Q4 2021 CatchMark Timber Trust Inc Earnings Call

Good morning, and welcome to the catchment timber Trust fourth quarter 2021 earnings Conference call.

Speaker 1: Good morning and welcome to the catchmark timber trust fourth quarter 2021 earnings conference call all participants will be.

All participants will be in listen only mode.

So can you just please signal conference, we're suppose progression Starkey followed by zero.

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Speaker 1: After today's presentation, there will be an opportunity to ask questions.

After today's presentation there'll be an opportunity to ask questions.

To ask a question you May press Star then one on your telephone keypad.

Speaker 1: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.

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Speaker 1: Please note this event is being recorded. I'd now like to turn the conference over to Ursula Godoy, Chief Financial Officer. Please go ahead.

Please note. This event is being recorded I now like to turn the conference over to Ursula Godoy Chief Financial Officer. Please go ahead.

Speaker 2: Good morning, and thank you for joining us for our review of Catchmark Timber Trust results for fourth quarter and full year 2021. I am Ursula Godoy, Chief Financial Officer of Catchmark. Joining me today on the call are Chief Executive Officer Brian Davis and Chief Resources Officer Todd Wright.

Good morning, and thank you for joining us for our radios catch my <unk> timber trust results for fourth quarter and full year 2021, I am also like Italy, Chief Financial Officer of catch Mike Joining me today on the call are Chief Executive Officer, Brian Davis, and Chief Resources Officer Todd.

Right.

Speaker 2: During this call, Cashmark Management will make forward-looking statements.

During this call category management will make forward looking statements. These forward looking statements are based on management's current beliefs and the information currently available.

Speaker 2: These forward-looking statements are based on management's current beliefs and the information currently available.

Speaker 2: Catchmark's 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.

<unk> 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.

Speaker 2: 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 file with the SEC.

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.

Speaker 2: Today's presentation includes certain non-GAAP financial measures.

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

Speaker 2: Reconciliations of these measurements are included in our fourth quarter 2021 earnings release and financial supplement which are posted on our website.

Reconciliations of these measurements are included in our fourth quarter 2021 earnings release, and financial supplement which are posted on our website.

Speaker 2: After our presentation, Brian , Todd, and I will be pleased to answer any of your questions.

After our presentation, Brian Todd and I will be pleased to answer any of your questions.

Speaker 2: Now I turn over the call to Chief Executive Officer Brian Davis.

Now I turn over the call to Chief Executive Officer, Brian Davis.

Thanks, Ursula and good morning, everyone and thank you for joining us today for our review of 2021 fourth quarter and full year results as well as 2022 company guidance.

Speaker 3: Thanks, Ursula. Good morning, everyone, and thank you for joining us today for our review of 2021 fourth quarter and full year results, as well as 2022 company guidance.

Speaker 3: I also want to reiterate yesterday's declaration of a quarterly cash dividend of 7.5 cents per share for Cashmark Commons stockholders of record as of February 28, 2022, payable on March 15.

Also want to reiterate yesterday's declaration of a quarterly cash dividend of seven and a half cents per share for ketchmark common stockholders of record as of February 28, 2022 payable on March 15th.

Speaker 3: With hindsight, 2021 will be viewed as a crucially important year for Ketchamart. It culminated in a strengthened company with a simplified business model focused on operations in one of the world's most important and increasingly dominant wood baskets, the US South.

With hindsight 2021 will be viewed as a crucially important year for cat Tomorrow.

It culminated in a strengthened company with a simplified business model focused on operations and one of the world's most important and increasingly dominant wood baskets the U S south.

We are clearly positioned for success as powerful macro forces are working to drive sustainable product price appreciation and catch Mark markets.

Speaker 3: We are clearly positioned for success as powerful macro forces are working to drive sustainable product price appreciation in catchmark markets.

Speaker 3: Our operating model, based on delivered wood and opportunistic stumpage sales from our prime timberland harvests and premier mill markets, continues to prove out in delivering substantial timber sales pricing premiums.

Our operating model based on delivered wood and opportunistic stumpage sales from our prime Timberland harvests and Premier mill markets continues to prove out and delivering substantial timber sales pricing premiums.

Speaker 3: and we continue to achieve the highest productivity per acre among our peer set while maintaining consistent per acre stocking levels.

We continue to achieve the highest productivity per acre among our peer set while maintaining consistent per acre stocking levels.

Speaker 3: Retail demand for our land sales remains robust. Following the completion of recent strategic large dispositions and the Triple T exit, we have significantly strengthened our balance sheet and have ample capital available to support a disciplined acquisition strategy.

Retail demand for our land sales remains robust following the completion of recent strategic large dispositions and the Triple T. Exit we have significantly strengthened our balance sheet and have ample capital available to support a disciplined acquisition strategy.

We also are pursuing exciting options for solar carbon sequestration and wetlands mitigation banking to maximize both the near term cash flow potential and long term value of our timberlands recently, we signed a 4000 acre lease with a solar developer and have option agreements on almost 8000 acres.

Speaker 3: We also are pursuing exciting options for solar, carbon sequestration, and wetlands mitigation banking to maximize both the near-term cash flow potential and long-term value of our timberland.

Speaker 3: Recently, we signed a 4,000-acre lease with a solar developer and have option agreements on almost 8,000 acres with other solar developers.

With other solar developers.

From a results standpoint for full year 2021, we realized net income of $58 $4 million or $1 20 per share.

Speaker 3: From a result standpoint, for full year 2021, we realized net income of $58.4 million or $1.20 per share.

We met our 2021 guidance for adjusted EBITDA at the higher end of the guidance range.

Speaker 3: We met our 2021 guidance for adjusted EBITDA at the higher end of the guidance range.

We generated a record $47 $2 million of net cash provided by operating activities, 17% higher than 2020.

Speaker 3: generated a record $47.2 million of net cash provided by operating activities, 17% higher than 2020.

Speaker 3: We produced CAD of $34.1 million and paid total cash distributions of $23.3 million to shareholders.

We produce CAD of $34 $1 million and paid total cash distributions of $23 $3 million to shareholders.

Speaker 3: The resulting payout ratio was below our historical range of 75% to 85% of cash available for distribution.

The resulting payout ratio was below our historical range of 75% to 85% of cash available for distribution.

Speaker 3: We achieved full-year U.S. South pricing for pulpwood and salt timber, 17% and 14% higher than in 2020, respectively, driven by strong...

We achieved full year U S south pricing for pulpwood, and sawtimber, 17% and 14% higher than in 2020, respectively, driven by strong market fundamentals.

Speaker 3: And we concluded a major capital recycling program and refocused efforts on U.S. South expansion.

And we concluded a major capital recycling program and refocused efforts on U S South expansion.

Regional household formation and home construction mill expansions and the ongoing decline of Canadian market competition due to the pine beetle infestation in British Columbia Harvest deferrals have helped and should continue to help increase demand in the U S south and create sustainable pricing tension, particularly in <unk>.

Speaker 3: Regional household formation and home construction, mill expansions, and ongoing decline of Canadian market competition due to pine beetle infestation and British Columbia harvest deferrals have helped and should continue to help increase demand in the U.S. South and create sustainable pricing tension, particularly in catchmark superior markets where we consistently have outperformed.

<unk> superior markets, where we consistently have outperformed.

Speaker 3: All indicators point to significant growth in the U.S. South for the lumber, pellet, and pulp industries, leading to tightening wood markets and price appreciation over time.

All indicators point to significant growth in the U S south for the lumber pellet and pulp industries, leading to tightening would markets and price appreciation over time.

Speaker 3: It's the largest wood market in North America and the only region which is appreciably expanding. The pellet industry is the fastest growing not only in North America, but also globally. And sawmills are also expanding.

The largest wood market in North America, and the only region, which is appreciably expanding the pellet industry is the fastest growing not only in North America, but also globally and saw mills are also expanding to.

Speaker 3: to meet increased demand, especially given longstanding and ongoing population growth in the region.

To meet increased demand, especially given longstanding and ongoing population growth in the region.

We believe we are strategically concentrating our operations and focusing on prime timberlands in leading mill markets and the right place at the right time.

Speaker 3: We believe we are strategically concentrating our operations and focusing on prime timberlands and leading mill markets in the right place at the right time.

Fourth quarter 2021 results highlight our transition to a simplified stronger business model, which is bolstered by ongoing product price appreciation.

Speaker 3: Fourth quarter 2021 results highlight our transition to a simplified, stronger business model, which is bolstered by ongoing product price appreciation.

Speaker 3: Net income of $33.9 million and earnings per share of $0.70 resulted primarily from the company's exit from the Triple T joint venture, proceeds from which were used to repay debt and further improve the company's capital position.

Net income of $33 9 million and earnings per share of <unk> 70 resulted primarily from the company's exit from the Triple T joint venture proceeds from which were used to repay debt and further improve the company's capital position.

The significant timber sales price increases and our harvest operations cushioned planned lower harvest volume revenues and adjusted EBITDA following the Triple T exit and Bandon sale.

Speaker 3: The significant timber sales price increases in our harvest operations cushioned planned lower harvest volume, revenues, and adjusted EBITDA following the Triple T exit and abandoned sales.

Speaker 3: For the quarter, U.S. South timber sales pricing was 32% and 21% higher than prior year for pulpwood and salt timber, respectively.

For the quarter U S south timber sales pricing was 32% and 21% higher than prior year for pulpwood and sawtimber respectively.

Speaker 3: Our blended pricing for pulpwood and salt timber has increased sequentially for three out of the last four quarters.

Our blended pricing for pulpwood and sawtimber has increased sequentially for three out of the last four quarters.

Lower asset management fees resulted from the Triple T exit, but dawsonville bluffs continued to generate fees and incentive based promotes for managing successful wetlands mitigation banking activities.

Speaker 3: Lower asset management fees resulted from the TTT exit, but Dawsonville Bluffs continued to generate fees and incentive-based promotes for managing successful wetlands mitigation banking activities.

Speaker 3: This is an environmental initiative we intend to expand into further as part of.

This is an environmental initiative, we intend to expand into further.

Part of our growth strategy.

Selling fewer timberlands across the quarter compared to fourth quarter 2020 was due to timing as most of 2021 sales occurred earlier in the year.

Speaker 3: Selling fewer timberlands across the quarter compared to fourth quarter 2020 was due to timing as most of 2021 sales occurred earlier in the year.

Speaker 3: During the quarter, we achieved significantly higher pricing year-over-year on acres with lesser stocking levels while contributing to meeting full-year guidance targets for timberland sales.

During the quarter, we achieved significantly higher pricing year over year on acres with lesser stocking levels, while contributing to meeting full year guidance targets for timberland sales.

Speaker 3: We have consistently achieved pricing above market averages on timber sales for both pulpwood and salt timber and expect this will be a key differentiator in catchmark performance going forward.

We have consistently achieved pricing above market averages on timber sales for both pulpwood and sawtimber and expect this will be a key differentiator in ketchmark performance going forward.

The results have been and will be directly attributable to our investments in prime timberlands in operations and leading mill markets using delivered an opportunistic stumpage sales.

Speaker 3: The results have been and will be directly attributable to our investments in prime timberlands and operations in leading mill markets using delivered and opportunistic stumpage sales.

We are very confident about generating predictable stable cash flow and delivering fully covered dividends within or below our historical payout ratio of 75% to 85% of cash available for distribution.

Speaker 3: We are very confident about generating predictable, stable cash flow and delivering fully covered dividends within or below our historical payout ratio of 75% to 85% of cash available for distribution.

At the same time utilizing our strengthened balance sheet, we are moving forward to grow through acquisitions of high quality timberlands and leading U S. No markets that can capitalize on our successful model.

Speaker 3: At the same time, utilizing our strengthened balance sheet, we are moving forward to grow through acquisitions of high-quality timberlands and leading U.S. mill markets that can capitalize on our successful model.

Speaker 3: That means remaining disciplined and prudent and seeking investments that can sustain our industry-leading harvest EBITDA per acre and market pricing premiums while also maintaining stable per acre merchantable inventory.

That means remaining disciplined and prudent in seeking investments that can sustain our industry, leading harvest EBITDA per acre and market pricing premiums, while also maintaining stable per acre of merchantable inventory.

Speaker 3: Opportunities pursuing carbon sequestration, wetland mitigation banking, and solar energy also remain underway.

Opportunities pursuing carbon sequestration wetland mitigation banking and solar energy also remain underway.

In summary, 2021 marked the end of a transition period of simplifying and strengthening <unk> business model.

Speaker 3: In summary, 2021 marked the end of a transition period of simplifying and strengthening Ketchamark's business model. It marked the end of our capital recycling program, focused on large dispositions, including the successful band in sale. And it also marked the end of our involvement with Triple T.

At the end of our capital recycling program focused on large dispositions, including the successful Bandon sale and it also marked the end of our involvement with Triple T.

We head into 2022 with a clear strategy based on focusing our activities and not only the nation's premier wood basket, but also one of the leading timberland regions in the world The U S South.

Speaker 3: We head into 2022 with a clear strategy based on focusing our activities in not only the nation's premier wood basket, but also one of the leading timberland regions in the world, the U.S. South.

The U S south more than any other region in North America is in the midst of a significant expansion supported by economic drivers that should help ensure steady demand for ketchmark harvests and support attractive price appreciation.

Speaker 3: The U.S. South, more than any other region in North America, is in the midst of a significant expansion supported by economic drivers that should help ensure steady demand for catchmark harvest and support attractive price appreciation.

We are taking full advantage of our investments in prime timberlands, and leading U S. South mill markets utilizing our very successful delivered wood and opportunistic stumpage sales model.

Speaker 3: We are taking full advantage of our investments in prime timberlands and leading U.S. south mill markets, utilizing our very successful delivered wood and opportunistic stumpage sales model.

Speaker 3: Our focus is on continuing to deliver our sizable pricing premiums on timber sales, sustain our timberlands, using superior stewardship practices to maintain their attractive stocking and productivity levels over time, and make new investments that fit our model to grow durable cash flow and shareholder value.

Our focus is on continuing to deliver our sizable pricing premiums on timber sales sustain our timberlands using superior stewardship practices to maintain their attractive stocking and productivity levels over time.

And make new investments that fit our model to grow durable cash flow and shareholder value.

Speaker 3: Now Ursula will cover fourth quarter and full year's results in greater detail, as well as review our capital position.

Now <unk> will cover fourth quarter and full year results in greater detail as well as review our capital positioning.

Thank you, Brian both fourth quarter and full year results highlight catch mikes strong operational performance recapture higher timber sales prices and achieve continued pricing premiums compared to market.

Speaker 2: Thank you, Brian . Both fourth quarter and full-year results highlight Tachmark's strong operational performance. We capture higher timber sales prices and achieve continued pricing premiums compared to market.

Speaker 2: We exited TTT and concluded our capital recycling program with a very profitable band in sale, which allowed us to concentrate activities exclusively in the U.S. South.

We exited triple T and concluded our capital recycling program with the very profitable Bandon sale, which allowed us to concentrate activities exclusively in the U S South.

Speaker 2: For 4th quarter 2021, lower year-over-year total revenues and adjusted EBITDA resulted from planned lower harvest volumes following recent large dispositions and lower asset management fees due to the Triple T equity.

For fourth quarter of 2021 lower year over year total revenues and adjusted EBITDA resulted from planned lower harvest volumes. Following recent large disposition and lower asset management fees due to the triple Pxs.

Speaker 2: We also sold fewer Timberland acres during the quarter, as most sales were completed earlier in the year.

We also saw fewer timberland acres during the quarter as most sales were completed earlier in the year.

Speaker 2: The revenue impact of planned lower harvest volumes was lessened by significant increases in timber sales pricing as we sustained pricing premiums over U.S. south wide average.

The revenue impact of planned lower harvest volumes was lessened by significant increases in timber sales pricing as we sustained pricing premiums of our U S south wide averages.

For the quarter ended December 31, 2021 catch Mike generated revenues of $25 million compared to $39 million in fourth quarter of 2020.

Speaker 2: For the quarter ended December 31st, 2021, Cashmark generated revenues of $20.5 million compared to $30.9 million in fourth quarter 2020.

Timber sales revenue totaled $16 4 million versus $19 $9 million in fourth quarter 2020.

Speaker 2: Timber sales revenue totaled $16.4 million versus $19.9 million in fourth quarter 2020.

Speaker 2: As planned, total harvest volume decreased year over year by 14% to approximately 500,000 tons.

As planned total harvest volume decreased year over year by 14% to approximately 500000 times.

Speaker 2: We capture significant timber sales price increases year over year. 32% for popwood and 21% for saw timber.

We capture significant timber sales price increases year over year.

32% for pulpwood and 21% for soft timber.

Speaker 2: When compared to Timber Mart South U.S. Southwide averages, pulpwood and saw timber stumpage pricing registered 52% and 38% premiums, respectively.

When compared to timber Mart, South U S south wide averages pulpwood and sawtimber stumpage pricing registered 52% and 38% premiums respectively.

We realized net income of $33 9 million compared to a $3 million net loss in fourth quarter 2020, resulting primarily from the Triple T exit.

Speaker 2: we realized net income of $33.9 million compared to a $3 million net loss in fourth quarter 2020, resulting primarily from the TTTX.

Speaker 2: Adjusted IBERA totaled $9 million compared to $17.3 million in fourth quarter 2020.

Adjusted EBITDA totaled $9 million compared.

Compared to $17 3 million in fourth quarter 2020.

Breaking out adjusted EBITDA by segment.

For the fourth quarter harvest EBITDA was $8 8 million compared to $9 $7 million in fourth quarter 2020.

Speaker 2: For the fourth quarter, Harvest Dividend was $8.8 million compared to $9.7 million in fourth quarter 2020.

Speaker 2: Real estate EBITDA decreased to $900,000 year over year from $6.4 million in 2020.

Real estate EBITDA decreased to $900000 year over year from $6 4 million in 2020.

Most of our 2021 timberland sales occurred earlier in the year. So fewer acres were sold in the fourth quarter as planned.

Speaker 2: Most of our 2021 Timberland sales occurred earlier in the year, so fewer acres were sold in the fourth quarter as planned.

Pricing and margins for acres sold were higher year over year, despite lower stocking levels unsold apex.

Speaker 2: Pricing and margins for acres sold were higher year over year despite lower stocking levels on sold acres.

Investment management EBITDA of $2 2 million compared to $3 2 million in 2020 was attributable to the triple to exit and the replacement of its asset management agreement with the transition services agreement effective through first quarter of 2022.

Speaker 2: Investment management EBITDA of 2.2 million dollars compared to 3.2 million dollars in 2020 was attributable to the TTT exit and the replacement of its asset management agreement with the transition services agreement effective through first quarter of 2022.

Speaker 2: The Dawsonville Blocks Joint Venture continues to provide asset management fees and register incentive-based promotes for our ongoing mitigation banking activities.

The Dawsonville bluffs joint venture continues to provide asset management fees and register incentive based promotes for our ongoing mitigation banking activity.

We also paid a dividend of $7 <unk> per share to stockholders on December 15 2021.

Speaker 2: We also paid a dividend of seven and a half cents per share to stockholders on December 15, 2021.

Speaker 2: For the full year ended December 31st, 2021, higher timber sales revenues driven by higher pricing helps spur strong operating results despite lower plant harvest volume.

For the full year ended December 31, 2021, higher timber sales revenue driven by higher pricing helped spur strong operating results despite lower planned harvest volumes.

<unk> generated revenues of $102 million nearly comparable to $104 3 million.

Speaker 2: Cashmark generated revenues of $102 million, nearly comparable to $104.3 million in 2020.

In 2020.

Timber sales revenue of $72 5 million.

Speaker 2: Timber sales revenue of $72.5 million was slightly higher than prior year's $72.3 million, highlighting the strength of product pricing as harvest volumes were near the low end of guidance at just over 2 million tons.

While slightly higher than prior years $72 $3 million highlighting the strength of product pricing as harvest volumes were near the low end of guidance at just over 2 million tons.

Speaker 2: Timberland sales revenue met guidance decreasing 10% to 14.1 million dollars from 15.6 million dollars in 2020 due to selling fewer acres but at higher pricing and margin.

Timberland sales revenue met guidance decreasing 10% to $14 1 million from $15 6 million in 2020, due to selling fewer acres, but at higher pricing and margins.

Speaker 2: Asset management fees declined 6% due to the TTT exit in related transition services agreements.

Asset management fees declined 6% due to the triple T exit and related transition services agreement.

Net income totaled $58 4 million compared to a $17 5 million net loss in 2020, primarily the result of recognizing gains on the triple T exit and Bandon large disposition.

Speaker 2: Net income totaled $58.4 million, compared to a $17.5 million net loss in 2020. Primarily the result of recognizing gains on the Triple T exit and banded large disposition.

Speaker 2: We achieved adjusted EBITDA of $49.4 million at the upper end of guidance compared to $52.1 million for full year 2020.

We achieved adjusted EBITDA of $49 4 million at the upper end of guidance compared to $52 1 million for full year 2020.

Breaking out adjusted EBITDA by segment.

Speaker 2: For full year 2021, Harvest Divida held steady at $34.2 million.

For full year 2021 harvest EBITDA held steady at $34 $2 million.

Speaker 2: Real estate EBITDA of $13.4 million declined slightly from $14.7 million in prior years.

Real estate EBITDA of $13 4 million declined slightly from $14 7 million in prior year.

Speaker 2: An investment management EBITDA of $12.3 million was comparable to $12.6 million in 2020.

In investment management EBITDA of $12 3 million was comparable to $12 6 million in 2020.

Taking into consideration the completion of capital recycling the Triple T exit.

Speaker 2: Taking into consideration the completion of capital recycling, the Triple T exit, and our renewed focus on operations in the U.S. South, full year 2021 results met or exceeded guidance and highlighted the strength of our business model to continue to deliver premium pricing from our timber sales.

Renewed focus on operations in the U S. South full year 2021 results met or exceeded guidance and highlighted the strength of our business model to continue to deliver premium pricing from our timber sales.

Speaker 2: At the same time, we also have continued to strengthen our balance sheet considerably.

At the same time, we also have continued to strengthen our balance sheet considerably.

Speaker 2: And now turning to our review of Kachmar's capital position at year-end 2021.

And now turning to our radio of catch much capital position at year end 2021.

All of our deleveraging efforts, resulting from strategic initiatives, including simplifying our business capital recycling focusing operations in the U S. South after the successful abandon sale and exiting Triple T has positioned us well for the next growth phase.

Speaker 2: All of our deleveraging efforts resulting from strategic initiatives, including simplifying our business, capital recycling, focusing operations in the U.S. South after the successful abandoned cell, and exiting TTT, have positioned us well for the next growth.

We have ample debt capital and cash on hand to execute on growth opportunities, including acquisitions and various environmental initiatives.

Speaker 2: We have ample debt capital and cash on hand to execute on growth opportunities, including acquisitions and various environmental initiatives.

The two profitable 2021 capital recycling disposition.

Speaker 2: The two profitable 2021 Capital Recycling Dispositions, Bandon and Oglethorpe, were particularly impactful.

<unk> and <unk> were particularly impactful.

Speaker 2: Comprising 23,100 acres and totaling $107.5 million, the two cells generated a gain of $24.2 million.

Comprising 23100 acres and totaling $107 $5 million. The two sales generated a gain of $24 2 million.

Bandon in the Pacific Northwest sold for $100 million on which a $23 $4 million gain was recognized.

Speaker 2: Bandon in the Pacific Northwest sold for 100 million dollars on which a 23.4 million dollar gain was recognized

Speaker 2: Net proceeds of $95.4 million were used to pay down outstanding debt.

Net proceeds of $95 $4 million were used to pay down outstanding debt.

As a result liquidity has increased from $180 million at the end of the second quarter to $277 million at year end.

Speaker 2: As a result, liquidity has increased from $180 million at the end of the second quarter to $277 million at year-end.

Speaker 2: with $254 million of borrowing capacity and $23 million of cash on hand.

With $254 million of borrowing capacity and $23 million of cash on hand.

Borrowing capacity was comprised of $150 million under our multi draw term facility.

Speaker 2: Borrowing capacity was comprised of 150 million dollars under our multi-drill term facility, 69 million dollars under our delayed drill term loan, and 35 million dollars under our working capital facility.

$69 million under our delayed draw term loan and $35 million under our working capital facility.

Our $300 million of debt outstanding has an effect of two 9% cost of debt capital with no near term maturities and we are well within our financial covenants.

Speaker 2: Our $300 million of debt outstanding has an effective 2.9% cost of debt capital with no near-term maturities, and we are well within our financial covenant.

In 2021, we paid out dividends of approximately $23 3 million or <unk> 48 per share.

Speaker 2: In 2021, we paid out dividends of approximately $23.3 million or $0.48 per share.

These dividends were fully covered by cash available for distribution of $34 $1 million.

Speaker 2: These dividends were fully covered by cash available for distribution of $34.1 million.

Speaker 2: This was below the company's target CAD payout ratio range of 75 to 85 percent.

This was below the company's target CAD payout ratio range of 75% to 85%.

We made no share repurchases under <unk> share repurchase program during the year.

Speaker 2: We made no share repurchases under Cashmark Share Repurchase Program during the year.

And had approximately $13 $7 million remaining in the program for future repurchases as of December 31, 2021.

Speaker 2: and had approximately $13.7 million remaining in the program for future repurchases as of December 31, 2021.

Speaker 2: In sum, CashMark is in a very strong capital position as we execute on our growth strategy.

In sum catch Mark is in a very strong capital position as we execute on our growth strategy.

Now Todd will review harvest operations and Timberland sales Todd.

Speaker 2: Now, Todd will review harvest operations and timberland sales.

Scott.

Speaker 4: Thank you, Ursula, and good morning, everyone. The fourth quarter delivered solid performance results for Catchmark's harvest operations as we turned our focus entirely on the US South. Residual impacts of regional wet weather in third quarter kept pressure on fourth quarter logging production while customer raw material inventories remained low.

Thank you Ursula and good morning, everyone.

The fourth quarter delivered solid performance results for cash marks harvest operations as we turned our focus entirely on the U S South.

The residual impacts of regional wet weather in third quarter kept pressure on fourth quarter logging production, while customer raw material inventories remained low.

Speaker 4: The pricing tension benefited Catchmark with favorable supply-demand dynamics in our markets, fueled by the strong fundamentals of increasing home building, robust repair and remodeling, ongoing mill expansions, and ownership focused in regions with extremely competitive markets and tight growth-to-drain characteristics.

The pricing tension benefited catch mark with favorable supply demand dynamics in our markets fueled by the strong fundamentals of increasing homebuilding robust repair and remodeling ongoing mill expansions and ownership focused in regions with extremely competitive markets and tight growth to drain characteristics. These fundamental dynamics remain in place in 2000.

Speaker 4: These fundamental dynamics remain in place in 2022 as well.

And 'twenty two as well the.

Speaker 4: flexibility of our operating model using delivered wood and opportunistic stuffage sales continues to produce significant benefits.

The flexibility of our operating model using delivered wood and opportunistic stumpage sales continues to produce significant benefits.

Speaker 4: in a market environment with a finite number of loggers to work with, it helps control our supply chain, allows us to get price premiums for our harvests, while loggers benefit from higher utilization rates, and it mitigates our risk and theirs.

In a market environment with a finite number of August to work with it helps control our supply chain allows us to get price premiums for our harvest, while loggers benefit from higher utilization rates and it mitigates our risk and theirs.

We capitalized on greater market pricing tension by negotiating deliberative stumpage sale pricing increases successful negotiations with many of our customers to support delivered price increases helped us offset rising costs and maintain our stumpage values as we passed increases along to our delivered logging contractors.

Speaker 4: capitalized on greater market pricing tension by negotiating delivered and stumpage sale pricing increases.

Speaker 4: Successful negotiations with many of our customers to support delivered price increases helped us offset rising costs and maintain our stumpage values as we passed increases along to our delivered logging contract.

Speaker 4: As a result, we continue to achieve substantial pricing premiums, also the strategic outcome of concentrating prime Timmerland holdings in leading U.S. South Mill markets.

As a result, we continue to achieve substantial pricing premiums also the strategic outcome of concentrating prime Timberland holdings in leading U S South mill markets.

Speaker 4: In the fourth quarter, year-over-year increases in the US South were 32% for pulpwood and 21% for sawtimber, and sequential quarter-over-quarter, 19% for pulpwood and 10% for sawtimber. More tellingly, catchmark pulpwood and sawtimber stumpage pricing also scored substantially above timber marked south-southwide pricing, 52% and 38% higher for pulpwood and sawtimber, respectively.

In the fourth quarter year over year increases in the U S, South where 32% for pulpwood and 21% for sawtimber and sequential quarter over quarter, 19% for pulpwood and 10% saw timber.

<unk> <unk> pulpwood and sawtimber stumpage pricing also scored substantially above timber Mart, south south wide pricing, 52% and 38% higher for pulpwood and sawtimber respectively.

Same kind of pricing advantages were registered for full year catch Mark stumpage prices for pulpwood, and sawtimber were 17% and 14% higher respectively compared with the prior year trending in general with increases in south wide prices, but we also realized 54% and 20% premiums for pulpwood and sawtimber respectively.

Speaker 4: Same kind of pricing advantages were registered for full year. Catchmark stumpage prices for Polkwood in September were 17% and 14% higher, respectively, compared to the prior year, trending in general with increases in southwide prices.

Speaker 4: But we also realized 54% and 20% premiums for pulpwood and salt timber, respectively, over US South white average.

<unk> south wide averages.

Planned lower harvest volumes, followed the successful execution of the two capital recycling large dispositions bandon in Oregon, and Oglethorpe, Georgia.

Speaker 4: And lower harvest volumes followed successful execution of the two capital recycling large dispositions, Bandon in Oregon and Oglethorpe in Georgia.

Speaker 4: For the year, in the US South, we registered a 4% increase in timber sales revenue over 2020 derived from the strong pricing we achieved through negotiations for delivered volume, along with opportunistic stumpage sales, and despite the planned 11% decrease in harvest volume.

For the year in the U S. South we registered a 4% increase in timber sales revenue over 2020 derived from the strong pricing we achieved through negotiations for delivered volume along with opportunistic stumpage sales and despite the planned 11% decrease in harvest volume.

Speaker 4: Before selling Bandon in August , we harvested 90% of planned four-year Pacific Northwest harvest volumes, generated $9 million in timber sales revenue, and captured a 7% increase in weighted average saw timber pricing year over year.

Before selling band and in August we harvested 90% of planned full year Pacific Northwest harvest volumes generated $9 million in timber sales revenue and captured a 7% increase in weighted average saw timber pricing year over year.

Speaker 4: Going forward, customer and product mix will remain key as we stay nimble to meet changing market dynamics.

Going forward customer and product mix will remain key as we stay nimble to meet changing market dynamics.

Strong lumber demand and improved pricing during the fourth quarter provide a favorable basis for negotiating with our customers and strong macro demand fundamentals help too.

Speaker 4: Strong lumber demand and improved pricing during the fourth quarter provide a favorable basis for negotiating with our customers, and strong macro demand fundamentals help too. They are pushing mill production, and that translates into improved market price across our regions for chip and saw and pine saw timber products, especially in the south central region of our Georgia timberlands, where our key customers have invested capital to improve existing mill capacity but built new facilities in the past three years.

They are pushing mill production and that translates into improved market price across our regions for chip and saw and pine sawtimber products, especially in the south Central region of our Georgia, Timberlands, where our key customers have invested capital to improve existing mill capacity.

Built new facilities in the past three years.

Speaker 4: Now let's review timberland sales, which need to be viewed in the context of our having already met the lower range of our full year timberland sales guidance by the end of the third quarter. It was a year highlighted by exceptionally strong buyer demand for our timberland sales.

Now, let's review timberland sales, which need to be viewed in the context of our having already met the lower range of our full year timberland sales guidance by the end of the third quarter.

It was a year highlighted by exceptionally strong buyer demand for our timberland sales.

Speaker 4: As expected, we executed $1 million in timberland sales in the fourth quarter. 400 acres sold compared to 4,000 acres sold for $6.8 million in the fourth quarter of 2020.

As expected, we executed $1 million in timberland sales in the fourth quarter 400 acres sold compared to 4000 acres sold for $6 $8 million in the fourth quarter 2020.

And we achieved significantly higher pricing year over year to $597 per acre compared to $1662 per acre in fourth quarter 2020.

Speaker 4: And we achieved significantly higher pricing year over year, $2,597 per acre compared to $1,662 per acre in fourth quarter 2020.

Margins also increased significantly year over year, 44% in the fourth quarter compared to 19% in 2020.

Speaker 4: Margins also increased significantly year over year, 44% in the fourth quarter compared to 19% in 2020.

Speaker 4: In addition, the excellent pricing was realized despite lower stocking levels on sold timberlands compared to the prior year and is indicative of the robust demand for rural red property within our ownership.

In addition, the excellent pricing was realized despite lower stocking levels unsold timberlands compared with the prior year and is indicative of the robust demand for rural Red property within our ownership.

Speaker 4: full year, we met guidance for timberland sales revenue, a 10% drop year over year, selling 19% fewer acres. We also achieved an 11% higher per acre price in 2020, despite a 19% lower total stock

The full year, we met guidance for timberland sales revenue, a 10% drop year over year selling 19% fewer acres. We also achieved an 11% higher per acre price in 2020, despite a 19% lower total stock.

Speaker 4: Margins increased to 31% compared to 21% in 2020. And acres sold had an average merchantable timber stocking of 21 tons per acre compared to 26 tons in 2020, and well below the catchmark portfolio average of 39 tons per acre. Brian , back to you.

Margins increased to 31% compared to 21% in 2020 and acres sold at an average merchantable timber stocking of 21 tons per acre compared to 26 tons in 2020, and well below the <unk> portfolio average of 39 tons per acre.

Brian back to you.

Thanks, Todd Ketchmark enters 2022 stronger and more focused than ever our business models tested proven and consistently successful at achieving timber sales price premiums, while we maintain industry, leading productivity per acre and stable per acre stocking.

Speaker 3: Thanks, Todd catchmark enters 2022 stronger and more focused than ever. Our business model is tested proven and consistently successful at achieving timber sales price premiums while we maintain industry leading productivity per acre and stable per acre stock.

Speaker 3: Our operations should benefit from dynamic long-term forces driving demand in the markets where we are located. And we are poised for growth as a result of recent strategic decisions to strengthen our balance sheet.

Our operations should benefit from dynamic long term forces driving demand in the markets, where we are located and we're poised for growth as a result of recent strategic decisions to strengthen our balance sheet.

Speaker 3: After reducing our footprint in the last several years, we see 2022 as a start to meaningful resumed expansion as we continue to produce durable cash flow to cover our dividend comfortably and create shareholder value. It will be a disciplined, prudent, step-by-step process, and it will show meaningful results over time as we gather momentum.

After reducing our footprint in the last several years, we see 2022 is the start to meaningful resumed expansion as we continue to produce durable cash flow to cover our dividend comfortably and create shareholder value, we will be a disciplined prudent step by step process and it will show meaningful.

<unk> overtime as we gather momentum.

Looking at full year guidance for 2022, Ketchmark projects, a GAAP net loss of between 5% and $7 million we.

Speaker 3: Looking at full-year guidance for 2022, Cashmark projects a gap net loss of between $5 and $7 million.

Speaker 3: We expect it just a diva DA between 35 and $41 million.

<unk> adjusted EBITDA of between 35% and $41 million harvest volumes are forecast between one six and one 8 million tonnes, reflecting consistent annual productivity on a per acre basis.

Speaker 3: Harvest volumes are forecast between 1.6 and 1.8 million tons, reflecting consistent annual productivity on a per acre basis.

Speaker 3: with a salt timber mix of approximately 45 to 50 percent.

With a solid timber mix of approximately 45% to 50%.

Speaker 3: Harvests are expected to increase during each of the first three quarters, with fourth quarter volume approximating the average.

Harvests are expected to increase during each of the first three quarters with fourth quarter volume approximating the average.

Speaker 3: Asset management fee revenue is projected at approximately $2 million, and timberland sales targets are anticipated in the range of $15 million to $17 million, representing about 2.5% of our fee acreage.

Asset management fee revenues projected at approximately $2 million and timberland sales targets are anticipated in the range of 15 million to $17 million.

Representing about two 5% of our fee acreage we.

Speaker 3: We expect about one-third of our annual Timberland sales to occur in the first quarter.

We expect about one third of our annual timberland sales to occur in the first quarter.

Timber sales pricing will be key to driving our 2022 performance.

Speaker 3: Timber sales pricing will be key to driving our 2022 performance.

Speaker 3: We expect macro-demand fundamentals in the U.S. South will continue to produce sustained price increases.

We expect macro demand fundamentals in the U S. South will continue to produce sustained pricing tension, which will benefit in particular, the leading markets, where we concentrate our operations.

Speaker 3: which will benefit in particular the leading markets where we concentrate our operation.

We expect our saw timber and total weighted average pricing to increase between 10 and 15% year over year during 2022.

Speaker 3: We expect our saw timber and total weighted average pricing to increase between 10 and 15% year over year during 2022.

Our markets and many of our customers are expanding operations and capacity as demand for their products is increasing.

Speaker 3: Our markets and many of our customers are expanding operations and capacity as demand for their products is increasing.

Speaker 3: We all benefit from our superior wood basket, primed to support this growth. As I stated earlier, Ketchmark is positioned for success in the right place at the right time.

We all benefit from our superior wood basket Prime to support this growth as I stated earlier cash Mark is positioned for success in the right place at the right time.

This outlook does not include potential contributions from future acquisitions and investments, including monetization of the company's environmental initiatives, which include opportunities related to carbon sequestration wetlands mitigation banking and solar projects.

Speaker 3: This outlook does not include potential contributions from future acquisitions and investments.

Speaker 3: including monetization of the company's environmental initiatives, which include opportunities related to carbon sequestration, wetlands mitigation banking, and solar projects.

Speaker 3: In assessing new investments, we continue to be diligent and disciplined, seeking timberlands that will fit into our growth strategy.

In assessing new investments, we continue to be diligent and disciplined seeking timberlands that will fit into our growth strategy. We continue to focus on acquisitions with near term cash accretion or long term accretive portfolio attributes as well as potential for providing environmentally focused alternative income.

Speaker 3: We continue to focus on acquisitions with near-term cash accretion or long-term accretive portfolio attributes, as well as potential for providing environmentally focused alternative income opportunities.

Opportunities.

We see opportunities in the marketplace, including bolt on local acquisitions to our existing portfolio.

Speaker 3: We see opportunities in the marketplace, including both on local acquisitions to our existing portfolio.

Speaker 3: We believe smaller acquisitions in the current environment are better, and that's where we are concentrating our activity.

We believe smaller acquisitions in the current environment are better and Thats, where we are concentrating our activity.

Now well into the first quarter of 2022.

Speaker 3: Now well into the first quarter of 2022, all of us at Catchmark are energized about the year ahead.

All of us at cash Mark are energized about the year ahead, our strategic focus on driving predictable and sustainable performance remains underpinned by our superior stewardship of Prime Timberlands in high demand U S South mill markets, which maximizes cash flow throughout the business cycle seeking to capture the highest value per acre.

Speaker 3: Our strategic focus on driving predictable and sustainable performance remains underpinned by our superior stewardship of prime timberland and high-demand U.S. South mill markets, which maximizes cash flow throughout the business cycle.

Speaker 3: seeking to capture the highest value per acre and sustainable yields.

And sustainable yields we have the capital to move ahead with our growth plans and we are well positioned to continue to fully cover our dividend from cash available for distribution, while building long term value for our shareholders.

Speaker 3: We have the capital to move ahead with our growth plans, and we are well positioned to continue to fully cover our dividend from cash available for distribution while building long-term value for our shareholders.

Speaker 3: 2022 is going to be a very productive year at Kachemark, and all of us hope your year is off to a good start too. Now, Ursula, Todd, and I will be pleased to take your questions.

'twenty two is going to be a very productive year at <unk> and all of US hope your year is off to a good start to now Ursula Todd and I will be pleased to take your questions.

We will now begin the question and answer session.

Speaker 5: To ask a question, you may press star then 1 on your telephone keypad.

Ask a question you may have started one of the telephone keypad.

Speaker 1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, please stand by.

If you're using 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 to assemble our roster.

Our first question comes from Dave Rodgers with Baird You May now go ahead.

Speaker 6: Our first question comes from Dave Rogers with Baird. You may now go ahead.

Speaker 7: Yeah, good morning, everybody. Brian and Todd wanted to start with you on the acquisition front and what you might be seeing. You mentioned them right at the end of your comments, Brian , but I'm curious on kind of what that pipeline looks like, you know, now that the portfolio cleanup is largely complete. So, what's that pipeline and how do you view a kind of accretion of the stuff that you want to buy today over the next year or so?

Yes, good morning, everybody, Brian and Todd wanted to start with you on the acquisition front and what you might be seeing you'd mentioned them right at the end of your comments, Brian , but I am curious on kind of what that pipeline looks like now that the portfolio cleanup is largely complete so what's that pipeline and how do you view kind of accretion of the stuff that you want to buy today over the next year or so.

Certainly good morning, Dave well, we really highlighted three aspects when we take a look at acquisitions, we've got kind of the near term accretion approach. We've got an aspect that we look at from a portfolio standpoint that help smooth out our age class and we're also look at opportunities with the environmental aspects to it not to do.

Speaker 3: Certainly. Good morning, Dave. Well, we really highlighted three aspects of when we take a look at acquisitions. We've got kind of the near term accretion approach. We've got an aspect that we look at from a portfolio standpoint that helps smooth out our age class. And we also look at opportunities with environmental aspects to it, not to dissimilar to mitigation bank credits that we've seen in Dawsonville Bluffs. We're building our pipeline.

Somewhere to mitigation bank credits that we've seen in Dawsonville bluffs, we're building our pipeline.

Really centered around the markets in which we're operating in we're looking at our pipeline does consist of some off market and marketed transactions.

Speaker 8: You know, really centered around the markets in which we're operating in. We're looking at our pipeline does consist of some off-marketed and marketed transactions.

Speaker 3: I do want to talk a little bit about the market in of itself.

I do want to talk a little bit about the market in of itself.

Speaker 3: We think this year's market offerings may be a little choppy.

We think this year's market offerings may be a little choppy. It's it's interesting that we're seeing some institutional owners that have seen some big growth in their values in 2021.

Speaker 3: It's interesting that we're seeing some institutional owners that have seen some big growth in their values in 2021 expect the same thing in 2022. You combine that with trying to assess valuations associated with carbon value and other initiatives. They may look to hold on to their holdings for this period of year, for this period. What we've also seen.

The same thing in 2022, you combine that with trying to assess valuations associated with carbon value in other initiatives. They may look to hold onto their holdings for this period of year for this period. What we've also seen is that folks who institutional owners, who sold off in the last couple of years.

Speaker 3: is that folks who, institutional owners, who sold off in the last couple of years are looking to get back into the market. So you're seeing this really competitive market, especially in the larger offerings. And historically in larger offerings, you've seen what we call a big deal discount. We think that's really kind of evaporated from a deal standpoint. And so for us...

We're looking to get back into the market. So you're seeing this really competitive market, especially in the larger offerings in historically in larger offerings, you've seen what we call our big deal discount and we think Thats really kind of evaporated from a deal standpoint, and so for us when we take a look at market.

Speaker 9: when we take a look at market bite sizes.

Bite sizes, obviously alluded to we have easily on our balance sheet being able to deploy about $100 million and really keep our leverage profile at our historical average and really put that to work without having to look at the equity markets and so what we feel is that we've got really we've got a small tract program, which.

Speaker 3: You know, Ursula alluded to, we have, you know, easily on our balance sheet being able to deploy about $100 million and really keep our leverage profile at our historical average.

Speaker 3: and really put that to work without having to look at the equity markets. And so what we feel is that we've got, really, we've got a small track program, which we're spread out within our marketplace, looking at transaction sizes at the low end of the $5 million, and then working up to about $50 million. The pipeline does continue.

We're spread out within our marketplace looking at transaction sizes at that low end of the $5 million and then working up to about $50 million pipeline does continue to build and one thing that we've also have done and we haven't been successful to date is actually partnering with other institutional investors, but not in the <unk>.

Speaker 3: And one thing that we've also have done, and we haven't been successful to date, is actually partnering with other institutional investors by not in the way of a joint venture, but essentially looking at an asset, bifurcating that asset and coming in with a joint bid. That way, it's the cheapest source of capital for us in a way that we can get the type of assets that we want.

They have a joint venture, but essentially looking at.

On asset bifurcated that asset and coming in with a joint bid that way it is.

The cheapest source of capital for us in a way that we can get the type of assets that we want so Dave when you're really talking about.

Speaker 3: So, Dave, when you're really talking about how are we building our pipeline, we're advancing on all fronts. It's going to be a choppy market. People are believing in the values and what we've seen on the ground. And when we think about accretion, we really think about it in either a near-term cash accretion relative to what we're doing, or a portfolio accretion that allows us to be sustainable and over-harvesting on a long-term basis and filling our age gaps that go along

How are we building our pipeline we are advancing on all fronts, it's going to be a choppy market people are believing in the values and what we've seen on the ground and when we think about accretion, we really think about it and either near term cash accretion relative to what we're doing.

Or a portfolio accretion that allows us to be sustainable and over harvesting on a long term basis and filling our age gaps that go along with it and we also understand what our cost of capital is and Thats why its important for us to have the type of debt capital available to us at this point in time to demonstrate our activity as it relates to acquisitions, but we did also alluded to as it is.

Speaker 3: And we also understand what our cost of capital is, and that's why it's important for us to have the type of debt capital available to us at this point in time to demonstrate our activity as it relates to acquisitions.

Speaker 3: What we did also allude to is it's going to take some time to get that type of momentum. We are going to be very disciplined and putting a ring in the bell when we take a look at acquisitions. So, you know, we're looking at all things at all times.

Going to take some time to get that type of momentum, we're going to be very disciplined and putting a ringing the bell when we take a look at acquisitions. So.

We're looking at all things at all times.

I appreciate all the added color there, Brian maybe on the flip side of that talk about a land sale activity I.

Speaker 7: I appreciate all the added color there, Brian . Maybe on the flip side of that, talk about land sale activity. I think you maybe had communicated previously you'd like to do a little bit more. Pricing is up, doing a little bit less, so I don't know if that's a function of some of the solar initiatives or other things that you're looking at or what you're thinking about in terms of land sales in the guidance, but I guess talk about what your view is on that 2.5% of CAE. Thank you, Brian .

I think you've maybe had communicated previously you'd like to do a little bit more pricing is up doing a little bit less so I don't know if thats a function of some of the solar initiatives or other things that youre looking at or what you were thinking about in terms of land sales in the guidance, but I guess talk about what your view is on that two 5% of fee acreage.

Yes, certainly.

Speaker 3: Yes, certainly. So it's really part and parcel. When we take a look at our portfolio of assets, we have very strong product price appreciation that goes along with this.

Really part and parcel when we take a look at our portfolio of assets. We have very strong product price appreciation that goes along with this double digit last year, we expect double digit again this year landfill pipeline given that we have a third of that really wrapped up in the first quarter of this year, we have an opportunity to really create additional attention associated with the types of.

Speaker 3: double-digit last year. We expect double-digit again this year. Lansdale Pipeline, given that we have a third of that really wrapped up in the first quarter of this year, we have an opportunity to really create additional tension associated with the types of

Land sales that we've been making we have good margins associated with those and so we didn't feel is necessary to do.

Speaker 3: land sales that we've been making, we have good margins associated with those, and so we didn't feel it was necessary to demonstrate the full 3%, but we do have that flexibility. We're going to be a seller if it makes the best sense for us on a long-term basis, rather than holding those assets. So I wouldn't read much more into it, other than taking a look at our portfolio of assets.

Demonstrate the full 3%, but we do have that flexibility, we're going to be a seller. If it makes the best sense for us on a long term basis, rather than holding those assets. So I wouldn't read much more intuit other than taking a look at our portfolio of assets that being said Todd maybe talk about at the ground level, what we're seeing from a demand side on the retail absolutely.

Speaker 3: That being said, Todd, maybe talk about at the ground level what we're seeing from a demand side on the retail. Absolutely. You know, and it's a mix of buyers. You've got...

A mix of buyers you've got.

Speaker 4: family trusts, adjoining landowners, you know, you've got people out there with some 1031 money that want to do exchanges and.

Family trusts adjoining landowners <unk> got people out there with some $2 31 money they wanted to exchanges and so it's.

Speaker 10: It's, you know, interestingly, you know, you're not seeing a whole lot of people that are are looking for something that has to be fully timbered. I mean, we've been able to maintain

Interestingly youre not seeing a whole lot of people that are looking for something that has to be fully timber and then we've been able to maintain.

Speaker 11: timber reservations on these properties. And so it's just people are looking to place money in a hard asset as opposed to maybe the stock market.

Timber reservations on these properties and so its just people are looking to place money in a hard asset as opposed to maybe the stock market at this point in time.

Alright, Thank you very much.

Thanks, Dave Thanks, Dave.

Okay.

Speaker 12: Our next question comes from Anthony Pettineri with Citi. You may now go ahead.

Our next question comes from Anthony Pettinari with Citi. You May now go ahead.

Hi, good morning.

Speaker 4: Brian , just circling back to the southern Timberland market, I'm wondering, I mean, we're two years into the pandemic and I guess the pandemic probably froze a lot of transactions or transaction volume was depressed. Between the beginning of 2020 and today, sort of before the pandemic and to date, how much do you think

Good morning, Brian just certainly hey, just circling back to the southern Timberland market I'm wondering I mean, we're two years into the pandemic and I guess, the pandemic, probably froze a lot of transactions.

Transaction volume was depressed between the beginning of 2020 and today sort of before the pandemic and to date like how much do you think.

Speaker 4: southern good quality industrial timberlands in the south have appreciated on a dollar per acre basis or on a percentage basis. Is there any kind of color that you can give there? And then to the extent that you're focused on bolt-ons, is it safe to say that those would be sort of adjacent to existing lands or could you be interested in maybe a new part of the south or a state that you're not currently operating in?

Good quality industrial timberlands in the south have appreciated.

On a dollar per acre basis or on a percentage basis is there any kind of color that you can give there.

And then to the extent that you're focused on bolt ons is it safe to say that those would be sort of adjacent to existing lands or could you be interested in a maybe a new part of the south or a state that youre not currently operating in.

Okay.

Absolutely so from a depreciation standpoint, when you take a look at doing a DCF on an asset youre really looking especially on larger basis youre looking over a longer term aspect to it so product pricing does have an influence regarding valuations itself I think before you had a little bit more speculation.

Speaker 3: Absolutely. So from an appreciation standpoint, when you take a look at doing a DCF on an asset, you're really looking, especially on a larger basis, you're looking over a longer term aspect to it. So product pricing does have an influence regarding valuations itself. I think before, you had a little bit more speculation regarding the expectation of pricing. So you had more risk as you were doing valuations. And I know in our market, we're actually demonstrating or experiencing the type of product price appreciation.

Guarding the expectation of pricing. So you had more risks as we were doing valuations.

And I know in our market were actually demonstrating our experiencing the type of product price appreciation. So what I would tell you is that.

Speaker 3: So what I would tell you is that the areas, the markets still matter regarding what you're seeing in product price appreciation. In some of the Gulf states, you're not gonna see the same type of product price appreciation. You are seeing mills going into the Gulf states areas. There's a reason for that. It's gonna take a while for those to come on. That product pricing is still gonna be speculative. So you're not gonna see that notable product price, that acreage appreciation that you would see in some of our markets that we have, like in Georgia or the Carolinas or Eastern Alabama. So what I would tell you is it's still bifurcated, not to dissimilar to what you see in our product pricing, would be the same kind of characterization and what I would see in land value. So it's like class A office space, Anthony. It's the same concept on having high quality assets should appreciate at a greater rate relative to other assets, other assets in other markets.

The areas that the market's still matter regarding what you're seeing in product price appreciation and some of the Gulf States Youre not going to see the same type of product price depreciation Youre seeing Gulf State you are seeing mills going into the Gulf States areas. There is a reason for that is going to take a while for those to come on that product pricing is still going to be speculative so youre not going to see that.

Notable product price that acreage appreciation that you would see in some of our markets that we have like in Georgia or the Carolinas.

Or eastern Alabama, So what I would tell you is it's still bifurcated not too dissimilar to what you see in our product pricing would be the same kind of characterization and what I would see in land value. So.

Slide class a office space Anthony it's the same concept on on having high quality assets should appreciate a greater rate relative to other assets other assets in other markets.

Speaker 3: So, as you're trying to think about on a per acre basis, I would say ours is appreciated greater than if we had owned something in the Gulf.

So as you are trying to think about on a per acre basis, I would say ours is appreciated greater than if we had owned something in the Gulf States.

Speaker 3: Secondly, I think you had asked about bolt-ons. Yeah, those are typically gonna be in our existing mill market. We have a very strong delivered wood aspect to our business, we have great relationships.

Secondly, I think you had asked about bolt ons.

Those are typically going to be in our existing mill market. We have a very strong delivered wood aspect to our business. We have great relationships stoppages, another part of which we go along with that we feel that we can get the operational scale. When we really look at bolt ons in our areas and so when we look at something if we want to go outside of our market has to be a market.

Speaker 13: Stumpage is another part of which we go along with that. We feel that we can get the operational scale when we really look at bolt-ons in our areas. And so when we look at something, if we want to go outside of our market, it has to be a market. So not just some of how we thought about Bandon.

So not as summer how we thought about Bandon abandon we had it was a great asset we had 18000 acres, but in order to get scale. There, we're going to have to really double our size there.

Speaker 3: Abandoned, it was a great asset. We had 18,000 acres, but in order to get scale there, we're going to have to really double our size there. That opportunity relative to valuation is going to be very difficult for us.

And that opportunity relative to valuations is going to be very difficult for us. So in the near term we really.

Speaker 3: So in the near term, we really feel that near local areas is gonna be best for us from a bolt-on. We'll look at areas outside of where we're operating only if we can get scale associated with that for our operating model in of itself. And so I'm not saying we wouldn't, but there has to be some considerations that go along with that.

Feel that Nir local areas is going to be best for us from a bolt on we will look at areas outside of where we are operating only if we can get scale associated with that for our operating model in of itself and so I'm not saying, we wouldn't but there has to be some considerations that go along with that.

Speaker 4: Okay, that's very helpful. And then just quick follow-up, is there anything more that you can say about the solar projects in terms of timeline, earnings accretion, potential for the future, just kind of any finer point you can put on the projects that you signed up for, or maybe just opportunities through 2022-23?

Okay. That's very helpful. And then just quick follow up is there anything more that you can say about the solar projects in terms of.

Timeline earnings accretion.

Potential for the future.

Just kind of any finer point you can put on the projects that you signed up for or maybe just opportunities through 'twenty two 'twenty three.

Yes, I'll give you a quick read so we noted a one transaction that we have over 4000 acres is going through the feasibility stage.

Speaker 3: Yeah. I'll give you a quick read. So we noted one transaction that we have with 4,000 acres is going to the feasibility stage.

Speaker 3: We basically get some cash up front associated with those 4,000 acres.

We basically get some cash upfront associated with those.

4000 acres in.

It's not notable other than from the standpoint that youre getting something that would be in excess of what you'd be getting from a recreational lease standpoint, but we do get the harvest the trees off of it really were the juice. In these types of transactions is really from the rental income that you would get on a perpetuity basis were essentially perpetuity up to 30 years.

Speaker 3: income that you would get on a perpetuity basis, or essentially perpetuity up to 30 years that you get on an annual basis, that would be equal to or maybe in excess of what that standing timber would be. And that's really where the opportunities are in these types of solar projects. And so from an earnings accretion standpoint, we're fortunate we're located in the U.S. South. It's much sunnier than where you are up in New York. And so you may not have the same appreciation, but we do get a lot of vitamin D down here. So therefore, it creates a lot.

<unk>.

You get an annual basis that would be equal to or maybe in excess of what that standing timber would be and that's really where the opportunities are in these types of solar projects and so from an earnings accretion standpoint, we're fortunate we're located in the U S South.

Speaker 14: And so, from an earnings accretion standpoint, we're fortunate we're located in the U.S. South. It's much sunnier than where you are up in New York. And so, you may not have the same appreciation, but we do get a lot of vitamin D down here. And so, therefore, it creates a lot of opportunity in the solar. And so, when you expand that, you multiply that out inside of a footprint, that's really where those opportunities are going to come in.

Much sunnier than where you are up.

In New York, and so you may not have the same appreciation, but we do get a lot of vitamin D down year and so therefore, it creates a lot of opportunity.

In the solar and so when you expand that.

Multiply that out inside of a footprint, that's really where those opportunities are going to come in.

Great that's very helpful I'll turn it over.

Thank you.

Speaker 15: Our next question comes from Buck Horn with Raymond James, you may now go ahead.

Our next question comes from Buck Horne with Raymond James You May now go ahead.

Speaker 16: Hey, good morning. Thanks for the time. I wanted to ask you, Brian , on the pricing expectation for, you know, being able to sustain maybe a 10 to 15% year-on-year improvement in solid timber pricing, you know, what kind of visibility do you guys have around that, that kind of, you know, that outlook, I guess, how long forward into the backlog, you know, do you have in terms of

Hey, good morning, Thanks for the time.

I wanted to ask you, Brian on the pricing expectation for being able to sustain maybe a 10% to 15%.

Year on year improvement and saw timber pricing what kind of visibility.

Do you guys have around that that kind of.

That outlook I guess, how long.

Into the backlog do you have in terms of your contracts or your confidence level in how thats going to play out over the course of the year.

Speaker 16: your contracts or your confidence level and how that's going to play out over the course of the year.

While our confidence level has got to be high if we werent included in our guidance box. So.

Speaker 3: Well, confidence level's got to be high if we're going to include it in our guidance box. So from the standpoint, it's interesting. So.

So from the standpoint is interesting so.

Speaker 17: You know, we, as you're always preparing for these types of calls, you look at, you know, what have we been talking about? And I went back to last year and saying, we really felt like we were on the precipice of.

As you are always preparing for these types of calls you look at what we've been talking about and I went back to last year and saying, we really felt like we are on the precipice of given these macro factors that's going on in our markets as we've always talked about timberland is a local market from the standpoint of growth.

Speaker 3: given these macro factors that's going on in our markets, as we've always talked about, timberland is a local market from the standpoint of, you know, growth, drain, and everything that goes along with that.

Drain and everything that goes along with that.

Speaker 18: Um, and we said we, we just needed a little bit of tension and we ended up having double digits this year, given the factors that we experienced during 2021.

And we said, we just needed a little bit of attention and we ended up having double digit this year given the factors that we experienced during 2021.

Speaker 3: And, Buck, I think you're very constructive in the housing side. We talk about that lost decade of housing and the aging housing stock and the work from home.

And Buck I think you are very constructive on the housing side, we've talked about that last decade of housing and the aging housing stock in the work from home as I think you put it untether.

Speaker 3: I think you put it, untethered migration for workers coming from the city centers. And so you combine that with a growing economy and additional usage for mass timber.

Migration for workers coming from the city centers and so you combine that with a growing economy and additional usage for mass timber.

This really supports what the mills are doing there, they're relocating the capital down to the U S South.

Seeing mill expansions that go along with that you've seen growth drain you got to remember in our marketplace. We've had a very healthy market. Even during we're not really seeing product price appreciation, but you've seen.

Speaker 19: trees being drawn down during that period of time. And so when you have pulpwood and strong lumber operations, you weren't too far from really getting the type of product price appreciation where we have today. And so, and Buck, on the other side, we really get a lot of questions on the supply side. And I think it's important to note, when you take a look at the U.S. South of the timberland ownership, 30% is really corporate TMOs. The remainder is either in public lands or private landowners.

Trees being drawn down during that period of time, and so when you're a pulpwood and strong lump.

Our lumber operations, you were too far from really getting this type of product price appreciation, where we have today and so in bulk on the other side, we really get a lot of questions on the supply side and I think it is important to note. When you take a look at the U S. South of the owner of the Timberland ownership, 30% is really <unk>.

Speaker 3: And so, and Buck, on the other side, we really get a lot of questions on the supply side. And I think it's important to note, when you take a look at the U.S. South,

Speaker 20: of the timberland ownership, 30% is really corporate TMOs.

Corporate team owes the remainder is either in public lands or private landowners and the private landowners and make a majority of that remaining acreage and inside of that and we end up doing a lot of math year, but 75% of that southern acreage. That's owned by private landowners is less than 20 acres.

Speaker 21: The remainder is either in public lands or private land owners.

Speaker 22: and the private landowners make a majority of that remaining acreage. And inside of that, we end up doing a lot of math here. But 75% of that southern acreage that's owned by private landowners is less than 20 acres.

Speaker 23: So you sit there and say, well, geez, I take a look at these growth drains. A lot of that is as a result of these private landowners that are harvesting well, less than what they're getting on a growth basis.

So you sit there and say well jeez I take all of these growth drain a lot of that is as a result of these private land owners that are harvesting well.

Less than what they are getting on a growth basis and so so the supply side, we believe especially on a delivered wood model. We have good visibility given these macro factors that gives us the confidence and really taken a look at where we expect to really this double digit gain going into 2021 and the real question is that becoming what's the duration of the housing.

Speaker 24: So the supply side, we believe, especially on a delivered wood model, we have good visibility given these macro factors that gives us the confidence and really taking a look at, we expect really this double digit gain going into 2021.

Speaker 3: And the real question is becoming what's the duration of the housing need, what's the duration of, you know, how does mass timber play into this, and how does the environmental aspects and the building codes and everything else combine to these things. We really feel like we're on the front end of something really special. Are we going to get to this?

Need what's the duration.

How does mass timber play into this and how does the environmental aspects into building codes and everything else combined these things we really feel like we're on the front end of something really special or are we going to get to this $60 $70 saw logs, while the log size is different than it used to be but never say never but so from that standpoint.

Speaker 25: $60, $70 saw logs, well, the log size is different than it used to be, but never say never. But so from that standpoint, I think we're really on the front end of this by demonstrating what we got last year and the conviction we have going into this year.

Think we're really on the front end of this by demonstrating what we got last year and the conviction we have going into this year.

Speaker 26: Todd, is there anything, any other antidotes you can talk about at the mill level?

Todd is there anything any other anecdotes you can talk about at the mill level.

Speaker 27: You know, really, and that's exactly where it is, Brian , is that, you know, you think about where the capitals been placed, you know, but you look back 1819, all the capital, it came into the southeast and a big portion of that, as we've talked about really sits in and around our holdings.

Really and Thats exactly where it is Brian is that you think about where the capital has been placed but you look back 18 19, all the capital that came into the southeast and a big portion of that as we've talked about really sits in and around our holdings. All of that is coming online so that that demand tension thats in the markets. We operate in has really helped.

Speaker 28: All of that is coming online, so that demand tension that's in the markets we operate in is really helping bolster our position and giving us our conviction moving forward.

To bolster our position and giving us our conviction moving forward you have it's.

Speaker 27: As Brian touched on, this is already in the tightest growth-to-drain basin, really, in the country. In addition to not just the production from the mill side, you also have over the last year, year and a half, you've seen some of the contractor attrition that has taken place, and so it's made a little bit tougher in order to get product to the facilities, and therefore that's additional tension that's helped with the pricing outlook that we have.

As Brian touched on this is already in the tightest growth to drain basin really in the country.

In addition to not just the production from the mill side. You also have over the last year year and a half you've seen some of the contract or attrition that has taken place and so it's made a little bit tougher in order to get product.

Product to the facilities and therefore, that's additional tension. That's that's helpful with the pricing outlook that we have and that helps us too because of our delivered wood model and the way we can leverage that and also being flexible with the stumpage sales. We have so all these things coming together are helping build a nice.

Speaker 29: And that helps us too, because of our delivered wood model and the way we can leverage that, and also being flexible with the stumpage that we have. So all these things coming together.

Outlook for us.

Speaker 16: That's great. Extremely, extremely detailed and helpful color guys. Thank you very much for that. That's, that's, that's great.

That's great extremely extremely detailed and helpful color guys. Thank you very much for that.

That's great.

A question maybe on the supply side go into that kind of at the midpoint to $1 7 million.

Speaker 30: question maybe on the supply side, going to that at the midpoint, the 1.7 million tonnage harvest volume. Can you help me just understand, you mentioned that that's a sustainable number. I'm just curious, how many years into the future

Tonnage harvest volume.

Can you help me just understand how you mentioned that that's a sustainable number I'm just curious is that how many years into the future.

Speaker 31: Is that sustainable at the $1.7 million number, or does it grow from there? Does it need to come down at all?

Is that sustainable at the kind of the $1 7 million.

Number or does it does it grow from there does need to come down at all.

Speaker 16: I'm trying to walk through the math in terms of the current acreage position of the company times the 39 tons per acre that you have stocked on the land right now. It gives you a little over 14 million tons on the land right now. Help me understand how sustainable the 1.7 million is for how many years in the future.

I'm trying to walk through the math I guess in terms of the current acreage position of the company time.

Call. It 39 tons per acre that you have stocked on the on the land right now. So it gives you a little over 14 million tonnes on the on the land right now so.

Help me understand how sustainable the $1 $7 million is for how many years in the future.

Sure Buck so that number that sits right in the middle of what we're looking at the 1618, so youll be in that range going forward you can look at that over kind of a 10 year period there'll be.

Speaker 27: Sure, but you know, so that number, you know, that's that's right in the middle of what we're looking at the 1618. So you'll be in that range going forward. You can look at that over kind of a 10 year period. There'll be fluctuation year to year. But in in on average, you're looking at that level and really from a.

Fluctuations year to year, but in on.

On average youre looking at that level and really from a from.

Speaker 32: from the productivity basis, you know, you look at it on a kind of a tons per acre per year, if you look into that. So we're in that four and a half, five tons per acre per year growth, that's about what our your harvest works out to. So we're able to look at that as even even flow going forward with a mix similar to what we're seeing today. And that, you know, 45 50% Oakwood salt timber kind of mix, if you will.

From the productivity basis, you look at it on a kind of a tons per acre per year. If you look into that so we're in that 455 tons per acre per year.

So thats about what are your harvest works out too so we're able to look at that.

Even even flow going forward with a mix similar to what we're seeing today in that 45, 50% pulpwood.

Pulpwood sawtimber kind of mix if you will.

Speaker 27: So that volume that you're looking at today could, you know, that 39 tons per acre of merch, that will go up over a period of time, year to year, depending on the number of acres that come into play, because you have in-growth that has to be factored in there as well.

So that volume that you are looking at today could that 39 tons per acre March that will go up over a period of time year to year, depending on the number of acres that come into play.

Because you have in growth that has to be factored in there as well and so all of those parts you might see some fluctuation of that we could go 38, we could move up to 41 again, recognizing we don't have a force that's been in place for over 100 years and so that everything is just perfectly level to unregulated. This has been built up over time, and so you're working through different vintages.

Speaker 33: all of those parts you might see some fluctuation of that we could go 38 we could move up to 41 again recognizing we don't have a forest that's that's been in place for over 100 years and so that everything is just perfectly leveled out.

Speaker 34: This has been built up over time. And so you're working through different vintages to get more to that run rate level if you will. And so that's kind of

To get more to that run rate level, if you will and so that's kind of what we're working with so bucket. If you think your model is complicated as a result from your financial model you come in here to a growth yield model that goes along with the thousands of plots with thousands of stems that go along with different geographical.

Speaker 35: So, Buck, if you think your model is complicated as a result from your financial model, you come in here and do a growth yield model that goes along with thousands of plots, with thousands of stems that go along with different geographical considerations that go along with that. And so we come out to you with a nice simple number of 1.6 to 1.8.

Considerations that go along with that and so we come out to you with a nice simple number of one six to one eight.

Speaker 16: Yeah, mad respect for the modeling skills guys. So I appreciate the color. Thanks again. Good luck Yep

Yeah.

Mad respect for the modeling skills guys. So I appreciate the color. Thanks, again and good luck.

Yep.

Thanks, Bob.

Speaker 36: Again, if you have a question, please press star then 1. Our next question comes from Craig Cucera with B. Reilly FBR. You may now go ahead.

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

Our next question comes from Craig Kucera with B Riley FBR you May now go ahead.

Yeah, Hey, good morning, guys. You mentioned your guidance doesn't include monetizing any of the environmental components of the portfolio such as mitigation credits or perhaps solar but can you give us a sense of how much incremental value of those might be worth in a sale.

Speaker 37: Hey, good morning, guys. You mentioned your guidance doesn't include monetizing any of the environmental components of the portfolio, such as mitigation credits or perhaps solar, but can you give us a sense of how much incremental value those might be worth in a sale?

Yeah, Hey, Craig it's Brian Good morning, Thanks for joining us.

Speaker 38: Yeah. Hey, Craig. It's Brian . Good morning. Thanks for joining us. The, you know, from our standpoint, we did talk about back in October that could represent approximately 20% of our cash flow into the future.

From our standpoint, we did talk about back in October that could represent approximately 20% of our cash flow into the future.

Speaker 39: Really, the carbon aspect of it can be the largest element into that, while solar has the closest front end to it, and we talked a little bit about what the dynamics and economics can be something along with that. Carbon is not too dissimilar from that opportunity, looking at some of actually our less productive properties that can actually operate under carbon sequestration contracts.

Really the carbon aspect of it can be the largest element into that while solar has the closest front end to it and we talked a little bit about what the dynamics and the economics can be something along with that carbon is not too dissimilar from that opportunity and looking at some are actually are less productive properties that can actually operate in under carbon sequestration contract.

Acts that can generate net timber.

Speaker 3: that can generate revenues in excess of what we would generate on a net timber revenue base.

Generate revenues in excess of what we would generate on a net timber revenue basis, and so that's kind of the scale that we're thinking about some of it is still relatively early stage, especially as it relates to carbon but we've been actively involved in exploring opportunities with that and Todd maybe you want to expand a little bit more as we think about carbon absolutely. So.

Speaker 3: So that's kind of the scale that we're thinking about. Some of it is still relatively early stage, especially as it relates to carbon, but we've been actively involved in.

Speaker 3: exploring opportunities with that, and Todd, maybe you want to expand a little bit more as we think about carbon.

Speaker 27: Absolutely. You know, and so still a little bit early stages, but we're actively reviewing the portfolio right now. We've engaged

Still a little bit early stages, but we are actively reviewing the portfolio right now we've engaged.

Speaker 27: third-party consultant we're out looking at will begin

Third party consultant, we're out looking at will begin actually.

Speaker 40: cruising and inventorying of potential stands for the program, and then we'll have an idea of what the potential credits could be.

Cruising in inventory of potential stands for the program and then we will have an idea of what the.

The potential credits could be associated with that.

Speaker 27: that part of the portfolio. Again, it's not something that we're going to include the entire footprint in. This has to be something that works in conjunction with our daily operating businesses.

Is that part of the portfolio again, it's not something that we're going to include the entire footprint and this has to be something that works in conjunction with our daily operating business as well and so we will have a better feel for that kind of mid mid year. If you will and then hopefully something call. It six to nine months down the road, we might be able to begin to see some monetization.

Speaker 27: And so we'll have a better feel for that kind of mid, mid year, if you will, and then, you know, hopefully something call it.

Okay, Great and just one more for me just circling back to the price increases in the fourth quarter, which were clearly pretty robust.

Speaker 16: Okay, great. And just one more for me, just circling back to the price increases in the fourth quarter, which were clearly pretty robust. You mentioned your expectation of maybe 10 to 15 percent this year. Are you seeing that level of price and power trending here in the first quarter, or is that really just an expectation?

You mentioned in your expectation of maybe 10% to 15%. This year are you seeing that level of pricing power trending here in the first quarter or is that really just an expert.

Occurring later in 2020.

Speaker 41: Right. You cut out there just a minute. I think your question was, are we seeing that trend up in the Q1 of the year?

You cut out there are so many of your I think your question was are we seeing that trend up and into Q1 and the answer is yes.

Speaker 27: Q1 could be a pretty strong quarter for us overall, and so you'll see some seasonality I think throughout the year.

Q1 could be pretty strong quarter for us overall.

And so youll see some seasonality I think throughout the year.

Speaker 42: somewhat similar to what we saw in 21. We came out of first quarter a little bit stronger than expectation and then that moderated down a little bit going into the third quarter and then it built.

Somewhat similar to what we saw in 'twenty. One we came out of the first quarter, a little bit stronger than expectation and that moderated down a little bit going into the third quarter and then build back up.

But the main thing is that the fundamental drivers were there the entire time and we were able to hold onto and maintain a majority of the uplift that we received and that's carrying over into the first quarter.

That'd be indicators going forward.

Okay. Thanks.

Thanks, Greg.

That concludes our Q&A session I would like to turn the conference back over to Brian Davis for any closing remarks.

Speaker 43: Thanks, Anthony. Well, as you can tell by this call, we're very excited about 2022. We really look forward to posting some great numbers and some great activity for our investors this coming year. And we look forward to talking to you next quarter.

Thanks Anthony.

As you can tell by this call. We're very excited about 2022, and we really look forward to closing some great numbers and some great activity.

For our investors this coming year, and we look forward to talking to you next quarter.

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

Speaker 44: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.