the effect of general economic conditions, including employment rates, interest rate levels, discount rates, housing starts and the general availability of financing for home mortgages;
availability of labor and developable land;
changes in the level of residential and commercial construction and remodeling activity;
changes in tariffs, quotas and trade agreements involving wood products;
changes in demand for our products and real estate;
changes in timber prices and timberland values;
changes in silviculture, production and production capacity in the forest products industry;
competitive pricing pressures for our products;
the effect of weather on our harvesting and manufacturing activities;
the risk of loss from fire (such as the Ola, Arkansas sawmill fire and fires on our timberland), floods, windstorms, hurricanes, pest infestation or other natural disasters;
changes in the cost or availability of shipping and transportation;
recent increases in inflation and the extent to which such increases will continue;
unforeseen environmental liabilities or expenditures;
changes in general and industry-specific environmental laws and regulations, and interpretations thereof by regulatory agencies;
disruptions or inefficiencies in our supply chain and/or operations.
Business and Economic Trends Affecting Our Operations
1 See Liquidity and Performance Measures for a reconciliation of Total Adjusted
EBITDDA to net income, the closest comparable GAAP measure, for each of the
First Quarter 2022 Compared with First Quarter 2021
1 Prior to elimination of intersegment fiber revenues of $42.1 million and $47.3
million for the three months ended March 31, 2022 and 2021, respectively. 2 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
See Note 2: Segment Information in the Notes to Condensed Consolidated
1 Sawlog and pulpwood sales prices are on a delivered basis, which includes
logging and hauling costs. Stumpage sales provide our customers the right to
Timberlands Adjusted EBITDDA - current year $ 76,434
First Quarter 2022 Compared with First Quarter 2021
Timberlands Adjusted EBITDDA for the first quarter of 2022 increased $8.6 million compared with the same period in 2021, primarily as a result of the following:
Logging and Hauling Cost per Unit: Log and hauling costs per unit were higher primarily due to increased diesel costs.
1 Prior to elimination of intersegment fiber costs of $42.1 million and $47.3
million for the three months ended March 31, 2022 and 2021, respectively. 2 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
See Note 2: Segment Information in the Notes to Condensed Consolidated
Lumber sales prices ($ per MBF) $ 1,075 $ 890 $ 185
1 MBF stands for thousand board feet.
Wood Products Adjusted EBITDDA - current year $ 149,951
First Quarter 2022 Compared with First Quarter 2021
Wood Products Adjusted EBITDDA for the first quarter of 2022 increased $24.4 million compared with the same period in 2021, primarily as a result of the following:
Lumber Price: Average lumber sales prices increased to $1,075 per MBF during the first quarter of 2022 compared to $890 during the first quarter of 2021.
Log Costs Per Unit: Log costs per unit were higher primarily as a result of increased indexed log costs at our Idaho sawmill.
Selling, general and administrative expenses 1,062 1,252
1 Management uses Adjusted EBITDDA to evaluate the performance of the segment.
Real Estate Adjusted EBITDDA - prior year $ 16,593 Rural real estate sales
Real Estate Adjusted EBITDDA - current year $ 30,124
First Quarter 2022 Compared with First Quarter 2021
Net cash from operating activities $ 230,299 $ 169,965 $ 60,334 Net cash from investing activities $ (17,122 ) $ (11,529 ) $ (5,593 ) Net cash from financing activities $ (34,595 ) $ (28,075 ) $ (6,520 )
Net Cash Flows from Operating Activities
Net cash from operating activities increased $60.3 million in the first quarter of 2022, compared to the first quarter of 2021 primarily as a result of the following:
Net Cash Flows from Investing Activities
Changes in cash flows from investing activities were primarily a result of the following:
We spent $17.2 million on capital expenditures for property, plant and equipment, timberlands reforestation and road construction projects during the first quarter of 2022 compared to $11.7 million during the first quarter of 2021.
Net Cash Flows from Financing Activities
Changes in cash flows from financing activities were primarily a result of the following:
We paid dividends of $30.5 million in the first quarter of 2022 compared to $27.5 million in the first quarter of 2021.
We repaid $3.0 million in long-term debt during the first quarter of 2022 and had no similar payment in the first quarter of 2021.
Future Sources and Uses of Cash
The following table presents the components and applicable limits of Total Asset Value (TAV), a component of the Leverage Ratio, at March 31, 2022:
Wood Products manufacturing facilities book basis (limited to 10% of TAV)
1 TAV also includes, as applicable, Construction in Progress (limited to 10% of
TAV) and Investments in Affiliates (limited to 15% TAV) as defined in the
At March 31, 2022, we were in compliance with all covenants under the Agreements. The following table sets forth the financial covenants for the Agreements and our status with respect to these covenants at March 31, 2022:
See Note 5: Debt in the Notes to the Condensed Consolidated Financial Statements for additional information on our debt and credit agreements.
Two major debt rating agencies routinely evaluate our debt, and our cost of borrowing can increase or decrease depending on our credit rating. Both Moody's and S&P rate our debt as investment grade.
1 Market capitalization is based on outstanding shares of 69.4 million and 67.0
million times closing share prices of $52.73 and $60.22 as of March 31, 2022,
and December 31, 2021, respectively. 2 Dividend yield is based on annualized dividends per share of $1.76 and share
prices of $52.73 and $60.22 as of March 31, 2022, and December 31, 2021,
3 Weighted-average cost of debt excludes deferred debt costs and credit facility
fees and includes estimated annual patronage credit on term loan debt.
We reconcile Total Adjusted EBITDDA to net income for the consolidated company as it is the most comparable GAAP measure.
The following table provides a reconciliation of net income to Total Adjusted EBITDDA for the respective periods:
The following table provides a reconciliation of cash from operating activities to CAD:
1 Net cash from operating activities for the three months ended March 31, 2022
and 2021 includes cash paid for real estate development expenditures of $2.2
million and $2.3 million, respectively. Net cash from operating activities for
the twelve months ended March 31, 2022 and 2021 includes cash paid for real
estate development expenditures of $8.8 million and $8.6 million,
2 The three and twelve months ended March 31, 2022 includes fire related capital
expenditures for the Ola, Arkansas sawmill of $5.1 million and $12.4 million,
respectively, and excludes of $0 and $15.0 million, respectively, of insurance
proceeds for the Ola, Arkansas sawmill property losses. 3 Net cash from investing activities includes payment for capital expenditures
Critical Accounting Policies and Estimates
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