Rayonier Inc. REIT

Hello everyone, thank you for joining us and welcome to the Q2 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 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference call over to Collin Mings, Vice President of Capital Markets and Strategic Planning. Collin, please go ahead.

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. Thank you for joining us. Thanks, Colin. Good morning, everyone. Before turning to our second quarter results, I'd like to provide a brief update on our merger of equals with Potlatch Deltic, as well as the two Timberland transactions we announced yesterday, which further advance our portfolio optimization strategy.

Since closing the merger in late January, our team has moved quickly to optimize our organizational structure, capture operational efficiencies, and integrate the two companies' cultures into a shared foundation. We also signed a lease on our new corporate headquarters in Atlanta, which we expect to open in early 2027. I'm proud of our team's execution over the past six months. We've made significant progress on integration initiatives, and we remain on track to achieve our run rate synergies targets. Moving to the transactions we announced yesterday, last week we closed two Timberland transactions with Resource Management Service, or RMS. The transactions comprise the sale of approximately 36,000 acres in southwest Washington for $145 million and the concurrent acquisition of approximately 57,000 acres in Texas and Alabama for $146 million, subject to customary closing adjustments. The transactions were structured as a tax-efficient, like-kind exchange and are expected to be accretive to cash flow on a timber-only basis with further upside potential from HBU real estate sales and land-based solutions opportunities. These transactions reflect our continued focus on portfolio optimization as we look to concentrate our capital in markets with the strongest cash flow attributes and the most favorable long-term growth prospects. Notably, we're able to advance these objectives through a land exchange transaction rather than an outright acquisition, thereby preserving our future capital allocation flexibility. Now let's move on to our second 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. For the second quarter, Rainier reported gap earnings of $19 million, or $0.06 per share. Adjusting for pro forma items, the majority of which were related to the merger, net income was $32 million, or $0.10 per share. Adjusted EBITDA in the second quarter was $124 million, which was well above the prior year period, primarily due to the contributions from the Potlatch-Delta operations, along with solid operational performance across our segments. Moving on to our segment results, let's start on page nine with our southern timber segment. Adjusted EBITDA in the second quarter of $53 million was 85% above the prior year quarter as increased harvest volumes more than offset lower pricing. Total harvest volumes more than doubled versus the prior year quarter, primarily due to the addition of roughly 1.5 million tons of volume from the potlatch deltic timberland. Turning to pricing in the southern timber segment, recall the beginning last quarter, our reported pricing reflects delivered log prices rather than net stumpage realizations, consistent with the prevalent mode of sale across the combined portfolio. In saw log markets, demand was steady as lumber prices climbed throughout the second quarter. Looking ahead, we expect that sawmills in the US South will continue to gain market share from Canada and gradually increase production in response to a more favorable lumber pricing environment, which should support stronger saw log demand within our southern footprint. In pulpwood markets, challenging conditions persisted during the quarter. Demand remained subdued while historically dry weather across the U.S. South, coupled with salvage harvesting associated with the fires in Florida and Georgia, further added to supply. That said, we believe that pulpwood pricing has generally stabilized in our primary market areas and we're encouraged by recent gains in container board pricing as well as improved mill operating rates for our customers. As it relates to the fires in the U.S. South, approximately 9,300 acres of our timberlands in Georgia were affected. Following our assessment of the damage, we recorded a casualty loss of approximately $2 million in the second quarter, which was reflected as a pro forma item. Our team moved quickly to initiate salvage operations on the affected tracks, harvesting approximately 50,000 tons during the quarter. These efforts are now largely complete, and we do not expect any material impacts to our business moving forward. Moving on to our Northwest Timber segment on page 10, second quarter of Jessedy Bedop of $26 million was significantly above the $7 million reported in the prior year quarter. Harvest volumes more than doubled in the second quarter as compared to the prior year period, primarily due to the contribution of 360,000 tons of incremental harvest volume from Potlatch Deltax, Idaho Timberlands. Notably, harvest activity in Idaho was strong during the second quarter due to drier-than-normal weather conditions. Improving lumber prices also helped propel saw log prices higher in Idaho in the quarter, as a significant portion of our saw log sales in the state are indexed to lumber prices. Turning to wood products on page 11, this segment generated $25 million of adjusted EBITDA in the second quarter, which was above our expectations entering the quarter. Notably, this was the strongest quarterly adjusted EBITDA result that this segment has registered since Potlatch Delta's third quarter of 2022. Our average lumber price realization was $505 per MBF. and shipments totaled 314 million board feet in line with our prior guidance. Our average lumber price realization increased by roughly 18% from $427 per MBF in the first quarter, including the pre-merger period. The improvement in lumber markets during the second quarter was driven primarily by supply side factors as milk curtailments coupled with higher tariffs on Canadian imports have limited supply. In addition, industry-wide transportation challenges, especially the limited availability of flatbed trucking, have constrained the flow of lumber into certain markets. Thank you for joining us. against this backdrop overall demand was relatively stable and the seasonal price weakness following the spring building season that we saw in each of the past two years did not materialize this year in fact buyers generally encountered less available supply than anticipated during the quarter which supported pricing our home center business also remained healthy through the quarter which was encouraging as demand from this channel typically tapers off heading into the summer months Channel inventories remain at normal levels and pricing has remained fairly stable into the early part of the third quarter with supply and demand generally in balance. Moving to our real estate segment on page 12. In the second quarter, real estate revenue totaled $54 million on approximately 7,500 acres sold at an average price of $6,300 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 second quarter was $38 million, up $20 million from the prior year period. Within improved development, sales totaled $6 million. We continue to see broad-based demand at our Wildlight and Heartwood development projects, and activity remains on a favorable trajectory, reflecting the benefit of the investments we've made over the past several years in entitlements, infrastructure, and market development. Meanwhile, the Chenal Valley project in Little Rock, which is relatively more mature, remains well-positioned to provide a steady stream of cash flow moving forward. Moving to the rural category, second quarter sales totaled $41 million, consisting of nearly 7,500 acres sold at an average price of roughly $5,400 per acre. The most notable transaction was a 460-acre bolt-on sale to a solar developer for $4.6 million, or roughly $10,000 per acre. This sale underscores the continued interest we are seeing from solar developers across our southern land portfolios. Thanks, Mark. Moving to our capital resources and liquidity.