Rayonier (RYN) Q1 2025 Earnings Call May 01, 2025 10:00 AM ET Company Participants Collin Mings - VP, Capital Markets and Strategic PlanningMark Mchugh - President & CEOApril Tice - Senior VP & CFODouglas Long - Executive VP & Chief Resource OfficerMatt McKellar - Vice PresidentKetan Mamtora - Director - Building Products Equity Research Conference Call Participants Anthony Pettinari - Analyst Operator Courtney. Did you guys have the Welcome, and thank you for joining Rayonier's First Quarter twenty twenty ...

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $27 million for the first quarter, a 39% decline compared to the prior year quarter, primarily due to lower results in the Southern Timber and Real Estate segments [8][9][14] - The net loss attributable to Rayonier was $3 million, or $0.02 per share, reflecting a challenging start to the year [13][14] - Cash available for distribution (CAD) decreased to $20 million from $31 million in the prior year period, driven by lower adjusted EBITDA [14][17] Business Line Data and Key Metrics Changes - In the Southern Timber segment, adjusted EBITDA was $27 million, down 21% in harvest volumes and 19% in weighted average net stumpage realizations [9][18] - The Pacific Northwest Timber segment saw adjusted EBITDA increase to $6 million, despite an 18% decrease in harvest volumes, due to lower costs and higher net stumpage realizations [10][22] - The Real Estate segment generated adjusted EBITDA of $2 million, down from $5 million in the prior year, attributed to fewer acres sold [11][26] Market Data and Key Metrics Changes - The Southern Timber segment faced challenging market conditions, with a 21% decline in harvest volumes and a 19% decrease in weighted average stumpage prices due to softer demand and increased salvage volume [9][19] - In the Pacific Northwest, average delivered domestic sawlog pricing increased by 7% to $91 per ton, driven by stronger demand from sawmills [22] - The overall market for timber remains impacted by economic uncertainty, with expectations for improved pricing in the second half of the year as salvage volume declines [20][34] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through the sale of its New Zealand business for $710 million, which will allow for capital concentration in core U.S. markets [4][5] - Rayonier plans to use at least 50% of the sale proceeds to reduce leverage and return capital to shareholders through share repurchases and a special dividend [6][7] - The company aims to streamline its portfolio and capitalize on growth opportunities in the U.S. timber market while reducing exposure to log export markets [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for improved market conditions in the second half of the year as salvage efforts moderate and operating conditions normalize [10][34] - The company anticipates full-year adjusted EBITDA guidance of $215 million to $235 million, excluding New Zealand operations, reflecting a generally stable outlook despite a slow start [12][29] - Management highlighted the long-term potential for growth in housing starts and lumber demand, despite current economic uncertainties [70][71] Other Important Information - The company has completed or announced asset dispositions totaling $1.45 billion, exceeding its original target of $1 billion [8] - The weighted average cost of debt was approximately 2.4%, with no debt maturities until 2026, positioning the company well for future capital allocation [17] Q&A Session Summary Question: How significant are labor constraints in logging and hauling today? - Management acknowledged that labor is a constant concern but noted improvements in productivity and sufficient labor availability to meet current demand [40][42] Question: Can you provide more color around the attractiveness of options for the New Zealand proceeds? - Management indicated that share repurchases remain a compelling use of capital, with $280 million remaining on the current repurchase authorization [43][44] Question: What is the outlook for lumber prices in response to higher Canadian import duties? - Management reported positive sentiment among sawmill customers, with some mills looking to secure more volume and potential price increases observed in recent negotiations [50][54] Question: Can you provide an update on natural climate solutions? - Management confirmed ongoing efforts in carbon capture and solar initiatives, with optimism about future developments in these areas [76][80]

Financial Data and Key Metrics Changes - Consolidated operating profit increased over 60% year-over-year, with net income rising by 7% and EBITDA increasing by 14% [5][12] - Operating profit for the first quarter of 2025 was $7,700,000 compared to $4,800,000 in the first quarter of 2024, while net income rose to $4,900,000 from $4,600,000 [12][14] - Adjusted EBITDA increased to $12,800,000 from $11,200,000 in the previous year [12][13] Business Line Data and Key Metrics Changes - The Coal Mining segment saw operating profit rise to $3,800,000 from an operating loss of $400,000 in the prior year, with segment adjusted EBITDA increasing to $5,800,000 from $1,800,000 [14] - North American Mining's operating profit decreased to $2,000,000 from $2,400,000, while segment adjusted EBITDA remained comparable at $4,700,000 [15] - Minerals Management's operating profit was stable at $7,900,000, with adjusted EBITDA increasing to $9,800,000 from $8,900,000 [16] Market Data and Key Metrics Changes - The coal mining segment's improvement was attributed to higher pricing and increased customer demand, particularly at Falkirk and Mississippi Lignite Mining Company [6][7] - North American Mining faced reduced customer demand, impacting operating profit, but is expected to improve in the second half of 2025 [8][17] Company Strategy and Development Direction - The company is optimistic about the regulatory environment for fossil fuels, with recent executive orders supporting coal and fossil fuel development [7][44] - The company is focusing on expanding its portfolio in Minerals Management and anticipates continued profitability in this segment [11][18] - The company is exploring solar initiatives, particularly on reclaimed mine land, to diversify its energy offerings [90][93] Management's Comments on Operating Environment and Future Outlook - Management views 2025 as a pivotal transition year, with expectations for moderate year-over-year increases in consolidated operating profit [12][19] - The company anticipates a return to normal operating levels at Mississippi Lignite Mining Company, although a reduction in sales price is expected to offset some improvements [17] - Management expressed confidence in the long-term growth potential of the mitigation resources business despite its current lumpiness [76] Other Important Information - The company has consolidated cash of approximately $62,000,000 and debt of $96,000,000 as of March 31, 2025 [20] - A significant noncash settlement charge is anticipated upon the termination of the defined benefit pension plan, which will impact net income [19] Q&A Session Summary Question: Can you explain the recurring inventory charges at Mississippi Lignite? - Management explained that inventory impairment is due to high-cost coal from inefficiencies and a lower adjustment in price based on a formula that considers historical indices [25][28] Question: What are the practical implications of a more favorable regulatory environment? - Management noted that the administration is focused on developing U.S. fossil fuel resources, which includes executive orders aimed at supporting coal [43][44] Question: Is there a way to track expansion in the mitigation resources business? - Management acknowledged the lack of a clear metric but confirmed that the business is growing rapidly [78][81] Question: What progress has been made on the solar initiative? - Management indicated ongoing development of solar projects, particularly on reclaimed mine land, while navigating uncertainties around tax credits [90][93]