Item 1. Financial Statements
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
$191,447
|
|
|
$259,130
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
(151,378)
|
|
|
(209,499)
|
|
Selling and general expenses
|
|
|
|
|
(14,032)
|
|
|
(9,968)
|
|
Other operating income (expense), net (Note 18)
|
|
|
|
|
2,448
|
|
|
(1,111)
|
|
|
|
|
|
|
(162,962)
|
|
|
(220,578)
|
|
OPERATING INCOME
|
|
|
|
|
28,485
|
|
|
38,552
|
|
Interest expense
|
|
|
|
|
(10,028)
|
|
|
(8,216)
|
|
Interest and other miscellaneous expense, net
|
|
|
|
|
(4)
|
|
|
(209)
|
|
INCOME BEFORE INCOME TAXES
|
|
|
|
|
18,453
|
|
|
30,127
|
|
|
|
|
|
|
(3,421)
|
|
|
(3,706)
|
|
NET INCOME
|
|
|
|
|
15,032
|
|
|
26,421
|
|
Less: Net income attributable to noncontrolling interests in the Operating Partnership
|
|
|
|
|
(341)
|
|
|
—
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3,843)
|
|
|
(567)
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER INC.
|
|
|
|
|
10,848
|
|
|
25,854
|
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
Foreign currency translation adjustment, net of income tax effect of $0, and $0
|
|
|
|
|
(14,288)
|
|
|
(44,023)
|
|
Cash flow hedges, net of income tax effect of $1,059 and $1,857
|
|
|
|
|
61,001
|
|
|
(83,475)
|
|
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0
|
|
|
|
|
294
|
|
|
217
|
|
Total other comprehensive income (loss)
|
|
|
|
|
47,007
|
|
|
(127,281)
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
62,039
|
|
|
(100,860)
|
|
Less: Comprehensive income attributable to noncontrolling interests in the Operating Partnership
|
|
|
|
|
(1,872)
|
|
|
—
|
|
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(580)
|
|
|
10,661
|
|
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER INC.
|
|
|
|
|
$59,587
|
|
|
($90,199)
|
|
EARNINGS PER COMMON SHARE (NOTE 8)
|
|
|
|
|
|
|
|
Basic earnings per share attributable to Rayonier Inc.
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
Diluted earnings per share attributable to Rayonier Inc.
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
ASSETS
|
CURRENT ASSETS
|
|
|
|
Cash and cash equivalents, excluding Timber Funds
|
$77,946
|
|
|
$80,454
|
|
Cash and cash equivalents, Timber Funds
|
4,674
|
|
|
4,053
|
|
Total cash and cash equivalents
|
82,620
|
|
|
84,507
|
|
Accounts receivable, less allowance for doubtful accounts of $45 and $25
|
51,902
|
|
|
49,082
|
|
|
|
|
|
|
24,993
|
|
|
10,594
|
|
|
|
|
|
Prepaid expenses
|
18,280
|
|
|
16,168
|
|
|
7,930
|
|
|
3,449
|
|
Other current assets
|
4,355
|
|
|
6,765
|
|
Total current assets
|
190,080
|
|
|
170,565
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
3,245,122
|
|
|
3,262,126
|
|
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
|
111,315
|
|
|
108,518
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
Land
|
6,569
|
|
|
6,548
|
|
Buildings
|
30,979
|
|
|
31,024
|
|
Machinery and equipment
|
4,395
|
|
|
4,615
|
|
Construction in progress
|
471
|
|
|
452
|
|
Total property, plant and equipment, gross
|
42,414
|
|
|
42,639
|
|
Less — accumulated depreciation
|
(12,700)
|
|
|
(12,238)
|
|
Total property, plant and equipment, net
|
29,714
|
|
|
30,401
|
|
|
475
|
|
|
2,975
|
|
RIGHT-OF-USE ASSETS
|
105,146
|
|
|
108,992
|
|
OTHER ASSETS
|
67,732
|
|
|
45,156
|
|
TOTAL ASSETS
|
$3,749,584
|
|
|
$3,728,733
|
|
LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
|
CURRENT LIABILITIES
|
|
|
|
Accounts payable
|
$35,083
|
|
|
$24,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued taxes
|
8,317
|
|
|
7,347
|
|
|
|
|
|
Accrued payroll and benefits
|
6,094
|
|
|
12,327
|
|
Accrued interest
|
9,627
|
|
|
6,325
|
|
Deferred revenue
|
8,137
|
|
|
11,112
|
|
Other current liabilities
|
33,587
|
|
|
29,234
|
|
Total current liabilities
|
100,845
|
|
|
91,135
|
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 9)
|
1,299,433
|
|
|
1,300,336
|
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, TIMBER FUNDS (NOTE 9)
|
59,967
|
|
|
60,179
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 19)
|
22,958
|
|
|
23,344
|
|
LONG-TERM LEASE LIABILITY
|
96,872
|
|
|
100,251
|
|
OTHER NON-CURRENT LIABILITIES
|
121,598
|
|
|
160,722
|
|
|
|
|
|
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP (NOTE 6)
|
137,990
|
|
|
130,121
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
Common Shares, 480,000,000 shares authorized,138,970,890 and 137,678,822 shares issued and outstanding
|
1,146,265
|
|
|
1,101,675
|
|
Retained earnings
|
407,716
|
|
|
446,267
|
|
Accumulated other comprehensive loss (Note 21)
|
(25,146)
|
|
|
(73,885)
|
|
TOTAL RAYONIER INC. SHAREHOLDERS’ EQUITY
|
1,528,835
|
|
|
1,474,057
|
|
Noncontrolling interests in consolidated affiliates (Note 6)
|
381,086
|
|
|
388,588
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
1,909,921
|
|
|
1,862,645
|
|
TOTAL LIABILITIES, NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND SHAREHOLDERS’ EQUITY
|
$3,749,584
|
|
|
$3,728,733
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive Loss
|
|
Noncontrolling Interests in Consolidated Affiliates
|
|
Shareholders’
Equity
|
|
Shares
|
|
Amount
|
|
Balance, January 1, 2021
|
137,678,822
|
|
|
$1,101,675
|
|
|
$446,267
|
|
|
($73,885)
|
|
|
$388,588
|
|
|
$1,862,645
|
|
Net income
|
—
|
|
|
—
|
|
|
11,189
|
|
|
—
|
|
|
3,843
|
|
|
15,032
|
|
Net income attributable to noncontrolling interests in the Operating Partnership
|
—
|
|
|
—
|
|
|
(341)
|
|
|
—
|
|
|
—
|
|
|
(341)
|
|
Dividends ($0.27 per share) (a)
|
—
|
|
|
—
|
|
|
(37,532)
|
|
|
—
|
|
|
—
|
|
|
(37,532)
|
|
Issuance of shares under the “at-the-market” equity offering, net of commissions and offering costs of $197
|
1,107,814
|
|
|
36,708
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,708
|
|
Issuance of shares under incentive stock plans
|
39,140
|
|
|
1,166
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,166
|
|
Stock-based compensation
|
—
|
|
|
2,156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,156
|
|
Repurchase of common shares
|
(5,020)
|
|
|
(155)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(155)
|
|
Measurement period adjustment of noncontrolling interests in consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
655
|
|
|
655
|
|
Adjustment of noncontrolling interests in the Operating Partnership
|
—
|
|
|
—
|
|
|
(11,867)
|
|
|
—
|
|
|
—
|
|
|
(11,867)
|
|
Conversion of units into common shares
|
150,134
|
|
|
4,715
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,715
|
|
Amortization of pension and postretirement plan liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|
—
|
|
|
294
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,652)
|
|
|
(2,636)
|
|
|
(14,288)
|
|
Cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
61,628
|
|
|
(627)
|
|
|
61,001
|
|
Allocation of other comprehensive income to noncontrolling interests in the Operating Partnership
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,531)
|
|
|
—
|
|
|
(1,531)
|
|
Distributions to noncontrolling interests in consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,737)
|
|
|
(8,737)
|
|
Balance, March 31, 2021
|
138,970,890
|
|
|
$1,146,265
|
|
|
$407,716
|
|
|
($25,146)
|
|
|
$381,086
|
|
|
$1,909,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
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|
|
|
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Noncontrolling Interests in Consolidated Affiliates
|
|
Shareholders’
Equity
|
|
Shares
|
|
Amount
|
|
Balance, January 1, 2020
|
129,331,069
|
|
|
$888,177
|
|
|
$583,006
|
|
|
($31,202)
|
|
|
$97,661
|
|
|
$1,537,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
—
|
|
|
—
|
|
|
25,854
|
|
|
—
|
|
|
567
|
|
|
26,421
|
|
Dividends ($0.27 per share)
|
—
|
|
|
—
|
|
|
(34,813)
|
|
|
—
|
|
|
—
|
|
|
(34,813)
|
|
Issuance of shares under incentive stock plans
|
2,407
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
Stock-based compensation
|
—
|
|
|
1,510
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,510
|
|
Repurchase of common shares
|
(152,237)
|
|
|
—
|
|
|
(3,152)
|
|
|
—
|
|
|
—
|
|
|
(3,152)
|
|
Amortization of pension and postretirement plan liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
217
|
|
|
—
|
|
|
217
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,894)
|
|
|
(10,129)
|
|
|
(44,023)
|
|
Cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
(82,376)
|
|
|
(1,099)
|
|
|
(83,475)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling interests in consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(725)
|
|
|
(725)
|
|
Balance, March 31, 2020
|
129,181,239
|
|
|
$889,753
|
|
|
$570,895
|
|
|
($147,255)
|
|
|
$86,275
|
|
|
$1,399,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$15,032
|
|
|
$26,421
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
Depreciation, depletion and amortization
|
45,213
|
|
|
34,329
|
|
Non-cash cost of land and improved development
|
1,813
|
|
|
412
|
|
Stock-based incentive compensation expense
|
2,156
|
|
|
1,510
|
|
Deferred income taxes
|
(1,128)
|
|
|
3,361
|
|
Amortization of losses from pension and postretirement plans
|
294
|
|
|
217
|
|
|
|
|
|
Gain on sale of large disposition of timberlands
|
—
|
|
|
(28,655)
|
|
Other
|
(3,681)
|
|
|
568
|
|
Changes in operating assets and liabilities:
|
|
|
|
Receivables
|
(3,697)
|
|
|
(5,316)
|
|
Inventories
|
(3,512)
|
|
|
(3,618)
|
|
Accounts payable
|
6,684
|
|
|
3,353
|
|
|
|
|
|
All other operating activities
|
(5,306)
|
|
|
(3,403)
|
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
53,868
|
|
|
29,179
|
|
INVESTING ACTIVITIES
|
|
|
|
Capital expenditures
|
(15,831)
|
|
|
(17,176)
|
|
|
|
|
|
Real estate development investments
|
(3,011)
|
|
|
(1,727)
|
|
|
|
|
|
Purchase of timberlands
|
(29,938)
|
|
|
(24,122)
|
|
|
|
|
|
Net proceeds from large disposition of timberlands
|
—
|
|
|
115,666
|
|
|
|
|
|
|
|
|
|
Other
|
4,356
|
|
|
2,070
|
|
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES
|
(44,424)
|
|
|
74,711
|
|
FINANCING ACTIVITIES
|
|
|
|
Issuance of debt
|
—
|
|
|
20,000
|
|
Repayment of debt
|
—
|
|
|
(20,000)
|
|
Dividends paid on common stock
|
(37,490)
|
|
|
(34,907)
|
|
Distributions to noncontrolling interests in the Operating Partnership
|
(1,155)
|
|
|
—
|
|
|
|
|
|
Proceeds from the issuance of common shares under incentive stock plan
|
1,166
|
|
|
66
|
|
Proceeds from the issuance of common shares under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs
|
32,545
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Repurchase of common shares
|
(155)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Repurchase of common shares made under repurchase program
|
—
|
|
|
(3,152)
|
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling interests in consolidated affiliates
|
(8,737)
|
|
|
(725)
|
|
|
|
|
|
CASH USED FOR FINANCING ACTIVITIES
|
(13,826)
|
|
|
(38,718)
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(5)
|
|
|
(2,303)
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
(4,387)
|
|
|
62,869
|
|
Balance, beginning of year
|
87,482
|
|
|
69,968
|
|
Balance, end of period
|
$83,095
|
|
|
$132,837
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
Cash paid during the period:
|
|
|
|
Interest (a)
|
$2,945
|
|
|
$2,595
|
|
Income taxes
|
4,838
|
|
|
185
|
|
Non-cash investing activity:
|
|
|
|
Capital assets purchased on account
|
4,814
|
|
|
4,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Interest paid is presented net of patronage payments received of $6.2 million and $4.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. For additional information on patronage payments, see Note 8 — Debt in the 2020 Form 10-K.
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
$191,447
|
|
|
$259,130
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
(151,378)
|
|
|
(209,499)
|
|
Selling and general expenses
|
|
|
|
|
(14,032)
|
|
|
(9,968)
|
|
Other operating income (expense), net (Note 18)
|
|
|
|
|
2,448
|
|
|
(1,111)
|
|
|
|
|
|
|
(162,962)
|
|
|
(220,578)
|
|
OPERATING INCOME
|
|
|
|
|
28,485
|
|
|
38,552
|
|
Interest expense
|
|
|
|
|
(10,028)
|
|
|
(8,216)
|
|
Interest and other miscellaneous expense, net
|
|
|
|
|
(4)
|
|
|
(209)
|
|
INCOME BEFORE INCOME TAXES
|
|
|
|
|
18,453
|
|
|
30,127
|
|
|
|
|
|
|
(3,421)
|
|
|
(3,706)
|
|
NET INCOME
|
|
|
|
|
15,032
|
|
|
26,421
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3,843)
|
|
|
(567)
|
|
NET INCOME ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS
|
|
|
|
|
11,189
|
|
|
25,854
|
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
Foreign currency translation adjustment, net of income tax effect of $0, and $0
|
|
|
|
|
(14,288)
|
|
|
(44,023)
|
|
Cash flow hedges, net of income tax effect of $1,059 and $1,857
|
|
|
|
|
61,001
|
|
|
(83,475)
|
|
Amortization of pension and postretirement plans, net of income tax expense of $0 and $0
|
|
|
|
|
294
|
|
|
217
|
|
Total other comprehensive income (loss)
|
|
|
|
|
47,007
|
|
|
(127,281)
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
62,039
|
|
|
(100,860)
|
|
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(580)
|
|
|
10,661
|
|
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RAYONIER, L.P. UNITHOLDERS
|
|
|
|
|
$61,459
|
|
|
($90,199)
|
|
|
|
|
|
|
|
|
|
Basic earnings per unit attributable to Rayonier, L.P.
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
Diluted earnings per unit attributable to Rayonier, L.P.
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
ASSETS
|
CURRENT ASSETS
|
|
|
|
Cash and cash equivalents, excluding Timber Funds
|
$77,946
|
|
|
$80,454
|
|
Cash and cash equivalents, Timber Funds
|
4,674
|
|
|
4,053
|
|
Total cash and cash equivalents
|
82,620
|
|
|
84,507
|
|
Accounts receivable, less allowance for doubtful accounts of $45 and $25
|
51,902
|
|
|
49,082
|
|
|
|
|
|
|
24,993
|
|
|
10,594
|
|
|
|
|
|
Prepaid expenses
|
18,280
|
|
|
16,168
|
|
|
7,930
|
|
|
3,449
|
|
Other current assets
|
4,355
|
|
|
6,765
|
|
Total current assets
|
190,080
|
|
|
170,565
|
|
TIMBER AND TIMBERLANDS, NET OF DEPLETION AND AMORTIZATION
|
3,245,122
|
|
|
3,262,126
|
|
HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT
|
111,315
|
|
|
108,518
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
Land
|
6,569
|
|
|
6,548
|
|
Buildings
|
30,979
|
|
|
31,024
|
|
Machinery and equipment
|
4,395
|
|
|
4,615
|
|
Construction in progress
|
471
|
|
|
452
|
|
Total property, plant and equipment, gross
|
42,414
|
|
|
42,639
|
|
Less — accumulated depreciation
|
(12,700)
|
|
|
(12,238)
|
|
Total property, plant and equipment, net
|
29,714
|
|
|
30,401
|
|
|
475
|
|
|
2,975
|
|
RIGHT-OF-USE ASSETS
|
105,146
|
|
|
108,992
|
|
OTHER ASSETS
|
67,732
|
|
|
45,156
|
|
TOTAL ASSETS
|
$3,749,584
|
|
|
$3,728,733
|
|
LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL
|
CURRENT LIABILITIES
|
|
|
|
Accounts payable
|
$35,083
|
|
|
$24,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued taxes
|
8,317
|
|
|
7,347
|
|
|
|
|
|
Accrued payroll and benefits
|
6,094
|
|
|
12,327
|
|
Accrued interest
|
9,627
|
|
|
6,325
|
|
Deferred revenue
|
8,137
|
|
|
11,112
|
|
Other current liabilities
|
33,587
|
|
|
29,234
|
|
Total current liabilities
|
100,845
|
|
|
91,135
|
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, EXCLUDING TIMBER FUNDS (NOTE 9)
|
1,299,433
|
|
|
1,300,336
|
|
LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS, TIMBER FUNDS (NOTE 9)
|
59,967
|
|
|
60,179
|
|
PENSION AND OTHER POSTRETIREMENT BENEFITS (NOTE 19)
|
22,958
|
|
|
23,344
|
|
LONG-TERM LEASE LIABILITY
|
96,872
|
|
|
100,251
|
|
OTHER NON-CURRENT LIABILITIES
|
121,598
|
|
|
160,722
|
|
|
|
|
|
|
|
|
|
REDEEMABLE OPERATING PARTNERSHIP UNITS (NOTE 6) 4,278,766 and 4,428,900 Units outstanding, respectively
|
137,990
|
|
|
130,121
|
|
CAPITAL
|
|
|
|
General partners’ capital
|
15,499
|
|
|
15,454
|
|
Limited partners’ capital
|
1,534,411
|
|
|
1,529,948
|
|
Accumulated other comprehensive loss (Note 21)
|
(21,075)
|
|
|
(71,345)
|
|
TOTAL CONTROLLING INTEREST CAPITAL
|
1,528,835
|
|
|
1,474,057
|
|
Noncontrolling interests in consolidated affiliates (Note 6)
|
381,086
|
|
|
388,588
|
|
TOTAL CAPITAL
|
1,909,921
|
|
|
1,862,645
|
|
TOTAL LIABILITIES, REDEEMABLE OPERATING PARTNERSHIP UNITS AND CAPITAL
|
$3,749,584
|
|
|
$3,728,733
|
|
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(Unaudited)
(Dollars in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
Accumulated
Other
Comprehensive Loss
|
|
Noncontrolling Interests in Consolidated Affiliates
|
|
Total Capital
|
|
|
General Partners’ Capital
|
|
Limited Partners’ Capital
|
|
Balance, January 1, 2021
|
|
$15,454
|
|
|
$1,529,948
|
|
|
($71,345)
|
|
|
$388,588
|
|
|
$1,862,645
|
|
Net income
|
|
112
|
|
|
11,077
|
|
|
—
|
|
|
3,843
|
|
|
15,032
|
|
Distributions on units ($0.27 per unit)
|
|
(387)
|
|
|
(38,300)
|
|
|
—
|
|
|
—
|
|
|
(38,687)
|
|
Issuance of units under the “at-the-market” equity offering, net of commissions and offering costs of $197
|
|
367
|
|
|
36,341
|
|
|
—
|
|
|
—
|
|
|
36,708
|
|
Issuance of units under incentive stock plans
|
|
12
|
|
|
1,154
|
|
|
—
|
|
|
—
|
|
|
1,166
|
|
Stock-based compensation
|
|
22
|
|
|
2,134
|
|
|
—
|
|
|
—
|
|
|
2,156
|
|
Repurchase of units
|
|
(2)
|
|
|
(153)
|
|
|
—
|
|
|
—
|
|
|
(155)
|
|
Adjustment of Redeemable Operating Partnership Units
|
|
(126)
|
|
|
(12,458)
|
|
|
—
|
|
|
—
|
|
|
(12,584)
|
|
Conversion of units into common shares
|
|
47
|
|
|
4,668
|
|
|
—
|
|
|
—
|
|
|
4,715
|
|
Measurement period adjustment of noncontrolling interests in consolidated affiliates
|
|
—
|
|
|
—
|
|
|
—
|
|
|
655
|
|
|
655
|
|
Amortization of pension and postretirement plan liabilities
|
|
—
|
|
|
—
|
|
|
294
|
|
|
—
|
|
|
294
|
|
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
(11,652)
|
|
|
(2,636)
|
|
|
(14,288)
|
|
Cash flow hedges
|
|
—
|
|
|
—
|
|
|
61,628
|
|
|
(627)
|
|
|
61,001
|
|
Distributions to noncontrolling interests in consolidated affiliates
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,737)
|
|
|
(8,737)
|
|
Balance, March 31, 2021
|
|
$15,499
|
|
|
$1,534,411
|
|
|
($21,075)
|
|
|
$381,086
|
|
|
$1,909,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Noncontrolling Interests in Consolidated Affiliates
|
|
Total Capital
|
|
General Partners’ Capital
|
|
Limited Partners’ Capital
|
|
Balance, January 1, 2020
|
$14,712
|
|
|
$1,456,471
|
|
|
($31,202)
|
|
|
$97,661
|
|
|
$1,537,642
|
|
Net income
|
259
|
|
|
25,595
|
|
|
—
|
|
|
567
|
|
|
26,421
|
|
Distributions on units ($0.27 per unit)
|
(349)
|
|
|
(34,464)
|
|
|
—
|
|
|
—
|
|
|
(34,813)
|
|
Issuance of units under incentive stock plans
|
1
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
66
|
|
Stock-based compensation
|
15
|
|
|
1,495
|
|
|
—
|
|
|
—
|
|
|
1,510
|
|
Repurchase of units
|
(32)
|
|
|
(3,120)
|
|
|
—
|
|
|
—
|
|
|
(3,152)
|
|
Amortization of pension and postretirement plan liabilities
|
—
|
|
|
—
|
|
|
217
|
|
|
—
|
|
|
217
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
(33,894)
|
|
|
(10,129)
|
|
|
(44,023)
|
|
Cash flow hedges
|
—
|
|
|
—
|
|
|
(82,376)
|
|
|
(1,099)
|
|
|
(83,475)
|
|
Distributions to noncontrolling interests in consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(725)
|
|
|
(725)
|
|
Balance, March 31, 2020
|
$14,606
|
|
|
$1,446,042
|
|
|
($147,255)
|
|
|
$86,275
|
|
|
$1,399,668
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
See Notes to Consolidated Financial Statements.
RAYONIER, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$15,032
|
|
|
$26,421
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
Depreciation, depletion and amortization
|
45,213
|
|
|
34,329
|
|
Non-cash cost of land and improved development
|
1,813
|
|
|
412
|
|
Stock-based incentive compensation expense
|
2,156
|
|
|
1,510
|
|
Deferred income taxes
|
(1,128)
|
|
|
3,361
|
|
Amortization of losses from pension and postretirement plans
|
294
|
|
|
217
|
|
|
|
|
|
Gain on sale of large disposition of timberlands
|
—
|
|
|
(28,655)
|
|
Other
|
(3,681)
|
|
|
568
|
|
Changes in operating assets and liabilities:
|
|
|
|
Receivables
|
(3,697)
|
|
|
(5,316)
|
|
Inventories
|
(3,512)
|
|
|
(3,618)
|
|
Accounts payable
|
6,684
|
|
|
3,353
|
|
|
|
|
|
All other operating activities
|
(5,306)
|
|
|
(3,403)
|
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
53,868
|
|
|
29,179
|
|
INVESTING ACTIVITIES
|
|
|
|
Capital expenditures
|
(15,831)
|
|
|
(17,176)
|
|
|
|
|
|
Real estate development investments
|
(3,011)
|
|
|
(1,727)
|
|
|
|
|
|
Purchase of timberlands
|
(29,938)
|
|
|
(24,122)
|
|
|
|
|
|
Net proceeds from large disposition of timberlands
|
—
|
|
|
115,666
|
|
|
|
|
|
|
|
|
|
Other
|
4,356
|
|
|
2,070
|
|
CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES
|
(44,424)
|
|
|
74,711
|
|
FINANCING ACTIVITIES
|
|
|
|
Issuance of debt
|
—
|
|
|
20,000
|
|
Repayment of debt
|
—
|
|
|
(20,000)
|
|
Distributions on units
|
(38,645)
|
|
|
(34,907)
|
|
Proceeds from the issuance of units under incentive stock plan
|
1,166
|
|
|
66
|
|
Proceeds from the issuance of units under the “at-the-market” (ATM) equity offering program, net of commissions and offering costs
|
32,545
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Repurchase of units
|
(155)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Repurchase of units made under repurchase program
|
—
|
|
|
(3,152)
|
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling interests in consolidated affiliates
|
(8,737)
|
|
|
(725)
|
|
|
|
|
|
CASH USED FOR FINANCING ACTIVITIES
|
(13,826)
|
|
|
(38,718)
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(5)
|
|
|
(2,303)
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
(4,387)
|
|
|
62,869
|
|
Balance, beginning of year
|
87,482
|
|
|
69,968
|
|
Balance, end of period
|
$83,095
|
|
|
$132,837
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
Cash paid during the period:
|
|
|
|
Interest (a)
|
$2,945
|
|
|
$2,595
|
|
Income taxes
|
4,838
|
|
|
185
|
|
Non-cash investing activity:
|
|
|
|
Capital assets purchased on account
|
4,814
|
|
|
4,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Interest paid is presented net of patronage payments received of $6.2 million and $4.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. For additional information on patronage payments, see Note 8 — Debt in the 2020 Form 10-K.
See Notes to Consolidated Financial Statements.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
1.BASIS OF PRESENTATION
The unaudited consolidated financial statements and notes thereto of Rayonier Inc. and its subsidiaries and Rayonier, L.P. have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The Rayonier Inc. and Rayonier, L.P. year-end balance sheet information was derived from audited financial statements not included herein. In the opinion of management, these financial statements and notes reflect any adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. These statements and notes should be read in conjunction with the financial statements and supplementary data included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC (the “2020 Form 10-K”).
On May 7, 2020, Rayonier Inc. contributed its 100% ownership interest in Rayonier Operating Company LLC (the “Contribution”) to Rayonier, L.P. As a result of the Contribution, Rayonier, L.P. expressly assumed all the obligations of Rayonier Inc. with respect to the outstanding 2022 Notes and Rayonier Inc. agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. under the Indenture, including the 2022 Notes.
On May 8, 2020, Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. As of March 31, 2021, the Company owned a 97.0% interest in the Operating Partnership, with the remaining 3.0% interest owned by limited partners of the Operating Partnership. As the sole general partner of the Operating Partnership, Rayonier Inc. has exclusive control of the day-to-day management of the Operating Partnership. Please see Note 2 - Merger with Pope Resources and Note 24 - Charges for Integration and Restructuring for further information pertaining to the merger.
Pursuant to ASC 250, the Contribution was accounted for as a change in reporting entity between entities under common control and applied retrospectively for all periods as if the Contribution had been in effect since inception of common control. As a result, the effect of the change in reporting entity on Rayonier L.P.’s operating income, net income attributable to Rayonier, L.P. and per unit amounts for the three months ended March 31, 2020, assuming the change in reporting entity occurred on January 1, 2020 are presented below (in thousands, except per unit amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2020
|
|
|
|
Operating income
|
|
—
|
|
Net income attributable to Rayonier, L.P. (a)
|
|
($3,596)
|
|
Basic earnings per unit attributable to Rayonier, L.P.
|
|
($0.03)
|
|
Diluted earnings per unit attributable to Rayonier, L.P.
|
|
($0.03)
|
|
(a) The effect of the change in net income attributable to Rayonier, L.P. is due to the interest expense and guarantee fees associated with the 2022 Notes.
SUMMARY OF UPDATES TO SIGNIFICANT ACCOUNTING POLICIES
For a full description of our other significant accounting policies, see Note 1 — Summary of Significant Accounting Policies in our 2020 Form 10-K.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
NEW ACCOUNTING STANDARDS
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance to ease the potential burden in accounting due to reference rate reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During Q2 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
In August 2020, the FASB issued ASU 2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. We are currently in the process of evaluating the effects of the provisions of ASU 2020-06 on our financial statements.
SUBSEQUENT EVENTS
We have evaluated events occurring from March 31, 2021 to the date of issuance of these Consolidated Financial Statements for potential recognition or disclosure in the consolidated financial statements. No events were identified that warranted recognition or disclosure.
2. MERGER WITH POPE RESOURCES
On May 8, 2020, Rayonier Inc. and Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. Pope Resources was a master limited partnership that primarily owned and managed timberlands in the U.S. Pacific Northwest. Pope Resources also managed and co-invested in three private equity timber funds and developed and sold real estate properties. For additional information about the merger, see Note 2 - Merger with Pope Resources in the 2020 Form 10-K.
The total purchase price was as follows (in millions):
|
|
|
|
|
|
|
|
Cash consideration
|
$247,318
|
|
Equity consideration
|
172,640
|
|
Redeemable Operating Partnership Unit consideration
|
106,752
|
|
Fair value of Pope Resources units held by us (a)
|
11,211
|
|
Total purchase price
|
$537,921
|
|
(a)Based on the closing price of Pope Resources units on the NASDAQ on May 7, 2020.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The acquisition of Pope Resources has been accounted for as a business combination under ASC 805, Business Combinations, (“ASC 805”). Under ASC 805, assets acquired and liabilities assumed in a business combination must be recorded at their fair value as of the acquisition date. Recorded fair valuation of assets acquired and liabilities assumed related to the acquisition of Pope Resources is preliminary and will be completed as soon as practicable, but no later than one year after the consummation of the transaction. Pursuant to ASC 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional amount adjustments during the reporting period in which the adjustments are determined. We will also be required to record, in the same period's financial statements, the effect on earnings of changes in depletion, depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.
As a result of refinements to the preliminary purchase price allocation, higher and better use timberlands increased by approximately $8.2 million. This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets.
The preliminary estimate of fair value required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. Those estimates and assumptions are subject to change as we obtain additional information related to those estimates during the applicable measurement periods (up to one year from the acquisition date). The most significant open items necessary to complete are related to timberlands, property, plant and equipment, higher and better use timberlands and real estate development investments, long-term debt instruments, environmental liabilities, intangible assets and tax related matters.
The preliminary fair value estimates were generally based on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in ASC 820, Fair Value Measurement, (“ASC 820”) with the exception of certain long-term debt instruments assumed in the merger that can be valued using observable market inputs and are therefore Level 2 measurements. See Note 11 — Fair Value Measurements for further information on the fair value hierarchy.
The following summarizes the fair value methodology utilized in our preliminary fair value estimates for significant assets and liabilities:
Income Approach — Estimates fair value for an asset based on the present value of cash flow projected to be generated by the asset. Projected cash flows are discounted at rates of return that reflect the relative risk of achieving the cash flows and the time value of money. This approach was primarily used to value acquired timber in both our Pacific Northwest and Timber Funds segment.
Cost Approach — Estimates value by determining the current cost of replacing an asset with another of equivalent economic utility. This approach was primarily used for property and equipment.
Market Approach — Estimates fair value for an asset based on values of recent comparable transactions. This approach was primarily used to value timberlands, higher and better use timberlands and real estate developments investments, certain land and building assets and long-term debt instruments.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The preliminary allocation of purchase price to the identifiable assets acquired and liabilities assumed was based on preliminary estimates of fair value as of May 8, 2020, and is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Timberlands
|
|
Timber Funds
|
|
Total
|
Timberland and Real Estate Business
|
|
|
|
|
|
Cash
|
$7,380
|
|
|
$8,870
|
|
|
$16,250
|
|
Accounts receivable
|
2,459
|
|
|
1,787
|
|
|
4,246
|
|
Other current assets
|
703
|
|
|
260
|
|
|
963
|
|
Timber and Timberlands
|
507,526
|
|
|
432,500
|
|
|
940,026
|
|
Higher and Better Use Timberlands and Real Estate Development Investments
|
34,748
|
|
|
—
|
|
|
34,748
|
|
Property, plant and equipment
|
11,616
|
|
|
—
|
|
|
11,616
|
|
Other assets
|
3,736
|
|
|
269
|
|
|
4,005
|
|
Total identifiable assets acquired
|
$568,168
|
|
|
$443,686
|
|
|
$1,011,854
|
|
|
|
|
|
|
|
Accounts payable
|
274
|
|
|
293
|
|
|
567
|
|
Current maturities of long-term debt
|
—
|
|
|
25,084
|
|
|
25,084
|
|
Accrued interest
|
244
|
|
|
275
|
|
|
519
|
|
Other current liabilities
|
9,038
|
|
|
2,080
|
|
|
11,118
|
|
Long-term debt
|
53,502
|
|
|
35,759
|
|
|
89,261
|
|
Long-term environmental liabilities
|
10,748
|
|
|
—
|
|
|
10,748
|
|
Other non-current liabilities (a)
|
2,616
|
|
|
—
|
|
|
2,616
|
|
Total liabilities assumed
|
$76,422
|
|
|
$63,491
|
|
|
$139,913
|
|
|
|
|
|
|
|
Net identifiable assets
|
$491,746
|
|
|
$380,195
|
|
|
$871,941
|
|
Less: noncontrolling interests
|
(3,816)
|
|
|
(330,204)
|
|
|
(334,020)
|
|
Total net assets acquired
|
$487,930
|
|
|
$49,991
|
|
|
$537,921
|
|
(a)Other non-current liabilities includes a $2.6 million deferred income tax liability resulting from the preliminary fair value adjustment to Pope Resources’ assets and liabilities.
These estimated fair values are preliminary in nature and subject to adjustments, which could be material. We have not identified any material unrecorded pre-merger contingencies where the related asset, liability or impairment is probable and the amount can be reasonably estimated. Our valuations will be finalized when certain information arranged to be obtained has been received and our review of that information has been completed. Prior to the finalization of the purchase price allocation, if information becomes available that would indicate it is probable that such events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the three months ended March 31, 2020, assuming the acquisition had occurred as of January 1, 2020, are presented below (in thousands, except per share and unit amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31, 2020
|
Sales
|
|
|
|
|
|
|
$283,500
|
|
|
|
|
|
|
|
|
|
Net income attributable to Rayonier Inc.
|
|
|
|
|
|
|
$18,398
|
|
Basic earnings per share attributable to Rayonier Inc.
|
|
|
|
|
|
|
$0.13
|
|
Diluted earnings per share attributable to Rayonier Inc.
|
|
|
|
|
|
|
$0.13
|
|
|
|
|
|
|
|
|
|
Net income attributable to Rayonier, L.P.
|
|
|
|
|
|
|
$18,998
|
|
Basic earnings per unit attributable to Rayonier, L.P.
|
|
|
|
|
|
|
$0.13
|
|
Diluted earnings per unit attributable to Rayonier, L.P.
|
|
|
|
|
|
|
$0.13
|
|
The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2020, including the following:
•additional depletion expense that would have been recognized relating to the basis increase in the acquired Timber and Timberlands;
•adjustment to interest expense to reflect the removal of Pope Resources debt and the additional borrowings we incurred in conjunction with the acquisition; and
•a reduction in expenses for the three months ended March 31, 2020 of $7.7 million for acquisition-related transaction costs.
Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
3. SEGMENT AND GEOGRAPHICAL INFORMATION
Sales between operating segments are made based on estimated fair market value, and intercompany sales, purchases and profits (losses) are eliminated in consolidation. We evaluate financial performance based on segment operating income (loss) and Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”). Asset information is not reported by segment, as we do not produce asset information by segment internally.
Operating income as presented in the Consolidated Statements of Income and Comprehensive Income is equal to segment income. Certain income (loss) items in the Consolidated Statements of Income and Comprehensive Income are not allocated to segments. These items, which include interest income (expense), miscellaneous income (expense) and income tax expense, are not considered by management to be part of segment operations and are included under “unallocated interest expense and other.”
The following tables summarize the segment information for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
SALES
|
|
|
|
|
2021
|
|
2020
|
Southern Timber
|
|
|
|
|
$51,677
|
|
|
$52,982
|
|
Pacific Northwest Timber
|
|
|
|
|
41,522
|
|
|
31,075
|
|
New Zealand Timber
|
|
|
|
|
57,579
|
|
|
37,538
|
|
Timber Funds (a)
|
|
|
|
|
14,939
|
|
|
—
|
|
Real Estate (b)
|
|
|
|
|
10,504
|
|
|
118,564
|
|
Trading
|
|
|
|
|
16,665
|
|
|
18,984
|
|
|
|
|
|
|
|
|
|
Intersegment Eliminations (c)
|
|
|
|
|
(1,439)
|
|
|
(13)
|
|
Total
|
|
|
|
|
$191,447
|
|
|
$259,130
|
|
(a)The three months ended March 31, 2021 includes $11.9 million of sales attributable to noncontrolling interests in Timber Funds.
(b)The three months ended March 31, 2020 includes $116.0 million from a Large Disposition. Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value.
(c)Primarily consists of the elimination of timberland investment management fees paid to us by the timber funds which are initially recognized as sales and cost of sales within the Timber Funds segment, as well as log marketing fees paid to our Trading segment from our Southern Timber and Pacific Northwest Timber segments for marketing log export sales.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
OPERATING INCOME (LOSS)
|
|
|
|
|
2021
|
|
2020
|
Southern Timber
|
|
|
|
|
$17,347
|
|
|
$15,070
|
|
Pacific Northwest Timber
|
|
|
|
|
1,350
|
|
|
(948)
|
|
New Zealand Timber
|
|
|
|
|
13,944
|
|
|
5,448
|
|
Timber Funds (a)
|
|
|
|
|
1,501
|
|
|
—
|
|
Real Estate (b)
|
|
|
|
|
1,687
|
|
|
26,774
|
|
Trading
|
|
|
|
|
244
|
|
|
(19)
|
|
|
|
|
|
|
|
|
|
Corporate and Other
|
|
|
|
|
(7,588)
|
|
|
(7,773)
|
|
Total Operating Income
|
|
|
|
|
28,485
|
|
|
38,552
|
|
Unallocated interest expense and other
|
|
|
|
|
(10,032)
|
|
|
(8,425)
|
|
Total Income before Income Taxes
|
|
|
|
|
$18,453
|
|
|
$30,127
|
|
(a)The three months ended March 31, 2021 includes $1.1 million of operating income attributable to noncontrolling interests in Timber Funds.
(b)The three months ended March 31, 2020 includes $28.7 million from a Large Disposition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
DEPRECIATION, DEPLETION AND AMORTIZATION
|
|
|
|
|
2021
|
|
2020
|
Southern Timber
|
|
|
|
|
$14,359
|
|
|
$18,182
|
|
Pacific Northwest Timber
|
|
|
|
|
16,284
|
|
|
10,702
|
|
New Zealand Timber
|
|
|
|
|
7,250
|
|
|
4,774
|
|
Timber Funds (a)
|
|
|
|
|
5,500
|
|
|
—
|
|
Real Estate (b)
|
|
|
|
|
1,557
|
|
|
35,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other
|
|
|
|
|
263
|
|
|
297
|
|
Total
|
|
|
|
|
$45,213
|
|
|
$69,700
|
|
(a)The three months ended March 31, 2021 includes $4.9 million of depreciation, depletion and amortization attributable to noncontrolling interests in Timber Funds.
(b)The three months ended March 31, 2020 includes $35.4 million from a Large Disposition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
NON-CASH COST OF LAND AND IMPROVED DEVELOPMENT
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate (a)
|
|
|
|
|
$1,813
|
|
|
$52,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
$1,813
|
|
|
$52,051
|
|
(a) The three months ended March 31, 2020 includes $51.6 million from a Large Disposition.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
4. REVENUE
PERFORMANCE OBLIGATIONS
We recognize revenue when control of promised goods or services (“performance obligations”) is transferred to customers, in an amount that reflects the consideration expected in exchange for those goods or services (“transaction price”). We generally satisfy performance obligations within a year of entering into a contract and therefore have applied the disclosure exemption found under ASC 606-10-50-14. Unsatisfied performance obligations as of March 31, 2021 are primarily due to advances on stumpage contracts and unearned license revenue. These performance obligations are expected to be satisfied within the next twelve months. We generally collect payment within a year of satisfying performance obligations and therefore have elected not to adjust revenues for a financing component.
CONTRACT BALANCES
The timing of revenue recognition, invoicing and cash collections results in accounts receivable and deferred revenue (contract liabilities) on the Consolidated Balance Sheets. Accounts receivable are recorded when we have an unconditional right to consideration for completed performance under the contract. Contract liabilities relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenue as (or when) we perform under the contract.
The following table summarizes revenue recognized during the three months ended March 31, 2021 and 2020 that was included in the contract liability balance at the beginning of each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Revenue recognized from contract liability balance at the beginning of the year (a)
|
|
|
|
|
$5,920
|
|
|
$6,425
|
|
(a) Revenue recognized was primarily from hunting licenses and the use of advances on pay-as-cut timber sales.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following tables present our revenue from contracts with customers disaggregated by product type for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
|
|
Elim.
|
|
Total
|
March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulpwood
|
$21,856
|
|
|
$2,495
|
|
|
$9,542
|
|
|
$260
|
|
|
—
|
|
|
$1,835
|
|
|
|
|
—
|
|
|
$35,988
|
|
Sawtimber
|
21,963
|
|
|
37,758
|
|
|
47,792
|
|
|
13,308
|
|
|
—
|
|
|
14,389
|
|
|
|
|
—
|
|
|
135,210
|
|
Hardwood
|
405
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
405
|
|
Total Timber Sales
|
44,224
|
|
|
40,253
|
|
|
57,334
|
|
|
13,568
|
|
|
—
|
|
|
16,224
|
|
|
|
|
—
|
|
|
171,603
|
|
License Revenue, Primarily From Hunting
|
4,417
|
|
|
91
|
|
|
58
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
4,569
|
|
Other Non-Timber/Carbon Revenue
|
3,036
|
|
|
1,178
|
|
|
187
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
4,415
|
|
Agency Fee Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
356
|
|
|
|
|
—
|
|
|
356
|
|
Total Non-Timber Sales
|
7,453
|
|
|
1,269
|
|
|
245
|
|
|
17
|
|
|
—
|
|
|
356
|
|
|
|
|
—
|
|
|
9,340
|
|
Improved Development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|
|
|
—
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rural
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,765
|
|
|
—
|
|
|
|
|
—
|
|
|
9,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue/Other (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
|
|
—
|
|
|
255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Real Estate Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,272
|
|
|
—
|
|
|
|
|
—
|
|
|
10,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from Contracts with Customers
|
51,677
|
|
|
41,522
|
|
|
57,579
|
|
|
13,585
|
|
|
10,272
|
|
|
16,580
|
|
|
|
|
—
|
|
|
191,215
|
|
Lease Revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232
|
|
|
—
|
|
|
|
|
—
|
|
|
232
|
|
Intersegment
|
—
|
|
|
—
|
|
|
—
|
|
|
1,354
|
|
|
—
|
|
|
85
|
|
|
|
|
(1,439)
|
|
|
—
|
|
Total Revenue
|
$51,677
|
|
|
$41,522
|
|
|
$57,579
|
|
|
$14,939
|
|
|
$10,504
|
|
|
$16,665
|
|
|
|
|
($1,439)
|
|
|
$191,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
|
|
Elim.
|
|
Total
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulpwood
|
$27,493
|
|
|
$3,127
|
|
|
$4,847
|
|
|
—
|
|
|
—
|
|
|
$2,530
|
|
|
|
|
—
|
|
|
$37,997
|
|
Sawtimber
|
19,509
|
|
|
27,445
|
|
|
30,788
|
|
|
—
|
|
|
—
|
|
|
16,112
|
|
|
|
|
—
|
|
|
93,854
|
|
Hardwood
|
481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
481
|
|
Total Timber Sales
|
47,483
|
|
|
30,572
|
|
|
35,635
|
|
|
—
|
|
|
—
|
|
|
18,642
|
|
|
|
|
—
|
|
|
132,332
|
|
License Revenue, Primarily from Hunting
|
4,589
|
|
|
97
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
4,743
|
|
Other Non-Timber/Carbon Revenue
|
910
|
|
|
406
|
|
|
1,846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
3,162
|
|
Agency Fee Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
329
|
|
|
|
|
—
|
|
|
329
|
|
Total Non-Timber Sales
|
5,499
|
|
|
503
|
|
|
1,903
|
|
|
—
|
|
|
—
|
|
|
329
|
|
|
|
|
—
|
|
|
8,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rural
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,397
|
|
|
—
|
|
|
|
|
—
|
|
|
2,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue/Other (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140
|
|
|
—
|
|
|
|
|
—
|
|
|
140
|
|
Large Dispositions
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
116,027
|
|
|
|
|
|
|
—
|
|
|
116,027
|
|
Total Real Estate Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118,564
|
|
|
—
|
|
|
|
|
—
|
|
|
118,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from Contracts with Customers
|
52,982
|
|
|
31,075
|
|
|
37,538
|
|
|
—
|
|
|
118,564
|
|
|
18,971
|
|
|
|
|
—
|
|
|
259,130
|
|
Intersegment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
|
|
(13)
|
|
|
—
|
|
Total Revenue
|
$52,982
|
|
|
$31,075
|
|
|
$37,538
|
|
|
—
|
|
|
$118,564
|
|
|
$18,984
|
|
|
|
|
($13)
|
|
|
$259,130
|
|
(a) Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following tables present our timber sales disaggregated by contract type for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Trading
|
|
|
|
Total
|
March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stumpage Pay-as-Cut
|
$21,257
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
$21,257
|
|
Stumpage Lump Sum
|
3
|
|
|
6,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
6,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stumpage
|
21,260
|
|
|
6,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
27,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivered Wood (Domestic)
|
18,059
|
|
|
34,122
|
|
|
17,106
|
|
|
13,568
|
|
|
1,091
|
|
|
|
|
83,946
|
|
Delivered Wood (Export)
|
4,905
|
|
|
—
|
|
|
40,228
|
|
|
—
|
|
|
15,133
|
|
|
|
|
60,266
|
|
Total Delivered
|
22,964
|
|
|
34,122
|
|
|
57,334
|
|
|
13,568
|
|
|
16,224
|
|
|
|
|
144,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Timber Sales
|
$44,224
|
|
|
$40,253
|
|
|
$57,334
|
|
|
$13,568
|
|
|
$16,224
|
|
|
|
|
$171,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stumpage Pay-as-Cut
|
$25,407
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
$25,407
|
|
Stumpage Lump Sum
|
388
|
|
|
5,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
5,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stumpage
|
25,795
|
|
|
5,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
30,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivered Wood (Domestic)
|
21,060
|
|
|
25,441
|
|
|
13,691
|
|
|
—
|
|
|
472
|
|
|
|
|
60,664
|
|
Delivered Wood (Export)
|
628
|
|
|
—
|
|
|
21,944
|
|
|
—
|
|
|
18,170
|
|
|
|
|
40,742
|
|
Total Delivered
|
21,688
|
|
|
25,441
|
|
|
35,635
|
|
|
—
|
|
|
18,642
|
|
|
|
|
101,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Timber Sales
|
$47,483
|
|
|
$30,572
|
|
|
$35,635
|
|
|
—
|
|
|
$18,642
|
|
|
|
|
$132,332
|
|
5. LEASES
We lease commercial and residential properties primarily located in Port Gamble, Washington. Our leases are operating leases and mostly range between one and five years, and may be extended on a case by case basis. Income associated with commercial and residential property leases generally includes scheduled rent increases, but do not include variable payments based on indexes.
The following table details our lease income for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Lease Income Components
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
Operating lease income
|
|
|
|
|
|
|
$232
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total lease income
|
|
|
|
|
|
|
$232
|
|
|
—
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
6. NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS IN CONSOLIDATED AFFILIATES
Matariki Forestry Group
We maintain a 77% controlling financial interest in Matariki Forestry Group (the “New Zealand subsidiary”), a joint venture that owns or leases approximately 417,000 legal acres of New Zealand timberland. Accordingly, we consolidate the New Zealand subsidiary’s balance sheet and results of operations. The portions of the consolidated financial position and results of operations attributable to the New Zealand subsidiary’s 23% noncontrolling interests are reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net income attributable to noncontrolling interests in consolidated affiliates.” Rayonier New Zealand Limited (“RNZ”), a wholly-owned subsidiary, serves as the manager of the New Zealand subsidiary.
The following table sets forth the income attributable to the New Zealand subsidiary’s noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Net income attributable to noncontrolling interests in the New Zealand subsidiary
|
|
|
|
|
$2,638
|
|
|
$567
|
|
ORM Timber Fund II, Inc. (Fund II), ORM Timber Fund III LLC (Fund III), and ORM Timber Fund IV LLC. (Fund IV) (Collectively, the “Funds”)
We are the manager of three private equity timber funds, Fund II, Fund III, and Fund IV, and maintain ownership interests in the Funds of 20%, 5%, and 15%, respectively. Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact the Funds’ economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate the Funds. Income attributed to third-party investors is reflected as an adjustment to income in our Consolidated Statements of Income and Comprehensive Income under the caption “Net income attributable to noncontrolling interests in consolidated affiliates.”
The following table sets forth the income attributable to the Funds’ noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Net income attributable to noncontrolling interests in the Funds
|
|
|
|
|
$1,076
|
|
|
—
|
|
Prior to the merger with Pope Resources, the Funds were formed by ORM LLC for the purpose of generating a return on investment through the acquisition, management, value enhancement and sale of timberland properties. Each Fund is organized to operate for a specified term from the end of its respective investment period: 10 years for each of Fund II and Fund III, and 15 years for Fund IV. Fund II is scheduled to terminate in March 2023, Fund III is scheduled to terminate in December 2025 and Fund IV is scheduled to terminate in January 2035. The obligations of each of the Funds do not have any recourse to the Company or the Operating Partnership.
Ferncliff Investors
We maintain an ownership interest in Ferncliff Investors, a real estate joint venture entity. In 2017, Ferncliff Management and Ferncliff Investors were formed for the purpose of raising capital from third parties to invest in an unconsolidated real estate joint venture entity, Bainbridge Landing LLC, which is developing a five-acre parcel on Bainbridge Island, Washington into a multi-family community containing apartments and townhomes. Ferncliff Management is the manager and 33.33% owner of Ferncliff Investors, with the remaining ownership interest in Ferncliff Investors held by third-party investors. Ferncliff Investors holds a 50% interest in Bainbridge Landing LLC, the joint venture entity that owns and is developing the property.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact the joint venture’s economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate Ferncliff Investors. The obligations of Ferncliff Investors do not have any recourse to the Company or the Operating Partnership.
Bainbridge Landing LLC is considered a voting interests entity. Ferncliff Investors accounts for its interest in the joint venture entity under the equity method because neither it nor the other member can exercise control over Bainbridge Landing LLC.
The Ferncliff Investors joint venture agreement provides for liquidation rights and distribution priorities that are disproportionate to member’s ownership interest. Due to the complex nature of cash distributions to members, net income of the joint venture is allocated to members, including us, using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, Ferncliff Investors income or loss is allocated to the members based on the period change in each member’s claim on the book value of net assets, excluding capital contributions and distributions made during the period.
The following table sets forth the income attributable to Ferncliff Investors’ noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Net income attributable to noncontrolling interests in Ferncliff Investors
|
|
|
|
|
$129
|
|
|
—
|
|
NONCONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP
Noncontrolling interests in the Operating Partnership relate to the third-party ownership of Redeemable Operating Partnership Units. Net income attributable to the noncontrolling interests in the Operating Partnership is computed by applying the weighted average Redeemable Operating Partnership Units outstanding during the period as a percentage of the weighted average total units outstanding to the Operating Partnership’s net income for the period. If a noncontrolling unitholder redeems a unit for a registered common share of Rayonier or cash, the noncontrolling interests in the Operating Partnership will be reduced and the Company’s share in the Operating Partnership will be increased by the fair value of each security at the time of redemption.
The following table sets forth the Company’s noncontrolling interests in the Operating Partnership:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2021
|
|
|
|
|
|
Beginning noncontrolling interests in the Operating Partnership
|
|
$130,121
|
|
|
|
|
|
|
|
|
Adjustment of noncontrolling interests in the Operating Partnership
|
|
11,867
|
|
|
|
Conversions of Redeemable Operating Partnership Units to Common Shares
|
|
(4,715)
|
|
|
|
Net Income attributable to noncontrolling interests in the Operating Partnership
|
|
341
|
|
|
|
Other Comprehensive Income attributable to noncontrolling interests in the Operating Partnership
|
|
1,531
|
|
|
|
Distributions to noncontrolling interests in the Operating Partnership
|
|
(1,155)
|
|
|
|
Total noncontrolling interests in the Operating Partnership
|
|
$137,990
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
7. VARIABLE INTEREST ENTITIES
ORM Timber Fund II, Inc. (Fund II), ORM Timber Fund III LLC (Fund III), and ORM Timber Fund IV LLC. (Fund IV) (Collectively, the “Funds”)
We are the manager of three private equity timber funds, Fund II, Fund III, and Fund IV, and maintain ownership interests in the Funds of 20%, 5%, and 15%, respectively. We determined, based upon an analysis under the variable interest entity guidance, that we have the power to direct the activities that most significantly impact the Funds’ economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate the Funds. For further information on the Funds, see Note 6 — Noncontrolling Interests.
The assets, liabilities and equity of the Funds as of March 31, 2021, were as follows:
|
|
|
|
|
|
Timber Funds
|
March 31, 2021
|
Assets:
|
|
Cash and cash equivalents
|
$4,674
|
|
Accounts receivable
|
3,099
|
|
Prepaid expenses
|
9
|
|
Other current assets
|
237
|
|
Total current assets
|
8,019
|
|
Timber and timberlands, net of depletion and amortization
|
408,338
|
|
Other assets
|
74
|
|
Total assets
|
$416,431
|
|
Liabilities and Equity:
|
|
Accounts payable
|
$2,064
|
|
Intercompany payable (a)
|
698
|
|
|
|
Accrued taxes
|
174
|
|
Accrued interest
|
505
|
|
Deferred revenue
|
323
|
|
Other current liabilities
|
514
|
|
Total current liabilities
|
4,278
|
|
Long-term debt, net of deferred financing costs
|
59,967
|
|
Funds’ equity
|
352,186
|
|
Total liabilities and equity
|
$416,431
|
|
(a)Includes management fees and other expenses payable to the Operating Partnership. These amounts are eliminated in the Consolidated Balance Sheets.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Ferncliff Investors
We maintain an ownership interest in Ferncliff Investors, a real estate joint venture entity. Based upon an analysis under the variable interest entity guidance, we have the power to direct the activities that most significantly impact the joint venture’s economic success. Therefore, we are considered the primary beneficiary and are required under ASC 810 — Consolidation to consolidate Ferncliff Investors. For further information on Ferncliff Investors, see Note 6 — Noncontrolling Interests.
The assets, liabilities and equity of Ferncliff Investors as of March 31, 2021, were as follows:
|
|
|
|
|
|
Ferncliff Investors
|
March 31, 2021
|
Assets:
|
|
Cash and cash equivalents
|
$139
|
|
Intercompany receivable
|
61
|
|
|
|
|
|
Total current assets
|
200
|
|
|
|
Advances to real estate joint venture entity
|
1,000
|
|
Total assets
|
$1,200
|
|
Liabilities and equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
$1,892
|
|
|
|
Ferncliff Investors’ equity
|
(692)
|
|
Total liabilities and equity
|
$1,200
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
8. EARNINGS PER SHARE AND PER UNIT
The following table provides details of the calculations of basic and diluted earnings per common share of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Earnings per common share - basic
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$15,032
|
|
|
$26,421
|
|
Less: Net income attributable to noncontrolling interests in the Operating Partnership
|
|
|
|
|
(341)
|
|
|
—
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3,843)
|
|
|
(567)
|
|
Net income attributable to Rayonier Inc.
|
|
|
|
|
$10,848
|
|
|
$25,854
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings per common share - weighted average shares
|
|
|
|
|
137,870,821
|
|
|
129,137,494
|
|
Basic earnings per common share attributable to Rayonier Inc.:
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
Earnings per common share - diluted
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$15,032
|
|
|
$26,421
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3,843)
|
|
|
(567)
|
|
|
|
|
|
|
|
|
|
Net income attributable to Rayonier Inc., before net income attributable to noncontrolling interests in the Operating Partnership
|
|
|
|
|
$11,189
|
|
|
$25,854
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings per common share - weighted average shares
|
|
|
|
|
137,870,821
|
|
|
129,137,494
|
|
Add: Dilutive effect of:
|
|
|
|
|
|
|
|
Stock options
|
|
|
|
|
4,051
|
|
|
1,075
|
|
Performance shares, restricted shares and restricted stock units
|
|
|
|
|
353,131
|
|
|
209,481
|
|
Noncontrolling interests in Operating Partnership units
|
|
|
|
|
4,330,794
|
|
|
—
|
|
Denominator for diluted earnings per common share - adjusted weighted average shares
|
|
|
|
|
142,558,797
|
|
|
129,348,050
|
|
Diluted earnings per common share attributable to Rayonier Inc.:
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Anti-dilutive shares excluded from the computations of diluted earnings per common share:
|
|
|
|
|
|
|
|
Stock options, performance shares, restricted shares and restricted stock units
|
|
|
|
|
194,256
|
|
|
406,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
194,256
|
|
|
406,326
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following table provides details of the calculations of basic and diluted earnings per unit of the Operating Partnership:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Earnings per unit - basic
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$15,032
|
|
|
$26,421
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3,843)
|
|
|
(567)
|
|
Net income available to unitholders
|
|
|
|
|
$11,189
|
|
|
$25,854
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings per unit - weighted average units
|
|
|
|
|
142,201,615
|
|
|
129,137,494
|
|
Basic earnings per unit attributable to Rayonier, L.P.:
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
Earnings per unit - diluted
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$15,032
|
|
|
$26,421
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3,843)
|
|
|
(567)
|
|
Net income available to unitholders
|
|
|
|
|
$11,189
|
|
|
$25,854
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings per unit - weighted average units
|
|
|
|
|
142,201,615
|
|
|
129,137,494
|
|
Add: Dilutive effect of unit equivalents:
|
|
|
|
|
|
|
|
Stock options
|
|
|
|
|
4,051
|
|
|
1,075
|
|
Performance shares, restricted shares and restricted stock units
|
|
|
|
|
353,131
|
|
|
209,481
|
|
Denominator for diluted earnings per unit - adjusted weighted average units
|
|
|
|
|
142,558,797
|
|
|
129,348,050
|
|
Diluted earnings per unit attributable to Rayonier, L.P.:
|
|
|
|
|
$0.08
|
|
|
$0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Anti-dilutive unit equivalents excluded from the computations of diluted earnings per unit:
|
|
|
|
|
|
|
|
Stock options, performance shares, restricted shares and restricted stock units
|
|
|
|
|
194,256
|
|
|
406,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
194,256
|
|
|
406,326
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
9. DEBT
Our debt consisted of the following at March 31, 2021:
|
|
|
|
|
|
|
March 31, 2021
|
Debt, excluding Timber Funds:
|
|
Term Credit Agreement borrowings due 2028 at a variable interest rate of 1.7% at March 31, 2021 (a)
|
$350,000
|
|
Senior Notes due 2022 at a fixed interest rate of 3.75%
|
325,000
|
|
Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 2.0% at March 31, 2021 (b)
|
300,000
|
|
2020 Incremental Term Loan Facility borrowings due 2025 at a variable interest rate of 2.0% at March 31, 2021 (c)
|
250,000
|
|
|
|
New Zealand subsidiary noncontrolling interests shareholder loan due 2025 at a fixed interest rate of 2.95%
|
24,074
|
|
Northwest Farm Credit Services Credit Facility with quarterly interest-only payments, collateralized by Core Timberlands, with the following tranches
|
|
Due 2025 at a fixed interest rate of 6.1%
|
11,512
|
|
Due 2028 at a fixed interest rate of 4.1%
|
11,984
|
|
Due 2033 at a fixed interest rate of 5.3%
|
19,363
|
|
Due 2036 at a fixed interest rate of 5.4%
|
9,838
|
|
Total debt, excluding Timber Funds
|
1,301,771
|
|
Less: Deferred financing costs, excluding Timber Funds
|
(2,338)
|
|
Long-term debt, net of deferred financing costs, excluding Timber Funds
|
1,299,433
|
|
|
|
|
|
Debt, Timber Funds:
|
|
Fund II Mortgages Payable, collateralized by Fund II timberlands with quarterly interest
payments, as follows: (d)
|
|
Due 2022 at a variable interest rate of 2.0% at March 31, 2021
|
11,000
|
|
Due 2022 at a variable interest rate of 2.0% at March 31, 2021
|
14,000
|
|
Fund III Mortgages Payable, collateralized by Fund III timberlands with quarterly interest
payments, as follows: (e)
|
|
Due 2023 at a fixed interest rate of 5.1%
|
19,431
|
|
Due 2024 at a fixed interest rate of 4.5%
|
15,544
|
|
Total debt, Timber Funds
|
59,975
|
|
Less: Deferred financing costs, Timber Funds
|
(8)
|
|
Long-term debt, net of deferred financing costs, Timber Funds
|
59,967
|
|
|
|
|
|
|
|
Long-term debt, net of deferred financing costs
|
$1,359,400
|
|
(a) As of March 31, 2021, the periodic interest rate on the term credit agreement (the “Term Credit Agreement”) was LIBOR plus 1.600%. We estimate the effective fixed interest rate on the term loan facility to be approximately 3.2% after consideration of interest rate swaps and estimated patronage refunds.
(b) As of March 31, 2021, the periodic interest rate on the incremental term loan (the “Incremental Term Loan Agreement”) was LIBOR plus 1.900%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.8% after consideration of interest rate swaps and estimated patronage refunds.
(c) As of March 31, 2021, the periodic interest rate on the 2020 incremental term loan (the “2020 Incremental Term Loan Facility”) was LIBOR plus 1.850%. We estimate the effective fixed interest rate on the incremental term loan facility to be approximately 2.3% after consideration of interest rate swaps and estimated patronage refunds.
(d) As of March 31, 2021, the periodic interest rate on the Fund II Mortgages Payable was 3-month LIBOR plus 1.700%.
(e) As of March 31, 2021, we estimate the effective fixed interest rate on the Fund III Mortgages Payable due 2023 and 2024 to be approximately 3.9% and 3.2%, respectively, after consideration of estimated patronage refunds.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Principal payments due during the next five years and thereafter are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Timber Funds
|
Timber Funds
|
Total
|
2021
|
—
|
|
—
|
|
—
|
|
2022
|
325,000
|
|
25,000
|
|
350,000
|
|
2023
|
—
|
|
17,980
|
|
17,980
|
|
2024
|
—
|
|
14,400
|
|
14,400
|
|
2025
|
284,074
|
|
—
|
|
284,074
|
|
Thereafter
|
685,000
|
|
—
|
|
685,000
|
|
Total Debt
|
$1,294,074
|
|
$57,380
|
|
$1,351,454
|
|
2021 DEBT ACTIVITY
U.S. Debt — Excluding Timber Funds
During the three months ended March 31, 2021, we made no borrowings or repayments on our Revolving Credit Facility. At March 31, 2021, we had available borrowings of $299.1 million under the Revolving Credit Facility, net of $0.9 million to secure our outstanding letters of credit.
U.S. Debt — Timber Funds
On January 1, 2021, both Fund II Mortgages Payable transitioned from a fixed interest rate of 2.0% to a variable rate of 3-month LIBOR plus 1.700%.
New Zealand
During the three months ended March 31, 2021, the New Zealand subsidiary made no borrowings or repayments on its working capital facility. At March 31, 2021, the New Zealand subsidiary had NZ$20.0 million of available borrowings under its working capital facility.
As of March 31, 2021, the outstanding balance on the shareholder loan is $24.1 million. Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loan since its inception. See Note 6 — Noncontrolling Interests for more information regarding the New Zealand subsidiary.
DEBT COVENANTS — EXCLUDING TIMBER FUNDS
In connection with our $350 million Term Credit Agreement, $300 million Incremental Term Loan Agreement, $250 million 2020 Incremental Term Loan Agreement and $300 million Revolving Credit Facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios.
The covenants listed below, which are the most significant financial covenants in effect as of March 31, 2021, are calculated on a trailing 12-month basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covenant Requirement
|
|
Actual Ratio
|
|
Favorable
|
Covenant EBITDA to consolidated interest expense should not be less than
|
2.5 to 1
|
|
6.7 to 1
|
|
4.2
|
Covenant debt to covenant net worth plus covenant debt shall not exceed
|
65
|
%
|
|
47
|
%
|
|
18
|
%
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
In connection with our $45 million NWFCS Credit Facility, customary covenants must be met, the most significant of which include interest coverage and debt-to-capitalization ratios.
The covenants listed below, which are the most significant financial covenants in effect as of March 31, 2021, are calculated on a trailing 12-month basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covenant Requirement
|
|
Actual Ratio
|
|
Favorable
|
Covenant loan-to-appraised value shall not exceed
|
50%
|
|
12%
|
|
38
|
%
|
Covenant EBITDA to consolidated interest expense should not be less than
|
2.5 to 1
|
|
6.7 to 1
|
|
4.2
|
Covenant debt to covenant net worth plus covenant debt shall not exceed
|
65
|
%
|
|
47
|
%
|
|
18
|
%
|
In addition to these financial covenants listed above, the 2022 Notes, Term Credit Agreement, Incremental Term Loan Agreement, 2020 Incremental Term Loan Facility, Revolving Credit Facility, and NWFCS Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At March 31, 2021, we were in compliance with all applicable covenants.
DEBT COVENANTS — TIMBER FUNDS
The Fund II Mortgages Payable to MetLife contain a requirement to maintain a loan-to-value ratio of less than 50%, with the denominator defined as fair market value of the timberland pledged as collateral.
The Fund III Mortgages Payable to NWFCS contain a requirement to maintain a minimum interest coverage ratio of 1.5:1, minimum working capital of $500,000, and a loan-to-value ratio of less than 50%, with the denominator defined as fair market value.
Both Timber Funds are in compliance with their respective debt covenants as of March 31, 2021.
10. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risk related to potential fluctuations in foreign currency exchange rates and interest rates. We use derivative financial instruments to mitigate the financial impact of exposure to these risks.
Accounting for derivative financial instruments is governed by ASC Topic 815, Derivatives and Hedging, (“ASC 815”). In accordance with ASC 815, we record our derivative instruments at fair value as either assets or liabilities in the Consolidated Balance Sheets. Changes in the instruments’ fair value are accounted for based on their intended use. Gains and losses on derivatives that are designated and qualify for cash flow hedge accounting are recorded as a component of accumulated other comprehensive loss (“AOCI”) and reclassified into earnings when the hedged transaction materializes. Gains and losses on derivatives that are designated and qualify for net investment hedge accounting are recorded as a component of AOCI and will not be reclassified into earnings until the investment is partially or completely liquidated. The changes in the fair value of derivatives not designated as hedging instruments and those which are no longer effective as hedging instruments, are recognized immediately in earnings.
FOREIGN CURRENCY EXCHANGE AND OPTION CONTRACTS
The functional currency of Rayonier New Zealand Limited, and the New Zealand subsidiary is the New Zealand dollar. The New Zealand subsidiary is exposed to foreign currency risk on export sales and ocean freight payments which are mainly denominated in U.S. dollars. The New Zealand subsidiary typically hedges 50% to 90% of its estimated foreign currency exposure with respect to the following twelve months forecasted sales and purchases, less distributions, and up to 75% of the forward 12 to 18 months. Additionally, the New Zealand subsidiary will occasionally hedge up to 50% of its estimated foreign currency exposure with respect to the following 18 to 48 months forecasted sales and purchases, less distributions, when the New Zealand dollar is at a cyclical low versus the U.S. dollar. Foreign currency exposure from the New Zealand subsidiary’s trading operations is typically hedged based on the following three months forecasted sales and purchases. As of March 31, 2021, foreign currency exchange contracts and foreign currency option contracts had maturity dates through September 2022 and August 2021, respectively.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Foreign currency exchange and option contracts hedging foreign currency risk on export sales and ocean freight payments qualify for cash flow hedge accounting. We may de-designate these cash flow hedge relationships in advance or at the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously accumulated in other comprehensive loss for de-designated hedges remains in accumulated other comprehensive loss until the forecasted transaction affects earnings. Changes in the value of derivative instruments after de-designation are recorded in earnings.
INTEREST RATE SWAPS
We are exposed to cash flow interest rate risk on our variable-rate Term Credit Agreement, Incremental Term Loan Agreement and 2020 Incremental Term Loan Facility and use variable-to-fixed interest rate swaps to hedge this exposure. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.
The following table contains information on the outstanding interest rate swaps as of March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Interest Rate Swaps (a)
|
Date Entered Into
|
Term
|
Notional Amount
|
Related Debt Facility
|
Fixed Rate of Swap (b)
|
Bank Margin on Debt
|
Total Effective Interest Rate (c)
|
August 2015
|
9 years
|
$170,000
|
|
Term Credit Agreement
|
2.20
|
%
|
1.60
|
%
|
3.80
|
%
|
August 2015
|
9 years
|
180,000
|
|
Term Credit Agreement
|
2.35
|
%
|
1.60
|
%
|
3.95
|
%
|
April 2016
|
10 years
|
100,000
|
|
Incremental Term Loan
|
1.60
|
%
|
1.90
|
%
|
3.50
|
%
|
April 2016
|
10 years
|
100,000
|
|
Incremental Term Loan
|
1.60
|
%
|
1.90
|
%
|
3.50
|
%
|
July 2016
|
10 years
|
100,000
|
|
Incremental Term Loan
|
1.26
|
%
|
1.90
|
%
|
3.16
|
%
|
June 2020
|
10 years
|
250,000
|
|
2020 Incremental Term Loan
|
1.10
|
%
|
1.85
|
%
|
2.95
|
%
|
(a) All interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.
(b) The interest rate swap entered in June 2020, was an off-market derivative, meaning it contained an embedded financing element, which the counterparties recovered through an incremental charge in the fixed rate over what would have been charged for an at-market swap.
(c) Rate is before estimated patronage payments.
TREASURY LOCKS
During the first quarter of 2020, we entered into three treasury lock agreements, which were designated and qualified as cash flow hedges. Prior to expiration, we de-designated and settled the treasury locks by converting them into interest rate swap lock agreements (discussed below). To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in accumulated other comprehensive loss and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. As of March 31, 2021, there was $18.8 million recorded in accumulated other comprehensive loss in connection with the settled treasury locks which will be reclassified to earnings through interest expense over the life of the anticipated issued debt. For additional information regarding the expired treasury lock agreements, see Note 16 - Derivative Instruments and Hedging Activities in our 2020 Form 10-K.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
INTEREST RATE SWAP LOCKS
Upon de-designation, we converted the above treasury lock agreements to interest rate swap lock agreements, which were designated and qualified as cash flow hedges. Prior to expiration, we de-designated and partially cash settled $11.1 million of the interest rate swap locks and converted them into interest rate swap agreements. To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in accumulated other comprehensive loss and is amortized using the straight-line method through interest expense over the remaining life of the hedged item. As of March 31, 2021, there was $1.3 million recorded in accumulated other comprehensive loss in connection with settled interest rate swap locks which will be reclassified to earnings through interest expense over the life of the anticipated issued debt. For additional information regarding the expired interest rate swap lock agreements, see Note 16 - Derivative Instruments and Hedging Activities in our 2020 Form 10-K.
FORWARD-STARTING INTEREST RATE SWAPS
We are exposed to cash flow interest rate risk on anticipated debt issuances and use forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the anticipated issuance date. For these derivative instruments, we report the gains/losses from the fluctuations in the fair market value of the hedges in AOCI and reclassify them to earnings as interest expense in the same period in which the hedged interest payments affect earnings.
The following table contains information on the outstanding forward-starting interest rate swaps as of March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Forward-Starting Interest Rate Swaps (a)
|
Date Entered Into
|
Term
|
Notional Amount
|
Fixed Rate of Swap
|
Related Debt Facility
|
Forward Date
|
Maximum Period Ending for Forecasted Issuance Date
|
February 2020
|
10 years
|
$325,000
|
|
1.40
|
%
|
Anticipated refinancing of Senior Notes due 2022
|
April 2022
|
April 2022
|
March 2020
|
4 years
|
100,000
|
|
0.88
|
%
|
Term Credit Agreement
|
August 2024
|
N/A
|
May 2020
|
4 years
|
50,000
|
|
0.74
|
%
|
Term Credit Agreement
|
August 2024
|
N/A
|
(a) All forward-starting interest rate swaps have been designated as interest rate cash flow hedges and qualify for hedge accounting.
CARBON OPTIONS
The New Zealand subsidiary enters into carbon options from time to time to sell carbon assets at certain prices. Changes in fair value of the carbon option contracts are recorded in “Interest and other miscellaneous expense, net” as the contracts do not qualify for hedge accounting treatment. As of March 31, 2021, all existing carbon option contracts have expired.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following tables demonstrate the impact, gross of tax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Income Statement Location
|
|
2021
|
|
2020
|
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
Foreign currency exchange contracts
|
Other comprehensive income (loss)
|
|
($2,852)
|
|
|
($5,480)
|
|
Foreign currency option contracts
|
Other comprehensive income (loss)
|
|
(929)
|
|
|
(1,149)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
Other comprehensive income (loss)
|
|
28,512
|
|
|
(39,450)
|
|
|
Interest expense
|
|
3,438
|
|
|
452
|
|
Treasury locks
|
Other comprehensive income (loss)
|
|
—
|
|
|
(20,846)
|
|
|
Interest expense
|
|
521
|
|
|
—
|
|
Interest rate swap locks
|
Other comprehensive income (loss)
|
|
—
|
|
|
854
|
|
|
Interest expense
|
|
35
|
|
|
—
|
|
Forward-starting interest rate swaps
|
Other comprehensive income (loss)
|
|
31,219
|
|
|
(19,710)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbon option contracts
|
Interest and other miscellaneous income, net
|
|
—
|
|
|
549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the next 12 months, the amount of the March 31, 2021 AOCI balance, net of tax, expected to be reclassified into earnings as a result of the maturation of our derivative instruments is a gain of approximately $2.6 million.
The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional Amount
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
Derivatives designated as cash flow hedges:
|
|
|
|
|
Foreign currency exchange contracts
|
$64,000
|
|
|
$49,000
|
|
|
Foreign currency option contracts
|
16,000
|
|
|
28,000
|
|
|
Interest rate swaps
|
900,000
|
|
|
900,000
|
|
|
|
|
|
|
|
Forward-starting interest rate swaps
|
475,000
|
|
|
475,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location on Balance Sheet
|
|
Fair Value Assets / (Liabilities) (a)
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
Derivatives designated as cash flow hedges:
|
|
|
|
|
Foreign currency exchange contracts
|
Other current assets
|
|
$3,477
|
|
|
$4,968
|
|
|
Other assets
|
|
160
|
|
|
1,050
|
|
|
Other current liabilities
|
|
(454)
|
|
|
—
|
|
|
Other non-current liabilities
|
|
(17)
|
|
|
—
|
|
Foreign currency option contracts
|
Other current assets
|
|
592
|
|
|
1,526
|
|
|
|
|
|
|
|
|
Other current liabilities
|
|
(7)
|
|
|
(11)
|
|
|
|
|
|
|
|
Interest rate swaps
|
Other assets
|
|
9,945
|
|
|
—
|
|
|
Other non-current liabilities
|
|
(29,301)
|
|
|
(51,580)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-starting interest rate swaps
|
Other assets
|
|
18,690
|
|
|
513
|
|
|
Other non-current liabilities
|
|
—
|
|
|
(13,042)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative contracts:
|
|
|
|
|
|
Other current assets
|
|
|
$4,069
|
|
|
$6,494
|
|
Other assets
|
|
|
28,795
|
|
|
1,563
|
|
Total derivative assets
|
|
|
$32,864
|
|
|
$8,057
|
|
|
|
|
|
|
|
Other current liabilities
|
|
|
(461)
|
|
|
(11)
|
|
Other non-current liabilities
|
|
|
(29,318)
|
|
|
(64,622)
|
|
Total derivative liabilities
|
|
|
($29,779)
|
|
|
($64,633)
|
|
(a) See Note 11 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy.
OFFSETTING DERIVATIVES
Derivative financial instruments are presented at their gross fair values in the Consolidated Balance Sheets. Our derivative financial instruments are not subject to master netting arrangements, which would allow the right of offset.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
11. FAIR VALUE MEASUREMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
A three-level hierarchy that prioritizes the inputs used to measure fair value was established in the Accounting Standards Codification as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following table presents the carrying amount and estimated fair values of our financial instruments as of March 31, 2021 and December 31, 2020, using market information and what we believe to be appropriate valuation methodologies under GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
Asset (Liability) (a)
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
|
Level 1
|
|
Level 2
|
Cash and cash equivalents, excluding Timber Funds
|
|
$77,946
|
|
|
$77,946
|
|
|
—
|
|
|
$80,454
|
|
|
$80,454
|
|
|
—
|
|
Cash and cash equivalents, Timber Funds
|
|
4,674
|
|
|
4,674
|
|
|
—
|
|
|
4,053
|
|
|
4,053
|
|
|
—
|
|
Restricted cash (b)
|
|
475
|
|
|
475
|
|
|
—
|
|
|
2,975
|
|
|
2,975
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding Timber Funds (c)
|
|
(1,299,433)
|
|
|
—
|
|
|
(1,304,371)
|
|
|
(1,300,336)
|
|
|
—
|
|
|
(1,313,631)
|
|
Long-term debt, Timber Funds (c)
|
|
(59,967)
|
|
|
—
|
|
|
(60,207)
|
|
|
(60,179)
|
|
|
—
|
|
|
(60,474)
|
|
Interest rate swaps (d)
|
|
(19,356)
|
|
|
—
|
|
|
(19,356)
|
|
|
(51,580)
|
|
|
—
|
|
|
(51,580)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-starting interest rate swaps (d)
|
|
18,690
|
|
|
—
|
|
|
18,690
|
|
|
(12,529)
|
|
|
—
|
|
|
(12,529)
|
|
Foreign currency exchange contracts (d)
|
|
3,166
|
|
|
—
|
|
|
3,166
|
|
|
6,018
|
|
|
—
|
|
|
6,018
|
|
Foreign currency option contracts (d)
|
|
585
|
|
|
—
|
|
|
585
|
|
|
1,515
|
|
|
—
|
|
|
1,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling Interests in the Operating Partnership (e)
|
|
137,990
|
|
|
137,990
|
|
|
—
|
|
|
130,121
|
|
|
130,121
|
|
|
—
|
|
(a)We did not have Level 3 assets or liabilities at March 31, 2021 and December 31, 2020.
(c)The carrying amount of long-term debt is presented net of capitalized debt costs on non-revolving debt. See Note 9 — Debt for additional information.
(e)Noncontrolling Interests in the Operating Partnership is neither an asset or liability and is classified as temporary equity in the Company’s Consolidated Balance Sheets. This relates to the ownership of Rayonier, L.P. units by various individuals and entities other than the Company.
We use the following methods and assumptions in estimating the fair value of our financial instruments:
Cash and cash equivalents and Restricted cash — The carrying amount is equal to fair market value.
Debt — The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities. The variable rate debt adjusts with changes in the market rate, therefore the carrying value approximates fair value.
Interest rate swap agreements — The fair value of interest rate contracts is determined by discounting the expected future cash flows, for each instrument, at prevailing interest rates.
Foreign currency exchange contracts — The fair value of foreign currency exchange contracts is determined by a mark-to-market valuation, which estimates fair value by discounting the difference between the contracted forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Foreign currency option contracts — The fair value of foreign currency option contracts is based on a mark-to-market calculation using the Black-Scholes option pricing model.
Noncontrolling Interests in the Operating Partnership — The fair value of noncontrolling interests in the Operating Partnership is determined based on the period-end closing price of Rayonier Inc. common shares.
12. COMMITMENTS
At March 31, 2021, the future minimum payments under non-cancellable commitments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Remediation (a)
|
|
Development Projects (b)
|
|
|
|
Commitments (c)
|
|
Total
|
Remaining 2021
|
$814
|
|
|
$17,440
|
|
|
|
|
$11,445
|
|
|
$29,699
|
|
2022
|
2,097
|
|
|
3,182
|
|
|
|
|
17,901
|
|
|
23,180
|
|
2023
|
1,853
|
|
|
267
|
|
|
|
|
18,512
|
|
|
20,632
|
|
2024
|
1,853
|
|
|
267
|
|
|
|
|
15,671
|
|
|
17,791
|
|
2025
|
2,338
|
|
|
267
|
|
|
|
|
10,625
|
|
|
13,230
|
|
Thereafter
|
2,575
|
|
|
3,899
|
|
|
|
|
29,987
|
|
|
36,461
|
|
|
$11,530
|
|
|
$25,322
|
|
|
|
|
$104,141
|
|
|
$140,993
|
|
(b)Primarily consisting of payments expected to be made on our Wildlight and Richmond Hill development projects.
(c)Commitments include payments expected to be made on financial instruments (foreign exchange contracts, interest rate swaps and forward-starting interest rate swaps) and other purchase obligations.
13. CONTINGENCIES
We have been named as a defendant in various lawsuits and claims arising in the normal course of business. While we have procured reasonable and customary insurance covering risks normally occurring in connection with our businesses, we have in certain cases retained some risk through the operation of large deductible insurance plans, primarily in the areas of executive risk, property, automobile and general liability. These pending lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on our financial position, results of operations, or cash flow.
14. ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES
Various federal and state environmental laws in the states in which we operate place cleanup or restoration liability on the current and former owners of affected real estate. These laws are often a source of “strict liability,” meaning that an owner or operator need not necessarily have caused, or even been aware of, the release of contaminated materials. Similarly, there are certain environmental laws that allow state, federal, and tribal trustees (collectively, the “Trustees”) to bring suit against property owners to recover damage for injuries to natural resources. Like the liability that attaches to current property owners in the cleanup context, liability for natural resource damages (“NRD”) can attach to a property simply because an injury to natural resources resulted from releases of contaminated materials on or from the owner’s property, regardless of culpability for the release. For additional information, see Note 13 - Environmental and Natural Resource Damage Liabilities in the 2020 Form 10-K.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
Changes in environmental and NRD liabilities from December 31, 2020 to March 31, 2021 are shown below:
|
|
|
|
|
|
|
Port Gamble, WA
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current portion at December 31, 2020
|
$10,615
|
Plus: Current portion
|
1,026
|
Total Balance at December 31, 2020
|
11,641
|
Expenditures
|
(111)
|
|
|
Total Balance at March 31, 2021
|
11,530
|
Less: Current portion
|
(930)
|
Non-current portion at March 31, 2021
|
$10,600
|
These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. See Note 2 - Merger with Pope Resources for information regarding our preliminary estimates of fair value. It is expected that the upland mill site cleanup and NRD restoration will occur over the next two to three years, while the monitoring of Port Gamble Bay, mill site and landfills will continue for an additional 10 to 15 years. NRD costs are subject to change as the scope of the restoration projects become more clearly defined. It is reasonably possible that these components of the liability may increase as the project progresses. Management continues to monitor the Port Gamble cleanup process and will make adjustments as needed. Should any future circumstances result in a change to the estimated cost of the project, we will record an appropriate adjustment to the liability in the period it becomes known and when we can reasonably estimate the amount. For further information on the timing and amount of future payments related to our environmental remediation liabilities, see Note 12 - Commitments.
15. GUARANTEES
We provide financial guarantees as required by creditors, insurance programs, and various governmental agencies.
As of March 31, 2021, the following financial guarantees were outstanding:
|
|
|
|
|
|
|
|
|
|
|
Financial Commitments (a)
|
|
Maximum Potential
Payment
|
|
|
Standby letters of credit
|
|
$885
|
|
|
|
Surety bonds (b)
|
|
9,340
|
|
|
|
Total financial commitments
|
|
$10,225
|
|
|
|
(a)We have not recorded any liabilities for these financial commitments in our Consolidated Balance Sheets. The guarantees are not subject to measurement, as the guarantees are dependent on our own performance.
(b)Surety bonds are issued primarily to secure performance obligations related to various operational activities, to provide collateral for our Wildlight development project in Nassau County, Florida and in connection with pending and completed sales from the Harbor Hill project in Gig Harbor, Washington. These surety bonds expire at various dates during 2021, 2022, 2023 and 2024 and are expected to be renewed as required.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
16. HIGHER AND BETTER USE TIMBERLANDS AND REAL ESTATE DEVELOPMENT INVESTMENTS
We continuously assess potential alternative uses of our timberlands, as some properties may become more valuable for development, residential, recreation or other purposes. We periodically transfer, via a sale or contribution from the real estate investment trust (“REIT”) entities to taxable REIT subsidiaries (“TRS”), higher and better use (“HBU”) timberlands to enable land-use entitlement, development or marketing activities. We also acquire HBU properties in connection with timberland acquisitions. These properties are managed as timberlands until sold or developed. While the majority of HBU sales involve rural and recreational land, we also selectively pursue various land-use entitlements on certain properties for residential, commercial and industrial development in order to enhance the long-term value of such properties. For selected development properties, we also invest in targeted infrastructure improvements, such as roadways and utilities, to accelerate the marketability and improve the value of such properties.
Changes in higher and better use timberlands and real estate development investments from December 31, 2020 to March 31, 2021 are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Higher and Better Use Timberlands and Real Estate Development Investments
|
|
Land and Timber
|
|
Development Investments
|
|
Total
|
Non-current portion at December 31, 2020
|
$79,901
|
|
|
$28,617
|
|
|
$108,518
|
|
Plus: Current portion (a)
|
212
|
|
|
6,544
|
|
|
6,756
|
|
Total Balance at December 31, 2020
|
80,113
|
|
|
35,161
|
|
|
115,274
|
|
Non-cash cost of land and improved development
|
(549)
|
|
|
(232)
|
|
|
(781)
|
|
Amortization of parcel real estate development investments
|
—
|
|
|
(139)
|
|
|
(139)
|
|
Timber depletion from harvesting activities and basis of timber sold in real estate sales
|
(243)
|
|
|
—
|
|
|
(243)
|
|
Capitalized real estate development investments (b)
|
—
|
|
|
5,291
|
|
|
5,291
|
|
Capital expenditures (silviculture)
|
96
|
|
|
—
|
|
|
96
|
|
|
|
|
|
|
|
Intersegment transfers
|
1,082
|
|
|
—
|
|
|
1,082
|
|
Purchase price allocation adjustment (c)
|
8,238
|
|
|
—
|
|
|
8,238
|
|
|
|
|
|
|
|
Total Balance at March 31, 2021
|
88,737
|
|
|
40,081
|
|
|
128,818
|
|
Less: Current portion (a)
|
(811)
|
|
|
(16,692)
|
|
|
(17,503)
|
|
Non-current portion at March 31, 2021
|
$87,926
|
|
|
$23,389
|
|
|
$111,315
|
|
(a)The current portion of Higher and Better Use Timberlands and Real Estate Development Investments is recorded in Inventory. See Note 17 — Inventory for additional information.
(b)Capitalized real estate development investments include $0.1 million of capitalized interest and $2.3 million of parcel real estate development investments. Parcel real estate development investments represent investments made for specific lots and/or commercial parcels that are currently under contract or expected to be ready for market within a year.
(c)Reflects measurement period adjustments on HBU properties acquired in the merger with Pope Resources. The estimated fair value of HBU properties acquired in the merger is approximately $34.7 million. This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets. See Note 2 - Merger with Pope Resources for additional information.
17. INVENTORY
As of March 31, 2021 and December 31, 2020, our inventory consisted entirely of finished goods, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
Finished goods inventory
|
|
|
|
Real estate inventory (a)
|
$17,503
|
|
|
$6,756
|
|
Log inventory
|
7,490
|
|
|
3,838
|
|
Total inventory
|
$24,993
|
|
|
$10,594
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
18. OTHER OPERATING INCOME (EXPENSE), NET
Other operating income (expense), net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Gain on foreign currency remeasurement, net of cash flow hedges
|
|
|
|
|
$2,429
|
|
|
$1,433
|
|
Gain on sale or disposal of property and equipment
|
|
|
|
|
90
|
|
|
3
|
|
Log trading marketing fees
|
|
|
|
|
6
|
|
|
47
|
|
Costs related to the merger with Pope Resources (a)
|
|
|
|
|
—
|
|
|
(2,487)
|
|
Equity income related to Bainbridge Landing LLC joint venture (b)
|
|
|
|
|
19
|
|
|
—
|
|
Miscellaneous expense, net
|
|
|
|
|
(96)
|
|
|
(107)
|
|
Total
|
|
|
|
|
$2,448
|
|
|
($1,111)
|
|
19. EMPLOYEE BENEFIT PLANS
We have one qualified non-contributory defined benefit pension plan covering a portion of our employees and an unfunded plan that provides benefits in excess of amounts allowable under current tax law in the qualified plan. Both plans are closed to new participants. Effective December 31, 2016, we froze benefits for all employees participating in the pension plan. In lieu of the pension plan, we provide those employees with an enhanced 401(k) plan match. Employee benefit plan liabilities are calculated using actuarial estimates and management assumptions. These estimates are based on historical information, along with certain assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause the estimates to change.
We are not required to make mandatory 2021 pension contributions due to our plan’s improved funding status and have made no pension contribution payments during the three months ended March 31, 2021.
The net pension and postretirement benefit (credits) costs that have been recorded are shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net Periodic Benefit (Credit) Cost
|
Income Statement Location
|
|
Pension
|
|
Postretirement
|
|
Three Months Ended
March 31,
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Service cost
|
Selling and general expenses
|
|
—
|
|
|
—
|
|
|
$2
|
|
|
$2
|
|
Interest cost
|
Interest and other miscellaneous expense, net
|
|
557
|
|
|
677
|
|
|
11
|
|
|
13
|
|
Expected return on plan assets (a)
|
Interest and other miscellaneous expense, net
|
|
(936)
|
|
|
(876)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of losses
|
Interest and other miscellaneous expense, net
|
|
288
|
|
|
215
|
|
|
5
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit (credit) cost
|
|
|
($91)
|
|
|
$16
|
|
|
$18
|
|
|
$17
|
|
|
|
|
|
|
|
|
|
|
|
(a)The weighted-average expected long-term rate of return on plan assets used in computing 2021 net periodic benefit cost for pension benefits is 5.7%.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
20. INCOME TAXES
Rayonier is a REIT under the Internal Revenue Code and therefore generally does not pay U.S. federal or state income tax. As of March 31, 2021, Rayonier owns a 97.0% interest in the Operating Partnership and conducts substantially all of its timberland operations through the Operating Partnership. The taxable income or loss generated by the Operating Partnership is passed through and reported to its unit holders (including the Company) on a Schedule K-1 for inclusion in each unitholder’s income tax return. Certain operations, including log trading and certain real estate activities, such as the entitlement, development and sale of HBU properties, are conducted through our TRS. The TRS subsidiaries are subject to United States federal and state corporate income tax. The New Zealand timber operations are conducted by the New Zealand subsidiary, which is subject to corporate-level tax at 28% in New Zealand and is treated as a partnership for U.S. income tax purposes.
PROVISION FOR INCOME TAXES
The Company’s tax expense is principally related to corporate-level tax in New Zealand and non-resident withholding tax on repatriation of earnings from New Zealand. The following table contains the income tax expense recognized on the Consolidated Statements of Income and Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Income tax expense
|
|
|
|
|
($3,421)
|
|
|
($3,706)
|
|
ANNUAL EFFECTIVE TAX RATE
The Company’s effective tax rate after discrete items is below the 21.0% U.S. statutory rate due to tax benefits associated with being a REIT. The following table contains the Company’s annualized effective tax rate after discrete items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
Annualized effective tax rate after discrete items
|
|
|
|
|
11.6
|
%
|
|
12.1
|
%
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
21. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in AOCI by component for the three months ended March 31, 2021 and the year ended December 31, 2020. All amounts are presented net of tax and exclude portions attributable to noncontrolling interests.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation (loss) gains
|
|
Net investment hedges of New Zealand subsidiary
|
|
Cash flow hedges
|
|
Employee benefit plans
|
|
Total Rayonier, L.P.
|
|
Allocation to Operating Partnership
|
|
Total Rayonier Inc.
|
Balance as of December 31, 2019
|
($226)
|
|
|
$1,321
|
|
|
($8,910)
|
|
|
($23,387)
|
|
|
($31,202)
|
|
|
—
|
|
|
($31,202)
|
|
Other comprehensive income (loss) before reclassifications
|
22,928
|
|
|
—
|
|
|
(71,644)
|
|
|
(1,794)
|
|
|
(50,510)
|
|
|
—
|
|
|
(50,510)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
9,498
|
|
|
869
|
|
(b)
|
10,367
|
|
|
(2,540)
|
|
|
7,827
|
|
Net other comprehensive income (loss)
|
22,928
|
|
|
—
|
|
|
(62,146)
|
|
|
(925)
|
|
|
(40,143)
|
|
|
(2,540)
|
|
|
(42,683)
|
|
Balance as of December 31, 2020
|
$22,702
|
|
|
$1,321
|
|
|
($71,056)
|
|
|
($24,312)
|
|
|
($71,345)
|
|
|
($2,540)
|
|
|
($73,885)
|
|
Other comprehensive (loss) income before reclassifications
|
(11,652)
|
|
|
—
|
|
|
56,637
|
|
(a)
|
—
|
|
|
44,985
|
|
|
—
|
|
|
44,985
|
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
4,991
|
|
|
294
|
|
(b)
|
5,285
|
|
|
(1,531)
|
|
|
3,754
|
|
Net other comprehensive (loss) income
|
(11,652)
|
|
|
—
|
|
|
61,628
|
|
|
294
|
|
|
50,270
|
|
|
(1,531)
|
|
|
48,739
|
|
Balance as of
March 31, 2021
|
$11,050
|
|
|
$1,321
|
|
|
($9,428)
|
|
|
($24,018)
|
|
|
($21,075)
|
|
|
($4,071)
|
|
|
($25,146)
|
|
(b)This component of other comprehensive (loss) income is included in the computation of net periodic pension and post-retirement costs. See Note 19 — Employee Benefit Plans for additional information.
The following table presents details of the amounts reclassified in their entirety from AOCI to net income for the three months ended March 31, 2021 and March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Details about accumulated other comprehensive income (loss) components
|
|
Amount reclassified from accumulated other comprehensive income (loss)
|
|
Affected line item in the income statement
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Realized loss on foreign currency exchange contracts
|
|
$1,205
|
|
|
$18
|
|
|
Other operating expense, net
|
Realized loss on foreign currency option contracts
|
|
594
|
|
|
9
|
|
|
Other operating expense, net
|
Noncontrolling interests
|
|
(414)
|
|
|
(6)
|
|
|
Comprehensive (loss) income attributable to noncontrolling interests
|
Realized loss (gain) on interest rate contracts
|
|
3,994
|
|
|
(452)
|
|
|
Interest expense
|
Income tax expense from net gain on foreign currency contracts
|
|
(388)
|
|
|
(6)
|
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (gain) from accumulated other comprehensive income
|
|
$4,991
|
|
|
($437)
|
|
|
|
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
22. RESTRICTED CASH
Restricted cash includes cash balances held in escrow as collateral for certain contractual obligations related to our Richmond Hill development project as well as cash held in escrow for real estate sales. As of March 31, 2021 and December 31, 2020, we had $0.5 million and $3.0 million, respectively, of restricted cash held in escrow. In addition, in order to qualify for like-kind exchange (“LKE”) treatment, the proceeds from real estate sales must be deposited with a third-party intermediary. These proceeds are accounted for as restricted cash until a suitable replacement property is acquired. In the event LKE purchases are not completed, the proceeds are returned to us after 180 days and reclassified as available cash. As of March 31, 2021 and December 31, 2020, we had no proceeds from real estate sales classified as restricted cash which were deposited with an LKE intermediary.
The following table contains the amounts of restricted cash recorded in the Consolidated Balance Sheets and Consolidated Statements of Cash Flows for the three months ended March 31, 2021:
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
|
|
|
|
|
Restricted cash held in escrow
|
$475
|
|
|
|
|
|
|
|
Total restricted cash shown in the Consolidated Balance Sheets
|
475
|
|
|
|
Cash and cash equivalents
|
82,620
|
|
|
|
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows
|
$83,095
|
|
|
|
23. ASSETS HELD FOR SALE
Assets held for sale is composed of properties under contract and expected to be sold within 12 months that also meet the other relevant held-for sale criteria in accordance with ASC 360-10-45-9. As of March 31, 2021 and December 31, 2020, the basis in properties meeting this classification was $7.9 million and $3.4 million, respectively. Since the basis in these properties was less than the fair value, including costs to sell, no impairment was recognized.
RAYONIER INC. AND SUBSIDIARIES
RAYONIER, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands unless otherwise stated)
24. CHARGES FOR INTEGRATION AND RESTRUCTURING
During 2020, we incurred and accrued for termination benefits (primarily severance) and accelerated share-based payment costs based upon actual and expected qualifying terminations of certain employees as a result of restructuring decisions made concurrent with and subsequent to the merger with Pope Resources. We also incurred non-recurring professional services costs for investment banking, legal, consulting, accounting and certain other fees directly attributable to the merger with Pope Resources.
A summary of the charges for integration and restructuring related to the merger with Pope Resources is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Professional services
|
—
|
|
|
$2,347
|
|
Other integration and restructuring costs
|
—
|
|
|
140
|
|
Total integration and restructuring charges related to the merger with Pope Resources
|
—
|
|
|
$2,487
|
|
Changes in accrued severance related to restructuring during the three months ended March 31, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2021
|
Accrued severance as of December 31, 2020
|
|
|
$112
|
|
|
|
|
|
Payments
|
|
|
(53)
|
|
Accrued severance as of March 31, 2021
|
|
|
$59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued severance is recorded within “Accrued Payroll and Benefits” in our Consolidated Balance Sheets. The majority of the accrued severance balance as of March 31, 2021 is expected to be paid within one year.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)
When we refer to “Rayonier” or “the Company” we mean Rayonier Inc. and its consolidated subsidiaries. References to the “Operating Partnership” mean Rayonier, L.P. and its consolidated subsidiaries. References to “we,” “us,” or “our,” mean collectively Rayonier Inc., the Operating Partnership and entities/subsidiaries owned or controlled by Rayonier Inc. and/or the Operating Partnership. References herein to “Notes to Financial Statements” refer to the Notes to Consolidated Financial Statements of Rayonier Inc. and Rayonier, L.P. included in Item 1 of this report.
This MD&A is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors which may affect future results. Our MD&A should be read in conjunction with our Consolidated Financial Statements included in Item 1 of this report, our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) and information contained in our subsequent reports filed with the Securities and Exchange Commission (the “SEC”).
FORWARD-LOOKING STATEMENTS
Certain statements in this document regarding anticipated financial outcomes, including our earnings guidance, if any, business and market conditions, outlook, expected dividend rate, our business strategies, including the recent acquisition of Pope Resources, expected harvest schedules, timberland acquisitions and dispositions, the anticipated benefits of our business strategies, and other similar statements relating to our 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 risk factors contained in Item 1A — Risk Factors in our 2020 Form 10-K and similar discussions included in other reports that we subsequently file with the SEC, among others, could cause actual results or events to differ materially from our historical experience and those expressed in forward-looking statements made in this document.
Forward-looking statements are only as of the date they are made, and we undertake no duty to update our forward-looking statements except as required by law. You are advised, however, to review any subsequent disclosures we make on related subjects in subsequent reports filed with the SEC.
NON-GAAP MEASURES
To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP measures, including “Cash Available for Distribution,” and “Adjusted EBITDA,” which are defined and further explained in Performance and Liquidity Indicators below. Reconciliation of such measures to the nearest GAAP measures can also be found in Performance and Liquidity Indicators below. Our 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.
OUR COMPANY
We are a leading timberland real estate investment trust (“REIT”) with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. We invest in timberlands and actively manage them to provide current income and attractive long-term returns to our shareholders. We conduct our business through an umbrella partnership real estate investment trust (“UPREIT”) structure in which our assets are owned by our Operating Partnership and its subsidiaries. Rayonier manages the Operating Partnership as its sole general partner. Our revenues, operating income and cash flows are primarily derived from the following core business segments: Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate, and Trading. As of March 31, 2021, we owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.75 million acres), U.S. Pacific Northwest (507,000 acres) and New Zealand (417,000 gross acres or 296,000 net plantable acres). We also act as the managing member in a private equity timber fund business with three funds comprising approximately 141,000 acres. On a “look-through basis,” our ownership in the timber fund business equates to approximately 17,000 acres.
SEGMENT INFORMATION
The Southern Timber, Pacific Northwest Timber, New Zealand Timber, and Timber Funds segments include all activities related to the harvesting of timber and other non-timber income activities, such as the licensing of properties for hunting, the leasing of properties for mineral extraction and cell towers, and carbon credit sales. Our New Zealand operations are conducted by Matariki Forestry Group, a joint venture (the “New Zealand subsidiary”), in which we maintain a 77% ownership interest. The Timber Funds segment operations are managed by ORM LLC, a subsidiary acquired in the merger with Pope Resources. We own approximately 20% of Fund II, 5% of Fund III and 15% of Fund IV. When referring to our proportionate ownership share of the Timber Funds segment, we will refer to the sums as “look-through” totals. See Note 6 - Noncontrolling Interests for additional information regarding our noncontrolling interests in the New Zealand Timber and Timber Funds segments.
The Real Estate segment includes all U.S. and New Zealand land or leasehold sales disaggregated into six sales categories: Improved Development, Unimproved Development, Rural, Timberland & Non-Strategic, Conservation Easement and Large Dispositions. It also includes residential and commercial lease activity, primarily in the town of Port Gamble, Washington.
The Trading segment primarily reflects log trading activities in New Zealand and Australia conducted by our New Zealand subsidiary. Our Trading segment activities include an export services joint venture with a third-party forest manager in which Matariki Forests Trading Ltd maintains a 50% ownership interest. The Trading segment complements the New Zealand Timber segment by providing added market intelligence, increasing the scale of export operations and achieving cost savings that directly benefit the New Zealand Timber segment. This additional market intelligence also benefits our Southern and Pacific Northwest export log marketing.
ENVIRONMENTAL MATTERS
INDUSTRY AND MARKET CONDITIONS
The demand for timber is directly related to the underlying demand for pulp, paper, packaging, lumber and other wood products. The significant majority of timber sold in our Southern Timber segment is consumed domestically. With a higher proportion of pulpwood, our Southern Timber segment relies heavily on downstream markets for pulp and paper, and to a lesser extent wood pellet markets. Our Pacific Northwest Timber and Timber Funds segments rely primarily on domestic customers but also export a significant volume of timber, particularly to China. The Southern, Pacific Northwest Timber and Timber Funds segments rely on the strength of U.S. lumber markets as well as underlying housing starts. Our New Zealand Timber segment sells timber to domestic New Zealand wood products mills and also exports a significant portion of its volume to markets in China, South Korea and India. In addition to market dynamics in the Pacific Rim, the New Zealand Timber segment is subject to foreign exchange fluctuations, which can impact the operating results of the segment in U.S. dollar terms.
As the current novel coronavirus (“COVID-19”) pandemic continues to evolve, the expected duration and the extent of economic disruption it may ultimately cause remain uncertain. Local, state and national governments continue to evaluate policies and restrictions in order to mitigate the spread of COVID-19. Government-mandated shutdowns or shelter-in-place orders in markets in which we operate could negatively impact our results. Further, prolonged periods of lower overall business activity as a result of COVID-19 could cause significant damage to the underlying economy, which would likely impact U.S. timber markets. We will continue to monitor COVID-19 and its impact on the markets in which we operate going forward.
We are also subject to the risk of price fluctuations in our major cost components. The primary components of our cost of sales are the cost basis of timber sold (depletion), the cost basis of real estate sold and logging and transportation costs (cut and haul). Depletion includes the amortization of capitalized costs (site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll costs). Other costs include amortization of capitalized costs related to road and bridge construction and software, depreciation of fixed assets and equipment, road maintenance, severance and excise taxes, fire prevention and real estate commissions and closing costs.
CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable. Actual results may differ from these estimates. For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Form 10-K.
DISCUSSION OF TIMBER INVENTORY AND SUSTAINABLE YIELD
See Item 1 — Business — Discussion of Timber Inventory and Sustainable Yield in our 2020 Form 10-K.
OUR TIMBERLANDS
Our timber operations are comprised of our core timberland holdings, which are disaggregated into three geographically distinct reporting segments: Southern Timber, Pacific Northwest Timber and New Zealand Timber in addition to our timber fund holdings, which represents our ownership in Timber Funds II, III and IV. The following tables provide a breakdown of our timberland holdings as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Timberland Holdings
|
|
|
(acres in 000s)
|
As of March 31, 2021
|
|
|
As of December 31, 2020
|
|
|
|
Owned
|
|
Leased
|
|
Total
|
|
|
Owned
|
|
Leased
|
|
Total
|
|
|
Southern
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
|
223
|
|
|
14
|
|
|
237
|
|
|
|
223
|
|
|
14
|
|
|
237
|
|
|
|
Arkansas
|
—
|
|
|
6
|
|
|
6
|
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
|
Florida
|
345
|
|
|
61
|
|
|
406
|
|
|
|
327
|
|
|
61
|
|
|
388
|
|
|
|
Georgia
|
611
|
|
|
64
|
|
|
675
|
|
|
|
602
|
|
|
71
|
|
|
673
|
|
|
|
Louisiana
|
140
|
|
|
—
|
|
|
140
|
|
|
|
140
|
|
|
—
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oklahoma
|
92
|
|
|
—
|
|
|
92
|
|
|
|
92
|
|
|
—
|
|
|
92
|
|
|
|
South Carolina
|
16
|
|
|
—
|
|
|
16
|
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
179
|
|
|
—
|
|
|
179
|
|
|
|
181
|
|
|
—
|
|
|
181
|
|
|
|
|
1,606
|
|
|
145
|
|
|
1,751
|
|
|
|
1,581
|
|
|
152
|
|
|
1,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Northwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oregon
|
61
|
|
|
—
|
|
|
61
|
|
|
|
61
|
|
|
—
|
|
|
61
|
|
|
|
Washington
|
442
|
|
|
4
|
|
|
446
|
|
|
|
442
|
|
|
4
|
|
|
446
|
|
|
|
|
503
|
|
|
4
|
|
|
507
|
|
|
|
503
|
|
|
4
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Zealand (a)
|
185
|
|
|
232
|
|
|
417
|
|
|
|
185
|
|
|
232
|
|
|
417
|
|
|
|
Total
|
2,294
|
|
|
381
|
|
|
2,675
|
|
|
|
2,269
|
|
|
388
|
|
|
2,657
|
|
|
|
(a)Represents legal acres owned and leased by the New Zealand subsidiary, in which we own a 77% interest. As of March 31, 2021, legal acres in New Zealand consisted of 296,000 plantable acres and 121,000 non-productive acres.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timber Fund Holdings
|
(acres in 000s)
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
Total
|
|
Look-through
|
|
Total
|
|
Look-through
|
Timber Funds
|
|
|
|
|
|
|
|
Oregon
|
51
|
|
|
7
|
|
|
51
|
|
|
7
|
|
Washington
|
71
|
|
|
9
|
|
|
71
|
|
|
9
|
|
California
|
19
|
|
|
1
|
|
|
19
|
|
|
1
|
|
Total
|
141
|
|
|
17
|
|
|
141
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Timberland under Management
|
(acres in 000s)
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
Total
|
|
|
|
Total
|
|
|
Southern
|
1,751
|
|
|
|
|
1,733
|
|
|
|
Pacific Northwest
|
507
|
|
|
|
|
507
|
|
|
|
New Zealand
|
417
|
|
|
|
|
417
|
|
|
|
Timber Funds
|
141
|
|
|
|
|
141
|
|
|
|
Total
|
2,816
|
|
|
|
|
2,798
|
|
|
|
The following tables detail activity for owned and leased acres in our core timberland holdings by state from December 31, 2020 to March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(acres in 000s)
|
Acres Owned
|
|
December 31, 2020
|
|
Acquisitions
|
|
Sales
|
|
Other
|
|
March 31, 2021
|
Southern
|
|
|
|
|
|
|
|
|
|
Alabama
|
223
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223
|
|
Florida
|
327
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
345
|
|
Georgia
|
602
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
611
|
|
Louisiana
|
140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
|
Oklahoma
|
92
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
South Carolina
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
181
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
179
|
|
|
1,581
|
|
|
27
|
|
|
(2)
|
|
|
—
|
|
|
1,606
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Northwest
|
|
|
|
|
|
|
|
|
|
Oregon
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
Washington
|
442
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
442
|
|
|
503
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
503
|
|
|
|
|
|
|
|
|
|
|
|
New Zealand (a)
|
185
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
185
|
|
Total
|
2,269
|
|
|
27
|
|
|
(2)
|
|
|
—
|
|
|
2,294
|
|
(a)Represents legal acres owned by the New Zealand subsidiary, in which we have a 77% interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(acres in 000s)
|
Acres Leased
|
|
December 31, 2020
|
|
New Leases
|
|
Sold/Expired Leases (a)
|
|
Other (b)
|
|
March 31, 2021
|
Southern
|
|
|
|
|
|
|
|
|
|
Alabama
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Arkansas
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Florida
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
Georgia
|
71
|
|
|
—
|
|
|
(1)
|
|
|
(6)
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
152
|
|
|
—
|
|
|
(1)
|
|
|
(6)
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Northwest
|
|
|
|
|
|
|
|
|
|
Washington (c)
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
New Zealand (d)
|
232
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232
|
|
Total
|
388
|
|
|
—
|
|
|
(1)
|
|
|
(6)
|
|
|
381
|
|
(a)Includes acres previously under lease that have been harvested and activity for the relinquishment of leased acres.
(b)Includes acres previously under lease that we have acquired as fee ownership.
(c)Primarily timber reservations acquired in the merger with Pope Resources.
(d)Represents legal acres leased by the New Zealand subsidiary, in which we have a 77% interest.
The following table details activity in our timber fund holdings by state from December 31, 2020 to March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(acres in 000s)
|
Acres Owned
|
|
December 31, 2020
|
|
Acquisitions
|
|
Sales
|
|
Other
|
|
March 31, 2021
|
Fund II
|
|
|
|
|
|
|
|
|
|
Oregon
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Washington
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
Total Fund II
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
Look-through share of Fund II
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
Fund III
|
|
|
|
|
|
|
|
|
|
Oregon
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
Washington
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
California
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
Total Fund III
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
Look-through share of Fund III
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
Fund IV
|
|
|
|
|
|
|
|
|
|
Oregon
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
Washington
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
Total Fund IV
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
Look-through share of Fund IV
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
Total Timber Funds
|
141
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
Look-through share of Funds
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
The following table provides key financial information by segment and on a consolidated basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Financial Information (in millions)
|
|
|
|
|
2021
|
|
2020
|
Sales
|
|
|
|
|
|
|
|
Southern Timber
|
|
|
|
|
$51.7
|
|
|
$53.0
|
|
Pacific Northwest Timber
|
|
|
|
|
41.5
|
|
|
31.1
|
|
New Zealand Timber
|
|
|
|
|
57.6
|
|
|
37.5
|
|
Timber Funds
|
|
|
|
|
14.9
|
|
|
—
|
|
Real Estate
|
|
|
|
|
|
|
|
Improved Development
|
|
|
|
|
0.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
9.8
|
|
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue/Other (a)
|
|
|
|
|
0.5
|
|
|
0.1
|
|
Large Dispositions
|
|
|
|
|
—
|
|
|
116.0
|
|
Total Real Estate
|
|
|
|
|
10.5
|
|
|
118.5
|
|
Trading
|
|
|
|
|
16.7
|
|
|
19.0
|
|
Intersegment Eliminations
|
|
|
|
|
(1.5)
|
|
|
—
|
|
Total Sales
|
|
|
|
|
$191.4
|
|
|
$259.1
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
Southern Timber
|
|
|
|
|
$17.3
|
|
|
$15.1
|
|
Pacific Northwest Timber
|
|
|
|
|
1.3
|
|
|
(0.9)
|
|
New Zealand Timber
|
|
|
|
|
14.0
|
|
|
5.4
|
|
Timber Funds
|
|
|
|
|
1.5
|
|
|
—
|
|
Real Estate (b)
|
|
|
|
|
1.7
|
|
|
26.8
|
|
Trading
|
|
|
|
|
0.2
|
|
|
—
|
|
Corporate and Other
|
|
|
|
|
(7.6)
|
|
|
(7.8)
|
|
Operating Income
|
|
|
|
|
28.5
|
|
|
38.6
|
|
Interest expense, interest income and other
|
|
|
|
|
(10.0)
|
|
|
(8.5)
|
|
Income tax expense
|
|
|
|
|
(3.5)
|
|
|
(3.7)
|
|
Net Income
|
|
|
|
|
15.0
|
|
|
26.4
|
|
Less: Net income attributable to noncontrolling interests in consolidated affiliates
|
|
|
|
|
(3.8)
|
|
|
(0.5)
|
|
Net Income Attributable to Rayonier, L.P.
|
|
|
|
|
$11.2
|
|
|
$25.9
|
|
Less: Net income attributable to noncontrolling interests in the Operating Partnership
|
|
|
|
|
(0.4)
|
|
|
—
|
|
Net Income Attributable to Rayonier Inc.
|
|
|
|
|
$10.8
|
|
|
$25.9
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (c)
|
|
|
|
|
|
|
|
Southern Timber
|
|
|
|
|
$31.7
|
|
|
$33.3
|
|
Pacific Northwest Timber
|
|
|
|
|
17.6
|
|
|
9.8
|
|
New Zealand Timber
|
|
|
|
|
21.2
|
|
|
10.2
|
|
Timber Funds
|
|
|
|
|
1.0
|
|
|
—
|
|
Real Estate
|
|
|
|
|
5.1
|
|
|
(1.1)
|
|
Trading
|
|
|
|
|
0.2
|
|
|
—
|
|
Corporate and Other
|
|
|
|
|
(7.3)
|
|
|
(5.0)
|
|
Total Adjusted EBITDA
|
|
|
|
|
$69.5
|
|
|
$47.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
(b)The three months ended March 31, 2020 includes $28.7 million from a Large Disposition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Southern Timber Overview
|
|
|
|
|
2021
|
|
2020
|
Sales Volume (in thousands of tons)
|
|
|
|
|
|
|
|
Pine Pulpwood
|
|
|
|
|
843
|
|
|
1,133
|
|
Pine Sawtimber
|
|
|
|
|
638
|
|
|
680
|
|
Total Pine Volume
|
|
|
|
|
1,481
|
|
|
1,813
|
|
Hardwood
|
|
|
|
|
31
|
|
|
30
|
|
Total Volume
|
|
|
|
|
1,512
|
|
|
1,843
|
|
|
|
|
|
|
|
|
|
Percentage Delivered Sales
|
|
|
|
|
36
|
%
|
|
32
|
%
|
Percentage Stumpage Sales
|
|
|
|
|
64
|
%
|
|
68
|
%
|
|
|
|
|
|
|
|
|
Net Stumpage Pricing (dollars per ton)
|
|
|
|
|
|
|
|
Pine Pulpwood
|
|
|
|
|
$17.10
|
|
|
$16.05
|
|
Pine Sawtimber
|
|
|
|
|
27.51
|
|
|
26.67
|
|
Weighted Average Pine
|
|
|
|
|
$21.58
|
|
|
$20.03
|
|
Hardwood
|
|
|
|
|
10.51
|
|
|
12.74
|
|
Weighted Average Total
|
|
|
|
|
$21.35
|
|
|
$19.91
|
|
|
|
|
|
|
|
|
|
Summary Financial Data (in millions of dollars)
|
|
|
|
|
|
|
|
Timber Sales
|
|
|
|
|
$44.2
|
|
|
$47.5
|
|
Less: Cut, Haul & Freight
|
|
|
|
|
(11.9)
|
|
|
(10.8)
|
|
|
|
|
|
|
|
|
|
Net Stumpage Sales
|
|
|
|
|
$32.3
|
|
|
$36.7
|
|
|
|
|
|
|
|
|
|
Non-Timber Sales
|
|
|
|
|
7.5
|
|
|
5.5
|
|
Total Sales
|
|
|
|
|
$51.7
|
|
|
$53.0
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
$17.3
|
|
|
$15.1
|
|
|
|
|
|
|
|
|
|
(+) Depreciation, depletion and amortization
|
|
|
|
|
14.4
|
|
|
18.2
|
|
Adjusted EBITDA (a)
|
|
|
|
|
$31.7
|
|
|
$33.3
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Acres (in thousands)
|
|
|
|
|
1,751
|
|
|
1,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Pacific Northwest Timber Overview
|
|
|
|
|
2021
|
|
2020
|
|
Sales Volume (in thousands of tons)
|
|
|
|
|
|
|
|
|
Pulpwood
|
|
|
|
|
79
|
|
|
82
|
|
|
Sawtimber
|
|
|
|
|
457
|
|
|
393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Volume
|
|
|
|
|
536
|
|
|
476
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (converted to MBF)
|
|
|
|
|
|
|
|
|
Pulpwood
|
|
|
|
|
7,559
|
|
|
7,789
|
|
|
Sawtimber
|
|
|
|
|
57,905
|
|
|
50,406
|
|
|
Total Volume
|
|
|
|
|
65,464
|
|
|
58,194
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Delivered Sales
|
|
|
|
|
78
|
%
|
|
78
|
%
|
|
Percentage Sawtimber Sales
|
|
|
|
|
85
|
%
|
|
83
|
%
|
|
|
|
|
|
|
|
|
|
|
Delivered Log Pricing (in dollars per ton)
|
|
|
|
|
|
|
|
|
Pulpwood
|
|
|
|
|
$29.36
|
|
|
$38.11
|
|
|
Sawtimber
|
|
|
|
|
90.98
|
|
|
75.40
|
|
|
Weighted Average Log Price
|
|
|
|
|
$81.64
|
|
|
$68.29
|
|
|
|
|
|
|
|
|
|
|
|
Summary Financial Data (in millions of dollars)
|
|
|
|
|
|
|
|
|
Timber Sales
|
|
|
|
|
$40.3
|
|
|
$30.6
|
|
|
Less: Cut and Haul
|
|
|
|
|
(16.0)
|
|
|
(14.2)
|
|
|
Net Stumpage Sales
|
|
|
|
|
$24.3
|
|
|
$16.4
|
|
|
|
|
|
|
|
|
|
|
|
Non-Timber Sales
|
|
|
|
|
1.3
|
|
|
0.5
|
|
|
Total Sales
|
|
|
|
|
$41.5
|
|
|
$31.1
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
|
|
$1.3
|
|
|
($0.9)
|
|
|
(+) Depreciation, depletion and amortization
|
|
|
|
|
16.3
|
|
|
10.7
|
|
|
Adjusted EBITDA (a)
|
|
|
|
|
$17.6
|
|
|
$9.8
|
|
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Acres (in thousands)
|
|
|
|
|
507
|
|
|
384
|
|
|
Sawtimber (in dollars per MBF)
|
|
|
|
|
$730
|
|
|
$611
|
|
|
Estimated Percentage of Export Volume
|
|
|
|
|
10
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
New Zealand Timber Overview
|
|
|
|
|
2021
|
|
2020
|
Sales Volume (in thousands of tons)
|
|
|
|
|
|
|
|
Domestic Pulpwood (Delivered)
|
|
|
|
|
106
|
|
|
101
|
|
Domestic Sawtimber (Delivered)
|
|
|
|
|
159
|
|
|
147
|
|
Export Pulpwood (Delivered)
|
|
|
|
|
47
|
|
|
16
|
|
Export Sawtimber (Delivered)
|
|
|
|
|
287
|
|
|
216
|
|
|
|
|
|
|
|
|
|
Total Volume
|
|
|
|
|
599
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivered Log Pricing (in dollars per ton)
|
|
|
|
|
|
|
|
Domestic Pulpwood
|
|
|
|
|
$40.15
|
|
|
$33.84
|
|
Domestic Sawtimber
|
|
|
|
|
80.95
|
|
|
69.97
|
|
Export Sawtimber
|
|
|
|
|
121.65
|
|
|
94.86
|
|
Weighted Average Log Price
|
|
|
|
|
$95.70
|
|
|
$74.16
|
|
|
|
|
|
|
|
|
|
Summary Financial Data (in millions of dollars)
|
|
|
|
|
|
|
|
Timber Sales
|
|
|
|
|
$57.3
|
|
|
$35.6
|
|
Less: Cut and Haul
|
|
|
|
|
(20.9)
|
|
|
(15.2)
|
|
Less: Port and Freight Costs
|
|
|
|
|
(12.0)
|
|
|
(8.0)
|
|
Net Stumpage Sales
|
|
|
|
|
$24.4
|
|
|
$12.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Timber Sales / Carbon Credits
|
|
|
|
|
0.2
|
|
|
1.9
|
|
Total Sales
|
|
|
|
|
$57.6
|
|
|
$37.5
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
$14.0
|
|
|
$5.4
|
|
|
|
|
|
|
|
|
|
(+) Depreciation, depletion and amortization
|
|
|
|
|
7.2
|
|
|
4.8
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
|
|
|
$21.2
|
|
|
$10.2
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
New Zealand Dollar to U.S. Dollar Exchange Rate (b)
|
|
|
|
|
0.7217
|
|
|
0.6500
|
|
Net Plantable Period-End Acres (in thousands)
|
|
|
|
|
296
|
|
|
295
|
|
Export Sawtimber (in dollars per JAS m3)
|
|
|
|
|
$141.45
|
|
|
$110.29
|
|
Domestic Sawtimber (in $NZD per tonne)
|
|
|
|
|
$123.39
|
|
|
$118.41
|
|
(b)Represents the period-average rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Timber Funds Overview
|
|
|
|
|
2021
|
|
2020
|
Sales Volume (in thousands of tons)
|
|
|
|
|
|
|
|
Pulpwood
|
|
|
|
|
9
|
|
|
—
|
|
Sawtimber
|
|
|
|
|
136
|
|
|
—
|
|
Total Volume
|
|
|
|
|
145
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Summary Financial Data (in millions of dollars)
|
|
|
|
|
|
|
|
Timber Sales
|
|
|
|
|
$13.6
|
|
|
—
|
|
Less: Cut and Haul
|
|
|
|
|
(5.5)
|
|
|
—
|
|
Net Stumpage Sales
|
|
|
|
|
$8.1
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberland Management Fees
|
|
|
|
|
1.4
|
|
|
—
|
|
Total Sales
|
|
|
|
|
$14.9
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
$1.5
|
|
|
—
|
|
Operating income attributable to NCI in Timber Funds
|
|
|
|
|
(1.1)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(+) Depreciation, depletion and amortization (“Look-through”)
|
|
|
|
|
0.6
|
|
|
—
|
|
Adjusted EBITDA (a)
|
|
|
|
|
$1.0
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
Period-End Acres (in thousands)
|
|
|
|
|
141
|
|
|
—
|
|
“Look-through” Period-End Acres (in thousands)
|
|
|
|
|
17
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Trading Overview
|
|
|
|
|
2021
|
|
2020
|
Sales Volume (in thousands of tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NZ Trading - Domestic
|
|
|
|
|
13
|
|
|
8
|
|
NZ Trading - Export
|
|
|
|
|
128
|
|
|
199
|
|
Total Volume
|
|
|
|
|
141
|
|
|
207
|
|
|
|
|
|
|
|
|
|
Summary Financial Data (in millions of dollars)
|
|
|
|
|
|
|
|
Trading Sales
|
|
|
|
|
$16.2
|
|
|
$18.6
|
|
Non-Timber Sales
|
|
|
|
|
0.4
|
|
|
0.3
|
|
Total Sales
|
|
|
|
|
$16.7
|
|
|
$19.0
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
$0.2
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
|
|
|
$0.2
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Real Estate Overview
|
|
|
|
|
2021
|
|
2020
|
Sales (in millions of dollars)
|
|
|
|
|
|
|
|
Improved Development
|
|
|
|
|
$0.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
9.8
|
|
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue/Other (a)
|
|
|
|
|
0.5
|
|
|
0.1
|
|
Large Dispositions (b)
|
|
|
|
|
—
|
|
|
116.0
|
|
Total Sales
|
|
|
|
|
$10.5
|
|
|
$118.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acres Sold
|
|
|
|
|
|
|
|
Improved Development
|
|
|
|
|
0.6
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
2,394
|
|
|
624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Dispositions (b)
|
|
|
|
|
—
|
|
|
66,946
|
|
Total Acres Sold
|
|
|
|
|
2,395
|
|
|
67,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Price per Acre (dollars per acre)
|
|
|
|
|
|
|
|
Improved Development
|
|
|
|
|
$406,452
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
4,079
|
|
|
3,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Dispositions (b)
|
|
|
|
|
—
|
|
|
1,733
|
|
Weighted Average (Total) (c)
|
|
|
|
|
$4,183
|
|
|
$3,842
|
|
Weighted Average (Adjusted) (d)
|
|
|
|
|
$4,079
|
|
|
$3,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (Excluding Large Dispositions)
|
|
|
|
|
$10.5
|
|
|
$2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
$1.7
|
|
|
$26.8
|
|
(+) Depreciation, depletion and amortization
|
|
|
|
|
1.6
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
(+) Non-cash cost of land and improved development
|
|
|
|
|
1.8
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(–) Large Dispositions (b)
|
|
|
|
|
—
|
|
|
(28.7)
|
|
Adjusted EBITDA (e)
|
|
|
|
|
$5.1
|
|
|
($1.1)
|
|
(a)Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.
(b)Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.
(c)Excludes Large Dispositions.
(d)Excludes Improved Development and Large Dispositions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Capital Expenditures By Segment (in millions of dollars)
|
|
|
|
|
2021
|
|
2020
|
Timber Capital Expenditures
|
|
|
|
|
|
|
|
Southern Timber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reforestation, silviculture and other capital expenditures
|
|
|
|
|
$3.3
|
|
|
$7.1
|
|
Property taxes
|
|
|
|
|
1.5
|
|
|
1.7
|
|
Lease payments
|
|
|
|
|
0.8
|
|
|
1.1
|
|
Allocated overhead
|
|
|
|
|
1.2
|
|
|
1.3
|
|
Subtotal Southern Timber
|
|
|
|
|
$6.7
|
|
|
$11.1
|
|
Pacific Northwest Timber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reforestation, silviculture and other capital expenditures
|
|
|
|
|
2.7
|
|
|
2.3
|
|
Property taxes
|
|
|
|
|
0.3
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
Allocated overhead
|
|
|
|
|
1.2
|
|
|
0.8
|
|
Subtotal Pacific Northwest Timber
|
|
|
|
|
$4.1
|
|
|
$3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Zealand Timber
|
|
|
|
|
|
|
|
Reforestation, silviculture and other capital expenditures
|
|
|
|
|
2.0
|
|
|
1.5
|
|
Property taxes
|
|
|
|
|
0.2
|
|
|
0.2
|
|
Lease payments
|
|
|
|
|
0.5
|
|
|
0.4
|
|
Allocated overhead
|
|
|
|
|
0.7
|
|
|
0.6
|
|
Subtotal New Zealand Timber
|
|
|
|
|
$3.4
|
|
|
$2.7
|
|
Total Timber Segments Capital Expenditures
|
|
|
|
|
$14.2
|
|
|
$17.1
|
|
Timber Funds (“Look-through”) (a)
|
|
|
|
|
0.2
|
|
|
—
|
|
Real Estate
|
|
|
|
|
0.1
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
Total Capital Expenditures
|
|
|
|
|
$14.5
|
|
|
$17.2
|
|
|
|
|
|
|
|
|
|
Timberland Acquisitions
|
|
|
|
|
|
|
|
Southern Timber
|
|
|
|
|
$29.9
|
|
|
$24.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberland Acquisitions
|
|
|
|
|
$29.9
|
|
|
$24.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Development Investments (b)
|
|
|
|
|
$3.0
|
|
|
$1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)The three months ended March 31, 2021 excludes $1.3 million of capital expenditures attributable to noncontrolling interests in Timber Funds.
(b)Represents investments in master infrastructure or entitlements in our real estate development projects. Real Estate Development Investments are amortized as the underlying properties are sold and included in Non-Cash Cost of Land and Improved Development.
The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for March 31, 2021 versus March 31, 2020 (millions of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Intersegment Eliminations
|
|
Total
|
Three Months Ended
March 31, 2020
|
|
$53.0
|
|
|
$31.1
|
|
|
$37.5
|
|
|
—
|
|
|
$118.5
|
|
|
$19.0
|
|
|
—
|
|
|
$259.1
|
|
Volume
|
|
(6.6)
|
|
|
2.1
|
|
|
9.2
|
|
|
—
|
|
|
6.3
|
|
|
(5.9)
|
|
|
—
|
|
|
5.1
|
|
Price
|
|
2.2
|
|
|
5.8
|
|
|
9.5
|
|
|
—
|
|
|
1.1
|
|
|
3.5
|
|
|
—
|
|
|
22.1
|
|
Non-timber sales
|
|
2.0
|
|
|
0.8
|
|
|
(1.9)
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
1.0
|
|
Foreign exchange (a)
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
Other
|
|
1.1
|
|
(b)
|
1.7
|
|
(b)
|
1.6
|
|
(c)
|
14.9
|
|
(d)
|
(115.4)
|
|
(e)
|
—
|
|
|
(1.5)
|
|
(f)
|
(97.6)
|
|
Three Months Ended
March 31, 2021
|
|
$51.7
|
|
|
$41.5
|
|
|
$57.6
|
|
|
$14.9
|
|
|
$10.5
|
|
|
$16.7
|
|
|
($1.5)
|
|
|
$191.4
|
|
(a) Net of currency hedging impact.
(b) Includes variance due to stumpage versus delivered sales.
(c) Includes variance due to domestic versus export sales.
(d) Timber Funds was a new segment in Q2 2020. Includes $11.9 million of sales attributable to noncontrolling interests in Timber Funds and $1.4 million of sales related to timberland investment management fees paid to us by the timber funds.
(e) Includes $116.0 million of sales from a Large Disposition in Q1 2020, partially offset by deferred revenue adjustments and marketing fees related to Improved Development sales, as well as residential and commercial lease revenue.
(f) Includes $1.4 million of Intersegment eliminations related to timberland management fees paid to us by the timber funds and reported as sales within the Timber Funds segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Intersegment Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Corporate and Other
|
|
Total
|
Three Months Ended
March 31, 2020
|
|
$15.1
|
|
|
($0.9)
|
|
|
$5.4
|
|
|
—
|
|
|
$26.8
|
|
|
—
|
|
|
($7.8)
|
|
|
$38.6
|
|
Volume
|
|
(3.4)
|
|
|
0.3
|
|
|
1.8
|
|
|
—
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
Price
|
|
2.2
|
|
|
5.8
|
|
|
9.5
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
18.6
|
|
Cost
|
|
0.6
|
|
|
(0.4)
|
|
|
0.2
|
|
|
—
|
|
|
(1.5)
|
|
|
0.5
|
|
|
0.2
|
|
|
(0.4)
|
|
Non-timber income
|
|
2.2
|
|
|
0.8
|
|
|
(1.8)
|
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
0.9
|
|
Foreign exchange (a)
|
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4)
|
|
Depreciation, depletion & amortization
|
|
0.6
|
|
|
(4.3)
|
|
|
(0.7)
|
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
(4.7)
|
|
Non-cash cost of land and improved development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
—
|
|
|
—
|
|
|
(0.4)
|
|
Other (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
(28.5)
|
|
|
—
|
|
|
—
|
|
|
(27.0)
|
|
Three Months Ended
March 31, 2021
|
|
$17.3
|
|
|
$1.3
|
|
|
$14.0
|
|
|
$1.5
|
|
|
$1.7
|
|
|
$0.2
|
|
|
($7.6)
|
|
|
$28.5
|
|
(a) Net of currency hedging impact.
(b) Timber Funds was a new segment in Q2 2020 and consists of $1.1 million of operating income attributable to noncontrolling interests in Timber Funds and $0.4 million of operating income attributable to Rayonier. Real Estate includes $28.7 million of operating income from a Large Disposition in Q1 2020, partially offset by deferred revenue adjustments and marketing fees related to Improved Development sales, as well as residential and commercial lease revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Corporate and Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Corporate and Other
|
|
Total
|
Three Months Ended
March 31, 2020
|
|
$33.3
|
|
|
$9.8
|
|
|
$10.2
|
|
|
—
|
|
|
($1.1)
|
|
|
—
|
|
|
($5.0)
|
|
|
$47.1
|
|
Volume
|
|
(6.6)
|
|
|
1.6
|
|
|
2.9
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
Price
|
|
2.2
|
|
|
5.8
|
|
|
9.5
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
18.6
|
|
Cost
|
|
0.6
|
|
|
(0.4)
|
|
|
0.2
|
|
|
—
|
|
|
(1.5)
|
|
|
0.5
|
|
|
(2.3)
|
|
|
(2.9)
|
|
Non-timber income
|
|
2.2
|
|
|
0.8
|
|
|
(1.8)
|
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
0.9
|
|
Foreign exchange (b)
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Other (c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Three Months Ended
March 31, 2021
|
|
$31.7
|
|
|
$17.6
|
|
|
$21.2
|
|
|
$1.0
|
|
|
$5.1
|
|
|
$0.2
|
|
|
($7.3)
|
|
|
$69.5
|
|
(b)Net of currency hedging impact.
(c)Timber Funds was a new segment in Q2 2020. Real Estate includes deferred revenue adjustments and marketing fees related to Improved Development sales, as well as residential and commercial lease revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Corporate and Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOUTHERN TIMBER
First quarter sales of $51.7 million decreased $1.3 million, or 2%, versus the prior year period primarily due to lower harvest volumes, partially offset by higher average net stumpage prices and higher pipeline easement revenue. Harvest volumes decreased 18% to 1.51 million tons versus 1.84 million tons in the prior year period. The decline in volume was largely due to the timing of harvest operations as compared to the prior year, as well as operational disruptions attributable to wet ground conditions in Georgia and winter snowstorms in the Gulf region. Average pine sawtimber stumpage prices increased 3% to $27.51 per ton versus $26.67 per ton in the prior year period. Robust demand from sawmills and growing demand from the export market coupled with constricted supply due to weather conditions translated into favorable sawtimber pricing across our markets. Average pine pulpwood stumpage prices increased 7% to $17.10 per ton versus $16.05 per ton in the prior year period due to favorable geographic mix as well as tighter supply due to adverse weather conditions. Overall, weighted-average stumpage prices (including hardwood) increased 7% to $21.35 per ton versus $19.91 per ton in the prior year period. Operating income of $17.3 million increased $2.3 million versus the prior year period due to higher net stumpage prices ($2.2 million), higher non-timber income ($2.2 million), lower costs ($0.6 million) and lower depletion rates ($0.6 million), partially offset by lower volumes ($3.4 million).
First quarter Adjusted EBITDA of $31.7 million was 5%, or $1.6 million, below the prior year period.
PACIFIC NORTHWEST TIMBER
First quarter sales of $41.5 million increased $10.4 million, or 34%, versus the prior year period. Harvest volumes increased 13% to 536,000 tons versus 476,000 tons in the prior year period, primarily due to incremental volume from the Pope Resources acquisition. Average delivered sawtimber prices increased 21% to $90.98 per ton versus $75.40 per ton in the prior year period, as exceptionally strong domestic lumber markets drove improved demand and pricing. Average delivered pulpwood prices decreased 23% to $29.36 per ton versus $38.11 per ton in the prior year period, as higher lumber mill residuals resulted in an increased supply of competing wood chip residuals. Operating income of $1.3 million improved $2.3 million versus the prior year period due to higher net stumpage prices ($5.8 million), higher non-timber income ($0.8 million) and volume/mix changes ($0.3 million), partially offset by higher depletion rates ($4.3 million) and higher overhead and other costs ($0.4 million).
First quarter Adjusted EBITDA of $17.6 million was 81%, or $7.9 million, above the prior year period.
NEW ZEALAND TIMBER
First quarter sales of $57.6 million increased $20.1 million, or 53%, versus the prior year period, as higher harvest volumes and log prices were partially offset by deferred carbon credit sales. Harvest volumes increased 25% to 599,000 tons versus 481,000 tons in the prior year period. The increase in harvest volumes was driven primarily by a normalized level of activity in the first quarter versus a prior year period constrained by COVID-19 disruptions. Average delivered prices for export sawtimber increased 28% to $121.65 per ton versus $94.86 per ton in the prior year period, while average delivered prices for domestic sawtimber increased 16% to $80.95 per ton versus $69.97 per ton in the prior year period. The increase in export sawtimber prices was driven primarily by stronger demand from China, as the prior year period was significantly impacted by the COVID-19 outbreak.
Improved export pricing in the current year quarter was also due in part to the restriction on competing log imports to China from Australia. The increase in domestic sawtimber prices (in U.S. dollar terms) was driven primarily by the rise in the NZ$/US$ exchange rate (US$0.72 per NZ$1.00 versus US$0.65 per NZ$1.00). Excluding the impact of foreign exchange rates, domestic sawtimber prices improved by a more modest 4% versus the prior year period due to improved demand. Operating income of $14.0 million increased $8.5 million versus the prior year period as a result of higher net stumpage prices ($9.5 million), higher volumes ($1.8 million) and lower costs ($0.2 million), partially offset by deferred carbon credit sales ($1.8 million), higher depletion rates ($0.7 million) and unfavorable foreign exchange impacts ($0.4 million). First quarter Adjusted EBITDA of $21.2 million was 107%, or $11.0 million above the prior year period.
TIMBER FUNDS
The Timber Funds segment generated first quarter sales of $14.9 million on harvest volumes of 145,000 tons, resulting in operating income of $1.5 million. First quarter Adjusted EBITDA was $1.0 million.
REAL ESTATE
First quarter sales of $10.5 million decreased $108.0 million versus the prior year period, while operating income of $1.7 million decreased $25.1 million versus the prior year period. The prior year first quarter sales and operating income included $116.0 million and $28.7 million, respectively, from a Large Disposition. Sales and operating income declined versus the prior year period due to lower acres sold (2,395 acres sold versus 67,570 acres sold in the prior year period), partially offset by an increase in weighted-average prices ($4,183 per acre versus $1,753 per acre in the prior year period).
Improved Development sales of $0.3 million included three residential lots in the Wildlight development project north of Jacksonville, Florida (an average of $84,000 per lot or $406,000 per acre). There were no Improved Development sales in the prior year period.
There were no Unimproved Development sales in the first quarter or the prior year period.
Rural sales of $9.8 million consisted of 2,394 acres at an average price of $4,079 per acre. This compares to prior year period sales of $2.4 million, which consisted of 624 acres at an average price of $3,842 per acre.
There were no Timberland & Non-Strategic sales in the first quarter or the prior year period.
First quarter Adjusted EBITDA of $5.1 million was $6.2 million above the prior year period.
TRADING
First quarter sales of $16.7 million decreased $2.3 million versus the prior year period primarily due to lower volumes, partially offset by higher prices. Sales volumes decreased 32% to 141,000 tons versus 207,000 tons in the prior year period. The Trading segment generated operating income of $0.2 million versus breakeven results in the prior year period due to improved trading margins resulting from higher prices.
OTHER ITEMS
CORPORATE AND OTHER EXPENSE / ELIMINATIONS
First quarter corporate and other operating expenses of $7.6 million decreased $0.2 million versus the prior year period, which included $2.5 million of costs related to the Pope Resources merger. This positive variance was largely offset by higher overhead expenses.
INTEREST EXPENSE
First quarter interest expense of $10.0 million increased $1.8 million versus the prior year period due to higher outstanding debt following the closing of the Pope Resources acquisition.
INTEREST AND OTHER MISCELLANEOUS EXPENSE, NET
There was negligible other miscellaneous expense in the first quarter versus $0.2 million of expense in the prior year period. The prior year period included unfavorable mark-to-market adjustments on marketable equity securities partially offset by favorable mark-to-market adjustments on carbon options and dividend income.
INCOME TAX EXPENSE
First quarter income tax expense of $3.5 million decreased $0.3 million versus the prior year period. The New Zealand subsidiary is the primary driver of income tax expense.
OUTLOOK
In our Southern Timber segment, we anticipate that demand from lumber mills will remain strong and that select U.S. South markets will continue to benefit from improving export demand. Further, we continue to expect a modest improvement in weighted average pricing relative to the prior year, with quarterly fluctuations largely driven by geographic mix.
In our Pacific Northwest Timber segment, we anticipate lower quarterly harvest volumes for the remainder of the year, as we pulled forward some volume in the first quarter to capture favorable demand and pricing. We further expect that strong lumber demand will continue to hold pricing at or above first quarter average prices for the balance of the year.
In our New Zealand Timber segment, we expect continued strong export and domestic demand, and we further expect that the restriction on Australian log imports into China will constrain log supplies. We anticipate that this positive operating momentum will translate into log prices remaining near or above levels realized in the first quarter, which will be partially offset by elevated shipping costs.
In our Real Estate segment, we expect a significant pickup in transaction activity for the balance of the year based on our current pipeline of opportunities. In particular, we are increasingly optimistic about our sales outlook for residential and commercial properties within our real estate development projects.
LIQUIDITY AND CAPITAL RESOURCES
Our principal source of cash is cash flow from operations, primarily the harvesting of timber and sales of real estate. As an UPREIT, our main use of cash is dividends and unitholder distributions. We also use cash to maintain the productivity of our timberlands through replanting and silviculture. Our operations have generally produced consistent cash flow and required limited capital resources. Short-term borrowings have helped fund working capital needs while acquisitions of timberlands generally require funding from external sources or Large Dispositions.
AT-THE-MARKET (“ATM”) EQUITY OFFERING PROGRAM
On September 10, 2020, we entered into a distribution agreement with a group of sales agents through which we may sell common shares, from time to time, having an aggregate sales price of up to $300 million. During the three months ended March 31, 2021, the Company sold 1.1 million shares under the ATM Program at an average price of $33.31 per share, generating aggregate gross proceeds of $36.9 million, excluding $0.4 million of commissions. As of March 31, 2021, $229.7 million remains available for issuance under the program.
The following table outlines the common stock issuance pursuant to our ATM program (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
Shares of common stock issued under the ATM program
|
1,107,814
|
|
|
—
|
|
Gross proceeds
|
$36.9
|
|
|
—
|
|
SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
(millions of dollars)
|
2021
|
|
2020
|
Cash and cash equivalents (excluding Timber Funds)
|
$77.9
|
|
|
$80.5
|
|
|
|
|
|
Total debt (excluding Timber Funds) (a)
|
1,294.1
|
|
|
1,294.9
|
|
Noncontrolling interests in the Operating Partnership
|
138.0
|
|
|
130.1
|
|
Shareholders’ equity
|
1,909.9
|
|
|
1,862.6
|
|
|
|
|
|
Total capitalization (total debt plus permanent and temporary equity)
|
3,342.0
|
|
|
3,287.6
|
|
Debt to capital ratio
|
39
|
%
|
|
39
|
%
|
Net debt to enterprise value (b)(c)
|
21
|
%
|
|
23
|
%
|
(a)Total debt as of March 31, 2021 and December 31, 2020 reflects principal on long-term debt, net of fair value adjustments and gross of deferred financing costs.
(b)Net debt is calculated as total debt less cash and cash equivalents.
(c)Enterprise value based on market capitalization (including Rayonier, L.P. “OP” units) plus net debt based on Rayonier’s share price of $32.25 and $29.38 as of March 31, 2021 and December 31, 2020, respectively.
SUMMARY OF GUARANTOR FINANCIAL INFORMATION
In March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022 (the “2022 Notes”). On May 7, 2020, Rayonier Inc. contributed its 100% ownership interest in Rayonier Operating Company LLC (the “Contribution”) to Rayonier, L.P. As a result of the Contribution, Rayonier, L.P. expressly assumed all the obligations of Rayonier Inc. with respect to the outstanding 2022 Notes and Rayonier Inc. agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P. under the Indenture, including the 2022 Notes. Rayonier L.P. is the current issuer of the 2022 Notes.
The subsidiary guarantor, Rayonier TRS Holdings Inc., and parent guarantor, Rayonier Inc., have guaranteed the notes fully and unconditionally on a joint and several basis. As a general partner of Rayonier, L.P., Rayonier Inc. consolidates Rayonier, L.P. and has no material assets or liabilities other than its interest in Rayonier, L.P. These notes are unsecured and unsubordinated and will rank equally with all other unsecured and unsubordinated indebtedness from time to time outstanding.
Rayonier, L.P. is a limited partnership, in which Rayonier Inc. is the general partner. The operating subsidiaries of Rayonier, L.P. conduct all of our operations. Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been eliminated in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors. As a result, our ability to make required payments on the notes depends on the performance of our operating subsidiaries and their ability to distribute funds to us. There are no material restrictions on dividends from the operating subsidiaries.
The summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P. for the three months ended March 31, 2021 and year ended December 31, 2020 are provided in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
March 31, 2021
|
|
December 31, 2020
|
Current assets
|
$70.0
|
|
|
$69.7
|
|
Non-current assets
|
75.3
|
|
|
48.3
|
|
Current liabilities
|
24.2
|
|
|
21.0
|
|
Non-current liabilities
|
1,861.0
|
|
|
1,942.4
|
|
Due to non-guarantors
|
551.6
|
|
|
596.7
|
|
|
|
|
|
|
|
|
|
The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P. for the three months ended March 31, 2021 and year ended December 31, 2020 are provided in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
March 31, 2021
|
|
December 31, 2020
|
Cost and expenses
|
($6.7)
|
|
|
($43.4)
|
|
Operating loss
|
(6.7)
|
|
|
(43.4)
|
|
Net loss
|
(18.1)
|
|
|
(81.3)
|
|
Revenue from non-guarantors
|
191.4
|
|
|
859.2
|
|
|
|
|
|
CASH FLOWS
The following table summarizes our cash flows from operating, investing and financing activities for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
2021
|
|
2020
|
Cash provided by (used for):
|
|
|
|
Operating activities
|
$53.9
|
|
|
$29.2
|
|
Investing activities
|
(44.4)
|
|
|
74.7
|
|
Financing activities
|
(13.8)
|
|
|
(38.7)
|
|
CASH PROVIDED BY OPERATING ACTIVITIES
Cash provided by operating activities increased $24.7 million primarily due to higher Adjusted EBITDA.
CASH USED FOR INVESTING ACTIVITIES
Cash used for investing activities of $44.4 million compares to cash provided by investing activities of $74.7 million in the prior year period. This variance is primarily due to proceeds from a Large Disposition in the prior year period ($115.7 million), higher timberland acquisitions ($5.8 million), and higher real estate development investments ($1.2 million), partially offset by other investing activities ($2.3 million) and lower capital expenditures ($1.3 million).
CASH USED FOR FINANCING ACTIVITIES
Cash used for financing activities decreased $24.9 million from the prior year period primarily due to net proceeds from the issuance of common shares under the ATM equity offering program ($32.5 million), decreases in share repurchases ($3.2 million), and increases in proceeds from the issuance of common shares under the Company’s incentive stock plan ($1.1 million), partially offset by increased distributions to consolidated affiliates ($8.1 million), dividends paid on common stock ($2.6 million) and distributions to noncontrolling interests in the Operating Partnership ($1.2 million).
EXPECTED 2021 EXPENDITURES
Capital expenditures in 2021 are expected to be between $73 million and $76 million, excluding capital expenditures attributable to the Timber Funds and any strategic timberland acquisitions we may make. Capital expenditures are expected to primarily consist of seedling planting, fertilization and other silvicultural activities, property taxes, lease payments, allocated overhead and other capitalized costs. Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.
We anticipate real estate development investments in 2021 to be between $16 million and $18 million, net of reimbursements from community development bonds. Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, Florida; Richmond Hill, our mixed-use development project located south of Savannah, Georgia; development properties in the town of Port Gamble, Washington; and development projects in Gig Harbor, Kingston and Bremerton Washington.
Our 2021 dividend payments on Rayonier Inc. common shares and distributions to Rayonier, L.P. unitholders are expected to be approximately $150.0 million and $4.6 million, respectively, assuming no change in the
quarterly dividend rate of $0.27 per share or partnership unit, or material changes in the number of shares or partnership units outstanding.
Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.
We have no mandatory pension contribution requirements in the current year.
Cash tax payments in 2021 are expected to be approximately $17.0 million, primarily related to the New Zealand subsidiary.
PERFORMANCE AND LIQUIDITY INDICATORS
The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity, and ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures of financial results: Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (“Adjusted EBITDA”) and Cash Available for Distribution (“CAD”). These measures are not defined by Generally Accepted Accounting Principles (“GAAP”), and the discussion of Adjusted EBITDA and CAD is not intended to conflict with or change any of the GAAP disclosures described above.
Management uses CAD as a liquidity measure. CAD is a non-GAAP measure of cash generated during a period that is available for common stock dividends, distributions to Operating Partnership unitholders, distributions to noncontrolling interests, repurchase of the Company’s common shares, debt reduction, timberland acquisitions and real estate development investments. CAD is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and real estate development investments), CAD attributable to noncontrolling interests in Timber Funds, working capital and other balance sheet changes. CAD is not necessarily indicative of the CAD that may be generated in future periods.
Management uses Adjusted EBITDA as a performance measure. 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 attributable to Rayonier. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, operating income (loss) attributable to noncontrolling interests in Timber Funds, costs related to the merger with Pope Resources and Large Dispositions.
We reconcile Adjusted EBITDA to Net Income for the consolidated Company and to Operating Income (Loss) for the segments, as those are the most comparable GAAP measures for each. The following table provides a reconciliation of Net Income to Adjusted EBITDA for the respective periods (in millions of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
Net Income to Adjusted EBITDA Reconciliation
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$15.0
|
|
|
$26.4
|
|
|
|
Operating income attributable to NCI in Timber Funds
|
|
|
|
|
(1.1)
|
|
|
—
|
|
|
|
Interest, net attributable to NCI in Timber Funds
|
|
|
|
|
0.1
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Excluding NCI in Timber Funds)
|
|
|
|
|
14.0
|
|
|
26.4
|
|
|
|
Interest, net and miscellaneous income attributable to Rayonier
|
|
|
|
|
9.9
|
|
|
8.1
|
|
|
|
Income tax expense attributable to Rayonier
|
|
|
|
|
3.5
|
|
|
3.7
|
|
|
|
Depreciation, depletion and amortization attributable to Rayonier
|
|
|
|
|
40.3
|
|
|
34.3
|
|
|
|
Non-cash cost of land and improved development
|
|
|
|
|
1.8
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating expense
|
|
|
|
|
—
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs related to the merger with Pope Resources (a)
|
|
|
|
|
—
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Dispositions (b)
|
|
|
|
|
—
|
|
|
(28.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
$69.5
|
|
|
$47.1
|
|
|
|
(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.
(b) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.
The following tables provide a reconciliation of Operating Income (Loss) by segment to Adjusted EBITDA by segment for the respective periods (in millions of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Southern Timber
|
|
Pacific Northwest Timber
|
|
New Zealand Timber
|
|
Timber Funds
|
|
Real Estate
|
|
Trading
|
|
Corporate
and
Other
|
|
Total
|
March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
$17.3
|
|
|
$1.3
|
|
|
$14.0
|
|
|
$1.5
|
|
|
$1.7
|
|
|
$0.2
|
|
|
($7.6)
|
|
|
$28.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income attributable to NCI in Timber Funds
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
14.4
|
|
|
16.3
|
|
|
7.2
|
|
|
0.6
|
|
|
1.6
|
|
|
—
|
|
|
0.3
|
|
|
40.3
|
|
Non-cash cost of land and improved development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$31.7
|
|
|
$17.6
|
|
|
$21.2
|
|
|
$1.0
|
|
|
$5.1
|
|
|
$0.2
|
|
|
($7.3)
|
|
|
$69.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
$15.1
|
|
|
($0.9)
|
|
|
$5.4
|
|
|
—
|
|
|
$26.8
|
|
|
—
|
|
|
($7.8)
|
|
|
$38.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
18.2
|
|
|
10.7
|
|
|
4.8
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.3
|
|
|
34.3
|
|
Non-cash cost of land and improved development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Costs related to the merger with Pope Resources (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Dispositions (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28.7)
|
|
|
—
|
|
|
—
|
|
|
(28.7)
|
|
Adjusted EBITDA
|
$33.3
|
|
|
$9.8
|
|
|
$10.2
|
|
|
—
|
|
|
($1.1)
|
|
|
—
|
|
|
($5.0)
|
|
|
$47.1
|
|
|
|
|
|
|
|
|
|
|
|
|
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(a) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.
(b) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value. In March 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and gain of approximately $116.0 million and $28.7 million, respectively.
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Nine Months Ended
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Southern Timber
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Pacific Northwest Timber
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New Zealand Timber
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Timber Funds
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Real Estate
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Trading
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Corporate
and
Other
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Total
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The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):