Rayonier Inc. REIT

Hello, everyone. Thank you for joining us and welcome to Q1 2026 Rainier Inc. Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Colin Mings, Vice President of Capital Markets and Strategic Planning. Colin, please go ahead.

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 and forms 10-K and 10-Q, followed by 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. Before turning to our first quarter results, I'd like to provide a brief update on the merger of equals with Potlatch Deltic. Since closing the transaction ahead of schedule in late January, our team has hit the ground running on integration efforts. I'm extremely proud of the collaboration and dedication that our people have shown as we work to align our cultures and business processes across the combined organization. The momentum we built in such a short time gives me great confidence in the value this combination will deliver for our shareholders and other stakeholders. Our leadership team has also made significant progress in optimizing our organizational structure and implementing changes that will drive meaningful overhead cost savings and operational efficiencies over time. We continue to expect $40 million of annual run rate synergies within 24 months of closing, with at least half of that achieved by the end of the first year. Since closing the merger, we've made significant progress toward these objectives, and we remain on track to achieve our synergies targets. Also, as it relates to the merger, we announced in late March that after completing a thorough review of alternatives, we would maintain the Rainier name, while also introducing a refreshed corporate logo that reflects the beginning of a new era as a combined company. During this review, we considered the rich history and established market presence of both the Rainier and Potlatch Delta corporate brands among customers, investors, and other stakeholders. We ultimately concluded that retaining the Rainier name would best position us to leverage our strong brand equity among stakeholders while also mitigating the cost, complexity, and potential risk of confusion in adopting an entirely new corporate identity. Now let's move to our first quarter results. I'll start with a review of our overall financial results, as well as our segment level performance, after which Wayne will review key liquidity and balance sheet metrics, as well as our outlook for the balance of the year. Please note that our first quarter results captured two months of post-merger contribution from the legacy potlatch Deltic operations following the January 30th closing of the merger. In addition, as a result of the merger, Our portable business segments have been updated to include a new wood product segment, which reflects Potlatch Delta's legacy lumber and plywood operations. For the first quarter, Rainier reported a gap loss of $12 million, or 5 cents per share. Adjusting for pro forma items, all of which were related to the merger, net income was $17 million, or 7 cents per share. Adjusted EBITDA in the first quarter was $94 million, which was well above the $27 million reported in the prior year period, primarily due to the contribution from the Potlatch-Deltic operations, along with strong operational performance across our segments. Moving on to our segment results, let's start on page 8 with our southern timber segment. Adjusted EBITDA in the first quarter of $46 million was 68% above the prior year quarter, as increased harvest volumes more than offset lower net stumpage realizations. Total harvest volumes increased 76% versus the prior year quarter, primarily due to the addition of roughly 1 million tons of volume from the potlatch deltic timberlands. As it relates to pricing in the southern timber segment, please note that we have revised our price reporting to reflect delivered log prices rather than net sumpage realizations to reflect the prevalent mode of sale in our southern timber operations following the merger. Also, as we discussed last quarter, our reported pricing in the south is lower as compared to the prior year standalone realizations for Rainier, largely due to the geographic mix shift associated with the merger. In grade log markets, demand was steady as lumber prices rose throughout the first quarter following capacity curtailments last year. As we move forward, we are optimistic that some local markets will see improved demand as sawmills potentially ratchet up production in response to a more favorable lumber pricing environment. In pulpwood markets, conditions remained challenging during the quarter as weaker demand following mill closures and maintenance downtime was compounded by historically dry weather conditions across the U.S. South. which allowed for the harvesting of typically inaccessible sites. As anticipated, this combination of increased supply and weaker demand resulted in continued pricing pressure to start the year. On a positive note, end product pricing for many of our pulp and packaging mill customers has improved following recent supply rationalization, which should contribute to some stabilization of demand going forward. I also want to touch briefly on the recent forest fires in the US South. First and foremost, our thoughts go out to the individuals and communities affected by these tragic events. Over the past couple of weeks, Rainier has been working alongside neighboring landowners and state and federal agencies to help contain the fires. To date, we have sustained property damage on roughly 10,000 acres, primarily in Georgia. Our team is actively assessing the impact and preparing to commence remediation and salvage operations on the affected tracks as conditions allow. Based on the fire activity to date and our preliminary assessment, we do not currently expect the fires to have a significant financial or operational impact to our business. Moving on to our Northwest timber segment on page nine. First quarter of Jesse Bedop of $9 million was 45% above the prior year quarter. Harvest volumes increased 38% in the first quarter as compared to the prior year period, primarily due to the contribution of 116,000 tons of incremental harvest volume from Potlatch-Deltax, Idaho Timberlands. Notably, harvest activity in Idaho was limited during the first quarter due to extended spring breakup conditions following a relatively mild winter. On a positive note, lumber pricing increased significantly throughout the first quarter in response to supply curtailments, which translated to an improved overall supply-demand balance. Moving forward, we expect some producers in the region to ramp up production in response to higher lumber prices, which should translate to positive log price momentum as well. Turning to wood products on page 10, this segment generated $7 million of adjusted EBITDA in the first quarter, modestly above our expectations for the two-month post-merger period. During this period, our average lumber price realization was $437 per MBF, and shipments totaled 199 million board feet. On a full quarter basis, including the pre-merger period, our average pricing was $427 per MBF, and shipments totaled 288 million board feet. Notably, our average lumber price realization rebounded by roughly 11% from an average of $384 per MBF in the fourth quarter for legacy potlatch Deltic. The improvement in the lumber market to start the year reflected the impact of reduced supply due to milk curtailments and higher tariffs on Canadian imports, as well as improved demand heading into the spring building season. This positive trajectory continued into mid-April. However, pricing in recent weeks across some products has moderated amid more balanced supply-demand dynamics. Moving to our real estate segment on page 11. In the first quarter, real estate revenue totaled $60 million on approximately 7,700 acres sold at an average price of $7,300 per acre. Sales increased significantly from the prior year quarter due to a higher number of acres sold, partially offset by a slightly lower average price per acre due to the sales mix. Real estate segment adjusted EBITDA in the first quarter was $46 million, up significantly from $2 million in the prior year period. Within improved development, sales totaled $7 million. Activity at our Wildlight and Heartwood development projects remains on a favorable trajectory as we continue to benefit from the investments we've made over the past several years in entitlements, infrastructure, and market development. Meanwhile, the Chenal Valley development project in Little Rock, Arkansas, which we added through the Potlatch-Deltic merger, further diversifies our platform and should remain a steady contributor to cash flow moving forward. Moving to the rural category, first quarter sales totaled $49 million, consisting of roughly 7,650 acres sold at an average price of nearly $6,500 per acre. The most notable transaction was a 2,200-acre sale to a solar developer, which exercised an option to purchase the property for nearly $23 million, or roughly $10,000 per acre. This sale underscores the continued interest we are seeing from solar developers across our southern land portfolios. Our pipeline of land under option for lease or sale to solar developers currently stands at approximately 80,000 acres. More broadly, overall sentiment in the rural land market also remains positive as we approach midyear. I'll now turn the call over to Wayne to cover key liquidity and balance sheet metrics, as well as our outlook for the balance of the year.