- Fourth quarter net income attributable
to Rayonier of $2.0 million ($0.02 per share) on revenues of $166.1
million
- Fourth quarter operating income of
$15.0 million and Adjusted EBITDA of $49.9 million
- Full-year net income attributable to
Rayonier of $102.2 million ($0.79 per share) on revenues of $816.1
million
- Full-year operating income of $170.1
million and Adjusted EBITDA of $337.7 million
- Full-year cash provided by operations
of $310.1 million and cash available for distribution (CAD) of
$240.1 million
Rayonier Inc. (NYSE:RYN) today reported fourth quarter net
income attributable to Rayonier of $2.0 million, or $0.02 per
share, on revenues of $166.1 million. This compares to net income
attributable to Rayonier of $64.2 million, or $0.50 per share, on
revenues of $239.7 million in the prior year quarter. The prior
year fourth quarter results included income from a Large
Disposition1 of $38.8 million. Excluding this item, pro forma net
income2 was $25.4 million, or $0.20 per share, on pro forma
revenues2 of $186.3 million in the prior year period.
Overview of Fourth Quarter Results: The following table
summarizes the current quarter and comparable prior year period
results:
Three Months Ended (millions of
dollars, except earnings per share (EPS))
December 31, 2018
December 31, 2017 $ EPS $ EPS
Revenues $166.1 $239.7 Large Dispositions1 — (53.4 )
Pro forma revenues2 $166.1 $186.3 Net income
attributable to Rayonier $2.0 $0.02 $64.2 $0.50 Large Dispositions1
— — (38.8 ) (0.30 ) Pro forma net income2 $2.0
$0.02 $25.4 $0.20
Fourth quarter operating income was $15.0 million versus $80.1
million in the prior year period. The prior year fourth quarter
operating income included $38.8 million of income from a Large
Disposition.1 Excluding this item, pro forma operating income2 was
$41.3 million in the prior year period. Fourth quarter Adjusted
EBITDA2 was $49.9 million versus $77.2 million in the prior year
period.
The following table summarizes operating income and Adjusted
EBITDA2 for the current quarter and comparable prior year
period:
Three Months Ended December 31,
Operating Income (Loss)
Pro forma OperatingIncome
(Loss)2
Adjusted EBITDA2 (millions of dollars)
2018 2017 2018 2017
2018 2017 Southern Timber $7.2 $7.2 $7.2
$7.2 $21.2 $19.5 Pacific Northwest Timber (4.1 ) 2.4 (4.1 )
2.4 2.0 10.6 New Zealand Timber 12.6 16.1 12.6 16.1 19.3 23.0 Real
Estate 4.6 58.8 4.6 20.0 12.4 28.2 Trading 0.3 1.2 0.3 1.2 0.3 1.2
Corporate and other (5.6 ) (5.6 ) (5.6 ) (5.6 ) (5.3 ) (5.3 ) Total
$15.0 $80.1 $15.0 $41.3 $49.9
$77.2
Overview of Full-Year Results: Full-year 2018 net income
attributable to Rayonier was $102.2 million, or $0.79 per share, on
revenues of $816.1 million. This compares to net income
attributable to Rayonier of $148.8 million, or $1.16 per share, on
revenues of $819.6 million in the prior year. The prior year
results included $0.7 million of costs related to shareholder
litigation3 and $67.0 million from Large Dispositions.1 Excluding
these items, pro forma net income2 was $82.5 million, or $0.65 per
share, on pro forma revenues2 of $724.2 million in the prior
year.
The following table summarizes the full-year and comparable
prior year results on an actual and pro forma basis:
Year Ended (millions of dollars, except earnings per share
(EPS))
December 31, 2018 December 31, 2017
$ EPS $ EPS
Revenues $816.1 $819.6 Large Dispositions1 — (95.4 ) Pro
forma revenues2 $816.1 $724.2 Net income
attributable to Rayonier $102.2 $0.79 $148.8 $1.16 Costs related to
shareholder litigation3 — — 0.7 0.01 Large Dispositions1 — —
(67.0 ) (0.52 ) Pro forma net income2 $102.2 $0.79
$82.5 $0.65
Full-year operating income was $170.1 million versus $215.5
million in the prior year. The prior year operating income included
$0.7 million of costs related to shareholder litigation3 and $67.0
million from Large Dispositions.1 Excluding these items, pro forma
operating income2 was $149.2 million in the prior year. Full-year
Adjusted EBITDA2 was $337.7 million versus $290.5 million in the
prior year.
The following table summarizes operating income, pro forma
operating income2 and Adjusted EBITDA2 for the current full-year
and comparable prior year:
Year Ended December 31,
Operating Income
Pro forma
OperatingIncome2
Adjusted EBITDA2 (millions of dollars)
2018 2017 2018 2017
2018 2017 Southern Timber $44.2 $42.2 $44.2
$42.2 $102.8 $91.6 Pacific Northwest Timber 8.1 1.1 8.1 1.1
40.9 33.1 New Zealand Timber 62.8 57.6 62.8 57.6 90.8 85.1 Real
Estate 76.2 130.9 76.2 63.9 123.4 95.5 Trading 1.0 4.6 1.0 4.6 1.0
4.6 Corporate and other (22.3 ) (20.9 ) (22.3 ) (20.2 ) (21.1 )
(19.4 ) Total $170.1 $215.5 $170.1 $149.2
$337.7 $290.5
Full-year cash provided by operating activities was $310.1
million versus $256.3 million in the prior year. Full-year cash
available for distribution (CAD)2 of $240.1 million increased $51.4
million versus the prior year primarily due to higher Adjusted
EBITDA2 ($47.2 million), lower cash interest paid ($2.9 million)
and lower capital expenditures ($3.0 million), partially offset by
higher cash taxes paid ($1.7 million).
“We are pleased to conclude our strongest year of financial
performance since the spin-off of the performance fibers business
in 2014, with all four of our key operating segments generating
post-spin highs in full-year Adjusted EBITDA,” said David Nunes,
President and CEO. “Fourth quarter results, as anticipated, were
relatively modest, as harvest volumes and real estate transaction
activity were both heavily front-loaded in the first half of the
year. We also elected to defer planned harvest volumes in the
fourth quarter due to the impacts of Hurricane Michael in the South
and deteriorating market conditions in the Pacific Northwest
associated with tariffs on log exports to China. Overall, Southern
Timber results increased modestly versus the prior year quarter
driven by a 9% increase in harvest volumes, while weighted-average
stumpage prices were relatively flat. Pacific Northwest Timber
results declined significantly versus the prior year quarter driven
by 25% lower harvest volumes and 15% lower delivered sawtimber
prices, primarily due to tariffs on log exports to China and the
corresponding reduction in export demand. New Zealand Timber
results declined modestly versus the prior year quarter, driven
primarily by increased port and freight costs and unfavorable
foreign exchange impacts. Real Estate results declined over the
prior year quarter, primarily due to lower volumes partially offset
by higher average pricing.”
Southern Timber
Fourth quarter sales of $38.7 million increased $6.2 million, or
19%, versus the prior year period. Harvest volumes increased 9% to
1.33 million tons versus 1.22 million tons in the prior year
period, due to low mill inventories and stronger overall demand,
partially offset by wet weather conditions, which hindered logging
operations. For the full year, harvest volumes were below our
initial guidance, as we made the decision to defer approximately
200,000 tons of harvest at the end of 2018 in response to the
anticipated market softness associated with Hurricane Michael.
Average pine sawtimber stumpage prices decreased 2% to $24.03 per
ton versus $24.44 per ton in the prior year period, while average
pine pulpwood stumpage prices decreased 2% to $14.82 per ton versus
$15.16 per ton in the prior year period. The decreases in average
sawtimber and pulpwood prices were driven primarily by geographic
mix, as an increased proportion of volume came from lower-priced
regions. Overall, weighted-average stumpage prices (including
hardwood) increased 1% to $18.37 per ton versus $18.24 per ton in
the prior year period. Operating income of $7.2 million was
equivalent to the prior year period as favorable volume changes
($0.9 million) and higher net stumpage prices ($0.2 million) were
offset by higher depletion rates ($0.7 million), lower non-timber
income ($0.3 million) and higher timber lease expense ($0.1
million).
Fourth quarter Adjusted EBITDA2 of $21.2 million was $1.7
million above the prior year period.
Pacific Northwest Timber
Fourth quarter sales of $18.4 million decreased $8.0 million, or
30%, versus the prior year period. Harvest volumes decreased 25% to
242,000 tons versus 321,000 tons in the prior year period, as
harvest levels were deliberately reduced by 50,000 tons in response
to softer market conditions caused by reduced export demand.
Average delivered sawtimber prices decreased 15% to $81.14 per ton
versus $95.34 per ton in the prior year period, while average
delivered pulpwood prices increased 7% to $47.36 per ton versus
$44.44 per ton in the prior year period. The decrease in delivered
sawtimber prices was driven by the implementation of tariffs on log
exports to China in August as well as concern regarding a potential
increase in Chinese tariffs in 2019, which resulted in
significantly reduced export demand in the fourth quarter. The
increase in delivered pulpwood prices was driven primarily by
species mix and a decrease in supply of wood chip residuals from
sawmills. Operating loss of $4.1 million versus operating income of
$2.4 million in the prior year period was primarily due to lower
net stumpage prices ($4.8 million), unfavorable volume changes
($1.5 million), and higher severance taxes, overhead and other
costs ($0.5 million), which were partially offset by higher
non-timber income ($0.2 million) and lower depletion rates ($0.1
million).
Fourth quarter Adjusted EBITDA2 of $2.0 million was $8.6 million
below the prior year period.
New Zealand Timber
Fourth quarter sales of $60.1 million increased $0.8 million, or
1%, versus the prior year period. Volumes increased 1% to 655,000
tons versus 649,000 tons in the prior year period. Average
delivered prices for export sawtimber decreased 1% to $114.89 per
ton versus $115.77 per ton in the prior year period, while average
delivered prices for domestic sawtimber decreased 4% to $79.54 per
ton versus $83.02 per ton in the prior year period. The decrease in
export sawtimber prices was primarily due to the global impacts of
the U.S. / China trade tensions and the corresponding depreciation
of the Chinese Yuan (CNY) versus the U.S. dollar. The decrease in
domestic sawtimber prices (in U.S. dollar terms) was driven
primarily by the fall in the NZ$/US$ exchange rate (US$0.66 per
NZ$1.00 versus US$0.70 per NZ$1.00). Excluding the impact of
foreign exchange rates, domestic sawtimber prices increased 1% from
the prior year period. Operating income of $12.6 million decreased
$3.5 million versus the prior year period as a result of lower net
stumpage prices ($3.2 million), unfavorable foreign exchange
impacts ($1.3 million), and higher road maintenance costs ($0.5
million), which were partially offset by higher volumes ($0.2
million) and higher non-timber income ($1.3 million).
Fourth quarter Adjusted EBITDA2 of $19.3 million was $3.7
million below the prior year period.
Real Estate
Fourth quarter sales of $16.5 million decreased $69.4 million
versus the prior year period, while operating income of $4.6
million decreased $54.2 million versus the prior year period. The
prior year fourth quarter sales and operating income included $53.4
million and $38.8 million, respectively, from a Large Disposition.1
Excluding this item, pro forma sales2 of $16.5 million decreased
$16.0 million versus the prior year period due to a lower number of
acres sold (2,249 acres sold versus 7,475 acres sold in the prior
year period), partially offset by an increase in weighted-average
prices ($7,406 per acre versus $4,378 per acre in the prior year
period).
Improved Development sales of $4.5 million in the Wildlight
development project included 27.9 acres of commercial property for
$3.6 million ($129,432 per acre) and 20 residential lots for $0.9
million ($46,730 per lot or $329,081 per acre).
Rural sales of $11.7 million were comprised of 2,102 acres at an
average price of $5,575 per acre. This compares to prior year
period sales of $3.3 million, comprised of 1,204 acres at an
average price of $2,721 per acre.
Non-strategic / Timberland sales of $0.2 million were comprised
of 116 acres at an average price of $3,381 per acre, partially
offset by a $0.2 million post-closing harvest adjustment to the
prior quarter New Zealand land sale. This compares to prior year
period sales of $23.0 million, comprised of 6,249 acres at an
average price of $3,686 per acre.
Fourth quarter Adjusted EBITDA2 of $12.4 million was $15.8
million below the prior year period.
Trading
Fourth quarter sales of $32.4 million decreased $3.2 million
versus the prior year period due to lower volumes. Sales volumes
decreased 10% to 292,000 tons versus 326,000 tons in the prior year
period. Operating income and Adjusted EBITDA2 of $0.3 million
decreased $0.9 million versus the prior year period.
Other Items
Fourth quarter corporate and other operating expenses of $5.6
million were equivalent to the prior year period as a reduction in
overhead costs allocated to operating segments ($0.5 million) was
offset by lower compensation and general corporate expenses ($0.5
million).
Fourth quarter interest expense of $8.1 million decreased $0.4
million versus the prior year period due to lower average debt
outstanding.
Fourth quarter income tax expense of $2.8 million decreased $2.1
million versus the prior year period. The New Zealand subsidiary is
the primary driver of income tax expense.
Outlook
“In 2019, we expect to achieve net income attributable to
Rayonier of $60 to $69 million and Adjusted EBITDA of $270 to $290
million,” added Nunes. “The projected year-over-year decline in
consolidated financial results is driven primarily by a much lower
expected contribution from the Real Estate segment following an
extraordinarily strong level of Real Estate activity in 2018, which
was bolstered by two significant transactions in Louisiana and New
Zealand. In our timber segments, we expect total Adjusted EBITDA to
be slightly lower, with gains in Southern Timber offset by lower
Adjusted EBITDA in Pacific Northwest Timber and New Zealand Timber.
In our Southern Timber segment, we expect to achieve full-year
harvest volumes of 6.2 to 6.3 million tons, while we expect modest
pricing improvements in certain regions driven by stronger overall
demand. In our Pacific Northwest Timber segment, we expect to
achieve harvest volumes of 1.3 to 1.4 million tons, while we expect
meaningfully lower average sawtimber prices driven by reduced
export demand and market uncertainty regarding China tariffs. In
our New Zealand Timber segment, we expect to achieve harvest
volumes of 2.7 to 2.8 million tons, while we expect continued
strong demand and pricing as Chinese customers seek supply from
non-tariff countries, which we expect will be offset by increased
shipping and logging costs. In our Real Estate segment, we remain
focused on opportunistically unlocking the long-term value of our
HBU development and rural property portfolio, and thus continue to
expect that period-to-period results will be lumpy. Following
outsized Real Estate results in 2018, we currently anticipate more
normalized transaction activity in 2019.”
Conference Call
A conference call and live audio webcast will be held on
Thursday, February 7, 2019 at 10:00 AM EST 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, March 7, 2019 by dialing
866-475-1461 (domestic) or 203-369-1508 (international), passcode:
02072019.
Complimentary copies of Rayonier press releases and other
financial documents are also available by calling (904)
357-9100.
1“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.
2Pro forma net income, pro forma revenues (sales), pro forma
operating income (loss), Adjusted EBITDA and CAD are non-GAAP
measures defined and reconciled to GAAP in the attached
schedules.
3“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. In addition, these costs include
the costs associated with the Company’s response to a subpoena it
received from the SEC in November 2014. In July 2016, the Division
of Enforcement of the SEC notified the Company that it had
concluded its investigation into the Company.
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
December 31, 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 (408,000 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 December 31, 2018
(unaudited)
(millions of dollars, except per share
information)
Three Months Ended Year Ended December 31,
September 30, December 31, December 31,
December 31, 2018 2018 2017 2018 2017
SALES $166.1
$200.9 $239.7 $816.1 $819.6 Costs and Expenses
Cost of sales (139.1 ) (143.2 ) (149.8 ) (605.2 ) (568.3 ) Selling
and general expenses (10.6 ) (10.8 ) (10.5 ) (41.9) (40.2 ) Other
operating (expense) income, net (1.4 ) (0.5 ) 0.7 1.1 4.4
OPERATING INCOME 15.0 46.4 80.1 170.1 215.5 Interest
expense (8.1 ) (7.9 ) (8.5 ) (32.1) (34.1 ) Interest and other
miscellaneous income, net 0.5 0.5 0.2 4.6 1.9
INCOME BEFORE INCOME TAXES 7.4 39.0 71.8 142.6 183.3
Income tax expense (2.8 ) (8.4 ) (4.9 ) (25.3) (21.8 )
NET
INCOME 4.6 30.6 66.9 117.3 161.5 Less: Net income attributable
to noncontrolling interest (2.6 ) (7.2 ) (2.7 ) (15.1) (12.7 )
NET INCOME ATTRIBUTABLE TO RAYONIER INC. $2.0 $23.4
$64.2 $102.2 $148.8
EARNINGS PER COMMON
SHARE Basic earnings per share attributable to Rayonier Inc.
$0.02 $0.18 $0.50 $0.79 $1.17 Diluted earnings per share
attributable to Rayonier Inc. $0.02 $0.18 $0.50 $0.79 $1.16
Pro forma net income per share (a) $0.02 $0.18 $0.20
$0.79 $0.65
Weighted Average Common Shares
used for determining Basic EPS 129,158,030 129,142,931
128,653,911 129,043,627 127,367,608
Diluted EPS 129,736,352 129,755,874 129,193,264
129,690,231 127,809,949
(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 December 31, 2018
(unaudited)
(millions of dollars)
December 31, December 31, 2018 2017
Assets
Cash and cash equivalents $148.4 $112.7 Other current assets 59.5
70.9 Timber and timberlands, net of depletion and amortization
2,401.3 2,462.1 Higher and better use timberlands and real estate
development investments 85.6 80.8 Property, plant and equipment
30.7 32.6 Less - accumulated depreciation (7.9 ) (9.3 ) Net
property, plant and equipment 22.8 23.3 Restricted cash 8.1 59.7
Other assets 55.0 49.0 $2,780.7 $2,858.5
Liabilities and Shareholders’ Equity Current
maturities of long-term debt — $3.4 Other current liabilities 63.5
65.1 Long-term debt 972.6 1,022.0 Other non-current liabilities
90.0 75.0 Total Rayonier Inc. shareholders’ equity 1,556.9 1,593.1
Noncontrolling interest 97.7 99.9 Total shareholders’
equity 1,654.6 1,693.0 $2,780.7 $2,858.5
B
RAYONIER INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY December 31, 2018 (unaudited)
(millions of dollars, except share
information)
Common Shares
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Non-controlling Interest 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 — — 102.2 — 15.1 117.3 Dividends
($1.06 per share) — — (137.9 ) — — (137.9 ) Issuance of shares
under incentive stock
plans
599,422 8.6 — — — 8.6 Stock-based compensation — 6.4 — — — 6.4
Dividend to New Zealand minority shareholder — — — — (11.0 ) (11.0
) Other (a) (81,523 ) (3.0 ) 0.7 (13.2 ) (6.3 ) (21.8 )
Balance, December 31, 2018 129,488,675 $884.3
$672.4 $0.2 $97.7 $1,654.6
(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
twelve months ended December 31, 2018 also includes the adjustment
related to the adoption of ASU No. 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 December 31, 2018
(unaudited)
(millions of dollars)
Year Ended December 31, 2018 2017
Cash
provided by operating activities: Net income $117.3 $161.6
Depreciation, depletion and amortization 144.1 127.6 Non-cash cost
of land and improved development 23.6 13.7 Gain on large
dispositions of timberlands — (67.0 ) Other items to reconcile net
income to cash provided by operating activities 27.3 27.1 Changes
in working capital and other assets and liabilities (2.2 ) (6.7 )
310.1 256.3
Cash used for investing activities
(a): Capital expenditures (62.3 ) (65.3 ) Real estate
development investments (9.5 ) (15.8 ) Purchase of timberlands
(57.6 ) (242.9 ) Net proceeds from large dispositions of
timberlands — 95.2 Rayonier office building — (6.1 ) Other (3.5 )
(0.4 ) (132.9 ) (235.3 )
Cash used for financing activities:
Net decrease in debt, net of issuance costs (53.4 ) (37.0 )
Dividends paid (136.8 ) (127.1 ) Proceeds from the issuance of
common shares under incentive stock plan 8.6 4.8 Proceeds from the
issuance of common shares from equity offering — 152.4 Other (12.1
) — (193.7 ) (6.9 )
Effect of exchange rate changes on
cash and restricted cash 0.5 0.8
Cash, cash
equivalents and restricted cash (a): Change in cash, cash
equivalents and restricted cash (16.0 ) 14.9 Balance, beginning of
year 172.5 157.6 Balance, end of period $156.5
$172.5
(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 December 31, 2018
(unaudited)
(millions of dollars)
Three Months Ended Year Ended December 31,
September 30, December 31, December 31, December 31,
2018 2018 2017 2018 2017
Sales Southern
Timber $38.7 $39.7 $32.5 $170.0 $144.5 Pacific Northwest Timber
18.4 27.8 26.4 109.8 91.9 New Zealand Timber
60.1 66.3 59.3 249.0 223.3 Real Estate 16.5 36.2 85.9 138.6 207.3
Trading 32.4 31.0 35.6 148.8 152.6 Intersegment Eliminations
— (0.1 ) — (0.1 ) —
Total sales $166.1 $200.9 $239.7 $816.1
$819.6
Pro forma sales (a) Southern
Timber $38.7 $39.7 $32.5 $170.0 $144.5 Pacific Northwest Timber
18.4 27.8 26.4 109.8 91.9 New Zealand Timber 60.1 66.3 59.3 249.0
223.3 Real Estate 16.5 36.2 32.5 138.6 111.9 Trading 32.4 31.0 35.6
148.8 152.6 Intersegment Eliminations — (0.1 )
— (0.1 ) —
Pro forma sales
$166.1 $200.9 $186.3 $816.1 $724.2
Operating income (loss) Southern Timber $7.2
$9.2 $7.2 $44.2 $42.2 Pacific Northwest Timber (4.1 ) 1.9 2.4
8.1 1.1 New Zealand Timber 12.6 16.4 16.1 62.8 57.6 Real
Estate 4.6 24.7 58.8 76.2 130.9 Trading 0.3 0.3 1.2 1.0 4.6
Corporate and Other (5.6 ) (6.2 ) (5.6 )
(22.3 ) (20.9 )
Operating income $15.0
$46.4 $80.1 $170.1 $ 215.5
Pro forma operating income (loss) (a) Southern Timber
$7.2 $9.2 $7.2 $44.2 $42.2 Pacific Northwest Timber (4.1 ) 1.9 2.4
8.1 1.1 New Zealand Timber 12.6 16.4 16.1 62.8 57.6 Real Estate 4.6
24.7 20.0 76.2 63.9 Trading 0.3 0.3 1.2 1.0 4.6 Corporate and Other
(5.6 ) (6.2 ) (5.6 )
(22.3
)
(20.2 )
Pro forma operating income $15.0 $46.4
$41.3 $170.1 $149.2
Adjusted
EBITDA (a) Southern Timber $21.2 $22.9 $19.5 $102.8 $91.6
Pacific Northwest Timber 2.0 9.7 10.6 40.9 33.1 New Zealand Timber
19.3 24.0 23.0 90.8 85.1 Real Estate 12.4 32.3 28.2 123.4 95.5
Trading 0.3 0.3 1.2 1.0 4.6 Corporate and Other (5.3 )
(5.9 ) (5.3 ) (21.1 ) (19.4 )
Adjusted EBITDA $49.9 $83.3 $77.2
$337.7 $290.5
(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 December 31, 2018
(unaudited)
(millions of dollars except per share
information)
LIQUIDITY
MEASURES:
Year Ended December 31, December 31, 2018 2017
Cash Provided by
Operating Activities $310.1 $256.3 Working capital and other
balance sheet changes (7.7 ) (2.3 ) Capital expenditures (a) (62.3
) (65.3 )
Cash Available for Distribution (b) $240.1 $188.7
Net income $117.3 $161.5 Interest, net and
miscellaneous income 29.7 32.2 Income tax expense 25.2 21.8
Depreciation, depletion and amortization 144.1 127.6 Non-cash cost
of land and improved development 23.6 13.7 Non-operating income
(2.2 ) — Costs related to shareholder litigation (c) — 0.7 Large
Dispositions (d) — (67.0 )
Adjusted EBITDA (i) $337.7
$290.5 Cash interest paid (e) (33.1 ) (36.0 ) Cash taxes paid (2.2
) (0.5 ) Capital expenditures (a) (62.3 ) (65.3 )
Cash Available
for Distribution (b) $240.1 $188.7
Cash Available for
Distribution (b) $240.1 $188.7 Real estate development
investments (9.5 ) (15.8 )
Cash Available for Distribution after
real estate development investments $230.6 $172.9
PRO FORMA SALES (f):
Three
Months Ended Southern Timber Pacific
Northwest Timber New Zealand Timber
Real Estate Trading Total
December 31, 2018 Sales $38.7 $18.4
$60.1 $16.5 $32.4 $166.1 Large Dispositions (d) — — —
— — — Pro forma sales $38.7
$18.4 $60.1 $16.5 $32.4 $166.1
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
December 31, 2017 Sales $32.5 $26.4 $59.3 $85.9 $35.6 $239.7
Large Dispositions (d) — — — (53.4 ) —
(53.4 ) Pro forma sales $32.5 $26.4 $59.3
$32.5 $35.6 $186.3
PRO FORMA SALES (f):
Year
Ended
Southern Timber Pacific Northwest Timber
New Zealand Timber Real Estate
Trading Total December 31, 2018 Sales $170.0
$109.8 $249.0 $138.6 $148.8 $816.1 Large Dispositions (d) —
— — — — — Pro forma sales $170.0
$109.8 $249.0 $138.6 $148.8
$816.1
December 31, 2017 Sales $144.5 $91.9
$223.3 $207.3 $152.6 $819.6 Large Dispositions (d) — —
— (95.4 ) — (95.4 ) Pro forma sales $144.5
$91.9 $223.3 $111.9 $152.6
$724.2
PRO FORMA NET
INCOME (g):
Three Months Ended Year Ended
December 31,2018
September 30,2018
December 31,2017
December 31,2018
December 31,2017
$ Per Diluted Share $ Per Diluted Share
$ Per Diluted Share $ Per Diluted Share $ Per Diluted Share
Net
income attributable to Rayonier Inc. $ 2.0 $ 0.02 $ 23.4 $ 0.18
$64.2 $ 0.50 $102.2 $0.79 $148.8 $ 1.16 Costs related to
shareholder litigation (c) — — — — — — — — 0.7 0.01 Large
Dispositions (d) — — —
— (38.8 ) (0.30 ) — — (67.0 ) (0.52 )
Pro forma net income $ 2.0 $ 0.02 $ 23.4
$ 0.18 $25.4 $ 0.20 $102.2 $0.79 $82.5 $ 0.65
PRO FORMA OPERATING INCOME (LOSS) AND ADJUSTED EBITDA
(h)(i):
Three Months
Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading Corporateand Other Total
December 31, 2018 Operating income (loss) $7.2 ($4.1 ) $12.6
$4.6 $0.3 ($5.6 ) $15.0 Depreciation, depletion and amortization
14.0 6.1 6.7 1.3 — 0.3 28.4 Non-cash cost of land and improved
development — — — 6.5 — —
6.5 Adjusted EBITDA $21.2 $2.0 $19.3
$12.4 $0.3 ($5.3 ) $49.9
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
December 31, 2017
Operating income $7.2 $2.4 $16.1 $58.8 $1.2 ($5.6 ) $80.1 Large
Dispositions (d) — — — (38.8 ) — —
(38.8 ) Pro forma operating income $7.2 $2.4 $16.1 $20.0
$1.2 ($5.6 ) $41.3 Depreciation, depletion and amortization 12.3
8.2 6.9 3.1 — 0.3 30.8 Non-cash cost of land and improved
development — — — 5.1 — —
5.1 Adjusted EBITDA $19.5 $10.6 $23.0
$28.2 $1.2 ($5.3 ) $77.2
PRO FORMA OPERATING INCOME
AND ADJUSTED EBITDA (h)(i):
Year
Ended
SouthernTimber
PacificNorthwestTimber
NewZealandTimber
RealEstate
Trading
CorporateandOther
Total December 31, 2018 Operating income $44.2 $8.1
$62.8 $76.2 $1.0 ($22.3 ) $170.1 Depreciation, depletion and
amortization 58.6 32.8 28.0 23.6 — 1.2 144.1 Non-cash cost of land
and improved development — — — 23.6 —
— 23.6 Adjusted EBITDA $102.8 $40.9
$90.8 $123.4 $1.0 ($21.1 ) $337.7
December 31, 2017 Operating income
$42.2 $1.1 $57.6 $130.9 $4.6 ($20.9 ) $215.5 Costs related to
shareholder litigation (c) — — — — — 0.7 0.7 Large Dispositions (d)
— — — (67.0 ) — — (67.0 ) Pro
forma operating income (loss) $42.2 $1.1 $57.6 $63.9 $4.6 ($20.2 )
$149.2 Depreciation, depletion and amortization 49.4 32.0 27.5 17.9
— 0.8 127.6 Non-cash cost of land and improved development —
— — 13.7 — — 13.7
Adjusted EBITDA $91.6 $33.1 $85.1 $95.5
$4.6 ($19.4 ) $290.5
(a) Capital expenditures exclude timberland acquisitions of
$57.6 million and $242.9 million during the twelve months ended
December 31, 2018 and December 31, 2017, respectively, as
well as spending on the Rayonier office building of $6.1 million
during the twelve months ended December 31, 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 2017,
the Company completed two dispositions of approximately 50,000
acres in total for a sales price and gain of approximately $95.4
million and $67.0 million, respectively.
(e) Cash interest paid is presented net of patronage refunds
received of $4.1 million and $3.0 million for the twelve months
ended December 31, 2018 and December 31, 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
RAYONIER INC. AND SUBSIDIARIES RECONCILIATION OF
ADJUSTED EBITDA GUIDANCE December 31, 2018 (unaudited)
(millions of dollars)
ADJUSTED EBITDA GUIDANCE
(a): 2019 Guidance
Net Income to Adjusted EBITDA Reconciliation Net income
$66.5
-
$76.5
Less: Net income attributable to noncontrolling interest
(7.0
) -
(8.0
) Net income attributable to Rayonier Inc.
$59.5
-
$68.5
Interest, net 34.5 - 35.5 Income tax expense
12.0
-
13.5
Depreciation, depletion and amortization 138.0 - 143.5 Non-cash
cost of land and improved development 19.0 - 21.0 Net income
attributable to noncontrolling interest
7.0
-
8.0
Adjusted EBITDA
$270.0
-
$290.0
Diluted Earnings per Share
$0.46
-
$0.53
(a) 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.
G
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McHugh904-357-9100investorrelations@rayonier.com
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