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CatchMark Timber Trust Inc (NYSE:CTT)
Q4 2019 Earnings Call
Feb 14, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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

Ursula Godoy-Arbelaez -- Senior Vice President, Chief Financial Officer & Treasurer

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'm 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 Timberlands.

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 M. Davis -- President, Chief Executive Officer & Director

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 continuing to deliver on CatchMark's objectives, and those objectives 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 the 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 mill markets with creditworthy counterparties and managing our timberlands to optimize harvest through sustainable best practices. We will continue to rely on a delivered wood sales model and fiber supply agreements to sustain predictable revenues and volumes. There will be no change in this operating approach, which has 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 mill markets, principally in the US South timber basket. We will seek transactions for prime properties in the $5 million to $50 million range with our preference for direct fee ownership and using less leverage; our Coastal Georgia acquisition in 2017 as 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 will 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/or optimize 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. In meeting CatchMark's guidance for the year, we realized increased timber sales, superior pricing in the US South timber basket and a significant increase in net timber revenue, driven by higher timber volumes in the Pacific Northwest, higher pricing in the US South and improved sawtimber mix. We completed integration of the 2018 Bandon acquisition in the Pacific Northwest, improving overall sawtimber 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'd like 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-Arbelaez -- Senior Vice President, Chief Financial Officer & Treasurer

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 fees. The results reinforce the efficacy of our strategy based on investing in prime timberland holdings near leading mill markets and maximizing our operations through our delivered wood sales model and fiber supply agreements.

For fourth quarter 2019, CatchMark increased revenues by 27% to $29.1 million compared to fourth quarter 2018, lowered 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 pine timberlands located near existing holdings in South Carolina for $1.9 million of cash on hand generated from capital recycling dispositions. We sold 3,200 acres of timberlands for $5 million increasing Real Estate EBITDA by $2.3 million over the same period in 2018. We entered into a $21.3 million contract for a large disposition of 14,400 acres of Georgia timberlands, 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 allocated losses and higher earned 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, increased 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 increased 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 delivered sales as a percentage of total volume. Total harvest volume in the US South remained comparable 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 and higher US 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 operations. 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 the Dawsonville Bluffs results. 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 a 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 term on our fixed rate debt stood at nine years at a weighted average interest rate of 2.17% before the applicable spread and expected patronage dividends. That compared to an average term of four years at 2.44% at the end of the third quarter.

The 2019 results do not include the recent approximately $21 million Georgia timberlands large disposition, which we closed last month on January 31. Proceeds of this transaction were used to repay approximately $21 million of outstanding debt on February 3. 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 will turn it over to Todd for the operations review.

Todd P. Reitz -- Chief Resources Officer

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 mill markets, fiber supply agreement partners, delivered wood model and opportunistic stumpage sales continued as our primary performance drivers, helping maintain pricing levels for all pine products substantially above TimberMart-South Southwide averages.

Specifically in 2019, CatchMark achieved pricing premiums that were 47% higher for pulpwood and 31% higher for sawtimber than the TimberMart-South averages. We are encouraged about the healthy pace of US housing starts with increasing levels of permits and homebuilder order files pointing to a $1.3 million [Phonetic] 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 a strong jobs market including rising real wages, all support this favorable outlook.

In addition, applying specifically to CatchMark, sawmill capital improvement and greenfield projects in the US South are coming to fruition and beginning to start operations. Although we did not expect fully realized demand to materialize in our markets until 2021 and into following years, we have begun to experience early demand upticks in 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 to 2.3 million 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'll turn it back over to Brian.

Brian M. Davis -- President, Chief Executive Officer & Director

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. An expected sharply reduced GAAP net loss for the year of between $10 million and $15 million reflects a substantial reduction in losses allocated from Triple T. As Todd noted, we anticipate harvest volumes between 2.3 million and 2.5 million tons. Asset management fee revenue is 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, while 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 fee acreage. In making new investments, we will continue to focus on buying prime 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 mill 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 mill markets. In particular, we are confident that we can continue to come across opportunities to expand our market presence through delivered wood 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 increased sawtimber mix, 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 of 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 timberlands and superior mill markets and 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 remained 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.

Questions and Answers:

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 -- Raymond James & Associates -- Analyst

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

Brian M. Davis -- President, Chief Executive Officer & Director

Great. Good morning, Collin.

Ursula Godoy-Arbelaez -- Senior Vice President, Chief Financial Officer & Treasurer

Good morning.

Collin Mings -- Raymond James & Associates -- Analyst

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 toward 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 M. Davis -- President, Chief Executive Officer & Director

Sure, Collin. I'll take that. So from a -- 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 have been very focused on developing expertise and bench strength. And it's now was demonstrated by this most recent leadership change of a number of people taking a great step forward filling those opportunities internally. We've brought in external General Counsel from Alston & Bird almost two years ago. Todd Reitz comes to us from Weyerhaeuser by way of Plum Creek. So, we have great bench strength. And so, from the standpoint of timing, the Board feel very comfortable on our 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 our value proposition through disciplined acquisitions of prime timberlands and high demand mill markets, superior management to provide predictable and stable cash flows, which we announced in our pre-read, but ultimately, my bias is toward 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 and we will be disciplined in our approach as we are 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 -- Raymond James & Associates -- Analyst

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 look -- maybe looking forward to maybe in the future less complexity, if you will, there is 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 M. Davis -- President, Chief Executive Officer & Director

Yeah. So as it relates to JVs in the future, I think Dawsonville Bluffs represents a great model. I believe my opening remarks captured some of that sentiment. We have a positive lean in recreating that type of success with the joint venture by virtue of scale and structure of Dawsonville. 2019 was a busy year as it relates to the integration associated with the Bandon and the full year operations of Triple T. I can tell you about the fourth quarter of 2019, we have reinvigorated our efforts as it relates to those types of joint ventures, as well as direct acquisitions.

Collin Mings -- Raymond James & Associates -- Analyst

Okay. Sticking with the asset management business, last quarter, the Company discussed how volatility in the lumber markets was a headwind. To maybe getting a deal with GP done as it relates to the Triple T joint venture, just recognizing you aren't going to negotiate on an earnings call. Maybe, you can you just remind us more broadly your latest thoughts to 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, call the, first two years of that JV forming.

Brian M. Davis -- President, Chief Executive Officer & Director

Correct. And also, as we've noted in prior calls, we've established a good working relationship with GPs 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 dialog with GP and we're both evaluating whether there is a transaction associated with potential agreement modifications that's mutually beneficial to both of us. And we should note -- 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 GP, then it may accelerate our ability to realize value with 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, is a great property, one of the fastest growing regions in the country, and we've been managing very well meeting our targets on the supply agreements and taking advantage of other revenue generating opportunities.

Collin Mings -- Raymond James & Associates -- Analyst

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 is 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 P. Reitz -- Chief Resources Officer

Hey, Collin, this is Todd. You bet. There -- in the fourth quarter, we ended up closing out with that $4 million deal. It's 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 and the pricing associated with an upland stand, you would see a little bit lower rate there.

Collin Mings -- Raymond James & Associates -- Analyst

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 call 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 P. Reitz -- Chief Resources Officer

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 here for some pricing improvement. And it's really driven from the standpoint of the Canadian log flow really going into the Japanese market has been a little bit diminished. And so, we've seen some of that pick up in the Pacific Northwest region. As of late, really just a couple of weeks ago, we received a modest improvement in pricing there. They've not only improved our export options, but it also drove some improvement in the local domestic market, which was very well received and who knows how long that will last. It could be a month, it 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 have been closed. And while it's an early indicator, 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 hitting a whole lot around concern over -- as you mentioned, the European issue of lumber coming in, some have speculated that maybe that 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 -- Raymond James & Associates -- Analyst

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

Brian M. Davis -- President, Chief Executive Officer & Director

Thanks, Collin.

Todd P. Reitz -- Chief Resources Officer

Good.

Operator

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

Randy Toth -- Raymond James -- Analyst

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

Brian M. Davis -- President, Chief Executive Officer & Director

Good morning, Randy.

Randy Toth -- Raymond James -- Analyst

[Indecipherable] up over 5% at the midpoint. Can you just talk about what's driving that year-over-year expectations?

Brian M. Davis -- President, Chief Executive Officer & Director

Yeah. 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 landfill 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 three years. It 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 forest, we have the merchantable inventory that's available to be delivered into the marketplace. And I think it's an important consideration. Todd, if you wouldn't mind talking a little bit more about the specifics of our harvest plan for 2020.

Todd P. Reitz -- Chief Resources Officer

Sure, Brian. So looking at 2020, we actually have an opportunity to fully implement Pacific Northwest and then really it's just utilizing that prime Southern timberland ownership we have through normal course business that is the main drivers for 2020. Do 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 0.5 million or so tons dedicated and locked up with our fiber supply agreement partners. There is 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, be very similar from a percentage basis. As we said in the opening remarks, we would 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, Q4 tend to be a little bit lighter production quarters compared to Q2 and Q3, which tend to have more available production days.

Randy Toth -- Raymond James -- Analyst

Okay. That's helpful. Thank you. And then, including the proceeds from the recent disposition, in Georgia, it looks like you're right around 8 times leverage. Is there a target range you would like to get to by the end of 2020? Thank you.

Brian M. Davis -- President, Chief Executive Officer & Director

Hey, Randy. It's a very similar question. I think Collin had asked as well as regarding a target. We don't really have a target. It was much more of a direction. We're very comfortable where we're operating today at an 8 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 well within 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 -- Raymond James -- Analyst

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

Brian M. Davis -- President, Chief Executive Officer & Director

Thanks, Randy.

Operator

And our next question will come from Dave Rodgers with Baird. Please go ahead.

David Rodgers -- Robert W. Baird & Co. -- Analyst

Yeah. Good morning everybody. I guess, I wanted to talk about the portfolio. Obviously, you guys have constructed since the IPO. But mill markets have changed since then distribution pattern. 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 mill markets that you want to be in, and what do you consider really available for sale as you continue to want to make the portfolio of higher and higher quality?

Brian M. Davis -- President, Chief Executive Officer & Director

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. It's in the top 4 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 opportunity is really inside of our marketplace like the accounting transaction or we call the Georgia timberlands transaction really fit that criteria for us for large dispositions. It's one kind of an asset profile to operational considerations and then three, impact on accretive nature associated with the proceeds. So for example, the Georgia timberlands, good marketplace, kind of outside of our operational expectations, regarding it's much more of a stumpage market for us versus our delivered wood 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 inside of our existing marketplace because we've bought so well since our IPO, along with the legacy property in of itself. There is 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 delivered wood model. So we like the markets we operate in today.

David Rodgers -- Robert W. Baird & Co. -- Analyst

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

Brian M. Davis -- President, Chief Executive Officer & Director

Yeah, that's on a continuous process. 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 then, we've done $21 million first quarter of this year. From our standpoint, that seems to be the right amount of tempo as it relates to capital recycling opportunities. We'll continue to review our portfolio. Ultimately, it becomes to -- what was the use of that capital and it's going to be focused on an accretive 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.

David Rodgers -- Robert W. Baird & Co. -- Analyst

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 giving growth parameters over the next year or two, three? Does that take keep you with 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 M. Davis -- President, Chief Executive Officer & Director

Yeah, 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 -- while we have grown that from 38 tons to 43 tons, we would expect to bring that level slightly down. It's 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 the 38 tons per acre range, but below 43.

David Rodgers -- Robert W. Baird & Co. -- Analyst

Great. Thank you.

Brian M. Davis -- President, Chief Executive Officer & Director

Great. Thanks, Dave.

Operator

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

Albert Sebastian -- Prospect Advisors LLC -- Analyst

Good morning.

Brian M. Davis -- President, Chief Executive Officer & Director

Good morning, Al.

Albert Sebastian -- Prospect Advisors LLC -- Analyst

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 -- I guess you closed in January?

Brian M. Davis -- President, Chief Executive Officer & Director

Right. So we can discuss more Al regarding the productivity. And so, that's about 1.8 tons per acre per year over the next 10 years or 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 -- Prospect Advisors LLC -- Analyst

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 2018. It was around $30 million. Could you give us some sort of guidance based on your EBITDA guidance this year or what that might be or give us a bracket?

Brian M. Davis -- President, Chief Executive Officer & Director

Yeah. 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 -- Prospect Advisors LLC -- Analyst

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 -- that line item might be for 2020?

Ursula Godoy-Arbelaez -- Senior Vice President, Chief Financial Officer & Treasurer

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

Albert Sebastian -- Prospect Advisors LLC -- Analyst

Okay. So this line item, probably, will be about $0.5 million for this year?

Ursula Godoy-Arbelaez -- Senior Vice President, Chief Financial Officer & Treasurer

That's right.

Albert Sebastian -- Prospect Advisors LLC -- Analyst

Okay. Thank you very much.

Brian M. Davis -- President, Chief Executive Officer & Director

Thanks, Al.

Operator

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

Collin Mings -- Raymond James & Associates -- Analyst

Thank you. I just -- first, a follow-up from 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 M. Davis -- President, Chief Executive Officer & Director

So Collin, 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 anything currently under contract. We're looking at a number of transactions. John Capriotti who has been spearheading our efforts since our IPO in 2013 has done a really good job, really building those opportunities for us, been able to recalibrate and refocus our efforts, doubling our efforts inside of our existing market area. And we're finding some pretty good liquidity for opportunities that really hit kind of highlight 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 -- Raymond James & Associates -- Analyst

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 M. Davis -- President, Chief Executive Officer & Director

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 in operational, and 2020 is going to be expanding those operations during the year, but we always keep our eyes and ears open associated with the four accretive opportunities.

Collin Mings -- Raymond James & Associates -- Analyst

Okay. And then, one other housekeeping one from me here, just as it relates to the anticipated gain from large dispositions recognizing that you provide a range around that, is that just the one 14,400-acre deal that's already closed. There is just kind of 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 kind of put out that guidance range?

Brian M. Davis -- President, Chief Executive Officer & Director

That's related to the transaction that we closed in January, Collin.

Collin Mings -- Raymond James & Associates -- Analyst

Okay. Thank you.

Brian M. Davis -- President, Chief Executive Officer & Director

Great. Thanks, Collin.

Todd P. Reitz -- Chief Resources Officer

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 M. Davis -- President, Chief Executive Officer & Director

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

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Ursula Godoy-Arbelaez -- Senior Vice President, Chief Financial Officer & Treasurer

Brian M. Davis -- President, Chief Executive Officer & Director

Todd P. Reitz -- Chief Resources Officer

Collin Mings -- Raymond James & Associates -- Analyst

Randy Toth -- Raymond James -- Analyst

David Rodgers -- Robert W. Baird & Co. -- Analyst

Albert Sebastian -- Prospect Advisors LLC -- Analyst

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