Overcoming minor storm-related slowdowns in operations, CatchMark Timber Trust, Inc. reported a slight increase in revenues, a higher GAAP net loss, and level Adjusted EBITDA for the quarter ended September 30, 2017 compared to the three-month period ended September 30, 2016. Increases in year-over-year harvest volumes and timber sales revenue resulted primarily from last year's acquisition and successful integration of properties in South Carolina.

CatchMark today also declared a cash dividend of $0.135 per share for its common stockholders of record on November 30, 2017, payable on December 15, 2017.

Jerry Barag, CatchMark President and CEO, said: "Our supply agreements and delivered wood sales model continued to help generate higher harvest volumes during the quarter, helping overcome storm-related operational slowdowns, lowered quotas and high inventories in our markets. We also continued to realize higher stumpage prices than South-wide market averages because of our locations and quality harvests. Year-over-year timber agreement volumes increased 23% and delivered volumes increased 11% during the quarter. The Dawsonville joint venture completed in April and the two acquisitions completed last month should help enhance our revenue growth going forward, and we remain very much on track to meet our full-year 2017 guidance."

Recent Acquisitions and Equity Offering

In two separate transactions post-close of the third quarter, CatchMark acquired a total of 19,564 acres of prime timberlands located in central South Carolina and coastal Georgia for a total of $54.2 million, exclusive of closing costs. The acquired timberlands, primarily pine plantations, contain approximately 1.4 million tons of merchantable timber. CatchMark closed the first transaction—Carolina Midlands V Acquisition for $10.9 million—on October 11, 2017 with proceeds from its multi-draw term facility. The second transaction—Coastal Georgia Acquisition—closed on October 31, 2017 for $43.3 million and was funded from proceeds of CatchMark's 2017 Follow-On Offering, which closed on October 17, 2017. The public offering of 4.6 million shares raised gross proceeds of $56.8 million and also was used to repay indebtedness incurred to fund the Carolina Midlands V acquisition.

Barag said: "In addition to the fourth quarter acquisitions bolstering long-term revenue growth, the recent equity offering helps set the stage for additional accretive acquisitions and potential joint ventures. All our efforts remain focused on providing a sustainable rate of return to stockholders and building long-term value."

Third Quarter Operations Overview

For the third quarter 2017, CatchMark:

• Generated revenues of $18.6 million, compared to $18.3 million in third quarter 2016.

• Incurred a net loss of $4.0 million in accordance with GAAP, compared to $2.9 million in the third quarter 2016.

• Realized Adjusted EBITDA of $7.1 million, comparable to the $7.2 million in the third quarter of 2016.

• Increased gross timber sales revenue by approximately 7% to $17.1 million, primarily resulting from a 9% increase in harvest volume to 603,516 tons up from 553,832 tons in third quarter 2016.

• Sold 233 acres of timberlands for $0.3 million, increasing the total acres sold for the first nine months of the year to 7,047 acres for total proceeds of $13.7 million.

• Paid a dividend of $0.135 per share to stockholders on September 15, 2017.

Barag said: "Severe weather-related flooding and road damage impacted transportation operations temporarily in some of our regions and resulted in some mill customer downtimes, but we avoided any significant loss of standing timber and our operations bounced back quickly without any substantial loss of momentum."

As of September 30, 2017, CatchMark had $163.3 million of borrowing capacity under its credit facilities and a cash balance of $11.8 million. During the three months ended September 30, 2017, CatchMark did not repurchase any shares under its share repurchase program and may purchase up to an additional $19.8 million under the program, as of the end of the quarter.

Results for Three Months and Nine Months Ended September 30, 2017

For the three months ended September 30, 2017, revenues increased to $18.6 million from $18.3 million for the three months ended September 30, 2016 due to an increase in timber sales revenue of $1.1 million and an increase in other revenue of $0.1 million, offset by a $0.9 million decrease in timberland sales revenue. Gross timber sales revenue increased 7% primarily as a result of a 9% increase in harvest volume. The harvest volume increase was driven by harvest from properties acquired in 2016, which generated $0.8 million in timber sales revenue during the three months ended September 30, 2017. Net loss increased to $4.0 million for the three months ended September 30, 2017 from $2.9 million for the three months ended September 30, 2016 primarily due to a $0.9 million increase in interest expense.

For the nine months ended September 30, 2017, revenues increased to $68.6 million from $61.5 million for the nine months ended September 30, 2016 due to an increase in timber sales revenue of $3.3 million, an increase in timberland sales revenue of $3.0 million, and an increase in other revenue of $0.8 million. Gross timber sales revenue increased 7% due to a 4% increase in harvest volume as well as an increase in delivered sales as a percentage of total volume. Approximately 72% of 2017 harvest volume came from delivered sales as compared to 63% for the nine months ended September 30, 2016. Net loss increased to $8.5 million for the nine months ended September 30, 2017 from $6.1 million for the nine months ended September 30, 2016 because of a $3.5 million increase in interest expense, offset by a $1.3 million improvement in operating loss.

Adjusted EBITDA

The discussion below is intended to enhance the reader's understanding of our operating performance and our ability to satisfy lender requirements. Earnings before Interest, Taxes, Depletion, and Amortization is a non-GAAP measure of operating performance. EBITDA is defined by the SEC; however, we have excluded certain other expenses due to their non-cash nature, 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 and should not be viewed as an alternative to net income as a measurement of our operating performance. Due to the significant amount of timber assets subject to depletion and the significant amount of financing subject to interest and amortization expense, management considers Adjusted EBITDA to be an important measure of our financial condition and performance. Our credit agreement contains a minimum debt service coverage ratio based, in part, on Adjusted EBITDA since this measure is representative of adjusted income available for interest payments.

For the three months ended September 30, 2017, Adjusted EBITDA was $7.1 million, comparable to the three months ended September 30, 2016, as a result of a $0.8 million increase in net timberland sales, offset by a $0.7 million decrease in net timber sales.  

For the nine months ended September 30, 2017, Adjusted EBITDA was $32.1 million, a $2.8 million increase from the nine months ended September 30, 2016, primarily due to a $3.1 million increase in net timberland sales and a $0.8 million increase in other revenue, offset by a $1.0 million increase in other operating expenses, forestry management expenses, and general and administrative expenses.

Our reconciliation of net loss to Adjusted EBITDA for the three months and nine months ended September 30, 2017 and 2016 follows: