Rayonier Inc. REIT

Welcome and thank you for joining REIT's fourth quarter and year-end 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 will turn the meeting over to Mr. Collin Mings Vice President, Capital Markets and Strategic Planning. Please go ahead.

Thank you and good morning. Welcome to Rayonier's Investor Teleconference covering fourth quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at Rayonier.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 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, Collin. 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 guidance for 2022. We concluded 2021 with solid operational results and are very pleased with our overall full-year financial performance. We achieved record full-year adjusted EBITDA results in both our southern timber and Pacific Northwest timber segments, despite contending with increased costs as well as volume constraints driven by inclement weather conditions. Our New Zealand timber segment achieved our third highest ever full-year adjusted EBITDA result, despite navigating a myriad of export market challenges and COVID-related headwinds during the course of the year. Meanwhile, in our real estate segment, we achieved the second highest adjusted EBITDA result and highest weighted average pricing since our separation into a pure play timber REIT. underscoring our focus on optimizing our portfolio and maximizing HBU premiums. We further achieved record improved development sales of roughly $52 million for the year. Overall for the full year, we generated GAAP EPS of $1.08 per share, pro forma EPS of $0.67 per share, and adjusted EBITDA of $330 million. While the pandemic continued to pose challenges throughout the year, we were able to achieve very strong results across the company, due in large part to the unwavering focus of our people, the relative strength of our markets, and our nimble approach to operational decision making. These factors, coupled with improving end market demand, are setting the foundation for another strong year in 2022. As Mark will discuss in greater detail, we're providing full-year 2022 adjusted EBITDA guidance of $310 to $340 million. Notably, the midpoint of our initial 2022 guidance is down only slightly from 2021, despite our expectation that the contribution from real estate activity will return to a more normalized level this year. Stepping back to the fourth quarter, we generated total adjusted EBITDA of $50 million and pro forma EPS of one cent per share. Drilling down to our different operating segments, our southern timber segment generated adjusted EBITDA of $34 million for the quarter, which was 44% above the prior year fourth quarter. We were encouraged to see net stumpage prices increase by 25% as well as a 14% increase in harvest volumes. In our Pacific Northwest timber segment, we achieved adjusted EBITDA of $13 million, down 8% from the prior year quarter. The year-over-year decrease was primarily attributable to higher costs partially offset by higher net stumpage prices and higher non-timber income. In our New Zealand timber segment, fourth quarter adjusted EBITDA fell to $10 million, down from $17 million in the prior year quarter. as higher pricing was more than offset by 9% lower production volumes and compressed margins due to significantly higher shipping costs. In our real estate segment, we generated adjusted EBITDA of $3 million, down significantly from $26 million in the prior year period, as a 90% reduction in acres sold was partially offset by a significant increase in weighted average prices. The moderation in real estate activity to end 2021 was anticipated following an exceptionally strong third quarter. Switching gears from fourth quarter results, I'd like to highlight the active quarter we had on the portfolio management front. As previously disclosed, we closed the final two transactions associated with our sale of the timber funds business during the fourth quarter and have now completely exited this business. In sum, we generated total proceeds to Rayonier of approximately $73 million through our divestiture of the timber funds business. We're very pleased to have successfully exited this business as it allows us to simplify our corporate structure and financial reporting. We're further pleased to have returned significant capital from this non-core asset at a favorable valuation relative to our initial underwriting in 2020. Additionally, we closed the acquisition of 66,800 acres in Texas and Georgia for $124 million, or roughly $1,860 per acre during the fourth quarter. These properties are positioned in strong timber markets with a diverse customer base, and we expect that they will generate a sustainable harvest of approximately 220,000 tons annually. The opportunistic use of our at-the-market Thank you for joining us today.