Rayonier Inc. REIT

Welcome and thank you for joining Rainier's second 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 that time. Now I will turn the meeting over to Mr. Colin Ming, 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 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, and 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. In the second quarter, we generated adjusted EBITDA of $69 million and pro forma net income of $8 million, or 5 cents per share. Adjusted EBITDA generated from our timber segments collectively declined 13% to the prior year quarter, as favorable results in our southern timber segment were more than offset by lower adjusted EBITDA in our Pacific Northwest timber and New Zealand timber segments. In our real estate segment, we achieved adjusted EBITDA of $20 million, down from $25 million in the prior year quarter. Reeling down further on our operating segment results, our southern timber segment generated second quarter adjusted EBITDA of $44 million, up $5 million from the prior year period. The improvement versus the prior year period reflected a 32% increase in harvest volumes, primarily due to the acquisitions completed in late 2022. which more than offset a 14% reduction in net stumpage realizations due to weaker demand and drier weather conditions. In our Pacific Northwest timber segment, second quarter adjusted EBITDA of $7 million was down $7 million from the prior year quarter, driven by an 11% decrease in harvest volumes and a 19% decline in domestic saw timber prices. During the quarter, both domestic and export market demand remained relatively soft, which led us to defer some planned harvest volumes until mill inventories normalize and end market demand improves. Turning to New Zealand timber segment, second quarter adjusted EBITDA of $8 million declined $7 million versus the prior year quarter. The weaker results were driven primarily driven by lower carbon credit revenues as we chose to defer the sale of carbon units amid significant market volatility, lower net stumpage realizations reflecting weaker export and domestic markets compared to the prior year period, and unfavorable foreign exchange impacts. In our real estate segment, we generated adjusted EBITDA of $20 million in the second quarter, down $5 million from the prior year, as higher weighted average per acre pricing was more than offset by 20% fewer acres sold. Despite the increase in interest rates as compared to a year ago, demand for rural land continues to be strong, and we remain encouraged by the favorable momentum in both our wildlife and heartwood development projects. Overall, I'm pleased with how our team navigated the operating environment during the quarter in light of ongoing macroeconomic challenges. As Mark will detail later in the call, we're updating our full year total adjusted EBITDA guidance to a range of $275 million to $300 million, which represents a 4% reduction at the midpoint versus our original guidance and is largely consistent with the directional guidance update that we provided last quarter. Our revised guidance maintains a similar midpoint expectation as the original guidance for our southern timber segments. but reflects a lower contribution from our Pacific Northwest and New Zealand timber segments due to softer market conditions in both regions, as well as a lower contribution from carbon credit sales in New Zealand. However, we expect these reductions will be partially offset by a higher contribution from our real estate segment than we contemplated in our original guidance due to a much stronger than anticipated land sales market. With that, let me turn it over to Mark for more details on our second quarter financial results.