- Fourth quarter net income attributable
to Rayonier of $48.3 million ($0.39 per share) on revenues of
$220.5 million
- Fourth quarter pro forma net income of
$5.7 million ($0.05 per share) on pro forma revenues of $142.8
million
- Fourth quarter operating income of
$61.5 million, pro forma operating income of $18.9 million and
Adjusted EBITDA of $52.0 million
- Full-year net income attributable to
Rayonier of $212.0 million ($1.73 per share) on revenues of $788.3
million
- Full-year pro forma net income of $69.1
million ($0.56 per share) on pro forma revenues of $581.0
million
- Full-year operating income of $255.8
million, pro forma operating income of $112.9 million and Adjusted
EBITDA of $239.7 million
- Full-year cash provided by operations
of $203.8 million and cash available for distribution (CAD) of
$144.3 million
Rayonier Inc. (NYSE:RYN) today reported fourth quarter net
income attributable to Rayonier of $48.3 million, or $0.39 per
share, on revenues of $220.5 million. This compares to net income
attributable to Rayonier of $10.3 million, or $0.08 per share, on
revenues of $137.1 million in the prior year quarter. The fourth
quarter results included $42.6 million of income from a Large
Disposition.1 The prior year fourth quarter results included $1.0
million of costs related to shareholder litigation.2 Excluding
these items, pro forma net income3 was $5.7 million, or $0.05 per
share, on pro forma revenues of $142.8 million versus $11.3
million, or $0.09 per share, on pro forma revenues of $137.1
million 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 December 31, December
31, (millions of dollars, except earnings per share (EPS))
2016 2015 $ EPS $
EPS Revenues $220.5 $137.1 Large Dispositions1 (77.7
) — Pro forma revenues3 $142.8 $137.1
Net income attributable to Rayonier $48.3 $0.39 $10.3 $0.08 Costs
related to shareholder litigation2 — — 1.0 0.01 Large Dispositions1
(42.6 ) (0.34 ) — — Pro forma net income3 $5.7 $0.05
$11.3 $0.09
Full-year 2016 net income attributable to Rayonier was $212.0
million, or $1.73 per share, on revenues of $788.3 million. This
compares to net income attributable to Rayonier of $46.2 million,
or $0.37 per share, on revenues of $544.9 million in the prior
year. The full-year results included $2.2 million of costs related
to shareholder litigation,2 $1.2 million of gain on foreign
currency derivatives4 and $143.9 million from Large Dispositions.1
The prior full-year results included $4.1 million of costs related
to shareholder litigation2 and $0.4 million of expense related to
the write-off of capitalized financing costs. Excluding these
items, pro forma net income3 was $69.1 million, or $0.56 per share,
on pro forma revenues of $581.0 million versus $50.7 million, or
$0.40 per share, on pro forma revenues of $544.9 million in the
prior year.
The following table summarizes the current full-year and
comparable prior year results on an actual and pro forma basis:
Year Ended December 31, December 31,
(millions of dollars, except earnings per share (EPS))
2016
2015 $ EPS $ EPS
Revenues $788.3 $544.9 Large Dispositions1 (207.3 ) —
Pro forma revenues3 $581.0 $544.9 Net income
attributable to Rayonier $212.0 $1.73 $46.2 $0.37 Costs related to
shareholder litigation2 2.2 0.02 4.1 0.03 Gain on foreign currency
derivatives4 (1.2 ) (0.01 ) — — Large Dispositions1 (143.9 ) (1.18
) — — Expense related to the write-off of capitalized financing
costs — — 0.4 — Pro forma net income3 $69.1
$0.56 $50.7 $0.40
Fourth quarter operating income was $61.5 million versus $15.7
million in the prior year period. The fourth quarter operating
income included $42.6 million from a Large Disposition.1 The prior
year fourth quarter operating income included $1.0 million of costs
related to shareholder litigation.2 Excluding these items, pro
forma operating income3 was $18.9 million versus $16.7 million in
the prior year period. Fourth quarter Adjusted EBITDA3 was $52.0
million versus $47.6 million in the prior year period.
The following table summarizes operating income (loss), pro
forma operating income (loss)3 and Adjusted EBITDA3 for the current
quarter and comparable prior year period:
Three Months Ended December 31,
Pro forma Operating Income Operating
Income (Loss)
(Loss)3
Adjusted EBITDA3
(millions of dollars)
2016 2015 2016
2015 2016 2015 Southern Timber
$8.1 $12.0 $8.1 $12.0 $20.8 $24.9 Pacific Northwest Timber
(3.1 ) (0.4 ) (3.1 ) (0.4 ) 7.2 3.5 New Zealand Timber 11.7 (1.1 )
11.7 (1.1 ) 17.9 6.9 Real Estate 49.4 10.3 6.8 10.3 10.6 16.2
Trading 0.5 0.6 0.5 0.6 0.5 0.6 Corporate and other (5.1 ) (5.7 )
(5.1 ) (4.7 ) (5.0 ) (4.5 ) Total $61.5 $15.7 $18.9
$16.7 $52.0 $47.6
Full-year operating income was $255.8 million versus $77.8
million in the prior year. The full-year operating income included
$2.2 million of costs related to shareholder litigation,2 $1.2
million of gain on foreign currency derivatives4 and $143.9 million
from Large Dispositions.1 The prior year operating income included
$4.1 million of costs related to shareholder litigation.2 Excluding
these items, pro forma operating income3 was $112.9 million versus
$81.9 million in the prior year. Full-year Adjusted EBITDA3 was
$239.7 million versus $208.0 million in the prior year.
The following table summarizes operating income (loss), pro
forma operating income (loss)3 and Adjusted EBITDA3 for the current
full year and comparable prior year:
Year Ended December 31, Pro
forma Operating Income Operating Income
(Loss)
(Loss)3
Adjusted EBITDA3
(millions of dollars)
2016 2015 2016
2015 2016 2015 Southern Timber
$43.1 $46.7 $43.1 $46.7 $92.9 $101.0 Pacific Northwest
Timber (4.0 ) 6.9 (4.0 ) 6.9 21.2 21.7 New Zealand Timber 33.1 2.8
33.1 2.8 58.3 33.0 Real Estate 202.4 44.3 58.5 44.3 84.7 70.8
Trading 2.0 1.2 2.0 1.2 2.0 1.2 Corporate and other (20.8 ) (24.1 )
(19.8 ) (20.0 ) (19.4 ) (19.7 ) Total $255.8 $77.8
$112.9 $81.9 $239.7 $208.0
Full-year cash provided by operating activities was $203.8
million versus $177.2 million in the prior year. Full-year cash
available for distribution (CAD)3 was $144.3 million versus $117.4
million in the prior year. Full-year CAD increased $26.9 million
versus the prior year primarily due to higher Adjusted
EBITDA3($31.7 million), partially offset by higher cash interest
paid ($3.2 million), higher cash taxes paid ($0.2 million) and
increased capital expenditures ($1.4 million).
“We are pleased with our fourth quarter results as favorable
Pacific Northwest and New Zealand Timber results more than offset
the impact of lower harvest volumes in Southern Timber and reduced
land sales in Real Estate,” said David Nunes, President and CEO.
“Southern Timber volumes decreased 9% relative to the prior year
quarter as we exercised our discretion to defer harvest volume in
response to weaker market conditions. Average stumpage prices in
Southern Timber decreased 6% versus the prior year quarter,
primarily due to geographic mix and continued supply impacts from
extended dry weather conditions. In Pacific Northwest Timber,
harvest volumes increased 13% and average prices increased 9%
relative to the prior year quarter, largely driven by strong
results from our newly-acquired Menasha properties. New Zealand
Timber results were well above the prior year quarter, as continued
strong export and domestic demand drove significantly higher
pricing. Real Estate results, excluding the gain on the
previously-announced Large Disposition,1 were below the prior year
quarter due to the sale of fewer Non-strategic / Timberland acres,
partially offset by a timberland sale in Washington for roughly
$6,500 per acre.”
Southern Timber
Fourth quarter sales of $30.6 million decreased $5.5 million, or
15%, versus the prior year period. Harvest volumes decreased 9% to
1.29 million tons versus 1.41 million tons in the prior year
period, as harvest levels were deliberately reduced in response to
softer market conditions. Average sawtimber stumpage prices were
relatively flat at $26.75 per ton versus $26.76 per ton in the
prior year period, while average pulpwood stumpage prices decreased
13% to $15.83 per ton versus $18.24 per ton in the prior year
period. The decrease in average pulpwood prices was largely due to
geographic mix as well as increased supply caused by extended dry
weather along the east coast. Overall, weighted-average stumpage
prices (including hardwood) decreased 6% to $19.06 per ton versus
$20.36 per ton in the prior year period. Operating income of $8.1
million decreased $3.9 million versus the prior year period due to
lower volumes ($1.2 million), lower weighted-average stumpage
prices ($1.7 million), higher depletion rates ($1.0 million) and
lower non-timber income ($0.4 million), which were partially offset
by lower software and road maintenance costs ($0.4 million).
Fourth quarter Adjusted EBITDA3 of $20.8 million was $4.1
million below the prior year period.
Pacific Northwest Timber
Fourth quarter sales of $22.9 million increased $4.2 million, or
22%, versus the prior year period. Harvest volumes increased 13% to
356,000 tons versus 315,000 tons in the prior year period due to
additional volume from our recent Menasha acquisition, partially
offset by planned harvest deferrals in the fourth quarter from our
legacy Washington properties. Average delivered sawtimber prices
increased 13% to $74.97 per ton versus $66.27 per ton in the prior
year period, while average delivered pulpwood prices decreased 12%
to $39.62 per ton versus $44.93 per ton in the prior year period.
The increase in average sawtimber prices was due to an overall
strengthening of export and domestic sawtimber markets, combined
with additional volume from our newly-acquired Menasha properties,
which generally command a higher sawtimber price than our legacy
Washington properties. The decrease in pulpwood prices was
primarily due to the increased availability of wood chips in
certain market areas. Operating loss of $3.1 million versus $0.4
million in the prior year period was primarily due to higher
depletion rates resulting from the Menasha acquisition ($5.9
million) and lower non-timber income ($0.5 million), which were
partially offset by higher prices ($2.3 million), higher volumes
($0.3 million) and lower overhead and severance taxes ($1.1
million).
Fourth quarter Adjusted EBITDA3 of $7.2 million was $3.7 million
above the prior year period.
New Zealand Timber
Fourth quarter sales of $46.6 million increased $6.5 million, or
16%, versus the prior year period. Harvest volumes decreased 1% to
562,000 tons versus 568,000 tons in the prior year period. Average
delivered prices for export sawtimber increased 19% to $104.26 per
ton versus $87.35 per ton in the prior year period, while average
delivered prices for domestic sawtimber increased 30% to $77.41 per
ton versus $59.71 per ton in the prior year period. The increase in
export sawtimber prices was primarily due to stronger demand from
China. The increase in domestic sawtimber prices (in U.S. dollar
terms) was driven primarily by strong domestic demand for
construction materials and the rise in the NZ$/US$ exchange rate
(US$0.72 per NZ$1.00 versus US$0.66 per NZ$1.00). Excluding the
impact of foreign exchange rates, domestic sawtimber prices
increased 18% from the prior year period. Operating income of $11.7
million increased $12.8 million versus the prior year period due to
higher prices ($7.5 million), lower overhead and forest management
expenses ($0.3 million), favorable changes in foreign exchange
impacts ($1.4 million) and higher non-timber and other income ($3.7
million), which were partially offset by changes in volume/mix
($0.1 million).
Fourth quarter Adjusted EBITDA3 of $17.9 million was $11.0
million above the prior year period.
Real Estate
Fourth quarter sales of $88.1 million increased $67.6 million
versus the prior year period, while operating income of $49.4
million increased $39.1 million versus the prior year period. The
fourth quarter sales and operating income included $77.7 million
and $42.6 million, respectively, from Large Dispositions.1
Excluding Large Dispositions,1 pro forma sales and operating income
decreased in the fourth quarter due to reduced land sales (1,489
acres sold versus 9,193 acres sold in the prior year period), which
were partially offset by a significant increase in weighted-average
prices ($6,929 per acre versus $2,233 per acre in the prior year
period) and the receipt of a $4.7 million deferred payment with
respect to a prior land sale.
Unimproved Development sales of $3.3 million were comprised of
an 84-acre tract in St. John’s County, Florida for $39,385 per
acre.
Rural sales of $1.5 million were comprised of 504 acres at an
average price of $2,749 per acre.
Non-strategic / Timberland sales of $5.6 million were comprised
of 901 acres at an average price of $6,228 per acre, including a
sale of 816 acres in Washington for $6,495 per acre.
Large Dispositions1 of $77.7 million were comprised of the
previously announced disposition of 37,000 acres in Alabama and
Mississippi at an average price of $2,094 per acre.
Fourth quarter Adjusted EBITDA3 of $10.6 million was $5.6
million below the prior year period.
Trading
Fourth quarter sales of $32.3 million increased $10.6 million
versus the prior year period due to higher volumes and prices.
Sales volumes increased 30% to 321,000 tons versus 247,000 tons in
the prior year period. Average prices increased 14% to $100.41 per
ton versus $87.97 per ton in the prior year period. The increases
in both volumes and prices were primarily due to stronger demand
from China. Operating income of $0.5 million decreased $0.1 million
versus the prior year period.
Other Items
Fourth quarter corporate and other operating expenses of $5.1
million decreased $0.6 million versus the prior year period due to
lower costs related to shareholder litigation2 ($1.0 million),
which were partially offset by increased selling, general and
administrative expenses ($0.2 million) and other minor variances
($0.2 million).
Fourth quarter interest expense of $8.6 million increased $1.5
million versus the prior year period due to higher outstanding
debt, partially offset by lower average rates.
Fourth quarter income tax expense of $2.8 million was
principally related to the New Zealand JV.
Outlook
“In 2017, we expect to achieve net income attributable to
Rayonier of $66 to $72 million, pro forma net income of $39 to $45
million and Adjusted EBITDA of $220 to $240 million,” added Nunes.
“In our Southern Timber segment, we expect harvest volumes to be
slightly down compared to 2016 as we continue to flex regional
harvest volumes based on end market conditions. We continue to see
near-term headwinds in product pricing in certain markets due to
ample mill log inventories, relatively modest near-term growth in
new housing construction, and high levels of Canadian lumber
imports. However, we’re optimistic that pricing will improve over
the longer-term as we see incremental growth in housing starts and
a potential return to some form of managed lumber trade. In our
Pacific Northwest Timber segment, we expect a modest increase in
harvest volumes with a full-year contribution from the Menasha
acquisition as well as a modest improvement in sawtimber prices due
to increased regional manufacturing capacity. In our New Zealand
Timber segment, we expect a modest increase in volume and continued
strong pricing dynamics driven by solid demand in both domestic and
export markets. In our Real Estate segment, we remain highly
focused on unlocking the long-term value of our HBU development and
rural property portfolio. We continue to be encouraged by the
market interest in our Wildlight development project north of
Jacksonville, Florida, and we expect to realize our first sales
from this project in 2017.”
Conference Call
A conference call and live webcast will be held on Thursday,
February 9, 2017 at 10:00 AM EST to discuss these results.
Access to the live webcast will be available at
www.rayonier.com. A replay of the webcast will be archived on the
Company’s website and available shortly after the call.
Investors may listen to the conference call by dialing
800-369-1184 (domestic) or 415-228-3898 (international), passcode:
Rayonier. A replay of the conference call will be available one
hour following the call until Thursday, February 16, 2017 by
dialing 800-568-3705 (domestic) or 203-369-3811 (international),
passcode: 02092017. Complimentary copies of Rayonier press releases
and other financial documents are also available by calling
1-800-RYN-7611.
1“Large Dispositions” are defined as transactions involving the
sale of timberland that exceed $20 million in size and do not have
any identified HBU premium relative to timberland value.
2“Costs related to shareholder litigation” include expenses
incurred as a result of the securities litigation, the shareholder
derivative demands and the Securities and Exchange Commission
investigation. See Note 10—Contingencies of Item 8 — Financial
Statements and Supplementary Data in the Company’s most recent
Annual Report on Form 10-K.
3Pro forma net income, Pro forma revenues (sales), Pro forma
operating income, Adjusted EBITDA and CAD are non-GAAP measures
defined and reconciled to GAAP in the attached exhibits.
4The Company used foreign exchange derivatives to mitigate the
risk of fluctuations in foreign exchange rates while awaiting the
planned capital contribution to the New Zealand JV.
About Rayonier
Rayonier is a leading timberland real estate investment trust
with assets located in some of the most productive softwood timber
growing regions in the United States and New Zealand. As of
December 31, 2016, Rayonier owned, leased or managed
approximately 2.7 million acres of timberlands located in the U.S.
South (1.85 million acres), U.S. Pacific Northwest (378,000 acres)
and New Zealand (433,000 acres). More information is available at
www.rayonier.com.
___________________________________________________________________________
Forward-Looking Statements
Forward-Looking Statements - Certain statements in this
presentation regarding anticipated financial outcomes including
Rayonier’s earnings guidance, if any, business and market
conditions, outlook, expected dividend rate, Rayonier’s business
strategies, including expected harvest schedules, timberland
acquisitions, sales of non-strategic timberlands, the anticipated
benefits of Rayonier’s business strategies, and other similar
statements relating to Rayonier’s future events, developments or
financial or operational performance or results, are
“forward-looking statements” made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
and other federal securities laws. These forward-looking statements
are identified by the use of words such as “may,” “will,” “should,”
“expect,” “estimate,” “believe,” “intend,” “project,” “anticipate”
and other similar language. However, the absence of these or
similar words or expressions does not mean that a statement is not
forward-looking. While management believes that these
forward-looking statements are reasonable when made,
forward-looking statements are not guarantees of future performance
or events and undue reliance should not be placed on these
statements.
The following important factors, among others, could cause
actual results or events to differ materially from those expressed
in forward-looking statements that may have been made in this
document: the cyclical and competitive nature of the industries in
which we operate; fluctuations in demand for, or supply of, our
forest products and real estate offerings; entry of new competitors
into our markets; changes in global economic conditions and world
events; fluctuations in demand for our products in Asia, and
especially China; various lawsuits relating to matters arising out
of our previously announced internal review and restatement of our
consolidated financial statements; the uncertainties of potential
impacts of climate-related initiatives; the cost and availability
of third party logging and trucking services; the geographic
concentration of a significant portion of our timberland; our
ability to identify, finance and complete timberland acquisitions;
changes in environmental laws and regulations regarding timber
harvesting, delineation of wetlands, and endangered species, that
may restrict or adversely impact our ability to conduct our
business, or increase the cost of doing so; adverse weather
conditions, natural disasters and other catastrophic events such as
hurricanes, wind storms and wildfires, which can adversely affect
our timberlands and the production, distribution and availability
of our products; interest rate and currency movements; our capacity
to incur additional debt; changes in tariffs, taxes or treaties
relating to the import and export of our products or those of our
competitors; changes in key management and personnel; our ability
to meet all necessary legal requirements to continue to qualify as
a real estate investment trust (“REIT”) and changes in tax laws
that could adversely affect beneficial tax treatment; the cyclical
nature of the real estate business generally; a delayed or weak
recovery in the housing market; the lengthy, uncertain and costly
process associated with the ownership, entitlement and development
of real estate, especially in Florida, which also may be affected
by changes in law, policy and political factors beyond our control;
unexpected delays in the entry into or closing of real estate
transactions; changes in environmental laws and regulations that
may restrict or adversely impact our ability to sell or develop
properties; the timing of construction and availability of public
infrastructure; and the availability of financing for real estate
development and mortgage loans.
For additional factors that could impact future results, please
see Item 1A - Risk Factors in the Company’s most recent Annual
Report on Form 10-K and similar discussion included in other
reports that we subsequently file with the Securities and Exchange
Commission (the “SEC”). Forward-looking statements are only as of
the date they are made, and the Company undertakes no duty to
update its forward-looking statements except as required by law.
You are advised, however, to review any further disclosures we make
on related subjects in our subsequent reports filed with the
SEC.
Non-GAAP Financial Measures - To supplement Rayonier’s
financial statements presented in accordance with generally
accepted accounting principles in the United States (“GAAP”),
Rayonier uses certain non-GAAP measures, including “cash available
for distribution,” “pro forma sales,” “pro forma operating income,”
“pro forma net income,” and “Adjusted EBITDA,” which are defined
and further explained in this communication. Reconciliation of such
measures to the nearest GAAP measures can also be found in this
communication. Rayonier’s definitions of these non-GAAP measures
may differ from similarly titled measures used by others. These
non-GAAP measures should be considered supplemental to, and not a
substitute for, financial information prepared in accordance with
GAAP.
RAYONIER INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF
CONSOLIDATED INCOME December 31, 2016 (unaudited)
(millions of dollars, except per share information)
Three Months Ended Year Ended December 31, September
30, December 31, December 31, December 31, 2016 2016
2015 2016 2015
SALES $220.5 $171.4 $137.1 $788.3 $544.9
Costs and expenses Cost of sales 161.9 116.6 114.1 524.7 441.1
Selling and general expenses 11.1 10.6 11.4 42.8 45.8 Other
operating income, net (14.0) (5.5) (4.1) (35.0) (19.8)
OPERATING
INCOME 61.5 49.7 15.7 255.8 77.8 Interest expense (8.6) (8.5)
(7.1) (32.2) (31.7) Interest income and miscellaneous income
(expense), net 0.4 0.2 1.3 (0.8) (3.0)
INCOME BEFORE INCOME
TAXES 53.3 41.4 9.9 222.8 43.1 Income tax (expense) benefit
(2.8) (0.8) (0.5) (5.0) 0.8
NET INCOME 50.5 40.6 9.4 217.8
43.9 Less: Net income (loss) attributable to noncontrolling
interest 2.2 1.2 (0.9) 5.8 (2.3)
NET INCOME ATTRIBUTABLE TO
RAYONIER INC. $48.3 $39.4 $10.3 $212.0 $46.2
EARNINGS PER
COMMON SHARE Basic earnings per share attributable to Rayonier
Inc. $0.39 $0.32 $0.08 $1.73 $0.37 Diluted earnings per share
attributable to Rayonier Inc. $0.39 $0.32 $0.08 $1.73 $0.37
Pro forma net income (a) $0.05 $0.33 $0.09 $0.56 $0.40
Weighted Average Common Shares used for determining
Basic EPS 122,618,278 122,597,927 123,186,975
122,585,200 125,385,085 Diluted EPS 122,900,350
122,882,633 123,300,068 122,812,323
125,900,189
(a) Pro forma net income is a non-GAAP
measure. See Schedule F for definition and a reconciliation to the
nearest GAAP measure.
A
RAYONIER INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS December 31, 2016 (unaudited)
(millions of dollars) December 31, December
31, 2016 2015
Assets Cash and cash equivalents $85.9 $51.8
Assets held for sale 23.2 — Other current assets 55.8 53.9 Timber
and timberlands, net of depletion and amortization 2,291.0 2,066.8
Higher and better use timberlands and real estate development
investments 70.4 65.4 Property, plant and equipment 23.1 15.8 Less
- accumulated depreciation (9.1) (9.1) Net property, plant and
equipment 14.0 6.7 Restricted deposits 71.7 23.5 Other assets 73.8
47.8 Total Assets $2,685.8 $2,315.9
Liabilities and
Shareholders’ Equity Current maturities of long-term debt $31.7
— Other current liabilities 60.3
59.5
Long-term debt 1,030.2 830.6 Other non-current liabilities 66.7
64.1 Total Rayonier Inc. shareholders’ equity 1,411.7 1,288.1
Noncontrolling interest 85.2 73.6 Total shareholders’ equity
1,496.9 1,361.7 $2,685.8 $2,315.9
B
RAYONIER INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY December 31, 2016
(unaudited) (millions of dollars, except share
information)
Common Shares
Accumulated
Other
Non-
Retained
Comprehensive
controlling
Shareholders'
Shares
Amount
Earnings
Income/(Loss)
Interest
Equity
Balance, December 31, 2014 126,773,097 $702.6 $790.7 ($4.8 )
$86.7 $1,575.2 Net income (loss) — — 46.2 — (2.3 ) 43.9 Dividends
($1.00 per share) — — (124.9 ) — — (124.9 ) Issuance of shares
under incentive stock
plans
205,219 2.1 — — — 2.1 Stock-based compensation — 4.5 — — — 4.5
Repurchase of common shares made under
repurchaseprogram
(4,202,697 ) — (100.0 ) — — (100.0 ) Other (a) (5,402 ) (0.4 ) 0.8
(28.7 ) (10.8 ) (39.1 )
Balance, December 31, 2015
122,770,217 $708.8 $612.8 ($33.5 ) $73.6 $1,361.7 Net income — —
212.0 — 5.8 217.8 Dividends ($1.00 per share) — — (123.2 ) — —
(123.2 ) Issuance of shares under incentive stock
plans
179,743 1.6 — — — 1.6 Stock-based compensation — 5.1 — — — 5.1
Repurchase of common shares made under repurchase program (35,200 )
— (0.7 ) — — (0.7 ) Other (a) (10,392 ) (5.6 ) — 34.4
5.8 34.6
Balance, December 31, 2016
122,904,368 $709.9 $700.9 $0.9 $85.2
$1,496.9
(a) Primarily includes shares purchased
from employees in non-open market transactions to pay withholding
taxes associated with the vesting of restricted stock, actuarial
changes and amortization of pension and postretirement plan
liabilities, foreign currency translation adjustments, and
mark-to-market adjustments of qualifying cash flow hedges. The
twelve months ended December 31, 2016 also includes changes as a
result of the recapitalization of the New Zealand JV.
C
RAYONIER INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS December 31, 2016 (unaudited)
(millions of dollars) Year Ended December 31,
2016 2015
Cash provided by operating activities: Net income
$217.8 $43.9 Depreciation, depletion and amortization 115.1 113.7
Non-cash cost of land and improved development 11.7 12.5 Gain on
sale of large dispositions (143.9 ) — Other items to reconcile net
income to cash provided by operating activities 12.7 7.6 Changes in
working capital and other assets and liabilities (9.6 ) (0.5 )
203.8 177.2
Cash used for investing
activities: Capital expenditures (58.7 ) (57.3 ) Real estate
development investments (8.7 ) (2.7 ) Purchase of timberlands
(366.5 ) (98.4 ) Assets purchased in business acquisition (0.9 ) —
Net proceeds from large dispositions 203.9 — Change in restricted
deposits (48.2 ) (16.8 ) Proceeds from settlement of net investment
hedge — 2.8 Rayonier office building under construction (6.3 ) 0.9
Other 2.2 5.2 (283.2 ) (166.3 )
Cash used for
financing activities: Increase in debt, net of issuance costs
236.6 106.4 Dividends paid (122.8 ) (124.9 ) Proceeds from the
issuance of common shares 1.6 2.1 Repurchase of common shares (0.7
) (100.0 ) Other (0.3 ) (0.1 ) 114.4 (116.5 )
Effect of
exchange rate changes on cash (0.9 ) (4.2 )
Cash and cash
equivalents: Change in cash and cash equivalents 34.1 (109.8 )
Balance, beginning of year 51.8 161.6 Balance, end of
year $85.9 $51.8
D
RAYONIER INC. AND SUBSIDIARIES BUSINESS SEGMENT SALES AND
OPERATING INCOME (LOSS) December 31, 2016 (unaudited)
(millions of dollars) Three Months Ended Year
Ended December 31, September 30, December 31,
December 31, December 31, 2016 2016 2015 2016 2015
Sales Southern Timber $30.6 $27.8 $36.1 $132.9 $139.1
Pacific Northwest Timber 22.9 16.1 18.7 75.2 76.5 New Zealand
Timber 46.6 42.2 40.1 172.5 161.6 Real Estate 88.1 60.6 20.5 299.4
86.5 Trading 32.3 24.7 21.7 108.3 81.2
Total sales $220.5
$171.4 $137.1 $788.3 $544.9
Pro forma sales (a)
Southern Timber $30.6 $27.8 $36.1 $132.9 $139.1 Pacific Northwest
Timber 22.9 16.1 18.7 75.2 76.5 New Zealand Timber 46.6 42.2 40.1
172.5 161.6 Real Estate 10.4 60.6 20.5 92.1 86.5 Trading 32.3 24.7
21.7 108.3 81.2
Pro forma sales $142.8 $171.4 $137.1 $581.0
$544.9
Operating income (loss) Southern Timber $8.1
$8.2 $12.0 $43.1 $46.7 Pacific Northwest Timber (3.1) (3.3) (0.4)
(4.0) 6.9 New Zealand Timber 11.7 6.6 (1.1) 33.1 2.8 Real Estate
49.4 43.1 10.3 202.4 44.3 Trading 0.5 0.5 0.6 2.0 1.2 Corporate and
other (5.1) (5.4) (5.7) (20.8) (24.1)
Operating income $61.5
$49.7 $15.7 $255.8 $77.8
Pro forma operating
income/(loss) (a) Southern Timber $8.1 $8.2 $12.0 $43.1 $46.7
Pacific Northwest Timber (3.1) (3.3) (0.4) (4.0) 6.9 New Zealand
Timber 11.7 6.6 (1.1) 33.1 2.8 Real Estate 6.8 43.1 10.3 58.5 44.3
Trading 0.5 0.5 0.6 2.0 1.2 Corporate and other (5.1) (4.2) (4.7)
(19.8) (20.0)
Pro forma operating income $18.9 $50.9 $16.7
$112.9 $81.9
Adjusted EBITDA (a) Southern Timber
$20.8 $18.2 $24.9 $92.9 $101.0 Pacific Northwest Timber 7.2 3.4 3.5
21.2 21.7 New Zealand Timber 17.9 12.6 6.9 58.3 33.0 Real Estate
10.6 56.6 16.2 84.7 70.8 Trading 0.5 0.5 0.6 2.0 1.2 Corporate and
other (5.0) (4.1) (4.5) (19.4) (19.7)
Adjusted EBITDA $52.0
$87.2 $47.6 $239.7 $208.0
(a) Pro forma sales, Pro forma operating
income (loss) and Adjusted EBITDA are non-GAAP measures. See
Schedule F for definitions and reconciliations.
E
RAYONIER INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP
MEASURES December 31, 2016 (unaudited) (millions of
dollars, except per share information)
LIQUIDITY MEASURES: Year Ended December 31, December 31,
2016 2015
Cash Provided by Operating Activities $203.8
$177.2 Working capital and other balance sheet changes (0.8 ) (2.5
) Capital expenditures (a) (58.7 ) (57.3 )
Cash Available for
Distribution (b) $144.3 $117.4
Net income $217.8
$43.9 Interest, net and miscellaneous expense (income) 33.0 34.7
Income tax expense (benefit) 5.0 (0.9 ) Depreciation, depletion and
amortization 115.1 113.7 Non-cash cost of land and improved
development 11.7 12.5 Costs related to shareholder litigation (c)
2.2 4.1 Gain on foreign currency derivatives (d) (1.2 ) — Large
Dispositions (e) (143.9 ) —
Adjusted EBITDA $239.7
$208.0 Cash interest paid (f) (36.2 ) (33.0 ) Cash taxes paid (0.5
) (0.3 ) Capital expenditures (a) (58.7 ) (57.3 )
Cash Available
for Distribution $144.3 $117.4
Cash Available for
Distribution $144.3 $117.4 Real estate development investments
(8.7 ) (2.7 )
Cash Available for Distribution after real estate
development investments $135.6 $114.7 (a)
Capital expenditures exclude timberland acquisitions of $366.5
million and $98.4 million and spending on the Rayonier office
building of $6.3 million and $0.9 million for the years ended
December 31, 2016 and December 31, 2015, respectively. (b) Cash
Available for Distribution (CAD) is a non-GAAP measure that
management uses to measure cash generated during a period that is
available for dividend distribution, repurchase of the Company’s
common shares, debt reduction and strategic acquisitions. CAD is
defined as cash provided by operating activities adjusted for
capital spending (excluding timberland acquisitions and spending on
the Rayonier office building) and working capital and other balance
sheet changes. CAD is not necessarily indicative of the CAD that
may be generated in future periods. (c) “Costs related to
shareholder litigation” include expenses incurred as a result of
the securities litigation, the shareholder derivative demands and
the Securities and Exchange Commission investigation. See Note
10—Contingencies of Item 8 — Financial Statements and Supplementary
Data in the Company’s most recent Annual Report on Form 10-K. (d)
The Company used foreign exchange derivatives to mitigate the risk
of fluctuations in foreign exchange rates while awaiting the
capital contribution to the New Zealand JV. (e) “Large
Dispositions” are defined as transactions involving the sale of
timberland that exceed $20 million in size and do not have any
identified HBU premium relative to timberland value. Large
Dispositions in 2016 included $143.9 million of gain, $36.1 million
of depletion and $22.2 million non-cash cost of land sold. (f) Cash
interest paid is presented net of patronage refunds received of
$0.4 million and $1.3 million for the years ended December 31, 2016
and December 31, 2015, respectively.
F
PRO FORMA SALES (a)
Pacific New Southern Northwest
Zealand Real Three Months Ended Timber
Timber Timber Estate Trading
Total December 31, 2016 Sales $30.6 $22.9
$46.6 $88.1 $32.3 $220.5 Large Dispositions (b) — — —
(77.7 ) — (77.7 )
Pro forma sales $30.6
$22.9 $46.6 $10.4 $32.3 $142.8
Pacific New Southern Northwest
Zealand Real Year Ended Timber
Timber Timber Estate Trading
Total December 31, 2016 Sales $132.9 $75.2
$172.5 $299.4 $108.3 $788.3 Large Dispositions (b) — —
— (207.3 ) — (207.3 )
Pro forma sales
$132.9 $75.2 $172.5 $92.1 $108.3
$581.0
PRO FORMA NET INCOME (c):
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31,
December 31, 2016 2016 2015 2016 2015 $
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
$
PerDilutedShare
Net income attributable to Rayonier Inc. $48.3 $0.39 $39.4
$0.32 $10.3 $0.08 $212.0 $1.73 $46.2 $0.37 Costs related to
shareholder litigation (d) — — 1.2 0.01 1.0 0.01 2.2 0.02 4.1 0.03
Gain on foreign currency derivatives (e) — — — — — — (1.2 ) (0.01 )
— — Large Dispositions (b) (42.6 ) (0.34 ) — — — — (143.9 ) (1.18 )
— — Expense related to the write-off of capitalized financing costs
— — — — — — — —
0.4 —
Pro forma net income $5.7 $0.05
$40.6 $0.33 $11.3 $0.09 $69.1
$0.56 $50.7 $0.40
PRO FORMA OPERATING INCOME (LOSS) AND ADJUSTED
EBITDA (f)(g):
Pacific New Corporate
Southern Northwest Zealand Real
and Three Months Ended Timber Timber
Timber Estate Trading other
Total December 31, 2016 Operating income (loss) $8.1
($3.1 ) $11.7 $49.4 $0.5 ($5.1 ) $61.5 Large Dispositions (b) —
— — (42.6 ) — — (42.6 ) Pro
forma operating income (loss) $8.1 ($3.1 ) $11.7 $6.8 $0.5 ($5.1 )
$18.9 Depreciation, depletion and amortization 12.7 10.3 6.2 2.2 —
0.1 31.5 Non-cash cost of land and improved development — —
— 1.6 — — 1.6 Adjusted
EBITDA $20.8 $7.2 $17.9 $10.6 $0.5
($5.0 ) $52.0
September 30, 2016
Operating income (loss) $8.2 ($3.3 ) $6.6 $43.1 $0.5 ($5.4 ) $49.7
Costs related to shareholder litigation (d) — — —
— — 1.2 1.2 Pro forma operating
income (loss) $8.2 ($3.3 ) $6.6 $43.1 $0.5 ($4.2 ) $50.9
Depreciation, depletion and amortization 10.0 6.7 6.0 9.2 — 0.1
32.0 Non-cash cost of land and improved development — —
— 4.3 — — 4.3 Adjusted
EBITDA $18.2 $3.4 $12.6 $56.6 $0.5
($4.1 ) $87.2
December 31, 2015
Operating income (loss) $12.0 ($0.4 ) ($1.1 ) $10.3 $0.6 ($5.7 )
$15.7 Costs related to shareholder litigation (d) — —
— — — 1.0 1.0 Pro forma
operating income (loss) $12.0 ($0.4 ) ($1.1 ) $10.3 $0.6 ($4.7 )
$16.7 Depreciation, depletion and amortization 12.9 3.9 7.5 3.4 —
0.2 27.9 Non-cash cost of land and improved development — —
0.5 2.5 — — 3.0 Adjusted
EBITDA $24.9 $3.5 $6.9 $16.2 $0.6
($4.5 ) $47.6
F
Pacific New
Corporate Southern Northwest
Zealand Real and Year Ended
Timber Timber Timber Estate
Trading other Total December 31, 2016
Operating income (loss) $43.1 ($4.0 ) $33.1 $202.4 $2.0 ($20.8 )
$255.8 Large Dispositions (b) — — — (143.9 ) — — (143.9 ) Costs
related to shareholder litigation (d) — — — — — 2.2 2.2 Gain on
foreign currency derivatives — — — — —
(1.2 ) (1.2 ) Pro forma operating income (loss) $43.1 ($4.0
) $33.1 $58.5 $2.0 ($19.8 ) $112.9 Depreciation, depletion and
amortization 49.8 25.2 23.4 16.3 — 0.4 115.1 Non-cash cost of land
and improved development — — 1.8 9.9 —
— 11.7 Adjusted EBITDA $92.9 $21.2
$58.3 $84.7 $2.0 ($19.4 ) $239.7
December 31, 2015 Operating income (loss) $46.7 $6.9
$2.8 $44.3 $1.2 ($24.1 ) $77.8 Costs related to shareholder
litigation (d) — — — — — 4.1
4.1 Pro forma operating income (loss) $46.7 $6.9 $2.8
$44.3 $1.2 ($20.0 ) $81.9 Non-operating expense — — — — — (0.1 )
(0.1 ) Depreciation, depletion and amortization 54.3 14.8 29.7 14.5
— 0.4 113.7 Non-cash cost of land and improved development —
— 0.5 12.0 — — 12.5
Adjusted EBITDA $101.0 $21.7 $33.0 $70.8
$1.2 ($19.7 ) $208.0
2017
Guidance Net Income to Adjusted EBITDA Reconciliation
Net income
$72.5
-
$78.5
Less: Net income attributable to noncontrolling interest (6.5 ) -
(7.0 ) Net Income attributable to Rayonier Inc.
$66.0
-
$71.5
Less: Large Dispositions (b) (27.0 ) - (27.0 )
Pro forma net
income
$39.0
-
$44.5
Interest, net 33.0 - 33.2 Income tax expense 10.5 - 11.3
Depreciation, depletion and amortization
116.0
-
124.0
Non-cash cost of land and improved development 15.0 - 20.0 Net
income attributable to noncontrolling interest 6.5 - 7.0
Adjusted EBITDA $220.0 - $240.0 (a) Pro
forma sales is defined as revenue adjusted for Large Dispositions.
Rayonier believes that this non-GAAP financial measure provides
investors with useful information to evaluate our core business
operations because it excludes specific items that are not
indicative of ongoing operating results. (b) “Large Dispositions”
are defined as transactions involving the sale of timberland that
exceed $20 million in size and do not have any identified HBU
premium relative to timberland value. On April 28, 2016, the
Company completed a disposition of approximately 55,000 acres
located in Washington for a sales price and gain of approximately
$129.5 million and $101.3 million, respectively. On October 21,
2016, the Company completed a second disposition of approximately
37,000 acres located in Mississippi and Alabama for a sales price
and gain of approximately $77.7 million and $42.6 million,
respectively. (c) Pro forma net income is defined as net income
attributable to Rayonier Inc. adjusted for costs related to
shareholder litigation, the gain on foreign currency derivatives,
Large Dispositions and expense related to the write-off of
capitalized financing costs. Rayonier believes that this non-GAAP
financial measure provides investors with useful information to
evaluate our core business operations because it excludes specific
items that are not indicative of ongoing operating results. (d)
“Costs related to shareholder litigation” includes expenses
incurred as a result of the securities litigation, the shareholder
derivative demands and the Securities and Exchange Commission
investigation. See Note 10—Contingencies of Item 8 — Financial
Statements and Supplementary Data in the Company’s most recent
Annual Report on Form 10-K. (e) The company used foreign exchange
derivatives to mitigate the risk of fluctuations in foreign
exchange rates while awaiting the capital contribution to the New
Zealand JV. (f) Pro forma operating income is defined as operating
income adjusted for costs related to shareholder litigation, the
gain on foreign currency derivatives and Large Dispositions.
Rayonier believes that this non-GAAP financial measure provides
investors with useful information to evaluate our core business
operations because it excludes specific items that are not
indicative of ongoing operating results. (g) Adjusted EBITDA is
defined as earnings before interest, taxes, depreciation,
depletion, amortization, the non-cash cost of land and improved
development, costs related to shareholder litigation, the gain on
foreign currency derivatives and Large Dispositions. Adjusted
EBITDA is a non-GAAP measure that management uses to make strategic
decisions about the business and that investors can use to evaluate
the operational performance of the assets under management. It
removes the impact of specific items that management believes do
not directly reflect the core business operations on an ongoing
basis.
F
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170208006209/en/
Rayonier Inc.InvestorsMark McHugh, 904-357-3757orMediaRoseann
Wentworth, 904-357-9185roseann.wentworth@rayonier.com
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