Rayonier Reports Third Quarter 2024 Results

Third quarter net income attributable to Rayonier of $28.8 million ($0.19 per share) on revenues of $195.0 million

Third quarter pro forma net income of $18.1 million ($0.12 per share)

Third quarter operating income of $27.6 million, pro forma operating income of $28.5 million, and Adjusted EBITDA of $71.8 million

Year-to-date cash provided by operations of $173.8 million and cash available for distribution (CAD) of $105.7 million

Updating full-year Adjusted EBITDA guidance to reflect current outlook and disposition activity announced concurrent with this release

Rayonier Inc. reported third quarter net income attributable to Rayonier of $28.8 million, or $0.19 per share, on revenues of $195.0 million. This compares to net income attributable to Rayonier of $19.2 million, or $0.13 per share, on revenues of $201.6 million in the prior year quarter.

The third quarter results included $12.0 million of net recoveries associated with legal settlements,¹ $0.9 million of costs related to disposition initiatives,² and a $0.3 million pension settlement charge.³ Excluding these items and adjusting for pro forma net income adjustments attributable to noncontrolling interests,⁴ third quarter pro forma net income⁵ was $18.1 million, or $0.12 per share. This compares to pro forma net income⁵ of $19.2 million, or $0.13 per share, in the prior year period.

Third quarter operating income was $27.6 million versus $35.4 million in the prior year period. Third quarter operating income included $0.9 million of costs related to disposition initiatives.² Excluding this item, pro forma operating income⁵ was $28.5 million. This compares to pro forma operating income⁵ of $35.4 million in the prior year period. Third quarter Adjusted EBITDA⁵ was $71.8 million versus $78.9 million in the prior year period.

Year-to-date cash provided by operating activities was $173.8 million versus $208.9 million in the prior year period. Year-to-date cash available for distribution (CAD)⁵ was $105.7 million, which decreased $9.1 million versus the prior year period due to lower Adjusted EBITDA⁵ ($19.2 million) and higher cash taxes paid ($0.8 million), partially offset by lower cash interest paid (net) ($11.0 million).

“We delivered solid operational results in the third quarter, despite macroeconomic challenges that continue to adversely impact our timber businesses,” said Mark McHugh, President and CEO. “We achieved total Adjusted EBITDA of $71.8 million, representing a 9% decrease versus the prior year quarter, primarily driven by a lower contribution from our New Zealand Timber segment.”

“In our Southern Timber segment, Adjusted EBITDA was comparable to the prior year quarter, as significantly higher non-timber income was largely offset by a 13% decline in harvest volumes and 3% lower weighted-average net stumpage realizations. In our Pacific Northwest Timber segment, Adjusted EBITDA improved 12% versus the prior year quarter, as a 10% increase in harvest volumes and favorable costs were partially offset by a 7% decrease in weighted-average net stumpage realizations. In our New Zealand Timber segment, Adjusted EBITDA declined 38% relative to the prior year quarter, primarily driven by lower carbon credit sales and a 16% decrease in weighted-average net stumpage realizations due to elevated shipping costs.”

“In our Real Estate segment, Adjusted EBITDA improved 5% versus the prior year quarter, as higher per-acre prices were partially offset by lower acres sold.”

“During the third quarter, we also significantly advanced our $1 billion disposition initiative, which led to the closing of several large transactions following the end of the quarter. Additional details regarding our recent disposition activity have been provided in a separate press release issued concurrent with this release.”

Southern Timber

Third quarter sales of $62.0 million decreased $2.0 million, or 3%, versus the prior year period. Harvest volumes decreased 13% to 1.57 million tons versus 1.81 million tons in the prior year period, primarily driven by wet ground conditions that constrained production as well as softer demand from lumber mills. Average pine sawtimber stumpage realizations decreased 5% to $27.46 per ton versus $28.85 per ton in the prior year period, primarily due to softer demand from sawmills and an unfavorable geographic mix. Average pine pulpwood stumpage realizations increased 4% to $17.21 per ton versus $16.54 per ton in the prior year period, primarily driven by improved demand from pulp mills and weather-related constraints on competing supply in certain markets. Overall, weighted-average net stumpage realizations (including hardwood) decreased 3% to $20.77 per ton versus $21.48 per ton in the prior year period. Non-timber sales of $16.7 million increased $6.8 million versus the prior year period, primarily driven by higher pipeline easement revenues and growth in our land-based solutions business. Operating income of $19.8 million increased $1.2 million versus the prior year period as higher non-timber income ($6.2 million) and lower costs ($0.1 million) were partially offset by lower volumes ($2.6 million), higher depletion expense ($1.4 million), and lower net stumpage realizations ($1.1 million).

Third quarter Adjusted EBITDA⁵ of $37.9 million was $0.2 million above the prior year period.

Pacific Northwest Timber

Third quarter sales of $27.2 million decreased $2.1 million, or 7%, versus the prior year period. Harvest volumes increased 10% to 319,000 tons versus 290,000 tons in the prior year period. Average delivered prices for domestic sawtimber decreased 12% to $95.27 per ton versus $108.20 per ton in the prior year period due to a combination of weaker demand from domestic lumber mills and an unfavorable species / product mix, as a lower proportion of Douglas-fir sawtimber was harvested in the current year period. Average delivered pulpwood prices decreased 9% to $30.14 per ton versus $33.09 per ton in the prior year period, primarily due to softer mill demand in the region. Operating income of $0.8 million versus an operating loss of $0.6 million in the prior year period was driven by lower depletion expense ($1.3 million), lower costs ($0.8 million), and higher volumes ($0.4 million), partially offset by lower net stumpage realizations ($1.1 million).

Third quarter Adjusted EBITDA⁵ of $8.7 million was 12%, or $0.9 million, above the prior year period.

New Zealand Timber

Third quarter sales of $66.8 million decreased $3.7 million, or 5%, versus the prior year period. Sales volumes decreased 1% to 686,000 tons versus 690,000 tons in the prior year period. Average delivered prices for export sawtimber increased 10% to $104.48 per ton versus $95.23 per ton in the prior year period, as higher shipping costs were partially passed on to export customers through increased prices. Average delivered prices for domestic sawtimber increased 2% to $64.89 per ton versus $63.45 per ton in the prior year period. Despite higher delivered log prices, net stumpage realizations declined 16% versus the prior year quarter, largely due to elevated shipping and production costs. Third quarter non-timber / carbon credit sales totaled $8.9 million versus $15.6 million in the prior year period, primarily due to a lower volume of carbon credits sold as compared to the prior year period. Operating income of $8.9 million decreased $8.6 million versus the prior year period due to lower carbon credit income ($6.6 million), lower net stumpage realizations ($2.6 million), higher costs ($0.2 million), and lower volumes ($0.1 million), partially offset by favorable foreign exchange impacts ($0.5 million) and lower depletion rates ($0.3 million).

Third quarter Adjusted EBITDA⁵ of $14.6 million was 38%, or $8.9 million, below the prior year period.

Real Estate

Third quarter sales of $30.1 million decreased $1.1 million versus the prior year period, while operating income of $8.6 million decreased $0.6 million versus the prior year period. Sales and operating income decreased versus the prior year period due to lower acres sold (2,916 acres sold versus 4,281 acres sold in the prior year period), partially offset by higher weighted-average prices ($8,835 per acre versus $5,781 per acre in the prior year period).

Improved Development sales of $12.0 million included $7.9 million from the Wildlight development project north of Jacksonville, Florida, $3.6 million from the Heartwood development project south of Savannah, Georgia, and $0.5 million from the sale of an industrial-use parcel in Kitsap County, Washington ($266,000 per acre). Sales in Wildlight consisted of two residential pod sales totaling 104 acres for $7.7 million ($74,000 per acre) and two small non-residential sales totaling $0.2 million. Sales in Heartwood consisted of an 8.8-acre commercial parcel for $3.6 million ($410,000 per acre). This compares to Improved Development sales of $3.1 million in the prior year period.

Rural sales of $13.8 million consisted of 2,800 acres at an average price of $4,916 per acre. This compares to prior year period sales of $20.5 million, which consisted of 3,799 acres at an average price of $5,386 per acre.

There were no Timberland & Non-Strategic sales in the third quarter. This compares to prior year period sales of $1.1 million, which consisted of 466 acres at an average price of $2,266 per acre.

Third quarter Adjusted EBITDA⁵ of $19.9 million increased $1.1 million versus the prior year period.

Trading

Third quarter sales of $9.0 million increased $2.2 million versus the prior year period, primarily due to higher volumes and prices. Sales volumes of 76,000 tons increased 24% versus the prior year period. The Trading segment generated an operating loss of $0.1 million, which was consistent with the prior year period.

Other Items

Third quarter corporate and other operating expenses of $10.5 million increased $1.1 million versus the prior year period, primarily due to $0.9 million of costs related to disposition initiatives² and higher compensation and benefits expenses, partially offset by lower professional services fees.

Third quarter interest expense of $10.0 million decreased $2.6 million versus the prior year period, primarily due to lower average outstanding debt.

Third quarter income tax expense decreased $0.5 million versus the prior year period. The New Zealand subsidiary is the primary driver of income tax expense.

Outlook

“Based on our year-to-date results and our expectations for the fourth quarter, we now expect full-year net income attributable to Rayonier of $343 to $359 million, EPS of $2.30 to $2.40, pro forma EPS of $0.36 to $0.40, and Adjusted EBITDA of $275 to $290 million,” added McHugh. “Our revised expectations for the year reflect slightly lower harvest volumes due to our recently announced timberland dispositions. As communicated previously, our prior financial guidance excluded the potential impact of 2024 asset sales as part of the $1 billion disposition target that we announced in November 2023. Our revised guidance reflects the impact of removing forecasted harvest volume from the disposition properties, as harvesting activities generally ceased on these properties around mid-year in preparation for the sale process.”

“In our Southern Timber segment, we now expect full-year harvest volumes of approximately 7.0 million tons and Adjusted EBITDA slightly below the lower end of our prior guidance range due to the disposition of approximately 91,000 acres in Oklahoma as well as weather-related impacts in certain markets. In our Pacific Northwest Timber segment, we now expect full-year harvest volumes of approximately 1.2 million tons and Adjusted EBITDA slightly below the lower end of our prior guidance range due to the disposition of approximately 109,000 acres in Washington. In our New Zealand Timber segment, we expect full-year harvest volumes in line with our prior guidance of 2.4 to 2.5 million tons, while we expect Adjusted EBITDA modestly below our prior guidance range due to lower carbon credit sales, softer export markets, and elevated shipping costs. In our Real Estate segment, we continue to expect strong fourth quarter closing activity and full-year Adjusted EBITDA within our prior guidance range, contingent on the timing of several large transactions.”

For full third quarter results click here.

About Rayonier

Rayonier is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. As of December 31, 2023, Rayonier owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.85 million acres), U.S. Pacific Northwest (418,000 acres) and New Zealand (421,000 acres). More information is available at www.rayonier.com.

Contact:

Collin Mings – Vice President, Capital Markets & Strategic Planning – investorrelations@rayonier.com – (904) 357-9100

Source: Rayonier, Inc.