RYN - Earnings call transcript Q2 2018

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Operator

Welcome and thank you for joining Rayonier's Second Quarter 2018 Teleconference Call. [Operator Instructions] Today's conference is being recorded.

If you have any objections, please disconnect at this time. And now I will turn the meeting over to Mr. Mark McHugh, Senior Vice President and CFO. begin. may you Sir,

Mark McHugh

good earnings. to and covering investor second quarter morning. you Rayonier's Welcome teleconference Thank

statements financial rayonier.com. earnings we Safe available remind Our Harbor and that include on and yesterday you federal pursuant our are forward-looking afternoon provisions statements website to these of at in I'd made to supplements like presentations, were the released laws. securities

the factors that, will to also with opening and start the make. referenced from we measure SEC of supplement. from are the with differ nearest may Form our results Dave lists Throughout measures, which actual comments GAAP filed CEO. that statements and Nunes, defined With XX-K release and cause in our presentations, and They're Dave? earnings on Our let's of may non-GAAP to we release the discuss Page these forward-looking materially our some teleconference also X reconciled earnings President financial materials. supplemental financial

David Nunes

good everyone. and Thanks Mark morning

the for Estate make some financial results, results, First, and and our Real Chris timber our following of it of Senior Long, our estate ask Doug review comment Resources to we'll Vice timber on diversity results, our review will and Senior overall Real Vice our of over Zealand to Timberland's turning portfolio. I'll the U.S. of discuss We're to quality Corr, to quarter then report reflective second results Forest Mark President pleased Estate our remarks results. New real our a strong before President and back

prior second million of increase $X.XX we quarter. and the significant share EBITDA year per the a represents quarter, of second For from which $XXX achieved earnings adjusted

The non-timber was prior quarter stronger recent adjusted incremental $X in increase coupled volumes in XX% easement increase while volume by overall from XX% driven year income. of from harvest income increase significant Southern Timber roughly higher EBITDA in was volume million demand, driven pipeline increase non-timber the Our primarily second segment and a acquisitions reflecting by the with sales.

was higher XX% continued volumes, delivered a in we sawtimber lift Our these XX% Pacific driven Based by both in domestic well markets. accelerated This of which as second harvest market conditions, as strengthening planned favorable reported quarter half the balance the Timber year. to that Northwest result comparatively level the average year. and the volume contributed export harvest on segment lower for pricing for second will timing in the a of some harvest strong

We in second a also Zealand. quarter New strong enjoyed

XX% second sales, domestic the period year quarter nearly the prior New increase increase volume in increased in Excluding prior driven year prices. export Timberland sawtimber by Zealand versus X% and XX% both adjusted EBITDA and

strong real the closing estate the results for continued properties. prior Louisiana, of improved quarter as primarily demand in well into segment, Moving as a HBU year rural reflecting significantly sale Timberland our over

financial results. in the our it is let our we is premium to review business strategy augmenting pleased Timberland that, As past, meaningfully Mark this yielding back see our that me to all real to results and stated about strong With over very turn and returns. core we're estate

Mark McHugh

Dave. Thanks

forma quarter $XX had in was million, Page we financial million as our $XXX per income attributable Let's no the net share share. while quarter. start EPS items Pro on Sales to or X pro million for $XX per with $X.XX highlights. Rayonier was $X.XX the operating was income and also totaled forma

the and Pacific Northwest Timberland prior $XXX prior due million in above partially Timber New was million quarter adjusted $XX the results segments lower in EBITDA period our Estate year Southern significantly quarter offset EBITDA Zealand in of Timber, sales. to of Real by favorable Second due adjusted to year results

these Zealand significantly. results excluding noted Timber sales, New improved Dave As Timberland also

a liquidity comparison at we've of and well as our capital X, bottom end, resources to provided overview Page year-end. of the an as On quarter

reconciliation activities to due on lower cash for operating available to and and prior closed or cash A adjusted measure $XX $XXX lower by the cash million is quarter half period supplement. CAD distribution in interest provided million million taxes primarily paid, lower $XXX year higher the the year CAD GAAP of expenditures. debt. other of compared for cash the Our financial million $XXX the with to of was provided Page EBITDA, capital first cash roughly and We of X of

our at of as excludes $XX million and Note debt intermediaries represented like-kind that detailed exchange quarter. that value provide classified results. these and of I’ll Doug closing a enterprise HBU to held $XXX on are of sales million cash now price call net timber review XX% over Our our therefore from Timberland based our cash. figures and stock of to are currently restricted by the turn more proceeds

Douglas Long

Thanks everyone. Mark. Good morning,

and Let's start X million the Southern $XX the million quarter year quarter of million Timber was $X segment. the Page second EBITDA quarter on favorable to with respectively. our prior Adjusted in and prior $X

production with approximately X.X tons XX,XXX compared lower full than quarter which by tons quarter. prior extraordinarily of of incremental the volume harvest million recent first the high to prior year volume quarter from The stronger Second primarily XXX,XXX was in of on level the overall we quarter, tons volume acquisitions, demand. was expected coupled driven increase

second $XX the easement. quarter pipeline period of sales that noting doubled of the closing in to our versus significant three prior year worth it's the Additionally million, non-timber

prior pine our of were fire. the $XX.XX essentially were and pulpwood in in Pine the year prices harvest prior salvage Mims per decrease ton pulpwood were period and due prices by to quarter quarter quarter the The year prior to the favorable West flat compared Second X% the the year compared to sawtimber X% X% geographic stumpage $XX.XX timber period. negatively prior was prior favorable affected pine mix, in West of prices quarter. of first to portion pulpwood prices unfavorable stumpage whereas ton quarter shifting compared to per

XX% sawtimber differences very specific, to attributable localized with geographic to overall can are both in the While pricing prices respectively. Hardwood and markets, per mix. driven see were product some ton in Hardwood mix. is so the of and the year, compared price markets favorable during X% to changes prior be coastal in flat and South we by product generally prior period-to-period continue and quarter $XX.XX relatively quarter strengthening last geographic modest year

moving favorable the respectively. prior to $X quarter Pacific quarter Northwest Now was and $XX timber Page the on EBITDA segment of million Adjusted prior year and million $X XX. million to

Second XX% to quarter the volume quarter. prior prior of quarter and tons flat higher was harvest essentially the than year XXX,XXX

both opportunity quarter thus prior of afforded in was in pricing. favorable year increase ton the were second prices respectively. The As favorable mentioned, to for $XXX.XX sold in an Dave again to us X% the quarter Delivered during scheduled strong the of volume both locking very pulpwood XX% the be and can quarter be sawtimber, that year half sawtimber accelerate market prior and otherwise conditions second to sawtimber prices New attributed to to was and per chip growing continued year results increase attention were pulp key prior coupled metrics shows respectively. and ton, strength Zealand with the driven favorable for quarter in segment. Timber XX% $XX.XX XX% markets. and Page for domestic Delivered in prior exports. mill, export at compared prices pulpwood and of prices strong per quarter by pulpwood The and West XX market from operating a Coast demand

quarter was very quarter. unfavorable of million included prices. sales $X year higher million. harvest due prior favorable another $XX million and delivered Adjusted export sawtimber quarter $XX segment million Timber of to $XX Zealand And to land strong prior EBITDA the favorable compared to primarily volumes New compared which Our

Zealand in respectively, India prices XXX,XXX prior parity. tension was of strong from and export due China, quarter X% and associated recent ton terms turn prior quarter of acquisitions. per volume XXXX Chris segments, decreased supplies. were X% to year EBITDA the congestion. cost pulpwood of compared to timing year cover and quarter with higher continue with compared tons and the higher harvest by per prior quarter compared of it quarter rise flat competition quarter year U.S. Second pricing prices Trading increased prior markets and higher of prior along $XX.XX lower ton sawtimber the Chris? $XXX.XX X% and Estate. tighten increased China, I'll dollar demand to XX% in in X% compared local increased Export prices with New to cheaper to complemented and to In margins continued shipping due export volume for sawmills prior due XX% year to to Domestic compared our export as continued supply ton Real quarter log shipments and cost. for mills primarily to to to to fiber to $XX.XX trading from mainly due second quarter logs competing and increase respectively, to quarter sawtimber incremental adjusted respectively, to now quarter and quarter modest between and roughly over prior reaching prior XX% $XXX,XXX a demand compared prior U.S. per exchange to demand rate. increased local quality Domestic customers the due India sought from port

Christopher Corr

Thank you, Doug.

Page Estate sold $XX XX,XXX estate second sales in Timberland a Real on activity quarter As million our delivered totaled results. highlighted Real sale with acres XX, on the Louisiana. segment by dominated strong very

development hold activity sales, average category per our a our a at our wildlife project. a in significant $X,XXX pace development premium of value. weighted improved acre, representing Timberland Excluding price of we improved steady to reflect generated Sales development

of places to closed We're quarter, category, of and an on pleased rural activity for a Louisiana. we $XXX,XXX non-strategic and and at per of million, lots an totaled acre. where progress total in $XXX,XXX $XX,XXX the of lots a in see per In $XXX,XXX transactions. per $XX $X,XXX or price property sale acres residential or XX we were closed to at lot, average acre. two of average the sales This comprised in per acres with million acres roughly the build pickup includes the roughly $X.X In Florida During Interest or a continues Louisiana of price sold, XX rural category, acres acre. sales our we're in of for X,XXX million and timberlands for roughly of XX,XXX $XXXX on $XX acre. XX and XX,XXX $X,XXX this per program, separate product starting very commercial particularly Texas, in

the during half much activity in extraordinarily real Following year. first quarters strong expect the second of second we estate, lighter and

activity in year on to now to concentrated Mark. pipeline. was development back discussed past, said, sales the the we in expect construction, with we've half. turn to tend our call I'll throughout year progress over both build project As and first be steady That real wildlife the estate continue this our lumpy the and infrastructure, our activity to in heavily results the

Mark McHugh

Thanks Chris.

We're to increasing our our based full-year now outlook $X.XX, As million, $XX adjusted noted the attributable results income Rayonier of EPS guidance. release, of year. We in our net and of $XXX year $X.XX earnings to $XXX $XX our million year-to-date the full EBITDA to for to million. balance anticipate of and million on

Additional our earnings our full line year X.X can release. reconciliation respect volume guidance, details our regarding a Schedule of segment achieve our expect on segments, to of million adjusted net of EBITDA individual Southern updated be to to we with guidance. found our tons prior and EPS, in G With to income including Timber X.X

the anticipate strong we for volumes harvest half. quarterly volumes the first in year, Although the given of remainder the lower

XXXX relatively a we as continue in for as move and tons some pricing year of our on new And then tons. pick modest volumes we're prices to of remain to stumpage In South expect guidance the weighted-average more our full stands. Pacific Pacific full achieve expect million the X.X our lumber our to year in X.X In lower to X.X achieve the based Timber X.X year. Zealand We we decline to momentum with of balance year. into Northwest, Northwest harvest this product some to We volume mix primarily segment, XXXX. track capacity to in New million quarterly online, the comes challenging volume on up likewise in Timber further expect segment, primarily flat

prices export and U.S. the a during the tensions Although second between result half we as ongoing trade anticipate the in softening some of China.

situation log as Zealand the created on situation tariffs, fundamental some New the While impact to U.S., wood are as by some not remain China closely. general market favorable have believe from China log the trade the of directly and the potential pullback the exports manufactured by falling well impacted uncertainty that export U.S. conditions we're in We products caused market. export market continuing monitor to tariffs

first Lastly, half following expect in Estate our in strong we very and activity of Real the year. segment, light extraordinarily the fourth an third quarters,

operating and call our turn of for on the I'll back EBITDA by regarding can supplement. Dave, to details XX Additional adjusted income Page volume, segment closing comments. be now found financials

David Nunes

in importance its as certainly quarterly quarter, these second our our strong to It we advantage the for cash pleased of remaining our turn in our allocation strongest remarks. value put the We'll during worked how action from distribution. our business over an result that team action structure, capital significant the market Overall, both going This now as our our the quarter, the deliver value and maximize share, we're To EBITDA XXXX. since for as $X.XX effective as end, seek long operational of favorable back our very increase $X.XX quarterly into sustainability And strategies we we questions. call and second to priorities. as it the during We'll strong growth, dividend X% to long quarter, our of very reflects this across the each stressed term. flow the prepared well continued commitment term reflects nimble adjusted further of Thanks operator, per proud share. results. shareholders in to in the per announced the capital cash mindset quarter segments. executed to over we with concludes our for Mark. second That well always to seek took we to confidence We've operational fibers build from nimble as capital spinoff of businesses. represents together forward, conditions allocation, continue our employ this philosophy I'm

Operator

Pettinari [Operator first from Anthony Our is Instructions] Citi. today from question

Randy Toth

mild your is Toth, talk year, you all what's risen for Anthony. guidance the This to EBITDA Zealand? Compared for in Can actually in Randy New at in Zealand. for has that beginning cut about except segments seems the sitting of driving expectations like it EBITDA New

David Nunes

any market bit associated softening the the been products wood that tariffs U.S. of impacted a China Yes, not the with list But in like seen we that kind there. potential China is discussed, tariffs. there directly of manufactured U.S. to obviously the by in Zealand on we've Again export conditions flow New situation. have trade of are

recent in market a overall of market market developments. China seen we export result so of that And think we’ve robust the healthy, remain little again skittishness bit just a construction as remains conditions again but the fundamental these trade in

Mark McHugh

expensive flows on have influence based currency. have the that New from also You some recent Zealand currency more made wood there

had that's seen impact so we little in some inventories And a just modest up and tick off late?

Randy Toth

port China And then far what theme, and you inventories just do the staying as rates? on the offtake think

Mark McHugh

You want to speak.

David Nunes

sits we've really speak can record inventory a XXXX levels. and have are buildup ratio months range healthy in first levels demand quarter, X.X currently exports saw after that, within I comfortable as dramatically we the year is over New in this the believe a again tracking last and just very more Yes two important track the than this on they feel and but And inventory that quarter. so before log large Chinese second entry level. we we in ratios to we And and Year seen discussed is set to fallen a China

QX so right that During pretty it’s built over seen drop-down it this we significant we feel and in X.X level a from a healthy months minute. like

Operator

Raymond question Mings from is from next Our James. Collin

Collin Mings

seen today on about? First coming talked of you the weakness question some that the you just quantify you’ve of Zealand, can pressure pricing New on off

Douglas Long

been is say so in Yes that attributable kind pressure Collin, ballpark pretty currency, the it’s so of Doug. of we things. I the the pricing to devaluation of on would far and much seen it’s

and more of China just they that before little see both we mentioned a congestion the New of with exports. I additional seen increase in costs were have port impact freight bit log Zealand We

currency and going mentioned just So of about slight [inaudible] kind just been some more we around things. freight to-date of where relatively that back. kind flow Right type our put products that Mark it’s devaluation and uncertainty the guidance that tick it’s fresh is with general that now

Collin Mings

sounds that think is looking recently there be adjustment guidance correction necessarily is it the meaningful continued here fair? more a some so just pressure Yes, forward I pricing like versus could

Mark McHugh

that’s Yes, fair.

David Nunes

will be Yes, say. fair that to to

Collin Mings

then But maybe level And at at process Dave guys I just this the these that? the more broadly of status the you and touch there your you engagement you then can some in just on point. can New looks and us are on limitations can this like on Zealand some juncture. deal, Timberlands with say And during acquired you Phaunos just quarter of recognize what sticking update probably

David Nunes

Sure.

Just the the process certainly year as voted ultimately resolve right stake those summer. XX% situation the we and down to the in board now and we unsolicited it U.K. its we Phaunos but an then offer recently process. the Zealand Manager will board the their case it’s in the committing that offer last or six the process to this ultimately for its have down and statement months of in in orderly Stafford an owning price. wind for Their timber new months. assets. several finalizing clear and made listed to either of We of Phaunos of believe is Stafford rejecting continue asset it itself defense proceed sale going in completion at remaining boil shareholders going made next interest And to the it’s that with which earlier traded over monitor certainly shareholders ensuing is refresher, board was all a in Phaunos began the resigned fund which publicly executing sale manager a is Their their fund former our the Phaunos partner Board an undertaking. the plan complicated that New to

Collin Mings

in on during as maybe timberland U.S. in again Florida, looks here And touch just Zealand acquired there the acquisition our the in the both New then and was just it as quarter? like particularly again far

David Nunes

a that Sure. XX,XXX roughly Florida for we're sell things approximate of or value. that the one It a acres. it’s little quarter an under acquired one roughly buy wasn't we at engagement and per that excited $X,XXX of $XX recently acres It sale did we we property in here that acre the is the was on bulk bought an a under and Whether an heavy in just over we internally fairly stress the Coastal this for we management the side XX,XXX just market. to acre that acquisition having portfolio sold was active million, a about the Xx side

that we that to price and a a were And at then that. fortunate we’re that bolt-on for we’re we felt operating bolt-on Zealand able we looking opportunities some so happy about replace significantly so we can acquisition at small feel in of again those and lower a with essentially low happy cost. gross we to pretty do add acreage acres XXX And so continue small where New had value

Collin Mings

one turn last one over. it then And just I'll

touched that a I on may Doug certain of a customers Just some gains and using margin as the pullback pricing mean every reason are half that as as lumber the are and in on year from log any some and prevent last in markets. there you year-over-year But far down to be or Recognizing month, pricing. pricing over market so? improvements seeing the knock maybe a bit experienced little month seeing in only this it’s try

Douglas Long

people negotiation to there strategy. trying in always would I say Collin everything do that was

they prices repeatedly lumbar going retreating if western but The to tactic are are the margins is they obviously seen have obviously per yet. had. those mills haven’t nice given based southern and everyone the on we even So mills price having using pricing

seen we So discussion reflect negotiations of prices. that’s price but always a haven’t that

Operator

Mamtora from Our Ketan next BMO is Markets. from Capital question

Ketan Mamtora

exports that off on south the you kind you’ve First U.S. progress about of there? progress of But small meaningfully update up can on base. of log number of of question, kind kind is going provide out talked what an

Douglas Long

if as read we general, say growing that releases. south press I it Sure, we in recent that quite small in in started a really exports rapidly base seen

general across where had of think we about the So first in I in XXXX just did meters X year as things XXXX. south half less we million south the cubic in actually over in in million X.X the the

extreme increase forward. been we as it’s So go

at was XXX resource southern and already For first units third our been us this export with look of southern year ports within ports total to months our we In as over we in six mill miles routed key exported land volume. we've based our surpassed the of the where at of three the quarters south. XXXX approximate

track So year year did we’ve months already in so we the upon that. six and essentially we did first doubling to on last improve what we’re we continue last

Ketan Mamtora

and you and kind kind lot a Second of log you Zealand appreciate export that into New about U.S. talked different do its of that kind question of when of I the issues any export to do of But dynamics? ripple anticipate you on - was more forward-looking. price due market the or trade works pressure effects kind anticipate

Douglas Long

It’s is we’re one particularly going used important kind war thing hard to are think infrastructure work South announced China that going loss China. I to is over what’s in happen the trade but coming in spending China. recently to and one Northwest the guess And primarily against war of of increasing in trade industry both tools the that rural are of areas construction out and seeing the is

going work hard but it’s in to productive to So tariffs also. that logs, going they’re to happen trade on to process we war in put think China what’s predict

David Nunes

to on tariffs important the lot a used with it’s Ketan which and China that of plywood the China. of potential respect in radiant the manufacturing going so list Yes, of get is U.S. to into note again

in lot China going So logs China. a Zealand into going different is the logs versus a New there of some into use the of

Ketan Mamtora

that I of the possibility do at all there you any possibility is last been Pacific the has be there federal XX we press years XX you on but Northwest question, that last Do opened us there in for for could recently Act. Species mean harvest again think was seen some think reworking could the lands the around that And to most any Endangered happen? haven't

David Nunes

That would surprise us.

if virtually that just have place a that from recognize we've manufacturing I occur. to think wood no that that could down you know were it gone even far capacity line I And standpoint. that too handle that you in think policy

that that is we I really think not something So horizon. the on think that's

Operator

Our next Babcock Bank from America. question from of is John

John Babcock

Just two here. quick questions

it's first season obviously The wildfire here.

what the I sense in get of if was Just and on great? question kind just a to will timberland could there markets the next seeing markets, point want kind you're but you had first has any for there just talk been the your of on be that risk if

Christopher Corr

to respect seen with some particularly impacts in to some seasons. We've down the put Oregon our X p.m. Sure, wildfire restrictions, properties work where been till we've kindly so

So as dynamics that's can't to starting supply a work cause on some basically day. people full

it’s that's early we probably it the that significant issues in impacts It is So and seen press we've you obviously yet been to building have the as there lot Northwest. quite that season but appears in we few and large fires be can fire in speak. hasn't an see Oregon

to come that So we're forward. starting see

John Babcock

in acquisition in turn Thanks. just if could kind about that I sort availability how my of be would before last you timberland Are over it then be interested properties of kind the just there? there information might right now out of talk markets activity of sale number any question for of And helpful? kind is

Mark McHugh

right now pretty all mean I three that operating in. activity I the geographies season prospective having comment on much active think but is we Sure, it in a said don't pretty generally of M&A that were

potential number a of So, right now busy opportunities. assessing we’re pretty

sheet to do disciplined. a well we're balance of capacity really back a fair and we're this going know you strong gets feel positioned some with like just remain to we really But bit where so. pretty to And of

pretty of not just of a As this approach I that's that kind sale disciplined on and sticking a of the function this and been properties has used function seeing for not mentioned earlier quarter just last to been light been year acquisitions. we've

Operator

question Steve is Davidson. next Chercover from from Our

Steve Chercover

earnings already So the first respect in you've with $X.XX pocket. all of got your guide to

drop-off to you're how cut or the generate wood $X.XX in just much? So going that you are will you are high second suggesting that so half, going basis to

Mark McHugh

function lot Steve really it's a a taken of so that. mean I having of

EBITDA You the of the know in half the front year.

to there sales. there's a of the You know recognize leverage and [op-inc] to is leverage harvest [op-inc] lot real estate incremental

roughly you off year of in for the have year those the more level so first second got same of half in year. and do the is And but the a of half you've taper [op-inc] the same going to interest the half as in you're expense of example first lot the

which of And lot it's that as pretty scale EPS. detailed lower of back got just a an EPS get that actual that recognizing the pretty the from a of guides in in time-to-time we've EBITDA really disconnect terms there from try taken has a to to area forward Again been about down just so this you a function math that be And into research and is we the guidance. having reconciliation. analyst it and translates explicit

happy in to adjusted offline. EBITDA income and I'm And that through more walk EPS so we down you to have the detailed step so from net kind of detail

Steve Chercover

mean is first absolutely, then $X.XX consensus half. Yes And this maybe now combined for will…. right the the a I because in

Mark McHugh

it in year. think particular first above which function activity we're the that well a contribution this Yes [op-inc] again I Steve of in real high just the of came of lot a is but also just so estate a that has half quarter

go what we from that we kind don't maximize like saw it to really so quarterly shy when – try we And get managing opportunities those we managing sort to we value. And of of away mean them, earnings in year to cut take otherwise Pacific of towards but we're Northwest, strength to but in the the that the the going second volume half cut half. market pull we we planned in first doesn't some forward real some

trying year. course the of the of the optimize to We're targets. the during annual kind economics towards managing were You business of

Steven Chercover

it And as to out provides boost a clearly be move an I'm even for chips then and your long-shot you of of Virgin provide of on we has fiber my embargo could that, them any a just bit know And pulpwood geographies? down can ecosystem wondering it through or opportunity the sell fiber. second to an sure you but one, a like that recycled I China said I’m put little

Douglas Long

markets heard mills shuttered Yeah that's the something Steve potentially their interest move buyers New mentioned right seen and lot we've to this very about itself that south some also West we're pulp We've looking is for Coast. pulp Doug, opportunities. much also replace to you watching. the even some as Chinese Zealand definitely now. We're And in pulp right into you're and about a trying at I but of particularly know the off

to increase about exporting we've we're now Turkey to the south right from So also. pulp but pulp seen Asia

the next it's we're something few seems trend So that over that definitely years monitoring. developing be to

Operator

Mark is Weintraub question next from Buckingham Our from Research.

Mark Weintraub

Timberland questions Two are it's you there. where processes cetera? auction that a contiguous one an primarily more situations or this et on maybe sales talking and about type quick out seeing the you owner Is you're

David Nunes

really always both. as owners sales always and it's the job in of to preference landscape whether sell properties take auction versus sale around on neighbors our Those situations negotiated in that for that obviously the of as and preferences side. or discussions terms not understand may be it terms with the doing and or are different side of well to then they of market. situations may those there sort both have the how logical sellers a mix in there's it's different We're buy It's of decent

Mark Weintraub

I could you And where we've last seeing is color it any shift is in know process, the but that's more relative question answer of that in in on processes there you to describe give? the a as seems been to years? any going tough couple what auction those situations to to what could be

David Nunes

certainly competitive for in do I terms what's in what auction mean and you we in trailing properties we I off haven't last couple been sorry, they fact seen mean am years. going successful that the of very in those on I in Mark remain haven't demand processes processes. timberland very by mean

Mark Weintraub

in It's to remains processes transactions? what really out private is that's think competitive. assume be get And I that Is you been successful to more negotiated auction very likely mean more type trying or so likely type I haven't much to if successful very that any be of in going reason is it been to it's still you're the you're more competitive. there because the

David Nunes

we don't acquired we're at doesn't average that of. that that low and and crack have has take still proud auctions have activity we the we negotiated mean say batting No been I'd of transactions. bulk a a question, the that there

high You auctions don't average in to a frankly. have want batting

Mark Weintraub

that and high, trend guidance, compare or timber run rate Right, the the do what expect at in they then how little – Are laying we year you you're or little or are when low? out they would in the to lastly sort volumes look next of levels these two?

Mark McHugh

levels, generally mean I Mark. trend Yes, rate they're run

We commitment have sustainable on a basis. operating yield a to

the up the a south sort bit profile just You of I'd relative building to the kind that our see again of disclose as XX-K But over sustainable and we of little this the sort of of yield. the your based that will range we're Pacific plus sustainable long-term peaks years. end in issues age some long-term Northwest the inventory still on end at that valleys at in lifting It's yield five in current in most harvest say a it's towards back is we're probably year. of each the part Zealand higher the lower and few of our range of next the to New of that segments relative so for those early kind years of where see our harvest stages you in still yields. kind different can it's ago. range sustainable that from But And in

David Nunes

be for in agree to X and of board tracking I Yes, capacity – I as bit think I area mean of a patient feet billion what operating would think about billion future our pays think little can years. X that kind about additional we of those it

of South but the So to in the second. inspired things write lifting the not in we're process

Mark Weintraub

first - you Northwest, interpret rates in wasn't and half. from accelerated to think you had of the kind we’re at quite I then sure year Pacific I to mentioned specific the how expected the half keeping second then of And in the

that’s Northwest full you not if So and in case bit with or you're case is you actually to a be what going in happens basically anticipating? originally were year harvest line are little the the what higher anticipated the than Pacific then

Mark McHugh

we just year took harvest of strong what the originally line in first more market that conditions. we’re the anticipating. the year Yes, of target with We given half full in

year-to-date in the our expectation by So of the that that updated levels. reflects segment financial and have again we current then we provided supplement harvest alongside full-year guidance

Operator

[Operator Instructions] Chip And our is next Vertical from Research. question Dillon from

Chip Dillon

why is you be Pacific New tariff for the Northwest the issue would to logs the issue given we I me not tariff Zealand just again that remind in think? would an not Question New for could but the Zealand have, to especially applied Northwest the and

Mark McHugh

goes whether plywood plywood recognize Zealand core softwood of issue not recognize issue that XX% finished or part roughly form facing or back products the concern that’s the hardwood in a into a sheet. the volume is full coming the and our it's particularly of perspective softwood and of it's Chip back a of kind the perspective in locked it's New or issue that

So certainly biggest conditions. to we that with front. exposure discussing or kind that's also some of shipping was is potential then of theoretical of there of earlier And change, kind what keep mind is were well as I where that a on probably that guidance think respect a the reflection currency as in the

Chip Dillon

means in then imagine. if into And tariff they can't a that Northwest else our buy what would on is they what they a anywhere the going lot get I timber from that kind slap do of China reverse, of

Mark McHugh

of effect products on being logs, much going the the We to see tariff ripple flow-through don’t this it's through of there's volumes. more then slapped effect back back log if on a coming have tariffs it’s a to a

Chip Dillon

estate, given know mentioned is sales gears economy lower first sort this of of next of in slowdown had to value normal would I real done or value the but expectations on - active be some robustness rural you the a shifting the just then especially mentioned kind for - you sort guess call. What there be the you've sales? cetera. a higher range you pace pretty I of half et year of And And the earlier the of of the HBU

Mark McHugh

but we the sell southern to about past annual as a next generally And think basis. historically it Chip just really average. we've our year the not in I experienced that’s talked expect land talk on to is in based already what what it target on yet is much we is - range of X.X% of

into those as think of that really XX,XXX of HBU specific And so we’re go what get that kind a to sense the looks acres we you're give specific to expecting XX,XXX we as pipeline going of channels. to kind to like. into take I sell better land closer or that And have timeframe, we

Chip Dillon

each last you think at it capital as right look And Would mainly allocating about is unique know you areas you looking sort stock the now buy in. stock market your prices to find are at sense? I at is asking or average when what you think - better - or operate open through - less just is then general more thing about as of that and in a timber you where your through looking transaction on the just but recognizing

Mark McHugh

market. kind buyback Yes, there sit broad I so mean transaction kind point own as is that. that difference is broad every a answered basis. market we a It’s a unique it Chip M&A and It’s have view at share of hard specific you very really on here of question. today the answer we transaction strong to of don't we your is between I look think timberland the

David Nunes

that transactions implicit into always But the to and stocks trade-off making where an on at keep mind an IRR comparison compared based acquisitions. the trading we’re our we of on in return where that look converting

of that any trade-off as So we’re at mindful transaction. we always look

Operator

further I And you. this at showing am no questions Thank time.

Mark McHugh

is any everybody. me. Thank thanks you. feel follow-up with have free This If to Mark questions McHugh. Well,

Operator

you. And does today's conference. this conclude Thank

You may disconnect at this time.

Rayonier (RYN) 2 Aug 182018 Q2 Earnings call transcript