- Net income attributable to Rayonier of
$109.8 million or $0.89 per share, on revenues of $261.6
million
- Pro forma net income of $9.1 million or
$0.07 per share, on pro forma revenues of $132.1 million
- Operating income of $121.6 million, pro
forma operating income of $20.9 million and Adjusted EBITDA of
$45.0 million
- Year-to-date cash provided from
operations of $77.0 million and cash available for distribution
(CAD) of $57.2 million
Rayonier Inc. (NYSE:RYN) today reported second quarter net
income attributable to Rayonier of $109.8 million, or $0.89 per
share, on revenues of $261.6 million. This compares to net loss
attributable to Rayonier of ($1.5) million, or ($0.01) per share,
on revenues of $115.8 million in the prior year quarter. The second
quarter results include $0.6 million of costs related to
shareholder litigation1 and $101.3 million of income from a large
disposition2 of timberland. The prior year second quarter results
included $1.5 million of costs related to shareholder litigation.1
Excluding these items, pro forma net income3 was $9.1 million, or
$0.07 per share, versus $0.0 million, or $0.00 per share, in the
prior year period.
The following table summarizes the current quarter and
comparable prior year period results on an actual and pro forma
basis:
Three Months Ended
(millions of dollars, except earnings per share (EPS))
June 30,
2016 June 30, 2015 $ EPS $
EPS Revenues $261.6 $115.8 Large dispositions2 (129.5
) — Pro forma revenues3 $132.1 $115.8
Net income (loss) attributable to Rayonier $109.8 $0.89 ($1.5 )
($0.01 ) Costs related to shareholder litigation1 0.6 0.01 1.5 0.01
Large dispositions2 (101.3 ) (0.83 ) — — Pro forma
net income3 $9.1 $0.07 — —
Second quarter operating income was $121.6 million versus $6.5
million in the prior year period. The second quarter operating
income includes $0.6 million of costs related to shareholder
litigation1 and $101.3 million of income from a large disposition.2
The prior year second quarter operating income included $1.5
million of costs related to shareholder litigation.1 Excluding
these items, pro forma operating income3 was $20.9 million versus
$8.0 million in the prior year period. Second quarter Adjusted
EBITDA3 was $45.0 million versus $33.1 million in the prior year
period.
The following table summarizes operating income (loss), pro
forma operating income (loss) and Adjusted EBITDA3 for the current
quarter and comparable prior year period:
Three Months
Ended June 30,
Pro forma
Operating
Operating
Adjusted
Income (Loss)
Income (Loss)(3)
EBITDA(3)
(millions of dollars)
2016 2015 2016
2015 2016 2015 Southern Timber $11.1 $11.8
$11.1 $11.8 $21.7 $24.4 Pacific Northwest Timber 1.1 1.7 1.1 1.7
4.8 4.6 New Zealand Timber 10.0 (0.9 ) 10.0 (0.9 ) 16.4 6.2 Real
Estate 105.7 1.4 4.4 1.4 7.7 3.6 Trading 0.6 (0.1 ) 0.6 (0.1 ) 0.6
(0.1 ) Corporate and other (6.9 ) (7.4 ) (6.3 ) (5.9 ) (6.2 ) (5.6
) Total $121.6 $6.5 $20.9 $8.0 $45.0
$33.1
Year-to-date cash provided by operating activities was $77.0
million versus $85.9 million in the prior year period. Year-to-date
cash available for distribution (CAD)3 of $57.2 million increased
$3.5 million versus the prior year period primarily due to higher
Adjusted EBITDA3 ($6.0 million), partially offset by higher cash
interest paid ($1.6 million) and capital expenditures ($0.9
million).
“We delivered another solid operational quarter, which reflects
the high quality and diversity of our portfolio,” said David Nunes,
President and CEO. “Southern timber volumes were down compared to
the prior year quarter due to the impact on harvesting from heavy
rainfall in Texas and other Gulf States, and overall stumpage
prices declined slightly due to the geographic mix of harvested
volumes. Results in the Pacific Northwest were comparable to the
prior year period as higher volumes were offset by slightly lower
prices, reflecting continued weakness in export demand and reduced
local sawmill capacity. New Zealand results were well above the
prior year quarter primarily due to increased demand from China for
Radiata pine logs as well as strong local markets. Real Estate
results, excluding the gain on the large disposition of Pacific
Northwest timberland, improved over the prior year quarter due to
strong Rural sales and receipt of a deferred payment related to a
prior land sale.”
Southern Timber
Second quarter sales of $29.6 million decreased $3.1 million, or
9%, versus the prior year period due to lower harvest volumes and a
decrease in average sawtimber and pulpwood prices. Harvest volumes
decreased 9% to 1.18 million tons versus 1.30 million tons in the
prior year period. This decrease in harvest volumes was driven by
significant rainfall in the Southwest, which led to an extended
interruption in harvesting. Average sawtimber stumpage prices
decreased 1% to $27.00 per ton versus $27.33 per ton in the prior
year period, while average pulpwood stumpage prices decreased 4% to
$18.31 per ton versus $19.10 per ton in the prior year period. The
decrease in average sawtimber prices was driven by mix,
specifically a significant reduction in volume from one of the
Company’s higher-priced sawtimber regions. The decrease in average
pulpwood prices was driven by higher volumes from lower-priced
regions, partially offset by pulpwood price increases along the
East Coast. Overall, weighted-average stumpage prices (including
hardwood) decreased 3% to $20.42 per ton versus $21.03 per ton in
the prior year period. Operating income of $11.1 million decreased
$0.7 million versus the prior year period due to lower volumes
($1.3 million) and lower prices ($0.8 million), which were
partially offset by lower depletion rates ($1.1 million) and higher
non-timber income ($0.2 million).
Second quarter Adjusted EBITDA3 of $21.7 million was $2.7
million below the prior year period.
Pacific Northwest Timber
Second quarter sales of $16.9 million decreased $0.2 million, or
1%, versus the prior year period due to a lower proportion of
delivered sales (94% versus 100% in the prior year period) and
lower pulpwood and sawtimber prices. Harvest volumes increased 7%
to 267,000 tons versus 250,000 tons in the prior year period.
Average delivered sawtimber prices decreased 3% to $74.54 per ton
versus $76.80 per ton in the prior year period, while average
delivered pulpwood prices decreased 1% to $42.97 per ton versus
$43.37 per ton in the prior year period. The decrease in average
sawtimber prices was driven by continued soft demand in export
markets and reduced local sawmill capacity, while the decrease in
average pulpwood prices was driven by an increase in available
fiber in the second quarter. Operating income of $1.1 million
decreased $0.6 million versus the prior year period due to higher
depletion rates ($0.5 million), lower prices ($0.2 million) and
lower non-timber income ($0.4 million), which were partially offset
by higher volumes ($0.2 million) and lower road maintenance,
selling and engineering costs ($0.3 million).
Second quarter Adjusted EBITDA3 of $4.8 million was $0.2 million
above the prior year period.
New Zealand Timber
Second quarter sales of $47.7 million increased $8.5 million, or
22%, versus the prior year period due to higher domestic and export
product prices and higher volumes. Harvest volumes increased 7% to
621,000 tons versus 582,000 tons in the prior year period. Average
delivered prices for export sawtimber increased 13% to $96.11 per
ton versus $85.31 per ton in the prior year period, while average
delivered prices for domestic sawtimber increased 7% to $71.37 per
ton versus $66.96 per ton in the prior year period. The increase in
export sawtimber prices was primarily due to stronger demand from
China. The increase in domestic sawtimber prices (in U.S. dollar
terms) was driven primarily by strong demand for construction
materials, partially offset by the fall in the NZ$/US$ exchange
rate (US$0.69 per NZ$1.00 versus US$0.74 per NZ$1.00). Excluding
the impact of foreign exchange rates, domestic sawtimber prices
increased 15% from the prior year period. Operating income of $10.0
million increased $10.9 million versus the prior year period due to
higher prices ($7.8 million), higher volumes ($1.1 million), lower
forest management costs ($0.6 million), lower depletion rates ($0.3
million), favorable changes in foreign exchange impacts ($0.7
million) and higher carbon credit sales ($0.7 million), which were
partially offset by lower land sales ($0.4 million).
Second quarter Adjusted EBITDA3 of $16.4 million was $10.2
million above the prior year period.
Real Estate
Second quarter sales of $137.3 million increased $130.4 million
versus the prior year period, while operating income of $105.7
million increased $104.3 million versus the prior year period. The
second quarter sales and operating income include $129.5 million
and $101.3 million, respectively, of a large disposition.2
Excluding the large disposition, second quarter pro forma sales of
$7.8 million increased $0.9 million versus the prior year period,
while pro forma operating income of $4.4 million increased $3.0
million versus the prior year period. Pro forma sales3 and pro
forma operating income3 increased in the second quarter due to
higher volumes (2,918 acres sold versus 2,337 acres sold in the
prior year period), partially offset by lower weighted average
prices ($2,664 per acre versus $2,971 per acre in the prior year
period). Second quarter operating income also increased due to the
receipt of a $4.0 million deferred payment with respect to a prior
land sale.
Rural second quarter sales of $7.3 million were comprised of
2,666 acres at an average price of $2,711 per acre, including 888
acres in Texas at $3,100 per acre.
Non-strategic / Timberland second quarter sales of $0.5 million
were comprised of 252 acres at an average price of $2,161 per acre,
including 200 acres in Alabama at $2,300 per acre.
Large Dispositions second quarter sales of $129.5 million were
comprised of the previously announced disposition of 55,320 acres
in Washington at an average price of $2,342 per acre.
Second quarter Adjusted EBITDA3 of $7.7 million was $4.1 million
above the prior year period.
Trading
Second quarter sales of $30.1 million increased $10.3 million
versus the prior year period due to higher volumes and prices.
Sales volumes increased 37% to 320,000 tons versus 234,000 tons in
the prior year period. Average prices increased 11% to $93.69 per
ton versus $84.16 per ton in the prior year period. The increase in
both volume and price was primarily due to stronger demand from
China. Operating income of $0.6 million increased $0.7 million
versus the prior year period.
Other Items
Second quarter corporate and other operating expenses of $6.9
million decreased $0.5 million versus the prior year period due to
lower selling, general and administrative expenses ($0.8 million)
and lower costs related to shareholder litigation1 ($0.9 million),
which were partially offset by transaction costs related to the
previously announced Menasha acquisition ($1.2 million).
Second quarter interest expense of $8.0 million decreased $0.5
million versus the prior year period, primarily due to lower rates
on the term credit agreement entered into in the third quarter of
2015, partially offset by higher outstanding debt.
Second quarter income tax expense of $2.3 million was
principally related to the New Zealand JV.
Outlook
“Based on our solid first half results, expectations of
continued strength in New Zealand export and domestic markets, and
a strong pipeline of Real Estate closings in the second half of the
year, we expect to achieve our prior full-year Adjusted EBITDA
guidance,” added Nunes. “Despite our strong outlook for the year,
we continue to expect relatively flat pricing through the balance
of the year in our Southern Timber and Pacific Northwest Timber
segments. In our New Zealand Timber segment, we are tracking well
ahead of our prior segment guidance, and we expect that this
segment will continue to benefit from stronger relative demand in
China for its Radiata pine logs. In our Real Estate segment, we
continue to be encouraged by market interest in our Wildlight
development project north of Jacksonville, Florida, and we have a
strong pipeline of other HBU opportunities slated to close in the
second half of 2016.”
Conference Call
A conference call and live webcast will be held on Thursday,
August 4, 2016 at 10:00 AM EDT to discuss these results.
Access to the live webcast will be available at
www.rayonier.com. A replay of the webcast will be archived on the
Company’s website and available shortly after the call.
Investors may listen to the conference call by dialing
800-369-1184 (domestic) or 415-228-3898 (international), passcode:
Rayonier. A replay of the conference call will be available one
hour following the call until Thursday, August 11, 2016 by dialing
800-759-4401 (domestic) or 203-369-3418 (international), passcode:
8042016.
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 10—Contingencies of Item 8 — Financial
Statements and Supplementary Data in the Company’s most recent
Annual Report on Form 10-K.
2“Large Dispositions” are defined as transactions involving the
sale of timberland that exceed $20 million in size and do not have
any identified HBU premium relative to timberland value.
3Pro forma net income, Pro forma revenues (sales), Pro forma
operating income, Adjusted EBITDA and CAD are non-GAAP measures
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 softwood timber
growing regions in the United States and New Zealand. As of
June 30, 2016, 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 (379,000 acres) and New
Zealand (436,000 acres). More information is available at
www.rayonier.com.
___________________________________________________________________________
Forward-Looking Statements - Certain statements in this
presentation 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; 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 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; 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 beneficial tax treatment; the cyclical
nature of the real estate business generally; 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;
unexpected delays in the entry into or closing of real estate
transactions; changes in environmental laws and regulations that
may restrict or adversely impact our ability to sell or develop
properties; 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 discussion 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.
Non-GAAP Financial Measures - To supplement Rayonier’s
financial statements presented in accordance with generally
accepted accounting principles in the United States (“GAAP”),
Rayonier uses certain non-GAAP measures, including “cash available
for distribution,” “pro forma sales,” “pro forma operating income,”
“pro forma net income,” and “Adjusted EBITDA,” which are defined
and further explained in this communication. Reconciliation of such
measures to the nearest GAAP measures can also be found in this
communication. Rayonier’s definitions of these non-GAAP measures
may differ from similarly titled measures used by others. These
non-GAAP measures should be considered supplemental to, and not a
substitute for, financial information prepared in accordance with
GAAP.
RAYONIER INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF
CONSOLIDATED INCOME (LOSS) June 30, 2016 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Six Months Ended June 30, March
31, June 30, June 30, June 30, 2016 2016 2015 2016
2015
SALES $261.6 $134.8 $115.8 $396.4
$256.1 Costs and Expenses Cost of sales 138.2 108.0 103.7
246.2 210.9 Selling and general expenses 11.3 9.8 12.7 21.0 23.6
Other operating income, net (9.5 ) (6.0 ) (7.1 ) (15.4) (12.7 )
OPERATING INCOME 121.6 23.0 6.5 144.6 34.3 Interest expense
(8.0 ) (7.1 ) (8.5 ) (15.1) (17.0 ) Interest income and
miscellaneous income (expense), net 0.3 (1.6 ) (1.2 ) (1.4)
(2.7 )
INCOME (LOSS) BEFORE INCOME TAXES 113.9 14.3 (3.2 )
128.1 14.6 Income tax (expense) benefit (2.3 ) 0.8 0.3
(1.5) 0.7
NET INCOME (LOSS) 111.6 15.1 (2.9 )
126.6 15.3 Less: Net income (loss) attributable to noncontrolling
interest 1.8 0.6 (1.4 ) 2.3 (0.9 )
NET INCOME
(LOSS) ATTRIBUTABLE TO RAYONIER INC. $109.8 $14.5
($1.5 ) $124.3 $16.2
EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per share attributable to Rayonier Inc. $0.90
$0.12 ($0.01 ) $1.01 $0.13 Diluted earnings (loss) per share
attributable to Rayonier Inc. $0.89 $0.12 ($0.01 ) $1.01 $0.13
Pro forma net income (a) $0.07 $0.11 —
$0.18 $0.14
Weighted Average Common Shares
used for determining Basic EPS 122,567,853 122,556,239
126,635,710 122,562,046 126,625,081
Diluted EPS 122,820,914 122,644,889 126,635,710
122,732,902 127,504,651
(a) Pro forma net income per share is a
non-GAAP measure. See Schedule F for definition and a
reconciliation to the nearest GAAP measure.
A
RAYONIER INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS June 30, 2016 (unaudited) (millions of
dollars) June 30, December 31, 2016 2015
Assets Cash and cash equivalents $129.7 $51.8 Other current
assets 65.2 53.9 Timber and timberlands, net of depletion and
amortization 2,306.1 2,066.8 Higher and better use timberlands and
real estate development investments 68.2 65.4 Property, plant and
equipment 17.8 15.8 Less - accumulated depreciation (8.7 ) (9.1 )
Net property, plant and equipment 9.1 6.7 Other assets 53.9
71.3 $2,632.2 $2,315.9
Liabilities and
Shareholders’ Equity Other current liabilities $68.0 $59.5
Long-term debt 1,052.3 830.6 Other non-current liabilities 91.4
64.1 Total Rayonier Inc. shareholders’ equity 1,336.8 1,288.1
Noncontrolling interest 83.7 73.6 Total shareholders’
equity 1,420.5 1,361.7 $2,632.2 $2,315.9
B
RAYONIER INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY June 30, 2016
(unaudited) (millions of dollars, except share
information)
Accumulated
Common Shares
Other
Non-
Retained
Comprehensive
controlling
Shareholders'
Shares
Amount
Earnings
Income/(Loss)
Interest
Equity
Balance, December 31, 2014 126,773,097 $702.6 $790.7 ($4.8 )
$86.7 $1,575.2 Net income (loss) — — 46.2 — (2.3 ) 43.9 Dividends
($1.00 per share) — — (124.9 ) — — (124.9 ) Issuance of shares
under incentive stock
plans
205,219 2.1 — — — 2.1 Stock-based compensation — 4.5 — — — 4.5
Repurchase of common shares made under repurchase program
(4,202,697 ) — (100.0 ) — — (100.0 ) Other (a) (5,402 ) (0.4 ) 0.8
(28.7 ) (10.8 ) (39.1 )
Balance, December 31, 2015
122,770,217 $708.8 $612.8 ($33.5 ) $73.6 $1,361.7 Net income — —
124.3 — 2.3 126.6 Dividends ($0.50 per share) — — (61.4 ) — — (61.4
) Issuance of shares under incentive stock
plans
138,514 0.6 — — — 0.6 Stock-based compensation — 2.8 — — — 2.8
Repurchase of common shares made under repurchase program (35,200 )
— (0.7 ) — — (0.7 ) Other (a) (8,621 ) (5.5 ) — (11.4 ) 7.8
(9.1 )
Balance, June 30, 2016 122,864,910
$706.7 $675.0 ($44.9 ) $83.7 $1,420.5
(a) Primarily includes shares
purchased from employees in non-open market transactions to pay
withholding taxes associated with the vesting of restricted stock,
actuarial changes and amortization of pension and postretirement
plan liabilities, foreign currency translation adjustments, and
mark-to-market adjustments of qualifying cash flow hedges. The six
months ended June 30, 2016 also include changes as a result of the
recapitalization of the New Zealand Joint Venture.
C
RAYONIER INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS June 30, 2016 (unaudited)
(millions of dollars) Six Months Ended June
30, 2016 2015
Cash provided by operating activities:
Net income $126.6 $15.3 Depreciation, depletion and amortization
51.7 53.8 Non-cash cost of land and improved development 5.8 4.9
Gain on sale of large disposition of timberlands (101.3 ) — Other
items to reconcile net income to cash provided by operating
activities 6.0 4.8 Changes in working capital and other assets and
liabilities
(11.8
) 7.1
77.0
85.9
Cash used for investing activities:
Capital expenditures (26.2 ) (25.3 ) Real estate development
investments (3.0 ) (0.9 ) Purchase of timberlands (276.6 ) (88.4 )
Assets purchased in business acquisition (1.1 ) — Net proceeds from
large disposition of timberlands 127.0 — Change in restricted cash
18.0 4.2 Other
(3.3
) 3.1
(165.2
) (107.3 )
Cash provided by (used for) financing activities:
Net increase in debt 227.6 27.7 Dividends paid (61.4 ) (63.4 )
Proceeds from the issuance of common shares 0.6 0.7 Repurchase of
common shares made under repurchase program (0.7 ) (9.0 ) Debt
issuance costs (0.8 ) — Other (0.1 ) (0.1 ) 165.2 (44.1 )
Effect of exchange rate changes on cash 0.9 (4.5 )
Cash and cash equivalents: Change in cash and cash
equivalents 77.9 (70.0 ) Balance, beginning of year 51.8
161.6 Balance, end of period $129.7 $91.6
D
RAYONIER INC. AND SUBSIDIARIES BUSINESS SEGMENT SALES,
PRO FORMA SALES, OPERATING INCOME, PRO FORMA OPERATING
INCOME AND ADJUSTED EBITDA June 30, 2016 (unaudited)
(millions of dollars) Three Months Ended Six
Months Ended June 30, March 31, June 30, June 30,
June 30, 2016 2016 2015 2016 2015
Sales Southern
Timber $29.6 $44.7 $32.7 $74.4 $68.2 Pacific Northwest Timber 16.9
19.3 17.1 36.2 36.3 New Zealand Timber 47.7 36.0 39.2 83.8 80.4
Real Estate 137.3 13.4 6.9 150.7 30.7 Trading 30.1 21.4 19.8 51.3
40.5 Intersegment Eliminations — — 0.1 —
—
Total sales $261.6 $134.8
$115.8 $396.4 $256.1
Pro forma sales (a)
Southern Timber $29.6 $44.7 $32.7 $74.4 $68.2 Pacific Northwest
Timber 16.9 19.3 17.1 36.2 36.3 New Zealand Timber 47.7 36.0 39.2
83.8 80.4 Real Estate 7.8 13.4 6.9 21.2 30.7 Trading 30.1 21.4 19.8
51.3 40.5 Intersegment Eliminations — — 0.1 —
—
Pro forma sales $132.1 $134.8
$115.8 $266.9 $256.1
Operating income Southern
Timber $11.1 $15.8 $11.8 $26.8 $24.2 Pacific Northwest Timber 1.1
1.4 1.7 2.4 4.3 New Zealand Timber 10.0 4.7 (0.9 ) 14.8 4.8 Real
Estate 105.7 4.2 1.4 109.9 14.0 Trading 0.6 0.4 (0.1 ) 1.0 0.2
Corporate and other (6.9 ) (3.5 ) (7.4 ) (10.3 ) (13.2 )
Operating income $121.6 $23.0 $6.5
$144.6 $34.3
Pro forma operating income
(a) Southern Timber $11.1 $15.8 $11.8 $26.8 $24.2 Pacific
Northwest Timber 1.1 1.4 1.7 2.4 4.3 New Zealand Timber 10.0 4.7
(0.9 ) 14.8 4.8 Real Estate 4.4 4.2 1.4 8.6 14.0 Trading 0.6 0.4
(0.1 ) 1.0 0.2 Corporate and other (6.3 ) (4.3 ) (5.9 ) (10.5)
(11.6)
Pro forma operating income $20.9 $22.2
$8.0 $43.1 $35.9
Adjusted EBITDA (a) Southern
Timber $21.7 $32.4 $24.4 $53.9 $51.2 Pacific Northwest Timber 4.8
6.0 4.6 10.7 11.0 New Zealand Timber 16.4 11.4 6.2 27.9 19.9 Real
Estate 7.7 9.7 3.6 17.4 23.8 Trading 0.6 0.4 (0.1 ) 1.0 0.2
Corporate and other (6.2 ) (4.3 ) (5.6 ) (10.3 ) (11.5 )
Adjusted EBITDA $45.0 $55.6 $33.1
$100.6 $94.6
(a) Pro forma sales, pro forma operating
income and Adjusted EBITDA are non-GAAP measures. See Schedule F
for definitions and reconciliations.
E
RAYONIER INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP
MEASURES June 30, 2016 (unaudited) (millions of
dollars except per share information)
LIQUIDITY MEASURES: Six Months Ended June 30, June 30, 2016
2015
Cash Provided by Operating Activities
$77.0
$85.9 Working capital and other balance sheet changes
6.4
(6.9 ) Capital expenditures (a) (26.2 ) (25.3 )
Cash Available
for Distribution (b) $57.2 $53.7
Net income
$126.6 $15.3
Interest, net and miscellaneous expense
(income)
16.5 19.7 Income tax expense (benefit) 1.5 (0.7 ) Depreciation,
depletion and amortization 51.7 53.8 Non-cash cost of land and
improved development 5.8 4.9 Costs related to shareholder
litigation (c) 1.0 1.6 Gain on foreign currency derivatives (d)
(1.2 ) — Large dispositions (e) (101.3 ) —
Adjusted
EBITDA $100.6 $94.6 Cash interest paid (f) (16.9 ) (15.3 ) Cash
taxes paid (0.3 ) (0.3 ) Capital expenditures (a) (26.2 ) (25.3 )
Cash Available for Distribution (b) $57.2 $53.7
Cash Available for Distribution (b) $57.2 $53.7 Real estate
development investments (3.0 ) (0.9 )
Cash Available for
Distribution after real estate development investments $54.2
$52.8
(a) Capital expenditures exclude
timberland acquisitions of $276.6 million and $88.4 million during
the six months ended June 30, 2016 and June 30, 2015,
respectively.
(b) Cash Available for Distribution (CAD)
is a non-GAAP measure that management uses to measure 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 defined as cash
provided by operating activities adjusted for capital spending
(excluding timberland acquisitions) and working capital and other
balance sheet changes. CAD is not necessarily indicative of the CAD
that may be generated in future periods.
(c) “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 10—Contingencies of
Item 8 — Financial Statements and Supplementary Data in the
Company’s most recent Annual Report on Form 10-K.
(d) The Company used foreign exchange
derivatives to mitigate the risk of fluctuations in foreign
exchange rates while awaiting the planned capital contribution to
the New Zealand JV.
(e) On April 28, 2016, the Company
completed a disposition of approximately 55,000 acres of timberland
located in Washington for a sales price and gain of approximately
$129.5 million and $101.3 million, respectively.
(f) Cash interest paid is presented net of
patronage refunds received of $0.4 million and $1.3 million for the
six months ended June 30, 2016 and June 30, 2015,
respectively.
F
PRO FORMA SALES (a)
Pacific New Corporate
Southern Northwest Zealand Real
and Three Months Ended Timber Timber
Timber Estate Trading other
Total June 30, 2016 Sales $29.6 $16.9 $47.7
$137.3 $30.1 — $261.6 Large dispositions (b) — — —
(129.5 ) — — (129.5 )
Pro forma sales
$29.6 $16.9 $47.7 $7.8 $30.1 —
$132.1
Pacific New
Corporate Southern Northwest Zealand
Real and Six Months Ended Timber
Timber Timber Estate Trading
other Total June 30, 2016 Sales $74.4
$36.2 $83.8 $150.7 $51.3 — $396.4 Large dispositions (b) — —
— (129.5 ) — — (129.5 )
Pro forma
sales $74.4 $36.2 $83.8 $21.2 $51.3
— $266.9
PRO FORMA NET INCOME (LOSS)
(c):
Three Months Ended
Six Months Ended June 30, 2016 March 31, 2016 June 30, 2015
June 30, 2016 June 30, 2015 $
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
Net income (loss) attributable to Rayonier Inc. $109.8 $0.89
$14.5 $0.12 ($1.5 ) ($0.01 ) $124.3 $1.01 $16.2 $0.13 Costs related
to shareholder litigation (d) 0.6 0.01 0.4 — 1.5 0.01 1.0 0.01 1.6
0.01 Gain on foreign currency derivatives (e) — — (1.2 ) (0.01 ) —
— (1.2) (0.01 ) — — Large dispositions (b) (101.3 ) ($0.83 ) —
— — — (101.3 ) ($0.83 ) — —
Pro forma net income $9.1 $0.07 13.7
$0.11 — — $22.8 $0.18 $17.8 $0.14
PRO FORMA
OPERATING INCOME (LOSS) AND ADJUSTED EBITDA (f)(g):
Pacific New
Corporate Southern Northwest Zealand
Real and Three Months Ended Timber
Timber Timber Estate Trading
other Total June 30, 2016 Operating income
(loss) $11.1 $1.1 $10.0 $105.7 $0.6 ($6.9 ) $121.6 Costs related to
shareholder litigation (d) — — — — — 0.6 0.6 Large dispositions (b)
— — — (101.3 ) — — (101.3 ) Pro
forma operating income (loss) $11.1 $1.1 $10.0 $4.4 $0.6 ($6.3 )
$20.9 Depreciation, depletion and amortization 10.6 3.7 6.4 1.6 —
0.1 22.4 Non-cash cost of land and improved development — —
— 1.7 — — 1.7 Adjusted
EBITDA $21.7 $4.8 $16.4 $7.7 $0.6
($6.2 ) $45.0
March 31, 2016 Operating
income (loss) $15.8 $1.4 $4.7 $4.2 $0.4 ($3.5 ) $23.0 Costs related
to shareholder litigation (d) — — — — — 0.4 0.4 Gain on foreign
currency derivatives (e) — — — — —
(1.2 ) (1.2 ) Pro forma operating income (loss) $15.8 $1.4
$4.7 $4.2 $0.4 ($4.3 ) $22.2 Depreciation, depletion and
amortization 16.6 4.6 4.9 3.2 — — 29.3 Non-cash cost of land and
improved development — — 1.8 2.3 —
— 4.1 Adjusted EBITDA $32.4 $6.0
$11.4 $9.7 $0.4 ($4.3 ) $55.6
June 30, 2015 Operating income (loss) $11.8 $1.7 ($0.9 )
$1.4 ($0.1 ) ($7.4 ) $6.5 Costs related to shareholder litigation
(d) — — — — — 1.5 1.5
Pro forma operating income (loss) $11.8 $1.7 ($0.9 ) $1.4
($0.1 ) ($5.9 ) $8.0 Depreciation, depletion and amortization 12.6
2.9 7.1 1.0 — 0.3 23.9 Non-cash cost of land and improved
development — — — 1.2 — —
1.2 Adjusted EBITDA $24.4 $4.6 $6.2
$3.6 ($0.1 ) ($5.6 ) $33.1
Pacific New
Corporate Southern Northwest
Zealand Real and Six Months Ended
Timber Timber Timber Estate
Trading other Total June 30, 2016
Operating income (loss) $26.8 $2.4 $14.8 $109.9 $1.0 ($10.3 )
$144.6 Costs related to shareholder litigation (d) — — — — — 1.0
1.0 Gain on foreign currency derivatives (e) — — — — — (1.2 ) (1.2
) Large dispositions (b) — — — (101.3 ) —
— (101.3 ) Pro forma operating income (loss) $26.8
$2.4 $14.8 $8.6 $1.0 ($10.5 ) $43.1 Depreciation, depletion and
amortization 27.1 8.3 11.3 4.8 — 0.2 51.7 Non-cash cost of land and
improved development — — 1.8 4.0 —
— 5.8 Adjusted EBITDA $53.9 $10.7
$27.9 $17.4 $1.0 ($10.3 ) $100.6
June 30, 2015 Operating income (loss) $24.2 $4.3 $4.8
$14.0 $0.2 ($13.2 ) $34.3 Costs related to shareholder litigation
(d) — — — — — 1.6 1.6
Pro forma operating income (loss) $24.2 $4.3 $4.8 $14.0 $0.2
($11.6 ) $35.9 Depreciation, depletion and amortization 27.0 6.7
15.1 4.9 — 0.1 53.8 Non-cash cost of land and improved development
— — — 4.9 — — 4.9
Adjusted EBITDA $51.2 $11.0 $19.9 $23.8
$0.2 ($11.5 ) $94.6
(a) Pro forma sales is defined as revenue
adjusted for large dispositions. Rayonier believes that this
non-GAAP financial measure provides investors with useful
information to evaluate our core business operations because it
excludes specific items that are not indicative of ongoing
operating results.
(b) “Large Dispositions” are defined as
transactions involving the sale of timberland that exceed $20
million in size and do not have any identified HBU premium relative
to timberland value. On April 28, 2016, the Company completed a
disposition of approximately 55,000 acres located in Washington for
a sales price and gain of approximately $129.5 million and $101.3
million, respectively.
(c) Pro forma net income is defined as net
income attributable to Rayonier Inc. adjusted for costs related to
shareholder litigation, the gain on foreign currency derivatives
and large dispositions. Rayonier believes that this non-GAAP
financial measure provides investors with useful information to
evaluate our core business operations because it excludes specific
items that are not indicative of ongoing operating results.
(d) “Costs related to shareholder
litigation” includes expenses incurred as a result of the
securities litigation, the shareholder derivative demands and the
Securities and Exchange Commission investigation. See Note
10—Contingencies of Item 8 — Financial Statements and Supplementary
Data in the Company’s most recent Annual Report on Form 10-K.
(e) The Company used foreign exchange
derivatives to mitigate the risk of fluctuations in foreign
exchange rates while awaiting the planned capital contribution to
the New Zealand JV.
(f) Pro forma operating income is defined
as operating income adjusted for costs related to shareholder
litigation, the gain on foreign currency derivatives and large
dispositions. Rayonier believes that this non-GAAP financial
measure provides investors with useful information to evaluate our
core business operations because it excludes specific items that
are not indicative of the ongoing operating results.
(g) Adjusted EBITDA is defined as earnings
before interest, taxes, depreciation, depletion, amortization, the
non-cash cost of land and improved development, costs related to
shareholder litigation, the gain on foreign currency derivatives
and large dispositions. Adjusted EBITDA is a non-GAAP measure that
management uses to make strategic decisions about the business and
allows investors to evaluate the core business performance related
to the assets under management. It removes the impact of specific
items that management believes does not directly reflect the core
business operations on an ongoing basis.
F
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version on businesswire.com: http://www.businesswire.com/news/home/20160803006635/en/
Rayonier Inc.InvestorsMark McHugh, 904-357-3757orMediaRoseann
Wentworth, 904-357-9185roseann.wentworth@rayonier.com
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