Rayonier Inc. REIT

Welcome and thank you for joining Rainier's second quarter 2021 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 would like to turn the meeting over to Mr. Colin Mengs, Vice President, Capital Markets and Strategic Planning.

Thank you and good morning. Welcome to Ray Anear's Investor Teleconference, covering second quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rayanear.com. I would like to remind you that in these presentations, we include forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. Our earnings release and Form 10-K, followed by the SEC, list some of the factors that may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on page two 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, Colin, and good morning, everyone. First, I'll make some high-level comments before turning it over to Mark McHugh, Senior Vice President and Chief Financial Officer, 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 balance of 2021. We are pleased to report that the encouraging momentum we experienced across all our businesses to start 2021 continued into the second quarter. Specifically, we generated adjusted EBITDA of $95 million and pro forma EPS of 22 cents per share. Adjusted EBITDA exceeded the prior year quarter by 21% as favorable results in each of our timber segments more than offset lower adjusted EBITDA in the real estate segment. As we reflect on the second quarter, the operating environment was markedly improved as compared to the prior year period. We're pleased with how our team continues to capitalize on strong domestic lumber markets, improving real estate market trends and export market opportunities. As Mark will discuss in greater detail, based on our solid first half results and our expectations for the balance of the year, we are modestly raising our 2021 adjusted EBITDA guidance. Drilling down to our different operating segments, Our southern timber segment generated a just-a-dee-ba-dah of $31 million for the quarter, which was 16% above the prior year second quarter. Net stumpage prices increased 14%, which more than offset a 4% reduction in harvest volumes as wet weather conditions impacted productions across the south. In our Pacific Northwest timber segment, we achieved adjusted EBITDA of $14 million, an improvement of $10 million versus the prior year quarter. This sharp increase in adjusted EBITDA was driven by a 30% increase in delivered saw timber prices, stemming from favorable domestic market, domestic lumber markets and increased log export demand, as well as higher volumes following the merger with Pope Resources. In our New Zealand timber segment, second quarter adjusted EBITDA nearly tripled to $28 million. The year over year increase in adjusted EBITDA was due to both significantly higher harvest volumes as the second quarter of 2020 was severely impacted by COVID-19 related headwinds and weighted average log prices that increased 51% as a result of robust export and domestic log demand. In our real estate segment, We generated adjusted EBITDA of $29 million, down from $45 million in an exceptionally strong period last year. The decline versus the prior year quarter was driven by a 61% reduction in acres sold, partially offset by significantly higher per acre prices. Importantly, our real estate team closed significant transactions in both our Wild Light and Belfast Commerce Park development projects during the quarter. Switching gears from second quarter results, I'd like to provide an update on the timber fund business that we acquired last year through our merger with Pope Resources. Two weeks ago, we announced that we had sold the rights to manage two of the timber funds, as well as our co-investment stake in both of these funds. The aggregate purchase price was $35.9 million and the transaction will be reflected in our third quarter financial results. As we had previously communicated, the private equity timber funds business was not a long-term strategic fit for Rainier. We believe this transaction reflects a favorable outcome for our shareholders as it allows us to simplify our operations and allocate capital to other strategic priorities. Following this transaction, we continue to manage as well as own a 20% co-investment stake in one timber fund comprising 31,000 acres in the Pacific Northwest. Since this fund is at the end of its investment term, it was not included in the sale transaction. Rather, we have commenced a process to liquidate the assets from this fund, which, if successful, will complete our exit from the fund business. With that, let me turn it over to Mark for more details on our second quarter financial results.