RYN - Earnings call transcript Q3 2019

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Operator

Welcome and thank you for joining Rayonier's Third Quarter 2019 Teleconference Call. [Operator Instructions] Today’s conference is being recorded.

If you have any objections, you may 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 third quarter morning. you Rayonier's Welcome teleconference, Thank

statements financial rayonier.com. earnings available Our and on and yesterday our are afternoon website at supplement were released

in I to statements pursuant securities the would to federal we harbor of remind that made provisions like safe laws. include these you forward-looking presentations,

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

with start comments and let's Nunes, President teleconference Dave? that, Dave our CEO. from opening With

Dave Nunes

our First, over results, U.S. back Mark real on of timber our results, Senior the following our turning to Forest I'll to consolidated discuss will timber comments And we'll estate Resources, of XXXX. Mark, results. Vice ask some our well for review make financial before our Long, the segments, Doug of as then review outlook remainder it high-level and President to as New Zealand comment

and adjusted EBITDA of EPS We generated third $XX breakeven the million, quarter. for

last the our Our to in real of timing as well year last below and results transaction discussed quarter, third estate were quarter primarily call. quarter and due anticipated prior activity earnings the

the during pulpwood experienced oversupply pressure of to prices from In demand an weaker also timber excess to versus conditions pricing prior the in lower export ground Southern the year quarter, our segment, were some domestic while market average volumes dry timber due modestly The quarter. declined and supply also market. saw due

adjusted these non-timber bolstered headwinds, to strong full for segment remain a the near-term record by in in income. year achieve XXXX, we Southern EBITDA our very timber on-track Despite year

conditions resulting soft from continue markets. timber and In challenging lumber to reduced segment, Northwest contend demand we our export market with Pacific

in response has results. deferred As prior with on which unfavorable noted these calls, impacted to volume year market this conditions, planned harvest further

our demand lumber In harvest increase China competitive salvage timber prior levels declined weakened log as we modest a generated from quarter, New timber and in although Europe, significantly, salvage, and versus Zealand significantly. supply pricing increased European the segment,

we've first While a half modest pricing well for pricing remains seen below improvement lows, export averages. in still mid-year

towards of activity on-track Overall, a Lastly, relatively to transaction. light weighted our quarter, pricing development full significant real was this to guidance. while we're average remained prior end strong the improved lower adjusted EBITDA achieve estate year due

it quarter And let Mark, with turn that, me to review back results. third over to financial our

Mark McHugh

Thanks Dave.

to highlights. for translating on the for Page breakeven X million, totaled operating to financial $XXX was Rayonier $XX attributable the with was million, start $X.X million, Let's quarter. and Sales while loss net our quarter EPS income roughly

segments. Third quarter our in to as EBITDA of adjusted million Zealand of significantly from $XX estate well EBITDA contribution due and prior our was timber quarter primarily New weaker Northwest significantly adjusted lower $XX year as a Pacific results below million, segment, real the

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

capital to to by lower nine or cash lower interest paid, available due the taxes EBITDA, primarily expenditures paid. in partially first was distribution Our higher period, for $XXX year months million $XXX the and offset prior of for year cash the compared adjusted CAD higher cash million

X provided million reconciliation of on financial by Page A cash activities of GAAP closed to with quarter operating $XXX million other provided measures cash of of the supplement. is We debt. CAD the $XX and and

value represented closing end, quarter million, our of XX% based $XXX our enterprise of at on stock debt net Our price

of review Doug, turn a over call our now to provide detailed more the timber to I'll results.

Doug Long

Good Mark. Thanks morning.

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

compared Third The quarter weaker in in quarter prior harvest lower prior volume timber year the of export saw approximately X.X due to decline particularly million compared volumes flat was tons quarter. part markets. in X% and was to demand, to

year. the and year by was stumpage volumes prior also pine the this per year Quarterly the ton of compared quarter quarter have outside stumpage that of pulpwood X% in X% impacted first unfavorable we price prior been removals the quarter $XX.XX experienced to average respectively. this and The

price mix, conditions, the a ground result quarter prior we due as pulpwood with increase supply less in from to our reduction compared harvested market. The strongest geographic as combined in dry of was to volume an

The was respectively. average pine primarily driven cents sawtimber X% year ton mix. by unfavorable reduction to The quarter prior the the was $XX.XX versus of prior and XX% quarter geographic prior compared price and the year per quarter

compared Chinese tariffs pricing to demand with export logs which coupled Yellow in prior lumber, due from in production. domestic on both resulting continued tariffs decline an Southern on Southern The primarily Pine and domestic increase to impacted periods Yellow Pine was weaker

strong the the continued prior primarily as year, results. million period of is a result same pipeline ease and revenue sales. $XX license Year-to-date XX% increased and in to deliver revenue non-timber income of Our team recreational higher than

to million Adjusted timber moving $X XX. EBITDA Pacific of segment Northwest Now Page on

quarter, quarter. and was compared prior to $X million year favorable compared prior million $X.X to unfavorable

than quarter quarter was X% Third XX% year prior XXX,XXX the of higher volume tons lower prior harvest quarter. and than

log XX-year on trade pressure declined volumes low, XXXX year-to-date in resulting As with to China continued have tensions a pricing. export continued,

seen in demand, modest However, uptick we've recently provide volumes increased should which for QX. a in

to unfavorable ton, to XX% year prior quarter. was of and the price compared delivered the average The timber flat compared per saw quarter, prior $XX.XX

decline relatively in dispute has trade stable quarters. up, year, pricing the last the U.S.-China heated significant pricing late four been the when Following last over

driven average probably by downgrade was logs $XX.XX quality prices weakening unfavorable ton in respectively. compared excess change quarter The domestic The prior export to logs, and to the supply delivered market and year diameter or compared of pulp the XX% small power the in demand. due pulpwood per was export to price the the prior XX% quarter to pulpwood quarter of

for export mills. which demand relative driven variants fiber prior Additional domestic increase reduced chips, the to for by should was supply year

we continue negative product U.S.-China summary, to in region. all categories related In various the impacts trade to across dispute the see

Page Zealand EBITDA million our million $X metrics the year prior timber segment. XX results quarter for operating and $X quarter shows the compared New the $XX to Adjusted prior was respectively. and third in quarter and key of million unfavorable

was Third some harvesting curtailed higher competitors quarter margin harvest the due vessel and the increase demand, prior tons quarter prior was timing volume quarter volume operations and due XX% in lower to in export prices. as respectively. XX% force XXX,XXX and export third in year domestic than in primarily increased the to quarter The of fall

and delivered at in alternative export the and XX% $XX.XX elevated quarter, compared lumber prior to average pricing, per slower deliveries quarter and logs log the supply yield was and inventories. unfavorable factors ton start consumption of which price year The of XX% to third including from of prior port contributed quarter Europe, decline respectively. the saw timber particularly have Many increased

which have did as situation for intelligence market it our not really the logs. plywood, pine end to from salvage well However, regions the they're cost opportunity usage, lumber, work generally of increased higher for preferred. suggests a shipments. quarter that satisfactory construction furniture, as end reduce the moldings And such is significantly higher the trial while European for and had Customers the now consumption improved suppliers and toward third

was fall As XX%. terms and in X% of declining cents the had in unfavorable the exchange compared timber inventory quarter, year , to rate, dollar New prior result, to almost the X% U.S. Zealand respectively quarter U.S. export due ton but the also by due quarter third end and price the prices. saw to ports prior $XX.XX pine at average dropped partially impact radiata per of Chinese domestic by The of

domestic when reverted in lag as Note behind export tends pricing log uncompetitive. pricing export that markets prices to domestic back supply become

New of X% impact foreign dollars respectively. were pricing to the prior domestic and rates, the exchange year in unfavorable compared quarter, X% prior and quarter Excluding Zealand

unfavorable per price The compared quarter of to to $XX.XX and prior X% prior ton pulpwood was quarter. X%, compared domestic year average favorable

which to year unfavorable quarter, prior compared X% quarter. pulpwood segment prior were quarter dollars quarter. breakeven the Trading favorable to results, but our $XXX,XXX compared $XXX,XXX Zealand compared prior In we were generate prior to New prices to year and flat favorable

it Mark for of turn estate our results remainder and year. cover over now the outlook real to I'll back to the

Mark McHugh

Thanks Doug.

As highlighted on Page XX.

Our quarter. real segment third estate relatively light a had

post million $X quarter totaled of closing deferred EBITDA to completion sales sold was due at on sales. improved price obligations of recognized the roughly development the quarter XXXX quarter average for an prior of acre. per on also in the Third Adjusted million. $X acres revenue $XXX,XXX $XXXX was

we have $XXX,XXX on site wildlife improved of driven project per the XX total in totaled wildlife sales a XX commercial development $X.X inception, acres Since $XX an Sales sale of million sold million acre development of by the price million, average project. at roughly retail acre. $X.X and our primarily grocery and realized category

momentum to underway, of Residential by wildlife to end the of XXX next is be construction and also strong. substantially XXXX. The well QX continues phase with be of completed lots residential our scheduled development

In roughly across $X Southern sold the rural XX Rural category, XXXX of an price average transactions acres over footprint. on acre. $XXXX totaled sales our comprise million sales at per

Timberlands and at $XXXX an per category non-strategic acres million, the price in sales of average $X.X XXX Lastly, acre. of totaled consisting

our the adjusted be in we to by balance EBITDA year, earnings full the to continue as decline achieve segments noted moving end large challenging part timber of our market. the expect $XXX conditions of in the in the $XXX to prior across guidance our export million million. of release Now outlook for year our lower toward on China to Market driven

our this timber lower be we EBITDA segment, certain year by segment primarily X.X estimate, the demand. Timber reducing impacted Timber Southern harvest guidance. on expect full X Based markets in activity decline full million modestly our our in to adjusted Southern we below In that million as our tons year on prior will we saw guidance of volume are to volume pullback range

harvest Pacific the EBITDA guidance. end In in guidance prior volume expect we of year adjusted with segment, and tons full to of million prior line our Northwest our our towards X.X higher Timber achieve

been While which we're nine contribute should and to starting market momentum demand see months conditions in to first through QX. have stronger difficult, the some results very

Pricing Zealand pricing to in we remain but lows New our has still at modestly achieve prior expect end we well the on while X.X of of X.X tons segment, average year year. achieve half in guidance. improved Timber harvest million to first remains EBITDA year our from adjusted mid Zealand million the New lower to the below In track volumes towards full

prior Lastly, expect in adjusted our our Real on remain strong EBITDA segment. a segment, to year achieve the full guidance and for track Estate we fourth quarter

comments. turn call now back for the I’ll closing Dave

Dave Nunes

Thanks Mark.

segments leading value objectives of building core our our focused timber While industry per been market conditions long-term have share. generating on and we remain across challenging returns

capital to quarter. initiatives respect To with in the allocation third were this end, we pretty active

During the acquisitions third million. quarter, aggregate we for XX,XXX of totaling an acres seven value $XX.X closed

with The in two XXXX XX,XXX age The The largest domestic good strong relatively million. a transactions and young stocked located acquired timber class footprint. acquired class for markets, existing an Zealand, million mix has acquisition within in Coastal is merchantability Florida markets closed of to in but acres and of $XX.X $XX.X complementary include older with heavily a Zealand situated New log Florida export has is New strongest is acquisition located approximately is and profile, for highly our acres demand. and one our age

third the of million. $XX for aggregate of the quarter acquisitions value XX,XXX through an end total nearly acres Year-to-date

upgrade focused long-term this on generation. reflect growth which sustainable cash is land acquisition portfolio, our flow our so far grow accretive and Our that to our year select our acquisitions disciplined harvest, strategy,

and We've have also acquisitions currently We good activity year. Timberland target direct into to expect top robust through pipeline a of smaller negotiations of bolt-on and going some our enjoyed opportunities markets. success next of remain acquisitions,

which of to $XX.XX During is stock the also of below advantage million believe took we of the our share, at an third we repurchase $X.X average quarter, price intrinsic our value. opportunity per

we've can to volatility be particularly keenly seen continue the volatility create. opportunities the the this We on capital and in given allocation, focused that that market

value for all buybacks a evaluate view including alternatives shareholders. towards acquisitions building We will our capital actively long-term focused and to continue allocation with

proud amidst challenging backdrop a our the of we've the year. conclusion, the operationally during of that months executed In team very I'm way for first market nine

for value underlying and commitment headwinds the The China I market remain that confident our our value business. in trade to challenging of of But team U.S. dispute continues the some towards maximizing assets potential. generate long-term potential our

questions. prepared This we’ll call over operator now to the for turn and concludes remarks our back the

Mark McHugh

the should I before higher prior volumes the year just Yes, have back we operator correction, that third we turn X% than to been than higher the you. quarter believe said in quick Zealand it that quarter were our quarter. New XX% prior harvest one Thank

Operator

comes Citi. Instructions] first Anthony with [Operator from Our question Pettinari

You may go ahead.

Randy Toth

in which X% to for Toth in just actually timber on time the prices, I is wanted Southern for Randy quarter. the focus Anthony. This filling fell

indexes talk is little localized into would basically that there what something think - I we’re about and Any was was specific Could helpful? a happened there that or bit happened given little what the a flat. spread be us a more more region. to you just detail Rayonier specific detail

Doug Long

Yeah, to is prices last from quarter-over-quarter see. typically Doug. decreased, normal till it's pretty this years decreased wide we timber QX, Sure, saw XX QX towards to so trend the

discounts However, were Georgia our associated prices our by export timber with of the impacted Alabama saw channel and simply them yards.

the prices. some in pulpwood yard essentially We sell had to volume

that So have the during export the quarter we gotten decided at things rough of the in the pretty markets. quarter, beginning

South of of the saw and an operations, ceased impact as essentially the of so exporters And outside that winds, central as that kind trade what normal our so, pine of would exports did be from we was have since with ourselves collapse

there also had in X% saw in. themselves the X% logs to But the realign as reported with into a was to Coast ourselves, coming amount those And of markets timber correction markets. increased saw Atlantic

a longer So and we did found it don't that in was the quarter QX. market change. somewhat to something expect But in though, Atlantic the drop was bounce appeared we have Coast, new its a

that some will offset volume the some modest would years past for of in anticipate it's of simply actually contributor QX timber our We however, partially markets. price of Arkansas the and gains. the But, be saw out anticipated some improvements two sales again our case been

occurrence did have a of unique lot we in of with down So a shutting operations happened kind in Atlanta the that a quarter export Coast.

Randy Toth

in first Thank radiata Zealand at I And average. New Chinese then demand and those XQ you pine think Have October average? pickup just the said in trending a switching to are seen how are gears you port than XX% inventories you. lower prices

Doug Long

that's great Yeah, question. a

inventories drop million almost So around in yeah, in radiata tons we to port September. as have China mentioned X.X saw that tons QX you from high And almost in inventories X pine managed XX% attracted September.

we something brings track So to ratio, which which more oversupply is see back a X.X closest two balance situation. the into falling from pricing, correction months, which positive in supplied we demand above a an us again inventory run months,

as U.S. decrease the tariff reasons And that we marginal and suppliers so South I the or America significant think from improving as ratio the mentioned such in that constraint

South, XX% from from block demand. then XXX radiata on trains which initiative Europe to manufacturing, typically reduction the plywood trailing per [indiscernible] month a XXX in and number significant increase favors in

have results the appreciation in those So a meaningful price month. in last resulted

Operator

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

go may ahead. You

Ketan Mamtora

maybe QX that even QX So just either way term, right at in sense? point, any of, on percentage how now the was Doug, can, much, is where we last it versus where just quantify just average there any it or high's, sort is in

Doug Long

digit as obviously, that negotiating, increases. still go single you We're high seen I But things can we've through. tell

Ketan Mamtora

this application. to work working as beetle; not any now, of on done, applications, But and all it for so out? many take that other some with how stands on European turning with is pine right to may like some you've And kind this years play the then it it it seems perspective

for your more And with sort Pacific into of, lumber do Southern kind both in and position. then, New of, you-all then, for And the your potential kind impact and U.S. log Northwest? what Zealand implications operations see coming with of Timber

Dave Nunes

Yes, a question. it's great

working honest. focused in it what's to we're salvage trying to we're and the work We've be teaching mentioned impacts on of impacts going lot on, what understand done still tour, we exact of are. the and As quite on our still a on European

over been product and of told variation. We've no months, the once of uses, stump for lot on efforts lot for valid, that a that, imported spent a China. it's six especially the There's it's longer to been

varying how there's out of volume five of be estimates years to be, everything two So from much harvested. can there,

time. We're at target point this to really better. a understand moving it's in So trying

the we've it's needs radiata demand end the to high with, to lot their customers out they're chase while not that been cheap But start wood that, meeting pleased in of area. really realizing find

been don't it's much as to have unfortunately. on detail go impact, So consumption lumber, and positive respect for course, as increase raising we I forward. With of a radiata that

Mark McHugh

that's mind. Ketan, keep thing to speak one I in to important can

China. As mills also just they for you residuals, And to for think home historically, flowed need a like find low-grade about need lumber, a a of has home grade lot lumber. find to to lumber that low

have it a we're the where market. a home low order effect And you grade so having second lumber seeing through as of a kind time ripples harder that finding

within have some And more European probably have markets. may markets U.S. to product issues otherwise going case, I lumber, would push think to the substation than be also you tendency into are a that

are of going time of those the that those understand so to But some this follow eye effects. is second, things of we're on. to keeping take fully an some order third And kind and some

Dave Nunes

thing one those number that in to think my that in that's a mentioned that we've getting add, teaching, half. is, I lot a to China other of blocktrains as text I I so comments was we our in And back XXX month, mentioned a to in seen subsidized And places. earlier the or across XXX forgot and important from that, reduction

don't the in that's see to happened. there's those that encouraging But why exact reduction know it's across. been that reasons lumber trains So a we pulling XX%

Ketan Mamtora

some take time levels where things soon? were? to is question it questions. Just shaking trust we do see mean, were also confidence to rebuilding of a back how normal of a couple deal back to if come I kind dispute, Do trade happen, of you with were to if they to things this Or kind might you out? it expect and and of pretty you U.S.-China other - and a get see

Dave Nunes

latter thinking our mean, fairly from of this I we're emotional think the context. dispute. probably protracted, some in in I cases, sort more has and perspective become an Ketan,

things see plays And don't an a see think and that substation immediate as I role pickup. that. the also I European from substitution so it think tomorrow, And case this where, if log issue, specter we'd - of lumber I whole a ended that's in

And kind going as so, of going would recovery slower of European to trade I well is it make volume both aspect the as yes, But cultural this helpful. the certainly of a presence dispute, the it forward. think be

Mark McHugh

and in phase we're One the deal, of up thing folks billion National looking mentioned. have was at to billion trades. actually D.C. There's there. yesterday with talks requirements gone White Council. got of $X one add of purchase to forest Economic opportunities products just I'd House meeting And $X been that, from $XX with billion billion I back to has from And in $X about the

at there it that And so one logs targets. reach could if thing to are be whether that in It $XX good would and that, we would be look it put to billion. be then those seemed change requirements a purchase contributor

And recovery That's White so than D.C. we normal meeting with House. would, back than just quicker the but may we from literally that's see a days. having early come

a having are about there So room target actual some current. there. above talks have work would we But of still lot to purchases be that

so And be off said, press. I and news like we, that that positive a factored right in could the having

Ketan Mamtora

lot from seen softwood Is hardwood at – of kind my just then Rayonier, this or interest side. hardwood the last all where in would of markets one your - you to that interesting a distress is? kind the of is markets. is And some question We've

Dave Nunes

our and to science technology the markets. softwood primary opportunity in leverage the see We

the years, we So whereas take to south in growth. plantations. thing. Typically, to plus ability Northwest, we to plantations, influence type XX-years hardwoods we're the XX-years XX-years up the think the That's softwood primarily focused where in XX on often softwood have

slow rotation. a So

opportunities. So focused softwood we're more typically on

Operator

Yinger with Davidson. Our D.A. Kurt next from question comes

You ahead. may go

Kurt Yinger

on challenging be this would year the thinking we to of you volumes? First off, some start maybe XXXX, your start harvest meaningfully might where because you harvest about XXXX think were different China conditions thinking year. than do Pacific obviously Northwest the market a with we about XXXX, into situation? How little If came lower in expectations

Dave Nunes

point as of our we're long-term that I general operating based to don't start if sense, at we we'll yet. have it's some as you generally of around a or to give or degree think flex starting that going about And generally But But a or at baseline, sustainable that market talking conditions. take. be on view to in vicinity, a XXXX quite kind look ready yield.

Kurt Yinger

through could demand that Northwest the uptick the guide Pacific help primarily mean, lot quarters, referenced? three kind export of with that the sort and volume implies of that you've quarter maybe And harvest? fourth of what the versus you us a done for is first I you've

Dave Nunes

seeing wetter a What No, some is than demand. in it's Doug sorry. We've approach increased again, the we're fall had normal.

from to is be the, private non-industrial owners. so starting And kind of constrained supply the from

increased seen customers. we've so And demand domestic from

stumpage crews. domestically, looking additional sales that And we're of so some looking market to demand there is increased With out one the reasons to our increase at we we're that some delivery with have.

Kurt Yinger

And the pretty the of market any I on a how dispute, realizations; impact think, be that'll lumber on next the pricing year might absent in view? in your to side year, expectation correlated Northwest you kind you stronger do change log then much on think or domestic lumber year mean, next China have the do well for improved Pacific trade

Dave Nunes

about resumed. has heading go to XXXX China Northwest volumes from Certainly, you the volume since historically, when if back, is enjoyed the

lot this dispute on sense, itself sorts going is of out. a how I an so this, And optionality to in think, trade depend

the And is deal we'll you export; that those certainly from of up where more it if of force describing, places I kind Doug will correlated what Northwest Absent one that, do that have be lumber ends it. be going more think happening, demand. to is underlying a mandated to elements benefit of

there's XXXX, noise XXXX, capacity the lot Canada. keep thing And or the you Western curtailment associated in permanent mind in to of permanent curtailment of or with as about closure of the other a kind in think

six mills that people that time And started of what is month had really lag one before shutdown, being recognize a to you good in those seeing lot of need a pricing. every was you

on to with starting see some curtailments. pricing associated just now mill of impacts those we're think lumbar the I

a improve elasticity And else well on more as see expect equal, I standpoint balanced to think being you'd pricing pricing and that should a into all market lumbar from lumbar translate logs. so as just

Dave Nunes

Yes, I that. with would agree

I board seen X,XXX another feet temporary billion feet in X,XXX $X think of Columbia board million and around curtailment. closures of British we've over permanent million

And to we're And potential think where see upside starting that's production. demand. so that's some for about in I XX% of that us domestic their

Kurt Yinger

of impact Got transitory exports realizations it, sales okay, thought a discombobulated lot because of to Southern that meaningful or it and lastly, then Southern log second recent versus sense. of kind saw attributable quarter. going I the thought the patterns, I might were a pricing how that And let's makes be that to pretty quarters just both back have log much the the in weakness some call percentage of in kind have harvest of items weather the small wouldn't and would

Doug Long

of we definitely our Yes, report. in South, dry the South some had see which on the bears weather did is an saw pricing across out impact timber

on an coastal did market. we it that. lot impact we’re the But out in of that it not So our a the working see we're - - we resourcing of export on was also volume resourcing

certain So in those coming that markets. we was volume that amount did of going out was have a

pricing. pricing on significant says - price take the that so impact a that And timber saw - we like we the to had did pulpwood it has

Kurt Yinger

that where a to whether Okay, think it or the stays this is it situation going so about way a and trying impact or lot I perspective, from I'm guess quarter good change wouldn't it's of there things to today. market demand XX is the supply domestically because export a forward where of if of call There lack? more figure much it out, just is just be mean, the upside I

Dave Nunes

Doug was a operations. logs price described discount saw of as Well recognized what we at that of some sell that basically export curtailed QX function to having earlier, a

that. was noise a bit that fair influenced there of So

So not a quarter. that normal rate run in bear mind that was

Operator

with Collin Raymond James. question next Our comes from Mings

ahead. may go You

Collin Mings

more to think Just think we’re now. some a going the in particular, of - do point you just was to led questions kind in off bit too. of for the sound some of tariffs back And little trigger what of again, I what David be to mean, sounds operations. earlier just curtailed export does you into the some shutdown operations acceleration first going it like you've base, But your that. broad the given

how And markets. on Because of been then for export highlighted a into a attribute I number acquisition this has that's in number factored markets the your of volatility know, the coastal underwriting of U.S. years be favorable just may the

particular or you're in U.S. focused South the the areas that

South optionality? as that as far

Doug Long

Rayonier have Sure Yes what's with section Collin, I'll through particularly we setup. chain exporters supply start all with to almost of had work the China. think - of is exporting folks happened I to the customers, that. process a so time One first like who our been for long this

felt like those want returns with XX% margin, in so, we going. weren't we we basically, And obviously, the to keep open keep we were investment mode, as but and supply and thought things about channels so it, great

investment trying going. were So we in mode keep that to

what so, other with was keep not that competitors, like, added getting kind feeling of on kind got everyone we ending inspected. peers side our and seeing but I the slowdowns really And that of how to we that. finally soon, and were significant is in long And moving think China this of okay, cargo on unloaded,

And that getting us tariff that's caused tariffs beyond when And decisions But around so made non-tariff was recoveries, related that this realizations that tough. things on to start when understand at were and beyond this say what know you - are our couldn't it. really there a we just to our see control were painful was you work where too what that you trade can you you costs impacting we your if that anticipate. the point that is

going talked was other point - was groups some having it they happen was and what hard figure And peers to felt out where just similarly to I that it of next. to getting my

Mark McHugh

helps underwriting, question, from And manufacturing underlying regarding where market your typically models look we're some look of think it we really price standpoint recognized Collin role our think an very that export against underwriting supply. it play pricing long-term when the we meaningful doing we that customers not DCF And second when known characteristics forecasting. that, we to the inform and at just at from about volatility demand pricing, think does relates to about wood and I basin as

Collin Mings

quarter Okay, prepared it thing very non-timber I on was just release color another just in think was it fronts. to And press highlighted the then remarks, U.S. income the highlighted in there in strong the both helpful another of

just of that? the speak maybe Can South. to sustainability

Doug Long

to outside see to we rate will strong And have though next as see still do these yes we strong business years, this year. pun, compare mean, very a pipelines for on year, respect have particularly ourselves the for strong going able a This Sure, easements, we a an year another obviously, particularly be when we'd I peak this us say but to with year I very been from a pipeline more has pipeline but in run we but opportunities our be replicate can't prior year forward. years.

Collin Mings

the obviously in what of you're of then this, the Zealand seeing on focus just on can equation. lot and Okay, Zealand? elaborate market side maybe apologize the New switching if domestic to you there I export missed but and I New But on a

Doug Long

by prices market export mentioned, a look a depending arrangements. Sure, yes lag typically as on or domestic pricing we forward quarter month we the

there seen that will over QX, anticipate corrections as do QX. we've then we significant fall actually So, we price in market, in price some export and increase be domestic

negotiations. monthly we on quarterly early like and it's said, So have I

typically a after So after see lag on bit the what's or pricing of mixed domestic and do some a it's pricing. we - going export bag

Collin Mings

guess was I that. more of appreciate demand side things? just I general the getting I

Doug Long

still side Oh having fairly of sorry, actually things, domestically. demand Yeah demand. on the demand strong we're

significantly QX, So much for we had as of demand an stronger too domestic. that that hasn't issue, been

As cost work couldn't when just in, working we prices forced export that they operators fell, very are saw high anymore.

saw that increased So we in point domestic demand time.

not of we're some typically one typically off, So We New and are in as mentioned almost on those thing. last of our XXX% harvesting three to - contract the falling type Dave call with out that in a that, seeing we Zealand. - agreements but were

we as back move markets. lever lever things but so we it's to us forth so the for respond change to And have we can hard rolling immediately, that those and

And have off. just bit as that of we it's really those kind of little New so, pullback roll off also scale think we to we're the can we our as contracts those as of opportunities might them back ability those not have in we we into kind about something to crews, a And but Zealand move crews QX immediately. the some turn

So our we New so and our the But have of ability market constrained there. conjunction do Zealand's little things. us of a contractors contracts more as go working have bring in at over how we off QX. with labor We're we to on based off looking as contracts out stage different our we those markets kind to roll handle into of volumes, a crews

Collin Mings

for the And just me, one and quarter acquisition that's Okay, as detail on Dave, last the activity during helpful the look comments the appreciate pipeline, one I there. out. then prepared just you

there. on seeing Can out a you color just you're quiet pretty success again Some not more on of do peers active maybe comments front? have though, maybe have the little it’s your some better acquisition that your maybe bit acquisition contrast market characterized or provide of been the on think either just the the behind of reasons a some you what driving and us front

Dave Nunes

think out there it's of number all, I a out of I things. There first of activity a there. lot is of is mean there. lot a Collin properties

is of are average And fit. We're are a fairly or looking considering think portfolio noted, have some always there lot we properties tend acquisitions. about to good we properties. have for - even as I that in average when be that disciplined below our to improve others a cases we properties looking and

We in for growth's growth interested just are sake. not

we're picky markets go very what so, about we into. And

very think targeting. we our I at look centric, as tend when acquisition think ourselves of market to we

you I as so bolt-on to another refer smaller transactions we've said well transactions. is concerted to effort know, aspect And this to that, that, year think having we transactions negotiated focus that on both, a as this had as

a really at like, we in that's And why move of of lot good year away not margin, as at properties, larger adding needle and we tend more we've aggregate, shy deals, small had in to a high but increments. acquisitions, those to we measure had have does timber much. tend looked we on I some think it quality smaller on those the look owners success, And from them individually the a feel

happy we're we're as them. we've develop these we're with We think going come what and And take nice so, opportunities to they as niche able we've done. developed and, a to

Operator

Capital question comes The next with from RBC Quinn Markets. Paul

go You ahead. may

Paul Quinn

much good Yes thanks I only had the I've have so questions morning got in just U.S. guys. of so Most the been asked one, really

in what down, guys the pricing? you for the pulpwood pricing weakness but South the is about saw reason talked timber

Doug Long

great Sure, question.

to across respect drive excess summer, yield pulpwood which had we the to operating area. the with supply normal So

work finally from were to a harvesting those lower was then as able net thinning thinnings price found stumpage also were down weather, mix quarter addition a backlog reason, that costs. volumes And our plays we And into thinning of our to geographic because the third volumes significantly XX%. And it by In region typically X%. dry. increased dry due the the increased pulpwood to highest on

as and of were region to pulpwood main saw prices the price up price there. versus is is difference volume kind There in we lowest changes. of value regions. the give reasons price, a in twice lowest highest X% the And difference that's our sense pulpwood And high and you significant region so in the a

Paul Quinn

that’s Yeah sense. all. of Best guys. makes luck that Thanks. Well,

Operator

The of next John from question Bank with comes America. Babcock

may ahead. go You

John Babcock

Just – want U.S. on to tag of kind of kind the

here. South a little bit

Obviously, what some just One Is were of adds get to consistent prices mentioned with increase this wanted from part of kind seeing landowners. the kind your in of peers why non-industrial more you some and earlier, mentioned color a kind you that this weakened. items saw that supply they reason is of of there? an seeing little but and bit something timber were other of private

Doug Long

when folks out Sure, period who even time, harvest. go who we have still this don't farmers really roads like a summer, there and I allows and have you networks dry have it XXX might to in as of folks acres even able road the mentioned, invested haven't

see And supply. an availability not significantly an increase have so we

when mills smart there so the time. the for at they're more As supply them point it is generated opportunities mills in they has after this go

of to starting to we we're private summer, dry some very that us owners wet parts South as use see rain farmers Northwest it the timber out to in constraint thing, do able the weather and started a starting lot more I and thinnings but and was to of which that and As same two harvest allowed allowed supply there be mentioned to those started last to and that may be see get has years. not

John Babcock

relative where on were, average to they based also, currently that prices in the last where our quickly just on on And quarter?

Mark McHugh

I mean, a pretty regional differences we by have considerably in it U.S. market varies again, the lot of

quarter-to-quarter that kind South are that kind noise. of driving of

of you export think I variety dry for operations. shutdown again so, weather, the reasons, the three And of kind the

to front. that’s again, of You product-by-product, we definitely to go were saw it's make kind a there on general unless hard decline market-by-market, commentary that

John Babcock

over either the prices lumber week South with trend Are then pickup from Pacific starting or last saw question, And any just in so. kind demand Northwest? seeing you last of to upwards in the or the mills

Mark McHugh

we short-term through, Expect which you mentioned haven't we before but Northwest in that nice. particular, as really Pacific been South been mentioned. demand, As seen very the increase seen has reflect some it's we've

hasn't yet. work it that through So chance to

Operator

with Weintraub Mark Global Securities. from comes question Seaport next Our

go ahead. may You

Unidentified Analyst

Hi, me? on for This have is hear Ryan just I can you Mark. actually one.

Dave Nunes

Yes.

Unidentified Analyst

on in harvest mentioned your influx competitors saw quick one Yes a one supply a of siding the the of great, that are an remainder Southern one landowners. have I guys from that bit week the I down for picked was demand, non-industrial of year. there just you guidance the weaker

was want that you impacting well? know Just Thanks. as if to

Doug Long

the I years that weather the couple mentioned what we we to folks who that earlier, and last over wet bring it's are to wood increased due seeing dry supply as Yes, from been market.

I say. have than this normal lot wood more have they market now So opportunity bought they would to the

had impact us. non-industrial impacted that's owners forest supply private of increased we so, have And from an

Dave Nunes

keep you have to the U.S. mind in But also that,

as very is quite talked being timber lot mentioned, U.S. South we the about a Mark the of Golden inventory across standing and varied differential

it South is about so, where and talking does of U.S. you're there because really depend the parts on

in tremendous to just that South price a their inventory growth other in lower than areas. see weaker and pricing both and have elasticity going really had you're

mindful pricing. to about thinking that you're you So that be when is have of and pretty careful where footprint

Operator

with question next comes Our Instructions] Chip Dillon Vertical from [Operator Research.

may go You ahead.

Salvator Tiano

morning, for Mark in Good Dave, Chip. This filling and is Doug. Salvator

that timber couple if and next a – up for the question or building years. you smaller supply weather that from South. So these me of firstly, done There you conditions we in the little inventory one from think bit either significant questions owners the these saw standing Do now extra a capacity. see demand few pent is on was similar

could temporary You spike see in supply?

Dave Nunes

that from to think I mean depending what it said back just region. question last gets I I the really on the

that inventory smaller favorable privates. non-industrial in you think I where have you've builds large and with had weather

some up going to You're tend to flowing supply that the kind see pent of to market. of

pay to to have what we lot you're kind just U.S. as the you that mindful so attention of region we to of And be referring and a look operationally across of

South.

Mark McHugh

going see private see landowner forests. greater in when weather, accessibility regions dry the across really to you non-industrial you're But

with price in market supply And to weather, dry will coming a response see that Likewise, tend have pullback you'll to tend and that the supply some regard. so you see wet incremental to weather. you when

Salvator Tiano

sense. Okay, yes, makes that

capacity with little Now the shifting all bit U.S. lumber that's just the a to

little lumber the have an where with just a started we Can given us that the expect do lumber you prices in South. at what to see going capacity a bit – the do little give you some least South? you primarily, now your start stand update bit next that do mills at higher, are of we’ve outlook slightly risk in seen is near years. And any Timberlands couple the but curtailments,

Doug Long

in is with be will about GP XXXX or forward. We local understand tracking XXXX our track tons that on we're take wood talked in demand up to the to side XXXX. Yes, going In and basket our talked before start complete add that amount a area, in additional sawmill few volume Albany quite a about that I'll of we of significant area.

Another and in more capacity potential maybe seeing increasing that are XXX,XXX of also locally, mill additional DuPont demand tons yard so in region. we here

these. mills couple is started opened up, and with that there a have then just where see that's but And getting lot we they're of

products sits are impacts. much also significant [indiscernible] we go in fiber another forward therefore generate amount of in in Texas, million space volume that's we that X.X announced tons doing. then, amount basket And increases right Lufkin, of in another So these a upgrades significant one there expected lot wood have we Alabama, of to our of

board up. to of this coming are slow we're that basically, start there I then and millions So so, seeing think mentioned is feet And of but Dave opportunity, when these what is earlier, years on get we curtailments see we’re to to take work to takes months inventory. one things start-ups, growth these going. to we're it sustaining two typically And often six saying to comes going

started. And plate route they're capacities, to so the XX% get so little XX% often name but they a bit functioning is that's at They have different.

So and yet, seen XX% work kinks of and supply them operating all online capacity out and coming work things that. the out lot say it the they and announced really, impact a of getting XX% would this labor we demand real haven't to like I as

where markets up although there level, short-term some high come a mills we is think it’s lot great, but XX%. impact So even in seen upsides of of at and we have the exact our long-term haven't key these

We are price seeing tension.

our That's But appreciation into why positive the and going in saw do some some I some offset volume additional at harvesting will kind timber markets. upside. QX of the price see of we of Arkansas before, expect mentioned to

Salvator Tiano

to about to potentially would hand willing would acquire on you're shares, M&A, thinking a Again should a just capacity What it like ultimate little bit new bit capital we or lot leverage a to your allocation. – little of the using kind on last It optimistic on a the this builds Timberlands one quarter year. any sounding about use next issuing more think How without issuing and little more be seems by debt. be take? you bit you're cash

Mark McHugh

to net generally market around capacity. Yes, debt-to-EBITDA leverage a - comfort or debt-to-EBITDA, we the leverage level the guided

million million of today, debt $XXX here that capacity? kind sit the for $XXX XXXX our we imply somewhere guidance based of on sort kind of updated to of As would in

Salvator Tiano

Perfect.

Mark McHugh

And kind grade specified. within of that investment investment we grade the targets

Salvator Tiano

Thanks.

Operator

time, closing remarks. Thank and call for no further there any this are turn the speakers over I to will back at you, questions.

Mark McHugh

questions. to I'd Thank today. feel free you. thank like follow up everybody me us contact This Please any is joining Mark to for McHugh. with

Operator

you. all for that Thank And participating. does conclude conference. you Thank today's

may disconnect. now You

Rayonier (RYN) 31 Oct 192019 Q3 Earnings call transcript