Rayonier (RYN) 3 Aug 232023 Q2 Earnings call transcript

Company Profile

Participants

Collin Mings	VP-Capital Markets and Strategic Planning
Dave Nunes	CEO
Mark McHugh	President and CFO
Doug Long	EVP and Chief Resource Officer
Mike Roxland	Truist Securities
Mark Weintraub	Seaport Research Partners
Anthony Pettinari	Citi Research
Ketan Mamtora	BMO Capital Markets
Buck Horne	Raymond James
Mark Weintraub	Seaport Research Partners
Paul Quinn	RBC Capital Markets

Call transcript

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Operator

Welcome and thank you for joining Rayonier's Second Quarter 2023 Teleconference Call. [Operator Instructions] Today's conference is being recorded.

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

Now I will turn the meeting over to Mr. Collin Mings, Vice President, Capital Markets and Strategic Planning.

Collin Mings

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

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

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

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

Dave Nunes

good and Colin, Thanks, everyone. morning,

First, review Then I'll McHugh, President comments Chief Mark high-level Executive Long, Resource and Financial and turning consolidated to and for over Vice Chief our Officer before it Zealand XXXX. make to estate our ask Doug U.S. some Officer, as financial real to President discuss segments, our we'll the Mark our of New comment will our following Timber results, as results well the review on remainder of outlook and Timber results.

adjusted Timber Zealand Timber Pacific income New lower offset our second in our the from results million $X of more or prior segment EBITDA net collectively million, and Northwest quarter, in EBITDA Timber year were than segments. $X.XX to forma generated the In we share. Favorable pro generated $XX adjusted declined of Southern our by and Timber quarter. per Adjusted XX% EBITDA segments

achieved adjusted $XX $XX Estate Real the prior down EBITDA from of year our quarter. In segment, million in million, we

segment operating on Going down our results. further

from prior Timber segment quarter up period. second million, the year Southern $X $XX EBITDA generated adjusted of million Our

acquisitions to volumes conditions. completed which more in due weaker year reduction dryer improvement than reflected The to in increase XX% due realizations offset versus a XXXX, period primarily and stumpage XX% a the demand harvest the prior net late in weather

Pacific XX% In was $X a decline segment, harvest an from down quarter by decrease quarter prices. EBITDA in of our domestic adjusted and the in Northwest prior $X driven XX% volumes sawtimber million Timber year million second

quarter, volumes led market and until the to During both export improves. remained and demand demand soft, domestic normalize end inventories planned some relatively market harvest mill which defer us

Turning to New Timber Zealand segment.

$X revenues by The the export unfavorable were compared million the Second year net significant reflecting million as declined volatility. credit to quarter. Lower carbon and domestic and results year quarter exchange impacts. units foreign prior chose lower weaker carbon to we of period market driven amid weaker prior the stumpage primarily realizations -- adjusted EBITDA of defer versus $X markets driven sale

our In of offset prior as we Real the average million in than $X XX% sold. segment, more higher second $XX EBITDA generated quarter, from down per the year, adjusted pricing Estate acres was acre fewer by weighted million

our and strong, for compared increase interest favorable land remain momentum to we the year to in a ago, by be Heartwood Despite continues Wildlight development demand in as encouraged rates and rural projects. both the

pleased environment in macroeconomic how operating quarter light I'm the our of the navigated Overall, during challenges. with ongoing team

guidance to to update X% at the year in guidance will we midpoint call, a of reduction the represents million, directional As EBITDA quarter. last adjusted range updating guidance original is a largely Mark $XXX detail later consistent versus full that the provided our million are our total with which and we $XXX

carbon well but Northwest contribution in as market revised Southern to regions Zealand from maintains guidance from in both softer credit reflects lower Our New conditions midpoint our a Pacific expectation our Zealand. due contribution Timber segment sales guidance similar for New as the original and as segments a Timber lower a

these in from contemplated due contribution original than our However, Real we to Estate guidance will partially we segment higher market. expect land be sales our a by a offset reductions much stronger-than-anticipated

for to me more on details let it Mark financial our that, results. With quarter second turn over

Mark McHugh

Dave. Thanks,

was net was per second down in the Let's $X X $X.XX an forma for associated while million settlement. $XXX million million per was On income for Sales Adjusted with or the net year $XX highlights. the the or in recovery million million attributable Rayonier million, Page net a financial second start on $XX quarter, share totaled to from EBITDA $XX adjusting our was after and $XX income quarter share. $XX operating pro legal with $X.XX prior basis, period. income million

provide bottom overview the resources our capital liquidity. an On of Page of we and X,

other partially of interest Our CAD, half cash the CAD $XXX was by for capital period. operating and in the year The or expenditures was reconciliation cash paid, offset lower lower higher distribution, driven the of versus million to available adjusted GAAP by Page prior first X provided $XX and is decrease year EBITDA, financial by measures higher the cash million on activities taxes. cash provided supplement. A of for

approximately second of the significant cost average quarter-end, on years cash maturity $X.X We the and quarter XXXX. our weighted billion with $XX maturities of was debt no weighted million our average closed At debt debt portfolio until approximately X.X%, five with of debt. was and

the based approximately on enterprise value $X.X price closing represented the billion of Our net at of stock quarter. of our end debt our XX%

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

Doug Long

Mark. Thanks,

higher sawlog higher pine per costs. decrease the nontimber driven our by year year primarily sawtimber an of prior acquisitions harvest driven quarter, Timber the XX% Average volumes pricing volume late XXXX. completed stumpage stumpage a pricing by was rose Page compared offset volumes Let's in or of year and to Total lower increase versus was start the $XX from tonne integration above with million partially million quarter successful XX% second Southern net in prior period. the $XX on in EBITDA segment. $X income, quarter, XX% Adjusted and prior or X by the we

roughly volume. operating pricing conditions reduced $XX and conditions, our weather weaker softer market the at net mills Overall, across and for average demand, outages Meanwhile, prices fell pulpwood reflected XX% in less to The pulp weather ton prior areas versus tension fell competition conditions. moderation $XX maintenance prior to the mills drier quarter second stumpage to roughly pulp extended demand as to tonne. per due quarter stumpage in weighted XX% saw from softer year sawmills per contributed dry versus and from chip all end-market pricing market the quarter year

construction strong a demand softer market tension market exceptionally as pricing The levels of drove for activity. weaker year result end products has and residential eased that ago a pulp

experienced believe we half of of pricing the that the during out the strength U.S. deterioration expect played relative first has year our diversity we the and largely However, and

a advantage demand as for be will improves. South competitive us forward footprint end moving key market

Moving $X million driven to Pacific was million volumes The quarter. on XX. realizations, offset our non-timber Timber by than costs, net primarily Northwest partially harvest was income. the year prior year-over-year by EBITDA higher of lower segment and Page higher lower $X Adjusted decrease lower stumpage

year with second $XX as tension reduced Volume due decreased deferred the to quarter primarily to domestic second response to domestic prior markets. sawlog weaker in from XX% from the demand lumber planned conditions. export period in pricing market delivered the soft in from quarter tonne, period, fell XX% some average the per At compared mills, prior coupled were harvest as year

end demand decreased pricing pulpwood as tonne, per seen $XX market dynamics year quarter, relative working to XX% versus at prior last the deteriorated year. Meanwhile, favorable

During log to prices lumber quarter, improve. Northwest ample our second started constrained Pacific had power the sawmills pricing which supplies, even as

positive the part recovery end further However, in in optimistic inventory and of momentum the normalization latter market translate that this we to a will of are prices demand and year. the solid lumber levels

Moving Page period the to to million Zealand second our ongoing the carbon in EBITDA was to quarter by segment. tonne in of XX the fewer million decrease year sector. results metrics lower shows net EBITDA of Timber quarter. per for to due harvest challenges export in property New Adjusted the credit sawtimber stumpage prior year adjusted key compared $X lower quarter, slightly Zealand. compared was below driven prices impacts realizations, New The XX% $XXX prior foreign declined primarily unfavorable operating and Chinese exchange year Average prior delivered the $X and volumes. sales,

relatively period. anticipated. COVID-XX containment of freight from in levels fell However, experienced prior late costs the high we the significantly remained in The flat and recovery had year in been net has relaxation as following than port realizations measures the the record stumpage XXXX economy Chinese slower

the demand rebound Pent-up new activity the early XX% a being meters, which month has in sales said, That translated cubic million X.X construction some declined pricing. July and quarter. in provide second year, roughly lift starts port to to inventories the through log slowed over of log to but property

the in largely change period New to prior New fell quarter Zealand the average $XX second to prices the Zealand per Shifting reflecting sawlog XX% delivered dollar market, U.S. to domestic the exchange rate. in dollar tonne, year

sawtimber X% dollar reflecting declined domestic from a impacts, period. prior increased exchange supply prices U.S. foreign the New pulpwood following in on disruptions Domestic Gabrielle. prices basis, XX% Zealand Cyclone Excluding year

the declined the Excluding as the period. Non-timber New improved in to carbon uncertainty. amid period in sale opted by from foreign we credits during prior to of XX% relative regulatory prior volatility year pricing exchange defer quarter impacts, Zealand income second the market resulting year

by in the following encouraged uptick to we market. Zealand taken New are pricing However, by government the credit steps recent the carbon stabilize

the active market to New and in pricing more carbon expect Zealand in the both in second half recovery of the Given liquidity, year. we market the be

we Lastly, Trading second in a slight profit quarter. segment, in our posted operating the

timber typically and are economies of feed our to a provide trading export scale low during activities reminder, to business. our additional margins designed As primarily

results. to I'll Estate Mark cover now it back turn to over Real

Mark McHugh

Thanks, Doug.

acre. of Page million segment average second Estate X,XXX second on results. totaled detailed in XX, delivered quarter per was Estate million. price segment $XX sold the $XX EBITDA roughly Estate quarter an acres $X,XXX at Real sales As our adjusted Real on Real strong

sale Heartwood homebuilder a sales first Drilling residential acres a $XX phase included Georgia, lots per for lot. of $X.X of improved South million of development down, $XX,XXX sales an totaled category site two base In to $X for community, national project, reflecting active the finished a $X.X million our pod XX residential the totaling in XX XXX-acre average of roughly price sales million. and Savannah, an million for adult development

excited sale Jacksonville, the very our a to components reception important Heartwood our about development $X.X In strategy. a our mixed-use community. of a Wildlight as sales two We're and of development active site the an to XX-acre homebuilder Wildlight sites project consisted active north adult they market of in of Florida, million second phase national of are adult for

believe commercial of each migration and help development demographic well from industrial to to benefit price and Heartwood and continue both favorable and will a we diverse mix our trends, catalyze positioned that one another. Overall, residential, demand users points and Wildlight that projects affordable end relatively are for

the Turning category. rural to

at an sales $X,XXX acres price Second County, $X,XXX quarter sales transactions X,XXX Key X,XXX average of acre. million, Texas, included consisting roughly of average in reflecting two roughly an $X per nearly totaled acre. acres $XX for Walker price roughly approximately of per million, totaling

the by environment. encouraged are the continued strong we rural demand rate Overall, interest land for higher despite

of in Bradford during holdings acre. on Lastly, quarter, acres County, also $X,XXX or Florida the closed nonstrategic roughly the XX per second we $XXX,XXX of sale for

to our outlook Now EBITDA per first of million attributable our total million. the year year, and full to $XXX to half full EPS $X.XX results anticipate moving adjusted now balance on year $XXX updated Based the year. $XX year to and $XX for million, full share of pro million Rayonier to we $X.XX on net forma for income of expectations full the our of

now X.X and we million first our With volumes the end million of weather Timber in that guidance segments, respect reflective at which to dry production tonnes, stronger-than-expected will half our segment is to X.X of prior year our higher individual the to of harvest due of full year conditions. expect achieve the Southern

harvest we volumes compared first anticipate year. half the remainder lower XXXX the of of However, quarterly to the as for

to stumpage a expect adjusted quarter anticipate year net mix. $XXX primarily versus to Southern seasonal in segment second $XXX we our of of Further, as full EBITDA Overall, well thinning pricing volume levels, a million. in due pricing achieve we modest the million to proportion increase in Timber decline geographic as

Timber million X.X tonnes to we in harvest volumes full response our we X.X soft as segment, harvest planned to of In now market Northwest Pacific year expect deferred million conditions. some

modestly delivered on levels XXXX lower average and end second Further, the pricing. that the net of log from based stumpage we demand half will in we believe will increase also modestly first realizations haul However, half year prices improved and market pricing from weighted lumber expect cut benefit

expect New Costs unfavorable Overall, full to we as now year response in full Timber over Zealand $XX deferred the to achieve to in harvest expect we of X.X planned volume segment, now Timber some our adjusted million conditions. In $XX have of balance our we year of the million. million Pacific EBITDA harvest million year. market to segment tonnes X.X Northwest volumes

We first modestly be expect the the that of year. will to export half sawtimber as lower pricing compared

be However, we by and expect this partially freight lower decline will costs. port offset

optimistic discussed log the drop recent Doug we In elevated rates the continue pricing from pricing that given as market. export we port As earlier, has modestly inventories. interest corner to second that the domestic are market, cautiously in a turned levels decline constrain expect will quarter construction Chinese residential sawlog

Turning to carbon the market.

have significant transaction first year. activity tempered market sales our of full in credit year We half for on carbon the volatility limited expectations and the based

the stabilize generate second expect market. $XX in Zealand uptick market will in the million in $XX year However, active carbon New EBITDA half to pricing action the the response to we to recent adjusted expect carbon full to we in segment the Overall, of following be million. now year the Timber more governmental of

Estate Real as despite our year the we and second HBU we full timing transaction adjusted higher $XX activity Based will interest be segment, properties the environment. better the $XXX to EBITDA anticipated expect rural quarter. for heavily rate up half demand closings, to of fourth the In expect million Timberland now than expected weighted on has of held million

and Lastly, the $XX regarding with in prior roughly of of and to Page a G on to supplement expense corporate million, release. EPS financial EBITDA net is found we $XX details adjusted of XX income our segment Schedule which More line our guidance. be including million earnings guidance, can updated reconciliation expect of

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

Dave Nunes

Mark. Thanks,

the reflect I on despite our on with value focused pleased the of long-term year, near-term assets first I'm As half environment. enhancing of has difficult a team preserving our the remained how and both operating

by and we're of see timber stabilization to operations. a Following improvement our of the encouraging to across end start many beginning signs served challenging XXXX, markets

shortage homebuyers further needs rapid rates. housing been amid In turned a mortgage the U.S., that prospective have to new the exacerbated by meet in housing increasingly their construction to has rise

XX many dearth increase significant their in market. the past the the prospective months and Specifically, has translated to in residences thereby current a listing of resale over rates sellers supply from discouraged

that home momentum in for is several building destocking the result, new materials. derived as construction of favorable orders As there a pulpwood signs such seeing completion. and we're residential early indicators sentiment, inventory from for products builder building nearing permits such Further, containerboard single-family are our as

better government as carbon the recently preserve the the remain several after on to has uncertain opted action stability in earlier, us taken discussed country's provide to emissions Meanwhile, over New more Zealand to we market sidelines months credit the past to the the of the in positions in trading over scheme, market balance conditions. value participate which year

Turning to real estate.

quarter was have year particular. XXXX, in have While in our pipeline the market fourth fully not the fundamentals remained our of this year-to-date the results year of reflected entering financial generally as dynamic much the half and weighted strong second transaction toward

positioning Overall, I the year All generally improved favorable our our projects believe will we development properties. remain the environment half half. more things both very second of the considered, business the of versus for encouraged and rural operating over by first be the

operational to to transition and with growing economy. for conditions, low advancing addition carbon managing team to In nature-based evolving has demand also our the solutions initiatives ongoing priorities a associated market support been the

of process solutions as become and that value to will list financial our corresponding these of offered important and solar others and these expect have and moving prospective long-term storage well our by counterparties grow, to the potential forward. increasingly now into capture wind, Interest proposition of are leases carbon as results. nature-based we opportunities place in and in We the from opportunities some continues converting timberlands

proud evolving Rayonier about prospects team We In that our the optimistic of all how sum, collectively I'm and time. is market over create conditions navigating and positioning base provides. value dedicated the land to our opportunities business of shareholder very of our future remain

turn and the remarks, questions. prepared operator back our the now to concludes That I'll for call

Operator

with [Operator Securities. Roxland Truist Instructions] Mike

ahead, You sir. may go

Mike Roxland

Thanks, on for and call taking Mark, on getting my David, the questions.

it the kick off happening U.S. in to wanted Just what's with

harvest expectations more type sort housing think last Timber, half of volumes and for of is is couple function the -- of year of I pulpwood back what that that your a quarterly -- lower South months, get housing that the seen single-family of given sawtimber on wanted have volumes? improving the increase your Southern the we've thoughts, would half I to back so just certainly in expected I your, year, the of given

Doug Long

this that sure, Yes, answer one. Doug. is I'll

is and we've of has pretty mix business We deliver been stumpage seen have there both active stumpage on what a reasonable harvesting our that sales. and

we wood in we forward of the lot contract. harvesting. had sales, the of the A a of sold of So XX-month been in year, harvesting a first the year the pulled half half first that the has by lot

seeing on stumpage, low there we're in market those so what inventories who out do and the buy tracks. the on is folks they that have and while very So moved they've harvested

stumpage And mix so lower our year. into we half second have the a going of

So the a we slight volumes harvested. that just slowdown in so just

Mike Roxland

of given in Got in you to how saw obviously you accelerated this seen in two I But itself the Have family of Have would in months? it? particularly -- timber? sawtimber has does it improvement single seen which housing the construction, last mean, or you relate three included or terms or sourced. demand, it mix it. say, pulpwood terms

Doug Long

we in negotiations. improvement apples-to-apples see we reported on have and type to in of while Yes, pricing in recent mix, some we're out, programs bottomed sales negotiations the recent an actually had pricing there discussed sales. to as our some in will remarks, harvest both absolutely. stumpage our We've be our pricing think recent appears fluctuations geography, been as starting some as encouraged well some by of of prepared price our based on delivered we've basis, And on

case, the historically the XX%, all to X% been stronger during pulpwood. year. a the But QX. And earlier markets that's of the our volume. XX% to markets it's compared and harvesting almost QX into in is Gulf That's This kind fitting from the of has volume shifts increase about in in coastal by company really

the even into what's we've while So the pricing is which guidance. and in per composite our improve, shift second going in in harvest built seen stabilize half, is pricing location there type our still

Mark McHugh

the not second be and to back acceleration conditions market for really year We stumpage in year. in of just is market Doug expect the sales conditions. the said, like volume and driven more the of favorable volumes that expectation Mike, about reiterate Yes, on the lower half actually by, any half statement of the

Mike Roxland

I to has it. and China how now? Got appreciate could of operations? have one on as any China question New And Australia the you guys obviously impact Australia and imports import do starts Any Zealand you all New now then of on reopened the just your China there. seen And impact from Zealand the restart an color your Australia? New from relationship increasing between you -- margins where friendly wood Zealand. think other wood from amount head Do

Doug Long

and is take Doug, this one. Yes, I'll that

have the China, to Australia, time, flow really harvesting And from over move a is seen flowing course, logs we've any and bit been shift we Australia quite started from restrictions or further wood JV what in too. between during domestically. on and trade into there's that being that fiber China And that used Australia the So back and really that wood large war impact we on exporting Australia. to additional seen not operate JV-- used of a

to So from expect to in some. Australia be a significant be be it There'll volume we shift There don't will China. going

don't for significant see going ports, marginal, Some event but this I comes that forward. from a us be to wood

Dave Nunes

Mike, And that. Yes. add I'd to

market, spat, to think where to of based domestic them don't were of XX% were shifts see that trade processing. on that increased returning we near you if -- China and prior the they roughly made anywhere they to You some about this they've

Mike Roxland

Thank much. second you very half. Good in luck the

Operator

you. Thank

question go Seaport Partners. Instructions] ahead. may next Our Mark Mark, Weintraub with comes [Operator Research from you

Mark Weintraub

you. Thank

And of on side it's from much a just being estate versus how to So more push a or of kind -- just real guidance. pretty that original me big better years function and increase sense holdings Have the is couple and your timing obviously, is forward relative forward driven. had a pull you of Curious to markets of your shift provide view today what kind maybe where HBU would they you color been ago? relatedly, in that a positive be of versus could just had a of helpful. maybe

Dave Nunes

there's Mark. to bit Good a unpack And Yes. fair there. question,

rural we insensitive pieces if buyers. what somewhat of to properties. the So real of found that recreation interest residential baseline that the is down is you cash estate, lot the our break there's market in rates, component a real of is fair a have and estate And

has so you transactions. but certainly has And impact, hasn't it's where had some highly there stabilizing. that an arena been been to It levered remarkably see not -- tend

baseline of And support. so provided that has a nice

fundamental thing keep another and in and because settings more COVID on the they to progressed think think side, seeing wanting more can we as in came live I other you're in mind out shift I rural work to through from home. a is people

product, which And of have into pace we and rural putting investment places and seen of we expectations into the we those. exceeded has progressed now we've has will that sales as through put translate capital modest had modest our subdividing a the or a parcels vastly so inventory -- amount And have those where our is into that post-COVID.

component And been big of it. so that's another

is efforts that shifting plot finished to seeing lot sales the remarks, good piece sales. standpoint, then of underwrote discussed those Wildlight we're we're And momentum. absorption as development we I I'd well and the expectations a thirdly, is the that Savannah, around say Jacksonville, progressing certainly, of that when ones projects, been Heartwood. we of diversifying example Heartland have think from nicely. improved Those originally strategy of -- north around our a briefly end And And an our of ahead in South our uses. and projects, really prepared

their will will standpoint, sell us a have helps finished and then the plot sell where we more it capital that. the their the got secondarily, end. more on homes. little and We've in and those group active Wildlight. very And of we've lots the control the ultimately into it bit communities. then builder been capital develop adult is from And of adult both And sales and community gives a homebuilder lots pleased entitled to plots, big progression active And a a with move Heartwood for

two And closing our complementing had are nicely on project, we've Wildlight on Heartwood. the these one closings And progressing and lots. single-family

Another our really a this has boils plant out of of sales and the to big Heartwood piece project. touches absorption that of And we've announcement it that kind project. come that influenced down of Hyundai rates is had have had that number homebuilders already Hyundai who've

with you're are so many we're well and Wildlight, projects, the which our And in I'd that ahead say both And Heartwood big results. of of worth supply, very years' seeing expectations. many,

And adding projects when keep progressing, our And to those how those for them. we so feel those as mind, And projects, extremely projects lands, around the value surrounding in they're motivation progressing. into was encouraged those are we we're also not are lot timberlands. a just like the got two by lands of but

Mark Weintraub

Thank much you unpacking. very for all that

you can given to so -- clarify. have yes, of pace, the all And just be? for elevated sort the seven it average view more what rate Presumably as years kind together, it five, -- your wanted will put the you next a do run is when of but heightened to

Dave Nunes

certainly run we expected now, sort sit we where that of say rate we and seen a than higher absorption. faster I'd have Yes.

both the in that from on also patterns to of these about rural Some the residential U.S. the they migration regional of seen some the apply And we've that in talked dynamics benefited particularly I projects. same

strong of areas Both districts school South. and these migration. strong in have

work of we And continuing that to we've been very thing And the by come. and to expect pipeline. seen, so encouraged we've yes, we're this what of another kind more we on

of a sector number we the other We earlier that projects estate real on within working are have at are that stages.

that expect projects are our we progress, going as P&L to to start impacts. other on well two as projects these some to we're working of so And translate

Mark McHugh

the clearing Recognize we've Mark, just a around alternative underlying in of seen that, premium. little this business move values that those solutions. as optionality around it that up, is expectation rise as that is the our about just in of given land timberland I'd price again, Mark. nature-based bit, well longer-term the balance terms hit all uses. rural HBU expectations premium to to continues some And though,

think development for hit our terms I what will the business that of Again, other certainly its that and last, willingness will increase optionality in to expect business call while seen that at relative to it be higher seen feel five rural sell continue of to some balanced stride, and so level HBU values that, And ago. it, years we've the we somewhat a our we've perform we there.. given the land in

Mark Weintraub

Interesting.

export pricing And so just there comments quickly, lumber I'm the you surprised would of bring sawtimber on market that to a of how were been has guess I But shifting much kind gears additional going other or you pricing. process business. of Pacific and pretty Northwest, the strong the timber understand making given sort analyzing the that to I domestically any that wasn't robust kind through of there? been on mean carry more of I what's nuance

Doug Long

that is I'm This Doug. answer happy Sure. to Yes. one.

rates the market beginning basically at year, forced we this West, the to was from you the trim attention their interest higher the and products mills particularly the kind weakening of really that production that Asia. start building match cooled to demand year, back with which had coupled And yes, exports like and So for also those inventories demand. of lower in lower to said, when

log So inventory. the ample had mills

confidence, in and gain and seeing QX, starting point, homebuilders we're your as into move people we as mentioned Dave to the are to market And more increase demand. that

seeing you you lumber would as pause maybe expect so that are pricing. capacity. movement that said. But your to those in logs increase mills have And to is the to now seeing right starting we're that What translated we're

up. down capacity. back capacity at So running They're weren't they that had brought and now stepping their full

stabilization we've And recently in markets. really with even some seen that momentum specific in positive log results pricing and so what is that here in some

think thing we've I So the positive that's seen.

really bit took up, in, They to in. so saw time, easier, China in now. a capacity. And logs in tension more they came able just wood. But to wasn't -- weren't little see so we running at specs volume July. point in that But starting at it North full more we're XX% ramped market ports were move at really, reduction But a American it that we flowing the during got

steady pretty a drawdown China. in So

that we're ourselves increasing And we are Port encouraged in QX also demand so moving exports from Angeles Export in And there. from yard. customer by our with back market

starting supply Canada. where British Columbia, to some up. some see we've so So we're seen think year. of mills on and They're logs into gotten and the They're been the point price back kind the now, already I've just I expect half have to now go confident -- that we running the from increases more see There's drain that capacity. as less seen we're of second and at

Mark Weintraub

I'll get luck good if another in back do have queue. in Okay. otherwise, the next doesn't quarter. question hit, I it get

Dave Nunes

Mark. Thanks,

Operator

you. Thank

Our next with caller Research. is Anthony Pettinari Citi

sir. ahead, may You go

Anthony Pettinari

recession, dividend free the case, you a versus but can if of if stress that not was levers pull? economic of about Can CAD updated in Good free there's wondering improvement we're case talk flow the morning. cash and a that full talk second you really guidance. little sort cash And in by macro you kind just year of base kind that's wondering flow maybe say of environment test half if the assumptions, we could and I or just you materialize, about XXXX. profile weaker obviously, talk in a the more kind could bit implied about doesn't

Dave Nunes

mute. on you're Mark,

Mark McHugh

higher I'm higher the flow back That's the free in back by No, of half our largely adjusted year. sorry. the Yes. is cash of year. in for EBITDA half expectation the driven

be that the despite through really we half set the headwinds will that a and the underfunded dividend the Obviously, on we cash do this that's basis modestly just function we've that, particular. long-term macroeconomic of in seen expect year, first so of dividend And

with to also over dividend expectations the desire grow Flow the time.

see in growth market poised recovery. saw we're we But cash in growth And has feel As grown. as backed in cash XXXX. a that's obviously, cash up XXXX in though flow XXXX. here and flow for term, flows as long very still We strong we some

levers continuously to in against conditions, feel have we we backdrop. And business long dividend well the shape, we But to we assess -- have sheet balance we in right that cash confident saw lot But market is that have assess. more of if certainly good well to obviously, that's situated. the a certainly, our something is at a both And pretty and now, manage flow our the leverage. as disposal very term, pronounced that still pullback as

Anthony Pettinari

just Okay. helpful. maybe credits. gears That's And very on shifting then

different you credit including the think, any the stabilize increase Zealand now actions on more to the then these after, U.S., maybe And piloted wondering of was if to provide to mentioned we've in just market. actions? plan You projects I New geographies, those in see could context credit government sales I the started some U.S.

of you sort as generally maybe in I wondering if U.S. talk long participating about Rayonier credit of well could in New just those South. Zealand the was and in as attractiveness projects term? markets the the

Doug Long

explore review to fair government year in encourage degree Zealand in NZUS is where its a to March market announced This emissions considerably to were liquidity on and focus to limiting to they causing plans reducing This whether Doug might again. of to for The changes need businesses created a to prices Sure. more trading uncertainty as the compared emissions ago. scheme market decline really opposed offsets. New and

Zealand take to complete. both And notably, NZU saw which The support carbon view uptick While we recently we've ETS will and the some controls this card helped and earlier. price adjust we in pricing liquidity higher government expect that time has to fall in settings, than has measures prices see news. seen a in New taken terms liquidity already of

then to So has some the to beyond in back and market come and put overreacted government probably they what was it expected the things. market try help and uncertainty there in everyone assure stabilize

Mark McHugh

Yes.

categories, As first that. which to markets to broadly include would tremendous We're solutions broadly, capture voluntary seeing Scheme. second Emissions as of would uses, carbon markets, there that and Zealand we alternative like right what land and well the have New solar storage Trading might tremendous it be just relates opportunity one as markets we piece tend three leases, of around now. which U.S., are term carbon solutions do both falling activity wind think solutions. in credit is Carbon nature-based nature-based regulated leases. as That be really the see into markets, still nature-based more long We of bucket

for And for bioenergy and lastly biofuels, aviation wood example, sustainable fiber be would fuel.

revenue of all that opportunities in arena. in how these the So market New categories that's the nature-based of been said, That has of broadly kind solutions major different of largest we development. us Zealand various stages about the for think nature-based driver solutions. are in regulated of To date,

participated haven't voluntary a offsets, and we're in the carbon certainly so number in currently. of in We voluntary U.S. voluntary evaluating the broader around given concerns quality opportunities of consistency the That's market just the yet market market

But seeing opportunity land really Doug to most said, But business. we're that investment as very overseeing right Rayonier as we're terms on opportunities around well our nature-based is proceeding tangible for the suffice just solutions medium-term that it capital area is front. now the in like cautiously of alternative say, use. I revenue that

it kind to turn of we're that some of So seeing currently. maybe of in back the an activity I'll provide him that overview to space

Doug Long

expect Yes, on following counterparties come Thanks, voluntary initial with in area. Mark's that, process of projects focused would relationships have with of we Mark. quality that the been on I and some carbon our on credits and online working to are respect comments in Yes. XXXX, with to the credits. We're developing we've we just top-tier

of Mark about given some early those concerns mentioned, carbon of As kind credibility

we And voluntary hoping credits. We're sold. some developed Integrity issuing now to Zealand experience to a were that's just carbon decade a assess and development. the seen we've New further standards our the that and and positive before really over markets practices And Council credit own carbon in best and evolve improved markets, But framework see this think of for given integrity. Credits for our with pass well carbon carbon

projected a The believe on to ourselves carbon value differentiating credits, it's the U.S. clearly both globally. and prudent for long-term perspective. quality We demand from focus by the in

across trend. that overall, quality we That's voluntary and integrity going the the on so that increased market. positive believe focus And to be a

New by digits at to it in purged low as few time, selling were credits we credits the actually over And in the past patient replaced years. in from cheap start. trade the increase traditionality. Zealand the durable achieve single I've are ones pricing and over $XX should when more that range $XX were And seen of market them low-quality

So buck. right we in voluntary to quick durable the take approach intend similar market building a realizing with and a business towards view a a

make we So carbon and we that at right like it think seems want That with growing the right enter the market, of right sure quality. that's I on where just it's kind things see now. we a to time the

goes we carbon our mentioned it done we or some and use mentioned capture As to alternative we've CCS, storage, solar wind. that -- comments Dave land done some

and Houston of the we for maybe based location from areas capture on are for civil hub carbon large further suitable likely capture carbon plans pipeline are initial front, a believe infrastructure, and but emitters our storage efforts. the geology, prioritized our other that On kind and capture perspective. existing ownership out timing There the we've carbon with the they're storage,

with a out really But earlier storage level, potential lease to our for in parties. actively as geological these are permitting do And leases injected years payments timeline when first acres land, XX,XXX on with the engaged these XXX,XXX economics year carbon-capture types the on potential structured upside lease executed for this for to payment excited for carbon about in We've process the potential given and about generally value our projects. Texas, involved for suitable in leases storage injection hub remain occurs and Louisiana, shareholders. a are acres At if capture the lengthy future. are identified types carbon those the then high we we've counterparties. the in add So with this of the material of several

developers We're really the is five capacity Alabama from the our of states. to all interest solar with to strong solar Texas grid shifting footprint. on a added to solar. XXXX projects top-tier Utility footprint well. And XX% of suits our southern the This lead over in Florida, the years. across industry among solar over really scale tripling to Now expected new next with five and electric QX top seeing

carbon per in acre years, NBS we've as few past to acres leasing itself $XX,XXX HBU a add approximately upside average be added developers. solar within storage. solution recently, other land potential the excess such of the are as attractive to more price fundamentals long-term nature-based annuity sales as X,XXX Over to capture by proving more the at sold an But opportunities

grid, option to capacity and Alabama suitable factors really in lines expressing acres wind. Florida, developers for on and the the Georgia, So as right in acres now, based Then with that's approximately on sites. have proximity slipping lease we currently lease interest lastly, XX,XXX or either such on And transmission acreage particular. under on more Texas sufficient

Oklahoma and a And presented In XXXX, a structured our a wind as installation more on in then is energy of in in of three our New have first each with we wind we a farm our and with area, with operations still We're currently XX than interest based property. on component that production multi-decade additional over in of potential this Zealand XX interest farms turbines. share seeing base turbine. turbines wind rental lease revenue

earlier, we space forward. been lot to a and continue said see the active go as Dave of as we've So in interest

fiber moving aviation biofuels, in level talked The bucket the And Mark third interest about petroleum-based fiber fuels, very low has of uses to demand. lastly, that sustainable traditionally significant. really also nontraditional carbon that I'm our achieve kind as on of products other of products been such

in down a due of small We're logging pulp means for currently our of were considered going varying while degrees will of land are take fiber supply about the a the is midterm and will wood to what demand coming And here some believe, encouraged to construction. for really in in many it and baskets. these not and be that size base. current, for it term cases, road, several more that discussion mill. projects projects is average a permitting incredible The long being demand our with dozen -- We're to we of

is thing that the traditional customers, that, these end-user I about new nice outside products. think, of our And they're

So to and different opportunities different we're going see within markets. flexes the

the moving a to nascent more also I'd where in of we other nature-based of a been starting and And more that area, is going what area summary kind solutions biodiversity. also nascent but into of our say biodiversity. go we're forward area starting is right a now. go kind as working that's So at into the on to we've look high-level

Dave Nunes

forward one you to be earnest start key work And of began this We under And that that was to we this the more year, the that expertise Anthony, leadership. effort fast opportunities, if just where from of potential I little add to in in we moved reasons what in that. and bring of expectations timing the and up today, part then earlier could opportunities we XXXX. back would behind divide perspective believe a where Doug's the to and improve understanding reorganization was announced the are our it we really

the positions brought to us have after a these those as opportunities. opportunities -- become have shift new that dedicated And go lot opportunities to of become allowed We've more material. it's

way we're the also not our these. And to the positioning about excited the portfolio, so of and just we're but of pursue very positioning the team structured

stay still like to fit portfolio. our the tuned. we And we early the kind and It's the of so taken, we've days, approach that but like

Anthony Pettinari

are over. details it I'll very turn helpful. Great. Great, thank you. That

Operator

Thank you.

Ketan BMO Mamtora with is caller next Capital Our Markets.

go sir. ahead, may You

Ketan Mamtora

bit. you. normal morning, quite point Any to and are they a Doug, expect at to relative you to start down would levels like to Whether historical you or -- with pretty Dave, as Good I there to kind port about having where Doug. are of inventories soon? they down China talked Mark averages? some Thank in sense get come

Doug Long

that Sure. answer Yes, this Doug. I'll is one.

July, saw meters at cubic about during approximately of So meters, the resulting mentioned, million we the kind that's we're of is decrease and cubic month in XX% about yes, inventory And as X.X ratio. X% in think to the demand we typically like of year-over-year. And seeing July what's to up a average port sales the daily month-end. in we inventories which XX,XXX

demand right price with historically, think the And equates we're appreciation, that two months. what to we've tensioning currently. that is this ratio you now, X.X in And seeing about to which about equates market of this an if months below when inventory ratio seen

now getting we're getting demand at have and we're a below that's back, where seen things. So inventory point point, ratio, months we we're to where typically two your that

come were. normalized, quite we have ratio. getting month from they bit more And into to that get to that inventories back to down when the point, a two So your where

that's think thing. a good I So

has have inventories which through also some lumber seen July, fallen we've in price improvements yielded too. lumber Additionally,

a Chinese period hot signs of softwood very increased a temperatures. it's prices demand showing during reduction low the the because market So in of and seasonally recovery is season, with inventory in both monsoon we're

we're starting to think I market. see seeing So point we're appreciation in where a price attention that

be So like to time it's market. that minute right feeling a in this good

Ketan Mamtora

helpful seeing or spruce from context. Doug, we that exports bark that's the No, with logs of European situation kind there the are update And lumber? right. All then current where any and of on into whether we are kind Asia, it's

Doug Long

Yes. Sure.

harvesting has spruce that we've cuts certain were come what that. itself seen pretty within mainly harvesting beetle countries, the of down read excess annual where the some But more harvest. from kind normalized still average I've what annual wound that their They're much think salvage has where of down. European now, and it's harvest in is back cutting their they're beyond they of I seen

see country processed ramp-up before. not European the if to across that I volume from saw that don't amount can up. salvaged of find But we really moving trying expect sawlogs. exported is home being significantly macro the reduced seen a see over demand see And being kind though particularly in we've we years. that for and Europe, of that don't at So around What with weaker it's volume those could still see back increased ramp the to I that the

expecting did look they logs to see anything in not way of European XXXX. So kind

Ketan Mamtora

timberland? helpful. deal question your final M&A bit my is from That's you talk then it. just And looking little Can side. Got in about pipeline and a how activity

Dave Nunes

I'll take Sure. that, Ketan.

I think slower a this year. has generally, been

excuse number a slowdown translating sort sitting pricing I activity. the a these I and and pretty And see think a say in land develop. that's me, capital a of number opportunities think of I that I of lot and our why waiting impact to buyer these speaks seeing part understanding side, And think And markets to it's that various sort continued -- big nature-based types solution, presented. of a of of volumes. optionality into of demand. owners demand even context to of a have often some the see think of your on in robust can we've flows I have impact you're flows, that of From how capital

nature-based asset again, around class flows the for those solutions, seeing so that into for seeing and reasons we're flowing reason. this -- And we're capital same

we're sorts to kind have end, to out. in itself the that of see so And how going

some for sort much some taking to geographies these for have sort transactions larger active in transactions and a of we're all smaller continue wait-and-see kind we'll good of We're our across bolt-ons. We things until fit of look to a the always that themselves pretty on of out. us, approach have

Ketan Mamtora

half. jump back very it. in That's queue. helpful. the back Got I'll Good the luck in

Operator

from Thank next you our comes Buck caller James. Horne with Raymond

You may go ahead, sir.

Buck Horne

guys. morning, thanks Hi, good time for the

on other the from the products you're the these pulp is Or containerboard like pulpwood we back that inventories their half bit your or hearing back little the Just market log from rebound? second, ground for you're any wondering market year? You're color of just pulpwood to characterize better demand terms should -- what a hearing of on look kind the end customers to what starting a into signs go for to what's of in the days? seeing going your mills pulp maybe market the

Doug Long

to inventories July as And has last as that see years Sure. post-COVID. fell of million June, started tonnes. that we pandemic, inventory mills a shift result A destocking plants year. of inventories up And lot across X.X averaged was to inventory in from in at which of and box good a to tonnes consumption X.X leading from situation recently, million the down in two X.X reference, occurred economic supply million was services the in the about that tonnes for improve chain high

as Kind this So is process that in now we see our we're prepared in the the right in derived we our of at pulpwood why that destocking And is that on clearing ballpark. products the chain mill is remarks, channel from mentioned that retail. the still supply mill of largely between wholesale complete part and inventories for inventory is retail more levels. normalized the last and working inventories

all And felt we see expect improved where ground recovery that. situation But containerboard more on started in the were inventory said, there. to as from mentioned see when demand. pronounced is matching happens, that demand that much And we've a to the we improved we the

Northwest, quotas we've and the like where removed improvements we now improvements, capacity to the So the mills we the we said, who see where lumber price take see the had us under more in have It's before in. more from mentioned were have that. wood move quota, and can in volumes. we much I

logs so we're mills their move pricing, and individual and quotas what started And to quite more far. translate that that few that they up start to open areas us seeing have seen bring so allowing is the to side expect in And a demand that, in the -- into mills and have things in. see that as on should to on we we

Buck Horne

the general as but Awesome. That's rural have very as And helpful M&A only timber remained that. not highlighted, to in asset pretty estate, for strong, color. markets, appreciate then demand just has real class. just switching I mean, guys you an I timberland

at a that in maybe activity of back the lot think right year? guys the stepping packages Sounds some you and nonstrategic Would parcels the about disposition like there's and you not sellers now. noncore, in putting step-up to of putting are market looking into that maybe half guys together

Dave Nunes

areas have kind we a flexibility think look Buck, I read that of portfolio. And I play that mean that's, I at. we is timber to advantage as our the that's always pure one something think manage we greater of actively of that that's have

that's something that considering. we're so And always

it it a of of that sheet balance a own that as have role to in And our as ordering seriously Mark toolkit. that properties standpoint, quality touched of rank flexibility our we active we and pure play. the portfolio back We from have very management take gets kind to some on relates

Buck Horne

time. Okay, thanks Appreciate all right, the guys.

Operator

question go from with Partners. Research Weintraub last our Sir, Seaport comes ahead. may you Thank Mark you. And

Mark Weintraub

for with opportunity -- just of and one, the solutions. opportunity all the the talked we Can in how to or the kind possibility the especially could lots the ask -- the you revenue give scale I identified be been and of time. over good though. follow-ons. here? rundown information, sense XXX,XXX earnings begin color you with nature-based a And Thanks potential XX,XXX for of the Lots carbon much I'll having about of associated on a capture think, solutions, acre of ballpark just you XX,XXX terms of so us opportunity on can

Mark McHugh

a number that of in position yet. we're I CCS activity to level Yes, just arena. of not that detail provide as we have as entered Mark, A currently around confidentiality into into and recognize prospective in leases. of discussions might this agreements lot there's that's that are that we're a the agreements under having been agreements ongoing enter well

be not next do while. the We're here a on point short that disclosures quite in on working evaluating. appropriate and position color can we that go-forward basis, hope we're to where some on a so a And at to provide we're more the in economics transactions on we provide

Mark Weintraub

fair Okay, enough.

Dave Nunes

of too, two have mind, in keep that pieces. And you kind

determinant land piece, the activity. pace lease has and while the is and started, the very the the piece piece. injection And of you land based injection on You have the have lease permitting piece

the harder your going a game. in that's be get of one early so to hands on to And sort

Mark Weintraub

it. Got

and -- that more the injection. on like So do that? on an understand rental a lease how the would be there depending Is fee bit would variable underlying it then I be land

Dave Nunes

That's correct.

Mark McHugh

long injection recognize, given injection But again, wouldn't these occur payments permitted. later date, those wells permitting the getting that's process a that until theoretically in that involved

Mark Weintraub

of hold things sense but a the I are when to place a go on what not might dynamic, because suggested I you represent? might think we be soon, soon side to bit And it more Understood. you maybe a to is in realize economic you

Mark McHugh

about detail Well, again, I working to some And at Street at you article provide that fairly can a month in around point ago of they we land owner time point in going given economics. illustratively, information again, through provided what Mark, ranges. we're But that were from and forward. wide detail Journal can Wall what level

of term, we again, meaningful that, are prospective early pretty for much us still see as -- recognize it's some and the those are this still in long several But out years several but revenues opportunity out. years revenues a stages or very

to I to six impact next provide expect last put in want don't I over again, months. it, we specific the here that XX a we've the on that the just to long think of months, a And to of activity it's So term. lot detail how some seen six we'll more again, XX to be timeline around but something kind business looking

Dave Nunes

devoting And lot Mark, getting to of efforts. comments, team these back a resources we're my furthering to

Mark Weintraub

Okay. Thanks. the Really appreciate help.

Operator

our And question from you. last Thank Markets. Paul Quinn RBC with comes Capital

go sir. ahead, You may

Paul Quinn

guys. much. so Morning, Thanks Yes.

up Just question. on Mark's following

between from. If the think how years, about like think how you sounds that solar, this which it's carbon is still XX number a without bucket? What's a a think big wind in you XX%, opportunity we ways How you're capture, out looked of we storage, financials, any do should your I you giving everything Is carbon it to all is ballpark this that it? XX% business,

Mark McHugh

Paul, the currently type we're been that to the we just activity where recognize to publicly. just last at around Again, there point that working are just better a out lot refine XX long-term but of there months. quite we put six figure has can not the of that, in view

the market of point contribution at quite to to type flow, But type as we're for -- of both meaningful. that the opportunity we that. brackets think opportunity around cash not again, revenue, to those Rayonier. just specific Suffice still EBITDA. that do in We're it trying ready terms percentage to the say, putting as that We are of size it well it's

Paul Quinn

look it... at Maybe Okay.

Dave Nunes

lot you a you, remind and also of lot potential And of overlay land to a uses you various between have have products.

that so -- we're And complexity managing that well. as

Paul Quinn

get on Okay. And another up look know, I basis. I areas increase down and don't the going think from of think credits as to the that get Do the then in the be pricing some log way you it a a sequestration you, current to material of Is that projects road? gets it sold, of deferred at maybe you take harvest. capture these terms

Mark McHugh

It be. certainly could

into of voluntary the saw a or carbon you If for example, carbon credits meaningful projects market. deferral sale forestry around

could or again, recognize relatively the for it that fiber But are be meaningful demand think of going all also I as biofuels. these bioenergy the at you look into that in industries emerging prospective still nascent stages.

again, seen but actually of we that around aviation we've a facilities and haven't types talk into sustainable biofuel bioenergy fiber facilities seen we of fuel, of facilities haven't so like -- those pull And yet. seen lot

about it start land exciting it what's When the terms together, or And all could aviation we that storage isolation, a carbon of So more meaningful at they for and capture any think or use just in be business. think them demand bioenergy confluence compounding again, of in effect, as in has of generally. opportunities for our fiber you for and I demand that right, to or think wood you fiber solar fuels. sustainable of again, us isolation, be these for look one into

currently, is -- that making So driving around is more land that's industry affecting market clearly much the our and obviously timberland values something M&A views it's this competitive.

of really size we're so prospects, still long the opportunities And the long-term to term. excited at these about point trying but we're

Paul Quinn

fair right, a lot. Thanks All enough.

Operator

will call Collin no turn Mings. are There I further the questions. now you. back to Thank over

Collin Mings

to contact thank you. questions. joining for like us follow-up with Please Thank us. everybody I'd any

Operator

Thank conference. This you. today's concludes

and ahead disconnect time. go at may this You

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