Anthony Timberlands Sets Record For 2020, Aided by Lumber Prices

2020 was the best year in Anthony Timberlands’ history, and this year is shaping up to surpass that, said Steve Anthony, president of the company, based in Bearden.

Of course, things can change in a heartbeat, as the volatility of lumber prices continues to demonstrate.

The COVID-19 pandemic that led to a building boom while simultaneously causing supply chain troubles pushed lumber prices to record peaks in May. Since then, however, prices have plunged 40%, though they remain historically high. Lumber futures for July delivery hit $1,711 per 1,000 board feet on May 10 but closed at $1,010 on Tuesday. Before the pandemic began to be felt in the United States, in early February 2020, futures were trading at $423 per thousand board feet.

“When it goes up that fast, it comes down equally fast,” Anthony said of the price increase. “I guess it remains to be seen where it settles.”

The robust prices have been a windfall for the company, and Anthony Timberlands has taken advantage of that windfall to invest in its operations, including $10 million in improvements to its pine sawmill in Malvern that were announced last month.

“We’re investing in every single one of our mills,” he said. “This spike that we’ve enjoyed has generated capital. All of our rolling stock at each of our mills has been substantially upgraded.

“We’ve added a treating cylinder to our treating plant in Hope. We’re in the midst of some major technological improvements at our flooring mill in Magnolia. Just selected pieces of equipment at every mill have been upgraded.”

Things weren’t looking so rosy just a little over a year ago. “2019 was the second-worst year in our company’s history,” Anthony said. That year, Anthony Timberlands reported $235 million in revenue, but that is no indication of profitability.

“And the first three months of 2020 were equally bad, so when the pandemic hit — February, March — it certainly didn’t look good. It was incredibly counterintuitive that the lumber market should explode as it did in the middle of the year. And it turned out to be the best year in our company’s history.” The company reported $273 million in revenue in 2020.

Anthony said he’s not sure what is behind the volatility of lumber prices. Although prices spiked last August, by October, lumber futures prices had dropped to more familiar levels, closing at $478 per 1,000 board feet on Oct. 29.

“Nobody saw it coming,” he said. “I’ve read various explanations for why it happened. Certainly, when you print and distribute trillions of dollars, then some of those people are going to spend that money.”

As for 2021, it’s looking better than 2020, Anthony said. “Things started off good in, say, February of this year, and they’ve been good since then, so even though prices are retreating pretty rapidly, they’re still twice as high as they normally would be this time of year,” he said.

Finding workers, however, is a challenge. “Before the pandemic, we were fully staffed at all mills,” Anthony said. “We had plentiful applications. Since the pandemic we’re shorthanded in every department and have no applications. We’ve increased our rates of pay by around 20%.” And the company has instituted bonuses.

But the forest products industry is intensely cyclical, he said. Although times are good now, “we may be in the deepest recession in our history in six months. And it’s hard to take things back once you give them,” Anthony said. “Without knowing that we’re in a never-ending good market, then it’s difficult to find a way to fairly compensate the employees and generate the applications that you need without locking in future expenses that end up being unsustainable.”

Anthony Timberlands, which produces softwood and hardwood lumber, oak flooring and treated wood, as well as managing more than 200,000 acres of timberland, is the last major Arkansas-owned forest products company. The past few years have seen consolidation in the industry. Among the changes, Deltic Timber Corp. of El Dorado merged with Potlatch Corp. of Spokane, Washington, to form PotlatchDeltic Corp. in 2018 and Canfor Corp. of Vancouver bought Anthony Forest Products Co. of El Dorado in 2015.

“We’re very fortunate,” Anthony said, noting that the barriers to entering the industry are high and the challenges to surviving in it are great. Building a sawmill these days can require a $100 million investment, and the estate tax can threaten the survival of a family-owned company, he said.