Rayonier Inc. REIT

Welcome and thank you for joining Rainier's second quarter 2020 teleconference call. At this time, all participants are in a listen-only mode. During the question and answer session, please press star 1 on your touchtone phone. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I will turn the meeting over to Mr. Mark McHugh, Senior Vice President and CFO. Sir, you may begin.

Thank you and good morning. Welcome to Rainier's Investor Teleconference covering second quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rainier.com. In these presentations, we include forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. Our earnings release and SEC filings list some of the factors that may cause actual results to differ materially from the forward-looking statements that we may make. They are also referenced on page 2 of our financial supplement. Throughout these presentations, we will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measure in our earnings release and supplemental materials. With that, let's start our teleconference with opening comments from Dave Nunes, President and CEO. Dave?

Thanks, Mark, and good morning, everyone. First, I'd like to point out that we are conducting this call from multiple locations, so bear with us as we move from speaker to speaker in addressing your questions. I will begin the call by making some high-level comments before turning it back over to Mark to review our consolidated financial results. Then we'll ask Doug Long, Senior Vice President, Forest Resources, to comment on our U.S. and New Zealand timber results. And following the review of our timber segments, Mark will discuss our real estate results as well as our outlook for the remainder of 2020. Before discussing our results for the quarter, I'd like to briefly update everyone on our ongoing response to the COVID-19 pandemic. We continue to contend with the challenges associated with the COVID-19 pandemic. Here at Rainier, we have responded by prioritizing the health and safety of our employees and contractors as well as their families while working to ensure business continuity. In mid-March, we implemented a work from home model for all U.S. office employees and instituted enhanced safety guidelines for field employees in an effort to do our part as a company to mitigate the spread of COVID-19. These measures have largely been effective in stemming the spread of this virus within our employee and contractor workforce and have allowed us to continue to supply our customers with logs and other products. Given the current state of the pandemic, we anticipate remaining in this mode in many of our locations through at least the end of the year and will likely not fully reopen our offices until a vaccine has been implemented or the number of new cases has dramatically subsided. In New Zealand, the government instituted a more stringent lockdown measure across a broader range of businesses, including forestry, beginning in late March and lasting through late April. which served to effectively end community spread of infections there. As a result, the New Zealand economy has fully reopened and our offices there are now operational. I'm very proud of how our employees have stepped up to keep our business running amid this pandemic while observing the necessary social distancing and safety protocols to mitigate the further spread of COVID-19. While this has been extremely disruptive to all aspects of life, I believe we are managing through it very well. With the closing of the Pope Resources transaction on May 8th, this quarter marks the first quarter that we are reporting the combined results of the two companies. Our team did a great job of both closing this transaction on an accelerated timeframe and in developing a thoughtful integration plan that effectively blended the best practices and considerable talent within each organization. All this work had to be completed under social distancing protocols associated with COVID-19, which is a tribute to the dedication and professionalism of both organizations. It also reinforced the strong cultural fit between our respective companies and we're all very excited about the future prospects of the combined organization. With that, I'd now like to switch gears and briefly discuss our quarterly results. For the second quarter, we reported adjusted EBITDA of $79 million and pro forma net income of $15 million or 11 cents per share. Overall, I'm pleased with how our team navigated very challenging market conditions amid the COVID-19 pandemic to deliver strong operational results across all segments. This is a tribute to both the diversity of our market exposure across our various segments, as well as the dedication of our outstanding employees. Our southern timber segment reported adjusted EBITDA of $26 million for the quarter, slightly below the prior year strong quarter, which was driven by substantial pipeline easement revenue. Second quarter results were aided by both volumes that were up 20% relative to the prior year quarter and stronger saw log markets towards the end of the quarter, driven by strong lumber pricing and resurgent export markets. Our southern timber segment continues to enjoy very high margins and relatively low cash flow volatility. In our Pacific Northwest timber segment, we achieved adjusted EBITDA of $4 million, up substantially from the prior year quarter on the strength of significantly higher volumes from Rainier legacy lands, as well as the addition of 55,000 tons of volume from the Pope Resources assets. We further enjoyed much stronger Log prices towards the end of the quarter driven by stronger lumber pricing, a resumption of normalized log export activity, and the improved species mix from the poke resources acquisition. In our New Zealand timber segment, we reported a adjusted EBITDA of $10 million, which is roughly half the level of our prior year quarter. The primary driver was a 23% reduction in volume based on the loss of over a month's worth of production associated with the strict New Zealand government lockdown measures put in place to contend with the impacts of COVID-19. Log pricing for both export and domestic markets was also off due to both the buildup of log inventories in China and a weaker New Zealand dollar. Lastly, our real estate segment, as anticipated last quarter, reported very strong second quarter adjusted EBITDA of $45 million, driven by the sale of 20,000 acres comprising of a mix of rural, development, and non-strategic parcels. We continue to be encouraged by the stability and demand across all sales categories within our real estate segment. With that, let me turn it back over to Mark to review our financial results as well as some changes that we've made to our financial disclosures this quarter.