CRO is the lumber pure play that's taken the biggest beating as a cyclical, due to low lumber prices:
Crown Pacific Anticipates Earnings Shortfall and Reduction of Quarterly Distribution
PORTLAND, Ore., Dec. 21 /PRNewswire/ -- Crown Pacific Partners, L.P. (NYSE: CRO - news) today announced that its earnings for the fourth quarter of 2000 would be significantly below analyst expectations of $0.20 per unit. The lower results will negatively impact the unitholder distribution level and the Board of Control is now analyzing, in accordance with the Partnership agreement, what level of quarterly distribution is sustainable given the current market conditions. The Board expects to complete this analysis, and announce the fourth quarter distribution level by mid-January 2001 after receiving the Partnership's fourth quarter results.
Continued dramatic declines in prices for lumber, logs and timberland have impacted the Partnership's cashflow and earnings necessary to pay the current level of distribution without impairing the long-term value of its assets.
biz.yahoo.com
That announcement of a dividend cut was fairly predictable, but it sliced the market cap by more than half.
Here's an excerpt from an October analyst report, when the stock was selling for about 18 vs. about 7.8 now:
Crown Pacific’s hallmark has been its ability to meet cash flow and distribution growth targets. However, with wood prices at current levels, we believe the company would encounter difficulties meeting objectives. Additionally, most of the cash flow generated has come from harvest levels that we believe exceed the growth rates on Crown Pacific’s lands. We note that, based on our estimate of Crown Pacific’s net asset value, we think there could be upside in CRO on a liquidation basis.
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Taking a look at the balance sheet, it is highly leveraged, with $688 M of LT debt, vs. $151 M equity.
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