First Quarter 2018

CatchMark Reports First Quarter 2018 Results and Declares Dividend

May 3, 2018
4:05pm

ATLANTA, May 3, 2018 /PRNewswire/ -- In line with expectations, CatchMark Timber Trust, Inc. (NYSE: CTT) reported higher revenue, an increase in GAAP net loss, and an increase in Adjusted EBITDA for the quarter ended March 31, 2018 compared to the three-month period ended March 31, 2017. Results were driven by a year-over-year increase in harvest volume, higher pulpwood pricing and the strong financial performance of the Dawsonville Bluffs joint venture.

CatchMark Timber Trust, Inc. (PRNewsFoto/CatchMark Timber Trust, Inc.)

CatchMark today also declared a cash dividend of $0.135 per share for its common stockholders of record on May 31, 2018, payable on June 15, 2018.

Jerry Barag, CatchMark's President and CEO said, "We had another solid operating quarter benefiting from increased harvest volume fueled by last year's acquisitions and robust returns on our investment in the Dawsonville Bluffs joint venture. We adjusted our harvest mix to take advantage of increased pulpwood pricing and we continued to increase our delivered sales. Overall, we remain very much on track to meet our 2018 operating plan and maintain a healthy dividend."

Results Overview

First quarter 2018 operating results included:

  • Generated revenues of $24.1 million, compared to $23.1 million in first quarter 2017, a 4% increase.
  • Incurred a net loss of $3.4 million in accordance with GAAP, compared to $2.0 million in the first quarter 2017, an increase primarily resulting from a non-recurring, non-cash write-off of deferred financing costs.
  • Realized Adjusted EBITDA of $14.9 million, compared to $10.6 million in the first quarter 2017, a 40% increase.
  • Increased timber sales volume by 12% to 574,785 tons, primarily from properties acquired in 2017.
  • Recognized $1.8 million in income from the unconsolidated Dawsonville Bluffs joint venture.
  • Completed timberland sales of approximately 2,200 acres for $4.3 million.
  • Paid a dividend of $0.135 per share to stockholders of record on March 16, 2018.

CatchMark continued to strengthen its balance sheet and maximize available capital to execute its growth strategy. In March 2018, the company completed a successful public capital raise of $72.5 million to pursue acquisitions and investments from its robust investment pipeline. In addition, CatchMark mitigated exposure to rising interest rates by converting $50 million of outstanding debt from floating to fixed rate through executing two interest rate swap transactions in February 2018. As of March 31, 2018, $300.0 million remained available under the company's multi-draw term and revolving credit facilities for direct acquisitions of timberland properties, joint venture investments and working capital needs.

Barag said: "We continue to defer some harvests to future periods when we expect to capture better pricing. Pent-up demand for housing continues to build from sustained below-average new U.S. home construction. But recent activity suggests the start of a turnaround and at some point the demand surge will encourage greater homebuilding activity especially given current positive economic drivers. Our timberland sales completed and under contract remain on target to meet plan for the year and we are very encouraged by opportunities presenting themselves in the acquisition market given our very active current pipeline."

Results for Three Months Ended March 31, 2018

CatchMark's revenues increased to $24.1 million for the three months ended March 31, 2018 from $23.1 million for the three months ended March 31, 2017 primarily due to an increase in timber sales revenue of $2.2 million. Gross timber sales revenue increased 13% primarily as a result of a 12% increase in harvest volume as well as an increase in delivered sales as a percentage of total volume. Timberland sales revenue decreased to $4.3 million for the three months ended March 31, 2018 from $5.5 million for the three months ended March 31, 2017 as a result of fewer acres sold during the quarter. Income from unconsolidated joint venture was $1.8 million reflecting CatchMark's execution of its investment strategy in Dawsonville Bluffs. Net loss increased to $3.4 million for the three months ended March 31, 2018 from $2.0 million for the three months ended March 31, 2017 primarily due to an increase in interest expense caused by a one-time, non-cash write-off of deferred financing costs.


Three Months

Ended

March 31, 2017


Changes attributable to:


Three Months

Ended

March 31, 2018

(in thousands)


Price/Mix


Volume


Timber sales (1)








Pulpwood

$

8,273



$

90



$

2,013



$

10,376


Sawtimber (2)

8,219



28



30



8,277



$

16,492



$

118



$

2,043



$

18,653



(1)   Timber sales are presented on a gross basis.

(2)   Includes chip-n-saw and sawtimber.

Adjusted EBITDA

The discussion below is intended to enhance the reader's understanding of our operating performance and our ability to satisfy lender requirements. Earnings before Interest, Taxes, Depletion, and Amortization ("EBITDA") is a non-GAAP measure of operating performance. EBITDA is defined by the SEC; however, we have excluded certain other expenses which we believe are not indicative of the ongoing operating results of our timberland portfolio, and we refer to this measure as "Adjusted EBITDA." As such, our Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and should not be viewed as an alternative to net income, cash from operations, or other financial statement data present in our consolidated financial statements as indicators of our operating performance. Due to the significant amount of timber assets subject to depletion and the significant amount of financing subject to interest and amortization expense, management considers Adjusted EBITDA to be an important measure of our financial condition and performance. By providing this non-GAAP financial measure, together with the reconciliation below, we believe we are enhancing investors' understanding of our business and our ongoing results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

  • Adjusted EBITDA does not reflect our capital expenditures, or our future requirements for capital expenditures;
  • Adjusted EBITDA does not reflect changes in, or our interest expense or the cash requirements necessary to service interest or principal payments on, our debt; and
  • Although depletion is a non-cash charge, we will incur expenses to replace the timber being depleted in the future, and Adjusted EBITDA does not reflect all cash requirements for such expenses.

Due to these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We further believe that our presentation of this non-GAAP financial measurement provides information that is useful to analysts and investors because they are important indicators of the strength of our operations and the performance of our business. Our credit agreement contains a minimum debt service coverage ratio based, in part, on Adjusted EBITDA since this measure is representative of adjusted income available for interest payments.

For the three months ended March 31, 2018, Adjusted EBITDA was $14.9 million, a $4.3 million increase from the three months ended March 31, 2017, primarily due to contributions from the Dawsonville Bluffs Joint Venture and an increase in net timber sales.

Our reconciliation of net loss to Adjusted EBITDA for the quarters ended March 30, 2018 and 2017 follows:


Three Months Ended
March 31,

(in thousands)

2018


2017

Net loss

$

(3,385)



$

(1,978)


Add:




Depletion

7,062



6,057


Basis of timberland sold, lease terminations and other (1)

2,856



3,517


Amortization (2)

1,725



304


Depletion, amortization, and basis of timberland and mitigation credits sold included in income from unconsolidated joint venture (3)

3,256




Stock-based compensation expense

765



420


Interest expense (2)

2,581



2,294


Other (4)

35



3


Adjusted EBITDA

$

14,895



$

10,617




(1)

Includes non-cash basis of timber and timberland assets written-off related to timberland sold, terminations of timberland leases and casualty losses.

(2)

For the purpose of the above reconciliation, amortization includes amortization of deferred financing costs, amortization of intangible lease assets, and amortization of mainline road costs, which are included in either interest expense, land rent expense, or other operating expenses in the accompanying consolidated statements of operations.

(3)

Reflects our share of depletion, amortization, and basis of timberland and mitigation credits sold of the unconsolidated joint venture.

(4)

Includes certain cash expenses that management believes do not directly reflect the core business operations of our timberland portfolio on an on-going basis, including costs required to be expensed by GAAP related to acquisitions transactions, joint ventures or new business initiatives.

Conference Call/Webcast

The company will host a conference call and live webcast at 10 a.m. ET on Friday, May 4, 2018 to discuss these results. Investors may listen to the conference call by dialing 1-888-347-1165 for U.S/Canada and 1-412-902-4276 for international callers. Participants should ask to be joined into the CatchMark call. Access to the live webcast will be available at www.catchmark.com. A replay of this webcast will be archived on the company's website shortly after the call. 

About CatchMark

CatchMark Timber Trust, Inc. (NYSE: CTT) is a self-administered and self-managed, publicly-traded REIT that strives to deliver superior risk-adjusted returns for all stakeholders through disciplined acquisitions, sustainable harvests and well-timed sales. Headquartered in Atlanta and focused exclusively on timberland ownership, CatchMark began operations in 2007 and owns interests in approximately 514,100 acres* of timberlands located in Alabama, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas. For more information, visit www.catchmark.com.
*As of March 31, 2018.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. Forward-looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Such statements include references to being on track to meet our operating plan and timberland sales target, execution of our growth strategy and maintenance of a healthy dividend; possible future direct acquisitions of timberland properties and joint venture investments; deferral of some harvests to future periods when we expect to capture better pricing; and the start of a home-building turnaround and greater homebuilding activity. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by our forward-looking statements including, but not limited to: (i) we may not generate the harvest volumes from our timberlands that we currently anticipate; (ii) the demand for our timber may not increase at the rate we currently anticipate or at all due to changes in general economic and business conditions in the geographic regions where our timberlands are located; (iii) the cyclical nature of the real estate market generally, including fluctuations in demand and valuations, may adversely impact our ability to generate income and cash flow from sales of higher-and-better use properties; (iv) timber prices may not increase at the rate we currently anticipate or could decline, which would negatively impact our revenues; (v) the supply of timberlands available for acquisition that meet our investment criteria may be less than we currently anticipate; (vi) we may be unsuccessful in winning bids for timberland that are sold through an auction process; (vii) we may not be able to access external sources of capital at attractive rates or at all; (viii) potential increases in interest rates could have a negative impact on our business; (ix) our share repurchase program may not be successful in improving stockholder value over the long-term; (x) our joint venture strategy may not enable us to access non-dilutive capital and enhance our ability to make acquisitions; and (xi) the factors described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017,  and our other filings with Securities and Exchange Commission. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to update our forward-looking statements, except as required by law.

 

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except for per-share amounts)



(Unaudited)
Three Months Ended

March 31,


2018


2017

Revenues:




Timber sales

$

18,653



$

16,492


Timberland sales

4,252



5,450


Other revenues

1,199



1,183



24,104



23,125


Expenses:




Contract logging and hauling costs

8,582



7,421


Depletion

7,062



6,038


Cost of timberland sales

3,147



3,863


Forestry management expenses

1,830



1,413


General and administrative expenses

2,945



2,478


Land rent expense

161



150


Other operating expenses

1,396



1,195



25,123



22,558


Operating (loss) income

(1,019)



567






Other income (expense):




Interest income

64



11


Interest expense

(4,251)



(2,556)



(4,187)



(2,545)






Net loss before unconsolidated joint venture

(5,206)



(1,978)


Income from unconsolidated joint venture

1,821




Net loss

$

(3,385)



$

(1,978)






Weighted-average common shares outstanding - basic and diluted

44,380



38,769






Net loss per share - basic and diluted

$

(0.08)



$

(0.05)


 


 

 

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except for per-share amounts)







(Unaudited)

March 31, 2018


December 31, 2017

Assets:




Cash and cash equivalents

$

8,087



$

7,805


Accounts receivable

2,576



4,575


Prepaid expenses and other assets

10,342



5,436


Deferred financing costs

389



403


Timber assets:




Timber and timberlands, net

701,836



710,246


Intangible lease assets, less accumulated amortization of $942 and $941 as of March 31, 2018 and December 31, 2017, respectively

15



16


Investment in unconsolidated joint venture

11,311



11,677


Total assets

$

734,556



$

740,158






Liabilities:




Accounts payable and accrued expenses

$

5,887



$

4,721


Other liabilities

1,919



2,969


Notes payable and lines of credit, less net deferred financing costs

262,765



330,088


Total liabilities

270,571



337,778






Commitments and Contingencies








Stockholders' Equity:




Class A Common stock, $0.01 par value; 900,000 shares authorized; 49,129 and 43,425 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively

491



434


Additional paid-in capital

730,039



661,222


Accumulated deficit and distributions

(270,852)



(261,652)


Accumulated other comprehensive income

4,307



2,376


Total stockholders' equity

463,985



402,380


Total liabilities and stockholders' equity

$

734,556



$

740,158



 

 

 

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)



(Unaudited)
Three Months Ended

March 31,


2018


2017

Cash Flows from Operating Activities:




Net loss

$

(3,385)



$

(1,978)


Adjustments to reconcile net loss to net cash provided by operating activities:




Depletion

7,062



6,038


Basis of timberland sold, lease terminations and other

2,856



3,536


Stock-based compensation expense

765



420


Noncash interest expense

1,671



262


Other amortization

54



42


Income from unconsolidated joint venture

(1,821)




Operating distribution from unconsolidated joint venture

2,188




Changes in assets and liabilities:




Accounts receivable

1,330



1,483


Prepaid expenses and other assets

76



(398)


Accounts payable and accrued expenses

1,284



(193)


Other liabilities

(1,133)



(906)


Net cash provided by operating activities

10,947



8,306






Cash Flows from Investing Activities:




Timberland acquisitions, earnest money paid and other

(2,319)



(979)


Capital expenditures (excluding timberland acquisitions)

(1,545)



(2,195)


Net cash used in investing activities

(3,864)



(3,174)






Cash Flows from Financing Activities:




Repayments of note payable

(69,000)




Financing costs paid

(95)



(30)


Issuance of common stock

72,450




Other offering costs paid

(3,490)




Dividends paid to common stockholders

(5,815)



(5,183)


Repurchase of common shares under the share repurchase program



(1,036)


Repurchase of common shares for minimum tax withholdings

(851)



(252)


Net cash used in financing activities

(6,801)



(6,501)


Net increase (decrease) in cash and cash equivalents

282



(1,369)


Cash and cash equivalents, beginning of period

7,805



9,108


Cash and cash equivalents, end of period

$

8,087



$

7,739


 

 

 

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
SELECTED DATA (UNAUDITED)



2018


2017


Q1


Q1

Timber Sales Volume ('000 tons)




Pulpwood

354



291


Sawtimber

221



220


Total

575



511






Delivered % as of Total Volume

83

%


81

%

Stumpage % as of Total Volume

17

%


19

%





Net Timber Sales Price ($ per ton)




Pulpwood

$

14



$

13


Sawtimber

$

23



$

24






Timberland Sales




Gross Sales ('000)

$

4,252



$

5,450


Acres Sold

2,200



2,800


Price per Acre

$

1,955



$

1,930






Timberland Acquisitions, Exclusive of Transaction Costs




Gross Acquisitions ('000)

$



$


Acres Acquired




Price per acre ($/acre)

$



$






Period End Acres ('000)




Fee

477



465


Lease

31



32


  Wholly-owned Total

508



497


Joint Venture Interest (1)


6





  Total

514



497



(1) Includes property owned by Dawsonville Bluffs, LLC, a joint venture in which CatchMark Timber Trust owns a 50% membership interest and serves as the sole manager.

 

SOURCE CatchMark Timber Trust, Inc.

For further information: Investors: Brian Davis, (855) 858-9794, info@catchmark.com; Media: Mary Beth Ryan, Miller Ryan LLC, (203) 268-0158, marybeth@millerryanllc.com