“Increased activity in the housing market resulted in stronger takeaway for our lumber business in the quarter and we closed over 40 transactions in our Real Estate business as the effects of the harsh winter faded,” said Michael Covey, chairman and chief executive officer of Potlatch Corporation. “We expect strong results in our Wood Products and Resource businesses in the second half of the year, particularly given that the third quarter is our seasonally highest harvest quarter. This quarter, our Real Estate segment also closed the second of two large sales that we planned this year. Our earnings are on track to increase for the third consecutive year,” concluded Mr. Covey.
Resource’s operating income was $10.8 million on revenues of $39.5 million in the second quarter, compared to operating income of $16.2 million on revenues of $51.9 million in the first quarter of 2014.Harvest volumes were seasonally lower in the Northern region due to spring breakup and wet weather constrained operations in the Southern region in the second quarter.Sawlog price realizations increased 9% in Idaho, which reflects the effect of indexing log prices to higher first quarter lumber prices.Log prices increased slightly in the Southern region due to a seasonally higher mix of hardwood sawlogs.Southern pine sawlog price realizations were flat.
Wood Products’ operating income was $14.9 million on revenues of $100.6 million in the second quarter, compared to operating income of $12.7 million on revenues of $87.8 million in the first quarter of 2014.Lumber shipments increased 13% in the second quarter of 2014 as a result of demand strengthening after the harsh winter weather ended.Average lumber prices realized in the second quarter were 1% higher than the first quarter of 2014.
Real Estate’s operating income was $12.4 million on revenues of $15.7 million in the second quarter, compared to operating income of $8.3 million on revenues of $14.4 million in the first quarter of 2014.Second quarter results included the sale of 9,400 acres of rural recreation property in Minnesota for $10 million.First quarter results included the sale of 11,000 acres of rural recreation property in Idaho for $11 million.
A replay of the conference call will be available two hours following the call until July 30, 2014 by calling 1-800-585-8367 for U.S./Canada or 1-404-537-3406 for international callers.Callers must enter conference I.D. number 66856712 to access the replay.
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 million acres of timberland in Arkansas, Idaho and Minnesota.Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of its forest resources.The company also conducts a land sales and development business and operates wood products manufacturing facilities through its taxable REIT subsidiary.
This press release contains certain forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended, including without limitation, statements about our expectations regarding future company performance; the direction of our business markets; the state of the domestic housing market; housing starts; business conditions in our Resource and Wood Products segments; lumber pricing; sawlog pricing; third quarter 2014 harvest levels; performance of our Wood Products, Resource and Real Estate segments in the second half of 2014; earnings growth; and similar matters.These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements.Factors that could cause actual results to differ materially include, but are not limited to, changes in timberland values; changes in timber harvest levels on the company’s lands; changes in timber prices; changes in policy regarding governmental timber sales; changes in the United States and international economies; changes in the level of construction activity; changes in Chinese demand; changes in tariffs, quotas and trade agreements involving wood products; changes in demand for our products; changes in production and production capacity in the forest products industry; competitive pricing pressures for our products; unanticipated manufacturing disruptions; changes in general and industry-specific environmental laws and regulations; unforeseen environmental liabilities or expenditures; weather conditions; changes in raw material, fuel and other costs; the ability to satisfy complex rules in order to remain qualified as a REIT; changes in tax laws that could reduce the benefits associated with REIT status; performance of agreements to purchase Idaho land; and other risks and uncertainties described from time to time in the company’s public filings with the Securities and Exchange Commission.The forward-looking statements are made as of the date of this press release and the company does not undertake to update any forward-looking statements.