RYN - Earnings call transcript Q1 2020

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Operator

Welcome, and thank you for joining Rayonier's First Quarter 2020 Teleconference Call. [Operator Instructions]. Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

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 first Investor and quarter earnings.

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

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

materially statements earnings and Form cause the may of some list that are release on XX-K may with also forward-looking Our Page our the results actual from make. They differ X to SEC we financial listed -- the factors referenced filed supplement. of

these to non-GAAP financial the Throughout materials. earnings measures reconciled measure also GAAP supplemental and our in defined we presentations, nearest release will which discuss and are

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

David Nunes

good Mark, morning, Thanks, everyone. and

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

address for I'd the transactions. discussing as Before results our to like our to COVID-XX an on quarter, and the financing merger recent briefly update response provide well as Pope Resources

of have I'd company, who our best extend all our to to global of like behalf on First, impacted those by pandemic. and wishes been this sympathies

COVID-XX. working business do employees In effort office all a as safety instituted safety enhanced our From we've at of implemented mitigate a employees by guidelines to and ensure for and as responded model in contractors continuity. while field Work part as families, spread Rayonier, to company and the Home well of employees an our for we prioritizing health the mid-March, their Here to

designation continue designated on workforce, essential March Department a critical memorandum, XX, guidance issued which of industry our end the industry with to cardboard through critical during such allow to COVID-XX as construction as to U.S. to this lumber Security a we forest as This responsibility providing to emergency. response crisis. critical the the the infrastructure manage continue On operating was to items grade tissue the products infrastructure users paper, boxes supply important Homeland and a industry

In New of across a instituted businesses, measures late stringent forestry, in however, Zealand, beginning the government broader lockdown range including March. more

New basis. XX, operations of Zealand the ended are process and our these currently April restarting phased effective a on lockdown in measures we there

tumultuous keep the observing are amid spread employees further this certainly the business well. period, a necessary we and answered the call Overall, protocols distancing of social it to we our managing proud mitigate while safety believe been COVID-XX. pandemic this running our has through very to of I'm have how while

for we the report X. in discuss our component the positive Pope's Mark will and series expect more merger to financing cash completed May announced a close transactions also the of May Pope at to meeting for proceeding vote previously X, scheduled a Resources of which to we on a that On successful with detail. is pending special of secure consideration, note, as I'm merger a unitholders pleased more recently planned, transaction later

million. closed Mississippi for we the during roughly proceeds in Additionally, XX,XXX net of quarter, disposition, -- acres first $XXX XX,XXX a large consisting of

unprecedented their focus market were dedication we completing our balance position required liquidity and Taken that financing completed given these team I'm transactions weeks, over for of conditions extremely transactions the Pope close the significantly sheet, the strengthened on proud facing. our bolstered and together, especially these our last to acquisition. several the

highly enough integration and has the to thank this excited Pope and process, calls primarily Working of video through worked can't professionalism family. excited our about we their our the iteration our through our their organization. to like for via about team I'm speak prospects welcome at in as unusual reinforced very phone all also I'd and a planning the of combined conferencing. into midst the perseverance strong really very them future respective cultural very companies Rayonier process we're circumstances, fit between I

now With to that, switch quarterly I'd like briefly to discuss our gears results.

conditions For with reported million COVID-XX to of pandemic forma amid or results EBITDA deliver strong how of challenging EPS. pleased operational the our we across pro first our quarter, I'm team $XX Overall, segments. loss $XXX,XXX adjusted and breakeven roughly navigated net market Timber the

driven the Our well Southern and generally quarter, below strong result, by our our strong first enjoy the Timber continued very another the which margins prior line low volatility. for Timber segment in X quarter, was enjoyed adjusted and million last with and segment Overall, but expectations $XX demand. guidance. above year of cash prior EBITDA reported relatively continues volume pulpwood high to flow quarter Southern We quarters

EBITDA since XXXX. our $XX result which of quarterly Northwest is second our segment, adjusted achieved quarter the In million, strongest Timber Pacific of we

While a in the quarter, the strong very advantage understandably pickup year. delivered in deteriorated of taken end the related of domestic pricing quarter in versus mill XXXX, happy very to sale have reflecting significant sales the relatively demand. we're we mill stayed some early early stumpage towards opportunities these shutdowns, stumpage so enjoyed with flat conditions COVID-XX strong Market

significant significant market adjusted In China EBITDA to China Zealand experienced lockdown further instituted which reported the in online, of million, export its own demand Zealand measures came implemented the volume. logs. as the limited New segment spread of strict The export prior COVID-XX, back we COVID-XX, flow in quarter Timber a represents of $XX contain our lockdown the and the from with measures to impacts which decline headwinds quarter. in which to contend New ability significantly segment, the markets QX move limited Zealand Timber New as reopened year its our of Later

the encouraged demand process are in New discussed earlier, As response. we're by the near-term currently in restarting operations and of Zealand

we X,XXX acres Estate than adjusted first Real our during negative million quarter as excluding quarter, fewer Mississippi. the in $X large disposition segment Lastly, reported our sold of EBITDA

quarter had the closings, a very significant a While expect anticipated we average light transaction run is estate and result further of we pickup second expectations this the to quarter. below volume first in timing certainly due in rate real the our in year, for

over me With to for detailed a it turn that, our let back Mark results. review financial of consolidated

Mark McHugh

Thanks, Dave.

million $XX Page income on to to highlights. start merger. the Sales net million this X gain and our million to million, the $X.XX million forma $XX $XXX was loss costs Pope financial Rayonier translates items totaled or Let's breakeven net with while EPS income included which from per and quarter share. was of operating Pro a attributable was related the Resources quarter $XX large Pro disposition $X.X forma $XXX,XXX, quarter. for a for

below offset year results Northwest the our in quarter, adjusted EBITDA primarily by segments, our lower Timber, in Zealand New Estate results quarter million to Pacific of Timber due favorable First Real was partially Timber Southern prior $XX segment. and

in disposition a adjusted closed that Real reminder, excludes the we As segment Estate of during EBITDA the quarter. our large the impact

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

cash lower million the X lower or adjusted offset on of GAAP other prior Our for partially taxes. measures were in higher interest compared the was and Page to period, financial of expenditures million $XX and $XX due by reconciliation which primarily activities EBITDA, year cash CAD, to cash is CAD higher capital distribution, supplement. A to provided provided operating cash paid, by available

We of $XXX and closed $X.X million roughly with of the quarter cash debt. billion

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

for Dave the As April, Resources month completed noted, of during acquisition. of in closing the Pope series the a transactions of preparation we financing

Specifically, maturity to of our million, we increased credit size million facility $XXX from the to extended and XXXX. revolving the date $XXX

extended August existing term XXXX $XXX our loan April of also the to from date million maturity We XXXX. facility

through X-year farm Lastly, term into entered term million the that of of into loan was account finance will for this X%. Pope This we interest credit and to rate patronage a payments facility expect payments. in syndicated eligible estimated new entered approximately facility we that loan over facility system Taking financing, into be $XXX the is the patronage and the facility's current we cost all-in spread swaps transaction. LIBOR, this anticipation

We're transactions economic have completed backdrop. very terms and attractive challenging very a on uncertain amidst these pleased to

liquidity facilities Pope's that closed and we during of first Pope with of Resources the Pope the existing these consideration, of available along pay for we liquidity $XXX over disposition in expenses quarter, ample have expect Pro debt fees the and associated the to forma million. closing merger place, cash portion with financings have now refinance transaction, large the to With the we the transaction. the and fund

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

Douglas Long

Good Mark. Thanks, morning.

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

ground of tons holidays weather quarter. general, those pick million as quarter First was operable prior approximately to higher on as conditions. compared quarter we X.X year landowners volume XX% X% prior and experienced the and first markets the to often the demand often quarter In with to lower in stronger up harvest the compared limits weather, supply

prior was than for a removals. still winter drier was first period, strong the this of relatively year XXXX significantly the quarter Although quarter

removals logs demand average increase markets. the $XX.XX prior dynamics impacts We unfavorable price relative in price of to the pine possible improved compared the The pandemic. was and year decrease to to per ton was driven with favorable quarter due COVID-XX the lowest the was in combination and XX% our quarter decision price prior prior availability the the some compared to to relative uncertainty of of market were of price to forward reduced production due near-term pull drier other to conditions. relatively also increased The over by the year quarter supply a such quarter. ground pulp had the The prior in X% from

increased relative we ton sawtimber the sawtimber quarter average This growth of compared pine demand The experienced the prior had price dimensional pine increase XX% summate $XX.XX for favorable of for and market X% and engineered per year to logs grade in to in was and due was prior plywood beginning quarter. the the respectively. large at quarter, the that quarter, housing products. the pricing lumber, prior to The reflects

It's important of income record a to in high below was in non-timber the for business to this note being XXXX. prior pipeline comparison non-timber reduction $X events. quarter First against quarter made our year due that year million income is a million $X

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

The unfavorable stumpage by volume quarter, respectively. sales price average -- the year and by to compared domestic removals decline sales quarter. increase and sum a The demand. due and delivered was harvest an improved XXX,XXX $XX driven increase the XX% quarter periods XX% and X% the sawtimber to with sawlog prior primarily log increasing quarter. The of XX% the meet chip-n-saw, primarily quarter delivered quarter higher both in First of to volume both to tons of year increased significant relative prior to was prior lump was per ton during mix $XX.X chip-n-saw prior the was

up We saw It's was from to quite due the prior strong by pricing negative expect favorable their we of responses basis, bit COVID-XX concern dynamics progressed. noting for quarter, quarter. experienced excluding Overall, pricing, market flat late choppy by to Zealand worth the of pandemic. volatility slowed quarter compared the and exports Early export February, in prior that we to were as and these year end the the Exports But evolve, had chip-n-saw, about market generally lockdown down. situation. demand particularly the tariffs driven spruce halted quarter going an China to first MBS on to in from different Then towards X% market data. as waived. and the turned are timber sentiment housing demand New quarter, sentiment a European as given continue conditions that the to the up picked due be growing regional

to particularly the compared price the prior period, prior per be the pulp average ton pulpwood year was prices versus XX% lower supply continues chips quarter, to Oregon. The The year of delivered quarter and market of respectively. X% unfavorable in and open the $XX.XX on prior

pulp However, as experience mills towards for we to in mid-March, demand curtailed production Washington. began increased logs lumber

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

demand respectively, lock First by as impacted the beginning was pandemic. due quarter of and harvest significantly to lower in quarter, Which led tons XX% prior eventually New XX% down a export volume in January than of to XXX,XXX the a and reduced first year result quarter prior end. quarter the China markets and COVID-XX Zealand

of and in were important for meters. after to struggled as travel processing restart Log time then to million which due over Chinese China employees mills restrictions, growth from slow costing back were period get the closed an to to their X inventories New Year, cubic led to hometowns

incredible Our plan production we in businesses, including and instituted other reduced responding quickly into In forestry. job New XX% lockdown did China, government Zealand than all of the Zealand the as New on of China. team an export averted domestic markets unessential and measures destinations situation to late March, sales to

currently in of effective recently the Zealand our process on basis. lifted a operations New However, these measures phased XX, reopening we and April are

the was year and and was which to the but The compared to U.S. COVID-XX but terms the reflects up per compared to dollar to declining average exchange due prices. $XX.XX the of prior of to tends domestic the to export New price respectively, unfavorable XX% impact the of demand quarter, quarter, $XX.XX price export X% the partially to the per sawtimber quarter Note prior due pandemic. export delivered that rate average reduction due ton prior domestic prior in pricing. Zealand sawtimber XX% fall U.S. compared ton in year unfavorable also behind the The X% lag pricing quarter, in

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

of and The price quarter ton same average driven $XX.XX respectively, factors domestic pulpwood to was sawtimber. by XX%, compared the the unfavorable prior per X% year prior quarter, and as domestic the

we've quarter, adjusted $XXX,XXX EBITDA In quarter breakeven unfavorable our that discussed. the which in due already market Trading first conditions export segment, generated to challenging we to compared year the was prior

real over results. it to our I'll now Mark turn back estate cover to

Mark McHugh

Thanks, Doug.

Real on moving Estate Now to results. segment our

sales XX,XXX As million included highlighted Mississippi, Page on a XX, roughly totaled roughly acres. $XXX real in disposition first XX,XXX large which estate sold, on of quarter consisting acres

totaled million. Excluding rural all this $X,XXX adjusted Real million large average Estate acre, quarter of XXX price in the EBITDA $X.X sales quarter acres first our disposition, on for sales segment was an $X at category. sold per negative

due closings. As call, light had the discussed Real earnings segment timing to activity estate transaction very first in last on our of our we anticipated the quarter during

year. Now remainder for our outlook moving on the to the of

expect over evolving will COVID-XX the the continue noted current in based As quarters XXXX the pandemic. Due very challenging guidance balance that be we next prior conditions we and our continuously these outlook the several earnings year. due our we to market are updating release, volatile on to our conditions, the impact of for to financial of

does XXXX by of full include of supplement our not net EPS. merger guidance XX earnings reconciliation attributable note a anticipated and Schedule financial to our financial updated segment that our Resources. Pope guidance impact Page guidance XXXX Rayonier provides And adjusted for our to our of release provides updated G with year please EBITDA our of and income the

the update to of second closing expect following quarter our guidance the for transaction of expected Pope our the the We call on earnings transaction. impact

of EPS impact excluding pro Pope million million, of XXXX, year transaction, now income $XX $X.XX income Rayonier $XXX Resources pro $X.XX net full EPS $X.XX, million year EBITDA the we to to forma to the $XXX anticipate million. $XX adjusted $X to $XX to of full net forma of million, and For to of attributable of $X.XX million

continued geographic Southern Overall, reduction XX,XXX COVID-XX by million. versus expect In million will offset of be pandemic. Timber our Mississippi Timber in We as $XXX to demand. to our disposition harvest X.X XXXX resulting demand, pulpwood markets well weaker as of tons to generally from in weaker average as acres in flat certain we demand and further demand segment, relatively that pricing the impacted harvest expect strong export pricing expect we volumes year the Southern million favorable Timber volumes mix adjusted segment the EBITDA XXXX increased now of million full due of X.X Southern $XXX sawtimber domestic

on now volatile domestic supply, the potential the regions million of In EBITDA sawtimber COVID-XX. be million volumes segment million which export the based XXXX dependent Northwest availability in duration demand partially we export our strong we cope segment, X.X $XX the full million. start domestic and declines improved in impact expect somewhat year, our with well to curtailments mill Overall, $XX coupled expect We demand of further curtailments. and due as adjusted in different China to the has expect competitive demand, on X.X Pacific tons Northwest as Northwest to of as with changes of mill Timber to Pacific harvest pricing year Pacific Timber our offset will of

In decrease April. primarily as X.X during our in a are volumes harvest New to million of the to between all and Zealand parts result timber activity shutdown segment, expected and full of Zealand million March tons, of X.X year nonessential New

We driven Zealand Overall, the some and level near-term resumed in activity pent-up timing $XX by New longer-term following shutdown, to Zealand expect million. economic pricing EBITDA pricing demand $XX export now be segment the the of we domestic while in resulting will from upside of New resultant demand. XXXX expect our of million Timber adjusted and

Lastly, on and to impacts in improved segment in strong adjusted sales we rural activity transactions. our the sales pipeline unimproved million our development $XX current balance XXXX of of we Overall, Real expect significant year of expect EBITDA to Real Estate the based segment, million. of COVID-XX, a timberland reasonably now in $XX anticipate we our the and although for continue slowdown Estate due to

provided COVID-XX, expense and interest taxes Schedule the the also Details in basis financial due supplemental uncertainty Page and to and allow land CapEx, volume investors that note added pricing accurate of guidance, minority scenarios. surrounding our to respect with elements cost I'd release. of our and G appear our have EBITDA a supplement. including the financial like data This range segments noncash Section of that different run X to we market of supplement should sold, earnings are interests disclosures XX on new on of other financial more to DD&A, our of sensitivities Timber under analysts

liquidity comments it balance our sheet Lastly, for remarks. a few I'll turning offer closing and back before Dave on to position

million, the of near-term which COVID-XX have capacity and the combination with contend us with provides closing a and expect believe flexibility to Resources over the transaction, financial challenges Following credit we associated we we cash as of revolving ample with $XXX liquidity Pope pandemic. of the

debt our when April nearest Our maturities XXXX in mature. million $XXX notes senior

maturity X.X%, funded next Our million thereafter loan is term cost our is Overall, $XXX all term of approximately to and into average interest our of in to fixed. debt weighted we've entered the swap hedges maturing debt rate XXXX. debt

two calculated a ratio credit X.Xx. agreement, ratio credit our calculated XX% in have EBITDA consolidated an than and less a and interest than debt financial as ratio facilities, as We consolidated network of must plus Under leverage we more interest leverage no consolidated expense. of interest covenants ratio to to debt consolidated coverage an no coverage our maintain

our leverage ratio of over XX% March calculated was was As XX, coverage calculated and ratio XXx. our interest

in anticipated decline So of covenants, and both within the of headroom we Pope closing the with EBITDA week. and XXXX anticipated to of expect maintain next plenty in plenty even transaction the headroom Resources adjusted have we

given challenges balance our in with sheet to with certainly our we associated and these financial strong the very immune while to feel pandemic, summary, overall market flexibility. COVID-XX ability In the confident not challenges, we're contend

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

David Nunes

its as these how longer-term is long-term we our achieving Thanks, challenge Nobody against per of global and yet quarters. for and building over share. dislocation volatility pandemic keenly economic executing next generating will ahead, an on we and sit today, priorities focused several market continued Mark. expect uncertain. industry-leading strategic knows our the certainly its remain significant challenges the and impacts Despite here last. we The and largely unprecedented mission remain returns economy is impacts But value long pandemic near-term and COVID-XX

our I'm Rayonier the well sheet, that and further dedication I storm, this demonstrated financial believe seen strength balance the is of conclusion, to resiliency I've in our through positioned this extremely people that liquidity And firsthand and have confident crisis. specifically, position In flexibility. weather

and our diverse As a pure-play manufacturing And downstream category. region and businesses. less mitigates single that a further geographically margins exposure to substantially strong timberland we portfolio REIT, volatility any we or than have enjoy product

diversity next optionality and our We further of we successful week transaction enhanced of close when Pope the Resources expect will that portfolio unitholders. Pope's be this vote following merger the

early busy management in well portfolio When moves we Resources anticipating were held and that given Pope underway. the transaction quarter well our already first a pending as financing were last the February, as other earnings call we very

at want However, and am more challenging and the continue manage and feel quarter through of I the the became result responded be how of to proud and exponentially exceptional employees pandemic by economic and fallout. busier I the COVID-XX poise they levels a with I and very such surrounded ensuing talent this fortunate reiterate of all how as to our to determination. dedication crisis organization.

the operator This our back turn and to concludes it to we'd like questions. remarks, for now prepared

Operator

[Operator Instructions].

question first James. with from Collin comes Raymond Our Mings

Collin Mings

-- you And process does restarting volumes Zealand on near ramping can start, to that the backup and term? referenced, stand for along activity of phase can elaborate mean your Dave, you what the you of in there could of where elaborate well operations tension New that? to times in as be the you on as lines, the market in couple a due just some you referenced demand. prepared Can remarks the release Dave, really pent-up that pricing those press

David Nunes

over closer a that who's to I'm Doug, to going turn Yes, that address. to not to little

Douglas Long

a safety staged Collin, reopen. yes, off to to Tuesday, a for were month, at force, but And Zealand basically, was approach. full we New of so we as essentially for reasons, reopen people allowed a haven't after been took lot

week, up, could off new And sure around to won gear make trying two, XX%, the in and after month the COVID. work; that people operating handle so XX%, guidelines being safe really, we're this were

safety. when matter -- we So it's a stage and of say really phase, it's

to back operate and and feel work first underneath this working that. everybody's and January week safely the distancing we our on since really make we look contractors use can side. social the and over to some guidelines actually the then export -- are so again, of up our the they their production lost staff on that Once last jobs that middle new of And

parts to kind in February So our them production really XX% late contractors, starting of reduced January. we've and

there's So some opportunity there.

as over to move couple expect the of we in So back next pick weeks. up volumes we do

So we look we actually safely. XXX% to produce above that if can do

Both lot export a side, domestically and of there's demand.

there's so -- a mentioned, that I the So skid been domestically. they're for and We as sites. demand in they've logs month, pent-up for logs. on the looking Obviously, logs forest. were without And cut did the have some

And the those customers. still so quickly we're then move ports And able some also. to to domestic were the there at logs

the for of X we have chain shipments get of up a weeks some and New have leaving that's going to But running those next X kind week operational. and so And Zealand fully yards to within early back really that export are fully report take X. supply or couple to and

David Nunes

of shutdown of I kind if to add New mind that getting the had kind Zealand, the keep China that, could back of into operation. backdrop in Collin, And in in just Yes. you

COVID Chinese the build associated inventory grew the meters. so cubic X in inventories and And Year to where million following with New lockdown, their

inventories at those come meters. log down to X.X of initially inventories to was started of A restocking they operate, lot roughly As we that, million mills. we've believe, seen cubic

deteriorated portion volume it less large as aged, And -- was coming we pricing some as it European pressure. that so result spruce a the of and that from has that, viable mind And of inventory have keep process. to economically as seen become of sort well in a

put wood. of that's the this prepared need lot pressure. touched is his and Doug or pressure on on for so And a green remarks a lot fresh of put

all And now. seeing in X we're translate segments so that our right of really

Collin Mings

-- there, And detail you that a fact focus segue is tariff Pacific on there. bit as conditions remarks, inventory Dave, update helpful on bit in a serves a on given again talk the has lot that. the also Europe more little forward. a about the demand really Zealand. the of prepared and appreciate just, supply Maybe the also my less China going a elaborated seen just bit again, again, China. from focused relief you've market Doug But the just little just next question, But cited and maybe Northwest. improved you That's coming New in and -- situation which I and choppy to

Just that to be place? And -- about now? like how the push how release Northwest long in long as Pacific you how the understanding and relates in versus markets pull think markets right latest tariff export the what's do it your might domestic

David Nunes

quite evolving if start, keep I'll Yes, and QX, of missed in But that anything. can so Doug the mind in we in tag course then Northwest. on I've saw an market the

as mind volume As we only into started mills, uptick then saw markets. that the strong in of demand China side. year, export we in domestic back QX, we end we to shipped domestic towards our in from in demand housing our And And of response export market. strong the a had a the come the on quarter, we see in keep really pickup the started to online X% the

large, so the up pick occurring preparation starting downtime. the was And not we at the last same quarter. number was we say the But mills as I'd shipments to export domestic into were taking QX. and But the of by of present that export our time month that also was saw market, in a

aggressive that of rates as both reference higher a Hence, lot out seen our by going was across you've taken sawmills well seen effective And North much a have proportion U.S. volatility higher been throughout So is, up of Canada. some operating really downtimes that got we've case. level One of pretty and have we And offset. to thing Canada. in had parts that's those recognize go forward. that than mill some America moving downtime the expected historically has that Western market a

how particular our sort go footprints. market it that? forward, know, if interesting Doug, so don't anything I out have in of to we to as that And be see plays add will to you

Douglas Long

or closures to when annual XX would curtailments, No, housing board announced COVID I agree. equivalent feet annualized reductions to the basis. billion we've on seen single-family pandemic. Dave lumber references X million That's the of starts I an roughly capacity Yes. approximately mean, sawmill

we Dave's that actually demand ratio was So to think of seeing rightsized of and the a are kind -- capacity amount point, we curtailments XX%. about running

So kind may curtailments. of have suggests that seen the we

One the kind an somewhat that's we're are of chains. supply more I'd their thing although long diversification rethinking is seeing countries term, probably demand term, is too, their thing it, definitely to export short add of that interesting

imports supply the seen turning believe So some market may and trend we're while And diversification customers then term pandemic Chinese to gain country some long-term experience the South demand, Taiwan lockdown in both which similar there's benefits some export longer-term. pine over in see of major in our starting for other Because that packaging short we've share both in the demand India, Korea and plywood. of increased chain with we they particular. is before lumber

there's So some interesting things.

is volatility supply a the right mentioned of moving where are parts they're around. countries Some chains move that we things now lot rethinking as there's of from, getting how wood

spots but are some different a just positive things play, -- lot there. there So in of

Collin Mings

of and How will Mississippi focus balance moving specifically, you you color of been Switching year? appreciate the the on deal liquidity magnitude following available referenced just the Mark, forward. know Timberland delevering the sale. I Pope closing More the the gears, much the additional play timing all there. of I of $XXX over million

Mark McHugh

that taking through leverage our we would mean, we near obviously We I to and back committed announced we rating. the were medium the to investment-grade that said comfort a we up to some sure. above zone, look in bit bring asset sales the Pope Yes, likely were term. when down transaction,

never the forma Mississippi was I deleveraging the expected and annualized those that under environment million for Mississippi say, $XXX it now plus transaction cash sense for from said, largely disposition largely we're targeted Pope disposition, an is of Pope, taking pro the together. contribution the completed, kind the pressure. all with would that the EBITDA need so kind And in of in That leverage-neutral, where obviously we

in we'd the kind been up we probably just the kind had And extent that bringing a Xs range in basis, the through over so term. going and back We're now that EBITDA on anticipating high to near the asset into sales. with that debt-to-EBITDA of be that down of was decline anticipated leverage

still suffice yes, the we're of same having that to I to investment-grade are lower -- there COVID-XX now, But we EBITDA, certainly pieces rating. this into very obviously, very don't so kind And the focused we account. would the that say with a prior have focused of right that maintaining it of that take to sheet, balance lot capacity on have on say and And had all pandemic. we're would leverage moving

Collin Mings

last Okay. me, And and turn over. it housekeeping for one I'll one

release, We guidance a closing? clear. updated Just, to Pope with conjunction with won't make the concurrent the Mark, transaction we're the for XQ separate there sure should in earnings expect deal just be like update

Mark McHugh

of hood, balance the under get looks year mean, I that. in while to mean business what or somewhat kind sense their into the too want of and we obviously, like. separate I far companies, to the Yes. obviously limited as a get directing we getting we're remain

the rate of the not under then transaction. as we'll given now, expectation, the right don't expect going close be as time on we and basis, update and at their right pandemic of we pieces great need to just moving where where we're the they would year, materially than a to year announced hood, different what get for digest balance would the I relative what's run for to to time to the remaining the a are again, that at to again, expectation mean, to full and now COVID-XX get sense But the also a having some time their the that. guidance. the they're we I long-range that relative expectations year, deal, the think So want sense

David Nunes

exposure I'd having the higher now, to Collin, to domestic is Douglas footprint certainly, are well in to just keep that as those All diverse improved thing transaction right lands, And markets. markets of logging and with only mill more things ground-based additional add good having sort to for of the that was going a of mind export. one And gaining be this transaction. challenging both a that after Yes. in objectives optionality. And applies the as proportion more respect Pope in having

it remain our excited adding to pretty we about So portfolio.

Operator

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

John Babcock

mean, talk just pretty like have there long-term and dire. far about a numbers some we're out guess obviously, quickly of those of I are I supply your kind to I been here as work. the that generally So housing as and time pretty how agreements forecasted facing want difficult

it you've on work? in for supply Northwest? get also even And but I agreements south, I -- Pacific like a you'd at some recognizing of to if how rates that, so the sounds comment want mean And recover seen the of kind those operating sense mills maybe the the broadly and

Douglas Long

is This I'll question. be to that happy Doug. take

very a here Northwest, sold Zealand our our annual the length. or the on Most and company. agreements of stumpage, either are the A few So long-term supply we lot maybe of wood in some also. more quarterly but is dealings New actually delivered have as at south thicken

beyond So year I supply think agreement agreement. length that's we only a on have one

a on definitely our would quarterly So transacts more basis.

John Babcock

kind sale, And the an to helpful. And just with to the or any Mississippi as contribution be volumes provide also, regards helpful? what then as could made you That's that I guess, what business attractive to property would Okay. additional land sell? far X of of kind made color that

David Nunes

that Dave. that. we process that is competitive take was a we this that It And sale last started. we Yes, This September. process I'll launched concluded a process. was Sure.

that and our I And both keep sale, an of scale to that market really had this limited felt grow this think some limited we in of in to mind the sale. that in ability appropriate holdings was Mississippi. a remaining we

the it very of and property, was pine was XX thought productive decision longer-term years had It And certainly was a of about market. points old. average age one key as plantations, XX% that a so that we prospects the

good really It and a we that was equal, where all question to being be it ability of impact was stronger prefer places So market the and long-term market. in better just to else a scale we property. can operating have

John Babcock

talk has demand you over trended in I since this kind of in Okay. America can out Northwest? you was last the next, end about commented And already of if wondering market the then about particularly how North kind few weeks, guess, I

David Nunes

And one the you market. now this market Yes. thing with particularly situation, the certainly market, I fairly is the COVID are -- keep with mean, to mind diverse the in with is of lumber the which strength market, industrial whereas, single-family of XX%. of reinforcing the and repair housing XX% portion the lumber is demand remodel is the portion And largest about at and roughly is XX%. the

in thing keep does so And a disproportionate important that's get to an mind. of the to amount attention. It tend

of we've our customers throughout time. pulpwood this from The backdrop a I'd of out demand is point other thing that strong period had

the You of the news things boxes. coverage like linerboard out side tissue and all about the of coming numbers think strong for

markets. And we affects demand, so it that it have have when find positively we generally, foundational all markets that

classes. And across so products like market all of being equal, to we'd nice -- demand diversity see the a product else

John Babcock

Okay. And was the think then kind it and and the we just should turn that's you accounts and about two capital or working coming all before wondering of about I I changing last how how with and pandemic if could over over. of payables question that? just talk quarter inventories receivables kind

David Nunes

of John. lot carry capital, generally We a working don't

expect wouldn't changes significant I So there.

Operator

Anthony from Pettinari comes question with next Our Citi.

Randy Toth

for This Randy Anthony. Toth is in actually sitting

I for think U.S. the

lower per changed to you previously expected. guidance, U.S. full the South, guide EBITDA on color ton within some you expected than due expected midpoint looking be had has harvest year to Can that previously, just Yet levels the geographic it of forecasting sale? year a full the what is besides maybe add pricing decline on suggests slight mix. you're for year. at now And flat

David Nunes

recognize that's a business you have of in Yes. -- cost when Randy, in fixed the an there's that nature. element

And you're to lower you be volume number of fixed have tons. spreading cost lower that going over when so a

else So and that's you down bring you're to certainly being EBITDA going going have to equal, to per ton. lower all contribute harvest a

more a sales. a sales. our in really year the in muted we're the as really been oil decline the has But year our The some with around non-timber today, But those more strong last different materially. year there. non-timber where expectation expectations volume-driven essentially I So year prices think really expectations think the in generally as for bit around particular, for pipeline moving I We are changed speaking, in being forecast pieces income. probably overall easement pricing well are measured more hasn't had for

in respect with that half was recognize driven Mississippi for also of the decline that decline the volume with the to probably Timber, associated And the Southern disposition. guidance by roughly

volume big projecting that in just with decline kind factor guidance, it, guidance to a guidance we're prior to the pretty because well that roughly disposition. at Mississippi of half as So revised say associated relative there. I'd the in kind you of was driver need was looking that the of

Douglas Long

to what just would a I before. now point where then heavier And slight add predicted than mix there's a was pulpwood

the average like ton, EBITDA it's per some look you causing that's at to seeing. weakness of So that's price the look that when composite slightly lower and we're

additional the of around coming volume some demand. So out that's is really sawlog

can in we quarters something and and So future recover things defer better. get

Randy Toth

Okay.

was of of the increasing in and think out I the And Understood. U.S. Okay. prepared momentum remarks, release demand there export

the PAC well? up? business just waivers, out South. Northwest? Chinese coming logs to is of these Is clarify, And margins? just as Or southern tariff on that Or on just ramping timberland that are that those the cover back does

Douglas Long

Sure.

logs the Phase that's as a tariffs both X south. to agreed resolution, the waive of on the and So for China and Northwest part year,

Now online good they're these shipments waivers are and from actually applied for month.

the it is to mechanism a actually they've while month. year, physical do for -- it's agreed they're So X

denied. X told it, there's have customers to about us takes it days no Our been one and been get who's

far, seamless So -- it's so things. been pretty it's get to those pretty

Dave So and China, have X have, more both kind for Northwest amount there they as in of range million fresh operations meters -- gone to seen wood while gives from a X them. impacted South, and the cut. of in million say we've them we Greenwood. Basically, That down cubic what -- which really the demand is mentioned, can they the optionality locked Zealand for from New down has of when Greenwood I lot the

the demand and south. increased in resulted out has that Northwest of So fresh logs, the for both

domestic resumed Georgia exporters we've own operations Alabama offset selling our to in third-party and actually we've in our restarted So that and demand. to Savannah, Mobile help Florida, curtailed and Washington

I that's demand it's been right now, us And domestic it's at curtailed. meet help offset we're volume something to actually So not the targets. just as seeing said, that margins, our

David Nunes

in the Northwest of done they're south exports Zealand, by New that are container, though, and Keep bulk. out in mind, break the whereas

so a that shipping dynamics at And play that. a different influence

Douglas Long

fuel those fuels. ocean seen year. low a costs with been very also global $XXX and We've to into rates per the point. ton sulfur We $XXX for IMO on. good ton the change -- talked the And fallen freight this respect in impacts COVID-XX the fall a of to start per on change to that's reduction Yes, really year from going have trade, the about significant the there's from

bulk shipping not So on the earlier about we're supply the really, mentioned spruce that's -- of Europe. an there's from brake containers. advantage decreased But experiencing not we

is things rates the global Europe from gone year-over-year to this China. over XX% freight balance spot to have have One up of seen for we

reduced And amount of we China volume the over that into persist of a Europe expect so really to months. last that's the coming while. for And from couple

freight thing. of while aren't same kind more not to we're experiencing increases where of south, experiencing we that going rate blank And are ships the there's that out because sailings

that, that containers. our us, like to out for but the and our are have seeing do our boxes we're match both So opportunity ports and things and Australia we U.S. of

Operator

with Mark Capital Markets. question Wilde BMO Our comes next from

Unidentified Analyst

Mark. for This is Jesse Bran on

view one me. And Do kind of quick in of the U.S. U.S.? any you length on the curtailments specifically the have the one in for Just

did in guys mill South, Florida? to exposure have the you any Klausner that shut

Douglas Long

question. have we now. mean Yes. I we're mean, encouraged a mean, -- the I it's -- heard I length hard of rumors curtailment

start prices X% is So that up reconfirming the Pacific encouraged year-over-year. I'll Northwest, we're lumber

the epidemic northwest down not we've highs, the seen while in year-over-year. kind back lumber So of settle

in of So In on going my out some next the no of heard at we've to weeks. one's couple about best that, committed looking but come they're restarting heard what's numbers curtailment the rumors of mills actually similarly, when the knowledge. South, we've their of

XX% mentioned, rolling now is pandemic, more due Dave firming now. really firming But So of we up with of up, lumber British another We're reduction reduction to prices out pricing before that, as a right those rumors had Columbia kind large West pandemic. and do Coast then that it's the first.

customer but With that that to small of respect we did to when of properties Klausner, do but we some ours a proximal or a goes small that, overall. that amount to market, they were yes, have have

David Nunes

the magnitude the I the still the place. in end is mean day determined all the over of to going the of duration on by the the year are to and decline of or that IT for estimates be

U.S. pandemic as the a on response response settled XXXX to think we down of housing he we where certainly sense of of going does can duration we or mill get starts of some need to to ago. sense COVID-XX kind still weeks regional like encouraging mean were be TAMs just even will the a and I those get relative and what couple what that, impact that the as be. to the there and signs But So to I I bit a think the kind then see is are a before

Mark McHugh

rates comments look at in sort mid-XXs. in have America Yes. a level, And now the operating tended we're call macro reiterate of be at the that, would range, earlier only from in you North currently looking the and is mill to XX% it, thing I XX% and

as remnant Columbia. look on. And reduction had that curtailments pine up breakdown been be back you suggests to at And in see of reiterate could see environment there's have of pretty impacts. as Mountain that come see well of And we us would and really some pick to come, British tight capacity also demand a Doug so if suggest you a inventory capacity we wonder and made, that the start linked that point to levels a that XX% beetle that as where you'll to rebalance those whether some

shape we so curtailments U.S. those see in footprint, we think relative better mill the to how relative over we're to And our

Operator

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

Paul Quinn

-- you And harvest to which for could forecast? bucket of $XX me you give million an us kind in I'm guidance. surprised the of lot detail But the million, Maybe reduced the with the by that is be with EBITDA of seems acreage estate, $XX expectation some a on just to looking that maybe those just to for not line lower drives predict. gave just of real expected additional very hard outline thoughts. always

David Nunes

the that into for detail, Yes. get there estate. that like to you forecast. in are level of you We're the pieces in hard it's said, moving lot Paul, of Recognize guidance. a real to And going not

we either last easy in driven You're they pretty prior of say, unimproved don't to is for estate any rest forecast. it's by anticipated. continue decline quarter, But to expectations that it strong quarter. we transactions or I'd kind and very QX, relative a assured, mostly around the muted the important light improved we closed the We talked is again, nature a much always more is binary speaking, by, had not year. that. quarter pipeline within us which so to given have close, we forecasted generally Obviously, when Because driven of for development real guidance in about sales. close of they

Obviously, that that's of kind COVID-XX greatest business to and the or pandemic. acquisitions. relates the we of of area lot of the the see as hit risk I a land pause on the not think developers mean it I operating kind either homebuilders are

And the initial you at say, into very a that our so more probably in estate, were coming above I'd strong, guidance for mix if anticipating XXXX we recognize real the I'd was normalized and expectation. say, of look kind that year

the we're sales year. think here I around of the today we risks at kind and and as unimproved sit for but those development -- looking improved

what reduction bulk that's drove of in I think the has guidance. been the

Operator

[Operator Instructions].

comes question from James. next Raymond with Our Mings Collin

Collin Mings

me. for follow-ups quick of couple a Just

I to on and can sawmills, solid. going as little what maybe now? you be in expecting But that remain on demand residuals seeing of from there's available as and just think, in pulpwood you're given far touched to right Doug, a the this the expand in pulpwood less pretty you just U.S. pricing remarks bit just terms

Douglas Long

really we're has for and mills to just for with that. spring crew lot curtailed Yes, demand This But their in seeing increases customers is maintenance. knowledge, from shifting Collin. our strong take think downtime I when producing postponed that's to to seen typically mean, haven't a of my due really these everyone Unfortunately, I season a of we sawtimber prices, cutting pulpwood. pulpwood.

been we're flat. pretty pricing, have strong, in while any not changes So prices seeing is the really demand

demand -- on increased being So shifts demand which pulpwood, but great strong cutting from is very sawlogs met see. to by is to the increased the people the demand less,

Collin Mings

Okay. And U.S. sticking with the

But you to what South moving for as here the a some income. prices just in referenced oil the little in just that really COVID-XX Mark response non-timber means relates questions, particular, that Randy's of Doug, forward? I elaborate maybe can pieces bit non-timber as more to moving well in income mean, plunge

Douglas Long

a it's good question. Yes,

capital was So in prices, investments non-timber of in going down. guidance last income year, and to oil record lot -- are And business that a easements in with expectation year low in into around built strength slow we our gas. our the that oil have

all think thinking going area. to this pullback And in we're year. weakness we're things our punit gas of they're be haven't very we necessarily to but see that a oil told that pipeline. There and that So in was cautious, canceled, no we there's in lot segments do been going some the being

Collin Mings

rule you economic seen actually any Have real sales Okay. land of recreational through then, or estate. to And going Mark, question back the on change fall outlook? the because in Paul's

Mark McHugh

very we've fall of transaction strong. don't say, still seen for any overall, I is none through, pipeline I'd And certainly real believe estate year the a size.

under contract. have We number a of transactions

slippage I certainly think seen some the in development some we've anything, on if improved side.

-- all lot real activity the now, of is see this But Home we with the a you're with At more going The underway again, is value, we a orders near-term likelihood. so guide Stay housing for see issue. all just timing believe, the to And of down not estate still probably right in there.

David Nunes

that pipeline. and that we where rural seeing lesser don't we that more the impact extent, as then And side, some to view you're a value, saw in delays but Collin, improved development Yes. to side both an impact the on timing. an transactions the And in were again, on

Mark McHugh

to the buyer the lead side, purchases. long of goes important investment making mean, I very It's Yes. transactions, that unimproved these goes note. times. both development on on a lot into part a work, improved the of a of lot There's that these and of lot in have

away, buyers those walk probably number to of some cost maybe some deals walk from. to they're sun have this, like in them reluctant just going situation be those determine but away that very a to not so a of And

Collin Mings

at front? review you on and that probably of of to expenditures it's will maybe Pope. just dialed that as back But your Mark, point evolve outlay have post things real or the recognizing again, you it kind demand and estate Recognizing, kind lot these any very being capital that small overall. numbers lead of all? with of balance time. that projects long-term Have a given concentrated, very brought just little a near-term are you But in softer term, longer of

Mark McHugh

and with much infrastructure already I of mean capital much that the our of in project, the in capital is that has ground. recognize been wildlight

And much getting with isn't pipeline. so there to as lots associated residential isn't -- Incremental is there the really there capital really delay. into

David Nunes

Look, it's to when makes investments. a certain investments and going moving a it's make certain reevaluation be it target, it sense to sense make makes continuous of to whether and

pipeline degree will that expectation to improved sales. with So some absolutely for around our development flex the

Collin Mings

a And again, back as bought just update last Got during for me. fluid quarter. picture, some stock closed forward, Pope on you just during us the And acquisition quarter. capital maybe you environment, does a like allocation $XX but it's near-term one bigger think recognizing balancing just obviously, priorities going it. just then it the And you here. just the look one focus But about million different

made You an acquisition.

maybe a as little about talk you the forward. more bit go balance Just

David Nunes

Yes, negotiation in markets that has really years, the We January of It's portfolio, both high the nice on plantation, improves as XX,XXX and percentage, in we at really the million completed XX% it purchased as touch as ownership product $XX Very excited we as summer. then we of a conditions and our from like last buyback. baskets diverse Mark I'll demand. a a wood per about plantation And of acquisition, quality on in with average this property, started This the well acres, logging or XX mill Louisiana. well $XX.XX the percent age process Louisiana Yes. perspective. tensioned plantation acre. can the a direct acquisition Collin, for touch was

were we Mississippi market earlier And disposition. was on comments more scale. lot and exciting where so back getting gaining an us This incremental kind we felt like of the my for in a area

completed in January. happy really early that to So have

Mark McHugh

capital in Collin, quarter. amount more pandemic. some on think environment. a is from the leverage obviously COVID-XX I'd the of that an And going buybacks we allocation Pope with we under the use pressure certainly currently is say buybacks market EBITDA Look, are capital transaction, last priorities. still just and current did share of the up broadly closing attractive of small But

carefully with deleveraging modest the the say probably I'd the So on managing is priority a medium balance term. top sheet focus today over some

With evaluating to our I But priority current respect leverage always Pope to on the our think acquisitions, not and profile, fair We're given top focus now. I'd current market. right out in say always there. integration what's say we're probably the a that it's it's of

Operator

further no Showing questions.

David Nunes

with thanks me right. the joining you please have and All call, if you. free any for Well further follow-up questions. feel to Thank

Operator

you your participation. Thank for

You may disconnect time. at this

Rayonier (RYN) 30 Apr 202020 Q1 Earnings call transcript