Pope Resources (NASDAQ:POPEZ)
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From Jun 2019 to Jun 2024
Pope Resources (NasdaqGSM:POPEZ) reported net income of $6.3 million, or
$1.30 per diluted ownership unit, on revenues of $17.6 million for the
quarter ended December 31, 2007. This compares to net income of $7.8
million, or $1.63 per diluted ownership unit, on revenues of $16.5
million for the quarter ended December 31, 2006. The $6.3 million net
income amount for 2007 is after a $1.9 million fourth quarter charge to
earnings for adding to an environmental remediation liability that is
described in more detail below.
Net income for the year ended December 31, 2007 totaled $15.5 million,
or $3.21 per diluted ownership unit, on revenues of $51.9 million. For
the corresponding period in 2006, net income totaled $24.9 million, or
$5.23 per diluted ownership unit, on revenues of $66.3 million.
Cash flow from operations for the quarter ended December 31, 2007 was
$10.0 million, compared to $15.1 million for the fourth quarter of 2006.
For the year ended December 31, 2007, cash flow from operations was
$22.0 million, compared to $43.5 million in 2006.
“We had a tough act to follow after our record
performance in 2006, but 2007 still compares very favorably relative to
all other years in the company’s history,”
said David L. Nunes, President and CEO. “By
shifting more of our planned log harvest volume to earlier in the year,
our log sale revenues held up better than would have otherwise been the
case given the softer log markets late in the year that were a function
of a stagnant national real estate market. In addition, our Real Estate
segment had a solid year, helped significantly by the delayed revenue
recognition of two sales that closed in 2006.”
Fourth quarter results for our Fee Timber segment, driven by harvest
volume of 7.3 million board feet (MMBF) compared to 3.7 MMBF in last year’s
fourth quarter, increased 108% as operating income went from $0.8
million in 2006 to $1.6 million in 2007. Somewhat offsetting this
positive volume impact was a 6% decline in realized log prices from $620
per thousand board feet (MBF) in the fourth quarter of 2006 to $585 per
MBF in 2007. Fee Timber operating income for the full year was $15.2
million, representing a 4% increase over 2006 results of $14.6 million.
At 55.2 MMBF, log harvest volume increased 1% in 2007 over 2006’s
harvest of 54.5 MMBF. Harvest volume in 2007 includes 5.3 MMBF of volume
harvested from tree farms acquired in late 2006 by ORM Timber Fund I,
LP. Offsetting this volume increase, our average realized log price
dropped 1% from $611 per MBF in 2006 to $607 per MBF in 2007. The
primary reason 2007 operating income for Fee Timber is higher than 2006
is due to a decline in the depletion rate.
Our Real Estate segment generated fourth quarter 2007 operating income
of $5.6 million on revenues of $12.5 million, compared to $7.9 million
of operating income on $13.0 million of revenue in the last quarter of
2006. Nearly $5.3 million of the 2007 income related to deferred revenue
on two sales that closed in 2006, one a 6-acre commercial site in Gig
Harbor and the other residual to the sale of a 200-acre residential
property in Bremerton. In each case, some or all of the revenue
recognition was deferred to 2007 pending the construction of certain
infrastructure improvements, for which the Partnership fulfilled its
obligations in 2007’s fourth quarter. Another
$3.0 million of operating income was generated through four additional
land sale transactions. Full year 2007 results for the Real Estate
segment reflect operating income of $5.2 million on revenues of $15.0
million, compared to $13.9 million of operating income on revenues of
$27.3 million for 2006.
Since early in this decade, we have been addressing environmental
remediation issues in the town of Port Gamble, Washington, with an
agreement for apportioning the cleanup costs with the prior owner, Pope
& Talbot, Inc. (“P&T”).
P&T filed for bankruptcy in late 2007 and as that case has unfolded we
have determined there is a low probability that P&T will be in a
position to fund its agreed-upon share of anticipated cleanup costs. As
a result, we have taken a $1.9 million charge to earnings in the current
quarter to accrue for estimated future environmental cleanup liabilities
in Port Gamble.
Fourth quarter results for our Timberland Management & Consulting
segment declined from a $0.1 million operating loss in 2006 to a loss of
$0.3 million in 2007. For the full year, this segment posted an
operating loss of $0.9 million compared to operating income of $1.3
million in 2006. The decline in operating results from this segment is
attributable to fewer assets under management in 2007 and a timberland
disposition fee earned in 2006 that was not repeated in 2007.
As announced previously, we will be reducing our 2008 timber harvest
volume by 36% from our long-term sustainable level in response to
expected soft prices for logs in the coming year since the slowdown in
housing starts has curtailed demand for solid wood products. Our planned
timber harvest for 2008 is 37 MMBF, which is 33% below the 55 MMBF we
harvested in 2007.
The financial schedules attached to this earnings release provide detail
on individual segment results and operating statistics.
About Pope Resources
Pope Resources, a publicly traded limited partnership, and its
subsidiaries Olympic Resource Management and Olympic Property Group, own
or manage over 430,000 acres of timberland and development property in
Washington and Oregon. In addition, we provide forestry consulting and
timberland investment 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.poperesources.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; our ability to estimate
accurately the amount of our exposure for environmental liabilities;
labor, equipment and transportation costs that affect our net income;
our ability to discover and to accurately estimate liabilities
associated with our properties; 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 "Risk Factors." 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.
Pope Resources, A Delaware Limited Partnership
Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in $000's, except per unit amounts)
Three months ended
December 31,
Twelve months ended
December 31,
2007
2006
2007
2006
Revenues
$
17,611
$
16,533
$
51,895
$
66,250
Costs and expenses:
Cost of sales
(6,160
)
(4,716
)
(20,462
)
(25,753
)
Operating expenses
(5,606
)
(4,235
)
(16,720
)
(14,592
)
Operating income
5,845
7,582
14,713
25,905
Interest, net
187
16
324
(625
)
Income before income taxes and minority interest
6,032
7,598
15,037
25,280
Income tax provision
91
14
69
(439
)
Income before minority interest
6,123
7,612
15,106
24,841
Minority interest
165
181
402
69
Net income
$
6,288
$
7,793
$
15,508
$
24,910
Average units outstanding - Basic
4,682
4,647
4,680
4,642
Average units outstanding - Diluted
4,828
4,778
4,825
4,762
Basic net income per unit
$
1.34
$
1.68
$
3.31
$
5.37
Diluted net income per unit
$
1.30
$
1.63
$
3.21
$
5.23
CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
December 31,
2007
2006
Assets:
Cash
$
2,174
$
7,194
Short term investments
30,775
25,000
Other current assets
2,095
8,933
Roads and timber
94,635
98,110
Properties and equipment
47,054
39,026
Other assets
2,592
2,019
Total
$
179,325
$
180,282
Liabilities and partners' capital:
Current liabilities
$
5,451
$
14,775
Long-term debt, excluding current portion
29,385
30,866
Other long-term liabilities
47,845
47,036
Total liabilities
82,681
92,677
Partners' capital
96,644
87,605
Total
$
179,325
$
180,282
SELECTED STATISTICS
Three months ended
Twelve months ended
31-Dec-07
31-Dec-06
31-Dec-07
31-Dec-06
Log sale volumes (thousand board feet):
Sawlogs
Douglas-fir
4,405
2,036
35,113
38,954
Whitewood
508
172
6,493
3,800
Cedar
672
301
2,238
1,075
Hardwood
429
420
2,733
3,591
Pulp
All species
1,272
763
8,584
7,113
Total
7,286
3,692
55,161
54,533
Average price realizations (per thousand board feet):
Sawlogs
Douglas-fir
572
624
621
669
Whitewood
399
419
462
445
Cedar
1,152
1,183
1,280
1,093
Hardwood
893
815
931
681
Pulp
All species
296
328
381
268
Overall
585
620
607
611
Owned timber acres
114,000
114,000
114,000
114,000
Acres under management
316,000
316,000
316,000
316,000
Capital expenditures ($000's)
$
4,748
$
3,177
$
12,161
$
12,200
Depletion ($000's)
615
522
4,794
6,492
Depreciation ($000's)
173
178
777
712
Debt to total capitalization
24
%
27
%
24
%
27
%
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's except per unit data)
Q4 2007 vs. Q4 2006
Q4 2007 vs. Q3 2007
Total
Total
Net income:
4th Quarter 2007
$
6,288
$
6,288
3rd Quarter 2007
3,551
4th Quarter 2006
7,793
Variance
$
(1,505
)
$
2,737
Detail of earnings variance:
Fee Timber
Log price realizations (A)
$
(255
)
$
(189
)
Log volumes (B)
2,228
(4,853
)
Depletion
(93
)
815
Production costs
(1,017
)
1,682
Other Fee Timber
(16
)
288
Timberland Management & Consulting
Management fee changes
(124
)
-
Other Timberland Mgmnt & Consulting
(115
)
(95
)
Real Estate
Environmental remediation liability
(1,732
)
(1,878
)
Land sales
(893
)
7,334
Other Real Estate
322
(350
)
General & administrative costs
(44
)
(137
)
Interest expense
32
41
Other (taxes, minority int., interest inc.)
202
79
Total change in earnings
$
(1,505
)
$
2,737
(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.