Kew eenaw Land Association, Limited Annual Meeting Presentation May 20, 2013
Keweenaw Land Association, Limited 2013 Annual Meeting Presentation May 20, 2013 Safe Harbor This presentation contains forward-looking statements. These forward-looking statements are subject to a number of risks and should not be relied upon as predictions of future events or promises of a given course of action. A number of factors such as land use, environmental and other governmental regulations, risk of loss from fires, floods and windstorms and other natural disasters could cause actual results to differ materially from those described in the foreword-looking statements. As with any investment, past performance is not a guarantee of future results. 2
Keweenaw Land Association, Limited Corporate Overview • Owns and manages 161,930 surface acres and 401,643 acres severed and attached mineral rights • Located in the western Upper Peninsula of Michigan and Northern Wisconsin • Reorganized as a Michigan corporation in 1999 • Staff of 17 full-time employees • Market capitalization of approximately $102.2 million • 1,294,118 shares outstanding • Current share price $79.00, with a 52-week price range of $68.25-$88.75 3
4
2012 Results - Net Income doubled over last year As of: December 31 2012 2011 Net Income $1,041,096 $520,820 Log Sales $9,668,988 $9,736,841 Gross Margin % 32.1% 30.4% Timber Operations Income $1,438,157 $1,175,159 Pre-tax Profit per cd-eq $17.43 $13.38 5
Ten Year Financial History • Improving Net Income post recession • Average Return on Capital 5.2% since 2003 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Receipts $10,509 $10,390 $9,170 $9,097 $11,238 $9,063 $9,845 $10,718 $9,079 $8,647 (in thousands) Net Income 1,041 521 164 291 1,363 243 861 1,430 924 624 after Tax (in thousands) Earnings $0.81 $0.40 $0.13 $0.23 $1.06 $0.19 $0.67 $1.12 $0.72 $0.49 Per Share* Return on 6.1% 3.3% 1.0% 1.8% 8.3% 1.5% 5.9% 11.1% 7.5% 5.3% Capital * - Earnings per share restated for 2-15-2011 stock split . 6
Keweenaw Land Association, Limited Strategic Plan • Core Business ‒ Commercial forestry company with real estate and mineral assets • Manage assets for long-term growth and capital appreciation – Optimize our timber and land portfolio • Management Initiatives ‒ Upgrade and consolidate core timberland holding ‒ Monetize non-strategic holdings through sale or development ‒ Promote development of mineral ownership through leasing to qualified exploration and mining companies ‒ Provide land acquisition and management services to third-party investors through a timber fund investment vehicle ‒ Explore new revenue opportunities in the Ecosystem Services markets 7
Business Segments • Fee Timber – Total standing inventory of 2.65 million cord equivalents – Standing sawtimber inventory of 234.4 MMBF – 62.1% of volume is northern hardwoods – Average annual harvest volume of 72,600 cd eq over past 10 years • Real Estate – 7,900 acres on commercial, recreational, and urban properties – Lake Superior and Lake Gogebic frontage, scenic river frontage – Sales of non-strategic, low productive, and conservation properties – Residential lot development • Property Leasing – Over 400,000 acres of subsurface (mineral) ownership – Surface, commercial, mineral exploration, and recreational camp leases – Sand and gravel royalties 8
Keweenaw stock has outperformed S&P 500 over past 10 years • Stock compound annual growth of 9.9% vs. 5.7% for S&P 500 Keweenaw Stock Price vs. S&P 500 Index Since 2003 Index Base Year 2003 = 100 0% 2% 4% 6% 8% 10% KEWL S&P 500 9
Strong Balance Sheet • Tangible land & timber assets, mostly land grant properties, recorded at historical cost according to Generally Accepted Accounting Principles (GAAP) • Long term debt less than $750,000 • Current Ratio – 4.7 to 1 (Current Assets/Current Liabilities) • A $2.5 million Operating Line of Credit through Wells Fargo • $3.9 million in available total cash resources • Positive cash flow of $1 million in 2012 10
Active management has resulted in increased value of land and timber assets • Per acre value up over 8% since 2009 appraisal, 115% since 1998 • Conducted independent third-party appraisals since 1998 • Executive Summary of recent appraisal provide to shareholders on website Acres under Management Overall Appraised Value Per Acre $1,000 163,000 162,000 $900 161,000 $800 160,000 $700 Value Per Acre 159,000 $600 158,000 $500 157,000 $400 156,000 $300 155,000 $200 154,000 $100 153,000 $- 152,000 1998 2000 2003 2006 2009 2012 11
Appraisal of land and timber increased by $11.25 million since 2009 • Increased inventory affirms our sustained yield management objective • Improved sawtimber mix due to appropriate silvicultural practices • Land acquisitions add higher quality timber and timberlands Appraised Value – 2009 $128.85 Land and Timber (in millions) Increase in Sawtimber volume $3.00 Increase in Pulpwood volume $2.71 Land Acquisitions $0.70 Product Price Change $4.83 Appraised Value – 2012 $140.10 Land and Timber 12
Keweenaw timberlands are well-stocked with high valued hardwood tree species • 88% of sawtimber inventory is hardwood • Hard Maple comprises nearly half of sawtimber inventory • Sales realization of hard maple significantly higher than softwood Keweenaw sawtimber mix percentage As of 12/31/2012 2012 Average Softwood, 12% Veneer and Sawlog Price Other Hdwd, 11% Hard Maple All Softwood Hard Maple, 49% $690 per mbf $270 per mbf Basswood, 9% Yellow Birch, 6% Soft maple, 13% 13
Log sort yard enables value-added sales • Secure site permits all-weather access to log customers • Sorting and remanufacturing of logs enables maximum return on log value 14
Real Estate Program - Focused on adding productive timberland in a cost effective and tax efficient manner • Since 2003, acquired 11,000 of productive timberland • Sold/exchanged 5,700 acres of HBU, non-strategic and low productive lands • Generated over $8 million in land sales • Reduced total non-productive acres by 14% 15
Successfully monetizing value of HBU properties through development and sale • Developed and sold 31 residential lots since initiation of program in 2003 • Generated $390,000 in value-added and $494,000 in pre-market development “as-is” value • Currently marketing 6 developments 16
Over 7,900 acres of land identified as available for future strategic land sales Development Properties – 1,600 acres • Located near urban or high use recreation areas • Targeting rural residential market for 1 to 5 acre lots Lake and River Frontage – 4,600 acres • Lake Superior, Lake Gogebic, Presque Isle River • Demand from conservation buyers and low intensity development Rural Recreation – 1,700 acres • Remote tracts with limited access to utilities • Strong market for individuals seeking recreational land and private hunting clubs 17
Mineral and other land assets actively promoted and managed • Contacted over 85 mining/exploration companies since 2006 • Recent Mineral Lease Activity • 2008 - Orvana lease • 2011 - Trans-Superior Gogebic-Taconite • 2012 - Keweenaw Copper Co. • 48 other surface, commercial and recreational property leases • Lease activity generates annual income over $220,000 per year 18
Orvana Mining Lease in final stages of permitting • Lease agreement signed in 2008 • Primary lease encompasses 681 acres • Option agreement added 2,382 acres near original lease • Income from lease includes annual rental fees plus sliding scale net smelter royalties upon initiation of mining • All key mining permits secured Approximate location KLA primary lease area 19
Continuously exploring other revenue opportunities • Timber Investment Fund • Provide acquisition, management, and disposition services for third-party investors • Opportunity to partner and co-invest in attractive hardwood timberlands • Leverage Keweenaw’s market position and management experience • Economies of scale through forest management, log marketing, mapping and inventory capabilities • Annual asset management fees and back-end participation fee • Emerging Eco-system Services Markets • Forest Carbon Markets • Conservation Easements • Mitigation Banking 20
Keweenaw as an Investment • Keweenaw is a unique northern hardwood timberland investment • Management team committed to enhancing the long- term value of the company • Remain focused on creating shareholder value – Practice sustainable forest management – Improving the quality and volume of standing timber – Maximizing timber sales revenue through merchandizing/marketing – Optimizing value of real estate and mineral assets • Continue to look for opportunities to generate new revenue sources from existing asset base 21
Contact Information If you have questions or wish to contact us regarding this presentation material, please call or email us at: Toll Free – 877-539-3362 Email – Investors@keweenaw.com David Ayer – Chairman Brian D. Glodowski – President Keweenaw Land Association, Limited 22
Recommend
More recommend
