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Rayonier(RYN) - 2024 Q1 - Earnings Call Transcript
RYNRayonier(RYN)2024-05-03 02:25
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Financial Data and Key Metrics Changes - The company generated adjusted EBITDA of 56millioninthefirstquarter,slightlyupfrom56 million in the first quarter, slightly up from 55 million in the prior year period [18] - Pro forma net income was 7millionor7 million or 0.05 per share, with pro forma items including a 4.5millionpensionsettlementcharge[6][14]−Cashavailablefordistribution(CAD)forthefirstquarterwas4.5 million pension settlement charge [6][14] - Cash available for distribution (CAD) for the first quarter was 37 million, compared to 30millionintheprioryearperiod[7]BusinessLineDataandKeyMetricsChanges−SouthernTimbersegmentadjustedEBITDAwas30 million in the prior year period [7] Business Line Data and Key Metrics Changes - Southern Timber segment adjusted EBITDA was 45 million, up 2millionor52 million or 5% from the prior year, driven by a 6% increase in harvest volumes [4][9] - Pacific Northwest Timber segment adjusted EBITDA was 5 million, down 2millionfromtheprioryear,duetoa172 million from the prior year, due to a 17% reduction in harvest volumes and an 11% decline in weighted average log prices [4][19] - New Zealand Timber segment adjusted EBITDA was 11 million, an increase of 5millionfromtheprioryear,primarilyduetohighercarboncreditsales[20][22]MarketDataandKeyMetricsChanges−AveragedeliveredexportsawtimberpricesinNewZealanddeclined45 million from the prior year, primarily due to higher carbon credit sales [20][22] Market Data and Key Metrics Changes - Average delivered export sawtimber prices in New Zealand declined 4% compared to the prior year, constrained by ongoing challenges in China's property sector [21] - Pulpwood pricing in the U.S. South remained stable, with improved end market demand translating into stable pricing [10][19] - Weighted average stumpage prices fell 4% year-over-year to approximately 23 per ton, driven by a shift in geographic mix towards lower-priced areas [127] Company Strategy and Development Direction - The company is evaluating strategic alternatives for its New Zealand joint venture interest and has engaged a financial adviser for this process [5] - The company aims to achieve a 1billiondispositiontarget,activelymarketingapproximately115,000acresinWashingtonStateandidentifying100,000acresintheU.S.Southforpotentialsale[135][70]−Thecompanyisfocusedonexpandingitsland−basedsolutions,with33,000acresunderoptionforsolardevelopment,upfrom27,000acresattheendof2023[31][48]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutimprovingfundamentalsintimbersegmentsduetofavorabledynamicsinsingle−familyhousingandlowerloginventoriesinChina[40]−Thecompanyanticipatesachievingitsfull−yearadjustedEBITDAguidanceof1 billion disposition target, actively marketing approximately 115,000 acres in Washington State and identifying 100,000 acres in the U.S. South for potential sale [135][70] - The company is focused on expanding its land-based solutions, with 33,000 acres under option for solar development, up from 27,000 acres at the end of 2023 [31][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving fundamentals in timber segments due to favorable dynamics in single-family housing and lower log inventories in China [40] - The company anticipates achieving its full-year adjusted EBITDA guidance of 290 million to 325million,excludingpotentialimpactsfromassetsales[15][26]−ManagementnotedthatwhilethereissomeweaknessinSouthernYellowPinelumberpricing,theyexpectthisdiscounttonarrowovertime,leadingtoimproveddemandandpricingforsawtimber[106][108]OtherImportantInformation−Thecompanyreportedastrongbalancesheetwithanetdebttoenterprisevalueof19325 million, excluding potential impacts from asset sales [15][26] - Management noted that while there is some weakness in Southern Yellow Pine lumber pricing, they expect this discount to narrow over time, leading to improved demand and pricing for sawtimber [106][108] Other Important Information - The company reported a strong balance sheet with a net debt to enterprise value of 19% and plans to use cash on hand to pay down 150 million of debt [125] - Non-timber income in New Zealand increased by 3 million year-over-year, reflecting higher carbon credit sales [23] Q&A Session Summary Question: Can you talk about the progress on the land-based solutions side? - Management indicated that they are building out their pipeline for land-based solutions, particularly in carbon capture and solar, with a focus on high-quality counterparties [42][46] Question: How are you evaluating strategic options for the New Zealand business? - The company is assessing various options to reach its 1 billion disposition target, including potentially exiting its position in New Zealand [68][70] Question: What are your expectations for carbon credit prices in New Zealand? - Management noted that while prices have trended lower recently, they remain relatively strong from a historical perspective, and the regulatory backdrop has stabilized [71][82] Question: What is the outlook for Southern Yellow Pine pricing? - Management believes the current discount for Southern Yellow Pine compared to other species will eventually correct, driven by increased demand and supply dynamics [105][108]