Q2 2020 CatchMark Timber Trust Inc Earnings Call
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Oh I can turn the conference over first Walker door, Chief Financial Officer.
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Good morning, and thank you for joining us where I reveals catchmark timber trust results for second quarter 2020.
What's the level, though <unk> Chief financial Officer Catchmark.
Joining me today on the call, our Chief Executive Officer, Brian Davis, Chief Resources Officer taught right.
John Rasor President of Triple P. Kimberly.
During this call password management will make forward looking statement.
These forward looking statements are based on management's current beliefs and the information currently available.
That's my actual results will be affected by certain risk and uncertainties that are beyond its control or ability to predict and could cause our actual results to differ materially from expectation.
For more information about the factors that could cause such differences. We refer you to our 2019 annual report on form 10-K.
Our quarterly reports on form 10-Q, four the first quarter 2020, and subsequent reports that we filed with the FCC.
Today's presentation includes certain non-GAAP financial measures.
Reconciliations of these measurements are included in our earnings release, I mean, our form 10-Q filed with the FCC yesterday Monday August 3rd 2020.
Most of which are posted on our website.
After our presentation, Ryan Todd John and I will be pleased to answer any of your question.
Now I turn over the call the Chief Executive Officer, Brian Davis.
Thank you Ursula and thank you all for joining US. This morning for Catchmark second quarter 2020, reinforce the case or business model and we executed effectively to take advantage of its flexibility and resilience.
We're in a central business that so far has avoided many of the challenges faced in the pandemic by other companies in other industries.
And we have managed through cobot 19, opportunistically matching harvest plans to changing demand from mills and their timber product customers.
As a result, we're on course to meet our revised plan for the year.
I don't recall today, our team will review Catchmark solid second quarter, 2020 result, punctuated by increased harvest activity year over year discuss the positive developments around the completed renegotiation of the Georgia Pacific what supply agreement, which allows triple team to achieve market based pricing and sets the stage for recapitalizing the trip.
Multi joint venture.
Review operations, where we took advantage of stepped up demand in our middle market, leading to increased harvest volumes driven by strong stumpage sales with improvement throughout the quarter.
Assess the impact of Cobot 19, as some timberland sales were delayed to later in the year, primarily due to pandemic related constraints in closing transactions.
But an active pipeline in place we expect to normalized sales over the course of the second half of the year, where they concentration in the fourth quarter.
Cover the amendment of our Cobank credit agreement, which among other things increases access to working capital and of course, we will answer your questions at the conclusion.
Yeah again, all of US a catchmark hope you remain well and safe and everyone. You know has been able to stay healthy during the ongoing pandemic.
I'm pleased to report better headquarters and field operations have not been materially impacted.
Continued to work remotely what team members recently wrote taking back into the office for key meetings and business needs.
Our personal and business associates in the field or pricing social distancing and we have remained safe.
We continued to be extremely disciplined maintaining frequent communications and connectivity with their customers to be as responses as possible to their supply chain needs.
And our fiber supply agreements and delivered what sales relationships continue to provide us an advantage and fulfilling customer supply chain requirements and the meeting market demand.
As a result, we delivered a strong second quarter from a harvest operations.
After initial pull backs by customers early in the pandemic, we were able to step up harvests during the quarter in the U.S. Sal and Pacific Northwest to capitalize on consistent mill uptime and increased demand for both pulpwood and sawtimber products.
We have been especially encouraged about the quick rebound in the housing market and heightened activity and home remodeling and home improvements, which have generated strong demand and our mill markets.
And we remain cautiously optimistic about the remainder of the year for meeting our operating plan understanding that cobot 19 creates considerable uncertainty about the national economy.
To reiterate as of now we remain on track and our business model execution and flexibility continue to provide us an advantage.
Comparing results for second quarter, 2022nd quarter 2019.
As anticipated revenues and adjusted EBITDA were lower and net loss was substantially improved due to a significant decrease in net loss allocated from the triple tea joint venture.
Timber sales revenue was comparable to last year's second quarter and harvests EBITDA was up slightly year over year.
Although some transactions were delayed result of administrative constraints due to the pandemic, we still close nearly $2 million of timberland sales during the quarter and we expect timberland sales to normalize by year end, given our active pipeline.
As a result revenues have not been lost only deferred trees continue to grow virus or no virus.
Bolstered by an amendment to our credit agreement with Cobank. We also have access to working capital and ample liquidity to fund growth when investment opportunities present themselves.
Notably recovered our second quarter dividend from cash from operations as measured on a GAAP basis.
Yesterday, we also declared a third quarter dividend of 13.5 cents per share for stockholders of record on August 31st 2020 payable on September 15 2020.
We continue to be rewarded by operating model investing and owning the highest quality timberlands operating and superior middle markets and working with credit worthy Counterparties.
At the same time, we realize cobot 19 remains a wildcard and we continue to focus on how it is affecting our operations seeking to minimize any detrimental impact or take advantage of opportunities.
In a moment Ursula and Todd will review the results in operations in greater detail, but first the second quarter also brought to fruition a major accomplishment for Catchmark, which sets the stage for recapitalizing, the triple tea joint venture.
Led by Catchmark Triple to you renegotiated its would supply agreement with Georgia Pacific and as a result, triple Tecan now achieved market based pricing for its timber sales. It can sell sawtimber to other third parties as well as receive increase reimbursements for extended haul distances and Triple T has expanded its ability to sell large kimberly.
In parcels that third party buyers.
Triple T. paid Georgia Pacific $145 million tremendous supply agreement, which was funded by 140 million of debt proceeds from Triple Tees credit facility and international 5 million dollar investment by Catchmark and the Triple tea joint venture on the same terms and conditions as its existing investment.
And turn the asset management agreement between Catchmark and Triple T was amended to increase Catchmarks asset management fees.
This transaction was immediately cat accretive for Catchmark.
For additional details please refer to the 8-K filed on June 24th 2020.
Brlforty has always operator to plan and now the re negotiated agreement with GP provides the opportunity to unlock additional revenues through market based pricing and timber sales from these premium timberlands.
These assets feature an above average side index 74 feet at age 25, and a maturing age class profile with access to top quartile mills and strong nearby end markets, including Austin, Dallas and Houston.
Importantly, the renegotiate agreement paves the way for shifting our focus to recapitalizing triple tea and unlocking greater value as we plan at the onset of the investment.
We now look to execute on this phase of our strategy to optimize returns for Catchmark enter institutional partners.
This plant fits with Catchmarks overwriting objectives of expanding our ownership of prime timberlands in high demand, though markets and managing our operations to generate predictable and stable cash flow throughout the business cycle supporting our dividend.
So it was a busy and productive quarter, we've been opportunistic and agile and navigating through the uncertainty posed by cobot 19, and have managed to limit the downsides keeping on our revised plan.
First of all went out details second quarter and half year results.
Thank you Brian.
For the quarter ended June Thirtyth, 20, Twond kazmer generated revenues of $21.8 million compared to $28.7 million in second quarter 2019 decreased primarily related to reduce timberland sale getting constraints in completing transactions did your pandemic disruption.
Decreased net loss on a GAAP basis by $24.4 million year over year.
$22 million, primarily due to a $26.3 million decrease in losses allocated from the triple tea joint venture.
We generated adjusted EBITDA of $9.4 million compared to $15.1 million in second quarter 2019, it decreased primarily resulting from lower timberland sales.
For the second quarter year over year harvest EBITDA increased by 1% to $7.4 million.
Real estate EBITDA decreased by 80% to $1.6 million due to lower timberland sale.
Investment management, EBITDA increased by 1% to $2.8 million.
We produce timber sales revenue of $16.2 million, consisting with a $16.3 million generated in second quarter 2019.
The increase total harvest volumes by 15% to 568000 time.
Primarily by capitalizing on increase now than me.
And by robust sales of home remodeling and improvement products doing that and then.
So you Levy hundred acres of timberland for $1.7 million compared to 4000 acres for $8.2 million second quarter 2019.
The lower per acre sales price resulted from selling Kimberly with a lower percentage of pine plantations in retaining timber reservation.
We generated $2.9 million in asset management fee revenues from the Triple tea and Dawsonville blocks joint ventures, consistent with the prior year period.
He paid a dividend of 13 on a hot centsper share to stockholders of record on June 15 2020.
Which was fully covered by GAAP cash from operation.
For the six month ended June Thirtyth, 2020, Kazmer generated revenues of $48.7 million compared to $51.2 million for the first six months of 29 team as high as timber sales revenue from increase harvest volume was offset by reduced.
[noise] timberland sales revenue.
We incurred a net loss of $10.4 million on a GAAP basis.
It is $61 million into first half of 2019, primarily due to a 53.8 million dollar decrease in both is allocated from the chip of tea joint venture.
We realized adjusted EBITDA of $22.3 million compared to $25.2 million for the first half of 29 team.
Harvest EBITDA increased by 10% to $16 million over the first half of 2019 due to increased timber sales from higher harvest volumes.
Well the state EBITDA declined to $6.1 million from $9.8 million due to reduced timberland sale.
And investment management EBITDA decreased to $5.7 million from $6.2 million as a result of lower income from the Dawsonville bluffs joint venture, which effectively round trip in the third quarter 2019.
We increased timber sales revenue by 5% to $34.3 million up from $32.8 million for the first six months of 29 team.
Timber sales volume increased by 18% to 1.2 million Tom.
We sold 4100 acres of timberland for $6.5 million compared to 4900 acres for $10.3 million in the first half of 29 team.
The lower year over year per acre sales price resulted from lower average merchantable inventory stocking levels.
20 times per acre compared to 31 times per acre for prior year sale.
As well as from Catchmark, retaining through timber reservation 115000 times of merchantable inventory with a 52% sawtimber Nick.
We generated $5.8 million in asset management fee revenues from the Triple tea and Dolphin Niblock joint ventures is 3% equally over second quarter 2019, due to burning incentive based promotes for Dawsonville blood.
Looking overall at the second quarter in first half of the year financial results held up well considering that pandemic constrained economy.
Delayed timberland sales were the major contributor to decreases in revenue and adjusted EBITDA year over year.
And at this transaction pipeline gives us confidence that we will normalize timberland sales over the course of the second half weighted to the fourth quarter.
Now turning to our capital position.
The major development for Catchmark doing the second quarter involved amending our credit agreement with Toby.
The amendment removed a reduction in the LTV ratio covenant, which would have been effective at the end of 2021.
It increased working capital by removing the minimum liquidity balance covenant and enables additional investments in joint ventures.
The multi draw term facility commitment was reduced from 200 million, so $150 million, which lowered unused commitment fees.
During the quarter Catchmark Barra $5 million under the multi drug time facility to find this additional equity investment in the triple tea joint venture.
After these amendments and transactions, we continue to have ample liquidity for future growth initiatives and other capital allocation priorities.
Including direct acquisitions in joint venture investments.
As of the ended the second quarter, we had over $150 million of borrowing capacity under our credit facilities.
Over $115 million from them all sites, all time facility and $35 million under the revolving credit facility.
In addition, we had cash on hand at quarter end of $9.4 million.
During the quarter catch my repurchased 8648 shares and their share repurchase program for $67000 and have $13.7 million remaining in the program for future repurchases as of June Thirtyth 2020.
In summary, our capital position is strong we have excellent liquidity in our deleveraging efforts over the past two years, where well time.
As discussed last quarter, we also have no maturity or refinancing risk on our long dated debt.
It's an advantageous position given the current state of the economy in general endemic related uncertainty.
Yeah, Hi, who'll cover a very good quarter for our harvest operation.
Thanks Ursula.
Operations during the quarter ran very well our property management partners did an excellent job managing our harvest there were many quit to respond to our customers needs in order to fill orders and maintain continuity of deliveries.
All mills ran better than anticipated and orders recovered more quickly than expected driven by exceptional do it yourself business the big box stores like lows at home depot.
In particular sawmill focus on the U.S. south is more heavily weighted towards to buy for production well mill operations were very diligent about maintaining tight inventories of logs and finished products.
In many cases inventories were down to no more than three days. So for producer didn't deliver is planned for if there was a weather events. They create an opportunity for producer like catchmark to fill the need harnessing our strong delivered program.
We were able to capitalize on this opportunity by using our fiber supply and delivered would relationships to meet demand and increase our harvest volumes.
Position delivered crews to respond to mill needs, a lined up well with our harvesting plans.
Oh Mills also continued to run very well during the quarter, especially containerboard fluff pulp producers in many cases retain mill maintenance outages were delayed and move to later in the year in order to take advantage of the increase demand.
Mills ran very consistently we're also able to capture stumpage sales volume that moves sooner rather than later in the year as a result, the increase in stumpage sales during the second quarter helped drive a 14% increase in harvest volume year over year in the U.S. So.
That's mark second quarter, 2020 realized stumpage prices for pulpwood and sawtimber continued to hold a significant premium over south what averages as a result of our assembling prime timberlands and strong micro markets are realized stumpage prices for pulpwood, and sawtimber were 12% and 8% lower respective.
Really compared to second quarter 2019 trending was 12%, 13% decreases in the south wide average.
Prices tracked by timber Mart South.
Specific northwest harvest volumes for the quarter also increased ahead of plan up 46% in three months ended June Thirtyth 2020 from prior year.
As improving fundamentals created an opportunity to sell into demand from key regional players.
And our presence in strong middle markets and our emphasis on delivered wood sales gave us an advantage in supplying build in a very tight inventory environment.
We remain cautiously optimistic about the U.S. housing market and returning builder confidence has an a central business and on a central sector. The demand for our products should remain strong for the second half of the year, but in the meantime, the length of the pandemic the pace of business Reopenings and the willingness or the government to maintain stimulus remain over.
Riding concerns.
We will move quickly to take advantage of changes in market demand and protect future revenues continuing to adjust harvest plans as necessary.
All this interview I return it back to Brian to discuss how we see the rest of the year playing out.
Thanks Todd.
Elements of our business model Prime timberlands, leading middle markets would supply agreements delivered sales credit worthy counterparties provide catchmark an edge in managing through the current volatile economic landscape. The nimbleness of our harvest operations was on full display in the second quarter and we will continue to see every advantage in maximizing our resolve.
To support our dividend, while protecting the long term value over assets.
We remain on track to meet our plan for the rest of the year and anticipate a rebound and timberland sales to more normal levels weighted to the fourth quarter as transaction markets recover our balance sheet as strong a way of ample liquidity to advance our business objectives, making direct timberland acquisitions and new investments at the appropriate opportunity.
The renegotiated would supply agreement with Georgia Pacific is an important achievement for our triple the investment.
Not only does it allow triple T to capture market pricing on timber sales, but we're also moving forward expeditiously to unlock the full value for institutional partners and catchmark shareholders through recapitalization strategy.
This is an exceptional opportunity.
Most importantly, we continue to expect to deliver an attractive dividend fully covered by GAAP cash flow from operations.
To sum up the second quarter in first half produced solid results, especially from our harvest operations in timber sales over the course of the second half timberland sales should normalize from depressed second quarter levels.
Asset management fees will continue from our amended agreement with the Triple tea joint venture.
Our liquidity position is extremely sound and we're comfortable with our financial covenants.
We will continue to review recycling opportunities to balanced leverage reduction share repurchases and growth opportunities.
And from all indications the value of our high quality assets is holding as market interest in premium assets provide support.
We remain focused on keeping everyone safe and healthy while continuing to run our business and execute our strategy without interruption.
And we expect to continue to meet our key objective to stockholders generating durable and predictable cash flows to deliver an attractive dividend through the remainder of the year and on ongoing basis.
As previously announced our veteran board member, Doug Rubinstein succeeded Willis parts as board Chairman at our June annual meeting, we want to again extend a warm welcome to Doug in his new role.
So all of you on the call. Please remain healthy and safe and now we will take your questions.
Thank you we wouldn't I'll begin my question answer session.
To ask a question for stores and one on the phone.
Careers or the speaker phone will you. Please [laughter] pressing the key.
Who are joining your question. Please press Star then too.
Today's first question comes from Anthony Pettinari with Citi. Please go ahead.
Good morning, active Randy cold sitting in for Anthony.
I'm wondering Randy.
Good morning, just on the renegotiated Triple P. would supply agreement can you provide additional detail.
Okay and for the asset management fee over the next two years I think previously it was in like $11 million to $12 million range annually.
Well.
As Brian Good morning. So we're excited to complete this phase of the Triple tea joint venture a first step was really to buy this premier property at a low cost basis, then to run it to plan to demonstrate our capabilities under the deliver wouldn't model and as an asset manager and ultimately what we're talking about now is fixing the supply green.
But to enhance their liquidity for the asset nothing materially as change associated with the asset management fee, it's a pretty specific and the too that we had followed on June 24th of 2020, the specific asset management fee numbers or we can work with you offline or to help you a fine those specific asset.
Management fee amounts.
Okay. Understood then maybe to switching gears, a boon to the U.S. dollar.
The Tim's Mercy health pricing data.
Bob prices fell nearly 10% for saw timber while you guys were down only 3% on a gross basis can you just talking about what you're seeing on the pricing side and what we are seeing in the various micromarket.
Thank you.
Sure. Randy This is Todd [noise] excuse me I think what you're seeing is a reflection of the strength of the micro markets that we operate in a really as we've talked about over and over in the is the ability to build out the ownership in the strongest markets in the south and so it was a reflection of mills coming back online very strong throughout the call.
Order.
Reflection of capital it was infused into these facilities over the last several years the ability to be efficient low cost operators.
Are you able to match that up with with our delivered program is a real key for us. So that's what's really driving a lot of the enhanced value that we see quarter over quarter by comparison.
Looking forward out.
Really anticipate pricing being fairly stable moving through the quarter.
Thats honestly they'll probably carry on through the year as mills continue to come on.
Production continues to be consistent as we see it right now and again as Brian stated early on in other Stillwater hurdles to clear out there, but the outlook right now with mill order files being stable and steady out through August and probably in early September.
That's all very encouraging for us and so we anticipate being able to capitalize on that opportunity moving forward.
Understood. Thank you I'll turn it over.
Thanks, Randy part of next question today comes from Dave Rodgers with Baird. Please go ahead.
Yeah. Good morning, guys. Thanks for all the details I guess I'm just on your comment about pricing in the second half of the year kind of being more stable. Obviously, there's a lot in the news about the mills running at that now full capacity. Obviously, the volume is suggesting that there they're taking down I'm more supply from from you guys. Another.
So why wouldn't we expect to see maybe a little bit better pricing in this environment, where we're catching up from a couple of months of being maybe down at the mills and why doesn't that give you more confidence as you look to the better half a the second half of this year and in the early half of 21.
Sure. So you know really in its in certain local markets. We are seeing some upticks here and there, but honestly as mills are running a while they are running at a strong capacity right now you're also seeing still a tight inventory at the facilities three to four days worth of either finished product or log supply so that being the case.
As you know you're not.
Your ability to surge in and out of those markets is going to be somewhat limited and so we've seen several customers if they get too much inventory, though actually slow the mill down or not buy for a few days until they work through that and while lumber pricing is actually through the roof. As you know Oh, there's still ample supply out there. So while the mills are running well, there's still a lot of supply.
Logs on the market and so they don't have to continue just a price to get the supply that they need in order run their facilities. Additionally, with the efficiencies of the mills that we're seeing out there, they're able to run a little bit smaller long sufficiently therefore that pricing isn't going to be as high as your traditional sawtimber piece.
Had been going into the marketplace. Dave. This is Brian just add onto that from the standpoint as we began 2020 in February our expectation was for some price appreciation in the mid single digits at the end of this year I think what happened during the second quarter trees grow. So we don't have lost revenues you have deferred revenue.
So from a growth drain standpoint day, we'd look at the some pricing tension more into 2021 than the second half of this year.
Okay helpful. Thank you both for that I'd, maybe on the acquisition side, you know acquisitions had been quiet for a while some of that for you guys a function of capital, but also the market had been quiet or as its opening backup in the mill demand is stabilizing or are you seeing more offerings out there in the market in.
Properties that you would be attracted to buy.
Hi, Dave as you pointed out at a sub $10 a share it's hard to put acquisitions in front of the capital allocation line. So that is an important consideration for us as it relates to acquisition activity. We continue to develop a pretty decent pipeline are targeted range in the smaller end of that kind of three to 10 million dollar size or we see.
Well I start properties in our prime markets, which we currently operate in you're seeing higher per acre prices then in the weaker markets and we're still actively engaged in some conversations, albeit that they have strong out given capital allocation perspectives as it relates to capital in the market a we're seeing market participants who have capital and there were acquiring about but.
Daniel properties and larger dispositions and that's really what's great about timberland as an investment trees that biological growth irrespective of who's president and what's happening in the stock market. They provide inflation protection through product price appreciation and long term demand fundamentals from increased use of this renewable resource provides for a very bright future.
Sure. So from that standpoint, I think it ultimately comes back to market sentiment you know the from a social business things standpoint, Theres lot of Ah Clunkiness as it relates to deals coming onto the marketplace, but they are we believed that there has been a bit pent up demand or opportunities that we should be starting to see once there is little bit more visibility into product.
Depreciation and the continuation of the mill activity.
With the stock up off the low Brian I guess, how do you guys think about then the balance between new stock buyback and then the new acquisition to kind of bulk up beside overall on the EBITDA of the company.
Well I would ultimately say from our standpoint, it's always been about supporting our dividend maintaining ample liquidity and really in front of that Dave is really reducing leverage a then opportunistic share repurchases and lastly acquisition, obviously, we'll be taking look at running our business on a long term basis ultimately what we're looking to do is.
Really part of what we talked about why we're excited about the triple T. A renegotiation of the wood supply agreement because this allows us to maximize the value of our Triple T. investment and then also you combine that with exploring capital recycling opportunities with ultimate goal is to simplify our business improve our capital structure and most importantly put us in the best.
Position to grow our cash flow per share over the long term and so we we look at all these things and triangulate those of what's the right thing to do in a long term basis, and so we're continuing a challenging ourselves into regarding that allocation of capital, but that's where we stand today.
Okay, great. Thank you.
Ladies and gentlemen, as a reminder, she'd like to ask a question. Please press Star then one.
Your next question comes from Paul why that RBC. Please go ahead.
Yes.
Hey, you've done a decent job learning lowering your debt, but to leverage is still ideas and net debt target or a leverage target dictate that we should be up will be accountable.
Good morning follow this is Ursula.
So this is a longer time.
As we have no maturity or refinancing risk on our long dated that we don't have our first trolleys coming due until twentytwenty for.
And couple that with our cost of debt being very competitive at sub two and a half time.
Additionally, you've seen over the last few years, we have continued to work to where lower leverage number and as Brian has already mentioned from a capital allocation standpoint. This is one of our top priority.
That said I mean for reference our historical net debt to EBITDA has been in the five and a half to 11 times range with an average of a time, which is where we are today.
Ryan has noted we don't really have a specific target with a specific timeline, but we do want to continuing down the lower end of that range.
Okay, and then more helpful operations, you're getting well are you noticing a pickup in and you say in the.
Right. So you know upon exports is having any kids.
On on them, okay, Okay on those nickel multichannel capabilities.
Hi, Paul it's Todd.
No actually weve.
Seeing that kind of level out if you will there was a little bit of a bump that happened Q2, we saw a few spots a few market or yards open back up if you will.
But since that time period, we've seen a couple of them actually pull back and that not being you know a major driver in what's going on in these marker markets for us. It's always been a very very small part of our business to begin with while it's nice to have the attention. When it's there really the the demand pull that we're seeing is more really from the domestic side.
If you will as you can deal with the pricing of lumber run now going going so well their export hasn't been a big part of what we're seeing out there.
We are hearing some news that they'll probably be some other activities. We moved throughout the second half of the year, but it just hasn't materialized at this point.
Okay, and let's say, that's maybe you want that Tim you guys look at all in the U.S. of primarily growth Langley shows you know wouldnt record lumber prices and they continue to be any pull through what's been it takes you get southern yellow pine prices up.
Right. So really see that as you know I think Brian touched on moving forward into 21.
We were anticipating stake taking a step back we were anticipating a nice bump coming on 2020 to pre cobot event with housing numbers being where they were projected to go I'm really feel like thats been delayed and this is going to be more of a 21 event.
If housing continues to improve as we're seeing right now these mills really get to where they can add.
Maybe even a third shift therefore that demand pool will really hit up until that time I really feel that's when we can be one of your biggest drivers to success going forward.
Until then we'll see a steady steady move throughout the rest of the quarter and probably into Q4, and we're really talking about the markets, which we operate in part because we've been very selective since this time of 2013 of picking and what we believe the best no markets to operate and and as you noted Paul that there is a delineate.
In between markets in growth drain ratios and we do study those things and that's why really during the second quarter from our standpoint.
Taking a view point up where we were in April in early May and taking look at our.
Our counterparties associated with that business, they've been very strong there well capitalize are good partners and so from the standpoint, what Todd is alluding to is you know trees. All I can travel so far and so from that standpoint, our growth drain our expectation is starting to see that tension in 2021, given these a near term factors.
Is it all the till I had before.
Thanks, Bob.
Next question today comes from Craig Kucera with B. Riley. Please go ahead.
Hey, good morning.
Brian I know you're going to recapitalize, the triple C joint venture, but asset sales are also on the table do you have a sense at what point you pull the plug on pursuing a recap and maybe start selling assets to take out some of those non strategic investors.
Oh, I would say given the current market conditions it'd be difficult to provide an indication of timing or strategy I. It is a great asset is great markets strong counterparties and reason enhancement should improve the liquidity for it.
No I recap can come in various forms I can come from a drop a traditional recap income from opportunistic timber sales disposition or a substantial portion of the timberlands are really a combination of all the affirmation. So it's hard for us really put a timeline on it and where we are an acceleration associated with that.
Got it and I may have missed this but was there any update or change to the existing 2020 guidance you guys put out in the first quarter.
Hi, Good morning, Craig I know, we are reaffirming our guidance was we had published back in May So there's no changes there.
Okay terrific. Thank you.
Thanks, Greg.
And ladies and gentlemen. This concludes the question answer session. During the conference back over to Brian Davis for any closing remarks.
Thank you Rocco and thank you for your time, and we hope you remain healthy and safe well talk in the third quarter.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect have a wonderful day.