CatchMark Timber Trust, Inc.
Q3 2019 Earnings Call Transcript

Published: 1 Nov 2019

[Operator:]

Good morning. And welcome to the CatchMark Timber Trust Third Quarter 2019 Earnings Call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Brian Davis. Please go ahead.

[Brian Davis:]

Good morning, and thank you for joining us for a review of CatchMark Timber Trust results for third 2019. I am Brian Davis, President and Chief Financial Officer of CatchMark. Joining me today on the call are Chief Executive Officer, Jerry Barag; Senior Vice President of Forest Resources, Todd Reitz; and John Rasor, President of Triple T.During this call, CatchMark management will make forward-looking statements. These forward-looking statements are based on management's current beliefs and information currently available. 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 expectation. For more information about the factors that could cause such differences, we refer you to our 2018 Annual Report on Form 10-K and subsequent reports that we file with the SEC.Today's presentation includes certain non-GAAP financial measures. Reconciliations of these measurements are included in our earnings release in our third quarter financial supplement, which are posted on our website and our Form 10-Q filed with SEC yesterday, Thursday, October 31, 2019. After our presentation, Jerry, Todd, John and I will be pleased to answer any of your questions.Now I'll turn over the call to Jerry Barag to cover CatchMark's third quarter 2019 results.

[Jerry Barag:]

Thank you, Brian. Good morning and thank you all for joining us on today's call. CatchMark had an excellent third quarter meeting our targets and continuing to outperform market wide averages because of our superior mill markets and operating strategy. Third quarter strong results were driven by higher harvest volumes, increased pulpwood pricing in the US South and fees from an investment management business. We achieve solid increases in total revenues. Timber sales and asset management fee revenue, a substantially lower net loss and significantly higher adjusted EBITDA.Increases were across the board and our cash flow remains solid. And yesterday we declared a quarterly cash dividend of $0.135 per share for common shareholders on record at November 26, payable on December 13th. Year-to-date dividends have been fully covered with cash available for distribution. In meeting our business plan, we saw a year-over-year increases in revenues, harvest volumes, timber sales and pulpwood pricing. We also exceeded targets for the investment management business related to Dawsonville Bluffs distributions and promotes. And the Triple T joint venture continues to perform well.CatchMark superior mill market locations, supply agreements and delivered wood strategy helped continue to drive these excellent operating results, and in particular pricing premiums achieved over Timber-Mart South wide averages. Our third quarter year-over-year volumes increased 19% with pricing up 3% for pulpwood and flat for sawtimber. In the US, CatchMark pulpwood pricing achieved a 58% premium over the Timber-Mart South wide average.And our pine soft timber achieved a 23% premium over the same benchmark. In the Pacific Northwest, we harvested 24,000 tons comprising 86% soft timber and generating $1.8 million in timber sales revenue during the quarter. The increased volumes and overall better pricing contributed to a 23% increase in CatchMark's total harvest EBITDA for the quarter. Our investment management business has continued to boost revenue growth to producing predictable and stable cash flow from timberland properties equal in quality to those in our wholly owned portfolio.In our joint ventures, we have invested in timberlands with the same high-quality attributes as our wholly-owned timberlands employing the same operational strategies as used in our wholly owned Timberland portfolio. The high-quality nature of these assets provides us with the opportunity to attract investment capital and earn asset management fees through our joint venture platform, as well as leverage our scale and timber land management efficiencies. This certainly is the case with our Triple-T joint venture through its first months Triple-T has performed better than underwriting, producing free cash flow, as well as earning CatchMark predictable and steady asset management fees including $2.8 million in the third quarter.We also had superior results from our Dawsonville Bluffs joint venture. Dawsonville produced above planned investment returns ahead of schedule, provided reliable asset management fees over its term and has generated additional incentive based promotes for CatchMark. During the quarter, we completed the disposition of substantially all of the joint ventures remaining for 4,400 acres of timberland and received $3.8million in cash distributions. Since inception through September 30, 2019, CatchMark has received $13.3 million in cash distributions from its $10.5 million investment in the joint venture.In addition, we've realized almost $1 million in asset management fees from Dawsonville Bluffs. Moving to Timberland sales, we sold approximately 1,100 acres of timber lands for $2.3 million during the quarter at a realized sale price per acre up nearly 10% year-over-year. Year-to-date through the third quarter, we have completed approximately $12.5 million in timberland sales and expect to complete an additional $3.5 million to $5.5 million in sales by year-end meeting our guidance.Taking a closer look at CatchMark's third quarter operating results, we increased total revenues by 7% to $26.4 million compared to the third quarter ended September 30, 2018. We reduced net losses by 74% to $20.6 million compared to $78.9 million in the third quarter 2018, primarily due to a decrease in losses allocated from Triple-T.We increased adjusted EBITDA by 44%; harvest EBITDA increased by 23% and investment management EBITDA increased by a 166%, primarily from incentive based asset management fees, and adjusted EBITDA generated by the Dawsonville Bluffs joint venture. We increased harvest volumes year-over-year by 19% to more than 634,000 tons that was a 28% increase compared to second quarter 2019. We increased timber sales by 18% year-over-year. In addition to the 1,100 acres of timberlands sold for $2.3 million, we completed a $19.9 million disposition of 10,800 acres to reduce that recognizing a gain of $7.2 million. We increased investment management fee revenue by 2% to $3.4 million, including earning an incentive based promote from Dawsonville Bluffs for exceeding joint venture investment hurdles.And we paid a dividend of $0.135 per share to stockholders on September 13, 2019. Taken altogether, it was an extremely busy and highly productive quarter which delivered excellent results.Now I'll turn it over to Brian to discuss our balance sheet and successful debt reduction initiatives.

[Brian Davis:]

Thank Jerry. Over the course of the past year, we have been successful in making significant progress and reducing company debt relative to adjusted EBITDA. This accomplishment reflects the full-year impact of asset management fee revenues earned from Triple-T and execution of our capital recycling program through dispositions. Those dispositions have totaled more than $25 million year-to-date in 2019. As of the end of the third quarter, net debt had decreased to 8.6x adjusted EBITDA from 10.1x as of June 30th.As a result, we remain on course to reach a sub 8x net debt to adjusted EBITDA ratio by year-end. During the quarter, CatchMark paid down a total of $20.1 million of the outstanding balance on our debt facility, using proceeds from recently large disposition. The dispositions of 10,800 acres in Georgia in Alabama for $19.9 million had the most significant impact on our debt reduction, while also resulting in a gain of $7.2 million. The transaction was extremely favorable from the standpoint of the attractive pricing achieved on timberlands outside of our preferred procurement area.As of September 30th, we have more than $200 million in liquidity, including $17.1 million s in cash and a total of $185.1 million under our various debt facilities. We continue to execute on our active interest rate risk management strategy by entering into hedging transactions to lower our already favorable borrowing costs and extend the average life of our fixed rate debt. Last week, we terminated our existing 10 swaps and entered into two new swaps that fixed interest rates on $275 million of our outstanding debt. The average term is nine years at a weighted average rate of 2.17%. Before the applicable credit spread and expected patronage refunds. That compares to 2.44% for an average term of four years under their previous swaps, and results in annual savings of $1.5 million to $2 million.Under CatchMark's $30 million share repurchase program. The company repurchased approximately 57,600 shares of its common stock for approximately $594,000 in open market transactions during the third quarter. Year-to-date, we have repurchased approximately 329,000 shares for $3 million and we may repurchase up to an additional $15.7 million worth of shares under the program.Now I will turn it over to Todd for review of our operations.

[Todd Reitz:]

Thanks, Brian. We had a very good third quarter, and our field operations did an excellent job capitalizing on favorable operating conditions to execute our business plan successfully as mills across our markets ran consistently. Third quarter year-over-year volumes were up 19%, stumpage pricing was up 3% and sawtimber pricing remain steady and strong. As a result, we realized that 23% increase in harvest EBITDA.Our delivered sales strategy as well as opportunistic stumpage sales and our select outperforming markets continue to drive consistent results for our operations. This is reflected in pricing for all our plan products those levels consistently and substantially above Timber-Mart South wide Averages as Jerry covered. Our increased harvest volumes put us on track to meet our full year target.Looking ahead to year-end, in the Southeast, weather conditions have been favorable for strong volume production and we anticipate CatchMark's harvest volume will be up with pricing remaining relatively steady quarter-over-quarter. And we're well positioned with our fiber supply partners and our delivered sales customers to have a very productive fourth quarter.We continue to expand operations in the Pacific Northwest, contributing to enhance revenues and improving our South timber mix.For the fourth quarter, we expect Pacific Northwest harvest volumes will increase slightly over third quarter's 24,000 tons with an uptick in pricing anticipated from the recovery underway in the region. So we have good reason for confidence about our operating results for the year and our ability to meet our harvest plans. Jerry?

[Jerry Barag:]

Thanks Bob. On the acquisitions front. At present, we're faced with a continuing dearth of deals that can meet our stringent criteria for selectively adding to our high quality portfolio of prime properties in premier mill markets. We continue to monitor our investment pipeline and analyze potential transactions, but will remain highly disciplined in our evaluation and due diligence.As Brian discussed, our debt repayments with proceeds from dispositions, combined with full year asset management fees from Triple-T put us on track to deliver a sub 8x net debt to adjusted EBITDA ratio by year-end. As we approach year-end, timberland sales remain on track to meet targets of $16 million to $18 million in sales for full year 2019.We also remain on course to meet our full year harvest target of between 2.2 million and 2.4 million tons. The investment management business is also delivering to plan. In February, we will provide full year guidance for 2020 expecting steady and consistent results from harvest operations, land sales and Triple-T asset management fees, while recognizing adjustments as a result of the Dawsonville Bluffs loss wind down.To sum up, we had an excellent quarter across all our operations and we are confident about meeting full year gardens. Harvest volumes and pricing are in line with plan and in the third quarter we're both up sequentially over the second quarter and year-over-year. On timber pricing, we also continue to be Timber-Mart South market averages. Our mills markets, fiber supply agreements and delivered with strategy continue to payoff.In our investment management business Dawsonville Bluffs delivered on all fronts return on investment, asset management fees preferred returns and promotes. Triple-T continues to perform well and generate consistent and reliable asset management fees. Timberland sales are also on course to me plan for the full year. We've reduced company leverage levels and our capital position is sound.In addition, our borrowing costs have been lowered through new attractive interest rate swaps with significantly longer terms that allow us to take advantage of the current lower interest rate environment. In terms of key operating results for the third quarter, revenues were higher. Net loss has been lowered and adjusted EBITDA shows strong year-over-year gains, and CatchMark continues to deliver a reliable, fully covered quarterly dividend. We believe we have and will continue to deliver strong operating results based on our consistent and strategic focus for acquiring the highest quality timberlands and high demand mill markets, which will produce durable revenue growth, and employing superior management, which seeks to maximize cash flow throughout the business cycle. All of us at CatchMark remains devoted and focused on our company mission, growing sustainable cash flow and supporting our dividend by executing a strategy based on performance excellence.Thank you again for joining us today. Now Brian, Todd, John and I will be pleased to take your questions.

[Operator:]

[Operator Instructions]Our first question comes from Colin Mings with Raymond James. Please go ahead.

[CollinMings:]

Thanks. Good morning guys. To start in the U.S. South, can you just maybe elaborate a little bit more on current market conditions. Specifically, we heard from one of your peers yesterday that weaker export market conditions have led to some deterioration in supply-demand dynamics, at least in some wood baskets. Have you seen that in any of your operating areas at all?

[JerryBarag:]

Hey, Collin, good morning. We really haven't experienced much of that, as you know, we've talked about in the past that was a really small percentage of what we do and where we operate. And so as that was deteriorating earlier in the year, we saw a lot of that really get absorbed if you will after a second third quarter and we had moved more towards our state with our domestic customers, as it had planned out throughout the course of the year, we didn't see that impacting a lot of the business force. So we haven't seen much of the volume come back in and impact where we tend to operate.

[CollinMings:]

Got it.

[JerryBarag:]

I might further add to that just reinforce the model that we employ from a strategic and management standpoint, we delivered sales kind of aligns us with the customers that we serve early in the year, so we have a lot of confidence over the course of a year of the amount of volumes we're going to be able to deliver into those customers.

[CollinMings:]

Got it. Maybe coming at it from a slightly different angle though, recognizing a meaningful portion of your volume, there is some sort of supply agreement tied to. Just as you think about the potential issues on some price deterioration from weaker supply-demand dynamics and maybe surrounding areas. How do you think about the potential risk of maybe some price deterioration just given some of the contracts you have in place there?

[BrianDavis:]

Sure, from the fiber supply side, as you know, that's really tied more towards a formulaic calculation, if you will. So throughout the course of the year we have very strong Q1, some of that carried over Q2 to Q3, there will be some, I would say a moderate drop off, just as the overall market has come down a little bit, but in the overall scheme of things, you're looking at 20% to 30% of what we do, everything else is on the outside open market sales that we have, and we've been able to capitalize due to, as Jerry mentioned, our delivery program, and it's helped us to really keep things at a level playing field kind of flat, if you will throughout the year, we've seen a very, very steady course of business and so we look for Q1 to be somewhat in line with that to be honest with you.

[CollinMings:]

Got it. So it sounds like you do anticipate, inherently, there being some modest decline just given benchmark pricing, if you will, on - the U.S. South is down from earlier this year. But net-net, the impact is going to be pretty negligible. Is that a fair takeaway?

[JerryBarag:]

Exactly, exactly how would characterize it.

[BrianDavis:]

And then we'll see what happens with the weather over the next fourth quarter and the first quarter of next year, but that obviously will have an impact one way or the other.

[CollinMings:]

Okay. And then maybe just as it relates to guidance. And clearly, in the press release kind of reaffirming some of the key components of that. But just with one quarter to go, can you narrow or refine that $52 million to $60 million range at all?

[BrianDavis:]

Hey, Collin, this is Brian. Good morning. At this point in time, we're comfortable with a range of 50 to 60. I understand your desire to help tighten up this range, but from our perspective, our volumes as Todd as alluded to, we're very comfortable with the 2.2 to 2.4 range; we also understand where asset management fees are going come in. The challenge we always have is from a land sales standpoint. And Jerry's alluded to; we plan on hitting our marks of $3.5 million to $5.5 million. But our underlying core line of business is very solid. And so at this point time, we don't feel compelled and it would be a little bit different than what we've done in the past is tightening up a guidance range. The only time we've done that, or at least expanded it is when we've had a material acquisition or activity during the quarter similar to what we had in Triple-T in 2018.

[CollinMings:]

And then just on Dawsonville. I think, again, original guidance there, the adjusted EBITDA contribution from that was $3 million to $5 million. If I understand kind of where things stand now, there will not be any sort of incremental benefit from Dawsonville going forward. Can you maybe just give us the color on how much was actually contributed this year from Dawsonville?

[BrianDavis:]

So, Dawsonville, what will we anticipate being on the top end of the range. I believe on Dawsonville we said $3 million to $5 million in adjusted EBITDA. What we anticipate on a go forward basis is that on the books, we have just under $2 million in value, and that's really related to the mitigation bank credits. So from a contribution to CTT, it'd be pretty negligible, probably less than $0.5 million annually thereafter.

[CollinMings:]

Got it. And then kind of tying that back, Jerry, to your comments and recognizing that CatchMark will provide full year 2020 guidance next year but just all else equal here, given you're not going to have that same benefit from Dawsonville, it would be reasonable to expect that there might be some natural downtick in adjusted EBITDA next year relative to this year? Is that fair or is there may be a component of that I'm missing?

[JerryBarag:]

So there are two from a 2020 guidance standpoint where things are today. There are two major factors that are influencing that. One is as you rightly pointed out is the burn off of Dawsonville, which sadly is reached maturity but happily has reached maturity too. Because it's been a very productive and profitable asset for us to work through. The other is that we haven't really done any sizable acquisitions in 2019. We've been integrating and coordinating the busy year that we had in 2018. So the two of those things will tend to flatten out the growth rate that we've historically exhibited over the last five or six years.

[CollinMings:]

Okay. Last issue for me, I just want to circle back on Triple-T. Can you maybe just two things here, provide an update on the sawlog supply agreement negotiations with the GP, again, recognizing somewhat limited what you can say, but just any sort of update on that front would be helpful. And then, it does look like Highland Capital did recently file bankruptcy. And again, I believe that's listed as one of the JV partners there. So any impact from that as it relates to Triple T.

[JerryBarag:]

Sure, so with respect to Triple-T and the GP negotiations. We have been working through this for quite some time. And the easiest way for me to characterize it is that the turmoil that we saw in the lumber markets starting early in 2019 and kind of going through the summer have had an impact from ability to get that done with GP as quickly as we would have liked to. It was just - they were managing their business and their business was in - was a lot more tumultuous than certainly what's going on in our side.We're continuing the conversation, and as soon as we have anything to report, we certainly will do that. But it's still ongoing and we're hopeful that it's - we're going to have a positive outcome to that.With respect to Highland, we did know that there was a bankruptcy filing as well. And that the entity that Highland had in bankruptcy is the manager, it has nothing to do with the investor that is in the Triple-T joint venture. We don't expect that there really any - there's any outfall or fallout from that bankruptcy filing. And the terms of the joint venture agreement really persist with respect to Highland's participation or Highland's investment funds participation in it.

[Operator:]

Our next question comes from Anthony Pettinari with Citi. Please go ahead.

[RandyToth:]

Good morning, guys. This is actually Randy Toth filling in for Anthony. Just quickly on the large disposition of roughly 11,000 acres in the quarter. I’m pretty sure that was mentioned last quarter and those acres were in Alabama and Georgia. But can you just comment on what drove that sale? Are you trying to deemphasize the region in which they were in. How should we think about that, given it's significant, not significant but a decent chunk of your acreage? Thank you.

[BrianDavis:]

Right. So as we think about our capital recycling program, we have a number of guideposts and where this one fell within those guideposts was really centered around our procurement area. So it's kind of an orphan relative to our core procurement area. And so from our standpoint operability location, it was identified as a potential capital recycling opportunity. But it does have very similar stocking characteristics to our core portfolio. But again, it was really one of those guideposts was put outside of that.The second component of that is what we always look at is the impact on our cash flow, get on it, we really want to make sure that when we do capital recycling, we do that on a neutral to accretive basis. So beyond that, this is where that transaction really fell into.

[JerryBarag:]

And with respect to the overall program, I think it demonstrates fairly well how small changes in our portfolio or underlying portfolio can impact the leverage profile that we have as a company and specifically net debt to EBITDA ratio that the people have seen to have a level of concern over.

[RandyToth:]

Absolutely. Okay, yes, that's very helpful. Then moving on, can we just talk about customer log inventories generally? We've seen some improvement in lumber demand recently; however, prices have continued to hover around $360. Any thoughts there would be helpful?

[JerryBarag:]

Sure, as you think about how the year is played out, I just make a quick coverage from West and East, if you haven't had the fire season that you typically have seen in the past. Inventories have remained a little bit higher, housing, as far as the starts came a little bit later in the year. And so customers have been able to maintain some inventory. They didn't have to scramble to try to build inventory as well. And that has been kind of the case if you would see in the south and that overall weather conditions have been favorable. So production has been good and mill inventory has remained steady because of that.

[Operator:]

Our next question comes from Dave Rogers with Baird. Please go ahead.

[DavidRodgers:]

Yes, good morning guys. On the large track landfill, is there a reason you wouldn't want to do even more of those? Obviously, there's some positive reaction and you talked about the leverage. Could we start to see more of those and more regular course for you guys?

[BrianDavis:]

Good morning, Dave. This is Brian. Consistent what we've been talking about this year regarding capital recycling, we're always reviewing opportunities for capital recycling within our portfolio, and given the positive reaction and where we anticipate on a target leverage basis, we don't anticipate of having closing any additional ones in the fourth quarter this year. But that's not to say during 2020 there’ll opportunities for us to continue down this path.

[DavidRodgers:]

Helpful. And I think it was Jerry in your comments, you talked about the premium you were getting to the South wide averages in pulp and sawtimber, I guess how is that compare, the numbers you gave for recently, how does that compare longer term? And is that getting more challenging, or is that becoming even easier just given kind of the way you've been tailoring the portfolio?

[JerryBarag:]

No, I mean, as the mark to the south wide average, it's actually getting easier because as we've been trying to point out for some time now, the markets across the US South are diverging fairly significantly, and the better markets are either holding steady or improving. And the flagging markets are probably undergoing a little bit more stress than we've seen even more recently. And so just by portfolio allocation or portfolio construction, and the fact that we are only situated and operating in the very best of the best markets across the US South and I would probably make the same assertion and in the Pacific Northwest, we're getting the premium, the significant premium that we're getting across South wide average, it's going to continue to grow and it has continued to grow.

[DavidRodgers:]

Helpful, Todd, maybe for you, I didn't hear your comment on this earlier. Can you talk about just in your markets where you would be delivering what the capacity increases that you anticipate maybe in 2020 and 2021? And how would that impact you? You did say that the current mill market seems to be fully functional. So what would be the capacity increases that you'd expect to see just overlapping your portfolio?

[ToddReitz:]

Sure. So a lot of the capital, as we know has been placed in these key markets where we're operating and those facilities while not fully up to, I guess, full utilization, if you will, they're probably running in that call it at 80% - 85%. Time will tell as you get more the impact from Canadian pullback, how that gets picked up in the south. But should they all fully come online, you could see an additional probably10% utilization I would think from all those customers, which would a nice bump in the overall marketplace for us.

[DavidRodgers:]

And then maybe last for me on the Bandon volume, I think you didn't call attention to the 24,000 tons. What do we expect ahead? Is there incremental capacity to be delivered from that? And what do we think about from a number perspective or is that kind of indicating that we're at more full production?

[JerryBarag:]

Sure. So we had - third quarter was 24,000. We're looking at fourth quarter is going to be call it [29,000 -30,000] in that range, but part of that is coming from a stumpage sale that we have sitting out there. And it was coming forth, coming to close here in this quarter, and the buyer moved on it. So we knew that was coming in, I would say looking forward run rate in that 15 to 20 range is probably a good number.

[DavidRodgers:]

That 15 to 20 years on a per quarter basis.

[JerryBarag:]

Right.

[Operator:]

Our next question comes from Paul Quinn with RBC Capital Markets. Please go ahead.

[PaulQuinn:]

Yes, thanks very much, guys. Just sitting back here, just wondering why timber pricing still remains flat on the sawlog side and just what it's really going to take to really get back to sort of pre-recession levels?

[JerryBarag:]

Well, pre-recession levels is probably fairly ambitious, at least where we are in cycle today and how long it's taken to get to this recovery and at some point, somebody's got to assume that there's going to be some kind of interruption to the upward cycle, but we don't see it on the near term horizon. But you can call it how you want to but to get from call it $25 to $40 plus a ton doesn't seem necessarily achievable in a couple of year period. At this point having said that, we do expect that there is momentum and prices should start to build and rise in those marks - in those best markets in the US south.Just the timing, if you look at North American production in total, at this point, you can kind of say that the loss production in British Columbia in terms of the volume of board feet that have been taken out have about matched the amount of the incremental volume that has been built into the south and delivered today. There's still more deliveries of additional capacity that's coming into the US South, that'll run through 2020 and probably good ways into 2021. And that is really from a North American standpoint additional capacity that will exceed where we started at the beginning of this reorganization cycle of the North American market.So in terms of even what's delivered to date, the operations of that haven't been optimized. So we're not really seeing the full impact yet of all of that construction build of plant equipment on the lumber manufacturing side. So I know it's hard not to be impatient, it's been a long time coming and there's been a long visibility into this and so people have been seeing the build of capacity coming in and want to see more tangible results. I'm still confident they're coming. And but it's not 100% within our control.

[PaulQuinn:]

Okay. That's fair. And maybe another way to look at it is just a specific timber growth versus drain in your buckets in your areas, and then what that looks like overall in the U.S. South? We still got a situation where we've just got too many damn trees down there.

[JerryBarag:]

Yes, I mean, from a growth rate standpoint, we monitor that very closely on a current basis, as well as a projected forward basis. And literally, and we do that market by market and in individual markets. And there are very healthy trends that are going on in the places where we're doing business. In particular in Texas, where ultimately the growth drain ratios have started to turn very positive, and with respect to the big property that we're involved in Texas, we think has significantly positive long-term momentum for prices in that part of the world.

[ToddReitz:]

Hey. Paul, this is Todd, I would add that you look at our micro markets where we operate from a balance of growth to drain, I would say that Georgia, South Carolina, some of these areas are in a little better position than maybe some of the more centrally located states in the Southeast. Just had more than capacity come in your overall utilization has been more consistent, therefore we don't see the - ultimately what you're speaking to is the overhang of volume. So we don't see as much of that in those regions or those areas, if you will.

[PaulQuinn:]

Okay. And then just maybe lastly, just on - I kind of want a ask a question on exports and your - that impact to you? And I understand you're not a big - that's not a big part of your program, but if that - if we get a U.S.-China trade deal and that export market goes back. Do you think that's a material lift on pricing in your areas as well?

[ToddReitz:]

I think again from a localized marketing, micro market, if you will. Yes, it would definitely help; you would hat additional tension in there. Really the question was how far inland does it reach and so right around your coastal counties and all I think you would see an improvement there.

[JerryBarag:]

Yes. So Coastal Carolina, definitely, we would see an impact from that. And we've got a fair amount of property there. Coastal Georgia, around Savannah, again, a fair significant amount of property there that we would see a lift and we could directly participate in with some excess volume that we have. And then the Pacific Northwest property that we just bought or we bought last year also has a direct outlet to export markets if that's what we choose so far. We're at the beginning of implementing our harvests and our management plan there. But that was a key consideration in underwriting and purchasing that asset was the direct ability to get to the export markets if they were desirable.

[Operator:]

This concludes our question-and-answer session. I'd like to turn the conference back over to Jerry Barag for any closing remarks.

[Jerry Barag:]

Thanks, Ben. Again, thank you all for joining us today. We're very proud of the work we did in this quarter. We are looking forward to the fourth quarter as well. This is the last conference call in calendar year 2019 we are having and we're looking forward to talking to you in the New Year.

[Operator:]

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