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Rayonier(RYN) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Rayonier Inc. and Rayonier, L.P., highlighting the significant gain from the sale of New Zealand operations and its impact on financial position Rayonier Inc. Financial Statements Rayonier Inc.'s Q2 2025 performance was significantly boosted by a $404.5 million gain from the New Zealand operations sale, leading to strong net income and a strengthened balance sheet Rayonier Inc. Consolidated Statement of Income Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Sales | $106,538 | $99,639 | +6.9% | | Operating Income | $14,545 | $4,547 | +219.9% | | Gain on sale of discontinued operations | $404,463 | $0 | N/A | | Net Income Attributable to Rayonier Inc. | $408,708 | $1,903 | +21,377.0% | | Diluted EPS | $2.63 | $0.01 | +26,200.0% | Rayonier Inc. Consolidated Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $892,256 | $303,065 | +194.4% | | Total Assets | $3,514,250 | $3,474,419 | +1.1% | | Total Long-Term Debt, Net | $844,905 | $1,044,410 | -19.1% | | Total Shareholders' Equity | $2,302,217 | $1,780,533 | +29.3% | Rayonier Inc. Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $88,687 | $107,627 | -17.6% | | Net cash provided by (used for) investing activities | $658,265 | ($47,445) | N/A | | Net cash used for financing activities | ($198,609) | ($125,078) | +58.8% | - The significant increase in cash from investing activities was driven by $687.6 million in net proceeds from the sale of discontinued operations (the New Zealand joint venture)27 Rayonier, L.P. Financial Statements Rayonier, L.P.'s financial statements largely mirror Rayonier Inc.'s due to consolidation, reflecting the same operational results and the significant gain from the New Zealand divestiture, with differences primarily in capital structure - The Operating Partnership's Consolidated Statements of Income and Cash Flows are substantively identical to Rayonier Inc.'s, as Rayonier Inc. operates as an UPREIT and consolidates Rayonier, L.P. for financial reporting103545 Rayonier, L.P. Net Income Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | | Sales | $106,538 | $99,639 | | Operating Income | $14,545 | $4,547 | | Net Income | $413,607 | $3,035 | | Net Income Attributable to Rayonier, L.P. Unitholders | $414,184 | $1,929 | Rayonier, L.P. Capital Structure (as of June 30, 2025) | Capital Component | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Redeemable Operating Partnership Units | $53,353 | $51,843 | | General partners' capital | $22,690 | $17,772 | | Limited partners' capital | $2,246,297 | $1,759,405 | | Total Capital | $2,302,217 | $1,780,533 | Notes to Consolidated Financial Statements Notes detail the $698.6 million New Zealand operations sale, segment performance with strong Real Estate offsetting Southern Timber weakness, debt compliance, and interest rate swap usage - On June 30, 2025, the company completed the sale of its 77% interest in its New Zealand operations for a purchase price of $710 million, receiving net proceeds of $698.6 million and recognizing a gain of $404.5 million. These operations are now reported as discontinued566566 Segment Adjusted EBITDA (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Southern Timber | $55,433 | $78,652 | -29.5% | | Pacific Northwest Timber | $13,304 | $10,637 | +25.1% | | Real Estate | $20,576 | $9,090 | +126.3% | | Trading | ($560) | $28 | N/A | | Total Adjusted EBITDA | $71,946 | $77,971 | -7.7% | Total Principal Debt Outstanding (as of June 30, 2025) | Debt Instrument | Principal Amount (in thousands) | | :--- | :--- | | Senior Notes due 2031 (2.75%) | $450,000 | | 2015 Term Loan (Variable) | $200,000 | | 2016 Incremental Term Loan (Variable) | $200,000 | | 2021 Incremental Term Loan (Variable) | $200,000 | | Total Principal Debt | $1,050,000 | - The company uses interest rate swaps with a notional amount of $600 million to hedge its exposure on its variable-rate term loans, effectively converting them to fixed-rate obligations132137 - The company repurchased approximately 1.5 million common shares for $34.9 million during the second quarter of 2025258 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights the $404.4 million gain from the New Zealand sale, improved liquidity, strong Real Estate performance offsetting Southern Timber weakness, and an optimistic outlook for timber and real estate markets Consolidated Results and Segment Performance Consolidated net income surged due to the $404.4 million New Zealand sale gain, with Real Estate driving Adjusted EBITDA growth from continuing operations, offsetting Southern Timber's decline - Southern Timber performance declined in Q2 2025, with a 5% decrease in harvest volume and a 14% drop in weighted-average net stumpage realizations, driven by softer mill demand and competing supply from salvage timber238 - Pacific Northwest Timber operating income improved to $1.6 million from a loss of $1.5 million in the prior year, benefiting from a 6% increase in domestic sawtimber prices and better cost management, despite a 15% volume decrease240 - The Real Estate segment had a strong quarter, with sales increasing to $29.4 million from $15.5 million YoY. This was driven by significant Improved Development sales in the Heartwood and Wildlight projects and a large Unimproved Development sale in Florida242243244 - The company recognized a $404.4 million gain on the sale of its New Zealand joint venture, which is reported under discontinued operations256 Liquidity and Capital Resources Liquidity significantly strengthened to $892.3 million cash due to the New Zealand asset sale, improving the debt-to-capital ratio to 31%, with sufficient funding for the next 12 months Key Liquidity Metrics | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $892.3 million | $303.1 million | | Total debt (principal) | $1,050.0 million | $1,050.0 million | | Debt to capital ratio | 31% | 36% | | Net debt to enterprise value | 4% | 16% | - Cash provided by investing activities for the first six months of 2025 was $658.3 million, mainly due to $687.6 million in net proceeds from the sale of the New Zealand joint venture268 - During Q2 2025, the company repurchased 1.5 million shares for $34.9 million. Year-to-date, repurchases totaled 1.6 million shares for $37.6 million258259 - The company expects 2025 capital expenditures to be between $52 million and $56 million, and real estate development investments to be between $23 million and $27 million275276 Outlook Management anticipates improved second-half 2025 performance, with modestly higher harvest volumes and prices in Southern and Pacific Northwest Timber, and significant Real Estate closing activity - Southern Timber: Expects materially higher volumes and modestly higher pine net stumpage realizations in the second half of 2025 compared to the first half260 - Pacific Northwest Timber: Expects weighted-average log pricing to be modestly higher in the second half of the year261 - Real Estate: Remains encouraged by the transaction pipeline and expects significant closing activity over the balance of the year261 Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk on its $600 million variable-rate debt via swaps, effectively converting it to fixed-rate, and discloses fair value sensitivity of its $450 million fixed-rate debt - The company has $600 million of variable-rate debt, which is fully hedged by an equal notional amount of interest rate swaps, mitigating exposure to interest rate fluctuations298299 - A hypothetical one-percentage point increase or decrease in interest rates would result in no change to interest payments on the company's variable-rate debt over a 12-month period due to the hedges in place299 - The fair value of the company's $450 million of fixed-rate debt was estimated at $398.3 million as of June 30, 2025. A hypothetical 1% increase in interest rates would decrease its fair value by approximately $20 million300 Controls and Procedures Management concluded that disclosure controls and procedures for both Rayonier Inc. and Rayonier, L.P. were effective as of June 30, 2025, with no material changes in internal control - For both Rayonier Inc. and Rayonier, L.P., management concluded that disclosure controls and procedures were effective as of June 30, 2025306310 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls307311 PART II - OTHER INFORMATION Legal Proceedings The company is involved in various lawsuits and claims arising in the normal course of business, none of which are expected to have a material adverse effect on its financial position - The company is a defendant in various lawsuits and claims arising in the normal course of business, which are not expected to have a material adverse effect on its financial position, results of operations, or cash flow149312 Unregistered Sales of Equity Securities and Use of Proceeds Rayonier repurchased 1.5 million common shares for $34.9 million in Q2 2025, with $262.4 million remaining under its share repurchase program, and issued shares for Operating Partnership units Q2 2025 Share Repurchases | Metric | Value | | :--- | :--- | | Total Shares Purchased (Public Program) | 1,472,928 | | Average Price Paid per Share | ~$23.71 | | Total Cost | ~$34.9 million | | Remaining Authorization (as of June 30, 2025) | $262.4 million | - The company issued 9,519 common shares in exchange for an equal number of Operating Partnership units during the quarter313 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025319 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications for both entities and financial statements in iXBRL format - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer for both Rayonier Inc. and Rayonier, L.P. (Exhibits 31.1, 31.2, 31.3, 31.4, 32.1, 32.2)320 - Financial statements and notes are filed in Inline Extensible Business Reporting Language (iXBRL) format (Exhibit 101)320