• Adjusted EBITDA: $72 million for the third quarter, down from $79 million in the prior year period.
• Pro Forma Net Income: $18 million or $0.12 per share for the third quarter.
• Sales: $195 million for the third quarter.
• Operating Income: $28 million for the third quarter.
• Net Income Attributable to Rayonier: $29 million or $0.19 per share for the third quarter.
• Cash Available for Distribution (CAD): $106 million for the first nine months, down from $115 million in the prior year period.
• Net Debt to Trailing 12 Months Adjusted EBITDA: Approximately 4.5 times at quarter end.
• Southern Timber Segment Adjusted EBITDA: $38 million for the third quarter.
• Pacific Northwest Timber Segment Adjusted EBITDA: $9 million for the third quarter.
• New Zealand Timber Segment Adjusted EBITDA: $15 million for the third quarter, down $9 million from the prior year quarter.
• Real Estate Segment Adjusted EBITDA: $20 million for the third quarter.
• Full Year Adjusted EBITDA Guidance: Revised to $275 million to $290 million.
• Full Year Net Income Guidance: $343 million to $359 million.
• Full Year Earnings Per Share Guidance: $2.30 to $2.40.
• Pro Forma Earnings Per Share Guidance: $0.36 to $0.40.

• Warning! GuruFocus has detected 6 Warning Sign with RYN.

Release Date: November 07, 2024

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

Positive Points

• Rayonier Inc (NYSE:RYN) announced timberland dispositions totaling 200,000 acres for $495 million, expected to generate a 9% accretion in CAD per share.
• The company has completed or announced pending timberland dispositions totaling $737 million, achieving roughly three-quarters of its $1 billion target.
• Rayonier Inc (NYSE:RYN) expects a reduction in leverage to approximately 2.8 times net debt to pro forma adjusted EBITDA following the dispositions.
• The real estate segment showed strong performance with third-quarter adjusted EBITDA of $20 million, driven by higher average per acre prices.
• The company is advancing its land-based solutions business, with 76,000 acres under lease for carbon capture and storage and 40,000 acres under option for solar development by year-end.

Negative Points

• Third-quarter adjusted EBITDA decreased to $72 million from $79 million in the prior year, primarily due to lower contributions from the New Zealand timber segment.
• The New Zealand timber segment faced a $9 million decrease in adjusted EBITDA due to lower carbon credit sales and elevated shipping costs.
• Southern timber segment experienced a 13% decline in harvest volumes and a 3% decrease in weighted average net stumpage realizations.
• Pacific Northwest timber segment saw a 7% decrease in weighted average net stumpage realizations despite increased harvest volumes.
• The company revised its full-year adjusted EBITDA guidance to $275 million to $290 million, reflecting the impact of completed and pending dispositions.

Q & A Highlights

Q: Could you provide an update on the strategic alternatives for your stake in the New Zealand business and your plans to reach the $1 billion disposition target? A: Mark Mchugh, President and CEO, explained that the evaluation of strategic alternatives for the New Zealand joint venture is ongoing, with no new updates at this time. The process is expected to be lengthy due to government provisions. Regarding the $1 billion target, Rayonier has completed three-quarters of the goal and will be opportunistic about future dispositions, including those in New Zealand.

Q: What are your expectations for the log market in China in 2025, considering supply reductions from Europe and potential demand changes due to Chinese stimulus measures? A: Douglas Long, Executive Vice President and Chief Resource Officer, noted that supply from Europe has decreased, with New Zealand taking a larger share of the market. While demand is stable, increased shipping rates have been a challenge. Chinese government stimulus has provided short-term opportunities, but the long-term impact remains uncertain.

Q: How should we think about the impact of the Oklahoma sale on the Southern portfolio quality and log prices? A: Mark Mchugh stated that the Oklahoma sale represents a small portion of the Southern portfolio, so the impact on overall business and log pricing is minimal. Oklahoma properties typically have lower per-acre values and productivity, so the sale is seen as an upgrade to the portfolio.

Q: Can you explain the cost dynamics in the Southern and Pacific Northwest timber segments and expectations for the fourth quarter? A: Douglas Long mentioned that costs are stable in the South, while the Pacific Northwest has seen reductions due to operational changes and lower fuel costs. The recent dispositions involved higher-cost operations, which should lead to further cost reductions.

Q: What does the statement about the disposition program being accretive to NAV per share mean? A: Mark Mchugh clarified that the statement refers to the higher valuations achieved in private markets compared to public markets. The proceeds from dispositions are used for share buybacks, which are expected to be accretive to NAV per share.

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