- First quarter net income attributable to Rayonier of $25.9
million ($0.20 per share) on revenues of $259.1 million
- First quarter pro forma net loss of $0.3 million ($0.00 per
share) on pro forma revenues of $143.1 million
- First quarter operating income of $38.6 million, pro forma
operating income of $12.4 million and Adjusted EBITDA of $47.1
million
- First quarter cash provided by operations of $29.2 million and
cash available for distribution (CAD) of $27.2 million
Rayonier Inc. (NYSE:RYN) today reported first quarter net income
attributable to Rayonier of $25.9 million, or $0.20 per share, on
revenues of $259.1 million. This compares to net income
attributable to Rayonier of $24.8 million, or $0.19 per share, on
revenues of $191.5 million in the prior year quarter. The first
quarter results included $28.7 million of income from a Large
Disposition,1 partially offset by costs related to the merger with
Pope Resources2 of $2.5 million. Excluding these items, pro forma
net loss3 was $0.3 million, or $0.00 per share, on pro forma
revenues3 of $143.1 million.
The following table summarizes the current quarter and
comparable prior year period results:
Three Months Ended
(millions of dollars, except earnings per
share (EPS))
March 31, 2020
March 31, 2019
$
EPS
$
EPS
Revenues
$259.1
$191.5
Large Dispositions1
(116.0
)
—
Pro forma revenues3
$143.1
$191.5
Net income attributable to Rayonier
$25.9
$0.20
$24.8
$0.19
Costs related to the merger with Pope
Resources2
2.5
0.02
—
—
Large Dispositions1
(28.7
)
(0.22
)
—
—
Pro forma net (loss) income3
($0.3
)
—
$24.8
$0.19
First quarter operating income was $38.6 million versus $38.5
million in the prior year period. The current quarter operating
income included $28.7 million of income from a Large Disposition,1
partially offset by costs related to the merger with Pope
Resources2 of $2.5 million. Excluding these items, current quarter
pro forma operating income3 was $12.4 million. First quarter
Adjusted EBITDA3 was $47.1 million versus $79.0 million in the
prior year period.
The following table summarizes operating income (loss), pro
forma operating income (loss)3 and Adjusted EBITDA3 for the current
quarter and comparable prior year period:
Three Months Ended March
31,
Operating Income
(Loss)
Pro forma Operating Income
(Loss)3
Adjusted EBITDA3
(millions of dollars)
2020
2019
2020
2019
2020
2019
Southern Timber
$15.1
$21.5
$15.1
$21.5
$33.3
$41.2
Pacific Northwest Timber
(0.9
)
(3.7
)
(0.9
)
(3.7
)
9.8
3.1
New Zealand Timber
5.4
15.7
5.4
15.7
10.2
22.0
Real Estate
26.8
10.0
(1.9
)
10.0
(1.1
)
17.4
Trading
—
0.5
—
0.5
—
0.5
Corporate and other
(7.8
)
(5.5
)
(5.3
)
(5.5
)
(5.0
)
(5.2
)
Total
$38.6
$38.5
$12.4
$38.5
$47.1
$79.0
Cash provided by operating activities was $29.2 million versus
$70.9 million in the prior year period. Cash available for
distribution (CAD)3 of $27.2 million decreased $35.0 million versus
the prior year period primarily due to lower Adjusted EBITDA3
($31.9 million), higher capital expenditures ($3.1 million) and
higher cash interest paid ($0.5 million), partially offset by lower
cash taxes paid ($0.4 million).
“The differential magnitude and timing of COVID-19 related
headwinds across our segments translated into a choppy start to the
year,” said David Nunes, President and CEO. “In the U.S., the
forest products industry has been designated by the federal
government as an essential critical infrastructure industry, and we
have therefore continued to operate, although end markets have been
affected. In New Zealand, the pandemic began disrupting export
markets in January, and in late March, the N.Z. government
instituted lockdown measures on all non-essential businesses,
including forestry. On April 28th, New Zealand ended these lockdown
measures, and our operations are currently in the process of being
reopened on a phased basis.”
“Overall, I’m pleased with how our team navigated the various
challenges associated with the COVID-19 pandemic to deliver strong
operational results in our timber segments during the first
quarter,” continued Nunes. “Southern Timber segment Adjusted EBITDA
declined 19% relative to an extraordinarily strong first quarter
2019 but was generally in-line with our expectations and well above
the prior three quarters, driven by continued strong pulpwood
demand. In Pacific Northwest Timber, Adjusted EBITDA improved
significantly versus the prior year quarter as results were
bolstered by targeted lump-sum sales and increased delivered log
volume to meet improved domestic demand. New Zealand Timber
Adjusted EBITDA declined 54% versus the prior year quarter amid
deteriorating market conditions caused by COVID-19, which resulted
in a 20% reduction in harvest volumes and declines in export and
domestic sawtimber prices of 18% and 16%, respectively, versus the
prior year period. As anticipated, Real Estate sales activity in
the first quarter was very limited, although average price
realizations remained strong.”
“We also recently completed several portfolio management and
financing initiatives in anticipation of closing the Pope Resources
transaction. On March 30th, our Real Estate segment closed a Large
Disposition consisting of approximately 67,000 acres in Mississippi
for $116.0 million. Following quarter-end, we closed a series of
debt financing transactions, which extended certain maturities,
increased the size of our revolving credit facility, and raised
$250 million of additional funded term debt. These actions further
bolstered our liquidity position and completed the financing
required for the Pope transaction, which we expect to close on May
8th.”
Southern Timber
First quarter sales of $53.0 million decreased $7.8 million, or
13%, versus the prior year period primarily due to lower net
stumpage prices, lower volumes and lower pipeline easement revenue.
Harvest volumes decreased 5% to 1.84 million tons versus 1.94
million tons in the prior year period. Average pine sawtimber
stumpage prices increased 1% to $26.67 per ton versus $26.38 per
ton in the prior year period due to geographic mix. Average pine
pulpwood stumpage prices decreased 11% to $16.05 per ton versus
$17.94 per ton in the prior year period primarily due to an
increase in available log supply resulting from drier ground
conditions in the current quarter versus the prior year period.
Overall, weighted-average stumpage prices (including hardwood)
decreased 5% to $19.91 per ton versus $21.03 per ton in the prior
year period. Operating income of $15.1 million decreased $6.4
million versus the prior year period as lower non-timber income
($4.3 million), lower net stumpage prices ($2.1 million), lower
volumes ($0.9 million) and higher indirect and overhead expenses
($0.5 million) were partially offset by lower lease-related
expenses ($0.8 million) and lower depletion rates ($0.6
million).
First quarter Adjusted EBITDA3 of $33.3 million was $7.9 million
below the prior year period.
Pacific Northwest Timber
First quarter sales of $31.1 million increased $10.6 million, or
51%, versus the prior year period. Harvest volumes increased 68% to
476,000 tons versus 283,000 tons in the prior year period due to a
significant increase in lump-sum stumpage sales and higher
delivered volumes to meet improved market demand. Average delivered
sawtimber prices decreased 4% to $75.40 per ton versus $78.47 per
ton in the prior year period due to a higher mix of chip-n-saw
volume in the current quarter coupled with reduced demand as the
COVID-19 pandemic led to production curtailments at many domestic
sawmills toward the end of the quarter. However, the announcement
of temporary relief from tariffs in China coupled with reduced
exports from Europe and New Zealand led to increasing China demand
for export logs toward the end of the quarter. Average delivered
pulpwood prices decreased 16% to $38.11 per ton versus $45.15 per
ton in the prior year period, driven primarily by excess chip
supply in the market. Operating loss of $0.9 million decreased $2.8
million versus the prior year period as higher net stumpage prices
($2.8 million), lower depletion rates ($0.7 million) and higher
non-timber income ($0.1 million) were partially offset by higher
overhead costs ($0.4 million) and an increase in other variable
costs ($0.4 million).
First quarter Adjusted EBITDA3 of $9.8 million was $6.7 million
above the prior year period.
New Zealand Timber
First quarter sales of $37.5 million decreased $19.6 million, or
34%, versus the prior year period. Harvest volumes decreased 20% to
481,000 tons versus 604,000 tons in the prior year period, as the
COVID-19 pandemic began disrupting export markets in January and
ultimately resulted in a government-mandated shutdown of all
non-essential activity (including the harvesting and transport of
logs) in New Zealand by late March. Average delivered prices for
export sawtimber decreased 18% to $94.86 per ton versus $116.24 per
ton in the prior year period, while average delivered prices for
domestic sawtimber decreased 16% to $69.97 per ton versus $83.42
per ton in the prior year period. The decrease in export sawtimber
prices was driven primarily by lower demand and challenging freight
logistics resulting from the COVID-19 lockdown in China. The
decrease in domestic sawtimber prices (in U.S. dollar terms) was
driven in part by the fall in the NZ$/US$ exchange rate (US$0.65
per NZ$1.00 versus US$0.68 per NZ$1.00). Excluding the impact of
foreign exchange rates, domestic sawtimber prices decreased 12%
versus the prior year period, generally following the negative
trend in the export market. Operating income of $5.4 million
decreased $10.3 million versus the prior year period as a result of
lower net stumpage prices ($7.4 million), lower volumes ($4.0
million), higher roading costs ($0.5 million), lower non-timber
income ($0.4 million) and higher overhead costs ($0.2 million),
partially offset by favorable foreign exchange impacts ($2.1
million) and lower depreciation and software amortization expenses
($0.1 million).
First quarter Adjusted EBITDA3 of $10.2 million was $11.8
million below the prior year period.
Real Estate
First quarter sales of $118.5 million increased $97.5 million
versus the prior year period, while operating income of $26.8
million increased $16.7 million versus the prior year period. First
quarter sales and operating income included $116.0 million and
$28.7 million, respectively, from Large Dispositions.1 Excluding
this item, pro forma sales3 were $2.5 million, while pro forma
operating loss3 was $1.9 million due to fewer acres sold (624 acres
sold versus 5,679 acres sold in the prior year period), partially
offset by an increase in weighted-average prices ($3,842 per acre
versus $3,687 per acre in the prior year period).
There were no Improved Development sales in the first quarter.
This compares to prior year period sales of $0.3 million, which
consisted of eight residential lots ($42,688 per lot or $292,000
per acre) in the Wildlight development project north of
Jacksonville, Florida.
There were no Unimproved Development sales in the first quarter.
This compares to prior year period sales of $1.0 million, which
consisted of a seven-acre tract in Bryan County, Georgia for
$145,773 per acre.
Rural sales of $2.4 million consisted of 624 acres at an average
price of $3,842 per acre. This compares to prior year period sales
of $12.7 million, which consisted of 3,338 acres at an average
price of $3,794 per acre.
There were no Timberland and Non-Strategic sales in the first
quarter. This compares to prior year period sales of $6.9 million,
which consisted of 2,333 acres at an average price of $2,972 per
acre.
Large Disposition1 sales of $116.0 million were comprised of
66,946 acres in Mississippi at an average price of $1,733 per
acre.
First quarter Adjusted EBITDA3 of ($1.1) million was $18.5
million below the prior year period.
Trading
First quarter sales of $19.0 million decreased $13.1 million
versus the prior year period due to lower volumes and prices
resulting from the impacts of the COVID-19 pandemic on key export
markets. Sales volumes decreased 26% to 207,000 tons versus 282,000
tons in the prior year period. The Trading segment generated
breakeven results versus operating income of $0.5 million in the
prior year period.
Other Items
First quarter corporate and other operating expenses of $7.8
million increased $2.3 million versus the prior year period,
primarily due to costs related to the Pope Resources merger ($2.5
million), partially offset by lower overhead costs ($0.2
million).
First quarter interest expense of $8.3 million increased $0.5
million versus the prior year period due to higher outstanding
debt.
First quarter income tax expense of $3.7 million decreased $0.6
million versus the prior year period as a result of lower taxable
income. The New Zealand subsidiary is the primary driver of income
tax expense.
Share Repurchases
During the first quarter, the Company repurchased $3.2 million
of common shares at an average price of $20.71 per share. As of
March 31, 2020, the Company had 129.2 million common shares
outstanding and $87.7 million remaining on its current share
repurchase authorization.
Pope Resources Merger & Financing Update
On April 6, 2020, Rayonier and Pope Resources filed with the
Securities and Exchange Commission (SEC) a definitive proxy
statement/prospectus for the Pope Resources merger transaction.
Pope Resources mailed this document to its unitholders for a
special meeting on May 5, 2020 to approve the merger. Pending a
successful vote of Pope Resources unitholders and the satisfaction
of other customary closing conditions, the merger transaction is
scheduled to close on May 8, 2020. For more information on the Pope
Resources merger transaction, see the definitive proxy
statement/prospectus.
During the month of April, Rayonier also executed a series of
transactions to, among other things, (1) increase the size of its
revolving credit facility to $300 million and extend the maturity
of the facility to April 2025, (2) extend the maturity of its
existing $350 million incremental term loan to April 2028, and (3)
enter into a new incremental term loan in the amount of $250
million with a maturity date of April 2025. In addition, Rayonier
completed a Large Disposition consisting of approximately 67,000
acres in Mississippi for $116 million on March 30, 2020. With the
closing of these transactions, Rayonier has ample liquidity to fund
the cash portion of the Pope Resources merger consideration,
refinance Pope’s existing debt, as needed, and pay fees and
expenses associated with the transaction. For more information on
these transactions, see our Current Reports on Form 8-K filed with
the SEC on April 2, 2020 and April 17, 2020.
COVID-19 Response & Revised 2020 Outlook
“At Rayonier, our first priority is the health and safety of our
employees and contractors,” stated Nunes. “We are currently working
hard to balance this priority with the designation of the U.S.
forest products industry as an essential critical infrastructure
industry in order to keep our business running while observing the
necessary social distancing and safety protocols to mitigate the
further spread of COVID-19. To this end, we have implemented a
work-from-home model for office employees and instituted enhanced
safety guidelines for field employees. Overall, we believe that
these arrangements are working well and are allowing our company
and industry to continue to supply essential forest products in the
U.S. while optimizing workplace safety. In New Zealand, we are
currently in the process of restarting operations following the
government-mandated lockdown, while employing similar safety
procedures.”
“Nevertheless, we expect that market conditions over the next
several quarters will continue to be very challenging and volatile
as governments and industries seek to cope with the far-reaching
impacts of the COVID-19 pandemic, including the significant
slowdown of construction and overall economic activity. Due to the
continuously evolving conditions created by COVID-19, we are
updating our prior 2020 financial guidance based on our current
outlook for the balance of the year. We now anticipate full-year
net income attributable to Rayonier of $33 to $46 million, pro
forma net income of $7 to $20 million, EPS of $0.26 to $0.36, pro
forma EPS of $0.05 to $0.15 and Adjusted EBITDA of $200 to $230
million, excluding the impact of the Pope Resources merger.”
“In our Southern Timber segment, we expect lower full-year
harvest volumes of 5.7 to 6.0 million tons due to the disposition
of 67,000 acres in Mississippi as well as the reduction of harvest
volumes in certain markets impacted by weaker demand. We further
expect that Southern Timber pricing will be relatively flat versus
2019 average pricing as continued strong pulpwood demand, favorable
geographic mix and increased export demand generally offset weaker
domestic sawtimber demand. In our Pacific Northwest Timber segment,
we expect full-year harvest volumes of 1.3 to 1.4 million tons
based on our strong start to the year coupled with improved export
demand, which has partially offset declines in domestic sawtimber
demand due to mill curtailments. We further expect that Pacific
Northwest pricing will be somewhat volatile and dependent on the
duration of domestic mill curtailments as well as potential changes
in China export demand and the availability of competitive supply
as different regions cope with the impacts of COVID-19. In our New
Zealand Timber segment, full-year harvest volumes are expected to
decrease to between 2.1 and 2.3 million tons, primarily as a result
of the shutdown of all non-essential activity in New Zealand during
parts of March and April. We expect some near-term upside in New
Zealand pricing resulting from pent-up demand following the
shutdown, while longer-term pricing will be driven by the timing of
resumed economic activity and the resultant level of domestic and
export demand. In our Real Estate segment, we anticipate a
significant slowdown in Improved and Unimproved Development sales
for the balance of the year, although we continue to expect
reasonably strong Rural sales activity based on our current
pipeline of transactions.”
“Despite the significant challenges being experienced by global
economies as a result of the COVID-19 pandemic, I believe that
Rayonier is well-positioned to weather this storm,” continued
Nunes. “The forest products industry has been designated as a
critical infrastructure industry by the U.S. Department of Homeland
Security, and we have therefore been able to maintain our U.S.
forestry operations in order to continue to supply fiber for the
manufacturing of essential products, including tissue paper,
cardboard boxes and structural lumber. I’m proud of the dedication
and resiliency that our employees have demonstrated during this
crisis, and I’m confident in the strength of our balance sheet and
liquidity position. As a pure-play timberland REIT, we enjoy strong
margins and substantially less volatility than downstream
manufacturing businesses, and we have a geographically diverse
portfolio that further mitigates our exposure to any single region
or product category. We expect that the diversity and optionality
of our portfolio will be further enhanced when we close the Pope
Resources merger transaction in the second quarter, pending the
successful vote of Pope’s unitholders.”
Conference Call
A conference call and live audio webcast will be held on
Thursday, April 30, 2020 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
800-857-5304 (domestic) or 517-645-6486 (international), passcode:
4438508. A replay of the conference call will be available one hour
following the call until Thursday, May 7, 2020 by dialing
800-819-5743 (domestic) or 203-369-3828 (international), passcode:
4302020.
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.
2“Costs related to the merger with Pope
Resources” include legal, accounting and due diligence, consulting
and other costs related to the previously announced definitive
merger agreement with Pope Resources, which is expected to close on
May 8, 2020.
3Pro forma net (loss) 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 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 March
31, 2020, 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 (384,000 acres) and New Zealand
(415,000 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; business disruptions arising from public health crises and
outbreaks of communicable diseases, including the recent outbreak
of the virus known as the novel coronavirus; 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 sales,” “pro forma operating income
(loss),” “pro forma net (loss) 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.
Important Additional Information and Where to Find It –
In connection with the proposed merger transaction, Rayonier and
Rayonier, L.P. (“Opco”) filed with the SEC on March 17, 2020, as
amended, a registration statement on Form S-4 to register the
shares of Rayonier common stock and units representing limited
partnership interests in Opco to be issued in connection with the
merger transaction. The registration statement includes a proxy
statement/prospectus that was sent to the unitholders of Pope
Resources seeking their approval of the merger-related proposals.
Investors and security holders are urged to read the registration
statement on Form S-4 and the related proxy statement/prospectus,
as well as any amendments or supplements to those documents and any
other relevant documents to be filed with the SEC in connection
with the proposed merger transaction because they will contain
important information about Rayonier, Pope and the proposed
transaction.
Investors and security holders may obtain copies of these
documents free of charge through the website maintained by the SEC
at www.sec.gov or from Rayonier at its website, www.rayonier.com,
or from Pope at its website, www.poperesources.com. Documents filed
with the SEC by Rayonier will be available free of charge by
accessing Rayonier’s website at www.rayonier.com under the heading
Investor Relations, or, alternatively, by directing a request by
telephone or mail to Rayonier at 1 Rayonier Way, Wildlight, FL
32097, and documents filed with the SEC by Pope will be available
free of charge by accessing Pope’s website at www.poperesources.com
under the heading Investor Relations or, alternatively, by
directing a request by telephone or mail to Pope at 19950 Seventh
Avenue NE, Suite 200, Poulsbo, WA 98370.
Participants in the Solicitation – Rayonier and Pope and
certain of their respective directors and executive officers and
other members of management and employees may be deemed to be
participants in the solicitation of proxies from the unitholders of
Pope in respect of the proposed merger transaction under the rules
of the SEC. Information about Pope’s directors and executive
officers is available in Pope’s Annual Report on Form 10-K and
certain of its Current Reports on Form 8-K. Information about
Rayonier’s directors and executive officers is available in
Rayonier’s proxy statement dated April 1, 2020 for its 2020 Annual
Meeting of Stockholders, and certain of its Current Reports on Form
8-K. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC regarding the merger when they become available.
Investors should read the definitive proxy statement/prospectus
carefully before making any voting or investment decisions. You may
obtain free copies of these documents from Rayonier or Pope using
the sources indicated above.
No Offer or Solicitation – This communication shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
RAYONIER INC. AND
SUBSIDIARIES
CONDENSED STATEMENTS OF
CONSOLIDATED INCOME
March 31, 2020
(unaudited)
(millions of dollars, except per
share information)
Three Months Ended
March 31,
December 31,
March 31,
2020
2019
2019
SALES
$259.1
$178.8
$191.5
Costs and Expenses
Cost of sales
(209.4
)
(140.2
)
(143.3
)
Selling and general expenses
(10.0
)
(10.8
)
(9.8
)
Other operating (expense) income, net
(1.1
)
(1.7
)
0.1
OPERATING INCOME
38.6
26.1
38.5
Interest expense
(8.3
)
(8.1
)
(7.7
)
Interest and other miscellaneous (expense)
income, net
(0.2
)
2.1
1.3
INCOME BEFORE INCOME TAXES
30.1
20.1
32.1
Income tax expense
(3.7
)
(2.7
)
(4.3
)
NET INCOME
26.4
17.4
27.8
Less: Net income attributable to
noncontrolling interest
(0.5
)
(1.4
)
(3.0
)
NET INCOME ATTRIBUTABLE TO RAYONIER
INC.
$25.9
$16.0
$24.8
EARNINGS PER COMMON SHARE
Basic earnings per share attributable to
Rayonier Inc.
$0.20
$0.12
$0.19
Diluted earnings per share attributable to
Rayonier Inc.
$0.20
$0.12
$0.19
Pro forma net (loss) income per share
(a)
—
$0.12
$0.19
Weighted Average Common Shares used for
determining
Basic EPS
129,137,494
129,149,307
129,172,925
Diluted EPS
129,348,050
129,436,456
129,750,281
(a) Pro forma net (loss) income per share
is a non-GAAP measure. See Schedule F for definition and
reconciliation to the nearest GAAP measurement.
A
RAYONIER INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2020
(unaudited)
(millions of dollars)
March 31,
December 31,
2020
2019
Assets
Cash and cash equivalents
$132.4
$68.7
Other current assets
56.7
57.3
Timber and timberlands, net of depletion
and amortization
2,355.6
2,482.0
Higher and better use timberlands and real
estate development investments
88.8
81.8
Property, plant and equipment
31.8
31.9
Less - accumulated depreciation
(10.0
)
(9.6
)
Net property, plant and equipment
21.8
22.3
Restricted cash
0.5
1.2
Right-of-use assets
92.0
99.9
Other assets
40.0
47.8
$2,787.8
$2,861.0
Liabilities and Shareholders’
Equity
Current maturities of long-term debt
—
82.0
Other current liabilities
69.2
69.2
Long-term debt
1,055.3
973.1
Long-term lease liability
83.4
90.5
Other non-current liabilities
180.2
108.6
Total Rayonier Inc. shareholders’
equity
1,313.4
1,440.0
Noncontrolling interest
86.3
97.6
Total shareholders’ equity
1,399.7
1,537.6
$2,787.8
$2,861.0
B
RAYONIER INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
March 31, 2020
(unaudited)
(millions of dollars, except
share information)
Common Shares
Retained Earnings
Accumulated Other
Comprehensive (Loss) Income
Non-controlling
Interest
Shareholders’ Equity
Shares
Amount
Balance, January 1, 2020
129,331,069
$888.2
$583.0
($31.2
)
$97.6
1,537.6
Net income
—
—
25.9
—
0.5
26.4
Dividends ($0.27 per share)
—
—
(34.8
)
—
—
(34.8
)
Issuance of shares under incentive stock
plans
2,407
0.1
—
—
—
0.1
Stock-based compensation
—
1.5
—
—
—
1.5
Repurchase of common shares made under
repurchase program
(152,223
)
—
(3.2
)
—
—
(3.2
)
Other (a)
(14
)
—
—
(116.1
)
(11.8
)
(127.9
)
Balance, March 31, 2020
129,181,239
$889.8
$570.9
($147.3
)
$86.3
1,399.7
Common Shares
Retained Earnings
Accumulated Other
Comprehensive (Loss) Income
Non-controlling
Interest
Shareholders’ Equity
Shares
Amount
Balance, January 1, 2019
129,488,675
$884.3
$672.4
$0.2
$97.7
$1,654.6
Net income
—
—
24.8
—
3.0
27.8
Dividends ($0.27 per share)
—
—
(35.1
)
—
—
(35.1
)
Issuance of shares under incentive stock
plans
26,031
0.6
—
—
—
0.6
Stock-based compensation
—
1.4
—
—
—
1.4
Other (a)
(1,140
)
—
—
(6.0
)
(2.1
)
(8.1
)
Balance, March 31, 2019
129,513,566
$886.3
$662.1
($5.8
)
$98.6
$1,641.2
(a)
Primarily includes shares purchased from
employees in non-open market transactions to pay withholding taxes
associated with the vesting of shares granted under the Company’s
Incentive Stock Plan, amortization of pension and postretirement
plan liabilities, foreign currency translation adjustments,
mark-to-market adjustments of qualifying cash flow hedges and
distributions to minority shareholders.
C
RAYONIER INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
March 31, 2020
(unaudited)
(millions of dollars)
Three Months Ended March 31,
2020
2019
Cash provided by operating
activities:
Net income
$26.4
$27.8
Depreciation, depletion and
amortization
34.3
36.5
Non-cash cost of land and improved
development
0.4
4.0
Gain on large dispositions of
timberlands
(28.7
)
—
Other items to reconcile net income to
cash provided by operating activities
5.8
6.8
Changes in working capital and other
assets and liabilities
(9.0
)
(4.2
)
29.2
70.9
Cash provided by (used for) investing
activities:
Capital expenditures
(17.2
)
(14.1
)
Real estate development investments
(1.7
)
(1.7
)
Purchase of timberlands
(24.1
)
(12.3
)
Net proceeds from large dispositions of
timberlands
115.7
—
Other
2.0
2.3
74.7
(25.8
)
Cash used for financing
activities:
Dividends paid
(34.9
)
(34.9
)
Proceeds from the issuance of common
shares under incentive stock plan
0.1
0.6
Repurchase of common shares made under
repurchase program
(3.2
)
—
Other
(0.7
)
(3.6
)
(38.7
)
(37.9
)
Effect of exchange rate changes on cash
and restricted cash
(2.4
)
0.8
Cash, cash equivalents and restricted
cash:
Change in cash, cash equivalents and
restricted cash
62.8
8.0
Balance, beginning of year
70.0
156.5
Balance, end of period
$132.8
$164.5
D
RAYONIER INC. AND
SUBSIDIARIES
BUSINESS SEGMENT SALES, PRO
FORMA SALES, OPERATING INCOME,
PRO FORMA OPERATING INCOME AND
ADJUSTED EBITDA
March 31, 2020
(unaudited)
(millions of dollars)
Three Months Ended
March 31,
December 31,
March 31,
2020
2019
2019
Sales
Southern Timber
$53.0
$45.8
$60.8
Pacific Northwest Timber
31.1
27.6
20.5
New Zealand Timber
37.5
60.6
57.1
Real Estate
118.5
22.1
21.0
Trading
19.0
22.7
32.1
Sales
$259.1
$178.8
$191.5
Pro forma sales (a)
Southern Timber
$53.0
$45.8
$60.8
Pacific Northwest Timber
31.1
27.6
20.5
New Zealand Timber
37.5
60.6
57.1
Real Estate
2.5
22.1
21.0
Trading
19.0
22.7
32.1
Pro forma sales
$143.1
$178.8
$191.5
Operating income (loss)
Southern Timber
$15.1
$12.0
$21.5
Pacific Northwest Timber
(0.9
)
(1.3
)
(3.7
)
New Zealand Timber
5.4
9.4
15.7
Real Estate
26.8
12.7
10.0
Trading
—
(0.3
)
0.5
Corporate and Other
(7.8
)
(6.5
)
(5.5
)
Operating income
$38.6
$26.1
$38.5
Pro forma operating income (loss)
(a)
Southern Timber
$15.1
$12.0
$21.5
Pacific Northwest Timber
(0.9
)
(1.3
)
(3.7
)
New Zealand Timber
5.4
9.4
15.7
Real Estate
(1.9
)
12.7
10.0
Trading
—
(0.3
)
0.5
Corporate and Other
(5.3
)
(6.5
)
(5.5
)
Pro forma operating income
$12.4
$26.1
$38.5
Adjusted EBITDA (a)
Southern Timber
$33.3
$28.3
$41.2
Pacific Northwest Timber
9.8
8.7
3.1
New Zealand Timber
10.2
16.1
22.0
Real Estate
(1.1
)
18.4
17.4
Trading
—
(0.3
)
0.5
Corporate and Other
(5.0
)
(6.2
)
(5.2
)
Adjusted EBITDA
$47.1
$65.0
$79.0
(a)
Pro forma sales, Pro forma operating
income (loss) and Adjusted EBITDA are non-GAAP measures. See
Schedule F for definitions and reconciliations.
E
RAYONIER INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
March 31, 2020
(unaudited)
(millions of dollars, except per
share information)
LIQUIDITY MEASURES:
Three Months Ended
March 31,
March 31,
2020
2019
Cash Provided by Operating
Activities
$29.2
$70.9
Working capital and other balance sheet
changes
15.2
5.4
Capital expenditures (a)
(17.2
)
(14.1
)
Cash Available for Distribution
(b)
$27.2
$62.2
Net Income
$26.4
$27.8
Interest, net and miscellaneous income
8.1
6.7
Income tax expense
3.7
4.3
Depreciation, depletion and
amortization
34.3
36.5
Non-cash cost of land and improved
development
0.4
4.0
Non-operating expense (income)
0.3
(0.3
)
Costs related to the merger with Pope
Resources (i)
2.5
—
Large Dispositions (e)
(28.7
)
—
Adjusted EBITDA (c)
$47.1
$79.0
Cash interest paid (d)
(2.6
)
(2.1
)
Cash taxes paid
(0.2
)
(0.6
)
Capital expenditures (a)
(17.2
)
(14.1
)
Cash Available for Distribution
(b)
$27.2
$62.2
Cash Available for Distribution
(b)
$27.2
$62.2
Real estate development investments
(1.7
)
(1.7
)
Cash Available for Distribution after
real estate development investments
$25.4
$60.5
PRO FORMA SALES (f):
Three Months Ended
Southern Timber
Pacific Northwest
Timber
New Zealand Timber
Real Estate
Trading
Total
March 31, 2020
Sales
$53.0
$31.1
$37.5
$118.5
$19.0
$259.1
Large Dispositions (e)
—
—
—
(116.0
)
—
(116.0
)
Pro forma sales
$53.0
$31.1
$37.5
$2.5
$19.0
$143.1
December 31, 2019
Sales
$45.8
$27.6
$60.6
$22.1
$22.7
$178.8
Large Dispositions (e)
—
—
—
—
—
—
Pro forma sales
$45.8
$27.6
$60.6
$22.1
$22.7
$178.8
March 31, 2019
Sales
$60.8
$20.5
$57.1
$21.0
$32.1
$191.5
Large Dispositions (e)
—
—
—
—
—
—
Pro forma sales
$60.8
$20.5
$57.1
$21.0
$32.1
$191.5
PRO FORMA NET (LOSS) INCOME
(g):
Three Months Ended
March 31, 2020
December 31, 2019
March 31, 2019
$
Per Diluted Share
$
Per Diluted Share
$
Per Diluted Share
Net Income Attributable to Rayonier
Inc.
$25.9
$0.20
$16.0
$0.12
$24.8
$0.19
Costs related to the merger with Pope
Resources (i)
2.5
0.02
—
—
—
—
Large Dispositions (e)
(28.7
)
(0.22
)
—
—
—
—
Pro Forma net (loss) income
($0.3
)
—
$16.0
$0.12
$24.8
$0.19
PRO FORMA OPERATING INCOME (LOSS) AND
ADJUSTED EBITDA (c) (h):
Three Months Ended
Southern Timber
Pacific Northwest
Timber
New Zealand Timber
Real Estate
Trading
Corporate and
Other
Total
March 31, 2020
Operating income (loss)
$15.1
($0.9
)
$5.4
$26.8
—
($7.8
)
$38.6
Costs related to the merger with Pope
Resources (i)
—
—
—
—
—
2.5
2.5
Large Dispositions (e)
—
—
—
(28.7
)
—
—
(28.7
)
Pro forma operating income (loss)
$15.1
($0.9
)
$5.4
($1.9
)
—
($5.3
)
$12.4
Depreciation, depletion and
amortization
18.2
10.7
4.8
0.4
—
0.3
34.3
Non-cash cost of land and improved
development
—
—
—
0.4
—
—
0.4
Adjusted EBITDA
$33.3
$9.8
$10.2
($1.1
)
—
($5.0
)
$47.1
December 31, 2019
Operating income (loss)
$12.0
($1.3
)
$9.4
$12.7
($0.3
)
($6.5
)
$26.1
Depreciation, depletion and
amortization
16.3
10.0
6.7
3.0
—
0.3
36.3
Non-cash cost of land and improved
development
—
—
—
2.6
—
—
2.6
Adjusted EBITDA
$28.3
$8.7
$16.1
$18.4
($0.3
)
($6.2
)
$65.0
March 31, 2019
Operating income (loss)
$21.5
($3.7
)
$15.7
$10.0
$0.5
($5.5
)
$38.5
Depreciation, depletion and
amortization
19.7
6.8
6.3
3.3
—
0.3
36.5
Non-cash cost of land and improved
development
—
—
—
4.0
—
—
4.0
Adjusted EBITDA
$41.2
$3.1
$22.0
$17.4
$0.5
($5.2
)
$79.0
(a)
Capital expenditures exclude timberland
acquisitions of $24.1 million and $12.3 million during the three
months ended March 31, 2020 and March 31, 2019, respectively.
(b)
Cash Available for Distribution (CAD) is
defined as cash provided by operating activities adjusted for
capital spending (excluding timberland acquisitions and real estate
development investments) and working capital and other balance
sheet changes. CAD is a non-GAAP measure of 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, timberland acquisitions
and real estate development investments. CAD is not necessarily
indicative of the CAD that may be generated in future periods.
(c)
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 the merger with Pope Resources
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.
(d)
Cash interest paid is presented net of
patronage refunds received of $4.3 million and $3.9 million for the
three months ended March 31, 2020 and March 31, 2019,
respectively.
(e)
“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 March 2020, the Company completed a
disposition of approximately 67,000 acres located in Mississippi
for a sales price and gain of approximately $116.0 million and
$28.7 million, respectively.
(f)
Pro forma revenue (sales) is defined as
revenue (sales) adjusted for Large Dispositions. Rayonier believes
that this non-GAAP financial measure provides investors with useful
information to evaluate core business operations because it
excludes specific items that are not indicative of ongoing
operating results.
(g)
Pro forma net (loss) income is defined as
net income attributable to Rayonier, Inc. adjusted for costs
related to the merger with Pope Resources 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
the merger with Pope Resources 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)
“Costs related to the merger with Pope
Resources” include legal, accounting and due diligence, consulting
and other costs related to the previously announced definitive
merger agreement with Pope Resources, which is expected to close on
May 8, 2020.
F
RAYONIER INC. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED
EBITDA GUIDANCE
March 31, 2020
(unaudited)
(millions of dollars)
ADJUSTED EBITDA GUIDANCE (a):
Prior Guidance
2020 Guidance
Net Income to Adjusted EBITDA
Reconciliation
Net income
$51.5
-
$62.5
$37.7
-
$51.2
Less: Net income attributable to
noncontrolling interest
(5.0
)
-
(6.0
)
(4.5
)
-
(5.0
)
Net income attributable to Rayonier
Inc.
$46.5
-
$56.5
$33.2
-
$46.2
Plus: Costs related to the merger with
Pope Resources (b)
—
-
—
2.5
-
2.5
Less: Large Dispositions (c)
—
-
—
(28.7
)
-
(28.7
)
Pro forma net income (d)
$46.5
-
$56.5
$7.0
-
$20.0
Interest, net
32.5
-
33.5
38.0
-
39.0
Income tax expense
5.5
-
7.0
8.0
-
9.0
Depreciation, depletion and
amortization
131.5
-
139.0
123.5
-
133.0
Non-cash cost of land and improved
development
24.0
-
28.0
19.0
-
24.0
Net income attributable to noncontrolling
interest
5.0
-
6.0
4.5
-
5.0
Adjusted EBITDA
$245.0
-
$270.0
$200.0
-
$230.0
Diluted Earnings per Share
$0.36
-
$0.44
$0.26
-
$0.36
Pro forma Diluted Earnings per Share
$0.36
-
$0.44
$0.05
-
$0.15
(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 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.
(b)
“Costs related to the merger with Pope
Resources” include legal, accounting and due diligence, consulting
and other costs related to the previously announced definitive
merger agreement with Pope Resources, which is expected to close on
May 8, 2020.
(c)
“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 March 2020, the Company completed a
disposition of approximately 67,000 acres located in Mississippi
for a sales price and gain of approximately $116.0 million and
$28.7 million, respectively.
(d)
Pro forma net (loss) income is defined as
net income attributable to Rayonier, Inc. adjusted for costs
related to the merger with Pope Resources 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.
G
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200429005871/en/
Investors/Media Mark McHugh 904-357-9100
investorrelations@rayonier.com
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