- Fourth quarter net income of $9 million
or $0.07 per share; full year net income of $99 million or $0.76
per share
- Fourth quarter pro forma net income of
$11 million or $0.09 per share; full year pro forma net income of
$66 million or $0.50 per share
- Adjusted EBITDA of $51 million in
fourth quarter and $235 million for the full year
- Realigns reportable segments and
expands disclosures
Rayonier (NYSE:RYN) reported fourth quarter 2014 net income
attributable to Rayonier of $9 million, or $0.07 per share,
compared to $80 million, or $0.62 per share, in the prior year
period. The current and prior period fourth quarter results
included $0.3 million and $48 million, respectively, of income from
discontinued operations.1 The current period also includes $2
million of costs related to the internal review and restatement
announced in November, 2014. Excluding these items, pro forma net
income2 was $11 million, or $0.09 per share, for the fourth quarter
and $32 million, or $0.25 per share, in the prior year period.
Full year 2014 net income attributable to Rayonier was $99
million, or $0.76 per share, compared to $372 million, or $2.86 per
share, in the prior year. The full year results include $43 million
of income from discontinued operations,1 $4 million of costs
related to the spin-off of the Performance Fibers business, a
cumulative adjustment of $3 million due to an out-of-period
adjustment in depletion expense3 and $3 million of costs related to
the internal review and restatement. The prior year results
included $268 million of income from discontinued operations1 and a
$16 million gain4 related to the consolidation of the Company’s
65%-owned New Zealand joint venture (JV). Excluding these items,
pro forma net income2 for full year 2014 was $66 million, or $0.50
per share, compared to $88 million, or $0.68 per share, in the
prior year.
Adjusted EBITDA7 was $235 million for full year 2014 compared to
$220 million in the prior year. Cash provided by operating
activities (including discontinued operations) was $316 million for
full year 2014 compared to $545 million in the prior year. Cash
available for distribution (CAD)5 was $115 million compared to $83
million in the prior year.
The following table summarizes the current quarter and
comparable prior year period results:
Three Months Ended (millions of dollars, except earnings per
share (EPS))
December 31, 2014 December 31,
2013 $ EPS $
EPS Net income attributable to Rayonier $8.9 $0.07 $79.7
$0.62 Internal review and restatement costs 2.4 0.02 — —
Discontinued operations1 (0.3 ) — (47.7 ) (0.37 ) Pro forma net
income2 $11.0 $0.09 $32.0 $0.25
The following table summarizes the 2014 full year and comparable
prior year results:
Year Ended (millions of dollars, except earnings per
share (EPS))
December 31, 2014 December 31,
2013 $ EPS $ EPS Net
income attributable to Rayonier $99.3 $0.76 $371.9 $2.86 Gain
related to consolidation of New Zealand JV4 — — (16.1 ) (0.12 )
Cost related to the spin-off of the Performance Fibers business 3.8
0.03 — — Cumulative out-of-period adjustment for depletion expense3
2.6 0.02 — — Internal review and restatement costs 3.4 0.02 — —
Discontinued operations1 (43.4 ) (0.33 ) (268.0 ) (2.06 ) Pro forma
net income2 $65.7 $0.50 $87.8 $0.68
“In 2014, we completed the spin-off of the Performance Fibers
business and began implementing a realigned strategy designed to
enhance long-term shareholder value,” said David Nunes, President
and CEO. “Despite organizational challenges associated with our
internal review, we were pleased with the underlying operational
performance of our assets, improved pricing in our Southern and
Pacific Northwest Timber segments, and steady rural land sales in
our Real Estate segment.”
Southern Timber
Fourth quarter sales of $39 million increased $9 million from
the prior year period, while operating income of $13 million was
comparable to the prior year period. Sales increased in the fourth
quarter due in equal part to higher harvest volumes and improved
pricing. Harvest volumes increased 14% to 1.5 million tons versus
1.3 million tons in the prior year period. Weighted average
stumpage prices increased 16% to $20.92 per ton versus $18.01 per
ton in the prior year period. These gains in sales were largely
offset in operating income by higher depletion expense and lower
non-timber income. The decline in non-timber income in the fourth
quarter was primarily attributable to a change in income
recognition for hunting leases. Previously, income from hunting
leases was recognized primarily in the third and fourth quarters,
whereas beginning in June, 2014, the Company now recognizes such
income pro rata on a monthly basis throughout the annual lease
term. This change led to a decline of approximately $6 million in
fourth quarter non-timber income versus what would have been
recognized under the prior income recognition approach.
Full year 2014 sales of $142 million increased $19 million from
2013, while pro forma operating income6 of $46 million increased $9
million from prior year results. Sales increased in 2014 primarily
due to higher pine pulpwood and sawtimber prices, which were driven
by improved demand as well as wet weather conditions through much
of the year. Harvest volumes were flat at 5.3 million tons in both
2014 and 2013. Weighted average stumpage prices increased 13% to
$20.72 per ton in 2014 versus $18.37 per ton in 2013. Increased
sales were partially offset in operating income by higher
cut-and-haul costs, higher depletion expense and lower non-timber
income, which was largely driven by the aforementioned change in
income recognition.
Fourth quarter and full year Adjusted EBITDA7 of $28 million and
$98 million were $3 million and $11 million, respectively, above
prior year periods.
Pacific Northwest Timber (formerly Northern Region)
Fourth quarter sales of $22 million and operating income of $4
million were both $5 million below the prior year period. Sales and
operating income declined in the fourth quarter due primarily to
lower harvest volumes and to a lesser extent reduced sawtimber
prices. Harvest volumes declined 34% to 326,000 tons versus 496,000
tons in the prior year period. The decline in harvest volumes was
driven by the sale of the Company’s New York timberlands in fourth
quarter 2013 as well as the reduction of harvest volumes in the
Pacific Northwest pursuant to the Company’s revised operating
strategy announced in November, 2014. Average delivered sawtimber
prices in the Pacific Northwest decreased 3% to $79.19 per ton
versus $81.47 per ton in the prior year period, while delivered
pulpwood prices increased 15% to $43.23 per ton versus $37.44 per
ton in the prior year period. Operating costs increased slightly
over the prior year period due to the timing of road maintenance
and engineering work performed. Non-timber income in the fourth
quarter was below the prior year period as a result of higher costs
and reduced cedar salvage sales.
Full year 2014 sales of $102 million were $8 million below 2013,
which included $3 million of sales from the formerly-owned New York
timberlands. Pro forma operating income6 of $31 million declined $1
million from prior year results. Sales declined in 2014 primarily
due to lower harvest volumes, which was partially offset by
improved sawtimber and pulpwood pricing. Harvest volumes declined
16% to 1.7 million tons from 2.0 million tons in 2013. The decline
in harvest volumes was driven by the sale of the Company’s New York
timberlands in fourth quarter 2013 as well as the aforementioned
reduction of harvest volumes pursuant to the Company’s revised
operating strategy. Average delivered sawtimber prices in the
Pacific Northwest increased 5% to $82.05 per ton versus $78.06 per
ton in 2013 and delivered pulpwood prices increased 6% to $39.20
per ton versus $37.14 per ton in 2013. The decline in sales was
partially offset in operating income by lower cut-and-haul costs,
while other operating costs in 2014 were generally comparable to
2013.
Fourth quarter and full year Adjusted EBITDA7 of $7 million and
$51 million were $6 million and $3 million, respectively, below the
prior year periods.
New Zealand Timber
Fourth quarter sales of $52 million increased $5 million from
the prior year period, and operating income of $3 million increased
$1 million from the prior year period. Sales increased in the
fourth quarter due to higher export volumes and land sales
partially offset by lower domestic and export product prices.
Harvest volumes increased 16% to 708,000 tons versus 611,000 tons
in the prior year period. Average delivered prices for domestic
sawlogs declined 10% to $68.87 per ton versus $76.80 per ton in the
prior year period, and average delivered prices for export sawlogs
declined 13% to $108.96 per ton versus $125.43 per ton in the prior
year period. The decline in domestic sawlog prices (in US dollar
terms) was primarily driven by the fall in the NZ$/US$ exchange
rate, while the decline in export sawlog prices was primarily
driven by weaker demand from China. Operating income improved
modestly as the decrease in prices was more than offset by the
higher volumes, lower operating costs and higher land sales.
Full year 2014 sales of $182 million increased $34 million from
2013, reflecting consolidation of the JV effective April 4, 2013,
while pro forma operating income6 of $10 million was $1 million
below prior year results. Total harvest volumes in 2014 of 2.4
million tons were comparable to 2013. Average delivered prices for
domestic sawlogs increased 6% to $78.15 per ton versus $73.82 per
ton in 2013, while average delivered prices for export sawlogs
declined 11% to $111.75 per ton versus $125.77 per ton in 2013. The
increase in domestic sawlog prices was primarily driven by stronger
demand in the first half of the year, while the decline in export
sawlog prices was primarily driven by weaker demand from China.
Operating income declined due to weaker overall pricing, which was
partially offset by the impact of a full year of consolidation of
the JV in 2014 as well as increased land sales.
Fourth quarter and full year Adjusted EBITDA7 of $14 million and
$46 million were $3 million and $8 million, respectively, above the
prior year periods.
Real Estate
Fourth quarter sales of $11 million were $86 million below 2013,
which included the sale of the Company’s New York timberlands for
$57 million at a gain of $3 million. Operating income of $3 million
was $23 million below the prior year period. Fourth quarter
sales and operating income decreased primarily due to lower
non-strategic/timberland sales, as the prior year period included
the New York timberlands sale as well as a 21,000 acre timberland
sale in Georgia.
Excluding the New York sale, full year sales of $77 million were
$15 million below 2013, and operating income of $48 million
was $5 million below the prior year. For the full year, lower
prices and volumes on timberland sales were partially offset by
increased rural sales volumes and prices. Full year operating
income also included a $6 million settlement of a bankruptcy claim
related to a 2006 sale.
Fourth quarter and full year Adjusted EBITDA7 of $7 million and
$70 million were $33 million and $14 million, respectively, below
the prior year periods.
Trading
The Trading segment complements the New Zealand Timber segment
by creating added scale in export operations and achieving cost
savings that directly benefit the New Zealand Timber segment.
Fourth quarter sales of $24 million were $15 million below 2013,
and operating income decreased $1 million versus the prior year
period. Full year sales of $104 million were $28 million below
2013, while operating income and Adjusted EBITDA7 of $2 million
were comparable to the prior year.
Other Items
Pro forma corporate and other operating expenses of $6 million
in the fourth quarter and $32 million for the full year improved $9
million and $14 million, respectively, over the prior year periods
primarily due to lower selling, general and administrative expenses
as a result of the spin-off of the Performance Fibers business.
Interest expense of $8 million in the fourth quarter decreased
$2 million from the prior year period due to lower outstanding
debt. Full year 2014 interest expense of $44 million increased $3
million from the prior year as the benefit of lower debt balances
was more than offset by additional interest expense resulting from
the consolidation of the JV for the full year and a lower
allocation of interest expense to discontinued operations.
Other non-operating expenses of $2 million in the fourth quarter
and $9 million for the full year increased $3 million and $12
million respectively over the prior year periods primarily due to
unfavorable mark-to-market adjustments on New Zealand interest rate
swaps.
The fourth quarter income tax benefit from continuing operations
was $4 million compared to an income tax benefit of $7 million in
the prior year period. The full year income tax benefit from
continuing operations was $10 million compared to $36 million in
2013. These income tax benefits were due to losses at Rayonier’s
taxable operations and interest and general and administrative
expenses not allocable to the discontinued operations of the
Performance Fibers business. The full year tax benefit was reduced
by a $14 million valuation allowance related to the cellulosic
biofuel producer credit (CBPC) reflecting Rayonier’s limited
potential use of the CBPC going forward, prior to its
expiration.
In the fourth quarter, the Company recorded a net $0.3 million
benefit from discontinued operations primarily due to revised
estimates of the Company’s 2014 tax expense.
Outlook
“In 2015, we expect further improvement in Southern pine sawlog
prices as the US housing market and economy continue to slowly
recover,” added Nunes. “With the devaluation of the Russian ruble,
we expect strong headwinds in the China log export market, which
will likely have a negative impact on demand and pricing in our
Pacific Northwest segment. We expect a more modest decline in our
New Zealand segment, which we expect will lose less market share to
Russian log exports. Reflecting our previously announced strategy
of harvesting in line with our long-term sustainable yield, we are
planning for harvest volumes in the Pacific Northwest to be
approximately 14% below 2014 levels, while we expect harvest
volumes in the South to be modestly higher than 2014 levels. In our
Real Estate segment, we expect a modest decline in rural land
sales, while we are planning for significantly lower non-strategic
/ timberland sales consistent with our strategy of reducing
reliance on these sales to augment cash flow.”
Further Information
A conference call will be held on Thursday, February 12, 2015 at
2 p.m. EST to discuss these results. Presentation materials and
access to the live webcast will be available at www.rayonier.com. Investors may also choose to
access the conference call by dialing (800) 369-1184, password:
Rayonier. A replay of this webcast will be available on the
Company’s website shortly after the call.
1Discontinued operations includes Performance Fibers in both the
three and twelve months ended December 31, 2014 and December 31,
2013. Discontinued operations also includes Wood Products in the
twelve months ended December 31, 2013.
2Pro forma net income is a non-GAAP measure defined and
reconciled to GAAP in the attached exhibits.
3In reviewing its depletion expense calculations, the Company
determined that prior years included immaterial understatements of
depletion expense as a result of including in merchantable timber
inventory certain volumes that should have been excluded. The
estimated cumulative effect of these prior year immaterial
adjustments was recorded as additional depletion expense in the
third quarter of 2014.
4The $16 million gain includes the recognition of a $10 million
deferred gain based on the original sale of Rayonier’s New Zealand
operations to the joint venture in 2005 and a $6 million benefit
due to the required fair market value remeasurement of Rayonier’s
equity interest in the JV immediately before the purchase of the
additional interest.
5CAD is a non-GAAP measure defined and reconciled to GAAP in the
attached exhibits.
6Pro forma operating income is a non-GAAP measure defined and
reconciled to GAAP in the attached exhibits.
7Adjusted EBITDA is a non-GAAP measure defined and reconciled to
GAAP in the attached exhibits.
About Rayonier
Rayonier is a geographically diverse international land
resources company primarily engaged in timberland management and
the sale of real estate. Rayonier owns, leases or manages
approximately 2.6 million acres of timberlands located in the U.S.
and New Zealand. Rayonier is structured as a real estate investment
trust. More information is available at www.rayonier.com.
_________________________________________________________________________
Forward-Looking Statements
Certain statements in this document regarding anticipated
financial outcomes including Rayonier’s earnings guidance, if any,
business and market conditions, outlook, expected dividend rate,
Rayonier’s realigned business strategy, including expected harvest
schedules, timberland acquisitions and sales of non-strategic
timberlands, the anticipated benefits of Rayonier’s realigned
business strategy, and other similar statements relating to
Rayonier’s future events, developments or financial or operational
performance or results, 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,”
“intend,” “project,” “anticipate” and other similar language.
However, the absence of these or similar words or expressions does
not mean that a statement is not forward-looking. While management
believes that these forward-looking statements are reasonable when
made, forward-looking statements are not guarantees of future
performance or events and undue reliance should not be placed on
these statements.
Forward-looking statements are only as of the date they are
made, and the Company undertakes no duty to update its forward-
looking statements except as required by law. You are advised,
however, to review any further disclosures we make on related
subjects in our subsequent Forms 10-Q, 10-K and 8-K, any amendments
thereto, and other reports filed with the SEC.
The following important factors, among others, could cause
actual results or events to differ materially from those expressed
in forward-looking statements that may have been made in this
document: 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; fluctuations in demand for our products in Asia, and
especially China; the uncertainties of potential impacts of
climate-related initiatives; the cost and availability of third
party logging and trucking services; 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, 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; 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; changes in key management and personnel; our
ability to meet all necessary legal requirements to continue to
qualify as a real estate investment trust (“REIT”) and changes in
tax laws that could adversely affect tax treatment of our specific
businesses or reduce the benefits associated with REIT status.
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; a delayed or weak recovery in the housing
market; 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/A and 10-Q and other reports on file with the Securities
and Exchange Commission. Rayonier assumes no obligation to update
these statements except as is required by law.
RAYONIER INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED
INCOME
December 31, 2014
(unaudited)
(millions of dollars, except per share
information)
Three Months Ended Year Ended December 31, September
30, December 31, December 31, December 31, 2014 2014
2013 2014 2013
SALES $147.4 $149.8 $238.5
$603.5 $659.7 Costs and expenses Cost of sales
126.8 118.1 197.2 483.9 530.8 Selling and general expenses 12.0 8.8
14.2 47.9 55.4 Other operating income (5.6 ) (9.2 ) (7.8 ) (26.6 )
(19.1 )
OPERATING INCOME BEFORE GAIN RELATED TO
CONSOLIDATION OF NEW ZEALAND JOINT VENTURE 14.2 32.1 34.9
98.3 92.6 Gain related to consolidation of New Zealand joint
venture — — — — 16.1
OPERATING INCOME 14.2 32.1 34.9 98.3 108.7 Interest expense
(8.4 ) (9.6 ) (10.3 ) (44.2 ) (40.9 ) Interest and other (expense)
income, net (2.1 ) (1.7 ) 0.6 (9.3 ) 2.4
INCOME
FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 3.7 20.8
25.2 44.8 70.2 Income tax benefit 4.3 11.3 6.9
9.6 35.6
INCOME FROM CONTINUING OPERATIONS 8.0
32.1 32.1 54.4 105.8 Income from discontinued operations, net 0.3
— 47.7 43.4 268.0
NET
INCOME 8.3 32.1 79.8 97.8 373.8 Less: Net (loss) income
attributable to noncontrolling interest (0.6 ) (0.6 ) 0.1
(1.5 ) 1.9
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
$8.9 $32.7 $79.7 $99.3 $371.9
EARNINGS PER COMMON SHARE BASIC EARNINGS PER SHARE
ATTRIBUTABLE TO RAYONIER INC. Continuing Operations
$0.07 $0.26 $0.25 $0.44 $0.83 Discontinued Operations — —
0.38 0.34 2.13 Net Income $0.07
$0.26 $0.63 $0.78 $2.96
DILUTED
EARNINGS PER SHARE ATTRIBUTABLE TO RAYONIER INC.
Continuing Operations $0.07 $0.25 $0.25 $0.43 $0.80 Discontinued
Operations — — 0.37 0.33 2.06
Net Income $0.07 $0.25 $0.62 $0.76
$2.86 Pro forma Net Income (a) $0.09 $0.28
$0.25 $0.50 $0.68
Weighted
Average Common Shares used for determining Basic EPS
126,549,192 126,501,837 126,216,451
126,458,710 125,717,311 Diluted EPS 128,302,545
129,790,513 128,949,778 131,038,263
130,105,101
(a) Pro forma net income is a non-GAAP
measure. See Schedule E for a reconciliation to the nearest GAAP
measure.
A
RAYONIER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
December 31, 2014
(unaudited)
(millions of dollars)
December 31, December 31, 2014 2013 (a)
Assets Cash
and cash equivalents $161.6 $199.6 Other current assets 52.8 319.5
Timber and timberlands, net of depletion and amortization 2,083.7
2,049.4 Property, plant and equipment 14.9 1,981.1 Less -
accumulated depreciation (8.2 ) (1,120.3 ) Net property, plant and
equipment 6.7 860.8 Other assets 148.3 256.2 Total
Assets $2,453.1 $3,685.5
Liabilities and
Shareholders’ Equity Current maturities of long-term debt
$129.7 $112.5 Other current liabilities 72.3 163.6 Long-term debt
621.8 1,461.7 Non-current liabilities for dispositions and
discontinued operations — 69.5 Other non-current liabilities 54.1
122.9 Total Rayonier Inc. shareholders’ equity 1,488.5 1,661.2
Noncontrolling interest 86.7 94.1 Total shareholders’
equity 1,575.2 1,755.3 $2,453.1 $3,685.5
(a) Includes the Performance Fibers
business that was spun-off on June 27, 2014.
B
RAYONIER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
December 31, 2014
(unaudited)
(millions of dollars)
Year Ended December 31,
2014 (a)
2013 (a)
Cash provided by operating activities: Net income $97.8
$373.8 Depreciation, depletion, amortization 120.0 116.8 Non-cash
cost of land sold 13.2 10.2 Non-cash cost of New York timberland
sale — 54.0 Gain on sale of discontinued operations, net — (42.1 )
Depreciation, depletion and amortization from discontinued
operations 38.0 74.9 Other items to reconcile net income to cash
provided by operating activities 0.3 7.9 Changes in working capital
and other assets and liabilities 46.3 20.0 Tax payment to IRS to
exchange AFMC for CBPC — (70.3 ) 315.6 545.2
Cash used for investing activities: Capital expenditures
(123.7 ) (162.2 ) Purchase of additional interest in New Zealand
joint venture — (139.9 ) Purchase of timberlands (130.0 ) (20.4 )
Jesup mill cellulose specialties expansion — (148.2 ) Proceeds from
disposition of Wood Products business — 62.7 Change in restricted
cash 62.3 (58.4 ) Other (0.5 ) (2.5 ) (191.9 ) (468.9 )
Cash
used for financing activities: Increase in debt, net of
issuance costs 124.5 73.4 Dividends paid (257.5 ) (237.0 ) Proceeds
from the issuance of common shares 5.6 10.1 Excess tax benefits on
stock-based compensation — 8.4 Repurchase of common shares (1.9 )
(11.3 ) Purchase of timberland deeds for Rayonier Advanced
Materials (12.7 ) — Debt issuance funds distributed to Rayonier
Advanced Materials (924.9 ) — Proceeds from spin-off of Rayonier
Advanced Materials 906.2 — Other (0.7 ) (0.7 ) (161.4 ) (157.1 )
Effect of exchange rate changes on cash (0.3 ) (0.2 )
Cash and cash equivalents: Change in cash and cash
equivalents (38.0 ) (81.0 ) Balance, beginning of year 199.6
280.6 Balance, end of year $161.6 $199.6
(a) Includes the Performance Fibers
business that was spun-off on June 27, 2014.
C
RAYONIER INC. AND SUBSIDIARIES
BUSINESS SEGMENT SALES AND OPERATING
INCOME (LOSS)
December 31, 2014
(unaudited)
(millions of dollars)
Three Months Ended Year Ended December 31, September
30, December 31, December 31, December 31, 2014 2014
2013 2014 2013
Sales Southern Timber $38.9 $37.5 $30.3
$141.8 $122.8 Pacific Northwest Timber 22.1 22.0 27.3 102.2 110.5
New Zealand Timber 51.7 48.5 47.0 182.4 148.7 Real Estate (c) 11.0
26.7 97.2 77.3 149.0 Trading 23.7 15.1 39.2 103.7 131.7
Intersegment Eliminations — — (2.5 ) (3.9 ) (3.0 )
Total sales $147.4 $149.8 $238.5 $603.5
$659.7
Pro forma operating income/(loss)
(a) Southern Timber (b) $13.5 $13.5 $13.4 $46.4 $37.8 Pacific
Northwest Timber (b) 3.7 6.3 8.6 31.4 32.7 New Zealand Timber 2.9
1.9 1.8 9.5 10.6 Real Estate (c) 2.6 16.4 25.4 47.5 55.9 Trading
(0.3 ) 2.5 0.5 1.7 1.8 Corporate and other (d) (5.8 ) (4.9 ) (14.8
) (32.2 ) (46.2 )
Pro forma operating income (a) $16.6
$35.7 $34.9 $104.3 $92.6
Adjusted EBITDA (a) Southern Timber $28.3 $27.6 $25.1 $97.9
$87.2 Pacific Northwest Timber 7.5 10.4 13.8 50.8 54.0 New Zealand
Timber 13.7 11.3 11.1 46.0 38.3 Real Estate (c) 7.2 23.4 39.9 69.8
83.5 Trading (0.3 ) 2.5 0.5 1.7 1.8 Corporate and other (d) (5.5 )
(4.9 ) (14.4 ) (31.3 ) (45.2 )
Adjusted EBITDA (a) $50.9
$70.3 $76.0 $234.9 $219.6
(a) Pro forma operating income and Adjusted EBITDA are non-GAAP
measures. See Schedule E for reconciliation. (b) The three months
ended September 30, 2014 and the year ended December 31, 2014
exclude $0.7 million and $1.9 million of expense in the Southern
and Pacific Northwest Timber segments, respectively, related to a
cumulative out-of-period adjustment for
depletion expense.
(c) The three months and year ended December 31, 2013 include the
impact of the 2013 sale of New York timberlands (sales of $57
million, operating income of $3 million and Adjusted EBITDA of $3
million). (d) The three months ended December 31, 2014 and
September 30, 2014 exclude $2.4 million and $1.0 million of costs
related to the internal review and restatements announced in
November 2014. The years ended December 31, 2014 and 2013 exclude
$3.4 million of internal review and restatement costs and a $16.1
million gain related to consolidation of the New Zealand joint
venture, respectively.
D
RAYONIER INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
December 31, 2014
(unaudited)
(millions of dollars, except per share
information)
CASH AVAILABLE FOR DISTRIBUTION (a): Year Ended
December 31, December 31, 2014 2013
Operating Income $98.3
$108.7 Depreciation, depletion, amortization 120.0 116.8 Non-cash
cost of land sold 13.2 10.2 Internal review and restatement costs
3.4 — Gain related to consolidation of New Zealand joint venture —
(16.1 )
Adjusted EBITDA $234.9 $219.6 Cash interest
paid (47.6 ) (44.1 ) Cash taxes paid (b) (8.8 ) (28.8 ) Capital
expenditures from continuing operations (c) (63.2 ) (63.6 )
Cash
Available for Distribution (a) $115.3 $83.1 Working capital and
other balance sheet changes 18.8 68.2 Capital expenditures from
continuing operations (c) 63.2 63.6 Cash flow from discontinued
operations (d) 118.3 276.3 Non-cash cost of New York timberland
sale — 54.0
Cash Provided by Operating
Activities
$315.6 $545.2 (a) Cash Available for
Distribution (CAD) is defined as cash provided by operating
activities adjusted for capital spending (excluding strategic
acquisitions), strategic divestitures, cash provided by
discontinued operations and working capital and other balance sheet
changes. 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 strategic
acquisitions. CAD is not necessarily indicative of the CAD that may
be generated in future periods. (b) The years ended December 31,
2014 and 2013 include payments made on behalf of the spun-off
Performance Fibers business. 2013 excludes a $70.3 million tax
payment to the IRS to exchange the alternative fuel mixture credit
(AFMC) for CBPC. (c) Capital expenditures exclude strategic capital
of $130.0 million for timberland acquisitions during the year ended
December 31, 2014. For the year ended December 31, 2013, strategic
capital totaled $139.9 million for the acquisition of an additional
interest in the New Zealand joint venture and $20.4 million for
timberland acquisitions. (d) 2013 includes a $70.3 million tax
payment to the IRS to exchange AFMC for CBPC.
ADJUSTED EBITDA: Three Months Ended December 31, 2014
September 30, 2014 December 31, 2013 Operating Income $14.2 $32.1
$34.9 Depreciation, depletion and amortization 29.7 34.0 35.2
Non-cash cost of land sold 4.6 3.2 5.9 Internal review and
restatement costs 2.4 1.0 —
Adjusted EBITDA
(a) $50.9 $70.3 $76.0 Year Ended
December 31, 2014 December 31, 2013 Operating Income $98.3 $108.7
Depreciation, depletion and amortization 120.0 116.8 Non-cash cost
of land sold 13.2 10.2 Gain related to consolidation of New Zealand
joint venture — (16.1 ) Internal review and restatement costs 3.4
—
Adjusted EBITDA (a) $234.9 $219.6
(a) Adjusted EBITDA is defined as earnings before
interest, taxes, depreciation, depletion, amortization, the
non-cash cost of real estate sold, the gain related to
consolidation of the New Zealand joint venture, discontinued
operations, separation costs related to Performance Fibers spin-off
and internal review and restatement costs in 2014. Adjusted EBITDA
is a non-GAAP measure used by our Chief Operating Decision Maker,
existing shareholders and potential shareholders to measure how the
Company is performing relative to the assets under management.
PRO FORMA OPERATING INCOME AND NET
INCOME: Three Months Ended December 31, 2014
September 30, 2014 December 31, 2013 Per Diluted Share
Per Diluted Share Per Diluted Share $ $ $
Operating
income $14.2 $32.1 $34.9 Internal review and restatement costs
2.4 1.0 — Cumulative out-of-period adjustment for depletion expense
(a) — 2.6 —
Pro forma operating income
$16.6 $35.7 $34.9
Net income
attributable to Rayonier Inc. $8.9 $0.07 $32.7 $0.25 $79.7
$0.62 Internal review and restatement costs 2.4 0.02 1.0 0.01 — —
Cumulative out-of-period adjustment for depletion expense (a) — —
2.6 0.02 — — Discontinued operations (0.3 ) — — —
(47.7 ) (0.37 )
Pro forma net income $11.0 $0.09
$36.3 $0.28 $32.0 $0.25 Year
Ended December 31, 2014 December 31, 2013 Per Diluted Share Per
Diluted Share $ $
Operating income $98.3 $108.7 Internal
review and restatement costs 3.4 — Gain related to consolidation of
New Zealand joint venture — (16.1 ) Cumulative out-of-period
adjustment for depletion expense (a) 2.6 —
Pro
forma operating income $104.3 $92.6
Net
income attributable to Rayonier Inc. $99.3 $0.76 $371.9 $2.86
Gain related to consolidation of New Zealand joint venture — —
(16.1 ) (0.12 ) Cost related to the spin-off of the Performance
Fibers business 3.8 0.03 — — Internal review and restatement costs
3.4 0.02 — — Cumulative out-of-period adjustment for depletion
expense (a) 2.6 0.02 — — Discontinued operations (43.4 ) (0.33 )
(268.0 ) (2.06 )
Pro forma net income $65.7 $0.50
$87.8 $0.68 (a) In reviewing its
depletion expense calculation, the Company determined that prior
years included immaterial understatements of depletion expense as a
result of including in merchantable timber inventory certain
volumes that should have been excluded. The estimated cumulative
effect of these prior year immaterial adjustments was recorded as
additional depletion expense in the third quarter of 2014.
E
RayonierInvestors: Mark McHugh, 904-357-3757Media: Mike Bell,
904-321-5537
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