Q3 2020 CatchMark Timber Trust Inc Earnings Call
Good afternoon.
Welcome to <unk>.
Trust third quarter 2020 earnings conference call and webcast.
All participants will be in listen only mode.
Assistance. Please signal a conference specialist by pressing the star key followed by zero after.
After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to also locally Chief Financial Officer. Please go ahead.
Good afternoon, and thank you for joining us for our radios Catchmark timber trust results for third quarter 2020.
What's the level of Italy, Chief financial Officer of Catchmark.
Today on the call are Chief Executive Officer, Brian Davis, Chief Resources Officer taught right and John Rasor precedent on public T. timberland.
During this call password management will make forward looking statements.
Forward looking statements are based on management's current beliefs and the information currently available.
Actual results will be affected by certain risks and uncertainties that are beyond its control or ability to predict and could cause our actual results could differ materially from expectations.
For more information about the factors that could cause such differences. We refer you to our 2019th annual report on form 10-K, our quarterly reports on form 10-Q for the first quarter of 2020 and subsequent reports that we file with the FCC.
Today's presentation includes certain non-GAAP financial measures we.
Reconciliations of these measurements are included in our earnings release and in our form 10-Q filed with the FCC yesterday Thursday October 29 2020.
Most of which are posted on our website.
After our presentation, Brian talk John and I will be pleased to answer any of your questions.
Now I turn over the call to Chief Executive Officer, Brian Davis.
Thanks, Ursula and thank you all for joining us on the call. This afternoon.
At the outset all of us at Catchmark wants to take this opportunity to express that we hope you your family friends and associates have remained well and sales during the ongoing pandemic.
Turning to the business at hand, now review the third quarter. The primary take away is that Catchmark remains on course in our plan to meet our guidance for full year 2020 results.
We continue to manage excess weight to the challenges presented by COVID-19 and are optimistic about how the ongoing recovery in the housing market will be beneficial break recent timber prices in all markets going forward.
We avoided direct damage to our timberlands from storms in the U.S. out and wildfires in the Pacific Northwest adjusting our harvest plans where necessary.
As a result, some timber sales have been moved into the fourth quarter.
As a direct product of our business model, which focuses on superior management, a prime timberlands in premier middle market and working with well capitalized Counterparties, we continue to secure higher than average market prices in the U.S. out for harvests.
Additionally, in the Pacific Northwest, we realize a 26% increase year over year and delivered sawtimber pricing as compared to third quarter 2019.
Resilience flexibility and adaptability of our business approach and the dedication of our entire Catchmark team have been instrumental in allowing us to take advantage of market opportunities during this volatile and uncertain time.
During the third quarter. We also have been focused on initiatives to recapitalize, the triple tea joint venture and maximize returns for our stockholders and our partners in due course.
Triple T. harvest operations benefiting from the renegotiated would supply agreement with Georgia Pacific continue to exceed our underwriting and continue to generate positive cash flow.
And we realized increased asset management fees from Triple D. as a result of last quarter's admitted asset management agreement.
We maintained our discipline in making capital allocation decisions interviewing recycling opportunities do balance leverage reduction share repurchases and growth opportunities.
In the meantime, our capital position remains strong and we have ample liquidity to fund growth as investment opportunities arise.
During the quarter, we did not complete any acquisitions large dispositions or share repurchases under our share repurchase program.
Notably, we once again fully covered our third quarter dividend from cash from operations.
Yesterday, we also declared a fourth quarter dividend of 13, and a half cents per share for stockholders of record on November Thirtyth 2020 payable on December 15th 2020.
We're also thankful that our Catchmark team has remained safe in our operations have not been impacted by health related issues during the pandemic.
Again, we hope that this is the case with you your colleagues and your families as well.
Our headquarters group has adopted in effective hybrid work model in office and remote work based on business and personal needs practicing social distancing and establish health protocols.
We continue to be extremely diligent maintaining constant communications with our customers to be as responsive as possible to their supply chain needs.
In our fiber supply agreements and delivered what sales relationships continue to provide us an advantage and fulfilling customer supply chain requirements and a meeting market demand.
Network of relationships has been particularly helpful in navigating through middle markets affected by wet weather conditions in the south and by wildfires out west.
As a result, we continue to deliver consistent cash flow in the third quarter and stayed on course to achieve our full year operating objectives. Although some harvest were delayed into the fourth quarter. We continue to attain premium pricing in the U.S. out for timber sales significantly above industry averages both for saw logs and pulpwood.
And if the civic northwest, we sold our timber at higher pricing into increased no market demand driven primarily by the improving housing fundamentals.
In addition, we remain on course to meet our timberland sales goals for the year.
We also are particularly encouraged by the momentum and what appears to be a durable homebuilding recovery driven by the combination of favorable demographics, low mortgage rates and lowest Oklahoma and supply.
Despite the pandemic single family starts are back above 1 million units a year for the first time since 2017 September building permits for single family serves more than 24% year over year Andy.
Andy and A.H.B. housing market index measuring monthly homebuilder sentiment just achieved a new record high in October.
These trends hold promise for improved pricing at the stump and 2021 and beyond to meet expected rising demand for timber products.
For the third quarter year over year revenues were lower primarily because 2019 had produce larger volumes from a timing strategy to concentrate harvest in the second half a 2019 after deferrals earlier in the year.
Third quarter 2020 results were also impacted by delaying harvests into the fourth quarter due to weather and fire disruptions.
Net loss was substantially reduced by a decrease in losses allocated from the Triple D. joint venture lower.
Lower adjusted EBITDA, primarily resulted from decreased earnings from the successful Dawson, both lost joint venture, which effectively wound down last year.
Except for weather related issues, which delayed some harvests primarily in the Carolinas. There is results had largely been anticipated and built into our harvest plan.
And as noted we expect to make up weather related deferred harvest during the ongoing quarter.
In sum, we remain very much on full year plan and looking further ahead. We are optimistic about the continued strength of the pulpwood markets and a strong prospects for sawtimber driven by improvements in the housing market.
So when I will cover third quarter results in greater detail as well as results for the first nine months of the year.
Thank you Brian.
For the quarter ended September Thirtyth, 2020, Catchmark generated revenues of $24.6 million compared to $26.4 million in third quarter, 2019 decrease primarily related to reduced timber sales from anticipated lower harvest volumes as well as weather delayed harvest.
Primarily in our mid Atlantic region.
This year's harvest volumes have been more evenly distributed compared to 2019, when harvest were weighted more heavily to the second half of the year.
<unk> third quarter 2020, timber sales revenue totaled $18.1 million, 8% below the $19.7 million generated in third quarter 2019.
Total harvest volume decreased by 8% to 581000 times.
We improved net loss on a GAAP basis by $16.4 million year over year to $4.1 million.
Right now really due to a $23 million decrease in losses allocated from the triple tea joint venture offset by a gain on the large disposition recognized in 2019.
We generated adjusted EBITDA of $12.4 million compared to $16.5 million in third quarter 29 team, primarily due to lower investment management EBITDA attributable to the profitable wind down of Dawsonville Blas and to a lesser extent the net decrease in timber sales.
Breaking out adjusted EBITDA by segment.
For the third quarter year over year harvest EBITDA was $8.5 million compared to $9.4 million in third quarter 2019 primary.
Primarily the result of lower harvest volumes.
Real estate EBITDA increased by 12% to $2.3 million year over year due to selling more acres 1200 versus 11 fund <unk> third quarter 2019.
The average break or sales price was $2047.
Investment management EBITDA decreased from $7.3 million in third quarter 2019 is $3.7 million.
Ever sold reflects the wind down of Dawson, Douglas, which had provided significant incentive based promotes and third quarter 2019.
On the upside we aren't and increase asset management fee from Triple team during the third quarter as a result of the amendment to the joint ventures asset management agreement completed during the second quarter of 2020.
We also paid a dividend of 13 and a half centsper share to stockholders of record on September 15, 2020, which was fully covered by cash from operations.
For the nine months ended September 32020, Kazmer generated revenues of $73.3 million compared to $77.6 million for the first nine months of 2019.
Timber sales revenue was comparable to prior year sales.
The $2.4 million for the first nine months of 2020 compared to $52.5 million for the same period in 2019, I still don't harvest volumes increased by 8% offset by lower pricing from our U.S. South region.
During the first nine months timberland sales decreased $3.7 million in line with expectations in asset management fees were comparable to the 2019 period.
Net loss improved by $66.9 million to $14.6 million compared to $81.5 million for the first nine months of 2019.
The improvement was primarily due to a $76.8 million decrease in losses allocate it from the triple tea joint venture.
Adjusted EBITDA totaled $34.7 million compared to $41.7 million for the first nine months of 2019.
The decrease was primarily due to lower adjusted EBITDA generated like Dawsonville Bluff in lower timberland sales.
Breaking out adjusted EBITDA by segment.
For the first nine months of 2020 harvest EBITDA increased year over year from $23.9 million to $24.5 million due to an increase in timber sales primarily by just start in the first half of 2020.
Real estate EBITDA decreased by $3.5 million to $8.3 million due primarily to lower timberland sales as epidemic have delayed closing transactions in the second quarter.
Investment management, EBITDA declined by $4.1 million to $9.4 million due primarily to the Dawsonville wind down.
During the first nine months of 2020, we sold 5200 acres of timberland for $8.9 million compared to 6000 acres for $12.6 million in the first nine months of 2019.
The lower per acre sales price resulted from lower average merchantable timber stocking levels and higher timber reservation. Some trucks sold in 2020.
Looking overall at the results for the third quarter and first nine months, we successfully continue to manage through the constraints of the covert economy and in the fourth quarter. We are poised to make up the harvest deferrals caused by recent storms and fires.
Anticipated timberland sales in the fourth quarter, including delayed sales from earlier in the year also are on track for closing.
These financial results are in line with expectations and full year results are on course to meet guidance.
Now turning to our capital position.
It was an eventful third quarter without major changes to the balance sheet. After a flurry of activity earlier in the year and in 2019, when we had undertaken concerted steps to de leverage.
So at the end of the third quarter, we had just over $150 million of borrowing capacity under our credit facilities nearly $116 million from the multi draw term facility and $35 million under the revolving credit facility.
In addition, we had cash on hand at quarter end up $8 million.
During the quarter Catchmark did not complete any transactions under its share repurchase program and we had $13.7 million remaining in the program for future repurchases as of September 30, 2020.
Overall customer continues to benefit from a strong capital position highlighted by ample liquidity and low cost of debt capital with no near term refinancing or maturity risk I.
As a result, we are well positioned for future growth as direct acquisition in joint venture investment opportunities present themselves.
Now Todd will cover harvest operations.
Thanks Ursula.
Third quarters can be eventful because of the relatively higher potential for hurricanes and wildfires and we again managed successfully through this one without direct damage to our timberlands.
Although some harvests have been deferred until the fourth quarter because of these events, we expect to realize any delayed revenues and keep on plan for full year 2020.
As expected our overall harvest volumes were down year over year since third quarter 2019 reflected higher activity boosted by harvest deferred from earlier in that year.
Results again were buoyed by our business model based on delivered would sales and fiber supply agreements with counterparties and some of the nation's leading micro markets sales.
Sales remain steady and consistent helping ensure steady cash flows and offsetting delayed production in the Carolinas and Pacific northwest due to weather and fire related issues.
Once again, we were able to continue to achieve higher pricing in the market averages in the U.S., so because of our superior middle markets and in the Pacific Northwest, we capitalized on higher local mill demand for timber as inventories remained low emerging from cobot disruptions and housing demand drivers increased.
Overall, the homebuilding recovery and strong demand for pulp related products continuing through the pandemic have supported consistent harvest volume flow in Catchmarks mill markets.
During the quarter, we harvested more than 590000 times, achieving price premiums in the U.S. south of 61% and 21% relative to timber Mart, south southwest averages for pulpwood and sawtimber respectively.
And the Pacific Northwest, we realized a 26% increase in delivered sawtimber pricing year over year benefiting from the factors previously discussed.
<unk> third quarter pricing also was 21% above second quarter 2020 pricing.
Stumpage prices also improved over the second quarter and were higher than U.S., south wide averages year over year or stumpage prices were 6% lower for pulpwood and 7% lower for sawtimber compared to much larger, 11% and 13% decreases in southwest averages.
Well whatever prices in the region decreased as compared to the prior year due to a heavier mix of chip and saw a smaller diameter saw timber as a result of shifting market demands.
We are optimistic that increased homebuilding activity and resulting heightened demand should prove beneficial in further boosting log prices in the near term.
Ball mill customers realize lumber pricing at all time highs, reaching well over $900 per thousand board foot during the third quarter.
In the U.S. out these increases are not fully translated into value back to land owners that is because mill operators have remained disciplined maintaining tight log in finished product inventories since uncertainty prevails over possible additional impact from COVID-19.
Well no orders across the country are showing signs of stability and mill utilization rates are peaking with increased hours of operation, we would not be surprised to see some mills started a third shift to capitalize on the strong demand and lumber pricing.
This leads us to expect a sustainable recovery in housing will be reflected in higher timber prices and 2021.
To wrap up Pacific Northwest harvest operations, which will temporarily interrupted late in the quarter because of nearby fire dangers and shutdowns of harvesting activities ordered by local governmental agencies have resumed and we are on track to meet full year plan that also holds true in the Carolinas were wet weather conditions from third quarter storms.
Only temporarily slow down our activities. We also expect to maintain our pricing premiums across our markets. In addition, our delivered would program continues to provide for our line opportunities in many of our micro markets in the form of additional quota when available.
Ryan back to you.
Thanks, Todd Todd to review of harvest operations points out once again, how the attributes or the Catchmark business model of Prime timberlands, leading middle markets, what supply agreements delivered sales and well capitalized counterparties give us an advantage in dealing with potential market challenges whether store fire.
Well from the pandemic.
Adaptability and flexibility of our business model are working for US again in the fourth quarter as we move to meet our full year plan support our dividend and realize the full value of our timberland assets now and in the future but.
The positive trajectory up housing markets and overall improvement in lumber prices offer clearsign supporting an outlook in our markets for increasing prices derived from a harvests absent future economic shocks.
As Ursula discussed our capital position is strong and liquid example for making new investments in direct acquisitions and possible additional joint ventures, and we'll remain disciplined in our capital priorities.
We also continue to position ourselves for future growth as last year's deleveraging and capital recycling help set the stage.
Specifically the recent renegotiated amendments to the Triple T. would supply agreement with Georgia Pacific are important steps in recapitalizing Triple D.
Our team is fully engaged in moving forward with various options to recapitalize triple tea and maximize its value for our stockholders and institutional partners.
In the meantime, the renegotiated supply agreement has allowed triple to you to realize higher pricing on Tempur sales and the amendment to our asset management agreement with Triple Ti has increased or asset management fees and some triple T is operating to our expectations and to plan.
These results taken together reinforce our expectation of continued to deliver an attractive dividend fully covered by cash flow from operations and providing long term shareholder value.
In conclusion third quarter results were anticipated compared to an outsized result in the third quarter 2019 that was primarily a product of harvest timing we've.
We expect the storm fire disruptions only delayed revenues into the fourth quarter. We continued to maintain our pricing premiums over U.S. south market averages timberland sales are on track to meet targets for the year the balance sheet is strong we.
We have maintained our discipline in capital allocations and our decision, making regarding additional recycling opportunities to balance leverage reduction share repurchases and growth opportunities remain on track to meet full year 2020 plan.
And we expect to meet our primary objective to stockholders generate durable and predictable cash flows to produce an attractive dividend on an ongoing basis.
So all of you on the call. Please remain healthy and safe and now we will take your questions.
We will begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if she goes into a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily.
Really to assemble our roster.
Our first question is from Anthony Pettinari from Citi Go ahead.
Good morning does that create any tole sitting in for Anthony.
I'd like Corning wedding Tomorrow.
Good morning, and welcome.
Talk about customer log inventories generally given the rapid moves in lumber.
I don't know, but thinking about that thank you.
Absolutely I'm, you're asking about customer inventories I think is what I heard there you know what we've seen is that customers have been very disciplined during the quarter coming out of second quarter, we had the drop off as they reduce their inventories during third quarter, they've begun to build that back up but disciplined from a standpoint of really only maintaining.
Call. It three days of inventory during the quarter or either of inbound logs and outbound finished product we have seen that improve to call. It three to five days as we move through the quarter and coming into the fourth quarter. If you were here so.
So again being very disciplined on on their inventory levels, so as not to be called shore should there be an additional turn back in the economy or something else come up with <unk>.
Got it got it understood and then maybe can you give us a little bit more color on your U.S., So micro markets and any differences rejoinder. Thank you.
Yeah, Randy I'll start off first then I'll turn it back over to Todd I, specifically, you know where a lot of people end up going with is really on the saw log prices in correlation to lumber prices that weve seen throughout this summer.
But what's interesting we've been very consistent yeah regarding the macro movements and then ultimately how we deploy our capital into the micro markets in which we have had a lot of success and we've really had we identified five a macro events that we expected it occurred that would ultimately drive a southern sawlog prices for the long term.
Three of those have happened one was the mountain pine beetle leading to the destruction of nearly 12 million acres in British Columbia.
Which has led to the British Columbia Mill closures, which ultimately led to the reallocation of capital the U.S. out those are the three key elements.
As part of our investment thesis associate with Catchmark, where we are now is really a early stage of a sustained housing recovery, which ultimately will result.
Result, in a drain or a use in the markets in which we operate and obviously the consumer products have been very stable and then the fifth one will ultimately be increased timber in timberland applications, such as in mass timber construction and carbon well.
What we're what we're most excited about is timberland in the most robust manufacturing regions, such as Georgia, and Texas, where we own or manage 90% of our assets well see the greatest amount of pricing tension first and we're encouraged by signs in those sub sectors.
Being said Todd if you wouldn't mind talk a little bit more about those subsectors absolutely. So you take about our Georgia market, there kind of right around the Alabama, Georgia line and then over on the coast. There in you know our south central market is where we have our fiber supply agreement our largest one with westrock that has produced.
Really consistent.
Inflow cash flows for so it's really a base load for US and then you know the other fiber supply agreements, we have or in the coastal Georgia area with IP and then moving up the coast or the Carolinas. We also have on there with IP at the regional facility really provides us an opportunity to base load the business. There and then outside of that you have a variety of customers.
In a well balanced position, if you will between pulp and sawmill customers and a majority of what we do there as you know is handled through a deliberate would program you know we're able to then flex and move with markets as they change in your own this year really highlighted that with the ability to be nimble as markets have changed product mix change request from customers one thing.
Or another and while we've seen come in more so this year than others is this demand for additional chip and saw volume you look at where lumber has moved throughout the course of the year, there's been a heavier focus on the two by four and so we've seen our customers move towards that and with our delivered model and the positioning in these markets, we have been able to react to that.
Okay. Thank you that's very helpful I'll turn it over.
Thanks, Randy our next question is from Paul Quinn from RBC go ahead.
Yeah, Thanks, very much onboarding, guys or afternoon, I guess first of all.
[laughter] tumors.
Timber sales deferrals that are that you're going to do into into Q4, how much is that.
What is that volume.
Hi, Paul So you know you're looking at and it's really.
Volume coming into the really as we said it on the nose the northwest Carolinas between the two you're probably looking at around 50000 tons or so that will move that didn't move in the third quarter that will move in the fourth quarter.
But recognize it also where we had really strong production and ourselves in coastal areas, they're not going to be ramped up by any means they were a little ahead of schedule. So and then when a balancing things out.
Okay, and then just just on inventories that that area is on those I mean, I think Todd you said there were three days another up to three to five days it really doesn't move around a lot right in the U.S. So it's nothing like Canada.
No you're exactly right and they've been spent a lot of kind of on time deliveries. If you will is what we're seeing and we're beginning to and and looking at you know so one you have your conversations the others is actually out in the field are going around you're looking at the various mills and what they actually have on site. So you are beginning to see a little bit of inventory building under some some in the yard log yards under.
Cranes and are beginning to see a little more volume in there that are set out yards under their their bins and all for storage of lumber. So that's beginning to improve a little bit but they don't get much beyond you know like I was saying kind of maybe say five days right now in the markets where were operating and it's just not be caught short at this point in time, let's get past the election get on into 21, C.L. things are moving with housing and everything.
Sales and I think there's the potential to see that build but at this point in time, they've been pretty consistent about.
Okay, and then just said I think thinking about de lever and especially in the U.S. So with that I mean, they just come off a record quarter made keeps that money because the saw log prices. You know remains remains very very low.
Have you been approached by anybody in terms of potential Greenfield out there looking for looking for a long term tumors apart.
We have not in our current markets Paul <unk> from our standpoint, we are in some of the best the most robust no markets, where I would expect you to see that is more the middle Gulf States, where those opportunities would be regarding very plentiful supply side as it relates to the logs and so I'm not surprised we have not.
And approach regarding any greenfield operations well.
What weve actually you're thinking like markets.
Yeah, I actually what we've seen in our Americas pause real expansion I'm, you know really the wave of capital that came from Canada lot of M&A activity a efficiency gains first now capital expansion plans second.
Okay, So where you would expect to see the Graham Phillips, basically I guess upper upper Mississippi, and kind of upper Alabama as well right.
Yep, that's right Western Alabama, Mississippi, Upper Mississippi East.
Eastern Louisiana to certain extent.
Nice quarter.
That's all I had great. Thanks Paal.
Our next question is from Nick Selman from Baird go ahead.
Hey, guys Nick on for Dave I, just had one quick question you guys have made some steps and reducing leverage and the dividend still pretty well covered but have you guys thought about cutting the dividend to reduce leverage even further they're not getting rewarded a 6% yield which is higher than that.
Hold on Tempur is that just kind of your thoughts there.
Hey, Nick Thanks for the question appreciate it it's interesting so we take a look at really what's our business model business models about predictability stability associated with the cash flows a up cycles down cycles, you talk about leverage and you talk about the components associated with that were very low capital expenditure needs. We have a very low cost.
Debt at 2.4% and from a shareholder return standpoint, it's important consideration for what they receive it is well covered and I understand the framework associated considerations of reducing leverage how we think about leverage reduction is really going to come from a couple of opportunities won through capital recycling from which we've demonstrated the better part of last H.
In months and the second component that would be through the successful recapitalization of triple D. and so from that standpoint, we view really view de leveraging from capital events. Obviously at current share price is somewhere between eight and $9 issuance of equity in exchange for a low cost that doesn't make really a lot of sense for us. So in the meantime, we're going to continue to stay Pat.
Hey, where their business model it remains a well covered dividend and we believe that's an important return consideration for our shareholders.
Great. That's my one question thanks, guys.
Thanks, Nik appreciate it.
Again, if you have a question. Please press Star then one.
Our next question is from Buck Horne from Raymond James Go ahead.
Hey, Good morning, guys I think you got into it. So my other question with the response, there, but I guess, maybe if you could just help us understand your thought process around the timing of the triple T. recap what avenues or options are you. Most optimistic about you know is it.
<unk> is an outright sale of the entire portfolios, the most likely outcome or or what are the.
Options and then of course, what would be the the most if you. If you had the capital to to redeploy I guess the second part of my question is at what where does share repurchases rank in terms of where you would recycle capital into.
Buck This is Brian that's a lot in there man so I will turn it off.
First and foremost one.
The trouble T. investment has performing very well, a G.P. and IP have been great partners. Since we've operated under this venture is really one of the strengths associated to a part of the acquisition the joint venture partnership, which we have in that marketplace operationally, John Rasor and his team have done a fantastic job.
Really making that thing Hum so from the standpoint of timing weve been very consistent in our approach.
We believe we announced after a second quarter after the renegotiation of the GP supply agreement, we really put ourselves in a two o'clock in order to get that completed a lot of that is driven by capital market activity Fund flows continue to be a very robust into this asset expressively given that you're looking at 10 year treasuries veterans.
70 to 80 basis points and you're looking at historical total returns in this space, 68% and you think about it on a risk adjusted basis, that's a pretty healthy risk premium associated with this asset in of itself and so from the standpoint of timeline. We're consistent two years from the time of the renegotiation associated triples, the amendment with.
Georgia Pacific.
Your second question is a little bit more I got to demonstrate little bit more dexterity around because it is a number of variable options associated with that it can be everything from an outright sale of the underlying assets.
To a new joint venture that takes on part of the assets through.
Also as well as in apportionment and so those are the ranges of outcomes I wish it could be a little bit more specific with you on that but I can tell you I'm. The focus of the management team has been very much. So on the triple T. recapitalization, obviously, we have not taken our eye off the ball as it relates to operating the business.
Because we have really three main factors for our business one operate the business or the way that we know how on a sustainable basis to.
Focus on the recapitalization of Triple C. And then three I really looking at to capital recycling opportunities, but maintain the discipline that we don't need to be a seller at any price, which segways into I believe your last part of your question, which is an allocation of capital how do we think about it where are we putting at first so first and foremost it's really about the dividend.
And the liquidity then the third component and we really and we've demonstrated this with our last capital recycling opportunity. It's a component of debt reduction share repurchases and acquisitions with the majority focused on debt reduction then followed by share repurchases and lastly by acquisitions, especially given where our current share prices today hopefully.
That answers your question, but.
It was extremely well done for a very a multipart question I got three into one there. So I'm I'm out [laughter] appreciate it great [laughter] [laughter] well done thanks, Bob appreciate it.
This concludes our question and answer session I would now like to turn the conference back over to Brian Davis for closing remarks.
Thank you for joining us today stay safe have a great holiday season, and we look forward to talking to you in 2021.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.
[noise].