CatchMark Delivers Strong First Quarter 2022 Results

CatchMark Timber Trust, Inc. (“CatchMark” or the “Company”) reported first quarter 2022 results. The company also declared a cash dividend of $0.075 per share for its common stockholders of record as of May 31, 2022, payable on June 15, 2022.

Brian M. Davis, CatchMark President and CEO, said: “First quarter results again demonstrated how CatchMark’s prime timberlands located in select leading U.S. South mill markets continue to deliver superior pricing for our harvests well above market averages while also registering significant year-over-year growth. For the full year, we expect to achieve sawtimber pricing of approximately 20% over 2021 as demand for new housing remains strong even in a higher interest rate environment. Retail land sales also contributed to our strong quarterly results, capturing excellent pricing for acreage with stocking and productivity characteristics below our portfolio averages. At the same time, our small-tract acquisition program has gained traction, benefiting from our improved balance sheet and strong liquidity position, and focusing on markets where our local presence gives us an advantage in finding good value.”

First Quarter 2022 Results

First quarter 2022 net income of $3.2 million resulted primarily from substantially higher net timber sales pricing, profits on timberland sales, and lower interest expense.

• Higher year-over-year Adjusted EBITDA resulted primarily from increased net timberland sales and higher net timber sales pricing.
• Revenues decreased slightly, down 3%, primarily due to lower year-over-year timber sales revenues, down 12%, resulting principally from reduced harvest volumes related to the disposition of the Bandon timberlands in the Pacific Northwest completed in third quarter 2021.
• CatchMark’s operations — now concentrated entirely in the U.S. South, the nation’s leading timber basket — again achieved significant increases in net timber sales prices and prices well above U.S. South-wide averages. These pricing advantages helped lessen the revenue impact of planned lower harvest volumes.

Business Segments Overview

Harvest Operations

• Timber sales revenue decreased year-over-year as a result of the exit from the Pacific Northwest in August 2021, offset by a $2.5 million increase in timber sales revenue from the U.S. South.
• In the U.S. South, where CatchMark now operates exclusively, timber sales revenue of $17.7 million was 17% higher year-over-year, despite a planned 2% decrease in harvest volumes.
• Harvest EBITDA increased 8% due to higher pricing and lower forestry management and other operating expenses, offset by lower volumes.
• Net timber sales prices for pulpwood and sawtimber were 8% and 30% higher, respectively, than first quarter 2021 and registered 37% and 47% premiums, respectively, over TimberMart-South South-wide averages.
• Harvest productivity on an annualized per-acre basis held steady.

Todd Reitz, CatchMark’s Chief Resources Officer, said: “CatchMark continues to benefit from our prime timberlands located in premier U.S. South mill markets. Strong demand for all products and low raw material inventories during the quarter kept pricing tension high and we capitalized on the opportunity, registering significant delivered and stumpage sales pricing increases. Successful negotiations with many of our customers supported delivered price increases and helped offset rising cut and haul costs, allowing us to maintain stumpage margins. Strong macro-demand fundamentals continue to drive mill production needs and pricing for chip-n-saw and pine sawtimber products should remain strong into the second quarter.”

Real Estate

• Timberland sales revenue increased 81% year-over-year from selling significantly more acres as compared to the same period last year. As expected, in the first quarter, we completed approximately 35% to 40% of our annual timberland sales target. CatchMark continued to generate strong relative pricing on below-portfolio quality assets, evidence of the robust retail demand for rural recreational land. The acres sold during the quarter had a substantially lower average merchantable timber stocking than the company portfolio average.
• CatchMark sold 3,400 acres of timberlands with a cost basis of $4.0 million for $6.1 million compared to first quarter 2021 when the company sold 1,800 acres with a cost basis of $1.9 million for $3.4 million.
• The 8% lower year-over-year timberland sales price per acre was due to lower productivity characteristics, including a significantly lower percentage of upland pine plantation and significantly lower pine stocking.

Investment Management

• Asset management fees decreased as a result of exiting the Triple T joint venture in 2021. The fees recognized from Triple T in the first quarter of 2022 were paid under a transition services agreement which expired in March 2022.
• Investment Management EBITDA decreased primarily due to a $0.9 million decrease in asset management fees and a $0.1 million decrease in Adjusted EBITDA generated by the Dawsonville Bluffs joint venture.
• CatchMark recognized $0.5 million of income and $0.6 million of Investment Management EBITDA from Dawsonville Bluffs and received $0.1 million in operating distributions from the joint venture, which continued to capitalize on strong demand for wetlands mitigation credits.

Accretive Acquisitions

After the quarter’s close, CatchMark entered into two separate purchase and sale agreements to acquire more than 2,400 acres of high-quality timberlands in Alabama and South Carolina for approximately $5 million dollars.

• The acquisitions will be funded with cash on-hand and are expected to close by early third quarter.
• The properties are located within existing CatchMark operating footprints in leading U.S. South mill markets where the company can serve existing mill customers and gain efficiencies with contractors.
• The transactions fit the company’s acquisition target objectives with long-term portfolio accretive attributes.

Davis said: “These timberlands have characteristics that feature a high allocation of pine plantations and good value compared to our underwriting metrics. We will continue to be deliberate and prudent in identifying acquisitions, whether under our small-tract program or larger acquisition strategy.”

Capital Position and Share Repurchases

Ample Liquidity

• CatchMark continued to maintain a strong balance sheet and ample liquidity, including $27.4 million of cash on-hand, with no changes in its credit facilities during the quarter.
• As of March 31, 2022, the company had $253.6 million of borrowing capacity remaining under its credit facilities.

CatchMark’s Chief Financial Officer Ursula Godoy-Arbelaez said: “During the quarter, company leverage remained low and debt capital remained available and attractively priced despite the rising interest rate environment, which we have hedged against. The company’s solid capital position allows us to move forward with our acquisition growth strategy, which we expect will gain further momentum over the course of the year.”

Covered Quarterly Dividend: Stockholders received a total of $­­3.6 million in dividend distributions, which were fully covered by net cash provided by operating activities and Cash Available for Distribution.

Share Repurchases: The company did not make any share repurchases during the quarter and had $13.7 million remaining under its share repurchase program as of March 31, 2022.

For the full first quarter results, click here.

About CatchMark

CatchMark (NYSE: CTT) invests in prime timberlands located in the nation’s leading mill markets, seeking to capture the highest value per acre and to generate sustainable yields through disciplined management and superior stewardship of its exceptional resources. Headquartered in Atlanta and focused exclusively on timberland ownership and management, CatchMark began operations in 2007 and owns interests in 365,300 acres* of timberlands located in the U.S. South. For more information, visit www.catchmark.com.

Contact:

Ursula Godoy-Arbelaez – Investor Relations – info@catchmark.com – (855) 858-9794

Source: CatchMark Timber Trust, Inc.