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CatchMark Announces Full-Year and Fourth Quarter 2017 Results, Declares First Quarter 2018 Dividend

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ATLANTA, Feb. 15, 2018 /PRNewswire/ -- CatchMark Timber Trust, Inc. (NYSE: CTT) reported increases in key year-over-year performance results for full-year 2017 while achieving enhanced productivity on existing timberlands, acquiring new high-quality timberlands with average stocking well-above industry averages, and increasing borrowing capacity for future institutional joint venture acquisitions.

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 February 28, 2018, payable on March 16, 2018.

Full-year 2017 performance highlights announced today include:

  • Increased total revenues by 12% to $91.3 million, compared to $81.9 million for full-year 2016.
  • Incurred a net loss of $13.5 million in accordance with GAAP, compared to $11.1 million for full-year 2016.
  • Increased Adjusted EBITDA by 14% to $42.0 million, compared to $36.8 million for full-year 2016.
  • Increased total harvest volumes by 6%.
  • Increased timber sales revenue by 10%.
  • Generated $1.1 million of income from the unconsolidated Dawsonville Bluffs joint venture with the Missouri Department of Transportation & Patrol Retirement System (MPERS).
  • Paid dividends totaling $0.54 per share.

During full-year 2017, CatchMark acquired interests in 30,600 acres of prime timberlands for $62 million, exclusive of closing costs, with an average stocking of 66 tons per acre compared to 35 to 40 tons per acre for South-wide regional averages. The three transactions included CatchMark's first institutional joint venture acquisition with MPERS.  CatchMark also sold 7,700 acres of timberlands for $14.8 million during the year, meeting its targets. Total holdings increased to more than 520,800 acres, as of December 31, 2017.

As of December 31, 2017, the company also had increased its borrowing capacity through expanded and revised credit facilities to $638 million compared to $500 million at December 31, 2016. As a result, CatchMark doubled its capacity to undertake future joint venture acquisitions, improved the weighted-average life of debt from five years to nearly nine years, lowered interest rate spreads, and reduced borrowing costs.

Jerry Barag, CatchMark's President and CEO, said: "Results for 2017 met the high-end of company guidance and achieved the objectives and goals of our long-term strategic plan, which is driving growth through both acquisitions and existing operations. Key to this success was achieving significant operational gains from increased productivity on new and existing timberlands, including increases in delivered sales. We continue to emphasize sound environmental stewardship in meeting exacting sustainability goals and ensuring long-term production for realizing attractive growth in revenues and Adjusted EBITDA. In integrating our first institutional joint venture, 12-month operational targets were met within the first eight months of ownership. Our acquisitions remain grounded in disciplined underwriting to secure premium quality properties in stocking and silviculture attributes, a hallmark of our ongoing commitment to stockholders to build the highest quality investment portfolio in our industry."

Under CatchMark's $30 million share repurchase program announced in August 2015, approximately $1 million of shares were repurchased during the year at an average price of $10.60.  No shares were repurchased during fourth quarter 2017. As of December 31, 2017, CatchMark may repurchase up to an additional $19.8 million under the program.

For fourth quarter 2017, CatchMark also registered strong gains, driven by higher harvest volumes. Fourth quarter operating highlights included:

  • Increased revenues by 11% to $22.7 million, compared to $20.4 million in fourth quarter 2016.
  • Incurred a net loss of $5.0 million in accordance with GAAP, compared to $4.9 million in the fourth quarter 2016.
  • Increased Adjusted EBITDA by 37% to $9.9 million, compared to $7.2 million in the fourth quarter 2016.
  • Increased total harvest volumes by 10%.
  • Increased timber sales revenue by 18%.
  • Acquired 19,564 acres of timberland for $51.6 million, excluding closing costs.
  • Completed timberland sales of 626 acres for $1.0 million.
  • Generated $1.3 million of income from the unconsolidated Dawsonville Bluffs joint venture.
  • Paid a dividend of $0.135 per share to stockholders of record on December 15, 2017.

Results for Fourth Quarter and Full Year 2017

For the quarter ended December 31, 2017, revenues increased to $22.7 million compared to $20.4 million for the quarter ended December 31, 2016, resulting from a $3.1 million increase in timber sales revenue, offset by $0.8 million decrease in timberland sales. Timber sales revenue increased by $3.1 million driven by delivered sales volume growth under our ongoing delivered wood strategy. Total timberland sales revenue decreased by $0.8 million due to approximately 400 fewer acres sold in fourth quarter 2017 compared to fourth quarter 2016.

CatchMark incurred a net loss of $5.0 million for the quarter ended December 31, 2017 compared to $4.9 million for the quarter ended December 31, 2016, including $1.3 million in income from the unconsolidated MPERS joint venture, a $0.7 million increase in net timber sales and a $0.5 million decrease in other operating expenses, offset by a $1.5 million increase in general and administrative expenses and a $0.9 million increase in interest expense. General and administrative expenses increased primarily due to corporate initiative costs of $1.3 million.


Three Months
Ended

December 31,
2016


Changes attributable to:


Three Months
Ended

December 31,
2017

(in thousands)


Price/Mix


Volume


Timber sales (1)








Pulpwood

$

9,260



$

353



$

2,020



$

11,633


Sawtimber (2)

8,102



22



668



8,792



$

17,362



$

375



$

2,688



$

20,425


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

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

Revenues increased to $91.3 million for the year ended December 31, 2017 from $81.9 million for the year ended December 31, 2016 due to an increase in timber sales revenue of $6.3 million, an increase in timberland sales revenue of $2.3 million, and an increase in other revenues of $0.9 million. Gross timber sales revenue increased by 10%, primarily from a 6% increase in harvest volume and an increase in delivered sales as a percentage of total volume – 74% of 2017 harvest volume derived from delivered sales as compared to 64% in 2016. Gross timber sales revenue from delivered sales includes logging and hauling costs that customers pay for deliveries.

Net loss increased to $13.5 million for the year ended December 31, 2017 from $11.1 million for the year ended December 31, 2016 due to a $4.5 million increase in interest expense, offset by $1.1 million in income from the MPERS joint venture and a $0.8 million improvement in operating loss.


For the Year
Ended
December 31,
2016


Changes attributable to:


For the Year
Ended
December 31,
2017

(in thousands)


Price/Mix


Volume


Timber sales (1)








Pulpwood

$

34,969



$

(773)



$

3,236



$

37,432


Sawtimber (2)

30,066



1,330



2,525



33,921



$

65,035



$

557



$

5,761



$

71,353


(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 as a measurement 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. 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 quarter ended December 31, 2017, Adjusted EBITDA was $9.9 million, a $2.7 million increase from the quarter ended December 31, 2016, primarily due to $2.0 million generated by the unconsolidated MPERS joint venture and a $1.1 million increase in net timber sales, offset by a $0.7 million decrease in timberland sales.

Our reconciliation of net loss to Adjusted EBITDA for the quarters ended December 31, 2017, 2016, and 2015 follows:

(in thousands)

Q4 2017


Q4 2016


Q4 2015

Net loss

$

(5,022)



$

(4,941)



$

(3,296)


Add:






Depletion

8,524



8,061



7,783


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

465



1,498



1,133


Amortization (2)

309



296



187


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

737






Stock-based compensation expense

761



404



247


Interest expense (2)

2,827



1,885



882


Other (4)

1,290





54


Adjusted EBITDA

$

9,891



$

7,203



$

6,990


 

(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.



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