RYN - Earnings call transcript Q3 2018

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Operator

Welcome and thank you for joining Rayonier's Third Quarter 2018 Teleconference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today's conference is being recorded.

If you have any objections, you may disconnect now.

Now I will turn the meeting over to Mr. President Vice Senior McHugh, and CFO. Mark may you begin. Sir,

Mark McHugh

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

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

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

Dave Nunes

Mark everyone. Thanks and morning good

I'd results. U.S. First, Mark consolidated Corr, comment President, the challenging review market the our Forest our timber And third given some results results. our results. our to before comments quarter New real Doug review to over Zealand following level financial it Resources We're high conditions back we'll Senior turning Vice Real discuss estate faced. to timber ask Senior results, our on of Long, President, will to and Then, Chris like Vice Estate pleased make with we

timber operational achieved estate from a $XX EBITDA performance we our as real all share adjusted our strong of as well the $X.XX reflecting earnings of per segments contribution quarter, solid and segment. across million, For

in of comprised wet and year sale $XXXX pulpwood $XX contributed per the In prices lower to price were Southern offset segment, Estate some and as quarter Real New saw New partially stronger pricing to Northwest productive Timber our greater our and strong was cut expected following with tension have quarter, XXXX the acre. markets by weather of at results. demand acres Zealand U.S. tariffs to approximately to In but financial prior driven response results Our harvest China. costs. quarter. compared a condition Timber flows Pacific log we Timber million during back led haul to Mark of segment, how over to In our segment, that, the the softness continued market a it Zealand pricing exports on pleased third rebounded to are wood timberland quickly volumes by these our let me from which the review in reduced With robust we but also in turn into over announcement enjoy higher

Mark McHugh

Thanks Dave.

made that have to our a wanted segment quarterly to highlight I discussing change we Before our reporting. results,

timberland reclassified period Estate And we our We made comparability our This New the better further third results that evaluate how from better performance. from period. took believe to effect prior with Zealand internally align to change reclassification. to change reporting the adjusted of We quarter we to Zealand Timber business it financial segment. the we have order period for provides segment in have New segment and this sales the reflect results Real in segment

million million, per also million as in forma attributable to $XX was $X.XX on, quarter. was Sales for Moving Page the quarter $XX quarterly of the X income a forma was $X.XX per and results. while of operating had EPS the income no share pro our net we supplement $XXX share. items provides financial summary or totaled Pro Rayonier

and contributions New to prior Northwest year and was favorable Partially lower Timber by $XX primarily Timber our quarter million our of in Pacific offset Zealand Third Southern segment. segments. Real a quarter adjusted results the Timber due EBITDA above Estate from

$XX Dave Estate net million of New Zealand, EBITDA were As by which timberland income and in impacted positively attributable share. $X.XX sale adjusted contributed $XX our of noted, Rayonier approximately million or per Real results our to

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

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

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

Doug Long

morning. Good Mark. Thanks

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

XX,XXX the demand X.X Production unusually the high was half approximately year prior in was harvest than to quarter our tons first million quarter in the lower XXXX of XXX,XXX prior and markets. Third tons volume and due respectively. quarter of tons strong

harvest with volume sustained coupled we which relatively Hurricane south. the third from expected into our to salvage operations Florence And the begin directly across with was timberland by the to hurricanes were expect about fortunate in on XXX those avoid fourth quarter. in acres recent We minor going significant damage we to Michael. quarter We decrease a weather properties acres impacted wet damage So, Michael. and

salvaged for to certain on hurricane near While of some quarters. are in areas wood volumes will we were market challenges to there be significant our likely properties, damage that do proximate damage we avoid term fortunate market the expect to as several

East impact and $XX.XX periods X.X% export to by both to prior prices. compared to were creating the increase the prior Coast of China West salvage pine supply Mims quarter and tariffs compared fire reducing quarter over and markets. favorable along the results. of quarter volume weather stumpage the Pine was prices respectively. the price wet to quarter prior on X.X% in pulpwood also in X.X% ton per volume increase Gulf the prior prices prior per prior quarter of the the year respectively. impact The pulpwood pine to were stumpage the in X.X% sawtimber East therefore from year and the influenced favorable general ton quarter the year was Third spot unfavorable The quarter to $XX.XX A due shift prices with from was year State of on combined Coast reduction and due

log During on implemented a China exporting economics had third of certainly negative of the the tariff XX% a on quarter, has impact which South. pine southern exports from log

year to Pulpwood are to very working adjusted were the mix. tend continuing the of favorable localized markets our and $X by million year are be Pacific quarter We prices and situation XX, $XX.XX was EBITDA Pulpwood to prior to headwinds product million driven on of and quarter. compared in quarter. the export page per to million so product-specific, prior Southern network hard favorable Northwest prior ton are maintain XX% closely. $XX the and despite monitor tariff the $X geographic to unfavorable and XX% unfavorable price quarter timber segment to changes prior both

first decrease quarter market driven or prior prior quarter. Third tons versus the was slowed to year Favorable the the of volumes and driven negatively both impacted result strong tons prices ton half increase XX,XXX year did the by The quarter quarter the in harvest pulpwood mix and to price we're unfavorable the XXX,XXX by in compared accelerate prior year export dollars and the the $X.XX not favorable quarter by to sales prices first our to production XX% The to of quarter volume the the me to XX% prior was prices of of prior last year prior ton an Delivered from $XXX X% tons quarter. this and prior this favorable to Pulpwood prices demand harvest the whereas third quarter us targets. and markets. favorable as in quarter. have fire to per sawtimber exports compared prior quarter due of year geographic Delivered restrictions unfavorable quarter also the compared competition conditions or XX,XXX in was year and opportunity was unfavorable in to and X% Moves quarter chip in $XX.XX increase prior per year. reoccur domestic to tension pulpwood this prior and prices from half year. volume a extendable a sawtimber year the afford that

were recent northwest third pricing stronger the market overall While relatively in dynamics the conditions deteriorated. in have quarter,

to New to Pacific fire $XX the Page EBITDA lower We have quarter a prices. export fourth and Zealand lower due has log million compared combination Zealand quarter. in lower inventories of in on taking our for $X operating another summer. quarter. timber quarter prepared Adjusted segment. compared additional to And unfavorable and prior as in domestic on into season with weighted China, uneventful New compared team pleased with the which customers key announcement due prior Coupled quarter declined and third the unfavorable metrics timber tariffs heading to materially year downstream primarily markets delivered and in Northwest year. prior volumes the the of the Our and long to dollars prices segment fire million exports offering season both log prices $X performance results eleven continually solid the million was for inventories was of average of the shows by

X% U.S., one volume timing prior X% XXX,XXX uncertainty to respectively. the year a and quarter was to X% cause devaluation to decreased shipments. and Export quarter export year $XXX.XX the sawtimber with China lower to modest ton prior of of variances of prices. Demand in prior due long China tensions clearly the trade market The of harvest strong compared prior the in but X% increased coupled were remains compared tons percent quarter prices quarter. per Chinese the of and quarter Third the compared volume around

Domestic increase changes ton by it the respectively lower seen rate. going lower sawtimber and over China. X% were in partly a volume export in quarter prior the terms volumes. to in reduction million New adjusted quarter costs our offset year export a In U.S. of to Chris $X.X turn to Estate. Real compared to quarter New and now third as prior due of pricing to to EBITDA Zealand, dollar exchange I'll trading prices rebound $XX.XX quarter we've segment X% a unfavorable cover into and of However primarily due per log Zealand prior U.S. result U.S. recent

Chris Corr

Thanks, Doug.

previously development closing roughly development segment project we during in a our New Zealand, on acre. $XX of on our improved weighted pace driven Estate including have or of mentioned, per sales lot lots. sale lots of reclassified results total Real North a a reflect improved now at residential real per category steady to the $X,XXX been the page totaled sales our $XX,XXX quarter X,XXX New first price the sales, by XX million XX estate we wildlife on segment highlighted As of timberland average activity closed on development for Sales townhome a $XXX,XXX generated our Timberland for include XXX primarily Island non-strategic excluding acres, acres sold Zealand of

million market acre commercial program acre encouraged totaled $X.X We quarter interest also County $XX of per unimproved $X.X for of totaled on for Georgia. the per million $X,XXX category the strong acre. $X,XXX average include The current sold pipeline per acres fewer category sale places one brand the sales development are are $XXX,XXX New per rural price we our sale roughly productive totaling comprised comprised non-strategic while closed on our category were at of acres acres sales an sales transactions results and our million In of average in at than two timberlands or we roughly of did and roughly rural $XXX an in we remains the price In in by acres XXX the of opportunities. $X,XXX million acres property $XXX,XXX closed prior in X,XXX $XX acre. roughly Zealand of X,XXX in

contract. are Real much development extraordinarily expect strong far the in Real tend center under lighter quarter or to year discussed quarter-to-quarter an our our infrastructure village Following from is lumpy during fourth we've lots past sold for we activity for so complete as most Estate, the either results in largely wildlife the and Estate project be

shifting back now turn to is to Mark. next focus of area development. residential refining over development call Our now plans the for the I'll

Mark McHugh

Thanks, Chris.

outlook, year to New $XXX our look the impact current third guidance volume the guidance of the range Timberland million prior as we're impacted volume we to adjusted out sale. reducing our back pulling achieve X.X we're our full Zealand expect salvage before to our of X.X the following in in a on As harvest year activity US Based to full million significant EBITDA fourth Michael. considering of quarter, to by million hurricane million $XXX we tons quarter markets

guidance, guidance. We modestly Overall Northwest the adjusted EBITDA some the our expect by nine adjusted of wood logs tariff based track full primarily with high New will prior the volumes X.X while that be U.S. demand to inventories harvest conditions tons modestly to to increased due months reduced expect inventories to log Zealand remain have timber volume, QX X.X achieve Prices harvest expect driven headwinds primarily southern rebounded China reduced achieve guidance. very mills. million China In end New first have also driven flows favorable. will expect the full the reduced segment, we EBITDA above in our and We're at Zealand from we X.X EBITDA volumes currently coupled below log been achieve our down pricing on New In segment, on market prior coupled Zealand. on in and nicely in we timber export of mix. domestic for Pacific tons with seeing of to modestly year our export towards that lower geographic prior roughly we be have million in adjusted as year

we segment, quarter for call relatively in estate Dave real nine the the turn I'll an year. of extraordinarily strong the expect fourth activity to our closing on months light back Lastly comments. now first following

Dave Nunes

Thanks Mark.

changes like I'd briefly address remarks, estate closing to some some real were organization. offering recently Before our implemented organizational that within

our projects development wildlife over gain long-term. in under right our realign momentum is Richmond now to support As better resources Chris the decided projects the to leadership. We've Hill have these to continued that time

of business land estate time through will the As segment. of such projects. sales the full Chris portfolio improved continue all organization. will continue assume including New under Chris unimproved non-strategic sales and be Rogers Oversight HBU management these active Rhett will to development report transition our Both including and two oversight will and development Rhett activity to to estate real and to reported Zealand land me real

Affairs been Mike report efforts and changes In Rayonier's Communications. help of forward. diversity portfolio. improved and oversee they the these with both about addition alignment of and often Bell discussed communications will feel affairs has me. Rayonier's We've promoted excited to Vice Mike quality will and public Public and going We're and President all performance will to

conditions, pure of and from declining pace recovery. uncertain housing approach market impeded the Our investment nimble us affordability allocation and midst interest rising capital key of play and some have differentiate housing focus believe is the that our to We're in the we competitors. challenging attributes rates

sustainable to the over quality position very the capitalize market Northwest a some log We they years our optionality success. also realigned our construction China ways. deteriorate stake increase in in New In in harvest our portfolio to in long-term well strongest Rayonier balance significant long-term exports and doing segments the market to high company our to joint past and region. flow and equity measured and several lift the into and moves south strong of is defensive all these that we deliberate us availability continues performance. the positioned generation, headwinds of the our strength recapitalized past short-term but which our made markets. recent in ahead on have portfolio sheet We've markets our on few financial allowing variety business impact helped portfolio addition, in We in is These to years moves so future. over based importantly Zealand to moves our potential that reduced Notwithstanding of positioning believe exposure the have on markets. improve of should the improved made cash labor Pacific our very also portfolio a venture to increase our increased concentrated We four tariffs the conditions significant for

also been per value a In eye an goal sheet done interest our and a decisions designed advantageous carefully all nimble all maturities by significant of balance with These ahead addition, capital managed maintaining long-term towards fixing allocation we've at of debt have and a building extending moves in long-term share. rates. approach to our opportunistic with rates rise

done I a market be the a tremendous has conditions, and employees. of for together to and on Despite job by our year. team remain solid dedication track great Our we strong another had very impressed and quarter working focus continue challenging

and how about our back long-term our so, we to with And for pleased the turn And I'll it prepared are continue optimistic positioned our over prospects now remarks well company. we're and concludes operator this for to questions. be

Operator

question you. Our with first Thank Instructions] [Operator Raymond from James. Collin comes Mings

Your open. line is

Collin Mings

guys. morning, good Hey,

Dave Nunes

Good morning.

Chris Corr

Collin. morning, Good

Collin Mings

in it beginning fourth Just just prepared you of as Northwest, the that to has you Doug, into we've start. moved the maybe seen the quarter, even further remarks deteriorated here can Maybe, Pacific in deterioration. like referenced you've the sounds given just quantify materially

about that? maybe talk So bit just a little more

Doug Long

Sure.

ranged things as that inventories begin are threat was XX% size in built start quarter, additional pricing fires on X% actually from export both that. on XX% at third and had species to lack with. come and supply flush started to summer tariffs see the we export change. the mills we then China the to and So we up in that mentioned really based late then imposed the quarter, call, And they log with as can in the towards but The to domestic of see that strong fourth

tariffs we came So to export back business those started into start see pull before the place. to even really

that continuing took from the we're see and happened and year-over-year had sharp from kind at to housing happen over the imports correction. We starts. [indiscernible] of lumber so places XX% And a prices perfect same time storm that offshore then up other

So, in the something slowdown mill believe start lumber that lumber inventory these will about seasonal erode of the economical I we the that to lower be that though that anymore start one think to prices demand will remainder even not import domestic thing quarter.

are We and year-over-year the half accelerate that occurred believe has year basis. of this a average capture will in results pricing those that the something decision our us that out pleased strategy and with harvests first of the to allowed pricing to year on flow our into full-year upside

we've the forward pull volume we back and of right happen going work allow going what's to with it and as going as forward. move So that we this inventories export to to forward, for markets the some see that out seen think was decision sit and the

Collin Mings

type lot just the in No of overall nuances I to way kind but of of that quantify degree recognize - Okay. quarter-to-date like there's terms - of deterioration? better deterioration a or quarter-over-quarter

Chris Corr

trends so overreact in said, specific a there, want thus bit in the the our a don't track and get QX, we in effect because regarding longer see the a we I like Norhtwest. Northwest think in obviously number little perfect party do pricing don't that but bit been certainly and to QX, are of positive so think pricing you'll services the want lag of Yes, to are Pacific into has far happened we quarter, a there third far of Collin, Doug what's term log a storm that

Collin Mings

bit very that and you that Timberland New And rest Dave, about a just enough. the how more pricing about your we does how quarter, Fair acreage the in position? acreage, to can about then a just just came does obviously there, as think healthy Okay. that how talk of compare maybe Zealand little sale Zealand New the

Dave Nunes

of an bet. broader in some - effort relates some sales standpoint, we properties gets base little to and to very of capital of years, our were posture so to over for keeping properties, it export allocation relative this of portion decent identified couple but from southern get last looking an eye the in they as the were - back that remote, two opportunistic the an You were Yes, place sort we've Island extent were we an that a less to efficient put always point. to Timberland of towards and to our access remote operations. North from They harder

New And sold rise those. so is we've effort then we put in the sold completed. this in and second a year one that an one to capitalize on place Zealand them in the about and markets the of ago We

that out And it - that's have regulated of attributes ownership. lease terms claim, From so a now average about a to of average perspective. our typically simple which forest, it XXX% the was its value. above years sort fee It evaluation you a would it XX it older ground to on a below also an did of property, was that rest from in so logging, of was age translates we're but plantation This include importantly region. not property little standpoint, based was an had relative standpoint, from of a average than perfectly and decent it productivity

happy opportunities to able that overall, and elsewhere. be for look happy it the and are So capital to recycle we sale take very with to

Collin Mings

update helpful. maybe just just litigation, the and just helpful the then the update recognize us there. there, of be That's out your with stake status Stafford limited given joint some venture and stand on where but can to op partner I number just you're headlines New you coming given of any Dave sticking would Zealand, the things with degree

Dave Nunes

bet. You

And the New relates now. said in that's control not we participation So probably ongoing their working orderly we them been a going Zealand. this as largely litigation, juncture. we've and something discuss closing venture transitioning transition folks at all successful Stafford and process And that in occur being that expect effort to we of as any fairly long we the in its we'll to know the to had before, orderly to they're joint through see of has we've it so acquire relationship with time the [indiscernible], well and them that

Collin Mings

it terms then little of deal of on asset And and from quarter. made $X maybe class a over It of last kind return about you just over. flow. upbeat prior about what talk right. in lot about Timberland have markets looks discussing me just backdrop, like environment, you've bit kind a turn of you're time, to in Mark, million spent All just to two. million I'll over acquisitions of the the guys been one time seeing the year $X the just deal against one a that last On Timberland a during calls number or deals total closed obviously, you've of and

terms softening what what of rates bit near-term discount just maybe you you're seeing the or any the that between buyer Timberland shift the market dynamics some about there in or markets? is deal there just Northwest trends activity you here just are seeing the a anything in or So are housing, in Pacific in some of seeing given flow, out values concerns

Mark McHugh

we or were believe our to been to properties additive that I for come to reflection guess, year that's particularly think sort than a of market just I years processes very and we less to having been haven't Timberland pretty well. invite to we properties high Dave obviously We've market auction in or as I'd of been that say active - continue comment have past that M&A it robust level portfolio. I'll see there have market. and a Doug this come we to had a

do to continued a number smaller we've size. in bolt-on so of acquisitions And

assuming is we going when You export pretty the activity assumptions I'd say overall, regular doesn't now. and DCF see relative know, say certainly tend we monthly have basis. real the was lot noise export housing underwritten say say of continue discount rates, maybe right correct interest we're asset transactions and the time. a overreact content a stats I'd real noise out as say And market XX-year overall all to to kind some to changed expected rates the interest significantly. given XX-year on whole in fluctuates, component view Obviously, But to of the valued creating making and certainly there's that we at to good northwest. meaningful situation the our had I and out flows is the basis present for clear, tends around this nature. been is mind, just it's higher opportunities hit needs we the wouldn't again, on to there's been things we uncertainty in over but bias south seeking of regarding and to that it's these a a so coming time. on market singles towards China pace Keep people's the it a long-term a while see see of don't that we I'd market. you doubles rates, see to up be of really IRRs not discount market long-term rise a DCF larger be to steady and a sustainable to that But know, a class, that fit meaningfully in private around Timberland trendline I'd in of of see that opportunity the prices overall the of in an so tend China rate harvest statistics environment and Timberland

Dave Nunes

add a only is some back active busy level. year, the been that And very the we've of would closings my of of to kind that fact but and the think activity of It's said prepared is thing to not I we Yes. this indicative gets that a I having had not remarks. lot Collin that and -

markets properties and being a there. - limited and more knitting we out both continue bias from an to we kind so of front. higher opportunity been quality And offense, view there's particular to that to stick in just We be going those properties disciplined and has towards standpoint have types of of are our that on a has been that higher pursuing and defense quality

Collin Mings

color thank you there. I'll over. All for it right, the turn

Operator

Markets. Capital BMO with Mamtora Ketan from comes question next Our

open. line is Your

Ketan Mamtora

Thank you.

first Just this XXXX you'll in doubling can so comment issue, recall are terms all have levels. tariff have volumes your that from at sticking what seeing What Southern it you question of exports? talked seen about this again I implemented? since got with on you you'll far

Doug Long

down process and have is the of we doubling things But you volumes. in with the XXX,XXX are year-to-date, July as South. our coming in in definitely so approximately we This Doug. we in have move really And last really forward slowed the quarter out tons. started that, our Sure. Yes, to of exports done [indiscernible] mentioned volumes

we has X% recall, properties, the we in open. own - mentioned our to our been export our just do that total own in harvest probably doors and for trying keep have stepped about to would the And as X% comments our back You market. of probably

we've a volume the step of being to in taken sent now amount that's considerable China. So back

Mark McHugh

be Ketan, XX% the to said, particularly longer I Yes, it's do network not to that to export a trying maintain clear. with tariff. China term But volume as is we that advantageous China are opportunity. mean export we to see

that infrastructure want - a hope an us, shutdown definitely and to and trade opportunity for today. the created that over the current not business around that but relationships be expectations it's don't the economical the we long an again, business we sort still run reaction will it's So of in our to war,

Doug Long

does results. south that dropped cubic by export kind And a the of in quarter, of in you not the saw Zealand meters give number we positive showed expect out general. we relative out even of seeing and of about that we of bit New the are impacts before, And just I been XXX,XXX as wars What that's second increases in mentioned on meters to markets, mainly the fixed more prices. it is about QX volume offsetting cubic impact our impact in have - XXX,XXX New out southern Yes, This QX. to south. decrease an to trade or in export things Zealand. But Rayonier in

all we Zealand So New side. in is from to diversification biggest the it to this robust. certainly wood continues to this from the positive that side, exporter nice and that taking away they a around that's in is China to the issue is I be it guess have of got demand the think we it And sense China. log get other got adding very message and somewhere have is

And anticipated seen the a Zealand New quicker log have fallen have flows so, U.S. that we rebound we trade in as off, prices.

there. we offsetting so, nice a had And effect have

Dave Nunes

another add one have is there. that And but ships more more fewer also of is seen there U.S. to that out commodities in And means exports logs thing to available of the just there's space out we is thing the northwest other

they to look to so New Zealand opportunities from towards export turning And for are there. logs

but come the this new of really would capacity, - going believe by shipping happen. are some in we this down seeing seeing quarter. in next shipping of there, shipping in I are think quarter to we we influx we kind prices rates increase And price it's and So our going also

expect that flow might offset from less is another the not you through So from China. commodity terms

Ketan Mamtora

prices, lumber signs these caution this that turning seeing back drop even sharp you of Are a any any pulling of Got sort on south have you color. it. back? And any U.S. helpful up pulling of just That's have with come of for bidding very really on postponing then months? people the over I in you seen side, appreciate sawmill kind last quite of the bit have either it. signs XX Or of stumpage? to it on signs people seen really sort projects or domestic

Doug Long

again. Dough it's Yes,

a heard on and I projects. back not So a pulling we anybody of thing feel Again, their term haven't people short term. the of that this lot think is long

delay forward. have resourcing around on to continuing we are sawmills people and so moving and the they think work far equipments I on heard So, more been the projects. getting that And have of

back we is So what correction. heard pulling believe a be of going are they said on short-term anyone of based we to kind specifically haven't who

as On run have lumber. last probably the seen the side, our we And didn't see we stumpage the we prices of lumbar. talked for them go stumpage also down haven't with about quarters, the up southern couple with

been So all. they prices haven't correlated to at lumber

have them see I the they would while with going year. what's and moving to the other been equation nice up of have run been forward on with the of lumber, just been the side so, stable very guess rest And for continued we it have

Ketan Mamtora

very XXXX. That's helpful. Good it. Got into luck

Doug Long

you. Thank

Operator

comes Citi. Pettinari Our next with Anthony question from

is open. line Your

Randy Toth

nicely. they over realizations sitting actually price Anthony. XQ I You Good average? morning. is out how first have pricing XQ guess export you seen in outlook kind for New in are What pretty Toth my rebounded Zealand mentioned Randy is This of question of in October? the

Mark McHugh

as Yes, that say quarter that had going is what to would I our seeing and December we our shipments, into comparable we look November into that. we prices second are

as dip And to QX, seeing on mentioned, some we starting but see very to cost that see pricing are savings we did in QX. our comparable we as shipping. are So

to we are more and QX at looking to QX. favorable So comparable compared QX a

Dave Nunes

level And U.S. one activity, this Randy, is a have And in would ports inventory we this haven't to as in very the in the add these I we that tariff China. seen takeaway. - coming shipments carefully associated is things in we drop seen the track the the drop log of that Dave. the from with of

the dramatically at of And ratio so in meters haven't pretty a and mean low. years. this to six we inventory X five seen I that come demand the as to a probably result, million seen we roughly now have level drop or China. inventory cubic about It's has

we Zealand. really it's less pricing out fairly in quick America. benefit reason North we got out turnaround so, have shipping as has been of mentioned, of as from that the rates And a you this New seen - Doug activity lower have further have And there

Mark diversification back thing that it gets earlier. to that about So, really talked

Randy Toth

over sales driving out. in sales Okay, started model there anything Was that's then X, guys of since breaking XX% should which that? you. the we you looking helpful. I at highest using believe that And think particular Or that? the about Slide generated delevered is how Thank

Doug Long

respect to with talking the are southern You timber?

Randy Toth

yes. Yes,

Doug Long

things is change matter I our lowest a wet think that. had to actually no, due or - we Yes It's methodology we what of stumpage don't weather. this like in as saw and a of removals kind

sales volume. really So, happened what of with a of it's process that more and factor

able and the stumpage. weather keep to wet our through delevered running crews we So are

they crews, had those of of Some seeing to there. more what move are probably off. you And that's

had we year. increase have moved a as slight through the We

more to specific. [indiscernible] value As we but think deliver wood we really most Each it's get market with delivered. the very we have basket

also a weather from And so impacting and combination that of wet harvest stump removals. are the it's where

Dave Nunes

model intend driven Yes, fair a that deliberate to I towards Gulf Atlantic geographic more is by and Doug? suspect of out Is mix that part we more stumpage have of as States or the of in region. the

Doug Long

Yes, done, QX contracts. move kept impact we the thing go crews the to stumpage crews have term salvage the work a do have to state we And it's we our Michael's with off one definitely. may them see Hurricane so with is be seen and going combination salvage long deliver have while into we

kind that's we of more could it's in impact considerable see that But a thing a So QX. happened. again, short-term be

Randy Toth

I very will that's helpful. you. over. Okay, Thank it turn

Operator

next [indiscernible] with question RBC Capital the comes from Our Market.

Your line is open.

Unidentified Analyst

of export maybe Hi, just guys. Good color morning. the the quarter, good on this a follow-up Lot situation of question U.S.

there is other to can any situation? divert markets given South, you the

Mark McHugh

East, folks like There Middle we markets. aware lots of to exploring that. is we other to export and New India folks are are Zealand. Pakistan other that Yes, exporting India And other we some places sending and from

our go the a right to and at this in So, spent options effort forward. that network to time, minute. point back have on we of we lot don't in develop want we are pull evaluating to China as this But

for opportunities long has the of those we looking But how wood. So exploring largest opportunities we we do for us. China are move that can and growth some term, think that

our these at And relationship so, we this are focused customers with time. on keeping

Unidentified Analyst

on Okay, view of with in in right. are guys' there? Is market, U.S. any development kind of housing what kind the broader the to seeing given customers there your And Thanks. on you you just talks sentiment? [indiscernible], involvement guys the near-term Any ground? shift back

Dave Nunes

take that. Dave. I'll is This

continued pattern sort growth in housing. of think I general on as we steady a view this

at to overall at housing starts in I level. roughly X.X think expect come million we

key don't meaningful But point I various some X.X%. as home I late areas. it's market been in rates hurricanes of rainfall think around median on stats the been also with fair and pretty through been, other in the we've the housing about of increase remember know market on prices. two a sort of we've there's regional as there's got with the sort lot been there. “cooling” has housing about there's median that of pretty affordability look also and X% to associated of seen Texas rise a of attention interest strong media in been forget well the bit increase mortgage as a hasn't thing at about a rates that bigger in in a touched of as much income these significant noise And household it's there and picture basis an but rising effect XX to important

makes and so a so we healthy affordability and family. perspective long-term wildlife growth our in is which lumber grow market. project a of single seen see And by pretty see it's thing slightly, and, levels I all still family we're that roughly down encouraged you And while the about continuing that put strong up together about in from year-over-year. certainly XX% repair single we're growth that has a remodel to We've think most percent X% ticked

gets expect and both have, the back markets where back both are for a have the view I've past, it's another say of kind gets about we saw general more is being markets touched Florida And there's this Now best of going. presence to pleased a in things spike out events, prices into see capitalize associated see it our really lumber of hurricanes in theme see is, we this fairly or in in this as and I'd to America those lumber strongest we mind to all of necessarily markets. mind our effect southern and response nice so a are we And been with on earlier really X.X%, to us of the that a get in once that's generally where rain imported we which downstream short Texas housing with to lumber going and markets North year of this the in healthy. that so that how it the noise nice overall don't its whether It's near-term outside feed we that's we earlier capacity push we're influx online. in market yes flow that as thing up to occurring order by and very and imports comes keep large on

Unidentified Analyst

thanks. All right,

us for you and a You affordability or of customers what so just wildly? residential for kind you points on refresh have that your price touched bit on guys have could residential

Chris Corr

Yes, On the in and hey course range is to right of there's around fours. and but single up sort the down family Chris. of Xs a this is average lower $XXX,XXX

Unidentified Analyst

it That's Thanks. me guys. for

Operator

question Next Merrill with Lynch. Bank America of Babcock comes John from

open. is Your line

John Babcock

morning. good Hey,

up, felt talked if seeing a sort Zealand, extent in little that you're are that's some you follow a are Generally the been markets on the has could want about Just just to impact provide that there color more bit that. around of which New you uncertainty China certain and impacted, having little to that of impact bit the being color?

Mark McHugh

occurred flows what's QX. U.S. if because, market in the expectation and what counterintuitive causing in New the is bit be mean coming I the noise would that, course quarter we trade generally of guess trade from Zealand that's talk a The lower in talked think up the fact, we Zealand was of some around I during see I kind about you about tensions pick the that last New pullback the which will

we've So seeing QX end ticked you the of of the prices QX. in know seen what pretty so kind we're in Zealand nicely far and in QX down prices and kind that we've of said rebound in the press call what while New towards those on release is

Dave Nunes

saw up you that time ratio into mentioned. comfort also think in Chinese We've that has the demand's that but level one we back I of important as one and Dave that the that recovered. prices devalue fallen come the know below one inventory on thing's the the pricing during seen impacted

pay willing of kind has to the log. to increased is price that same the So person China the in get demand that

John Babcock

from demand with of the bit kind seem both whether tariffs the also if an I in the end just slowed overall Okay, though guess I wondered was and generally you're that be that's having they're at actually little slowdown. market just though impact. customers seeing in China quarter growth not a I seeing getting is any you're last to or exhibiting

Mark McHugh

on year the we we we mentioned was saw to haven't looking targets some weaker No, bit our time. We're hit really before. in to-date in we've for very that the markets exports we and little timing that point a QX as successful been had at volume

looked we so some QX, our in to have more to that And were targets. date we volume with export planning so

John Babcock

now where you. on then was thank also seem last you and that Okay, also, downturn strategy footprint change might I consider wearing just to to if then I what right And with and the acquisition fit just markets question had a be how were valuation, was enter might a target your you good acquisitions?

Mark McHugh

terms might I an materials our Yes this lower think of not as to and capacity is of have if quality much with well certainly have in to earlier higher were opportunities and have bias been then see I quality that financial in you where those what's as your you otherwise and priced we downturn, expect that very period area are so positioned. point of discount markets think back this gets I what a I where discussed a the think view properties a towards move and as investor you you think having into it to this general did and I get of we we're think you as where I a forward and sort gets a

few past the We have been for de-levering organically years.

just right properties strategy and capacity higher going an We our be with have incremental stick after patient a to now of debt standpoint going to pretty continue quality and properties. from we're meaningful mean for doesn't going to go but them. quality at after to to lower that we're accordingly the priced they're have are of us that to look be not It going

John Babcock

Okay.

Operator

question Chercover Steve Davidson. with will from next come Our

Your line is open.

Steve Chercover

several when Lot over I Hi you're your Dave. a last referring increasing into couple Zealand. have but, morning been you've purchases Good in years? Mark. to things drill my stake to the to wanted just opportunistic referring done you questions the I incremental assume answered of really of New were

Mark McHugh

the to we referring we was down. Well, I partner our what there we're when transaction effectively really Steve diluted think recapitalization did

transaction. increased that recapitalization XX% we So our stake from via to XX%

Steve Chercover

matter right Stafford's Okay, yes of And doesn't? Thanks. first that's of their your stake this in on change privatization doesn't refusal he finals right.

Mark McHugh

essentially where a yet To compulsory XX% done force the to Stafford has it's a that, not really a to new there. I They not believe. stake refusal. partner it's of threshold gotten in of and acquisition offer be first say There there will over right you're right our Matariki. But largely effectively is minority the it the completed being be suffice first clear acquisition with [indiscernible] there's of that

Steve Chercover

Got it.

impacted just have Okay. to sense was a Michael and And then subject do hurricane acreage much by of therefore salvage. be you how

Mark McHugh

on got I that. Doug's believe some stats

Doug Long

do. I Yes,

X.X acres and impacted approximately XX an XXX,XXX million of are Florida tons how an or can the XX losses million So considered the for estimates billion acres on a of estimated And that talk Service by acres land With were these timber then severely the additional loss out salvage, about tons damaged were million purpose of and pine complete I'll cleanup. same we bit X.X acquire much catastrophically break little hardwood. a hurricane. Forest meaning capacity million timber moderately to estimated so that's salvage of or forest

of acres, hardwood. say did an that working in And say unfortunately, in more the And million and with they there's much fact around So the during that's was up a The acres camp by of to and X.XX tons few that a pine need also Herculean wood talking then acres tons million to about commission also storm salvaged. shows area some got time $XXX roughly complete have be smaller turned damage. the unfortunate are ages X integrates. still of XX,XXX Forestry Georgia or Alabama composed but George a task damaged And more loss. XX as is and XXX,XXX that severely they forest Forestry of gets estimate they're that it land than million

gets more for down separate we've a those obviously time it things assess the the year huge for of shake points that experience trees in and are a blow snapped my a a at storm violently. what of hard And tree this right further So are to from that impact certain of from usually but snaps winds. you the the the and it of stand or when it's to have to lot and due task and was tough they eye, timbers you'll seen fiber long folks can this out the lumber like lot front And in make point, off of the happens ones. get it's be and away to high

hearing production log. folks decks saw actually logs seen take seeing be higher value I'm will think currently lumber looking landlords before first I and to so mainly what as cheat be put we've folks what we've be the salvageable and value increase an from the pulpwood decrease local what local and for of of logs, months about in we're heard it where are on markets the some his that higher few in and looks the wet to for on sawmills may

little folks we so time So what's around bit the going to understand hard and really this be in a at kind to further going market of them, markets are impacts see, could perfect on. assess crews as And reduction point We are area. we as value have pulpwood move those could those less to trying are capture with logs, in that in mentioned I supply see salvage a start to actually logs. as

salvage and about main per The X.X X looking situation. of the XXXX tricky success Hurricane for million efforts in you they we impact a long did a salvaging which all done. it's is Hugo tons acre successful And from acres tourists. study was were So become how and question back will about said at

taking pretty mentioned time they'll left difficult it to this what logs lot form value That's months wintertime of in. for it's higher that consensus wood in because but crews field kind not should a obviously us, the with six more And over the saying, by it's of them they months. and that six of of working products expect just months a salvage but that us. time. it's They away we going So consistent particular lot very won't they're on crews the for attempt not than curve it's will the harvesting this have last non-local I six ground there's be as you're a sell that's recoverable the tell to

of a bulldozers We acres products deal to you after and So it's and to while and million into, that's lot of our spring million us high difficult hurricanes and just unfortunately when ground been to and the wood ended really to having standing but of that's have to kind on and aftermath. push a down move the flush forward. XXs. shows slow a basically that how going goes X the be passive assess that's for X him and they'll with in XXs then then timber the value and burn up hit use down when And chains case it to own get going prepared it

to it's So for that a you scale the with. gives hard have assess of the really but that right to work and now sense teams work

the salvage. our and only we we local had thankfully the that markets on But So acres there'll the be of on impacts impacts on periphery expect markets. then XXX the

we've the three impact decision we've we how watching going to interesting on that markets I of to we some leaving I they're over to is made to here the Atlantic these why coast date small go thing five crews So it's so another and but assess local QX, and on both salvage. mentioned know had us in and considering to directly seven are that's see pull can this it's back volume

it producing mills impact it's the crews these could our the dynamic very local a right So so situation as for on have markets now.

Steve Chercover

you that for that all Thank detail.

meet been were Hugo the long maybe mentioned and Do maybe you articles in hurricane incented maybe recent your ago You a for you're and was the liquidity to that so thing of that's otherwise the and have than and out XX, folks, to back you about it, wondering think But a that's down. down era all lot XX it'll who the resultant between who into years also Hurricane for biomass, play get can I south that the serve of destination is obviously different the as folks oversupply. thresholds. blow the in plant that's source one term can't trees there's of burning current emergence

Mark McHugh

we can mean will looking long-term all dislocation this timber on look opportunity. in but impact taken production these nature address volume as nature kind term in short supply that that. salvage on relatively older task capitalized a so said well Herculean think a the I I out and see longer be keep be those Yes, Doug I a hurricanes to certainly the to is see opportunities We'll recent and we for in focus regarding short-term a we're in term markets there of of that's but of capitalize longer market could in a like mind you on the that always timber we're it think mean, the is constrained basis. the thing if is term we lot

Dave Nunes

an markets as operate the add mind the so Steve to much most other in. and it's poorer in the around thing we article footprint that that in really is was in I'd reference not keeps of the Reserve concentrated that the impact of that Conservation Program

Steve Chercover

Okay, call. thank you the all for

Operator

a [Operator Instructions] from question We Mings with Collin coming do Raymond have James.

open Your line Colin. is

Collin Mings

Thanks.

pay are more going kind sales your or you follow bit clarify, for to some few one Steve's that, the you commentary, to impact just the retain crews have of some you over do activity. can that as just Doug's costs think you expect about delivered also relates it a me to the looking the crews next having movement just salvage of Jeffords to quarters that out volumes log in little these up question as Just back quick in you logging maybe and to

Mark McHugh

there. the the obviously know crews we're locally salvage hard very more. that, keep this something to to over crews. seeing and work do may that happen respect It's that is the pay costs crews see impact we're salvage. what But costs not there And that right of impact dangerous those the and not having seeing type the stoppage to of volume to be that's primarily to on very leaving we volumes. going No, With really

here. a lot sticks the costs pick-up the crisscrossed the work for and reason see go salvage it's trees impact off we so on. and over You impact the That's locally broken and over are like but have of up that don't there

Collin Mings

Okay, thanks.

Operator

this time, no have questions I'll further for so we Then closing. at back hand the call

Mark McHugh

and with McHugh. Mark today for is joining phone call forward to this look everybody HI, catching of I Thanks up you by some the later.

Operator

Thank today's Hey with that, will conclude conference. you for your participation.

disconnect at your time. lines may this You

Rayonier (RYN) 1 Nov 182018 Q3 Earnings call transcript