- Third quarter net income attributable
to Rayonier of $23.4 million ($0.18 per share) on revenues of
$200.9 million
- Third quarter operating income of $46.4
million and Adjusted EBITDA of $83.3 million
- Year-to-date cash provided by
operations of $261.1 million and cash available for distribution
(CAD) of $222.0 million
Rayonier Inc. (NYSE:RYN) today reported third quarter net income
attributable to Rayonier of $23.4 million, or $0.18 per share, on
revenues of $200.9 million. This compares to net income
attributable to Rayonier of $24.7 million, or $0.19 per share, on
revenues of $184.4 million in the prior year quarter.
The following table summarizes the current quarter and
comparable prior year period results:
Three Months Ended (millions of
dollars, except earnings per share (EPS))
September 30, 2018
September 30, 2017 $
EPS $ EPS Revenues $
200.9 $ 184.4 Net income attributable to Rayonier $ 23.4 $
0.18 $ 24.7 $ 0.19
Third quarter operating income was $46.4 million versus $39.3
million in the prior year period. Third quarter Adjusted EBITDA1
was $83.3 million versus $69.3 million in the prior year
period.
In order to more closely align our segment reporting with how we
internally evaluate business performance, we have reclassified New
Zealand timberland sales from the New Zealand Timber segment to the
Real Estate segment. Prior period segment results have also been
adjusted to reflect this reclassification.
The following table summarizes operating income and Adjusted
EBITDA1 for the current quarter and comparable prior year
period:
Three Months Ended September 30,
Operating Income Adjusted
EBITDA1 (millions of dollars)
2018
2017 2018 2017 Southern Timber $
9.2 $ 11.5 $ 22.9 $ 24.2 Pacific Northwest Timber 1.9 1.1 9.7 7.6
New Zealand Timber 16.4 19.3 24.0 27.8 Real Estate 24.7 11.4 32.3
13.4 Trading 0.3 1.1 0.3 1.1 Corporate and other (6.2 )
(5.1 ) (5.9 ) (4.8 ) Total $ 46.4 $
39.3 $ 83.3 $ 69.3
Year-to-date cash provided by operating activities was $261.1
million versus $186.9 million in the prior year period.
Year-to-date cash available for distribution (CAD)1 of $222.0
million increased $78.5 million versus the prior year period
primarily due to higher Adjusted EBITDA1 ($74.8 million), lower
cash interest paid ($2.5 million) and lower capital expenditures
($1.6 million), partially offset by higher cash taxes paid ($0.3
million).
“Following a very strong first half of the year, we are pleased
to report third quarter results above expectations, largely driven
by a timberland sale in New Zealand,” said David Nunes, President
and CEO. “Southern Timber results reflect 2% lower harvest volumes
and a 3% increase in pine pulpwood stumpage prices relative to the
prior year quarter, as wet weather conditions hindered harvest
efforts but positively impacted pulpwood pricing. Overall,
weighted-average stumpage prices in Southern Timber decreased 1%
due to the geographic mix of sawtimber harvest volumes and the
impact of tariffs on China export volume. Pacific Northwest Timber
results improved versus the prior year quarter driven by 23% higher
harvest volumes as well as higher delivered sawtimber and pulpwood
prices, partially offset by higher cut and haul costs. New Zealand
Timber results declined modestly versus the prior year quarter,
driven primarily by 7% lower harvest volumes and softer pricing as
we contended with the global impacts of the U.S. / China trade
tensions. Real Estate results (which have been reclassified to
include New Zealand timberland sales) were well above the prior
year quarter, driven primarily by a $28.1 million timberland sale
in New Zealand comprised of 4,996 productive acres at an average
price of $5,628 per acre.”
Southern Timber
Third quarter sales of $39.7 million increased $2.4 million, or
6%, versus the prior year period. Harvest volumes decreased 2% to
1.33 million tons versus 1.36 million tons in the prior year
period, primarily due to wet ground conditions hampering our
ability to harvest. Average pine sawtimber stumpage prices
decreased 1% to $25.55 per ton versus $25.93 per ton in the prior
year period due to geographic mix and the impact of China tariffs
on export prices. Average pine pulpwood stumpage prices increased
3% to $16.74 per ton versus $16.32 per ton in the prior year
period, as wet ground conditions generated favorable spot markets
in the current quarter and the prior year quarter included salvage
timber volume from the West Mims fire. Overall, weighted-average
stumpage prices (including hardwood) decreased 1% to $19.36 per ton
versus $19.63 per ton in the prior year period. Operating income of
$9.2 million decreased $2.4 million versus the prior year period
due to lower net stumpage prices ($0.4 million), volume/mix changes
($0.2 million), lower non-timber income ($0.5 million) and higher
depletion rates ($1.2 million).
Third quarter Adjusted EBITDA1 of $22.9 million was $1.2 million
below the prior year period.
Pacific Northwest Timber
Third quarter sales of $27.8 million increased $8.7 million, or
46%, versus the prior year period. Harvest volumes increased 23% to
310,000 tons versus 252,000 tons in the prior year period, as the
prior year period was hampered by fire restrictions. Average
delivered sawtimber prices increased 15% to $102.74 per ton versus
$89.62 per ton in the prior year period, while average delivered
pulpwood prices increased 18% to $48.93 per ton versus $41.43 per
ton in the prior year period. The increase in delivered sawtimber
prices was driven by continued strong demand from both domestic and
export markets, while the increase in delivered pulpwood prices was
driven primarily by price tension resulting from chip exports in
the first half of the year. The increases in delivered sawtimber
and pulpwood prices were partially offset by higher cut and haul
costs resulting from an increased proportion of cable logging as
well as increased demand for logging and trucking contractors.
Operating income of $1.9 million increased $0.8 million versus the
prior year period due to higher net stumpage prices ($0.9 million),
volume/mix changes ($0.9 million), higher non-timber income ($0.3
million) and lower depletion rates ($0.2 million), which were
partially offset by higher road maintenance, engineering, overhead
and other costs ($1.5 million).
Third quarter Adjusted EBITDA1 of $9.7 million was $2.1 million
above the prior year period.
New Zealand Timber
Third quarter sales of $66.3 million decreased $3.8 million, or
5%, versus the prior year period. Volumes decreased 7% to 724,000
tons versus 774,000 tons in the prior year period, driven primarily
by the timing of export shipments. Average delivered prices for
export sawtimber increased 1% to $114.54 per ton versus $113.35 per
ton in the prior year period, while average delivered prices for
domestic sawtimber decreased 3% to $80.74 per ton versus $83.61 per
ton in the prior year period. The increase in export sawtimber
prices was primarily due to stronger demand from China relative to
the prior year quarter. However, despite continued strong export
demand, pricing declined versus the second quarter due to the
global impacts of the U.S. / China trade tensions, including the
depreciation of the Chinese Yuan (CNY) versus the U.S. dollar. The
decrease in domestic sawtimber prices (in U.S. dollar terms) versus
the prior year quarter was driven primarily by the fall in the
NZ$/US$ exchange rate (US$0.68 per NZ$1.00 versus US$0.73 per
NZ$1.00). Excluding the impact of foreign exchange rates, domestic
sawtimber prices increased 5% from the prior year period. Operating
income of $16.4 million decreased $2.9 million versus the prior
year period as a result of lower volumes ($1.6 million), lower net
stumpage prices ($2.4 million), unfavorable foreign exchange
impacts ($0.5 million), higher depletion rates ($0.2 million) and
higher road maintenance and overhead costs ($0.2 million), which
were partially offset by higher non-timber income ($2.0
million).
Third quarter Adjusted EBITDA1 of $24.0 million was $3.8 million
below the prior year period.
Real Estate
Third quarter sales of $36.2 million increased $19.0 million
versus the prior year period, while operating income of $24.7
million increased $13.4 million versus the prior year period due to
a higher number of acres sold (7,336 acres sold versus 2,549 acres
sold in the prior year period), partially offset by a decrease in
weighted-average prices ($4,929 per acre versus $6,764 per acre in
the prior year period).
Improved Development closings of $1.3 million in the Wildlight
development project included 2.2 acres of commercial property for
$0.5 million ($225,000 per acre) and 20 residential lots for $0.8
million ($42,000 per lot or $288,000 per acre).
Unimproved Development sales of $1.2 million were comprised of
126 acres at an average price of $9,325 per acre. This compares to
the prior year period sales of $13.9 million, comprised of 1,319
acres at an average price of $10,540 per acre.
Rural sales of $4.5 million were comprised of 1,420 acres at an
average price of $3,161 per acre. This compares to prior year
period sales of $3.1 million, comprised of 1,128 acres at an
average price of $2,771 per acre.
Non-strategic / Timberland sales of $29.2 million were comprised
of 5,785 acres at an average price of $5,039 per acre, including a
$28.1 million timberland sale in New Zealand comprised of 4,996
productive acres at an average price of $5,628 per acre. This
compares to prior year period sales of $0.2 million, comprised of
102 acres at an average price of $1,616 per acre.
Third quarter Adjusted EBITDA1 of $32.3 million was $18.9
million above the prior year period.
Trading
Third quarter sales of $31.0 million decreased $9.7 million
versus the prior year period due to lower volumes. Sales volumes
decreased 24% to 283,000 tons versus 371,000 tons in the prior year
period. Operating income and Adjusted EBITDA1 of $0.3 million
decreased $0.8 million versus the prior year period.
Other Items
Third quarter corporate and other operating expenses of $6.2
million increased $1.1 million versus the prior year period due to
a reduction in overhead costs allocated to operating segments ($0.5
million), higher stock-based compensation and other benefits
expense ($0.3 million), higher property taxes ($0.2 million) and
higher insurance costs ($0.1 million).
Third quarter interest expense of $7.9 million decreased $0.7
million versus the prior year period due to lower average debt.
Third quarter income tax expense of $8.4 million increased $5.4
million versus the prior year period. The New Zealand JV is the
primary driver of income tax expense.
Outlook
“Based on results for the first nine months and our expectations
for the balance of the year, we anticipate that full-year Adjusted
EBITDA will be above our prior guidance,” added Nunes. “In our
Southern Timber segment, we expect to achieve full-year harvest
volumes of 5.6 to 5.7 million tons and Adjusted EBITDA modestly
below prior guidance, as we are choosing to pull back harvest
volumes in certain market areas that have been impacted by
Hurricane Michael. In our Pacific Northwest Timber segment, we
expect to achieve full-year harvest volumes of approximately 1.3
million tons and Adjusted EBITDA toward the lower end of prior
guidance, as domestic and export prices have softened following the
announcement of tariffs on log exports into China. In our New
Zealand Timber segment, we expect to achieve full-year harvest
volumes of 2.6 to 2.7 million tons and Adjusted EBITDA modestly
above prior guidance, as reduced log inventories in China coupled
with reduced trade flows from the U.S. have led to some recent
strengthening of export prices. In our Real Estate segment, we
anticipate full-year Adjusted EBITDA well above prior guidance
driven by the New Zealand timberland sale in the third quarter
(which contributed Adjusted EBITDA and net income attributable to
Rayonier of $27.7 million and $12.8 million, respectively), while
we expect fourth quarter Real Estate closings will be relatively
light. On balance, we remain on track to achieve our prior earnings
guidance before considering the impact of the third quarter New
Zealand timberland sale, which represents upside to the prior
guidance.”
Conference Call
A conference call and live audio webcast will be held on
Thursday, November 1, 2018 at 10:00 AM EDT to discuss these
results.
Access to the live audio 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, November 8, 2018 by dialing
888-568-0032 (domestic) or 203-369-3891 (international), passcode:
11082018.
Complimentary copies of Rayonier press releases and other
financial documents are also available by calling (904)
357-9100.
1Adjusted EBITDA and CAD are non-GAAP measures defined and
reconciled to GAAP in the attached schedules.
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
September 30, 2018, Rayonier owned, leased or managed
approximately 2.6 million acres of timberlands located in the U.S.
South (1.8 million acres), U.S. Pacific Northwest (378,000 acres)
and New Zealand (407,000 acres). More information is available at
www.rayonier.com.
___________________________________________________________________________
Forward-Looking Statements - Certain statements in this
press release 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 and dispositions, 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; 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 downturn 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 revenues (sales),” “pro forma
operating income (loss),” “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 September 30, 2018
(unaudited)
(millions of dollars, except per share
information)
Three Months Ended
Nine Months Ended September 30, June
30, September 30, September 30,
September 30, 2018 2018 2017 2018 2017
SALES $ 200.9
$ 245.9 $ 184.4 $ 650.0 $ 579.9 Costs
and Expenses Cost of sales (143.2 ) (184.4 ) (137.0 ) (466.2 )
(418.4 ) Selling and general expenses (10.8 ) (11.5 ) (9.9 ) (31.3
) (29.8 ) Other operating (expense) income, net (0.5 )
1.6 1.8 2.6 3.7
OPERATING INCOME 46.4 51.6 39.3 155.1 135.4 Interest
expense (7.9 ) (8.1 ) (8.6 ) (24.0 ) (25.5 ) Interest and other
miscellaneous income, net 0.5 2.9
1.1 4.0 1.6
INCOME
BEFORE INCOME TAXES 39.0 46.4 31.8 135.1 111.5 Income tax
expense (8.4 ) (7.1 ) (3.0 ) (22.4 )
(16.8 )
NET INCOME 30.6 39.3 28.8 112.7 94.7 Less:
Net income attributable to noncontrolling interest (7.2 )
(3.0 ) (4.1 ) (12.5 ) (10.0 )
NET
INCOME ATTRIBUTABLE TO RAYONIER INC. $ 23.4 $ 36.3
$ 24.7 $ 100.2 $ 84.7
EARNINGS PER
COMMON SHARE Basic earnings per share attributable to Rayonier
Inc. $ 0.18 $ 0.28 $ 0.19 $ 0.78 $ 0.67 Diluted earnings per share
attributable to Rayonier Inc. $ 0.18 $ 0.28 $ 0.19 $ 0.77 $ 0.67
Pro forma net income per share (a) $ 0.18 $ 0.28
$ 0.19 $ 0.77 $ 0.45
Weighted
Average Common Shares used for determining Basic EPS
129,142,931 129,067,325 128,610,696
129,005,074 126,934,003 Diluted
EPS 129,755,874 129,711,287
128,965,780 129,674,438 127,344,007
(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 September 30, 2018
(unaudited)
(millions of dollars)
September 30,
December 31, 2018 2017
Assets Cash and cash equivalents $
146.3 $ 112.7 Other current assets 88.4 70.9 Timber and
timberlands, net of depletion and amortization 2,386.9 2,462.1
Higher and better use timberlands and real estate development
investments 79.7 80.8 Property, plant and equipment 32.3 32.6 Less
- accumulated depreciation (9.5 ) (9.3 ) Net
property, plant and equipment 22.8 23.3 Restricted cash 45.4 59.7
Other assets 72.7 49.0 $ 2,842.2
$ 2,858.5
Liabilities and Shareholders’ Equity
Current maturities of long-term debt — $ 3.4 Other current
liabilities 81.6 65.1 Long-term debt 972.4 1,022.0 Other
non-current liabilities 87.1 75.0 Total Rayonier Inc. shareholders’
equity 1,600.3 1,593.1 Noncontrolling interest 100.8
99.9 Total shareholders’ equity 1,701.1
1,693.0 $ 2,842.2 $ 2,858.5
B
RAYONIER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
EQUITY September 30, 2018 (unaudited)
(millions of dollars, except share
information)
Common Shares
RetainedEarnings
AccumulatedOtherComprehensiveIncome
Non-controllingInterest
Shareholders’Equity
Shares Amount Balance, December 31,
2016 122,904,368 $ 709.9 $ 700.9 $ 0.9 $ 85.2 $ 1,496.9 Net
income — — 148.8 — 12.7 161.5 Dividends ($1.00 per share) — —
(128.0 ) — — (128.0 ) Issuance of shares under incentive stock
plans
322,314 4.8 — — — 4.8 Stock-based compensation — 5.4 — — — 5.4
Issuance of shares under equity offering 5,750,000 152.4 — — —
152.4 Other (a) (5,906 ) (0.2 ) (14.3 ) 12.5
2.0 —
Balance, December 31,
2017 128,970,776 $ 872.3 $ 707.4 $ 13.4 $ 99.9 $ 1,693.0 Net
income — — 100.2 — 12.5 112.7 Dividends ($0.79 per share) — —
(102.9 ) — — (102.9 ) Issuance of shares under incentive stock
plans
577,857 8.2 — — — 8.2 Stock-based compensation — 5.0 — — — 5.0
Other (a) (81,396 ) (3.0 ) 0.7 (1.1 )
(11.5 ) (14.8 )
Balance, September 30, 2018
129,467,237 $ 882.4 $ 705.5 $ 12.3 $
100.8 $ 1,701.1
(a) Primarily includes shares purchased from employees in
non-open market transactions to pay withholding taxes associated
with the vesting of restricted stock and performance shares,
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 nine
months ended September 30, 2018 also includes the adjustment
related to the adoption of ASU 2018-02. The twelve months ended
December 31, 2017 also includes the cumulative-effect adjustment
related to the adoption of ASU No. 2016-16.
C
RAYONIER INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS September 30, 2018
(unaudited)
(millions of dollars)
Nine Months Ended September 30,
2018 2017
Cash provided by operating
activities: Net income $ 112.7 $ 94.7 Depreciation, depletion
and amortization 115.7 96.6 Non-cash cost of land and improved
development 17.1 8.6 Gain on large dispositions of timberlands —
(28.2 ) Other items to reconcile net income to cash provided by
operating activities 30.0 21.2 Changes in working capital and other
assets and liabilities (14.4 ) (6.0 ) 261.1
186.9
Cash used for investing activities
(a): Capital expenditures (44.1 ) (45.7 ) Real estate
development investments (6.9 ) (11.8 ) Purchase of timberlands
(39.0 ) (239.1 ) Net proceeds from large dispositions of
timberlands — 42.0 Rayonier office building — (6.0 ) Other
2.1 0.5 (87.9 ) (260.1 )
Cash
(used for) provided by financing activities: Net decrease in
debt, net of issuance costs (53.4 ) (31.9 ) Dividends paid (101.8 )
(95.0 ) Proceeds from the issuance of common shares under incentive
stock plan 8.2 3.7 Proceeds from the issuance of common shares from
equity offering — 152.4 Other (5.5 ) —
(152.5 ) 29.2
Effect of exchange rate changes on
cash and restricted cash (1.4 ) 1.2
Cash, cash equivalents and restricted cash (a): Change in
cash, cash equivalents and restricted cash 19.3 (42.8 ) Balance,
beginning of year 172.4 157.6 Balance,
end of period $ 191.7 $ 114.8
(a) Due to the adoption of ASU No. 2016-18, restricted cash is
now included with cash and cash equivalents when reconciling the
beginning-of-period and end-of-period total amounts shown and
therefore changes in restricted cash are no longer reported as
investing activities. Prior period amounts have been restated to
conform to current period presentation.
D
RAYONIER INC. AND SUBSIDIARIES BUSINESS SEGMENT
SALES, PRO FORMA SALES, OPERATING INCOME, PRO FORMA
OPERATING INCOME AND ADJUSTED EBITDA September 30, 2018
(unaudited)
(millions of dollars)
Three Months Ended Nine
Months Ended September 30, June 30,
September 30, September 30, September 30, 2018 2018
2017 2018 2017
Sales Southern Timber $ 39.7 $ 48.0 $ 37.3 $
131.3 $ 112.0
Pacific Northwest Timber
27.8 32.2 19.1 91.4 65.5 New Zealand Timber 66.3 69.7 70.1 188.9
164.0 Real Estate 36.2 49.9 17.2 122.1 121.5 Trading 31.0
46.2 40.7 116.4
117.0
Total sales $ 200.9 $ 245.9
$ 184.4 $ 650.0 $ 579.9
Pro
forma sales (a) Southern Timber $ 39.7 $ 48.0 $ 37.3 $ 131.3 $
112.0 Pacific Northwest Timber 27.8 32.2 19.1 91.4 65.5 New Zealand
Timber 66.3 69.7 70.1 188.9 164.0 Real Estate 36.2 49.9 17.2 122.1
79.5 Trading 31.0 46.2 40.7
116.4 117.0
Pro forma
sales $ 200.9 $ 245.9 $ 184.4 $ 650.0
$ 537.9
Operating income (loss)
Southern Timber $ 9.2 $ 15.7 $ 11.5 $ 37.1 $ 35.0 Pacific Northwest
Timber 1.9 5.6 1.1 12.2 (1.3 ) New Zealand Timber 16.4 17.8 19.3
50.1 41.5 Real Estate 24.7 18.9 11.4 71.6 72.1 Trading 0.3 0.2 1.1
0.7 3.4 Corporate and Other (6.2 ) (6.5 ) (5.1
) (16.6 ) (15.3 )
Operating income $ 46.4
$ 51.6 $ 39.3 $ 155.1 $ 135.4
Pro forma operating income (loss) (a) Southern Timber
$ 9.2 $ 15.7 $ 11.5 $ 37.1 $ 35.0 Pacific Northwest Timber 1.9 5.6
1.1 12.2 (1.3 ) New Zealand Timber 16.4 17.8 19.3 50.1 41.5 Real
Estate 24.7 18.9 11.4 71.6 43.9 Trading 0.3 0.2 1.1 0.7 3.4
Corporate and Other (6.2 ) (6.5 ) (5.1 )
(16.6 ) (14.6 )
Pro forma operating income $
46.4 $ 51.6 $ 39.3 $ 155.1 $ 107.9
Adjusted EBITDA (a) Southern Timber $ 22.9 $
30.6 $ 24.2 $ 81.7 $ 72.1 Pacific Northwest Timber 9.7 15.0 7.6
38.9 22.5 New Zealand Timber 24.0 25.8 27.8 71.4 62.0 Real Estate
32.3 45.9 13.4 111.0 67.2 Trading 0.3 0.2 1.1 0.7 3.4 Corporate and
Other (5.9 ) (6.2 ) (4.8 ) (15.8 )
(14.1 )
Adjusted EBITDA $ 83.3 $ 111.3
$ 69.3 $ 287.9 $ 213.1
(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 September 30, 2018 (unaudited)
(millions of dollars except per share
information)
LIQUIDITY MEASURES: Nine Months
Ended September 30, September 30, 2018 2017
Cash
Provided by Operating Activities $ 261.1 $ 186.9 Working
capital and other balance sheet changes 5.0 2.3 Capital
expenditures (a) (44.1 ) (45.7 )
Cash Available
for Distribution (b) $ 222.0 $ 143.5
Net income $
112.7 $ 94.7 Interest, net and miscellaneous income 22.5 24.2
Income tax expense 22.4 16.8 Depreciation, depletion and
amortization 115.7 96.6 Non-cash cost of land and improved
development 17.1 8.6 Non-operating (income) expense (2.6 ) (0.3 )
Costs related to shareholder litigation (c) — 0.7 Large
Dispositions (d) — (28.2 )
Adjusted EBITDA
(i) $ 287.9 $ 213.1 Cash interest paid (e) (20.9 ) (23.5 ) Cash
taxes paid (0.8 ) (0.5 ) Capital expenditures (a) (44.1 )
(45.7 )
Cash Available for Distribution (b) $ 222.0 $
143.5
Cash Available for Distribution (b) $ 222.0 $
143.5 Real estate development investments (6.9 )
(11.8 )
Cash Available for Distribution after real estate
development investments $ 215.1 $ 131.8
PRO FORMA SALES (f):
Three
Months Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading Total
September 30, 2018
Sales $ 39.7 $
27.8 $ 66.3 $ 36.2 $ 31.0 $ 200.9 Large Dispositions (d) —
— — — — — Pro forma sales $ 39.7
$ 27.8 $ 66.3 $ 36.2 $ 31.0 $ 200.9
June 30, 2018
Sales $ 48.0 $ 32.2 $ 69.7 $ 49.9 $ 46.2 $ 245.9 Large Dispositions
(d) — — — — — — Pro forma
sales $ 48.0 $ 32.2 $ 69.7 $ 49.9 $ 46.2 $ 245.9
September 30, 2017 Sales $ 37.3 $ 19.1 $ 70.1 $ 17.2 $ 40.7
$ 184.4 Large Dispositions (d) — — — —
— — Pro forma sales $ 37.3 $ 19.1 $ 70.1 $ 17.2 $
40.7 $ 184.4
PRO FORMA SALES (f):
Nine Months Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading Total
September 30, 2018
Sales $ 131.3 $
91.4 $ 188.9 $ 122.1 $ 116.4 $ 650.0 Large Dispositions (d)
— — — — — — Pro
forma sales $ 131.3 $ 91.4 $ 188.9 $ 122.1 $ 116.4 $ 650.0
September 30, 2017 Sales $ 112.0 $ 65.5 $
164.0 $ 121.5 $ 117.0 $ 579.9 Large Dispositions (d) —
— — (42.0 ) — (42.0 ) Pro forma
sales $ 112.0 $ 65.5 $ 164.0 $ 79.5 $ 117.0 $ 537.9
PRO FORMA NET INCOME (g):
Three Months Ended Nine Months Ended
September 30,2018
June 30,2018
September 30,2017
September 30,2018
September 30,2017
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
Net income attributable to Rayonier Inc. $ 23.4 $ 0.18 $
36.3 $ 0.28 $ 24.7 $ 0.19 $ 100.2 $ 0.77 $ 84.7 $ 0.67 Costs
related to shareholder litigation (c) — — — — — — — — 0.7 0.01
Large Dispositions (d) — — — — —
— — — (28.2 ) (0.23 )
Pro
forma net income $ 23.4 $ 0.18 $ 36.3 $ 0.28 $ 24.7 $ 0.19 $
100.2 $ 0.77 $ 57.2 $ 0.45
PRO FORMA
OPERATING INCOME (LOSS) AND ADJUSTED EBITDA (h)(i):
Three Months Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading
CorporateandOther
Total September 30, 2018
Operating income $ 9.2 $ 1.9 $ 16.4 $ 24.7 $ 0.3 ($6.2 ) $
46.4 Depreciation, depletion and amortization 13.7 7.8 7.5 5.5 —
0.3 34.8 Non-cash cost of land and improved development —
— — 2.1 — — 2.1 Adjusted
EBITDA $ 22.9 $ 9.7 $ 24.0 $ 32.3 $ 0.3 ($5.9 ) $ 83.3
June 30, 2018 Operating income $ 15.7 $ 5.6 $ 17.8 $ 18.9 $
0.2 ($6.5 ) $ 51.6 Depreciation, depletion and amortization 14.9
9.4 8.0 13.7 — 0.3 46.4 Non-cash cost of land and improved
development — — — 13.3 — —
13.3 Adjusted EBITDA $ 30.6 $ 15.0 $ 25.8 $ 45.9 $
0.2 ($6.2 ) $ 111.3
September 30, 2017 Operating
income $ 11.5 $ 1.1 $ 19.3 $ 11.4 $ 1.1 ($5.1 ) $ 39.3
Depreciation, depletion and amortization 12.7 6.5 8.5 0.7 — 0.3
28.7 Non-cash cost of land and improved development —
— — 1.3 — — 1.3 Adjusted EBITDA
$ 24.2 $ 7.6 $ 27.8 $ 13.4 $ 1.1 ($4.8 ) $ 69.3
PRO FORMA OPERATING INCOME (LOSS) AND ADJUSTED EBITDA
(h)(i):
Nine Months Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading
CorporateandOther
Total September 30, 2018
Operating income $ 37.1 $ 12.2 $ 50.1 $ 71.6 $ 0.7 ($16.6 )
$ 155.1 Depreciation, depletion and amortization 44.6 26.7 21.3
22.3 — 0.9 115.7 Non-cash cost of land and improved development
— — — 17.1 — —
17.1 Adjusted EBITDA $ 81.7 $ 38.9 $
71.4 $ 111.0 $ 0.7 ($15.8 ) $ 287.9
September 30, 2017 Operating income (loss) $ 35.0 ($1.3 ) $
41.5 $ 72.1 $ 3.4 ($15.3 ) $ 135.4 Costs related to shareholder
litigation (c) — — — — — 0.7 0.7 Large Dispositions (d) —
— — (28.2 ) — —
(28.2 ) Pro forma operating income (loss) $ 35.0 ($1.3 ) $ 41.5 $
43.9 $ 3.4 ($14.6 ) $ 107.9 Depreciation, depletion and
amortization 37.1 23.8 20.5 14.8 — 0.5 96.6 Non-cash cost of land
and improved development — — —
8.6 — — 8.6 Adjusted EBITDA $
72.1 $ 22.5 $ 62.0 $ 67.2 $ 3.4 ($14.1 ) $ 213.1
(a) Capital expenditures exclude timberland acquisitions of
$39.0 million and $239.1 million during the nine months ended
September 30, 2018 and September 30, 2017, respectively,
as well as spending on the Rayonier office building of $6.0 million
during the nine months ended September 30, 2017.
(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 common stock dividends, distributions to the New
Zealand minority shareholder, repurchase of the Company’s common
shares, debt reduction, strategic acquisitions and real estate
development investments. CAD is defined as cash provided by
operating activities adjusted for capital spending (excluding
timberland acquisitions and spending on the Rayonier office
building) 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 and the
shareholder derivative demands. 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) “Large Dispositions” are defined as transactions involving
the sale of timberland that exceed $20 million in size and do not
have a demonstrable premium relative to timberland value. In
January 2017, the Company completed a disposition of approximately
25,000 acres of timberland located in Alabama for a sales price and
gain of approximately $42.0 million and $28.2 million,
respectively.
(e) Cash interest paid is presented net of patronage refunds
received of $4.1 million and $3.0 million for the nine months ended
September 30, 2018 and September 30, 2017,
respectively.
(f) Pro forma revenues (sales) is defined as revenues (sales)
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.
(g) Pro forma net income is defined as net income attributable
to Rayonier Inc. adjusted for costs related to shareholder
litigation 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.
(h) Pro forma operating income (loss) is defined as operating
income (loss) adjusted for costs related to shareholder litigation
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.
(i) Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation, depletion, amortization, the non-cash cost of
land and improved development, non-operating income and expense,
costs related to shareholder litigation and Large Dispositions.
Adjusted EBITDA is a non-GAAP measure that management uses to make
strategic decisions about the business and that investors can use
to evaluate the operational performance of the assets under
management. It removes the impact of specific items that management
believes do not directly reflect the core business operations on an
ongoing basis.
F
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version on businesswire.com: https://www.businesswire.com/news/home/20181031005836/en/
Rayonier Inc.Investors/Media:Mark McHugh,
904-357-9100investorrelations@rayonier.com
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