Rayonier Inc. (NYSE:RYN) Q2 2019 Earnings Conference Call Transcript

Aug 08, 2019 • 10:00 am ET

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Rayonier Inc. (NYSE:RYN) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
David L. Nunes

lumber from beetle kill and windthrow salvage timber. While we believe export markets have generally stabilized and began to rebound, we're continuing to monitor the situation closely.

Lastly, our Real Estate segment delivered a strong quarter, driven by a significant unimproved development sale consisting of 784 acres at a price of over $18,000 per acre. As we've stated in the past, this business is all about premium, and we're very pleased that our real estate strategy is continuing to yield strong results that meaningfully augment our core Timberland returns.

Overall, I'm pleased with how our team navigated these various market challenges to deliver strong operational results during the quarter. Nevertheless, pricing dynamics in the Pacific Northwest and New Zealand continue to be unfavorable, relative to our expectations going into the year. Thus, we have revised our full-year guidance to reflect this. We now anticipate full-year adjusted EBITDA of $245 million to $265 million and earnings per share of $0.42 to $0.49.

And with that, let me turn it over to Mark to review our financial results.

Executive
Mark D. McHugh

Thanks, Dave.

Let's start on Page 5 with our financial highlights. Sales for the quarter totaled $185 million, while operating income was $31 million and net income attributable to Rayonier was $19 million or $0.14 per share. Pro forma EPS was also $0.14 per share as we had no pro forma items in the quarter.

Second-quarter adjusted EBITDA of $61 million was significantly below the prior-year quarter adjusted EBITDA of $111 million due to lower contributions from each of our timber segments as well as significantly-lower adjusted EBITDA on our Real Estate segment as the prior-year quarter included a $43 million non-strategic/Timberland transaction in Louisiana.

On the bottom of Page 5, we provide an overview of our capital resources and liquidity at quarter-end as well as a comparison to year-end. Our cash available for distribution or CAD for the first half of the year was $95 million, compared to $164 million in the prior-year period, primarily due to lower adjusted EBITDA as well as higher capital expenditures. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on Page 8 of the financial supplement.

We closed the quarter with $131 million of cash and $975 million of debt. Our net debt of $844 million represented 18% of our enterprise value based on our closing stock price at quarter-end.

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

Executive
David L. Nunes

Thanks, Mark. Doug Long, our Senior Vice President of Forest Resources is in China this week, so I'll be discussing our timber segment results in his absence.

We'll start on Page 9 with our Southern Timber segment. Adjusted EBITDA on the second quarter of $28 million was $14 million and $3 million unfavorable compared to the prior quarter and prior-year quarter respectively. Second quarter harvest volume of approximately 1.3 million tons was 34% and 14% lower than the prior quarter and