CatchMark reports Q2 loss of US$4.6M, from year-ago income of US$1.8M, on revenues down 23% to US$24.6M; company generated US$8.8M million in timberland sales, acquired 1,300 acres of prime timberlands in southeast Alabama for US$2.2M

ATLANTA , August 4, 2022 (press release) –

• Recognized a net loss of $4.6 million, resulting primarily from fees and expenses related to the pending merger with PotlatchDeltic Corporation.
• Produced Adjusted EBITDA of $13.7 million and $24.6 million in total revenues.
• Captured blended net timber sales pricing 10% higher year over year driven by a 21% increase in sawtimber pricing.
• Continued to generate significant premiums over TimberMart-South South-wide pricing averages as a result of prime timberlands located in strong local markets.
• Generated $8.8 million in timberland sales, accelerating timing of full-year plan.
• Acquired 1,300 acres of prime timberlands located in southeast Alabama for $2.2 million.

CatchMark Timber Trust, Inc. (NYSE: CTT) today reported second quarter 2022 results.

Brian M. Davis, CatchMark's President and CEO, said: "Second quarter results were in line with our business plan. They reflect planned lower harvest volumes in the U.S. South, partially offset by higher timber sales pricing, and last year's Bandon disposition in the Pacific Northwest as well as lower asset management fees due to last year's Triple T exit. Net loss was attributable to fees and expenses related to the pending PotlatchDeltic merger. We continued to achieve pricing premiums across our prime U.S. South timberlands as compared to market averages, in particular generating strong sawtimber pricing. Year over year, we also completed more timberland sales as planned. Net cash from operating activities and cash available for distribution comfortably covered our quarterly dividend."

The timing of the declaration of a third quarter CatchMark dividend and its payment date will depend on the timing of the closing of the merger with PotlatchDeltic. The merger is expected to close by the end of the third quarter.

SECOND QUARTER 2022 RESULTS

The following table summarizes the current quarter and comparable prior year period results:

Business Segments Overview

Harvest Operations 

• Timber sales revenue and Harvest EBITDA were each 27% lower year over year as a result of lower harvest volumes.
• Overall harvest volumes were down 24% year over year due to planned reduced harvests in the U.S. South and the 2021 sale of the Bandon timberlands in the Pacific Northwest.
• In the U.S. South, where CatchMark now operates exclusively, timber sales revenue of $14.7 million was 10% lower year over year due to a planned 19% decrease in harvest volumes, offset by 10% increase in blended net timber sales pricing year over year.
• Sawtimber pricing increased 21% year over year while pulpwood pricing was down 5%.
• Harvests from CatchMark's prime timberlands located exclusively in leading mill markets across the U.S. South continued to generate significant pricing premiums over TimberMart-South South-wide averages during the second quarter.
• Sawtimber mix, as a percentage of total volume, increased to 41% from 39% year over year.

Real Estate 

Timberland Sales

• Timberland sales revenue increased 16% year over year due to selling 1,400 more acres in second quarter 2022 than in second quarter 2021, meeting plan targets.
• Real Estate EBITDA increased 18% as a result of higher timberland sales revenue.
• Timberland sales price per acre at $1,564 was 10% lower than the $1,743 per-acre price achieved in second quarter 2021 due to lower productivity characteristics in the acres sold, including a significantly lower percentage of pine plantations.
• The margin on timberland sales increased year over year to 27% despite the lower sales price per acre.
• Acres sold in the current quarter had a significantly lower average merchantable timber stocking than the CatchMark portfolio average of 39 tons per acre at the beginning of the year.
• CatchMark made no large dispositions during the quarter as the company's capital recycling program ended in 2021.

Timberland Acquisitions

• CatchMark acquired the Big Island timberlands, comprising approximately 1,300 high-quality acres located in Barbour County, AL for $2.2 million, or $1,653 per acre. The acquired timberlands have a site index of 70 and comprise 82% pine plantations. The timberlands are located within a primary haul zone near existing CatchMark mill markets.
• During the quarter, CatchMark also agreed to acquire 870 acres in Georgia for a total of $2.0 million. This transaction is expected to close in the third quarter.

Investment Management 

• The significant decreases in year-over-year asset management fee revenue, down 97%, and Investment Management EBITDA, down 87%, were due to last year's Triple T exit and the expiration of the related transition services agreement on March 31, 2022.
• Incentive-based promotes and joint venture income continued to be generated from Dawsonville Bluffs as the joint venture continued to capitalize on strong demand for wetlands mitigation credits. 
• During the quarter, CatchMark recognized $0.3 million of income, $0.4 million of Adjusted EBITDA and received a $0.3 million cash distribution from Dawsonville Bluffs. After quarter's close, CatchMark received an additional $0.5 million cash distribution from the joint venture.

Capital Position and Share Repurchases

CatchMark maintained its strong balance sheet and ample liquidity during the quarter.

• As of June 30, 2022, the company had $33.7 million of cash on hand and $253.6 million of borrowing capacity remaining under its credit facilities. There were no changes to its credit facilities during the quarter.
• Interest expense decreased $0.6 million year over year to $2.8 million, primarily due to a 32% lower weighted-average debt outstanding balance, offset by higher weighted-average interest rates, which the company has effectively hedged against through its interest rate management program.

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 June 30, 2022.

Conference Call
Due to the company's pending merger with PotlatchDeltic Corporation, a second quarter 2022 earnings call will not be held.

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 approximately 350,000 acres* of timberlands located in the U.S. South. For more information visit www.catchmark.com.

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