Rayonier Inc. REIT

Welcome and thank you for joining Ray and Nir's second quarter 2022 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 telephone keypad. 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. Colin Mings, 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 forms 10-K and 10-Q, followed with 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. 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 US 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 2022. We achieved earnings per share of 16 cents and adjusted EBITDA of $83 million in the second quarter. Adjusted EBITDA was 13% below the prior year quarter. as favorable results in our southern timber and Pacific Northwest timber segments were more than offset by lower adjusted EBITDA in our New Zealand timber and real estate segments. Drilling down further, our southern timber segment generated adjusted EBITDA of $39 million in the second quarter, which was 27% above the prior year period. Weighted average net stumpage realizations increased by 18%, driven by strong demand for both pulpwood and saw timber, while favorable logging conditions further contributed to a 4% increase in harvest volumes. The construction of our southern timberlands portfolio, with 73% of our ownership located in top quartile markets, helps us benefit from some of the most tensioned markets across the U.S. South, which in turn allowed us to register higher stumpage realizations despite increased cut and haul costs. In our Pacific Northwest timber segment, we achieved adjusted EBITDA of $14 million, up 3% from the prior year quarter. The year-over-year increase was primarily attributable to 19% higher weighted average log prices, partially offset by a 6% reduction in harvest volumes and higher costs. Our operations in the region continue to benefit from favorable domestic lumber markets as well as incremental tension created by export market demand. In sum, our U.S. timber segments continue to generate strong financial performance and pricing gains driven by favorable end market demand as well as localized supply tension and both segments are on pace to achieve record adjusted EBITDA for the full year. Conversely, our New Zealand segment continues to be impacted by various export market headwinds. Second quarter adjusted EBITDA of $15 million declined 46% from the prior year period, as our team contended with compressed margins due to significantly higher fuel, shipping, and port costs, coupled with lower delivered log pricing. export demand continued to be impacted by China's strict lockdown measures in response to a rise in COVID-19 cases, which in turn led to persistently high port inventories. In our real estate segment, we generated a adjusted EBITDA of $25 million, down from $29 million in the prior year period. and significantly higher per acre values in the current quarter were more than offset by a 41% reduction in acres sold. While the timing of land sales will remain lumpy quarter to quarter, our real estate team continues to capitalize on strong demand for rural land, as well as positive momentum across both our Wild Light and Heartwood development projects. As Mark will discuss in greater detail later in the call, we are updating our full year adjusted EBITDA guidance to $310 to $330 million. Following an excellent start to 2022, we are on track for a stronger year than we had originally anticipated in both our southern timber and Pacific Northwest timber segments and expect that both segments will post record years. In addition, our real estate segment outlook is fairly consistent with our prior guidance. However, in our New Zealand timber segment, export market headwinds have persisted longer than we had anticipated and have negatively impacted our full year outlook. Overall, the net impact of our revised outlook by segment translates to a modest reduction in the upper end of our total full year adjusted EBITDA guidance versus our prior guidance. With that, let me turn it over to Mark for more details on our second quarter financial results.