RYN - Earnings call transcript Q2 2020

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Operator

Welcome, and thank you for joining Rayonier’s Second Quarter 2020 Teleconference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today’s conference is being recorded.

If you have any objections, you may disconnect 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 second Investor and quarter earnings.

Our our In supplement are forward-looking laws. earnings were released federal provisions to pursuant yesterday financial statements the securities afternoon statements Safe made available website presentations, these on rayonier.com. at we include of and Harbor and

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

Dave Nunes

and good Thanks, everyone. morning, Mark,

segments, our like we’ll from to well out I’d Mark Then speaker will are consolidated so, as financial XXXX. timber Senior some the U.S. to Forest Vice discuss will President, speaker to results Doug we your as move our results. in our for estate as comment turning New that timber us Mark ask review review begin locations, addressing remainder to results, our the by before of Long, Zealand Resources, real and our on outlook back questions. with it of from and multiple following First, high-level making call to we over I this call point the conducting comments bear

everyone quarter, the response the COVID-XX results update pandemic. our discussing I’d ongoing like for to to our Before on briefly

COVID-XX challenges contend associated We with the continue pandemic. with the to

Here at Rayonier.

from do while field guidelines and the U.S. prioritizing work to employees our and we working model as enhanced by ensure families, largely our their and employees as and products. us safety for for company to part and instituted and allowed customers within spread to responded logs an measures spread contractor implemented office a of effective have continuity. a mitigate stemming been virus to business employees the contractors, other to home mid-March, the all our These with as well In supply employee have this effort have in safety our in We health workforce, of COVID-XX. continue of

has has forestry, the across more the the anticipate Given in new in offices this community we not many In our of subsided. April, Zealand, the number which of cases dramatically at state New or our government will beginning reopen vaccine businesses, range likely through pandemic, there. remaining locations of infections implemented measure current mode of the year of fully of been broader effectively least the lasting and in including through and spread late a until March a stringent serve to late instituted end a lockdown end

the the the result, keep very amid observing necessary stepped our and of a to fully social New are of Zealand have COVID-XX. proud reopened, further our As how employees up economy this pandemic, operational. protocols I’m offices and to running spread safety our now business distancing there mitigate while has

While I managing well. life, of are to through this extremely we it all been has believe disruptive very aspects

the are on With Pope of the reporting two May we quarter the first transaction the that combined closing companies. the this marks Resources X, of quarter results

of COVID-XX, protocols talent and very accelerated both both All quarterly associated briefly social dedication completed in on strong the that team plan which respective cultural this frame closing under the future and this the fit With job work within between we’re integration to combined our and the an organizations. all a prospects practices organization. tribute I’d and a results. companies, gears now time developing It like switch our considerable to about transaction effectively best reinforced of had is professionalism discuss organization. to of each great Our be a also that, the did blended and distancing excited with thoughtful

segments. adjusted million quarter, million of with net forma reported how and the dedication outstanding cents across pandemic For tribute market $XX COVID-XX challenging the both our employees. strong well This navigated diversity pleased various the across the income share. $X.XX results very deliver of or of EBITDA our segments operational conditions I’m team exposure pro of to to our market a our second all we Overall, as per is amid as $XX

the by million substantial prior below reported which segment easement pipeline strong for Timber adjusted of Southern the revenue. quarter, EBITDA year’s slightly Our quarter, driven $XX was

Second volumes the prior were that sawlog year the markets. towards relative up quarter, quarter by to pricing export were strong the stronger results and lumber and end XX% aided driven quarter of resurgent by markets both

over In of with half Zealand The dollar. impacts loss New off log New achieved of further pricing the species log enjoy mix continues volume primary which the adjusted quarter in also from and volatility. high markets month’s buildup to both Timber towards the the put end we acquisition. the prices COVID-XX. both production Our EBITDA our in Zealand log Log addition much segment, cash was Resources from worth year quarter. to of weaker to for the $XX and enjoyed driver a was inventories resumption contend prior associated the of very reported is improved margins on from the a the a normalized reduction measures lands Resources XX,XXX In of New export volumes stronger activity timber adjusted Pope tons the up substantially pricing, and we driven export the $X stronger as of well lumber Southern roughly million, of of quarter, the Rayonier our China place as prior domestic lockdown Zealand a government of significantly Northwest and EBITDA from due in assets. Timber strict of segment the of by million, segment, with from XX% relatively level strength our Pacific volume-based We year Pope legacy on low flow higher

Real quarter, our as Adjusted of development reported $XX the segment, million, parcels. of last of driven Estate strong second and a by comprising non-strategic acres, EBITDA mix anticipated XX,XXX quarter rural sale of very Lastly,

that by results over to our segment. the of be within let all made continue Estate our financial as me review We financial Mark as disclosures demand some across that, encouraged this With back to Real to stability sales turn categories it well quarter. changes we’ve our to

Mark McHugh

Dave. Thanks,

implemented our business non-GAAP acquisition on as that measures. results our discussing segments quarter for recent Before our of I’d well this Resources to the and like to some changes briefly we Pope comment quarter, as

of of As noted, Rayonier million the outstanding Rayonier partnership The dollars aggregate of of second acquisition consideration completed we units Dave $XXX our partnership Pope units by or acquire during all shares paid to cash, and general X.X X.X interest partnership operating limited Pope million common Rayonier the million of LP. consisted Resources of and quarter. of OP

HBU three funds a that or the $XXX Pope transaction West Pope oversees in in timber timberland of these area. equity approximately assumed debt. timber and investments added of fund Washington, legacy approximately also to dollars Resources The million of in management opportunities co equity Puget We repaid business portfolio, attractive funds, private pipeline XXX,XXX an Sound private our acres

segment. revised reportable of refer we As funds additional segment Funds" one our business Pope segment, to acquired as transaction. segments, a which the adding of result management reflects private part and equity of we acquisition, "Timber the the as timber fund the have This Pope Resources the operations business

funds, interest a our the communicated operating the of majority the despite liabilities. in release, earnings consolidate the having fund’s equity private to in and not As XXX% are results, as we assets required timber funds, managing member of three

Since we loss better income non-controlling from to statements, loss interests is the our our the attributed in order certain financial timber proportionate As Rayonier. reflected to reflect to consolidated to under in third-party an the to consolidated changes such, our the caption income funds required income all funds measures fully or we "net and to attributable three timber as consolidate financial this are statement in statements, in adjustment into financial non-GAAP implemented or contribution investors are business affiliates."

to these Pope of quarter Timber put reporting place more economic structure, changes the will with useful also is to pro Funds from from I’d and like as the the to first the managing Specifically, analysts Rayonier. information provide have based our Resources investors by interest, believe pro three Rayonier timber ownership funds forma our funds. income of Adjusted fees we of amount for contribution the respective in that the which we the forma incorporate to facilitate full this as the our well business We and revenues, assess of EBITDA Rayonier’s operating acquisition. revised UPREIT each to contribution highlight received under value "look-through" on timber definitions and management that

with or that attributable Page rural premium than considered Please estate on LP Inc.’s did these includes emphasis on no place more primarily the significant Rayonier overview OP property to starting to going estate Rayonier, In an under timberland Rayonier aligns sales, quarter as cent of of category release reflected new will earlier, highlights. that we have as units results now the XX-Q category approximately no sales quarterly million real interest segment per net a to to results. effective this premium our merger to such note Development, long-term to align categories. $XX Non-Strategic only Unimproved financial of the in to X.X our end X partnership." impact Note be closely as forward. purposes of acquisition. sales OP Inc. of the timberland or relates we $XX the and we basis, Xst, difference Large attributable the premium definition forma Rayonier issued the and the within million our revised are $X costs been timberland a portfolio our the registered sales forward. sales, provide operating Disposition. April SEC I’ll be "net the real and the value. financial on noted consideration period quarter representing reclassification Disposition with our $X.XX that the for Rayonier prior $XXX net internally. The value. and pro better pro on greater excluding consists as income management these L.P. non-strategic The because be to in internally. forma of way categories per development consisted shares, category use, well going million our a those income evaluate share. with business million all demonstrable that a that reports and was Lastly, On reporting were non-controlling in dollars, Also, and was of fit second estate sales the The representing with of not cents will generally economic had totaled composition Rayonier, we for income real units views cover consolidated dollars, Rayonier to These of quarter we dollars the million of manage related the also property real This the all second Sales common caption Form while number Pope As Large to adjustment gears composition improved of sales income now we sales capital the All outstanding unchanged, categories income switch of equivalents these million summary, of of units $X.XX now includes allocation was in and as $XX reports categories operating of above share. results, are Resources. statement our we reflect rather little earnings communicated the estate for amounts units reclassified financial how adjustment filings between securities, which changed our L.P. to financial and Development within

in above in to our EBITDA adjusted New results the our to partially quarter was shutdown. of Zealand Estate of lower $XX significantly much due Timber due million $XX offset COVID-XX segment Real primarily by prior year EBITDA well the Second results segment stronger million, quarter adjusted

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

cash million cash Cash closed which to dollars of taxes primarily or for by to Available Supplement. due first and We EBITDA, of and quarter Distribution, prior higher the million Rayonier. higher lower $XX expenditures. on period, by to half is non-recourse million $X.X to the capital debt, adjusted to debt for interest operating GAAP paid Timber cash activities in year cash $XX A offset the the the provided of with is attributable $XX CAD, lower Our of other CAD Funds partially and billion compared year was measures dollars segment, reconciliation both of of exclude Page paid, provided the Financial X cash which dollars and

debt Our reflects that quarter used balance in facilities Pope closed fund the the April, to were acquisition. we end credit which Resources

billion I’ll back Doug Our stock enterprise call more now $X.X net on results. of timber our end. our our dollars of of a represented to debt closing review quarter over detailed price to at the value-based provide turn XX%

Doug Long

Thank you, Mark. Good morning.

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

and to compared the the second in XXXX Second the quarter quarter tons experienced strong volume a prior in XX% volumes million prior to year quarter, comparatively compared of but the lower XX% in of first Both approximately each quarter harvest XXXX following reduction year. quarter. volume higher X.X was

strong which compared log flat production quarter volumes. For in COVID-XX resulted meet pricing of COVID-XX compared larger higher pandemic. which was volume partially pine due of in quarter the for due the prior uncertainty an quarter average stoppage to increased million $XX.XX/ton compared prior experienced the At demand stages the as pulpwood year quarter. unfavorable some supply to year of to to The the and markets pulled prior in Pulpwood sawlogs relative diameter of price unfavorable was into exports conditions. to the to The The than resulted we summaged X% This prior the price decline the remained of at in price of pricing average the half by increased quarter, stable to the drier quarter, is of in pulpwood strong forward quarter. to we was second well second pulpwood pine first to the $XX.XX/ton chip-n-saw offset as logs by increase X.X into prior mix availability the driven during and prior as tons compared demand X% the lumber in the lower year onset year year, of the ground of and same quarter, early sawtimber and period was X% resurgence prior respectively. pricing X% China. higher

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

quarter, unfavorable quarter, moving the prior the from prior quarter Pacific of tons newly $X XX,XXX quarter, decrease to compared XX,XXX favorable quarter volume price volumes compared stumpage and pick we markets. $XX.XX/ton to was put unfavorable the compared the of market the the prior million second the supply A market-related was downtime with quarter year flat due pressure of pulpwood as noting of market Adjusted compared The year prior XX% light in through The domestic Now did the and in respectively. and the the of strong in prior to to X% pulpwood was that The capture of pulp domestic to prior tons higher compared shows Pope combined tons harvest first results in segment. of $X pulpwood with well prior see on timberland. year The up low. year increased excess addition metrics below which incremental but the driven of the was to keep harvest quarter chips open demand quarter. sawtimber Resources in the on result prior dollars worth quarter of primarily as Resources prior from toward second acquired prices X% harvest as quarter. the quarter spruce, quarter by $XX the quarter. the timberlands. the of activity end and volume compared quarter, both pricing. the mills considerably Market was the million delivered in compared year volume-driven, of the quarter Timber at Adjusted quarter the increase of in of delivered the average our a compared second was to tons Page to volume This XX compared sale continued volume volume million second sawtimber operating uncertainty key to the to It’s XX. dollars prior average was coupled lingered quarter unfavorable for weaker approximates as to year XXX,XXX New comparatively prices. volume was our due acquired the $XX.XX/ton European Pope $X XXX,XXX prior to price the demand XX% EBITDA much Of Northwest the supply export XX% unfavorable the represented prior EBITDA segment COVID-XX Page but dollars Zealand to export dollars to year quarter. million on largely prior million in Timber quarter $XX and

restocked quarter. COVID-XX harvest quarter XX% demand XXth. and higher XXX,XXX no month of were China prior lockdown, emerging lower of resume from same than we than but its as At the production decks. production tons log government-mandated during Second prior surged the over quarter, on time, volume April the mills lockdowns permitted XX% After was a to the year was

quarter, second the of as in quarter, year heavily demand, of compared in the to trends the of but U.S. compared to in price plan demand, China was unfavorable production quarter sawtimber to the job to export changes compared team order delivering domestic pricing, pent-up weighed unfavorable due to and the terms, pandemic During the price our the year the export export whereas an Compared did COVID-XX quarter, X% prior largely the XXX% pricing incredible to respectively. generally and XX% dollar was average exchange $XX.XX/ton pickup results the these export variance in meet quarter, on prior thereby to domestic The to year Zealand. last circumstances. of under to prior resuming two due to and prior months the The safely sawtimber due was quarter followed $XX.XX/ton market exceptional average prior lower in and delivered prior NZ$/US$ quarter, XX% favorable rate, of the both COVID-XX. New X% compared

same Excluding rates, of X% favorable the driven in and impact XX% NZ respectively, compared and the on Funds quarter XX% to as newly dollars. to the of foreign pricing The discuss the I’ll dollars the price domestic unfavorable EBITDA prior $XX.XX/ton X% created XX, was the factors EBITDA, Timber Adjusted XX,XXX prior compared generated was the by Highlighted which exchange of quarter year million quarter, $X contribution average pulpwood domestic second Funds and Page sawtimber. was funds $XXX,XXX look-through from unfavorable the domestic now tons. year quarter the of from quarter. was prior which consolidated volume results prior the harvest in dollars on segment. our briefly reflects Timber compared segment to the

the generated $XXX,XXX cover $XXX,XXX $XXX,XXX turn Mark second our adjusted our in quarter, favorable back Mark? EBITDA I’ll respectively. segment, it estate which over the now Trading results. to to year quarter prior in quarter in is real to and prior Lastly, compared we of

Mark McHugh

Thanks, Doug.

category quarter industrial XX, Project, to post-closing delivered an for for as in million sale price was XXX-acre acre. or per roughly site this segment million $X Sales from Sales obligations, over highlighted only million $X Real Development strong GA acre. Hill totaled EBITDA at in Savannah, $X,XXX quarter Adjusted average in second the dollars of Improved the Page a south per our $XX results. the of million the dollars $XX,XXX and sale on by we Richmond of acres totaled dollars, results on sold infrastructure Estate dollars. our our recognized As highlighted XX,XXX $XX million second $X.X Development revenue quarter. Due

at development lots the for project, residential sales $X per were $XX,XXX closed which Unimproved on sale $X of sales acre, $XX north acre of totaled dollars dollars price Jacksonville, XXX-acre acre. Park" totaled of acres approximately acre per including and $X in in Sales in of per the St. In million $X,XXX a for first million $XX,XXX acre XX Florida. phase consisted St. X,XXX an at per price dollars million "Forest County, of Johns dollars County, average the million dollars, acre. also our We per a Both a Development sold $X,XXX roughly in of FL, FL, lot. $XX.XX the sale Wildlight category rural or million on $XX X,XXX category, for John’s sale a these dollars or X,XXX or

consisted Non-strategic timberlands the of at category several acres acre. roughly of in price Lastly, totaled this parcels low-value sales $XX of and Georgia. $XXX an average million in consisting XX,XXX primarily Sales in dollars, category per geographically-isolated

Now our outlook. moving on to

Adjusted newly As updating earnings our provides in reflect attributable The acquired $XX for sawtimber XX Income year We and full-year million provides EBITDA balance driven updated stronger well as demand. volumes of expect to assets, Supplement $XX to the million $X.XX will Schedule higher million Attributable from to dollars, to now With Pope XXXX reconciliation call, year. first Net $XX anticipate assets. EBITDA EPS cents, million conditions improved Adjusted segment contribution by $XXX the to Page to $XX of X.X of now million to quarter Resources $X.XX tons Rayonier harvest Financial we communicated year volume reflects respect of outlook our to to of million our our income million with as Rayonier guidance million market outlook earnings Adjusted with partial-year G Timber from dollars. are EBITDA release for of Pope a $X.XX we the Adjusted our $XXX an our $X.XX segment of individual of partial-year to on improved million financial $XXX EPS X.X net increases our EBITDA and a acquired and segments, and of Southern EPS. contribution $XXX full to by our guidance full anticipated respect forma million export Resources cents, dollars. the that to of achieve of is our to pro guidance

weighted pricing We average U.S. expect in the that

which for both to rural properties South due achieve anticipated relatively Adjusted as the and tons X.X we tons lower pricing outlook for and mill Pacific to now of increased as Zealand full mix. as offsets pulpwood Adjusted harvest $XX Estate roughly pricing million alternative and and million will of supply we remain million dollars. second downtime continued supply expect wood million by improved seasonal New sawtimber as to segment, demand development flat now higher EBITDA the from X.X shutdown year our of improved strong X.X chip well demand million to attributable $XX of relatively Timber demand residuals $XX Adjusted In well in Northwest million the offset to segment, volumes full-year EBITDA volumes continued properties. as our geographic higher increase Adjusted higher partial-year to EBITDA $XX on the we million that further the million our mill to flat and in expect with $XX estimated flat a We of contribution to duration anticipate million of from In the an year will shutdown. relatively the We EBITDA some value improving be dollars, anticipate Real million of pricing Pacific acquired due of species Zealand dependent through anticipate Pope Timber competition segment, shorter-than-anticipated economic activity strengthening Sawtimber New pricing half and pulpwood of mix. timberlands. demand demand end expect In to higher markets We reflects domestic X.X Resources of strong full-year and curtailments. $XX volume following due sources. Northwest The harvest to is

comments. Lastly, for contribute now year Dave we EBITDA new that segment million to dollars. back call $X full- to Adjusted Timber turn expect Funds of million $X closing our the will I’ll

Dave Nunes

Thanks, Mark.

the seen, from all recovery. long the while a COVID-XX the we’ve we a unprecedented full presents global an depths still the As recovered economic pandemic economy, for way are we’re challenge of slowdown, from partially and

While evolves. resiliency has our that over this the as business we expect months, we well believe that and confident also markets storm. Nevertheless, pandemic is to in position people very the end of exhibited volatility the are in flexibility. continued very Rayonier have heartened I I’m I’m that COVID-XX by and past the continue our some weather the to the positioned liquidity several to and pandemic, financial further balance demonstrated adaptability throughout see dedication extremely our sheet, strength encouraged

per strong responded continue a achieving feel and or manufacturing than such our strategic dedication I to on value by returns and remain manage to and share. through all against timberland margins be substantially mitigates of REIT, generating our a that have exceptional our building volatility we our ahead, single reiterate long-term to determination. talent challenges very and Despite As want and organization. and exposure diverse the executing enjoy I portfolio product downstream industry-leading of pure-play how poise we with employees less to surrounded further proud crisis businesses, have we of fortunate geographically any levels category. to and region mission am keenly I focused our this significant priorities how

these continue will I’ll over to power We This the turn leverage operator results. employees our to to the of questions. of our harness the concludes optionality and dedication now for of remarks, and culture back prepared achieve and portfolio it and diversity our our

Operator

Citi. coming is first Pettinari of from question Anthony [Operator The Instructions]

open. line is Your

Randy Toth

you Toth actually drivers U.S. of for on is about Can the This in full Anthony. the year the morning. Good Randy talk especially harvest expectations,

your mention export release, on increased driver. of the in South? expectations Can you was touch the I volume there think in for primary U.S.

to maybe numbers And year? saw the tariffs? remind before we the for us annual that compares South how

Doug Long

in demand Sure. South management us. interest increased a Doug. the combination And demand log both The for seen This is export domestic and so the drive that on was we’ve increase lumber. of for

due people’s The got So were the to – exports, war respect is. a calm. trade side. side on increase lumber, still lot the was impacts our monthly tariffs U.S. the would minds COVID on the for as in the of QX, released land being of leverage the that we a increase exports on fairly where on saw be within China In Phase put base restrictions But I, to just through and tariffs it is margins on export basis. the and China. in that’s With domestic being

So there was being waivers allowed.

ramp from shipments to we able were volumes but to go we the our so our export specific not I’m And U.S. that volumes. And going into up have,

between South go XXX% we over increased via as QX forward. South increases QX, and seeing similar and we’re

So southern demand European things is it’s other don’t has out products good Yellow typically is in the And China spruce pine and treating grown one for pine New compete about and in Zealand. or with used definitely that the pine the Radiata sending in of strong.

So demand more to strong second as see that of we in look and go year. forward forward to we’ve the half the continued of

Randy Toth

switching maybe just then And gears.

now. Deal deleveraging line Pope how you you’ve the planning maybe Any timberlands of couple there Can time now you’re closed, and be had for talk detail the on see helpful. those could months With of sales a there? you type would what land

Mark McHugh

of put the some pandemic, going the credit it comprise be. that, that to kind year kind leverage. for bulk and quarter. in sure. we of we had metrics Obviously, thus Of within the was we that want Recognize on the to Pope, the Mississippi started was pressure Yes, really, deleveraging of the in with anticipated the which EBITDA disposition announcement million. where our And this stay out of of as before had $XXX to we first needed year large that

the end I year about us So only midpoint you guidance, at mean, obviously, a puts for X.Xx think I to But relative where that today, if with year. EBITDA assets. net I debt look at the from our quarter we reflects sit that EBITDA just to contribution the Pope debt, think of partial

If you normalize of run Pope, probably we’re at full X.Xx. a closer to year more rate,

to normalized organic we’d expect to say return so largely environment. said, that more I higher end we our of to I’d would But And towards we clearly delever that a flow cash operating be. think as the where like growth through

appropriate grow and to sales. that, normalized we’d have in to again, Of we see flow think any execute like to we If we time. at point here course, asset But more from always as cash that think flexibility return necessary I the that’s additional operations.

Randy Toth

I’ll over. it you. Thank turn Okay.

Operator

is Capital The Wilde, next coming BMO question Mark Markets. from

Your is open. line

Jesse Barone

Jesse on for It’s Barone Mark.

What QX? Just starting as demand China? inventory levels went QX like you what how seeing of through in guys and into progresses of are kind you kind are

Dave Nunes

in Sure. I’ll China record in Year, take level Yes, that, came a of Justin. inventories pandemic. This cubic meters keep The the Lunar that is New were of out and the midst high Dave. the X in in jumped we when QX. mind of COVID to million we

low seen we’ve come Chinese economy It’s considerably. just as under so meters. reopen, million dipped to that’s as And as cubic down the X

Our estimate it sits at that X.X is about meters. million cubic right now

of supply is there we’re mind, we said the flooding. months, amount construction has keep about at China recently, as We that that disrupted a to things ports. and the of that, track feel sitting that, ratio currently a and part in a X.X of as been we stable more environment. like months in One it and to feel in rain projects that’s that’s And measured Having demand see both pretty we a that’s range. as in pretty or market well of tremendous –

to positive XX% overlaying understanding, environment. still at about capacity. Mills, And otherwise an operating that’s are fairly so a our

the rainy right relatively So of the a feel through dealing the period we up, inventories kind we that generally that with year. they’re getting back second the now see imbalanced, combination half the stronger of are ramping fact and mills of them

Jesse Barone

helpful. super That’s Great.

before me. other thinking updated the there? really Funds around business? weren’t any business. it thinking updated Kind of have grow one any you of know to kind that Just own But now said Timber I from you looking actually guys the that you around

Dave Nunes

table continue contribution No. on all to more business. And respect I of that on Mark to walked with we our future. options how the keep through mean, still say forma pro we’re I’d handling in the that. the come you to the

Jesse Barone

it All guys. over. right. I’ll turn Thanks,

Operator

next The from D.A. question Yinger, Davidson. is coming Kurt

open. is line Your

Kurt Yinger

Yes. my Good and morning, everyone questions. taking appreciate

will could look Pacific mean, little you kind I having off. a about realizations in for like the start to of that your talk Pope bit of wanted what impact just the I mix average Northwest? in and off, First the

Dave Nunes

can does things. a take pope, mind and I’ll Keep Doug for afterwards. Yes. number little that that a then it touch bit, that of in on

timber all, First of inventory. their mix heavier in have they Douglas-fir merchantable of a

you’ve from speaking, generally around Douglas-fir got so standpoint. And more optionality a market

Japan then deeper mind as more in as gentle market exposure, the You’ve market. to that topography. well have the lands say, you’ve And domestic two, got a a Pope got keep the

And plans so the pop closer is are slightly much brings considerably. to instance the logging and of more down general, logging costs And then much, that customers. expensive cable lower on in so your pope

costs hauling the so different. are And

customers. considerably the in are pope serve than rates they the And portfolio. are So then we addition, do similar some Rayonier for on OBP lower

us And and serving some respect to those volume gives with customers exposure. so it added

to similarly in excited side does run markets treat estate about business, respect of area. So structured it’s from the and real to then Savannah our real very the And we’re really and we business perspective. how what also with a the estate Jacksonville it

just forward so the And additional strong that adding Puget combining that represents. sort to of Sound market we’re and looking region an

Doug Long

it job one contribution. – say sawtimber, add stands we average Pope overall, harvesting just to talked pricing had expect but adds would would we our you that flat we’re is last thing increase pricing pretty a our about just year, from obviously down Dave chip saw bring big given this regarding is Pope, it – things it. great over and increased in which on for mix the shows I’d Doug. just volume saw that cleared that I so with This Dave year and in did quarter-over-quarter, a our just we

Kurt Yinger

an half start on differences that’s second between we in ahead XXXX any I as kind assumed annualized of what mean And to we the impact the Perfect. the full noteworthy of basis? might guide looking think Okay. with year about versus Pope,

Mark McHugh

we we COVID-XX of Obviously, the when well EBITDA in just average of as so estimated doing that a with pandemic. we Recall Yes. midst transaction that $XX transaction, as of million. the announced five-year contribution the the closed year, annual the the timing

magnitude. very assets operating the considered, to are things of I think going a that the contribution all But not We’re get pro-rated well.

I think that control the think into obviously until operation our the particular, date on acquisition. we’re that longer for the assets year, term recognize expectations business haven’t of assets those of really changed going outlook and meaningfully. we didn’t I in the And as up those positive pretty well again,

of so annual they their had actually proportion And than I’d higher harvested, the year a of proportion through. the that say, we’re plan

year be. the again, would another just to pro-rated so going this reason the not is And expect of rate what run that contribution to we be reflective contribution

Kurt Yinger

long-term and down year some I Okay. just kind stuff of makes and segment lumpy then you estate on year Florida the high realize of level, one, in think about out, my that And of could it’s think maybe the remind any real the at last to how about it us going a sort have in there? thoughts in, but to tougher near-term, you

Dave Nunes

Mark we’ve Yes, that, little with and one way think I touched and I I’ll at afterwards. on a this mean, start in categories. bit in sales of the level, Mark chime restructured the kind

be put And fund And really emphasis from a Our is practice, to premium. really and a timberland that’s the we had more funded normal value otherwise at a timberland cash that focus generating dividend can’t have stepped historically, deemphasize much to players number away on on simply sold that sector has premium. period where of generate decidedly operations. with

assets how our we allocation we And assets in of have think either or non-strategic we purposes. segment, quality sales see so deeper still sell then But we within about premium. how the capital we kind category terms that IR estate about lower deck. some estate if the segment, are that for the three in of will areas. broad And can just it’s of all it, that into have in operate real And really data you look our real you

as made downstream a moving some where kind infrastructure we of have we’re in our once to have added get environment strong areas. been as rural that where And chain, our with project And essentially investments out COVID really category. we by developing. we that are unimproved investments unimproved And the reached. people to of level, at it’s or have development. of is an entitlements we that development, the up in we for rural encouraged And been the real see then Texas of Louisiana, how in see we more is of out. playing that benefits stable potentially one particularly and that and a have the first selling how this business. entitlements. baseline see by The in excuse estate – have product And We encouraged me, typically land demand particular, sales. looking those been that And number but of And types urban entitlements we have Florida, very in we’re has the food allow sell those

three in the we there. project a are And in relatively really that’s where Estate amount we then then have move we feel land, sort improved development. we we have date, have about And And modest a are – started acres – radius catalyzed have so the lot. Jacksonville XX,XXX project. that Real about and of that of level within Wildlight these XXX getting acres in value the been segment, about improve and And a investing project. involved. CapEx And highest of These surrounding within absorbed mind lot areas And – of within have to And north talk the to ago. three four a is miles of we’ve only to these those absorption. Florida our we keep areas that broader there’s we years project. that net five-mile have XX we This

good room we our going moving we’ve sales that’s in public schools, strong year. just as that of Richmond that’s have the so South and over North, a projects have we and similar see miles project XX project ahead. some progress And terms of there, a getting And in to lot years growing a this Hill lot infrastructure We’ve Wildlight grow Savannah. decades to area. Fairly made initial a to of then of completed made

under that’s have construction. We new I-XX a interchange

elementary Pope the downtown radius all construction all passenger help high under Seattle. associated Puget new assets. a benefited then within those two-mile our up project, particular, Wildlight, and are in a construction with water project. and of sewer only development to this third school of the school a is on improved Roughly XX,XXX really acres. have Kingston have And these designed And Sound have project And a miles that’s We West assets from in northwest utilities. under service parkway, again, our that we open more new area. of And projects project, like And XX a that’s into these ferry are Seattle. roughly five-mile

so saw up, open ferry located. that’s coming we where improved County service over And Kitsap that demand once into we’ve seen

fit two our Town certainly are stages of improved and And Florida Gamble. Arborwood the about one, so the called Kingston, from right within two excited projects, There miles very roughly earlier to our we’ve that projects one Kingston. but is development Mill there near got then is category these And of very relative Georgia characteristics. projects. development, And similar in we’re historic Port other both

premiums. just a So thing, we’re approach gives of we sense I one that of think again, focus I if excited those. that about it’s those. bit a little you how sort And But with on leave a you of

Kurt Yinger

the I’ll over. Dave. turn color, Appreciate excellent. That’s it

Operator

Paul from coming The next Capital question is RBC Markets. Quinn,

open. is line Your

Paul Quinn

guys. Good Thanks Yes. much. very morning,

Dave Nunes

Good morning.

Paul Quinn

Appreciate the And prices. guidance. at revised we’re knowing record that lumber

that wondering the the quarter-over-quarter? how sales? And EBITDA changes in to what’s your embedded mix revised that Just guide, tracking through log considering is

Doug Long

Doug. XX% rally that. rallies. And log so current end it’s we prices in start pricing was of lumber lag Sun at up saw while June confidence the are with I’ll This lumber Sure. Yield price typically areas up is really QX, pine Increase the some the since really what and started XX% is gain in to in then.

all as So thing it know, slower, was jump lumber but Doug-fir rally big done bit we and since then. the had same has a a

full that, then as Northwest. housing the saw confidence board construction that and pretty And about mills across come – so And saw repair back once relieved And COVID. get confidence, in with production the got we remodeling those of South them procured optimistic that. were part really the and into we’re once they restrictions we

Northwest, back rapidly. tensions. more is mentioned, active export translate ratio the back we southern export demand that price supply prices to typical production, in markets. too. some back full those in and seeing near markets it And the baskets back stump pick now wood as to with more intention now, so Dave lumber particularly And at mainly that But southern we stumpage increases up, saw And mills we’re also, where that’s making saw

tip So because updated to has specifics currently in I you go expectations. hands and Northwest we’re the markets. won’t But been seeing to the those as negotiations of don’t premiums or and the guidance in our signals want we’re across mentioned, I South, our reflect price into that

Paul Quinn

sheet That’s a that going going you digest just Okay. little and Pope, And on closed here? fair forward guys to Is little quieter on the then little helpful. seems you’ll front which to a while balance be is simulate. And heavy. say be take to to a it M&A

Dave Nunes

Yes.

towards upper certainly, the think we’re end of debt I capacity. targeted our

the And Generally, so equity of period. I going a think it’s think now, about ability little with absent to as grow quieter are sort forward. acquisitions pickier we to we going right a be certainly

offerings out COVID many to you’re confirmatory I due diligence. as some seeing difficult of with people do that the not market travel for because on think restrictions, it’s

level. pickier at looking comfortable the out that now get a that’s we’re a things to But the little are all until I’d that sheet balance assumption being there. still a right say fair just little more We’re we

Paul Quinn

picky suggest it but past, that’s to there not best the that’s luck. I’ll in you So weren’t leave of

Operator

next is with Seaport. Our question line Weintraub is from Mark, Mark open. your

Mark Weintraub

of sounds though U.S. that half you’re the had you log prices comments last up in misheard, question see indicated pricing the Just it the U.S. just beginning you’re and evidence a the And one as but through prepared saw on in back maybe I – following thought assuming year. answer Maybe timber the the getting then actually just last clarification. flattish to relatively that I to of in question

South having more – there. that is a that more up Maybe year? Or start would positive misheard? show bend. next I likely Maybe

Mark McHugh

Yes. No, clarify that. I’ll

is think we going average price be we’re sawlogs. flat. is average, composite increased relatively expectations the seeing for to So actually our of in But South price on what that

lower you pulpwood of half particularly second we’re look for So states, the down and into prices area we previous to see of if and the in where year. year, significantly. the go referring much flat typically, the particular, are we of have back increased reason harvest over that’s out as And go Arkansas kind stall we our of is prices years, on the our kind that so for what

We also a tapered to increase in typically saw spending year, at prior time volumes the have of pulpwood. about X%

volume we’re increased comment regions as more the to is increased prices but seeing states helping be going we’re have pulpwood. geographic mix well going the Gulf volume percentage volume the in sawtimber as thin that what to to So we to going basically that of to the shift lower-priced that’s as we’re see of offset

being looking relatively we’re average flat. price at So the composite

So differentiation that’s the of kind there.

Mark Weintraub

Got it.

the is be And then, just any important that. should levels. tying I giving type the be products, the level And you between And are you’re – normalized more assume to and about targets more that get know, magnitude, the just part extent equation. the that you’d helpful. strength to getting press your would and lag that any that Dave, then this, then release, And an you I comfortable debt when in sense assume cognizant to significant I the flow this Okay. we you talked in wood in about that expect part translate over comment that you to Mark, A, to to your over is targets, think of in confirmation b, other on when about of, of terms time improved normalized growth log cash leverage And of prices drivers time. getting expect of? cash make in flow of the there

Mark McHugh

to that. happy take I’m Mark. sure, Yes,

of are in we there a getting as recognized components to I occurred what was in mean, as the flow. a there well, around normalized QX lost year, see particularly of We this growth mean is pandemic. few that of cash element certainly, that. pricing COVID-XX an think I I volume level

in Zealand, New really Northwest log shutdown midyear and Pacific Timber moving acquisition volume. the the Pope any Pacific weren��t Northwest Zealand which we And of because certainly in in yes, segment of New so the because

the We’re sustainable guidance, from that our going provided, going the to end be is we long-term guidance last even updated the year, to which below up yield. is

pricing a level just this growth, have because, cash well portfolio. certainly, returning we harvest of opportunity not And so normalized I improvement, to as flow from of going year for activity more that be is to as across both a think there the the

Mark Weintraub

so thank Okay, you much.

Operator

with from America. John Sir, of line now question open. Babcock your is next Our Bank

John Babcock

good and taking morning Hi, questions. thanks my for

here that guess, the following and quickly Paul question, kind of was So I asking. on just

look As with change this in U.S. Northwest on transaction, close acquisitions and your now future of in how does at the the also of the kind the you M&A timberland polk emphasis and of

looking the generally at that and South you’re mix there?

Dave Nunes

I don’t Yes. would say have view portfolio that we a prescribed around mix.

age have I perspective class asset all base. think fit looking at existing times, properties from for with a we’re that our an complementary

And always buy competitive it’s properties feel all fit. we’re looking And like then ability in have that that holds and find we lastly, to true that things a geographies, so that nice for can at really rates. we

opposed that proportion of We have on transactions as do higher negotiated auctions. basis through a we a

a local number a by have regular And smaller be that existing program see stream may property we the market. steady geographies with of familiar past transactions we’ve fit nice forward so But brought And our at a and in of not things that of with that we’re always there bolt-on has years. they’re they base. the I looking are necessarily lastly, over that think out asset had – those a often

John Babcock

publicly Okay. traded And we UPREIT structure not stocks. then one see, I among next is the at typically least many that mean question,

keep that? your so to term want going the with longer I sort I of plan do forward? sense. this you What’s get structure mean, intend entity And to

Dave Nunes

this be Yes. it to John, we when across designed multiple forward. so used out, laid really was transactions going

recognize that OP up thus those portion set in take set units. have have treatment. that OP recognize units you We gain they, friendly. capital designed consideration of we gains investors to it And shares future, up when the who point, example, from for they And at It’s Rayonier these Pope if million of then And units, company. allow the for going capital OP were particular it X.X they so And roughly that to the a exchange unitholders be transaction. take to that investor with Pope way. we those deferred a Resources, choose their and of for to forward, chose

take a timber an tremendous points going attractive that, liability other that’s might view defer at of investor transaction. owning or gives you amount individual capital to organizations, gains from it very associated level where so different And we those they the of have And investors. to flexibility with investors when to forward that manage tax think different

many hope time, these to over our part so we it’s able units. OP for they’ve our those the time. – offer the And that to for timber these lands being by take owners, ability long periods can, this of recognize And to business of grow owned owners that

And some of them optionality. just to don’t that sell. retain They’d like to want

assets you most of that then optionality had owners would portfolio. in holding lastly, in the have those have current timberland value time, for units effect, that place. So allows same OP I to, in Rayonier you deeply first all at diversified those but the value kept don’t for keep think the And those OP retain units, mind a recognize in exchange for you those at a

unitholders. the is is I very the Resources the and things assets offers broadly OP Rayonier, so of that the a between we’ve U.S. Pope And to essentially And units mix think got Thinking case more certainly the within about of markets the one that diversify. ability diversified

have Pacific commensurate ownership baskets. diversified across Resources, transaction, all Northwest OP the units as And of that the those selected those Pope and South, part wood they of now a now unitholders that New Zealand.

we’re So running. Rayonier, increase get about excited it’s as of that to of the doesn’t but some through and now form se. debt about pretty up assets. to another And manner equity. do growing us our it. the gives this of it a were per trying load with running, kind It’s grow opportunity – our other to And in it and up we’re that use excited that costs There

excited chest, we in as So our have to tool tool in it an it at now. and additional look play we’re

John Babcock

here. quick last question then to the contribution Pacific And from Pope provide be earnings quarter? the in Might in able Okay. last you the just Northwest

Mark McHugh

Yes. roughly $X It was million.

John Babcock

EBITDA? Of

Mark McHugh

That’s EBITDA. that, a was $X million correct. roughly to like was It It probably than of million $X bit $X.X lower million.

John Babcock

all I thank have. That’s Okay, you.

Mark McHugh

of we Doug-fir. that like we assets transaction, said, mix operating a Recognize point. talked when of And Dave cost, John, like contribution just as quick costs lower have because the a those the announced higher OBT as earlier, well because that, – margin lower higher on about of real

higher had get those a to per from contribution Going ton than Resources legacy Pope assets the in portfolio. we

expect to pretty going forward. it’s be meaningful contributor going a we again, So

John Babcock

you. thank Okay,

Operator

for to turn I’d Thank no remarks. requests, have it closing back I like further you. to As management

Mark McHugh

Yes, feel today. Mark us sure. is to all with questions. any McHugh. This you Thank joining free for with And follow-up me

Operator

you Thank ahead now go has and for much. your concluded. Conference participation. Thank Please very you disconnect.

Rayonier (RYN) 8 Aug 202020 Q2 Earnings call transcript