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

prior-year quarter respectively. The reduction in volume was expected after record-level stumpage removals in the first quarter. Further, we typically see lower volumes in the spring as many mills take maintenance downtime and wetter weather often limits the operability of lands. The average pine pulpwood stumpage price of $17.16 per ton was 4% unfavorable compared to the prior quarter, but 7% favorable compared to the prior-year quarter. The reduced price, compared to the prior quarter, was primarily the result of geographic mix, coupled with some softening in markets in our Gulf States region. Compared to the prior-year quarter, pulp prices in all markets were favorable, which was primarily driven by wet ground conditions at the beginning of the year restricting supply.

The average pine sawtimber price of $25.82 per ton was 2% unfavorable to both the prior quarter and prior-year quarter. The slight decline in pricing, compared to the prior quarter, was primarily due to a reduction in export prices as domestic pricing was relatively stable. In comparison to the prior-year quarter, the decline was due to geographic mix with an increased proportion of volume harvested in our Gulf States region.

Our non-timber income continued their impressive run in the second quarter with sales of $9 million. The team is on place for a record year with year-to-date non-timber revenue of $19 million, driven primarily by increased recreational license income and pipeline easement sales.

Now moving to the Pacific Northwest segment on Page 10. Adjusted EBITDA of $2 million was $1 million and $13 million unfavorable compared to the prior quarter and prior-year quarter respectively. Second quarter harvest volume of 250,000 tons was 12% and 33% lower than the prior quarter and prior-year quarter respectively. As I mentioned earlier, we continue to pullback harvest volumes in the second quarter in response to soft market conditions, resulting from the ongoing US-China trade dispute and weak lumber markets.

The average delivered sawtimber price of $78.35 per ton was flat compared to the prior quarter and 24% unfavorable compared to the prior-year quarter. Following the significant decline in pricing from the third quarter of last year when the trade war heated up, pricing has been relatively stable over the last three quarters. The average delivered pulpwood price of $42.26 per ton was 6% and 15% unfavorable compared to the prior quarter and prior-year quarter respectively. The change in pulpwood prices, compared to both periods, was driven primarily by reduced export demand for chips, yielding increased fiber supply for domestic mills.

Page 11 shows the results and key operating metrics for our New Zealand Timber segment. Adjusted EBITDA in the second quarter of $20 million was $2 million and $6 million unfavorable compared to the prior quarter and prior-year quarter respectively. The unfavorable variance, compared to the prior quarter, was due to lower export prices into China and lower non-timber revenue, partially offset by 13% higher volumes related to the timing of export shipments. The unfavorable variance, compared to the prior-year quarter, was due