Potlatch Corp.'s wood products segment swung to an operating loss of $600,000 in the third quarter from a $1.5 million profit in the year-earlier period, the company reported today. This occurred even though revenues grew 7.7% to $64.9 million.
"As expected, our wood products segment experienced price pressure during the third quarter, but lumber sales volumes were adequate to operate our mills at capacity and the segment managed to operate at a positive cash flow level," Michael Covey, the chairman, president, and chief executive officer, said in a statement.
The wood segment's quarterly operating loss was its first for Spokane, Wash.-based Potlatch since the final three months of 2009. Lumber shipment volumes increased 10% from 3Q2009, but sales prices decreased 2%.
Elsewhere in the company, the resource group's operating profit slumped by more than half to $24.3 million from a year-earlier $55.4 million, but the company noted that last year's results included a timber deed sale worth $41.5 million. Revenue dropped 29% drop to $74.4 million, with last year's extraordinary sale again skewing results. In fact, Potlatch called its third-quarter results "excellent," with a 14% rise in fee harvest volumes over last year's third quarter and prices up 16%.
Company-wide, net earnings shrank to $18.1 million from $45.8 million. EBITDA--earnings before interest, taxes, depreciation, and amortization, a popular way to track cash flow--totaled $56.4 million this quarter vs. $63 million a year ago. Excluding sales, EBITDA was $28.2 million in this year's third quarter and $14.4 million a year ago.
Looking forward, Potlatch said it expects lumber prices to remain under pressure the rest of this year and early in 2011. "In addition, lower lumber prices are putting modest downward pressure on sawlog pricing, impacting our resource segment's results," Covey said. "The third quarter is our seasonally strongest quarter in the resource business, and weather conditions often begin to deteriorate about mid-November, particularly in our Northern region, so we expect harvest levels and the demand for logs to decrease as we move through the fourth quarter."