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spk00: Good morning. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Potlatch Deltic fourth quarter 2021 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Mr. Jerry Richards, Vice President and Chief Financial Officer, for opening remarks. Sir, you may proceed.
spk03: Thank you, Emma. Good morning, everyone, and welcome to Potlatch Deltics' fourth quarter 2021 earnings conference call. Joining me on the call is Eric Cramer, Potlatch Deltics' President and Chief Executive Officer. This call will contain forward-looking statements. Please review the warning statements in our press release, on the presentation slides, and in our filings with the SEC concerning the risks associated with these forward-looking statements. Also, please note that reconciliation and non-GAAP measures can be found on our website at www.potlatchdeltic.com. I'll now turn the call over to Eric for some comments, and then I will cover our fourth quarter results and our outlook. Thank you, Jerry. Starting with our results, a full-year adjusted EBITDA of $653 million shattered the record we set just last year. That performance is a tribute to and would not be possible without the performance, resilience, flexibility, and continued focus of our employees in year two of the pandemic. Our wood product segment generated a record $394 million of adjusted EBITDA in 2021, To put that in context, Wood Products earned more in 2021 than the entire company did in 2020, and consolidated 2020 EBITDA was the company record at the time. On the operational front, we shipped just over 1 billion board feet of lumber. We completed virtually all of our capital projects on time and under budget. and our employees' safety performance was outstanding. Key safety milestones achieved during the year included two-year anniversaries without recordable injuries at our Bemidji and our Waldo sawmills, three months during the year where all of our mills were incident-free, and also a record low injury severity rate for the year. Still, we were disappointed about the fire at our Ola, Arkansas sawmill in 2021. Thankfully, nobody was injured and property damage and lost profits are covered by insurance. Restarting the large log line at Ola in the third quarter of 2022 is a top company priority. Furthermore, once the mill restarts, it will have significantly lower cash processing costs and higher production volume than before. Our timberland segment generated record-adjusted EBITDA of $263 million in 2021, despite our harvest volume falling short of our 6-million-ton plan. Indexed Idaho saw log prices hit record levels during the year, which more than offset the effect of OLA-related harvest deferrals in the South and a decline in low-margin polkwood shipments in Idaho. Our real estate segment generated adjusted EBITDA of $48 million in 2021. On the rural side of the business, we sold approximately 18,000 acres at just over $2,100 per acre. Our rural sales team continues to do an excellent job identifying opportunities that create value. On the development side of our real estate business, we sold 159 residential lots in our Chennault Valley Master Plan community in Little Rock, and we completed a commercial sale during the year. Lot sales are off to a strong start in 2022, which is a tribute to our team's focus on creating inventory to meet strong residential lot demand. Turning to capital allocation, We distributed $388 million of cash to shareholders in 2021, equal to 90% of our cash available for distribution for the year. We paid a $4 per share special dividend in December. We also increased the regular dividend 7.3% in the fourth quarter to $1.76 per share on an annual basis. we remain committed to growing the regular dividend sustainably. The large fourth quarter dividend increase reflects both bullishness in our business and the successful completion of accretive Timberland acquisitions. Speaking of Timberland acquisitions, we closed four bolt-on deals in the South in the fourth quarter for an aggregate consideration of $131 million. The largest transaction was a tax-free merger with Luter Land and Timber Company, whereby we acquired just over 51,000 acres of high-quality, well-stocked timberlands in southern Arkansas and northern Louisiana for 1.96 million shares and the assumption of $6.6 million of debt. The Luter timberlands are a highly attractive addition to our portfolio. Average stocking levels of approximately 90 tons per acre and an average timber age greater than 40 years are both well above the norm. Typical metrics for southern timberlands are roughly 45 tons per acre and an average age of timber of 14 to 15 years, assuming a 30-year growing cycle and even age management. We expect to realize average annual EBITDA of $8.5 million over the first 10 years of ownership, providing an appealing cash yield. We had a liquidity of nearly $600 million at the end of 2021 after paying the special dividend. Our leverage also remains the lowest of the timber REITs despite our large special dividend. Our financial strength provides a solid platform for continued growth as we consider additional accretive acquisitions and investments in our existing mills. I will now provide some thoughts on our expectations for 2022. BC transportation challenges and COVID absenteeism stressed a supply chain that has had difficulty consistently meeting lumber demand over the last two years. As a result, lumber prices increased back above $1,000 per 1,000 board feet as reported by Random Links. We do not believe prices at this level are sustainable, and we expect lumber prices to moderate as we move through 2022. Having said that, we continue to believe average lumber prices for the full year will be structurally higher than long-term averages due to exceptional lumber demand and tight supply. Housing fundamentals remain robust. U.S. housing starts increased to 1.7 million units on a seasonally adjusted basis, and building permits were nearly 1.9 million units in December. Both statistics were notable milestones and represent a strong finish to a strong year. A shortage of homes in the large millennial demographic cohort continue to underpin our view that housing should be set up for a multi-year boom. We are monitoring rising mortgage rates given their effect on housing affordability. Homebuyers and builders have levers to offset affordability issues caused by higher rates. Migration to less costly housing markets given the durability of remote work, builder concessions, and smaller houses are examples of factors that may mitigate the effect of higher mortgage rates. Interestingly, Freddie Mac released a forecast just last week predicting that the single-family housing market will remain stable in 2022. They expect that higher mortgage rates will moderate the pace of home price increases and that the entry-level home segment will remain tight due to a shortage of homes for sale. We expect continued growth in the repair and remodel segment in 2022. In the last week, RISI published an expectation that R&R spend will increase 3% in 2022, and the Harvard Joint Center for Housing study is predicting 17% growth. Factors supporting growth in the repair and remodel segment include high levels of home equity, the work-from-home trend, and the age of U.S. housing stock, which is now 42 years on average. Regarding environmental, social, and governance reporting, we plan to publish our third annual ESG report in May. We are also developing a full ESG section of our website, and we plan to publish a carbon and climate report in September. Potlatch Delta has a strong ESG story, and we are committed to do our part to mitigate climate change and continue our legacy of responsibility across the ESG spectrum. To wrap up my comments, Potlatch Delta is very well positioned to take advantage of favorable industry fundamentals, and our strong balance sheet and liquidity provide a high degree of flexibility as we seek to maximize shareholder value. We'll now turn it over to Jerry to discuss fourth quarter results and our outlook. Thank you, Eric. Starting with page four of the slides, adjusted EBITDA decreased from $107 million in the third quarter to $76 million in the fourth quarter. The decline largely reflects the effect of lower indexed Idaho saw log prices and seasonally lower harvest volumes in the fourth quarter. I'll now review each of our operating segments and provide more color on the fourth quarter results. Information for our timberland segment is displayed on slides five through seven. The segment's adjusted EBITDA was $42 million in the fourth quarter compared to $76 million in the third quarter. We harvested 349,000 tons of saw logs in the north in the fourth quarter. This is down seasonally from the 462,000 tons that we harvested in the third quarter. Northern saw log prices were 28% lower on a per ton basis in the fourth quarter compared to the third quarter. The decrease in saw log prices reflects lower prices for indexed and cedar saw logs, as well as seasonally heavier logs. Because of our index prices reset on a one month lag, the higher lumber prices that occurred in December won't be reflected in our saw log prices until the first quarter. In the south, we harvested just under 1.1 million tons in the fourth quarter. This volume was 4% higher than the third quarter as our southern timberlands team worked hard to minimize the amount of our harvest shortfall for the year. Our southern saw log prices were 2% lower in the fourth quarter compared to the third quarter. As discussed on last quarter's call, we expected pine saw log prices to moderate once conditions dried out and saw log mill – or saw log mill – saw mill log inventories returned to more normal levels. Sorry. Turning to wood products on Slides 8 and 9, adjusted EBITDA was $37 million in the fourth quarter compared to $27 million in the third quarter. Our average lumber price realization increased 6% from $533 per thousand board feet in the third quarter to $563 per thousand board feet in the fourth quarter. Our price increase is comparable to the Random Links framing lumber composite on a percentage basis when the composite is shifted to account for the length of our order files. Our lumber prices increased each month during the fourth quarter. Our average lumber price realizations per 1,000 board feet were $487 in October, $570 in November, and $639 in December. Lumber shipments decreased from 265 million board feet in the third quarter to 243 million board feet in the fourth quarter. COVID absenteeism was a drag on production. Our plywood business performed exceptionally well in 2021 and delivered record profitability. The negative residuals and panels variance on page 8 of the slides primarily reflects a decline in plywood prices after peaking at an all-time high in the third quarter. Moving to real estate on slides 10 and 11, the segments adjusted EBITDA was $10 million in the fourth quarter, up slightly from $9 million in the third quarter. Higher rural land sales closings slightly exceeded fewer residential lot sales in our Chenal Valley Master Plan Community in Little Rock, Arkansas. Shifting to financial items, which are summarized on slide 12, our total liquidity remains strong at nearly $600 million. This amount includes $296 million of cash, as well as availability on our undrawn revolver. Speaking of our revolver, in December, we extended its maturity to February 14, 2027. We also reduced the size of the facility to $300 million, given our strong balance sheet and plentiful available capital. We refinanced $40 million of debt scheduled to mature in December 2021, reducing our annual interest expense to approximately $700,000. We also repaid the $6.6 million of debt we assumed in the Luder merger in December and $3 million of medium-term notes of maturity in January. We did not repurchase any shares during the fourth quarter. As a reminder, we have a 10b-5-1 plan in place. This reflects our ability and commitment to repurchase our shares at attractive prices. Capital expenditures were $19.6 million in the fourth quarter. Note that the amount I just mentioned includes real estate development expenditures, which are included in cash from operations in our cash flow statement, and excludes the Timberland acquisitions that Eric discussed. We also recorded a favorable income tax adjustment of approximately $5 million in the fourth quarter, mostly to reflect lower state income taxes. I will now provide some high-level outlook comments. The details are presented on slide 13. We expect to harvest about 6.1 million tons in our timberland segment in 2022, with approximately 70% of the volume in the south. We expect our annual harvest volume run rate will increase to 6.2 to 6.4 million tons after our Ola Arkansas sawmill startup curve is behind us sometime in 2023. Harvest volumes in the north are planned to be comparable in the first quarter relative to the fourth quarter. We expect northern solid prices to increase significantly in the first quarter, reflecting higher lumber index prices. Harvest volumes and saw log prices in the South are expected to decrease seasonally in the first quarter. The saw log price decline is due primarily to seasonally fewer hardwood saw logs in the mix. We plan to ship just over 1 billion board feet of lumber in 2022. In the first quarter, we plan to ship 230 to 240 million board feet of lumber. Our estimates reflect uncertainty associated with pandemic-related absenteeism. Our average lumber price thus far in the first quarter, including orders booked but not yet shipped, is approximately 70% higher than our average fourth quarter lumber price. Our current lumber prices are approximately 90% higher than our average fourth quarter price. As a reminder, a $10 per thousand board foot change in lumber price equals approximately $12 million of consolidated EBITDA for us on an annual basis. Shifting to real estate, we expect to sell approximately 13,500 acres of rural land and approximately 165 Chenal Valley residential lots in 2022. Additional real estate details are provided on the slide. We estimate that interest expense will be $3 million in the first quarter and just over $8 million per quarter for the second, third, and fourth quarters of 2022. Interest expense is lower in the first quarter because that is when we receive our annual patronage payment from the farm credit banks. Our total capital expenditures are planned to be in the range of $70 to $75 million in 2022, excluding acquisitions. That estimate includes approximately $15 million to rebuild OLA, which we expect will be reimbursed by insurance. Overall, we expect to start 2022 with a very strong first quarter. We anticipate total adjusted EBITDA for the first quarter will be a bit more than double fourth quarter's level, due primarily to higher lumber and index saw log prices. We remain bullish on industry fundamentals despite rising interest rates. Our integrated operating model and leverage to lumber prices are aligned with those fundamentals, and we are well positioned to continue growing shareholder value. That concludes our prepared remarks. Emma, I'd now like to open the call to Q&A.
spk00: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question today comes from Kurt Yinger with D.A. Davidson. Your line is now open.
spk01: Great. Thanks, and good morning, Eric and Jerry. Good morning. I just wanted to start off on plywood. Jerry, you touched on the negative impact from lower prices kind of flushing through there. realizing what you're making is a bit different than commodities. Is there anything we should be mindful of as we think about prices potentially recovering there like we've seen kind of on the commodity side?
spk03: Yeah, Kurt. So our plywood prices did decline in the fourth quarter considerably. Interestingly enough, it was about a one-quarter lag to what happened to lumber prices. If you think about lumber prices Q2 to Q3 last there was a pretty significant drop in that quarter. Our plywood prices held up in Q3 largely because our order files were pretty long. And as we got into Q4, prices reset as demand softened a little bit. I think the worst of it is behind us. And our expectation is things are going to be relatively flat from here as we look out through 2022. Got it. Okay. That's helpful.
spk01: And then you talked about kind of the longer term outlook in terms of end market trends, but hoping you could just talk a little bit about what you're seeing in terms of order trends on the lumber side from the big box retailers. Any way to think about that in terms of how it's trending versus last year and any concerns around inventory levels in that channel or indications of maybe sticker shock starting to slow consumption at all?
spk03: Yeah, Kurt. So, you know, R&R, it paused last year, Q2 and Q3. You know, prices got up to $1,600 a thousand. You know, and then the market rebounded in Q4. We expect, as we said in our opening remarks, we expect growth in R&R to continue. um you know for us home center takeaway it picked up during q4 and it's still a solid business for us here in q1 there's lots of reasons why our and our activity is going to stay strong you know we've talked about a limited supply of new homes people want to expand living space to include outdoor areas record home equity levels strong labor market median age of houses is 42 years. All these factors are going to work together to help support the R&R business. What I would tell you specific to our business, and I don't want to get too down in the weeds for competitive reasons, But I would tell you that our home center demand today is currently outpacing our expectations. We think that's driven both by the DIY as well as the pro-contractor segments of R&R. So the way I'd characterize it is we have a program with the home centers to deliver a certain volume of lumber each week, each quarter. And what I would tell you is that they've come to us and they have asked for incremental lumber supply here early in 2022. And they're obviously gearing up for the spring, summer R&R season. So from our point of view, the R&R market, the home center market, it's very strong.
spk01: Got it. Okay. Well, that's good to hear. And then just lastly on, I guess, the three other bolt-on southern timberland transactions that you touched on, any color there you could give us in terms of acreage and, I guess, geography and valuation?
spk03: Well, yeah, so they're relatively small. They were all down in the south. You know, they were, well, three of them, two of them were in Arkansas, and one of them was over in Mississippi. You know, they were in the, gosh, you know, $2,000 an acre kind of range on average. Very attractive, well-stocked tracks. And our average real IRR over the course of the year, which would include those four deals in Q4, was around 5.4%, which is well above our cost of capital. for our Timberlands business. So we were quite enthusiastic. Several of those deals, by the way, were kind of one-off negotiated transactions. And if you look at our track record, that's kind of how we like to acquire Timberland. We don't like the big, you know, highly competitive broad auctions. All the excess returns tend to get bid away. We like finding these little niche one-off deals where the competitive bidding intensity is relatively low. And that's what we got in fourth quarter.
spk01: Got it. Okay. Well, appreciate all the color and good luck here in the new year.
spk03: Thanks.
spk00: Your next question comes from the line of Paul Quinn with RBC Capital Markets. Your line is now open.
spk03: Yeah, thanks very much. Morning, guys. Morning. Just want to get some more information on the oil of fire and the insurance proceeds or, you know, what the extent the insurance covers. Is there any business interruption insurance? And then when do you expect the mill to be back up and what's the new production capacity of the mill? Yeah, so I'll take the first part of that, Paul, in terms of insurance coverage. So insurance coverage is good. You know, we have coverage of both property damage as well as business interruption. with a minor deductible, around a million dollars for the deductible. And, you know, what we have over time is a bit of a mismatch, you know, in terms of when we incur expenses or capital expenditures. Certainly, we had business interruption or losses last year, and we got to go through the business interruption piece of that coverage. But You know, we'll come out very well financially at the end of the day. In the comments here, you know, CapEx to rebuild all is about $15 million this year, 2022. And that's fully covered by insurance. We've already kind of taken our lumps for the small deductible. And we're in the process of sorting through the business interruption. So, you know, throughout the year, you'll probably continue to see, you know, some noise both on the positive at this point perspective in terms of recoveries. And we'll continue to call that out as a special item as it occurs. And then I'll pass it over to Eric for the second part of the questions. Yeah, so good morning, Paul. So, yeah, in terms of startup, you know, we're going to take delivery of that new large log line kind of in the July-August timeframe. We're having regular interaction with the vendor, and the equipment is on track, and demolition has been completed at the site, and there's structural steel going in as we speak. So we're confident in that July-August kind of a timeframe. So what I tell you is that when we get done with getting through the hiccups that inevitably come from starting up a piece of equipment like this, the mill is going to be really competitive. We think recovery is going to be roughly 10% improved over the pre-fire OLA. We think our processing costs are going to be about 15% lower than the pre-fire OLA. And we're going to get about 25 million feet of incremental production, so up in the 150 million foot per year kind of range. So we think the mill's competitiveness is really going to improve kind of once it's up and running. Okay. And then just over on real estate, I mean, just looking at lot sales values in Q4 versus the outlook, why the expectation of higher pricing on the lot sales? Are they better lots? Is the market moving up significantly? It's a great question, Paul. And, you know, actually, it's a combination of both, to be honest with you. But the primary answer is, you know, I'll start with this piece of it, you know, is really mix usually is the primary factor. So, you know, there were a lot of more entry level type home lots, you know, that were sold in the fourth quarter. And what we have in the mix for the first quarter is more of the premium lots, if you will. And what we do is we release kind of a community by community. So you can see that mix swing quarter over quarter. We also did increase prices around 10% last year and continue to increase prices for lots just because demand has been so strong. I guess the other interesting, as I'm talking about strong demand for lots, when you look at, we released or made 139 lots available in the second half of last year, all of those sold or are under contract. and just last week we released 26 lots in another community you know again some of these nicer more premium lots that are referred to as to you know why the average price is higher all 26 are now uh spoken for so we our team you know quite honestly can't develop lots fast enough and demand has just been extraordinarily strong in that in that project yeah and on that on that note paul we had expected of those 26 lots we had expected 14 of them to sell And instead, as Jerry said, all 26 went. So if that gives you any indication about how the builders are thinking about 2022, I think that's a really good real-time indication. Okay, that's great. And then just over on the Timberland side, expectation for acquisitions in 2022, do you see any change at all in the marketplace, and are you still focused on the south? Yeah, we'd love to find something to do up in the inland region, Paul. It's just very little comes to market here. So we're almost forced to go look to the south for growth. The south is big, it's deep, it's liquid. So that's kind of where the Timberland M&A game is played these days. And what I would say is there are a number of deals that are in the pipeline that And I would tell you that it's unbelievably competitive right now chasing Timberland deals. Discount rates are at rock-bottom levels, and people are being very aggressive, both REITs as well as TMOs. So we'll see if things change, but it's a really competitive market right now for Timberland. So the expectation for a higher interest rate – through hikes in the Fed haven't really come back to higher discount rates at this point yet? No, I don't think so. And the other way to look at it, there's a lot of talk about people investing in real assets these days. Timberland historically has been a pretty good inflation hedge. And if you believe in wood baskets starting to tighten, you can offset interest rate increases with increased log prices to offset um you know those potentially higher discount rates you know so people people when they buy timberland they really buy it for the long term you know not for what's happening to interest rates today or tomorrow or next year even it's really a long-term play um but i'll tell you that it's more competitive than ever okay maybe one bonus question because you brought it up just just on tightening timber markets especially in the south do you expect those those saw log prices to move up materially anytime soon, or what's your expectation of price increases to your sawmill assets? Yeah, it's a great question, Paul. And, you know, you look at our southern solid price realizations last year, 2021 is up 4% compared to 2020. So certainly, you know, wet weather and log shortages at mills played a role. You know, I think it's still a bit early in our mind as to whether, you know, there's kind of a broader tensioning that's occurring. You know, we do see that, you know, in the future and I think we're on the right trend and path as mill capacity continues to get added or expanded in the U.S. south. Now, having said that, we are forecasting next year, 2022 versus 2021, that solid pricing probably moves up another 2%. So we're quite optimistic. It's hard to say beyond kind of local wood baskets and mix whether, like I said, things have turned in the south, which is really the broader question you're asking. Go ahead. All right. That's all I had. Best of luck, guys. Thanks. Great. Thanks. Thanks.
spk00: Your next question comes from the line of Keaton Mumtora with BMO Capital Markets. Your line is now open.
spk04: Thank you, Anne. Good afternoon. First question, I was just curious, we've seen this big rally in lumber prices at a time usually where demand is seasonally slow. What do you think are the two or three key drivers? Is it more driven by sort of the absenteeism that you're seeing at the mills, inability to really produce lumber? Or is it that demand actually has continued to remain strong in all the different sort of end markets?
spk03: Yeah, Keith, and the way I would characterize it is it's a function of both, really. You know, we've seen demand remain pretty strong here, despite the fact that we're in the winter months. R&R remains strong. Housing starts figures have been pretty strong. So demand has been strong. And then so if you look at the supply-sided equation, certainly COVID has impacted production and shipment volumes. We think it costs us 10 million feet of shipments in the fourth quarter. We think it's going to cost us another 5 million feet here in Q1. It's an issue the whole industry is grappling with. And when you combine that with, you know, the issues that B.C. has had with the flooding and all the transportation issues up there trying to get lumber out of B.C. down to the U.S., where, you know, B.C. is 15 to 20 percent of North American supply, I think that has helped conspire to raise prices as well. But, you know, I think you got to think about this in terms of the diminishing amount of spare capacity that's in the lumber producing industry. If you take a look at the longer term, and I mean longer term, just like a five-year trend, we've seen North American capacity grow roughly 2 billion board feet. Despite all this talk you hear about all these new mills and all these expansions, you add it all up, net, net, you've seen roughly 3 million feet come out of Canada, and you've seen, you know, 4 or 5 billion feet here in the U.S. But over that same five-year stretch, you've seen North American consumption grow by roughly 8 billion board feet. So capacity utilization is getting tighter and tighter in the industry. And any time there's a hiccup in the supply chain, whether it's B.C. floods or it's COVID absenteeism, it's going to force prices higher. So I think, you know, this is just a situation the industry finds itself in after, you know, a decade of underbuilding in the U.S., you know, there wasn't a whole lot of free cash flow floating around the industry for people to go invest in their mills. So now we're left with, you know, demand is coming in really strong, and there just isn't the supply to meet it. So it's really both a supply and a demand issue.
spk04: Got it. That's helpful perspective. And then switching to your CapEx plans for 2022, outside of, you know, OLA that we discussed earlier. Can you talk about maybe a couple of key projects that are going on at your saw mills for this year?
spk03: Yeah, so we've got two extra projects that are going into OLA besides the rebuild project. We're putting in a new trimmer optimization piece of equipment. We're also putting in a log simulator. That's about $4 million of capital and 32% kind of IRRs on those projects. um we thought as long as we're rebuilding ola and we got all this opportunity with that mill to really get it in you know fighting shape we thought why not enhance the performance in the middle of those two projects we've also got a uh an interesting project out at our our plywood mill um this is about a four and a half million dollar project with a roughly 40 uh irr um it's a it's an automated patch line So right now you've got 10, 15 people that do patch repair for plywood as it moves down the assembly line. This new automatic patch equipment that we're installing, it's not only going to remove roughly 12 employees from the mill, which labor is hard to get, so that's helpful. We're also going to cut chemical usage about $1.7 million per year. um so that project is going to going to wrap up here in q1 and q2 will be off the races um so we're really looking forward to getting that behind us as well and then we're also investing some capital frankly for projects that aren't going to happen um this year necessarily because of the you know vendor lead times or throughout into into next year we got two projects uh out of our gwyn mill um that look really attractive to us so we're gonna we're gonna start work on those projects here this year as well. One's an edger upgrade and the other's a trim sword line replacement project. So a lot of things in the hopper, but our focus candidly this year is really the Ola sawmill rebuild.
spk04: Got it. That's very helpful. And then, turning to real estate, you mentioned the development, the Schnell Valley development side. But even on the rural side, it seems like there's quite a bit of activity and interest. For Q1, you're talking about over $4,000 in price per acre. That seems like a very healthy number.
spk03: Yeah, that's correct, Kate. And then I would just start by saying overall demand for rural has been really strong as well. You know, it's a combination of factors. You know, some of it, you know, is just rural recreation and people, you know, in a pandemic window wanting space and prioritizing that even more than prior to the pandemic. But, you know, everything I'll touch on is when you think about, you know, our team always finds kind of new market opportunities. We're always thinking about, you know, what is the next way to kind of create value for And one of the things that, you know, I'll throw in the mix is, you know, there's about 50 million of solar projects that our team is looking at. You know, this could be longer term. It's not necessarily, I'm not talking Q1 specifically here. But those, you know, would be instances where most likely we would sell the land after harvesting it and sell it at a really attractive price. So, you know, overall, you know, give me some examples as to, you know, certain segments of that market have just been really strong and they continue to evolve over time. You know, as you see in the Q1 price per acre, you know, obviously, you know, we have one or more really attractive deals that we're anticipating and look forward to providing color in April, assuming we can pull those over the finish line. Yeah, and Keaton, just to add to what Jerry was saying, interestingly enough, you know, we've spoken about this Luter deal down in South Arkansas and North Louisiana. Luter had a history of really not selling much land. They kind of kept it for themselves. And since we've acquired Luter and made the announcement, we've now fielded a dozen inbound phone calls, people interested in trying to buy some rural acreage from us. So there's pent-up demand out there for some of those tracks. And we're not going to rush into any deals. We like to take our time, stratify our acreage, and really be conscious about what we're going to sell and what kind of premium we're going to get. But I think that kind of gives you an indication of what we like to do after we do a meaningful timberland acquisition. We stratify and then we extract those acres that have got really high world demand potential, price potential, and we sell them off. But we're seeing, as Jerry said, no slowdown in rural demand.
spk04: Got it. That's very helpful. And just one quick one from me. On feeder prices, have you started to see those stabilize or are they still under pressure so far in Q1?
spk03: Yeah, you know, still a bit under pressure would be the short answer, Caden. You know, but the decline has not been as significant. And the other thing that's important is, you know, they're still trading at really attractive prices relative to history. So, you know, even though they've come off, you know, kind of a record peak, if you will, you know, we're still very happy with the price that they're trading at today.
spk04: Got it. That's very helpful. I'll turn it over. Good luck in 2022. Thank you.
spk00: Your next question comes from the line of John Babcock with Bank of America. Your line is now open.
spk02: Hey, thanks for taking my questions. Starting out, did you make any comments on where you expect EBITDA to come out at all for the quarter?
spk03: Yeah, in the prepared comments, you know, John, at the very end, I kind of touched on and said, you know, we expect Q1 EBITDA consolidated for the company to probably be a bit more than double Q4 is our current estimate. Obviously, you know, a key moving part is lumber pricing, you know, prices, which, you know, made a strong move and on a spot basis, you know, provided color that they're up 90%, you know, compared to our fourth quarter average, but it also feels like, you know, there's a chance they might've hit a, hit a, hit a peak. And, you know, it depends on kind of how the rest of the quarter plays out.
spk02: Okay. Gotcha. Just want to clarify that. And then the next part, just on Ola, sounds like you guys expect that to start up in three Q four Q sorry, not three Q four Q July, August timeframe. How should we think about the ramp up of that?
spk03: That's a little early to try to be giving that kind of guidance, John. I mean, I think our plan is to get to fully operational by January 1st of 2023. um you know these these uh these startups are always challenging a lot of kinks to get worked out in the system but i think you could draw a you know a line starting august 1st at zero production for the large log line and then it's going to linearly get to hopefully get to 150 million feet by january 1st that might be just a simple way to look at it and think about it okay
spk02: And, you know, CapEx is going to be a little bit elevated this year. How would you have us think about, you know, the longer-term CapEx profile? I think in the past we've had, you know, $40 million, $45 million annually baked in, you know, and it sounds like about, you know, $15 million or so is over, of course, plus or minus, you know, a couple million for other investments. So how would you have us kind of think about that?
spk03: Well, I would say that, you know, our timberlands capex is relatively stable around, I don't know, $17 million a year. Our real estate capex, it really just depends on, you know, our ability to produce lots. And that runs, who knows, $10, $12 million a year. And then it's wood products. And for us, wood products, it's really driven by discretionary investments. You know, to what extent do we see high return projects that we feel really good about? It varies from year to year. You know, I think this year it is elevated because of the OLA spend. I think you've got to back out, you know, that $15 million of insurance proceeds that we're going to get reimbursed. But I think a normal run rate would be in the $25 to $30 million kind of range going forward had there not been an OLA.
spk02: Okay. Thank you. That's all I have.
spk00: At this time, I'm showing there are no more questions. I'll now turn the call back over to Jerry Richards. Thank you.
spk03: You know, just to reiterate, you know, we expect to start, you know, 2022 with a really strong quarter, as you heard, you know, in the Q&A, you know, at least double what we just generated in the fourth quarter. You know, housing fundamentals and repair and remodel market fundamentals remain really strong or well-positioned. have a really strong balance sheet to continue to grow the company and grow shareholder value over time. So thanks for your interest and certainly available to answer detailed modeling questions the rest of the day. Thank you.
spk00: This concludes today's conference call. Thank you for attending. You may now disconnect.
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