Q3 2020 Rayonier Inc Earnings Call
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Welcome and thank you for joining Rayoniers third quarter 2020 teleconference call. At this time all participants are in a listen only mode. During the question and answer session. Please press star one on your Touchtone phone to ask a question. Today's conference is being recorded if you have any objections you may disconnect at this time now I.
I will turn the meeting over to Mr., Collin Mings, Vice President capital markets and strategic planning, Sir you may begin.
Thank you and good morning, welcome to Rayoniers Investor teleconference, covering third quarter earnings our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rainy or dot com.
In these presentations. We include forward looking statements made pursuant to the safe Harbor provisions of Federal Securities laws, Our earnings release, and SEC filings with some of the factors that may cause actual results to differ materially from the forward looking statements. We may make they are also referenced on page two of our financial supplement.
These presentations, we will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measure in our earnings release and supplemental materials with that let's start our teleconference with opening comments from Dave noon as president and CEO Dave.
Thanks, Colin and welcome aboard.
I'll begin the call by making some high level comments before turning it over to Mark for Q, Our senior Vice President and CFO to review our consolidated financial results. Then we'll ask Doug long Senior Vice President Forest resources to comment on our US a New Zealand timber results and following the review of our timber results segments Mark will discuss.
Yes, our real estate results as well as our outlook for the remainder of 2020.
We generated adjusted EBITDA of $67 million and pro forma net income of $7.5 million or six cents per share in the third quarter.
We delivered strong operating results across our three regional timber segments as well as within our real estate business.
Despite facing some ongoing challenges associated with the COVID-19 pandemic, we benefited from robust new residential construction activity continued strong repair and remodel spending improved demand from key export log markets and strong market dynamics for our pulpwood customers.
Our collective results underscore the strength of the markets, we operate in the diversity diversity of our portfolio and the resiliency of our business.
Despite strong operating results, we had to navigate multiple casualty events during the quarter, including Hurricane Laura in the U.S, south as well as wildfires in Oregon.
Thoughts go out to all those who are affected by these tragic events.
While we sustained some property damage Fortunately no rainier employees were injured.
From an operational standpoint, we expect only limited near term disruptions to our business given the geographic diversity of our footprint, while the direct impact to US was limited we have taken steps to help those communities get back on their feet through financial donations to disaster relief efforts.
Drilling down to our different ex reporting segments, our southern timber segment generated adjusted EBITDA of $26 million for the quarter.
Which was 16% above the prior year third quarter.
Results were bolstered by a 16% increase in harvest volumes and 8% higher saw log stumpage prices relative to the prior year quarter.
Sawlog pricing benefitted from healthy mill demand amidst record lumber prices as well as growth in log exports along the Atlantic coast in.
In our Pacific Northwest timber segment, we achieved adjusted EBITDA of $9 million up substantially from the prior year quarter, driven by an 18% increase in weighted average log prices as well as the addition of 55000 tons of volume from the Pope resources assets.
In our New Zealand timber segment, we reported adjusted EBITDA of $18 million slightly above the prior year quarter modestly lower log prices were offset by a slight increase in harvest volumes as well as higher carbon credit sales in contrast to our prior two quarters during which we experienced coded relate.
Good Lockdowns, our New Zealand business was fully operational throughout the third quarter.
Our real estate segment reported very strong third quarter, adjusted EBITDA of $22 million driven by the sale of over 10000 acres of rural land. Overall, we have continued to see healthy demand across all our real estate sales categories, which we will elaborate on later in the call.
Before turning the call back over to Mark I'd like to provide a brief update on our ongoing response to the COVID-19 pandemic.
The work from home model, we instituted for all US employees in mid March remains in place and field employees continued to observe enhance safety guidelines.
Given the current state of the pandemic, we anticipate remaining in this mode in many of our locations through at least the end of the year.
While the pandemic has been extremely disruptive to all aspects of life I continue to believe that Rangers been managing through it very well despite the challenges posed by the pandemic. Our team has managed to operate very efficiently and has also advanced several important strategic initiatives. This year, most notably the.
Closing and integration of the Pope resources acquisition and has continued to respond in a nimble manner to rapidly changing market conditions.
On that note I want to reiterate how pleased we've been with the Pope resources transaction to date since closing the deal on on May eight the collaboration among our employees has been tremendous supporting our view that the combined organization would benefit from the blending of best practices and the talent associated with each company.
We're also already seeing the benefits associated with our.
Increased scale and operational flexibility in the Pacific Northwest.
We have managed to achieve synergies modestly ahead of our initial estimates.
With that let me turn it over to Mark to review, our financial results and highlights from the quarter.
Thanks, Dave to start I'd like to briefly comment on the write offs this quarter associated with Hurricane Laura and the wildfires in Oregon in total these casualty events resulted in write offs of $15 million of which approximately $8 million was attributable to rayonier and the balance was attributable to the non controlling interest in the timber funds business.
We've included these charges as a pro forma item in our third quarter results due to the nature of these events and the infrequency with which they materially impact our results.
As it relates to our southern timber segment Hurricane Laura made landfall in Louisiana on August 27 impacting nearly 8000 acres of our timberland properties in the state, we anticipate being able to salvage approximately 1000 acres based on existing milk quotas and the condition of the damage timber as a result of the Hurricane we wrote off timber bases in the amount of.
$6 million during the quarter.
Moving to the Oregon wildfires, our timber fund segment was directly impacted by two fires during the quarter, specifically the BG Creek fire in northwest, Oregon impacted roughly 9000 acres of land owned by RM timber fund too and the Slater fire in southwest, Oregon impacted about 1000 acres of land owned by RM timber fund for.
Rainier manages both funds and owns a 20% economic interest in fund II and 15% interest in fund for.
Based on our latest assessment, we estimate that approximately 60% of the damage merchantable timber will be salvageable as a result of the wildfires, we wrote off timber basis of approximately $9 million on a consolidated basis. However, based on our economic interest in these funds only $2 million of this write off was attributable to rate here.
I will now switch gears and provide an overview of our third quarter results starting on page five with our financial highlights sales for the quarter totaled $199 million, while operating income was $2 million and net loss attributable to rayonier was $1 million or a loss of one cents per share on a pro forma basis net income was $7.5 million.
Or six cents per share the pro forma adjustments for the third quarter included the timber write offs previously discussed as well as costs related to the Pope resources merger.
Third quarter, adjusted EBITDA of $67 million was well above the prior year quarter adjusted EBITDA of $43 million, all three timber operating segments as well as our real estate segment posted stronger results relative to the prior year quarter.
These positive variances versus the prior year quarter were partially offset by higher corporate and other expenses as well as a slight loss in our trading segment.
On the bottom of page five we provide an overview of our capital resources and liquidity at quarter end as well as a comparison to year end 2019.
Our cash available for distribution or CBD for the first nine months of the year was $124 million compared to $116 million in the prior year period, primarily due to higher adjusted EBITDA and lower capex, partially offset by higher cash interest paid but.
A reconciliation of CD to cash provided by operating activities and other GAAP measures is provided on page eight the financial supplement.
We closed the quarter with $75 million of cash and $1.3 billion of debt, both of which exclude cash and debt attributable to the timber funds segment, which is nonrecourse rainier.
Our net debt of $1.2 billion represented 26% of our enterprise value based on our closing stock price at quarter end.
Consistent with our nimble approach to capital allocation, we establish an aftermarket or ATM equity offering program in September while we did not issue any shares under the ATM program. During the quarter. We view this program as a tool that will allow us to opportunistically access equity capital in a very efficient manner I will now turn the call over to Doug to provide a more detailed review of our timber results.
Thanks, Mark Good morning, let's start on page nine what our southern timber segment adjusted EBITDA in the third quarter of $26 million was $4 million above the prior year quarter.
Results reflect strong demand across much of our USLF footprint for both pulpwood and sawtimber.
Specifically third quarter harvest volume of approximately 1.5 million tonnes was 16% above the prior year quarter.
Domestic demand from sawmills has been robust and we also remain encouraged by the growth in log exports lung Atlantic coast as demand from China for southern Yellow Pine has rebounded in response to the tariff waivers introduced earlier this year.
We are well positioned to capitalize on this market opportunity moving forward, which provides an added layer of market demand.
Turning to pricing average sawlog stumpage pricing was $25 per ton and 8% increase compared the prior year quarter imply.
The improvement in solid pricing was attributable to stronger demand for both domestic and export grade timber pricing.
Pricing also benefited from a geographic mix weighted toward our stronger Atlanta coastal markets.
Pulpwood pricing was flat relative to the prior year period.
Third quarter results included a modest amount of salvage volume due to hurricane Laura.
We expect sales activity to increase during the fourth quarter anticipate the ramp up and these efforts to lead to a short term drag on pulpwood pricing.
Third quarter, non timber income of $5 million was $3 million below the prior year quarter.
Due to a reduction and pipeline easement revenue.
Recall, the 2019 marked a record high year for our non timber income business.
Moving to our Pacific Northwest timber segment on page 10.
Adjusted EBITDA of $9 million was $6 million above the prior year quarter.
This was primarily driven by significantly improved pricing environment as well as an increase in volume shipped to the Pope resources acquisition.
Terminals in the region are generally running at full capacity.
With the surge in lumber prices translating into increased profitability for the mills log pricing dynamics has certainly improved.
However, export market demand has been relatively sluggish given increased supply of European logs and lumber into China.
Pacific Northwest harvest volumes augmented by our acquisition of folk resources were also favorable.
Of the 346000 tons harvested in the third quarter 55000 tons represent volume from the acquired Pope resource Timberlands.
At $93 per ton, our average delivered solid price during third quarter was at its highest level since 2018 and up 19% from prior year quarter.
The strength in pricing, primarily reflects robust demand due to the surge in lumber prices over the past several months as well as a higher percentage of Douglas fir as a result, the Pope resources acquisition.
Meanwhile, pulpwood pricing fell 15% relative to prior year quarter due to weaker export markets and higher sawmill residuals.
It's an increase in daily consumption during the third quarter, which is brought three upon port inventory back into a healthy supply demand balance.
Slightly software export demand increase domestic log supply create some downward pressure on domestic pricing.
Specifically average delivered prices for domestic September decreased 7% from the prior year period to $70 per ton.
Meanwhile, the average domestic pulpwood price, so I'll, 10% as compared to the prior year quarter, but has increased relative to earlier this year.
Ah now briefly discuss the results from our tumor fund segment highlight on page 12, the timber fund segment generate consolidate EBITDA of $1 million in the third quarter on harvest volume of 110000 tons.
Just it EBITDA, which reflects the look through contribution from the funds was $200000 as noted in our press release consolidated EBITDA and adjusted EBITDA and the timber fund segment are pro forma for the right off associated with the fires that Mark discussed earlier.
Lastly, and our timber trading statement, we generated negative adjusted EBITDA of $600000 in the third quarter civic.
Typically are training segment has very low margins and is designed to augment our feet timber export sales in the third quarter, we incurred increased port storage and shipping fees and China associated with Covid disruptions, which contributed to this negative EBITDA result.
I will now turn it back over to Mark to cover a real estate results Mark. Thanks, Doug as highlighted on page 13, a real estate segment delivered strong results in the third quarter sales totaled $29 million on roughly 10600 acres sold and an average price of over $2300 per acre as well as a conservation easement sale a $3 million.
Adjusted EBITDA for the quarter was $22 million sales and the improved development category totaled $1.3 million highlighted by the sale of 15 lots and our wildlife development project North of Jacksonville, Florida for $1 million or $65000 per lot.
We also clothes on our first post merger land sale from legacy Pope resources property in Washington, consisting of one industrial lot in Kitsap County for $300000.
In the rural category sales totaled $23 million on roughly 10500 acres sold and an average price of $2200 per acre.
The category was highlighted by a 7300 acre sale for $14 million or $1900 per acre across bore counties in Georgia, and a 1400 acres sale for $3 million or approximately $2100 per acre in South Carolina.
We also continue to see robust demand for a rural places program during the quarter. We closed on 28 lots totaling 340 acres for $2 million or approximately $6300 per acre. We believe this program may benefit in a post covid environment as the growth and work from home arrangements make rural living outside of city and suburban centers more feasible for larger Paul.
<unk> of the population.
Lastly, we closed on a 2000 and 150 acre conservation easement sale in Washington for $3 million or roughly 14 50 per acre.
The property that the conservation easement covers was acquired as part of the merger with Pope resources.
As noted in our earnings release, we began reporting conservation easement sales as a new sales category within the real estate segment. This quarter since conservation Eastern sales involved the sale of certain land use rights rather than outright sale. Then land. These sales are not reflected in our average per acre metrics for the segment.
We are optimistic about the prospect of additional conservation easements opportunities going forward as they allow us to capture the HBU value of certain properties, while retaining the underlying land to continue to grow and harvest timber.
Overall following light activity in Q1, coupled with Covid related headwinds earlier in the year demand has come back strong in a real estate development project areas as well as for rural land market strength is being driven by a combination of favorable demographics, historically low mortgage rates and ending and the increased need for space as many families reassess their living situation.
<unk> after months of sheltering in place and working from home.
We continue to be encouraged by the pipeline of opportunities and Wildlife, Florida, Richmond Hill, Georgia, and the Puget Sound area of Washington, and Wildlife, which is now in its fourth year development. The village centers, gaining critical mass with several new buildings openings since July enrichment he'll we expect the new interchange on Interstate 95, which is on track for completion before the end of this year to Jenner.
Right <unk> incremental demand for the residential mixed use an industrial portions of the project.
Now moving onto our outlook as noted in our earnings release, we expect to achieve full year adjusted EBITDA modestly above the high end of our prior guidance range of $240 million to $260 million. Additionally, we anticipate the pro forma EPS will be around the high end of our prior guidance range of 17 to 21.
With respect to our individual segments, we now expect that our southern timber segment will achieve full year harvest volumes of roughly $6 2 million tons and full year adjusted EBITDA towards the higher end of our prior guidance range of $104 million to $109 million, we expect that strong demand for both pulpwood and sawtimber will continue through the balance of the year, although we.
That lower price salvage timber and markets affected by Hurricane Laura will impact our average pulpwood prices over the next few quarters.
And our Pacific Northwest timber segment, we now expect full year adjusted EBITDA well above our prior guidance range of 30 $32 million, we believe the strengthening of the Pacific northwest market, coupled with the partial year contribution from Pope resources will likely result in full year adjusted EBITDA from the segment more than doubling the $17 million reported in 2019.
While the wildfires have disrupted harvests activity in Oregon, we expect only a modest impact of our portfolio given the geographic dispersion of our Pacific Northwest footprint, we still expect harvests between one six and 1.7 million tons in the region during 2020.
We further expect continued strong sawtimber pricing, but believe pulpwood pricing will remain well below year ago levels.
And our New Zealand timber segment, we know anticipate full year harvest volumes of roughly 2.5 million tons and full year adjusted EBITDA near the high end of our prior guidance range of $50 million to $56 million. Our operations continued to normalize following the COVID-19 disruptions earlier this year with modest improvements anticipated in both export and domestic pricing.
Where we are very encouraged by the recovering activity to date, we continue to expect the competition from European salvage volume may constrained pricing to some extent.
And a real estate segment, we expect to achieve full year adjusted EBITDA near the high end of our prior guidance range of 77 to eight $3 million due to continued strong demand in a favorable transaction pipeline across our sales categories.
Lastly, we expect that our new timber fund segment will contribute full year adjusted EBITDA below our previous guidance range due to the operational impacts of the fires that we discussed earlier.
I will now turn the call back today for closing comments.
Thanks, Mark overall, we remain very encouraged by the stability of our business and the strength of our end markets, especially in what is clearly been a tumultuous year for many industries, although still very elevated we note that lumber prices have trended lower in recent weeks as such we believe it's prudent to prepare for some continued.
Volatility and markets as their remains considerable uncertainty stemming from the COVID-19 pandemic the upcoming election, and a broader economic outlook as we look toward 2021.
We've talked a lot in the past about our operational flexibility are nimble approach to capital allocation and our focus on building long term value per share.
While the challenges posed in 2020 have tested our resolve I'm very pleased with the progress made this year as we continue to focus on long term value creation for shareholders on that note I want to reiterate how proud I am of our employees. Our team has navigated the COVID-19 pandemic with poise and determination.
The integration of Pope resources has gone exceptionally well, especially considering the safety protocols and social distancing requirements necessitated by the pandemic.
We continue to make significant progress towards several other strategic initiatives and we've stayed nimble and capitalized on market opportunities as they have emerged.
Additionally, when faced with natural disasters in both the us south in the Pacific Northwest during the third quarter, our team mobilized quickly and safely to assess the damage to our lands and execute a plan to maximize salvage opportunities I feel very fortunate to be surrounded by such exceptional talent at all levels of our organization and continue to be.
Leave this helps position us for future success.
This concludes our prepared remarks, I will now turn the call back over to the operator for questions.
Thank you we will now begin our question and answer session. If you'd like to ask a question. Please press star one. Please let me get your phone and record your name slowly and clearly when prompted her name is required to introduce your name again that star one if you'd like to ask a question.
Our first question comes from Anthony pattern with City. Your line is open.
Good morning.
Putting in for Anthony.
Ooh talk about the price improvement in the mail that salt physical young September.
The improvement was driven by next as well as at Portland, So maybe.
About the sprinkler things seriously.
Among the <unk>.
<unk> that export business is expected to be this year and how that compares the prior year.
Sure This is Doug.
I believe what your question was little broke up there before I understand you want to talk about the increase we've seen particularly in the south and pricing on September and then our comments around the export so I'll I'll cover those those for real quickly here.
The main benefit to increase lumber prices across the south has been increased demand for saw logs and loosening, a long specs, which allowed us to harvest track Savior to saw grade.
And the quarter.
Me a quarter of the 8% year over your increase is due to actual increase in pricing and the remainder is due to a shift and salt timber harvest the Atlantic coast, where we have greater competition with exports and therefore higher relative pricing.
Has been the case for the past few years due to our expiring, Arkansas timber Dave's harvest will shift back in queue for towards the Gulf region, which realized that lower average price ultimate prices. So we did have a delay typically we see that volume happening in Q3 going into the queue for initiatives can we were heavily weighted to queue for.
With respect to the export that you mentioned.
We've seen them rebounded we talked about for sending alpine going into China. Once the tariffs waivers were put in place and suddenly upon fills a niche market for previous for pressure treating and that demand has been growing across yourself. In Q1 was all about 155000 tonnes by Q3, it was up to four and seven foreign to say 4000 tonnes and reynders.
Added and that is a similar increase and so we expect to see about a 55 per cent increase over 2019 volumes. So we're seeing them pretty pretty good demand there for that and it's create that tension on the Atlantic Coast Force.
Got it okay that that's very helpful. And then maybe it could be over and you commented.
Kenny Loggins court and what the uptake of those volumes of them in October the.
How are you thinking about that thank you.
Sure.
China economy has had an impressive v-shaped recovery covid not that was led by construction to start with but now shifting more heavily to industrial activity and exports to cover the downfall from competing nations are still struggling with covid.
We've also seen with that consumer spending in China has been positive since queue to some of the U S with home purchases and other durable goods. So over the course of the quarter. We've seen an increase in demand from 60000 cubic meters per day up to 110000 cubic meters per day for rapine now, particularly is going in that furniture employment infection commented earlier.
So while we had historically high for inventories of around 7 million cubic meters going into the third quarter. This robust demand has brought that supply demand ratio Dow.
Into the kind of 152 months balance that we consider as being healthy and we've seen it basically come down to around 4 million cubic meters. At this point in time, so with respect to that the strong demand. We're seeing we feel like we're in a good position right now where whereas I am radar mindsets.
Well, we have still seen is the increase supply of the German, particularly German but European spruce and so that's impacting the exports offset northwest, particularly for hemlock and so I expect that we'll do considerably less if almost no exports upstate northwest because that strong domestic ma'am, we have right now.
Okay. That's very helpful. Thank you.
Thank you. Our next question comes from Kurt.
Davidson Your line is open.
Great. Thank you and good morning, everyone.
I just wanted to start in the Pacific Northwest and the sequential improvement and realizations could you maybe help us parse out how much of that was really attributable to pope's mix versus kind of apples to apples.
Nice gains.
Sure.
Synthetic northwest the strong number markets resulted in average 19% increase across both are chipping saw in salt tumor grades. So we saw that lift across all the grades base.
Based on the series, we harvested in the quarter, we had about 7% higher proportion of chipping sore and are great mix, which often trade that a 20% discount that <unk>.
But this was made up for by the higher proportion of Douglas fir are mixed with additional Pope volume. So that's kind of what we saw that additional Pope volume helped offset the increase amount of seven somewhere harvesting.
Got it okay, that's helpful and.
With lumber rolling over and I realize it spits not directly tied to it but could you maybe just talk about how.
Your prices in the Pacific northwest trended over the quarter and kind of exiting where they might be versus the Q3 average.
Yeah, we're not going to publicly talk about some kind of the forward look on the pricing and things like that but what I would say is lower pricing still looks to be that a historical historically strong going into the end of the quarter and we believe going into the spring also for more him from our customers and expert.
<unk> for strong housing and repair remodeling activity in 2021.
So while the sawmill pricing, it's well above their cash cost of production and so what we've seen as competition for supply of Green logs appears to be a bigger driver the absolute number pricing that fits right now.
Got it okay.
And then as we start to look ahead to 2021 could you just talk directionally.
About some of the different drivers of.
Harvest variations versus 2020, or even 2019, if that's more representative just given all that's happened this year.
Again, we're not providing any any guidance.
And I look forward basis at this point, but suffice it to say that we publish are sustainable yield by segment I think our general operating philosophy is that we're going to be generally in that range. We may shift volume reflects volume from time to time based on market conditions, but are going in expectation in any given year is that we're going to be at around or sustain.
Yield.
Okay, and then just lastly.
Maybe you could just talk a bit about capital allocation priorities and what you're seeing as far as.
Potential timberland acquisitions and just valuations.
Across those opportunities.
Yes, I think if you if you look over the year I think the biggest impediment to the timberland transaction activity was just the inability to to.
From travel restrictions to get people out on the ground to do additional due diligence as we've seen that he's we've seen more properties coming on the market and we've seen a pick up in activity. So so I think I think from an offering standpoint, we're back I'd say, two or more normalized level in terms of pricing keeping me.
Mind that that this is influenced by capital flows and I think we still see the timber asset class as a safe Haven for capital and so we've seen we've continued to see a fairly robust amount of capital available in the space to invest in we've certainly seen that reflected in.
An asset values.
To date.
Got it okay. That's very helpful. I appreciate all the color and good luck in the fourth quarter.
Thanks.
Thank you. Our next question comes from Paul Quinn with RBC capital markets. Your line is open.
Yeah. Thank you. Good morning, just a follow up question timber pricing it looks like you've got a very significant bump in the Pacific northwest, but yeah, while the U S. So prices increase it really.
Anything close to what we've seen in the on the lumber site.
With the expectation that Lumbers days.
Pretty robust going forward.
Pay to pick up on that is there a lag there or or is this.
That's it.
And Paul a lot of that a lot of that really is a function of what part of the U S South you're in and as we've discussed before.
We had a stronger pricing performance on our on our logs relative to the broader market just because we tend to be and more.
Balanced or tension would baskets in the south so the south still and Ah overall sense, how to build an inventory has had a build an inventory since the the global financial crisis.
Of a decade ago, but that builds been very differential and where where you have areas that are more imbalance from a growth trained standpoint, we've seen more price elasticity and you see that in our results for Q3.
Okay, and then how do you guys look at in the changing environment your percentages delivered sales versus stomach sales, but what's happening that.
What are you going for it.
Yes, the the changes, particularly happened in the south a lot of that is related to our export program and we're delivering directly to our own yard and exporting and so through that process. We have shifted heavier to an export program on the Atlantic Coast. We've also seen what the spectrum the weather and things like that we've had that we've been able to gain additional crew.
News and then utilize them and keep them working for US basically as we go forward. So it's been two combinations, but primarily it was the greater leverage to the.
Export market has increased our need for or delivered crews and then through that process getting some also greater quotas into some of the local mills.
Garner for that so we've continued all of those colors.
Great that's all I had.
Thanks.
Thank you as a reminder, if you'd like to ask a question. Please press star one. Our next question comes from John Babcock with Bank of America. Your line is open.
Hi, Good morning. This question I mean, primarily obviously you close.
Sources earlier this year, just wanted to get a sense or another you've got another court under your belt with that where you see opportunity to an answer owns everyone's and recognize that I would say that.
<unk> goal is ultimate to reduce leverage to some extent here. So I just wanted to get a sense for where you are.
The opportunity there.
I mean, I would say that our approach is still very consistent with where it has been for the last number of years, we tend to have a preference around.
Bolt on transactions in all three of our geographies, where we see a complimentary fit from an age class.
Standpoint.
And all three of our Geography's, we have a rank ordered various subregional markets and we we.
We will put more emphasis on those and so we've we've had a quality bias and the things that we've looked at and gone. After I think the Pope acquisition is certainly consistent with that.
And right now we're looking at at at transaction opportunities really across all three of our of our timber segments, but again with an eye toward <unk>.
Quality and and and market dynamics.
Okay, and then with regards it it's an equity offering is the goal for that I said can you just talk about the point where.
Probably will be deployed.
Should you decide to proceed Adam.
You mentioned maintaining flexibility on that front. So have you can just kind of talk about that and if they're kind of any thoughts around when and if that might be is.
Yeah sure. This is marcum I'd say are much around capital allocation has always been to be nimble, an opportunistic and really we view. The ATM program is just another tool and toolkit to optimize our capital allocation opportunities and to raise capital when desired in a very cost effective manner.
We also believe that it provides nice symmetry with our buyback program at her which we still have roughly I think $88 million available pursuant to the last authorization.
As we discussed earlier on the call we didn't issue any shares under the ATM during the third quarter. So we intend to remain very disciplined around capital allocation and particularly the issuance of equity.
Ultimately our appetite to use the ATM is going to be heavily influenced by the stock price as well as the opportunity set that we have available to deploy that capital at any given point in time.
Okay, and how do you balance the Sarah Jones, I would like to share buybacks of that effective I just can be based on where the stock straightened are there any other.
Taxes are taken into account.
Yeah, I mean, that's obviously be a significant driver really the design of our capital allocation program or broadly as to build niv per share over time, and so we look to deploy buybacks when we see an opportunity to generate generate that niv accretion per share buybacks and.
Likewise, when will use the ATM as appropriate to fund growth opportunities. When we think that there is an opportunity that warns the issuance of shares.
Again, we saw it as being sort of various symmetrical in terms of having that ability to buyback shares.
When when the pricing is opportune and likewise have the opportunity to to issue shares when we liked the price and we like the opportunities that we have available to deploy that capital.
Okay.
Equity offering, they're having any sort of limitations.
That we should be mindful.
Subject to typical trading restrictions around material non-public information, it's a continuous offering program and and so I would say it operates much like the converse of a buyback where you are able to issue shares periodically into the market through open market transactions.
Okay and then just last question before I turn it over just on Europe. If you can talk about that trend that you're seeing there and ultimately how that's he talked a little bit about how it's impacting the China market, but I just want to get a sense for volumes and how that compares this quarter University the last part.
Yes, we.
<unk> to see in the second quarter, they pump Weimar Europe was reduced do the covid, but going into Q3, they've really stepped up I don't have the exact numbers with me right now, but I can tell you that Germany's had an all time high on their exports. So we're seeing increased supply going into into China, particularly out of out of Germany over that time, but it was coming off of a lower lower quarter. So Jeremy has become the <unk>.
Largest M quarter of logs into China's point in time behind New Zealand, we'd also see in the meantime, a reduction in supply from Russia, and a couple of other places that had been a bit of bouncing there.
Okay.
Thank you and at this time, we have no further questions on the audio line.
Thank you. This is calming I'd like to thank everybody for joining us please contact us with any follow up questions.
That concludes today's conference. Thank you for participating you may disconnect at this time.