Rayonier Inc. REIT

Welcome and thank you for joining Ray and Ir's first quarter 2023 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 first 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 in Forms 10-K and 10-Q, followed with the SEC, lists 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 measures in our earnings release and supplemental materials. With that, let's start our teleconference with opening comments from Dave Nunes, our CEO. Dave?

Thanks, Colin. Good morning, everyone. First, I'll make some high-level comments before turning it over to Mark McHugh, President and Chief Financial Officer, to review our consolidated financial results. Then we'll ask Doug Long, Executive Vice President and Chief Resource Officer, 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 2023. For the first quarter, we generated a adjusted EBITDA of $55 million and pro forma net income of $1.1 million, or one cent per share. as our team navigated numerous market challenges. The total adjusted EBITDA generated by our timber segments collectively declined 30 percent relative to an extraordinarily strong first quarter 2022 amid weaker end market demand, continued macroeconomic headwinds, and the harvest disruptions associated with Tropical Cyclone Gabriel, which hit New Zealand's North Island in February. As anticipated, real estate closings were relatively light in the first quarter. However, our full-year real estate pipeline remains relatively strong, and we continue to expect that closing activity will be heavily weighted toward the second half of the year. Drilling down further in our operating segments, our southern timber segment generated first quarter adjusted EBITDA of $43 million, down $6 million from the prior year period. as weaker demand for pulp products and lumber, coupled with drier weather conditions, drove a 14 percent reduction in net stumpage prices. Both demand and pricing were impacted by softer market conditions during the quarter, as our customers worked through elevated log inventories and recalibrated for slower end market demand. Compared to less tensioned markets in the US South, the relative price elasticity in a majority of our markets translated to a sharper pullback in pricing from 2022 levels. However, our absolute pricing levels, EBITDA per acre and EBITDA per ton, remain very favorable compared to the US South overall. In our Pacific Northwest timber segment, first quarter adjusted EBITDA of $7 million was down $14 million from the prior year quarter. The decrease versus the prior year period was attributable to a 24% decrease in harvest volumes and a 12% decline in domestic saw timber prices. Overall, market conditions in the region softened due to weaker lumber demand and pricing, less tension from the export market, and general macroeconomic uncertainty. Given the pricing declines we saw during the quarter, we opted to defer some planned harvests until end market demand and mill inventories normalize. Turning to our New Zealand timber segment, first quarter adjusted EBITDA of $6 million declined $4 million versus the prior year quarter due to lower carbon credit sales, unfavorable foreign exchange impacts, and 7% lower harvest volumes resulting from the impacts of Cyclone Gabriel. While delivered export saw timber prices also declined by roughly 11%, stumpage realizations were relatively flat as shipping costs returned to more normalized levels. As it relates to Cyclone Gabriel, our thoughts go out to all of those who were affected by the storm. While we sustained some timber and property damage fortunately no rainier employees or contractors were injured by the storm during the quarter we completed our damage assessment and determined that a $2.3 million write off was necessary due to timber damage on roughly 2600 acres. From an operational standpoint, we also lost several production days during the first quarter. However, access to the forest has been restored, and we currently expect that much of this production will be recaptured by the end of the year. In our real estate segment, we generated adjusted EBITDA of $7 million for the first quarter, down $18 million from the prior year period, as higher weighted average per acre prices were more than offset by 76% fewer acres sold. Despite the increase in interest rates as compared to a year ago, demand for rural land remains strong, and we remain pleased by the favorable momentum in both our Wild Light and Heartwood development projects. With that, let me turn it over to Mark for more details on our first quarter financial results.