Yahoo Finance Rayonier Inc (RYN) (Q1 2024) Earnings Call Transcript Highlights: Navigating Market Challenges ...
Adjusted EBITDA: $56 million, up from $55 million in the prior year period.
Pro Forma Net Income: $7 million or $0.05 per share.
Revenue: $168 million for the first quarter.
Operating Income: $16 million.
Net Income Attributable to Rayonier: $1 million or $0.01 per share.
Cash Available for Distribution (CAD): $37 million, up from $30 million in the prior year period.
Net Debt to Trailing 12-Month Adjusted EBITDA: Approximately 4.1x.
Weighted Average Cost of Debt: Approximately 2.8%.
Real Estate Revenue: $16 million, with 1,900 acres sold at an average price of $5,800 per acre.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Adjusted EBITDA increased to $56 million, up from $55 million in the prior year, driven by stronger results in Southern Timber and New Zealand Timber segments.
Southern Timber segment saw a 6% increase in harvest volumes, boosting its adjusted EBITDA to $45 million.
New Zealand Timber segment's adjusted EBITDA rose by $5 million due to higher carbon credit sales and favorable foreign exchange impacts.
Cash available for distribution rose to $37 million, up from $30 million in the prior year, reflecting higher adjusted EBITDA and cash interest received.
The company is on track to meet its full year 2024 adjusted EBITDA guidance of $290 million to $325 million, excluding potential impacts from additional asset sales.
Negative Points
Net income attributable to Rayonier was only $1 million, indicating minimal profitability.
Real Estate segment's adjusted EBITDA was down $2 million from the prior year, with first quarter closings relatively light.
Pacific Northwest Timber segment's adjusted EBITDA decreased by $2 million due to a 17% reduction in harvest volumes and an 11% decline in weighted average log prices.
Export sawtimber prices in New Zealand decreased by 4%, reflecting ongoing challenges in China's property sector.
The company faces uncertainty with its $1 billion disposition target and strategic evaluations, including potential exits from New Zealand operations.
Q & A Highlights
Q: Can you talk a little more about the progress on the land-based solutions side, specifically regarding solar and CCS, and the expected impact on EBITDA over the next 2-5 years? A: Douglas M. Long, Executive VP & Chief Resource Officer, explained that the pipeline for land-based solutions, especially CCS and solar, is robust and growing. He highlighted that while there are incremental steps and a multiyear process for permitting and construction, they expect significant contributions to EBITDA in the 3-5 year horizon. Mark D. McHugh, President, CEO & Director, added that they aim for $75 million in adjusted EBITDA by 2030, with an interim target of $30 million by 2027. They are also seeing strong interest from various industries in their CCS projects and have increased their leased acres for CCS to 70,000, with discussions ongoing for an additional 200,000 acres.
Q: Are you looking at mostly leasing land for solar developments, or are you considering outright sales as well? A: Douglas M. Long clarified that for solar developments, they are primarily focusing on leasing the land as it is financially advantageous and preferred by many of their customers, who favor not making large upfront capital investments.
Q: With the slow offtake in China, have you seen any improvement in activity levels, or is it remaining steady? A: Douglas M. Long noted that while the broader Chinese economy is showing signs of strength, the property sector remains sluggish. However, there has been a notable increase in exports and manufacturing, which benefits Radiata pine from New Zealand due to its versatility. He also mentioned that log inventories at Chinese ports are decreasing, which historically leads to better pricing conditions.
Q: Does weak Southern Yellow Pine lumber pricing pose a risk to your U.S. South harvest volumes outlook for this year? A: Douglas M. Long acknowledged the potential impact but remains optimistic due to the flexibility in their operations to switch between lumber and pulpwood, depending on demand. He also mentioned that pulpwood customer operating rates have improved, which supports strong demand in that segment.
Q: Can you provide more details on the strategic options being considered for the New Zealand business and how this ties into your overall disposition strategy? A: Mark D. McHugh stated that they are exploring various strategic alternatives for their New Zealand operations, including a potential exit. This process is part of a broader strategy to reach a $1 billion disposition target, focusing on less strategic assets to optimize their portfolio and achieve new leverage targets.
Q: What are the dynamics and demand like in your development projects from homebuilders, especially considering the current interest rate environment? A: Mark D. McHugh reported strong and robust demand in their development projects, particularly in single-family residential sectors, including age-restricted communities. This demand is seen as a positive indicator for their development strategy moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
