Rayonier Inc. Price & Performance (RYN)

Our President and CEO.

Mark Thanks, Colin. Morning, everyone. First, I'll make some high level comments before turning it over to April Theiss, Senior Vice President and Chief Financial Officer, who review our consolidated financial results. Then Doug Long, Executive Vice President and Chief Resource Officer will comment U. S. And New Zealand timber results, And following the review of our timber segments, April will discuss our real estate results and our outlook for 2025. We were pleased to finish 2024 with better than expected fourth which allowed us to deliver full year adjusted EBITDA of $299,000,000 roughly 3% above the high end of our prior guidance range and slightly above the prior year. Full year pro form a net income was $70,000,000 or $0.47 per These full year results demonstrate our resilience and nimble execution amid persistent market headwinds. In the fourth quarter, we generated adjusted EBITDA of $115,000,000 and pro form a net income of $41,000,000 or $0.27 per share. The 23% increase in adjusted EBITDA versus the prior year quarter driven primarily by significantly improved results in our Real Estate and New Zealand Timber segment. Our Real Estate segment delivered adjusted EBITDA of $63,000,000 up $10,000,000 from the prior year period.

The increased contribution from our real estate business was bolstered an extraordinarily strong weighted average price per acre of roughly $7,200 excluding improved development and large dispositions. Demonstrating our team's ability to optimize the value of our portfolio by generating significant HBU premiums above Timberland value. Shifting to our Timber segment operating results. Our Southern Timber segment generated fourth quarter adjusted EBITDA EBITDA of $35,000,000 up modestly from the prior year period as significantly higher non timber income was largely offset by a 3% decline in harvest volumes and 15% lower weighted average net stumpage realizations. The decline in stumpage prices was driven in large part by the impact of salvage volume on the market throughout the quarter following Hurricane Helene. In our Pacific Northwest Timber segment, fourth quarter adjusted EBITDA of $6,000,000 was flat versus prior year quarter. As a 3% decrease in harvest volumes and a 9% decrease in average delivered log prices were largely offset by lower cost and higher non timber income. Turning to our New Zealand Timber segment, fourth quarter adjusted EBITDA of $20,000,000 increased $8,000,000 versus the prior year quarter. The increase in adjusted EBITDA was driven by favorable foreign exchange impacts, higher volume, higher net stumpage realizations and lower cost partially offset by lower carbon credit sales.

In addition to the strong finish to the year operationally, we successfully closed on $495,000,000 of previously announced large dispositions totaling approximately 200,000 acres during the fourth quarter. As discussed on our November earnings call, these transactions have allowed us to reduce leverage and return capital to shareholders, while also generating accretion to CAD per share. To date, we've now closed on roughly $737,000,000 of dispositions, approximately 74% of our original $1,000,000,000 target.

Which has allowed us to reduce net leverage to below three times and return over $110,000,000 of capital to shareholders in the form of cash special dividends and share repurchases. Including $15,000,000 of share repurchases in the fourth quarter. Turning to our outlook for 2025. As April will discuss in greater detail later in the call, we're providing full year adjusted EBITDA guidance of $270,000,000 The slight decline at the midpoint relative to 2024 adjusted EBITDA reflects the dispositions completed in the fourth quarter as well as modestly lower expectations in our real estate segment following the extraordinarily strong results realized last year.

Overall, as we move into the new year, we are cautiously optimistic that Timber Prices will gradually improve along with end market demand. In addition, we expect another strong contribution from our real estate platform this year given the continued favorable demand trends for our rural HBU and development properties. Lastly, we remain encouraged by the pipeline of opportunities that continue to build on the land based solutions front. Especially as it relates to solar and carbon capture and storage. Which we expect will drive meaningful cash flow growth in the coming years. With that, let me turn it over to April for more details on our fourth quarter financial results.

Thanks, Mark. Moving to the financial highlights on Page five of the supplement. For the fourth quarter, sales totaled $726,000,000 while operating income was $346,000,000 and net income attributable to Rainier was $327,000,000 or $2.15 per share.

On a pro form a basis, net income was $41,000,000 or $0.27 per share. Pro form a items in the fourth quarter included $291,000,000 of income from large dispositions a $1,600,000 gain from a terminated cash flow hedge, dollars 1,600,000.0 of costs associated with legal settlements, and $1,100,000 of restructuring charges.

Our adjusted EBITDA was $115,000,000 in the fourth quarter up from $94,000,000 in the prior year period. Moving on to capital resources and liquidity at the bottom of Page five.

Our cash available for distribution or CAD for the year was $184,000,000 versus $164,000,000 in the prior year period. The increase was driven by higher adjusted EBITDA lower net cash interest paid, and lower capital expenditures partially offset by slightly higher cash taxes paid. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on Page eight. As a result of the tax taxable gains arising from the Timberland dispositions completed during the fourth quarter, We declared a $1.8 per share special dividend in early December.

Which was paid on January 30, in a combination of cash and shares. In aggregate, the special dividend resulted in $68,000,000 of cash and 7,700,000.0 common shares and OP units being distributed following year end. For modeling purposes, we now have approximately 156,100,000.0 shares and 2,100,000.0 OP units following the special dividend. By issuing shares to meet part of our REIT taxable income distribution requirement, we have retained significant flexibility to further reduce debt execute on share repurchases or fund other future capital allocation priorities. To this end, we continue to believe that share repurchases represent a compelling use of capital at the current stock price During the fourth quarter, we repurchased 488,000 shares at an average price of roughly $30 per share. Notably, our fourth quarter share repurchases occurred prior to the ex dividend date with respect to the $1.8 per share special dividend. In December, our Board approved a new $300,000,000 share repurchase program which affords us significant capacity to act opportunistically as it relates to share repurchases moving forward. Proceeds from our disposition plan have also allowed us to meaningfully reduce leverage. After paying off a total of $190,000,000 of debt During the quarter, we closed the fourth quarter with $323,000,000 of [indiscernible] And roughly $1,100,000,000 of debt Our net debt to trailing twelve months adjusted EBITDA was approximately 2.6 times at quarter end or 2.9 times pro form a for the cash component of the special dividend that we paid last week.

At quarter end, our weighted average cost of debt was approximately 2.7% and the weighted average maturity on our debt portfolio was approximately with no significant debt maturities until 2026. Our net debt to enterprise value based on our closing stock price at the end of the quarter was 17%. I will also note that we The 4.4% adjustment in the quarterly dividend to $0.2725 per share from $0.285 per share reflects the 5.1% increase in shares and units outstanding as a result of the recent special dividend and is consistent with our previous communications regarding its anticipated impact on our ordinarily quarterly dividend. I'll turn now the call over to Doug provide a more detailed review of our timber results. Thanks, April. Let's start on Page nine, our Southern Timber segment.

Adjusted EBITDA in the fourth quarter of $35,000,000 was above the prior year quarter as higher non timber revenue and lower costs more than offset lower harvest volumes and net stumpage realizations. Total harvest volume fell 3% versus the prior year quarter due to the disposition of our Oklahoma acreage. As well as production constraints resulting from some contractors temporarily shifting to salvage operations on properties impacted by Hurricane Helene. Meanwhile, non timber revenue increased $7,000,000 versus prior year period driven by growth in our Land Based Solutions business and higher pipeline easement revenues.

Average sawlog stowage pricing $25 per ton a 14% decrease compared to the prior year period due to a less favorable geographic mix and the availability of low priced salvage timber in the Atlantic region. Elkwood net stumpage pricing was 9% lower than the prior year quarter at roughly $16 per ton, also due to geographic mix availability of salvage volume. Overall, weighted average stowage prices in the fourth quarter decreased 15% versus the prior year quarter, roughly $19 per ton. [indiscernible] In grade markets, green log demand was relatively soft in the Atlantic region during the quarter with mills shifting their procurement to salvage logs. In our golf markets, dry weather conditions led to ample supply which also weighed on pricing. Encouragingly, Tavanuel pine lumber prices ended the fourth quarter and currently sit near their highest levels in three quarters. We Overall, we believe the outlook for gray markets will improve as Southern Yellow Pine lumber continues to gain share the overall North American market and the availability of salvage volume declines Atlantic Region. Shifting to pulpwood, While we have been encouraged by sustained improvements in end market demand for our pulp customers, ample supply from hurricane salvage operations, in the Atlantic Region and dry ground conditions in the Gulf Region led to elevated mill inventories and quota implementations during the quarter, which weighed on pulpwood prices.

As it relates to salvage operations, the direct impact to our portfolio the most recent hurricane season was relatively minor and our salvage operations are now largely complete. However, the availability of salvage volume in our Atlantic markets has certainly been a headwind over the last several months and we expect that this dynamic will likely persist through the first half of twenty twenty five which may continue to weigh on pricing. Moving to our Pacific Northwest Timber segment on Page 10. Fourth quarter adjusted EBITDA of $6,000,000 was in line with the prior year quarter as lower net stump utilizations and harvest volumes were largely offset by lower costs and higher non timber income. Total harvest volumes decreased 3% in the fourth quarter as compared to the prior year period. Reflecting the impact of our recent dispositions [indiscernible] At $89 per ton, average delivered domestic solid pricing in the fourth quarter decreased 5% the prior year period, due to a combination of weaker demand from lumber mills and an unfavorable product mix.

As a higher proportion of chip and salt was harvested current year period.

Meanwhile, at $30 per ton, pulpwood pricing was up 4% versus the prior year quarter. Demand for both domestic lumber mills and export markets remained soft in the SIF Northwest during the fourth quarter, As we look toward 2025, there are indications that market conditions are gradually improving. To this end, lumber prices have begun to show positive momentum with producers in the region well positioned to benefit from potential the reductions, in Western SPF supply Canadian producers.

In addition, we are cautiously optimistic [indiscernible] export market will gradually reemerge in response to signs of stabilization in the Chinese property market and an anticipated recovery in demand, Douglas fir logs in Japan. Moving to New Zealand, Page 11 shows our results and key operating metrics Adjusted EBITDA the fourth quarter of $20,000,000 was $8,000,000 above the prior year quarter.

The increase in adjusted EBITDA compared to the prior year period was driven by favorable [indiscernible] higher volumes, higher net stumpage realizations, and lower costs partially offset lower carbon credit income.

Average delivered export salt surfer prices of $108 per ton increased 7% compared to the prior year quarter.

However, these pricing gains were largely offset by higher pork freight costs, with net stumpage realizations increasing only 1% versus the prior year quarter. In December, offtake from Chinese ports was approximately 57,000 cubic meters per day.

Although up slightly from prior year levels, log demand remains relatively soft. Inventory levels have generally adjusted the weaker demand environment as China's property sector remains sluggish. At the December, softwood log inventories at Chinese ports two two point six million cubic meters.

Slightly higher than they were a year ago. Shifting to the New Zealand domestic market. Fourth quarter average delivered sawlog prices increased 6% the prior year period While economic headwinds New Zealand persist, we are encouraged by signs of property market stabilization increased consumer confidence as the Reserve Bank of New Zealand has lowered its official cash rate by 125 basis points since August of last year.

The lower interest rate environment is anticipated to contribute to improved demand in the domestic market 2025.

Fourth quarter non timber income in New Zealand of $6,000,000 decreased $2,000,000 relative to the prior year period The year over year decrease primarily reflects a lower volume of carbon credits sold, as well as modestly lower pricing as compared to prior year period.

Positively, carbon prices New Zealand have generally stabilized following policy decisions announced in August.

Lastly, in our trading segment, we we registered a slight operating loss in the fourth quarter As a reminder, our trading activities typically generate Low margins are primarily designed to provide additional economies of scale to our feed timber export business. I'll now turn back over to April to cover our real estate results. Thanks, Doug. As detailed on Page 12, the contribution from our Real Estate segment during the fourth was considerably above the prior year period. Real estate revenue totaled $567,000,000 on roughly two seven thousand three hundred acres sold. Which included roughly 200,000 acres of large Excluding these transactions, fourth quarter sales totaled $72,000,000 on roughly 7,800 acres sold at an average price of $8,900 The strong average price per acre reflects both a higher proportion of development sales closed during the period as well as the significant premiums above Timberland value that our team achieved on rural land sales. Real estate segment adjusted EBITDA in the fourth quarter was $63,000,000 the strongest quarterly contribution in over three years. Drilling down, sales in the improved development category totaled $14,000,000 with activity primarily focused in our Heartwood development projects South Of Savannah, Georgia. The largest transaction was a 37 acre build for rent residential parcel that sold for $9,100,000 or $244,000 per acre.

This project will bring more homes to the Village Center and will enhance Heartwood's diverse mix of industrial, commercial, and residential uses. In addition, we also closed a 37 acre residential pod for $2,000,000 or $54,000 per acre as well as a seven acre industrial parcel for $1,700,000 or $240,000 per acre. In our wildlife development project, we closed the sale of a 0.9 acre commercial parcel for the development of a credit union for roughly $900,000 Entering 2025, there continues to be healthy interest from homebuilders in both our Wildlight and Heartwood projects as the pace of residential sales continues to trend favorably. While the timeline for some commercial deals have extended as developers contend with the current interest rate environment, continue to be pleased with the overall momentum at both projects.

In our unimproved development category, sales totaled $12,400,000 as we sold a 1,100 acre property directly east of Exit 1 off Interstate 95 in St. Marys, Georgia. The buyer plans to construct a highly amenitized master plan community including a golf course totaling about 1,300 residential units. Similar to many of our land sales to homebuilders, we will also benefit from true up payments, based on the final selling price of the homes in the community as they are sold. We expect that this master plan community will catalyze demand for our adjacent landholding. Including over 300 acres nearby for a mix of commercial and residential uses. Turning to the rural category. Fourth quarter sales totaled $43,000,000 consisting of approximately 6,600 acres at an average price of roughly $6,500 per acre.

We had an exceptionally strong finish to the year as the conversion of our rural transaction pipeline exceeded our expectations heading into year end. Despite interest rates remaining relatively elevated, we have been encouraged by increased buyer interest over the last several months and continue to see favorable demand and pricing for our rural properties. In addition, we continue to see strong interest from conservation focused buyers which contributed meaningfully to the sales activity during the fourth quarter. Moving forward, we remain optimistic about the long term outlook for our real estate business and expect that historically low unemployment the housing supply shortage favorable demographic and migration trends and the prospect of lower interest rates should spur further demand for both development and roll properties as we progress through 2025. Now moving on to our outlook for 2020 Page 14 of our supplement shows our financial guidance by segment, and Schedule G of our earnings release provides a reconciliation of our guidance from net income attributable to Rainier to adjusted EBITDA. For full year 2025, we expect to achieve adjusted EBITDA of $270,000,000 to $300,000,000 Net income attributable to Rayonier of $79,000,000 to $100,000,000 and earnings per share of $0.51 to $0.64 Our guidance excludes the potential impact of any additional asset sales as part of our previously announced $1,000,000,000 disposition plan.

With respect to our individual segments, starting with our Southern Timber segment, we expect to achieve full year harvest volumes of 6,900,000 to 7,100,000 tons. A modest increase versus the prior year primarily due to the carryover of some planned 2024 partially offset by reduced volume from the Oklahoma disposition.

As it relates to pricing, while we expect pine stumpage realizations to trend higher as the year progresses, We anticipate that full year realizations will be slightly lower versus the prior year due in part to the continued impact of salvage volume into the market. Lastly, we expect a modest decrease in non timber income for full year 2025 as compared to the prior year. Which benefited from significant pipeline easement activity.

Overall, We expect full year adjusted EBITDA of $141,000,000 to $149,000,000 slightly below full year 2024 results. In our Pacific Northwest Timber segment, we expect to achieve full year harvest volumes of approximately thousand tons The anticipated decrease relative to the prior year reflects the reduction in our Pacific Northwest sustainable yield resulting from the recent dispositions in Washington. Further, we expect that year weighted average log pricing will increase modestly versus the prior year as a result of improving demand conditions. Based on these factors, we expect full year adjusted EBITDA of $21,000,000 to $26,000,000 comparable to the full year 2024 results. In our New Zealand segment, we expect full year harvest volumes of 2,500,000 to 2,700,000 tons. As it relates to pricing, we expect improving supply demand dynamics to drive modest increases in both domestic and export timber pricing relative to the full year pricing achieved in 2024. We also anticipate a modest increase in carbon credit sales in 2025 as pricing has stabilized following a period of unusual market volatility. Overall, we expect full year adjusted EBITDA of $54,000,000 to $60,000,000 up modestly versus full year 2024 results.

Turning to our Real Estate segment.

We are encouraged by the continued strong demand and value realizations for HBU properties. Our current pipeline suggests another solid year for both our rural land sales programs as well as our improved development projects. However, similar to 2024, we anticipate very light closing activity in the first quarter with a corresponding adjusted EBITDA of less than $10,000,000 Overall, we expect full year adjusted EBITDA of $86,000,000 to $96,000,000 down modestly from the exceptionally strong full year 2024 results.

Our 2025 guidance [indiscernible] expected cost savings following recent actions we took to realign our organizational structure and reduce overhead costs in light of recent disposition activity. Since November 2023, we have completed dispositions totaling approximately two hundred and fifty five thousand first. Aresto roughly 11% of our total U. S. Acreage. This led us to make difficult but necessary adjustments to maintain an efficient overhead structure in light of the reduced scale of the company. While also reallocating resources to focus on important [indiscernible] [indiscernible] [indiscernible] Overall, these actions these actions translated to a roughly 10% reduction in in our U. S. Work and resulted in $1,100,000 of restructuring charges.

In the fourth quarter for estimated severance related expenses. I'll now turn the call back to Mark for closing comments.

Thanks, April. Before concluding today's call, I'd like to recognize the exceptional effort displayed by our team in advancing several important strategic initiatives throughout 2024. Simultaneously navigating the difficult headwinds facing our timber businesses. On the land based solutions front, we were pleased to recently announce a new PoreSpace easement agreement an affiliate of Reliant Carbon Capture and Storage, covering approximately 104,000 acres in Alabama. More broadly, our team continues to advance discussions with a number of high quality counterpart given the favorable attributes of our portfolio. In total, as of year end, we had approximately 154,000 acres under carbon capture and storage lease an approximately 39,000 acres under option for solar development. Continuing to grow our land based solutions business is a key and we are encouraged by the financial contributions that are beginning to materialize as we build toward the 2027 and 02/1930 adjusted EBITDA targets that we communicated at our Investor Day last February. As I discussed earlier, we also made tremendous progress on our disposition and capital structure realignment plan in 2024. We've now closed on roughly $737,000,000 of dispositions capitalizing on the disconnect between public and private Timberland values in a manner that has been accretive to both CAD and NAV per share.

Looking forward, we continue to advance our evaluation of strategic alternatives respect to our joint venture interest in New Zealand as well as other potential asset sales, with a view toward further streamlining our portfolio improving our balance sheet positioning and capitalizing on the publicprivate disconnect. Throughout 2024, our team demonstrated remarkable agility adjusting to local market dynamics, severe weather events and an ever evolving macroeconomic environment. Further, as April discussed, we've recently taken actions to realign our organizational structure for our smaller footprint. While such decisions were difficult, they will position us to operate more efficiently while remaining ready to advance our strategic priorities capture emerging Looking ahead, we remain [indiscernible] that an undersupplied U. S. Housing market and an expected recovery in repair and remodel demand, will translate into improving end market conditions. Further, we anticipate the potential constraints on the supply of Canadian lumber into The U. S. Market from continued production cuts higher duty rates and the prospect of new tariffs may likewise translate to improving operating conditions as more North American lumber production shifts into The U. S. Lastly, on the real estate front, as I detailed earlier, we finished the year with an exceptionally strong quarter in terms of both sales volume and premiums achieved to Timberland values.

Looking ahead, we believe that more favorable financing conditions could further bolster the demand we're seeing across our real estate categories and we are especially encouraged by the positive momentum that continues to build across our improved development platform.

In sum, I'm proud of how our team was able to navigate challenging market conditions throughout the year to deliver strong financial results, while also maintaining a relentless focus on driving shareholder value creation. That concludes our prepared remarks. I'll now turn the call back to the operator for questions.

Thank you, sir. Matthew McKellar from RBC, you may go ahead.

Matthew McKellar, your line is open, sir.

Thanks very much. Please correct me if I heard this wrong. It sounds like you're wrapping up your own salvage operations. Do you expect other salvage volumes in the market to continue to put pressure on price through maybe the first half of the year? Does this imply anything about your own volumes in the South through the year? And maybe specifically, should we also be expecting stronger volumes from Rainier in the South in the second half of the year as these salvage operations wrap up.

Sure. This is Doug. I'll start with that. So, yes, Hurricane Helene obviously, was a large hurricane as a Cat four coming across from Florida's Big Bend and into Georgia and then all the way up to North Carolina. And so we really saw something that I haven't seen in my career. So it's had a significant impact. And to your point, it's definitely impacted the stumpage markets in that area. So over 10,000,000 acres of porcelain were were impacted in Florida and Georgia. And while we only had a couple of thousand acres, and we've pretty much cleaned that up, we're still seeing a lot of other people working through that backlog basically. And so we do expect that that's going to create some headwinds going into the first half of the year. You can imagine based on that scale, there are a lot of sub operations underway. And most of crews pivoted that salvage of damaged timber both within the path and then also neighboring wood baskets. So the impact to us was small, we're really seeing this influx of unexpected volume that led to a steep drop from much of our Georgia Wood basket as timberland owners were price takers in order to kind of clean up their wood that was damaged.

So to reduce its higher [indiscernible] So we contended with that pricing dynamic for the entirety of Q4 and originally thought that it would be winding down sooner, but we've seen is that there's a lot of wood in the market there from the length of that. And so people continue on with their salvage operations. And so we do see that being a headwind going into at least the first half of twenty twenty five and think it should wrap up sometime in that first half So to your point, staging our volumes and working around that. With the geographic diversity we have, we are able to harvest in other areas. So we're trying not to exacerbate the problem by putting more volume into particular areas But we will continue to pretty much have a steady run rate as we go because we have the ability to flex across geographic areas as we go forward. But we do think this is going to weigh on our geographic we still do have volume that we're moving in that area to meet commitments we have with mills and things like that. So going to be some headwinds to start the year for us across our southern footprint, but we will move volume around geographically as we can.

Hey, Matt, I'd just add to that that like Doug said, this was a pretty significant factor in the fourth quarter and really the biggest driver of that year over year or this quarter relative to the prior year quarter that decline in overall stumpage pricing Unfortunately, we expected that it's going to be a transitory impact, but we're anticipating while we had one quarter of impact, as it relates to 2024, we're anticipating two quarters of impact as it relates to 2025. So again, that's one of the major factors if not the main factor that's straining our outlook for pricing gains in The U. S. South and 2025. Hopefully, as the market works through that glut of stumpage volume, we'll start to see a pickup in pricing on the back half of the year. And really to the extent that that coincides a pickup in lumber production, in the South due to increased duties on Canadian lumber. Which I believe everybody is anticipating, we think we could see a pretty nice tailwind in But again, the ongoing impact of that salvage volume has certainly muted our overall expectations for full year pricing gains in the South.

Great. Thanks very much for that color. Next for me, just in terms of a general outlook, what are your expectations for what the Timberlands M and A market looks like in twenty twenty five?

Yes, this is Mark. I'll take that. Overall, I'd say that the demand on the M and A market has continued to outstrip supply, especially with respect to higher quality properties. We estimate that there is about $3,000,000,000 to $4,000,000,000 of capital available for Timberland acquisitions. We think a significant portion of those funds are specifically targeting carbon or climate focused investments. With all that said, there hasn't been a whole lot of property on the market recently, but we're still seeing successful transaction outcomes certainly very strong values being paid for the assets that we have seen come to market, particularly those higher quality assets. For example, there have been several smaller to medium sized deals over the past couple of years in The U. S. South where we've seen value per acre in excess of $3,000 So overall, we think the market is still quite competitive especially for higher quality assets. As well as again assets with that unique carbon angle. But again relatively relatively limited volume on the market right now. [indiscernible] our appetite for Timberland acquisitions, given our debt financing costs as well as our overall cost of capital, It's really tough to make math work right now on buying timberland assets.

Again, the Timberland M and A market is highly competitive. Especially for those higher quality assets, which are generally the ones that would be pursuing and we continue to see those per acre values move up. For example, the Nacreep South average acre per acre value in The U. S. South currently sits about 22.4 per acre, which is up roughly 5% from year end 2023. So With all that said, we haven't seen that same value momentum for Timberland assets reflected in our share price. So rather than buying assets, as you know, we've been selling assets over the past year with a view towards both improving our balance sheet positioning as well as putting ourselves in a position to take advantage of share buyback opportunities. So in short, I'd say that we think the best place and certainly the cheapest place for us to buy Timberland assets right now is in the public market by buying back our own stock. Thanks very much. Turn it back. Thank you.

Our next caller is Mark Weintraub with Seaport. Sir, you may go ahead.

Thank you. I was hoping to get a little bit more color on the very, very strong values you got on some of the rural land sales. How much of that was was the specifics of the properties you were selling versus where you own these lands more generally? Yes, Mark, this is Mark. I'd start by saying kudos to our real estate team for pulling together what was really an exceptional quarter. We knew entering the year that our pipeline was going to be heavily back end loaded. The team worked very hard to close several major transactions in the fourth quarter, which contributed to those very strong results. So overall, we've been very pleased with the pricing we've been able to achieve, particularly in the fourth quarter. And we really think that that reflects the quality of our HBU portfolio. We continue to generate what we think are industry leading pricing and premiums on our HB real estate transactions. And we also think that this is a big part of our value creation story. It's also part of our story that we don't really think is fully appreciated by the market. Again, for context, as you noted, we sold about 8,000 acres of rural HBU and unimproved development properties in the fourth quarter.

Achieved a weighted average price per acre of $7,200 So again, very pleased and impressed with what the team was able to accomplish there. And we continue to see that momentum build within our HBU portfolio. And Mark, was it a certain portion that was extremely high that took that average up? Or did you see that the averages across the swath of what you were selling tended to be higher? Well, there were a number of major transactions. Again, as we've said in past, those real estate results tend to be lumpy. They tend to be heavily driven by one or two transactions that can really move the dial. And that's why ultimately going into the quarter, we had more muted expectation for real estate in the fourth quarter. We ended up converting on more of those transactions that were in the pipeline. Than we anticipated. There was one transaction in particular, an unapproved development transaction that was in excess of $10,000 per acre. I think that was just over thousand acres in total. So again, when you have those types of trends, you don't get those every quarter. But again, overall, very pleased with the results we're seeing in our rural HBU business.

Got you. Thank you. And then appreciated the comments on alternative land and solar in particular. Do you anticipate that you're going to see any meaningful revenue pickup in solar this year? Or are we still thinking it's more a year or two years away? If you could any update on expected timelines?

Yes, Mark, I'll take that. So we were really pleased about the financial contribution from land based solutions in 2024. So as you saw on the supplement, it was almost $15,000,000 this year. And we're happy about the growth that we had in the acres under option for solar and under lease for CCS over the course of the year. We do expect the contribution to grow over time and that's why we broke that out in the supplement, so you could provide the visibility and see how we're progressing. Think The bulk of our land sales solution revenue is in the solar option payments and the base rents for CCS leases And so we're growing those revenues right now off a small base. We still have a relatively limited number of counterparties and there's inherently going to be churns So at this point, at least not yet, We're at a point where we'd be fair to assume a run rate for any quarter or year going forward. Especially given some of the NDAs associated with the agreements we really can't get into the impact of any particular lease or individual moving pieces But overall, I would say that we believe that we're on the trajectory that we communicated in the Investor So by 2027.

And again, Mark, I just reiterated that, as we discussed at Investor Day, we really anticipate that, that pickup contribution from Land Based Solutions will occur beyond 2027. Recognize that essentially all of the major contributors to our land based solutions pipeline right now or most of them are certainly in that CCS and solar arena. Those tend to be they tend to be fairly long permitting timetables associated with those projects. So call it three, four years in solar probably more like four to six years in CCS. And so the last two years has been the bulk of activity and really building up that pipeline. And I think it's probably two years from now where you really start to see that converting over solar options into leases and CCS leases into injection royalties, converting over with some higher degree of regularity. But where we'd like get to is that you have kind of a stabilized base of options in the solar arena where there some portion of that is converting into leases annually and that becomes a more predictable source of cash flow growth.

CCS is going to be more binary around those injection permits which again can be fairly complex to achieve. But again, very happy with how that pipeline is building, but we really expect to see that ramp start to occur in a more significant way a couple of years out.

Okay. You. I'll get back if you have a follow-up, but I'll let others jump on first.

Thank you. Our next caller is Mike Rocklin with Truist. You may go ahead, sir.

Yes. Thank you, Mark, and Abilcon for taking my questions. Just At this point, are you finished with your corporate realignment or is there more to come And are you continuing to pursue and I guess that's the first question. Second question would be are there other ways that you're looking to drive efficiency throughout your portfolio?

Yes, I'll take that. So at this point, we've done the realignment. But I would say from a corporate examination, we're always looking at ways to keep a close eye on expenses in general. Particularly given our current operating environment, And so we do anticipate looking at that. I mean, recall that over the last eighteen months, the large dispositions have reduced our asset base. By almost 11%. And so, of course, we took a fresh look at how we were organized our op field operations in both The U. S. South and the Pacific Northwest. I would say that that's a continuous effort. We're always looking for ways to to be efficient. We not only did that in The U. S. In our operations, but we also did that in the corporate.

Looked at ways to reduce our overhead cost and streamline our processes And really looking at how we were allocating our resources and making sure that we were putting it to the areas where we wanted to grow and particularly land based solutions. And so that's not a one and done. We're always looking for ways to be more efficient But But from this point, that's we've taken those actions and the impact for this year.

Got it. Thank you, April. And then just secondly, it looks like U. S. Gypsum is going to make use of IPs closed side of Rx tech I think you had some timberland acreage around there. So can you talk about any potential benefit from Rayonir as U. S. Rayonier in takes over the property and starts to bring up operations?

Sure.

This is Doug.

I'll answer that. We were happy to see that announcement about use gypsum that mill. We're still waiting to learn more about their plans for that mill. Understand that they intend to use some recycled fiber and we're not haven't been basically in the loop yet to understand what percent would be recycled fiber versus would be virgin fiber. So a little too early yet to be able to address that question. So we're actually waiting to find out once they've completed that and where this goes.

Got it. But Doug, you said there could be some upside, regard to they probably will use some some burner fiber is your sense?

Right now, it's just it's truly for me to know at this point in time. That's that if they do use virgin fiber that would be definitely positive for that market, but we're not sure yet what the plans are.

Got it. Thank you. And the last question, Scott, I'm with you. Appreciate that. And then one last question before turning it over. Just on land based solutions, obviously, lot of momentum kudos to you for driving that. Just any concerns about the new administration and their what they're looking to do in terms of curbing disbursement from the IRA and obviously you guys got that bump in the credits to eighty, eighty five most of the time from $50 a ton So if the new administration curtails disbursements from the IRA, if they, let's say, suspend approvals for certain things like they've suspended approvals for wind, both onshore and offshore. I think New Jersey just just stopped one project they were looking to do. So long story short, any concerns, reservations you have about the new administration and what they're doing around ESG land based solutions. Thank you. Sure. This is Doug again. Yes, it's still early days for the new administration and think we all know every day there's a lot of unknowns as how it relates to how these executive awards are going to play out. Some go in, some come out within twenty four hours. So we're watching how it goes.

But that said, it's been well documented that the initiatives you mentioned related to like electric vehicles offshore wind are not favored. That's been pretty clear.

Continue to think that it would be very complex and unpopular to repeal the IRA in its entirety or to really meaningfully roll back some of the key provisions that are driving growth in our land based solutions business. Given the impact that this legislation has had on job creation and particularly in a lot of those rural Southern states, From what I've read recently, approximately 85% of the IRA investments 68% of the newly created jobs were in Republican congressional districts based on the state we read about last year. So a lot of that money is flowing into the South and Rural South in particular.

Focusing on carbon capture and storage, in particular, you mentioned about some of those credits. President Trump signed the use it act in the law during his first term that extended the 45Q tax credits for current capture storage including Class six wells and made CO2 pipelines eligible for streamline permitting via his FAST Act.

A lot of multinational oil and gas companies have made significant investments in this technology. Under the IRA, but also going forward and look to promote the expansion of the fossil fuels it does align with that. So the ability as you think about the multinationals that made commitments they're outside The U. S, it fits well with kind of the Mont we've heard from Drill Baby Drill. So by capturing Carbon Capture Storage, it continues to allow the use of those fossil fuels.

We still think that carbon capture storage is still well positioned in the current political landscape.

And we closed on the Reliant one that Mark mentioned post the election. So we've had good comments and feedback from people we're working with.

On solar, there's no doubt that our incentives amplified solar developments. As we laid out our Investor Day last year, solar development was already on a steep growth curve even before the IRA Given the strong and growing demand we're seeing from clean energy, hungry tech industry, we see a lot of lot of interest from them. So we expect solar and wind will remain on favorable growth trajectory over the coming years. Got it. Thank you, Doug. Appreciate all the color and to look at 25. Thank you. Thank you. Our And our next caller is Anthony Pettinari with Citi. You may go ahead, sir.

Hi, good morning.

Just looking at the guide for Pacific Northwest, I think you're expecting kind of EBITDA to be relatively flattish to down a little bit Despite kind of a a much larger reduction in harvest and I think kind of modest price appreciation. Is there anything kind of bridging the gap there, whether it's non timber activity or something with costs or and then could you just talk about kind of plans to export out of the Pacific Northwest in 2025 and any kind of quantification of the impact of the Washington disposition on [indiscernible] average Pacific Northwest sawtimber pricing maybe that we'll see this year?

Hey, Anthony, we couldn't hear the first part of that question. So I'm sorry, could you repeat it? It was just really muted. Sorry. Just in terms of Pacific Northwest, I think you're expecting EBITDA to be kind of flattish to down modestly year over year despite what looks like a pretty big reduction in harvest and maybe modest price appreciation. So just wanted to understand if there's anything else there that is bridging the gap No, I really think it's a function of, I expect any material growth there in non timber income, which tends to be a relatively small contributor in the Pacific Northwest, So yes, despite again, even though that guide is relatively flat, to 2023, recognize that I'm sorry, 2024 recognized that we sold about 25% of our overall asset base there. So that certainly implies expectation of higher pricing in 2025 relative to 2024?

Yes. The only thing I'd add to that is that based on the dispositions we have had, we do expect to have some lower cost with respect to our logging operations. So we sold some of the higher steeper ground and some of the farther out. So we will in addition to seeing that price increase Mark mentioned, we also are looking at cost savings based on residual footprint that we have post the dispositions. So certainly if you look at that on an EBITDA per acre basis, we're anticipating a pretty material pickup again, on EBITDA per acre given the reduced acreage relative to last year.

In the the disposition in terms of sort of average Saw timber pricing versus the regional average? Is it pretty close or how much of a mix impact is there?

I mean those properties that we sold were a bit heavier to Hemlock.

Than the portfolio average. And like Doug said, they generally had higher operating cost just given the topography And so as we discussed at the time that we announced those dispositions, We felt as though those dispositions were improving the overall quality of our Pacific Northwest portfolio given both that percentage of Douglas fir which is going to trade at a premium to Hemlock as well as just the overall operating cost across the portfolio.

Okay. Okay. That's helpful. And then Mark, in your prepared remarks, I think you mentioned tariffs just wondering if you could any kind of finer point on maybe direct or maybe indirect impact of tariffs on your three regions?

I mean, we're certainly not anticipating any direct impact. Given that we're not manufacturing lumber Look like a lot of other companies, we're closely monitoring the tariff situation right now. Clearly a 25% universal tariff on Canadian goods into The U. S. Would likely lead to higher lumber prices as well as incremental lumber production shifting to The U. S. At least in the short term. The prevailing view is that this would certainly be a positive for lumber producers and there would be a corollary to being a positive for timberland owners. That said, it's worth noting that whether or not new tariffs come into play, the existing duty rates currently being assessed on lumber from Canada are expected to reset significantly higher in the latter half of this year. So assuming this occurs, we would expect that it would similarly translate to both higher lumber prices as well as higher operating rates at U. S. Mills, which would likewise benefit tall hog pricing in The U. S. U. S. This dynamic is certainly a contributing factor to kind of how we think about [indiscernible] in log prices as we move through the year. Especially in the Pacific Northwest, which more directly competes with Western SPF from Canada.

With all that said, I think we also need to be mindful of the potential knock on effects that could counteract this phenomenon. For example, if increased prices for building products or interest rate increases further strained housing affordability this could potentially translate to a broader pullback of demand, both in new home construction as well as repair and remodel. So again, overall, we expect there could be some puts and takes here as it relates to tariffs. But on balance, kind of a net short term positive, certainly for lumber producers, as well as timberland owners like Rainier.

Okay. That's very helpful. I'll turn it over. [indiscernible] Our next caller is Ketan Mamtora with BMO Capital Markets. Sir, you may go ahead.

Thank you.

First question on on the asset disposition program, clearly you've made a lot of progress on the balance sheet side the net leverage. As we sit here today, do you think you need to do more from a balance sheet standpoint or any further sales will be focused more on kind of what kind of values you can capture and the disparity that you guys talked about Yes, Ketan, this is Mark. As we discussed on prior calls, we're very pleased with what we've been able to achieve on the disposition front to date. When we first announced the plan fifteen months ago, recall that we had two objectives. First was to reduce our net leverage to three times net debt to EBITDA or lower. And the second was to capitalize on this publicprivate disconnect that we saw in the market by monetizing assets or private market values and returning a portion of that capital to shareholders.

Since then, we've completed almost $740,000,000 of Timberland at a weighted average EBITDA multiple of about 45 times. And our current pro form a net debt to EBITDA is around 2.9 times or pro form a for recent special dividend I'm sorry, 2.6 times at year end pro form a for the special dividend I believe it's about 2.9 times. So putting all that together, I'd say we've gone a very long way towards achieving what we set out to do with the plan. And we think we've generated significant value accretion for our shareholders along the way. In terms of where we go from here, I'd say that we're still focused on getting to that $1,000,000,000 disposition target.

But I think we have the luxury of being very patient and opportunistic in our approach. We're sitting at a very position right now in terms of our capital structure. And our debt profile. So again, we can afford to be patient here. Ultimately, we're only going to pursue additional dispositions if we think they enhance our strategic positioning and maximize value for our shareholders. We still think that that opportunity exists. But again, we're going to be opportunistic as we assess options going forward.

Understood, Mark. That's helpful. But there's nothing in this where $1,000,000,000 is kind of a sort of a cap, right? If you find something where you get exceptionally strong values, would you be open to overshooting that $1,000,000,000 number that you all have kind of targeted?

Yes. Look, again, we're not deliberately looking to overshoot the $1,000,000,000 target, but we're certainly not averse to doing so if we're able to achieve compelling values on the various assets that we're still considering. And if we were to exceed that target, we have some flexibility to redeploy those proceeds into other growth opportunities or Timberland acquisitions in particular potentially through like kind exchange transactions, which would give us some more flexibility around the potential distribution. Alternatively, we could look to further delever and return capital to shareholders, especially if we see a compelling buyback opportunity which I certainly think that's how we feel right now, kind of getting more of the stock is. We've always operated with that mindset of nimble capital allocation and active portfolio management. Really with a view towards building long term value per share. So we're going to continue to adhere to that mindset as we consider additional [indiscernible] Understood. And then one other question and perhaps Doug can chime in here as well. If you look at U. S. South, Over the last ten years, we've seen significant increase in lumber production in The U. S. South, right, call it from 15,000,000,000 board feet to 22,000,000,000 board board feet roughly.

Yet if you look at it doesn't lock prices, and pulpwood prices during the same sort of ten year, they are actually down not just the Southern average, but also in some of the coastal markets like Florida and Georgia. So I'm curious as you look at that sort of ten year period and as we sit here today, what gives you confidence that as more Lumber product [indiscernible] sell and lock prices. Yes, there's a lot to unpack in that question, Ketan.

Look, I think there have been a lot of dynamics and shifting dynamics over the last several years that have caused lumber I'm sorry, timber prices in the South and not move higher as much as had been anticipated. One of those dynamics right now and certainly over the last call it eighteen months has been this disconnect that we've seen develop between Southern Yellow Pine lumber prices and SPF lumber prices. Again, I think that there's been a fair amount of discussion around why that exists and why that's persisted here recently. Some of that is driven by just the preferred end use for those different types of lumber. So for example, SBF tents have a preferred use in single family construction. Southern Yellow Pine tends to have a preferred use. In repair and remodel. And so with the pullback in repair and remodel activity, we think that that's really been one of the big drivers of that disconnect that's developed between SPF lumber and SYP lumber. So yes, the thesis had been historically that as we continue to see capacity come out of Canada and more of that production shifted to The U. S. South or the thought was that more of that production would shift to The U. S. South that that would translate to higher prices for sawlogs.

But the issue that we have right now or that I'd say the market has right now is that given that disconnect between SPF and SYP, Southern Mills just haven't been as profitable as would have been expected in this type of demand environment. Again, think that some of these issues are transitory. I do think that we expect or the market expects that repair and remodel should pick up. We've kind of been suffering from this lock in effect of the following the rapid rise in mortgage rates where essentially people couldn't afford to move and really it's that resale activity that drives R and R spending. People tend to remodel a home either right before they sell it or right after they buy it. And again, that resale activity has been pretty limited. So we think the market is starting to normalize. We think we're going to see a pickup in R and R activity. We think we should see some more normalization of SYP lumber prices relative to SPF. And on balance, we think that that should drive both SYP lumber prices as well as install log prices higher.

And again, I think if you couple that with what's anticipated to be a pretty meaningful uptick in lumber duties after mid year kind of irrespective of any new tariffs, that could come into play. Again, we think that that could create a pretty meaningful tailwind for solid pricing in the South. But here your point that it hasn't materialized on the timetable that many would have expected at different points in time over the last five, ten years. But it does feel as though we're kind of entering an inflection point here in the coming years.

Thanks, Matt. That's very helpful. I appreciate the perspective.

Thank you. And our last question comes from Mark Weintra with Seaport.

Thank you. I hope this is a fair question question. I'll try and keep it really short. So a year ago, you hired a financial advisor to help evaluate this [indiscernible] Has that process largely played out at this point? Or is there anything any color you can give us how we should be thinking about that given that was a year ago when that was announced or almost a year ago?

Yes, we don't have anything specific to report on New Zealand at this point other than to say that we are still actively engaged in that evaluation of strategic alternatives. There. That process is not concluded. Recall the one we initially announced that review of strategic alternatives for New Zealand, We indicated that we expected that process to be a very lengthy process.

Given some of the complexities of our joint venture structure there. So again, we're still working through it on, but we're not in a position to comment further at this point. Very good. And thank you.

And at this time, I am showing no further questions, sir.

All right. This is Colin Mings.

I'd like to thank everybody for joining us. Please contact us with any follow-up questions.

Thank you. This concludes today's conference call. You may go ahead and disconnect at this [indiscernible] [indiscernible]