Q1 2021 CatchMark Timber Trust Inc Earnings Call

Good morning, and welcome to the catch Mark timber Trust results for the first quarter 2021 and.

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I would now like to turn the conference over to Ursula Godoy Chief Financial Officer Ketchmark. Please go ahead.

Good morning, and thank you for joining us for our radios Petsmart <unk> timber trust results for first quarter 2021.

I am also never really deep on each of lots of tariff catch Mike joining me today on the call are Chief Executive Officer, Brian Davis Chief.

If resources Officer, Todd Reitz, and John Rasor, President of Triple T Timberlands.

During this call catchment management will make forward looking statement vs.

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 risks and uncertainties that are beyond its control or ability to predict.

And could cause our actual results to differ materially from expectations.

For more information about the factors that could cause such differences. We refer you to our 2020 annual report on form 10-K, and subsequent reports that we filed with the SEC.

Today's presentation includes certain non-GAAP financial measures.

Reconciliations of these measurements are included in our first quarter 2021 earnings release, and financial supplement which are posted on our website and in our form 10-Q filed with the SEC yesterday may six 2021.

After our presentation, Brian Todd 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 being on the call with US today all of US at catch Mark Hope you. Your colleagues families and friends continued to stay healthy and safe 2021 got off to an exceptionally strong start for cash mark driven by higher timber prices both in the U S South and Pacific Northwest.

And we continue to achieve significant pricing premiums over south wide market averages for harvest in the U S south while capturing prices significantly higher year over year in the Pacific Northwest.

Low interest rates strong housing market demand and increased home repair and remodeling activity together with continued strong mill activity resulted in higher timber prices during the quarter.

As discussed in our last call. The market has been building to a point of price inflection for some time.

This began with British Columbia Mill closures, a couple of years ago, the re location of capital and corresponding mill capacity expansion in the U S South and now the potential for a more sustained and durable housing recovery.

These factors are all now driving improved product pricing and select southern micro markets and a resilient housing markets is encouraging consumption of wood products, reducing the log oversupply in the U S South.

Various demographic trends, including millennials, forming households, and aging in place baby boomers are helping generate demand for housing that is outstripping supply and igniting new construction in fact privately owned housing units authorized by building permits were at a seasonally adjusted annual rate.

<unk> of nearly 1.8 million of March more than 30% above the level a year ago and the highest since 2006.

Add in the ongoing significant economic stimulus and the result is a buoyant timber product market, which catch market is benefiting from.

In addition, we should continue to gain from pricing premiums, we consistently achieve from our prime timberlands located in Premier mill markets as well as our standing as a preferred and reliable supplier to our customer base as we utilize a differentiated operating model employing delivered sales supplemented by our opportunity.

The stumpage sales.

We believe our business model is particularly well suited to excel in the current market.

For the first quarter tracking long standing company performance Ketchmark realized increases in U S. South pulpwood and saw timber stumpage prices of eight per cent and 9%, respectively compared to prior year quarter, outpacing, 3% and 4% increases in U S South wide average prices.

Our Pacific Northwest Salt timber price increased 15% year over year due to continued strong demand fundamentals.

As planned total harvest volumes during the quarter were lower year over year importantly, harvest volumes remain on track to meet full year guidance as we've maintained consistent annual productivity on a per acre basis with the potential to sustain current strong timber pricing.

Kimberly on sales are also on course to meet full year guidance, although first quarter timberland sales were lower year over year due to selling 40 per said fewer acres per acre timberland sales pricing increased significantly and we expect to complete a substantial number of sales in the second quarter.

Investment management results improved during the quarter due to contributions from the Dawsonville bluffs joint venture and last year's amended Triple T asset management agreement.

Awesome Bill capitalize on the strong market demand for mitigation credits, while higher asset management fees earned from Triple T resulted from last year's successful renegotiation of the wood supply agreement with Georgia Pacific.

We continued to make progress on pursuing a recapitalization opportunities for Triple T and the week of the renegotiated, Georgia Pacific Wood supply agreement, which allows triple T to capture market based pricing for harvest and expanse Triple T 's ability to sell harvest in timberlands to third parties.

Since our investment with a consortium of institutional joint venture partners nearly three years ago. We believe we have significantly increased triple T per acre value and delivered improved financial performance through our superior operational management and as a result of the renegotiated, Georgia Pacific Wood supply agreement.

Increased opportunities to market products to third parties within Triple Ts deep regional wood basket.

And enhance the forest management, and silver cultural practices, whichever improve force attributes and standing forest inventory.

Looking at our capital structure, there were no major changes during the quarter, we maintain a healthy liquidity stable average and advantageous management of debt capital Yeah.

Yesterday, we also declared a cash dividend of $13.05 per share for common stockholders of record as of May 28 payable on June 15th.

In sum it was a very strong quarter timber sales harvest EBITDA investment management, EBITDA net loss and adjusted EBITDA improved year over year again, most telling timber sales revenue increased on the strength of higher pricing, resulting from improving timber market dynamics.

With a positive outlook for pricing our business model can continue to leverage the benefits from the current operating environment, and we remain well positioned to generate predictable stable cash flow and deliver fully covered dividends our primary objectives.

Now Ursula will cover first quarter results in greater detail and review our capital position.

Thank you, Brian we had an excellent quarter with myself bolstered by a harvest operations, which not only benefited from higher pricing for timber sales.

Also capture pricing, which constantly outperform market averages in the U S South where we concentrate our activity.

Our three business segments harvest operation real estate on investment management are all performing well and we are on plan to meet full year guidance.

For the quarter ended March 31st 2021.

That's my generated revenues of $27 $7 million compared to $27 million, Inc. First quarter 2023.

<unk> three per cent increase.

Timber sales revenue totaled $21 million, 11% higher Inc. First quarter 'twenty 'twenty as a result of higher timber prices, partially offset by lower harvest volume.

As expected in our harvest plan total harvest volume decreased to 525000 tons from 595000 times a year earlier.

The planned year over year harvest volume reduction, we saw differently from timberland sales and strategic capital recycling initiatives as we have maintained consistent annual productivity on a per acre basis.

Net loss improved by 87% to $6 million compared to $4 $2 million, Inc. First quarter 2020, driven.

Driven by higher total revenue and lower expenses.

Adjusted EBITDA of $12 $9 million with comparable to first quarter 'twenty 'twenty, despite lower harvest volume and fewer acres sold highlighting strong pricing for timber and timberland sales.

Yeah.

Breaking out adjusted EBITDA by segment.

For the first quarter harvest EBITDA was $8 $9 million compared to $8 $6 million, Inc. First quarter 2028, 4% increase.

Real estate EBITDA decreased 30% year over year to $3 $1 million due just selling 1200 fewer acres well, we achieved an 18% higher per acre price over first quarter 2020.

Investment management, EBITDA increased 32% year over year to $3 $8 million helped by strong market demand for Dawsonville bluffs mitigation credits and the increased asset management fees from Triple T.

We also paid a dividend of 13 on a half cents per share to stockholders on March 15.

Which was fully covered by cash from operations.

Now, let's turn to catch more its capital position.

We have maintained ample liquidity and built a strong capital foundation for growth.

At the same time, we continue to evaluate strategic capital recycling opportunity to generate proceeds for funding desirable timberland investment paying down outstanding debt.

Purchasing shares of our common stock and taking on other capital allocation priorities.

As of March 31st 2021, the company had $151 million of borrowing capacity available under our credit facility.

15 of $160 million under the multi draw term facility and $35 million under the revolving credit facility.

Attractive borrowing Pos staggered long term maturity and a favorable mix of fixed to floating rate debt continue to highlight our active debt and interest rate management strategy.

As of March 31st.

$14 7 million still remaining in our share repurchase program for future common stock repurchases as we did not repurchase any shares under the program during the quarter.

Yeah.

Our overriding objective and commitments remain to deliver fully covered quarterly dividend.

And during the quarter stockholders received $6 $6 million in dividend distributions fully covered by net cash provided by operating activity.

Now Todd will review operations, which as we have highlighted produced extremely solid results in the quarter.

Hi.

Thank you Ursula.

Our strong fourth quarter of 2020 housing fundamentals carried over into the first quarter catch Mark continues to benefit from Prime Timberland holdings in leading mill markets. Both on the U S South and Pacific Northwest as well as from our delivered wood model supplemented by opportunistic stumpage sales.

Robust housing continued to drive strong sawmill production, which has been running at better than 90% capacity.

Mills have not been building finished lumber inventories, but rather selling lumber product as quickly as they can produce it with older files being filled four to six weeks out.

New mill consumption helped generate increase delivered rates within our superior micro markets, which contributed to a 9% increase in harvest EBITDA per acre year over year.

What weather also limited overall logging production, which contributed to light mill inventories and added pressure on both sawmills and pulp operators to meet market demand and.

In addition to our study delivered production, we also capitalized on exceptional stumpage sale opportunities they captured excellent pricing, which helped boost our overall harvest EBITDA.

Total timber sales revenue increased 11% year over year to $20 $1 million driven by a 3 million dollar increase in the Pacific northwest offset by a $1 1 million dollar decrease in the U S. L. In line with the planned decrease in our regional harvest volume.

In the U S. South we again realized stumpage prices for both pulpwood and saw timber at significant premiums to timber Mart, South south wide averages 50.

<unk> 57 per cent for saw timber and 27 per cent for pulpwood.

In the Pacific Northwest timber sales revenue increased 161% year over year to $4 $9 million and harvest volume increased 96%, we capitalized on both favorable market conditions and our delivered wood sales model to generate a 15% increase and saw timber pricing.

Now, let's review timberland sales due.

Due to market timing, we sold fewer acres on first quarter 2021 compared to first quarter 2020, 1800 acres versus 3000 on a year ago.

But we achieved an 18% increase in average price per acre of $1923. The improved per acre sales price resulted in part from higher year over year average merchantable timber stocking levels.

While higher than first quarter 2020 sales. These stocking levels were still well below the company portfolio average 21 tons per acre versus 41 tons per acre.

Sales also generated an improved margin 36 per cent in first quarter 2021 versus 28 per cent in first quarter 2020, as we continue to focus sales on acres that are less productive or have lower near term cash flow potential.

As a result of selling fewer acres of timberland sales revenue and real estate EBITDA were down 30% year over year. However, we're benefiting from a strong pipeline of timberland sales transactions in the second quarter and have closed on nearly $4.4 million on sales quarter to date, we could transact up to $10 million in <unk>.

Total timberland sales for the full quarter.

Market pricing remains favorable and we're on track to meet disposition targets for the full year.

Looking ahead, we expect saw mills continue to run at near full capacity with the nation's housing market and the repair and remodeling business staying robust.

In addition, export markets are reviving to compete with domestic markets for volume, creating more price tension in many of our micro markets. Both in the U S South and Pacific Northwest.

Strong OSB markets also should help support pulpwood prices as we move into summer months, when thinning activity occurs and prices typically trend down.

We reiterate our full year guidance for harvest production of between 2 million and $2 2 million tonnes, reflecting consistent annual productivity on a per acre basis. We also continue to anticipate third quarter will be our highest production quarter as seasonally tends to be the case rigs.

Regarding regional activity, we continue to expect 95 per cent of full year harvest to come from the U S South and most of our Pacific Northwest harvest to occur during the first two quarters in.

In short all signs point to a solid second quarter for cash marks harvest operations supported by our delivered wood model and stumpage sales with momentum carrying forward to meet full year 2021 guidance, Brian back to you.

Thanks, Todd the United States appears to be emerging from the COVID-19 pandemic. The economy looks strong catch marks timber sales are benefiting from the improving housing market advantageous mill expansions in and around our micro markets and solid demand for pulpwood products.

Our extremely focused and proven operating strategy using delivered wood sales and opportunistic stumpage sales continues to produce pricing premiums.

We continued to benefit from concentrating our investments and premier timberlands in select leading mill markets.

And we are profiting from superior execution of our strategy during.

During the year, we will continue to move forward on the Triple T Recapitalization strategy, a prime objective since last year's renegotiated, Georgia Pacific Wood supply agreement.

And we will continue to evaluate new growth opportunities, while remaining committed to optimizing our portfolio and strengthening our balance sheet further including through attractive capital recycling opportunities as they arise.

As noted we are on track to meet full year guidance, delivering an attractive dividend fully covered by cash flow from operations and continue to create long term shareholder value through sustainable and responsible stewardship of our highly valuable timberlands. Thank.

Thank you for your attention today, and now Ursula Todd John and I will be happy to take your questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

If you are using a speakerphone please pick up your handset before pressing the keys.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Anthony Pettinari with Citi. Please go ahead.

Good morning, guys. This is actually Randy tole sitting in for Anthony.

You guys talked about good morning. Good morning, you talked about strong land sales pipeline with up to 10 million in sales and to Q. If everything goes well do you anticipate timberland sales, possibly exceeding the $13 million to $15 million for the full year that you had guided to previously.

Hey, Randy this is Todd.

As it stands right now that would get US right in line with kind of that 1% to 2% we target for the year. So we really don't see pushing beyond that.

Gotcha and get approved as we look at that but.

No.

Okay, Yeah, so no additional volume got it.

And then maybe just switching to actual timber sales can you just comment.

Lee on what Youre hearing from mill customers to the extent you can maybe how our log decks at the mills are customers, adding shifts.

Just any color there would be very helpful.

Absolutely so as far as you know kind of what are the log decks look like you know, it's kind of a continuation of what we saw coming out of Q4, and then rolling into Q1 and that they're they werent really building a lot of inventory on either inbound or outbound because every day. There was rolling on was being produced just as fast as I could.

As we've worked through kind of the low.

All in winter months, you begin to see a little bit of log inventory building not much lumber inventories still remains a very light.

And that's kind of across the board at any producers were looking at or working with at this point. Additionally, as you move into the summer months traditionally they do not.

Carry a real heavy log inventory because you can run into if you had for some reason you werent turning your inventory over you could run into some bluestine issues and things like that so really a lot of equilibrium in there right now between production out of the Woods also lining up with you know mill production there as far as.

Adding shifts I think a lot of the producers would love to do that they're running the shifts they have right now at a kind of a max capacity. If you will but the biggest constraint being labor you know we've heard multiple stories of employees.

Employees walking in and kind of saying, Hey, you know I'm going on I think I'm Gonna go home for a little while because my stimulus check has come in and and.

Which is a little bit of a head scratcher. Because these are you know there's a pretty good paying jobs. In these areas that are you know 20 Bucks an hour and these are typically in rural areas. So they are just labor constrained.

In order to add additional shifts in capacity there.

Running as hard as they can at this point and should the other shifts get added that would definitely be an adder and you would see an uptick in production, but but right now everything we're hearing and seeing is kind of the low two shifts at near mass capacity for the mills right now.

Got it got it.

Maybe shifting over to freight a lot of companies are reporting higher freight costs with expectations for that to continue into the summer are you seeing any impact from that and does the delivered log model kind of shields you from that because you're talking on the same guys or does that any color there would be helpful as well.

Yeah, absolutely and you're kind of really hit the nail on the head there from another aspect of the delivered model benefit that we see as you know it's not just to the end user on the customer it goes back to the.

The contractor force that we work with you know because there is the consistency day in year over year or kind of ability to know where you work it and you're going to have a steady place to go it helps us.

Manage our costs, a little better from a customer standpoint, we have quite a few.

Fuel adjustment adders in place or you know that can be positive or negative depending on what is going all the fuel at the time, but we have adjustments in place. So that it's not something that has to be completely borne on the landowner as far as covering that cost. So hauling traditionally kind of to the root of your question here you know hauling.

Has to be the greatest bottleneck that we see in the industry and that's been that way for a long time.

Just trucking can be can be troublesome and you've seen it go from where producers on all their own trucks too where they contract. It all out it's been back in force.

Because of that and fuel costs being the biggest driver there we do monitor this very closely.

Work very proactively with producers so that you know not getting cut short.

On on the production side of things. So it's on our radar consistently but fortunately we have some ways to mitigate some of that impact.

Got it okay.

Yes, that's very helpful. I'll turn it over thank you.

You bet. Thanks Randy.

Okay.

The next question comes from Paul Quinn with RBC. Please go ahead.

Okay.

Yeah, Thanks very much.

Okay.

You said, maybe you could give it some more color on on these timberland sales in the quarter I mean, it looked like the stocking was down on a higher percentage of <unk>.

It would.

Is there something to think about the location that gave you that sort of quarter over quarter premium price.

Yeah. So.

No really it falls in line with the focus we've had are really trying to continue to focus on on tracks that are maybe a little less productive lower cash flow near term cash flow as we've talked about but the real driver behind its been interesting is that you know its adjacency owners of joiners.

One on one a little.

Bigger piece of the Pie. If you will you know we're not growing in more land. So there is some scarcity there you've got this greater demand of flight of folks coming out of the out of cities wanting to maybe have a little more space. So really it's been a host of different buyers from family Trust to individuals' to those that just would rather.

Place money in hard assets instead of you know potentially speculating on the market in those kind of things so.

Theres been some 10 31 money that.

That needed to be placed as well and you're just seeing a greater demand.

We knew Q1 would be a little light in Q2 has come in very very positive for us and.

Just kind of the demand supply demand dynamics, there nothing really unique about the location other than we have high quality holdings on the on the front end that we required and that carries through to the back into whenever you have a disposition opportunity.

Okay. So for the Q2 expect it sales that are on the 10 million Mark that should be up at the 19 $90 per acre as opposed to the 1600.

There's a it's going to track higher than the 16, you know there's still a few deals pending and we're working through but yes, we would anticipate that being stronger than than anything around 1600, and probably closer to that 18 1900 Mark.

Okay and then.

I guess back to Triple T asset you know I guess, you're working through this recapitalization, but just wondering what what what does it mean obstacles to be able to get that done I mean, it seems like we've been talking for a while and just trying to understand that a little bit.

More.

More on APA as Brian Yeah, we had been talking through it so you have to remember.

It is a sequencing of Oh, managing $1 1 million acres is not a small thing.

So pretty much for the first year, we were getting that operation up and running it was not performing as well when we took it over withdrawn raisers leadership, we got that asset up and humming. The next step was getting a market based wood supply agreement, which we completed last summer. The next part after that Paul you are.

If you really think about is when you're a buyer for that asset you want to make sure any amendments to the wood supply agreement are tracking to what you wrote down and what you negotiated and so you have to demonstrate that track record that the wood supply agreement and the market price mechanism is working and so really when the calendar turned.

Is when we really working on Ernest we engaged last year Perella Weinberg partners as well as Raymond James to help us with the execution of the recapitalization strategy for familiar with Perella Weinberg partners are the banker on that has that represented this asset a couple of times, including the original disposition.

<unk> from this from the industrial ownership of this and so we have a great team working on this and so the the next part of this is really you know the the positive sentiment that has gone into this sector capital formation around this and so anything that book of this size will take some time to.

Close on and move on it's not a 60000 net discrete acres sitting in western Alabama. They can close inside of a 90 day. So these things do take time, we indicated in July of last year. We are we're operating on a two year clock in and we feel from a progressing standpoint, while it may not be as transparent to you or the market.

We're encouraged by the amount of work that we've been able to complete internally and we're on track to hit our hurdles and so we're encouraged to the point in time, where we can demonstrate that to the marketplace.

Okay. Thanks for that and then just lastly, you know we've had some of your peers on the Timberland REIT side report.

Pretty much flat.

Pricing in the in the U S. So specifically.

You know for quite a while you guys seem to have seen a uptick just wondering how sustainable you think.

You know your I.

I guess price and inflation is going to be going forward.

[laughter] right. So that's under the category you on the bad or are you going to win the war right and so if all you've been following this sector as long as anyone else has in and everybody said, it's been around the corner and you know were cautiously optimistic I think we talked about.

I'm on our last earnings call, we were expecting a price appreciation that kind of at that mid three five per cent range and obviously, we out shot that on a positive basis, but it's for all the reasons, what we thought it's a it really is micro market driven you have the demand fundamentals, we show the heat maps and there's nothing as we sit here for.

Weeks into this 13 week quarter, we still feel very confident on where we are relative to be able to reproduce the type of pricing that we showed in the first quarter are the sustainability on that and you have to sit there and think well what would cause something for it to go on the other direction is the only way we're really thinking about it. It is is there a is there another.

Relapsed associated with COVID-19 is there are you know is there is change in sentiment in housing, but when you sit here today you know you listened to the house builders are you know on.

I read yesterday that one builder was able to pass along between January and March a 10% increase in our sales price of their homes and so you have this pent up demand element. We think this is a three to four year run, but we won't know until we get a chance to look back Paul So I'm cautious, but I do like where we are as we sit here during four weeks in.

To the second quarter.

Great. Thanks for the color best of luck guys.

Thanks, Paul I appreciate it.

Again, if you have a question. Please press Star then one.

The next question comes from Dave Rodgers with Baird.

Please go ahead.

Hey, good morning, everybody I just wanted to follow up on some things you touched on earlier I guess harvest revenue was up 11% EBITDA of only four so its costing you more to kind of get that product to market I don't know if thats just a mix shift if you're seeing more pressure on labor and I guess I was curious on what youre seeing kind of as you move into the second quarter with kind of broader labor issues.

Necessarily at the mills, but maybe getting your own product in the market and if you've been able to hold margin or if that's going to become a greater pressures that you're moving on.

Sure Dave.

Really what you saw on on some of the cost.

Cost side of things is reflection of as you know we basically doubled.

Quarterly production on the Pacific Northwest, where you've got some higher.

Inherent cost of logging out there there was some additional road work on those kind of things but.

Kind of associate and then also you did have some wet weather in the south and so a little bit of increased cost to make be able to.

Keep production going if you will but nothing out there that says hey, this is going to be a trend going forward, we still feel very much in line with kind of what we look at on an annual basis tied directly back to the total production that we have scheduled so nothing.

Nothing alarming, there or anything real trending a different way in regards to labor kind of goes back to Randy's question earlier around the around the hauling side, we're not seeing any real issues from a let's call. It a long production you know stumped to truck.

Were there tend to be a little more pressure a little bit more of a bottleneck is around the hauling side and so just the ability to keep drivers and trucks.

<unk> has tended to always be a little bit of a challenge.

Nothing that is causing us concern at this point of time, because we do have dedicated crews that we've been working with you know on and these are crews that you know while we may work tracked attractive like 10 15 year relationships with these guys. So you have a long track record history here. It's all about the relationship that we built with them and so you know a lot of them no one day.

Stability behind you know our business and what were doing if they're utilizing a lot of contract labor and that becomes an issue. They would have the ability even though they may not want to they would have the ability to go out and they could purchase their own trucking to fill in those gaps and have a have a steady employee in it so.

It's an ebb and flow part of the business, we monitor it closely but we're not really seeing anything that would lead.

We just stay on the path of inquiry major increased costs I mean, you'll have the seasonality of you know you do more thing and you'll see some of your cut and haul costs go up just because there's more handling a little more labor involved in moving that product.

Should fuel begin to go up what we would see pressure on or we'd have to work very very closely with our end customers.

Making sure those fuel adjustments are in place on that we're able to you know kind of pass some of that through the whole value chain and not trying to bear that cost all on our own.

That's helpful. Todd Thanks for that and then I.

Brian maybe just a follow up on the Triple T question and if I missed this part of the answer I apologize, but.

You described the process I guess I'd love to know where you are in the process. In terms of you know are you actually negotiating with a small number of people is it still marketing is it still feelers.

I guess any added color down that road might be a little more helpful.

Dave Great question do appreciate it and I understand the desire to understand where we are in the process I would explain it is that we're on the I would call. It a bottom in the third inning, maybe early fourth inning as it relates to a nine inning game.

And Oh, hopefully that can help with you give some context around where we are on the process.

Alright, thank you.

Yeah.

The next question comes from Albert Sebastian with Prospect Advisors. Please go ahead.

Thank you and good morning.

Good morning Al.

Couple of questions first on the on the land that was sold in the quarter.

You indicated 21 tons per acre.

Versus your existing portfolio of 41 tons per acre.

Can you give us some sort of indication the EBITDA associated with the land sales.

Are you talking about the productivity from the land on which we would be selling yeah. I'm just trying to get a feel I'm just trying to get a feel Brian for the sort of the multiple it was sold out on an EBITDA per basis. The the 1800.

The ATM to make this whole debate.

Yeah, so yeah.

We can do with our work with you offline, but the way to think about it is if you have an average portfolio of 41 that means we sold off 20 times off of that asset and so you've taken off their productivity associated with that asset in of itself and so your near term expectations on cash contribution would be limited really to.

Recreational leases in which you'd be earning on that property, which would be offset by property taxes. So in on our approach to regular way retail sales is essentially we do a cash flow analysis net present value of saying is it better to sell at these prices or hold it and so essentially.

From a accretive or dilutive basis, we feel like hitting the bid on at those prices is actually accretive to us.

We can step, but tell me exactly the mechanics that go along with that yeah.

So it sounds like the EBITDA.

Pretty negligible, it's close to zero right EBIT yeah.

That's right.

That's a good thing to be able to sell land.

Oh, yeah, very very high multiples, given where your share prices trading yet so I assume it.

Land sales that you're going to have the $10 million this quarter.

So what it would be of a similar nature, where the EBITDA associated with the land sales is.

Pretty low.

Similar to the type of sales you had in the in the first quarter.

That's right on I don't see anything that we've got out there that's gonna be drag.

Drastically different than what we've already been moving too it really fits into the into the model and kind of our approach.

And focus on what we're moving as.

As far as a disposition program so yeah that'd be very much in line.

Yeah, just touching touching on it well.

Others have asked about.

You know higher cost because one thing I will say that does that just sort of stick out in your in your numbers here yeah. This contract logging and hauling costs went from.

You know, it's up about one and a half million dollars on that and in the quarter year over year.

So just drilling down one what can we expect here is it going to be that as you would you would expect I mean, if you if you're on.

You know if you harvest.

Volumes are down one would expect debt you're hauling costs would be maybe flat to down but they were up actually quite a bit. So can you give us some sort of indication of where do you think that's going on golf with the remainder per year.

<unk>.

Hi, Yeah, so on the contract logging and hauling side you're right.

Costs went up by about $1 $5 million, but really that is driven by the mix. The regional mix. If you will as Todd alluded to earlier, we increased our harvest volume from the Pacific Northwest, which has a higher contract logging and hauling right.

Then in the southern region, and so really it's really driven by the regional mix.

On the prepared remarks, Todd also touched on we continue to expect that overall for the year 95 per cent of our harvest is going to come from the U S South and the other five percentage coming from the Pacific Northwest. So hopefully that can still give you a little bit more guidance as to the remainder of the year and what you.

Scott.

Yeah and also since I have you on the line just one other quick question I noticed that other liabilities was down quite a bit.

32 million too.

15 point.

8 million Yep.

Yep.

Yeah. So what was what was the reduction that was that was for just for the quarter. So what was the reduction there.

Yeah.

That's on there really has to do with the mark to market on the swaps that we have in play.

Non non cash.

Okay.

Fantastic. Thank you appreciate it.

Thanks Al.

Yes.

This concludes our question and answer session I would like to turn the conference back over to Brian Davis for any closing remarks.

Thanks, Andrew and thank you for joining us today and into our next call have a great summer and remember to show your mom's depreciation this weekend day care.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Yeah.

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