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| 8-K - FORM 8-K Q3 2015 EARNINGS RELEASE - CatchMark Timber Trust, Inc. | a8-kcttq32015earningsrelea.htm |
FOR IMMEDIATE RELEASE
CatchMark Sustains Strong Growth in Third Quarter-Adjusted EBITDA Increases 69%; Declares Dividend
ATLANTA - November 2, 2015 - Sustaining solid year-over-year growth from execution of operating strategies, CatchMark Timber Trust, Inc. (NYSE: CTT) today announced increased revenues and Adjusted EBITDA for the period ended September 30, 2015. The company also anticipates an active period for acquisitions between now and year-end and declared a fourth quarter dividend.
Company highlights for the third quarter 2015 include:
• | Generated total revenues of $17.6 million for the three months ended September 30, 2015 compared to $12.7 million for the third quarter 2014, a 39% increase. |
• | Realized $8.8 million in Adjusted EBITDA for the quarter compared to $5.2 million for third quarter 2014, an increase of 69%. |
• | Increased gross timber sales revenue by approximately 11% to $12.6 million, resulting primarily from integration of recent acquisitions. |
• | Increased total timber sales volume by 12% to 445,000 tons, compared to third quarter 2014. |
• | Maintained average net prices per ton for sawtimber and pulpwood, compared to third quarter 2014. |
• | Paid a dividend of $0.125 per share on September 14, 2015. |
Jerry Barag, CatchMark's President and CEO, said: "We continue to deliver on our promise of durable growth and provide recurring dividends from economically sustainable harvests on our prime timberlands, resulting from our active forest management and diligent environmental stewardship. The productivity of our properties will ensure high production levels over time. A robust transaction pipeline
and approximately $280 million in available capital from cash and various credit facilities bode well for a busy fourth quarter in adding to our existing assemblages of well-stocked timberland properties.”
Other important company initiatives include:
• | During the nine months ended September 30, 2015, CatchMark acquired approximately 17,600 acres of timberland for $28.4 million and sold 5,600 acres for $10.3 million. The cost basis on the timberlands sold was $7.8 million. |
• | Through September 30, 2015, CatchMark’s $30 million share repurchase program, announced during the third quarter, resulted in $4.6 million in repurchases of 448,000 shares at an average price per share of $10.21. |
CatchMark also announced a dividend of $0.125 per share for stockholders of record on November 27, 2015, payable on December 14, 2015.
Willis J. Potts, Jr., CatchMark's Chairman of the Board, said: "Our operating strategy, strong capital position, share repurchase program, acquisitions program, and selective land sales should combine to continue to strengthen CatchMark and help ensure prospects for enhancing dividends and shareholder value over the long-term.”
Results for Three and Nine Months Ended September 30, 2014
CatchMark’s revenues increased to $17.6 million for the three months ended September 30, 2015 from $12.7 million for the three months ended September 30, 2014 due to an increase in timber sales revenue of $1.2 million, an increase in timberland sales revenue of $3.1 million, and an increase in other revenues of $0.7 million. Gross timber sales revenue increased by approximately 11%, primarily due to an increase in harvest volume as a result of incremental harvest on properties acquired in the past 12 months. Timberland sales revenue increased due to selling more acres in 2015. Net loss increased to $1.9 million for the three months ended September 30, 2015 from $0.8 million for the three months ended September 30, 2014 as a result of incurring an operating loss and an increase in interest expense.
Three Months Ended September 30, 2014 | Changes attributable to: | Three Months Ended September 30, 2015 | |||||||||||||
(amounts in thousands) | Price | Volume | |||||||||||||
Timber sales (1) | |||||||||||||||
Pulpwood | $ | 6,829 | $ | (82 | ) | $ | 382 | $ | 7,129 | ||||||
Sawtimber (2) | 4,563 | 66 | 875 | 5,504 | |||||||||||
$ | 11,392 | $ | (16 | ) | $ | 1,257 | $ | 12,633 | |||||||
(1) | Timber sales are presented on a gross basis. |
(2) | Includes sales of chip-n-saw and sawtimber. |
Revenues increased to $52.0 million for the nine months ended September 30, 2015 from $33.4 million for the nine months ended September 30, 2014 due to an increase in timber sales revenue of $8.7 million, an increase in timberland sales revenue of $8.7 million, and an increase in other revenues of $1.1 million. Gross timber sales revenue increased by approximately 29%, mainly due to an approximately 30% increase in harvest volume as a result of incremental harvest on properties acquired in the past 12 months. Timberland sales revenue increased due to selling more acres in 2015. Net loss increased to $5.1 million for the nine months ended September 30, 2015 from $1.5 million for the nine months ended September 30, 2014 as a result of incurring an operating loss and an increase in interest expense.
Nine Months Ended September 30, 2014 | Changes attributable to: | Nine Months Ended September 30, 2015 | |||||||||||||
(amounts in thousands) | Price | Volume | |||||||||||||
Timber sales (1) | |||||||||||||||
Pulpwood | $ | 17,752 | $ | (274 | ) | $ | 3,395 | $ | 20,873 | ||||||
Sawtimber (2) | 11,910 | 362 | 5,254 | 17,526 | |||||||||||
$ | 29,662 | $ | 88 | $ | 8,649 | $ | 38,399 | ||||||||
(1) | Timber sales are presented on a gross basis. |
(2) | Includes sales of 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 from Continuing Operations 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 due to their non-cash nature, 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 three months ended September 30, 2015, Adjusted EBITDA was $8.8 million, a $3.6 million increase from the three months ended September 30, 2014, primarily due to a $0.8 million increase in net timber sales, a $2.9 million increase in net revenue from timberland sales and a $0.7 million increase in other revenues, offset by a $0.4 million increase in other operating expenses, a $0.1 million increase in general and administrative expenses, and a $0.2 million increase in forestry management fees.
For the nine months ended September 30, 2015, Adjusted EBITDA was $25.2 million, a $13.1 million increase from the nine months ended September 30, 2014, primarily due to a $6.3 million increase in net timber sales, a $8.1 million increase in net revenue from timberland sales and a $1.1 million increase in other revenues, offset by a $0.9 million increase in other operating expenses, a $0.7 million increase in general and administrative expenses, and a $0.8 million increase in forestry management fees.
Our reconciliation of net loss to Adjusted EBITDA for the three months and nine months ended September 30, 2015 and 2014 follows:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(amounts in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net loss | $ | (1,944 | ) | $ | (764 | ) | $ | (5,091 | ) | $ | (1,501 | ) | |||
Add: | |||||||||||||||
Depletion | 6,710 | 4,857 | 19,308 | 10,390 | |||||||||||
Basis of timberland sold | 2,859 | 299 | 7,753 | 1,043 | |||||||||||
Amortization (1) | 188 | 428 | 578 | 654 | |||||||||||
Stock-based compensation expense | 231 | 106 | 642 | 285 | |||||||||||
Interest expense (1) | 719 | 257 | 2,042 | 1,244 | |||||||||||
Adjusted EBITDA | $ | 8,763 | $ | 5,183 | $ | 25,232 | $ | 12,115 | |||||||
(1) | 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. |
Conference Call/Webcast
The company will host a conference call and live webcast at 10 a.m. ET on Tuesday, November 3, 2015 to discuss these results. Investors may listen to the conference call by dialing 877-876-9177 for U.S/Canada and 785-424-1666 for international callers. Participants will be asked to provide conference I.D. number 571191. 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
Headquartered in Atlanta, CatchMark Timber Trust, Inc. is a self-administered and self-managed publicly traded REIT that began operations in 2007 and owns interests in approximately 404,500 acres* of timberland located in Alabama, Florida, Georgia, Louisiana and Texas. Listed on the NYSE (CTT), CatchMark provides institutions and individuals an opportunity to invest in a public company focused exclusively on timberland ownership with an objective of producing stockholder returns from sustainably recurring harvests. For more information, visit www.catchmark.com. From time to time, CatchMark releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts regarding new postings. Enrollment information is found in the “Investors Relations” section of www.catchmark.com.
* As of September 30, 2015.
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, but are not limited to, that we anticipate that it will be an active period for acquisitions between now and year end, that the productivity of our properties will ensure high production levels over time, that a robust transaction pipeline and available capital bode well for the fourth quarter and that our operating strategy, strong capital position, share repurchase program, acquisitions program and selective land sales should combine to continue to strengthen CatchMark and help ensure prospectus for enhancing dividends and shareholder value over the long-term. Readers of this press release should be aware that there are various factors that could cause actual results to differ materially from any forward-looking statements made in this press release. Factors that could cause or contribute to such differences include, but are 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 shareholder value over the long-term; and (ix) the factors described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, under the heading “Risk Factors” 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.
Contacts
Investors: Media:
Brian Davis Mary Beth Ryan, Miller Ryan LLC
(855) 858-9794 (203) 268-0158
info@catchmark.com marybeth@millerryanllc.com
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except for per-share data)
(Unaudited) Three Months Ended September 30, | (Unaudited) Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues: | |||||||||||||||
Timber sales | $ | 12,633 | $ | 11,392 | $ | 38,399 | $ | 29,662 | |||||||
Timberland sales | 3,555 | 485 | 10,320 | 1,575 | |||||||||||
Other revenues | 1,441 | 776 | 3,328 | 2,187 | |||||||||||
17,629 | 12,653 | 52,047 | 33,424 | ||||||||||||
Expenses: | |||||||||||||||
Contract logging and hauling costs | 4,874 | 4,472 | 14,818 | 12,426 | |||||||||||
Depletion | 6,710 | 4,857 | 19,308 | 10,390 | |||||||||||
Cost of timberland sales | 3,089 | 345 | 8,496 | 1,186 | |||||||||||
Forestry management expenses | 1,071 | 857 | 3,253 | 2,363 | |||||||||||
General and administrative expenses | 1,684 | 1,438 | 5,216 | 4,214 | |||||||||||
Land rent expense | 158 | 211 | 533 | 616 | |||||||||||
Other operating expenses | 1,112 | 750 | 2,985 | 2,076 | |||||||||||
18,698 | 12,930 | 54,609 | 33,271 | ||||||||||||
Operating (loss) income | (1,069 | ) | (277 | ) | (2,562 | ) | 153 | ||||||||
Other income (expense): | |||||||||||||||
Interest income | 1 | 175 | 3 | 177 | |||||||||||
Interest expense | (876 | ) | (662 | ) | (2,532 | ) | (1,831 | ) | |||||||
(875 | ) | (487 | ) | (2,529 | ) | (1,654 | ) | ||||||||
Net loss available to common stockholders | $ | (1,944 | ) | $ | (764 | ) | $ | (5,091 | ) | $ | (1,501 | ) | |||
Weighted-average common shares outstanding - basic and diluted | 39,430 | 36,874 | 39,470 | 28,942 | |||||||||||
Net loss per-share available to common stockholders - basic and diluted | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.13 | ) | $ | (0.05 | ) | |||
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except for per-share data)
(Unaudited) | |||||||
September 30, 2015 | December 31, 2014 | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 11,372 | $ | 17,365 | |||
Accounts receivable | 2,205 | 798 | |||||
Prepaid expenses and other assets | 3,095 | 2,781 | |||||
Deferred financing costs, less accumulated amortization of $726 and $267 as of September 30, 2015 and December 31, 2014, respectively | 3,904 | 4,245 | |||||
Timber assets (Note 3): | |||||||
Timber and timberlands, net | 545,897 | 543,101 | |||||
Intangible lease assets, less accumulated amortization of $934 and $931 as of September 30, 2015 and December 31, 2014, respectively | 23 | 26 | |||||
Total assets | $ | 566,496 | $ | 568,316 | |||
Liabilities: | |||||||
Accounts payable and accrued expenses | $ | 3,727 | $ | 2,359 | |||
Other liabilities | 4,852 | 3,265 | |||||
Note payable and line of credit (Note 4) | 138,002 | 118,000 | |||||
Total liabilities | 146,581 | 123,624 | |||||
Commitments and Contingencies (Note 6) | — | — | |||||
Stockholders’ Equity: | |||||||
Class A common stock, $0.01 par value; 889,500 shares authorized; 39,104 and 36,193 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | 391 | 362 | |||||
Class B-3 common stock, $0.01 par value; 3,500 shares authorized; 0 and 3,164 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | — | 32 | |||||
Additional paid-in capital | 608,574 | 612,518 | |||||
Accumulated deficit and distributions | (187,198 | ) | (167,364 | ) | |||
Accumulated other comprehensive loss | (1,852 | ) | (856 | ) | |||
Total stockholders’ equity | 419,915 | 444,692 | |||||
Total liabilities and stockholders’ equity | $ | 566,496 | $ | 568,316 | |||
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited) Three Months Ended September 30, | (Unaudited) Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||
Net loss | $ | (1,944 | ) | $ | (764 | ) | $ | (5,091 | ) | $ | (1,501 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||
Depletion | 6,710 | 4,857 | 19,308 | 10,390 | |||||||||||
Other amortization | 30 | 23 | 88 | 67 | |||||||||||
Stock-based compensation expense | 231 | 106 | 642 | 285 | |||||||||||
Noncash interest expense | 158 | 405 | 490 | 587 | |||||||||||
Basis of timberland sold | 2,859 | 299 | 7,753 | 1,043 | |||||||||||
Changes in assets and liabilities: | |||||||||||||||
Accounts receivable | (44 | ) | 928 | (1,407 | ) | (174 | ) | ||||||||
Prepaid expenses and other assets | 280 | 255 | 397 | 830 | |||||||||||
Accounts payable and accrued expenses | 420 | (200 | ) | 1,015 | 178 | ||||||||||
Other liabilities | (571 | ) | (70 | ) | 560 | 1,019 | |||||||||
Net cash provided by operating activities | 8,129 | 5,839 | 23,755 | 12,724 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Timberland acquisitions | (890 | ) | (5,237 | ) | (28,541 | ) | (91,326 | ) | |||||||
Capital expenditures (excluding timberland acquisitions) | (570 | ) | (155 | ) | (1,626 | ) | (691 | ) | |||||||
Net cash used in investing activities | (1,460 | ) | (5,392 | ) | (30,167 | ) | (92,017 | ) | |||||||
Cash Flows from Financing Activities: | |||||||||||||||
Proceeds from note payable | — | — | 20,500 | 86,500 | |||||||||||
Repayments of note payable | — | (118,491 | ) | (498 | ) | (138,660 | ) | ||||||||
Financing costs paid | (3 | ) | (21 | ) | (252 | ) | (964 | ) | |||||||
Issuance of common stock | — | 168,906 | — | 190,222 | |||||||||||
Dividends paid to common stockholders | (4,904 | ) | (4,920 | ) | (14,743 | ) | (10,415 | ) | |||||||
Repurchase of common shares | (4,588 | ) | — | (4,588 | ) | — | |||||||||
Stock issuance costs | — | (8,367 | ) | — | (10,041 | ) | |||||||||
Net cash (used in) provided by financing activities | (9,495 | ) | 37,107 | 419 | 116,642 | ||||||||||
Net (decrease) increase in cash and cash equivalents | (2,826 | ) | 37,554 | (5,993 | ) | 37,349 | |||||||||
Cash and cash equivalents, beginning of period | 14,198 | 8,409 | 17,365 | 8,614 | |||||||||||
Cash and cash equivalents, end of period | $ | 11,372 | $ | 45,963 | $ | 11,372 | $ | 45,963 | |||||||
SELECTED DATA
2015 | 2014 | ||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | YTD | Q1 | Q2 | Q3 | YTD | ||||||||||||||||||||||||
Timber Sales Volume ('000 tons) | |||||||||||||||||||||||||||||||
Pulpwood | 262 | 292 | 289 | 843 | 177 | 236 | 258 | 671 | |||||||||||||||||||||||
Sawtimber | 175 | 157 | 156 | 488 | 86 | 125 | 138 | 349 | |||||||||||||||||||||||
Total | 437 | 449 | 445 | 1,331 | 263 | 361 | 396 | 1,020 | |||||||||||||||||||||||
Delivered % as of total volume | 65 | % | 59 | % | 61 | % | 62 | % | 79 | % | 63 | % | 62 | % | 67 | % | |||||||||||||||
Stumpage % as of total volume | 35 | % | 41 | % | 39 | % | 38 | % | 21 | % | 37 | % | 38 | % | 33 | % | |||||||||||||||
Net timber sales price ($ per ton) | |||||||||||||||||||||||||||||||
Pulpwood | $ | 13 | $ | 13 | $ | 13 | $ | 13 | $ | 14 | $ | 13 | $ | 13 | $ | 13 | |||||||||||||||
Sawtimber | $ | 26 | $ | 26 | $ | 25 | $ | 26 | $ | 22 | $ | 24 | $ | 25 | $ | 24 | |||||||||||||||
Timberland Sales | |||||||||||||||||||||||||||||||
Gross Sales (1) ('000) | $ | 6,174 | $ | 591 | $ | 3,554 | $ | 10,319 | $ | 65 | $ | 1,025 | $ | 486 | $ | 1,575 | |||||||||||||||
Acres Sold | 3,400 | 258 | 1,953 | 5,611 | 29 | 547 | 206 | 782 | |||||||||||||||||||||||
Price per acre | $ | 1,816 | $ | 2,291 | $ | 1,820 | $ | 1,839 | $ | 2,250 | $ | 1,873 | $ | 2,357 | $ | 2,015 | |||||||||||||||
Timberland Acquisitions | |||||||||||||||||||||||||||||||
Gross Acquisitions (1) ('000) | $ | 14,533 | $ | 12,771 | $ | 550 | $ | 27,854 | $ | 243 | $ | 85,376 | $ | — | $ | 85,619 | |||||||||||||||
Acres Acquired | 7,668 | 9,686 | 290 | 17,644 | 203 | 44,321 | — | 44,524 | |||||||||||||||||||||||
Price per acre ($/acre) | $ | 1,895 | $ | 1,318 | $ | 1,898 | $ | 1,579 | $ | 1,200 | $ | 1,926 | $ | — | $ | 1,923 | |||||||||||||||
Period End Acres ('000) | |||||||||||||||||||||||||||||||
Fee | 369 | 379 | 377 | 377 | 247 | 291 | 291 | 291 | |||||||||||||||||||||||
Lease | 29 | 28 | 28 | 28 | 30 | 30 | 30 | 30 | |||||||||||||||||||||||
Total | 398 | 407 | 405 | 405 | 277 | 321 | 321 | 321 | |||||||||||||||||||||||
(1) Exclusive of closing costs.