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Executives

John B. Hobbs - Vice President of Investor Relations

Rick R. Holley - Chief Executive Officer, President and Director

David W. Lambert - Chief Financial Officer and Senior Vice President

Analysts

Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division

Anthony Pettinari - Citigroup Inc, Research Division

Chip A. Dillon - Vertical Research Partners, LLC

Gail S. Glazerman - UBS Investment Bank, Research Division

George L. Staphos - BofA Merrill Lynch, Research Division

Steven Chercover - D.A. Davidson & Co., Research Division

Collin Mings - Raymond James & Associates, Inc., Research Division

Plum Creek Timber (PCL) Q3 2012 Earnings Call October 29, 2012 5:00 PM ET

Operator

Good afternoon, my name is Jamaria, and I will be your conference operator today. At this time, I would like to welcome everyone to the Plum Creek Third Quarter Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Mr. John Hobbs, Vice President of Investor Relations for Plum Creek. Sir, you may begin.

John B. Hobbs

Thank you, Jamaria. Good afternoon, ladies and gentlemen, and welcome to the third quarter 2012 conference call for Plum Creek. I'm John Hobbs, Vice President of Investor Relations. Today, we have on the line Rick Holley, President and CEO; and David Lambert, Senior Vice President and CFO.

This call is open to all investors and members of the media. However, the Q&A portion of the call is intended for the professional investment community only. We ask that other participants please follow up with any questions by calling me after the call at 1 (800) 858-5347. I encourage you to visit our website, www.plumcreek.com. There, you'll find our press release and supplemental financial statements for the third quarter of 2012.

Before we begin, I'd like to take this time to remind everyone that certain of our statements today will be forward looking, involving known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ from those expressed or implied. These risks and factors are routinely detailed in our filings with the Securities and Exchange Commission. Following today's prepared remarks, we'll open up the call for your questions. [Operator Instructions]

Now, I'll turn the call over to Rick.

Rick R. Holley

Good afternoon. Before we talk about our third quarter earnings, I want all of you to know that our thoughts and prayers are with everyone who is in the path of this terrible storm that is impacting the East Coast. We carefully considered whether to go forward with our earnings call today given the impact of the storm on our investors. Our first thought, of course, is for everyone's safety. After talking to several of you, we decided it was best to get this information into the marketplace, and John Hobbs, David Lambert and I will put extra effort into being available at your convenience over the next few days for any follow-up conversations. Thank you for your understanding, and be safe.

We are very pleased with our results for the third quarter. Northern sawlog prices were a little stronger than we initially thought, and Southern sawlog prices held steady, as expected, while pulpwood prices were very stable for the quarter. Our Real Estate segment posted revenues in the middle of a range of expectation, while the manufacturing segment continued to perform well with panel demand and pricing particularly strong. As a result, we reported earnings at the upper end of our guidance range.

Now I'll turn the call over to David, who will review our quarter, as well as our outlook for the remainder of the year. David?

David W. Lambert

Thank you, Rick. We reported net income of $0.36 for the third quarter compared to $0.31 for the third quarter of 2011 and $0.22 for the second quarter of this year. As Rick mentioned, business conditions were much as we expected. Northern Resources' $5 million operating dollar profit, improved a $1 million from the second quarter's results. The improvement was driven by a seasonal increase in the segment's harvest volume. Our harvest volume of 1.1 million tons increased about 170,000 tons from the second quarter. Sawlog prices declined sequentially from $71 per ton in the second quarter to $69 per ton in the third. We had been expecting prices to seasonally fall about $4 per ton, so pricing was a bit better than we initially expected.

Strengthening domestic sawlog demand in the West offset some price pressure on logs caused from incremental harvest from state and nonindustrial landowners that often takes place in the summer when these lands are more accessible. Export shipments from our West Coast lands increased during the third quarter, and we directed 51,000 tons or 15% of our Oregon sawlog harvest into this market. Export log prices are currently comparable to the domestic market, but as Chinese markets firm, we would expect to again see a price premium for logs sold into that market.

Pulpwood demand remains solid in the New England and Lake States areas with prices holding steady at $42 per ton. We expect our fourth quarter harvest to be about 100,000 tons lower than the third quarter at about 1 million tons. We expect the sawlog pulpwood mix to be similar to the third quarter's 60-40 mix.

We are seeing our lumber mill customers add hours to their production schedules to meet improving demand. We also see a fairly mixed log inventory situation at our customers' mills. Some have full decks, while others are below target levels for this time of the year and are looking to increase inventories going into the winter. Overall, it's a fairly balanced near-term situation. And as a result, we would expect fourth quarter sawlog prices to be fairly stable in the $68 to $69 per ton range for the Northern segment.

Pulpwood demand remains solid, and we would expect Northern pulpwood prices to hold steady in the $41 to $42 per ton range. The Southern Resources' $23 million operating profit was $1 million higher than the second quarter's profit due to higher pulpwood harvest volumes. Pulpwood customers in several Southern wood baskets struggled to build and maintain log inventories during the quarter. We responded by bringing some fourth quarter volume forward. As a result of our third quarter pulpwood harvest was about 220,000 tons higher than the second quarter. Our sawlog harvest volume was unchanged from the second quarter and prices for both sawlogs and pulpwood on average were unchanged.

In the fourth quarter, we had started to see some upward price pressure for both pulpwood and small sawlogs in many regions of the South. Increased OSB production and the extension of production hours at sawmills are increasing demand for pulpwood and small-diameter sawlogs. Logging capacity constraints are starting to show up in some markets and a return to more normal weather patterns has restricted access to lower-lying timberlands, adding additional pressure on supplies. Some customers' log decks lower than target, and prices are firming in some Southern markets.

Our fourth quarter harvest in the South should be about 3 million tons, a 700,000 ton reduction from the third quarter. The primary reason for the reduction was our shift to pulpwood harvest from the fourth quarter to the third quarter to capture spot market opportunities. We anticipate our fourth quarter pulpwood harvest to be approximately 1.7 million tons with a sawlog harvest of 1.3 million to 1.4 million-ton range.

Our log mix favors small-diameter sawlogs in the fourth quarter. And as a result, we expect our average sawlog prices to hold steady at $20 per ton. We believe pulpwood prices will increase $1 and average $11 per ton in the quarter.

In the Real Estate segment, we completed 96 million of rural land sales during the third quarter. As we mentioned in July, the quarter was anchored by a large, nonstrategic sale of nearly 100,000 acres of Wisconsin timberlands at a price of $675 per acre. This represented an attractive value for these Lake States timberlands.

The balance of the quarter's activity consisted of approximately 29 million of rural land and conservation land sales. In our 5,400 acres of conservation sales this quarter, approximately 4,000 acres of lands located in -- included approximately 4,000 acres of lands located in New Hampshire that protect critical wildlife habitat and recreational fisheries. The sale recognizes the unique conservation value of this particular property, and the $800 per acre price represents an excellent value outcome for our shareholders.

We continue to expect a good year in our Real Estate segment. Interest in rural lands continues to be good. The Gulf South continues to be in the high demand, and the Lake States region remains steady. Average prices are consistent with levels we've experienced over the past several quarters. We now expect our full year sales to be between 300 million and 325 million, and the land bases to be approximately 42% of sales in 2012.

Our manufacturing segment posted a $9 million operating profit, unchanged from the second quarter. Demand, particularly for our panel products, continues to be robust. Prices for our MDF and industrial plywood products continues to be very strong. The plywood price is advancing an additional 6% this quarter, and MDF price is growing 3% from the second quarter's level.

Plum Creek's lumber mills produce appearance grade boards, and board prices seasonally declined about 5% in the third quarter. This is counter to the strength exhibited by the commodity lumber markets this past quarter. The manufacturing business continues to perform very well, and is expected to generate over $40 million of adjusted EBITDA this year. With seasonally lower sales volumes expected in the fourth quarter, manufacturing operating income should be slightly lower than the third quarter's results.

We expect our fourth quarter interest expense and taxes to be similar to the third quarter. We expect our fourth quarter's results should be between $0.25 and $0.35 per share, putting us in the lower end of our guidance range for the year. The reduction in earnings from the third quarter's level is primarily due to sequentially lower land sale activity and to a lesser extent, lower expected harvest levels in the fourth quarter. For the year, we still expect to grow our cash flow significantly with adjusted EBITDA increasing approximately $50 million compared to last year.

I'll turn it back to Rick.

Rick R. Holley

We had a solid third quarter and are encouraged by the fundamental improvements we are seeing from the demand side. Housing starts are growing consistently, and housing has shifted from being a drag on the economy to a bright spot in our nation's recovery. Housing starts are expected to be up a solid 25% in 2012, and we expect them to increase from 750,000 starts this year to 900,000 starts in 2013. The house recovery is supported by improving home inventory levels, firming home values, record affordability and strengthening consumer confidence. These factors, combined with solid demographics, all point to improved residential construction and repair and remodel markets.

The improvement in end-use demand this year has translated to vastly stronger finished product prices. Third quarter random length lumber and structural panel indexes were 25% and 46% respectively above last year's third quarter levels. Mills have responded with some overtime, however, we're yet to see material increases in shifts or reopening of closed facilities.

For the time being, the dry weather pattern experienced in the South has allowed mills to secure adequate log supplies. We expect this situation to change dramatically as housing continues to expand, weather patterns are normalized and the impact of a tight logging contractor supply chain is revealed.

Contractor availability is emerging -- is an emerging bottleneck that is starting to be felt in many regions of the country. We have anticipated this and are well-positioned to benefit from a tighter supply chain as we continue to serve our customers. Throughout the South, our customers appear more confident than we have seen them in quite a while.

As we head into winter, we are already experiencing stronger pulpwood and small log wood -- sawlog values. As lumber demand grows, we will start to feel the impact from reduced Canadian lumber supplies, which will support improvement in sawlog prices in our markets.

Our balance sheet remains strong and conservatively positioned. We ended the third quarter with over $650 million of liquidity, including $320 million of cash. Looking forward, we have $250 million of notes that mature in 2013. Given the attractiveness of the bond market, we anticipate capping the market later this quarter to pre-finance these maturities.

Our capital plan remains on schedule, and we estimate capital expenditures of approximately $73 million for the year. This covers our reforestation, maintenance capital for manufacturing, and most importantly, advance silviculture treatments that enhance the growth and yield of our forest.

These historical investments are a driving factor behind our growing harvest profile with long-term harvest scheduled to increase to over 20 million tons. In addition to our regular capital program, we have purchased $18 million of Southern timberlands through small parcel acquisitions, as well as $103 million timber deed transaction that closed in the first quarter of the year.

We remain active in evaluating timber acquisition opportunities. The timberland market is still very competitive, and we will remain disciplined in our approach to capital allocation and only complete transactions that grow our net cash flow and enhance shareholder value. We continue to be excited about the future prospects for Plum Creek. We expect to see significant improvement in timber prices and growth in our income and cash flow, and look forward to 2013 with optimism.

Now we'll open up for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question for the day will come from the line of Joshua Barber with Stifel, Nicolaus.

Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division

I wonder, Ricky, you made some comments about expecting housing to pick up next year, and I think one of the things we've all been looking at this year is the lag between log prices and lumber prices. When do you expect that to start converging? And do you think that we could see similar log price appreciation when that happens to what we've seen out of the lumber and OSB market this year?

Rick R. Holley

We normally see a lag of 6 to 12 months. And obviously, we've seen finished product prices pick up. And so we would expect as we go into 2013, particularly our expectation, 900,000 housing starts come to fruition, that we would start to see this lag go away and log prices pick up, especially Southern log prices, which obviously went down more than some of the ones we've seen in the West. So I would expect to see that in the first half of next year. Now whether you see another 25% to 45% increase, I don't know. But clearly, if you look at historical trends for sawlog price, particularly in the South, you could see 10%, 15%, 20%, 30% very easily. And sawlog lumber manufacturers today, if the prices are cheap, they're getting pretty healthy margins. So they do have an ability to pay.

Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division

Okay, that's helpful. And also, you guys made some comments about seeing some better demands out of certain wood baskets in the South on the pulpwood side. Can you talk about the expense that you've seen the impact from the biomass projects that are being built now? And as they're getting closer to completion, starting to look for supply, do you expect some good pressures to your benefit, at least, coming from those markets? And have you seen it so far?

Rick R. Holley

Yes. Thus far, Josh, I don't think we're seeing a lot of impact from the pellet markets, which is really the biomass market on pulpwood. But we're starting to see OSB come back online, which is putting some pressure on prices. In certain regions, we're starting to see some wetter weather patterns, which puts some pressure on pulpwood prices. But I was just in the South last week talking to 2 companies that are getting into pellet manufacturing and committing the capital. And I think over the next year or so, you're start to see a lot more capacity, and these are plants that use 1 million tons of pulpwood, each one of them. I think we're going to start to see more pressure on pulpwood prices and we -- in some of these markets, we can see some pretty dramatic increases.

Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division

Well, we're certainly experiencing a fair amount of wet weather now, so maybe it will help.

Rick R. Holley

Yes.

Operator

Our next question will come from the line of Anthony Pettinari with Citigroup.

Anthony Pettinari - Citigroup Inc, Research Division

Your fourth quarter guidance, again, implied kind of a full year EPS that's at the lower end of your original guidance, as you mentioned. And when you step back and look at the entire year and maybe the factors that put you kind of closer to the lower end of that range, is it primarily the fourth quarter kind of lower harvest and maybe some timing of land sales? Or when you look back at the whole year, were there other factors, maybe Chinese demand or Southern sawlog prices, that maybe weren't as strong as you originally expected?

Rick R. Holley

Yes, I think it's 2 or 3 things. One is, if you look at our land sales basis, it's a little bit higher than we expected than when the year started. And that's kind of a $6-plus million impact, which is $0.04 or so a share. And then you look at our Southern sawlog volume, we've actually brought it down a bit because we expect, and we just -- the question was just asked, we expect to see better prices next year so our Southern sawlog volume in the fourth quarter this year we brought down a bit, which obviously has an impact. Southern sawlog prices for the year have not been quite as good as we anticipated when we started the year and gave you the price expectations, so that had an impact. And our SG&A, as you even saw it for the quarter, is up a bit. And that has to do with some higher performance-based compensation and also some IT expenses as we go through and put some new systems in place in the company. So it's a number of different things. But importantly, as David said, our EBITDA, we came into the year expecting it to grow our adjusted EBITDA by $50 million, and we're on track to achieve that. And that's really the focus. This land basis moves earnings around a bit, so the focus here in the company is always on cash flow, and we're certainly going to, I believe, achieve that target. But some of it is just the markets didn't come out as we expected, and holding some volume up 'til next year when we expect better prices.

Anthony Pettinari - Citigroup Inc, Research Division

Okay, that's very helpful. And then just switching gears to China. You mentioned potentially strengthening demand. Are you going to hit your 2012 export guidance of 300,000 tons? And maybe can you give us any color in terms of where export log prices were maybe at the beginning of 3Q and maybe where they are now?

David W. Lambert

At the beginning of the quarter, their export log price in the third quarter was very comparable to the second quarter's level. We are starting to see some firming in both the domestic market as we look into the November pricing and -- so we see the export pricing starting to go up with that as well. As far as total tonnage for the year, I think we're seeing volume very comparable to last year when they were about 200,000 tons. Volumes really didn't grow as far as total shipments, so we didn't see as big of increase in exports as we had expected earlier in the year.

Rick R. Holley

And we would expect some rebound in the China market next year as their political situation with the change in government stabilize and they put their new policy and plans in place. So my guess is we'll see a pickup in that marketplace in the second or third quarter of next year.

Operator

Our next question will come from the line of Chip Dillon with Vertical Research.

Chip A. Dillon - Vertical Research Partners, LLC

And so far, I think we're all still standing here, but we'll know in a couple hours back here on the East Coast. First question was on the timber deed transaction, what was the basis of the timber deed harvest? And can you tell us, I know the year total is going to be 700,000, but how much -- how many tons were harvested in the second and third quarters?

David W. Lambert

I have that, let me dig it out for you, Chip.

Rick R. Holley

By the way, our fingers are crossed that you're still standing hours from now, so...

David W. Lambert

In the second -- on a year-to-date basis, we've harvested about 450,000 tons under the timber deed. And on a second quarter basis, there was about a little over 200,000 tons as part of that.

Chip A. Dillon - Vertical Research Partners, LLC

Got you. And that's the harvest. And I think in the second quarter, the basis -- your cost basis was about $3 million for that 200,000 tons. Was it like $4 million in the third? Is that a good way -- is that a good...

David W. Lambert

Yes, about $3.6 million.

Chip A. Dillon - Vertical Research Partners, LLC

Okay. Got you, got you. And then I guess the second question is, in the -- as you look at the -- this might be a little bit bigger picture, but it seems like in the last few months, more -- you've heard a little bit more about -- and I think you mentioned this, but wood pellet plant activity, I think, maybe and -- I might be mistaken, but I think in Georgia, there might have been a big one announced and a couple others. And I think these are still emanating out of Europe primarily or at least the customers are from Europe. Are you all seeing more interest? And possibly, could we hear about like contracts? Could it get to that extent at least for pulpwood? Or would it still be tied to maybe buying more of the wood waste that's left behind?

Rick R. Holley

Chip, I think most of it has to do with contracts, and we've been approached by every one of these, as you might expect, the contracts for pulpwood and some woody biomass that we generate in the fourth, the tops and limbs and that sort of thing that we've talked about before, but it's not industrial wood waste. It's really -- for the majority of it is pulpwood that they're contracting for. And as you know, there was 1 company that recently announced 3 plants, each of about 1 million tons in size, one in Georgia, 2 in South Carolina, and these will all be basically primarily pulpwood and the volume would come out of the Savannah port there in Georgia.

Chip A. Dillon - Vertical Research Partners, LLC

Got you. And then one last quick one. Have you given any thought to -- given the incredible flexibility you have as a REIT versus some of the other ones that are kind of nervous, but they may not put it that way, regarding staying within the rails, if you will, have you thought about maybe buying a sawmill or 2 just given how strong the lumber business seems to be? At least you're starting to see a lot more of a jump there in terms of pricing, as you mentioned. And while you would expect some of that to carry over to the log level, one could argue there could be a way to capture more value by being fully integrated, and you do it anyway I know on a specialty basis. Is that something that we could see you all do here and there? Or not really?

Rick R. Holley

No, I don't think you're going to see us do that. I think in many of these markets, what we've learned is, we're really good at managing timberlands and working with contractors and customers. And there are others that are better at manufacturing lumber. We still have a stud mill in Kalispell, Montana, that's curtailed. And once we see these markets firm up and have lasting belief they will stay firm, we'll open that mill up so we'll have a little more lumber capacity. But I wouldn't expect us to get into the lumber business in any more way than that.

Operator

Our next question will come from the line of Gail Glazerman with UBS.

Gail S. Glazerman - UBS Investment Bank, Research Division

Maybe attacking the pellet question on a slightly different angle. There continue to be stories of European utilities backing away from certain investments and projects. Does your outlook for the kind of ultimate end use demand out of Europe change at all as you've progressed through the year?

Rick R. Holley

No. I think, if anything, once the U.K. announced the ROC, which is the Renewable Obligation Credit that these utilities will get, we saw more utilities firm up their expectations. If anything, the U.K. government, at 1 point in time, was going to force all those utilities to get line and not let all of them convert to renewable energy. And then they backed off on that and let everybody do it. So I think the demand -- I've heard numbers like 30 million tons that they're looking for in the United States alone, so it's a big demand source, and we've not seen anybody back off.

Gail S. Glazerman - UBS Investment Bank, Research Division

Okay. And looking at kind of the rural and development properties, it seems like you're still doing a lot of your activity in the Gulf states. Are you starting to see any signs of improvement in some of your higher-value markets like Florida?

Rick R. Holley

Not so much in Florida, but we're starting to see at least some boots on the ground, if you will, in Montana. People are starting to look at properties there again from some of these other states. And everybody's looking for a deal today. Nobody's willing to pay what we think is the fair value for properties. But the good news is there are some people kicking the tires now in some of these high-end markets, which I think is a positive development for the next couple of years.

Operator

Our next question will come from the line of George Staphos with Bank of America.

George L. Staphos - BofA Merrill Lynch, Research Division

My first question was on some of the comments you made regarding the South side. First of all, you mentioned that you're seeing some initial signs of logging constraints. Obviously, you've talked about this in prior quarters and years, but could you give us any specific anecdotal evidence regarding what you're seeing? And then you said you pulled forward some of your Southern pulpwood harvest to meet customer demand. Let's say we continue to see an improvement in production and capacity being brought on, on the OSB side, on the sawmill side -- well, OSB side; would you have any ability to flex your production next year if, in fact, pulpwood demand stays very, very healthy?

Rick R. Holley

On the second question, George, I think we can. It's going to be market-by-market specific as it was, this year as well. I mean, not every pulpwood market was terrific. And we had some that were -- we've got pulpwood prices on the stump at $19 and some were still sub-$10. So it really depends, and we'll work the markets as we have in the past. Regarding the question on logging capacity constraints, I was just in the South last week and talking to the contractors that they're kind of tapped out. Even though business doesn't seem that good, volumes around the South and housing's still low and a lot of production's still curtailed for lumber capacity, all these logging contractors are pretty well tapped out right now. They're as busy as they can be. And then in Oregon, for instance, there is a lack of capacity right now that a lot of us timberland owners are really buying for. So you're starting to really start to feel the crunch. And this is at still fairly low production levels. So as we see these increases next year to 900,000 housing starts presumably higher production levels in lumber, both in the West and the South, it's going to have a real impact. That's why for Plum Creek, this core contractor program we put in place is really critical because we have excellent relationships with contractors in every region, which is going to serve us really quite well.

George L. Staphos - BofA Merrill Lynch, Research Division

Rick, I have to segue my second question, then I'll turn it over. How should we think about the dividend? Obviously, it's a board decision, but the indicators are certainly looking more positive, more uniformly positive as you look out to 2013. What do you think the mile markers might be in terms of when you ultimately are able to raise the dividend? Would it be resource income ultimately matching dividend cash flow as a -- for instance? What are your thoughts?

Rick R. Holley

Thanks, George. And really, it has to do with continued improvement in our core resource business. Both Southern and Northern resources manufacturers have done quite well, which contributes our natural resource business and kind of the run rate business we have in Real Estate. But most importantly, if we see the expected improvement that we talked about 2013 and higher prices in our resource business, I would expect you'll start to see us think more seriously about increasing the dividend. As we've talked about, it's a very important part of total shareholder value delivery, and we would like to get back to increasing it on a more thoughtful basis every year or so in a meaningful way. So as we start to see cash flow improve from that business, you'll see us work to increase the dividend.

Operator

Our next question will come from the line of Steve Chercover with D.A. Davidson.

Steven Chercover - D.A. Davidson & Co., Research Division

First question, the 100,000 acre sale in Wisconsin, is that subject to any type of 1031 exchange?

David W. Lambert

No, it's not.

Steven Chercover - D.A. Davidson & Co., Research Division

All right, so not compelled to buy anything, but you'd like to if you can find it.

David W. Lambert

Yes.

Steven Chercover - D.A. Davidson & Co., Research Division

And Rick, you said that the land basis in -- or I guess, year-to-date has been higher than you anticipated, and yet I thought in Q3, it might have been lower. So am I incorrect?

Rick R. Holley

Yes, the 42% we were -- I mentioned was for the year, year-to-date -- or it will be for the year, for 2012. I think last quarter, it was in the low 30s. So it's been -- the first quarter was the highest, and it's varied every quarter since, but for the year, it's going to average about 42%, which is higher than we anticipated when we started the year.

Steven Chercover - D.A. Davidson & Co., Research Division

Okay, for the full year, yes. In Q3, I thought it was maybe a bit lower than I was expecting. And finally, all these wood biomass plants, at last domestically, do you know if they're being supported by any sort of subsidy?

Rick R. Holley

No, they're not. I mean, not themselves. I mean, the only subsidy, if you want to call it that, are these ROCs, the Renewable Obligation Credit, that are offered by the U.K. and other European countries. And those same countries, many of them have carbon taxes because many of these countries burn a lot of coal, and there's a carbon tax on that. So if there's any kind of subsidy, it's really in Europe. It's not here in the United States.

Steven Chercover - D.A. Davidson & Co., Research Division

Yes, I was really concerned with the U.S. So to the extent that they're happening in the U.S., it's not a subsidy per ton, but I guess just, ultimately, policy drives it because you've got to meet some sort of mandate.

Rick R. Holley

Yes, and it's really the U.K. policy or the European countries that are participating. It's their policy, not ours.

Operator

And our final question for today will come from the line of Collin Mings with Raymond James & Associates.

Collin Mings - Raymond James & Associates, Inc., Research Division

I recently spent a little time on your Envision Alachua website. Clearly, things are just getting off the ground, and as you mentioned earlier, not really any land sales there to speak to as of yet. But can you update us on the community's response and how things are going as it relates to the opportunities there?

Rick R. Holley

Yes. I think the -- because as you saw on the website, we involve everybody in the community through a partnership with the community, University of Georgia and the State of Florida. And I think it's gone very, very well. We're in the process of working with the development department at the state level and also different departments at University the Florida to attract somebody into that area for that initial development, kind of that core, if you will, to the future development there. So we're very pleased with where it's at and very excited about the long-term opportunities there.

Collin Mings - Raymond James & Associates, Inc., Research Division

Okay. And then how would you characterize the level of either bidding or interest on that Wisconsin nonstrategic land sales? And maybe, again, going back to just the overall timberland acquisition environment right now?

David W. Lambert

We still see that very strong. Typically, bidding interest is a little lighter in these hardwood regions, but we met our wholesale expectations, and there was a strong turnout. As we look kind of across the board at timber offerings, there's still a deep interest and a lot of liquidity in this space.

Operator

And at this time, I will now turn the floor over to management for any closing remarks at this time.

Rick R. Holley

Well, again, we thank everybody. We know it's a tough day on the East Coast. We thank you for participating today and, again, we're all available the rest of this week or next week at any time that works for you to help you in any way we can with the information we provided today. So thank you and be safe.

Operator

Ladies and gentlemen, this concludes today's conference call. We appreciate your participation, and you may now disconnect.

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