UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017March 31, 2024
OR
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☐ | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to |
Commission File Number 1-6780![logocolor450pxwidthpnga27.jpg](https://capedge.com/proxy/10-Q/0000052827-24-000150/ryn-20240331_g1.jpg)
RAYONIER INC.
Incorporated(Exact name of registrant as specified in the its charter) | | | | | | | | | | | | | | |
North Carolina | 1-6780 | 13-2607329 |
(State or other Jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Rayonier, L.P.
(Exact name of North Carolina
I.R.S. Employer Identification No. 13-2607329registrant as specified in its charter) | | | | | | | | | | | | | | |
Delaware | 333-237246 | 91-1313292 |
(State or other Jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
1 RAYONIER WAY
YULEE,WILDLIGHT, FL 32097
(Principal Executive Office)
Telephone Number: (904) 357-9100
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: | | | | | | | | |
Title of each class | Trading Symbol | Exchange |
Common Shares, no par value, of Rayonier Inc. | RYN | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES x NO oRayonier Inc. Yes ☒No☐ Rayonier, L.P. Yes ☒No☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES x NO oRayonier Inc. Yes ☒No☐ Rayonier, L.P. Yes ☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Rayonier Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | | | | |
Large accelerated filer x☒
| Accelerated Filer | Accelerated filer o ☐ | Non-accelerated Filer | |
Non-accelerated filer o ☐ | Smaller Reporting Company | Smaller reporting company o ☐ | Emerging Growth Company | Emerging growth company o ☐ |
Rayonier, L.P. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | Non-accelerated Filer | ☒ | Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Rayonier Inc.☐Rayonier, L.P.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO xRayonier Inc. Yes ☐No☒ Rayonier, L.P. Yes ☐No☒
As of October 27, 2017, there were outstanding 128,931,674April 26, 2024, Rayonier Inc. had 148,877,048 Common Shares outstanding. As of April 26, 2024, Rayonier, L.P. had 2,091,364 Units outstanding.
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2024 of Rayonier Inc., a North Carolina corporation, and Rayonier, L.P., a Delaware limited partnership. Unless stated otherwise or the context otherwise requires, references to “Rayonier” or “the Company” mean Rayonier Inc. and references to the “Operating Partnership” mean Rayonier, L.P. References to “we,” “us,” and “our” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership.
Rayonier Inc. has elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 2004. The Company is structured as an umbrella partnership REIT (“UPREIT”) under which substantially all of its business is conducted through the Operating Partnership. Rayonier Inc. is the sole general partner of the registrant.Operating Partnership. On May 8, 2020, Rayonier, L.P. acquired Pope Resources, a Delaware Limited Partnership (“Pope Resources”) and issued approximately 4.45 million operating partnership units (“OP Units” or “Redeemable Operating Partnership Units”) of Rayonier, L.P. as partial merger consideration. These OP Units are generally considered to be economic equivalents to Rayonier common shares and receive distributions equal to the dividends paid on Rayonier common shares.
As of March 31, 2024, the Company owned a 98.6% interest in the Operating Partnership, with the remaining 1.4% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership.
Rayonier Inc. and the Operating Partnership are operated as one business. The management of the Operating Partnership consists of the same members as the management of Rayonier Inc. As general partner with control of the Operating Partnership, Rayonier Inc. consolidates Rayonier, L.P. for financial reporting purposes, and has no material assets or liabilities other than its investment in the Operating Partnership.
We believe combining the quarterly reports of Rayonier Inc. and Rayonier, L.P. into this single report results in the following benefits:
•Strengthens investors’ understanding of Rayonier Inc. and the Operating Partnership by enabling them to view the business as a single operating unit in the same manner as management views and operates the business;
•Creates efficiencies for investors by reducing duplicative disclosures and providing a single comprehensive document; and
•Generates time and cost savings associated with the preparation of the reports when compared to preparing separate reports for each entity.
There are a few important differences between Rayonier Inc. and the Operating Partnership in the context of how Rayonier Inc. operates as a consolidated company. The Company itself does not conduct business, other than through acting as the general partner of the Operating Partnership and issuing equity or equity-related instruments from time to time. The Operating Partnership holds, directly or indirectly, substantially all of the Company’s assets. Likewise, all debt is incurred by the Operating Partnership or entities/subsidiaries owned or controlled by the Operating Partnership. The Operating Partnership conducts substantially all of the Company’s business and is structured as a partnership with no publicly traded equity.
To help investors understand the significant differences between the Company and the Operating Partnership, this report includes:
•Separate Consolidated Financial Statements for Rayonier Inc. and Rayonier, L.P.;
•A combined set of Notes to the Consolidated Financial Statements with separate discussions of per share and per unit information, noncontrolling interests and shareholders’ equity and partners’ capital, as applicable;
•A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations which includes specific information related to each reporting entity;
•A separate Part I, Item 4. Controls and Procedures related to each reporting entity;
•A separate Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds; and
•Separate Exhibit 31 and 32 certifications for each reporting entity within Part II, Item 6.
TABLE OF CONTENTS
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| | PART I - FINANCIAL INFORMATION | |
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4. | | | |
| | PART II - OTHER INFORMATION | |
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6. | | | |
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| | PART I - FINANCIAL INFORMATION | | | | | | | | |
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| | PART II - OTHER INFORMATION | | | | | | | | |
1. | | | | | | | | | | |
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2. | | | | | | | | | | |
5. | | | | | | | | | | |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
| | | | | $168,097 | | | $179,082 | |
Costs and Expenses | | | | | | | |
Cost of sales | | | | | (133,180) | | | (149,166) | |
Selling and general expenses | | | | | (18,978) | | | (16,778) | |
Other operating income (expense), net (Note 14) | | | | | 271 | | | (2,516) | |
| | | | | (151,887) | | | (168,460) | |
OPERATING INCOME | | | | | 16,210 | | | 10,622 | |
Interest expense, net | | | | | (9,744) | | | (11,700) | |
Interest and other miscellaneous (expense) income, net | | | | | (4,992) | | | 9,554 | |
INCOME BEFORE INCOME TAXES | | | | | 1,474 | | | 8,476 | |
Income tax benefit (expense) (Note 16) | | | | | 832 | | | (1,039) | |
NET INCOME | | | | | 2,306 | | | 7,437 | |
Less: Net income attributable to noncontrolling interests in the operating partnership | | | | | (20) | | | (174) | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (929) | | | 1,037 | |
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | | | | | 1,357 | | | 8,300 | |
OTHER COMPREHENSIVE (LOSS) INCOME | | | | | | | |
Foreign currency translation adjustment, net of income tax effect of $0 and $0 | | | | | (16,951) | | | (3,733) | |
Cash flow hedges, net of income tax effect of $1,866 and $312 | | | | | 2,966 | | | (12,319) | |
Pension and postretirement benefit plans, net of income tax effect of $1,222 and $0 | | | | | 9,562 | | | 1 | |
Total other comprehensive loss | | | | | (4,423) | | | (16,051) | |
COMPREHENSIVE LOSS | | | | | (2,117) | | | (8,614) | |
Less: Comprehensive loss attributable to noncontrolling interests in the operating partnership | | | | | 17 | | | 156 | |
Less: Comprehensive loss attributable to noncontrolling interests in consolidated affiliates | | | | | 947 | | | 1,032 | |
COMPREHENSIVE LOSS ATTRIBUTABLE TO RAYONIER INC. | | | | | ($1,153) | | | ($7,426) | |
EARNINGS PER COMMON SHARE (NOTE 5) | | | | | | | |
Basic earnings per share attributable to Rayonier Inc. | | | | | $0.01 | | | $0.06 | |
Diluted earnings per share attributable to Rayonier Inc. | | | | | $0.01 | | | $0.06 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
SALES |
| $177,946 |
| |
| $171,421 |
| |
| $559,178 |
| |
| $567,814 |
|
Costs and Expenses | | | | | | | |
Cost of sales | 136,583 |
| | 116,624 |
| | 416,683 |
| | 362,790 |
|
Selling and general expenses | 9,936 |
| | 10,607 |
| | 29,771 |
| | 31,638 |
|
Other operating income, net (Note 14) | (7,844 | ) | | (5,499 | ) | | (22,702 | ) | | (20,867 | ) |
| 138,675 |
| | 121,732 |
| | 423,752 |
| | 373,561 |
|
OPERATING INCOME | 39,271 |
| | 49,689 |
| | 135,426 |
| | 194,253 |
|
Interest expense | (8,553 | ) | | (8,544 | ) | | (25,600 | ) | | (23,603 | ) |
Interest income and miscellaneous income (expense), net | 1,128 |
| | 258 |
| | 1,650 |
| | (1,115 | ) |
INCOME BEFORE INCOME TAXES | 31,846 |
| | 41,403 |
| | 111,476 |
| | 169,535 |
|
Income tax expense (Note 7) | (3,043 | ) | | (779 | ) | | (16,817 | ) | | (2,274 | ) |
NET INCOME | 28,803 |
| | 40,624 |
| | 94,659 |
| | 167,261 |
|
Less: Net income attributable to noncontrolling interest | 4,115 |
| | 1,269 |
| | 9,968 |
| | 3,613 |
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | 24,688 |
| | 39,355 |
| | 84,691 |
| | 163,648 |
|
OTHER COMPREHENSIVE (LOSS) INCOME | | | | | | | |
Foreign currency translation adjustment, net of income tax expense of $0, $0, $0 and $0 | (7,317 | ) | | 12,022 |
| | 16,599 |
| | 28,046 |
|
Cash flow hedges, net of income tax (expense) benefit of ($614), $229, $534 and $1,293 | (2,162 | ) | | 4,195 |
| | (1,597 | ) | | (22,055 | ) |
Amortization of pension and postretirement plans, net of income tax expense of $0, $0, $0 and $0 | 116 |
| | 632 |
| | 349 |
| | 1,881 |
|
Total other comprehensive (loss) income | (9,363 | ) | | 16,849 |
| | 15,351 |
| | 7,872 |
|
COMPREHENSIVE INCOME | 19,440 |
| | 57,473 |
| | 110,010 |
| | 175,133 |
|
Less: Comprehensive income attributable to noncontrolling interest | 2,289 |
| | 3,649 |
| | 13,537 |
| | 11,808 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC. |
| $17,151 |
| |
| $53,824 |
| |
| $96,473 |
| |
| $163,325 |
|
EARNINGS PER COMMON SHARE (Note 10) | | | | | | | |
Basic earnings per share attributable to Rayonier Inc. |
| $0.19 |
| |
| $0.32 |
| |
| $0.67 |
| |
| $1.34 |
|
Diluted earnings per share attributable to Rayonier Inc. |
| $0.19 |
| |
| $0.32 |
| |
| $0.67 |
| |
| $1.33 |
|
| | | | | | | |
Dividends declared per share |
| $0.25 |
| |
| $0.25 |
| |
| $0.75 |
| |
| $0.75 |
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
ASSETS |
CURRENT ASSETS | | | |
Cash and cash equivalents |
| $104,062 |
| |
| $85,909 |
|
Accounts receivable, less allowance for doubtful accounts of $23 and $33 | 39,408 |
| | 20,664 |
|
Insurance settlement receivable (Note 8) | 73,000 |
| | — |
|
Inventory (Note 15) | 24,497 |
| | 21,379 |
|
Prepaid expenses | 16,656 |
| | 11,807 |
|
Assets held for sale (Note 17) | — |
| | 23,171 |
|
Other current assets | 3,322 |
| | 1,874 |
|
Total current assets | 260,945 |
| | 164,804 |
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION | 2,492,049 |
| | 2,291,015 |
|
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS (NOTE 5) | 79,223 |
| | 70,374 |
|
PROPERTY, PLANT AND EQUIPMENT | | | |
Land | 3,043 |
| | 2,279 |
|
Buildings | 24,105 |
| | 7,990 |
|
Machinery and equipment | 4,449 |
| | 4,658 |
|
Construction in progress | 1,127 |
| | 8,170 |
|
Total property, plant and equipment, gross | 32,724 |
| | 23,097 |
|
Less — accumulated depreciation | (9,398 | ) | | (9,063 | ) |
Total property, plant and equipment, net | 23,326 |
| | 14,034 |
|
RESTRICTED CASH (NOTE 16) | 10,631 |
| | 71,708 |
|
OTHER ASSETS | 45,545 |
| | 73,825 |
|
TOTAL ASSETS |
| $2,911,719 |
| |
| $2,685,760 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
CURRENT LIABILITIES | | | |
Accounts payable |
| $27,692 |
| |
| $22,337 |
|
Insurance settlement payable (Note 8) | 73,000 |
| | — |
|
Current maturities of long-term debt (Note 4) | — |
| | 31,676 |
|
Accrued taxes | 7,562 |
| | 2,657 |
|
Accrued payroll and benefits | 7,331 |
| | 9,277 |
|
Accrued interest | 8,032 |
| | 5,340 |
|
Other current liabilities | 26,799 |
| | 20,679 |
|
Total current liabilities | 150,416 |
| | 91,966 |
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS (NOTE 4) | 1,030,269 |
| | 1,030,205 |
|
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 13) | 31,431 |
| | 31,856 |
|
OTHER NON-CURRENT LIABILITIES | 42,369 |
| | 34,981 |
|
COMMITMENTS AND CONTINGENCIES (NOTES 6 and 8) |
| |
|
SHAREHOLDERS’ EQUITY | | | |
Common Shares, 480,000,000 shares authorized, 128,916,631 and 122,904,368 shares issued and outstanding | 870,006 |
| | 709,867 |
|
Retained earnings | 675,911 |
| | 700,887 |
|
Accumulated other comprehensive income (Note 18) | 12,638 |
| | 856 |
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY | 1,558,555 |
| | 1,411,610 |
|
Noncontrolling interest | 98,679 |
| | 85,142 |
|
TOTAL SHAREHOLDERS’ EQUITY | 1,657,234 |
| | 1,496,752 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $2,911,719 |
| |
| $2,685,760 |
|
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
ASSETS |
CURRENT ASSETS | | | |
| | | |
| | | |
| | | |
Cash and cash equivalents | $159,903 | | | $207,696 | |
| | | |
| | | |
Trade receivables, less allowance for doubtful accounts of $202 and $210 | 35,309 | | | 28,652 | |
Other receivables | 5,145 | | | 11,517 | |
| 43,541 | | | 31,017 | |
| | | |
Prepaid expenses | 20,148 | | | 19,070 | |
| 10,025 | | | 9,932 | |
Other current assets | 5,873 | | | 9,074 | |
Total current assets | 279,944 | | | 316,958 | |
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION | 2,959,052 | | | 3,004,316 | |
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT | 106,403 | | | 105,595 | |
PROPERTY, PLANT AND EQUIPMENT | | | |
Land | 6,453 | | | 6,453 | |
Buildings | 31,147 | | | 31,251 | |
Machinery and equipment | 6,633 | | | 6,523 | |
Construction in progress | 1,895 | | | 1,841 | |
Total property, plant and equipment, gross | 46,128 | | | 46,068 | |
Less — accumulated depreciation | (19,638) | | | (19,059) | |
Total property, plant and equipment, net | 26,490 | | | 27,009 | |
| 677 | | | 678 | |
RIGHT-OF-USE ASSETS | 90,319 | | | 95,474 | |
OTHER ASSETS | 106,872 | | | 97,555 | |
TOTAL ASSETS | $3,569,757 | | | $3,647,585 | |
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY |
CURRENT LIABILITIES | | | |
Accounts payable | $34,134 | | | $26,561 | |
| | | |
| | | |
| | | |
Accrued taxes | 5,567 | | | 4,394 | |
| | | |
Accrued payroll and benefits | 6,680 | | | 14,215 | |
Accrued interest | 9,913 | | | 7,094 | |
Pension and other postretirement benefits (Note 15) | 1,223 | | | 8,444 | |
Dividend and distribution payable | — | | | 30,148 | |
Deferred revenue | 20,900 | | | 19,012 | |
| | | |
Other current liabilities | 35,339 | | | 30,409 | |
Total current liabilities | 113,756 | | | 140,277 | |
| 1,361,985 | | | 1,365,773 | |
| | | |
PENSION AND OTHER POSTRETIREMENT BENEFITS, NON-CURRENT (NOTE 15) | 1,448 | | | 1,441 | |
LONG-TERM LEASE LIABILITY | 82,932 | | | 87,684 | |
LONG-TERM DEFERRED REVENUE | 15,349 | | | 11,294 | |
OTHER NON-CURRENT LIABILITIES | 79,051 | | | 81,863 | |
| | | |
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 4) | 69,589 | | | 81,651 | |
SHAREHOLDERS’ EQUITY | | | |
Common Shares, 480,000,000 shares authorized, 148,649,321 and 148,299,117 shares issued and outstanding | 1,512,339 | | | 1,497,641 | |
Retained earnings | 296,533 | | | 338,244 | |
Accumulated other comprehensive income (Note 17) | 22,370 | | | 24,651 | |
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY | 1,831,242 | | | 1,860,536 | |
Noncontrolling interests in consolidated affiliates (Note 4) | 14,405 | | | 17,066 | |
TOTAL SHAREHOLDERS’ EQUITY | 1,845,647 | | | 1,877,602 | |
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY | $3,569,757 | | | $3,647,585 | |
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands, except share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares | | Retained Earnings | | Accumulated Other Comprehensive Income | | Noncontrolling Interests in Consolidated Affiliates | | Shareholders’ Equity |
| Shares | | Amount | |
Balance, January 1, 2024 | 148,299,117 | | | $1,497,641 | | | $338,244 | | | $24,651 | | | $17,066 | | | $1,877,602 | |
Net income | — | | | — | | | 1,377 | | | — | | | 929 | | | 2,306 | |
Net income attributable to noncontrolling interests in the operating partnership | — | | | — | | | (20) | | | — | | | — | | | (20) | |
Dividends ($0.285 per share) (a) | — | | | — | | | (42,777) | | | — | | | — | | | (42,777) | |
| | | | | | | | | | | |
Issuance of shares under incentive stock plans | 752 | | | — | | | — | | | — | | | — | | | — | |
Stock-based compensation | — | | | 3,218 | | | — | | | — | | | — | | | 3,218 | |
Repurchase of common shares | (924) | | | (31) | | | — | | | — | | | — | | | (31) | |
| | | | | | | | | | | |
Adjustment of noncontrolling interests in the operating partnership | — | | | — | | | (291) | | | — | | | — | | | (291) | |
Conversion of units into common shares | 350,376 | | | 11,511 | | | — | | | — | | | — | | | 11,511 | |
Pension and postretirement benefit plans | — | | | — | | | — | | | 9,562 | | | — | | | 9,562 | |
Foreign currency translation adjustment | — | | | — | | | — | | | (16,178) | | | (773) | | | (16,951) | |
Cash flow hedges | — | | | — | | | — | | | 4,070 | | | (1,104) | | | 2,966 | |
Allocation of other comprehensive loss to noncontrolling interests in the operating partnership | — | | | — | | | — | | | 265 | | | — | | | 265 | |
Distributions to noncontrolling interests in consolidated affiliates | — | | | — | | | — | | | — | | | (1,713) | | | (1,713) | |
Balance, March 31, 2024 | 148,649,321 | | | $1,512,339 | | | $296,533 | | | $22,370 | | | $14,405 | | | $1,845,647 | |
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RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)
(Unaudited)
(Dollars in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares | | Retained Earnings | | Accumulated Other Comprehensive Income | | Noncontrolling Interests in Consolidated Affiliates | | Shareholders’ Equity |
| Shares | | Amount | |
Balance, January 1, 2023 | 147,282,631 | | | $1,462,945 | | | $366,637 | | | $35,813 | | | $15,317 | | | $1,880,712 | |
| | | | | | | | | | | |
Net income (loss) | — | | | — | | | 8,474 | | | — | | | (1,037) | | | 7,437 | |
Net income attributable to noncontrolling interests in the operating partnership | — | | | — | | | (174) | | | — | | | — | | | (174) | |
Dividends ($0.285 per share) (a) | — | | | — | | | (42,172) | | | — | | | — | | | (42,172) | |
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $24 | 400 | | | (10) | | | — | | | — | | | — | | | (10) | |
Issuance of shares under incentive stock plans | 1,564 | | | — | | | — | | | — | | | — | | | — | |
Stock-based compensation | — | | | 2,499 | | | — | | | — | | | — | | | 2,499 | |
Repurchase of common shares | (1,167) | | | (41) | | | — | | | — | | | — | | | (41) | |
| | | | | | | | | | | |
Adjustment of noncontrolling interests in the operating partnership | — | | | — | | | (2,376) | | | — | | | — | | | (2,376) | |
Conversion of units into common shares | 729,551 | | | 23,881 | | | — | | | — | | | — | | | 23,881 | |
Pension and postretirement benefit plans | — | | | — | | | — | | | 1 | | | — | | | 1 | |
Foreign currency translation adjustment | — | | | — | | | — | | | (3,552) | | | (181) | | | (3,733) | |
Cash flow hedges | — | | | — | | | — | | | (12,504) | | | 185 | | | (12,319) | |
| | | | | | | | | | | |
Allocation of other comprehensive loss to noncontrolling interests in the operating partnership | — | | | — | | | — | | | 1,110 | | | — | | | 1,110 | |
| | | | | | | | | | | |
Balance, March 31, 2023 | 148,012,979 | | | $1,489,274 | | | $330,389 | | | $20,868 | | | $14,284 | | | $1,854,815 | |
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| Common Shares | | Retained Earnings | | Accumulated Other Comprehensive Income/(Loss) | | Non-controlling Interest | | Shareholders’ Equity |
| Shares | | Amount | |
Balance, December 31, 2015 | 122,770,217 |
| |
| $708,827 |
| |
| $612,760 |
| |
| ($33,503 | ) | |
| $73,656 |
| |
| $1,361,740 |
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Net income | — |
| | — |
| | 211,972 |
| | — |
| | 5,798 |
| | 217,770 |
|
Dividends ($1.00 per share) | — |
| | — |
| | (123,155 | ) | | — |
| | — |
| | (123,155 | ) |
Issuance of shares under incentive stock plans | 179,743 |
| | 1,576 |
| | — |
| | — |
| | — |
| | 1,576 |
|
Stock-based compensation | — |
| | 5,136 |
| | — |
| | — |
| | — |
| | 5,136 |
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Repurchase of common shares | (45,592 | ) | | (178 | ) | | (690 | ) | | — |
| | — |
| | (868 | ) |
Actuarial change and amortization of pension and postretirement plan liabilities | — |
| | — |
| | — |
| | 5,533 |
| | — |
| | 5,533 |
|
Foreign currency translation adjustment | — |
| | — |
| | — |
| | 2,780 |
| | 3,542 |
| | 6,322 |
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Cash flow hedges | — |
| | — |
| | — |
| | 22,608 |
| | 214 |
| | 22,822 |
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Recapitalization of New Zealand Joint Venture | — |
| | (5,398 | ) | | — |
| | 3,438 |
| | 1,960 |
| | — |
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Recapitalization costs | — |
| | (96 | ) | | — |
| | — |
| | (28 | ) | | (124 | ) |
Balance, December 31, 2016 | 122,904,368 |
| |
| $709,867 |
| |
| $700,887 |
| |
| $856 |
| |
| $85,142 |
| |
| $1,496,752 |
|
Cumulative-effect adjustment due to adoption of ASU No. 2016-16 | — |
| | — |
| | (14,365 | ) | | — |
| | — |
| | (14,365 | ) |
Net income | — |
| | — |
| | 84,691 |
| | — |
| | 9,968 |
| | 94,659 |
|
Dividends ($0.75 per share) | — |
| | — |
| | (95,302 | ) | | — |
| | — |
| | (95,302 | ) |
Issuance of shares under incentive stock plans | 262,561 |
| | 3,665 |
| | — |
| | — |
| | — |
| | 3,665 |
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Stock-based compensation | — |
| | 4,084 |
| | — |
| | — |
| | — |
| | 4,084 |
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Repurchase of common shares | (298 | ) | | — |
| | — |
| | — |
| | — |
| | — |
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Amortization of pension and postretirement plan liabilities | — |
| | — |
| | — |
| | 349 |
| | — |
| | 349 |
|
Foreign currency translation adjustment | — |
| | — |
| | — |
| | 13,335 |
| | 3,264 |
| | 16,599 |
|
Cash flow hedges | — |
| | — |
| | — |
| | (1,902 | ) | | 305 |
| | (1,597 | ) |
Issuance of shares under equity offering, net of costs | 5,750,000 |
| | 152,390 |
| | — |
| | — |
| | — |
| | 152,390 |
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Balance, September 30, 2017 | 128,916,631 |
| |
| $870,006 |
| |
| $675,911 |
| |
| $12,638 |
| |
| $98,679 |
| |
| $1,657,234 |
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 |
OPERATING ACTIVITIES | | | |
Net income |
| $94,659 |
| |
| $167,261 |
|
Adjustments to reconcile net income to cash provided by operating activities: | | | |
Depreciation, depletion and amortization | 96,602 |
| | 83,685 |
|
Non-cash cost of land and improved development | 8,631 |
| | 10,111 |
|
Stock-based incentive compensation expense | 4,084 |
| | 3,894 |
|
Deferred income taxes | 16,714 |
| | 4,472 |
|
Amortization of losses from pension and postretirement plans | 349 |
| | 1,881 |
|
Gain on sale of large disposition of timberlands | (28,183 | ) | | (101,325 | ) |
Other | 29 |
| | (251 | ) |
Changes in operating assets and liabilities: | | | |
Receivables | (18,639 | ) | | (3,897 | ) |
Inventories | (617 | ) | | (4,591 | ) |
Accounts payable | 5,018 |
| | 583 |
|
Income tax receivable/payable | (126 | ) | | (47 | ) |
All other operating activities | 8,352 |
| | 2,132 |
|
CASH PROVIDED BY OPERATING ACTIVITIES | 186,873 |
| | 163,908 |
|
INVESTING ACTIVITIES | | | |
Capital expenditures | (45,731 | ) | | (40,246 | ) |
Real estate development investments | (11,780 | ) | | (4,815 | ) |
Purchase of timberlands | (239,052 | ) | | (353,828 | ) |
Assets purchased in business acquisition | — |
| | (1,113 | ) |
Net proceeds from large disposition of timberlands | 42,029 |
| | 126,965 |
|
Rayonier office building under construction | (5,979 | ) | | (3,933 | ) |
Change in restricted cash | 61,078 |
| | 22,430 |
|
Other | 383 |
| | 444 |
|
CASH USED FOR INVESTING ACTIVITIES | (199,052 | ) | | (254,096 | ) |
FINANCING ACTIVITIES | | | |
Issuance of debt | 63,389 |
| | 694,096 |
|
Repayment of debt | (95,216 | ) | | (454,419 | ) |
Dividends paid | (95,008 | ) | | (92,095 | ) |
Proceeds from the issuance of common shares under incentive stock plan | 3,665 |
| | 889 |
|
Proceeds from the issuance of common shares from equity offering, net of costs | 152,390 |
| | — |
|
Repurchase of common shares made under share repurchase program | — |
| | (690 | ) |
Debt issuance costs | — |
| | (818 | ) |
Other | — |
| | (139 | ) |
CASH PROVIDED BY FINANCING ACTIVITIES | 29,220 |
| | 146,824 |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 1,112 |
| | 1,626 |
|
CASH AND CASH EQUIVALENTS | | | |
Change in cash and cash equivalents | 18,153 |
| | 58,262 |
|
Balance, beginning of year | 85,909 |
| | 51,777 |
|
Balance, end of period |
| $104,062 |
| |
| $110,039 |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | |
Cash paid during the period: | | | |
Interest (a) |
| $23,485 |
| |
| $23,540 |
|
Income taxes | 513 |
| | 495 |
|
Non-cash investing activity: | | | |
Capital assets purchased on account | 4,575 |
| | 4,376 |
|
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
OPERATING ACTIVITIES | | | |
Net income | $2,306 | | | $7,437 | |
Adjustments to reconcile net income to cash provided by operating activities: | | | |
Depreciation, depletion and amortization | 37,083 | | | 37,599 | |
Non-cash cost of land and improved development | 2,953 | | | 4,208 | |
| | | |
Stock-based incentive compensation expense | 3,218 | | | 2,499 | |
Deferred income taxes | (1,004) | | | (1,155) | |
Pension settlement charge | 5,673 | | | — | |
| | | |
Timber write-offs resulting from casualty events | — | | | 2,302 | |
| | | |
| | | |
| | | |
| | | |
Other | 1,899 | | | 578 | |
Changes in operating assets and liabilities: | | | |
Receivables | (7,493) | | | 3,730 | |
Inventories | 565 | | | (4,098) | |
Accounts payable | 8,537 | | | 8,913 | |
| | | |
All other operating activities | (1,439) | | | 1,938 | |
CASH PROVIDED BY OPERATING ACTIVITIES | 52,298 | | | 63,951 | |
INVESTING ACTIVITIES | | | |
Capital expenditures | (18,868) | | | (18,746) | |
| | | |
Real estate development investments | (5,483) | | | (7,753) | |
| | | |
Purchase of timberlands | — | | | (8,729) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Other | 302 | | | 3,029 | |
CASH USED FOR INVESTING ACTIVITIES | (24,049) | | | (32,199) | |
FINANCING ACTIVITIES | | | |
| | | |
| | | |
Dividends paid on common shares (a) | (72,258) | | | (42,149) | |
Distributions to noncontrolling interests in the operating partnership (b) | (1,085) | | | (861) | |
| | | |
| | | |
Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs | — | | | (10) | |
| | | |
| | | |
Repurchase of common shares to pay withholding taxes on vested incentive stock awards | (31) | | | (41) | |
| | | |
| | | |
| | | |
| | | |
| | | |
Distributions to noncontrolling interests in consolidated affiliates | (1,713) | | | — | |
| | | |
| | | |
CASH USED FOR FINANCING ACTIVITIES | (75,087) | | | (43,061) | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (956) | | | (362) | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | |
Change in cash, cash equivalents and restricted cash | (47,794) | | | (11,671) | |
Balance, beginning of year | 208,374 | | | 115,407 | |
Balance, end of period | $160,580 | | | $103,736 | |
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(a)The three months ended March 31, 2024 includes an additional cash dividend of $0.20 per common share, totaling $29.8 million. The additional dividend was paid on January 12, 2024, to shareholders of record on December 29, 2023.
(b)The three months ended March 31, 2024 includes an additional cash distribution of $0.20 per operating partnership unit, totaling $0.5 million. The additional distribution was paid on January 12, 2024, to holders of record on December 29, 2023.
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | |
Cash paid during the period: | | | |
Interest (a) | $800 | | | $3,802 | |
Income taxes | 1,845 | | | 2,203 | |
Non-cash investing activity: | | | |
Capital assets purchased on account | 7,330 | | | 5,689 | |
| | | |
| | | |
| | | |
| | | |
| |
(a) | Interest paid is presented net of patronage payments received of $3.0 million and $0.4 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. For additional information on patronage payments, see Note 5 — Debt in the 2016 Form 10-K. |
(a)Interest paid is presented net of patronage payments received of $8.1 million and $6.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively. For additional information on patronage payments, see Note 7 — Debt in the 2023 Form 10-K.
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands, except per unit amounts)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
| | | | | $168,097 | | | $179,082 | |
Costs and Expenses | | | | | | | |
Cost of sales | | | | | (133,180) | | | (149,166) | |
Selling and general expenses | | | | | (18,978) | | | (16,778) | |
Other operating income (expense), net (Note 14) | | | | | 271 | | | (2,516) | |
| | | | | (151,887) | | | (168,460) | |
OPERATING INCOME | | | | | 16,210 | | | 10,622 | |
Interest expense, net | | | | | (9,744) | | | (11,700) | |
Interest and other miscellaneous (expense) income), net | | | | | (4,992) | | | 9,554 | |
INCOME BEFORE INCOME TAXES | | | | | 1,474 | | | 8,476 | |
Income tax benefit (expense) (Note 16) | | | | | 832 | | | (1,039) | |
NET INCOME | | | | | 2,306 | | | 7,437 | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (929) | | | 1,037 | |
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS | | | | | 1,377 | | | 8,474 | |
NET INCOME ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO: | | | | | | | |
Limited Partners | | | | | 1,363 | | | 8,389 | |
General Partners | | | | | 14 | | | 85 | |
Net income attributable to unitholders | | | | | 1,377 | | | 8,474 | |
OTHER COMPREHENSIVE (LOSS) INCOME | | | | | | | |
Foreign currency translation adjustment, net of income tax effect of $0 and $0 | | | | | (16,951) | | | (3,733) | |
Cash flow hedges, net of income tax effect of $1,866 and $312 | | | | | 2,966 | | | (12,319) | |
Pension and postretirement benefit plans, net of income tax expense of $1,222 and $0 | | | | | 9,562 | | | 1 | |
Total other comprehensive loss | | | | | (4,423) | | | (16,051) | |
COMPREHENSIVE LOSS | | | | | (2,117) | | | (8,614) | |
Less: Comprehensive loss attributable to noncontrolling interests in consolidated affiliates | | | | | 947 | | | 1,032 | |
COMPREHENSIVE LOSS ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS | | | | | ($1,170) | | | ($7,582) | |
| | | | | | | |
Basic earnings per unit attributable to Rayonier, L.P. | | | | | $0.01 | | | $0.06 | |
Diluted earnings per unit attributable to Rayonier, L.P. | | | | | $0.01 | | | $0.06 | |
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands) | | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
ASSETS |
CURRENT ASSETS | | | |
| | | |
| | | |
| | | |
Cash and cash equivalents | $159,903 | | | $207,696 | |
| | | |
| | | |
Trade receivables, less allowance for doubtful accounts of $202 and $210 | 35,309 | | | 28,652 | |
Other receivables | 5,145 | | | 11,517 | |
| 43,541 | | | 31,017 | |
| | | |
Prepaid expenses | 20,148 | | | 19,070 | |
| 10,025 | | | 9,932 | |
Other current assets | 5,873 | | | 9,074 | |
Total current assets | 279,944 | | | 316,958 | |
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION | 2,959,052 | | | 3,004,316 | |
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT | 106,403 | | | 105,595 | |
PROPERTY, PLANT AND EQUIPMENT | | | |
Land | 6,453 | | | 6,453 | |
Buildings | 31,147 | | | 31,251 | |
Machinery and equipment | 6,633 | | | 6,523 | |
Construction in progress | 1,895 | | | 1,841 | |
Total property, plant and equipment, gross | 46,128 | | | 46,068 | |
Less — accumulated depreciation | (19,638) | | | (19,059) | |
Total property, plant and equipment, net | 26,490 | | | 27,009 | |
| 677 | | | 678 | |
RIGHT-OF-USE ASSETS | 90,319 | | | 95,474 | |
OTHER ASSETS | 106,872 | | | 97,555 | |
TOTAL ASSETS | $3,569,757 | | | $3,647,585 | |
LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL |
CURRENT LIABILITIES | | | |
Accounts payable | $34,134 | | | $26,561 | |
| | | |
| | | |
| | | |
Accrued taxes | 5,567 | | | 4,394 | |
| | | |
Accrued payroll and benefits | 6,680 | | | 14,215 | |
Accrued interest | 9,913 | | | 7,094 | |
Pension and other postretirement benefits (Note 15) | 1,223 | | | 8,444 | |
Distribution payable | — | | | 30,148 | |
Deferred revenue | 20,900 | | | 19,012 | |
| | | |
Other current liabilities | 35,339 | | | 30,409 | |
Total current liabilities | 113,756 | | | 140,277 | |
| 1,361,985 | | | 1,365,773 | |
| | | |
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 15) | 1,448 | | | 1,441 | |
LONG-TERM LEASE LIABILITY | 82,932 | | | 87,684 | |
LONG-TERM DEFERRED REVENUE | 15,349 | | | 11,294 | |
OTHER NON-CURRENT LIABILITIES | 79,051 | | | 81,863 | |
| | | |
| | | |
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 4) 2,093,522 and 2,443,898 Units outstanding, respectively | 69,589 | | | 81,651 | |
CAPITAL | | | |
General partners’ capital | 18,057 | | | 18,325 | |
Limited partners’ capital | 1,787,713 | | | 1,814,193 | |
Accumulated other comprehensive income (Note 17) | 25,472 | | | 28,018 | |
TOTAL CONTROLLING INTEREST CAPITAL | 1,831,242 | | | 1,860,536 | |
Noncontrolling interests in consolidated affiliates (Note 4) | 14,405 | | | 17,066 | |
TOTAL CAPITAL | 1,845,647 | | | 1,877,602 | |
TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL | $3,569,757 | | | $3,647,585 | |
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(Unaudited)
(Dollars in thousands, except share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Units | | Accumulated Other Comprehensive Income | | Noncontrolling Interests in Consolidated Affiliates | | Total Capital | | |
| | General Partners’ Capital | | Limited Partners’ Capital | | | |
Balance, January 1, 2024 | | $18,325 | | | $1,814,193 | | | $28,018 | | | $17,066 | | | $1,877,602 | | | |
Net income | | 14 | | | 1,363 | | | — | | | 929 | | | 2,306 | | | |
Distributions on units ($0.285 per unit) | | (434) | | | (42,940) | | | — | | | — | | | (43,374) | | | |
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Stock-based compensation | | 32 | | | 3,186 | | | — | | | — | | | 3,218 | | | |
Repurchase of units | | (1) | | | (30) | | | — | | | — | | | (31) | | | |
Adjustment of Redeemable Operating Partnership Units | | 6 | | | 545 | | | — | | | — | | | 551 | | | |
Conversion of units into common shares | | 115 | | | 11,396 | | | — | | | — | | | 11,511 | | | |
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Pension and postretirement benefit plans | | — | | | — | | | 9,562 | | | — | | | 9,562 | | | |
Foreign currency translation adjustment | | — | | | — | | | (16,178) | | | (773) | | | (16,951) | | | |
Cash flow hedges | | — | | | — | | | 4,070 | | | (1,104) | | | 2,966 | | | |
Distributions to noncontrolling interests in consolidated affiliates | | — | | | — | | | — | | | (1,713) | | | (1,713) | | | |
Balance, March 31, 2024 | | $18,057 | | | $1,787,713 | | | $25,472 | | | $14,405 | | | $1,845,647 | | | |
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| | Units | | Accumulated Other Comprehensive Income | | Noncontrolling Interests in Consolidated Affiliates | | Total Capital |
| | General Partners’ Capital | | Limited Partners’ Capital | |
Balance, January 1, 2023 | | $18,251 | | | $1,806,895 | | | $40,249 | | | $15,317 | | | $1,880,712 | |
Net income (loss) | | 85 | | | 8,389 | | | — | | | (1,037) | | | 7,437 | |
Distributions on units ($0.285 per unit) | | (431) | | | (42,602) | | | — | | | — | | | (43,033) | |
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $24 | | — | | | (10) | | | — | | | — | | | (10) | |
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Stock-based compensation | | 25 | | | 2,474 | | | — | | | — | | | 2,499 | |
Repurchase of units | | — | | | (41) | | | — | | | — | | | (41) | |
Adjustment of Redeemable Operating Partnership Units | | (6) | | | (573) | | | — | | | — | | | (579) | |
Conversion of units into common shares | | 239 | | | 23,642 | | | — | | | — | | | 23,881 | |
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Pension and postretirement benefit plans | | — | | | — | | | 1 | | | — | | | 1 | |
Foreign currency translation adjustment | | — | | | — | | | (3,552) | | | (181) | | | (3,733) | |
Cash flow hedges | | — | | | — | | | (12,504) | | | 185 | | | (12,319) | |
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Balance, March 31, 2023 | | $18,163 | | | $1,798,174 | | | $24,194 | | | $14,284 | | | $1,854,815 | |
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See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands) | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
OPERATING ACTIVITIES | | | |
Net income | $2,306 | | | $7,437 | |
Adjustments to reconcile net income to cash provided by operating activities: | | | |
Depreciation, depletion and amortization | 37,083 | | | 37,599 | |
Non-cash cost of land and improved development | 2,953 | | | 4,208 | |
Stock-based incentive compensation expense | 3,218 | | | 2,499 | |
Deferred income taxes | (1,004) | | | (1,155) | |
Pension settlement charge | 5,673 | | | — | |
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Timber write-offs resulting from casualty events | — | | | 2,302 | |
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Other | 1,899 | | | 578 | |
Changes in operating assets and liabilities: | | | |
Receivables | (7,493) | | | 3,730 | |
Inventories | 565 | | | (4,098) | |
Accounts payable | 8,537 | | | 8,913 | |
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All other operating activities | (1,439) | | | 1,938 | |
CASH PROVIDED BY OPERATING ACTIVITIES | 52,298 | | | 63,951 | |
INVESTING ACTIVITIES | | | |
Capital expenditures | (18,868) | | | (18,746) | |
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Real estate development investments | (5,483) | | | (7,753) | |
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Purchase of timberlands | — | | | (8,729) | |
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Other | 302 | | | 3,029 | |
CASH USED FOR INVESTING ACTIVITIES | (24,049) | | | (32,199) | |
FINANCING ACTIVITIES | | | |
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Distributions on units (a) | (73,343) | | | (43,010) | |
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Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs | — | | | (10) | |
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Repurchase of units to pay withholding taxes on vested incentive stock awards | (31) | | | (41) | |
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Distributions to noncontrolling interests in consolidated affiliates | (1,713) | | | — | |
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CASH USED FOR FINANCING ACTIVITIES | (75,087) | | | (43,061) | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (956) | | | (362) | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | |
Change in cash, cash equivalents and restricted cash | (47,794) | | | (11,671) | |
Balance, beginning of year | 208,374 | | | 115,407 | |
Balance, end of period | $160,580 | | | $103,736 | |
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(a)The three months ended March 31, 2024 includes an additional cash distribution of $.20 per operating partnership unit, totaling $30.2 million. The additional distribution was paid on January 12, 2024, to holders of record on December 29, 2023.
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| Three Months Ended March 31, |
| 2024 | | 2023 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | |
Cash paid during the period: | | | |
Interest (a) | $800 | | | $3,802 | |
Income taxes | 1,845 | | | 2,203 | |
Non-cash investing activity: | | | |
Capital assets purchased on account | 7,330 | | | 5,689 | |
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(a)Interest paid is presented net of patronage payments received of $8.1 million and $6.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively. For additional information on patronage payments, see Note 7 — Debt in the 2023 Form 10-K.
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
1.BASIS OF PRESENTATION
The unaudited consolidated financial statements and notes thereto of Rayonier Inc. and its subsidiaries (“Rayonier” or the “Company”)and Rayonier, L.P. have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The Rayonier Inc. and Rayonier, L.P. year-end balance sheet information was derived from audited financial statements not included herein. In the opinion of management, these financial statements and notes reflect allany adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the financial statements and supplementary data included in the Company’sour Annual Report on Form 10-K for the year ended December 31, 2016,2023, as filed with the SEC (the “2016“2023 Form 10-K”).
As of March 31, 2024, the Company owned a 98.6% interest in the Operating Partnership, with the remaining 1.4% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership.
SUMMARY OF UPDATES TO SIGNIFICANT ACCOUNTING POLICIES
For a full description of our other significant accounting policies, see Note 1 — Summary of Significant Accounting Policies in our 2023 Form 10-K.
Investment in Real EstateACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
The Company capitalizes costs directly and indirectly associated with development of identified real estate projects. Direct costs include land and common development costs (such as roads, utilities and amenities), and capitalized property taxes. Indirect costs include administration, legal fees, capitalized interest, and project administration to the extent that such costs are related to a specific project. Interest is capitalized based on the amount of underlying expenditures of real estate projects under development.
Revenue Recognition for Real Estate Sales
The Company generally recognizes revenue on sales of real estate using the full accrual method at closing, when cash has been received, title and risk of loss have passed to the buyer and there is no continuing involvement with the property. Revenue is recognized using the percentage-of-completion method on sales of real estate containing future performance obligations. Cost of sales associated with real estate sold includes the cost of the land, the cost of any timber on the property that was conveyed to the buyer, any real estate development costs and any closing costs including sales commissions that may be borne by the Company.
When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. When developed land is sold, costs are allocated to each sold unit or lot based upon the relative sales value. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated periodically throughout the year, with adjustments being allocated prospectively to the remaining units available for sale.
Recently Adopted Standards
In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, stating entities should recognize income tax consequences of intra-entity transfers of assets other than inventory in the period in which they occur. As such, the Company is required to apply the changes on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU No. 2016-16 is effective for annual periods beginning after December 15, 2017 with early adoption permitted at the beginning of an annual period for which financial statements have not been issued. Rayonier early adopted ASU No. 2016-16 during the first quarter ended March 31, 2017. See Note 7 — Income Taxes for additional information.
In March 2016,November 2023, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation2023-07, Segment Reporting (Topic 718)280): Improvements to Employee Share-Based Payment Accounting. This update simplifiesReportable Segment Disclosures, which requires disclosure of significant segment expenses that are regularly provided to the accounting for employee share-based payment transactions, includingchief operating decision maker (“CODM”) and a description of other segment items (the difference between segment revenue less the accounting for income taxes, forfeituressegment expenses disclosed under the significant expense principle and statutory tax withholding requirements,each reported measure of segment profit or loss) by reportable segment, as well as classification in the statement of cash flows. ASU No. 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Rayonier adopted ASU No. 2016-09 during the first quarter ended March 31, 2017. Upon adoption, additional excess tax benefits and tax deficiencies are recorded to “Income tax expense” in the Consolidated Statements of Income and Comprehensive Income, forfeitures are accounted for when they occur and cash paid by Rayonier when directly withholding shares for tax withholding purposes are classified as a financing activity within the Consolidated Statements of Cash Flows. The adoption of this standard did not have a material impact on the consolidated financial statements.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
New Accounting Standards
In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires that an employer report the service cost component of net periodic benefit cost in the Consolidated Statements of Income in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Additionally, the other components of net periodic benefit cost (interest cost, expected return on plan assets and amortization of losses or gains) are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. If a separate line item is used to present the other components of net benefit cost, that line item must be appropriately described. If a separate line item is not used, the line item used in the income statement to present the other components of net benefit cost must be disclosed. ASU No. 2017-07 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. ASU No. 2017-07 is required to be applied retrospectively to all periods presented beginning in the period of adoption. Rayonier intends to adopt ASU No. 2017-07 in the Company’s first quarter 2018 Form 10-Q. Interest cost, expected return on plan assets and amortization of losses or gains are currently recorded in “Selling and general expenses” and “Cost of sales” in the Consolidated Statements of Income and “Timber and timberlands, net of depletion and amortization” in the Consolidated Balance Sheets. Upon adoption, these components of net period benefit cost will be recorded in “Interest income and miscellaneous income (expense), net.” As the Company froze benefits for all employees participating in the pension plan effective December 31, 2016, the service cost component of net period benefit is no longer recognized by Rayonier. Based on current actuarial estimates and management assumptions, Rayonier anticipates that the adoption of this standard will not have a significant impact on the Company’s consolidated financial statements. See Note 13 — Employee Benefit Plans for the components of net periodic benefit cost.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of Cash Flows. ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. ASU No. 2016-18 is required to be applied retrospectively to all periods presented beginning in the period of adoption. Rayonier intends to adopt ASU No. 2016-18 in the Company’s first quarter 2018 Form 10-Q. The Company currently records changes in restricted cash within the investing sectiondisclosure of the Consolidated Statementstitle and position of Cash Flows. Upon adoption, restricted cash will be included with cashthe entity’s CODM and cash equivalents when reconcilingan explanation of how the beginning-of-periodCODM uses the reported measures of segment profit or loss in assessing segment performance and end-of-period total amounts shown on the Consolidated Statements of Cash Flows and therefore changes in restricted cash will not be reported as cash flow activities. Rayonier will continuedeciding how to disclose the nature of restrictions on the Company’s cash, cash equivalents, and restricted cash. See Note 16 — Restricted Cash for additional information.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses the diversity in practice in how certain cash receipts and cash payments are presented and classified in the Consolidated Statements of Cash Flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU No. 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. ASU No. 2016-15 is required to be applied retrospectively to all periods presented beginning in the period of adoption. Early adoption is permitted.allocate resources. The Company anticipates the adoption of this standard will not have a significant impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which currently requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. ASU No. 2016-02 also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. ASU No. 2016-02pronouncement is effective for annual reporting periods in fiscal years beginning after December 15, 2018, including2023, and for interim periods within that reporting period. ASU No. 2016-02 is requiredin fiscal years beginning after December 15, 2024. We do not expect the adoption of this pronouncement to be applied on a modified retrospective basis beginning at the earliest period presented. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new guidance on theour consolidated financial statements.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
In May 2014, the FASB and International Accounting Standards Board (“IASB”) jointly issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), a comprehensive new revenue recognition standard that will supersede current revenue recognition guidance. The guidance provides a unified model to determine when and how revenue is recognized and will require enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In August 2015,December 2023, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced annual income tax disclosures, primarily through changes to the Effective Date. ASU No. 2015-14 provides a one-year deferral of the effective date of the new standard, with an option for organizations to adopt early based on the original effective date. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligationsrate reconciliation and Licensing.income taxes paid reconciliation. The update clarifies the guidance for identifying performance obligations. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The update clarifies the guidance for assessing collectibility, presenting sales taxes and other similar taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and disclosing the accounting change in the period of adoption. In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The update clarifies that a financial assetpronouncement is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. This standard will be effective for Rayonierannual reporting periods in fiscal years beginning January 1, 2018after December 15, 2024. Early adoption and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company expects to adopt using the cumulative-effect method.
As of September 30, 2017, and subject to the Company’s ongoing evaluation of new transactions and contracts, Rayonier has substantially completed its evaluation of the expected impact of adopting Topic 606 and anticipates thatretrospective application are permitted. We do not expect the adoption of this standard willpronouncement to impact our consolidated financial statements.
Recent accounting pronouncements adopted or pending adoption not discussed above are either not applicable or are not expected to have a significantmaterial impact on the Company’sour consolidated financial statements aside from adding expanded disclosures. Rayonier is also currently identifying and implementing appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under Topic 606. A material change in controls over financial reporting is not anticipated.condition, results of operations, or cash flows.
Subsequent EventsSUBSEQUENT EVENTS
The Company hasWe have evaluated events occurring from September 30, 2017March 31, 2024 to the date of issuance of these Consolidated Financial Statements for potential recognition or disclosure in the consolidated financial statements. No events were identified that warranted recognition. See Note 8 — Contingencies for events that warrantedrecognition or disclosure.
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2. | JOINT VENTURE INVESTMENT |
Matariki Forestry Group
The Company maintains a controlling financial interest in Matariki Forestry Group (the “New Zealand JV”), a joint venture that owns or leases approximately 0.4 million legal acres of New Zealand timberland. Accordingly, the Company consolidates the New Zealand JV’s balance sheet and results of operations. The portions of the consolidated financial position and results of operations attributable to the New Zealand JV’s 23% noncontrolling interest are shown separately within the Consolidated Statements of Income and Comprehensive Income and Consolidated Statements of Shareholders’ Equity. Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary of Rayonier Inc., serves as the manager of the New Zealand JV.
RAYONIER INC.2. SEGMENT AND SUBSIDIARIESGEOGRAPHICAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
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3. | SEGMENT AND GEOGRAPHICAL INFORMATION |
Sales between operating segments are made based on estimated fair market value, and intercompany sales, purchases and profits (losses) are eliminated in consolidation. The Company evaluatesWe evaluate financial performance based on segment operating income and Adjusted EBITDA.Earnings Before Interest, Taxes, Depreciation, Depletion and Amortization
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
(“Adjusted EBITDA”). Asset information is not reported by segment, as the Company doeswe do not produce asset information by segment internally.
Operating income as presented in the Consolidated Statements of Income and Comprehensive Income (Loss) is equal to segment income. Certain income (loss) items in the Consolidated Statements of Income and Comprehensive Income (Loss) are not allocated to segments. These items, which include gains (losses) from certain asset dispositions, interest income (expense),expense, interest and miscellaneous (expense) income (expense) and income tax benefit (expense) benefit,, are not considered by management to be part of segment operations and are included under “Corporate and other” or “unallocated interest expense and other.”
The following tables summarize the segment information for the three and nine months ended September 30, 2017March 31, 2024 and 2016:2023:
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| | | Three Months Ended March 31, |
SALES | | | | | 2024 | | 2023 |
Southern Timber | | | | | $69,978 | | | $71,842 | |
Pacific Northwest Timber | | | | | 25,192 | | | 34,419 | |
New Zealand Timber | | | | | 45,700 | | | 44,105 | |
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Real Estate | | | | | 15,564 | | | 16,276 | |
Trading | | | | | 11,774 | | | 12,569 | |
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Intersegment Eliminations (a) | | | | | (111) | | | (129) | |
Total | | | | | $168,097 | | | $179,082 | |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
SALES | 2017 | | 2016 | | 2017 | | 2016 |
Southern Timber |
| $31,897 |
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| $27,826 |
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| $95,390 |
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| $102,205 |
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Pacific Northwest Timber | 18,644 |
| | 16,139 |
| | 62,887 |
| | 52,316 |
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New Zealand Timber | 69,913 |
| | 42,179 |
| | 187,817 |
| | 125,951 |
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Real Estate (a) | 17,240 |
| | 60,626 |
| | 97,149 |
| | 211,296 |
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Trading | 40,252 |
| | 24,651 |
| | 115,935 |
| | 76,046 |
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Total |
| $177,946 |
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| $171,421 |
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| $559,178 |
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| $567,814 |
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(a)Primarily consists of log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.
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| | | Three Months Ended March 31, |
OPERATING INCOME (LOSS) | | | | | 2024 | | 2023 |
Southern Timber | | | | | $23,005 | | | $22,223 | |
Pacific Northwest Timber | | | | | (4,360) | | | (3,543) | |
New Zealand Timber (a) | | | | | 7,430 | | | (663) | |
| | | | | | | |
Real Estate | | | | | (128) | | | 883 | |
Trading | | | | | 41 | | | 341 | |
| | | | | | | |
Corporate and Other | | | | | (9,778) | | | (8,619) | |
Total Operating Income | | | | | 16,210 | | | 10,622 | |
Unallocated interest expense and other (b) | | | | | (14,736) | | | (2,146) | |
Total Income before Income Taxes | | | | | $1,474 | | | $8,476 | |
(a)The three months ended March 31, 2023 includes $2.3 million of timber write-offs resulting from casualty events. Timber write-offs resulting from casualty events are recorded within the Consolidated Statements of Income and Comprehensive Income (Loss) under the caption “Cost of Sales.”
| |
(a) | The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $42.0 million and $129.5 million, respectively. |
(b)The three months ended March 31, 2024 includes $5.7 million of pension settlement charges and $1.3 million of net costs associated with legal settlements. The three months ended March 31, 2023 includes $9.1 million of net recoveries associated with legal settlements.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
OPERATING INCOME (LOSS) | 2017 | | 2016 | | 2017 | | 2016 |
Southern Timber |
| $11,436 |
| |
| $8,183 |
| |
| $35,031 |
| |
| $34,976 |
|
Pacific Northwest Timber | 1,134 |
| | (3,293 | ) | | (1,278 | ) | | (874 | ) |
New Zealand Timber | 19,280 |
| | 6,613 |
| | 56,327 |
| | 21,385 |
|
Real Estate (a) | 11,437 |
| | 43,078 |
| | 57,235 |
| | 152,997 |
|
Trading | 1,142 |
| | 481 |
| | 3,380 |
| | 1,456 |
|
Corporate and other | (5,158 | ) | | (5,373 | ) | | (15,269 | ) | | (15,687 | ) |
Total Operating Income | 39,271 |
| | 49,689 |
| | 135,426 |
| | 194,253 |
|
Unallocated interest expense and other | (7,425 | ) | | (8,286 | ) | | (23,950 | ) | | (24,718 | ) |
Total Income before Income Taxes |
| $31,846 |
| |
| $41,403 |
| |
| $111,476 |
| |
| $169,535 |
|
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
DEPRECIATION, DEPLETION AND AMORTIZATION | | | | | 2024 | | 2023 |
Southern Timber | | | | | $21,795 | | | $20,610 | |
Pacific Northwest Timber | | | | | 9,075 | | | 10,650 | |
New Zealand Timber | | | | | 4,020 | | | 4,455 | |
| | | | | | | |
Real Estate | | | | | 1,749 | | | 1,503 | |
| | | | | | | |
| | | | | | | |
Corporate and Other | | | | | 444 | | | 381 | |
Total | | | | | $37,083 | | | $37,599 | |
| |
(a) | The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $28.2 million and $101.3 million, respectively. |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
DEPRECIATION, DEPLETION AND AMORTIZATION | 2017 | | 2016 | | 2017 | | 2016 |
Southern Timber |
| $12,736 |
| |
| $9,988 |
| |
| $37,092 |
| |
| $37,102 |
|
Pacific Northwest Timber | 6,481 |
| | 6,668 |
| | 23,766 |
| | 14,978 |
|
New Zealand Timber (a) | 8,478 |
| | 5,956 |
| | 29,341 |
| | 17,252 |
|
Real Estate (b) | 735 |
| | 9,260 |
| | 14,038 |
| | 35,988 |
|
Trading | — |
| | — |
| | — |
| | — |
|
Corporate and other | 277 |
| | 106 |
| | 469 |
| | 298 |
|
Total |
| $28,707 |
| |
| $31,978 |
| |
| $104,706 |
| |
| $105,618 |
|
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT | | | | | 2024 | | 2023 |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Real Estate | | | | | $2,953 | | | $4,208 | |
| | | | | | | |
| | | | | | | |
Total | | | | | $2,953 | | | $4,208 | |
| |
(a) | The nine months ended September 30, 2017 includes $8.9 million of timber cost basis expensed in conjunction with a timberland sale. |
| |
(b) | The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $8.1 million and $21.9 million, respectively. |
3. REVENUE
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT | 2017 | | 2016 | | 2017 | | 2016 |
Southern Timber | — |
| | — |
| | — |
| | — |
|
Pacific Northwest Timber | — |
| | — |
| | — |
| | — |
|
New Zealand Timber | — |
| | — |
| | 128 |
| | 1,824 |
|
Real Estate (a) | 1,272 |
| | 4,336 |
| | 14,246 |
| | 10,092 |
|
Trading | — |
| | — |
| | — |
| | — |
|
Total |
| $1,272 |
| |
| $4,336 |
| |
| $14,374 |
| |
| $11,916 |
|
PERFORMANCE OBLIGATIONSWe recognize revenue when control of promised goods or services (“performance obligations”) is transferred to customers, in an amount that reflects the consideration expected in exchange for those goods or services (“transaction price”). Unsatisfied performance obligations as of March 31, 2024 are primarily due to advances on stumpage contracts, unearned license revenue, unearned carbon capture and storage revenue and post-closing obligations on real estate sales. Of these performance obligations, $20.9 million is expected to be recognized within the next twelve months, with the remaining $15.3 million expected to be recognized thereafter as we satisfy our performance obligations. We generally collect payment within a year of satisfying performance obligations and therefore have elected not to adjust revenues for a financing component.
CONTRACT BALANCES
The timing of revenue recognition, invoicing and cash collections results in trade receivables and deferred revenue (contract liabilities) on the Consolidated Balance Sheets. Trade receivables are recorded when we have an unconditional right to consideration for completed performance under the contract. Contract liabilities relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenue as (or when) we perform under the contract.
The following table contains contract balances recorded in the Consolidated Balance Sheets at March 31, 2024 and December 31, 2023:
| | | | | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 | Balance Sheet Location |
Contract assets | | | | |
Trade receivables, net (a) | $35,309 | | | $28,652 | | Trade receivables |
Contract liabilities | | | | |
Deferred revenue, current (b) | 20,900 | | | 19,012 | | Deferred revenue |
Deferred revenue, non-current (c) | 15,349 | | | 11,294 | | Long-term deferred revenue |
(a)The increase in trade receivables was primarily driven by timing of sales in our timber segments.
(b)The increase in deferred revenue, current is driven by the current portion of a carbon capture and storage contract entered into in the first quarter of 2024, partially offset by the satisfaction of post-closing obligations on real estate sales and the timing of renewals of hunting contracts.
(c)The increase in deferred revenue, non-current is primarily driven by a carbon capture and storage contract entered into in the first quarter of 2024.
The following table summarizes revenue recognized during the three months ended March 31, 2024 and 2023 that was included in the contract liability balance at the beginning of each year:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Revenue recognized from contract liability balance at the beginning of the year (a) | | | | | $10,235 | | | $11,400 | |
| |
(a) | The nine months ended September 30, 2017 and September 30, 2016 include Large Dispositions of $5.7 million and $1.8 million, respectively. |
(a) Revenue recognized was primarily from hunting licenses, the use of advances on pay-as-cut timber sales and the satisfaction of post closing obligations on real estate sales.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following tables present our revenue from contracts with customers disaggregated by product type for the three months ended March 31, 2024 and 2023:
Rayonier’s | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Real Estate | | Trading | | | | Elim. | | Total |
March 31, 2024 | | | | | | | | | | | | | | | | | |
Pulpwood | $25,931 | | | $1,551 | | | $7,754 | | | | | — | | | $1,138 | | | | | — | | | $36,374 | |
Sawtimber | 33,740 | | | 22,677 | | | 34,405 | | | | | — | | | 10,195 | | | | | — | | | 101,017 | |
Hardwood | 1,195 | | | — | | | — | | | | | — | | | — | | | | | — | | | 1,195 | |
Total Timber Sales | 60,866 | | | 24,228 | | | 42,159 | | | | | — | | | 11,333 | | | | | — | | | 138,586 | |
License Revenue, Primarily From Hunting | 5,275 | | | 95 | | | 51 | | | | | — | | | — | | | | | — | | | 5,421 | |
Land-Based Solutions (a) | 1,710 | | | — | | | — | | | | | — | | | — | | | | | — | | | 1,710 | |
Other Non-Timber/Carbon Credit Revenue | 2,127 | | | 869 | | | 3,490 | | | | | — | | | — | | | | | — | | | 6,486 | |
Agency Fee Income | — | | | — | | | — | | | | | — | | | 330 | | | | | — | | | 330 | |
| | | | | | | | | | | | | | | | | |
Total Non-Timber Sales | 9,112 | | | 964 | | | 3,541 | | | | | — | | | 330 | | | | | — | | | 13,947 | |
Improved Development | — | | | — | | | — | | | | | 1,825 | | | — | | | | | — | | | 1,825 | |
| | | | | | | | | | | | | | | | | |
Rural | — | | | — | | | — | | | | | 8,728 | | | — | | | | | — | | | 8,728 | |
Timberland & Non-Strategic | — | | | — | | | — | | | | | 610 | | | — | | | | | — | | | 610 | |
| | | | | | | | | | | | | | | | | |
Deferred Revenue/Other (b) | — | | | — | | | — | | | | | 4,112 | | | — | | | | | — | | | 4,112 | |
| | | | | | | | | | | | | | | | | |
Total Real Estate Sales | — | | | — | | | — | | | | | 15,275 | | | — | | | | | — | | | 15,275 | |
| | | | | | | | | | | | | | | | | |
Revenue from Contracts with Customers | 69,978 | | | 25,192 | | | 45,700 | | | | | 15,275 | | | 11,663 | | | | | — | | | 167,808 | |
Lease Revenue | — | | | — | | | — | | | | | 289 | | | — | | | | | — | | | 289 | |
Intersegment | — | | | — | | | — | | | | | — | | | 111 | | | | | (111) | | | — | |
Total Revenue | $69,978 | | | $25,192 | | | $45,700 | | | | | $15,564 | | | $11,774 | | | | | ($111) | | | $168,097 | |
| | | | | | | | | | | | | | | | | |
Three Months Ended | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Real Estate | | Trading | | | | Elim. | | Total |
March 31, 2023 | | | | | | | | | | | | | | | | | |
Pulpwood | $26,783 | | | $3,715 | | | $6,081 | | | | | — | | | $1,439 | | | | | — | | | $38,018 | |
Sawtimber | 34,543 | | | 29,781 | | | 37,683 | | | | | — | | | 10,667 | | | | | — | | | 112,674 | |
Hardwood | 1,120 | | | — | | | — | | | | | — | | | — | | | | | — | | | 1,120 | |
Total Timber Sales | 62,446 | | | 33,496 | | | 43,764 | | | | | — | | | 12,106 | | | | | — | | | 151,812 | |
License Revenue, Primarily from Hunting | 5,222 | | | 136 | | | 55 | | | | | — | | | — | | | | | — | | | 5,413 | |
Land-Based Solutions (a) | 835 | | | — | | | — | | | | | — | | | — | | | | | — | | | 835 | |
Other Non-Timber/Carbon Credit Revenue | 3,339 | | | 787 | | | 286 | | | | | — | | | — | | | | | — | | | 4,412 | |
Agency Fee Income | — | | | — | | | — | | | | | — | | | 334 | | | | | — | | | 334 | |
| | | | | | | | | | | | | | | | | |
Total Non-Timber Sales | 9,396 | | | 923 | | | 341 | | | | | — | | | 334 | | | | | — | | | 10,994 | |
Improved Development | — | | | — | | | — | | | | | 4,802 | | | — | | | | | — | | | 4,802 | |
| | | | | | | | | | | | | | | | | |
Rural | — | | | — | | | — | | | | | 6,499 | | | — | | | | | — | | | 6,499 | |
Timberland & Non-Strategic | — | | | — | | | — | | | | | 1,637 | | | — | | | | | — | | | 1,637 | |
| | | | | | | | | | | | | | | | | |
Deferred Revenue/Other (b) | — | | | — | | | — | | | | | 3,093 | | | — | | | | | — | | | 3,093 | |
| | | | | | | | | | | | | | | | | |
Total Real Estate Sales | — | | | — | | | — | | | | | 16,031 | | | — | | | | | — | | | 16,031 | |
| | | | | | | | | | | | | | | | | |
Revenue from Contracts with Customers | 71,842 | | | 34,419 | | | 44,105 | | | | | 16,031 | | | 12,440 | | | | | — | | | 178,837 | |
Lease Revenue | — | | | — | | | — | | | | | 245 | | | — | | | | | — | | | 245 | |
Intersegment | — | | | — | | | — | | | | | — | | | 129 | | | | | (129) | | | — | |
Total Revenue | $71,842 | | | $34,419 | | | $44,105 | | | | | $16,276 | | | $12,569 | | | | | ($129) | | | $179,082 | |
(a) Consists of sales from carbon capture and storage (“CCS”), solar and wind energy contracts.
(b) Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following tables present our timber sales disaggregated by contract type for the three months ended March 31, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Trading | | | | Total |
March 31, 2024 | | | | | | | | | | | | | |
Stumpage Pay-as-Cut | $33,530 | | | 3 | | | — | | | | | — | | | | | $33,533 | |
Stumpage Lump Sum | — | | | 1,981 | | | — | | | | | — | | | | | 1,981 | |
| | | | | | | | | | | | | |
Total Stumpage | 33,530 | | | 1,984 | | | — | | | | | — | | | | | 35,514 | |
| | | | | | | | | | | | | |
Delivered Wood (Domestic) | 25,113 | | | 19,559 | | | 10,828 | | | | | 758 | | | | | 56,258 | |
Delivered Wood (Export) | 2,223 | | | 2,685 | | | 31,331 | | | | | 10,575 | | | | | 46,814 | |
Total Delivered | 27,336 | | | 22,244 | | | 42,159 | | | | | 11,333 | | | | | 103,072 | |
| | | | | | | | | | | | | |
Total Timber Sales | $60,866 | | | $24,228 | | | $42,159 | | | | | $11,333 | | | | | $138,586 | |
| | | | | | | | | | | | | |
March 31, 2023 | | | | | | | | | | | | | |
Stumpage Pay-as-Cut | $30,477 | | | — | | | — | | | | | — | | | | | $30,477 | |
Stumpage Lump Sum | 105 | | | 624 | | | — | | | | | — | | | | | 729 | |
| | | | | | | | | | | | | |
Total Stumpage | 30,582 | | | 624 | | | — | | | | | — | | | | | 31,206 | |
| | | | | | | | | | | | | |
Delivered Wood (Domestic) | 29,413 | | | 29,168 | | | 11,595 | | | | | 403 | | | | | 70,579 | |
Delivered Wood (Export) | 2,451 | | | 3,704 | | | 32,169 | | | | | 11,703 | | | | | 50,027 | |
Total Delivered | 31,864 | | | 32,872 | | | 43,764 | | | | | 12,106 | | | | | 120,606 | |
| | | | | | | | | | | | | |
Total Timber Sales | $62,446 | | | $33,496 | | | $43,764 | | | | | $12,106 | | | | | $151,812 | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
4. NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS IN CONSOLIDATED AFFILIATES
Matariki Forestry Group
We maintain a 77% controlling financial interest in Matariki Forestry Group (the “New Zealand subsidiary”), a joint venture that owns or leases approximately 422,000 legal acres of New Zealand timberland. Accordingly, we consolidate the New Zealand subsidiary’s balance sheet and results of operations. Income attributable to the New Zealand subsidiary’s 23% noncontrolling interests is reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income (Loss) under the caption “Net income attributable to noncontrolling interests in consolidated affiliates.” Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary, serves as the manager of the New Zealand subsidiary.
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP
Noncontrolling interests in the operating partnership relate to the third-party ownership of redeemable operating partnership units. Net income attributable to the noncontrolling interests in the operating partnership is computed by applying the weighted average redeemable operating partnership units outstanding during the period as a percentage of the weighted average total units outstanding to the Operating Partnership’s net income for the period. If a noncontrolling unitholder redeems a unit for a registered common share of Rayonier or cash, the noncontrolling interests in the operating partnership will be reduced and the Company’s share in the operating partnership will be increased by the fair value of each security at the time of redemption.
The following table sets forth the Company’s noncontrolling interests in the operating partnership:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Beginning noncontrolling interests in the operating partnership | | | | | $81,651 | | | $105,763 | |
| | | | | | | |
Adjustment of noncontrolling interests in the operating partnership | | | | | 291 | | | 2,376 | |
Conversions of redeemable operating partnership units to common shares | | | | | (11,511) | | | (23,881) | |
Net income attributable to noncontrolling interests in the operating partnership | | | | | 20 | | | 174 | |
Other comprehensive loss attributable to noncontrolling interests in the operating partnership | | | | | (265) | | | (1,110) | |
Distributions to noncontrolling interests in the operating partnership | | | | | (597) | | | (861) | |
Total noncontrolling interests in the operating partnership | | | | | $69,589 | | | $82,461 | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
5. EARNINGS PER SHARE AND PER UNIT
Basic earnings per common share (“EPS”) is calculated by dividing net income attributable to Rayonier Inc. by the weighted average number of common shares outstanding. Diluted EPS is calculated by dividing net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership by the weighted average number of common shares outstanding adjusted to include the potentially dilutive effect of outstanding stock options, performance shares, restricted shares, restricted stock units and noncontrolling interests in operating partnership units.
The following table provides details of the calculations of basic and diluted earnings per common share of the Company:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Earnings per common share - basic | | | | | | | |
Numerator: | | | | | | | |
Net Income | | | | | $2,306 | | | $7,437 | |
Less: Net income attributable to noncontrolling interests in the operating partnership | | | | | (20) | | | (174) | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (929) | | | 1,037 | |
Net income attributable to Rayonier Inc. | | | | | $1,357 | | | $8,300 | |
Denominator: | | | | | | | |
Denominator for basic earnings per common share - weighted average shares | | | | | 148,567,375 | | | 147,377,448 | |
Basic earnings per common share attributable to Rayonier Inc.: | | | | | $0.01 | | | $0.06 | |
Earnings per common share - diluted | | | | | | | |
Numerator: | | | | | | | |
Net Income | | | | | $2,306 | | | $7,437 | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (929) | | | 1,037 | |
| | | | | | | |
Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the operating partnership | | | | | $1,377 | | | $8,474 | |
Denominator: | | | | | | | |
Denominator for basic earnings per common share - weighted average shares | | | | | 148,567,375 | | | 147,377,448 | |
Add: Dilutive effect of: | | | | | | | |
Stock options | | | | | 165 | | | 1,886 | |
Performance shares, restricted shares and restricted stock units | | | | | 630,270 | | | 612,412 | |
Noncontrolling interests in operating partnership units | | | | | 2,178,239 | | | 3,087,383 | |
Denominator for diluted earnings per common share - adjusted weighted average shares | | | | | 151,376,049 | | | 151,079,129 | |
Diluted earnings per common share attributable to Rayonier Inc.: | | | | | $0.01 | | | $0.06 | |
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Anti-dilutive shares excluded from the computations of diluted earnings per common share: | | | | | | | |
Stock options, performance shares, restricted shares and restricted stock units | | | | | 93,575 | | | 64,667 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Basic earnings per unit (“EPU”) is calculated by dividing net income available to unitholders of Rayonier, L.P. by the weighted average number of units outstanding. Diluted EPU is calculated by dividing net income available to unitholders of Rayonier, L.P. by the weighted average number of units outstanding adjusted to include the potentially dilutive effect of outstanding unit equivalents, including stock options, performance shares, restricted shares and restricted stock units
The following table provides details of the calculations of basic and diluted earnings per unit of the Operating Partnership:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Earnings per unit - basic | | | | | | | |
Numerator: | | | | | | | |
Net Income | | | | | $2,306 | | | $7,437 | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (929) | | | 1,037 | |
Net income available to unitholders | | | | | $1,377 | | | $8,474 | |
Denominator: | | | | | | | |
Denominator for basic earnings per unit - weighted average units | | | | | 150,745,614 | | | 150,464,831 | |
Basic earnings per unit attributable to Rayonier, L.P.: | | | | | $0.01 | | | $0.06 | |
Earnings per unit - diluted | | | | | | | |
Numerator: | | | | | | | |
Net Income | | | | | $2,306 | | | $7,437 | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (929) | | | 1,037 | |
Net income available to unitholders | | | | | $1,377 | | | $8,474 | |
Denominator: | | | | | | | |
Denominator for basic earnings per unit - weighted average units | | | | | 150,745,614 | | | 150,464,831 | |
Add: Dilutive effect of unit equivalents: | | | | | | | |
Stock options | | | | | 165 | | | 1,886 | |
Performance shares, restricted shares and restricted stock units | | | | | 630,270 | | | 612,412 | |
Denominator for diluted earnings per unit - adjusted weighted average units | | | | | 151,376,049 | | | 151,079,129 | |
Diluted earnings per unit attributable to Rayonier, L.P.: | | | | | $0.01 | | | $0.06 | |
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit: | | | | | | | |
Stock options, performance shares, restricted shares and restricted stock units | | | | | 93,575 | | | 64,667 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
6. DEBT
Our debt consisted of the following at September 30, 2017:
| | | | | |
| March 31, 2024 |
Debt | | | |
| | September 30, 2017
| |
Senior Notes due 2031 at a fixed interest rate of 2.75% | $450,000 | |
2015 Term Credit AgreementLoan borrowings due 20242028 at a variable interest rate of 2.9% at September 30, 2017 (a)7.01% | 350,000 | | $350,000
|
| Senior Notes |
| |
2021 Incremental Term Loan borrowings due 20222029 at a fixedvariable interest rate of 3.75%6.96% | 325,000200,000 | |
| |
2016 Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 3.1% at September 30, 2017 (b)7.06% | 300,000200,000 | |
Revolving Credit Facility2022 Incremental Term Loan borrowings due 20202027 at an averagea variable interest rate of 2.5% at September 30, 20177.01% | 50,000100,000 | |
New Zealand JVsubsidiary noncontrolling interestinterests shareholder loan due 2026 at 0%a fixed interest rate of 3.64% (a) | 8,40624,040 | |
Total debtNew Zealand subsidiary noncontrolling interests shareholder loan due 2027 at a fixed interest rate of 6.48% (a) | 1,033,40624,040 | |
New Zealand subsidiary noncontrolling interests shareholder loan due 2025 at a fixed interest rate of 2.95% (a) | 20,605 | |
| |
| |
| |
| |
| |
| |
Total principal debt | 1,368,685 | |
| |
Less: Unamortized discounts | (2,688) | |
| |
Less: Deferred financing costs | (3,137(4,012) | | )
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Total long-term debt | $1,361,985 | |
(a) Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loans since inception.
The following table contains information on the outstanding variable rate debt as of March 31, 2024:
| | | | | | | | | | |
Debt | | | Periodic Interest Rate (a) | Effective Fixed Interest Rate (b) |
Long-term debt, net of deferred financing costs2015 Term Loan | |
| Daily Simple SOFR + 1.70% | $1,030,2693.01 | % |
2022 Incremental Term Loan | | | Daily Simple SOFR + 1.70% | 4.55 | % |
2016 Incremental Term Loan | | | Daily Simple SOFR + 1.75% | 2.38 | % |
2021 Incremental Term Loan | | | Daily Simple SOFR + 1.65% | 1.45 | % |
| |
(a) | As of September 30, 2017, the periodic interest rate on the term loan facility was LIBOR plus 1.625%. The Company estimates the effective fixed interest rate on the term loan facility to be approximately 3.3% after consideration of interest rate swaps and estimated patronage refunds. |
| |
(b) | As of September 30, 2017, the periodic interest rate on the incremental term loan was LIBOR plus 1.900%. The Company estimates the effective fixed interest rate on the incremental term loan facility to be approximately 2.8% after consideration of interest rate swaps and estimated patronage refunds. |
(a) Includes credit spread adjustment of 0.1%.
(b) Effective interest rate is after consideration of interest rate swaps and estimated patronage.
Principal payments due during the next five years and thereafter are as follows:
|
| | | |
2017 | — |
|
2018 | — |
|
2019 | — |
|
2020 | 50,000 |
|
2021 | — |
|
Thereafter | 983,406 |
|
Total Debt |
| $1,033,406 |
|
2017 Debt Activity
During the nine months ended September 30, 2017, the Company made additional borrowings of $25.0 million on the Revolving Credit Facility. A draw of $15.0 million during the first quarter was used to repay the $15.0 million solid waste bonds that were due in 2020 and an additional draw of $10.0 million made in the second quarter was used to partially fund the acquisition of 91,000 acres in coastal Florida, Georgia and South Carolina. In the third quarter, the Company used available cash to repay $31.5 million of mortgage notes which were due in August 2017. As of September 30, 2017, the Company had available borrowings of $139.6 million under the Revolving Credit Facility, net of $10.4 million to secure its outstanding letters of credit.
In addition, the New Zealand JV made borrowings and repayments of $38.4 million on its working capital facility. As of September 30, 2017, draws totaling NZ$40.0 million remain available on the working capital facility. The New Zealand JV also repaid $10.9 million of its shareholder loan held by the non-controlling interest party during the nine months ended September 30, 2017. Changes in exchange rates increased debt on a U.S. dollar basis for its shareholder loan by $0.5 million during the nine months ended September 30, 2017.
| | | | | | | |
| Total | | |
2024 | — | | | |
2025 | 20,605 | | | |
2026 | 224,040 | | | |
2027 | 124,040 | | | |
2028 | 350,000 | | | |
Thereafter | 650,000 | | | |
Total Debt | $1,368,685 | | | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
2024 DEBT ACTIVITY
U.S. Debt Covenants
During the three months ended March 31, 2024, we made no borrowings or repayments on our Revolving Credit Facility. At March 31, 2024, we had available borrowings of $293.0 million under the Revolving Credit Facility, net of $7.0 million to secure our outstanding letters of credit.
New Zealand Debt
During the three months ended March 31, 2024, the New Zealand subsidiary made no borrowings or repayments on its working capital facility (the “New Zealand Working Capital Facility”). At March 31, 2024, the New Zealand subsidiary had NZ$20.0 million of available borrowings under its working capital facility.
DEBT COVENANTS
In connection with the Company’s $350 million term credit agreement (the “Term Credit Agreement”), $300 million incremental term loan agreement (the “Incrementalour 2015 Term Loan Agreement”)Agreement, 2016 Incremental Term Loan Agreement, 2021 Incremental Term Loan Agreement, 2022 Incremental Term Loan Agreement and $200 million revolving credit facility (the “RevolvingRevolving Credit Facility”),Facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios.
The covenants listed below, which are the most significant financial covenants in effect as of March 31, 2024, are calculated on a trailing 12-month basis:
| | | | | | | | | | | | | | | | | |
| Covenant Requirement | | Actual Ratio | | Favorable |
Covenant EBITDA to consolidated interest expense should not be less than | 2.5 to 1 | | 11.7 to 1 | | 9.2 |
Covenant debt to covenant net worth plus covenant debt shall not exceed | 65 | % | | 43 | % | | 22 | % |
In addition to thesethe financial covenants listed above, the Senior Notes due 2031, 2015 Term CreditLoan Agreement, 2016 Incremental Term Loan Agreement, 2021 Incremental Term Loan Agreement, 2022 Incremental Term Loan Agreement, and Revolving Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At September 30, 2017, the Company wasMarch 31, 2024, we were in compliance with all applicable covenants.
7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
| |
5. | HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS |
Rayonier continuously assesses potential alternative uses of its timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. The Company periodically transfers, via a sale or contribution from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. The Company also acquires HBU properties in connection with timberland acquisitions. These propertiesWe are managed as timberlands until sold or developed. While the majority of HBU sales involve rural and recreational land, the Company also selectively pursues various land-use entitlements on certain properties for residential, commercial and industrial development in order to enhance the long-term value of such properties. For selected development properties, Rayonier also invests in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.
An analysis of higher and better use timberlands and real estate development investments from December 31, 2016 to September 30, 2017 is shown below:
|
| | | | | | | | | | | |
| Higher and Better Use Timberlands and Real Estate Development Investments |
| Land and Timber | | Development Investments | | Total |
Non-current portion at December 31, 2016 |
| $59,956 |
| |
| $10,418 |
| |
| $70,374 |
|
Plus: Current portion (a) | 5,096 |
| | 11,963 |
| | 17,059 |
|
Total Balance at December 31, 2016 | 65,052 |
| | 22,381 |
| | 87,433 |
|
Non-cash cost of land and improved development | (1,579 | ) | | (604 | ) | | (2,183 | ) |
Timber depletion from harvesting activities and basis of timber sold in real estate sales | (1,979 | ) | | — |
| | (1,979 | ) |
Capitalized real estate development investments (b) | — |
| | 11,780 |
| | 11,780 |
|
Capital expenditures (silviculture) | 195 |
| | — |
| | 195 |
|
Intersegment transfers | 4,142 |
| | (762 | ) | | 3,380 |
|
Total Balance at September 30, 2017 | 65,831 |
| | 32,795 |
| | 98,626 |
|
Less: Current portion (a) | (6,024 | ) | | (13,379 | ) | | (19,403 | ) |
Non-current portion at September 30, 2017 |
| $59,807 |
| |
| $19,416 |
| |
| $79,223 |
|
| |
(a) | The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 15 — Inventory for additional information.
|
| |
(b) | Capitalized real estate development investments includes $0.3 million of capitalized interest. |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The Company leases certain buildings, machinery, and equipment under various operating leases. The Company also has long-term lease agreements on certain timberlands in the Southern U.S. and New Zealand. U.S. leases typically have initial terms of approximately 30 to 65 years, with renewal provisions in some cases. New Zealand timberland lease terms range between 30 and 99 years. Such leases are generally non-cancellable and require minimum annual rental payments.
At September 30, 2017, the future minimum payments under non-cancellable operating leases, timberland leases and other commitments were as follows:
|
| | | | | | | | | | | | | | | |
| Operating Leases | | Timberland Leases (a) | | Commitments (b) | | Total |
Remaining 2017 |
| $312 |
| |
| $3,533 |
| |
| $4,813 |
| |
| $8,658 |
|
2018 | 1,130 |
| | 9,271 |
| | 6,901 |
| | 17,302 |
|
2019 | 907 |
| | 8,796 |
| | 5,589 |
| | 15,292 |
|
2020 | 724 |
| | 8,391 |
| | 5,510 |
| | 14,625 |
|
2021 | 625 |
| | 8,450 |
| | 4,905 |
| | 13,980 |
|
Thereafter (c) | 1,230 |
| | 153,753 |
| | 12,737 |
| | 167,720 |
|
|
| $4,928 |
| |
| $192,194 |
| |
| $40,455 |
| |
| $237,577 |
|
| |
(a) | The majority of timberland leases are subject to increases or decreases based on either the Consumer Price Index, Producer Price Index or market rates. |
| |
(b) | Commitments include payments expected to be made on derivative financial instruments (foreign exchange contracts and interest rate swaps) and construction of the Company’s office building and Wildlight development project. |
| |
(c) | Includes 20 years of future minimum payments for perpetual Crown Forest Licenses (“CFL”). A CFL consists of a license to use public or government owned land to operate a commercial forest. The CFL's extend indefinitely and may only be terminated upon a 35-year termination notice from the government. If no termination notice is given, the CFLs renew automatically each year for a one-year term. As of September 30, 2017, the New Zealand JV has four CFL’s under termination notice that are currently being relinquished as harvest activities are concluding, as well as two fixed term CFL’s expiring in 2062. The annual license fee is determined based on current market rental value, with triennial rent reviews. |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The operations conducted by the Company’s REIT entities are generally not subject to U.S. federal and state income tax. The New Zealand JV is subject to corporate level tax in New Zealand. Non-REIT qualifying operations are conducted by the Company’s TRS. The primary businesses performed in Rayonier’s TRS include log trading and certain real estate activities, such as the sale and entitlement of development HBU properties. For the three and nine months ended September 30, 2017, the Company recorded income tax expense of $3.0 million and $16.8 million, respectively. For the three and nine months ended September 30, 2016, the Company recorded income tax expense of $0.8 million and $2.3 million, respectively.
Provision for Income Taxes
The Company’s effective tax rate is below the 35.0% U.S. statutory rate due to tax benefits associated with being a REIT. The Company’s annualized effective tax rate (“AETR”) as of September 30, 2017 and September 30, 2016 was 15.1% and 1.3%, respectively. The increase in income tax expense and the corresponding AETR for the three and nine months ended September 30, 2017 is principally related to the New Zealand JV.
In accordance with GAAP, the Company recognizes the impact of a tax position if a position is “more-likely-than-not” to prevail. For the three and nine months ended September 30, 2017, there were no material changes in uncertain tax positions.
Prepaid Taxes
In the first quarter 2017, the Company early adopted ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. ASU No. 2016-16 requires income tax consequences of intra-entity transfers of assets other than inventory be recognized in the period in which they occur. See Note 1 — Basis of Presentation. As a result, a cumulative-effect adjustment to retained earnings was recorded for the long-term prepaid federal income tax of $14.4 million related to recognized built-in gains on 2006, 2008 and 2010 intercompany sales of timberlands between the REIT and the TRS. Taxes for the transactions were paid at the time of sale, but the gain and income tax expense were deferred. See the Consolidated Statement of Shareholders’ Equity for the cumulative-effect adjustment to retained earnings due to the adoption of this standard.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
In re Rayonier Inc. Securities Litigation
Following the Company’s November 10, 2014 earnings release and filing of the restated interim financial statements for the quarterly periods ended March 31, 2014 and June 30, 2014 (the “November 2014 Announcement”), shareholders of the Company filed five putative class actions against the Company and Paul G. Boynton, Hans E. Vanden Noort, David L. Nunes, and H. Edwin Kiker arising from circumstances described in the November 2014 Announcement, entitled respectively:
Sating v. Rayonier Inc. et al., Civil Action No. 3:14-cv-01395, filed November 12, 2014 in the United States District Court for the Middle District of Florida;
Keasler v. Rayonier Inc. et al., Civil Action No. 3:14-cv-01398, filed November 13, 2014 in the United States District Court for the Middle District of Florida;
Lake Worth Firefighters’ Pension Trust Fund v. Rayonier Inc. et al., Civil Action No. 3:14-cv-01403, filed November 13, 2014 in the United States District Court for the Middle District of Florida;
Christie v. Rayonier Inc. et al., Civil Action No. 3:14-cv-01429, filed November 21, 2014 in the United States District Court for the Middle District of Florida; and
Brown v. Rayonier Inc. et al., Civil Action No. 1:14-cv-08986, initially filed in the United States District Court for the Southern District of New York and later transferred to the United States District Court for the Middle District of Florida and assigned as Civil Action No. 3:14-cv-01474.
On January 9, 2015, the five securities actions were consolidated into one putative class action entitled In re Rayonier Inc. Securities Litigation, Case No. 3:14-cv-01395-TJC-JBT, in the United States District Court for the Middle District of Florida. The plaintiffs alleged that the defendants made false and/or misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The plaintiffs sought unspecified monetary damages and attorneys’ fees and costs. Two shareholders, the Pension Trust Fund for Operating Engineers and the Lake Worth Firefighters’ Pension Trust Fund, moved for appointment as lead plaintiff on January 12, 2015, which was granted on February 25, 2015. On April 7, 2015, the plaintiffs filed a Consolidated Class Action Complaint (the “Consolidated Complaint”). In the Consolidated Complaint, plaintiffs added allegations as to and added as a defendant N. Lynn Wilson, a former officer of Rayonier. With the filing of the Consolidated Complaint, David L. Nunes and H. Edwin Kiker were dropped from the case as defendants. Defendants timely filed Motions to Dismiss the Consolidated Complaint on May 15, 2015.After oral argument on Defendants' motions on August 25, 2015, the Court dismissed the Consolidated Complaint without prejudice, allowing plaintiffs leave to refile. Plaintiffs filed the Amended Consolidated Class Action Complaint (the “Amended Complaint”) on September 25, 2015, which continued to assert claims against the Company, as well as Ms. Wilson and Messrs. Boynton and Vanden Noort. Defendants timely filed Motions to Dismiss the Amended Complaint on October 26, 2015. The court denied those motions on May 20, 2016. On December 31, 2016, the case continued to be in the discovery phase and the Company could not determine whether there was a reasonable likelihood a material loss had been incurred nor could the range of any such loss be estimated. On March 13, 2017, the Company reached an agreement in principle to settle the case and all parties executed a term sheet memorializing such agreement. The parties executed and filed with the Court the Stipulation and Agreement of Settlement on April 12, 2017 (the “Settlement Agreement”), which Settlement Agreement included the material terms contained in the term sheet executed on March 13. Pursuant to the terms of the Settlement Agreement, which was subject to Court approval and requests for exclusion by members of the settlement class, the Company agreed to cause certain of its directors’ and officers’ liability insurance carriers to fund a settlement payment to the class of $73 million (the “Settlement Fund”). The insurance carriers fully funded the Settlement Fund by deposits in an escrow account as required by the Settlement Agreement. On September 19, 2017, the court held the final fairness hearing as to the settlement. The amounts agreed to on March 13, 2017, including the realized amount funded by the insurance carriers, were reflected in the Company’s Consolidated Financial Statements as of September 30, 2017. On October 5, 2017, the court entered orders approving the settlement and plan of distribution, dismissing the case against all defendants with prejudice and awarding Plaintiffs’ counsel certain fees and cost reimbursements to be paid from the Settlement Fund.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Derivative Claims
On November 26, 2014, December 29, 2014, January 26, 2015, February 13, 2015, and May 12, 2015, the Company received separate letters from shareholders requesting that the Company investigate or pursue derivative claims against certain officers and directors related to the November 2014 Announcement (“Derivative Claims”). Although these demands do not identify any claims against the Company, the Company has certain obligations to advance expenses and provide indemnification to certain current and former officers and directors of the Company. The Company has also incurred expenses as a result of costs arising from the investigation of the claims alleged in the various demands. At this preliminary stage, the ultimate outcome of these matters cannot be predicted, nor can the range of potential expenses the Company may incur as a result of the obligations identified above be estimated. On October 13, 2017, counsel for all five shareholders involved in the Derivative Claims filed a complaint in the name of one of the shareholders from whom the Company received a request to investigate. That case is pending in the United States District Court for the Middle District of Florida and is styled Molloy v. Boynton, et al., Civil Action No. 3:17-cv-01157-TJC-MCR. The complaint alleges breaches of fiduciary duties and unjust enrichment and names as defendants, former officers Paul G. Boynton, Hans E. Vanden Noort and N. Lynn Wilson, and former directors C. David Brown, II, Mark E. Gaumond, James H. Miller, Thomas I. Morgan and Ronald Townsend.
The Company has also been named as a defendant in various other lawsuits and claims arising in the normal course of business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, it has in certain cases retained some risk through the operation of large deductible insurance plans, primarily in the areas of executive risk, property, automobile and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flow.
The Company provides financial guarantees as required by creditors, insurance programs, and various governmental agencies.
As of September 30, 2017, the following financial guarantees were outstanding:
|
| | | | | | | | |
Financial Commitments | | Maximum Potential Payment | | Carrying Amount of Associated Liability |
Standby letters of credit (a) | |
| $10,353 |
| | — |
|
Guarantees (b) | | 2,254 |
| | 43 |
|
Surety bonds (c) | | 1,304 |
| | — |
|
Total financial commitments | |
| $13,911 |
| |
| $43 |
|
| |
(a) | Approximately $9.2 million of the standby letters of credit serve as credit support for infrastructure at the Company’s Wildlight development project. The remaining letters of credit support various insurance related agreements, primarily workers’ compensation. These letters of credit will expire at various dates during 2017 and 2018 and will be renewed as required. |
| |
(b) | In conjunction with a timberland sale and note monetization in 2004, the Company issued a make-whole agreement pursuant to which it guaranteed $2.3 million of obligations of a special-purpose entity that was established to complete the monetization. At September 30, 2017, the Company has a de minimis liability to reflect the fair market value of its obligation to perform under the make-whole agreement. |
| |
(c) | Rayonier issues surety bonds primarily to secure timber harvesting obligations in the State of Washington and to provide collateral for outstanding claims under the Company’s previous workers’ compensation self-insurance programs in Washington and Florida. Rayonier has also obtained performance bonds to secure the development activity at the Company’s Wildlight development project. These surety bonds expire at various dates during 2017 and 2018 and are expected to be renewed as required. |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
| |
10. | EARNINGS PER COMMON SHARE |
The following table provides details of the calculations of basic and diluted earnings per common share:
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net Income |
| $28,803 |
| |
| $40,624 |
| |
| $94,659 |
| |
| $167,261 |
|
Less: Net income attributable to noncontrolling interest | 4,115 |
| | 1,269 |
| | 9,968 |
| | 3,613 |
|
Net income attributable to Rayonier Inc. |
| $24,688 |
| |
| $39,355 |
| |
| $84,691 |
| |
| $163,648 |
|
| | | | | | | |
Shares used for determining basic earnings per common share | 128,610,696 |
| | 122,597,927 |
| | 126,934,003 |
| | 122,574,094 |
|
Dilutive effect of: | | | | | | | |
Stock options | 84,380 |
| | 113,849 |
| | 94,528 |
| | 88,594 |
|
Performance and restricted shares | 270,704 |
| | 170,857 |
| | 315,475 |
| | 120,212 |
|
Shares used for determining diluted earnings per common share | 128,965,780 |
| | 122,882,633 |
| | 127,344,006 |
| | 122,782,900 |
|
| | | | | | | |
Basic earnings per common share attributable to Rayonier Inc.: |
| $0.19 |
| |
| $0.32 |
| |
| $0.67 |
| |
| $1.34 |
|
| | | | | | | |
Diluted earnings per common share attributable to Rayonier Inc.: |
| $0.19 |
| |
| $0.32 |
| |
| $0.67 |
| |
| $1.33 |
|
|
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Anti-dilutive shares excluded from the computations of diluted earnings per share: | | | | | | | |
Stock options, performance and restricted shares | 621,447 |
| | 745,878 |
| | 600,039 |
| | 863,244 |
|
Total | 621,447 |
| | 745,878 |
| | 600,039 |
| | 863,244 |
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
| |
11. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
The Company is exposed to market risk related to potential fluctuations in foreign currency exchange rates and interest rates. The Company usesWe use derivative financial instruments to mitigate the financial impact of exposure to these risks.
Accounting for derivative financial instruments is governed by ASC Topic 815, Derivatives and Hedging, (“ASC 815”). In accordance with ASC 815, the Company records itswe record our derivative instruments at fair value as either assets or liabilities in the Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings when the hedged transaction materializes. Gains and losses on derivatives that are designated and qualify for net investment hedge accounting are recorded as a component of AOCI and will not be reclassified into earnings until the Company’s investment in its New Zealand operations is partially or completely liquidated. The ineffective portion of any hedge, changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings. The Company’s hedge ineffectiveness was de minimis for all periods presented.
Foreign Currency Exchange and Option ContractsFOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS
The functional currency of Rayonier’s wholly owned subsidiary, RayonierOur New Zealand Limited,subsidiary’s domestic sales and theoperating expenses are predominately denominated in New Zealand JV is the New Zealand dollar. The New Zealand JV is exposed to foreign currency risk ondollars, while its export sales, shareholder distributions and ocean freight payments which are mainlypredominately denominated in U.S. dollars. TheTo the extent New Zealand JVdollar costs exceed New Zealand dollar revenues (the “foreign exchange exposure”), the New Zealand subsidiary manages the foreign exchange exposure through the use of derivative financial instruments. It typically hedges 35%a portion of export sales receipts to cover 50% to 90% of its estimatedthe projected foreign currencyexchange exposure with respect tofor the following three12 months, forecasted sales and purchases, 25%up to 75% of forecasted sales and purchases for the forward three to 12 months and up to 50% of the forward 12 to 18 months and up to 50% for the forward 18 to 24 months. Foreign currencyAdditionally, it will occasionally hedge export sales receipts to cover up to 50% of the foreign exchange exposure fromfor the forward 24 to 36 months and up to 25% of the foreign exchange
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
exposure for the forward 36 to 48 months when the the New Zealand JV’sdollar is at a cyclical low versus the U.S. dollar. The New Zealand subsidiary’s trading operations is typically hedged based onhedge a portion of export sales receipts to cover the projected foreign exchange exposure for the following three months forecasted sales and purchases.months. As of September 30, 2017,March 31, 2024, foreign currency exchange contracts and foreign currency option contracts had maturity dates through February 2019 and October 2018, respectively.March 2027.
Foreign currency exchange and option contracts hedging foreign currency risk on export sales and ocean freight payments qualify for cash flow hedge accounting. The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.
The CompanyWe may de-designate these cash flow hedge relationships in advance or at the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously accumulated in other comprehensive incomeAOCI for de-designated hedges remains in accumulated other comprehensive incomeAOCI until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings.
The New Zealand JV is exposed to foreign currency risk when making shareholder loan payments whichINTEREST RATE PRODUCTS
We are denominated in U.S. dollars. The New Zealand JV typically hedges 75% to 100% of its estimated foreign currency exposure with respect to the following three months forecasted distributions, up to 75% of forecasted distributions for the forward three to six months and up to 50% of the forward six to 12 months. For the three and nine months ended September 30, 2017, the change in fair value of the foreign exchange forward contracts of $0.6 million and $0.3 million, respectively, was recorded in “Interest income and miscellaneous income (expense), net” as the contracts did not qualify for hedge accounting treatment. As of September 30, 2017, foreign exchange forward contracts had maturity dates through March 2018.
For additional information on the shareholder loan see Note 4 — Debt.
Interest Rate Swaps
The Company is exposed to cash flow interest rate risk on itsour variable-rate Term Credit Agreementdebt and Incremental Term Loan Agreement (as discussed below), and useson anticipated debt issuances. We use variable-to-fixed interest rate swaps and forward-starting interest rate swap agreements to hedge this exposure. For these derivative instruments, the Company reportswe report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassifiesreclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.
In August 2015,To the Company entered intoextent we de-designate or terminate a nine-year interest rate swap agreement for a notional amountcash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of $170 million. This swap agreement fixes the variable portion of the interest rate on the Term Credit Agreement borrowings due 2024 from LIBOR to an average rate of 2.20%. Together with the bank margin of 1.625%, this results in a rate of 3.83% before estimated patronage payments. This derivative instrument has been designated as an interest rate cash flow hedge at the time of de-designation remains in AOCI and qualifies for hedge accounting.is amortized using the straight-line method through interest expense over the remaining life of the hedged item. To the extent the associated hedged item is no longer effective, the gain or loss is reclassified out of AOCI to earnings immediately.
INTEREST RATE SWAPS
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Also, in August 2015,The following table contains information on the Company entered into a nine-year forwardoutstanding interest rate swap agreement with a start date in April 2016 for a notional amountswaps as of $180 million. This swap agreement fixes the variable portion of theMarch 31, 2024:
| | | | | | | | | | | | | | | | | | | | |
Outstanding Interest Rate Swaps (a) |
Date Entered Into | Term | Notional Amount | Related Debt Facility | Fixed Rate of Swap | Bank Margin on Debt (b) | Total Effective Interest Rate (c) |
August 2015 | 9 years | $170,000 | | 2015 Term Loan | 2.10 | % | 1.70 | % | 3.80 | % |
August 2015 | 9 years | 180,000 | | 2015 Term Loan | 2.26 | % | 1.70 | % | 3.96 | % |
April 2016 | 10 years | 100,000 | | 2016 Incremental Term Loan | 1.50 | % | 1.75 | % | 3.25 | % |
April 2016 | 10 years | 100,000 | | 2016 Incremental Term Loan | 1.51 | % | 1.75 | % | 3.26 | % |
May 2021 | 7 years | 200,000 | | 2021 Incremental Term Loan | 0.67 | % | 1.65 | % | 2.32 | % |
December 2022 | 5 years | 100,000 | | 2022 Incremental Term Loan | 3.72 | % | 1.70 | % | 5.42 | % |
(a)All interest rate on the Term Credit Agreement borrowings due 2024 from LIBOR to an average rate of 2.35%. Together with the bank margin of 1.625%, this results in a rate of 3.97% before estimated patronage payments. This derivative instrument has been designated as an interest rate cash flow hedge and qualifies for hedge accounting.
In April 2016, the Company entered into two 10-year interest rate swap agreements, each for a notional amount of $100 million. These swap agreements fix the variable portion of the interest rate on the Incremental Term Loan borrowings due 2026 to an average rate of 1.60%. Together with the bank margin of 1.90%, this results in a rate of 3.50% before estimated patronage payments. These derivative instrumentsswaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.
In July 2016,(b)Includes the Company entered into an interest rate swap agreement for a notional amountSOFR Credit Spread Adjustment component of $100 million through May 2026. This swap agreement fixes the variable portion of the interest rate on the Incremental Term Loan borrowings due 2026 from LIBOR to an average rate of 1.26%0.1%. Together with the bank margin of 1.90%, this results in a rate of 3.16%
(c)Rate is before estimated patronage payments. This derivative instrument has
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
FORWARD-STARTING INTEREST RATE SWAPS
The following table contains information on the outstanding forward-starting interest rate swaps as of March 31, 2024:
| | | | | | | | | | | | | | | | | | | | |
Outstanding Forward-Starting Interest Rate Swaps (a) |
Date Entered Into | Term | Notional Amount | Fixed Rate of Swap | Related Debt Facility | Forward Date | Maximum Period Ending for Forecasted Issuance Date |
April 2020 | 4 years | $100,000 | | 0.78 | % | 2015 Term Loan | August 2024 | N/A |
May 2020 | 4 years | 50,000 | | 0.64 | % | 2015 Term Loan | August 2024 | N/A |
May 2023 | 4 years | 50,000 | | 3.29 | % | 2015 Term Loan | August 2024 | N/A |
| | | | | | |
(a)All forward-starting interest rate swaps have been designated as an interest rate cash flow hedgehedges and qualifiesqualify for hedge accounting.
The following tables demonstratetable demonstrates the impact, gross of the Company’stax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income (Loss) for the three and nine months ended September 30, 2017March 31, 2024 and 2016.2023:
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| Income Statement Location | | 2024 | | 2023 |
Derivatives designated as cash flow hedges: | | | | | |
Foreign currency exchange contracts | Other comprehensive (loss) income | | ($5,490) | | | $3,813 | |
| Other operating income (expense), net | | 459 | | | (2,429) | |
Foreign currency option contracts | Other comprehensive (loss) income | | (1,638) | | | (270) | |
| Other operating income (expense), net | | 8 | | | — | |
Interest rate products | Other comprehensive (loss) income | | 15,041 | | | (9,660) | |
| Interest expense, net | | (7,278) | | | (3,463) | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | |
| | | | | |
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| | | | | |
| | | | | |
|
| | | | | | | | | |
| | | Three Months Ended September 30, |
| Income Statement Location | | 2017 | | 2016 |
Derivatives designated as cash flow hedges: | | | | | |
Foreign currency exchange contracts | Other comprehensive (loss) income | |
| ($1,579 | ) | |
| $259 |
|
Foreign currency option contracts | Other comprehensive (loss) income | | (716 | ) | | 635 |
|
Interest rate swaps | Other comprehensive (loss) income | | (533 | ) | | 3,529 |
|
| | | | | |
Derivatives not designated as hedging instruments: | | | | |
Foreign currency exchange contracts | Interest income and miscellaneous income (expense), net | | 609 |
| | — |
|
|
| | | | | | | | | |
| | | Nine Months Ended September 30, |
| Income Statement Location | | 2017 | | 2016 |
Derivatives designated as cash flow hedges: | | | | | |
Foreign currency exchange contracts | Other comprehensive (loss) income | |
| $1,611 |
| |
| $2,075 |
|
Foreign currency option contracts | Other comprehensive (loss) income | | 219 |
| | 2,564 |
|
Interest rate swaps | Other comprehensive (loss) income | | (2,921 | ) | | (25,459 | ) |
| | | | | |
Derivatives designated as a net investment hedge: | | | | | |
Foreign currency exchange contract | Other comprehensive (loss) income | | — |
| | (4,606 | ) |
| | | | | |
Derivatives not designated as hedging instruments: | | | | |
Foreign currency exchange contracts | Other operating income, net | | — |
| | 895 |
|
| Interest income and miscellaneous income (expense), net | | 283 |
| | — |
|
Foreign currency option contracts | Other operating income, net | | — |
| | 258 |
|
Interest rate swaps | Interest income and miscellaneous income (expense), net | | — |
| | (1,219 | ) |
During the next 12 months, the amount of the September 30, 2017March 31, 2024 AOCI balance, net of tax, expected to be reclassified into earnings as a result of the maturation of the Company’s derivative instruments is a gain of approximately $2.0approximately $22.5 million. The following table contains details of the expected reclassified amounts into earnings:
| | | | | |
| Amount expected to be reclassified into earnings in next 12 months |
|
Derivatives designated as cash flow hedges: | |
Foreign currency exchange contracts | ($1,034) | |
Foreign currency option contracts | (121) | |
Interest rate products (a) | 23,625 | |
Total estimated net gain on derivatives contracts | $22,470 | |
(a) These reclassified amounts are expected to fully offset variable interest rate payments made to debt holders, resulting in no net impact on our earnings or cash flows.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:
| | | | | | | | | | | | |
| Notional Amount | |
| March 31, 2024 | | December 31, 2023 | |
Derivatives designated as cash flow hedges: | | | | |
Foreign currency exchange contracts | $127,450 | | | $122,700 | | |
Foreign currency option contracts | 106,000 | | | 98,000 | | |
Interest rate swaps | 850,000 | | | 850,000 | | |
| | | | |
Forward-starting interest rate swaps | 200,000 | | | 200,000 | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
|
| | | | | | | |
| Notional Amount |
| September 30, 2017 | | December 31, 2016 |
Derivatives designated as cash flow hedges: | | | |
Foreign currency exchange contracts |
| $55,100 |
| |
| $44,800 |
|
Foreign currency option contracts | 58,000 |
| | 91,000 |
|
Interest rate swaps | 650,000 |
| | 650,000 |
|
| | | |
Derivative not designated as a hedging instrument: | | | |
Foreign currency exchange contracts | 18,020 |
| | — |
|
The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets:Sheets at March 31, 2024 and December 31, 2023. Changes in balances of derivative financial instruments are recorded as operating activities in the Consolidated Statements of Cash Flows: |
| | | | | | | | | |
| Location on Balance Sheet | | Fair Value Assets / (Liabilities) (a) |
| | | September 30, 2017 | | December 31, 2016 |
Derivatives designated as cash flow hedges: | | | | |
Foreign currency exchange contracts | Other current assets | |
| $2,145 |
| |
| $692 |
|
| Other assets | | 173 |
| | 33 |
|
| Other current liabilities | | (12 | ) | | (261 | ) |
Foreign currency option contracts | Other current assets | | 753 |
| | 1,064 |
|
| Other assets | | 56 |
| | 327 |
|
| Other current liabilities | | (173 | ) | | (574 | ) |
| Other non-current liabilities | | (17 | ) | | (426 | ) |
Interest rate swaps | Other assets | | 14,606 |
| | 17,204 |
|
| Other non-current liabilities | | (6,302 | ) | | (5,979 | ) |
| | | | | |
Derivative not designated as a hedging instrument: | | | | |
Foreign currency exchange contracts | Other current assets | | 269 |
| | — |
|
| | | | | |
Total derivative contracts: | | | | | |
Other current assets | | |
| $3,167 |
| |
| $1,756 |
|
Other assets | | | 14,835 |
| | 17,564 |
|
Total derivative assets | | |
| $18,002 |
| |
| $19,320 |
|
| | | | | |
Other current liabilities | | | (185 | ) | | (835 | ) |
Other non-current liabilities | | | (6,319 | ) | | (6,405 | ) |
Total derivative liabilities | | |
| ($6,504 | ) | |
| ($7,240 | ) |
| | | | | | | | | | | | | | | | | |
| Location on Balance Sheet | | Fair Value Assets / (Liabilities) (a) |
| | | March 31, 2024 | | December 31, 2023 |
Derivatives designated as cash flow hedges: | | | | |
Foreign currency exchange contracts | Other current assets | | $366 | | | $1,175 | |
| Other assets | | 274 | | | 2,405 | |
| Other current liabilities | | (1,803) | | | (664) | |
| Other non-current liabilities | | (953) | | | — | |
Foreign currency option contracts | Other current assets | | 122 | | | 342 | |
| Other assets | | 1,294 | | | 2,158 | |
| Other current liabilities | | (289) | | | (139) | |
| Other non-current liabilities | | (1,186) | | | (789) | |
Interest rate swaps | Other current assets | | 3,600 | | | 5,742 | |
| Other assets | | 42,986 | | | 37,983 | |
| Other non-current liabilities | | — | | | (546) | |
Forward-starting interest rate swaps | Other assets | | 16,959 | | | 12,790 | |
| Other non-current liabilities | | — | | | (8) | |
| | | | | |
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| | | | | |
| | | | | |
| | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Total derivative contracts: | | | | | |
Other current assets | | | $4,088 | | | $7,259 | |
Other assets | | | 61,513 | | | 55,336 | |
Total derivative assets | | | $65,601 | | | $62,595 | |
| | | | | |
Other current liabilities | | | (2,092) | | | (803) | |
Other non-current liabilities | | | (2,139) | | | (1,343) | |
Total derivative liabilities | | | ($4,231) | | | ($2,146) | |
| |
(a) | See Note 12 — Fair Value Measurements for further information on the fair value of the Company’s derivatives including their classification within the fair value hierarchy.
|
(a) See Note 8 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy. Offsetting Derivatives
OFFSETTING DERIVATIVES
Derivative financial instruments are presented at their gross fair values in the Consolidated Balance Sheets. The Company’sOur derivative financial instruments are not subject to master netting arrangements, which would allow the right of offset.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
| |
12. | FAIR VALUE MEASUREMENTS |
Fair Value of Financial Instruments
8. FAIR VALUE MEASUREMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
A three-level hierarchy that prioritizes the inputs used to measure fair value was established in the Accounting Standards Codification as follows:
Level 1— Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than quoted prices included in Level 1.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. (a)
The following table presents the carrying amount and estimated fair values of our financial instruments held by the Company at September 30, 2017as of March 31, 2024 and December 31, 2016,2023, using market information and what the Company believeswe believe to be appropriate valuation methodologies under GAAP:
|
| | | | | | | | | | | | | | | | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Asset (Liability) (a) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| | | Level 1 | | Level 2 | | | | Level 1 | | Level 2 |
Cash and cash equivalents |
| $104,062 |
| |
| $104,062 |
| | — |
| |
| $85,909 |
| |
| $85,909 |
| | — |
|
Restricted cash (b) | 10,631 |
| | 10,631 |
| | — |
| | 71,708 |
| | 71,708 |
| | — |
|
Current maturities of long-term debt | — |
| | — |
| | — |
| | (31,676 | ) | | — |
| | (31,984 | ) |
Long-term debt (c) | (1,030,269 | ) | | — |
| | (1,042,766 | ) | | (1,030,205 | ) | | — |
| | (1,030,708 | ) |
Interest rate swaps (d) | 8,304 |
| | — |
| | 8,304 |
| | 11,225 |
| | — |
| | 11,225 |
|
Foreign currency exchange contracts (d) | 2,575 |
| | — |
| | 2,575 |
| | 464 |
| | — |
| | 464 |
|
Foreign currency option contracts (d) | 619 |
| | — |
| | 619 |
| | 391 |
| | — |
| | 391 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2024 | | December 31, 2023 |
Asset (Liability) (a) | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Level 1 | | Level 2 | | | Level 1 | | Level 2 |
Cash and cash equivalents | | $159,903 | | | $159,903 | | | — | | | $207,696 | | | $207,696 | | | — | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Restricted cash (b) | | 677 | | | 677 | | | — | | | 678 | | | 678 | | | — | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Long-term debt (c) | | (1,361,985) | | | — | | | (1,299,434) | | | (1,365,773) | | | — | | | (1,299,951) | |
| | | | | | | | | | | | |
Interest rate swaps (d) | | 46,586 | | | — | | | 46,586 | | | 43,179 | | | — | | | 43,179 | |
| | | | | | | | | | | | |
Forward-starting interest rate swaps (d) | | 16,959 | | | — | | | 16,959 | | | 12,782 | | | — | | | 12,782 | |
Foreign currency exchange contracts (d) | | (2,116) | | | — | | | (2,116) | | | 2,916 | | | — | | | 2,916 | |
Foreign currency option contracts (d) | | (59) | | | — | | | (59) | | | 1,572 | | | — | | | 1,572 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Noncontrolling interests in the operating partnership (e) | | 69,589 | | | — | | | 69,589 | | | 81,651 | | | — | | | 81,651 | |
| |
(a) | The Company did not have Level 3 assets or liabilities at September 30, 2017. |
| |
(b) | Restricted cash represents the proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow for a real estate sale. See Note 16 — Restricted Cash for additional information.
|
| |
(c) | (a)We did not have Level 3 assets or liabilities at March 31, 2024 and December 31, 2023. (b)Restricted cash represents proceeds from like-kind exchange sales deposited with a third-party intermediary and cash held in escrow. See Note 18 — Restricted Cash for additional information. (c)The carrying amount of long-term debt is presented net of deferred financing costs and unamortized discounts on non-revolving debt. See Note 6 — Debt for additional information. (e)Noncontrolling interests in the operating partnership is neither an asset nor liability and is classified as temporary equity in the Company’s Consolidated Balance Sheets. This relates to the ownership of long-term debt is presented net of capitalized debt costs on non-revolving debt. |
| |
(d) | See Note 11 — Derivative Financial Instruments and Hedging Activities for information regarding the Balance Sheet classification of the Company’s derivative financial instruments.
|
We use the following methods and assumptions in estimating the fair value of itsour financial instruments:
Cash and cash equivalents and Restricted cash — The carrying amount is equal to fair market value.
Debt— The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities. The variable rate debt adjusts with changes in the market rate, therefore the carrying value approximates fair value.
Interest rate swap agreements— The fair value of interest rate contracts is determined by discounting the expected future cash flows, for each instrument, at prevailing interest rates.
Foreign currency exchange contracts— The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation, which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.
Foreign currency option contracts— The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.
Noncontrolling interests in the operating partnership— The fair value of noncontrolling interests in the operating partnership is determined based on the period-end closing price of Rayonier Inc. common shares.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
9. CONTINGENCIES
We have been named as a defendant in various lawsuits and claims arising in the normal course of business. While we have procured reasonable and customary insurance covering risks normally occurring in connection with our businesses, we have in certain cases retained some risk through the operation of large deductible insurance plans, primarily in the areas of executive risk, property, automobile and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on our financial position, results of operations, or cash flow.
10. ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES
Various federal and state environmental laws in the states in which we operate place cleanup or restoration liability on the current and former owners of affected real estate. These laws are often a source of “strict liability,” meaning that an owner or operator need not necessarily have caused, or even been aware of, the release of contaminated materials. Similarly, there are certain environmental laws that allow state, federal, and tribal trustees (collectively, the “Trustees”) to bring suit against property owners to recover damage for injuries to natural resources. Like the liability that attaches to current property owners in the cleanup context, liability for natural resource damages (“NRD”) can attach to a property simply because an injury to natural resources resulted from releases of contaminated materials on or from the owner’s property, regardless of culpability for the release.
Changes in environmental and NRD liabilities from December 31, 2023 to March 31, 2024 are shown below:
| | | | | |
| Port Gamble, WA |
| 13. |
| |
| |
| |
| |
| |
Non-current portion at December 31, 2023 | EMPLOYEE BENEFIT PLANS$4,785 |
Plus: Current portion | 11,793 |
Total Balance at December 31, 2023 | 16,578 |
Expenditures charged to liabilities | (171) |
Increase to liabilities (a) | 2,667 |
Total Balance at March 31, 2024 | 19,074 |
Less: Current portion | (14,414) |
Non-current portion at March 31, 2024 | $4,660 |
(a)The Company hasincrease in liabilities reflects revised environmental and NRD cost estimates recorded during the three months ended March 31, 2024.
It is expected that the upland mill site cleanup and NRD restoration will occur over the next one to two years, while the monitoring of Port Gamble Bay, mill site, and landfills will continue for an additional 15 to 20 years. NRD costs are subject to change as the scope of the restoration projects become more clearly defined. It is reasonably possible that these components of the liability may increase as the project progresses. Management continues to monitor the Port Gamble cleanup process and will make adjustments as needed. Should any future circumstances result in a change to the estimated cost of the project, we will record an appropriate adjustment to the liability in the period it becomes known and when we can reasonably estimate the amount.
We do not currently anticipate any material loss in excess of the amounts accrued; however, we are not able to estimate a possible loss or range of loss, if any, in excess of the established liabilities. Our future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations, and the availability and application of technology. We do not expect the resolution of such uncertainties to have a material adverse effect on our consolidated financial position or liquidity.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
11. GUARANTEES
We provide financial guarantees as required by creditors, insurance programs, and various governmental agencies.
As of March 31, 2024, the following financial guarantees were outstanding:
| | | | | | | | | | |
Financial Commitments (a) | | Maximum Potential Payment | | |
Standby letters of credit (b) | | $6,996 | | | |
Surety bonds (c) | | 9,985 | | | |
Total financial commitments | | $16,981 | | | |
(a)We have not recorded any liabilities for these financial commitments in our Consolidated Balance Sheets. The guarantees are not subject to measurement as the guarantees are dependent on our own performance.
(b)Approximately $6.3 million of the standby letters of credit serve as credit support for real estate construction in our Wildlight development project. The remaining letters of credit support various insurance related agreements. These letters of credit will expire at various dates during 2024 and will be renewed as required.
(c)Surety bonds are issued primarily to secure performance obligations related to various operational activities and to provide collateral for our Wildlight development project in Nassau County, Florida and our Heartwood development project in Richmond Hill, Georgia. These surety bonds expire at various dates during 2024, 2025, and 2026 and are expected to be renewed as required.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
12. HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS
We routinely assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. We periodically transfer, via a sale or contribution from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. We also acquire HBU properties in connection with timberland acquisitions. These properties are managed as timberlands until sold or developed. While the majority of HBU sales involve rural and recreational land, we also selectively pursue various land-use entitlements on certain properties for residential, commercial and industrial development in order to enhance the long-term value of such properties. For selected development properties, we also invest in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.
Changes in higher and better use timberlands and real estate development investments from December 31, 2023 to March 31, 2024 are shown below:
| | | | | | | | | | | | | | | | | |
| Higher and Better Use Timberlands and Real Estate Development Investments |
| Land and Timber | | Development Investments | | Total |
Non-current portion at December 31, 2023 | $86,986 | | | $18,609 | | | $105,595 | |
Plus: Current portion (a) | 1,699 | | | 24,639 | | | 26,338 | |
Total Balance at December 31, 2023 | 88,685 | | | 43,248 | | | 131,933 | |
Non-cash cost of land and improved development | (213) | | | (1,571) | | | (1,784) | |
Amortization of parcel real estate development investments | — | | | (1,968) | | | (1,968) | |
Timber depletion from harvesting activities and basis of timber sold in real estate sales | (189) | | | — | | | (189) | |
Capitalized real estate development investments (b) | — | | | 7,850 | | | 7,850 | |
Capital expenditures (silviculture) | 76 | | | — | | | 76 | |
| | | | | |
Intersegment transfers | 9,442 | | | — | | | 9,442 | |
| | | | | |
Total Balance at March 31, 2024 | 97,801 | | | 47,559 | | | 145,360 | |
Less: Current portion (a) | (14,068) | | | (24,889) | | | (38,957) | |
Non-current portion at March 31, 2024 | $83,733 | | | $22,670 | | | $106,403 | |
(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 13 — Inventory for additional information. (b)Capitalized real estate development investments include $0.3 million of capitalized interest and $2.4 million of parcel real estate development investments. Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within one year.
13. INVENTORY
As of March 31, 2024 and December 31, 2023, our inventory consisted entirely of finished goods, as follows:
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
Finished goods inventory | | | |
Real estate inventory (a) | $38,957 | | | $26,338 | |
Log inventory | 4,405 | | | 4,490 | |
Carbon unit inventory (b) | 179 | | | 189 | |
Total inventory | $43,541 | | | $31,017 | |
(b)Represents the basis in New Zealand carbon units intended to be sold in the next 12 months.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
14. OTHER OPERATING INCOME (EXPENSE), NET
Other operating income (expense), net consisted of the following:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Gain (loss) on foreign currency remeasurement, net of cash flow hedges | | | | | $242 | | | ($2,484) | |
Gain on sale or disposal of property and equipment | | | | | 10 | | | 2 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Miscellaneous income (expense), net | | | | | 19 | | | (34) | |
Total | | | | | $271 | | | ($2,516) | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
15. EMPLOYEE BENEFIT PLANS
We have one qualified non-contributory defined benefit pension plan covering a portion of itsour employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plan. Bothplans. We closed enrollment in the pension plans are closed to new participants.salaried employees hired after December 31, 2005. Effective December 31, 2016, the Companywe froze benefits for all employees participating in the pension plan. In lieu of the pension plan, the Company provideswe provide those employees with an enhanced 401(k) plan match.match similar to what is currently provided to employees hired after December 31, 2005. Employee benefit plan liabilities are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.
In December 2022, the Rayonier Board of Directors approved the resolution to terminate the Defined Benefit Plan and notified impacted parties of the termination and alternative distribution options. The Defined Benefit Plan was terminated on February 28, 2023. On July 20, 2023, the Rayonier Board of Directors approved the resolution to terminate the unfunded plan and will distribute all benefits in accordance with Section 409A of the Internal Revenue Code. The unfunded plan was terminated on July 31, 2023. In the fourth quarter of 2023, distributions were made to settle the obligation with participants in the Defined Benefit Plan electing the lump sum distribution option. In March 2024, the remaining Defined Benefit Plan liability was settled with the purchase of annuity contracts from a third-party insurance company. We made a cash contribution of $2.7 million during the settlement process in order to fund the Defined Benefit Plan on a plan termination basis. We recognized a pre-tax non-cash pension settlement charge of $5.7 million related to the actuarial losses in AOCI.
The unfunded plan will be settled entirely with lump sum cash payments estimated at $1.2 million. We expect to recognize additional pre-tax non-cash pension settlement charges related to the actuarial losses currently in AOCI upon settlement of the remaining obligations of the unfunded plan. These payments and charges are currently expected to occur in 2024, with the specific timing and final amounts dependent upon several factors. Projected cash contributions are an estimate, as actual amounts and timing are dependent upon several factors. See Note 17 - Accumulated Other Comprehensive Income for additional information. The net pension and postretirement benefit (credit) costs that have been recorded are shown in the following table:
|
| | | | | | | | | | | | | | | |
| Pension | | Postretirement |
| Three Months Ended September 30, | | Three Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Components of Net Periodic Benefit Cost | | | | | | | |
Service cost | — |
| |
| $327 |
| |
| $13 |
| |
| $2 |
|
Interest cost | 815 |
| | 869 |
| | 2 |
| | 12 |
|
Expected return on plan assets (a) | (945 | ) | | (1,008 | ) | | — |
| | — |
|
Amortization of losses | 116 |
| | 632 |
| | — |
| | — |
|
Net periodic benefit (gain) cost |
| ($14 | ) | |
| $820 |
| |
| $15 |
| |
| $14 |
|
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| Pension | | Postretirement |
| Nine Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Components of Net Periodic Benefit Cost | | | | | | | |
Service cost | — |
| |
| $980 |
| |
| $39 |
| |
| $5 |
|
Interest cost | 2,444 |
| | 2,606 |
| | 5 |
| | 36 |
|
Expected return on plan assets (a) | (2,836 | ) | | (3,023 | ) | | — |
| | — |
|
Amortization of losses (gains) | 349 |
| | 1,893 |
| | — |
| | (12 | ) |
Net periodic benefit (gain) cost |
| ($43 | ) | |
| $2,456 |
| |
| $44 |
| |
| $29 |
|
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Components of Net Periodic Benefit (Credit) Cost | Income Statement Location | | Pension | | Postretirement |
| Three Months Ended March 31, | | Three Months Ended March 31, |
| 2024 | | 2023 | | 2024 | | 2023 |
Service cost | Selling and general expenses | | — | | | — | | | $1 | | | $1 | |
Interest cost | Interest and other miscellaneous (expense) income, net | | 513 | | | 844 | | | 18 | | | 17 | |
Expected return on plan assets (a) | Interest and other miscellaneous (expense) income, net | | (542) | | | (887) | | | — | | | — | |
Amortization of losses | Interest and other miscellaneous (expense) income, net | | — | | | 1 | | | — | | | — | |
Pension settlement loss | Interest and other miscellaneous (expense) income, net | | 5,673 | | | — | | | — | | | — | |
Net periodic benefit (credit) cost | | | $5,644 | | | ($42) | | | $19 | | | $18 | |
| | | | | | | | | |
| |
| (a) | The weighted-average expected long-term rate of return on plan assets used in computing 2017 net periodic benefit cost for pension benefits is 7.2%.
| | | | | |
| 14. | OTHER OPERATING INCOME, NET | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Other operating income, net comprised the following:
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Lease and license income, primarily from hunting |
| $4,331 |
| |
| $3,769 |
| |
| $12,419 |
| |
| $13,991 |
|
Other non-timber income | 1,312 |
| | 666 |
| | 5,485 |
| | 1,721 |
|
Foreign currency income | 165 |
| | 533 |
| | 15 |
| | 34 |
|
(Loss) gain on sale or disposal of property and equipment | (63 | ) | | 58 |
| | (69 | ) | | 81 |
|
Gain (loss) on foreign currency exchange and option contracts | 1,295 |
| | (333 | ) | | 2,476 |
| | (1,406 | ) |
Deferred payment related to a prior land sale | — |
| | — |
| | — |
| | 4,000 |
|
Costs related to acquisition | — |
| | (91 | ) | | — |
| | (1,306 | ) |
Gain on foreign currency derivatives (a) | — |
| | — |
| | — |
| | 1,153 |
|
Log trading agency and marketing fees | 823 |
| | 637 |
| | 1,949 |
| | 1,568 |
|
Gain on sale of carbon credits | — |
| | 359 |
| | — |
| | 1,113 |
|
Miscellaneous (expense) income, net | (19 | ) | | (99 | ) | | 427 |
| | (82 | ) |
Total |
| $7,844 |
| |
| $5,499 |
| |
| $22,702 |
| |
| $20,867 |
|
| |
(a) | The Company used foreign exchange derivatives to mitigate the risk of fluctuations in foreign exchange rates while awaiting the capital contribution to the New Zealand JV. |
(a)Prior to remeasurement of the Defined Benefit Plan due to the pension settlement, the weighted-average expected long-term rate of return on plan assets used in computing 2024 net periodic benefit cost for benefits was 5.0%. Following the pension settlement, the expected long-term rate of return on plan assets used in computing 2024 net periodic benefit cost for pension benefits is 3.1%.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
16. INCOME TAXES
Rayonier is a REIT under the Internal Revenue Code and therefore generally does not pay U.S. federal or state income tax. As of September 30, 2017March 31, 2024, Rayonier owns a 98.6% interest in the Operating Partnership and December 31, 2016, Rayonier’s inventory was solely comprisedconducts substantially all of finished goods,its timberland operations through the Operating Partnership. The taxable income or loss generated by the Operating Partnership is passed through and reported to its unit holders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return.
Certain operations, including log trading and certain real estate activities, such as follows:the entitlement, development and sale of HBU properties, are conducted through our TRS. The TRS subsidiaries are subject to United States federal and state corporate income tax. The New Zealand timber operations are conducted by the New Zealand subsidiary, which is subject to corporate-level tax at 28% in New Zealand and is treated as a partnership for U.S. income tax purposes.
PROVISION FOR INCOME TAXES |
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Finished goods inventory | | | |
Real estate inventory (a) |
| $19,403 |
| |
| $17,059 |
|
Log inventory | 5,094 |
| | 4,320 |
|
Total inventory |
| $24,497 |
| |
| $21,379 |
|
The Company’s tax expense is principally related to corporate-level tax in New Zealand and non-resident withholding tax on repatriation of earnings from New Zealand. The following table contains the income tax expense recognized on the Consolidated Statements of Income and Comprehensive Income (Loss): | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Income tax benefit (expense) (a) | | | | | $832 | | | ($1,039) | |
(a)The three months ended March 31, 2024 includes a $1.2 million income tax benefit related to the pension settlement.
ANNUAL EFFECTIVE TAX RATE
The Company’s effective tax rate after discrete items is below the 21.0% U.S. statutory rate due to tax benefits associated with being a REIT. The following table contains the Company’s annualized effective tax rate after discrete items:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Annualized effective tax rate after discrete items | | | | | 9.8 | % | | 7.9 | % |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
17. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following table summarizes the changes in AOCI by component for the three months ended March 31, 2024 and the year ended December 31, 2023. All amounts are presented net of tax and exclude portions attributable to noncontrolling interests.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign currency translation (losses) gains | | Net investment hedges of New Zealand subsidiary | | Cash flow hedges | | Employee benefit plans | | Total Rayonier, L.P. | | Allocation of Operating Partnership | | Total Rayonier Inc. |
Balance as of December 31, 2022 | ($18,067) | | | $1,321 | | | $67,204 | | | ($10,209) | | | $40,249 | | | ($4,436) | | | $35,813 | |
Other comprehensive (loss) income before reclassifications | (1,466) | | | — | | | 10,537 | | (a) | (1,449) | | | 7,622 | | | (75) | | | 7,547 | |
Amounts reclassified from accumulated other comprehensive income | — | | | — | | | (21,895) | | | 2,042 | | (b) | (19,853) | | | 1,144 | | | (18,709) | |
Net other comprehensive (loss) Income | (1,466) | | | — | | | (11,358) | | | 593 | | | (12,231) | | | 1,069 | | | (11,162) | |
Balance as of December 31, 2023 | ($19,533) | | | $1,321 | | | $55,846 | | | ($9,616) | | | $28,018 | | | ($3,367) | | | $24,651 | |
Other comprehensive (loss) income before reclassifications | (16,178) | | | — | | | 11,090 | | (a) | 5,110 | | | 22 | | | — | | | 22 | |
Amounts reclassified from accumulated other comprehensive income | — | | | — | | | (7,020) | | | 4,452 | | (b) | (2,568) | | | 265 | | | (2,303) | |
Net other comprehensive (loss) income | (16,178) | | | — | | | 4,070 | | | 9,562 | | | (2,546) | | | 265 | | | (2,281) | |
Balance as of March 31, 2024 | ($35,711) | | | $1,321 | | | $59,916 | | | ($54) | | | $25,472 | | | ($3,102) | | | $22,370 | |
| |
(a) | Represents cost of HBU real estate (including capitalized development investments) expected to be sold within 12 |
months.(a)The three months ended March 31, 2024 includes $15.0 million of other comprehensive income related to interest rate products. The year ended December 31, 2023 included $10.3 million of other comprehensive income related to interest rate products. See Note 57 — Higher And Better Use Timberlands And Real Estate Development InvestmentsDerivative Financial Instruments and Hedging Activities for additional information.(b)This component of other comprehensive income is included in the computation of net periodic pension and post-retirement costs. The three months ended March 31, 2024 includes a pension settlement charge of $4.5 million, net of tax of $1.2 million. The year ended December 31, 2023 includes a $2.0 million pension settlement charge. See Note 15 — Employee Benefit Plansfor additional information. The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the three months ended March 31, 2024 and March 31, 2023: | | | | | | | | | | | | | | | | | | | | |
Details about accumulated other comprehensive income components | | Amount reclassified from accumulated other comprehensive income | | Affected line item in the Income Statement |
| March 31, 2024 | | March 31, 2023 | |
Realized loss (gain) on foreign currency exchange contracts | | $459 | | | ($2,429) | | | Other operating income (expense), net |
Realized loss on foreign currency option contracts | | 8 | | | — | | | Other operating income (expense), net |
Noncontrolling interests | | (108) | | | 559 | | | Comprehensive loss attributable to noncontrolling interests |
Realized gain on interest rate contracts | | (7,278) | | | (3,463) | | | Interest expense, net |
Income tax effect from net (loss) gain on foreign currency contracts | | (101) | | | 525 | | | Income tax benefit (expense) |
| | | | | | |
| | | | | | |
Net gain on cash flow hedges reclassified from accumulated other comprehensive income | | ($7,020) | | | ($4,808) | | | |
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
18. RESTRICTED CASH
Restricted cash includes cash deposited with a like-kind exchange (“LKE”) intermediary. In order to qualify for like-kind exchange (“LKE”)LKE treatment, the proceeds from real estate sales must be deposited with a third-party intermediary. These proceeds are accounted for as restricted cash until a suitable replacement property is acquired. In the event LKE purchases are not completed, the proceeds are returned to the Company after 180 days and reclassified as available cash. As of September 30, 2017 and December 31, 2016, the Company had $10.6 million and $71.7 million, respectively, of proceeds from real estate sales classified asAdditionally, restricted cash which were deposited with an LKE intermediaryincludes cash balances held in escrow as collateral for certain contractual obligations related to our Heartwood development project as well as cash held in escrow for a real estate sale.sales.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheets that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
| | | |
Restricted cash: | | | |
Restricted cash deposited with LKE intermediary | — | | | $1,646 | |
Restricted cash held in escrow | 677 | | | 3,316 | |
Total restricted cash | 677 | | | 4,962 | |
| | | |
| | | |
Cash and cash equivalents | 159,903 | | | 98,774 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | $160,580 | | | $103,736 | |
19. ASSETS HELD FOR SALE
Assets held for sale areis composed of properties not included in inventory which are under contract and expected to be sold within the next 12 months andthat also meet the other relevant held-for saleheld-for-sale criteria in accordance with ASC 360-10-45-9. As of September 30, 2017, there were no properties identified that met this classification. As ofMarch 31, 2024 and December 31, 2016,2023, the basis in properties meeting this classification was $23.2 million.$10.0 million and $9.9 million, respectively. Since the basis in these properties was less than the fair value, including costs to sell, no impairment was recognized.
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
| |
18. | ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) |
The following table summarizes the changes in AOCI by component for the nine months ended September 30, 2017 and the year ended December 31, 2016. All amounts are presented net of tax and exclude portions attributable to noncontrolling interest.
|
| | | | | | | | | | | | | | | | | | | |
| Foreign currency translation gains/ (losses) | | Net investment hedges of New Zealand JV | | Cash flow hedges | | Employee benefit plans | | Total |
Balance as of December 31, 2015 |
| ($2,450 | ) | |
| $6,271 |
| |
| ($11,592 | ) | |
| ($25,732 | ) | |
| ($33,503 | ) |
Other comprehensive income before reclassifications | 7,387 |
| | — |
| | 22,024 |
| | 3,020 |
| (b) | 32,431 |
|
Amounts reclassified from accumulated other comprehensive income | — |
| | (4,606 | ) | | 583 |
| | 2,513 |
| (c) | (1,510 | ) |
Net other comprehensive income/(loss) | 7,387 |
| | (4,606 | ) | | 22,607 |
| | 5,533 |
| | 30,921 |
|
Recapitalization of New Zealand JV | 3,622 |
| | — |
| | (184 | ) | | — |
| | 3,438 |
|
Balance as of December 31, 2016 |
| $8,559 |
| |
| $1,665 |
| |
| $10,831 |
| |
| ($20,199 | ) | |
| $856 |
|
Other comprehensive income before reclassifications | 13,335 |
| | — |
| | 202 |
| (a) | — |
| | 13,537 |
|
Amounts reclassified from accumulated other comprehensive income | — |
| | — |
| | (2,104 | ) | | 349 |
| (c) | (1,755 | ) |
Net other comprehensive income/(loss) | 13,335 |
| | — |
| | (1,902 | ) |
| 349 |
|
| 11,782 |
|
Balance as of September 30, 2017 |
| $21,894 |
| |
| $1,665 |
| |
| $8,929 |
| |
| ($19,850 | ) | |
| $12,638 |
|
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”) | |
(a) | Includes $2.9 million of other comprehensive loss related to interest rate swaps. See Note 11 — Derivative Financial Instruments and Hedging Activities for additional information.
|
| |
(b) | This accumulated other comprehensive income component is comprised of $2.4 million from the annual computation of pension liabilities and a $5.4 million curtailment gain. See Note 15 — Employee Benefit Plansof the 2016 Form 10-Kfor additional information.
|
| |
(c) | This component of other comprehensive income is included in the computation of net periodic pension cost. See Note 13 — Employee Benefit Plansfor additional information.
|
The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the nine months ended September 30, 2017 and September 30, 2016:
|
| | | | | | | | | | |
Details about accumulated other comprehensive income components | | Amount reclassified from accumulated other comprehensive income | | Affected line item in the income statement |
| | September 30, 2017 | | September 30, 2016 | | |
Realized (gain) loss on foreign currency exchange contracts | |
| ($2,928 | ) | |
| $43 |
| | Other operating income, net |
Realized (gain) loss on foreign currency option contracts | | (867 | ) | | 502 |
| | Other operating income, net |
Noncontrolling interest | | 873 |
| | (235 | ) | | Comprehensive income attributable to noncontrolling interest |
Income tax expense (benefit) from (gain) loss on foreign currency contracts | | 818 |
| | (87 | ) | | Income tax expense |
Net (gain) loss from accumulated other comprehensive income | |
| ($2,104 | ) | |
| $223 |
| | |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
| |
19. | CONSOLIDATING FINANCIAL STATEMENTS |
The condensed consolidating financial information below follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in wholly-owned subsidiaries, which are eliminated upon consolidation, and the allocation of certain expenses of Rayonier Inc. incurred for the benefit of its subsidiaries.
In March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022. In connection with these notes, the Company provides the following condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.
The subsidiary guarantors, Rayonier Operating Company LLC (“ROC”) and Rayonier TRS Holdings Inc., are wholly-owned by the parent company, Rayonier Inc. The notes are fully and unconditionally guaranteed on a joint and several basis by the guarantor subsidiaries. |
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
| For the Three Months Ended September 30, 2017 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
SALES | — |
| | — |
| |
| $177,946 |
| | — |
| |
| $177,946 |
|
Costs and Expenses | | | | | | | | | |
Cost of sales | — |
| | — |
| | 136,583 |
| | — |
| | 136,583 |
|
Selling and general expenses | — |
| | 4,096 |
| | 5,840 |
| | — |
| | 9,936 |
|
Other operating expense (income), net | — |
| | 81 |
| | (7,925 | ) | | — |
| | (7,844 | ) |
| — |
| | 4,177 |
| | 134,498 |
| | — |
| | 138,675 |
|
OPERATING (LOSS) INCOME | — |
| | (4,177 | ) | | 43,448 |
| | — |
| | 39,271 |
|
Interest expense | (3,139 | ) | | (4,982 | ) | | (432 | ) | | — |
| | (8,553 | ) |
Interest and miscellaneous income (expense), net | 2,486 |
| | 704 |
| | (2,062 | ) | | — |
| | 1,128 |
|
Equity in income from subsidiaries | 25,341 |
| | 33,929 |
| | — |
| | (59,270 | ) | | — |
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 24,688 |
| | 25,474 |
| | 40,954 |
| | (59,270 | ) | | 31,846 |
|
Income tax expense | — |
| | (133 | ) | | (2,910 | ) | | — |
| | (3,043 | ) |
NET INCOME | 24,688 |
| | 25,341 |
| | 38,044 |
| | (59,270 | ) | | 28,803 |
|
Less: Net income attributable to noncontrolling interest | — |
| | — |
| | 4,115 |
| | — |
| | 4,115 |
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | 24,688 |
| | 25,341 |
| | 33,929 |
| | (59,270 | ) | | 24,688 |
|
OTHER COMPREHENSIVE LOSS | | | | | | |
|
| | |
Foreign currency translation adjustment, net of income tax | (5,866 | ) | | — |
| | (7,317 | ) | | 5,866 |
| | (7,317 | ) |
Cash flow hedges, net of income tax | (1,787 | ) | | (533 | ) | | (1,629 | ) | | 1,787 |
| | (2,162 | ) |
Amortization of pension and postretirement plans, net of income tax | 116 |
| | 116 |
| | — |
| | (116 | ) | | 116 |
|
Total other comprehensive loss | (7,537 | ) | | (417 | ) | | (8,946 | ) | | 7,537 |
| | (9,363 | ) |
COMPREHENSIVE INCOME | 17,151 |
| | 24,924 |
| | 29,098 |
| | (51,733 | ) | | 19,440 |
|
Less: Comprehensive income attributable to noncontrolling interest | — |
| | — |
| | 2,289 |
| | — |
| | 2,289 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC. |
| $17,151 |
| |
| $24,924 |
| |
| $26,809 |
| |
| ($51,733 | ) | |
| $17,151 |
|
| | | | | | | | | |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
| For the Three Months Ended September 30, 2016 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
SALES | — |
| | — |
| |
| $171,421 |
| | — |
| |
| $171,421 |
|
Costs and Expenses | | | | | | |
| | |
Cost of sales | — |
| | — |
| | 116,624 |
| | — |
| | 116,624 |
|
Selling and general expenses | — |
| | 5,904 |
| | 4,703 |
| | — |
| | 10,607 |
|
Other operating expense (income), net | — |
| | 190 |
| | (5,689 | ) | | — |
| | (5,499 | ) |
| — |
| | 6,094 |
| | 115,638 |
| | — |
| | 121,732 |
|
OPERATING (LOSS) INCOME | — |
| | (6,094 | ) | | 55,783 |
| | — |
| | 49,689 |
|
Interest expense | (3,139 | ) | | (5,150 | ) | | (255 | ) | | — |
| | (8,544 | ) |
Interest and miscellaneous income (expense), net | 2,199 |
| | 694 |
| | (2,635 | ) | | — |
| | 258 |
|
Equity in income from subsidiaries | 40,295 |
| | 50,315 |
| | — |
| | (90,610 | ) | | — |
|
INCOME BEFORE INCOME TAXES | 39,355 |
| | 39,765 |
| | 52,893 |
| | (90,610 | ) | | 41,403 |
|
Income tax benefit (expense) | — |
| | 530 |
| | (1,309 | ) | | — |
| | (779 | ) |
NET INCOME | 39,355 |
| | 40,295 |
| | 51,584 |
| | (90,610 | ) | | 40,624 |
|
Less: Net income attributable to noncontrolling interest | — |
| | — |
| | 1,269 |
| | — |
| | 1,269 |
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | 39,355 |
| | 40,295 |
| | 50,315 |
| | (90,610 | ) | | 39,355 |
|
OTHER COMPREHENSIVE INCOME | | | | | | |
|
| | |
Foreign currency translation adjustment, net of income tax | 9,793 |
| | — |
| | 12,020 |
| | (9,791 | ) | | 12,022 |
|
Cash flow hedges, net of income tax | 4,044 |
| | 3,530 |
| | 665 |
| | (4,044 | ) | | 4,195 |
|
Amortization of pension and postretirement plans, net of income tax | 632 |
| | 632 |
| | — |
| | (632 | ) | | 632 |
|
Total other comprehensive income | 14,469 |
| | 4,162 |
| | 12,685 |
| | (14,467 | ) | | 16,849 |
|
COMPREHENSIVE INCOME | 53,824 |
| | 44,457 |
| | 64,269 |
| | (105,077 | ) | | 57,473 |
|
Less: Comprehensive income attributable to noncontrolling interest | — |
| | — |
| | 3,649 |
| | — |
| | 3,649 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC. |
| $53,824 |
| |
| $44,457 |
| |
| $60,620 |
| |
| ($105,077 | ) | |
| $53,824 |
|
| | | | | | | | | |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
| For the Nine Months Ended September 30, 2017 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
SALES | — |
| | — |
| |
| $559,178 |
| | — |
| |
| $559,178 |
|
Costs and Expenses | | | | | | | | | |
Cost of sales | — |
| | — |
| | 416,683 |
| | — |
| | 416,683 |
|
Selling and general expenses | — |
| | 11,880 |
| | 17,891 |
| | — |
| | 29,771 |
|
Other operating expense (income), net | — |
| | 212 |
| | (22,914 | ) | | — |
| | (22,702 | ) |
| — |
| | 12,092 |
| | 411,660 |
| | — |
| | 423,752 |
|
OPERATING (LOSS) INCOME | — |
| | (12,092 | ) | | 147,518 |
| | — |
| | 135,426 |
|
Interest expense | (9,417 | ) | | (14,723 | ) | | (1,460 | ) | | — |
| | (25,600 | ) |
Interest and miscellaneous income (expense), net | 7,033 |
| | 2,087 |
| | (7,470 | ) | | — |
| | 1,650 |
|
Equity in income from subsidiaries | 87,075 |
| | 112,253 |
| | — |
| | (199,328 | ) | | — |
|
INCOME BEFORE INCOME TAXES | 84,691 |
| | 87,525 |
| | 138,588 |
| | (199,328 | ) | | 111,476 |
|
Income tax expense | — |
| | (450 | ) | | (16,367 | ) | | — |
| | (16,817 | ) |
NET INCOME | 84,691 |
| | 87,075 |
| | 122,221 |
| | (199,328 | ) | | 94,659 |
|
Less: Net income attributable to noncontrolling interest | — |
| | — |
| | 9,968 |
| | — |
| | 9,968 |
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | 84,691 |
| | 87,075 |
| | 112,253 |
| | (199,328 | ) | | 84,691 |
|
OTHER COMPREHENSIVE INCOME (LOSS) | | |
|
| | | | | | |
Foreign currency translation adjustment, net of income tax | 13,335 |
| | — |
| | 16,599 |
| | (13,335 | ) | | 16,599 |
|
Cash flow hedges, net of income tax | (1,902 | ) | | (2,921 | ) | | 1,324 |
| | 1,902 |
| | (1,597 | ) |
Amortization of pension and postretirement plans, net of income tax | 349 |
| | 349 |
| | — |
| | (349 | ) | | 349 |
|
Total other comprehensive income (loss) | 11,782 |
| | (2,572 | ) | | 17,923 |
| | (11,782 | ) | | 15,351 |
|
COMPREHENSIVE INCOME | 96,473 |
| | 84,503 |
| | 140,144 |
| | (211,110 | ) | | 110,010 |
|
Less: Comprehensive income attributable to noncontrolling interest | — |
| | — |
| | 13,537 |
| | — |
| | 13,537 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC. |
| $96,473 |
| |
| $84,503 |
| |
| $126,607 |
| |
| ($211,110 | ) | |
| $96,473 |
|
| | | | | | | | | |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
| For the Nine Months Ended September 30, 2016 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
SALES | — |
| | — |
| |
| $567,814 |
| | — |
| |
| $567,814 |
|
Costs and Expenses | | | | | | | | | |
Cost of sales | — |
| | — |
| | 362,790 |
| | — |
| | 362,790 |
|
Selling and general expenses | — |
| | 11,485 |
| | 20,153 |
| | — |
| | 31,638 |
|
Other operating expense (income), net | — |
| | 378 |
| | (21,245 | ) | | — |
| | (20,867 | ) |
| — |
| | 11,863 |
| | 361,698 |
| | — |
| | 373,561 |
|
OPERATING (LOSS) INCOME | — |
| | (11,863 | ) | | 206,116 |
| | — |
| | 194,253 |
|
Interest expense | (9,417 | ) | | (11,678 | ) | | (2,508 | ) | | — |
| | (23,603 | ) |
Interest and miscellaneous income (expense), net | 6,346 |
| | 2,059 |
| | (9,520 | ) | | — |
| | (1,115 | ) |
Equity in income from subsidiaries | 166,719 |
| | 188,588 |
| | — |
| | (355,307 | ) | | — |
|
INCOME BEFORE INCOME TAXES | 163,648 |
| | 167,106 |
| | 194,088 |
| | (355,307 | ) | | 169,535 |
|
Income tax expense | — |
| | (387 | ) | | (1,887 | ) | | — |
| | (2,274 | ) |
NET INCOME | 163,648 |
| | 166,719 |
| | 192,201 |
| | (355,307 | ) | | 167,261 |
|
Less: Net income attributable to noncontrolling interest | — |
| | — |
| | 3,613 |
| | — |
| | 3,613 |
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC. | 163,648 |
| | 166,719 |
| | 188,588 |
| | (355,307 | ) | | 163,648 |
|
OTHER COMPREHENSIVE (LOSS) INCOME | | | | | | | | | |
Foreign currency translation adjustment, net of income tax | 20,529 |
| | (4,607 | ) | | 32,653 |
| | (20,529 | ) | | 28,046 |
|
Cash flow hedges, net of income tax | (22,733 | ) | | (25,458 | ) | | 3,403 |
| | 22,733 |
| | (22,055 | ) |
Amortization of pension and postretirement plans, net of income tax | 1,881 |
| | 1,881 |
| | — |
| | (1,881 | ) | | 1,881 |
|
Total other comprehensive (loss) income | (323 | ) | | (28,184 | ) | | 36,056 |
| | 323 |
| | 7,872 |
|
COMPREHENSIVE INCOME | 163,325 |
| | 138,535 |
| | 228,257 |
| | (354,984 | ) | | 175,133 |
|
Less: Comprehensive income attributable to noncontrolling interest | — |
| | — |
| | 11,808 |
| | — |
| | 11,808 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO RAYONIER INC. |
| $163,325 |
| |
| $138,535 |
| |
| $216,449 |
| |
| ($354,984 | ) | |
| $163,325 |
|
| | | | | | | | | |
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING BALANCE SHEETS |
| As of September 30, 2017 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
ASSETS | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | |
Cash and cash equivalents |
| $63,219 |
| |
| $6,605 |
| |
| $34,238 |
| | — |
| |
| $104,062 |
|
Accounts receivable, less allowance for doubtful accounts | — |
| | 2,764 |
| | 36,644 |
| | — |
| | 39,408 |
|
Insurance settlement receivable | 73,000 |
| | — |
| | — |
| | — |
| | 73,000 |
|
Inventory | — |
| | — |
| | 24,497 |
| | — |
| | 24,497 |
|
Prepaid expenses | — |
| | 1,466 |
| | 15,190 |
| | — |
| | 16,656 |
|
Other current assets | — |
| | 15 |
| | 3,307 |
| | — |
| | 3,322 |
|
Total current assets | 136,219 |
| | 10,850 |
| | 113,876 |
| | — |
| | 260,945 |
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION | — |
| | — |
| | 2,492,049 |
| | — |
| | 2,492,049 |
|
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS | — |
| | — |
| | 79,223 |
| | — |
| | 79,223 |
|
NET PROPERTY, PLANT AND EQUIPMENT | — |
| | (178 | ) | | 23,504 |
| | — |
| | 23,326 |
|
RESTRICTED CASH | — |
| | — |
| | 10,631 |
| | — |
| | 10,631 |
|
INVESTMENT IN SUBSIDIARIES | 1,489,553 |
| | 2,797,221 |
| | — |
| | (4,286,774 | ) | | — |
|
INTERCOMPANY RECEIVABLE | 35,502 |
| | (625,541 | ) | | 590,039 |
| | — |
| | — |
|
OTHER ASSETS | 2 |
| | 6,699 |
| | 38,844 |
| | — |
| | 45,545 |
|
TOTAL ASSETS |
| $1,661,276 |
| |
| $2,189,051 |
| |
| $3,348,166 |
| |
| ($4,286,774 | ) | |
| $2,911,719 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
| | |
CURRENT LIABILITIES | | | | | | |
| | |
Accounts payable | — |
| |
| $3,129 |
| |
| $24,563 |
| | — |
| |
| $27,692 |
|
Insurance settlement payable | 73,000 |
| | — |
| | — |
| | — |
| | 73,000 |
|
Current maturities of long-term debt | — |
| | — |
| | — |
| | — |
| | — |
|
Accrued taxes | — |
| | (19 | ) | | 7,581 |
| | — |
| | 7,562 |
|
Accrued payroll and benefits | — |
| | 3,616 |
| | 3,715 |
| | — |
| | 7,331 |
|
Accrued interest | 6,094 |
| | 1,932 |
| | 6 |
| | — |
| | 8,032 |
|
Other current liabilities | — |
| | 656 |
| | 26,143 |
| | — |
| | 26,799 |
|
Total current liabilities | 79,094 |
| | 9,314 |
| | 62,008 |
| | — |
| | 150,416 |
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS | 323,342 |
| | 663,521 |
| | 43,406 |
| | — |
| | 1,030,269 |
|
PENSION AND OTHER POSTRETIREMENT BENEFITS | — |
| | 32,116 |
| | (685 | ) | | — |
| | 31,431 |
|
OTHER NON-CURRENT LIABILITIES | — |
| | 13,508 |
| | 28,861 |
| | — |
| | 42,369 |
|
INTERCOMPANY PAYABLE | (299,715 | ) | | (18,961 | ) | | 318,676 |
| | — |
| | — |
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY | 1,558,555 |
| | 1,489,553 |
| | 2,797,221 |
| | (4,286,774 | ) | | 1,558,555 |
|
Noncontrolling interest | — |
| | — |
| | 98,679 |
| | — |
| | 98,679 |
|
TOTAL SHAREHOLDERS’ EQUITY | 1,558,555 |
| | 1,489,553 |
| | 2,895,900 |
| | (4,286,774 | ) | | 1,657,234 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $1,661,276 |
| |
| $2,189,051 |
| |
| $3,348,166 |
| |
| ($4,286,774 | ) | |
| $2,911,719 |
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING BALANCE SHEETS |
| As of December 31, 2016 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
ASSETS | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | |
Cash and cash equivalents |
| $21,453 |
| |
| $9,461 |
| |
| $54,995 |
| | — |
| |
| $85,909 |
|
Accounts receivable, less allowance for doubtful accounts | — |
| | 2,991 |
| | 17,673 |
| | — |
| | 20,664 |
|
Inventory | — |
| | — |
| | 21,379 |
| | — |
| | 21,379 |
|
Prepaid expenses | — |
| | 427 |
| | 11,380 |
| | — |
| | 11,807 |
|
Assets held for sale | — |
| | — |
| | 23,171 |
| | — |
| | 23,171 |
|
Other current assets | — |
| | 236 |
| | 1,638 |
| | — |
| | 1,874 |
|
Total current assets | 21,453 |
| | 13,115 |
| | 130,236 |
| | — |
| | 164,804 |
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION | — |
| | — |
| | 2,291,015 |
| | — |
| | 2,291,015 |
|
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS | — |
| | — |
| | 70,374 |
| | — |
| | 70,374 |
|
NET PROPERTY, PLANT AND EQUIPMENT | — |
| | 177 |
| | 13,857 |
| | — |
| | 14,034 |
|
RETRICTED CASH | — |
| | — |
| | 71,708 |
| | — |
| | 71,708 |
|
INVESTMENT IN SUBSIDIARIES | 1,422,081 |
| | 2,671,428 |
| | — |
| | (4,093,509 | ) | | — |
|
INTERCOMPANY RECEIVABLE | 26,472 |
| | (611,571 | ) | | 585,099 |
| | — |
| | — |
|
OTHER ASSETS | 2 |
| | 46,846 |
| | 26,977 |
| | — |
| | 73,825 |
|
TOTAL ASSETS |
| $1,470,008 |
| |
| $2,119,995 |
| |
| $3,189,266 |
| |
| ($4,093,509 | ) | |
| $2,685,760 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | |
Accounts payable | — |
| |
| $1,194 |
| |
| $21,143 |
| | — |
| |
| $22,337 |
|
Current maturities of long-term debt | 31,676 |
| | — |
| | — |
| | — |
| | 31,676 |
|
Accrued taxes | — |
| | (111 | ) | | 2,768 |
| | — |
| | 2,657 |
|
Accrued payroll and benefits | — |
| | 5,013 |
| | 4,264 |
| | — |
| | 9,277 |
|
Accrued interest | 3,047 |
| | 2,040 |
| | 253 |
| | — |
| | 5,340 |
|
Other current liabilities | — |
| | 165 |
| | 20,514 |
| | — |
| | 20,679 |
|
Total current liabilities | 34,723 |
| | 8,301 |
| | 48,942 |
| | — |
| | 91,966 |
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS | 291,390 |
| | 663,343 |
| | 75,472 |
| | — |
| | 1,030,205 |
|
PENSION AND OTHER POSTRETIREMENT BENEFITS | — |
| | 32,541 |
| | (685 | ) | | — |
| | 31,856 |
|
OTHER NON-CURRENT LIABILITIES | — |
| | 12,690 |
| | 22,291 |
| | — |
| | 34,981 |
|
INTERCOMPANY PAYABLE | (267,715 | ) | | (18,961 | ) | | 286,676 |
| | — |
| | — |
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY | 1,411,610 |
| | 1,422,081 |
| | 2,671,428 |
| | (4,093,509 | ) | | 1,411,610 |
|
Noncontrolling interest | — |
| | — |
| | 85,142 |
| | — |
| | 85,142 |
|
TOTAL SHAREHOLDERS’ EQUITY | 1,411,610 |
| | 1,422,081 |
| | 2,756,570 |
| | (4,093,509 | ) | | 1,496,752 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $1,470,008 |
| |
| $2,119,995 |
| |
| $3,189,266 |
| |
| ($4,093,509 | ) | |
| $2,685,760 |
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS |
| For the Nine Months Ended September 30, 2017 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES |
| ($40,090 | ) | |
| $77,358 |
| |
| $149,824 |
| |
| ($219 | ) | |
| $186,873 |
|
INVESTING ACTIVITIES | | | | | | | | | |
Capital expenditures | — |
| | — |
| | (45,731 | ) | | — |
| | (45,731 | ) |
Real estate development investments | — |
| | — |
| | (11,780 | ) | | — |
| | (11,780 | ) |
Purchase of timberlands | — |
| | — |
| | (239,052 | ) | | — |
| | (239,052 | ) |
Net proceeds from large disposition | — |
| | — |
| | 42,029 |
| | — |
| | 42,029 |
|
Rayonier office building under construction | — |
| | — |
| | (5,979 | ) | | — |
| | (5,979 | ) |
Change in restricted cash | — |
| | — |
| | 61,078 |
| | — |
| | 61,078 |
|
Investment in subsidiaries | — |
| | 12,307 |
| | — |
| | (12,307 | ) | | — |
|
Other | — |
| | — |
| | 383 |
| | — |
| | 383 |
|
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES | — |
| | 12,307 |
| | (199,052 | ) | | (12,307 | ) | | (199,052 | ) |
FINANCING ACTIVITIES | | | | | | |
| | |
Issuance of debt | — |
| | 25,000 |
| | 38,389 |
| | — |
| | 63,389 |
|
Repayment of debt | — |
| | (15,000 | ) | | (80,216 | ) | | — |
| | (95,216 | ) |
Dividends paid | (95,008 | ) | | — |
| | — |
| | — |
| | (95,008 | ) |
Proceeds from the issuance of common shares under incentive stock plan | 3,665 |
| | — |
| | — |
| | — |
| | 3,665 |
|
Proceeds from the issuance of common shares under equity offering | 152,390 |
| | — |
| | — |
| | — |
| | 152,390 |
|
Repurchase of common shares | — |
| | — |
| | — |
| | — |
| | — |
|
Issuance of intercompany notes | (32,000 | ) | | — |
| | 32,000 |
| | — |
| | — |
|
Intercompany distributions | 52,809 |
| | (102,521 | ) | | 37,405 |
| | 12,307 |
| | — |
|
Other | — |
| | — |
| | — |
| | — |
| | — |
|
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 81,856 |
| | (92,521 | ) | | 27,578 |
| | 12,307 |
| | 29,220 |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH | — |
| | — |
| | 893 |
| | 219 |
| | 1,112 |
|
CASH AND CASH EQUIVALENTS | | | | | | |
| | |
Change in cash and cash equivalents | 41,766 |
| | (2,856 | ) | | (20,757 | ) | | — |
| | 18,153 |
|
Balance, beginning of year | 21,453 |
| | 9,461 |
| | 54,995 |
| | — |
| | 85,909 |
|
Balance, end of period |
| $63,219 |
| |
| $6,605 |
| |
| $34,238 |
| | — |
| |
| $104,062 |
|
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
| | | | | | | | | | | | | | | | | | |
| CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS |
| For the Nine Months Ended September 30, 2016 |
| Rayonier Inc. (Parent Issuer) | | Subsidiary Guarantors | | Non- guarantors | | Consolidating Adjustments | | Total Consolidated |
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES |
| ($578 | ) | |
| $26,589 |
| |
| $137,897 |
| | — |
| |
| $163,908 |
|
INVESTING ACTIVITIES | | | | | | | | | |
Capital expenditures | — |
| | — |
| | (40,246 | ) | | — |
| | (40,246 | ) |
Real estate development investments | — |
| | — |
| | (4,815 | ) | | — |
| | (4,815 | ) |
Purchase of timberlands | — |
| | — |
| | (353,828 | ) | | — |
| | (353,828 | ) |
Assets purchased in business acquisition | — |
| | — |
| | (1,113 | ) | | — |
| | (1,113 | ) |
Net proceeds from large disposition | — |
| | — |
| | 126,965 |
| | — |
| | 126,965 |
|
Rayonier office building under construction | — |
| | — |
| | (3,933 | ) | | — |
| | (3,933 | ) |
Change in restricted cash | — |
| | — |
| | 22,430 |
| | — |
| | 22,430 |
|
Investment in subsidiaries | — |
| | (285,937 | ) | | — |
| | 285,937 |
| | — |
|
Other | — |
| | — |
| | 444 |
| | — |
| | 444 |
|
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES | — |
| | (285,937 | ) | | (254,096 | ) | | 285,937 |
| | (254,096 | ) |
FINANCING ACTIVITIES | | | | | | | | | |
Issuance of debt | — |
| | 548,000 |
| | 146,096 |
| | — |
| | 694,096 |
|
Repayment of debt | — |
| | (140,000 | ) | | (314,419 | ) | | — |
| | (454,419 | ) |
Dividends paid | (92,095 | ) | | — |
| | — |
| | — |
| | (92,095 | ) |
Proceeds from the issuance of common shares | 889 |
| | — |
| | — |
| | — |
| | 889 |
|
Repurchase of common shares | (690 | ) | | — |
| | — |
| | — |
| | (690 | ) |
Debt issuance costs | — |
| | (818 | ) | | — |
| | — |
| | (818 | ) |
Issuance of intercompany notes | (12,000 | ) | | — |
| | 12,000 |
| | — |
| | — |
|
Intercompany distributions | 162,107 |
| | (155,731 | ) | | 279,561 |
| | (285,937 | ) | | — |
|
Other | (139 | ) | | — |
| | — |
| | — |
| | (139 | ) |
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 58,072 |
| | 251,451 |
| | 123,238 |
| | (285,937 | ) | | 146,824 |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH | — |
| | — |
| | 1,626 |
| | — |
| | 1,626 |
|
CASH AND CASH EQUIVALENTS | | | | | | | | | |
Change in cash and cash equivalents | 57,494 |
| | (7,897 | ) | | 8,665 |
| | — |
| | 58,262 |
|
Balance, beginning of year | 2,472 |
| | 13,217 |
| | 36,088 |
| | — |
| | 51,777 |
|
Balance, end of period |
| $59,966 |
| |
| $5,320 |
| |
| $44,753 |
| | — |
| |
| $110,039 |
|
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
When we refer to “we,” “us,” “our,”“Rayonier” or “the Company,” or “Rayonier,”Company” we mean Rayonier Inc. and its consolidated subsidiaries. References to the “Operating Partnership” mean Rayonier, L.P. and its consolidated subsidiaries. References to “we,” “us,” or “our,” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership.References herein to “Notes to Financial Statements” refer to the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P. included in Item 1 of this report.
This MD&A is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors which may affect future results. Our MD&A should be read in conjunction with our Consolidated Financial Statements included in Item 1 of this report, our Annual Report on Form 10-K for the year ended December 31, 20162023 (the “2016“2023 Form 10-K”) and information contained in our subsequent reports filed with the Securities and Exchange Commission (the “SEC”).
Forward-Looking StatementsFORWARD-LOOKING STATEMENTS
Certain statements in this document regarding anticipated financial outcomes, including Rayonier’sour earnings guidance, if any, business and market conditions, outlook, expected dividend rate, Rayonier’sour business strategies, including expected harvest schedules, timberland acquisitions sales of non-strategic timberlands,and dispositions, the anticipated benefits of Rayonier’sour business strategies, and other similar statements relating to Rayonier’sour 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 risk factors contained in Item 1A — Risk Factors in the 2016our 2023 Form 10-K, and similar discussions included in other reports that we subsequently file with the SEC, among others, could cause actual results or events to differ materially from the Company’sour historical experience and those expressed in forward-looking statements made in this document.
Forward-looking statements are only as of the date they are made, and the Company undertakeswe undertake no duty to update itsour forward-looking statements except as required by law. You are advised, however, to review any subsequent disclosures the Company makeswe make on related subjects in its subsequent reports filed with the SEC.
Non-GAAP MeasuresNON-GAAP MEASURES
To supplement Rayonier’sour financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Rayonier useswe use certain non-GAAP measures, including “cash available“Cash Available for distribution,Distribution,” and “Adjusted EBITDA,” which are defined and further explained in Performance and Liquidity Indicators below. Reconciliation of such measures to the nearest GAAP measures can also be found in Performance and Liquidity Indicators below. Rayonier’sOur 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.
OBJECTIVE
The objective of the Management’s Discussion and Analysis is to detail material information, events, uncertainties and other factors impacting the Company and the Operating Partnership and to provide investors an understanding of “Management’s perspective.” Item 2, Management’s Discussion and Analysis highlights the critical areas for evaluating our performance which includes a discussion on the reportable segments, liquidity and capital, and critical accounting estimates. The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and notes.
OUR COMPANY
Our Company
We are a leading timberland real estate investment trust (“REIT”) with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. We invest in timberlands and actively manage them to provide current income and attractive long-term returns to our shareholders. We conduct our business through an umbrella partnership real estate investment trust (“UPREIT”) structure in which our assets are owned by our Operating Partnership and its subsidiaries. Rayonier manages the Operating Partnership as its sole general partner. Our revenues, operating income and cash flows are primarily derived from the following core business segments: Southern Timber, Pacific Northwest Timber, New Zealand Timber, Real Estate, and Trading. As of September 30, 2017,March 31, 2024, we owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.9(1.85 million acres) and, U.S. Pacific Northwest (378,000(418,000 acres). We also have a 77% ownership interest in Matariki Forestry Group, a joint venture (the “New and New Zealand JV”), that owns(422,000 gross acres or leases approximately 429,000 acres (294,000297,000 net plantable acres) of timberlands in New Zealand..
SEGMENT INFORMATION
The Southern Timber, Pacific Northwest Timber and New Zealand Timber segments include all activities related to the harvesting of timber and other non-timber incomevalue-added activities such as the licensing of properties for hunting, and the leasing of properties for mineral extraction and cell towers. Thetowers, the sale of carbon credits, and revenue from land-based solutions such as carbon capture and storage, solar, and wind energy. Our New Zealand operations are conducted by Matariki Forestry Group, a joint venture (the “New Zealand subsidiary”), in which we maintain a 77% ownership interest. See Note 4 - Noncontrolling Interests for additional information regarding our noncontrolling interests in the New Zealand Timber segment also reflects any land or leasehold sales that occur within our New Zealand portfolio.segment. The Real Estate segment includes all U.S. and New Zealand land or leasehold sales disaggregated into fivesix sales categories: Improved Development, Unimproved Development, Rural, Timberland & Non-Strategic, / TimberlandsConservation Easements and Large Dispositions. It also includes residential and commercial lease activity, primarily in the town of Port Gamble, Washington.
The Trading segment primarily reflects the log trading activities that supportin New Zealand and Australia conducted by our New Zealand operations.subsidiary. It also includes log trading activities conducted from the U.S. South and Pacific Northwest. Our Trading segment activities include an export services joint venture with a third-party forest manager in which Matariki Forests Trading Ltd maintains a 50% ownership interest. The Trading segment complements the New Zealand Timber segment by addingproviding added market intelligence, increasing the scale of export operations and achieving cost savings that directly benefit the New Zealand Timber segment. Trading also generally contributes modestly to earnings without significant investment and providesThis additional market intelligence thatalso benefits our Southern and Pacific Northwest export log marketing.
ENVIRONMENTAL MATTERS
Industry and Market Conditions
INDUSTRY AND MARKET CONDITIONS
The demand for timber is directly related to the underlying demand for pulp, paper, packaging, lumber and other wood products. The significant majority of timber sold in our Southern Timber segment is consumed domestically. With a higher proportion of pulpwood, our Southern Timber segment relies heavily on downstream markets for pulp and paper, and to a lesser extent wood pellet markets. Our Pacific Northwest Timber segment relies primarily on domestic customers but also exports a significant volume of timber particularly to China. Both theChina and Japan. The Southern Timber and Pacific Northwest Timber segments rely on the strength of U.S. lumber markets as well as underlying housing starts. Our New Zealand Timber segment sells timber to domestic New Zealand wood products mills and also exports a significant portion of its volume to Asian markets, particularly in China and South Korea and India.Korea. In addition to market dynamics in the Pacific Rim, the New Zealand Timber segment is subject to foreign exchange fluctuations, which can impact the operating results of the segment in U.S. dollar terms.
The CompanyPricing in our timber segments is influenced by macroeconomic factors, including residential construction activity, and can also vary considerably on a local level based on weather, the available inventory of logs, mill demand, and export market access. In our Southern Timber segment, weather-related constraints on competing supply benefited first quarter harvest volumes and net stumpage realizations. In our Pacific Northwest Timber segment, weighted-average delivered log prices remain under pressure due to weaker domestic demand and reduced export market tension. In our New Zealand Timber segment, lower levels of construction activity in China continue to negatively impact export market demand and prices.
We are also subject to the risk of price fluctuations in itscertain of our cost components, primarily logging and transportation (cut and haul), ocean freight and demurrage costs. Other major cost components. The primary components of the Company'sour cost of sales are the cost basis of timber sold (depletion), and the cost basis of real estate sold and logging and transportation costs (cut and haul).sold. Depletion includes the amortization of capitalized costs (sitesite preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll costs).costs. The cost basis of real estate sold includes the cost basis in land and costs directly associated with the development and construction of identified real estate projects, such as infrastructure, roadways, utilities, amenities and/or other improvements. Other costs include amortization of capitalized costs related to road and bridge construction and software, depreciation of fixed assets and equipment, road maintenance, severance and excise taxes, fire prevention and real estate commissions and closing costs.
Our Real Estate segment is exposed to changes in interest and mortgage rates as higher rates could negatively impact buyer demand for the properties we sell. However, our improved development projects, specifically Wildlight, our development project north of Jacksonville, Florida, and Heartwood, our development project south of Savannah, Georgia, continue to benefit from favorable migration and demographic trends, which have thus far outweighed the impacts of higher interest rates.
Critical Accounting Policies and Use of EstimatesCRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable. Actual results may differ from these estimates. For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2016our 2023 Form 10-K.
ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. When developed land is sold, costs are allocated to each sold unit or lot based upon the relative sales value. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated periodically throughout the year, with adjustments being allocated prospectively to the remaining units available for sale.
DISCUSSION OF TIMBER INVENTORY AND SUSTAINABLE YIELD Discussion of Timber Inventory and Sustainable Yield
See Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield in the 2016our 2023 Form 10-K.
OUR TIMBERLANDS
Our Timberlands
Our timber operations are disaggregated into three geographically distinct segments: Southern Timber, Pacific Northwest Timber and New Zealand Timber. The following table providestables provide a breakdown of our timberland holdings as of September 30, 2017March 31, 2024 and December 31, 2016:2023:
|
| | | | | | | | | | | | | | | | | |
(acres in 000s) | As of September 30, 2017 | | As of December 31, 2016 |
| Owned | | Leased | | Total | | Owned | | Leased | | Total |
Southern | | | | | | | | | | | |
Alabama | 254 |
| | 24 |
| | 278 |
| | 284 |
| | 24 |
| | 308 |
|
Arkansas | — |
| | 13 |
| | 13 |
| | — |
| | 14 |
| | 14 |
|
Florida | 281 |
| | 101 |
| | 382 |
| | 281 |
| | 92 |
| | 373 |
|
Georgia | 618 |
| | 104 |
| | 722 |
| | 554 |
| | 107 |
| | 661 |
|
Louisiana | 144 |
| | 1 |
| | 145 |
| | 145 |
| | 1 |
| | 146 |
|
Mississippi | 67 |
| | — |
| | 67 |
| | 67 |
| | — |
| | 67 |
|
Oklahoma | 92 |
| | — |
| | 92 |
| | 92 |
| | — |
| | 92 |
|
South Carolina | 18 |
| | — |
| | 18 |
| | — |
| | — |
| | — |
|
Tennessee | 1 |
| | — |
| | 1 |
| | 1 |
| | — |
| | 1 |
|
Texas | 182 |
| | — |
| | 182 |
| | 187 |
| | — |
| | 187 |
|
| 1,657 |
|
| 243 |
|
| 1,900 |
| | 1,611 |
| | 238 |
| | 1,849 |
|
| | | | | | | | | | | |
Pacific Northwest | | | | | | | | | | | |
Oregon | 61 |
| | — |
| | 61 |
| | 61 |
| | — |
| | 61 |
|
Washington | 316 |
| | 1 |
| | 317 |
| | 316 |
| | 1 |
| | 317 |
|
| 377 |
| | 1 |
| | 378 |
| | 377 |
| | 1 |
| | 378 |
|
| | | | | | | | | | | |
New Zealand (a) | 179 |
| | 250 |
| | 429 |
| | 179 |
| | 254 |
| | 433 |
|
Total | 2,213 |
| | 494 |
| | 2,707 |
| | 2,167 |
| | 493 |
| | 2,660 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
(acres in 000s) | As of March 31, 2024 | | | As of December 31, 2023 | | |
| Owned | | Leased | | Total | | | Owned | | Leased | | Total | | |
Southern | | | | | | | | | | | | | | |
Alabama | 250 | | | 5 | | | 255 | | | | 250 | | | 5 | | | 255 | | | |
Arkansas | — | | | 2 | | | 2 | | | | — | | | 2 | | | 2 | | | |
Florida | 361 | | | 36 | | | 397 | | | | 361 | | | 36 | | | 397 | | | |
Georgia | 612 | | | 50 | | | 662 | | | | 612 | | | 50 | | | 662 | | | |
Louisiana | 146 | | | — | | | 146 | | | | 147 | | | — | | | 147 | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Oklahoma | 91 | | | — | | | 91 | | | | 91 | | | — | | | 91 | | | |
South Carolina | 15 | | | — | | | 15 | | | | 16 | | | — | | | 16 | | | |
| | | | | | | | | | | | | | |
Texas | 281 | | | — | | | 281 | | | | 282 | | | — | | | 282 | | | |
| 1,756 | | | 93 | | | 1,849 | | | | 1,759 | | | 93 | | | 1,852 | | | |
| | | | | | | | | | | | | | |
Pacific Northwest | | | | | | | | | | | | | | |
Oregon | 6 | | | — | | | 6 | | | | 6 | | | — | | | 6 | | | |
Washington | 408 | | | 4 | | | 412 | | | | 408 | | | 4 | | | 412 | | | |
| 414 | | | 4 | | | 418 | | | | 414 | | | 4 | | | 418 | | | |
| | | | | | | | | | | | | | |
New Zealand (a) | 188 | | | 234 | | | 422 | | | | 188 | | | 233 | | | 421 | | | |
Total | 2,358 | | | 331 | | | 2,689 | | | | 2,361 | | | 330 | | | 2,691 | | | |
| |
(a) | Represents legal acres owned and leased by the New Zealand JV, in which Rayonier owns a 77% interest. As of September 30, 2017, legal acres in New Zealand were comprised of 294,000 plantable acres and 135,000 non-productive acres. |
(a)Represents legal acres owned and leased by the New Zealand subsidiary, in which we own a 77% interest. As of March 31, 2024, legal acres in New Zealand consisted of 297,000 plantable acres and 125,000 non-productive acres.
The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 20162023 to September 30, 2017:March 31, 2024:
| | (acres in 000s) | Acres Owned | (acres in 000s) | Acres Owned |
| December 31, 2016 | | Acquisitions | | Sales | | September 30, 2017 |
| December 31, 2023 | | | December 31, 2023 | | Acquisitions | | Sales | | Other | | March 31, 2024 |
Southern | | | | | | | |
Alabama | |
Alabama | |
Alabama | 284 |
| | — |
| | (30 | ) | | 254 |
|
Florida | 281 |
| | 5 |
| | (5 | ) | | 281 |
|
Georgia | 554 |
| | 64 |
| | — |
| | 618 |
|
Louisiana | 145 |
| | — |
| | (1 | ) | | 144 |
|
Mississippi | 67 |
| | — |
| | — |
| | 67 |
|
| Oklahoma | |
Oklahoma | |
Oklahoma | 92 |
| | — |
| | — |
| | 92 |
|
South Carolina | — |
| | 18 |
| | — |
| | 18 |
|
Tennessee | 1 |
| | — |
| | — |
| | 1 |
|
| Texas | 187 |
| | — |
| | (5 | ) | | 182 |
|
| 1,611 |
| | 87 |
| | (41 | ) | | 1,657 |
|
Texas | |
Texas | |
| 1,759 | |
| | | | | | | |
Pacific Northwest | | | | | | | |
Pacific Northwest | |
Pacific Northwest | |
Oregon | |
Oregon | |
Oregon | 61 |
| | — |
| | — |
| | 61 |
|
Washington | 316 |
| | — |
| | — |
| | 316 |
|
| 377 |
| | — |
| | — |
| | 377 |
|
| 414 | |
| | | | | | | |
New Zealand (a) | 179 |
| | — |
| | — |
| | 179 |
|
New Zealand (a) | |
New Zealand (a) | |
Total | 2,167 |
| | 87 |
| | (41 | ) | | 2,213 |
|
(a)Represents legal acres owned by the New Zealand subsidiary, in which we have a 77% interest.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(acres in 000s) | Acres Leased |
| December 31, 2023 | | New Leases | | Sold/Expired Leases | | Other (a) | | March 31, 2024 |
Southern | | | | | | | | | |
Alabama | 5 | | | — | | | — | | | — | | | 5 | |
Arkansas | 2 | | | — | | | — | | | — | | | 2 | |
Florida | 36 | | | — | | | — | | | — | | | 36 | |
Georgia | 50 | | | — | | | — | | | — | | | 50 | |
| | | | | | | | | |
| 93 | | | — | | | — | | | — | | | 93 | |
| | | | | | | | | |
Pacific Northwest | | | | | | | | | |
Washington (b) | 4 | | | — | | | — | | | — | | | 4 | |
| | | | | | | | | |
New Zealand (c) | 233 | | — | | | — | | | 1 | | | 234 | |
Total | 330 | | | — | | | — | | | 1 | | | 331 | |
(a)Includes adjustments for land mapping reviews.
| |
(a) | Represents legal acres owned by the New Zealand JV, in which Rayonier has a 77% interest. |
(b)Primarily timber reservations acquired in the merger with Pope Resources.
(c)Represents legal acres leased by the New Zealand subsidiary, in which we have a 77% interest.
|
| | | | | | | | | | | |
(acres in 000s) | Acres Leased |
| December 31, 2016 | | New Leases | | Leases Sold/ Expired (a) | | September 30, 2017 |
Southern | | | | | | | |
Alabama | 24 |
| | — |
| | — |
| | 24 |
|
Arkansas | 14 |
| | — |
| | (1 | ) | | 13 |
|
Florida | 92 |
| | 10 |
| | (1 | ) | | 101 |
|
Georgia | 107 |
| | — |
| | (3 | ) | | 104 |
|
Louisiana | 1 |
| | — |
| | — |
| | 1 |
|
| 238 |
| | 10 |
| | (5 | ) | | 243 |
|
| | | | | | | |
Pacific Northwest | | | | | | | |
Washington | 1 |
| | — |
| | — |
| | 1 |
|
| | | | | | | |
New Zealand (b) | 254 |
| | 8 |
| | (12 | ) | | 250 |
|
Total | 493 |
| | 18 |
| | (17 | ) | | 494 |
|
| |
(a) | Includes acres previously under lease that have been harvested or expired. |
| |
(b) | Represents legal acres leased by the New Zealand JV, in which Rayonier has a 77% interest. |
RESULTS OF OPERATIONS
Results of Operations
Consolidated ResultsCONSOLIDATED RESULTS
The following table provides key financial information by segment and on a consolidated basis:
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Financial Information (in millions) | 2017 | | 2016 | | 2017 | | 2016 |
Sales | | | | | | | |
Southern Timber |
| $31.9 |
| |
| $27.8 |
| |
| $95.4 |
| |
| $102.2 |
|
Pacific Northwest Timber | 18.6 |
| | 16.1 |
| | 62.9 |
| | 52.3 |
|
New Zealand Timber | 69.9 |
| | 42.2 |
| | 187.8 |
| | 126.0 |
|
Real Estate | | | | | | | |
Improved Development | 0.1 |
| | — |
| | 0.2 |
| | 1.7 |
|
Unimproved Development | 13.9 |
| | 1.4 |
| | 16.4 |
| | 2.2 |
|
Rural | 3.1 |
| | 6.4 |
| | 15.3 |
| | 17.4 |
|
Non-Strategic / Timberlands | 0.2 |
| | 52.8 |
| | 23.3 |
| | 60.5 |
|
Large Dispositions | — |
| | — |
| | 42.0 |
| | 129.5 |
|
Total Real Estate | 17.3 |
| | 60.6 |
| | 97.2 |
| | 211.3 |
|
Trading | 40.2 |
| | 24.7 |
| | 115.9 |
| | 76.0 |
|
Total Sales |
| $177.9 |
| |
| $171.4 |
| |
| $559.2 |
| |
| $567.8 |
|
| | | | | | | |
Operating Income (Loss) | | | | | | | |
Southern Timber |
| $11.5 |
| |
| $8.2 |
| |
| $35.0 |
| |
| $35.0 |
|
Pacific Northwest Timber | 1.1 |
| | (3.3 | ) | | (1.3 | ) | | (0.9 | ) |
New Zealand Timber | 19.3 |
| | 6.6 |
| | 56.3 |
| | 21.4 |
|
Real Estate (a) | 11.4 |
| | 43.1 |
| | 57.3 |
| | 153.0 |
|
Trading | 1.1 |
| | 0.5 |
| | 3.4 |
| | 1.5 |
|
Corporate and other | (5.1 | ) |
| (5.4 | ) |
| (15.3 | ) |
| (15.7 | ) |
Operating Income | 39.3 |
| | 49.7 |
| | 135.4 |
| | 194.3 |
|
Interest expense, interest income and other | (7.5 | ) |
| (8.3 | ) |
| (23.9 | ) |
| (24.8 | ) |
Income tax expense | (3.0 | ) | | (0.8 | ) | | (16.8 | ) | | (2.2 | ) |
Net Income | 28.8 |
| | 40.6 |
| | 94.7 |
| | 167.3 |
|
Less: Net income attributable to noncontrolling interest | 4.1 |
| | 1.2 |
| | 10.0 |
| | 3.7 |
|
Net Income Attributable to Rayonier Inc. |
| $24.7 |
| |
| $39.4 |
| |
| $84.7 |
| |
| $163.6 |
|
| | | | | | | |
Adjusted EBITDA (b) | | | | | | | |
Southern Timber |
| $24.2 |
| |
| $18.2 |
| |
| $72.1 |
| |
| $72.1 |
|
Pacific Northwest Timber | 7.6 |
| | 3.4 |
| | 22.5 |
| | 14.1 |
|
New Zealand Timber | 28.4 |
| | 12.6 |
| | 86.0 |
| | 40.5 |
|
Real Estate | 13.4 |
| | 56.6 |
| | 43.5 |
| | 74.0 |
|
Trading | 1.1 |
| | 0.5 |
| | 3.4 |
| | 1.5 |
|
Corporate and Other | (4.8 | ) | | (4.1 | ) | | (14.1 | ) | | (14.4 | ) |
Total Adjusted EBITDA |
| $69.9 |
| |
| $87.2 |
| |
| $213.4 |
| |
| $187.8 |
|
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
Financial Information (in millions) | | | | | 2024 | | 2023 |
Sales | | | | | | | |
Southern Timber | | | | | $70.0 | | | $71.8 | |
Pacific Northwest Timber | | | | | 25.2 | | | 34.4 | |
New Zealand Timber | | | | | 45.7 | | | 44.1 | |
| | | | | | | |
Real Estate | | | | | | | |
Improved Development | | | | | 1.8 | | | 4.8 | |
| | | | | | | |
Rural | | | | | 8.7 | | | 6.5 | |
Timberland & Non-Strategic | | | | | 0.6 | | | 1.6 | |
| | | | | | | |
Deferred Revenue/Other (a) | | | | | 4.4 | | | 3.3 | |
| | | | | | | |
Total Real Estate | | | | | 15.6 | | | 16.3 | |
Trading | | | | | 11.8 | | | 12.6 | |
Intersegment Eliminations | | | | | (0.1) | | | (0.1) | |
Total Sales | | | | | $168.1 | | | $179.1 | |
| | | | | | | |
Operating Income (Loss) | | | | | | | |
Southern Timber | | | | | $23.0 | | | $22.2 | |
Pacific Northwest Timber | | | | | (4.4) | | | (3.5) | |
New Zealand Timber (b) | | | | | 7.4 | | | (0.7) | |
| | | | | | | |
Real Estate | | | | | (0.1) | | | 0.9 | |
Trading | | | | | — | | | 0.3 | |
Corporate and Other | | | | | (9.8) | | | (8.6) | |
Operating Income | | | | | 16.2 | | | 10.6 | |
Interest expense, net | | | | | (9.7) | | | (11.7) | |
Interest and other miscellaneous (expense) income, net (c) | | | | | (5.0) | | | 9.6 | |
Income tax benefit (expense) (d) | | | | | 0.8 | | | (1.1) | |
Net Income | | | | | 2.3 | | | 7.4 | |
Less: Net (income) loss attributable to noncontrolling interests in consolidated affiliates | | | | | (0.9) | | | 1.1 | |
Net Income Attributable to Rayonier, L.P. | | | | | $1.4 | | | $8.5 | |
Less: Net income attributable to noncontrolling interests in the operating partnership | | | | | — | | | (0.2) | |
Net Income Attributable to Rayonier Inc. | | | | | $1.4 | | | $8.3 | |
| | | | | | | |
Adjusted EBITDA (e) | | | | | | | |
Southern Timber | | | | | $44.8 | | | $42.8 | |
Pacific Northwest Timber | | | | | 4.7 | | | 7.1 | |
New Zealand Timber | | | | | 11.4 | | | 6.1 | |
| | | | | | | |
Real Estate | | | | | 4.6 | | | 6.6 | |
Trading | | | | | — | | | 0.3 | |
Corporate and Other | | | | | (9.3) | | | (8.2) | |
Total Adjusted EBITDA | | | | | $56.2 | | | $54.7 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| |
(a) | The nine months ended September 30, 2017 and September 30, 2016 included Large Dispositions of $28.2 million and $101.3 million, respectively. |
| |
(b) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
|
(a)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
(b)The three months ended March 31, 2023 includes $2.3 million of timber write-offs resulting from casualty events.
(c)The three months ended March 31, 2024 includes $5.7 million of pension settlement charges and $1.3 million of net costs associated with legal settlements. The three months ended March 31, 2023 includes $9.1 million of net recoveries associated with legal settlements.
(d)The three months ended March 31, 2024 includes a $1.2 million income tax benefit related to the pension settlement.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Southern Timber Overview | 2017 | | 2016 | | 2017 | | 2016 |
Sales Volume (in thousands of tons) | | | | | | | |
Pine Pulpwood | 818 |
| | 634 |
| | 2,405 |
| | 2,610 |
|
Pine Sawtimber | 469 |
| | 333 |
| | 1,494 |
| | 1,195 |
|
Total Pine Volume | 1,287 |
| | 967 |
| | 3,899 |
| | 3,805 |
|
Hardwood | 69 |
| | 123 |
| | 193 |
| | 227 |
|
Total Volume | 1,356 |
| | 1,090 |
| | 4,092 |
| | 4,032 |
|
| | | | | | | |
Percentage Delivered Sales | 23 | % | | 32 | % | | 21 | % | | 27 | % |
Percentage Stumpage Sales | 77 | % | | 68 | % | | 79 | % | | 73 | % |
| | | | | | | |
Net Stumpage Pricing (dollars per ton) | | | | | | | |
Pine Pulpwood | $16.32 |
| |
| $17.36 |
| |
| $16.43 |
| |
| $18.34 |
|
Pine Sawtimber | 25.93 |
| | 26.17 |
| | 25.99 |
| | 26.74 |
|
Weighted Average Pine | $19.83 |
| |
| $20.40 |
| |
| $20.10 |
| |
| $20.98 |
|
Hardwood | 15.98 |
| | 14.84 |
| | 13.02 |
| | 13.38 |
|
Weighted Average Total | $19.63 |
| |
| $19.76 |
| |
| $19.76 |
| |
| $20.54 |
|
| | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | |
Sales | $31.9 |
| |
| $27.8 |
| |
| $95.4 |
| |
| $102.2 |
|
Less: Cut and Haul | (5.3 | ) | | (6.3 | ) | | (14.6 | ) | | (19.4 | ) |
Net Stumpage Sales | $26.6 |
| |
| $21.5 |
| |
| $80.8 |
| |
| $82.8 |
|
| | | | | | | |
Operating Income |
| $11.5 |
| |
| $8.2 |
| |
| $35.0 |
| |
| $35.0 |
|
(+) Depreciation, depletion and amortization | 12.7 |
| | 10.0 |
| | 37.1 |
| | 37.1 |
|
Adjusted EBITDA (a) |
| $24.2 |
| |
| $18.2 |
| |
| $72.1 |
| |
| $72.1 |
|
| | | | | | | |
Other Data | | | | | | | |
Non-Timber Income (in millions of dollars) (b) | $5.1 |
| |
| $3.9 |
| |
| $15.2 |
| |
| $13.4 |
|
Period-End Acres (in thousands) | 1,900 |
| | 1,885 |
| | 1,900 |
| | 1,885 |
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
Southern Timber Overview | 2024 | | 2023 | | | | |
Sales Volume (in thousands of tons) | | | | | | | |
Pine Pulpwood | 1,016 | | | 979 | | | | | |
Pine Sawtimber | 922 | | | 886 | | | | | |
Total Pine Volume | 1,938 | | | 1,865 | | | | | |
Hardwood | 69 | | | 28 | | | | | |
Total Volume | 2,007 | | | 1,893 | | | | | |
| | | | | | | |
% Delivered Volume (vs. Total Volume) | 30 | % | | 36 | % | | | | |
% Pine Sawtimber Volume (vs. Total Pine Volume) | 48 | % | | 48 | % | | | | |
% Export Volume (vs. Total Volume) (a) | 1 | % | | 2 | % | | | | |
| | | | | | | |
Net Stumpage Pricing (dollars per ton) | | | | | | | |
Pine Pulpwood | $16.89 | | | $17.32 | | | | | |
Pine Sawtimber | 30.62 | | | 31.57 | | | | | |
Weighted Average Pine | $23.42 | | | $24.09 | | | | | |
Hardwood | 13.35 | | | 20.07 | | | | | |
Weighted Average Total | $23.07 | | | $24.03 | | | | | |
| | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | |
Timber Sales | $60.9 | | | $62.4 | | | | | |
Less: Cut and Haul | (13.4) | | | (15.7) | | | | | |
Less: Port and Freight | (1.2) | | | (1.5) | | | | | |
Net Stumpage Sales | $46.3 | | | $45.3 | | | | | |
| | | | | | | |
Land-Based Solutions (b) | 1.7 | | | 0.8 | | | | | |
Other Non-Timber Sales | 7.4 | | | 8.6 | | | | | |
Total Sales | $70.0 | | | $71.8 | | | | | |
| | | | | | | |
Operating Income | $23.0 | | | $22.2 | | | | | |
| | | | | | | |
(+) Depreciation, depletion and amortization | 21.8 | | | 20.6 | | | | | |
Adjusted EBITDA (c) | $44.8 | | | $42.8 | | | | | |
| | | | | | | |
Other Data | | | | | | | |
| | | | | | | |
Period-End Acres (in thousands) | 1,849 | | | 1,910 | | | | | |
| |
(a) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
|
| |
(b) | Non-Timber Income is presented net of direct charges and excludes allocated overhead. |
(a)Estimated percentage of export volume, which includes volumes sold to third-party exporters in addition to direct exports through our log export program.
(b)Consists of sales from carbon capture and storage (“CCS”), solar and wind energy contracts.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
Pacific Northwest Timber Overview | 2017 | | 2016 | | 2017 | | 2016 |
Sales Volume (in thousands of tons) | | | | | | | |
Pulpwood | 59 |
| | 64 |
| | 219 |
| | 231 |
|
Sawtimber | 193 |
| | 177 |
| | 707 |
| | 608 |
|
Total Volume | 252 |
| | 241 |
| | 926 |
| | 839 |
|
| | | | | | | |
Sales Volume (converted to MBF) | | | | | | | |
Pulpwood | 5,516 |
| | 6,016 |
| | 20,525 |
| | 21,920 |
|
Sawtimber | 25,380 |
| | 24,084 |
| | 91,596 |
| | 80,014 |
|
Total Volume | 30,896 |
| | 30,100 |
| | 112,121 |
| | 101,934 |
|
| | | | | | | |
Percentage Delivered Sales | 76 | % | | 100 | % | | 85 | % | | 93 | % |
Percentage Sawtimber Sales | 76 | % | | 74 | % | | 76 | % | | 72 | % |
| | | | | | | |
Delivered Log Pricing (in dollars per ton) | | | | | | | |
Pulpwood |
| $41.43 |
| |
| $40.07 |
| |
| $39.65 |
| |
| $42.85 |
|
Sawtimber | 89.62 |
| | 76.69 |
| | 80.79 |
| | 72.80 |
|
Weighted Average Log Price |
| $76.47 |
| |
| $67.02 |
| |
| $70.29 |
| |
| $64.32 |
|
| | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | |
Sales |
| $18.6 |
| |
| $16.1 |
| |
| $62.9 |
| |
| $52.3 |
|
Less: Cut and Haul | (6.7 | ) | | (7.8 | ) | | (26.9 | ) | | (24.6 | ) |
Net Stumpage Sales |
| $11.9 |
| |
| $8.3 |
| |
| $36.0 |
| |
| $27.7 |
|
| | | | | | | |
Operating Income (Loss) |
| $1.1 |
| |
| ($3.3 | ) | |
| ($1.3 | ) | |
| ($0.9 | ) |
(+) Depreciation, depletion and amortization | 6.5 |
| | 6.7 |
| | 23.8 |
| | 15.0 |
|
Adjusted EBITDA (a) |
| $7.6 |
| |
| $3.4 |
| |
| $22.5 |
| |
| $14.1 |
|
| | | | | | | |
Other Data | | | | | | | |
Non-Timber Income (in millions of dollars) (b) |
| $0.4 |
| |
| $0.5 |
| |
| $2.4 |
| |
| $2.1 |
|
Period-End Acres (in thousands) | 378 |
| | 379 |
| | 378 |
| | 379 |
|
Sawtimber (in dollars per MBF) |
| $681 |
| |
| $563 |
| |
| $624 |
| |
| $556 |
|
Estimated Percentage of Export Volume | 30 | % | | 20 | % | | 26 | % | | 25 | % |
| | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | | |
Pacific Northwest Timber Overview | 2024 | | 2023 | | | | | |
Sales Volume (in thousands of tons) | | | | | | | | |
Pulpwood | 53 | | | 77 | | | | | | |
Domestic Sawtimber (a) | 245 | | | 284 | | | | | | |
Export Sawtimber | 19 | | | 23 | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total Volume | 317 | | | 384 | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
% Delivered Volume (vs. Total Volume) | 88 | % | | 97 | % | | | | | |
% Sawtimber Volume (vs. Total Volume) | 83 | % | | 80 | % | | | | | |
% Export Volume (vs. Total Volume) (b) | 8 | % | | 13 | % | | | | | |
| | | | | | | | |
Delivered Log Pricing (in dollars per ton) | | | | | | | | |
Pulpwood | $29.31 | | | $48.23 | | | | | | |
Domestic Sawtimber | 84.31 | | | 93.12 | | | | | | |
Export Sawtimber (c) | 137.76 | | | 163.16 | | | | | | |
Weighted Average Log Price | $78.54 | | | $88.17 | | | | | | |
| | | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | | |
Timber Sales | $24.2 | | | $33.5 | | | | | | |
Less: Cut and Haul | (10.8) | | | (17.2) | | | | | | |
Less: Port and Freight | (1.2) | | | (1.4) | | | | | | |
Net Stumpage Sales | $12.2 | | | $14.9 | | | | | | |
| | | | | | | | |
Non-Timber Sales | 1.0 | | | 0.9 | | | | | | |
Total Sales | $25.2 | | | $34.4 | | | | | | |
| | | | | | | | |
Operating Loss | ($4.4) | | | ($3.5) | | | | | | |
| | | | | | | | |
(+) Depreciation, depletion and amortization | 9.1 | | | 10.6 | | | | | | |
Adjusted EBITDA (d) | $4.7 | | | $7.1 | | | | | | |
| | | | | | | | |
Other Data | | | | | | | | |
| | | | | | | | |
Period-End Acres (in thousands) | 418 | | | 474 | | | | | | |
Sawtimber (in dollars per MBF) (e) | $650 | | | $730 | | | | | | |
| | | | | | | | |
| | | | | | | | |
| |
(a) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
|
| |
(b) | Non-Timber Income is presented net of direct charges and excludes allocated overhead. |
(a)Includes volumes sold to third-party exporters.
(b)Estimated percentage of export volume, which includes volumes sold to third-party exporters in addition to direct exports through our log export program.
(c)Pricing is reported on a CFR basis (i.e., inclusive of export costs and freight).
(e)Delivered Sawtimber excluding chip-n-saw.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
New Zealand Timber Overview | 2017 | | 2016 | | 2017 | | 2016 |
Sales Volume (in thousands of tons) | | | | | | | |
Domestic Pulpwood (Delivered) | 131 |
| | 99 |
| | 336 |
| | 285 |
|
Domestic Sawtimber (Delivered) | 239 |
| | 220 |
| | 652 |
| | 630 |
|
Export Pulpwood (Delivered) | 28 |
| | 21 |
| | 83 |
| | 60 |
|
Export Sawtimber (Delivered) | 376 |
| | 213 |
| | 819 |
| | 675 |
|
Stumpage | — |
| | — |
| | — |
| | 10 |
|
Total Volume | 774 |
| | 552 |
| | 1,890 |
| | 1,658 |
|
| | | | | | | |
Delivered Log Pricing (in dollars per ton) | | | | | | | |
Domestic Pulpwood |
| $34.42 |
| |
| $32.55 |
| |
| $34.16 |
| |
| $31.30 |
|
Domestic Sawtimber |
| $83.61 |
| |
| $75.06 |
| |
| $80.54 |
| |
| $71.26 |
|
Export Sawtimber |
| $113.35 |
| |
| $97.44 |
| |
| $111.62 |
| |
| $96.04 |
|
| | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | |
Sales |
| $69.9 |
| |
| $42.2 |
| |
| $163.5 |
| |
| $124.2 |
|
Less: Cut and Haul | (24.8 | ) | | (18.3 | ) | | (60.3 | ) | | (52.1 | ) |
Less: Port and Freight Costs | (12.9 | ) | | (6.6 | ) | | (28.5 | ) | | (19.3 | ) |
Net Stumpage Sales |
| $32.2 |
| |
| $17.3 |
| |
| $74.7 |
| |
| $52.8 |
|
| | | | | | | |
Land Sales | — |
| | — |
| | 24.3 |
| | 1.8 |
|
Total Sales |
| $69.9 |
| |
| $42.2 |
| |
| $187.8 |
| |
| $126.0 |
|
| | | | | | | |
Operating Income |
| $19.3 |
| |
| $6.6 |
| |
| $56.3 |
| |
| $21.4 |
|
(+) Non-operating income | 0.6 |
| | — |
| | 0.3 |
| | — |
|
(+) Depreciation, depletion and amortization (a) | 8.5 |
| | 6.0 |
| | 29.3 |
| | 17.3 |
|
(+) Non-cash cost of land sold | — |
| | — |
| | 0.1 |
| | 1.8 |
|
Adjusted EBITDA (b) |
| $28.4 |
| |
| $12.6 |
| |
| $86.0 |
| |
| $40.5 |
|
| | | | | | | |
Other Data | | | | | | | |
Non-timber Income / Carbon credits ($ in MMs) |
| $0.1 |
| |
| $0.5 |
| |
| $0.3 |
| |
| $1.4 |
|
New Zealand Dollar to U.S. Dollar Exchange Rate (c) | 0.7328 |
| | 0.7178 |
| | 0.7154 |
| | 0.6897 |
|
Net Plantable Period-End Acres (in thousands) | 294 |
| | 299 |
| | 294 |
| | 299 |
|
Export Sawtimber (in dollars per JAS m3) |
| $131.80 |
| |
| $113.25 |
| |
| $129.72 |
| |
| $111.63 |
|
Domestic Sawtimber (in $NZD per tonne) |
| $125.51 |
| |
| $115.03 |
| |
| $123.73 |
| |
| $113.38 |
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
New Zealand Timber Overview | 2024 | | 2023 | | | | |
Sales Volume (in thousands of tons) | | | | | | | |
Domestic Pulpwood (Delivered) | 50 | | | 55 | | | | | |
Domestic Sawtimber (Delivered) | 135 | | | 137 | | | | | |
Export Pulpwood (Delivered) | 63 | | | 42 | | | | | |
Export Sawtimber (Delivered) | 232 | | | 247 | | | | | |
| | | | | | | |
Total Volume | 480 | | | 481 | | | | | |
| | | | | | | |
% Delivered Volume (vs. Total Volume) | 100 | % | | 100 | % | | | | |
% Sawtimber Volume (vs. Total Volume) | 76 | % | | 80 | % | | | | |
% Export Volume (vs. Total Volume) (a) | 61 | % | | 60 | % | | | | |
| | | | | | | |
Delivered Log Pricing (in dollars per ton) | | | | | | | |
Domestic Pulpwood | $33.00 | | | $33.37 | | | | | |
Domestic Sawtimber | 68.13 | | | 71.58 | | | | | |
Export Sawtimber | 108.72 | | | 112.97 | | | | | |
Weighted Average Log Price | $87.87 | | | $90.99 | | | | | |
| | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | |
Timber Sales | $42.2 | | | $43.8 | | | | | |
Less: Cut and Haul (b) | (16.6) | | | (17.2) | | | | | |
Less: Port and Freight (b) | (12.1) | | | (11.8) | | | | | |
Net Stumpage Sales | $13.5 | | | $14.8 | | | | | |
| | | | | | | |
| | | | | | | |
Carbon Credit Sales | 3.4 | | | — | | | | | |
Other Non-Timber Sales | 0.1 | | | 0.3 | | | | | |
Total Sales | $45.7 | | | $44.1 | | | | | |
| | | | | | | |
Operating Income (Loss) | $7.4 | | | ($0.7) | | | | | |
(+) Timber write-offs resulting from casualty events (c) | — | | | 2.3 | | | | | |
| | | | | | | |
(+) Depreciation, depletion and amortization | 4.0 | | | 4.5 | | | | | |
| | | | | | | |
Adjusted EBITDA (d) | $11.4 | | | $6.1 | | | | | |
| | | | | | | |
Other Data | | | | | | | |
New Zealand Dollar to U.S. Dollar Exchange Rate (e) | 0.6165 | | | 0.6300 | | | | | |
Net Plantable Period-End Acres (in thousands) | 297 | | | 297 | | | | | |
Export Sawtimber (in dollars per JAS m3) | $126.41 | | | $131.35 | | | | | |
Domestic Sawtimber (in $NZD per tonne) | $121.56 | | | $124.98 | | | | | |
| |
(a) | The nine months ended September 30, 2017 includes $8.9 million of DD&A related to timberland sales. |
| |
(b) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators.
|
| |
(c) | Represents the average period rate. |
(a)Percentage of export volume reflects direct exports through our log export program.
(b)Prior period has been restated to reclassify certain export related costs from cut and haul to port and freight.
(c)Timber write-offs resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume damaged by casualty events that cannot be salvaged.
(e)Represents the period-average rate.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Real Estate Overview | 2017 | | 2016 | | 2017 | | 2016 |
Sales (in millions of dollars) | | | | | | | |
Improved Development (a) |
| $0.1 |
|
| — |
|
|
| $0.2 |
|
|
| $1.7 |
|
Unimproved Development | 13.9 |
|
| 1.4 |
|
| 16.4 |
|
| 2.2 |
|
Rural | 3.1 |
|
| 6.4 |
|
| 15.3 |
|
| 17.4 |
|
Non-Strategic / Timberlands | 0.2 |
|
| 52.8 |
|
| 23.3 |
|
| 60.5 |
|
Large Dispositions (b) | — |
| | — |
| | 42.0 |
| | 129.5 |
|
Total Sales |
| $17.3 |
| |
| $60.6 |
| |
| $97.2 |
| |
| $211.3 |
|
| | | | | | | |
Acres Sold | | | | | | | |
Improved Development (a) | 0.2 |
| | — |
| | 1.5 |
| | 46.6 |
|
Unimproved Development | 1,319 |
| | 73 |
| | 1,449 |
| | 121 |
|
Rural | 1,128 |
| | 2,069 |
| | 5,140 |
| | 6,180 |
|
Non-Strategic / Timberlands | 102 |
| | 21,459 |
| | 9,758 |
| | 27,842 |
|
Large Dispositions (b) | — |
| | — |
| | 24,954 |
| | 55,320 |
|
Total Acres Sold | 2,549 |
| | 23,601 |
| | 41,303 |
| | 89,510 |
|
| | | | | | | |
Gross Price per Acre (dollars per acre) | | | | | | | |
Improved Development (a) |
| $269,412 |
| | — |
| |
| $318,108 |
| |
| $37,353 |
|
Unimproved Development | 10,540 |
| | 18,500 |
| | 11,318 |
| | 18,302 |
|
Rural | 2,771 |
| | 3,082 |
| | 2,988 |
| | 2,797 |
|
Non-Strategic / Timberlands | 1,616 |
| | 2,465 |
| | 2,382 |
| | 2,174 |
|
Large Dispositions (b) | — |
| | — |
| | 1,681 |
| | 2,342 |
|
Weighted Average (Total) (c) |
| $6,764 |
| |
| $2,569 |
| |
| $3,393 |
| |
| $2,392 |
|
Weighted Average (Adjusted) (d) |
| $6,747 |
| |
| $2,569 |
| |
| $3,365 |
| |
| $2,344 |
|
| | | | | | | |
Sales (Excluding Large Dispositions) |
| $17.3 |
|
|
| $60.6 |
| |
| $55.2 |
| |
| $81.8 |
|
| | | | | | | |
Operating Income |
| $11.4 |
| |
| $43.1 |
| |
| $57.3 |
| |
| $153.0 |
|
(+) Depreciation, depletion and amortization | 0.7 |
| | 9.2 |
| | 5.9 |
| | 14.0 |
|
(+) Non-cash cost of land and improved development | 1.3 |
| | 4.3 |
| | 8.5 |
| | 8.3 |
|
(–) Large Dispositions (b) | — |
| | — |
| | (28.2 | ) | | (101.3 | ) |
Adjusted EBITDA (e) |
| $13.4 |
| |
| $56.6 |
| |
| $43.5 |
| |
| $74.0 |
|
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
Real Estate Overview | | | | | 2024 | | 2023 |
Sales (in millions of dollars) | | | | | | | |
Improved Development (a) | | | | | $1.8 | | | $4.8 | |
| | | | | | | |
Rural | | | | | 8.7 | | | 6.5 | |
Timberland & Non-Strategic | | | | | 0.6 | | | 1.6 | |
| | | | | | | |
| | | | | | | |
Deferred Revenue/Other (b) | | | | | 4.4 | | | 3.3 | |
| | | | | | | |
Total Sales | | | | | $15.6 | | | $16.3 | |
| | | | | | | |
| | | | | | | |
Acres Sold | | | | | | | |
Improved Development (a) | | | | | 6.0 | | | 27.9 | |
| | | | | | | |
Rural | | | | | 1,498 | | | 1,531 | |
Timberland & Non-Strategic | | | | | 430 | | | 528 | |
| | | | | | | |
| | | | | | | |
Total Acres Sold | | | | | 1,933 | | | 2,087 | |
| | | | | | | |
| | | | | | | |
Gross Price per Acre (dollars per acre) | | | | | | | |
Improved Development (a) | | | | | $303,156 | | | $172,420 | |
| | | | | | | |
Rural | | | | | 5,828 | | | 4,245 | |
Timberland & Non-Strategic | | | | | 1,421 | | | 3,100 | |
| | | | | | | |
| | | | | | | |
Weighted Average (Total) | | | | | $5,774 | | | $6,200 | |
Weighted Average (Adjusted) (c) | | | | | $4,845 | | | $3,952 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Operating (Loss) Income | | | | | ($0.1) | | | $0.9 | |
(+) Depreciation, depletion and amortization | | | | | 1.7 | | | 1.5 | |
| | | | | | | |
(+) Non-cash cost of land and improved development | | | | | 3.0 | | | 4.2 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Adjusted EBITDA (d) | | | | | $4.6 | | | $6.6 | |
(a)Reflects land with capital invested in infrastructure improvements.
(b)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
(c)Excludes Improved Development.
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
Trading Overview | | | | | 2024 | | 2023 |
Sales Volume (in thousands of tons) | | | | | | | |
U.S. | | | | | 23 | | | 13 | |
NZ | | | | | 83 | | | 92 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total Volume | | | | | 105 | | | 105 | |
| | | | | | | |
Summary Financial Data (in millions of dollars) | | | | | | | |
Trading Sales | | | | | $11.3 | | | $12.1 | |
Non-Timber Sales | | | | | 0.4 | | | 0.5 | |
Total Sales | | | | | $11.8 | | | $12.6 | |
| | | | | | | |
Operating Income | | | | | — | | | $0.3 | |
| | | | | | | |
Adjusted EBITDA (a) | | | | | — | | | $0.3 | |
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
Capital Expenditures By Segment (in millions of dollars) | 2024 | | 2023 | | | | |
Timber Capital Expenditures | | | | | | | |
Southern Timber | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Reforestation, silviculture and other capital expenditures | $7.0 | | | $6.9 | | | | | |
Property taxes | 2.0 | | | 2.0 | | | | | |
Lease payments | 0.4 | | | 0.5 | | | | | |
Allocated overhead | 1.6 | | | 1.5 | | | | | |
Subtotal Southern Timber | $11.0 | | | $10.8 | | | | | |
Pacific Northwest Timber | | | | | | | |
| | | | | | | |
| | | | | | | |
Reforestation, silviculture and other capital expenditures | 2.7 | | | 3.0 | | | | | |
Property taxes | 0.2 | | | 0.3 | | | | | |
| | | | | | | |
Allocated overhead | 1.3 | | | 1.3 | | | | | |
Subtotal Pacific Northwest Timber | $4.1 | | | $4.5 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
New Zealand Timber | | | | | | | |
Reforestation, silviculture and other capital expenditures | 1.7 | | | 2.0 | | | | | |
Property taxes | 0.2 | | | 0.2 | | | | | |
Lease payments | 1.0 | | | 0.4 | | | | | |
Allocated overhead | 0.7 | | | 0.7 | | | | | |
Subtotal New Zealand Timber | $3.6 | | | $3.3 | | | | | |
Total Timber Segments Capital Expenditures | $18.7 | | | $18.7 | | | | | |
| | | | | | | |
Real Estate | 0.1 | | | 0.1 | | | | | |
Corporate | 0.1 | | | — | | | | | |
Total Capital Expenditures | $18.9 | | | $18.7 | | | | | |
| | | | | | | |
Timberland Acquisitions | | | | | | | |
Southern Timber | — | | | $5.1 | | | | | |
Pacific Northwest Timber | — | | | 3.6 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Timberland Acquisitions | — | | | $8.7 | | | | | |
| | | | | | | |
| | | | | | | |
Real Estate Development Investments (a) | $5.5 | | | $7.8 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | |
| (a) | Reflects land with capital invested in infrastructure improvements. Sales for the nine months ended September 30, 2017 are presented net of $0.3 million of deferred revenue adjustments due to remaining performance obligations. Price per acre is calculated on gross sales of $0.5 million for the nine months ended September 30, 2017. | | |
| |
(b) | Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In January 2017, the Company completed a disposition of approximately 25,000 acres located in Alabama for a sale price and gain of approximately $42.0 million and $28.2 million, respectively. In April 2016, the Company completed a disposition of approximately 55,000 acres in Washington for a sale price and gain of approximately $129.5 million and $101.3 million, respectively. |
| |
(c) | Excludes Large Dispositions. |
| |
(d) | Excludes Improved Development and Large Dispositions. |
| |
(e) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.
|
(a)Represents investments in master infrastructure or entitlements in our real estate development projects. Real Estate Development Investments are amortized as the underlying properties are sold and included in Non-Cash Cost of Land and Improved Development.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Capital Expenditures By Segment (in millions of dollars) | 2017 | | 2016 | | 2017 | | 2016 |
Timber Capital Expenditures | | | | | | | |
Southern Timber | | | | | | | |
Reforestation, silviculture and other capital expenditures |
| $5.6 |
| |
| $4.0 |
| |
| $11.4 |
| |
| $11.5 |
|
Property taxes | 1.6 |
| | 1.6 |
| | 6.1 |
| | 5.2 |
|
Lease payments | 0.5 |
| | 0.5 |
| | 3.0 |
| | 3.2 |
|
Allocated overhead | 0.9 |
| | 1.0 |
| | 2.6 |
| | 3.1 |
|
Subtotal Southern Timber |
| $8.6 |
| |
| $7.1 |
| |
| $23.1 |
| |
| $23.0 |
|
Pacific Northwest Timber | | | | | | | |
Reforestation, silviculture and other capital expenditures | 1.5 |
| | 1.1 |
| | 5.3 |
| | 4.1 |
|
Property taxes | 0.2 |
| | 0.1 |
| | 0.7 |
| | 0.4 |
|
Allocated overhead | 0.5 |
| | 0.4 |
| | 1.5 |
| | 1.1 |
|
Subtotal Pacific Northwest Timber |
| $2.2 |
| |
| $1.6 |
| |
| $7.5 |
| |
| $5.6 |
|
New Zealand Timber | | | | | | | |
Reforestation, silviculture and other capital expenditures | 2.7 |
| | 3.0 |
| | 6.6 |
| | 6.4 |
|
Property taxes | 0.2 |
| | 0.2 |
| | 0.5 |
| | 0.5 |
|
Lease payments | 0.4 |
| | 1.3 |
| | 2.5 |
| | 2.6 |
|
Allocated overhead | 0.7 |
| | 0.7 |
| | 2.2 |
| | 1.9 |
|
Subtotal New Zealand Timber |
| $4.0 |
| |
| $5.2 |
| |
| $11.8 |
| |
| $11.4 |
|
Total Timber Segments Capital Expenditures |
| $14.8 |
| |
| $13.9 |
| |
| $42.4 |
| |
| $40.0 |
|
Real Estate | 0.7 |
| | 0.1 |
| | 1.1 |
| | 0.2 |
|
Corporate | 0.4 |
| | — |
| | 2.2 |
| | — |
|
Total Capital Expenditures |
| $15.9 |
| |
| $14.0 |
| |
| $45.7 |
| |
| $40.2 |
|
| | | | | | | |
Timberland Acquisitions | | | | | | | |
Southern Timber |
| $1.9 |
| |
| $77.1 |
| |
| $216.2 |
| |
| $91.4 |
|
Pacific Northwest Timber | — |
| | 0.1 |
| | 1.5 |
| | 262.4 |
|
New Zealand Timber | — |
| | — |
| | 21.4 |
| | — |
|
Subtotal Timberland Acquisitions |
| $1.9 |
| |
| $77.2 |
| |
| $239.1 |
| |
| $353.8 |
|
| | | | | | | |
Real Estate Development Investments |
| $6.2 |
| |
| $1.8 |
| |
| $11.8 |
| |
| $4.8 |
|
Rayonier Office Building |
| $0.4 |
| |
| $2.8 |
| |
| $6.0 |
| |
| $3.9 |
|
The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for September 30, 2017March 31, 2024 versus September 30, 2016March 31, 2023 (millions of dollars):
| Sales | |
Sales | |
Sales | | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Real Estate | | Trading | | Intersegment Eliminations | | Total |
Three Months Ended March 31, 2023 | |
Volume | |
Price | |
Non-timber sales | |
Foreign exchange (a) | |
Other | |
Three Months Ended March 31, 2024 | |
| | Sales | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Total |
Three Months Ended September 30, 2016 | |
| $27.8 |
| |
| $16.1 |
| |
| $42.2 |
| |
| $60.6 |
| |
| $24.7 |
| |
| $171.4 |
|
Volume/Mix | | 5.3 |
| | 0.4 |
| | 19.0 |
| | (54.0 | ) | | 9.3 |
| | (20.0 | ) |
Price | | (0.2 | ) | | 3.3 |
| | 8.2 |
| | 10.7 |
| | 6.2 |
| | 28.2 |
|
Foreign exchange (a) | | — |
| | — |
| | 0.5 |
| | — |
| | — |
| | 0.5 |
|
Other | | (1.0 | ) | (b) | (1.2 | ) | (b) | — |
| | — |
| | — |
| | (2.2 | ) |
Three Months Ended September 30, 2017 | |
| $31.9 |
| |
| $18.6 |
| |
| $69.9 |
| |
| $17.3 |
| |
| $40.2 |
| |
| $177.9 |
|
(a) Net of currency hedging impact.
(b) Includes variance due to stumpage versus delivered sales.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Sales | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Total |
Nine Months Ended September 30, 2016 | |
| $102.2 |
| |
| $52.3 |
| |
| $126.0 |
| |
| $211.3 |
| |
| $76.0 |
| |
| $567.8 |
|
Volume/Mix | | 1.2 |
| | 2.9 |
| | 18.4 |
| | (42.7 | ) | | 24.5 |
| | 4.3 |
|
Price | | (3.2 | ) | | 5.4 |
| | 18.5 |
| | 16.4 |
| | 15.4 |
| | 52.5 |
|
Foreign exchange (a) | | — |
| | — |
| | 2.5 |
| | — |
| | — |
| | 2.5 |
|
Other | | (4.8 | ) | (b) | 2.3 |
| (b) | 22.4 |
| (c) | (87.8 | ) | (d) | — |
| | (67.9 | ) |
Nine Months Ended September 30, 2017 | |
| $95.4 |
| |
| $62.9 |
| |
| $187.8 |
| |
| $97.2 |
| |
| $115.9 |
| |
| $559.2 |
|
(a) Net of currency hedging impact.
(b) Includes variance due to stumpage versus delivered sales.
(c) Includes variance due to domestic versus export sales.
(d) Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Income (Loss) | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Real Estate | | Trading | | Corporate and Other | | Total |
Three Months Ended March 31, 2023 | | $22.2 | | | ($3.5) | | | ($0.7) | | | | | $0.9 | | | $0.3 | | | ($8.6) | | | $10.6 | |
Volume | | 1.5 | | | (0.2) | | | — | | | | | (0.5) | | | — | | | — | | | 0.8 | |
Price (a) | | (1.9) | | | (0.4) | | | (1.7) | | | | | (1.0) | | | — | | | — | | | (5.0) | |
Cost | | 1.7 | | | — | | | 0.5 | | | | | (0.4) | | | (0.3) | | | (1.1) | | | 0.4 | |
Non-timber income (b) | | (0.5) | | | — | | | 3.3 | | | | | — | | | — | | | — | | | 2.8 | |
Foreign exchange (c) | | — | | | — | | | 3.4 | | | | | — | | | — | | | — | | | 3.4 | |
Depreciation, depletion & amortization | | — | | | (0.3) | | | 0.3 | | | | | (0.3) | | | — | | | (0.1) | | | (0.4) | |
Non-cash cost of land and improved development | | — | | | — | | | — | | | | | 0.8 | | | — | | | — | | | 0.8 | |
Other (d) | | — | | | — | | | 2.3 | | | | | 0.4 | | | — | | | — | | | 2.8 | |
Three Months Ended March 31, 2024 | | $23.0 | | | ($4.4) | | | $7.4 | | | | | ($0.1) | | | — | | | ($9.8) | | | $16.2 | |
| | | | | | | | | | | | | | | | |
(a)For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs). For Real Estate, price is presented net of cash closing costs.
(b)For the Southern Timber segment, includes income from carbon capture and storage (“CCS”), solar and wind energy contracts. For the New Zealand Timber segment, includes $24.3 million of timberland sales in 2017, offset by $1.8 million of timberland sales in 2016.income from carbon credit sales.
(d) Real Estate includes $42.0 million of sales from Large Dispositions in 2017, offset by $129.5 million of sales from Large Dispositions in 2016.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Corporate and Other | | Total |
Three Months Ended September 30, 2016 | |
| $8.2 |
| |
| ($3.3 | ) | |
| $6.6 |
| |
| $43.1 |
| |
| $0.5 |
| |
| ($5.4 | ) | |
| $49.7 |
|
Volume/Mix | | 2.7 |
| | — |
| | 3.2 |
| | (41.8 | ) | | — |
| | — |
| | (35.9 | ) |
Price | | (0.2 | ) | | 3.3 |
| | 8.1 |
| | 10.7 |
| | — |
| | — |
| | 21.9 |
|
Cost | | (0.3 | ) | | 0.7 |
| | 0.9 |
| | (0.2 | ) | | 0.6 |
| | 0.5 |
| | 2.2 |
|
Non-timber income | | 1.3 |
| | (0.1 | ) | | (0.4 | ) | | — |
| | — |
| | — |
| | 0.8 |
|
Foreign exchange (a) | | — |
| | — |
| | 1.0 |
| | — |
| | — |
| | — |
| | 1.0 |
|
Depreciation, depletion & amortization | | (0.2 | ) | | 0.5 |
| | (0.1 | ) | | 0.4 |
| | — |
| | (0.2 | ) | | 0.4 |
|
Non-cash cost of land and improved development | | — |
| | — |
| | — |
| | (0.8 | ) | | — |
| | — |
| | (0.8 | ) |
Three Months Ended September 30, 2017 | |
| $11.5 |
| |
| $1.1 |
| |
| $19.3 |
| |
| $11.4 |
| |
| $1.1 |
| |
| ($5.1 | ) | |
| $39.3 |
|
(a) (c)Net of currency hedging impact.
(d)New Zealand Timber includes $2.3 million of timber write-offs resulting from casualty events in Q1 2023. Real Estate includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Corporate and Other | | Total |
Nine Months Ended September 30, 2016 | |
| $35.0 |
| |
| ($0.9 | ) | |
| $21.4 |
| |
| $153.0 |
| |
| $1.5 |
| |
| ($15.7 | ) | |
| $194.3 |
|
Volume/Mix | | 0.6 |
| | 0.8 |
| | 2.5 |
| | (30.6 | ) | | — |
| | — |
| | (26.7 | ) |
Price | | (3.2 | ) | | 5.4 |
| | 15.8 |
| | 16.4 |
| | — |
| | — |
| | 34.4 |
|
Cost | | 0.2 |
| | 0.4 |
| | (0.1 | ) | | (0.5 | ) | | 1.9 |
| | 0.6 |
| | 2.5 |
|
Non-timber income | | 1.8 |
| | 0.3 |
| | (1.1 | ) | | — |
| | — |
| | — |
| | 1.0 |
|
Foreign exchange (a) | | — |
| | — |
| | 2.7 |
| | — |
| | — |
| | — |
| | 2.7 |
|
Depreciation, depletion & amortization | | 0.6 |
| | (7.3 | ) | | (0.3 | ) | | 1.0 |
| | — |
| | (0.2 | ) | | (6.2 | ) |
Non-cash cost of land and improved development | | — |
| | — |
| | — |
| | (4.8 | ) | | — |
| | — |
| | (4.8 | ) |
Other | | — |
| | — |
| | 15.4 |
| (b) | (77.2 | ) | (c) | — |
| | — |
| | (61.8 | ) |
Nine Months Ended September 30, 2017 | |
| $35.0 |
| |
| ($1.3 | ) | |
| $56.3 |
| |
| $57.3 |
| |
| $3.4 |
| |
| ($15.3 | ) | |
| $135.4 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA (a) | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Real Estate | | Trading | | Corporate and Other | | Total |
Three Months Ended March 31, 2023 | | $42.8 | | | $7.1 | | | $6.1 | | | | | $6.6 | | | $0.3 | | | ($8.2) | | | $54.7 | |
Volume | | 2.7 | | | (2.0) | | | (0.1) | | | | | (0.9) | | | — | | | — | | | (0.3) | |
Price (b) | | (1.9) | | | (0.4) | | | (1.7) | | | | | (1.0) | | | — | | | — | | | (5.0) | |
Cost | | 1.7 | | | — | | | 0.5 | | | | | (0.4) | | | (0.3) | | | (1.1) | | | 0.4 | |
Non-timber income (c) | | (0.5) | | | — | | | 3.3 | | | | | — | | | — | | | — | | | 2.8 | |
Foreign exchange (d) | | — | | | — | | | 3.3 | | | | | — | | | — | | | — | | | 3.3 | |
Other (e) | | — | | | — | | | — | | | | | 0.3 | | | — | | | — | | | 0.3 | |
Three Months Ended March 31, 2024 | | $44.8 | | | $4.7 | | | $11.4 | | | | | $4.6 | | | — | | | ($9.3) | | | $56.2 | |
| | | | | | | | | | | | | | | | |
(b)For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs). For Real Estate, price is presented net of cash closing costs.
(c)For the Southern Timber segment, includes income from carbon capture and storage (“CCS”), solar and wind energy contracts. For the New Zealand Timber segment, includes income from carbon credit sales.
(d)Net of currency hedging impact.
(b) New Zealand Timber(e)Real Estate includes $14.8 million of income from timberlanddeferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in 2017addition to residential and $0.4 million from a settlement received in 2017.
| |
(c) | Real Estate includes $28.2 million of operating income from Large Dispositions, offset by $101.3 million of operating income from Large Dispositions in 2016 and the receipt of a $4.0 million deferred payment related to a prior land sale in 2016. |
commercial lease revenue.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA (a) | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Corporate and Other | | Total |
Three Months Ended September 30, 2016 | |
| $18.2 |
| |
| $3.4 |
| |
| $12.6 |
| |
| $56.6 |
| |
| $0.5 |
| |
| ($4.1 | ) | |
| $87.2 |
|
Volume/Mix | | 5.2 |
| | 0.3 |
| | 5.4 |
| | (53.7 | ) | | — |
| | — |
| | (42.8 | ) |
Price | | (0.2 | ) | | 3.3 |
| | 8.1 |
| | 10.7 |
| | — |
| | — |
| | 21.9 |
|
Cost | | (0.3 | ) | | 0.7 |
| | 0.9 |
| | (0.2 | ) | | 0.6 |
| | (0.7 | ) | | 1.0 |
|
Non-timber income | | 1.3 |
| | (0.1 | ) | | (0.4 | ) | | — |
| | — |
| | — |
| | 0.8 |
|
Foreign exchange (b) | | — |
| | — |
| | 1.8 |
| | — |
| | — |
| | — |
| | 1.8 |
|
Three Months Ended September 30, 2017 | |
| $24.2 |
| |
| $7.6 |
| |
| $28.4 |
| |
| $13.4 |
| |
| $1.1 |
| |
| ($4.8 | ) | |
| $69.9 |
|
| |
(a) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.
|
| |
(b) | Net of currency hedging impact. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA (a) | | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Corporate and Other | | Total |
Nine Months Ended September 30, 2016 | |
| $72.1 |
| |
| $14.1 |
| |
| $40.5 |
| |
| $74.0 |
| |
| $1.5 |
| |
| ($14.4 | ) | |
| $187.8 |
|
Volume/Mix | | 1.2 |
| | 2.3 |
| | 4.8 |
| | (42.0 | ) | | — |
| | — |
| | (33.7 | ) |
Price | | (3.2 | ) | | 5.4 |
| | 15.8 |
| | 16.4 |
| | — |
| | — |
| | 34.4 |
|
Cost | | 0.2 |
| | 0.4 |
| | (0.1 | ) | | (0.5 | ) | | 1.9 |
| | 0.3 |
| | 2.2 |
|
Non-timber income | | 1.8 |
| | 0.3 |
| | (1.1 | ) | | — |
| | — |
| | — |
| | 1.0 |
|
Foreign exchange (b) | | — |
| | — |
| | 3.7 |
| | — |
| | — |
| | — |
| | 3.7 |
|
Other | | — |
| | — |
| | 22.4 |
| (c) | (4.4 | ) | (d) | — |
| | — |
| | 18.0 |
|
Nine Months Ended September 30, 2017 | |
| $72.1 |
| |
| $22.5 |
| |
| $86.0 |
| |
| $43.5 |
| |
| $3.4 |
| |
| ($14.1 | ) | |
| $213.4 |
|
| |
(a) | Adjusted EBITDA is a non-GAAP measure defined and reconciled in Performance and Liquidity Indicators below.
|
| |
(b) | Net of currency hedging impact. |
| |
(c) | New Zealand Timber includes $24.3 million of timberland sold in 2017 less cash costs of $0.5 million and $0.4 million of operating income from a settlement received in 2017, offset by $1.8 million of timberland sold in 2016. |
| |
(d) | Real Estate includes the receipt of a $4.0 million deferred payment related to a prior land sale in 2016. |
Southern Timber
Third First quarter sales of $31.9$70.0 million increased $4.1decreased $1.9 million, or 15%3%, versus the prior year period. Harvest volumes increased 6% to 2.01 million tons versus 1.89 million tons in the prior year period, as we benefited from weather-related constraints on competing supply. Average pine sawtimber stumpage realizations decreased 3% to $30.62 per ton versus $31.57 per ton in the prior year period, primarily due to a less favorable geographic mix. Average pine pulpwood stumpage realizations decreased 2% to $16.89 per ton versus $17.32 per ton in the prior year period, which was also primarily driven by an unfavorable geographic mix. Overall, weighted-average net stumpage realizations (including hardwood) decreased 4% to $23.07 per ton versus $24.03 per ton in the prior year period. Non-timber sales of $9.1 million decreased 3% versus the prior year period, as lower pipeline easement revenues were partially offset by growth in our land-based solutions business. Operating income of $23.0 million increased $0.8 million versus the prior year period due to favorable costs ($1.7 million) and higher volumes ($1.5 million), partially offset by lower net stumpage realizations ($1.9 million) and lower non-timber income ($0.5 million). First quarter Adjusted EBITDA of $44.8 million was 5%, or $2.0 million, above the prior year period.
PACIFIC NORTHWEST TIMBER
First quarter sales of $25.2 million decreased $9.2 million, or 27%, versus the prior year period. Harvest volumes increased 24%decreased 17% to 1.36 million317,000 tons versus 1.09 million384,000 tons in the prior year period, primarily due to incremental volume from recent acquisitions and the prior year curtailment of harvest activityLarge Disposition we completed in certain eastern markets.Oregon in late 2023. Average pinedelivered prices for domestic sawtimber stumpage prices decreased 1%9% to $25.93$84.31 per ton versus $26.17$93.12 per ton in the prior year period while average pinedue to a combination of weaker demand from domestic lumber mills, reduced export market tension, and an unfavorable species mix, as a lower proportion of Douglas-Fir sawtimber was harvested in the current year period. Average delivered pulpwood stumpage prices decreased 6%39% to $16.32$29.31 per ton versus $17.36 per ton in the prior year period. The modest decrease in average sawtimber prices was primarily driven by geographic mix, as impacts from recent hurricanes limited operability in one of the Company’s higher-priced sawtimber regions. The decrease in average pulpwood prices was largely due to salvage volume from the West Mims fire as well as increased supply along the east coast. Overall, weighted-average stumpage prices (including hardwood) decreased 1% to $19.63 per ton versus $19.76 per ton in the prior year period. Operating income of $11.5 million increased $3.3 million versusthe prior year period due to higher volumes ($2.7 million), higher non-timber income ($1.3 million) and lower overhead expense ($0.3 million), which were partially offset by lower weighted-average stumpage prices ($0.2 million), higher leased land expenses ($0.2 million), higher depletion rates ($0.2 million) and higher severance and franchise taxes ($0.4 million). Third quarter Adjusted EBITDA of $24.2 million was $6.0 million above the prior year period.
Year-to-date sales of $95.4 million decreased $6.8 million, or 7%, versus the prior year period. Harvest volumes increased 2% to 4.09 million tons versus 4.03 million tons in the prior year period. Average pine sawtimber stumpage prices decreased 3% to $25.99 per ton versus $26.74$48.23 per ton in the prior year period while average pine pulpwood, as supply constraints and strong end-market demand significantly benefited the prior year period. An operating loss of $4.4 million versus an operating loss of $3.5 million in the prior year period was driven by lower net stumpage realizations ($0.4 million), higher depletion expense ($0.3 million), and lower volumes ($0.2 million). First quarter Adjusted EBITDA of $4.7 million was 34%, or $2.4 million, below the prior year period.
NEW ZEALAND TIMBER
First quarter sales of $45.7 million increased $1.6 million, or 4%, versus the prior year period. Sales volumes of 480,000 tons were relatively flat versus the prior year period. Average delivered prices for export sawtimber decreased 10%4% to $16.43$108.72 per ton versus $18.34$112.97 per ton in the prior year period, driven by weaker construction demand in China. Average delivered prices for domestic sawtimber declined 5% to $68.13 per ton versus $71.58 per ton in the prior year period. The modest decrease in average sawtimber prices was driven by lower demand in the Gulf states as well as geographic mix due to recent hurricanes affecting the ability to harvest volume in one of the Company’s higher-priced sawtimber regions. The decrease in average pulpwood prices was due to salvage volume from the West Mims fire and increased supply as a result of extended dry weather along the east coast during the first half of the year. Overall, weighted-average stumpage prices (including hardwood) decreased 4% to $19.76 per ton versus $20.54 per ton in the prior year period. Operating income of $35.0 million remained flat versus the prior year period due to higher non-timber income ($1.8 million), higher volumes ($0.6 million), lower depreciation and amortization ($0.6 million), and lower overhead expense ($1.5 million), which were offset by lower weighted-average stumpage prices ($3.2 million), higher severance and franchise taxes ($0.9 million) and higher lease land expenses ($0.4 million). Year-to-date Adjusted EBITDA of $72.1 million remained the same as the prior year period.
Pacific Northwest Timber
Third quarter sales of $18.6 million increased $2.5 million, or 16%, versusthe prior year period. Harvest volumes increased 5% to 252,000 tons versus 241,000 tons in the prior year period, primarily due to improved export market conditions, partially offset by fire restrictions in Oregon. Average delivered sawtimber prices increased 17% to $89.62 per ton versus $76.69 per ton in the prior year period, while average delivered pulpwood prices increased 3% to $41.43 per ton versus $40.07 per ton in the prior year period. The increase in average sawtimber and pulpwood prices was due to stronger domestic and export markets. Operating income of $1.1 million increased $4.4 million relative to an operating loss of $3.3 million in the prior year period due to higher prices ($3.3 million), lower depletion rates ($0.5 million), lower overhead expense ($0.4 million) and lower road maintenance expense ($0.3 million), which were partially offset by lower non-timber income ($0.1 million). Third quarter Adjusted EBITDA of $7.6 million was $4.2 million above the prior year period.
Year-to-date sales of $62.9 million increased $10.6 million, or 20%, versusthe prior year period. Harvest volumes increased 10% to 926,000 tons versus 839,000 tons in the prior year period. Average delivered sawtimber prices increased 11% to $80.79 per ton versus $72.80 per ton in the prior year period, while average delivered pulpwood prices decreased 7% to $39.65 per ton versus $42.85 per ton in the prior year period. The increase in average sawtimber prices was due to stronger domestic and export sawtimber markets as well as a more favorable species mix. The decrease in average pulpwood prices was due to an increase in volume from a lower-priced region and an increase in the availability of wood chip residuals from lumber mills, which in turn reduced the demand for pulpwood logs. Operating loss of $1.3 million versus operating loss of $0.9 million in the prior year period was primarily due to higher depletion rates resulting from our Menasha acquisition ($7.3 million) and higher road maintenance and other costs ($0.4 million), which were partially offset by higher prices ($5.4 million), lower overhead expense ($0.8 million), higher volumes ($0.8 million) and higher non-timber income ($0.3 million). Year-to-date Adjusted EBITDA of $22.5 million was $8.4 million above the prior year period.
New Zealand Timber
Third quarter sales of $69.9 million increased $27.7 million, or 66%, versusthe prior year period. Harvest volumes increased 40% to 774,000 tons versus 552,000 tons in the prior year period, driven primarily by lower volumes in the prior year quarter due to the timing of export shipments coupled with incremental volume from recent acquisitions. Average delivered prices for export sawtimber increased 16% to $113.35 per ton versus $97.44 per ton in the prior year period, while average delivered prices for domestic sawtimber increased 11% to $83.61 per ton versus $75.06 per ton in the prior year period. The increase in export sawtimber prices was primarily due to stronger demand from China. The increase in domestic sawtimber prices (in U.S. dollar terms) was driven by strong localweaker domestic demand for construction materials and a modest risedecreased competition from export markets, coupled with the decline in the NZ$/US$ exchange rate (US$0.730.62 per NZ$1.00 versus US$0.720.63 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices increased 9% fromdecreased 3% versus the prior year period. First quarter non-timber / carbon
credit sales totaled $3.5 million versus $0.3 million in the prior year period. Operating income of $19.3$7.4 million increased $12.7$8.1 million versusthe prior year period due to higher prices ($8.1 million), higher volumes ($3.2 million), favorable foreign exchange impacts ($1.03.4 million), higher carbon credit income ($3.3 million), the prior year write-off of timber basis due to a tropical cyclone casualty event ($2.3 million), lower costs ($0.5 million), and lower forest management and overhead costsdepletion rates ($0.9 million)0.3 million), which were partially offset by lower carbon salesnet stumpage realizations ($0.4 million) and higher depletion rates ($0.11.7 million). ThirdFirst quarter Adjusted EBITDA of $28.4$11.4 million was $15.888%, or $5.4 million, above the prior year period.
REAL ESTATE
First quarter sales of $15.6 million decreased $0.7 million versus the prior year period,.
Year-to-date sales while operating loss of $187.8$0.1 million increased $61.8decreased $1.0 million or 49%, versusthe prior year period. Harvest volumes increased 14% to 1.89 million tons versus 1.66 million tons in the prior year period due to incremental volume from recent acquisitions. Average delivered prices for export sawtimber increased 16% to $111.62 per ton versus $96.04 per ton in the prior year period, while average delivered prices for domestic sawtimber increased 13% to $80.54 per ton versus $71.26 in the prior year period. The increase in export sawtimber prices was primarily due to stronger demand from China, while the increase in domestic sawtimber prices (in U.S. dollar terms) was driven primarily by stronger local demand for construction materials and a modest rise in the NZ$/US$ exchange rate (US$0.72 per NZ versus US$0.69 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices increased 9% from the prior year period. Operating income of $56.3 million increased $34.9 million versus the prior year period due to higher prices ($15.8 million), higher income from land sales ($14.8 million), favorable foreign exchange impacts ($2.7 million), changes in mix ($2.5 million) and higher other income ($0.6 million), which were partially offset by lower carbon sales ($1.1 million), higher depreciation ($0.3 million) and higher forest management costs ($0.1 million). Year-to-date Adjusted EBITDA of $86.0 million was $45.5 million above the prior year period.
Real Estate
Third quarter sales of $17.3 million decreased $43.3 million versusthe prior year period, while operating income of $11.4 million decreased $31.7 million versusthe prior year period. Sales and operating income decreased inversus the third quarterprior year period due to a lower number offewer acres sold (2,549(1,933 acres sold versus 23,6012,087 acres sold in the prior year period) and lower weighted-average prices ($5,774 per acre versus $6,200 per acre in the prior year period), partially offset by an increasefavorable deferred revenue adjustments.
Improved Development sales of $1.8 million consisted of two transactions in weighted-average pricesthe Heartwood development project south of Savannah, Georgia, including a 3.1-acre multi-tenant retail parcel for $1.0 million ($6,764321,000 per acre versus $2,569acre) and 18 finished residential lots for $0.8 million (a base price before true-up of $46,000 per acrelot or $284,000 per acre). This compares to Improved Development sales of $4.8 million in the prior year period) due to the mix of properties sold. Third quarter Adjusted EBITDA of $13.4 million was $43.2 million below the prior year period.
Improved Development sales included the first residential lot closing for a model home within the Company’s Wildlight development. Unimproved Development sales of $13.9 million primarily consisted of a 1,300-acre tract in Nassau County, Florida for $10,000 per acre. This compares to the prior year quarter sales of $1.4 million for a 73-acre tract in St. John’s County, Florida for approximately $18,500 per acre. Rural sales of $3.1$8.7 million were comprisedconsisted of 1,1281,498 acres at an average price of $2,771 per acre, including 90 acres in Texas for $6,850$5,828 per acre. This compares to the prior year quarterperiod sales of $6.4$6.5 million, comprisedwhich consisted of 2,0691,531 acres at an average price of $3,082$4,245 per acre. Non-strategic /
Timberland & Non-Strategic sales of $0.2$0.6 million were comprisedconsisted of 102 acres at an average price of $1,616a 430-acre transaction for $1,421 per acre, including 85 acres of non-strategic property with limited productivity (i.e., 100% non-plantable).acre. This compares to the prior year quarterperiod sales of $52.8$1.6 million, comprisedwhich consisted of 21,459 acres at an average price of $2,465 per acre, including 17,772 acres in Georgiaa 528-acre transaction for $2,720$3,100 per acre.
Year-to-date sales of $97.2 million decreased $114.1 million versus the prior year period, while operating income of $57.3 million decreased $95.7 million versus the prior year period. Year-to-date sales and operating income include $42.0 million and $28.2 million, respectively, from Large Dispositions in 2017 and $129.5 million and $101.3 million in the prior year period. Sales and operating income decreased in the first nine months primarily due to lower volumes (41,303 acres sold versus 89,510 acres sold in the prior year period). Year-to-date operating income also decreased due to the receipt of a $4.0 million deferred payment in 2016 with respect to a prior land sale. Year-to-dateFirst quarter Adjusted EBITDA of $43.5$4.6 million was $30.5 million below the prior year period.
Trading
Third quarter sales of $40.2 million increased $15.5 million versusthe prior year period due to higher volumes and prices. Sales volumes increased 38% to 371,000 tons versus 269,000 tons in the prior year period due to increased volume from existing suppliers and stumpage blocks purchased from third-parties, coupled with improving export market demand. Average prices increased 18% to $108.58 per ton versus $91.80 per ton in the prior year period primarily due to stronger demand from China. Operating income and Adjusted EBITDA of $1.1 million increased $0.6 million versus the prior year period.
Year-to-date sales of $115.9 million increased $39.9 million versusthe prior year period due to higher volumes and prices. Sales volumes increased 32% to 1,079,000 tons versus 816,000 tons in the prior year period due to increased volume from existing suppliers and stumpage blocks purchased from third-parties, coupled with improving export market demand. Average prices increased 15% to $107.45 per ton versus $93.18 per ton in the prior year period primarily due to stronger demand from China. Operating income of $3.4 million increased $1.9decreased $2.0 million versus the prior year period.
Other Items
Corporate and Other Expense/EliminationsTRADING
Third First quarter sales of $11.8 million decreased $0.8 million versus the prior year period, primarily due to lower prices. Sales volumes of 105,000 tons remained flat versus the prior year period. The Trading segment generated breakeven results versus operating income of $0.3 million in the prior year period.
OTHER ITEMS
CORPORATE AND OTHER EXPENSE / ELIMINATIONS
First quarter corporate and other operating expenses of $5.1$9.8 million decreased $0.3 million versus the prior year period due to lower costs related to shareholder litigation ($1.2 million) and lower pension expense ($0.7 million), which were partially offset by higher depreciation expense ($0.2 million) and a reduction in overhead costs allocated to the segments ($1.4 million) as a result of pension and organizational changes made in the fourth quarter of 2016.
Year-to-date corporate and other operating expense of $15.3 million decreased $0.4increased $1.2 million versus the prior year period, primarily due to lower costs related to shareholder litigation ($1.5 million),higher compensation and benefits expenses and professional services fees. Compensation and benefits expenses were elevated versus the prior year period transaction costs relatedquarter primarily due to the Menasha acquisition ($1.3 million), and lower pension costs ($2.5 million). These decreases were partially offset by higher depreciationacceleration of equity compensation expense ($0.2 million), the prior year gain on foreign currency derivatives ($1.2 million) and a reduction in overhead costs allocated to the segments ($3.5 million) as a result of pension and organizational changes made in the fourth quarter of 2016.for retirement-eligible employees.
Costs related to shareholder litigation include expenses incurred as a result of the securities litigation and the shareholder derivative demands. See Note 8 — Contingencies. 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.INTEREST EXPENSE
Interest Expense
Third First quarter interest expense of $8.6$9.7 million increased $0.1 million versusthe prior year period due to a higher periodic interest rate on the Company’s revolver, partially offset by lower average debt due to the repayment of $31.5 million of mortgage notes during the quarter. Year-to-date interest expense of $25.5 million increased $1.9decreased $2.0 million versus the prior year period, primarily due to higherlower average outstanding debt versus thedebt.
INTEREST AND OTHER MISCELLANEOUS (EXPENSE) INCOME, NET
First quarter interest and other miscellaneous (expense) income includes a $5.7 million pension settlement charge and $1.3 million of net costs associated with legal settlements. The prior year period.period includes $9.1 million of net recoveries associated with legal settlements.
Income Tax ExpenseINCOME TAX BENEFIT (EXPENSE)
Third First quarter net income tax benefit of $0.8 million versus income tax expense of $3.0$1.1 million increased $2.2 million versusin the prior year period. Year-to date income tax expense of $16.8 million increased $14.6 million versus the prior year period. The increase in third quarter and year-to-date income tax expense versus the prior year periodsperiod was primarily due to improved results froma $1.2 million tax benefit associated with the New Zealand JV, which is the primary driver of income tax expense.pension termination and settlement.
Based on our solid results for the first nine months, expectations of continued strength in New Zealand export and domestic markets and a strong pipeline of Real Estate closings in the fourth quarter, we expect to achieve full-year Adjusted EBITDA near the higher end of our prior guidance. OUTLOOK
In our Southern Timber segment, we anticipate lower quarterly harvest volumes for the remainder of the year. We expect fourth quarter volumes tothat pine stumpage realizations will decrease slightly versusmodestly over the third quarterremainder of the year due to wet ground conditions in certain areas resulting from the recent storms, and we expect product pricing to decrease modestly due toa less favorable geographic mix and an increasea relatively higher proportion of thinning volume. Further, we continue to expect higher non-timber income for full-year 2024 relative to full-year 2023 driven by growth in thinning activity. our land-based solutions business.
In our Pacific Northwest Timber segment, we expect fourth quarterharvest volumes to increase versusduring the third quarter due tosecond half of the lifting of fire restrictions,year. We believe that market conditions have generally stabilized, and we expect continued strength in sawtimberthat end-market demand will improve modestly over the course of the year. We further expect weighted-average delivered log prices based on favorable domestic and export market conditions. will increase modestly into the second half of the year as mill inventories continue to normalize.
In our New Zealand Timber segment, we anticipate higher quarterly harvest volumes for the remainder of the year. We expect fourth quarter volumesweighted-average log prices to decline modestly versusin the third quarter, whilenear term before rebounding in the second half of the year due to lower expected log supply into China. Following the recent pull back in carbon credit pricing, we expect product pricing will continuenow anticipate the full-year contribution from carbon credit sales to reflect strong demand from China as well as domestic construction markets. be comparable with the prior year.
In our Real Estate segment, we anticipate additional closingsexpect higher transaction volume and operating results in the Wildlight development in the fourth quarter as the project picks up momentum following significant progress on initial infrastructure development during the year.second quarter.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
Our principal source of cash is cash flow from operations, primarily the harvesting of timber and sales of real estate. As a REIT,an UPREIT, our main use of cash is dividends.dividends and unitholder distributions. We also use cash to maintain the productivity of our timberlands through replanting and silviculture. Our operations have generally produced consistent cash flow and required limited capital resources. Short-term borrowings have helped fund working capital needs, while acquisitions of timberlands generally require funding from external sources or asset dispositions.Large Dispositions.
Summary of LiquidityUPDATE ON INITIATIVES TO ENHANCE SHAREHOLDER VALUE
We are continuing to make progress toward our $1 billion disposition target, and Financing Commitmentswe are actively evaluating several large-scale transactions. Specifically, we are currently marketing approximately 115,000 acres in Washington state, and we have further identified approximately 100,000 acres in the U.S. South that may be suitable for disposition. In addition, we are evaluating strategic alternatives for our New Zealand joint venture interest and have engaged a financial advisor to assist us with this process. We expect to provide additional information as it becomes available.
SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS |
| | | | | | | |
| September 30, | | December 31, |
(millions of dollars) | 2017 | | 2016 |
Cash and cash equivalents |
| $104.1 |
| |
| $85.9 |
|
Total debt (a) | 1,033.4 |
| | 1,065.5 |
|
Shareholders’ equity | 1,657.2 |
| | 1,496.9 |
|
Total capitalization (total debt plus equity) | 2,690.6 |
| | 2,562.4 |
|
Debt to capital ratio | 38 | % | | 42 | % |
Net debt to enterprise value (b) | 20 | % | | 23 | % |
| | | | | | | | | | | |
| March 31, | | December 31, |
(millions of dollars) | 2024 | | 2023 |
Cash and cash equivalents | $159.9 | | | $207.7 | |
| | | |
Total debt (a) | 1,368.7 | | | 1,372.7 | |
Noncontrolling interests in the operating partnership | 69.6 | | | 81.7 | |
Shareholders’ equity | 1,845.6 | | | 1,877.6 | |
| | | |
Total capitalization (total debt plus permanent and temporary equity) | 3,283.9 | | | 3,332.0 | |
Debt to capital ratio | 42 | % | | 41 | % |
Net debt to enterprise value (b)(c) | 19 | % | | 19 | % |
| |
(a) | Total debt as of September 30, 2017 includes $1,033.4 million of long-term borrowings, gross of $3.1 million of deferred financing costs. |
| |
(b) | Enterprise value is calculated as the number of shares outstanding multiplied by the Company’s share price plus net debt as of September 30, 2017 and December 31, 2016. |
Cash Flows(a)Total debt as of March 31, 2024 and December 31, 2023 reflects principal on long-term debt, gross of deferred financing costs and unamortized discounts.
(b)Net debt is calculated as total debt less cash and cash equivalents.
(c)Enterprise value based on market capitalization (including Rayonier, L.P. “OP” units) plus net debt based on Rayonier’s share price of $33.24 and $33.41 as of March 31, 2024 and December 31, 2023, respectively.
AT-THE-MARKET (“ATM”) EQUITY OFFERING PROGRAM
On November 4, 2022 we entered into a new distribution agreement with a group of sales agents through which we may sell common shares, from time to time, having an aggregate sales price of up to $300 million (the “2022 ATM Program”). As of March 31, 2024,$269.7million remains available for issuance under the 2022 ATM Program.
The following table outlines common share issuances pursuant to our ATM program (dollars in millions):
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Common shares issued under the ATM program | | | | | — | | | 400 | |
Average price of common shares issued under the ATM program | | | | | — | | | $34.03 | |
Gross proceeds from common shares issued under the ATM program | | | | | — | | | — | |
Commissions | | | | | — | | | — | |
CASH FLOWS
The following table summarizes our cash flows from operating, investing and financing activities for the ninethree months ended September 30, 2017March 31, 2024 and 2016.2023:
| | | | | | | | | | | |
(millions of dollars) | 2024 | | 2023 |
Cash provided by (used for): | | | |
Operating activities | $52.3 | | | $64.0 | |
Investing activities | (24.0) | | | (32.2) | |
Financing activities | (75.1) | | | (43.1) | |
|
| | | | | | | |
(millions of dollars) | 2017 | | 2016 |
Cash provided by (used for): | | | |
Operating activities |
| $186.9 |
| |
| $163.9 |
|
Investing activities | (199.1 | ) | | (254.1 | ) |
Financing activities | 29.2 |
| | 146.8 |
|
Cash Provided by Operating ActivitiesCASH PROVIDED BY OPERATING ACTIVITIES
Cash provided by operating activities increased $23.0 million primarily due to higher operating results.
Cash Used for Investing Activities
Cash used for investing activities decreased $55.0 million compared to 2016 primarily due to a decrease in timberland acquisitions of $114.8 million, an increase in the use of restricted cash of $38.6 million, and a decrease in assets purchased in business acquisition of $1.1 million. These amounts were partially offset by a decrease in net proceeds from Large Dispositions of $85.0 million, an increase in real estate development investments of $7.0 million, an increase in capital expenditures of $5.5 million and an increase in spending on the construction of the Company’s office building of $2.0 million.
Cash Provided by Financing Activities
Cash provided by financing activities decreased $117.6$11.7 million from the prior year period primarily due to a decreasechanges in net debt issuances of $270.6working capital.
CASH USED FOR INVESTING ACTIVITIES
Cash used for investing activities decreased $8.2 million from the prior year period due to lower cash used for timberland acquisitions ($8.7 million) and an increase in dividends paid of $2.9 million. These amounts werelower real estate development investments ($2.3 million), partially offset by an increase in equity issuances of $155.2lower proceeds from other investing activities ($2.7 million) and higher capital expenditures ($0.1 million).
CASH USED FOR FINANCING ACTIVITIES
Cash used for financing activities increased $32.0 million and a decrease infrom the prior year period. This is primarily due to higher dividends paid on common shares repurchases of $0.7 million.($30.1 million), higher distributions to noncontrolling interests in consolidated affiliates ($1.7 million), and higher distributions to noncontrolling interests in the operating partnership ($0.3 million).
FUTURE USES OF CASH
We expect future uses of Contents
cash to include working capital requirements, principal and interest payments on long-term debt, lease payments, capital expenditures, real estate development investments, timberland acquisitions, dividends on Rayonier Inc. common shares and distributions on Rayonier, L.P. units, distributions to noncontrolling interests, and repurchases of the Company’s common shares to satisfy other commitments.
Expected 2017 ExpendituresSignificant long-term uses of cash include the following (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Future uses of cash (in millions) | Total | | Payments Due by Period |
2024 | | 2025-2026 | | 2027-2028 | | Thereafter |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Long-term debt (a) | $1,368.7 | | | — | | | $244.7 | | | $474.0 | | | $650.0 | |
Interest payments on long-term debt (b) | 326.9 | | | 59.7 | | | 140.1 | | | 90.4 | | | 36.7 | |
Operating leases — timberland (c) | 186.8 | | | 7.2 | | | 15.7 | | | 14.5 | | | 149.4 | |
Operating leases — PP&E, offices (c) | 5.5 | | | 1.0 | | | 1.4 | | | 0.8 | | | 2.3 | |
Commitments — real estate projects | 45.3 | | | 33.7 | | | 2.3 | | | 2.3 | | | 7.0 | |
Commitments — derivatives (d) | 2.8 | | | 1.7 | | | 1.0 | | | 0.1 | | | — | |
Commitments — environmental remediation (e) | 19.1 | | | 14.3 | | | 1.3 | | | 0.8 | | | 2.7 | |
Commitments — other (f) | 2.6 | | | 2.0 | | | 0.6 | | | — | | | — | |
Total | $1,957.7 | | | $119.6 | | | $407.1 | | | $582.9 | | | $848.1 | |
(a)The book value of long-term debt, net of deferred financing costs and unamortized discounts, is currently recorded at $1,362.0 million on our Consolidated Balance Sheets, but upon maturity the liability will be $1,368.7 million. See Note 6 - Debt for additional information. (b)Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of March 31, 2024 and excludes the impact of hedging.
(c)Excludes anticipated renewal options.
We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, the remaining issuances available under the Company’s ATM Program, Large Dispositions and the use of our revolving credit facilities. We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term.
EXPECTED 2024 EXPENDITURES
Capital expenditures in 20172024 are expected to be between $66$83 million and $68$88 million, excluding capital expenditures related to the office building and any strategic timberland acquisitions we may make. Capital expenditures are expected to be comprised primarily consist of seedling planting, fertilization and other silvicultural activities, property taxes, lease payments, allocated overhead and other capitalized costs. Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.
RealWe anticipate real estate development investments in 2017 are expected2024 to be between $15$30 million and $18 million.$34 million, net of reimbursements from community development bonds. Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, at the interchange of I-95Florida and State Road A1A.
Construction ofHeartwood, our new headquarters buildingmixed-use development project located in Richmond Hill just south of Savannah, Georgia.
Our 2024 dividend payments on Rayonier Inc. common shares and distributions to Rayonier, L.P. unitholders, excluding the Wildlight development project is substantially complete. The new office allowed usadditional dividend and distribution paid on January 12, 2024 to consolidate three existing leased offices in Jacksonville and Fernandina Beach, Florida into one location and has also served as a catalyst for the Wildlight project. Construction costsshareholders of this building incurred in 2017record on December 29, 2023, are expected to be approximately $6 million.
Our 2017 dividend payments are expected to be approximately $127$171 million and $2 million, respectively, assuming no change in the quarterly dividend rate of $0.25$0.285 per share or partnership unit, or material changes in the number of shares or partnership units outstanding.
Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.
We have no mandatory pension contribution requirements in 2017 but may make discretionarymade cash contributions in 2024 of $2.7 million in order to fund the future. Cash incomeDefined Benefit Plan on a plan termination basis. Additionally, we anticipate settling the Excess Benefit Plan with lump sum payments upon termination of the Defined Benefit Plan with cash contributions of approximately $1.2 million. See Note 15 — Employee Benefit Plans for additional information. Full-year 2024 cash tax payments in 2017 are expected to be minimal. between $5.0 million and $8.0 million, primarily related to the New Zealand subsidiary.
OFF-BALANCE SHEET ARRANGEMENTS
We utilize off-balance sheet arrangements to provide credit support for certain suppliers and vendors in case of their default on critical obligations, and collateral for outstanding claims under our previous workers’ compensation self-insurance programs. These arrangements consist of standby letters of credit and surety bonds. As part of our ongoing operations, we also periodically issue guarantees to third parties. Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts. See Note 11 — Guarantees for details on the letters of credit and surety bonds as of March 31, 2024. PerformanceSUMMARY OF GUARANTOR FINANCIAL INFORMATION
In May 2021, Rayonier, L.P. issued $450 million of 2.75% Senior Notes due 2031 (the “Senior Notes due 2031”). Rayonier TRS Holdings Inc., Rayonier Inc., and Liquidity IndicatorsRayonier Operating Company, LLC agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. in regards to the Senior Notes due 2031. As a general partner of Rayonier, L.P., Rayonier Inc. consolidates Rayonier, L.P. and has no material assets or liabilities other than its interest in Rayonier, L.P. These notes are unsecured and unsubordinated and will rank equally with all other unsecured and unsubordinated indebtedness from time to time outstanding.
Rayonier, L.P. is a limited partnership, in which Rayonier Inc. is the general partner. The operating subsidiaries of Rayonier, L.P. conduct all of our operations. Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been excluded in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors. As a result, our ability to make required payments on the notes depends on the performance of our operating subsidiaries and their ability to distribute funds to us. There are no material restrictions on dividends from the operating subsidiaries.
The summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P. for the three months ended March 31, 2024 and year ended December 31, 2023 are provided in the table below:
| | | | | | | | | | | |
(in millions) | March 31, 2024 | | December 31, 2023 |
Current assets | $151.3 | | | $197.5 | |
Non-current assets | 108.3 | | | 98.8 | |
Current liabilities | 22.8 | | | 60.0 | |
Non-current liabilities | 2,277.0 | | | 2,181.6 | |
Due to non-guarantors | 957.2 | | | 861.5 | |
| | | |
| | | |
The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P. for the three months ended March 31, 2024 and year ended December 31, 2023 are provided in the table below:
| | | | | | | | | | | |
(in millions) | March 31, 2024 | | December 31, 2023 |
Cost and expenses | ($8.2) | | | ($32.3) | |
Operating loss | (8.2) | | | (32.3) | |
Net loss | (18.9) | | | (70.5) | |
Revenue from non-guarantors | 168.1 | | | 1,108.9 | |
| | | |
PERFORMANCE AND LIQUIDITY INDICATORS
The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, and ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures of financial results: Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”) and Cash Available for Distribution (“CAD”). These measures are not defined by Generally Accepted Accounting Principles (“GAAP”), and the discussion of Adjusted EBITDA and CAD is not intended to conflict with or change any of the GAAP disclosures described above.
Management uses CAD as a liquidity measure. CAD is a non-GAAP measure that management uses to measureof cash generated during a period that is available for dividend distribution,common share dividends, distributions to operating partnership unitholders, distributions to noncontrolling interests, repurchase of the Company’s common shares, debt reduction, timberland acquisitions and strategic acquisitions. We definereal estate development investments. CAD is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and spending on the Company’s office building)real estate development investments) and working capital and other balance sheet changes. CAD is not necessarily indicative of the CAD that may be generated in future periods.
Management uses Adjusted EBITDA as a performance measure. 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 ofexcludes specific items that management believes doare not directly reflectindicative of the core business operations on anCompany’s ongoing basis.operating results. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, costs related to shareholder litigation, the gain on foreign currency derivativesnon-operating income and expense, timber write-offs resulting from casualty events and Large Dispositions. Costs related to shareholder litigation include expenses incurred as a result of the securities litigation and the shareholder derivative demands. See Note 8 — Contingencies. 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.
We reconcile Adjusted EBITDA to Net Income for the consolidated Company and to Operating Income for the segments, as those are the most comparable GAAP measures for each. The following table provides a reconciliation of Net Income to Adjusted EBITDA for the respective periods (in millions of dollars):
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net Income to Adjusted EBITDA Reconciliation | | | | | | | |
Net income |
| $28.8 |
| |
| $40.6 |
| |
| $94.7 |
| |
| $167.3 |
|
Interest, net | 8.1 |
| | 8.3 |
| | 24.2 |
| | 24.8 |
|
Income tax expense | 3.0 |
| | 0.8 |
| | 16.8 |
| | 2.2 |
|
Depreciation, depletion and amortization | 28.7 |
| | 32.0 |
| | 96.6 |
| | 83.7 |
|
Non-cash cost of land and improved development | 1.3 |
| | 4.3 |
| | 8.6 |
| | 10.1 |
|
Costs related to shareholder litigation | — |
| | 1.2 |
| | 0.7 |
| | 2.2 |
|
Gain on foreign currency derivatives (a) | — |
| | — |
| | — |
| | (1.2 | ) |
Large Dispositions (b) | — |
| | — |
| | (28.2 | ) | | (101.3 | ) |
Adjusted EBITDA |
| $69.9 |
| |
| $87.2 |
| |
| $213.4 |
| |
| $187.8 |
|
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | | | |
| 2024 | | 2023 | | | | | | |
Net Income to Adjusted EBITDA Reconciliation | | | | | | | | | |
Net Income | $2.3 | | | $7.4 | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Interest, net and miscellaneous income | 7.7 | | | 11.2 | | | | | | | |
Income tax (benefit) expense (a) | (0.8) | | | 1.1 | | | | | | | |
Depreciation, depletion and amortization | 37.1 | | | 37.6 | | | | | | | |
Non-cash cost of land and improved development | 3.0 | | | 4.2 | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Timber write-offs resulting from casualty events (b) | — | | | 2.3 | | | | | | | |
Non-operating expense (income) (c) | 7.0 | | | (9.1) | | | | | | | |
Adjusted EBITDA | $56.2 | | | $54.7 | | | | | | | |
| |
(a) | (a)The three months ended March 31, 2024 includes a $1.2 million income tax benefit related to the pension settlement. (b)Timber write-offs resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume damaged by casualty events which cannot be salvaged. (c)The three months ended March 31, 2024 includes $5.7 million of pension settlement charges and $1.3 million of net costs associated with legal settlements. The three months ended March 31, 2023 includes $9.1 million of net recoveries associated with legal settlements.
Gain on foreign currency derivativesis the gain resulting from the foreign exchange derivatives the Company used to mitigate the risk of fluctuations in foreign exchange rates while awaiting the capital contribution to the New Zealand JV.
|
| |
(b) | Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In January 2017, the Company completed a disposition of approximately 25,000 acres located in Alabama for a sale price and gain of approximately $42.0 million and $28.2 million, respectively. In April 2016, a disposition of approximately 55,000 acres located in Washington was completed for a sales price and gain of approximately $129.5 million and $101.3 million, respectively. |
The following tables provide a reconciliation of Operating Income (Loss) by segment to Adjusted EBITDA by segment for the respective periods (in millions of dollars): |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Corporate and other | | Total |
September 30, 2017 | | | | | | | | | | | | | |
Operating income (loss) |
| $11.5 |
| |
| $1.1 |
| |
| $19.3 |
| |
| $11.4 |
| |
| $1.1 |
| |
| ($5.1 | ) | |
| $39.3 |
|
Non-operating income | — |
| | — |
| | 0.6 |
| | — |
| | — |
| | — |
| | 0.6 |
|
Depreciation, depletion and amortization | 12.7 |
| | 6.5 |
| | 8.5 |
| | 0.7 |
| | — |
| | 0.3 |
| | 28.7 |
|
Non-cash cost of land and improved development | — |
| | — |
| | — |
| | 1.3 |
| | — |
| | — |
| | 1.3 |
|
Adjusted EBITDA |
| $24.2 |
| |
| $7.6 |
| |
| $28.4 |
| |
| $13.4 |
| |
| $1.1 |
| |
| ($4.8 | ) | |
| $69.9 |
|
| | | | | | | | | | | | | |
September 30, 2016 | | | | | | | | | | | | | |
Operating income (loss) |
| $8.2 |
| |
| ($3.3 | ) | |
| $6.6 |
| |
| $43.1 |
| |
| $0.5 |
| |
| ($5.4 | ) | |
| $49.7 |
|
Depreciation, depletion and amortization | 10.0 |
| | 6.7 |
| | 6.0 |
| | 9.2 |
| | — |
| | 0.1 |
| | 32.0 |
|
Non-cash cost of land and improved development | — |
| | — |
| | — |
| | 4.3 |
| | — |
| | — |
| | 4.3 |
|
Costs related to shareholder litigation | — |
| | — |
| | — |
| | — |
| | — |
| | 1.2 |
| | 1.2 |
|
Adjusted EBITDA |
| $18.2 |
| |
| $3.4 |
| |
| $12.6 |
| |
| $56.6 |
| |
| $0.5 |
| |
| ($4.1 | ) | |
| $87.2 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | Real Estate | | Trading | | Corporate and other | | Total |
September 30, 2017 | | | | | | | | | | | | | |
Operating income (loss) |
| $35.0 |
| |
| ($1.3 | ) | |
| $56.3 |
| |
| $57.3 |
| |
| $3.4 |
| |
| ($15.3 | ) | |
| $135.4 |
|
Non-operating income | — |
| | — |
| | 0.3 |
| | — |
| | — |
| | — |
| | 0.3 |
|
Depreciation, depletion and amortization | 37.1 |
| | 23.8 |
| | 29.3 |
| | 5.9 |
| | — |
| | 0.5 |
| | 96.6 |
|
Non-cash cost of land and improved development | — |
| | — |
| | 0.1 |
| | 8.5 |
| | — |
| | — |
| | 8.6 |
|
Costs related to shareholder litigation | — |
| | — |
| | — |
| | — |
| | — |
| �� | 0.7 |
| | 0.7 |
|
Large Dispositions (a) | — |
| | — |
| | — |
| | (28.2 | ) | | — |
| | — |
| | (28.2 | ) |
Adjusted EBITDA |
| $72.1 |
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| $22.5 |
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| $86.0 |
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| $43.5 |
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| $3.4 |
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| ($14.1 | ) | |
| $213.4 |
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September 30, 2016 | | | | | | | | | | | | | |
Operating income (loss) |
| $35.0 |
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| ($0.9 | ) | |
| $21.4 |
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| $153.0 |
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| $1.5 |
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| ($15.7 | ) | |
| $194.3 |
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Depreciation, depletion and amortization | 37.1 |
| | 15.0 |
| | 17.3 |
| | 14.0 |
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| | 0.3 |
| | 83.7 |
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Non-cash cost of land and improved development | — |
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| | 1.8 |
| | 8.3 |
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| | 10.1 |
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Costs related to shareholder litigation | — |
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| | — |
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| | — |
| | 2.2 |
| | 2.2 |
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Gain on foreign currency derivatives (b) | — |
| | — |
| | — |
| | — |
| | — |
| | (1.2 | ) | | (1.2 | ) |
Large Dispositions (a) | — |
| | — |
| | — |
| | (101.3 | ) | | — |
| | — |
| | (101.3 | ) |
Adjusted EBITDA |
| $72.1 |
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| $14.1 |
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| $40.5 |
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| $74.0 |
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| $1.5 |
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| ($14.4 | ) | |
| $187.8 |
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Three Months Ended | Southern Timber | | Pacific Northwest Timber | | New Zealand Timber | | | | Real Estate | | Trading | | Corporate and Other | | Total |
March 31, 2024 | | | | | | | | | | | | | | | |
Operating income (loss) | $23.0 | | | ($4.4) | | | $7.4 | | | | | ($0.1) | | | — | | | ($9.8) | | | $16.2 | |
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Depreciation, depletion and amortization | 21.8 | | | 9.1 | | | 4.0 | | | | | 1.7 | | | — | | | 0.4 | | | 37.1 | |
Non-cash cost of land and improved development | — | | | — | | | — | | | | | 3.0 | | | — | | | — | | | 3.0 | |
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Adjusted EBITDA | $44.8 | | | $4.7 | | | $11.4 | | | | | $4.6 | | | — | | | ($9.3) | | | $56.2 | |
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March 31, 2023 | | | | | | | | | | | | | | | |
Operating income (loss) | $22.2 | | | ($3.5) | | | ($0.7) | | | | | $0.9 | | | $0.3 | | | ($8.6) | | | $10.6 | |
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Timber write-offs resulting from casualty events (a) | — | | | — | | | 2.3 | | | | | — | | | — | | | — | | | 2.3 | |
Depreciation, depletion and amortization | 20.6 | | | 10.6 | | | 4.5 | | | | | 1.5 | | | — | | | 0.4 | | | 37.6 | |
Non-cash cost of land and improved development | — | | | — | | | — | | | | | 4.2 | | | — | | | — | | | 4.2 | |
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Adjusted EBITDA | $42.8 | | | $7.1 | | | $6.1 | | | | | $6.6 | | | $0.3 | | | ($8.2) | | | $54.7 | |
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(a)Timber write-offs resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume damaged by casualty events which cannot be salvaged.
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(a) | Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In January 2017, the Company completed a disposition of approximately 25,000 acres located in Alabama for a sale price and gain of approximately $42.0 million and $28.2 million, respectively. In April 2016, a disposition of approximately 55,000 acres located in Washington was completed for a sales price and gain of approximately $129.5 million and $101.3 million, respectively.
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| (b) | Gain on foreign currency derivativesis the gain resulting from the foreign exchange derivatives used by the Company to mitigate the risk of fluctuations in foreign exchange rates while awaiting the capital contribution to the New Zealand JV.
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The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
Cash provided by operating activities | $52.3 | | | $64.0 | |
Capital expenditures (a) | (18.9) | | | (18.7) | |
Net cost (recovery) on legal settlements (b) | 1.3 | | | (9.1) | |
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Working capital and other balance sheet changes | 2.1 | | | (5.8) | |
CAD | $36.8 | | | $30.4 | |
Mandatory debt repayments | — | | | — | |
CAD after mandatory debt repayments | $36.8 | | | $30.4 | |
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| Nine Months Ended September 30, |
| 2017 | | 2016 |
Cash provided by operating activities |
| $186.9 |
| |
| $163.9 |
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Capital expenditures (a) | (45.7 | ) | | (40.2 | ) |
Working capital and other balance sheet changes | 2.5 |
| | (0.2 | ) |
CAD | 143.7 |
| | 123.5 |
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Mandatory debt repayments | — |
| | — |
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CAD after mandatory debt repayments |
| $143.7 |
| |
| $123.5 |
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Cash used for investing activities |
| ($199.1 | ) | |
| ($254.1 | ) |
Cash provided by financing activities |
| $29.2 |
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| $146.8 |
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Cash used for investing activities | ($24.0) | | | ($32.2) | |
Cash used for financing activities | ($75.1) | | | ($43.1) | |
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(a) | Capital expenditures exclude timberland acquisitions of $239.1 million and $353.8 million and spending on the Rayonier officebuilding of $6.0 million and $3.9 million during the nine months ended September 30, 2017 and September 30, 2016, respectively.
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(a)Capital expenditures exclude timberland acquisitions and real estate development investments.
(b)Net cost (recovery) on legal settlements reflects the net loss (gain) from litigation regarding insurance claims.
Liquidity Facilities
2017 Debt Activity
During the nine months ended September 30, 2017, the Company made additional borrowings of $25.0 million on the Revolving Credit Facility. A draw of $15.0 million during the first quarter was used to repay the $15.0 million solid waste bonds that were due in 2020 and an additional draw of $10.0 million made in the second quarter was used to partially fund the acquisition of 91,000 acres in coastal Florida, Georgia and South Carolina. In the third quarter, the Company used available cash to repay $31.5 million of mortgage notes which were due in August 2017. As of September 30, 2017, the Company had available borrowings of $139.6 million under the Revolving Credit Facility, net of $10.4 million to secure its outstanding letters of credit.
In addition, the New Zealand JV made borrowings and repayments of $38.4 million on its working capital facility. As of September 30, 2017, draws totaling NZ$40.0 million remain available on the working capital facility. The New Zealand JV also repaid $10.9 million of its shareholder loan held by the non-controlling interest party during the nine months ended September 30, 2017. Changes in exchange rates increased debt on a U.S. dollar basis for its shareholder loan by $0.5 million during the nine months ended September 30, 2017.
Off-Balance Sheet Arrangements
We utilize off-balance sheet arrangements to provide credit support for certain suppliers and vendors in case of their default on critical obligations, and collateral for outstanding claims under the Company’s previous workers’ compensation self-insurance programs. These arrangements consist of standby letters of credit and surety bonds. As part of our ongoing operations, we also periodically issue guarantees to third parties. Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts. See Note 9 — Guarantees for details on the letters of credit, surety bonds and guarantees as of September 30, 2017.
Contractual Financial Obligations
In addition to using cash flow from operations, we finance our operations through the issuance of debt and by entering into leases. These financial obligations are recorded in accordance with accounting rules applicable to the underlying transaction, with the result that some are recorded as liabilities on the Consolidated Balance Sheets, while others are required to be disclosed in the Notes to Consolidated Financial Statements and Management’s Discussion and Analysis.
The following table aggregates our contractual financial obligations asprovides supplemental cash flow data (in millions of September 30, 2017 and anticipated cash spending by period:dollars):
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| Three Months Ended March 31, |
| 2024 | | 2023 |
Purchase of timberlands | — | | | ($8.7) | |
Real Estate Development Investments | (5.5) | | | (7.8) | |
Distributions to noncontrolling interests in consolidated affiliates | (1.7) | | | — | |
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LIQUIDITY FACILITIES
2024 DEBT ACTIVITY
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Contractual Financial Obligations (in millions) | Total | | Payments Due by Period |
Remaining 2017 | | 2018-2019 | | 2020-2021 | | Thereafter |
Long-term debt (a) |
| $1,033 |
| | — |
| | — |
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| $50 |
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| $983 |
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Interest payments on long-term debt (b) | 208 |
| | 8 |
| | 66 |
| | 64 |
| | 70 |
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Operating leases — timberland | 193 |
| | 4 |
| | 18 |
| | 17 |
| | 154 |
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Operating leases — PP&E, offices | 4 |
| | — |
| | 2 |
| | 1 |
| | 1 |
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Commitments — derivatives (c) | 32 |
| | 1 |
| | 9 |
| | 9 |
| | 13 |
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Commitments — other (d) | 10 |
| | 4 |
| | 4 |
| | 2 |
| | — |
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Total contractual cash obligations |
| $1,480 |
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| $17 |
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| $99 |
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| $143 |
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| $1,221 |
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(a) | The book value of long-term debt, net of deferred financing costs, is currently recorded at $1,030.3 million on the Company’s Consolidated Balance Sheet, but upon maturity the liability will be $1,033.4 million. |
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(b) | Projected interest payments for variable rate debt were calculated based on outstanding principal amounts and interest rates as of September 30, 2017. |
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(c) | Commitments — derivatives represents payments expected to be made on derivative financial instruments (foreign exchange contracts and interest rate swaps). See Note 11 — Derivative Financial Instruments and Hedging Activities.
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(d) | Commitments — other includes payments expected to be made on the construction of the Company’s office building and Wildlight development project. |
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Market and Other Economic Risks
We are exposed to various market risks, including changes in interest rates, commodity prices and foreign exchange rates. Our objective is to minimize the economic impact of these market risks. We use derivatives in accordance with policies and procedures approved by the Audit Committee of the Board of Directors. Derivatives are managed by a senior executive committee whose responsibilities include initiating, managing and monitoring resulting exposures. We do not enter into financial instruments for trading or speculative purposes.
As of September 30, 2017, we had $700 million of U.S. long-term variable rate debt. Our primaryInterest Rate Risk
We are exposed to interest rate exposure onrisk through our variable rate debt results fromdue to changes in LIBOR.SOFR. However, we use interest rate swaps to manage our exposure to interest rate movements on our term credit agreementagreements by swapping existing and anticipated future borrowings from floating rates to fixed rates. As of March 31, 2024, we had $850 million of U.S. long-term variable rate debt outstanding on our term credit agreements.
The notional amount of outstanding interest rate swap contracts with respect to our term credit agreements at September 30, 2017March 31, 2024 was $650also $850 million. The $350 million 2015 Term CreditLoan Agreement matures in April 2028, with the associated interest rate swaps maturing in August 2024. We have entered into forward starting interest rate swaps to cover $200 million of the 2015 Term Loan Agreement through the extended maturity date. The 2016 Incremental Term Loan Agreement and associated interest rate swaps mature in August 2024May 2026, and the 2021 Incremental Term Loan agreementAgreement and associated interest rate swaps mature in May 2026.June 2029. We have entered into an interest rate swap agreement to cover $100 million of borrowings under the 2022 Incremental Term Loan Agreement through the maturity date in December 2027. At this current borrowing and derivatives level, a hypothetical one-percentage point increase/decrease in interest rates would result in ano corresponding increase/decrease of approximately $0.5 million in interest payments and expense over a 12 month12-month period.
The fair market value of our U.S. long-term fixed interest rate debt is also subject to interest rate risk. The estimated fair value of our long-term fixed-ratefixed rate debt at September 30, 2017March 31, 2024 was $334.4$449.4 million compared to the $325$518.7 million principal amount. We use interest rates of debt with similar terms and maturities to estimate the fair value of our debt. Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise. A hypothetical one-percentage point increase/decrease in prevailing interest rates at September 30, 2017March 31, 2024 would result in a corresponding decrease/increase in the fair value of our long-term fixed-ratefixed rate debt of approximately $14 million.$24 million and $26 million, respectively.
We estimate the periodic effective interest rate on our U.S. long-term fixed and variable rate debt for the third quarter wasto be approximately 3.3%2.7% after consideration of interest rate swaps and estimated patronage payments,and excluding unused commitment fees on the revolving credit facility.
The functional currencyfollowing table summarizes our outstanding debt, interest rate swaps and average interest rates, by year of the Company’s New Zealand-based operationsexpected maturity and their fair values at March 31, 2024:
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(Dollars in thousands) | 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total | | Fair Value |
Variable rate debt: | | | | | | | | | | | | | | | |
Principal amounts | — | | | — | | | $200,000 | | | $100,000 | | | $350,000 | | | $200,000 | | | $850,000 | | | $850,000 | |
Average interest rate (a)(b) | — | | | — | | | 7.06 | % | | 7.01 | % | | 7.01 | % | | 6.96 | % | | 7.01 | % | | |
Fixed rate debt: | | | | | | | | | | | | | | | |
Principal amounts | — | | | $20,605 | | | $24,040 | | | $24,040 | | | — | | | $450,000 | | | $518,685 | | | $449,434 | |
Average interest rate (b) | — | | | 2.95 | % | | 3.64 | % | | 6.48 | % | | — | | | 2.75 | % | | 2.97 | % | | |
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Interest rate swaps: | | | | | | | | | | | | | | | |
Notional amount | $350,000 | | | — | | | $200,000 | | | $100,000 | | | — | | | $200,000 | | | $850,000 | | | $46,586 | |
Average pay rate (b) | 2.18 | % | | — | | | 1.50 | % | | 3.72 | % | | — | | | 0.67 | % | | 1.85 | % | | |
Average receive rate (c) | 5.31 | % | | — | | | 5.31 | % | | 5.31 | % | | — | | | 5.31 | % | | 5.31 | % | | |
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Forward-starting interest rate swaps | | | | | | | | | | | | | | | |
Notional amount | — | | | — | | | — | | | — | | | $200,000 | | | — | | | $200,000 | | | $16,959 | |
Average pay rate (b) | — | | | — | | | — | | | — | | | 1.37 | % | | — | | | 1.37 | % | | |
Average receive rate (c) | — | | | — | | | — | | | — | | | 5.31 | % | | — | | | 5.31 | % | | |
(a) Excludes estimated patronage refunds.
(b) Interest rates as of March 31, 2024.
(c) Average daily SOFR rate as of March 31, 2024 based on a 30-day look back period.
Foreign Currency Exchange Rate Risk
The New Zealand JV is the New Zealand dollar. Through these operations and our ownership in the New Zealand JV, wesubsidiary’s export sales are exposed to foreign currency risk on cash held in foreign currencies, shareholder loan payments which arepredominately denominated in U.S. dollars, and on foreign export salestherefore its cash flows are affected by fluctuations in the exchange rate between the New Zealand dollar and the U.S. dollar. This exposure is partially managed by a natural currency hedge, as ocean freight payments thatand shareholder distributions are predominantly denominatedalso paid in U.S. dollars. To mitigate these risks,We manage any excess foreign exchange exposure through the use of derivative financial instruments.
Foreign Exchange Exposure
At March 31, 2024, the New Zealand JV routinely enters into foreign currency exchange contracts and foreign currency option contracts to hedge a portion of the New Zealand JV’s foreign exchange exposure. At September 30, 2017, the New Zealand JV had foreign currency exchange contracts representing 42% of forecast shareholder distribution payments over the next 12 months. At September 30, 2017, the New Zealand JV alsosubsidiary had foreign currency exchange contracts with a notional amount of $55$127 million and foreign currency option contracts with a notional amount of $58$106 million outstanding related to foreign export sales and ocean freight payments.sales. The amount hedged represents 41%a portion of forecastforecasted U.S. dollar denominated harvesting sales proceeds over the next 18 monthsexport timber and 54% of log trading sales proceeds over the next 3 months. At September 30, 2017, the New Zealand JV also had36 months and next 2 months, respectively.
The following table summarizes our outstanding foreign currency exchange rate risk contracts with a notional amount of $2 million outstanding on behalf of suppliers.at March 31, 2024:
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(Dollars in thousands) | 0-1 months | | 1-2 months | | 2-3 months | | 3-6 months | | 6-12 months | | 12-18 months | | 18-24 months | | 24-36 months | | Total | | Fair Value |
Foreign exchange contracts to sell U.S. dollar for New Zealand dollar | | | | | | | | |
Notional amount | $8,750 | | $9,200 | | $6,000 | | $16,000 | | $18,500 | | $22,000 | | $17,000 | | $30,000 | | $127,450 | | ($2,116) |
Average contract rate | 1.5982 | | 1.6148 | | 1.6087 | | 1.6135 | | 1.6740 | | 1.6533 | | 1.6352 | | 1.6681 | | 1.6437 | | |
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Foreign currency option contracts to sell U.S. dollar for New Zealand dollar | | | | | | | | |
Notional amount | — | | — | | — | | $8,000 | | $24,000 | | $28,000 | | $10,000 | | $36,000 | | $106,000 | | ($59) |
Average strike price | — | | — | | — | | 1.6383 | | 1.6446 | | 1.7105 | | 1.6880 | | 1.6693 | | 1.6740 | | |
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Item 4. |
Item 4. CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Rayonier Inc.
DISCLOSURE CONTROLS AND PROCEDURES
Rayonier’s management is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934 (the “Exchange Act”), are designed with the objective of ensuring information required to be disclosed by the Company in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported or submitted within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Because of the inherent limitations in all control systems, no control evaluation can provide absolute assurance that all control exceptions and instances of fraud have been prevented or detected on a timely basis. Even systems determined to be effective can provide only reasonable assurance that their objectives are achieved.
Based on an evaluation of ourthe Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including the Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of September 30, 2017.March 31, 2024.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
In the quarter ended September 30, 2017,March 31, 2024, based upon the evaluation required by paragraph (d) of SEC Rule 13a-15,13a-15(d) under the Exchange Act, there were no changes in our internal control over financial reporting that would materially affect or are reasonably likely to materially affect our internal control over financial reporting.
DISCLOSURE CONTROLS AND PROCEDURES 1934 (the “Exchange Act”), are designed with the objective of ensuring information required to be disclosed by Rayonier, L.P. in reports filed under the Exchange Act, such as this quarterly report on Form 10-Q, is (1) recorded, processed, summarized and reported or submitted within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including Rayonier’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Because of the inherent limitations in all control systems, no control evaluation can provide absolute assurance that all control exceptions and instances of fraud have been prevented or detected on a timely basis. Even systems determined to be effective can provide only reasonable assurance that their objectives are achieved.
Based on an evaluation of the Operating Partnership’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, our management, including Rayonier’s Chief Executive Officer and Chief Financial Officer, concluded the design and operation of the disclosure controls and procedures were effective as of March 31, 2024.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
In the quarter ended March 31, 2024, based upon the evaluation required by Rule 13a-15(d) under the Exchange Act, there were no changes in internal control over financial reporting that would materially affect or are reasonably likely to materially affect internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Rayonier Inc.
REGISTERED SALES OF EQUITY SECURITIES
From time to time, the Company may issue common shares in exchange for units in the Operating Partnership. Such shares are issued based on an exchange ratio of Equity Securitiesone common share for each unit in the Operating Partnership. During the quarter ended March 31, 2024, the Company issued 350,376 common shares in exchange for an equal number of units in the Operating Partnership pursuant to the agreement of the Operating Partnership.
ISSUER REPURCHASES OF EQUITY SECURITIES
In February 2016, the Board of Directors approved the repurchase of up to $100 million of Rayonier’s common shares (the “share repurchase program”) to be made at management’s and the Board of Director’s discretion. The program has no time limit and may be suspended or discontinued at any time. There were no shares repurchased under this program in the thirdfirst quarter of 2017 and2024. As of March 31, 2024, there was $99.3$87.7 million, or approximately 3,437,5362,639,243 shares based on the period endperiod-end closing stock price of $28.89, available for repurchase as of September 30, 2017.
In 1996, we began a Common Share repurchase program (the “1996 anti-dilutive program”) to minimize the dilutive effect of our employee incentive stock plans on earnings per share. This program limits the number of shares that may be purchased each year to the greater of 1.5% of outstanding shares at the beginning of the year or the number of incentive shares issued to employees during the year. In October 2000, July 2003 and October 2011, our Board of Directors authorized the purchase of additional shares in the program totaling 2.1 million shares. The 1996 anti-dilutive program does not have an expiration date. There were no shares purchased$33.24, remaining under this program in the third quarter of 2017 and there were 3,778,625 shares available for purchase at September 30, 2017.program.
The following table provides information regarding our purchases ofRayonier common stockshares during the quarter ended September 30, 2017:March 31, 2024:
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Period | | Total Number of Shares Purchased (a) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (c) |
January 1 to January 31 | | 625 | | | $32.07 | | | — | | | 2,895,328 | |
February 1 to February 29 | | — | | | — | | | — | | | 2,548,023 | |
March 1 to March 31 | | 299 | | | 34.50 | | | — | | | 2,639,243 | |
Total | | 924 | | | | | — | | | |
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Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (a) |
July 1 to July 31 | | — |
| | — |
| | — |
| | 7,216,161 |
|
August 1 to August 31 | | — |
| | — |
| | — |
| | 7,216,161 |
|
September 1 to September 30 | | — |
| | — |
| | — |
| | 7,216,161 |
|
Total | | — |
| | | | — |
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(a)Includes 924 shares repurchased to satisfy tax withholding requirements related to the vesting of shares under the Rayonier Incentive Stock Plan. The price per share surrendered is based on the closing price of the Company’s common shares on the respective vesting dates of the awards.
(b)Purchases made in open-market transactions under the $100 million share repurchase program announced on February 10, 2016.
(c)Maximum number of shares authorized to be purchased under the share repurchase program at the end of January, February and March are based on month-end closing stock prices of $30.30, $34.43 and $33.24, respectively.
Rayonier, L.P.
UNREGISTERED SALES OF EQUITY SECURITIES
There were no unregistered sales of equity securities made by the Operating Partnership during the quarter endedMarch 31, 2024.
ISSUER REPURCHASES OF EQUITY SECURITIES
Pursuant to the Operating Partnership’s limited partnership agreement, limited partners have the right to redeem their units in the Operating Partnership for cash, or at our election, shares of Rayonier Common Stock on a one-for-one basis. During the quarter ended March 31, 2024, 350,376 units in the Operating Partnership held by limited partners were redeemed in exchange for shares of Rayonier Common Stock.
Item 5. OTHER INFORMATION
Insider Trading Arrangements and Policies
None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended March 31, 2024, as such terms are defined under item 408(a) of Regulation S-K.
Item 6.EXHIBITS
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22.1 | | | Incorporated by reference to Exhibit 22.1 to the Registrant’s June 30, 2022 Form 10-Q |
31.1 | | | | |
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(a) | Maximum number of shares authorized to be purchased as of September 30, 2017 include 3,778,625 under the 1996 anti-dilutive program and approximately 3,437,536 under the share repurchase program. |
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31.1 |
| | Filed herewith |
31.2 | |
| Filed herewith |
3231.3 | |
| Filed herewith |
31.4 | | | Filed herewith |
32.1 | | | Furnished herewith |
10132.2 | |
| Furnished herewith |
101 | | The following financial information from ourRayonier Inc. and Rayonier, L.P.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017,March 31, 2024, formatted in Inline Extensible Business Reporting Language (“XBRL”iXBRL”), includes: (i) the Consolidated Statements of Income and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017March 31, 2024 and 2016;2023 of Rayonier Inc.; (ii) the Consolidated Balance Sheets as of September 30, 2017March 31, 2024 and December 31, 2016;2023 of Rayonier Inc.; (iii) the Consolidated Statements of Changes in Shareholders’ Equity for the NineThree Months Ended September 30, 2017March 31, 2024 and the Years Ended December 31, 2016 and 2015;2023 of Rayonier Inc.; (iv) the Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2024 and 2016;2023 of Rayonier Inc.; (v) the Consolidated Statements of Income and (v)Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023 of Rayonier, L.P.; (vi) the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 of Rayonier, L.P.; (vii) the Consolidated Statements of Changes in Capital for the Three Months Ended March 31, 2024 and 2023 of Rayonier, L.P.; (viii) the Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 of Rayonier, L.P.; and (ix) the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P. | Filed herewith |
104 | | The cover page from the Company’s Quarterly Report on Form 10-Q from the quarter ended March 31, 2024, formatted in Inline XBRL (included as Exhibit 101). | Filed herewith |
* Management contract or compensatory plan.
SIGNATURESIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrantregistrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | RAYONIER INC. |
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| | | RAYONIER INC.
| | (Registrant) |
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| By: | /s/ APRIL TICE |
| | April Tice Director,Senior Vice President and Chief Financial Services and Corporate ControllerOfficer
(Duly Authorized Officer, Principal Accounting Officer) |
Date: NovemberMay 3, 20172024
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| | RAYONIER, L.P. |
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| | By: RAYONIER INC., its sole general partner |
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| By: | /s/ APRIL TICE |
| | April Tice Senior Vice President and Chief Financial Officer (Duly Authorized Officer, Principal Accounting Officer) |
Date: May 3, 2024