Rayonier (NYSE:RYN) today reported first quarter net income of
$26 million, or 33 cents per share, compared to $40 million, or 50
cents per share, in first quarter 2008.
Cash provided by operating activities of $65 million was $35
million below the prior year period. Cash available for
distribution1 of $54 million was $6 million below first quarter
2008. (See Schedule D for more details.)
Lee M. Thomas, Chairman, President and CEO said, "The benefits
of our business mix were clear as we continued to generate good
cash flow, despite persistent weakness in the housing market. We
experienced solid demand for our Performance Fibers products and
non-strategic timberlands, which partially offset the softness in
our timber business."
Timber
Sales of $33 million declined $12 million from first quarter
2008, while operating income decreased $12 million to an operating
loss of $1 million. Despite generating an operating loss, the
Timber segment contributed $15 million of Adjusted EBITDA1 for the
quarter.
In the Eastern region, sales were comparable to the prior year
period reflecting higher volumes offset by overall lower prices and
a sales mix shift from sawtimber to pulpwood. In the Western
region, sales declined from the prior year period as weak demand
due to sawmill curtailments continued to negatively impact prices
and volumes.
Based on current conditions, the Company expects to operate at
reduced harvest levels, particularly in the Northwest.
Real Estate
Sales and operating income of $27 million and $14 million were
$3 million and $7 million below first quarter 2008, respectively.
Lower rural property volumes and prices were partially offset by a
15,000 acre increase in non-strategic timberland sales at per acre
pricing comparable to the prior year period. Non-strategic
timberland sales totaled 19,000 acres and generated $23 million in
revenue during the quarter.
Performance Fibers
Sales and operating income were $204 million and $41 million, an
increase of $29 million and $4 million from the prior year period,
respectively. Increased cellulose specialty prices were largely
offset by higher caustic costs.
Other Items
Corporate and other expenses declined $1 million from the prior
year period due to general cost reductions.
Interest and other, net increased $1 million from first quarter
2008 due to higher average net debt balances.
The first quarter effective tax rate from continuing operations
before discrete items of 19.4 percent was consistent with the prior
year period rate of 20.5 percent. Including discrete items, the
first quarter 2009 effective tax rate from continuing operations
was 16.8 percent compared to 20.0 percent in the prior year
period.
Outlook
�We expect to generate solid cash flows well in excess of our
$2.00 per share dividend in 2009, despite the difficult economy.
Our conservative debt levels, manageable debt maturities and strong
balance sheet provide significant operating flexibility,� said
Thomas.
�We expect that the weak housing market will continue to
negatively impact our timber businesses, particularly in the
Northwest, and anticipate holding even more volume off the market.
In Real Estate, we expect steady demand for our rural and
non-strategic timberlands. Performance Fibers earnings are expected
to remain strong and in line with 2008.�
Further Information
A conference call will be held on Thursday, April 30, 2009 at
2:00 p.m. EDT to discuss these results. Interested parties are
invited to listen to the live webcast by logging on to www.rayonier.com and following the link.
Investors may also choose to access the conference call by dialing
(888) 790-3052, password: Rayonier. Financial Presentation
materials are available at the website. A replay will be available
on the site shortly after the call.
For further information, visit the company�s website at
www.rayonier.com.
Complimentary copies of Rayonier press releases and other financial
documents are also available by mail or fax by calling
1-800-RYN-7611.
1 Cash available for distribution (CAD) and Adjusted EBITDA are
non-GAAP measures defined and reconciled to GAAP in the attached
exhibits.
Rayonier is a leading international forest products company with
three core businesses: Timber, Real Estate and Performance Fibers.
The company owns, leases or manages 2.6 million acres of timber and
land in the United States and New Zealand. The company�s holdings
include approximately 200,000 acres with residential and commercial
development potential along the fast-growing Interstate 95 corridor
between Savannah, Georgia, and Daytona Beach, Florida. Its
Performance Fibers business is one of the world�s leading producers
of high-value specialty cellulose fibers. Approximately 40 percent
of the company�s sales are outside the U.S. to customers in
approximately 40 countries. Rayonier is structured as a real estate
investment trust. More information is available at
www.rayonier.com.
Certain statements in this document regarding anticipated
financial outcomes including earnings guidance, if any, business
and market conditions, outlook and other similar statements
relating to Rayonier's future financial and operational
performance, are "forward-looking statements" made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and other federal securities laws. These
forward-looking statements are identified by the use of words such
as "may," "will," "should," "expect," "estimate," "believe,"
"anticipate" and other similar language. Forward-looking statements
are not guarantees of future performance and undue reliance should
not be placed on these statements.
The following important factors, among others, could cause
actual results to differ materially from those expressed in
forward-looking statements that may have been made in this
document: the effect of the current financial crisis, which is
impacting many areas of our economy, including the availability and
cost of credit, pricing of raw materials and energy and demand for
our products and real estate; the cyclical and competitive nature
of the industries in which we operate; fluctuations in demand for,
or supply of, our forest products and real estate offerings; entry
of new competitors into our markets; changes in global economic
conditions and world events, including political changes in
particular regions or countries; changes in energy and raw material
prices, particularly for our performance fibers and wood products
businesses; impacts of the rising cost of fuel, including the cost
and availability of transportation for our products, both
domestically and internationally, and the cost and availability of
third party logging and trucking services; unanticipated equipment
maintenance and repair requirements at our manufacturing
facilities; the geographic concentration of a significant portion
of our timberland; our ability to identify, finance and complete
timberland acquisitions; changes in environmental laws and
regulations, including laws regarding air emissions and water
discharges, remediation of contaminated sites, timber harvesting,
delineation of wetlands, and endangered species, that may restrict
or adversely impact our ability to conduct our business, or
increase the cost of doing so; adverse weather conditions, natural
disasters and other catastrophic events such as hurricanes, wind
storms and wildfires, which can adversely affect our timberlands
and the production, distribution and availability of our products
and raw materials such as wood, energy and chemicals; interest rate
and currency movements; our capacity to incur additional debt, and
any decision we may make to do so; changes in tariffs, taxes or
treaties relating to the import and export of our products or those
of our competitors; the ability to complete like-kind-exchanges of
property; changes in key management and personnel; our ability to
continue to qualify as a REIT and to fund distributions using cash
generated through our taxable REIT subsidiaries; and changes in tax
laws that could reduce the benefits associated with REIT
status.
In addition, specifically with respect to our Real Estate
business, the following important factors, among others, could
cause actual results to differ materially from those expressed in
forward-looking statements that may have been made in this
document: the cyclical nature of the real estate business
generally, including fluctuations in demand for both entitled and
unentitled property; the lengthy, uncertain and costly process
associated with the ownership, entitlement and development of real
estate, especially in Florida, which also may be affected by
changes in law, policy and political factors beyond our control;
the potential for legal challenges to entitlements and permits in
connection with our properties; unexpected delays in the entry into
or closing of real estate transactions; the existence of competing
developers and communities in the markets in which we own property;
the pace of development and the rate and timing of absorption of
existing entitled property in the markets in which we own property;
changes in the demographics affecting projected population growth
and migration to the Southeastern U.S.; changes in environmental
laws and regulations, including laws regarding water withdrawal and
management and delineation of wetlands, that may restrict or
adversely impact our ability to sell or develop properties; the
cost of the development of property generally, including the cost
of property taxes, labor and construction materials; the timing of
construction and availability of public infrastructure; and the
availability of financing for real estate development and mortgage
loans.
Additional factors are described in the company's most recent
Form 10-K and 10-Q on file with the Securities and Exchange
Commission. Rayonier assumes no obligation to update these
statements except as is required by law.
�
RAYONIER CONDENSED STATEMENTS OF CONSOLIDATED
INCOME MARCH 31, 2009 (unaudited)
(millions of dollars, except per
share information)
� � � Three Months Ended March 31, December 31, March 31, 2009 2008
2008
Sales Timber $ 33.2 $ 51.8 $ 44.7 Real Estate 26.6 48.0
29.4 Performance Fibers Cellulose specialties 156.7 163.0 132.7
Absorbent materials � 46.9 � � 62.5 � � 42.2 � Total Performance
Fibers 203.6 225.5 174.9 Wood Products 11.8 19.0 18.9 Other
Operations 2.4 9.9 7.2 Intersegment Eliminations � (3.2 ) � (0.3 )
� - �
Total Sales
$ 274.4 � $ 353.9 � $ 275.1 � �
Operating Income (Loss)
Timber
$ (1.2 ) $ 10.3 $ 10.8 Real Estate 14.4 29.9 21.8 Performance
Fibers 40.8 31.8 37.1 Wood Products (3.6 ) (3.8 ) (2.5 ) Corporate
and other � (6.8 ) � (7.4 ) � (7.7 )
Operating Income 43.6
60.8 59.5 Interest / Other, net (12.6 ) (13.5 ) (11.1 ) Income Tax
Expense � (5.2 ) � (6.1 ) � (9.7 )
Income from Continuing
Operations $ 25.8 $ 41.2 $ 38.7 Income from Discontinued
Operations � 0.1 � � 2.2 � � 1.0 �
Net Income $ 25.9 � $
43.4 � $ 39.7 � � � �
Income per Common Share: Diluted
Continuing operations $ 0.33 � $ 0.52 � $ 0.49 � Net income $ 0.33
� $ 0.55 � $ 0.50 � �
Weighted average Common Shares used
for determining Diluted EPS � 79,272,477 � � 79,406,271 � �
79,212,287 � � � -A- � � �
RAYONIER
CONDENSED CONSOLIDATED BALANCE
SHEETS
MARCH 31, 2009 (unaudited) (millions of dollars) �
CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31,
2009 2008
Assets Current assets (excluding New Zealand
assets held for sale) $ 277.8 $ 270.9 New Zealand assets held for
sale � 49.8 � � 56.1 � Total current assets � 327.6 � � 327.0 �
Timber and timberlands, net of depletion and amortization 1,238.9
1,255.0 Property, plant and equipment 1,401.2 1,392.5 Less -
accumulated depreciation � (1,047.4 ) � (1,041.8 ) � 353.8 � �
350.7 � Other assets � 149.0 � � 149.2 � $ 2,069.3 � $ 2,081.9 �
Liabilities and Shareholders' Equity Current liabilities $
168.0 $ 163.0 Long-term debt 748.0 746.6 Non-current liabilities
for dispositions and discontinued operations 94.9 96.4 Other
non-current liabilities 136.6 137.0 Shareholders' equity � 921.8 �
� 938.9 � $ 2,069.3 � $ 2,081.9 � � -B- � � �
RAYONIER
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS MARCH 31,
2009 (unaudited)
(millions of dollars)
�
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three
Months Ended March 31, 2009 2008
Cash provided by operating
activities: Net Income $ 25.9 $ 39.7 Depreciation, depletion,
amortization and non-cash basis of real estate sold 42.0 36.1 Other
non-cash items included in income 6.7 8.8 Changes in working
capital and other assets and liabilities � (9.8 ) � 15.6 � � 64.8 �
� 100.2 �
Cash used for investing activities: Capital
expenditures (29.8 ) (31.8 ) Purchase of timberlands - (19.6 )
Change in restricted cash (3.0 ) 10.0 Other � 4.1 � � 3.2 � � (28.7
) � (38.2 )
Cash used for financing activities: Repayment,
net of borrowings and issuance costs - (55.0 ) Dividends paid (39.4
) (39.1 ) Issuance of common shares 0.2 0.6 Repurchase of common
shares (1.4 ) (3.5 ) Excess tax benefits from equity-based
compensation � 0.1 � � 0.9 � � (40.5 ) � (96.1 )
Effect of
exchange rate changes on cash � 0.2 � � (0.1 )
Cash and cash
equivalents: Decrease in cash and cash equivalents (4.2 ) (34.2
) Balance, beginning of year � 61.7 � � 181.1 � Balance, end of
period $ 57.5 � $ 146.9 � � -C- � � �
RAYONIER
RECONCILIATION OF NON-GAAP MEASURES MARCH 31, 2009
(unaudited) (millions of dollars) �
CASH AVAILABLE FOR
DISTRIBUTION (a): Three Months Ended March 31, 2009 2008 Cash
provided by operating activities $ 64.8 $ 100.2 Capital
expenditures (b) (29.8 ) (31.8 ) Change in committed cash 13.4 (8.0
) Like-kind exchange tax benefits on real estate sales (c) - (2.9 )
Other � 5.8 � � 3.1 �
Cash Available for Distribution $ 54.2
� $ 60.6 � � �
(a) Cash Available for
Distribution (CAD) is defined as cash provided by operating
activities adjusted for capital spending, the tax benefits
associated with certain strategic acquisitions, the change in
committed cash, and other items which include cash provided by
discontinued operations, proceeds from matured energy forward
contracts and the change in capital expenditures purchased on
account. CAD is a non-GAAP measure of cash generated during a
period that is available for dividend distribution, repurchase of
the Company�s common shares, debt reduction and for strategic
acquisitions net of associated financing.
(b) Capital spending excludes
strategic acquisitions.
(c) Represents taxes that would
have been paid if the Company had not completed LKE
transactions.
� � � � � �
ADJUSTED EBITDA (d):
Real
Performance Wood Corporate Timber
Estate
� Fibers Products and other Total
Three Months Ended March
31, 2009 Cash provided by operating activities $ 14.2 $ 21.5 $ 42.2
$ (2.8 ) $ (10.3 ) $ 64.8 Income tax expense - - - - 4.7 4.7
Interest, net - - - - 12.5 12.5 Working capital and other � 0.9 �
1.8 � 12.9 � � 0.4 � � (12.8 ) � 3.2 � Adjusted EBITDA $ 15.1 $
23.3 $ 55.1 � $ (2.4 ) $ (5.9 ) $ 85.2 � � � March 31, 2008 Cash
provided by operating activities $ 26.5 $ 26.2 $ 58.3 $ (4.0 ) $
(6.8 ) $ 100.2 Income tax expense - - - - 9.8 9.8 Interest, net - -
- - 11.1 11.1 Working capital and other � 3.6 � 0.8 � (10.1 ) � 2.9
� � (21.8 ) � (24.6 ) Adjusted EBITDA $ 30.1 $ 27.0 $ 48.2 � $ (1.1
) $ (7.7 ) $ 96.5 � �
(d) Adjusted EBITDA is defined as
earnings before interest, taxes, depreciation, depletion,
amortization and the non-cash cost basis of real estate sold.
Adjusted EBITDA is a non-GAAP measure of the operating cash
generating capacity of the Company. Management considers this
measurement to be important to estimate the enterprise and
shareholder values of the Company as a whole and of its core
segments, and for allocating capital resources. In addition,
analysts, investors and creditors use this measurement when
analyzing the financial condition and cash generating ability of
the Company.
� -D- �
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