POULSBO, Wash., Feb. 25, 2020 /PRNewswire/ -- Pope Resources
(NASDAQ:POPE) reported net loss attributable to unitholders of
$2.5 million, or $0.59 per ownership unit, on consolidated revenue
of $28.9 million for Q4 2019. This
compares to net loss attributable to unitholders of $1.7 million, or $0.41 per ownership unit, on consolidated revenue
of $22.6 million for Q4 2018. The Q4
2019 and Q4 2018 results include increases in the environmental
remediation liability for Port Gamble,
Washington of $1.6 million and
$2.7 million, respectively. Excluding
these charges, adjusted net loss attributable to
unitholders1 for Q4 2019 was $926,000, or $0.17
per unit, and adjusted net income attributable to unitholders for
Q4 2018 was $1.0 million or
$0.21 per ownership unit.
Full-year 2019 net income attributable to unitholders totaled
$2.4 million, or $0.52 per ownership unit, on consolidated revenue
of $109.9 million. This compares to
full-year 2018 net income attributable to unitholders of
$6.8 million, or $1.54 per ownership unit, on consolidated revenue
of $103.6 million. The 2019 and 2018
results include increases to the environmental remediation
liability for Port Gamble of
$1.6 million and $5.6 million, respectively. Excluding these
charges, adjusted net income attributable to unitholders was
$4.0 million and $12.4 million, or $0.93 and $2.84 per
ownership unit, for 2019 and 2018, respectively.
Consolidated cash provided by operations during Q4 2019 was
$7.1 million compared to $9.8 million during Q4 2018. Full-year 2019
consolidated cash provided by operations was $34.2 million compared to $39.8 million for full-year 2018.
Cash available for distribution (CAD)2 was
$1.3 million during Q4 2019 compared
to $4.9 million during Q4 2018.
Full-year 2019 CAD was $19.8 million compared to $18.5 million for full-year 2018.
"With log supply bolstered by mild weather and log demand
un-tensioned by lackluster export takeaway, it was a challenging
quarter for a log-seller like us and we did well to tread water
with average log price realizations," said Tom Ringo, President and CEO. "In contrast, our
Real Estate segment closed out 2019 with a flurry of three
significant closings: a $3.3 million
sale to the Port Gamble S'Klallam Tribe in conjunction with our
recently announced mediation agreement; a $2.6 million conservation easement sale in our
Hood Canal operating area; and the sale of an undeveloped parcel
for $1.1 million. These Real Estate
positives were partially offset by a $1.6
million addition to our environmental remediation accrual,
as we learned more about our obligations related to millsite
restoration and long-term monitoring. During the quarter, we also
incurred $3.4 million of general and
administrative expense leading up to our January announcement of
entering into a definitive merger agreement with Rayonier. We are
currently working through regulatory approvals and other customary
closing conditions, with an eye toward a mid-year closing."
The following table summarizes key metrics for the fourth
quarters and full year results of 2019 and 2018. Metrics presented
on a look-through basis represent the sum of the following two
components: Partnership on a stand-alone basis plus the
Partnership's share of its three private equity timber funds, based
on the Partnership's percentage ownership interest in each fund,
which ranges from 5% to 20%.
(in millions, except
volume and price data)
|
|
|
Q4 2019
|
Q4 2018
|
|
Full-year
2019
|
Full-year
2018
|
Volume (MMBF) -
Partnership
|
7.7
|
|
18.6
|
|
|
62.5
|
|
59.7
|
|
Volume (MMBF) -
Funds
|
30.0
|
|
16.6
|
|
|
81.1
|
|
77.0
|
|
Volume (MMBF) -
Look-through 3
|
12.0
|
|
20.2
|
|
|
73.1
|
|
68.7
|
|
Delivered log price
($/MBF) - Partnership
|
$543
|
|
$643
|
|
|
$604
|
|
$726
|
|
Delivered log price
($/MBF) - Funds
|
$585
|
|
$650
|
|
|
$589
|
|
$700
|
|
Delivered log price
($/MBF) - Look-through 3
|
$556
|
|
$643
|
|
|
$602
|
|
$725
|
|
Revenue -
consolidated
|
$28.9
|
|
$22.6
|
|
|
$109.9
|
|
$103.6
|
|
Net income (loss) -
consolidated
|
($5.7)
|
|
($3.4)
|
|
|
($10.0)
|
|
$7.6
|
|
Net income (loss)
attributable to unitholders
|
($2.5)
|
|
($1.7)
|
|
|
$2.4
|
|
$6.8
|
|
Adjusted net income
(loss) attributable to unitholders
|
($0.9)
|
|
$1.0
|
|
|
$4.0
|
|
$12.4
|
|
Cash flow from
operations - consolidated
|
$7.1
|
|
$9.8
|
|
|
$34.2
|
|
$39.8
|
|
Cash available for
distribution (CAD) 2
|
$1.3
|
|
$4.9
|
|
|
$19.8
|
|
$18.5
|
|
Debt, net of
unamortized debt issuance costs - Partnership
|
|
|
|
$96.5
|
|
$94.0
|
|
Debt, net of
unamortized debt issuance costs - Funds
|
|
|
|
$57.3
|
|
$57.3
|
|
Partnership Timber
Partnership Timber operating income during Q4 2019 was
$1.0 million, compared to
$5.0 million in Q4 2018. Adjusted
EBITDDA4 for this segment during Q4 2019 was
$1.5 million, versus $6.2 million in Q4 2018. The decline in both
metrics is attributable primarily to a 59% decrease in harvest
volume and a 16% decrease in average realized log prices.
For the full year 2019, operating income was $15.2 million, compared to $21.3 million in 2018. Adjusted EBITDDA for 2019
was $19.7 million, versus
$25.3 million in 2018. The decline in
both metrics was attributable to a 17% decrease in average realized
log prices, offset partially by a 5% increase in harvest volume. In
2019, average realized log prices for the Partnership in 2019
declined from the all-time historical highs achieved in 2018 as the
result of a well-supplied domestic log market due to limited supply
disruptions in the Pacific Northwest and diminished export demand,
particularly from China. The
increase in harvest volume is attributable to raising the
Partnership's sustainable harvest volume to 57 million board feet
(MMBF) during 2019, from 52 MMBF previously. The extra
harvest volume above the sustainable level in 2018 and 2019 is
attributable to harvesting timber on recent small tract
acquisitions and from real estate tracts that are not part of the
sustainable cut calculation.
Funds Timber
Funds Timber generated an operating loss of $1.3 million during Q4 2019, compared to
operating loss of $152,000 in Q4
2018. Note that these operating income figures benefit from the
elimination of $1.5 million and
$1.2 million of management fees paid
by the Funds to the Partnership in Q4 2019 and Q4 2018,
respectively, resulting from the consolidation of the Funds into
our financial statements. Adjusted EBITDDA for this segment during
Q4 2019 was $7.0 million, versus
$3.4 million in Q4 2018. Delivered
log volume more than doubled in Q4 2019 versus Q4 2018, and average
realized log prices declined 10%. During Q4 2019, the Funds sold
timber deeds on 5.2 million MMBF of volume compared to 4.3 MMBF
during Q4 2018. The Partnership's share of Adjusted EBITDDA from
this segment for Q4 2019 was $1.1
million, versus $203,000
during Q4 2018.
For the full year 2019, Funds Timber generated an operating loss
of $5.3 million, versus operating
income of $8.4 million in 2018. Note
that these operating income (loss) figures benefit from the
elimination of $5.7 million and
$4.6 million of management fees paid
by the Funds to the Partnership in 2019 and 2018, respectively,
resulting from the consolidation of the Funds into our financial
statements. Adjusted EBITDDA for this segment was $15.8 million in 2019, versus $26.8 million in 2018. Harvest volume, including
timber deed sales, was 81.1 MMBF in 2019, a 5% increase over 2018,
due to the added operations from the acquisition of a tree farm in
Q4 2018 and another in Q1 2019. Average realized log prices during
2019 were $589/MBF, a decrease of 16%
from 2018. The Partnership's share of Adjusted EBITDDA from this
segment for 2019 was $2.1 million,
versus $3.2 million for 2018.
Timberland Investment Management (TIM)
Total revenue, on an internal reporting basis (substantially all
of which is eliminated in consolidation) amounted to $1.5 million during Q4 2019 versus $1.2 million in Q4 2018. The increase in
quarterly revenues is attributable to timberland acquisitions in Q4
2018 and Q1 2019 by Fund IV. After eliminations, TIM generated an
operating loss of $1.3 million during
Q4 2019, compared to an operating loss of $1.2 million in Q4 2018. The larger operating
loss in 2019 is due primarily to increased costs associated with
managing our expanding timber fund portfolios. Adjusted EBITDDA
during Q4 2019 was $174,000 versus a
loss of $5,000 in Q4 2018.
After the elimination of revenue of $5.7
million in 2019 and $4.6
million in 2018, TIM generated an operating loss of
$4.9 million in 2019 and $4.5 million in 2018. The increase in eliminated
revenue is due to the acquisition of three tree farms in 2018 and
one tree farm in 2019 by Fund IV. The increase in operating
expenses in 2019 compared to 2018 is attributable to additional
costs associated with managing Fund IV's expanding timberland
portfolio. Adjusted EBITDDA for 2019 was $679,000 versus $82,000 for 2018.
Real Estate
Real Estate generated operating income of $2.4 million during Q4 2019, compared to an
operating loss of $3.6 million in Q4
2018. Adjusted EBITDDA for the Real Estate segment was $4.1 million during Q4 2019, versus a loss of
$777,000 in Q4 2018. The increase in
both metrics is due primarily to strong Q4 2019 results from the
sale of a 921-acre parcel of timberland for $3.3 million, though we retained timber deeds for
periods ranging from five to 15 years on 128 of those acres; a
conservation easement sale on 1,937 acres of our Hood Canal tree
farm for $2.6 million; and the sale
of a 210-acre parcel of undeveloped land for $1.1 million. By contrast, Q4 2018 only included
the sale of a commercial parcel in Bremerton, Washington, along with a parcel of
undeveloped land for a combined $480,000.
With respect to operating income, Q4 2019 included environmental
remediation expense of $1.6 million
compared to $2.7 million in Q4 2018,
in each case reflecting an increase to the liability as elements of
the project became more clearly defined.
Full year 2019 operating income was $3.1
million, versus an operating loss of $5.4 million in 2018. Results for 2019 and 2018
include $1.6 million and $5.6 million of environmental remediation
expenses, respectively, for our project at Port Gamble. Adjusted EBITDDA for 2019 was
$5.3 million, versus $827,000 in 2018. In addition to the above
mentioned Q4 transactions, 2019 also included the sale of the final
65 residential lots from our Harbor Hill project in Gig Harbor, Washington for $12.0 million and seven residential rural lots
for a combined $770,000. Besides the
Q4 2018 sales mentioned above, 2018 also included a $3.7 million conservation easement sale and the
sale of four residential parcels in Kitsap County for $2.1
million.
General & Administrative (G&A)
G&A expenses were $5.4 million
during Q4 2019 and $12.1 million for
the full year 2019 compared to $2.3
million in Q4 2018 and $7.2
million for full year 2018. The increase in G&A expenses
is due primarily to legal and professional fees of $3.4 million in Q4 2019 and $5.3 million for the full year of 2019 related to
our strategic evaluation project, which ultimately led to the
recently announced pending merger with Rayonier, Inc. and its
subsidiaries.
Partnership Capital Allocation (excluding the Funds)
In Q4 2019, the Partnership paid a quarterly cash distribution
to unitholders of $4.4 million,
representing $1.00 per unit. Q4 2019
capital outflows were financed by net borrowings of $4.1 million and CAD of $1.3 million (that is net of capital expenditures
of $397,000, environmental
remediation payments of $167,000, and
Real Estate development project expenditures of $150,000).
For full year 2019, the Partnership paid total distributions to
unitholders of $17.4 million,
representing $4.00 per unit. Other
capital outlays consisted of $3.0
million of co-investment in Fund IV, $863,000 of unit repurchases at an average price
of $68.63 per unit, and 322 acres of
small tract timberland acquisitions totaling $781,000. These capital outlays were
financed by $19.8 million of CAD
(that is net of Real Estate capital expenditures of $2.8 million, maintenance capital expenditures of
$1.7 million, and environmental
remediation payments of $649,000),
and net borrowings of $2.5
million.
About Pope Resources
Pope Resources, a publicly traded limited partnership, and its
subsidiaries Olympic Resource Management and Olympic Property
Group, own or manage 122,000 acres of timberland and 1,500 acres of
development property in Washington. In addition, Pope Resources
co-invests in and consolidates three private equity timber funds
that own 141,000 acres of timberland in Washington, Oregon, and California. The Partnership and its
predecessor companies have owned and managed timberlands and
development properties for over 165 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.
Forward Looking Statements
This press release contains a number of projections and
statements about our expected financial condition, operating
results, business plans and objectives, and about management's
plans for future operations and strategies, as well as discussions
about future plans and intentions for reinvestment and deployment
of capital. These statements reflect management's estimates and
intentions based on current goals and 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. Among those forward-looking statements
contained in this report are statements about management's
expectations for future log prices, harvest volumes and markets,
statements about our expectations for future sales in our Real
Estate segment and our Fund operations, statements that reflect the
timing or likelihood of completion of our previously announced
merger with Rayonier, Inc., statements about the expected
availability of and potential future uses of capital resources, and
statements about management's expectations for future remediation
efforts at Port Gamble. Readers,
however, should note that all statements other than expressions of
historical fact are forward-looking in nature. Some of the factors
that may cause actual operating results and financial condition to
fall short of expectations, or that may cause us to deviate from
our current plans, include our ability to accurately predict
fluctuations in log markets domestically and internationally, and
to adjust our harvest volumes in a timely and appropriate manner;
political sensitivities and events, including the reactions of
foreign governments and international treaty organizations and
similar bodies, that may affect the cost of competing products and
demand for our products; the activities of activist investors and
management's responses to those actions, including uncertainties
that surround the expectations of these and other potential
activists; our ability to anticipate and manage interest rate risk
as it affects our borrowing costs; costs that arise in connection
with the completion of our proposed merger with Rayonier, Inc.,
fluctuations in interest rates that affect the U.S. housing market
and related demand for our products from that market; our ability
to estimate the cost of ongoing and changing environmental
remediation obligations, including our ability to anticipate and
address the political and regulatory climate that impacts these
obligations; increasing reliance on engineered, recycled, and other
alternative products as a competitive factor for our products; our
ability to consummate various pending and anticipated real estate
transactions on the terms management expects; housing market
conditions that affect demand for both our forest products and our
real estate offerings; our ability to manage our timber funds and
their assets in a manner that our investors consider acceptable,
and to raise additional capital or establish new funds on terms
that are advantageous to the Partnership; conditions in the housing
construction and wood-products markets, both domestically and
globally, that affect demand for our products; the effects of
competition, particularly by larger and better-financed
competitors; fluctuations in foreign currency exchange rates that
affect both competition for sales of our products and our
customers' demand for them; conditions affecting credit markets as
they affect the availability of capital and costs of borrowing for
us, and the related impacts on purchasers of forest products and
development properties; labor, equipment and transportation costs
that affect our net income; our ability to anticipate and mitigate
potential impacts of our operations on adjacent properties; the
impacts of natural disasters on our timberlands and on surrounding
areas; and our ability to discover and to accurately estimate other
liabilities associated with our assets. Factors that may affect the
timing and likelihood of our proposed merger with Rayonier, Inc.,
include the potential for unitholder litigation and the related
costs and risks; the requirement to obtain the approval of our
unitholders (including the potential that one or more unitholders
may seek to influence the outcome of such approval); the potential
for one or more competing transactions; and the satisfaction or
waiver of other conditions precedent to the merger. Other risk
factors are set forth in that part of our Annual Report on Form
10-K entitled "Risk Factors," and in our other filings with the
Securities and Exchange Commission from time to time.
Forward-looking statements in this release are made only as of
the date shown above, and we cannot undertake to update these
statements.
We utilize the following performance and liquidity measures to
enhance the reader's understanding of our operating performance and
ability to generate cash. These measures are not defined by GAAP
and they are not intended to conflict with or change any of the
GAAP disclosures herein.
1 Adjusted net income attributable to unitholders
excludes environmental remediation expense. As disclosed in our
Form 10-K, our environmental remediation project at Port Gamble is the result of operations
conducted by the former owner of the site. As such, it does not
result from our continuing operations and will not impact our
operating results once the project is completed. Moreover, this
item represents our only non-core operating activity and is a
matter over which management has limited control. We believe that
eliminating this expense from our per unit metrics provides
management (and thus investors) with insight into results from our
core operating activities. Our definition of adjusted net income
attributable to unitholders is limited in that it excludes an
expense that has historically been material. We believe, therefore,
it is important to view this measure as providing supplemental
information to our net income attributable to unitholders.
2 Management uses cash available for distributions
(CAD) as a meaningful indicator of liquidity and, as such, has
provided this information in addition to the generally accepted
accounting principles (GAAP)-based presentation of cash provided by
operating activities. Management considers this metric in
evaluating capital allocation alternatives. CAD is calculated for
the Partnership only and is a measure of cash generated by the
Partnership that starts with consolidated cash provided by
operating activities and subtracts cash provided by operating
activities for the Funds and capital expenditures of the
Partnership only, and adds distributions received by the
Partnership from the Funds. CAD represents cash generated that is
available to the Partnership for capital allocation alternatives,
such as distributions to unitholders, repurchasing units, paying
down debt, co-investing in the Funds, acquisition of timberland and
real estate, and other discretionary and nondiscretionary
activities. Our definition of CAD is limited in that it does not
solely represent residual cash flows available for discretionary
expenditures since the measure does not deduct required principal
payments on the Partnership's debt and other contractual
obligations. We believe, therefore, it is important to view CAD as
a measure that provides supplemental information to our
Consolidated Statements of Cash Flows. Our definition of CAD may be
different from similarly titled measures reported by other
companies, including those in our industry. CAD is not necessarily
indicative of the CAD that may be generated in future periods. CAD
is a non-GAAP liquidity measure which is reconciled to the GAAP
measure of cash provided by operating activities in the tables
below.
3 "Look-through" results present the Partnership
on a stand-alone basis plus the Partnership's minority share of
each fund: 20% for Fund II, 5% for Fund III, and 15% for Fund IV.
These look-through financial measures are presented as supplemental
information with which readers can obtain an additional perspective
on certain aspects of our performance after giving effect to the
Partnership's controlling, but minority, interests in its private
equity timber funds.
4 We define Adjusted EBITDDA as earnings before
interest, taxes, depletion, depreciation, amortization, gain or
loss on timberland sold, and environmental remediation expense. In
addition, we reflect Adjusted EBITDDA on an internal reporting
basis without eliminating inter-segment activity, which has no net
impact on total Adjusted EBITDDA. Accordingly, fees earned from
managing the funds are reflected in the Timberland Investment
Management segment and this same amount is reflected as expense in
the Funds Timber segment. We believe Adjusted EBITDDA captures the
ongoing operations of each of our segments and is a useful
supplemental metric to assess the segments' financial performance.
Our definition of Adjusted EBITDDA may be different from similarly
titled measures reported by other companies, including those in our
industry. Adjusted EBITDDA is not necessarily indicative of the
Adjusted EBITDDA that may be generated in future periods. Adjusted
EBITDDA is a non-GAAP performance measure which is reconciled to
the GAAP measure of operating income in the tables below.
CONDENSED
CONSOLIDATING STATEMENTS OF INCOME
(LOSS) (in millions, except
per unit amounts - unaudited)
|
|
Q4
2019
|
|
Q4 2018
|
|
Partner-
ship
|
|
ORM
Timber
Funds
|
|
Consol-
idating
Entries
|
|
Consol-
idated
|
|
Partner-
ship
|
|
ORM
Timber
Funds
|
|
Consol-
idating
Entries
|
|
Consol-
idated
|
Revenue
|
$14.0
|
|
|
$16.8
|
|
|
($1.8)
|
|
|
$28.9
|
|
|
$15.0
|
|
|
$9.1
|
|
|
($1.5)
|
|
|
$22.6
|
|
Cost of
sales
|
(4.1)
|
|
|
(16.4)
|
|
|
—
|
|
|
(20.5)
|
|
|
(6.5)
|
|
|
(8.0)
|
|
|
—
|
|
|
(14.4)
|
|
Operating
expenses
|
(10.2)
|
|
|
(3.1)
|
|
|
1.8
|
|
|
(11.4)
|
|
|
(6.8)
|
|
|
(2.5)
|
|
|
1.5
|
|
|
(7.8)
|
|
Environmental
remediation
|
(1.6)
|
|
|
—
|
|
|
—
|
|
|
(1.6)
|
|
|
(2.7)
|
|
|
—
|
|
|
—
|
|
|
(2.7)
|
|
Gain on sale of
timberland
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Operating
loss
|
(1.8)
|
|
|
(2.7)
|
|
|
—
|
|
|
(4.5)
|
|
|
(1.0)
|
|
|
(1.3)
|
|
|
—
|
|
|
(2.3)
|
|
Net interest
expense
|
(0.8)
|
|
|
(0.6)
|
|
|
—
|
|
|
(1.4)
|
|
|
(0.7)
|
|
|
(0.5)
|
|
|
—
|
|
|
(1.2)
|
|
Income tax
benefit
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Net loss
|
(2.6)
|
|
|
(3.1)
|
|
|
—
|
|
|
(5.7)
|
|
|
(1.6)
|
|
|
(1.8)
|
|
|
—
|
|
|
(3.4)
|
|
Net loss attributable
to noncontrolling interests (NCI)
|
0.4
|
|
|
2.8
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
1.6
|
|
Net income (loss)
attributable to unitholders
|
($2.2)
|
|
|
($0.3)
|
|
|
$—
|
|
|
($2.5)
|
|
|
($1.6)
|
|
|
($0.2)
|
|
|
$—
|
|
|
($1.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average units outstanding
|
|
|
|
|
|
|
4.317
|
|
|
|
|
|
|
|
|
4.313
|
|
Basic and diluted
loss per unit
|
|
|
|
|
|
|
($0.59)
|
|
|
|
|
|
|
|
|
($0.41)
|
|
CONDENSED
CONSOLIDATING STATEMENTS OF INCOME
(LOSS) (in millions, except
per unit amounts - unaudited)
|
|
Full-year
2019
|
|
Full-year
2018
|
|
Partner-
ship
|
|
ORM
Timber
Funds
|
|
Consol-
idating
Entries
|
|
Consol-
idated
|
|
Partner-
ship
|
|
ORM
Timber
Funds
|
|
Consol-
idating
Entries
|
|
Consol-
idated
|
Revenue
|
$68.3
|
|
|
$48.6
|
|
|
($7.0)
|
|
|
$109.9
|
|
|
$59.3
|
|
|
$49.8
|
|
|
($5.6)
|
|
|
$103.6
|
|
Cost of
sales
|
(31.0)
|
|
|
(48.1)
|
|
|
—
|
|
|
(79.2)
|
|
|
(21.4)
|
|
|
(36.7)
|
|
|
—
|
|
|
(58.1)
|
|
Operating
expenses
|
(28.9)
|
|
|
(11.3)
|
|
|
7.0
|
|
|
(33.2)
|
|
|
(23.6)
|
|
|
(9.2)
|
|
|
5.6
|
|
|
(27.2)
|
|
Environmental
remediation
|
(1.6)
|
|
|
—
|
|
|
—
|
|
|
(1.6)
|
|
|
(5.6)
|
|
|
—
|
|
|
—
|
|
|
(5.6)
|
|
Gain on sale of
timberland
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Operating income
(loss)
|
6.8
|
|
|
(10.8)
|
|
|
—
|
|
|
(4.0)
|
|
|
8.8
|
|
|
3.8
|
|
|
—
|
|
|
12.6
|
|
Net interest
expense
|
(3.6)
|
|
|
(2.2)
|
|
|
—
|
|
|
(5.8)
|
|
|
(2.6)
|
|
|
(2.2)
|
|
|
—
|
|
|
(4.9)
|
|
Income tax benefit
(expense)
|
(0.1)
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.2)
|
|
|
0.1
|
|
|
(0.2)
|
|
|
—
|
|
|
(0.1)
|
|
Net income
(loss)
|
3.2
|
|
|
(13.2)
|
|
|
—
|
|
|
(10.0)
|
|
|
6.2
|
|
|
1.4
|
|
|
—
|
|
|
7.6
|
|
Net (income) loss
attributable to noncontrolling interests (NCI)
|
0.6
|
|
|
11.8
|
|
|
—
|
|
|
12.4
|
|
|
0.1
|
|
|
(0.9)
|
|
|
—
|
|
|
(0.8)
|
|
Net income (loss)
attributable to unitholders
|
$3.8
|
|
|
($1.3)
|
|
|
$—
|
|
|
$2.4
|
|
|
$6.3
|
|
|
$0.5
|
|
|
$—
|
|
|
$6.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average units outstanding
|
|
|
|
|
|
|
4.321
|
|
|
|
|
|
|
|
|
4.317
|
|
Basic and diluted
earnings per unit
|
|
|
|
|
|
|
$0.52
|
|
|
|
|
|
|
|
|
$1.54
|
|
CONDENSED
CONSOLIDATING BALANCE SHEETS
|
(in millions -
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
Assets:
|
Partner-
ship
|
|
ORM Timber
Funds
|
|
Consol-
idating
Entries
|
|
Consol-
idated
|
|
Partner-
ship
|
|
ORM Timber
Funds
|
|
Consol-
idating
Entries
|
|
Consol-
idated
|
Cash
|
$2.0
|
|
|
$6.2
|
|
|
$—
|
|
|
$8.2
|
|
|
$1.8
|
|
|
$3.3
|
|
|
$—
|
|
|
$5.1
|
|
Restricted
cash
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
Land and timber held
for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
Other current
assets
|
3.8
|
|
|
4.9
|
|
|
(1.1)
|
|
|
7.7
|
|
|
4.6
|
|
|
4.9
|
|
|
(1.0)
|
|
|
8.6
|
|
Total current
assets
|
6.7
|
|
|
11.1
|
|
|
(1.1)
|
|
|
16.8
|
|
|
13.1
|
|
|
8.3
|
|
|
(1.0)
|
|
|
20.4
|
|
Timber and
roads
|
69.6
|
|
|
297.7
|
|
|
—
|
|
|
367.3
|
|
|
72.4
|
|
|
305.6
|
|
|
—
|
|
|
378.0
|
|
Timberland
|
19.6
|
|
|
57.4
|
|
|
—
|
|
|
77.0
|
|
|
19.7
|
|
|
54.5
|
|
|
—
|
|
|
74.3
|
|
Land held for
development
|
20.2
|
|
|
—
|
|
|
—
|
|
|
20.2
|
|
|
20.9
|
|
|
—
|
|
|
—
|
|
|
20.9
|
|
Buildings and
equipment, net
|
5.3
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
5.5
|
|
|
—
|
|
|
—
|
|
|
5.5
|
|
Investment in ORM
Timber Funds & Real Estate joint venture
|
36.0
|
|
|
—
|
|
|
(36.0)
|
|
|
—
|
|
|
36.0
|
|
|
—
|
|
|
(36.0)
|
|
|
—
|
|
Other
assets
|
6.6
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|
7.3
|
|
|
2.0
|
|
|
—
|
|
|
9.3
|
|
Total assets
|
$164.1
|
|
|
$366.3
|
|
|
($37.1)
|
|
|
$493.3
|
|
|
$174.9
|
|
|
$370.4
|
|
|
($37.0)
|
|
|
$508.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
$7.8
|
|
|
$3.5
|
|
|
($1.1)
|
|
|
$10.2
|
|
|
$6.5
|
|
|
$3.2
|
|
|
($1.0)
|
|
|
$8.8
|
|
Current portion of
long-term debt
|
0.1
|
|
|
25.0
|
|
|
—
|
|
|
25.1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Current portion of
environmental remediation
|
1.1
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
Total current
liabilities
|
9.0
|
|
|
28.5
|
|
|
(1.1)
|
|
|
36.5
|
|
|
7.7
|
|
|
3.2
|
|
|
(1.0)
|
|
|
10.0
|
|
Long-term debt, net
of current portion and unamortized debt issuance costs
|
96.4
|
|
|
32.3
|
|
|
—
|
|
|
128.8
|
|
|
93.9
|
|
|
57.3
|
|
|
—
|
|
|
151.2
|
|
Environmental
remediation and other long-term liabilities
|
9.1
|
|
|
—
|
|
|
—
|
|
|
9.1
|
|
|
8.1
|
|
|
0.3
|
|
|
—
|
|
|
8.4
|
|
Total
liabilities
|
114.5
|
|
|
60.8
|
|
|
(1.1)
|
|
|
174.3
|
|
|
109.8
|
|
|
60.9
|
|
|
(1.0)
|
|
|
169.6
|
|
Partners'
capital
|
45.0
|
|
|
305.5
|
|
|
(307.7)
|
|
|
42.8
|
|
|
59.2
|
|
|
309.5
|
|
|
(311.3)
|
|
|
57.5
|
|
Noncontrolling
interests
|
4.5
|
|
|
—
|
|
|
271.7
|
|
|
276.2
|
|
|
5.9
|
|
|
—
|
|
|
275.2
|
|
|
281.1
|
|
Total liabilities and equity
|
$164.1
|
|
|
$366.3
|
|
|
($37.1)
|
|
|
$493.3
|
|
|
$174.9
|
|
|
$370.4
|
|
|
($37.0)
|
|
|
$508.2
|
|
RECONCILIATION
BETWEEN NET INCOME AND CASH FLOWS FROM OPERATIONS
|
(in millions -
unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
($5.7)
|
|
|
($3.4)
|
|
|
($10.0)
|
|
|
$7.6
|
|
Add back
(deduct):
|
|
|
|
|
|
|
|
Depletion
|
10.3
|
|
|
6.0
|
|
|
31.2
|
|
|
27.1
|
|
Equity-based
compensation
|
0.2
|
|
|
0.2
|
|
|
1.2
|
|
|
1.1
|
|
Real estate project
expenditures
|
(0.2)
|
|
|
(1.0)
|
|
|
(2.8)
|
|
|
(3.2)
|
|
Depreciation and
amortization
|
0.2
|
|
|
0.2
|
|
|
0.8
|
|
|
0.6
|
|
Deferred
taxes
|
—
|
|
|
(0.1)
|
|
|
0.1
|
|
|
(0.1)
|
|
Cost of land
sold
|
0.7
|
|
|
0.3
|
|
|
9.3
|
|
|
1.7
|
|
Gain on sale of
timberland
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
Gain on disposal of
property and equipment
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
Environmental
remediation accruals
|
1.6
|
|
|
2.7
|
|
|
1.6
|
|
|
5.6
|
|
Environmental
remediation payments
|
(0.2)
|
|
|
(0.4)
|
|
|
(0.6)
|
|
|
(1.5)
|
|
Change in other
operating accounts
|
0.3
|
|
|
5.2
|
|
|
3.7
|
|
|
0.8
|
|
Cash provided by
operations
|
$7.1
|
|
|
$9.8
|
|
|
$34.2
|
|
|
$39.8
|
|
RECONCILIATION
BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO
UNITHOLDERS AND ADJUSTED NET INCOME ATTRIBUTABLE TO
UNITHOLDERS,
INCLUDING PER UNIT AMOUNTS (in millions, except per unit amounts -
unaudited)
|
|
Quarter ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) attributable to unitholders
|
($2.5)
|
|
|
($1.7)
|
|
|
$2.4
|
|
|
$6.8
|
|
Added
back:
|
|
|
|
|
|
|
|
Environmental
remediation
|
1.6
|
|
|
2.7
|
|
|
1.6
|
|
|
5.6
|
|
Adjusted net income
(loss) attributable to unitholders1
|
$
|
(0.9)
|
|
|
$
|
1.0
|
|
|
$
|
4.0
|
|
|
$
|
12.4
|
|
|
|
|
|
|
|
|
|
Per unit
amounts:
|
|
|
|
|
|
|
|
GAAP basic and
diluted net income (loss) per unit
|
($0.59)
|
|
|
($0.41)
|
|
|
$0.52
|
|
|
$1.54
|
|
Added
back:
|
|
|
|
|
|
|
|
Environmental
remediation
|
0.42
|
|
|
0.62
|
|
|
0.41
|
|
|
1.30
|
|
Adjusted basic and
diluted net income (loss) per unit1
|
($0.17)
|
|
|
$0.21
|
|
|
$0.93
|
|
|
$2.84
|
|
SEGMENT ADJUSTED
EBITDDA (in millions -
unaudited)
|
|
Partnership
Timber
|
Funds
Timber
|
TIM
|
Real
Estate
|
G&A and
Other
|
Consolidated
|
Q4 2019
|
|
|
|
|
|
|
Operating income
(loss) - external
|
$1.0
|
|
($1.3)
|
|
($1.3)
|
|
$2.4
|
|
($5.4)
|
|
($4.5)
|
|
Intersegment
activity
|
—
|
|
(1.5)
|
|
1.4
|
|
0.1
|
|
—
|
|
—
|
|
Operating income
(loss) - internal
|
1.0
|
|
(2.7)
|
|
0.2
|
|
2.4
|
|
(5.4)
|
|
(4.5)
|
|
Depletion,
depreciation, and amortization
|
0.6
|
|
9.7
|
|
—
|
|
0.1
|
|
—
|
|
10.4
|
|
Environmental
remediation expense
|
—
|
|
—
|
|
—
|
|
1.6
|
|
—
|
|
1.6
|
|
Gain on sale of
timberland
|
(0.1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.1)
|
|
Adjusted
EBITDDA
|
1.5
|
|
7.0
|
|
0.2
|
|
4.1
|
|
(5.4)
|
|
7.3
|
|
Less Adjusted EBITDDA
attributable to NCI
|
—
|
|
(5.9)
|
|
—
|
|
0.4
|
|
—
|
|
(5.5)
|
|
Look-through Adjusted
EBITDDA
|
$1.5
|
|
$1.1
|
|
$0.2
|
|
$4.5
|
|
($5.4)
|
|
$1.9
|
|
|
|
|
|
|
|
|
Q4 2018
|
|
|
|
|
|
|
Operating income
(loss) - external
|
$5.0
|
|
($0.2)
|
|
($1.2)
|
|
($3.6)
|
|
($2.3)
|
|
($2.3)
|
|
Intersegment
activity
|
—
|
|
(1.2)
|
|
1.2
|
|
0.1
|
|
—
|
|
—
|
|
Operating income
(loss) - internal
|
4.9
|
|
(1.3)
|
|
—
|
|
(3.5)
|
|
(2.3)
|
|
(2.3)
|
|
Depletion,
depreciation, and amortization
|
1.3
|
|
4.7
|
|
—
|
|
0.1
|
|
—
|
|
6.2
|
|
Environmental
remediation expense
|
—
|
|
—
|
|
—
|
|
2.7
|
|
—
|
|
2.7
|
|
Adjusted
EBITDDA
|
6.2
|
|
3.4
|
|
—
|
|
(0.8)
|
|
(2.3)
|
|
6.5
|
|
Less Adjusted EBITDDA
attributable to NCI
|
—
|
|
(3.2)
|
|
—
|
|
—
|
|
—
|
|
(3.2)
|
|
Look-through Adjusted
EBITDDA
|
$6.2
|
|
$0.2
|
|
$—
|
|
($0.8)
|
|
($2.3)
|
|
$3.4
|
|
|
|
Partnership
Timber
|
Funds
Timber
|
TIM
|
Real
Estate
|
G&A and
Other
|
Consolidated
|
Full-year
2019
|
|
|
|
|
|
|
Operating income
(loss) - external
|
$15.2
|
|
($5.3)
|
|
($4.9)
|
|
$3.1
|
|
($12.1)
|
|
($4.0)
|
|
Intersegment
activity
|
(0.2)
|
|
(5.5)
|
|
5.5
|
|
0.4
|
|
(0.1)
|
|
—
|
|
Operating income
(loss) - internal
|
15.0
|
|
(10.8)
|
|
0.6
|
|
3.5
|
|
(12.2)
|
|
(4.0)
|
|
Depletion,
depreciation, and amortization
|
4.8
|
|
26.7
|
|
0.1
|
|
0.3
|
|
—
|
|
31.8
|
|
Environmental
remediation expense
|
—
|
|
—
|
|
—
|
|
1.6
|
|
—
|
|
1.6
|
|
Gain on sale of
timberland
|
(0.1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.1)
|
|
Adjusted
EBITDDA
|
19.7
|
|
15.8
|
|
0.7
|
|
5.3
|
|
(12.2)
|
|
29.3
|
|
Less Adjusted EBITDDA
attributable to NCI
|
—
|
|
(13.7)
|
|
—
|
|
0.6
|
|
—
|
|
(13.1)
|
|
Look-through Adjusted
EBITDDA
|
$19.7
|
|
$2.1
|
|
$0.7
|
|
$5.9
|
|
($12.2)
|
|
$16.2
|
|
|
|
|
|
|
|
|
Full-year
2018
|
|
|
|
|
|
|
Operating income
(loss) - external
|
$21.3
|
|
$8.4
|
|
($4.5)
|
|
($5.4)
|
|
($7.2)
|
|
$12.6
|
|
Intersegment
activity
|
(0.2)
|
|
(4.6)
|
|
4.5
|
|
0.4
|
|
(0.1)
|
|
—
|
|
Operating income
(loss) - internal
|
21.1
|
|
3.8
|
|
—
|
|
(5.0)
|
|
(7.3)
|
|
12.6
|
|
Depletion,
depreciation, and amortization
|
4.2
|
|
23.0
|
|
0.1
|
|
0.3
|
|
0.1
|
|
27.7
|
|
Environmental
remediation expense
|
—
|
|
—
|
|
—
|
|
5.6
|
|
—
|
|
5.6
|
|
Adjusted
EBITDDA
|
25.3
|
|
26.8
|
|
0.1
|
|
0.9
|
|
(7.2)
|
|
45.9
|
|
Less Adjusted EBITDDA
attributable to NCI
|
—
|
|
(23.6)
|
|
—
|
|
—
|
|
—
|
|
(23.6)
|
|
Look-through Adjusted
EBITDDA
|
$25.3
|
|
$3.2
|
|
$0.1
|
|
$0.9
|
|
($7.2)
|
|
$22.3
|
|
CASH AVAILABLE FOR
DISTRIBUTION (CAD) (in
millions - unaudited)
|
|
Quarter ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Cash provided by
operations - consolidated
|
$7.1
|
|
|
$9.8
|
|
|
$34.2
|
|
|
$39.8
|
|
Less: Cash provided
by operations - Funds & Real Estate joint venture
|
(5.7)
|
|
|
(4.8)
|
|
|
(14.2)
|
|
|
(20.8)
|
|
Less: Partnership
capital expenditures (1)
|
(0.4)
|
|
|
(0.4)
|
|
|
(1.7)
|
|
|
(2.3)
|
|
Add: Partnership's
share of Fund distributions
|
0.3
|
|
|
0.2
|
|
|
1.4
|
|
|
1.9
|
|
Cash available for
distribution (CAD)
|
$1.3
|
|
|
$4.9
|
|
|
$19.8
|
|
|
$18.5
|
|
|
|
(1)
|
Capital expenditures
by the Partnership only and excluding timberland
acquisitions.
|
The following two tables reflect the Partnership's share of the
Funds' results based on its 20%, 5%, and 15% ownership interest in
Fund II, Fund III, and Fund IV, respectively. We present this as
additional information to help readers understand the financial
benefit we receive from investing in these private equity vehicles
and the resulting economics of owning Pope Resources units. These
results will fluctuate between periods based on the relative
activity in each fund and the Partnership's different ownership
interest in each fund:
PARTNERSHIP'S
SHARE OF TIMBER FUNDS - ASSETS AND
LIABILITIES (in millions -
unaudited)
|
|
December
31,
|
|
2019
|
|
2018
|
|
|
|
|
Cash
|
$0.9
|
|
|
$0.4
|
|
Other current
assets
|
0.7
|
|
|
0.6
|
|
Timber and
roads
|
33.5
|
|
|
34.0
|
|
Timberland
|
6.9
|
|
|
6.4
|
|
Other
assets
|
—
|
|
|
0.3
|
|
|
|
|
|
Current liabilities,
excluding current portion of long-term debt
|
0.4
|
|
|
0.4
|
|
Total debt
|
1.6
|
|
|
7.1
|
|
PARTNERSHIP'S
SHARE OF TIMBER FUNDS - REVENUES AND
EXPENSES (in millions -
unaudited)
|
|
Quarter ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Revenue
|
$2.4
|
|
|
$0.8
|
|
|
$6.4
|
|
|
$5.8
|
|
Cost of
sales
|
(2.3)
|
|
|
(0.7)
|
|
|
(6.0)
|
|
|
(3.9)
|
|
Operating
expenses
|
(0.4)
|
|
|
(0.3)
|
|
|
(1.4)
|
|
|
(1.1)
|
|
Interest expense,
net
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.3)
|
|
|
(0.3)
|
|
VOLUME DATA -
LOOK-THROUGH (unaudited)
|
|
Quarter ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Volumes by species
(million board feet):
|
|
|
|
|
|
|
|
Douglas-fir
domestic
|
5.5
|
|
|
10.1
|
|
|
38.5
|
|
|
36.9
|
|
Douglas-fir
export
|
0.7
|
|
|
3.4
|
|
|
10.1
|
|
|
9.2
|
|
Whitewood
domestic
|
2.3
|
|
|
1.0
|
|
|
5.6
|
|
|
3.4
|
|
Whitewood
export
|
0.1
|
|
|
0.6
|
|
|
1.2
|
|
|
1.8
|
|
Pine
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
0.2
|
|
Cedar
|
0.1
|
|
|
0.2
|
|
|
1.5
|
|
|
1.3
|
|
Hardwood
|
0.2
|
|
|
1.2
|
|
|
3.3
|
|
|
2.7
|
|
Pulpwood - all
species
|
1.9
|
|
|
2.7
|
|
|
11.5
|
|
|
9.5
|
|
Total log sale
volume
|
11.0
|
|
|
19.2
|
|
|
72.0
|
|
|
65.0
|
|
Timber deed sale
volume
|
1.0
|
|
|
1.0
|
|
|
1.1
|
|
|
3.7
|
|
Total
volume
|
12.0
|
|
|
20.2
|
|
|
73.1
|
|
|
68.7
|
|
PRICE DATA -
LOOK-THROUGH (unaudited)
|
|
Quarter ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Average price
realizations by species (per thousand board feet):
|
|
|
|
|
|
|
|
Douglas-fir
domestic
|
$
|
637
|
|
|
$
|
660
|
|
|
$
|
652
|
|
|
$
|
778
|
|
Douglas-fir
export
|
653
|
|
|
776
|
|
|
704
|
|
|
852
|
|
Whitewood
domestic
|
522
|
|
|
604
|
|
|
524
|
|
|
627
|
|
Whitewood
export
|
498
|
|
|
623
|
|
|
521
|
|
|
693
|
|
Pine
|
433
|
|
|
550
|
|
|
433
|
|
|
565
|
|
Cedar
|
986
|
|
|
1,001
|
|
|
980
|
|
|
1,268
|
|
Hardwood
|
521
|
|
|
740
|
|
|
597
|
|
|
731
|
|
Pulpwood - all
species
|
306
|
|
|
370
|
|
|
348
|
|
|
368
|
|
Overall delivered log
price
|
556
|
|
|
643
|
|
|
602
|
|
|
725
|
|
Timber deed
sales
|
376
|
|
|
221
|
|
|
380
|
|
|
459
|
|
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SOURCE Pope Resources