CatchMark Announces Second Quarter 2022 Results

FINANCIAL HIGHLIGHTS

(in millions except for tons and acres)

Three Months Ended June 30,

Change

2022

2021

Dollars, Tons or Acres

%

Results of Operations

Revenues

$                       24.6

$                   31.9

$                                  (7.4)

(23) %

Net Income (Loss)

$                        (4.6)

$                     1.8

$                                  (6.3)

360 %

Adjusted EBITDA

$                       13.7

$                   17.6

$                                  (3.9)

(22) %

Harvest Volume (tons)

399,862

528,007

(128,145)

(24) %

Acres Sold

5,700

4,300

1,400

29 %

Three Months Ended June 30,

Change

(in millions except for prices)

2022

2021

$

%

Timber Sales Revenue - Consolidated

$                       14.7

$                       20.1

$                        (5.4)

(27) %

Timber Sales Revenue - U.S. South

$                       14.7

$                       16.4

$                        (1.7)

(10) %

Timber Sales Revenue - PNW

$                           —

$                         3.7

$                        (3.7)

(100) %

Harvest EBITDA

$                         6.9

$                         9.4

$                        (2.5)

(27) %

Net Timber Sales Price - U.S. South (per ton):

Pulpwood

$                          14

$                          15

$                           (1)

(5) %

Sawtimber

$                          31

$                          26

$                            5

21 %

Three Months Ended June 30,

Change

(in millions except for prices)

2022

2021

$

%

Timberland Sales Revenue

$                         8.8

$                         7.6

$                         1.2

16 %

Real Estate EBITDA

$                         8.7

$                         7.3

$                         1.3

18 %

Average Sales Price (per acre)

$                     1,564

$                     1,743

$                       (179)

(10) %

Three Months Ended June 30,

Change

(in millions)

2022

2021

$

%

Asset Management Fee Revenue

$                         0.1

$                         3.2

$                        (3.1)

(97) %

Investment Management EBITDA

$                         0.4

$                         3.3

$                        (2.9)

(87) %

*

As of June 30, 2022

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except for per-share amounts)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Revenues:

Timber sales

$            14,679

$            20,111

$            32,402

$            40,260

Timberland sales

8,818

7,632

14,888

10,989

Asset management fees

110

3,211

2,289

6,329

Other revenues

952

986

1,922

2,048

24,559

31,940

51,501

59,626

Expenses

Contract logging and hauling costs

6,277

8,825

12,618

17,556

Depletion

3,201

6,657

7,350

14,382

Cost of timberland sales

6,475

5,641

10,812

7,796

Forestry management expenses

1,498

1,707

3,123

3,594

General and administrative expenses

7,650

3,094

11,619

6,694

Land rent expense

106

20

186

133

Other operating expenses

1,441

1,714

2,690

3,427

26,648

27,658

48,398

53,582

Other income (expense):

Interest income

48

—

51

1

Interest expense

(2,778)

(3,337)

(5,279)

(6,265)

Gain on large dispositions

—

759

—

759

(2,730)

(2,578)

(5,228)

(5,505)

Income (loss) before unconsolidated joint venture

(4,819)

1,704

(2,125)

539

Income from unconsolidated joint venture:

Dawsonville Bluffs

260

49

750

663

Net income (loss)

(4,559)

1,753

(1,375)

1,202

Net income (loss) attributable to noncontrolling interests

(11)

4

(3)

3

Net income (loss) attributable to common stockholders

$             (4,548)

$               1,749

$             (1,372)

$               1,199

Weighted-average common shares outstanding — basic

48,522

48,421

48,501

48,398

Income (loss) per share — basic

$                (0.09)

$                 0.04

$                (0.03)

$                 0.02

Weighted-average common shares outstanding — diluted

48,522

48,562

48,501

48,513

Income (loss) per share — diluted

$                (0.09)

$                 0.04

$                (0.03)

$                 0.02

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except for per-share amounts)

June 30, 2022

December 31, 2021

Assets:

Cash and cash equivalents

$                      33,727

$                           22,963

Accounts receivable

3,852

5,436

Prepaid expenses and other assets

18,179

6,294

Operating lease right-of-use asset

2,371

2,527

Deferred financing costs

2,279

2,606

Timber assets:

Timber and timberlands, net

453,240

466,130

Intangible lease assets

—

1

Investments in unconsolidated joint ventures

1,719

1,353

Total assets

$                    515,367

$                        507,310

Liabilities:

Accounts payable and accrued expenses

$                         7,143

$                             3,677

Operating lease liability

2,556

2,707

Other liabilities

3,957

18,683

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

298,478

298,247

Total liabilities

312,134

323,314

Commitments and Contingencies

—

—

Stockholders' Equity:

Class A common stock, $0.01 par value; 900,000 shares authorized; 49,248 and 48,888 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

492

489

Additional paid-in capital

731,339

729,960

Accumulated deficit and distributions

(546,127)

(537,477)

Accumulated other comprehensive income (loss)

15,326

(11,217)

Total stockholders' equity

201,030

181,755

Noncontrolling Interests

2,203

2,241

Total equity

203,233

183,996

Total liabilities and equity

$                    515,367

$                        507,310

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Cash Flows from Operating Activities:

Net income (loss)

$       (4,559)

$        1,753

$      (1,375)

$       1,202

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depletion

3,201

6,657

7,350

14,382

Basis of timberland sold, lease terminations and other

6,698

5,701

10,738

7,667

Stock-based compensation expense

853

767

1,704

1,386

Noncash interest expense

381

586

771

1,171

Noncash lease expense

2

6

5

11

Other amortization

29

44

59

87

Gain on large dispositions

—

(759)

—

(759)

(Income) loss from unconsolidated joint ventures

(260)

(49)

(750)

(663)

Operating distributions from unconsolidated joint ventures

296

—

384

—

Interest paid under swaps with other-than-insignificant financing element

980

1,438

2,377

2,845

Changes in assets and liabilities:

Accounts receivable

(665)

(747)

1,397

(258)

Prepaid expenses and other assets

3,181

282

3,420

497

Accounts payable and accrued expenses

4,385

220

3,529

878

Other liabilities

(350)

2,561

(3,401)

1,606

Net cash provided by operating activities

14,172

18,460

26,208

30,052

Cash Flows from Investing Activities:

Timberland acquisitions and earnest money paid

(2,291)

—

(2,291)

—

Capital expenditures (excluding timberland acquisitions)

(892)

(1,003)

(2,990)

(3,320)

Distributions from unconsolidated joint ventures

—

266

—

266

Net proceeds from large dispositions

—

7,340

—

7,340

Net cash (used in) provided by investing activities

(3,183)

6,603

(5,281)

4,286

Cash Flows from Financing Activities:

Repayments of notes payable

—

(7,295)

—

(7,295)

Financing costs paid

(29)

(3)

(61)

(7)

Interest paid under swaps with other-than-insignificant financing element

(980)

(1,438)

(2,377)

(2,845)

Dividends/distributions paid

(3,648)

(6,563)

(7,296)

(13,128)

Repurchases of common shares

—

(80)

(26)

(158)

Repurchase of common shares for minimum tax withholding

—

(49)

(403)

(538)

Net cash used in financing activities

(4,657)

(15,428)

(10,163)

(23,971)

Net change in cash and cash equivalents

6,332

9,635

10,764

10,367

Cash and cash equivalents, beginning of period

27,395

12,656

22,963

11,924

Cash and cash equivalents, end of period

$      33,727

$     22,291

$     33,727

$    22,291

CATCHMARK TIMBER TRUT, INC. AND SUBSIDIARIES

SELECTED DATA (UNAUDITED)

2022

2021

Q1

Q2

YTD

Q1

Q2

Consolidated

Timber Sales Volume (tons, '000)

Pulpwood

228

235

463

273

300

573

Sawtimber ⁽¹⁾

241

164

405

252

228

480

Total

469

399

868

525

528

1,053

Harvest Mix

Pulpwood

49 %

59 %

53 %

52 %

57 %

54 %

Sawtimber ⁽¹⁾

51 %

41 %

47 %

48 %

43 %

46 %

Period-end Acres ('000)

Fee

352

348

348

385

375

375

Lease

13

—

—

15

15

15

Wholly-owned total

365

348

348

400

390

390

Joint venture interests ⁽⁶⁾

—

—

—

1,081

1,080

1,080

Total

365

348

348

1,481

1,470

1,470

U.S. South

Timber Sales Volume (tons, '000)

Pulpwood

228

235

463

271

297

568

Sawtimber ⁽¹⁾

241

164

405

205

194

399

Total

469

399

868

476

491

967

Harvest Mix

Pulpwood

49 %

59 %

53 %

57 %

61 %

59 %

Sawtimber ⁽¹⁾

51 %

41 %

47 %

43 %

39 %

41 %

Delivered % as of total volume

66 %

70 %

68 %

74 %

77 %

76 %

Stumpage % as of total volume

34 %

30 %

32 %

26 %

23 %

24 %

Net Timber Sales Price ($ per ton) ⁽²⁾

Pulpwood

$          15

$          14

$          15

$          14

$          15

$          15

Sawtimber ⁽¹⁾

$          33

$          31

$          32

$          25

$          26

$          25

Timberland Acquisition

Gross sales ('000) ⁽³⁾

$           —

$    2,200

$    2,200

$           —

$           —

$           —

Acres acquired

—

1,300

1,300

—

—

—

Price per acre ⁽³⁾

$           —

$    1,653

$    1,653

$           —

$           —

$           —

Timberland Sales

Gross sales ('000)

$    6,070

$    8,818

$  14,888

$    3,357

$    7,632

$  10,989

Acres sold

3,400

5,700

9,100

1,800

4,300

6,100

% of fee acres

1.0 %

1.6 %

2.6 %

0.5 %

1.2 %

1.6 %

Price per acre ⁽⁴⁾

$    1,771

$    1,564

$    1,642

$    1,923

$    1,743

$    1,749

Large Dispositions ⁽⁵⁾

Gross sales ('000)

$           —

$           —

$           —

$           —

$    7,536

$    7,536

Acres sold

—

—

—

—

5,000

5,000

Price per acre

$           —

$           —

$           —

$           —

$    1,522

$    1,522

Gain ('000)

$           —

$           —

$           —

$           —

$        759

$        759

Pacific Northwest ⁽⁸⁾

Timber Sales Volume (tons,'000)

Pulpwood

—

—

—

2

3

5

Sawtimber ⁽¹⁾

—

—

—

47

34

81

Total

—

—

—

49

37

86

Harvest Mix

Pulpwood

— %

— %

— %

4 %

8 %

6 %

Sawtimber ⁽¹⁾

— %

— %

— %

96 %

92 %

94 %

Delivered % as of total volume

— %

— %

— %

100 %

100 %

100 %

Stumpage % as of total volume

— %

— %

— %

— %

— %

— %

Delivered Timber Sales Price ($ per ton) ^{(2) (7)}

Pulpwood

$           —

$           —

$           —

$          30

$          30

$          30

Sawtimber ⁽¹⁾

$           —

$           —

$           —

$        104

$        106

$        105

⁽¹⁾

Includes chip-n-saw and sawtimber.

⁽²⁾

Prices per ton are rounded to the nearest dollar.

⁽³⁾

Exclusive of transaction costs.

⁽⁴⁾

Excludes value of timber reservations. For the three months ended June 30, 2022 and 2021, we retained 32,000 tons and 49,000 tons of merchantable inventory, with a sawtimber mix of 45% and 32%, respectively. For the six months ended June 30, 2022 and 2021, we retained 50,000 tons and 59,000 tons of merchantable inventory, with a sawtimber mix of 58% and 36%, respectively.

⁽⁵⁾

Large dispositions are sales of blocks of timberland properties in one or several transactions with the objective to generate proceeds to fund capital allocation priorities. Large dispositions may or may not have a higher or better use than timber production or result in a price premium above the land's timber production value. Such dispositions are infrequent in nature, are not part of core operations, and would cause material variances in comparative results if not reported separately.

⁽⁶⁾

Represents properties owned by Triple T joint venture in which CatchMark owned a common partnership interest; and Dawsonville Bluffs, LLC, a joint venture in which CatchMark owns a 50% membership interest.

⁽⁷⁾

Delivered timber sales price includes contract logging and hauling costs.

⁽⁸⁾ 

Exited the Pacific Northwest in August 2021.

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED)

(in thousands)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Net income (loss)

$         (4,559)

$          1,753

$         (1,375)

$          1,202

Add:

Depletion

3,201

6,657

7,350

14,382

Interest expense ⁽¹⁾

2,397

2,752

4,508

5,094

Amortization ⁽¹⁾

412

636

835

1,269

Depletion, amortization, and basis of timberland and mitigation credits sold included in loss from unconsolidated joint venture ⁽²⁾

40

15

104

103

Basis of timberland sold, lease terminations and other ⁽³⁾

6,698

5,701

10,738

7,667

Stock-based compensation expense

853

767

1,704

1,386

Gain on large disposition ⁽⁴⁾

—

(759)

—

(759)

Merger-related costs ⁽⁵⁾

4,595

—

4,595

—

Post-employment benefits ⁽⁶⁾

—

7

8

23

Other ⁽⁷⁾

36

48

52

147

Adjusted EBITDA ⁽⁸⁾

$        13,673

$        17,577

$        28,519

$        30,514

⁽¹⁾  

For the purpose of the above reconciliation, amortization includes amortization of deferred financing costs, amortization of operating lease assets and liabilities, 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. Includes non-cash basis of timber and timberland assets written-off related to timberland sold, terminations of timberland leases and casualty losses.

⁽²⁾

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

⁽³⁾

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

⁽⁴⁾

Large dispositions are sales of blocks of timberland properties in one or several transactions with the objective to generate proceeds to fund capital allocation priorities. Large dispositions may or may not have a higher or better use than timber production or result in a price premium above the land's timber production value. Such dispositions are infrequent in nature, are not part of core operations, and would cause material variances in comparative results if not reported separately.

⁽⁵⁾

Reflects merger-related legal fees, consulting fees and other professional fees required to be expensed by GAAP that management believes do not directly reflect the core business operations of our timberland portfolio on an on-going basis.

⁽⁶⁾

Reflects one-time, non-recurring post-employment benefits associated with the retirement of our former CEO, including severance pay, payroll taxes, professional fees, and accrued dividend equivalents.

⁽⁷⁾

Includes certain cash expenses paid, or reimbursement received, 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.

⁽⁸⁾

Adjusted EBITDA is a non-GAAP financial measure of operating performance. EBITDA is defined by the SEC as earnings before interest, taxes, depreciation and amortization; 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. Due to the significant amount of timber assets subject to depletion, significant income (losses) from unconsolidated joint ventures based on hypothetical liquidation book value, or HLBV, and the significant amount of financing subject to interest and amortization expense, management considers Adjusted EBITDA to be an important measure of our financial performance. By providing this non-GAAP financial measure, together with the reconciliation above, 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 is a supplemental measure of operating performance that does not represent and should not be considered in isolation or as an alternative to, or substitute for net income, cash flow from operations, or other financial statement data presented in accordance with GAAP in our consolidated financial statements as indicators of our operating 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 GAAP.

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

ADJUSTED EBITDA BY SEGMENT (UNAUDITED)

(in thousands)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Timber sales

$        14,679

$        20,111

$        32,402

$        40,260

Other revenue

952

986

1,922

2,048

(-)    Contract logging and hauling costs

(6,277)

(8,825)

(12,618)

(17,556)

(-)    Forestry management expenses

(1,498)

(1,707)

(3,123)

(3,594)

(-)    Land rent expense

(106)

(20)

(186)

(133)

(-)    Other operating expenses

(1,441)

(1,714)

(2,690)

(3,427)

(+)   Stock-based compensation

165

143

336

250

(+/-) Other

397

393

439

446

Harvest EBITDA

6,871

9,367

16,482

18,294

Timberland sales

8,818

7,632

14,888

10,989

(-)    Cost of timberland sales

(6,475)

(5,641)

(10,812)

(7,796)

(+)   Basis of timberland sold

6,321

5,342

10,340

7,284

Real Estate EBITDA

8,664

7,333

14,416

10,477

Asset management fees

110

3,211

2,289

6,329

Unconsolidated Dawsonville Bluffs joint venture EBITDA

300

64

854

766

Investment Management EBITDA

410

3,275

3,143

7,095

Total Operating EBITDA

15,945

19,975

34,041

35,866

(-)     General and administrative expenses

(7,650)

(3,094)

(11,619)

(6,694)

(+)    Stock-based compensation

688

624

1,368

1,136

(+)    Interest income

48

—

51

1

(+)    Merger-related costs

4,595

—

4,595

—

(+)    Post-employment benefits

—

7

8

23

(+/-)  Other

47

65

75

182

Corporate EBITDA

(2,272)

(2,398)

(5,522)

(5,352)

Adjusted EBITDA ⁽¹⁾

$        13,673

$        17,577

$        28,519

$        30,514

⁽¹⁾

See definition of Adjusted EBITDA in footnote 6 to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CASH AVAILABLE FOR DISTRIBUTION (UNAUDITED)

(in thousands, except for per share data)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Cash Provided by Operating Activities

$        14,172

$        18,460

$        26,208

$        30,052

Capital expenditures (excluding timberland acquisitions)

(892)

(1,003)

(2,990)

(3,320)

Working capital change

(6,551)

(2,316)

(4,945)

(2,723)

Distributions from unconsolidated joint ventures

—

266

—

266

Post-employment benefits

—

7

8

23

Interest paid under swaps with other-than-insignificant financing element

(980)

(1,438)

(2,377)

(2,845)

Other

36

48

52

147

Cash Available for Distribution ⁽¹⁾

$          5,785

$        14,024

$        15,956

$        21,600

Adjusted EBITDA ⁽²⁾

$        13,673

$        17,577

$        28,519

$        30,514

Interest paid

(2,397)

(2,752)

(4,508)

(5,094)

Capital expenditures (excluding timberland acquisitions)

(892)

(1,003)

(2,990)

(3,320)

Merger-related costs

(4,595)

—

(4,595)

—

Distributions from unconsolidated joint ventures

296

266

384

266

Adjusted EBITDA from unconsolidated joint ventures

(300)

(64)

(854)

(766)

Cash Available for Distribution ⁽¹⁾

$          5,785

$        14,024

$        15,956

$        21,600

Dividends/distributions paid

$          3,648

$          6,563

$          7,296

$        13,128

Weighted-average shares outstanding — basic

48,522

48,421

48,501

48,398

Dividends per share

$          0.075

$          0.135

$          0.150

$          0.270

⁽¹⁾  

Cash Available for Distribution (CAD) is a non-GAAP financial measure. It is calculated as cash provided by operating activities, adjusted for capital expenditures (excluding timberland acquisitions), working capital changes, cash distributions from unconsolidated joint ventures and certain cash expenditures 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 activities.

⁽²⁾

See definition of Adjusted EBITDA in footnote 8 to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.