Rayonier Inc. REIT

Thank you for joining Ryanair's first quarter 2025 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.

Thank you and good morning. Welcome to Rainier's Investor Teleconference, covering first quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rainier.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'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?

Thanks, Colin. Good morning, everyone. First, I'll make some high-level comments before turning it over to April Tice, Senior Vice President and Chief Financial Officer, to review our consolidated financial results. Then Doug Long, Executive Vice President and Chief Resource Officer, will comment on our timber results. And following a review of our timber segments, April will discuss our real estate results and our outlook for the balance of the year. Before turning to our first quarter results, I'd like to touch on the pending sale of our New Zealand business. On March 10th, we announced that we had entered into an agreement to sell the entities holding our New Zealand joint venture interest to the Rahatan Group, or TRG, for $710 million, subject to closing adjustments. Our decision to exit New Zealand was not made lightly. Rainier's presence in New Zealand dates back to 1988, when the company first set up an export operation in the region. Over time, the value of our New Zealand portfolio has appreciated considerably, and the joint venture has contributed meaningfully to Rainier's growth and success. That said, the New Zealand business lacks meaningful synergies with our core U.S. operations, and we further believe that the value of this business hasn't been fully appreciated in the public markets. Therefore, we determined that it would be best for our shareholders to sell our ownership interest in the New Zealand joint venture and to focus our efforts on future growth opportunities within the United States. TRG is a well-regarded manager of forestry assets in the region, and we look forward to transferring the stewardship of this business to their organization in the coming months. The transaction remains on track to close in 2025, subject to the receipt of regulatory approvals and the satisfaction of other closing conditions. Consistent with the large dispositions we completed in 2023 and 2024, the New Zealand sale aligns with our previously stated goal of enhancing shareholder value by capitalizing on the disconnect between public and private Timberland values and reducing leverage in a higher interest rate environment. Further, exiting New Zealand will concentrate our capital in core U.S. Timberland markets with favorable long-term growth prospects, reduce our exposure to log export markets, and simplify and streamline our portfolio, financial reporting, and overall value proposition. As we shared in March, we anticipate using at least 50 percent of the sale proceeds from the New Zealand transaction to reduce leverage and return capital to shareholders through a combination of share purchases and a special dividend. The remaining proceeds are expected to be deployed opportunistically to fund capital allocation priorities, including additional share buybacks and potential reinvestment into synergistic acquisitions. As it relates to the special dividend, we currently anticipate distributing $1 to $1.40 per share in connection with the transaction, the details of which will be announced later this year following the closing of the sale. Similar to the special dividend we declared in December 2024, we expect that it will be paid in a combination of cash and common shares. With the announcement of the New Zealand transaction, We have now completed or announced pending dispositions to only $1.45 billion, significantly exceeding our original $1 billion target. By successfully executing on the asset disposition and capital structure realignment plan, we've strengthened our financial position, reduced our leverage, streamlined our portfolio, and better positioned Rainier for future growth. Moving to our first quarter financial results, excluding the contribution from New Zealand, which we are now classifying as discontinued operations, we generated adjusted EBITDA of $27 million and a pro forma net loss of $3 million, or two cents per share. The 39% decline in adjusted EBITDA versus the prior year quarter reflects lower results in our southern timber and real estate segments, partially offset by stronger results in our Pacific Northwest timber segment. First quarter results were negatively impacted by several factors, including the timing of real estate closings, challenging timber market conditions in the U.S. South, and reduced harvest volumes due to our 2024 disposition activities. In our southern timber segment, we generated first quarter adjusted EBITDA of $27 million, down from the prior year period as harvest volumes declined 21 percent and weighted average net stumpage realizations were down 19 percent. First quarter results reflect softer demand from mills, the continued impact of salvage volume in our Atlantic region, a shift in geographic mix to lower-priced regions, and reduced volume due to the large disposition we completed in Oklahoma during the fourth quarter of 2024. Overall, it's been a challenging start to the year for our US South timber operations, due in part to our sizable presence in regions impacted by Hurricane Helene, which led to a spike in salvage volume on the market over the last two quarters. However, we expect that both volumes and pricing will improve in the second half of the year as salvage efforts moderate and operating conditions normalize. In our Pacific Northwest timber segment, first quarter adjusted EBITDA of $6 million increased versus the prior year quarter as lower costs and higher net stumpage realizations more than offset an 18% decrease in harvest volumes due to the Washington dispositions we completed at the end of last year. Overall, we are pleased to see an increase in adjusted EBITDA in our Pacific Northwest timber segment despite a significant reduction in acreage and volume due to our recent dispositions, which underscores the relative quality of our residual portfolio there. In our real estate segment, closing activity was very light to start the year, consistent with our prior guidance. Our real estate segment generated adjusted EBITDA of $2 million in the first quarter, down $3 million from the prior year period. The lower contribution was driven by fewer acres sold partially offset by higher weighted average prices. Turning to our outlook for the balance of 2025, as April will discuss in greater detail later in the call, we are updating our full-year adjusted EBITDA guidance to $215 to $235 million, which excludes our New Zealand operations. Despite the relatively slow start to the year, we still anticipate consolidated full-year adjusted EBITDA results generally in line with our prior guidance after adjusting to the reclassification of our New Zealand business to discontinued operations. With that, let me turn it over to April for more details on our first quarter financial results.