- Third quarter net income attributable
to Rayonier of $19.7 million or $0.16 per share, on revenues of
$151.7 million
- Year-to-date net income attributable to
Rayonier of $35.9 million or $0.28 per share, on revenues of $407.8
million
- Third quarter pro forma net income of
$21.6 million or $0.17 per share; year-to-date pro forma net income
of $39.4 million or $0.31 per share
- Adjusted EBITDA of $65.8 million in
third quarter and $160.4 million year-to-date
- Repurchase of $65.2 million of shares
during the third quarter
Rayonier Inc. (NYSE:RYN) today reported third quarter net income
attributable to Rayonier of $19.7 million, or $0.16 per share, on
revenues of $151.7 million. This compares to net income
attributable to Rayonier of $32.7 million, or $0.25 per share, on
revenues of $149.8 million in the prior year quarter. The third
quarter results include $1.5 million of costs related to
shareholder litigation1 and $0.4 million of costs related to the
write-off of capitalized financing costs in connection with new
credit facilities. The prior year third quarter results included a
$2.6 million cumulative out-of-period adjustment for depletion
expense2 and $1.0 million of internal review and restatement costs.
Excluding these items, pro forma net income3 was $21.6 million, or
$0.17 per share, versus $36.3 million, or $0.28 per share, in the
prior year period.
For the first nine months of 2015, net income attributable to
Rayonier was $35.9 million, or $0.28 per share, on revenues of
$407.8 million. This compares to net income attributable to
Rayonier of $90.5 million, or $0.69 per share, on revenues of
$456.2 million in the prior year period. Pro forma net income3 was
$39.4 million, or $0.31 per share, versus $56.5 million, or $0.43
per share, in the prior year period.
The following table summarizes the current quarter and
comparable prior year period results on a pro forma basis:
Three Months Ended September 30,
September 30, (millions of dollars, except earnings per
share (EPS))
2015 2014 $ EPS
$ EPS Revenues $151.7 N/A $149.8 N/A
Net income attributable to Rayonier $19.7 $0.16 $32.7 $0.25
Costs related to shareholder litigation1 1.5 0.01 — — Costs related
to the write-off of capitalized financing costs 0.4 — — —
Cumulative out-of-period adjustment for depletion expense2 — — 2.6
0.02 Internal review and restatement costs — — 1.0 0.01 Pro forma
net income3 $21.6 $0.17 $36.3 $0.28
The following table summarizes the current year-to-date and
comparable prior year period results on a pro forma basis:
Nine Months Ended September 30,
September 30, (millions of dollars, except earnings per
share (EPS))
2015 2014 $ EPS
$ EPS Revenues $407.8 N/A $456.2
N/A Net income attributable to Rayonier $35.9 $0.28 $90.5
$0.69 Costs related to shareholder litigation1 3.1 0.03 — — Costs
related to the write-off of capitalized financing costs 0.4 — 1.7
0.01 Costs related to the spin-off of the Performance Fibers
business — — 3.8 0.03 Cumulative out-of-period adjustment for
depletion expense2 — — 2.6 0.02 Internal review and restatement
costs — — 1.0 0.01 Discontinued operations, net4 — — (43.1 )
(0.33 ) Pro forma net income3 $39.4 $0.31 $56.5 $0.43
Third quarter Adjusted EBITDA5 was $65.8 million versus $70.3
million in the prior year period. For the first nine months of
2015, Adjusted EBITDA5 was $160.4 million versus $184.0 million in
the prior year period.
The following table summarizes Adjusted EBITDA5 for the current
quarter, year-to-date and comparable prior year periods:
Three Months Ended
Nine Months Ended September 30
September 30 (millions of dollars)
2015
2014 2015 2014 Southern Timber $24.9
$27.6 $76.1 $69.7 Pacific Northwest Timber 7.3 10.4 18.3 43.4 New
Zealand Timber 6.1 11.2 26.0 32.2 Real Estate 30.9 23.4 54.6 62.5
Trading 0.4 2.5 0.6 2.0 Corporate and other (3.8 ) (4.8 ) (15.2 )
(25.8 ) Adjusted EBITDA5 $65.8 $70.3 $160.4
$184.0
Cash provided by operating activities was $143.4 million versus
$284.1 million in the prior year period, which included $102.4
million in cash flows from discontinued operations.4 Cash available
for distribution (CAD)6 of $97.9 million increased $11.1 million
versus the prior year period due to lower cash interest paid ($16.3
million), lower cash tax payments ($10.1 million), decreased
capital expenditures from continuing operations ($6.7 million) and
decreased real estate development costs ($1.6 million), which were
partially offset by lower Adjusted EBITDA5 ($23.6 million). Cash
interest and taxes paid in the prior year period include payments
related to the spun-off Performance Fibers business.
“We enjoyed a stronger than anticipated third quarter based
largely on favorable results in our Real Estate segment, coupled
with solid performance from our Timber segments amid challenging
market conditions,” said David Nunes, President and CEO. “In our
Southern Timber segment, sawtimber prices rose as stumpage volumes
were harvested at favorable prices locked in earlier in the year
when wet weather conditions prevailed, while average pulpwood
prices decreased as a result of changes in geographic mix. In the
Pacific Northwest and New Zealand Timber segments, continued weak
demand from China impacted sawtimber prices, which more than offset
favorable New Zealand volumes and Pacific Northwest pulpwood
prices. The Real Estate business benefited from strong sales of
Rural and Non-Strategic/Timberland properties at favorable prices
compared with the prior year quarter.”
Southern Timber
Third quarter sales of $34.8 million decreased $2.7 million
versus the prior year period due to a lower proportion of delivered
sales (28% versus 33% in the prior year period) and changes in
geographic mix. Harvest volumes were comparable to the prior year
period at 1.42 million tons. Average sawtimber stumpage prices
increased 6% to $27.27 per ton versus $25.78 per ton in the prior
year period, while average pulpwood stumpage prices decreased 9% to
$16.39 per ton versus $17.99 per ton in the prior year period. The
increase in average sawtimber prices was driven by the continued
harvesting of stumpage under contracts executed earlier in the year
when prices were higher due to wet weather conditions. The decrease
in average pulpwood prices was driven primarily by geographic mix;
specifically, a large timber sale in the Company’s lowest-priced
pulpwood region. Excluding the impact of geographic mix, pulpwood
prices were roughly flat versus the prior year period. Overall,
weighted average stumpage prices (including hardwood) decreased 4%
to $19.63 per ton versus $20.51 per ton in the prior year period.
Pro forma operating income7 of $10.5 million decreased $3.0 million
versus the prior year period due to lower pricing ($0.9 million),
changes in volume/mix ($0.2 million), lower non-timber income ($0.8
million), higher costs ($0.7 million), and higher depletion rates
($0.4 million).
Third quarter Adjusted EBITDA5 of $24.9 million was $2.7 million
below the prior year period.
Year-to-date sales of $103.0 million increased $0.1 million
versus the prior year period due to higher harvest volumes and
improved stumpage pricing, which were largely offset by a lower
proportion of delivered sales (26% versus 33% in the prior year
period). Harvest volumes increased 6% to 4.08 million tons versus
3.84 million tons in the prior year period. Average sawtimber
stumpage prices increased 6% to $27.83 per ton versus $26.29 per
ton in the prior year period, while average pulpwood stumpage
prices decreased 2% to $18.09 per ton versus $18.46 per ton in the
prior year period. The increase in average sawtimber prices was
driven primarily by stumpage sales achieving strong timber prices
when wet weather was restricting supply, which was partially offset
by increased harvest activity in lower-priced sawtimber regions.
The decrease in average pulpwood prices was primarily attributable
to geographic mix. Overall, weighted average stumpage prices
(including hardwood) increased 1% to $20.77 per ton versus $20.64
per ton in the prior year period. Pro forma operating income7 of
$34.7 million increased $1.8 million versus the prior year period
due to higher volumes ($2.9 million), higher pricing ($0.1
million), and higher non-timber income ($2.7 million), which were
partially offset by higher depletion rates ($2.1 million) and costs
($1.8 million).
Year-to-date Adjusted EBITDA5 of $76.1 million was $6.4 million
above the prior year period.
Pacific Northwest Timber
Third quarter sales of $21.6 million decreased $0.4 million
versus the prior year period due to lower sawtimber prices
partially offset by higher pulpwood prices, higher harvest volumes,
and a higher proportion of delivered sales (80% versus 61% in the
prior year period). Harvest volumes increased 2% to 353,000 tons
versus 346,000 tons in the prior year period. Average delivered
sawtimber prices decreased 11% to $74.33 per ton versus $83.91 per
ton in the prior year period, while average delivered pulpwood
prices increased 21% to $45.88 per ton versus $37.86 per ton in the
prior year period. The decrease in average sawtimber prices was
driven by weaker demand from China and the recent shutdown of mills
in Shelton and Tacoma, Washington. The increase in average pulpwood
prices was driven by strong local demand for pulpwood logs. Pro
forma operating income7 of $3.1 million decreased $3.2 million
versus the prior year period due to lower prices ($3.4 million) and
lower non-timber income ($0.2 million), which were partially offset
by higher volumes ($0.2 million) and other minor variances ($0.2
million).
Third quarter Adjusted EBITDA5 of $7.3 million was $3.1 million
below the prior year period.
Year-to-date sales of $57.8 million decreased $22.3 million
versus the prior year period due to the planned reduction of
harvest volumes and, to a lesser extent, lower sawtimber prices.
Harvest volumes declined 31% to 928,000 tons versus 1.34 million
tons in the prior year period. Average delivered sawtimber prices
decreased 11% to $74.11 per ton versus $83.28 per ton in the prior
year period, while average delivered pulpwood prices increased 18%
to $44.48 per ton versus $37.62 per ton in the prior year period.
The decrease in average sawtimber prices was driven by weaker
demand from China and the shutdown of some local mills. The
increase in average pulpwood prices was driven by strong local
demand for pulpwood logs. Pro forma operating income7 of $7.4
million decreased $20.4 million versus the prior year period due to
lower volumes ($12.2 million), lower prices ($8.0 million), higher
depletion rates ($0.6 million), and higher costs ($0.5 million),
which were partially offset by higher non-timber income ($0.9
million).
Year-to-date Adjusted EBITDA5 of $18.3 million was $25.1 million
below the prior year period.
New Zealand Timber
Third quarter sales of $41.1 million decreased $7.4 million
versus the prior year period due to lower domestic and export
product prices, which were partially offset by higher volumes.
Harvest volumes increased 8% to 721,000 tons versus 670,000 tons in
the prior year period. Average delivered prices for export
sawtimber declined 21% to $82.42 per ton versus $104.11 per ton in
the prior year period and average delivered prices for domestic
sawtimber declined 23% to $60.12 per ton versus $78.28 per ton in
the prior year period. The decline in export sawtimber prices was
primarily due to weaker demand from China, while the decline in
domestic sawtimber prices (in U.S. dollar terms) was driven
primarily by the fall in the NZ$/US$ exchange rate (US$0.66 per
NZ$1.00 versus US$0.85 per NZ$1.00). Excluding the impact of
foreign exchange rates, domestic sawtimber prices were comparable
to the prior year period. This segment generated an operating loss
of $0.9 million for the quarter versus operating income of $1.9
million in the prior year period, with the decline due to the
decrease in prices ($3.5 million), which was partially offset by
lower depletion rates ($0.7 million).
Third quarter Adjusted EBITDA5 of $6.1 million was $5.1 million
below the prior year period.
Year-to-date sales of $121.5 million decreased $9.3 million
versus the prior year period due to lower domestic and export
product prices, which were partially offset by higher volumes.
Harvest volumes increased 12% to 1.84 million tons versus 1.65
million tons in the prior year period. Average delivered prices for
export sawtimber declined 21% to $89.01 per ton versus $113.01 per
ton in the prior year period, while average delivered prices for
domestic sawtimber declined 19% to $65.54 per ton versus $80.99 per
ton in the prior year period. The decline in export sawtimber
prices was primarily due to weaker demand from China, while the
decline in domestic sawtimber prices (in U.S. dollar terms) was
driven primarily by the fall in the NZ$/US$ exchange rate (US$0.72
per NZ$1.00 versus US$0.85 per NZ$1.00). Excluding the impact of
foreign exchange rates, domestic sawtimber prices declined roughly
4%. Operating income of $3.8 million decreased $2.8 million versus
the prior year period, as the decrease in prices ($7.8 million) was
largely offset by lower depletion rates ($2.1 million), lower costs
($1.1 million), the impact of foreign exchange changes ($0.9
million), and other minor variances ($0.9 million).
Year-to-date Adjusted EBITDA5 of $26.0 million was $6.2 million
below the prior year period.
Real Estate
Third quarter sales of $35.2 million increased $8.5 million
versus the prior year period, while operating income of $20.0
million increased $3.6 million versus the prior year period. Sales
and operating income increased in the third quarter due to higher
volumes (14,204 acres sold versus 12,122 acres in the prior year
period) and higher weighted average prices ($2,480 per acre versus
$2,202 per acre in the prior year period).
Year-to-date sales of $66.0 million decreased $0.2 million
versus the prior year period, while operating income of $34.0
million decreased $10.9 million versus the prior year period. Sales
and operating income decreased due to lower volumes (23,938 acres
sold versus 39,527 acres in the prior year period) partially offset
by higher weighted average prices ($2,756 per acre versus $1,676
per acre in the prior year period). Year-to-date operating income
also decreased as the prior year period included $5.8 million in
proceeds from a bankruptcy settlement with respect to a former land
sale customer.
Unimproved Development third quarter sales of $0.1 million were
comprised of a 20-acre sale in Bryan County, Georgia for $5,000 per
acre.
Rural third quarter sales of $9.8 million were comprised of
3,503 acres at an average price of $2,796 per acre, including 3,058
acres in Walker County, Texas at an average price of $2,818 per
acre.
Non-strategic/Timberland third quarter sales of $25.3 million
were comprised of 10,681 acres at an average price of $2,373 per
acre, including 9,940 acres sold for conservation at an average
price of $2,393 per acre.
Third quarter Adjusted EBITDA5 of $30.9 million was $7.5 million
above the prior year period. Year-to-date Adjusted EBITDA5 of $54.6
million was $7.9 million below the prior year period.
Trading
Third quarter sales of $19.0 million increased $3.9 million
versus the prior year period due to higher volumes, partially
offset by lower prices, primarily as a result of continued weak
demand in China. Sales volumes increased 66% to 231,000 tons versus
139,000 tons in the prior year period. Average prices decreased 21%
to $82.45 per ton versus $104.74 per ton in the prior year period.
Operating income of $0.4 million decreased $2.1 million versus the
prior year period primarily due to a NZ$/US$ exchange gain ($2.5
million) in the prior year period.
Year-to-date sales of $59.5 million decreased $20.5 million
versus the prior year period due to lower prices as a result of
unfavorable China market conditions, partially offset by higher
volumes. Sales volumes increased 4% to 679,000 tons versus 652,000
tons in the prior year period. Average prices decreased 27% to
$86.50 per ton versus $118.86 per ton in the prior year period.
Operating income decreased $1.4 million versus the prior year
period, primarily due to a NZ$/US$ exchange gain ($1.2 million) in
the prior year period.
Other Items
Excluding $1.5 million of costs related to shareholder
litigation,1 third quarter corporate and other operating expenses
of $3.8 million decreased $1.1 million versus the prior year
period, primarily due to lower selling, general and administrative
expenses as a result of the spin-off of the Performance Fibers
business.
Excluding $0.4 million of costs related to the write-off of
capitalized financing costs, third quarter interest expense of $7.2
million decreased $2.4 million versus the prior year period,
primarily due to lower outstanding debt.
Third quarter other non-operating expenses of $1.6 million were
comprised of unfavorable mark-to-market adjustments on New Zealand
joint venture interest rate swaps, which decreased $0.1 million
from the prior year period.
The third quarter income tax benefit from continuing operations
was $0.6 million and is principally related to the New Zealand
joint venture.
Share Repurchases
During the third quarter, the Company repurchased $65.2 million
of common stock at an average price of $23.65 per share. Since the
inception of the $100 million share repurchase authorization in
June, the Company has repurchased $75.9 million of common stock at
an average price of $23.95 per share. This equates to the
repurchase of 3.2 million shares, or 2.5% of total shares
outstanding since the beginning of the repurchase authorization in
June. As of September 30, 2015, the Company had 123.8 million
shares of common stock outstanding and $24.1 million remaining in
its current share repurchase authorization.
Outlook
“In light of the continued sluggish recovery in housing starts
and challenging export market conditions, we are accelerating the
step-down of our harvest volumes in the Pacific Northwest,” stated
Nunes. “For the full year, the Company now expects harvest volumes
to be approximately 5.4 million tons in the South, 1.2 million tons
in the Pacific Northwest (14% below prior guidance of 1.4 million
tons), and 2.4 million tons in New Zealand. Notwithstanding our
plans to reduce harvest levels for 2015, we remain on track to
achieve our full-year Adjusted EBITDA guidance based largely on
stronger than expected results in our Real Estate segment.”
“Looking ahead, in our Southern Timber segment, we anticipate
continued solid pulpwood demand and prices in our key market areas.
We expect limited near-term upside in sawtimber prices but continue
to expect that the gradual improvement in U.S. housing starts will
drive increases in sawlog prices over the next few years. In our
Pacific Northwest Timber segment, our decision to accelerate
harvest reductions will preserve value and enhance our harvest
flexibility going forward. In our New Zealand Timber segment,
following a difficult third quarter, we are seeing a marked
improvement in export demand and pricing in China in the fourth
quarter. In our Real Estate segment, we continue to see steady
demand for rural and conservation properties and are encouraged by
increasing interest in selected development properties as we
develop catalysts for demand.”
"We continue to be focused on disciplined capital allocation and
long-term value creation for our shareholders. We are pleased to
have completed three-quarters of our $100 million share repurchase
authorization at prices that we believe are well below our
intrinsic value. We will continue to look for opportunities to
optimize our portfolio value and generate long-term returns for our
shareholders through the disciplined management of our assets and
capital."
Conference Call
A conference call will be held on Tuesday, November 3, 2015
at 11:00 AM EST to discuss these results. Supplemental 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.
A replay of the teleconference will be available one hour after
the call ends until Tuesday, November 10, 2015. The replay number
is (866) 373-4994, passcode: 5631. Complimentary copies of Rayonier
press releases and other financial documents are also available by
calling 1-800-RYN-7611.
1“Costs related to shareholder litigation” include expenses
incurred as a result of the securities litigation, the shareholder
derivative demands and the Securities and Exchange Commission
investigation. See Note 12—Contingencies of Item 1 — Financial
Statements in the Company’s most recent Quarterly Report on Form
10-Q.
2During 2014, 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.
3Pro forma net income is a non-GAAP measure defined and
reconciled to GAAP in the attached exhibits.
4Discontinued operations include Performance Fibers business in
the nine months ended September 30, 2014.
5Adjusted EBITDA is a non-GAAP measure defined and reconciled to
GAAP in the attached exhibits.
6CAD is a non-GAAP measure defined and reconciled to GAAP in the
attached exhibits.
7Pro forma operating income is a non-GAAP measure defined and
reconciled to GAAP in the attached exhibits.
About Rayonier
Rayonier is a leading timberland real estate investment trust
with assets located in some of the most productive timber growing
regions in the U.S. and New Zealand. As of September 30, 2015,
Rayonier owned, leased or managed approximately 2.7 million acres
of timberlands located in the U.S. South (1.9 million acres), U.S.
Pacific Northwest (373,000 acres) and New Zealand (444,000 acres).
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 business strategies, including expected harvest
schedules, timberland acquisitions, sales of non-strategic
timberlands, the anticipated benefits of Rayonier’s business
strategies, 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.
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; various lawsuits relating to matters arising out
of our previously announced internal review and the restatement of
our consolidated financial statements; 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 regarding 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.
For additional factors that could impact future results, please
see Item 1A — Risk Factors in the Company’s most recent Annual
Report on Form 10-K and similar discussions included in other
reports that we subsequently file with the Securities and Exchange
Commission (the “SEC”).
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 reports filed with the SEC.
RAYONIER INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED
INCOME
September 30, 2015
(unaudited)
(millions of dollars, except per share
information)
Three Months Ended Nine Months Ended September 30,
June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
SALES $151.7 $115.8
$149.8 $407.8 $456.2 Costs and Expenses Cost
of sales 116.0 103.7 118.1 327.0 357.1 Selling and general expenses
10.7 12.7 8.8 34.3 35.9 Other operating income, net (2.8 ) (7.1 )
(9.2 ) (15.5 ) (20.9 )
OPERATING INCOME 27.8 6.5 32.1 62.0
84.1 Interest expense (7.6 ) (8.5 ) (9.6 ) (24.6 ) (35.9 ) Interest
income and miscellaneous expense, net (1.6 ) (1.2 ) (1.7 ) (4.2 )
(7.1 )
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
18.6 (3.2 ) 20.8 33.2 41.1 Income tax benefit 0.6 0.3
11.3 1.3 5.3
INCOME (LOSS) FROM CONTINUING
OPERATIONS 19.2 (2.9 ) 32.1 34.5 46.4 Income from discontinued
operations, net — — — — 43.1
NET INCOME (LOSS) 19.2 (2.9 ) 32.1 34.5 89.5 Less: Net
(loss) attributable to noncontrolling interest (0.5 ) (1.4 ) (0.6 )
(1.4 ) (1.0 )
NET INCOME (LOSS) ATTRIBUTABLE TO RAYONIER
INC. $19.7 ($1.5 ) $32.7 $35.9 $90.5
EARNINGS (LOSS) PER COMMON SHARE BASIC EARNINGS
(LOSS) PER SHARE ATTRIBUTABLE TO RAYONIER INC. Continuing
Operations $0.16 ($0.01 ) $0.26 $0.28 $0.38 Discontinued Operations
— — — — 0.34 Net Income (Loss)
$0.16 ($0.01 ) $0.26 $0.28 $0.72
DILUTED EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO RAYONIER
INC. Continuing Operations $0.16 ($0.01 ) $0.25 $0.28 $0.36
Discontinued Operations — — — — 0.33
Net Income (Loss) $0.16 ($0.01 ) $0.25 $0.28
$0.69 Pro forma Net Income (a) $0.17 —
$0.28 $0.31 $0.43
Weighted
Average Common Shares used for determining Basic EPS
125,143,706 126,635,710 126,501,837
126,125,802 126,428,279 Diluted EPS 125,305,972
126,635,710 129,790,513 126,770,703
131,681,660
(a) Pro forma Net Income per share is a
non-GAAP measure. See Schedule E for definition and a
reconciliation to the nearest GAAP measure.
A
RAYONIER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
September 30, 2015
(unaudited)
(millions of dollars)
September 30, December 31, 2015 2014
Assets Cash and cash equivalents $65.8 $161.6 Other current
assets 57.8 52.1 Timber and timberlands, net of depletion and
amortization 2,038.0 2,088.5 Higher and better use timberlands and
real estate development costs 67.3 77.4 Property, plant and
equipment 14.9 14.9 Less - accumulated depreciation (8.7 ) (8.2 )
Net property, plant and equipment 6.2 6.7 Other assets 79.4
66.8 $2,314.5 $2,453.1
Liabilities and
Shareholders’ Equity Current maturities of long-term debt —
$129.7 Other current liabilities 81.4 72.3 Long-term debt 791.2
621.8 Other non-current liabilities 65.7 54.1 Total Rayonier Inc.
shareholders’ equity 1,308.4 1,488.5 Noncontrolling interest 67.8
86.7 Total shareholders’ equity 1,376.2
1,575.2 $2,314.5 $2,453.1
B
RAYONIER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
September 30, 2015
(unaudited)
(millions of dollars)
Nine Months Ended September 30, 2015 2014
Cash
provided by operating activities: Net income $34.5 $89.5
Depreciation, depletion and amortization 85.8 90.3 Non-cash cost of
land sold and real estate development costs recovered upon sale 9.5
8.6 Depreciation, depletion and amortization from discontinued
operations — 38.0 Other items to reconcile net income to cash
provided by operating activities 2.8 13.6 Changes in working
capital and other assets and liabilities 10.8 44.1
143.4 284.1
Cash used for investing
activities: Capital expenditures (38.5 ) (45.2 ) Capital
expenditures from discontinued operations — (60.4 ) Real estate
development costs (1.7 ) (3.3 ) Purchase of timberlands (88.5 )
(93.2 ) Change in restricted cash (17.8 ) 47.3 Other 3.6
(0.5 ) (142.9 ) (155.3 )
Cash used for financing activities:
Increase in debt, net of issuance costs 76.5 109.7 Dividends paid
(94.3 ) (225.9 ) Proceeds from the issuance of common shares 1.3
4.6 Repurchase of common shares (73.6 ) (1.7 ) Net cash disbursed
upon spin-off of Performance Fibers business — (31.4 ) Other —
(0.7 ) (90.1 ) (145.4 )
Effect of exchange rate changes
on cash (6.2 ) (0.2 )
Cash and cash equivalents: Change
in cash and cash equivalents (95.8 ) (16.8 ) Balance, beginning of
year 161.6 199.6 Balance, end of period $65.8
$182.8
C
RAYONIER INC. AND SUBSIDIARIES
BUSINESS SEGMENT SALES AND OPERATING
INCOME
September 30, 2015
(unaudited)
(millions of dollars)
Three Months Ended Nine Months Ended September 30,
June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
Sales Southern Timber $34.8 $32.7
$37.5 $103.0 $102.9 Pacific Northwest Timber 21.6 17.1 22.0 57.8
80.1 New Zealand Timber 41.1 39.2 48.5 121.5 130.8 Real Estate 35.2
6.9 26.7 66.0 66.2 Trading 19.0 19.8 15.1 59.5 80.0 Intersegment
Eliminations — 0.1 — — (3.8 )
Total sales
$151.7 $115.8 $149.8 $407.8 $456.2
Pro forma operating income (a) Southern Timber
$10.5 $11.8 $13.5 $34.7 $32.9 Pacific Northwest Timber 3.1 1.7 6.3
7.4 27.8 New Zealand Timber (0.9 ) (0.9 ) 1.9 3.8 6.6 Real Estate
20.0 1.4 16.4 34.0 44.9 Trading 0.4 (0.1 ) 2.5 0.6 2.0 Corporate
and other (3.8 ) (5.9 ) (4.9 ) (15.4 ) (26.5 )
Pro forma
operating income $29.3 $8.0 $35.7 $65.1
$87.7
Adjusted EBITDA (a) Southern
Timber $24.9 $24.4 $27.6 $76.1 $69.7 Pacific Northwest Timber 7.3
4.6 10.4 18.3 43.4 New Zealand Timber 6.1 6.2 11.2 26.0 32.2 Real
Estate 30.9 3.6 23.4 54.6 62.5 Trading 0.4 (0.1 ) 2.5 0.6 2.0
Corporate and other (3.8 ) (5.6 ) (4.8 ) (15.2 ) (25.8 )
Adjusted EBITDA $65.8 $33.1 $70.3
$160.4 $184.0
(a) Pro forma operating income and
Adjusted EBITDA are non-GAAP measures. See Schedule E for
definitions and reconciliations.
D
RAYONIER INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
September 30, 2015
(unaudited)
(millions of dollars except per share
information)
CASH AVAILABLE FOR DISTRIBUTION (a): Nine Months
Ended September 30, September 30, 2015 2014 Operating Income $62.0
$84.1 Depreciation, depletion and amortization 85.8 90.3 Non-cash
cost of land sold and real estate development costs recovered upon
sale 9.5 8.6 Costs related to shareholder litigation (b) 3.1 —
Internal review and restatement costs — 1.0
Adjusted EBITDA $160.4 $184.0 Cash interest paid (c) (d)
(21.9 ) (38.2 ) Cash taxes paid (c) (0.4 ) (10.5 ) Real estate
development costs (1.7 ) (3.3 ) Capital expenditures from
continuing operations (e) (38.5 ) (45.2 )
Cash Available for
Distribution $97.9 $86.8 Working capital and other balance
sheet changes 5.3 46.4 Real estate development costs 1.7 3.3
Capital expenditures from continuing operations (e) 38.5 45.2 Cash
flow from discontinued operations — 102.4
Cash
Provided by Operating Activities $143.4 $284.1
(a) Cash Available
for Distribution (CAD) is defined as cash provided by operating
activities adjusted for capital spending (excluding strategic
acquisitions), real estate development costs, 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) “Costs related to shareholder
litigation” include expenses incurred as a result of the securities
litigation, the shareholder derivative demands and the Securities
and Exchange Commission investigation. See Note 12—Contingencies of
Item 1 — Financial Statements in the Company’s most recent
Quarterly Report on Form 10-Q. (c) The nine months ended September
30, 2014 include payments related to the spun-off Performance
Fibers business. (d) Cash interest paid is presented net of
patronage refunds received of $1.3 million for the nine months
ended September 30, 2015 and $2.1 million for the nine months ended
September 30, 2014. (e) Capital expenditures exclude timberland
acquisitions of $88.5 million and $93.2 million during the nine
months ended September 30, 2015 and September 30, 2014,
respectively.
E
PRO FORMA OPERATING
INCOME AND NET INCOME (a):
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September
30, 2015 2015 2014 2015 2014 $
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
Operating income $27.8 $6.5 $32.1 $62.0 $84.1 Costs related
to shareholder litigation (b) 1.5 1.5 — 3.1 — Cumulative
out-of-period adjustment for depletion expense — — 2.6 — 2.6
Internal review and restatement costs — — 1.0 — 1.0
Pro forma operating income $29.3 $8.0 $35.7 $65.1
$87.7
Net income (loss) attributable to Rayonier
Inc. $19.7 $0.16 ($1.5 ) ($0.01 ) $32.7 $0.25 $35.9 $0.28 $90.5
$0.69 Costs related to shareholder litigation (b) 1.5 0.01 1.5 0.01
— — 3.1 0.03 — — Costs related to the write-off of capitalized debt
costs 0.4 — — — — — 0.4 — 1.7 0.01 Costs related to the spin-off of
the Performance Fibers business — — — — — — — — 3.8 0.03 Cumulative
out-of-period adjustment for depletion expense — — — — 2.6 0.02 — —
2.6 0.02 Internal review and restatement costs — — — — 1.0 0.01 — —
1.0 0.01 Discontinued operations, net — — — — — — — —
(43.1 ) (0.33 )
Pro forma net income $21.6 $0.17 — —
$36.3 $0.28 $39.4 $0.31 $56.5 $0.43 (a)
Pro forma operating income is defined as operating income
adjusted for costs related to shareholder litigation, a cumulative
out-of-period adjustment for depletion expense and internal review
and restatement costs. Pro forma net income is defined as net
income attributable to Rayonier Inc. adjusted for costs related to
shareholder litigation, costs related to the write-off of
capitalized debt costs, costs related to the spin-off of the
Performance Fibers business, a cumulative out-of-period adjustment
for depletion expense, internal review and restatement costs and
discontinued operations. (b) “Costs related to shareholder
litigation” include expenses incurred as a result of the securities
litigation, the shareholder derivative demands and the Securities
and Exchange Commission investigation. See Note 12—Contingencies of
Item 1 — Financial Statements in the Company’s most recent
Quarterly Report on Form 10-Q.
ADJUSTED
EBITDA (a): Three Months Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading
Corporateandother
Total September 30, 2015 Operating income (loss)
$10.5 $3.1 ($0.9 ) $20.0 $0.4 ($5.3 ) $27.8 Non-operating expense —
— — — — (0.1 ) (0.1 ) Depreciation, depletion and amortization 14.4
4.2 7.0 6.3 — 0.1 32.0 Non-cash cost of land sold and real estate
development costs recovered upon sale — — — 4.6 — — 4.6 Costs
related to shareholder litigation (b) — — — — — 1.5
1.5 Adjusted EBITDA $24.9 $7.3 $6.1 $30.9 $0.4
($3.8 ) $65.8
June 30, 2015 Operating
income (loss) $11.8 $1.7 ($0.9 ) $1.4 ($0.1 ) ($7.4 ) $6.5
Depreciation, depletion and amortization 12.6 2.9 7.1 1.0 — 0.3
23.9 Non-cash cost of land sold and real estate development costs
recovered upon sale — — — 1.2 — — 1.2 Costs related to shareholder
litigation (b) — — — — — 1.5 1.5
Adjusted EBITDA $24.4 $4.6 $6.2 $3.6 ($0.1 ) ($5.6 ) $33.1
September 30, 2014 Operating income (loss)
$12.8 $4.4 $1.9 $16.4 $2.5 ($5.9 ) $32.1 Depreciation, depletion
and amortization 14.8 6.0 9.3 3.8 — 0.1 34.0 Non-cash cost of land
sold and real estate development costs recovered upon sale — — —
3.2 — — 3.2 Internal review and restatement costs — — — — —
1.0 1.0 Adjusted EBITDA $27.6 $10.4 $11.2
$23.4 $2.5 ($4.8 ) $70.3
E
Nine Months Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading
Corporateandother
Total September 30, 2015 Operating income
(loss) $34.7 $7.4 $3.8 $34.0 $0.6 ($18.5 ) $62.0 Depreciation,
depletion and amortization 41.4 10.9 22.2 11.1 — 0.2 85.8 Non-cash
cost of land sold and real estate development costs recovered upon
sale — — — 9.5 — — 9.5 Costs related to shareholder litigation (b)
— — — — — 3.1 3.1
Adjusted EBITDA $76.1 $18.3 $26.0 $54.6
$0.6 ($15.2 ) $160.4
September 30, 2014
Operating income (loss) $32.2 $25.9 $6.6 $44.9 $2.0 ($27.5 ) $84.1
Depreciation, depletion and amortization 37.5 17.5 23.5 11.1 — 0.7
90.3 Non-cash cost of land sold and real estate development costs
recovered upon sale — — 2.1 6.5 — — 8.6 Internal review and
restatement costs — — — — — 1.0
1.0 Adjusted EBITDA $69.7 $43.4 $32.2
$62.5 $2.0 ($25.8 ) $184.0
Three Months
Ended Nine Months Ended September 30, June
30, September 30, September 30, September 30, 2015
2015 2014 2015 2014 Net (loss) income $19.2 ($2.9 ) $32.1 $34.5
$89.5 Interest, net, continuing operations 9.1 9.7 11.3 28.8 39.2
Income tax benefit, continuing operations (0.6 ) (0.3 ) (11.3 )
(1.3 ) (5.3 ) Depreciation, depletion and amortization 32.0 23.9
34.0 85.8 90.3 Non-cash cost of land sold and real estate
development costs recovered upon sale 4.6 1.2 3.2 9.5 8.6 Costs
related to shareholder litigation (a) 1.5 1.5 — 3.1 — Costs related
to the spin-off of the Performance Fibers business — — — — 3.8
Internal review and restatement costs — — 1.0 — 1.0 Discontinued
operations — — — — (43.1 ) Adjusted
EBITDA $65.8 $33.1 $70.3 $160.4 $184.0
(a) Adjusted EBITDA is defined as earnings
before interest, taxes, depreciation, depletion, amortization, the
non-cash cost of land sold and real estate development costs
recovered upon sale, costs related to shareholder litigation, costs
related to the spin-off of the Performance Fibers business,
internal review and restatement costs and discontinued operations.
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. (b) “Costs related to shareholder litigation” include
expenses incurred as a result of the securities litigation, the
shareholder derivative demands and the Securities and Exchange
Commission investigation. See Note 12—Contingencies of Item 1 —
Financial Statements in the Company’s most recent Quarterly Report
on Form 10-Q.
E
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151102006757/en/
Rayonier Inc.InvestorsMark McHugh, 904-357-3757orMediaRoseann
Wentworth, 904-357-9185roseann.wentworth@rayonier.com
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