CEO: Deltic Timber to focus on selling land during FY08

Will Atkinson | Apr 22, 2008 1:40pm EDT | Comment

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Deltic Timber Corp. (NYSE:DEL) CEO Ray Dillon said the natural resources company, which grows and harvest timber, will mainly focus on closing sales of commercial land. Residential real estate and lumber markets are predicted to remain depressed for the remainder of 2008, he said.

“We also anticipate that some of the commercial acres being sought after by potential buyers will close in 2008,” Dillon said. “However, as we have said before, the predictability of this type of sale is very difficult and their timing tends to be very sporadic.”

Another area of focus for 2008 will be the sale of hardwood timberland acres, the chief executive officer said. Proceeds from these sales will be used to purchase pine timber land, he said.

Dillon said 2008 will be a year of challenges, given the current business environment.

“The year could also present some unique opportunities and we will be focused on recognizing and capitalizing on any such opportunities as they arrive,” Dillon said.

During the first quarter, CFO Kenneth Mann said Deltic Timber capitalized on a current customer interest in recreational land. Deltic sold 674 acres for about $2,100 per acre or approximately $1.4 million during the quarter, the chief financial officer said. The proceeds were used to purchase pine timberland, he said.

After Monday’s closing, Deltic reported a preliminary first-quarter net loss of $0.4 million, or $0.03 per share, compared with a profit of $6.6 million, or $0.53 per share, a year ago.

“The decrease in earnings was primarily attributable to the sale of 680 acres of undeveloped real estate for a pre-tax margin of $7.5 million during 2007’s first quarter,” Mann said.

Quarterly sales plunged 31% to $27.8 million versus $40.4 million during the year-ago period. The El Dorado, Ariz.-based firm blamed the lethargic results on wet weather, timing, pine harvest volume, lower sales price and volume and reduced real estate sales activity.

Royalty payments from a gas well were one positive aspect in Deltic’s results. The royalties totaled about $40,000 in monthly payments from gas companies.

In midday trading, DEL shares are down 9.76%, or $5.54, at $51.22. Over the last 52 weeks, shares have ranged between $45.46 and $64.98.