Rayonier Reports Third Quarter 2016 Results

Rayonier Inc. (NYSE:RYN) today reported third quarter net income attributable to Rayonier of $39.4 million, or $0.32 per share, on revenues of $171.4 million. This compares to net income attributable to Rayonier of $19.7 million, or $0.16 per share, on revenues of $151.7 million in the prior year quarter. The third quarter results include $1.2 million of costs related to shareholder litigation. 1 The prior year third quarter results included $1.5 million of costs related to shareholder litigation 1 and $0.4 million of expense related to the write-off of capitalized financing costs in connection with new credit facilities. Excluding these items, pro forma net income 2 was $40.6 million, or $0.33 per share, versus $21.6 million, or $0.17 per share, in the prior year period.

The following table summarizes the current quarter and comparable prior year period results on an actual and pro forma basis:
         
Three Months Ended
September 30, September 30,
(millions of dollars, except earnings per share (EPS)) 2016 2015
$ EPS $ EPS
 
Revenues $171.4   $151.7  
 
Net income attributable to Rayonier $39.4 $0.32 $19.7 $0.16
Costs related to shareholder litigation 1 1.2 0.01 1.5 0.01

Expense related to the write-off of capitalized financing costs
    0.4  
Pro forma net income 2 $40.6   $0.33   $21.6   $0.17

Third quarter operating income was $49.7 million versus $27.8 million in the prior year period. The third quarter operating income includes $1.2 million of costs related to shareholder litigation. 1 The prior year third quarter operating income included $1.5 million of costs related to shareholder litigation. 1 Excluding this item, pro forma operating income 2 was $50.9 million versus $29.3 million in the prior year period. Third quarter Adjusted EBITDA 2 was $87.2 million versus $65.8 million in the prior year period.

The following table summarizes operating income (loss), pro forma operating income (loss) 2 and Adjusted EBITDA 2 for the current quarter and comparable prior year period:
             
Three Months Ended September 30,
Pro forma
Operating Income Operating Income
(Loss)

(Loss) (2)

Adjusted EBITDA (2)
(millions of dollars) 2016 2015 2016   2015 2016 2015
Southern Timber $8.2 $10.5 $8.2 $10.5 $18.2 $24.9
Pacific Northwest Timber (3.3 ) 3.1 (3.3 ) 3.1 3.4 7.3
New Zealand Timber 6.6 (0.9 ) 6.6 (0.9 ) 12.6 6.1
Real Estate 43.1 20.0 43.1 20.0 56.6 30.9
Trading 0.5 0.4 0.5 0.4 0.5 0.4
Corporate and other (5.4 ) (5.3 ) (4.2 ) (3.8 ) (4.1 ) (3.8 )
Total $49.7   $27.8   $50.9   $29.3   $87.2   $65.8  

Year-to-date cash provided by operating activities was $163.9 million versus $143.4 million in the prior year period. Year-to-date cash available for distribution (CAD) 2 of $123.5 million increased $22.6 million versus the prior year period primarily due to higher Adjusted EBITDA 2 ($27.4 million), partially offset by higher cash interest paid ($1.7 million), higher cash taxes paid ($0.1 million) and higher capital expenditures ($3.0 million).

"Our strong overall results this quarter reflect the balance and diversity of our portfolio, as favorable Real Estate and New Zealand Timber results more than offset the impact of lower harvest volumes across all our regions," said David Nunes, President and CEO. "Southern Timber volumes decreased 23% relative to the prior year quarter as our ability to harvest in Texas and Louisiana continued to be hampered by wet ground conditions from heavy rainfall, and as we reduced volumes in certain eastern markets following unseasonably dry weather, which led to higher mill inventories and softer market conditions. Average stumpage prices in Southern Timber increased by 1%, primarily due to geographic mix. In the Pacific Northwest, harvest volumes decreased 32% relative to the prior year quarter, partially offset by a 3% increase in average domestic and export sawtimber prices. New Zealand Timber results were well above the prior year quarter even though harvest volumes were 23% lower. This performance improvement was driven by an 18% increase in export prices, reflecting strong demand from China for Radiata pine logs, as well as a 25% increase in domestic sawtimber prices as a result of solid domestic demand and a strengthening of the New Zealand dollar. Real Estate results were significantly above the prior year quarter due to a large Non-Strategic / Timberland sale in Georgia and continued strong demand for Rural HBU properties."

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