CatchMark Delivers Strong First Quarter 2022 Results and Declares Dividend

FINANCIAL HIGHLIGHTS

(in millions except for tons and acres)

Three Months Ended March 31,

Change

2022

2021

Dollars, Tons or Acres

%

Results of Operations

Revenues

$                       26.9

$                   27.7

$                                  (0.7)

(3) %

Net Income (Loss)

$                         3.2

$                    (0.6)

$                                   3.7

678 %

Adjusted EBITDA

$                       14.8

$                   12.9

$                                   1.9

15 %

Harvest Volume (tons)

468,608

524,762

(56,154)

(11) %

Acres Sold

3,400

1,800

1,600

96 %

Three Months Ended March 31,

Change

(in millions except for prices)

2022

2021

$

%

Timber Sales Revenue - Consolidated

$                       17.7

$                       20.1

$                        (2.4)

(12) %

Timber Sales Revenue - U.S. South

$                       17.7

$                       15.2

$                         2.5

17 %

Timber Sales Revenue - PNW

$                           —

$                         4.9

$                        (4.9)

(100) %

Harvest EBITDA

$                         9.6

$                         8.9

$                         0.7

8 %

Net Timber Sales Price - U.S. South (per ton):

Pulpwood

$                          15

$                          14

$                            1

8 %

Sawtimber

$                          33

$                          25

$                            8

30 %

Three Months Ended March 31,

Change

(in millions except for prices)

2022

2021

$

%

Timberland Sales Revenue

$                         6.1

$                         3.4

$                         2.7

81 %

Real Estate EBITDA

$                         5.8

$                         3.1

$                         2.6

83 %

Average Sales Price (per acre)

$                     1,771

$                     1,923

$                       (152)

(8) %

Three Months Ended March 31,

Change

(in millions)

2022

2021

$

%

Asset Management Fee Revenue

$                         2.2

$                         3.1

$                        (0.9)

(30) %

Investment Management EBITDA

$                         2.7

$                         3.8

$                        (1.1)

(28) %

* As of March 31, 2022

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except for per-share amounts)

Three Months Ended March 31,

2022

2021

Revenues:

     Timber sales

$                 17,723

$                    20,149

     Timberland sales

6,070

3,357

     Asset management fees

2,179

3,118

     Other revenues

970

1,062

26,942

27,686

Expenses

     Contract logging and hauling costs

6,341

8,731

     Depletion

4,149

7,725

     Cost of timberland sales

4,337

2,155

     Forestry management expenses

1,625

1,887

     General and administrative expenses

3,969

3,600

     Land rent expense

80

113

     Other operating expenses

1,249

1,713

21,750

25,924

Other income (expense):

     Interest income

3

1

     Interest expense

(2,501)

(2,928)

(2,498)

(2,927)

Income (loss) before unconsolidated joint venture

2,694

(1,165)

Income from unconsolidated joint venture:

     Dawsonville Bluffs

490

614

Net income (loss)

3,184

(551)

     Net income (loss) attributable to noncontrolling interests

8

(1)

Net income (loss) attributable to common stockholders

$                   3,176

$                        (550)

Weighted-average common shares outstanding — basic

48,479

48,796

Income (loss) per share — basic

$                    0.07

$                       (0.01)

Weighted-average common shares outstanding — diluted

48,479

48,796

Income (loss) per share — diluted

$                    0.07

$                       (0.01)

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except for per-share amounts)

March 31, 2022

December 31, 2021

Assets:

     Cash and cash equivalents

$                 27,395

$                    22,963

     Accounts receivable

3,187

5,436

     Prepaid expenses and other assets

9,179

6,294

     Operating lease right-of-use asset

2,450

2,527

     Deferred financing costs

2,444

2,606

     Timber assets:

          Timber and timberlands, net

460,022

466,130

          Intangible lease assets

1

1

     Investments in unconsolidated joint ventures

1,755

1,353

               Total assets

$               506,433

$                  507,310

Liabilities:

     Accounts payable and accrued expenses

$                   2,773

$                      3,677

     Operating lease liability

2,632

2,707

     Other liabilities

1,355

18,683

     Notes payable and lines of credit, net of deferred financing costs

298,370

298,247

               Total liabilities

305,130

323,314

Commitments and Contingencies

—

—

Stockholders' Equity:

     Class A common stock, $0.01 par value; 900,000 shares
          authorized; 49,248 and 48,888 shares issued and outstanding
          as of March 31, 2022 and December 31, 2021, respectively

492

489

     Additional paid-in capital

730,836

729,960

     Accumulated deficit and distributions

(537,940)

(537,477)

     Accumulated other comprehensive income (loss)

6,064

(11,217)

               Total stockholders' equity

199,452

181,755

Noncontrolling Interests

1,851

2,241

               Total equity

201,303

183,996

               Total liabilities and equity

$               506,433

$                  507,310

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Three Months Ended March 31,

2022

2021

Cash Flows from Operating Activities:

     Net income (loss)

$                    3,184

$                     (551)

     Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:

       Depletion

4,149

7,725

       Basis of timberland sold, lease terminations and other

4,040

1,966

       Stock-based compensation expense

851

619

       Noncash interest expense

390

585

       Noncash lease expense

3

5

       Other amortization

30

43

       (Income) loss from unconsolidated joint ventures

(490)

(614)

       Operating distributions from unconsolidated joint ventures

88

—

       Interest paid under swaps with other-than-insignificant
       financing element

1,397

1,407

       Changes in assets and liabilities:

          Accounts receivable

2,062

489

          Prepaid expenses and other assets

239

215

          Accounts payable and accrued expenses

(856)

658

          Other liabilities

(3,051)

(955)

               Net cash provided by operating activities

12,036

11,592

Cash Flows from Investing Activities:

     Capital expenditures (excluding timberland acquisitions)

(2,098)

(2,317)

               Net cash used in investing activities

(2,098)

(2,317)

Cash Flows from Financing Activities:

     Financing costs paid

(32)

(4)

     Interest paid under swaps with other-than-insignificant financing
     element

(1,397)

(1,407)

     Dividends/distributions paid

(3,648)

(6,565)

     Repurchases of common shares

(26)

(78)

     Repurchase of common shares for minimum tax withholding

(403)

(489)

               Net cash used in financing activities

(5,506)

(8,543)

Net change in cash and cash equivalents

4,432

732

Cash and cash equivalents, beginning of period

22,963

11,924

Cash and cash equivalents, end of period

$                  27,395

$                  12,656

CATCHMARK TIMBER TRUT, INC. AND SUBSIDIARIES

SELECTED DATA (UNAUDITED)

2022

2021

Q1

Q1

Consolidated

Timber Sales Volume (tons, '000)

Pulpwood

228

273

Sawtimber ⁽¹⁾

241

252

Total

469

525

Harvest Mix

Pulpwood

49 %

52 %

Sawtimber ⁽¹⁾

51 %

48 %

Period-end Acres ('000)

Fee

352

385

Lease

13

15

Wholly-owned total

365

400

Joint venture interests ⁽⁴⁾

—

1,081

Total

365

1,481

U.S. South

Timber Sales Volume (tons, '000)

Pulpwood

228

271

Sawtimber ⁽¹⁾

241

205

Total

469

476

Harvest Mix

Pulpwood

49 %

57 %

Sawtimber ⁽¹⁾

51 %

43 %

Delivered % as of total volume

66 %

74 %

Stumpage % as of total volume

34 %

26 %

Net Timber Sales Price ($ per ton) ⁽²⁾

Pulpwood

$                     15

$                      14

Sawtimber ⁽¹⁾

$                     33

$                      25

Timberland Sales

Gross sales ('000)

$                 6,070

$                  3,357

Acres sold

3,400

1,800

% of fee acres

1.0 %

0.5 %

Price per acre ⁽³⁾

$                 1,771

$                  1,923

Pacific Northwest ⁽⁶⁾

Timber Sales Volume (tons,'000)

Pulpwood

—

2

Sawtimber ⁽¹⁾

—

47

Total

—

49

Harvest Mix

Pulpwood

— %

4 %

Sawtimber ⁽¹⁾

— %

96 %

Delivered % as of total volume

— %

100  %

Stumpage % as of total volume

— %

— %

Delivered Timber Sales Price ($ per ton) ^{(2) (5)}

Pulpwood

$                      —

$                      30

Sawtimber ⁽¹⁾

$                      —

$                    104

(1)

Includes chip-n-saw and sawtimber.

(2)

Prices per ton are rounded to the nearest dollar.

(3)

Excludes value of timber reservations. For the three months ended March 31, 2022 and 2021, we retained 7,000 tons and 9,800 tons of merchantable inventory, with a sawtimber mix of 79% and 56%, respectively.

(4)

Represents properties owned by Triple T joint venture in which CatchMark owned a common partnership interest; and Dawsonville Bluffs, LLC, a joint venture in which CatchMark owns a 50% membership interest.

(5)

Delivered timber sales price includes contract logging and hauling costs.

(6)

Exited the Pacific Northwest in August 2021.

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA  (UNAUDITED)

(in thousands)

Three Months Ended March 31,

2022

2021

Net income (loss)

$                  3,184

$                    (551)

Add:

     Depletion

4,149

7,725

     Interest expense ⁽¹⁾

2,111

2,342

     Amortization ⁽¹⁾

423

633

     Depletion, amortization, and basis of timberland and mitigation credits sold
     included in loss from unconsolidated joint venture ⁽²⁾

64

88

     Basis of timberland sold, lease terminations and other ⁽³⁾

4,040

1,966

     Stock-based compensation expense

851

619

     Post-employment benefits ⁽⁴⁾

8

16

     Other ⁽⁵⁾

16

99

Adjusted EBITDA ⁽⁶⁾

$                14,846

$                12,937

(1)

For the purpose of the above reconciliation, amortization includes amortization of deferred financing costs, amortization of operating lease assets and liabilities, amortization of intangible lease assets, and amortization of mainline road costs, which are included in either interest expense, land rent expense, or other operating expenses in the accompanying consolidated statements of operations. Includes non-cash basis of timber and timberland assets written-off related to timberland sold, terminations of timberland leases and casualty losses.

(2)

Reflects our share of depletion, amortization, and basis of timberland and mitigation credits sold of the unconsolidated Dawsonville Bluffs joint venture.

(3)

Includes non-cash basis of timber and timberland assets written-off related to timberland sold, terminations of timberland leases and casualty losses.

(4)

Reflects one-time, non-recurring post-employment benefits associated with the retirement of our former CEO, including severance pay, payroll taxes, professional fees, and accrued dividend equivalents.

(5)

Includes certain cash expenses paid, or reimbursement received, that management believes do not directly reflect the core business operations of our timberland portfolio on an on-going basis, including costs required to be expensed by GAAP related to acquisitions, transactions, joint ventures or new business initiatives.

(6)

Adjusted EBITDA is a non-GAAP financial measure of operating performance. EBITDA is defined by the SEC as earnings before interest, taxes, depreciation and amortization; however, we have excluded certain other expenses which we believe are not indicative of the ongoing operating results of our timberland portfolio, and we refer to this measure as Adjusted EBITDA. As such, our Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Due to the significant amount of timber assets subject to depletion, significant income (losses) from unconsolidated joint ventures based on hypothetical liquidation book value, or HLBV, and the significant amount of financing subject to interest and amortization expense, management considers Adjusted EBITDA to be an important measure of our financial performance. By providing this non-GAAP financial measure, together with the reconciliation above, we believe we are enhancing investors' understanding of our business and our ongoing results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA is a supplemental measure of operating performance that does not represent and should not be considered in isolation or as an alternative to, or substitute for net income, cash flow from operations, or other financial statement data presented in accordance with GAAP in our consolidated financial statements as indicators of our operating performance. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

ADJUSTED EBITDA BY SEGMENT (UNAUDITED)

(in thousands)

Three Months Ended March 31,

2022

2021

Timber sales

$                17,723

$                20,149

Other revenue

970

1,062

(-)    Contract logging and hauling costs

(6,341)

(8,731)

(-)    Forestry management expenses

(1,625)

(1,887)

(-)    Land rent expense

(80)

(113)

(-)    Other operating expenses

(1,249)

(1,713)

(+)   Stock-based compensation

171

107

(+/-) Other

42

53

Harvest EBITDA

9,611

8,927

Timberland sales

6,070

3,357

(-)    Cost of timberland sales

(4,337)

(2,155)

(+)   Basis of timberland sold

4,019

1,942

Real Estate EBITDA

5,752

3,144

Asset management fees

2,179

3,118

Unconsolidated Dawsonville Bluffs joint venture EBITDA

554

702

Investment Management EBITDA

2,733

3,820

Total Operating EBITDA

18,096

15,891

(-)     General and administrative expenses

(3,969)

(3,600)

(+)    Stock-based compensation

680

512

(+)    Interest income

3

—

(+)    Post-employment benefits

8

16

(+/-)  Other

28

118

Corporate EBITDA

(3,250)

(2,954)

Adjusted EBITDA ⁽¹⁾

$                14,846

$                12,937

(1)

See definition of Adjusted EBITDA in footnote 6 to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.

CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES

CASH AVAILABLE FOR DISTRIBUTION (UNAUDITED)

(in thousands, except for per share data)

Three Months Ended March 31,

2022

2021

Cash Provided by Operating Activities

$                12,036

$                11,592

Capital expenditures (excluding timberland acquisitions)

(2,098)

(2,317)

Working capital change

1,606

(407)

Distributions from unconsolidated joint ventures

—

—

Post-employment benefits

8

16

Interest paid under swaps with other-than-insignificant financing element

(1,397)

(1,407)

Other

16

99

Cash Available for Distribution ⁽¹⁾

$                10,171

$                  7,576

Adjusted EBITDA ⁽²⁾

$                14,846

$                12,937

Interest paid

(2,111)

(2,342)

Capital expenditures (excluding timberland acquisitions)

(2,098)

(2,317)

Distributions from unconsolidated joint ventures

88

—

Adjusted EBITDA from unconsolidated joint ventures

(554)

(702)

Cash Available for Distribution ⁽¹⁾

$                10,171

$                  7,576

Dividends/distributions paid

$                  3,648

$                  6,565

Weighted-average shares outstanding — basic

48,479

48,796

Dividends per share

$                  0.075

$                  0.135

(1)

Cash Available for Distribution (CAD) is a non-GAAP financial measure. It is calculated as cash provided by operating activities, adjusted for capital expenditures (excluding timberland acquisitions), working capital changes, cash distributions from unconsolidated joint ventures and certain cash expenditures that management believes do not directly reflect the core business operations of our timberland portfolio on an on-going basis, including costs required to be expensed by GAAP related to acquisitions, transactions, joint ventures or new business activities.

(2)

See definition of Adjusted EBITDA in footnote 6 to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.