• Adjusted EBITDA: $27 million, down 39% from the prior year.
• Pro Forma Net Loss: $3 million or $0.02 per share.
• First Quarter Sales: $83 million.
• Cash Available for Distribution (CAD): $20 million, down from $31 million in the prior year.
• Southern Timber Segment Adjusted EBITDA: $27 million, with a 21% decline in harvest volumes.
• Pacific Northwest Timber Segment Adjusted EBITDA: $6 million, with an 18% decrease in harvest volumes.
• Real Estate Segment Adjusted EBITDA: $2 million, with $10 million in revenue from 1,000 acres sold.
• Share Repurchases: 95,000 shares at $27.61 per share in Q1; 404,000 shares at $24.75 per share in April.
• Cash and Debt: $216 million in cash and $1.1 billion in debt at quarter end.
• Full Year 2025 Adjusted EBITDA Guidance: $215 million to $235 million.

• Warning! GuruFocus has detected 3 Warning Sign with UTZ.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rayonier Inc (NYSE:RYN) announced the pending sale of its New Zealand business for $710 million, which is expected to enhance shareholder value and reduce leverage.
• The company plans to use at least 50% of the sale proceeds to reduce leverage and return capital to shareholders through share repurchases and a special dividend.
• Rayonier Inc (NYSE:RYN) reported an increase in adjusted EBITDA in its Pacific Northwest timber segment, despite a reduction in acreage and volume.
• The company has significant capital allocation flexibility with $287 million remaining on its share repurchase authorization.
• Rayonier Inc (NYSE:RYN) is optimistic about improving market conditions in the second half of the year, particularly in the US South timber operations as salvage efforts moderate.

Negative Points

• Rayonier Inc (NYSE:RYN) reported a 39% decline in adjusted EBITDA compared to the prior year, primarily due to lower results in its southern timber and real estate segments.
• The company's first quarter results were negatively impacted by challenging timber market conditions in the US South and reduced harvest volumes.
• The southern timber segment experienced a 21% decline in harvest volumes and a 19% decrease in weighted average net stumpage realizations.
• Real estate segment adjusted EBITDA was down $3 million from the prior year period due to fewer acres sold.
• The company anticipates lower non-timber income in 2025 compared to 2024, primarily due to a decrease in pipeline easement revenue.

Q & A Highlights

Q: How significant are labor constraints in logging and hauling today, and how might they impact higher lumber production in the US due to potential tariffs on Canadian lumber? A: Douglas Long, Executive Vice President, Chief Resource Officer, noted that while labor constraints have been a concern, productivity improvements have helped. If demand increases significantly, companies with long-term relationships with loggers, like Rayonier, could see a competitive advantage as loggers might invest to increase production.

Q: Can you provide more color on the attractiveness of share repurchases and the use of proceeds from the New Zealand sale? A: Mark Mchugh, President and CEO, stated that share repurchases are a compelling use of capital given the current stock price. Rayonier has repurchased $13 million worth of stock this year and plans to continue opportunistic buybacks, with over $280 million remaining on their repurchase authorization. The New Zealand transaction will provide significant capital allocation capacity.

Q: What are the expectations for log prices in response to higher Canadian import duties, and are sawmill customers taking concrete steps to ramp production? A: Douglas Long explained that there is positive sentiment among sawmills, with some expanding current shift work. However, uncertainty has tempered actions like adding new shifts. Recent negotiations have shown real price increases as sawmills seek more volume, particularly in the US South.

Q: Could you elaborate on the negative impact of salvage volumes in the Atlantic region and the geographic mix shift within southern timberlands? A: Douglas Long detailed that the Atlantic region has been impacted by salvage volumes, leading to significant price declines. Rayonier shifted some harvest to the Gulf region, which has lower prices, contributing to the overall price decline. The salvage operations are winding down, and a reversal is expected in the latter half of the year.

Q: How do you view the demand and pricing outlook for southern timber given the current housing market conditions? A: Mark Mchugh acknowledged the challenging conditions but remains optimistic about long-term fundamentals, including an underbuilt housing stock. While near-term uncertainty exists, the expectation is that timber pricing will improve as salvage volumes decrease and potential trade policy changes impact the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.