The continuing COVID-19 crisis has wiped out many, many businesses, due to huge amounts of lost sales. Imagine if you owned a business dealing in perishable goods when this crisis hit.
A different side of this scenario is found in the timber business - where business has also slowed down, but those trees keep growing, creating more product to sell.
CatchMark Timber Trust (CTT) is a REIT which "seeks to deliver consistent and growing per share cash flow from disciplined acquisitions and superior management of prime timberlands located in high demand U.S. mill markets."
CTT owns a lot of acreage in the Southeast, but its biggest holdings are in Texas, where it owns more than 1 million acres. 95% of CatchMark’s timberlands are located in the top five markets in the U.S. South.
(CTT site)
Management commented on how the crisis has deferred some of CTT's revenue on the May 5 Q1 '20 earnings call:
"For CatchMark, particularly with regard to saw timber, the impacts relate to deferring some revenue, not losing revenue.
Our trees are still growing in the forest and the raw materials we provide cause us to be an essential business. Our operating model based on owning and investing in the highest quality timberlands near superior mill markets and working with credit-worthy counterparties has positioned us to manage through this period." (Q1 '20 call)
CTT has three main income sources - Harvest brings in 50%, while Real Estate and Investment Mgt. each bring in 25%. The business model has become more diversified since 2014:
(CTT site)
Its two biggest harvest volume customers are large cap players: International Paper, with a market cap $14.6B, and WestRock, with a market cap of $7.9B.
(CTT site)
Segments:
With no commercial land development or international exposure, CTT concentrates on its timber operations
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