Pope Resources (NASDAQ:POPEZ)
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From May 2019 to May 2024
Pope Resources (Nasdaq:POPEZ) reported net income of $4.8 million, or
$1.01 per diluted ownership unit, on revenues of $15.3 million for the
second quarter ended June 30, 2007. This compares to net income of $3.5
million, or 74 cents per diluted ownership unit, on revenues of $15.6
million for the comparable period in 2006.
Net income for the six months ended June 30, 2007 totaled $5.7 million,
or $1.19 per diluted ownership unit, on revenues of $22.1 million. Net
income for the corresponding period in 2006 totaled $8.8 million, or
$1.86 per diluted ownership unit, on revenues of $31.7 million.
Earnings before interest, taxes, depreciation, depletion, and
amortization (EBITDDA) for the quarter ended June 30, 2007 were $7.0
million, compared to $6.0 million for the second quarter of 2006. For
the six months ended June 30, 2007, EBITDDA was $8.8 million, compared
to $14.9 million for year-to-date 2006 results.
“Our operating results for second quarter 2007
were higher than last year’s comparable
quarter primarily because our harvest volume increased by 36%, from 17
million board feet (MMBF) in 2006 to 23 MMBF in 2007,”
said David L. Nunes, President and CEO. “Log
prices generally softened during the second quarter given the decline in
domestic housing starts, but we were able to mitigate much of the impact
of this trend by virtue of locking in second quarter prices earlier in
the year when market sentiment was less bearish, and by shifting our
harvest mix toward select markets where pricing remained healthier. As a
result, our average realized log price increased by 4% during the
quarter, from $603 per thousand board feet (MBF) in 2006 to $626 per MBF
in 2007.”
For the first six months of 2007, Fee Timber operating income declined
5% to $9.7 million from $10.2 million in 2006. This decline was driven
by a 16% drop in harvest volumes, from 39 MMBF in 2006 to 33 MMBF in
2007. This was offset somewhat by a 1% increase in the average realized
log price, which rose from $606 per MBF in 2006 to $611 per MBF in 2007.
Through the first half of 2007, we harvested 60% of our planned annual
harvest volume, compared to the first half of 2006, when we harvested
71% of the total annual harvest volume.
Our Timberland Management & Consulting segment posted a year-to-date
operating loss of $0.3 million compared to income of $1.3 million in
2006. The decline in operating income from this segment is the result of
fewer assets under management in 2007 and a timberland disposition fee
earned in 2006 that was not repeated in 2007.
Operating income for our Real Estate segment declined from $0.2 million
for the first six months of 2006 to a $1.0 million loss for the
comparable period in 2007. This anticipated decline is due to a
significant reduction in the number of land sale closings in the first
half of 2007 compared to the first half of last year. We expect to
generate revenue from our Gig Harbor and Bremerton projects during the
balance of 2007, but do not expect to reach the record level attained in
2006.
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; 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.
Management considers earnings (net income or loss) before interest
expense, income taxes, depreciation, depletion and amortization
(EBITDDA) to be an important measure of operating profitability,
particularly when comparing results between different timber-owning
companies because there are varying methods of calculating depletion
expense under GAAP. With different issuers employing various calculation
methodologies, disclosure of EBITDDA can make it easier for the reader
to make meaningful comparisons between the operating results and
cash-generating capabilities of different timber companies.
Pope Resources, A Delaware Limited Partnership
Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in $000's, except per unit amounts)
Three months ended June 30,
Six months ended June 30,
2007
2006
2007
2006
Revenues
$
15,326
$
15,610
$
22,113
$
31,693
Costs and expenses:
Cost of sales
(6,294
)
(8,414
)
(9,131
)
(14,839
)
Operating expenses
(4,080
)
(3,461
)
(7,342
)
(6,934
)
Operating income
4,952
3,735
5,640
9,920
Interest, net
18
(217
)
27
(526
)
Income before income taxes and minority interest
4,970
3,518
5,667
9,394
Income tax provision
(10
)
8
(17
)
(437
)
Income before minority interest
4,960
3,526
5,650
8,957
Minority interest
(145
)
14
19
(119
)
Net income
$
4,815
$
3,540
$
5,669
$
8,838
Average units outstanding - Basic
4,685
4,641
4,675
4,638
Average units outstanding - Diluted
4,786
4,753
4,776
4,750
Basic net income per unit
$
1.03
$
0.76
$
1.21
$
1.91
Diluted net income per unit
$
1.01
$
0.74
$
1.19
$
1.86
CONSOLIDATED BALANCE SHEETS
(all amounts in $000's)
June 30,
2007
December 31,
2006
Assets:
Cash
$
6,146
$
7,194
Short term investments
25,000
25,000
Other current assets
10,705
8,933
Roads and timber
95,814
98,110
Properties and equipment
42,207
39,026
Other assets
1,490
2,019
Total
$
181,362
$
180,282
Liabilities and partners' capital:
Current liabilities
$
13,341
$
14,775
Long-term debt, excluding current portion
29,543
30,866
Other long-term liabilities
46,867
47,036
Total liabilities
89,751
92,677
Partners' capital
91,611
87,605
Total
$
181,362
$
180,282
RECONCILIATION BETWEEN NET INCOME AND EBITDDA
(all amounts in $000's)
Three months ended June 30,
Six months ended June 30,
2007
2006
2007
2006
Net income
$
4,815
$
3,540
$
5,669
$
8,838
Added back:
Interest, net
(18
)
217
(27
)
526
Depletion
2,038
2,119
2,749
4,692
Depreciation and amortization
197
175
399
359
Income tax expense
10
(8
)
17
437
EBITDDA
$
7,042
$
6,043
$
8,807
$
14,852
RECONCILIATION BETWEEN CASH FROM OPERATIONS AND EBITDDA
(all amounts in $000's)
Three months ended June 30,
Six months ended June 30,
2007
2006
2007
2006
Cash from operations
$
7,718
$
7,858
$
6,907
$
12,313
Added back:
Change in working capital
-
1,522
2,368
5,682
Interest
-
217
-
526
Deferred revenue
260
-
-
-
Minority interest
-
13
19
-
Deferred taxes
-
36
-
19
Income tax provision
10
-
17
437
Less:
Change in working capital
(673
)
-
-
-
Interest
(17
)
(26
)
-
Deferred revenue
-
(666
)
(77
)
(941
)
Cost of land sold
(14
)
(2,856
)
(46
)
(2,869
)
Equity based compensation
(103
)
(72
)
(361
)
(195
)
Minority interest
(145
)
-
-
(120
)
Income tax provision
-
(8
)
-
-
Other
6
(1
)
6
-
EBITDDA
$
7,042
$
6,043
$
8,807
$
14,852
SEGMENT INFORMATION
(all amounts in $000's)
Three months ended June 30,
Six months ended June 30,
2007
2006
2007
2006
Revenues:
Fee Timber
$
14,614
$
10,449
$
20,806
$
24,173
Timberland Management & Consulting (TM&C)
356
544
708
2,568
Real Estate
356
4,617
599
4,952
Total
15,326
15,610
22,113
31,693
EBITDDA:
Fee Timber
9,266
6,195
12,629
15,071
TM&C
(149
)
71
(259
)
1,250
Real Estate
(419
)
629
(936
)
324
General & Administrative
(1,656
)
(852
)
(2,627
)
(1,793
)
Total
7,042
6,043
8,807
14,852
Depreciation, depletion and amortization:
Fee Timber
2,122
2,181
2,916
4,825
TM&C
20
20
41
36
Real Estate
43
43
87
77
General & Administrative
50
50
104
113
Total
2,235
2,294
3,148
5,051
Operating income/(loss):
Fee Timber
7,289
4,014
9,694
10,246
TM&C
(169
)
37
(300
)
1,333
Real Estate
(462
)
586
(1,023
)
247
General & Administrative
(1,706
)
(902
)
(2,731
)
(1,906
)
Total
$
4,952
$
3,735
$
5,640
$
9,920
SELECTED STATISTICS
Three months ended
Six months ended
30-Jun-07
30-Jun-06
30-Jun-07
30-Jun-06
Log sale volumes (thousand board feet):
Sawlogs
Douglas-fir
15,991
11,842
23,106
28,282
Whitewood
2,922
1,149
3,713
3,145
Cedar
575
227
635
586
Hardwood
878
1,144
1,007
1,706
Pulp
All species
2,241
2,288
4,185
4,964
Total
22,607
16,650
32,646
38,683
Average price realizations (per thousand board feet):
Sawlogs
Douglas-fir
638
665
630
675
Whitewood
477
452
480
443
Cedar
1,333
1,182
1,320
993
Hardwood
945
670
910
646
Pulp
All species
398
260
430
255
Overall
626
603
611
606
Owned acres (A)
140,294
117,435
140,294
117,435
Acres under management
292,647
291,925
292,647
291,925
Capital expenditures ($000's)
$
3,101
$
2,713
$
4,410
$
4,148
Depletion ($000's)
$
2,038
$
2,119
$
2,749
$
4,692
Depreciation ($000's)
$
197
$
175
$
399
$
359
Debt to total capitalization
25
%
31
%
25
%
31
%
(A) 2007 acres include 23,858 acres owned by ORM Timberfund I, LP.
QUARTER TO QUARTER COMPARISONS
(Amounts in $000's except per unit data)
Q2 2007 vs. Q2 2006
Q2 2007 vs. Q1 2007
Total
Total
Net income:
2nd Quarter 2007
$
4,815
$
4,815
1st Quarter 2007
854
2nd Quarter 2006
3,540
Variance
$
1,275
$
3,961
Detail of earnings variance:
Fee Timber
Log price realizations (A)
$
520
$
1,085
Log volumes (B)
3,592
7,264
Depletion
81
(1,327
)
Production costs
(989
)
(2,145
)
Other Fee Timber
68
4
Timberland Management & Consulting
Management fee changes
(77
)
(1
)
Other Timberland Mgmnt & Consulting
(129
)
(37
)
Real Estate
Land sales
(1,370
)
-
Other Real Estate
326
103
General & administrative costs
(804
)
(681
)
Interest expense
96
38
Other (taxes, minority int., interest inc.)
(39
)
(342
)
Total change in earnings
$
1,275
$
3,961
(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.