CatchMark Timber Trust, Inc.
Q4 2019 Earnings Call Transcript

Published: 14 Feb 2020

[Operator:]

Good day. And welcome to the CatchMark Timber Trust Fourth Quarter 2019 Earnings Call and Webcast. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Ursula Godoy, Chief Financial Officer. Please go ahead, ma'am.

[Ursula Godoy:]

Good morning. Thank you for joining us for our review of CatchMark Timber Trust results for fourth quarter and full year 2019 as well as 2020 company guidance. I am Ursula Godoy Chief Financial Officer of CatchMark. Joining me today on the call are Chief Executive Officer Brian Davis; Chief Resources Officer Todd Reitz; and John Rasor President of Triple T timberland.During this call CatchMark management will make forward-looking statements. These forward-looking statements are based on management's current beliefs and the 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 expectations.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 filed with the SEC. Today's presentation includes certain non-GAAP financial measures. Reconciliations of these measurements are included in our earnings release, which is posted on our website. After our presentation, Brian, Todd, John and I will be pleased to answer any of your questions.Now I turn over the call to Chief Executive Officer Brian Davis.

[Brian Davis:]

Thank you Ursula and good morning everyone. On our call today, our team looks forward to reviewing CatchMark's excellent fourth quarter and full year 2019 results, providing company guidance for the year ahead and setting out the guiding principles for continue to deliver on CatchMark's objectives.And those objectives that steadfastly center on increasing shareholder value through stable and predictable cash flow generation and supporting a strong reliable dividend. Before we begin, I want to recognize the outstanding contributions of Jerry Barag; who together with the team help lead CatchMark since its listing on New York Stock Exchange more than six years ago.Over that time without exception, we delivered on our plan and strategy, meeting our operating targets and guidance. We also assembled what we believe is the highest quality timberlands portfolio in our industry positioned to deliver durable cash flow growth for our shareholders over the long term. All of us thank Jerry for his leadership, creativity and friendship.Going forward, we intend to maintain CatchMark's course built on three strategic pillars for delivering predictable cash flow growth. Those three pillars are; investing in prime timberlands, operating near high demand middle markets with credit worthy counterparties, and managing our timberlands to optimize harvest through sustainable best practices.We will continue to rely on a delivered with sales model and fiber supply agreements to sustain predictable revenues and volumes. There will be no change in this operating approach which is underpinned delivering consistent and predictable cash flow.We intend to be extremely disciplined and focused on strengthening and expanding our timberlands, particularly in and around our current markets with proven customers and partners. And this approach takes advantage of our positions in some of the country's best-known markets. Principally in the U.S. South timber basket.We will see transactions for prime properties in a $5 million to $15 million range with our preference for direct the ownership and using less leverage. Our Coastal Georgia acquisition in 2017 is an example.Joint ventures also can contribute to provide us with the investment opportunities to grow our holdings by leveraging our platform for scale and operating efficiencies. In terms of size and partnership structure, we would look to use the model of our very successful Dawsonville Bluffs joint venture which effectively round trip last year.Importantly, we also will be focused on further reducing overall company leverage. Collectively, we intend to continue to redeploy capital by selling assets that are less productive and no longer meet our operating targets and buy more productive assets that are accretive to cash flow, and were optimized portfolio construction.We also may use proceeds for a combination of debt reduction and share repurchases. So growth will occur through a disciplined approach focused on direct fee ownership smaller to mid-sized deals, potentially additional joint venture co-investments, and less leverage.All of our attention is on providing our shareholders with predictable and stable cash flow. It's a simple strategy and we intend to keep our strategy simple. Turning to 2019 results. It was a very good year for CatchMark.We met our company guidance and produced anticipated cash flow growth, benefiting from our superior timberland holdings, delivered wood sales model, fiber supply agreements and rigorous management practices. And meeting CatchMark's guidance for the year.We realized increased timber sales, superior pricing, the US South timber basket, and a significant increase in net timber revenue driven by higher timber volumes in the Pacific Northwest, higher price in the US south and an improved sawtimber mix.We completed integration of the 2018 Bandon acquisition in the Pacific Northwest. Improving over sale of timber mix. We increased asset management fees from a full year of Triple T joint venture, which is meeting all of its operating targets.Taken together, all of these initiatives continue to support a consistent dividend from operating cash flows for our shareholders and position CatchMark for future growth. Ursula will now review the financial results and then Todd will provide an overview of operations.And Ursula, I take this opportunity to welcome you as Chief Financial Officer. You've been an integral part of our team since the start of CatchMark. And we all look forward to working with you in your new role.

[Ursula Godoy:]

Thank you very much Brian, and good to be with all of you on today's call. As Brian highlighted CatchMark generated excellent year over year results for both fourth quarter and full year 2019 fueled by increased timber revenues and asset management sees.The results reinforce the efficacy of our strategy based on investing in prime timberland holdings near leading markets and maximizing our operations through our deliver with sales model and fiber supply agreements.For fourth quarter 2019 CatchMark increased revenues by 27% to $29.1 million compared to fourth quarter 2018. Lower net loss by 69% to $11.8 million primarily due to lower losses allocated from the Triple T joint venture. Increased adjusted EBITDA by 61% to $15.1 million. Increased total harvest volumes by 23% to 628,000 tons. Increased gross timber sales revenue by 23% to $20 million. Increased net timber revenues by 30% to $11.7 million. And increased harvest EBITDA by 42% to $9.7 million.Net timber revenues increased as a result of higher harvest volumes and increased sawtimber mix. The increased sawtimber mix derived from a 7% increase in the US South and the fully integrated Pacific Northwest operations.During the fourth quarter CatchMark also acquired 900 acres of prime timberland, located near existing holdings in South Carolina for $1.9 million of cash on hand generated from capital recycling disposition. We sold 3200 acres of timberland for $5 million, increasing real estate EBITDA by $2.3 million for the same period in 2018.We enter into a $21.3 million contract for a large disposition of 14,400 acres of Georgia timberland, which closed in January 2020, as part of the company's capital recycling strategy. And we paid a dividend of $0.135 per share to stockholders of record on December 13, 2019.For full year 2019, the company reported the following year over year results. Increased total revenues by 9% to $106.7 million compared to full year 2018. Lowered net loss by 24% to $93.3 million, primarily due to lower allocator losses in higher earn asset management fees from Triple T.Increased adjusted EBITDA by 14% to $56.9 million due to higher net timber revenues and asset management fees. Increased total harvest volumes by 3% to 2.24 million tons driven by integration of our Pacific Northwest property. Increased timber sales by 4% to $72.6 million.Increase net timber revenue by 9% to $41.4 million. And increased harvest EBITDA by 8% to $33.7 million. These gains were generated in part by a higher sawtimber mix. Increased pricing in the US South and the integration of Pacific Northwest operations.Gross timber sales revenue increase year over year by $3.1 million as a result of a $5.2 million increase in the Pacific Northwest region offset by a $2 million decrease in the US South region resulting from a 9% decrease in deliver sales as a percentage of total volume.Total harvest volume in the US South remained comfortable year over year with pulpwood pricing increasing 2% and sawtimber pricing increasing 1%. Net timber revenues increased by 9% as a result of higher harvest volumes and increased sawtimber mix in higher U.S. South pricing.For full year 2019, we also increased asset management fee revenue by 113% to $11.9 million, primarily due to a full year of Triple T operation. We recognized $600,000 of incentive based promotes, $1 million of income, $4.8 million of adjusted EBITDA and received $4.8 million of distributions from the highly successful Dawsonville Bluffs joint venture.We increased investment management EBITDA by 35% to $16.7 million due to Triple T fees and Dawsonville Bluffs result. We realized timberland sales of $17.6 million from the disposition of 9,200 acres. The proceeds were in-line with 2018 results in company targets.We completed large dispositions of 14,400 acres for $25.4 million, capturing a gain of $8 million and paying down outstanding debt. And lastly, we paid fully covered dividends of $26.3 million, or $0.54 per share.In 2019, we also made significant progress on our mission to reduce company debt relative to adjusted EBITDA and met our year-end target of sub 8 times net debt to adjusted EBITDA ratio, down from 9.5 times at year-end 2018.This accomplishment reflects the full year impact of asset management fee revenues earned from Triple T and the execution of our ongoing capital recycling program through large dispositions of timberlands that no longer meet our productivity criteria. By year end 2019, liquidity had increased to $196.6 million from $170.6 million at year-end 2018.This was comprised of $185.1 million of debt capacity and $11.5 million of cash on hand. In addition, we also took advantage of the favorable interest rate environment to blend and extend existing interest rate swaps.After fourth quarter hedging transactions to fix rates on $275 million of debt, the average time on our fixed rate debt stood at 9 years at a weighted average interest rate of 2.17% before the applicable spread, and expected patronage dividend. That compared to an average term of 4 years at 2.44% at the end of the third quarter.The 2019 results do not include the recent approximately $21 million Georgia timberland's large disposition, which we closed last month on January 31st. Proceeds of this transaction were used to repay approximately $21 million of outstanding debt on February 3rd.As a result, our fixed to floating rate debt is now 63% and liquidity has now increased to $206 million. These results all underscore our commitment and focus on appropriately deleveraging and strengthening our balance sheet.During the fourth quarter 2019, CatchMark did not repurchase any shares under the company's $30 million stock repurchase program. For full year 2019, the company repurchased approximately 329,000 shares for $3 million with $15.7 million remaining available under the program at year-end.Now I'll turn it over to Todd for the operations review.

[Todd Reitz:]

Thank you, Ursula. At the outset, I want to recognize our team of field managers for the excellent job they continue to do working with our customers and contractors to ensure we execute on our commitments. Their efforts paid off again during a very strong fourth quarter where we met plan on production and pricing, including achieving a favorable sawtimber mix.Our strong middle markets, fiber supply agreement partners delivered wood model and opportunistic stumpage sales continued as our primary performance drivers helping maintain pricing levels for all time products substantially above TimberMart-South South-wide averages.Specifically in 2019 CatchMark achieved pricing premiums that were 47% higher for pulpwood and 31% higher for sawtimber than TimberMart-South averages. We're encouraged about the healthy pace of U.S. housing starts with increasing levels of permits and homebuilder order files pointing to a 1.3 million start projection for full year 2020.This should lead to stronger lumber demand and higher pricing for finished products which should produce better supply demand dynamics in the timber market. Low existing home inventories favorable mortgage rates and the strong jobs market including rising real wages all support this favorable outlook.In addition applied specifically to CatchMark sawmill capital improvement and Greenfield projects in the US South are coming to fruition and beginning to start operations. Although we do not expect fully realized demand materializing our markets until 2021.And in the following years, we have begun to experience early demand uptakes and local and regional micro markets. Pricing is expected to trend up slightly during the year with seasonal ebbs and flows.We also expect our harvest volume for the year to increase the 2.3 to 2.5 million ton range, with 95% of our production coming from US South operations. Our sawtimber mix projects at approximately 40% from the US South and 80% from the Pacific Northwest.We forecast first quarter 2020 harvest volumes to be higher year over year and first quarter pricing to be relatively stable quarter over quarter. For further 2020 guidance, I turn it back over to Brian.

[Brian Davis:]

Thanks Todd. Consistent with our past practices guidance does not include potential contributions from acquisitions, possible new joint venture investments, or additional capital recycling. We forecast adjusted EBITDA of between $48 million and $56 million, reflecting decreased contributions from Dawsonville Bluffs, which effectively wrapped up last year.And expected sharply reduced GAAP net loss for the year of between $10 million to $15 million reflects a substantial reduction in losses allocated from Triple T.As Todd noted, we anticipate harvest volumes between 2.3 and 2.5 million tons. Asset Management fee revenues projected at $11 million to $12 million, primarily from Triple T. Higher anticipated harvest EBITDA will be driven primarily by increased harvest volumes and steady pricing.But our investment management EBITDA will decrease due to the absence of significant contributions from Dawsonville Bluffs. Timberland sales targets of $15 million to $17 million remain in our traditional annual range of 1% to 2% of the acreage.In making new investments we will continue to focus on buying planned timberland assets. Our analysis and due diligence will concentrate on achieving sustainable yield and durable cash flow based on strong stocking and productivity characteristics, as well as locations in superior middle markets.We intend to remain highly disciplined and prudent using our ownership presence to find appropriate off market deals concentrating in and around our existing middle markets. In particular, we are confident that we can continue to come across opportunities to expand our market presence through delivered would model relationships.To sum up, CatchMark delivered an excellent 2019 operating results and we improved our capital position to enable future growth. We realized a significant increase in adjusted EBITDA, higher harvest volumes, increased timber sales, superior pricing in the US South timber basket and increase salted remix, a significant increase in net timber revenue and harvest EBITDA, the successful integration of the Bandon property in the Pacific Northwest, significant asset management fees earned from Triple T, the success Dawsonville Bluffs and meeting timberland sales targets.In addition, the capital recycling strategy employing targeted large dispositions continues to improve the overall quality of our timber assets, reduce leverage, strengthen our balance sheet and enable future investments in prime timberlands, furthering our growth strategy.And most importantly, we have a strong cohesive group of executives and staff dedicated and focused to meeting our ongoing targets. Our team remains steadfast in implementing a simple and proven strategy based on investing and owning premier timberland in superior and middle markets, employing the best sustainable management practices to help deliver durable harvest yields.Taken together, these initiatives executed by our outstanding team will enable us to continue to provide a consistent dividend supported by predictable and stable operating cash flows for our shareholders. All of us at CatchMark remain disciplined, dedicated and confident about meeting our objectives going forward.Thank you again for joining us today. Now Ursula, Todd, John, and I will be pleased to take your questions.

[Operator:]

Thank you. We will now begin the question and answer session. [Operator instructions] And our first question will come from Collin Mings with Raymond James. Please go ahead.

[Collin Mings:]

Thank you. Good morning, Brian and team and congratulations again to everyone.

[Brian Davis:]

Good morning, Collin.

[Collin Mings:]

To start, I did want to follow up on the leadership change in your opening remarks, Brian. First, is there any additional color you can provide on the timing of the transition? And then also, Brian, I was curious just as it relates to your prepared remarks, as you and the board look to where the company goes from here. It sounds like lower leverage is a key priority. Do you and Ursula have any specific targets in mind?

[Brian Davis:]

Sure Collin, I'll take that. So from your first question regarding timing. The process for leadership development began with my promotion to President in April of last year. We've been developing our team from the time which we had our IPO which we had nine employees. Today, we have 25.And so the board and myself has been very focused on developing expertise in bench strength. And that was demonstrated by this most recent leadership change of a number of people taking a great step forward, filling those opportunities internally.We brought in external General Counsel from Alston & Bird almost two years ago. Todd Reitz comes to us from Warehouser by way of Palm Creek. So we have great bench strength. And so from the standpoint of timing, the board felt very comfortable on a move forward as it relates to the leadership team which we have in place today.Now, your ultimate question comes back to an approach. And our approach really is to continue to deliver a value proposition through discipline acquisitions of prime timberlands, and high demand middle markets, superior management to provide predictable and stable cash flows which we announced in our pre read.But, ultimately my bias is towards a relatively simple corporate structure for a company of our size with a lower leverage profile. As it relates to a target, it's more of a direction versus a target. And that direction is a lower leverage profile than what we currently have.We will be disciplined in our approach, as we're well within our financial covenants or no near term maturities. And we have plenty of liquidity. So this would be more of a bias over a period of time as it relates to the direction for leverage.

[Collin Mings:]

Okay, fair enough. Sticking with the simplicity theme, if you will. I do want to touch on joint ventures as well. Brian, it does sound like while you are maybe looking forward to maybe in the future less complexity if you will.There's still a willingness to conduct smaller joint venture opportunities. So just curious on the JV front, is there any near term opportunities that you've identified on that front? Just again, given the wind down here of Dawsonville?

[Brian Davis:]

Yeah, so as it relates to JVs in the future, I think Dawsonville Bluffs represents a great model. I believe my in opening remarks captured some of that sentiment. We have a positive lean in recreating that type of success with a joint venture by virtue of scale and structure of Dawsonville.2019 was a busy year as it relates to the integration. So with Bandon and the full year operations of Triple T. I can tell you about the fourth quarter of 2019 we've reinvigorated our efforts as it relates to those types of joint ventures as well as direct acquisitions.

[Collin Mings:]

Okay. Sticking with the asset management business. Last quarter, the company discussed how volatility in the lumber markets was a headwind maybe getting a deal with GP done as it relates to the Triple T joint venture.Just recognizing you're going to negotiate on an earnings call. Maybe can you just remind us more broadly, your latest thoughts the best path to create value on as it relates to Triple T especially recognizing there is some extra incentive for CatchMark to get something done here within the first two years of that JV forming.

[Brian Davis:]

Correct. And also, as we've noted in prior calls we've established a good working relationship with GP. Since we began managing the property in 2018. And under John Rasor's guidance, we're meeting all the targets under our existing wood supply agreements.We remain engaged in a constructive dialogue with GP and we're both evaluating whether there's a transaction associated with potential agreement modifications that's mutually beneficial to both of us. And we should know and you're correct, Collin, we're not going to negotiate on an earnings call.But if we're able to reach an agreement with the GP, then it may accelerate our ability to realize value the respect to the Triple T joint venture. But consistent with other calls if we're not able to reach an agreement with GP then we believe Triple T is still a very good investment.It's a great property in one of the fastest growing regions in the country. And we've been managing a very well meeting our targets on the supply agreements and taking advantage of other revenue generating opportunities.

[Collin Mings:]

Okay. I appreciate the color there, Brian. Switching gears real quick to the just the real estate activity during the quarter. I don't know if there's some additional details you can provide, obviously the per acre transaction price or per acre of the different transactions that were completed in the fourth quarter, I should say, just optically looked a little low. Obviously, there's a lot that goes into a per acre pricing on timberland deals, but just curious if you can provide a little bit more color on that. Just given where those realizations were?

[Todd Reitz:]

Hey Collin, this is Todd, you bet. They're in the fourth quarter, we ended up closing out with a $4 million deal. It was really a pure hardwood timberland sale had difficulty of access operability type items with it. So therefore, being pure hardwood doesn't have the stocking level on the pricing associated with enough one stand. You would see a little bit lower rate there.

[Collin Mings:]

Okay, and one last one for me and I'll turn it over. Again, Todd, just as it relates to the timberland markets, and specifically the demand for logs in the Pacific Northwest. Recognizing you guys don't have a huge presence there.But just if you can weigh in obviously a lot of discussion on some of the other earnings calls as it relates to the impact of the export markets on tension in the Pacific Northwest. A lot of uncertainty created by both the European salvage wood situation and the coronavirus. Not to mention obviously the trade situation. So just your thoughts on the Pacific Northwest as you start ramping up harvest volumes in that region?

[Todd Reitz:]

Sure. And just to reiterate, you're right, we don't have a huge exposure or play within the whole export arena there, but it does provide some tension. And as of late, we actually have an opportunity there for some pricing improvement and it's really driven from the standpoint of the Canadian log flow.Really going into the Japanese market, it has been a little bit diminished. And so we've seen some of that pickup in the Pacific Northwest region. As of late, really just a couple of weeks ago, we received a modest improvement in pricing there that not only improved our export option, but it also drove some improvement in the local domestic market which was very well received.And who knows how long that'll last, it could be a month, could be the whole quarter, we'll just have to wait and see, but it is a data point. Things are improving there, we'd like to see that. Additionally, in the South, we've seen a little bit of uptick there, you mentioned the tariff easing potentially.We don't really know exactly what that's going to look like at this point in time. We know something is coming. But in the South most recent we had market reopen that had been closed.And while it's an early indicator of maybe things to come, it was encouraging in spite of the fact that we don't know exactly what it's going to look like going forward as far as the timing of the tariffs being removed or reduced.We did see that happen. So we welcome that again back to the tension in the overall marketplace. Outlook is still very positive in the overall scheme of things with all of our domestic customers. Not really hearing a whole lot around concern over as you mentioned, the European issue of lumber coming in.Some have speculated that maybe that had hit its peak last year and we could see that going down. So not a whole lot of concern around that at this point in time coming from our customers anyway.

[Collin Mings:]

Okay. Thank you. I'll turn it over.

[Brian Davis:]

Thanks Collin.

[Operator:]

And our next question will come from Anthony Pettinari of Citi. Please go ahead.

[Randy Toth:]

Good morning. This is actually Randy Toth sitting in for Anthony.

[Brian Davis:]

Good morning, Randy.

[Randy Toth:]

I think the high risk of up over 5% at the midpoint. Can you just talk about what's driving that year-over-year expectation?

[Brian Davis:]

Yes. From our standpoint, our management of our assets has really been focused on maximizing the returns of our overall portfolio. We have everything from our direct harvest activity to investment management business to land sale business, as well as our other revenues.Our management approach over the last couple of years has included some harvest deferrals or harvesting at the lower end of our range for the past 3 years has actually led to our Southern stocking of our forest growing from 38 tons per acre to 43 tons per acre at the end of 2019.And so as we look at maximizing the value associated with our Forest, we have the merchantable inventory that's available to be delivered into the marketplace. And I think it's important consideration. Todd, if you wouldn't mind talking a little bit more about the specifics of a harvest plan for 2020.

[Todd Reitz:]

Sure, Brian. So looking at 2020 we actually have an opportunity to fully implement seven Northwest and then really it's just utilizing that Prime Southern timberland ownership we have three normal course business that are the main drivers for 2020. You think about the overall mix of what we're going to be producing, we're still going to be in that 75% target range.As far as a delivered program is concerned, we already have, half a million or so tons dedicated and locked up with our fiber supply agreement partners. There's additional upside potential with that. As we look to Q1 production, over '19, if you look at the first quarter of '20, compared to the first quarter of '19, to be very similar from a percentage basis.As we said in the opening remarks, we would we've anticipate pricing to be modestly improving throughout the year. So quarter over quarter that may be fairly flat and growing as we move forward.In addition to just the first quarter, as we look out throughout the year, we would anticipate a little more consistent flow throughout the year as compared to '19. We're not going to see that building. When you think about Q1 and Q4 it tend to be a little bit lighter production quarters compared to Q2 and Q3, which tend to have more we're available production days.

[Randy Toth:]

Okay, that's helpful. Thank you. And then including the proceeds from the recent disposition. In Georgia, it looks like they're right around eight times leverage. Is there a target range you would like to get to by the end of 2020? Thank you.

[Brian Davis:]

Hey Randy, it's a very similar question. And I think Collin had asked as well as regarding a target. We don't really have a target was much more of a direction. We're very comfortable where we are operating today at an eight times leverage.Our bias is to move that leverage number down over a period of time. But again, we're not in any rush. We have a well-covered dividend. We have good visibility and predictability associated with our cash flow. We've got no near term maturities and in our financial covenants. And so from a standpoint of having a target, we don't at this time, it's much more of a direction.

[Randy Toth:]

Okay, that's helpful. I'll turn it over. Thank you.

[Brian Davis:]

Thanks, Randy.

[Operator:]

And our next question, will from Dave Rogers with Baird. Please go ahead.

[Dave Rogers:]

Yes, good morning, everybody. I just wanted to talk about the portfolio. Obviously you guys have constructed it since the IPO. But middle markets have changed since then distribution patterns. So how much of the portfolio now that you've undertaken a couple of bigger sales over the last six months.How much of the portfolio today sits in the highest quality middle market that you want to be in? And what do you consider really available for sale as you continue to want to make the portfolio higher and higher quality?

[Brian Davis:]

Right. Dave this is Brian, good morning. So from our standpoint, we have this in our investor presentation. 95% of our acres under current management sits in the top four markets in the US South. And so we feel very confident that we've done a great job since IPO of assembling a superior asset base relative to anybody else.And so the opportunities really sit inside of our marketplace like the [indiscernible] transaction or what we call the Georgia Timberlands transaction really fit that criteria for us for large dispositions. It's one, kind of an asset profile. Two, operational considerations. And three, impact on creative nature associated with the proceeds.So, for example, the Georgia timberlands good marketplace, guy outside of our operational expectations regarding it's much more of a stumpage market for us versus our deliver wooden model, create some sort of variability associated with cash flow versus what we normally would want to do.Stocking levels were lower at 28 tons per acre versus our average around 43 tons per acre. And then from a productivity standpoint, because we've been active on these tracks. It was more of about 1.8 tons per acre from a productivity standpoint over the next 10 years, versus 4.5 to 5.5 tons.And so what we've seen Dave is really an opportunity exists inside of our existing marketplace. Because we bought so well since our IPO along with a legacy property and of itself. There's a lot more liquidity for existing assets. It provides us the opportunity to actually redeploy in our existing marketplace to create much more scale and opportunity for us to execute under deliver wood model. So, we like the markets we operate in today.

[Dave Rogers:]

And to taking those three criteria, how much of the portfolio then falls below that, where you're making that decision to recycle still?

[Brian Davis:]

Yes, that's a continuous process. So if you think about the capital recycling activity we've done over the last couple of years. We've our Southwest properties, which consider consisted of Texas and Louisiana, we recycle those properties and acquisition of Bandon last year we did about $25 million of dispositions in our existing marketplace in the US South of which we use $20 million of that debt to pay down.And we've done $21 million first quarter this year. From our standpoint, that seems to be the right about at tempo as it relates to capital recycling opportunities. We will continue to review our portfolio ultimately becomes to what is the use of that capital and it's going to be focused on and their creative use of that capital whether through paying down or relatively inexpensive debt or really building up our pipeline, which we've been doing since the fourth quarter of last year of these kind of middle market, lower middle market acquisition opportunities in that $5 million to $10 million range.

[Dave Rogers:]

Thanks and then maybe on the harvest deferrals that you mentioned, taking the total stocking from 38 to 43 tons per acre. The plan that you have now kind of that you've set out for 2020. And going forward, how does that impact your expectation of stocking levels given growth parameters over the next year Q3? Does that keep you at that 43 tons with growth rates or do you kind of work that back down into the 30s? How do you think about that?

[Brian Davis:]

So first off, it starts with the acquisitions we've made since our IPO. We've had an opportunity to really buy high quality, very productive sites. So from a growth rate standpoint, we have a much above average as it relates to growth criteria. That being said, we would anticipate while we have grown that from 38 tons at 43 tons, we would expect to bring that level slightly down is really not much of concern. It's on a normalized basis.So from our standpoint, we've been operating the asset to maximize the value. And we feel very comfortable with that we'd be operating above that 38 tons per acre range but below 43.

[Dave Rogers:]

Great thank you.

[Brian Davis:]

Great. Thanks, Dave.

[Operator:]

And our next question will come from Albert Sebastian with Prospect Advisors. Please go ahead.

[Albert Sebastian:]

Good morning.

[Brian Davis:]

Good morning, Al.

[Albert Sebastian:]

Just a few questions. First, could you give us the EBITDA associated with the sale that you entered into the 14,400 acres in Georgia that you've, I guess closed in January?

[Brian Davis:]

Right. So we can discuss more our regarding the productivity. And so that's about 1.8 tons per acre per year over the next 10 years. You can use a weighted average of what we realize on a per ton basis that can give you an expectation around EBITDA.

[Albert Sebastian:]

Okay, okay. And just taking a look at your guidance. Your net cash provided by operating activities for the year was about $33 million for 2019 it was around $30 million. Could you give us some sort of guidance based on your EBITDA guidance this year of what that might be or give us a bracket?

[Brian Davis:]

One way to think about it Al, is that we considered around payout ratio regarding our dividends? So we target a 75% to 85% payout ratio. So if you know what our dividends are going to be for 2020 you can kind of back into the expectations regarding cash generation.

[Albert Sebastian:]

Okay, okay. And distributions from unconsolidated joint ventures. I assume a lot of that was about $4 million in 2019. It was just under $5 million in 2018. I assume a lot of that is Dawsonville. Could you give us a handle on what that number or that line item might be for 2020?

[Ursula Godoy:]

Good morning Al. This is our Ursula. I'll take that question. So you're right, as we discussed, Dawsonville Bluffs contribution for '19 was near the top-end of our range around $4.8 million. Currently, we have approximately $2 million in value on the books.And this is mainly coming from our mitigation bank credit. So from a contribution standpoint to CatchMark for the next couple of years is we anticipate it's going to be pretty negligible at no more than call it $0.5 million annually beginning in 2020.

[Albert Sebastian:]

Okay, so this line item probably will be about a $0.5 million this year?

[Ursula Godoy:]

That's right.

[Albert Sebastian:]

Okay. Thank you very much.

[Brian Davis:]

Thanks. Al.

[Operator:]

[Operator Instructions] Our next question is a follow up from Collin Mings with Raymond James. Please go ahead.

[Collin Mings:]

Thank you. First the follow up for me is just want to go back to Dave's question on the portfolio. Can you maybe just expand a little bit more on the 900 acres you acquired during the fourth quarter? And then just kind of more specifically, do you have any other acquisitions currently under contract, as we sit here today?

[Brian Davis:]

So on 900 acres, it was in our existing marketplace. What we've noticed in this -- this is a very small transaction. But what we've noticed in the lower end of the middle market, we actually have some opportunities in that space given our operating area.We have a lot of connectivity into these marketplaces. And there seems to be, we're building a very strong pipeline in this kind of $5 million to $10 million range. We don't have any currently under contract. We're looking at a number of transactions.John Capriotti has been spearheading our efforts since our IPO in 2013, has done a really good job, really building that those opportunities for us being able to recalibrate, refocus our efforts, doubling our efforts in our existing market area.And we're finding some pretty good liquidity for our opportunities that really hit the kind of light up our board for us. So we're excited about, albeit this is 900 acres that we did in the fourth quarter, but it really speak to more about the opportunities that we see in our existing marketplace.

[Collin Mings:]

Got it. And along these lines, how does the Pacific Northwest fit into the potential for some of these smaller deals that you're targeting?

[Brian Davis:]

Right. Pacific Northwest has had a little bit different availability in the marketplace. From a liquidity standpoint. We're not seeing as many opportunities in the Pacific Northwest as we are in the Southeast.Some of that speaks to our existing size of our operations out there, Todd and his team has done a fantastic job in 2019 of getting that up and operational and 2020 is going to be expanding those operations during the year. But we always keep our eyes and ears open associated with -- for creative opportunities.

[Collin Mings:]

Okay. And then one other housekeeping one from me here. Just as it relates to the end anticipated gain from large dispositions, recognizing that you provide a range around that, is that just the 14,400 acre deal that's already closed? Is there just uncertainty as it relates to some of the accounting of that, or is there some additional large dispositions that you're thinking about as you put out that guidance range?

[Brian Davis:]

No, that's related to the transaction that we closed in January, Collin.

[Collin Mings:]

Okay. Thank you.

[Brian Davis:]

Great. Thanks Collin.

[Todd Reitz:]

Thank you, Collin.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Davis, CEO and President for any closing remarks. Please go ahead, sir.

[Brian Davis:]

Thank you for joining us today and we look forward to talking with you next quarter.

[Operator:]

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