels decreased 24,843 tons to 155,531 tons, when compared to the first quarter of 2008s harvest level of 180,374 tons. The decrease is due in part to weather and timing of the harvest. Deltic plans to keep 2009s total pine sawtimber harvest volume comparable to the level in 2008, thus continuing to manage the timberlands on a sustainable-yield basis. The average sales price for pine sawtimber was $29 per ton in the first quarter of 2009, a 22 percent decrease from the first quarter of 2008. The decrease is a result of lower demand due to curtailments and closures of sawmills in Deltics operating region. The Company harvested 89,833 tons of pine pulpwood during the first quarter of 2009, a decrease of 9,943 tons from the same period in 2008. The average sales price was $11 per ton, a 31 percent decrease from $16 per ton for the first quarter of 2008. Lower pulpwood prices and volume are due to decreased demand for fiber by area papermills. The Company sold approximately 277 acres of non-strategic hardwood bottomland at an average sales price of $1,485 per acre during the first quarter of 2009 compared to sales of approximately 674 acres at an average sales price of $2,128 per acre for the same period of 2008. The 2009 decrease in the per-acre sales price is due to the location and quality of land sold. The Woodlands segment reported hunting lease income of $.5 million in the first quarter of 2009 essentially unchanged from first quarter of 2008.
continues to evaluate additional leasing requests within the currently defined boundary of the Fayetteville Shale Play, although future leasing will probably not be significant within the boundary currently defined by the Arkansas Oil and Gas Commission. The ultimate benefit to Deltic from these mineral leases remains speculative and unknown to the Company and is contingent on the successful extraction and sale of natural gas from this area. Deltics gas royalties from the defined Fayetteville Shale Play area were approximately $133,000 per month during the first quarter of 2009 compared to $40,000 per month during the first quarter of 2008. Deltic has reported total oil and gas royalty income of $.4 million and $.3 million for the first quarter of 2009 and 2008, respectively. Oil and gas lease rental income was $.5 million for the first quarter of 2009 and 2008.
The net change in purchased stumpage inventory to be utilized in the Companys sawmill operations used cash of $.5 million in 2009 and 2008. The Company advanced Del-Tin Fiber $1.9 million in the first quarter of 2009, and received repayments of $1.4 million, for a net advance of $.5 million during the first quarter. This compares to a net repayment of $.1 million for the same period of 2008. Funds held by trustees to be used for acquisitions of timberland designated as replacement property for income tax purposes, as required for tax-deferred exchanges, showed a net decrease of $2.8 million in the first quarter of 2009 versus an increase of $.2 million for the same period of 2008. Deltic received proceeds from other investing activities of $.4 million and $.2 million in 2009 and 2008, respectively. Deltic had borrowings of $3.5 million and repayments of borrowings of $1.5 million in 2009 versus no activity in 2008. The Company had $1.1 million of treasury stock purchases in 2009 and none in 2008. Deltic paid dividends on common stock of $.9 million during both 2009 and 2008. Proceeds from stock option exercises and related tax benefits in 2009 decreased $.8 million from 2008.
In December 2000, the Companys Board of Directors authorized a stock repurchase program of up to $10 million of Deltic common stock. In December 2007, the Board announced a $25 million expansion of this program. As of March 31, 2009, the Company had expended $14.3 million under this program, with the purchase of 363,462 shares at an average cost of $39.35 per share; 35,571 shares have been purchased in 2009 under this program. In its two previously completed repurchase programs, Deltic purchased 479,601 shares at an average cost of $20.89 and 419,542 shares at a $24.68 per share average cost, respectively.
On August 26, 2004, Del-Tin Fiber refinanced its existing long-term debt by entering into a credit agreement consisting of a letter of credit and term loan with multiple lending institutions. The funds provided from this credit agreement were used, together with the existing balance in Del-Tin Fibers debt service reserve and bond sinking fund accounts, to redeem $60 million of its $89 million industrial revenue bonds. Under the new credit agreement, the lenders, on September 1, 2004, loaned Del-Tin Fiber $30 million which is repayable over five years in equal quarterly installments, beginning December 31, 2004, and issued on Del-Tin Fibers behalf, a letter of credit in the amount of $29.7 million to support the remaining industrial revenue bonds originally issued in 1998 by Union County, Arkansas. Concurrent with this event, on August 26, 2004, Deltic executed a guarantee agreement in connection with the refinancing of the debt of Del-Tin Fiber. Under Deltics guarantee agreement, Deltic unconditionally guarantees the due and punctual payment of 50 percent ($16 million at March 31, 2009) of Del-Tins obligations under its credit agreement.
Read the The complete ReportDEL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Keeley of Keeley Fund Management.
Deltic Timber Corporation is a natural resources company engaged primarily in the growing and harvesting of timber. In addition to their timber operations Deltic is engaged in the manufacture and marketing of lumber and in real estate development projects. Deltic Timber Corp. has a market cap of $482 million; its shares were traded at around $38.78 with a P/E ratio of 110.8 and P/S ratio of 3.7. The dividend yield of Deltic Timber Corp. stocks is 0.7%. Deltic Timber Corp. had an annual average earning growth of 1.6% over the past 10 years. GuruFocus rated Deltic Timber Corp. the business predictability rank of 2-star.
Highlight of Business Operations:
The Company recorded a net loss of $1.2 million for the first quarter of 2009, compared to a loss of $.4 million for the same period of 2008. The Woodlands segment, Deltics established core operation, provided $5.7 million in operating income during the current quarter of 2009. Deltics Real Estate and Mills segments reported operating losses in the first quarter of 2009. The Real Estate segment recorded a loss of $1 million in the current-year quarter compared to a loss of $.6 million for the corresponding period of 2008 due to a lack of sales activity in the 2009 period. The Companys Mills segment recorded an operating loss of $3.6 million in the first quarter of 2009, which compares to a loss of $4.4 million in the first quarter of 2008. The improvement reflects increased hourly production rates and lower log costs, which helped to offset the historical low sales price per MBF of lumber sold and low demand due to reduced housing starts that is affecting the forest products industry. Deltic owns a 50 percent interest in Del-Tin Fiber L.L.C. and recorded related equity income of $.8 million for the first quarter of 2009, an increase from $.7 million for the same quarter of 2008.For the first quarter of 2009, pine sawtimber harvest levels decreased 24,843 tons to 155,531 tons, when compared to the first quarter of 2008s harvest level of 180,374 tons. The decrease is due in part to weather and timing of the harvest. Deltic plans to keep 2009s total pine sawtimber harvest volume comparable to the level in 2008, thus continuing to manage the timberlands on a sustainable-yield basis. The average sales price for pine sawtimber was $29 per ton in the first quarter of 2009, a 22 percent decrease from the first quarter of 2008. The decrease is a result of lower demand due to curtailments and closures of sawmills in Deltics operating region. The Company harvested 89,833 tons of pine pulpwood during the first quarter of 2009, a decrease of 9,943 tons from the same period in 2008. The average sales price was $11 per ton, a 31 percent decrease from $16 per ton for the first quarter of 2008. Lower pulpwood prices and volume are due to decreased demand for fiber by area papermills. The Company sold approximately 277 acres of non-strategic hardwood bottomland at an average sales price of $1,485 per acre during the first quarter of 2009 compared to sales of approximately 674 acres at an average sales price of $2,128 per acre for the same period of 2008. The 2009 decrease in the per-acre sales price is due to the location and quality of land sold. The Woodlands segment reported hunting lease income of $.5 million in the first quarter of 2009 essentially unchanged from first quarter of 2008.
continues to evaluate additional leasing requests within the currently defined boundary of the Fayetteville Shale Play, although future leasing will probably not be significant within the boundary currently defined by the Arkansas Oil and Gas Commission. The ultimate benefit to Deltic from these mineral leases remains speculative and unknown to the Company and is contingent on the successful extraction and sale of natural gas from this area. Deltics gas royalties from the defined Fayetteville Shale Play area were approximately $133,000 per month during the first quarter of 2009 compared to $40,000 per month during the first quarter of 2008. Deltic has reported total oil and gas royalty income of $.4 million and $.3 million for the first quarter of 2009 and 2008, respectively. Oil and gas lease rental income was $.5 million for the first quarter of 2009 and 2008.
The net change in purchased stumpage inventory to be utilized in the Companys sawmill operations used cash of $.5 million in 2009 and 2008. The Company advanced Del-Tin Fiber $1.9 million in the first quarter of 2009, and received repayments of $1.4 million, for a net advance of $.5 million during the first quarter. This compares to a net repayment of $.1 million for the same period of 2008. Funds held by trustees to be used for acquisitions of timberland designated as replacement property for income tax purposes, as required for tax-deferred exchanges, showed a net decrease of $2.8 million in the first quarter of 2009 versus an increase of $.2 million for the same period of 2008. Deltic received proceeds from other investing activities of $.4 million and $.2 million in 2009 and 2008, respectively. Deltic had borrowings of $3.5 million and repayments of borrowings of $1.5 million in 2009 versus no activity in 2008. The Company had $1.1 million of treasury stock purchases in 2009 and none in 2008. Deltic paid dividends on common stock of $.9 million during both 2009 and 2008. Proceeds from stock option exercises and related tax benefits in 2009 decreased $.8 million from 2008.
In December 2000, the Companys Board of Directors authorized a stock repurchase program of up to $10 million of Deltic common stock. In December 2007, the Board announced a $25 million expansion of this program. As of March 31, 2009, the Company had expended $14.3 million under this program, with the purchase of 363,462 shares at an average cost of $39.35 per share; 35,571 shares have been purchased in 2009 under this program. In its two previously completed repurchase programs, Deltic purchased 479,601 shares at an average cost of $20.89 and 419,542 shares at a $24.68 per share average cost, respectively.
On August 26, 2004, Del-Tin Fiber refinanced its existing long-term debt by entering into a credit agreement consisting of a letter of credit and term loan with multiple lending institutions. The funds provided from this credit agreement were used, together with the existing balance in Del-Tin Fibers debt service reserve and bond sinking fund accounts, to redeem $60 million of its $89 million industrial revenue bonds. Under the new credit agreement, the lenders, on September 1, 2004, loaned Del-Tin Fiber $30 million which is repayable over five years in equal quarterly installments, beginning December 31, 2004, and issued on Del-Tin Fibers behalf, a letter of credit in the amount of $29.7 million to support the remaining industrial revenue bonds originally issued in 1998 by Union County, Arkansas. Concurrent with this event, on August 26, 2004, Deltic executed a guarantee agreement in connection with the refinancing of the debt of Del-Tin Fiber. Under Deltics guarantee agreement, Deltic unconditionally guarantees the due and punctual payment of 50 percent ($16 million at March 31, 2009) of Del-Tins obligations under its credit agreement.
Read the The complete ReportDEL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Keeley of Keeley Fund Management.
