Plum Creek Tops Zacks Estimates – Analyst Blog

Plum Creek Timber Co. Inc. (PCL), a real estate investment trust (REIT) owning and managing timberlands in the U.S., reported fiscal 2010 first quarter earnings of $87 million or 54 cents per share, compared with $157 million or 95 cents per share in the year-earlier quarter.

 

The first quarter earnings included an after-tax gain of $11 million or 7 cents per share related to the sale of natural gas assets. Excluding the non-recurring items, fiscal 2010 first quarter earnings were $76 million or 47 cents per share. The earnings exceeded the Zacks Consensus Estimate by 9 cents.

 

During first quarter 2010, Plum Creek reported revenues of $317 million vis-à-vis $470 million in the year-ago quarter. Although revenues and earnings declined year-over-year, the company reported better-than-expected performance across all the segments with stabilization in most timber markets and modest log price improvements. In addition, Plum Creek is gradually benefiting from its manufacturing downsizing and cost management efforts.

 

By segment, the Northern Resources division reported an operating profit of $4 million during the quarter compared with $2 million in the previous year, with improved sawlog markets and lower costs. In the Southern Resources segment, operating profit increased to $30 million from $20 million in the year-ago quarter, primarily due to higher pulpwood prices and strong sawlog harvests.

 

Operating Income in the Real Estate segment was $62 million during the quarter compared with $170 million in the year-earlier quarter. However, operating income in the first quarter of 2009 included $162 million from the sale of $250 million worth of conservation lands in Montana. The Manufacturing segment reported an operating profit of $4 million during the quarter versus $22 million operating loss in the previous year.

 

Plum Creek continued to sell large tracts of rural lands including non-strategic timberlands to raise cash. During the quarter, the company sold 24,000 acres of land in the South for $32 million, and 35,000 acres of conservation lands in Wisconsin and Arkansas for $19 million.

 

Despite a challenging macroeconomic environment, Plum Creek generated $129 million of cash flow from operations during the quarter. At quarter end, the company had cash and cash equivalents of $304 million and total long-term debt of $1.6 billion.

 

For full year 2010, Plum Creek expects earnings in the range of $1.30 to $1.50 per share, while for the second quarter, earnings are expected in the range of 10 cents to 15 cents. Second quarter harvests have been historically low as the thawing spring weather restricts harvesting activities. Due to seasonality of harvest levels, Plum Creek anticipates modest results across all its segments during the second quarter.