CatchMark Reports First Quarter 2021 Results, Declares Dividend
CatchMark Timber Trust, Inc. reported first quarter 2021 results. The company also declared a cash dividend of $0.135 per share for its common stockholders of record as of May 28, 2021, payable on June 15, 2021.
–Higher timber prices — both in the U.S. South and Pacific Northwest — drove an 11% increase in timber sales revenue and a 4% increase in Harvest EBITDA.
–CatchMark’s realized U.S. South pulpwood and sawtimber stumpage prices were 8% and 9% higher, respectively, compared to prior year quarter, outpacing 3% and 4% increases in U.S. South-wide average prices for the same period.
–The company’s Pacific Northwest delivered sawtimber price increased 15% year-over-year due to continued strong demand fundamentals.
–Net loss improved by 87% to $0.6 million driven by increased total revenues and lower expenses.
–Adjusted EBITDA of $12.9 million was comparable to prior year quarter despite a 12% planned reduction in harvest volumes and 40% fewer acres sold.
–Results again validate the company’s business model which focuses on owning prime timberlands in leading mill markets and optimizing harvest operations through delivered wood sales, supplemented by opportunistic stumpage sales.
Brian M. Davis, CatchMark’s Chief Executive Officer, said: “Low interest rates, strong housing market demand and increased home remodeling together with the significant ramp up in mill production after 2020 pandemic-related slowdowns, resulted in higher timber prices during the quarter. CatchMark’s prime timberlands in superior mill markets continued to outperform, capturing pricing for pulpwood and sawtimber in the U.S. South significantly above TimberMart-South averages as well as a significant sawtimber price increase in the Pacific Northwest. Investment management results improved due to contributions from Dawsonville Bluffs and last year’s renegotiated Triple T asset management agreement. Per-acre timberland sales pricing increased significantly, and we are on track to complete a substantial number of sales in the second quarter. As planned, harvest volumes during the quarter were lower year-over-year. Harvest volumes remain on track to meet full-year guidance, as we maintain consistent annual productivity on a per-acre basis with the potential to sustain current strong timber prices.”
First Quarter 2021 Results
Business Segments Overview
CatchMark continued to benefit from its prime timberland portfolio in strong micro-markets across the U.S. South and Pacific Northwest.
–The company realized timber sales prices at significant premiums to market averages, which escalated during the quarter due to strong demand for timber products generated by accelerated housing starts, lack of finished lumber in the supply chain, and reduced mill inventories.
–Total timber sales revenue increased year-over-year, driven by a $3.0 million increase in the Pacific Northwest offset by a $1.1 million decrease in the U.S. South, the result of a 17% reduction in regional harvest volume, as planned due to recent timberland sales and capital recycling dispositions.
–CatchMark realized stumpage prices for pulpwood and sawtimber 8% and 9% higher, respectively, compared to first quarter 2020, outpacing 3% and 4% increases in South-wide average prices tracked by TimberMart-South.
–Pulpwood and sawtimber stumpage prices registered significant 57% and 27% premiums over TimberMart-South South-wide averages.
–Timber sales revenue increased to $4.9 million, a 161% increase from first quarter 2020 results.
–Harvest volume increased 96% from capitalizing on favorable market conditions and the company’s delivered wood sales model. Sawtimber mix and delivered sales as a percentage of volume increased 14% and 16%, respectively, year over year, and delivered sawtimber price increased 15% due to strong demand fundamentals.
Todd Reitz, Chief Resources Officer, said: “As strong fourth quarter 2020 housing fundamentals carried over into the first quarter, CatchMark continues to benefit from prime timberlands holdings in leading mill markets as well as our delivered wood model supplemented by opportunistic stumpage sales. Robust housing demand continued to drive strong sawmill production and new mill consumption helped generate increased delivered rates within our superior micro-markets, which in part resulted in a 9% increase in Harvest EBTDA per acre year-over-year.”
–CatchMark sold 1,200 fewer acres during first quarter 2021 — 1,800 acres versus 3,000 in the prior year quarter, but at an 18% higher average price per acre — $1,923 in first quarter 2021 versus $1,627 in first quarter 2020.
–The improved per-acre sales price resulted in part from higher average merchantable timber stocking levels and generated an improved margin — 36% in first quarter 2021 versus 28% in first quarter 2020.
–The acres sold during the quarter had a substantially lower average merchantable timber stocking than the company portfolio average — 21 tons per acre versus 41 tons per acre.
Acquisitions and Large Dispositions: No acquisitions or large dispositions occurred during the first quarter.
–CatchMark recognized $0.6 million of income and $0.7 million of Investment Management EBITDA from the Dawsonville Bluffs joint venture, which capitalized on strong market demand for mitigation credits.
–Asset management fees increased as a result of last year’s amendment to the Triple T joint venture’s asset management agreement, following the successful renegotiation of its wood supply agreement with Georgia Pacific.
–CatchMark continues to pursue recapitalization opportunities for Triple T in the wake of the renegotiated Georgia-Pacific wood supply agreement and enhanced silviculture practices that have increased stocking per acre on these prime timberlands since acquisition.
Capital Position and Share Repurchases
–CatchMark continued to maintain ample liquidity for growth initiatives and other capital allocation priorities, including direct acquisitions and joint venture investments.
–As of March 31, 2021, the company had $150.9 million of borrowing capacity available under its credit facilities, consisting of $115.9 million under the Multi-Draw Term Facility and $35.0 million under the Revolving Credit Facility.
–The company’s active debt and interest rate management strategy continues to provide attractive borrowing costs, staggered long-term maturities and a favorable mix of fixed-to-floating rate debt.
Covered Quarterly Dividend: Stockholders received a total of $6.6 million in dividend distributions, which were fully covered by net cash provided by operating activities.
Share Repurchases: CatchMark did not repurchase any shares of common stock under its share repurchase program during the quarter and had $13.7 million remaining in the program for future repurchases as of March 31, 2021.
Ursula Godoy-Arbelaez, CatchMark’s Chief Financial Officer, said: “In maintaining CatchMark’s strong capital position, we continue to evaluate capital recycling opportunities to generate proceeds for funding desirable timberland investments, paying down outstanding debt, repurchasing shares of our common stock, and other capital allocation priorities.”
CatchMark (NYSE: CTT) seeks to deliver consistent and growing per share cash flow from disciplined acquisitions and superior management of prime timberlands located in high demand U.S. mill markets. Concentrating on maximizing cash flows throughout business cycles, the company strategically harvests its high-quality timberlands to produce durable revenue growth and takes advantage of proximate mill markets, which provide a reliable outlet for merchantable inventory. Headquartered in Atlanta and focused exclusively on timberland ownership and management, CatchMark began operations in 2007 and owns interests in 1.5 million acres* of timberlands located in Alabama, Florida, Georgia, Oregon, South Carolina and Texas. For more information, visit www.catchmark.com.
Ursula Godoy-Arbelaez – Investor Relations – (855) 858-9794
Source: CatchMark Timber Trust, Inc.