Deltic Timber Corp : Preliminary Fourth quarter and Year of 2013 results

21O EAST ELM STREET ELDORADO, AR 71730

NYSE: DEL

FOR RELEASE February 26, 2014 CONTACT: Kenneth D. Mann lnvestor Relations (870) 881-6432

EL DORADO, AR- Deltic Timber Corporation (NVSE-DEL) announced today that net income for the fourth quarter of 2013 was $2.3 million, $.18 a share, compared to nelincome of $2.4 million, $.19 a share, for the fourth quarter of 2012. The slight decrease was mainly due lo a lower pine pulpwood harvest volume combined with the sale of fewer acres of non-strategie recreational-use hardwood bottomland, essentially offset by the margin on increased residentiallot sales activity and lower generai and administrative expenses. For the year of 2013, net income was $26.2 million, $2.06 a share, compared to $9.2 million, $.73 a share, for the twelve months ended December 31, 2012. Net cash provided by operating activities was $8.1 million for the fourth quarter of 2013, compared lo $3.1 million for the same period a year ago. Cash provided by operating activities for the year of 2013 was
$42.1 million compared to $24.1 million for the year of 2012.
Commenting on the results, President and Chief Executive Officer, Ray C. Dillon, stated, "Led by our Manufacturing segment, which was expanded during the year with the acquisition of the remaining ownership interest of Del- Tin Fiber, Deltic's operations established a new record for financial performance in 2013. The benefits of the Company's strategy of owning vertically integrated assets and managing them intensively lo achieve growing results were very evident. With the increased earnings and their resulting cash flows, we had sufficient working capitai available to use during 2013 to accomplish a
$33.6 million capitai program lo further improve our operations; pay $5.2 million to acquire the remaining ownership interest of Del- Tin Fiber; pay increased dividends,lor a total of $5.1 million distributed to our shareholders; repurchase $2.2 million of the Company's common stock; and stili repay $2 million of the debt outstanding under Deltic's revolving credi!facility''.
The Woodlands segment reported operating income of $3.4 million in the fourth quarter of 2013, compared lo $4.2 million for the same period a year ago. The pine sawtimber harvest during the fourth
quarter of 2013 was 103,263 tons, which compares to 101 ,845 tons harvested in the prior-year period. The average pine sawtimber sales price was $22 per ton in both periods. In the fourth quarter of 2013, the Company harvested 65,634 tons of pine pulpwood, compared to 116,441 tons harvested in 2012's fourth quarter, while the average per-ton sales price was $8 for both periods. The decrease in pine pulpwood harvest volume was due to the m ix of products growing on the specific timberland tracts harvested in the respective periods. Oil and gas revenues, consisting of lease rentals and net royalties, were $1.4 million for the fourth quarter of 2013 versus $1.2 million in 2012's fourth quarter. The increase was due to a higher average sales price for natural gas produced in the fourth quarter of 2013. Deltic sold 53 acres of non-strategie recreational-use hardwood bottomland in the fourth quarter of 2013, for an average price of $2,900 per acre versus 988 acres sold at an average sales price of $1 ,500 per acre in the fourth quarter of 2012.
The Company's Manufacturing segment reported operating income of $5.6 million during the fourth quarter of 2013 compared to $5.2 million for the same quarter of 2012. In the second quarter of
2013, Deltic acquired the balance of the ownership interest in Del-Tin Fiber from the Company's former
joint venture partner and has since consolidated the 2013 operating results of Del- Tin Fiber into the Manufacturing segment. Del- Tin Fiber's prior-period sales volume and average sales price of medium density fiberboard ("MDF") are provided for comparison purposes for this segment. The average lumber sales price was $355 per thousand board feet for the fourth quarter of 2013, an increase of $29 per thousand board feet when compared to $326 per thousand board feet reported in 2012's fourth quarter. The lumber sales volume was 65.4 million board feet in the fourth quarter of 2013 versus 69.2 million board feet for the same period a year ago, a decrease of 3.8 million board feet, as the Company reduced production to match demand. Deltic will continue to monitor lumber market conditions in order to match sawmill production to market demand. The average sales price for MDF sold during 2013's fourth quarter was $570 per thousand square feet, $29 per thousand square feet higher than the $541 per thousand square feet reported in the fourth quarter of 2012. MDF sales volume in the fourth quarter of 2013 was
22.6 m illion square feet, a 22 percent decrease from the 29 million square feet sold during the fourth quarter of 2012, as a combined result of market-related downtime taken during the quarter and the impact of a planned outage for plant maintenance during the month of December. Deltic will continue to monitor
the MDF market and make adjustments to the operating hours at Dei-Tin in arder to match the plant's production to market demand.
The Company's Real Estate segment reported an operating loss of $.2 million in the fourth
quarter of 2013 compared to an operating loss of $.4 million for the same period of 2012. Residential lot sales totaled 15 in 2013's fourth quarter, an increase of 3 lots when compared to 2012's fourth quarter. The average per-lot sales price in the fourth quarter of 2013 was $82,300, which compares to $70,000 per lot for 2012's fourth quarter. The Company had no commerciai real estate sales in the fourth quarter of either 2013 or 2012.
Corporale expense was $4.2 million for the fourth quarter of 2013, which compares to $4.5 million
for the same period of 2012, due to lower generai and administrative expenses. Deltic recorded income tax expense of $1.2 million in 2013's fourth quarter, which compares to $1.6 million in 2012's fourth quarter. The decrease was a result of lower pretax income combined with the benefit of a lower effective income tax rate in the fourth quarter of 2013.
Capitai expenditures were $8.1 million in the fourth quarter of 2013 and $33.6 million far the year of 2013. For the corresponding periods of 2012, capitai expenditures totaled $15.7 million and $24 million respectively. The quarter-over-quarter decrease was primarily due to the acquisition of fewer timberland acres in the 2013 quarter. The increase in the annual capitai program from 2012 to 2013 was mainly due to planned increased expenditures in the Manufacturing segment during 2013 far projects to improve productivity and efficiency.
Far the year of 2013, the pine sawtimber harvest level was 605,361 tons compared to 606,879 tons harvested in 2012, while the average pine sawtimber sales price was $22 per ton for both years.
The pine pulpwood harvest volume was 340,083 tons in 2013 compared to 474,834 tons in 2012, with no change in the average sales price of $8 per ton. Sales of non-strategie timberland for the year of 2013 totaled 1,677 acres with an average sales price of $1,500 per acre, while in 2012, the Company sold
1,776 acres with a per-acre sales price of $1,600. Oil and gas lease rental and net royalty income were
$5.1 million in 2013 versus $4.9 million in 2012. The average lumber sales price increased $75 per thousand board feet, or 24 percent, from $309 per thousand board feet in 2012 to $384 per thousand board feet in 2013. Lumber sales volume decreased 11.8 million board feet, !rom 272.9 million board feet
in 2012 to 261.1 million board feet in 2013, as Deltic adjusted sawmill operating hours to meet the market demand far lumber. The average sales price for MDF increased $55 per thousand square feet, or 11 percent, tram $523 per thousand square feet in 2012 to $578 per thousand square feet in 2013. MDF sales volume decreased trom 120.1 million square feet in 2012 to 107.7 million square feet in 2013, as Del-T in Fiber balanced production with demand. Residentiallot sales far the year of 2013 totaled 65 lots at an average sales price of $76,000 per lot compared to 50 lots at $69,600 per lot for 2012. The Company had no commerciai real estate acreage sales in either 2013 or 2012.
Regarding the outlook for the first quarter and year of 2014, Mr. Dillon stated, "We currently anticipate the pine sawtimber harvest to be 175,000 to 185,000 tons and 575,000 to 625,000 tons, respectively, depending on weather conditions in Deltic's operating area. Finished lumber sales are estimated to be 65 to 75 million board feet for the first quarter and 270 to 290 million board feet far the year. MDF sales volumes for the first quarter and year of 2014 are forecasted to be 25 to 35 million square feet and 11 O to 130 million square feet, respectively. Actual sales volumes for both finished lumber and MDF are dependent upon market conditions. Residentiallot sales are projected at 15 to 20 lots and 60 to 80 lots for the first quarter and year of 2014, respectively. Commerciai acreage within Chenal Valley continues to receive interest, but due to the volatile nature of commerciai real estate transactions and significant number of factors involved, it is difficult to anticipate future closings".
Statements included herein that are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" within the meaning of the federai securities laws. Sueh statements reflect the Company's current expectations and involve certain risks and uncertainties. Actual results could differ materially from those included in such forward-looking statements. Factors that could cause such differences include, but are not limited to, the cyclical nature of the industry, changes in interest rates, credi! availability, generai economie conditions, adverse weather, cast and availability of materials used to manufacture the Company's products, natura! gas pricing, and the other risk factors described from time to time in the reports and disclosure documents filed by the Company with the Securities and Exchange Commission.
Deltic will hold a conference cali on Thursday, February 27,2014, at 10:00 a.m. Centrai Time to discuss fourth quarter 2013 earnings. lnterested parties may participate in the cali by dialing
1-866-953-6856 and referencing participant passcode identification number 39325929. The cali will also be broadcast live aver the Internet and can be accessed through the lnvestor Relations section of the Deltic website, at www.deltic.com. Online replays of the cali will be available through the Deltic website, and a recording of the cali will be available until Thursday, March 6, 2014, by dialing 1-888-286-801O and referencing replay passcode identification number 37962685.
Summary financial data and operating statistics for the fourth quarter of 2013 and twelve months ended December 31, 2013 with comparisons to 2012 are contained in the following tables.
Deltic Timber Corporation SEGMENT INFORMATION (Preliminary and Unaudited)
(Millions of dollars)
Three Months Ended
December 31,2013
Operating lncome/
Sales (Loss)
Three Months Ended
December 31,2012
Operating lncome/
Sales (Loss)

Twelve Months Ended Twelve Months Ended

December 31, 2013 December 31, 2012
Operating Operating lneome/ lncome/
Sales (Loss) Sales (Loss)

Woodlands $ 33.8 16.8 37.3 18.4
Manufacturing 168.0 38.5 105.9 18.1

Real Estate 11.7 (1.4) 11.0 (2.1) Corporale (18.0) (17.4) Eliminations (13.8) (0.2) (13.3) 0.1

Total net sales/operating income $ 199.7 35.7 140.9 17.1
Deltic Timber Carparatian

CONSOLIDAlED STATEMENTS OF INCOME (Preliminary and Unaudited)

(Thausands af dallars, except per share amaunts)
Three Manths Ended Twelve Manths Ended

December 31, December 31,

2013 2012 2013 2012

Net sales $ 48,372 36,665 199,702 140,908
Casts and expenses
Cast af sales 35,491 24,956 130,752 94,706
Depreciatian, amartizatian, and
cast af fee timber harvested 3,904 2,321 15,131 10,642
Generai and administrative expenses 4,452 4,753 19,037 18,428

Tatal casts and expenses 43,847 32,030 164,920 123,776
Gain an invaluntary canversian af assets 881

Operating incarne 4,525 4,635 35,663 17,132
Equity in earnings af Dei-Tin Fiber 357 1,084 959 lnterest incarne 4 13 17 lnterest and ather debt expense, net
af capitalized interest (1 ,147) (1 ,018) (4,578) (4,092) Gain an bargain purchase 128 3,413
Other incame/(expense) (18) (21) 3,229 20

Incarne belare incarne taxes 3,489 3,957 38,824 14,036 lncome tax expense (1 '152) (1 ,553) (12,632) (4,801) Net incarne $ 2,337 2,404 26,192 9,235
Earnings per camman share
Basic $ 0.18 0.19 2.06 0.73
Assuming dilutian $ 0.18 0.19 2.05 0.73
Dividends per camman share paid $ 0.100 0.075 0.400 0.300
Weighted average camman shares autstanding (thausands)
Basic 12,547 12,538 12,566 12,525
Assuming dilutian 12,601 12,587 12,624 12,588
Deltic Timber Corporation CONSOLIDATED BALANCE SHEETS (Preliminary and Unaudited) (Thousands of dollars)
Dee. 3t,
20t3
Dee. 3t,

2012

Assets
Current assets
Cash and cash equivalents
Trade accounts receivable, net of allowance

Prepaid expenses and other current assets
Total current assets
lnvestment in real estate held far development and sale lnvestment in Del- Tin Fiber
Timber and timberlands- nel Property, plant, and equipment - net Deferred charges and other assets

Liabilities and Stockholders' Equity
Current liabilities
Trade accounts payable
Accrued taxes other than income taxes
Incame taxes payable
Deferred revenues and other accrued liabilities
Total current liabilities
Long-term debt
Deferred tax liabilities - net Other noncurrent liabilities Commitments and contingencies Stockholders' equity
Cummulative perferred stock
Common stock, t 2,8t 3,879 shares issued
Capitai in excess of par value
Retained earnings
Treasury stock
Accumulated other comprehensive loss
Total stockholders' equity
Totalliabilities and stockholders' equity

$ 4,374 5,6t3

7,33t 5,277 t2,439 4,894

3,155 2,808

27,299 t8.592
57,953 57,088
6,293
248,833 240,2t5
75,259 26,668

2,000 4,353

$ 4tt,344 353,209

$ 8,198 t ,98t

2,2t o t ,95t
t ,077
t0,330 9,094

2t,8t5 t3,026
90,000 63,000
7,5t 4 47t
25,743 44,482
t 28 t28

84,796 82,597 t89,720 t68,608 (5,693) (5,000) (2,679) (14.t 03)

266,272 232,230

$ 4t t ,344 353,209

Dellic Timber Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (Preliminary and Unaudited)
(Thousands of dollars)
Operating activities

December 31,

2013 2012
Nelincarne $ 26,192 9,235
Adjustments lo reconcile net incarne lo nelcash provided by operaling activilies:

lnvesting activities

Financing activities

Deltic Timber Corporation

OTHER DATA (Preliminary and Unaudited)

Woodlands
Pine sawtimber harvested from

Manufacturing
Finished lumber sales -
thousands of board feet 65,421 69,216 261,108 272,875
Finished lumber price -
per thousand board feet $ 355 326 384 309
Finished MDF sales- (3/4 inch basis)
thousands of square feet 22,611 28,974 107,698 120,108
Finished MDF price - (3/4 inch basis)
per thousand square feet $ 570 541 578 523
Real Estate
Residential

Commerciai
Acres so/d
Average sa/es price - per acre $

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