RAYONIER INC (RYN)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was weak on reported metrics: revenue fell to $82.9M and net EPS was ($0.02), with Adjusted EBITDA down 39% YoY to $27.1M as Southern Timber and Real Estate softness outweighed a stronger Pacific Northwest .
• Results materially missed Wall Street consensus, driven by real estate closing timing, salvage timber overhang in Atlantic markets, and lower harvest volumes post-2024 dispositions; consensus EPS $0.08 vs actual ($0.02), revenue $153.1M vs $82.9M, EBITDA $53.5M vs $27.1M. Bold miss on EPS and revenue; estimates require recalibration to reflect NZ discontinued ops treatment.*
• Guidance pivot: FY25 Adjusted EBITDA cut to $215–$235M (from $270–$300M), while reported net income/EPS were raised (to $424–$458M, $2.71–$2.93) to incorporate the anticipated gain on the New Zealand JV sale; quarterly guidance was introduced (Q2 net income $3–$8M; EPS $0.02–$0.05) .
• Strategic catalysts: asset simplification and capital deployment as NZ exit closes (post-quarter) with net proceeds ~$699M; management is prioritizing debt reduction and buybacks (95K shares repurchased in Q1, 404K in April, $287.4M authorization remaining) .

What Went Well and What Went Wrong

• What Went Well

  • Pacific Northwest Timber delivered a step-up in profitability: Adjusted EBITDA rose 35% YoY to $6.4M as delivered sawtimber pricing increased 7% and costs fell .
  • Management advanced portfolio streamlining and capital flexibility: introduced quarterly guidance, and reiterated plans to redeploy New Zealand proceeds toward leverage reduction and buybacks; ~$13M of buybacks YTD through April 30 .
  • CEO tone on H2 improvement, citing expected salvage moderation and potential tariff tailwinds: “we anticipate stronger financial results during the second half of the year” .

• What Went Wrong

  • Southern Timber headwinds: harvest volumes down 21% and weighted-average stumpage down 19%; Adjusted EBITDA declined 40% YoY to $27.0M due to salvage inflows, softer mill demand, and unfavorable geographic mix .
  • Real Estate segment a slow start: $10.2M sales on 1,031 acres, with Adjusted EBITDA down $2.6M YoY to $2.0M given limited closings and unfavorable deferred revenue adjustments .
  • Consolidated profitability compressed: operating income fell to $0.1M (from $8.6M prior year) with non-GAAP charges including $1.7M legal settlements and $1.1M restructuring .

Financial Results

Q1 actual vs Wall Street consensus (S&P Global):

Segment performance

KPIs

Margins (S&P Global)

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We generated total Adjusted EBITDA of $27.1 million—representing a 39% decline compared to the prior year period—as lower results in our Southern Timber and Real Estate segments were partially offset by stronger results in our Pacific Northwest Timber segment.”
• “We expect pine stumpage realizations to trend higher from first quarter levels as salvage efforts moderate and operating conditions normalize in the coming quarters.”
• “Despite the relatively slow start to the year, we still anticipate consolidated full-year Adjusted EBITDA results generally in line with our prior guidance (after adjusting for the reclassification of New Zealand operations to discontinued operations).”
• On strategy: “Following the anticipated closing of the New Zealand transaction later this year, we expect to have significant additional capital allocation capacity, which we plan to deploy toward value‑enhancing uses, including additional share repurchases.”

Q&A Highlights

• Labor capacity and logging productivity: management sees adequate current capacity with potential to scale via established contractor relationships if demand ramps; productivity gains in equipment help mitigate bottlenecks .
• Buyback posture and NZ proceeds: buybacks viewed as compelling at current valuation; $287M authorization remaining; 10b5‑1 plan facilitates opportunistic repurchases even during blackout periods .
• Non‑timber income drivers: expected YoY decline in pipeline easements after an unusually strong 2024; hunting/recreation steady; ongoing focus on land-based solutions .
• Tariff dynamics and sawmill capacity: positive sentiment; mills expanding current shifts rather than adding new ones; strongest capacity momentum observed in the U.S. South; recent price increases noted in negotiations .
• Salvage/mix shift clarification: SE Georgia saw 25%+ price declines; product mix skewed to pulpwood and thinnings; geographic shift to Gulf increased exposure to lower-priced markets; salvage impacts expected to wind down during Q2 .

Estimates Context

• Material miss vs consensus: EPS ($0.02) vs $0.08*, revenue $82.9M vs $153.1M*, EBITDA $27.1M (Adj.) vs $53.5M*. The magnitude reflects real estate’s slower closings and Southern Timber pricing/volume pressure from salvage timber and mill demand softness .
• Street models likely need to reflect: (1) NZ segment reclass to discontinued ops (prior-period retrospectives already applied), (2) quarterly guidance cadence for Real Estate variability, and (3) segment-level Adjusted EBITDA revisions (South down; PNW and Real Estate up modestly at midpoints) .
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• Expectation reset: FY25 Adjusted EBITDA cut to $215–$235M and Q2 EPS guided to $0.02–$0.05; near-term results remain constrained by salvage dynamics and real estate timing .
• H2 setup improves: salvage volume expected to moderate and Canadian duty increases should support sawtimber pricing, especially in South and PNW .
• Capital return capacity rising: post-quarter NZ sale closed with ~$699M net proceeds; management targets at least 50% for leverage reduction and shareholder returns (special dividend $1.00–$1.40 anticipated) .
• Pacific Northwest resilience: portfolio quality and pricing support margin stability despite reduced acreage; watch domestic sawmill demand and export softness (China) .
• Real Estate cadence matters: Q1 was light; closings expected to concentrate in Q3–Q4 with segment Adjusted EBITDA raised to $90–$100M .
• Share repurchases likely continue: $287.4M authorization remaining; management sees buybacks accretive amid public-private timberland valuation disconnect .
• Tactical positioning: favor exposure to segments with tariff tailwinds (PNW/South sawtimber), and monitor quarterly guidance for Real Estate to time catalysts around announced closings .

Notes:

• Reported figures reflect reclassification of New Zealand operations to discontinued operations; prior periods have been retrospectively adjusted .
• Non-GAAP items in Q1: $1.7M legal settlements and $1.1M restructuring; pro forma net loss ($2.7M) .
• Operating cash flow $27.7M; CAD $20.3M in Q1 .