Rayonier Inc. REIT

Welcome and thank you for joining Ryanair's third quarter 2024 conference 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. You may go ahead.

Thank you and good morning. Welcome to Ray Anear's Investor Teleconference, covering third 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 filed 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're 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 Mark McHugh, our President and CEO. Mark?

Mark McHugh Thanks, Colin. Good morning, everyone. Before reviewing our results for the third quarter, I'd like to first discuss the Timberland dispositions we announced concurrent with our earnings release yesterday afternoon. Then I'll make some high-level comments on the quarter before turning it over to April Tice, Senior Vice President and Chief Financial Officer, to review our consolidated financial results. We'll then 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, April will discuss our real estate results and our outlook for the balance of the year. Yesterday afternoon, as part of our previously announced asset disposition and capital structure realignment plan, We announced completed and pending Timberland dispositions totaling 200,000 acres for an aggregate purchase price of $495 million. The total value represents an implied EBITDA multiple of 45 times the trailing three-year average EBITDA from these properties, illustrating what we continue to believe is a significant disconnect between private market Timberland values and the valuation implied by the company's share price. We expect that the Timberland dispositions will generate pro forma CAD per share accretion of approximately 9 percent, while also further concentrating our portfolio in markets with the strongest cash flow attributes and the most favorable long-term growth prospects. The Timberlands were sold through four separate transactions to high-caliber institutional investors and consist of approximately 91,000 acres in southeast Oklahoma and 109,000 acres on the Olympic Peninsula in northwest Washington. Three of these deals, which collectively comprise roughly 75 percent of the total proceeds, have already closed during the fourth quarter, and the remaining transaction is expected to close before the end of the year. Importantly, these dispositions are generating significant proceeds for deleveraging. Pro forma for the dispositions, we expect that leverage will decline to approximately 2.8 times net debt to pro forma justitiba da. We have already used $90 million of the proceeds to pay down our only unhedged floating rate debt, and the remaining proceeds will be used to further reduce leverage, return capital to shareholders, or fund other capital allocation priorities. As a result of these dispositions, we expect to make a special distribution to meet our REIT taxable income distribution requirements. We plan to announce the details of the special distribution before the end of the year. Since introducing our initiatives to enhance shareholder value last November, we have now completed or announced pending Timberland dispositions totaling $737 million, roughly three-quarters of our original $1 billion target. Our execution of this plan underscores our relentless focus on nimble capital allocation, active portfolio management, and prudent balance sheet management. Additional details regarding the dispositions and the pro forma impact for Rainier are provided in a supplemental presentation posted to our website. Now let's move on to our third quarter results. Overall, we generated third quarter adjusted EBITDA of $72 million and pro forma net income of $18 million, or 12 cents per share. The decline in adjusted EBITDA versus the prior year period was primarily attributable to a lower contribution from our New Zealand timber segment. Drilling down further on our timber segment operating results, our southern timber segment generated third quarter adjusted EBITDA of $38 million, which was comparable to the prior year period as significantly higher non-timber income was largely offset by a 13% decline in harvest volumes and 3% lower weighted average net stumpage realizations. In our Pacific Northwest timber segment, third quarter adjusted EBITDA of $9 million increased $1 million versus the prior year quarter, as a 10% increase in harvest volumes and favorable costs were partially offset by a 7% decrease in weighted average net stumpage realizations. Turning to our New Zealand timber segment, third quarter adjusted EBITDA of $15 million decreased $9 million versus the prior year quarter. The decrease in adjusted EBITDA was driven by lower carbon credit sales and a 16 percent decline in weighted average net stumpage realizations, primarily due to elevated shipping costs. In our real estate segment, we generated third quarter adjusted EBITDA of $20 million, up $1 million from the prior year period, as higher average per acre prices were partially offset by lower acres sold. Based on our year-to-date performance and our expectations for the balance of the year, we are updating our full year adjusted EBITDA guidance range to $275 to $290 million. This revision largely reflects the impact of the completed and pending dispositions discussed earlier, as we generally ceased harvesting operations on these timberlands around mid-year ahead of the sales process. With that, let me turn it over to April for more details on our third quarter financial results.