Q3 2019 Earnings Call
Good morning, and welcome to the Catchmark timber Trust third quarter 2019 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist purposes.
The Starkey followed by zero.
After today's presentation, there will be an opportunity to ask questions.
Question You May Press Star then one on your Touchtone phone.
To withdraw your question. Please press Star then too.
Please note this event is being recorded.
I'd now like to turn the conference over to Brian Davis. Please go ahead.
Good morning, and thank you for joining us for a review of Catchmark timber trust results for third quarter 2019.
Brian Davis, President and Chief Financial Officer of Catchmark.
Joining me today on a call our Chief Executive Officer, Jerry Barag Senior Vice President of Forest resources toward rights and John Rasor.
President of trouble tea.
During this call Catchmark management will make forward looking statements.
These forward looking statements are based on management's current beliefs and their information currently available.
Catchmarks actual results will be affected by certain risks and uncertainties, there beyond its control or ability to predict.
And could cause <unk> actual results could differ materially from expectations.
More information about the factors that could cause such differences. We refer you to our 2018 annual report on Form 10-K , and subsequent reports that we filed with the ITC.
Today's presentation includes certain non.
non-GAAP financial measures reconciliations of these measurements are included in our earnings release in our third quarter financial supplement which are posted on our website and our Form 10-Q filed with the FCC yesterday Thursday October 30, Onest 2019.
After our presentation Jerry Todd.
John and I will be pleased to answer any of your questions.
Now I turn it over the call to Jerry Bragg to cover Catchmarks third quarter 2019 results.
Thank you Brian Good morning, and thank you all for joining us on todays call.
Catchmark had an excellent third quarter meeting our targets and continuing to outperform market.
While the average is because of our superior middle markets and operating strategy.
Third quarter strong results were driven by higher harvest volumes increased pulpwood pricing in the U.S. sell and fees from our investment management business.
We achieved solid increases in total revenues timber sales and asset management fee revenue.
Substantially lower net loss and significantly higher adjusted EBITDA.
Increases were across the board and our cash flow remain solid.
And yesterday, we declared a quarterly cash dividend of 13, and a half centsper share common shareholders on record at November 26.
Well on December 30.
Year to date dividends have been fully covered with cash available for distribution.
In meeting our business plan, we saw year over year increases in revenues harvest volumes timber sales and pulpwood pricing.
We also exceeded targets for the investment management business.
Related to Dawsonville bluffs distributions and promotes and the triple tea joint venture continues to perform well.
Catchmark superior middle market locations supply agreements and delivered what strategy helped continue to drive these excellent operating results and in particular pricing premiums achieved over timber Mart south.
South wide averages.
Our third quarter year over year volumes increased 19% with pricing up 3% for pulpwood and flat for salt timber.
In the U.S. sell Catchmark pulpwood pricing achieved the 58% premium over the timber Mart, South southwest average and our pine soft timber.
We achieved a 23% premium over the same benchmark.
In the Pacific Northwest, we harvested 24000 tons, comprising 86% saw timber and generating $1.8 million and timber sales revenue during the quarter.
The increase volumes and overall better pricing.
Reviewed it to a 23% increase in Catchmarks total harvest EBITDA for the quarter.
Our investment management business has continued to boost revenue growth to producing predictable and stable cash flow from timberland properties equal in quality to those in our wholly owned portfolio.
And our joint ventures, we have.
Yes, it in timberlands with the same high quality attributes as our wholly owned timberlands employing the same operational strategies as used in our wholly on timberland portfolio.
The high quality nature of these assets provides us with the opportunity to attract investment capital and there are an asset management fees through our joint venture platform as well as leverage.
Our scale and timberland management efficiencies.
There's certainly as the case with a triple tea joint venture.
There was first 15 months Triple T has performed better than underwriting producing free cash flow as well as earning catchmark predictable and steady asset management fees, including $2.8 million from the third quarter.
We also had superior results from our Dawsonville bluffs joint venture.
Awesome Bill has produced above planned investment returns ahead of schedule provided reliable asset management fees over its term and has generated additional incentive based promotes for catchmark.
During the quarter, we completed the disposition.
<unk> of substantially all of the joint ventures remaining to 4400 acres of timberland and received $3.8 million in cash distributions.
Since inception through September 30, 29 team Catchmark has received $13.3 million in cash distributions from its 10.5 million dollar.
<unk> in the joint venture.
In addition, we've realized almost $1 million, an asset management fees from Dawsonville boss.
Moving to timberland sales, we sold approximately 1100 acres of timberland for $2.3 million during the quarter at a realized sale price per acre up nearly 10%.
Year over year.
Year to date through the third quarter, we have completed approximately 12, and a half million dollars and timberland sales and expect to complete an additional three and a half to five and a half million dollars and sales by year end meeting our guidance.
Taking a closer look at Catchmarks third quarter operating results.
The increase total revenues by 7% to $26.4 million compared to the third quarter ended September 32018.
We reduced net losses by 74% to $20.6 million compared to $78.9 million in the third quarter 2018, primarily due to a.
Yes, and losses allocated from Triple check.
We increase it we increased adjusted EBITDA by 44% harvest EBITDA increased by 23% and investment management EBITDA increased by 166% primarily from incentive based asset management fees and adjusted EBITDA generated by the thoughts.
And Bill Bluffs joint venture.
We increased harvest volumes year over year by 19% to more than 634000 tons.
That was a 28% increase compared to second quarter 2019.
We increased timber sales by 18% year over year. In addition to the 1100 acres of timberland.
Hold for $2.3 million, we completed a $19.9 million disposition of 10800 acres to reduce that recognizing a gain of $7.2 million.
We increased investment management fee revenue by 27% to $3.4 million, including earning an incentive based promote from Dawson.
Bill Blas for exceeding joint venture investment hurdles.
And we've paid dividends of 13.5 cents per share to stockholders on September 13 2019.
Taken altogether, it was an extremely busy and highly productive quarter, which delivered excellent results.
Now I'll turn it over to Brian to discuss our balance sheet.
That's the and successful debt reduction initiatives.
Thank you Gerry over the course of the past year, we've been successful and making significant progress in reducing company debt relative to adjusted EBITDA.
This accomplishment reflects the full year impact of asset management fee revenues earned from triple tea and execution of.
Capital recycling program do dispositions.
Those dispositions of total more than $25 million year to date in 2019.
As of the ended the third quarter net debt had decreased to 8.6 times adjusted EBITDA from 10.1 times as of June Thirtyth.
As a result.
We remain on course to reach a sub eight times net debt to adjusted EBITDA ratio by year end.
During the quarter Catchmark pay down a total of $20.1 million of the outstanding balance on our debt facility using proceeds from recent large dispositions.
The disposition of 10000.
An 800 acres in Georgia, and Alabama for $19.9 million had the most significant impact on our debt reduction.
While also resulting in a gain of $7.2 million.
The transaction was extremely favorable from the standpoint of the attractive pricing achieved on timberlands outside of our preferred procurement.
Area.
As of September Thirtyth, we have more than $200 million in liquidity, including $17.1 million in cash and a total of $185.1 million under our various debt facilities.
We continue to execute on our active interest rate risk management strategy right.
Entering into hedging transactions to lower our already favorable borrowing costs and extend the average life of our fixed rate debt.
Last week, we terminated our existing 10 swaps and entered into two new swaps that fixed interest rates on $275 million of our outstanding debt.
The average term at nine years at a weighted average rate of 2.17%.
For the applicable credit spread and expected patronage response.
That compares to 2.44% for an average term a four years under the previous swaps and resulted in annual savings of one and a half to 2 million.
In dollars.
Under Catchmarks $30 million share repurchase program the company repurchased approximately 57600 shares of its common stock for approximately $594000 in open market transactions during the third quarter.
Year to date, we have repurchased approximately.
329000 shares for $3 million, we may repurchase up to an additional $15.7 million worth of shares under the program.
Now I'll turn it over to talk for a review of our operations.
Thanks, Brian .
Very good third quarter, and our field operations did an excellent job.
Capitalizing on favorable operating conditions to execute our business plan successfully as mills across our markets ran consistently.
Third quarter year over year volumes were up 19%.
What pricing was up 3% and saw timber pricing remains steady and strong as a result, we realized a 23%.
Percent increase in harvest EBITDA.
Our delivered sales strategy as well as opportunistic stumpage sales in our select outperforming markets continue to drive consistent result for operations. This is reflected in pricing for all our PON products at levels consistently and substantially above timber Mart, south southwest averages and.
Gary covered.
Our increased harvest volumes put us on track to meet our full year targets.
Looking ahead to year end in the southeast weather conditions have been favorable for strong volume production and we anticipate catchmarks harvest volume will be up with price, where remaining relatively steady quarter over quarter and we're well.
Positioned with our fiber supply partners and our delivered sales customers to have a very productive fourth quarter.
We continue to expand operations in the Pacific northwest contributing to enhance revenues and improving our sawtimber mix for the fourth quarter, We expect Pacific Northwest harvest volumes will increase slightly over third quarter is 24000.
Some tons with an uptick in pricing anticipated from the recovery underway in the region. So we have good reason for confidence about our operating results for the year and our ability to meet our harvest plans Jerry.
Thanks, Bob.
On the acquisitions from at present, we're faced with a continuing dearth of deals the can meet our stringent criteria.
Syria for selectively adding to our high quality portfolio of Prime properties in Premier Mill markets. We continue to monitor our investment pipeline and analyze potential transactions, but will remain highly disciplined in our evaluation and due diligence as Brian discussed our debt repayments with proceeds from dispositions.
Combined with full year asset management fees from Triple to put us on track to deliver a sub eight times net debt to adjusted EBITDA ratio by year end.
As we approach your end timberland sales remain on track to meet targets of $16 million to $18 million and sales for full year 2019.
We also remain.
On on course to meet our full year harvest target of between 2.2 million and 2.4 million tons.
The investment management business is also delivering to plan.
In February we will provide full year guidance for 2020 expecting steady and consistent results from harvests operations land sales and Triple T. asset management fees.
While recognizing adjustments as the result of the Dawsonville Bluff swine Dell.
To sum up we had an excellent quarter across all our operations and we are confident about meaningful your guidance harvest volumes and pricing or in line with plan and in the third quarter were both up sequentially over the second quarter and year over year.
On timber pricing, we also continued to be timber Mart south market averages.
Our middle markets fiber supply agreements and delivered what strategy continue to pay off.
And our investment management business Dawsonville bluffs delivered on all fronts return on investment asset management fees preferred returns and promotes.
Triple team continues to perform well and generate consistent and reliable asset management fees.
Timberland sales are also on course to me plan for the full year.
We have reduced company leverage levels and our capital position a sound.
In addition, our borrowing costs have been lower through new attractive interest rate swaps with significantly.
The longer terms that allow us to take advantage the current lower interest rate environment.
In terms of key operating results for the third quarter revenues were higher net loss has been lowered and adjusted EBITDA showed strong year over year games and Catchmark continues to deliver a reliable fully covered quarterly dividend.
We believe we have and will continue to deliver strong operating results based on our consistent and strategic focus for acquiring the highest quality timberlands in high demand mill markets, which will produce durable revenue growth.
And employing superior management, which seeks to maximize cash flow throughout the business cycle.
All of US at Catchmark remained devoted and focus on our company mission growing sustainable cash flow and supporting our dividend by executing a strategy based on performance excellence.
Thank you again for joining us today now, Brian Todd John and I will be pleased to take your questions.
We will now begin.
In the question and answer session to ask a question you made press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Collin Mings with Raymond James. Please go ahead.
Thanks, Good morning, guys.
Thank you all.
To start in the U.S. South can you just maybe elaborate a little bit more on current market conditions, specifically, we heard from one of your peers yesterday that weaker export market conditions.
I have led to some deterioration supply demand dynamics leasing some wood baskets have you seen that the in any of your operating areas at all.
Hey call and good morning.
We really haven't experienced much of that as you know we've talked about in the past that that was a really small percentage or what we do and where we operate and.
So as that was deteriorating earlier in the year, we saw a lot of that really get absorbed if you will after second third quarter, and we had moved more towards or stayed with our domestic customers.
As it had planned out throughout the course of the year, we didnt see that impact in a lot of the business force. So we havent seen much of the.
In come back in an impact where we tend to operate.
Got it and maybe ill and I am I might further add to that.
Just reinforces the model that we that we employed from a strategic and management standpoint, with delivered sales kind of aligns us with the customers that we.
Sure.
Early in the year, so we have a lot of confidence.
Over the course of year of the amount of volumes were going to be able to deliver into those customers.
Got it may be coming at it from a slightly different angle, though recognizing.
Meaningful portion of your volume if there is.
Im sort of supply agreement tied to just as you think about the potential issues on some price deterioration from weaker supply demand dynamics and maybe surrounding areas. How how do you think about potential risk maybe some price deterioration just given some of the contracts you have to place there.
Sure you know from the from the fibers.
Supply side as you know thats really tied more towards a formulaic.
Calculation, if you will so throughout the course of the year. We are very strong Q1, some of that carried over Q2 Q3, there will be some.
I would say a moderate drop off just as the overall market has come down a little bit.
But in the overall scheme of things you're looking at 20, 30% of what we do everything else is on the outside open market sales that we have we've been able to capitalize due to as Jerry mentioned our delivered program.
And it's helped us to really keep things on a level level, playing field kind of flat if you will.
Throughout.
The year, we've seen a very very steady course of business and so we look for Q1 to be somewhat in line with that to be honest.
Got it so it sounds like you do anticipate inherently there being some modest decline just given benchmark pricing. If you will on the U.S. out the down from earlier this year, but net net the impacts going to.
Pretty negligible as that is that fair take away.
Exactly exactly I would characterize it and then we'll see what happens with with the weather over the next current fourth quarter in the first quarter of next year, but that obviously will have an impact one way or the other.
Right.
Okay and then.
Maybe just as it relates to guidance and clearly in the press release kind of reaffirming some of the key component of that but just with one quarter to go can you narrow or refine that 50 to 60 million dollar range at all.
Hey columns as Brian good morning.
At this point in time, we're comfortable with a range of 50 to 60 I understand your desire to.
I do hope.
Tighten up this range, but from our perspective, our volumes as Todd as alluded to we're very comfortable with the 2.2 to 2.4 range. We also understand where asset management fees are going to come in the challenge. We always have is from a land sales standpoint, and Jerry as alluded to we plan on hitting our marks of three.
After five and half million dollars, but our underlying core line of business is very solid and so at this point Tom.
Don't feel compel and it would be a little bit different than what we've done in the past of tightening up a guidance range to only time, we've done that or at least expanded it is when we've had a material.
Acquisition activity during the quarter somewhere to what we had and tripled.
In 2018.
Okay.
And then just on Dawsonville I think again original guidance there. The adjusted EBITDA contribution from that was three to 5 million I, if I understand kind of where things stand now they will not be any sort of incremental benefit from dawsonville going forward can you maybe just.
Give us the.
Color on how much was actually contributed this year from Dawsonville.
Yes, so dawsonville what will we anticipate being on the top end of the range Humbly run Dawsonville, we said at $3 million to $5 million and adjusted EBITDA. What we anticipate on a go forward basis is that on the books, we have just under.
For $2 million and value and Thats really related to the mitigation bank credits. So from a contribution to CGT it'd be pretty negligible, probably less than a half a million dollars annually thereafter.
Got it and then kind of tying that back Jerry to your comments and recognizing that.
Thank you Mike will provide.
Full year 2020 guidance next year, but just all else equal here, given you're not going to have that same benefit from dawsonville. It would be reasonable to expect that there might be some natural downtick in adjusted EBITDA next year relative to this year is that fair there maybe a component of that I'm missing.
Oh.
So there are too from a 2020 guidance.
Standpoint, where things are today, there's two major factors.
The are influencing that one is as you rightly pointed out is the.
The burn off of of thoughts and Bill.
You know, which sadly is reached maturity, but happily us reach maturity to because it's been a very productive and profitable.
Asset for us to work through the other is.
That.
We havent really done any sizable acquisitions and 29.
I mean.
Weve been.
Integrating coordinating yet the busy year that we had in 2018. So the two of those things will tend to flatten out the.
The growth rate that we have historically exhibited.
Over the last five or six years.
Okay.
Issue for me I, just want to circle back on Triple T. Can you just two things here provide a update on this fall log supply agreement negotiations with the GP again, recognizing somewhat less than what you can say, but just any sort of update on that front would be helpful. And then it does look like Highland capital did recently filed bankruptcy.
I believe.
Thats listed as one of the JV partner Theres, so any impact from that as it relates to triple Pete.
Sure so with respect to triple too and the GP negotiations.
We are.
We have been working through this for quite some time.
And the easiest way for me to characterize it is that.
The turmoil that we saw in the lumber markets starting early in 2019 and kind of going through the summer.
Have had an impact from a a ability to.
That.
With GP.
As quickly as we would've liked to it was just they were managing their business and their business was in.
Well, it's a lot more tumultuous than certainly what's going on on our side.
We're continuing the conversation and.
As soon as we have.
Anything to report.
We certainly will do that but but it's still ongoing and and we're hopeful that it's we're going to have a positive outcome to that.
With respect to Highland.
We didnt know the there was a bankruptcy filing as well.
And that.
The entity that the.
The Highland had in bankruptcy is the manager it has nothing to do with the Investor that is in the triple to joint venture.
The we don't expect that Theyre really any theres any outfall or fallout from from that bankruptcy filing.
And.
The terms of the joint venture agreement really really persist with respect to highlands.
Participation on it or apartments investment funds purchase patient.
Okay I appreciate all the color guys I'll turn it over.
Thanks.
Hello.
Thanks, guys.
Our next question comes from Anthony Pettinari with Citi. Please go ahead.
Good morning, guys is actually Randy tole sitting in for Anthony.
Just real quickly on hi, good morning, just quickly on the large disposition of roughly 11000 acres in the.
Sure I'm pretty sure that was mentioned last quarter and those acres were in Alabama, and Georgia, but can you just comment on what drove that sale are you trying to deemphasize the region in which they were and how should we think about that given its.
A significant significant but a decent chunk of your acreage.
Thank you.
All right. So as we think about our capital recycling program, we have a number of guide posts and where there is one fell within that guide posts was really centered around our German area. So it's kind of an orphan relative to our core procurement area and so from our standpoint Operability location. It was identified.
Right as a potential capital recycling opportunity and but it does have a very somewhere stocking characteristics to our core portfolio, but again. It was really one of those guidepost was put outside of that the second component of that is what we always look at is the impact on our cash flow CAD on it we really want to make sure that when we do capital recycling, we do that.
Neutral to accretive basis, so beyond that this is where that transaction really fell into.
And with respect to the overall program I think it demonstrates a fairly well.
How.
Small changes in in our portfolio our underlying portfolio.
Ill.
Can impact the the leverage profile that we have as company, specifically net debt to EBITDA.
Ratio the.
People have seem to have a level concern over.
Absolutely. Okay. That's very helpful. Then moving on.
Can we just talking about.
Steamer log inventories generally.
We've seen some improvement in lumber demand recently, however prices have continued to hover around $360 any thoughts there would be helpful.
Sure you know as you think about how the Eurs played out.
It does make a quick coverage from west to east.
If you will you haven't had the fire season that you typically have seen in the past inventories have remained a little bit higher.
Housing.
As far as that starts came a little bit later in the year. So customers have been able to maintain some inventory. They didnt have to scramble to try to build inventory as well and that has been kind of the case, if you would see in the south of that overall.
Weather conditions have been favorable so production has been good mill inventory has remained steady because of that.
Got to that's very helpful. I'll turn it over thank you.
Thank you thanks ready.
Our next question comes from Dave Rodgers with Baird. Please go ahead.
Hi, good morning, guys on the large.
Track land sales.
Is there anything you wouldn't want to do you even more of those obviously, there's some positive reaction and you talked about the leverage.
Could we start to see more of those and more regular course for you guys.
Good morning, Dave This is Brian .
System, what we've been talking about this year regarding capital recycling, we're always reviewing opportunities.
Earnings for capital recycling within our portfolio and given the positive reaction and where we anticipate on a target leverage basis.
No we don't anticipate having closing any additional ones in the fourth quarter. This year, but thats not to say during 2020 to be opportunities for us to continue down this path.
Helpful.
I think it was Jerry and your comments you talked about the premium you were getting to the southwest averages in pulp and sawtimber I guess, how does that compare the number you gave for for recently, how does that compare longer term and and is that getting more challenging or is that becoming even easier just given kind of the way you've been tailoring the portfolio.
No I mean, you know as as the Mark to the South wide average, it's actually getting easier because.
As we've been trying to two point out for sometime now.
The markets across the yourself are diverging fairly significantly and the better markets.
Our either holding steady or improving.
And.
The the flagging markets are.
Probably undergoing a little bit more stress.
Than we've seen even more recently.
And so I'm just by.
By portfolio allocation or portfolio construction and the fact that we are only.
Situated and operating in the very best of the best markets across the yourself.
Would probably make the same assertion and in the Pacific Northwest.
We're getting.
During the premium the significant premium that we're getting across south wide average it was going to continue to grow when it has continued to grow.
Helpful. Todd maybe for you I Didnt hear if you comment on this earlier can you talk about just in your markets, where you would be delivering what the.
The.
City increases that you anticipate maybe in 20 and 21 on how they would that would impact you you did say that the current mill markets seem to be fully functional so what would be the capacity increases that you'd expect to see just overlapping your portfolio.
Sure. So a lot of the capital as we know has been placed in these key markets, where we're operating in.
Those facilities, while not fully up to.
I guess full utilization if you will know, they're probably running in that color 80, 85%.
Time will tell as you get more the impact from the Canadian pullback how that gets picked up in the south but you know should they all fully come online.
You could see an additional 10% utilization I would think from all those customers.
Which would be a nice bump in the overall marketplace.
And then maybe last for me on the band in volume I think you didnt call attention to the 24000 tonne.
What do we expect to head is there incremental capacity.
Study to be delivered from that and what what do we think about from a number perspective or is that kind of indicating that were more at full production.
Sure. So we had a third quarter was 24000, we're looking at fourth quarter is going to be call. It 20 930 in that range, but part of that is coming from.
Hey, stumpage sale that we have sitting out there and it was coming forth coming to close here this quarter and the the bar moved on it. So we knew that was coming in I would say looking forward run rate in that 15 to 20.
Range is probably a good number.
And that 15 to 20 is on a per quarter basis.
Correct.
Great all right. Thank you.
Well thanks, David.
As a reminder, if you have a question you can press Star then one to enter the Q.
Our next question comes from Paul Quinn with RBC capital markets. Please go ahead.
Yes, thanks, very much guys.
Hey, just.
Sitting back here, just just wondering why.
Timber pricing still remains flat on the Sawlog siding and just what it's really going to take.
To really get back to sort of pre recession levels.
Well pre recession levels this problem.
Really a fairly ambitious.
Where we are in cycle today and.
How long it's taken to get to this recovery and at some point somebody's got to assume that.
The theres going to be some kind of interruption to the to the.
The upward cycle, but we don't see it on the near term horizon.
But you know.
You can you can call it how you want to but to get from call. It $25 ton to 40, plus dollars a ton doesnt seem necessarily achievable in.
A couple of your.
Period at this point, having said that we do expect.
That there is better month, there there is momentum and prices should start to build and rise.
In those mark in those best markets in the yourself.
Just the timing the.
If you look at north.
American production in total at this point you can kind of say that the lost production in British Columbia in terms of the volume of board feet that have been taken out have about matched the.
The amount of incremental volume that has been built into the south and.
Delivered today.
We're still more deliveries of additional capacity, that's coming into the yourself that will run through 2020, and probably a good ways into 2021 and that that is really from a north American standpoint additional capacity.
The.
That.
That will exceed where we started at the beginning of this reorganization cycle of the North American markets, So and in terms of.
And what is delivered today the operations that haven't been optimized. So we're we're not really seeing the full impact yet.
Of all that construction build of plant equipment on the lumber manufacturing side. So.
I know, it's it's hard not to be in patient, it's been a longtime coming and and there has been alone all long visibility into this and so people have been seeing the build of capacity coming in and you don't want to see.
The more tangible results.
I'm still confident they're coming and.
But it's not 100% within our control.
Okay, that's fair and maybe another way to look at it is just as specific.
Timber growth versus strain in your buckets in.
In your areas and then.
What that looks like overall anyway. So we still got a situation, where we've just got too many damn trees down there.
Yes, I mean from a from a growth rate standpoint, we monitor that very closely on a.
Current basis as well as a projected forward basis.
And.
Literally and we do that market by market in individual markets and there are very healthy trends that are going on in places, where we're doing business in particular in Texas, where ultimately up to the growth drain.
Ratios have started to turn very positive.
With respect to big property the that were involved in Texas, We think has.
Significantly positive Oh.
Long term momentum for prices in that part of the world.
Hey, Paul This is Todd I would add that you look at our micro markets.
Where we operate from a balance of grows to drain I would say that Georgia South Carolina. Some of these are in a little better positioned than maybe some of the more centrally located.
Stays in the southeast just had more than capacity come in here.
Overall utilization has been more consistent therefore don't see the ultimately what you're speaking to is.
The overhang of volume so we don't see as much of that in those regions, where those areas. If you will.
Okay.
Yeah. Thanks for that and then add just maybe lastly, just sun.
Colin asked a question on exports in your your that impact to you and I understand you're not a big.
That's not a big part.
Your program, but if that.
If we get a U.S., China trade deal and then export market goes back.
I think thats a material lift on.
On on pricing.
In your areas as well.
I think again from a from a localized marketing.
Micro market if you will.
Yes, It would definitely help you would have that additional tension in there.
Really the question is how far inland doesn't reach and so run around your coastal counties and all I think you would see an improvement there does yeah. So so coastal Carolina definitely we would see an impact from it and we've got a fair amount of property there coastal Georgia.
Savannah again, a fair significant amount of property there there that we would see a lift and we could directly participate in you know with some excess volume that we have and then the Pacific Northwest property that we just bought or are we bought last year.
Also has a direct.
Let to export markets, if that's what we choose so far we're at the beginning of of implementing our harvest and our management plan there, but that was a key consideration in underwriting and purchasing that asset was the direct ability to get to the export markets. If they were desirable.
Great. That's all I had best of luck.
Thanks, well thank you.
So.
It's a question and answer session I'd like to turn the conference back over to Jerry Barag for any closing remarks.
Thanks Ben.
Again, thank you all for joining us today.
We're very proud of the work we did in this quarter. We are looking forward to the fourth quarter as well. This is the last conference call in calendar year.
2019, it will have him and we're looking forward to talking to and the new year.
The conference has now concluded thank.
Q for attending today's presentation you may now disconnect.
[noise].