Potlatch 1Q16 Earnings Call Notes

Potlatch Corporation’s (PCH) CEO Mike Covey on Q1 2016 Results

Sold 172k acres in Central Idaho for $114m

“We announced this morning that we have sold 172,000 acres of timberlands in Central Idaho for $114 million. As many of you know, Central Idaho is our realized strategic timberland holding based on productivity and location.”

Norther Idaho generates $117 EBITDA per acre, which is 5x central Idaho

“In addition, the truck-haul distance is shorter in Northern Idaho which results in much higher stumpage values in Central Idaho. For these reasons, our Northern Idaho property generates a $117 of EBITDA per acre, which is over 5 times that of Central Idaho.”

Northern Idaho appraised at $2000 per acre

“As you know, we had an appraisal completed in 2012 when log prices were much lower that concluded the 352,000 core acres of our ownership in Northern Idaho were worth of $2,000 per acre.”

Eric Cremers

We had seen a nice run in lumber prices our expectation is for modest gains going forward

“we had seen a real nice run in lumber prices. Our expectation from here is for continued very modest gains in pricing. We are not really yet to the heart of the building season and with the U.S. dollar continuing to be relatively weak, we think that bodes well for the future.”

Dealers have learned to operate with low inventories

“It’s hard to get good data on where things stand out in the distribution network. Our general feeling is that dealers have learned to operate with very low inventories. It’s more of a just in time kind of a business. So any change in the outlook or demand or lumber or housing starts, shows up very rapidly in the form of price increase or decrease. So I think it’s fair to say that that inventories are – they’re relatively low levels. “

Plum Creek 3Q15 Earnings Call Notes

Plum Creek Timber (PCL) Rick R. Holley on Q3 2015 Results

Lumber manufacturers have had a challenging year so far

“Lumber manufacturers have had a challenging year so far. North American lumber prices have been under pressure as mill operators contended with uneven demand growth and the impact of shifting exchange rates on supply. ”

Weaker Canadian dollar has improved position of Canadian producers

“The weaker Canadian dollar has improved the cost position of Canadian producers allowing them to produce more lumber. The production increases came principally from the Canadian provinces of east of the Rockies, primarily there in Alberta. ”

Lumber producers have adjusted their supply as prices have come down

“In response to low lumber prices, we have recently seen softwood lumber producers throughout North America adjust their production schedules to more closely match current supply and demand. As a result, inventories have come down and lumber price have improved and are trending up.”

We have reduced harvest below where we initially expected

“We have reduced harvest in areas where we believe we can realize future pricing uplift. As a result, we now expect our 2015 harvest to be approximately 18.5 million tons. That’s less than our initial plans to harvest between and 19 million and 20 million tons this year. As a result, we expect to be on the lower end of our earnings guidance for the year. While this decision, reducing harvest, impacts our fourth quarter earnings, it’s the right thing to do from a shareholder value perspective.”

Recent price trends are encouraging

“We view the recent lumber price trends as encouraging. We see no change in longer term demand trends.”

The Chinese have destocked their lumber inventory

“just as we went through a little bit of an inventory cycle here with lumber, over in China that same thing has occurred. Their log decks now are down 30% from where they were earlier in the year. I think they’re starting to purchase wood. They really had a slow purchase rate in the third quarter as they were trying to rebalance it. So even though their fundamental demand isn’t picking up, I think their log purchase activity will start picking up and will feel a little bit better. We’ve seen prices in the Chinese markets firm in the last month or two and turn upwards’

Homebuilders are dealing with land and labor shortages

“I think the headwind that housing still has is the very thing you mentioned, is labor. In some markets, labor is challenging for a lot of homebuilders. The lack of lots, developed lots that are ready to build on, is a challenge in many of these markets which – Seattle is a perfect case. Put a house in the market in Seattle and it’s sold in a day. There’s just not a lot of land to build additional properties on new homes, so it’s a challenge.”

Plum Creek 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Sawlog customers were cautious last year

“During 2014, Southern lumber producers were generally cautious in their production decisions. For some producers, construction activity at their mill and startup challenges with new equipment disrupted their production. We expect these production headwinds to shift to tailwinds in the latter half of 2015, as they work out the kinks in their new equipment.
Other customers are in the midst of their capital projects and we expect this increased capacity will come online over the course of the next two years. All this investment bodes well for southern sawlog demand in the coming years

Packaging customers remained healthy and competitive

“Packaging customers remained healthy and competitive the other customers who bought the bulk of our southern pulpwood production, some new pulp mills began taking deliveries towards the end of 2014 and others are scheduled to begin production over the course of 2015. As these mills move up the start up curve, we expect them to exert healthy competition in their local pulpwood markets.

3.5-3.8m tons of timber for 2015 in Northern Segement

“Looking forward to 2015, we are planning to harvest between 3.5 million tons and 3.8 million tons of timber in the Northern segment, with roughly a 60-40 mix of sawlogs and pulpwood. We expect to see the normal seasonal variation in harvest volume, with the second quarter harvest being the lowest of the year.

15m tons in the south

“For 2015, we are expecting harvest between 15.5 million tons and 16.2 million tons of timber in the South. We expect the mix to be similar to 2014’s harvest, approximately 42% sawlogs, 58% pulpwood.

Timberland selling for 2k per acre in the south

“n the South, where well-managed industrial timberlands are being valued in excess of $2,000 per acre, the price premiums associated with HBU lands have compressed to the point where the current premiums are not as compelling. In these markets, we are inclined to hold these properties off the market for the time being and allow the HBU premiums to bill to the point where the value differential is more substantial.

Maybe some slowing from China but western markets very tight

“As we think about Asia, we are seeing probably slightly slower demand coming from China here early in the year for the first six months. Inventories in Asia have come down significantly from where they were six months ago. I think there is still a little bit of rebalancing there to take place and then we will probably see a better feel for their underlying demand, but our Western markets, they remain very tight.

The Chinese just need to get their inventories in line

“Clearly, we have seen the shiploads in the last few months going from the west coast to China have come down significantly.
I think the inventories were as high as 4.5 million cubic meters. They are down to 3 cubic meter and 3.4 meters 3.5 meters now, still above where they like them and there is a different balance in each port, but I think it’s the next six months, where the Chinese really get their inventories in line and then we will see activities normalize.