WILDLIGHT, Fla.–(BUSINESS WIRE)–Rayonier Inc. (NYSE:RYN) today reported third quarter net income attributable to Rayonier of $75.8 million, or $0.53 per share, on revenues of $364.7 million. This compares to net loss attributable to Rayonier of $0.8 million, or ($0.01) per share, on revenues of $198.9 million in the prior year quarter.
The third quarter results included $14.5 million of income from a Large Disposition,1 a$7.2 million gain on Fund II Timberland Dispositions attributable to Rayonier,2 a $3.7 million gain on investment in Timber Funds,3 and a $0.9 million gain on debt extinguishment.4 The prior year third quarter results included costs related to the merger with Pope Resources5 of $0.4 million and timber write-offs resulting from casualty events6 attributable to Rayonier of $7.9 million.
Excluding these items and adjusting for pro forma net income adjustments attributable to noncontrolling interests in the operating partnership,8 pro forma net income7 was $50.3 million, or $0.35 per share, on pro forma revenues7 of $251.8 million versus pro forma net income7 of $7.3 million, or $0.06 per share, on pro forma revenues7 of $191.2 million in the prior year period.
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, 2021 |
| September 30, 2020 |
| ||||||||
|
|
| $ |
| EPS |
| $ |
| EPS |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Revenues | $364.7 |
|
|
|
| $198.9 |
|
|
|
| ||
|
| Large Dispositions1 | (20.0 | ) |
|
|
| |
|
|
|
| ||
|
| Fund II Timberland Dispositions attributable to Rayonier2 | (17.5 | ) |
|
|
| |
|
|
|
| ||
|
| Sales attributable to noncontrolling interests in Timber Funds | (75.4 | ) |
|
|
| (7.7 | ) |
|
|
| ||
|
| Pro forma revenues7 | $251.8 |
|
|
|
| $191.2 |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Net income attributable to Rayonier | $75.8 |
|
| $0.53 |
|
| ($0.8 | ) |
| ($0.01 | ) |
|
|
| Large Dispositions1 | (14.5 | ) |
| (0.10 | ) |
| |
|
| |
|
|
|
| Fund II Timberland Dispositions attributable to Rayonier2 | (7.2 | ) |
| (0.05 | ) |
| |
|
| |
|
|
|
| Gain on investment in Timber Funds3 | (3.7 | ) |
| (0.03 | ) |
| |
|
| |
|
|
|
| Gain related to debt extinguishments and modifications4 | (0.9 | ) |
| |
|
| |
|
| |
|
|
|
| Costs related to the merger with Pope Resources5 | |
|
| |
|
| 0.4 |
|
| |
|
|
|
| Timber write-offs resulting from casualty events6 attributable to Rayonier | |
|
| |
|
| 7.9 |
|
| 0.07 |
|
|
|
| Pro forma net income adjustments attributable to noncontrolling Interests in the Operating Partnership8 | 0.8 |
|
| |
|
| (0.2 | ) |
| |
|
|
|
| Pro forma net income7 | $50.3 |
|
| $0.35 |
|
| $7.3 |
|
| $0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
Third quarter operating income was $123.3 million versus $1.8 million in the prior year period. Adjusting for $14.5 million of income from a Large Disposition,1 a $7.2 million gain on Fund II Timberland Dispositionsattributable to Rayonier,2 a $3.7 million gain on investment in Timber Funds III and IV3 and $30.5 million of operating income attributable to noncontrolling interests in the Timber Funds segment, current quarter pro forma operating income7 was $67.4 million. Prior year third quarter operating income included costs related to the merger with Pope Resources5 of $0.4 million, timber write-offs resulting from casualty events6 of $15.2 million (of which $7.9 million was attributable to Rayonier) and an operating loss attributable to noncontrolling interests in the Timber Funds segment of $10.3 million. Excluding these items, pro forma operating income7 was $20.3 million in the prior year period. Third quarter Adjusted EBITDA7 was $114.6 million versus $67.2 million in the prior year period. The following table summarizes operating income (loss), pro forma operating income (loss)7 and Adjusted EBITDA7 for the current quarter and comparable prior year period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Three Months Ended September 30, |
| ||||||||||||||||
|
|
| Operating Income (Loss) |
| Pro forma Operating Income (Loss)7 |
| Adjusted EBITDA7 |
| ||||||||||||
|
| (millions of dollars) | 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| ||||||
|
| Southern Timber | $12.8 |
|
| $5.1 |
|
| $12.8 |
|
| $11.1 |
|
| $24.4 |
|
| $26.1 |
|
|
|
| Pacific Northwest Timber | 2.1 |
|
| (1.8 | ) |
| 2.1 |
|
| (1.8 | ) |
| 12.5 |
|
| 9.1 |
|
|
|
| New Zealand Timber | 13.3 |
|
| 10.7 |
|
| 13.3 |
|
| 10.7 |
|
| 19.9 |
|
| 18.1 |
|
|
|
| Timber Funds | 41.3 |
|
| (12.4 | ) |
| (0.2 | ) |
| (0.3 | ) |
| 0.5 |
|
| 0.2 |
|
|
|
| Real Estate | 60.6 |
|
| 9.5 |
|
| 46.1 |
|
| 9.5 |
|
| 63.8 |
|
| 22.2 |
|
|
|
| Trading | |
|
| (0.6 | ) |
| |
|
| (0.6 | ) |
| |
|
| (0.6 | ) |
|
|
| Corporate and Other | (6.7 | ) |
| (8.7 | ) |
| (6.7 | ) |
| (8.3 | ) |
| (6.4 | ) |
| (7.9 | ) |
|
|
| Total | $123.3 |
|
| $1.8 |
|
| $67.4 |
|
| $20.3 |
|
| $114.6 |
|
| $67.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Year-to-date cash provided by operating activities was $277.4 million versus $138.0 million in the prior year period. Year-to-date cash available for distribution (CAD)7 of $203.9 million increased $79.7 million versus the prior year period primarily due to higher Adjusted EBITDA7 ($86.5 million) and lower cash interest paid ($1.5 million), partially offset by higher cash taxes paid ($6.7 million) and higher capital expenditures ($1.7 million).
We are pleased to report our strongest quarterly Adjusted EBITDA result since our separation into a pure-play timberland REIT in 2014, said David Nunes, President and CEO. Adjusted EBITDA of $114.6 million was 71% higher than the prior year quarter, fueled by solid contributions across our timber segments as well as an outsized contribution from our Real Estate segment due to the closing of two significant development transactions.
In Southern Timber, Adjusted EBITDA declined 7% versus the prior year quarter, as 16% higher net stumpage prices were more than offset by a 20% reduction in harvest volumes primarily due to wet weather conditions. In Pacific Northwest Timber, Adjusted EBITDA improved 38% versus the prior year quarter primarily due to a 15% increase in sawtimber prices. In New Zealand Timber, Adjusted EBITDA improved 10% versus the prior year quarter, as favorable pricing more than offset a significant increase in export shipping costs as well as 14% lower production volumes due to a two-week government-mandated shutdown in August related to COVID-19.
The Real Estate segment had an exceptionally strong quarter, generating record levels of pro forma sales, pro forma operating income and Adjusted EBITDA, largely due to a $37.5 million Unimproved Development sale consisting of 359 acres in Kingston, Washington, which was part of the Pope Resources real estate portfolio. Real Estate segment Adjusted EBITDA improved $41.5 million versus the prior year quarter, as weighted-average pricing of $17,490 per acre was partially offset by a 61% reduction in acres sold.
Notably, we also closed several transactions during the third quarter associated with our planned exit of the Timber Funds business that we acquired in the Pope Resources transaction. Specifically, during the quarter, we sold the rights to manage two timber funds (Fund III and Fund IV) that were previously managed by Popes Olympic Resource Management (ORM) subsidiary, as well as our co-investment stake in both funds, for an aggregate purchase price of $35.9 million. We subsequently entered into three separate agreements to sell the timberland assets within Fund II for an aggregate purchase price of $156.8 million. One of these transactions, totaling $87.1 million, closed on September 30th and is reflected in our third quarter financial results. The other two transactions, totaling $69.7 million, closed on October 5th and November 1st, respectively, and will be reflected in our fourth quarter financial results. Based on Rayoniers 20% ownership interest in Fund II and factoring in the repayment of Fund II debt, proceeds to Rayonier from the sale of the Fund II assets will be approximately $24 million. In addition, we expect to receive a carried interest incentive fee upon the wind down of Fund II totaling approximately $14 million. With the completion of these various transactions, we will fully exit the Timber Funds business and expect to discontinue reporting the Timber Funds segment beginning in Q1 2022.
Southern Timber
Third quarter sales of $44.8 million decreased $2.8 million, or 6%, versus the prior year period. Harvest volumes decreased 20% to 1.19 million tons versus 1.48 million tons in the prior year period, as wet weather conditions and constrained trucking availability impacted production across the region. Average pine sawtimber stumpage prices increased 12% to $28.06 per ton versus $25.02 per ton in the prior year period. The increase in average pine sawtimber stumpage prices was driven by strong domestic lumber demand, as well as upward pressure on chip-n-saw pricing due to increased competition from pulp mills. Average pine pulpwood stumpage prices climbed 23% to $19.14 per ton versus $15.50 per ton in the prior year period. The significant increase in pulpwood pricing relative to the prior year period reflects strong domestic demand, constrained supply due to wet weather conditions and an increase in pulpwood exports to China. Overall, weighted-average stumpage prices (including hardwood) increased 16% to $21.88 per ton versus $18.88 per ton in the prior year period. Operating income of $12.8 million increased $7.7 million versus the prior year period due to the prior year period write-off of timber basis as a result of Hurricane Laura6 ($6.0 million), higher net stumpage prices ($3.6 million), lower depletion rates ($0.4 million) and lower costs ($0.3 million), partially offset by lower volumes ($2.6 million).
Third quarter Adjusted EBITDA7 of $24.4 million was 7%, or $1.7 million, below the prior year period.
Pacific Northwest Timber
Third quarter sales of $31.5 million increased $2.6 million, or 9%, versus the prior year period, while harvest volumes of 346,000 tons remained flat versus the prior year period. Average delivered sawtimber prices increased 15% to $107.56 per ton versus $93.34 per ton in the prior year period, driven by favorable domestic lumber markets coupled with increased export demand. Average delivered pulpwood prices decreased 2% to $31.34 per ton versus $32.12 per ton in the prior year period, as increased lumber production resulted in an increased supply of competing sawmill residuals. Operating income of $2.1 million improved $3.9 million versus the prior year period due to higher net stumpage prices ($3.2 million), lower costs ($0.5 million) and lower depletion rates ($0.4 million), partially offset by lower non-timber income ($0.2 million).
Third quarter Adjusted EBITDA7 of $12.5 million was 38%, or $3.5 million, above the prior year period.
New Zealand Timber
Third quarter sales of $75.6 million increased $12.8 million, or 20%, versus the prior year period, as higher log prices were partially offset by lower volumes. Harvest volumes decreased 14% to 668,000 tons versus 776,000 tons in the prior year period, primarily due to the government-mandated shutdown of all non-essential activity in New Zealand (including the harvesting and transport of logs) from August 18th through August 31st due to an outbreak of COVID-19. Average delivered prices for export sawtimber increased 59% to $149.68 per ton versus $94.42 per ton in the prior year period, while average delivered prices for domestic sawtimber increased 21% to $85.00 per ton versus $70.24 per ton in the prior year period. The increase in export sawtimber prices versus the prior year period reflects the restriction on competing log imports into China from Australia in the current year quarter, as well as the ability of log exporters to pass higher costs along to customers in the current environment. While net stumpage realizations on export volume were above prior year period levels, favorable export pricing was largely offset by significantly higher shipping costs, as supply chain issues drove increased freight and demurrage costs. The increase in domestic sawtimber prices (in U.S. dollar terms) was driven in part by the rise in the NZ$/US$ exchange rate (US$0.70 per NZ$1.00 versus US$0.66 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices improved 14% versus the prior year period, following the upward trend in the export market. Operating income of $13.3 million increased $2.6 million versus the prior year period as a result of higher net stumpage prices ($6.7 million), favorable foreign exchange impacts ($1.2 million) and lower depletion rates ($0.2 million), partially offset by lower carbon credit sales ($3.3 million), lower volumes ($1.9 million) and higher costs ($0.3 million).
Third quarter Adjusted EBITDA7 of $19.9 million was 10%, or $1.8 million, above the prior year period.
Timber Funds
Third quarter sales of $94.5 million increased $84.7 million versus the prior year period, while operating income of $41.3 million increased $53.7 million versus the prior year period. Third quarter sales and operating income included $87.1 million and $36.0 million, respectively, from the Fund II Timberland Dispositions.2 Third quarter operating income also included a $3.7 million gain on investment in Timber Funds,3 which reflects the gain recognized on the sale of our investment in Timber Funds III and IV. The prior year quarter included timber write-offs of $9.2 million resulting from two fires in Oregon.6 Excluding these items and adjusting for the portion of sales and operating income attributable to noncontrolling interests, pro forma sales7 were $1.6 million and pro forma operating loss7 was $0.2 million. This compares to pro forma sales7 and pro forma operating loss7 of $2.2 million and $0.3 million, respectively, in the prior year period.
Harvest volumes decreased 44% to 61,000 tons versus 110,000 tons in the prior year period, as Timber Funds III and IV were sold during the quarter and therefore contributed volume only through the July 21st closing date.
Third quarter Adjusted EBITDA7 of $0.5 million was $0.3 million above the prior year period.
Real Estate
Third quarter sales of $93.4 million increased $64.6 million versus the prior year period, while operating income of $60.6 million increased $51.2 million versus the prior year period. Third quarter sales and operating income included $20.0 million and $14.5 million, respectively, from Large Dispositions.1 Excluding this item, pro forma sales7were $73.4 million, while pro forma operating income7 was $46.1 million. Pro forma sales7 and pro forma operating income7 increased versus the prior year period due to a significant increase in weighted-average prices ($17,490 per acre versus $2,332 per acre in the prior year period), partially offset by a 61% reduction in the number of acres sold(4,131 acres sold versus 10,562 acres sold in the prior year period).
Improved Development sales of $27.8 million included $25.0 million from the Belfast Commerce Park development project south of Savannah, Georgia and $2.8 million from the Wildlight development project north of Jacksonville, Florida. Sales in the Belfast Commerce Park consisted of a 471-acre parcel for $25.0 million ($53,000 per acre). Sales in Wildlight consisted of 42 residential lots for $2.8 million (an average of $66,000 per lot or $354,000 per acre). This compares to prior year period Improved Development sales of $1.3 million.
Unimproved Development sales of $37.5 million consisted of a 359-acre sale in Kingston, Washington for $105,000 per acre. This property was one of the Higher and Better Use assets acquired in our 2020 acquisition of Pope Resources. There were no Unimproved Development sales in the prior year period.
Rural sales of $6.9 million consisted of 3,260 acres at an average price of $2,128 per acre. This compares to prior year period sales of $23.2 million, which consisted of 10,482 acres at an average price of $2,218 per acre.
Timberland & Non-Strategic sales in the current quarter and the prior year quarter were negligible.
Large Dispositions in the quarter totaled $20.0 million and consisted of 8,088 acres in Washington at an average price of $2,479 per acre. There were no Large Dispositions in the prior year period.
There were no Conservation Easement sales in the third quarter. This compares to prior year period sales of $3.1 million. Because these transactions involve the conveyance of certain land use rights rather than an outright sale of the land, they are not reflected in our average per-acre metrics for the segment.
Third quarter Adjusted EBITDA7 of $63.8 million was $41.5 million above the prior year period.
Trading
Third quarter sales of $25.6 million increased $3.4 million versus the prior year period primarily due to higher prices, partially offset by lower volumes. Sales volumes decreased 30% to 177,000 tons versus 252,000 tons in the prior year period. The Trading segment generated breakeven results versus an operating loss of $0.6 million in the prior year period.
Other Items
Third quarter corporate and other operating expenses of $6.7 million decreased $2.0 million versus the prior year period, primarily due to lower employee benefits costs ($0.6 million), lower legal costs ($0.5 million) and lower other overhead costs ($0.5 million), coupled with $0.4 million of costs related to the Pope Resources merger5 in the prior year period.
Third quarter interest expense of $11.3 million increased $0.8 million versus the prior year period due to higher average debt outstanding during the period.
Third quarter interest and miscellaneous income of $1.3 million increased $1.4 million versus the prior year period, primarily due to a $0.9 million gain on debt extinguishment4 related to the voluntary repayment of our $45 million credit facility with Northwest Farm Credit Services (NWFCS), which was assumed in connection with the Pope Resources acquisition.
Third quarter income tax expense of $2.8 million increased $2.1 million versus the prior year period. The New Zealand subsidiary is the primary driver of income tax expense.
In September 2020, we established an at-the-market (ATM) equity offering program under which we may sell common shares, from time to time, having an aggregate sales price of up to $300 million. There were 1.4 million shares issued under the ATM program during the three months ended September 30, 2021 at an average price of $37.26 per share.
Outlook
Based on our year-to-date results and our expectations for the fourth quarter, we now anticipate full-year net income attributable to Rayonier of $148 to $152 million, EPS of $1.05 to $1.08, pro forma EPS of $0.62 to $0.65, and Adjusted EBITDA of $320 to $330 million, said Nunes.
In our Southern Timber segment, we now expect full-year harvest volumes of 5.7 to 5.8 million tons, as production has been constrained by regional weather conditions and trucking availability. However, we expect that improved pricing will largely offset the decline in volumes. Overall, we now expect full-year Adjusted EBITDA of $118 to $120 million, a slight decrease at the midpoint from prior guidance.
In our Pacific Northwest Timber segment, we are maintaining our full-year volume guidance of 1.7 to 1.8 million tons. We expect that weighted average log pricing in the region will be lower in the fourth quarter as compared to the exceptionally strong pricing realized during the third quarter, but will be fairly consistent with the pricing achieved during the first half of the year. We now expect full-year Adjusted EBITDA of $53 to $55 million, a modest increase at the midpoint from prior guidance.
In our New Zealand Timber segment, we now expect full-year harvest volumes of 2.5 to 2.6 million tons, as we do not expect to fully recover production lost during the third quarter due to the COVID-19 shutdown. We further expect lower export pricing during the fourth quarter as log inventories in China remain elevated. Overall, we now expect full-year Adjusted EBITDA of $75 to $78 million, a decrease from prior guidance.
In our Real Estate segment, we now expect full-year Adjusted EBITDA of $101 to $104 million, a significant increase from prior guidance. The successful completion of a $37.5 million Unimproved Development sale during the third quarter is the primary driver for this favorable revision, as we were able to execute on this sale sooner than previously anticipated. Following an extraordinarily strong third quarter, we expect real estate closings for the balance of the year to be relatively light.
Conference Call
A conference call and live audio webcast will be held on Thursday, November 4, 2021 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 Companys website and available shortly after the call.
Investors may listen to the conference call by dialing 888-604-9366 (domestic) or 517-308-9338 (international), passcode: RAYONIER. A replay of the conference call will be available one hour following the call until Friday, December 3, 2021 by dialing 800-395-6236 (domestic) or 203-369-3270 (international), passcode: 6983.
Complimentary copies of Rayonier press releases and other financial documents are also available by calling (904) 357-9100.
| 1Large 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. |
| 2Fund II Timberland Dispositions represent the disposition of Fund II Timberland assets, which we manage and own a co-investment stake in. Proceeds from Fund II Timberland Dispositions will ultimately be distributed to owners of ORM Timber Fund II and not reinvested. |
| 3Gain on investment in Timber Funds represents the gain recognized on the sale of rights to manage two timber funds (Funds III and IV) previously managed by the Companys Olympic Resources Management (ORM) subsidiary, as well as its co-investment stake in both funds. |
| 4Gain on debt extinguishments and modifications includes prepayment penalties and the write-off of fair market value adjustments and unamortized capitalized loan costs. |
| 5Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources. |
| 6Timber write-offs resulting from casualty events include the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events that cannot be salvaged. |
| 7Pro 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 exhibits. |
| 8Pro forma net income adjustments attributable to noncontrolling interests in the Operating Partnership are the proportionate share of pro forma items that are attributable to Noncontrolling Interests in the Operating Partnership. |
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, 2021, Rayonier owned or leased under long-term agreements approximately 2.6 million acres of timberlands located in the U.S. South (1.74 million acres), U.S. Pacific Northwest (490,000 acres) and New Zealand (418,000 acres). The Company also acts as the managing member in a private equity timber fund business with one fund comprising approximately 18,000 acres.
Contacts
Investors/Media
Collin Mings
904-357-9100
investorrelations@rayonier.com
BEIJING, CHINA - Media OutReach Newswire - 8 November 2024 - Since its inception more…
Acquisition Expands TBS’ Regional Waste Management Platform in Indonesia and Singapore, aligning with its TBS2030…
KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 8 November 2024 - It’s that time…
BARCELONA, SPAIN - Media OutReach Newswire - 8 November 2024 - On November 6, Central…
SINGAPORE - Media OutReach Newswire - 8 November 2024 - Singapore is strengthening its position…
PARIS, FRANCE - Media OutReach Newswire – 8 November 2024 - This year, OPPO once…
