Welcome, and thank you for joining Rayonier Inc.'s fourth quarter and full year 2024 conference call. At this time, all participants are in a listen-only mode. During the question and answer session, please press star one on your telephone keypad. Now I will turn the meeting over to Mr.

Collin Mings, Vice President, Capital Markets and Strategic Planning..

Thank you, and good morning. Welcome to Rayonier Inc.'s investor teleconference covering fourth quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rayonier.com.

I would like to remind you that in these presentations, we include forward-looking statements made pursuant to the Safe Harbor provisions of federal securities laws.

Our earnings release and forms 10-K and 10-Q filed with the SEC list some of the factors that may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on page two of our financial supplement.

Throughout these presentations, we will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measures in our earnings release and supplemental material. With that, let's start our teleconference with opening comments from Mark McHugh, our President and CEO..

Thanks, Collin. Good morning, everyone. First, I'll make some high-level comments before turning it over to April Tice, Senior Vice President and Chief Financial Officer, to review our consolidated financial results. Then Doug Long, Executive Vice President and Chief Resource Officer, will comment on our US and New Zealand timber results.

Following the review of our Timber segments, April will discuss our real estate results and our outlook for 2025.

We were pleased to finish 2024 with better than expected fourth quarter financial results, which allowed us to deliver full-year adjusted EBITDA of $299 million, roughly 3% above the high end of our prior guidance range and slightly above the prior year..

Full-year pro forma net income was $70 million or $0.47 per share. These full-year results demonstrate our resilience and nimble execution amid persistent market headwinds. In the fourth quarter, we generated adjusted EBITDA of $115 million and pro forma net income of $41 million or $0.27 per share.

The 23% increase in adjusted EBITDA versus the prior year quarter was driven primarily by significantly improved results in our Real Estate and New Zealand Timber segments. Our Real Estate segment delivered adjusted EBITDA of $63 million, up $10 million from the prior year period.

The increased contribution from our real estate business was bolstered by an extraordinarily strong weighted average price per acre of roughly $7,200, excluding improved development and large dispositions, demonstrating our team's ability to optimize the value of our portfolio by generating significant HBU premiums above Timberland value.

Shifting to our Timber segment operating results, our Southern Timber segment generated fourth quarter adjusted EBITDA of $35 million, up modestly from the prior year period. A significantly higher non-timber income was largely offset by a 3% decline in harvest volumes and 15% lower weighted average net stumpage realizations.

The decline in stumpage prices was driven in large part by the impact of salvage volume on the market throughout the quarter following Hurricane Helene..

In our Pacific Northwest Timber segment, fourth quarter adjusted EBITDA of $6 million was flat versus the prior year quarter. As a 3% decrease in harvest volumes and a 9% decrease in average delivered log prices were largely offset by lower costs and higher non-timber income.

Turning to our New Zealand Timber segment, fourth quarter adjusted EBITDA of $20 million increased $8 million versus the prior year quarter. The increase in adjusted EBITDA was driven by favorable foreign exchange impacts, higher volume, higher net stumpage realizations, and lower costs partially offset by lower carbon credit sales.

In addition to the strong finish to the year operationally, we successfully closed on $495 million of previously announced large dispositions, totaling approximately 200,000 acres during the fourth quarter.

As discussed on our November earnings calls, these transactions have allowed us to reduce leverage and return capital to shareholders, while also generating accretion to CAD per share..

To date, we've now closed on roughly $737 million of dispositions, approximately 74% of our original $1 billion target, which has allowed us to reduce net leverage to below three times and return over $110 million of capital to shareholders in the form of cash special dividends and share repurchases, including $15 million of share repurchases in the fourth quarter.

Turning to our outlook for 2025, as April will discuss in greater detail later in the call, we're providing full-year adjusted EBITDA guidance of $270 million.

The slight decline at the midpoint relative to 2024 adjusted EBITDA reflects the dispositions completed in the fourth quarter, as well as modestly lower expectations on our real estate segment following the extraordinarily strong results realized last year..

Overall, as we move into the New Year, we are cautiously optimistic that Timber prices will gradually improve along with end market demand. In addition, we expect another strong contribution from our real estate platform this year given the continued favorable demand trends for our rural HBU and development properties.

Lastly, we remain encouraged by the pipeline of opportunities that continue to build on the land-based solutions front, especially as it relates to solar and carbon capture and storage, which we expect will drive meaningful cash flow growth in the coming years.

With that, let me turn it over to April for more details on our fourth quarter financial results..

Thanks, Mark. Moving to the financial highlights on page five of the supplement, for the fourth quarter, sales totaled $726 million while operating income was $346 million and net income attributable to Rayonier Inc. was $327 million or $2.15 per share. On a pro forma basis, net income was $41 million or $0.27 per share.

Pro forma items in the fourth quarter included $291 million of income from large dispositions, a $1.6 million gain from a terminated cash flow hedge, $1.6 million of costs associated with legal settlements, and $1.1 million of restructuring charges.

Our adjusted EBITDA was $115 million in the fourth quarter, up from $94 million in the prior year period. Moving on to capital resources and liquidity at the bottom of page five, our cash available for distribution or CAD for the year was $184 million versus $164 million in the prior year period.

The increase was driven by higher adjusted EBITDA, lower net cash interest paid, and lower capital expenditures partially offset by slightly higher cash taxes paid. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on page eight of the financial supplement.

As a result of the taxable gains arising from the Timberland dispositions completed during the fourth quarter, we declared a $1.80 per share special dividend in early December, which was paid on January 30th in a combination of cash and shares.

In aggregate, the special dividend resulted in $68 million of cash and 7.7 million common shares and OP units being distributed following year-end. For modeling purposes, we now have approximately 156.1 million shares and 2.1 million OP units outstanding following the special dividend.

By issuing shares to meet part of our REIT taxable income distribution requirement, we have retained significant flexibility to further reduce debt, execute on share repurchases, or fund other future capital allocation priorities.

To this end, we continue to believe that share repurchases represent a compelling use of capital at the current stock price. During the fourth quarter, we repurchased 488,000 shares at an average price of roughly $30 per share.

Notably, our fourth quarter share repurchases occurred prior to the ex-dividend date with respect to the $1.80 per share special dividend. In December, our board approved a new $300 million share repurchase program, which affords us significant capacity to act opportunistically as it relates to share repurchases moving forward.

Proceeds from our disposition plans have also allowed us to meaningfully reduce leverage. After paying off a total of $190 million of debt during the quarter, we closed the fourth quarter with $323 million of cash and roughly $1.1 billion of debt.

Our net debt to trailing twelve months adjusted EBITDA was approximately 2.6 times at quarter-end or 2.9 times pro forma for the cash component of the special dividend that we paid last week.

At quarter-end, our weighted average cost of debt was approximately 2.7% and the weighted average maturity on our debt portfolio was approximately four years, with no significant debt maturities until 2026. Our net debt to enterprise value based on our closing stock price at the end of the quarter was 17%.

I will also note that we declared our first quarter dividend yesterday after the market closed.

The 4.4% adjustment in the quarterly dividend to $0.27 and a quarter cents per share from $0.28 and a half cents per share reflects the 5.1% increase in shares and units outstanding as a result of the recent special dividend and is consistent with our previous communications regarding its anticipated impact on our ordinary quarterly dividend.

I'll turn now the call over to Doug to provide a more detailed review of our timber results..

Thanks, April. Let's start on page nine with our Southern Timber segment. Adjusted EBITDA in the fourth quarter of $35 million was above the prior year quarter as higher non-timber revenue and lower costs more than offset lower harvest volumes and net stumpage realizations.

Total harvest volume fell 3% versus the prior year quarter due to the disposition of our Oklahoma acreage, as well as production constraints resulting from some contractors temporarily shifting to salvage operations on properties impacted by Hurricane Helene.

Meanwhile, non-timber revenue increased $7 million versus the prior year period driven by growth in our land-based solutions business and higher pipeline easement revenues.

Average sawlog stumpage pricing was $25 per ton, a 14% decrease compared to the prior year period due to a less favorable geographic mix and the availability of low-priced salvage timber in the Atlantic region.

Pulpwood net stumpage pricing was 9% lower than the prior year quarter at roughly $16 per ton, also due to geographic mix and availability of salvage volume. Overall, weighted average stumpage prices in the fourth quarter decreased 15% versus the prior year quarter, roughly $19 per ton.

In gray markets, green log demand was relatively soft in the Atlantic region during the quarter with mills shifting their procurement to salvage logs. In our Gulf markets, dry weather conditions led to ample supply, which also weighed on pricing.

Encouragingly, Southern Yellow Pine lumber prices ended the fourth quarter on an upward trend and currently sit near their highest levels in three quarters.

Overall, we believe the outlook for gray markets will improve as Southern Yellow Pine Lumber continues to gain share in the overall North American market and the availability of salvage volume declines in the Atlantic region.

Shifting to pulpwood, while we have been encouraged by sustained improvements in end market demand for our pulp customers, ample supply from hurricane salvage operations in the Atlantic region and dry ground conditions in the Gulf region led to elevated mill inventories and quota implementations during the quarter, which weighed on pulpwood prices.

As it relates to salvage operations, the direct impact to our portfolio from the most recent hurricane season was relatively minor and our salvage operations are now largely complete.

However, the availability of salvage volume in our Atlantic markets has certainly been a headwind over the last several months, and we expect that this dynamic will likely persist through the first half of 2025, which may continue to weigh on pricing.

Moving to our Pacific Northwest Timber segment on page ten, fourth quarter adjusted EBITDA of $6 million was in line with the prior year quarter as lower net stumpage realizations and harvest volumes were largely offset by lower costs and higher non-timber income.

Total harvest volumes decreased 3% in the fourth quarter as compared to the prior year period, reflecting the impact of our recent dispositions in Washington.

At $89 per ton, average delivered domestic sawlog pricing in the fourth quarter decreased 5% from the prior year period due to a combination of weaker demand from lumber mills and an unfavorable product mix, as a higher proportion of chip and saw was harvested in the current year period.

Meanwhile, at $30 per ton, pulpwood pricing was up 4% versus the prior year quarter. While demand from both domestic lumber mills and export markets remained soft in the Pacific Northwest during the fourth quarter, as we look toward 2025, there are indications that market conditions are gradually improving.

To this end, lumber prices have begun to show positive momentum with producers in the region well-positioned to benefit from potential reductions in Western SPF supply from Canadian producers.

In addition, we are cautiously optimistic that attention from the export market will gradually reemerge in response to signs of stabilization in the Chinese property market and an anticipated recovery in demand for Douglas fir logs in Japan. Moving to New Zealand, page eleven shows our results and key operating metrics for the segment.

Adjusted EBITDA in the fourth quarter of $20 million was $8 million above the prior year quarter. The increase in adjusted EBITDA compared to the prior year period was driven by favorable foreign exchange impacts, higher volumes, higher net stumpage realizations, and lower costs partially offset by lower carbon credit income.

Average delivered export sawtimber prices of $108 per ton increased 7% compared to the prior year quarter. However, these pricing gains were largely offset by higher port and freight costs, with net stumpage realizations increasing only 1% versus the prior year quarter.

In December, offtake from Chinese ports was approximately 57,000 cubic meters per day. Although up slightly from prior year levels, log demand remains relatively soft. Inventory levels have generally adjusted to the weaker demand environment as China's property sector remains sluggish.

At the end of December, softwood log inventories at Chinese ports stood at approximately 2.6 million cubic meters, slightly higher than they were a year ago. Shifting to the New Zealand domestic market, fourth quarter average delivered sawlog prices increased 6% from the prior year period.

While economic headwinds in New Zealand persist, we are encouraged by signs of property market stabilization and increased consumer confidence as the Reserve Bank of New Zealand has lowered its official cash rate by 125 basis points. The lower interest rate environment is anticipated to contribute to improved demand in the domestic market in 2025.

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

Positively, carbon prices in New Zealand have generally stabilized following policy decisions announced in August. Lastly, in our trading segment, we registered a slight operating loss in the fourth quarter.

As a reminder, our trading activities typically generate low margins and are primarily designed to provide additional economies of scale to our fee timber export business. I'll now turn back over to April to cover our real estate results..

Thanks, Doug. As detailed on page twelve, the contribution from our real estate segment during the fourth quarter was considerably above the prior year period. Real estate revenue totaled $567 million on roughly 207,300 acres sold, which included roughly 200,000 acres of large dispositions completed during the quarter.

Excluding these transactions, fourth quarter sales totaled $72 million on roughly 7,800 acres sold at an average price of $8,900 per acre.

The strong average price per acre reflects both a higher proportion of development sales closed during the period as well as the significant premiums above Timberland value that our team achieved on rural land sales. Real estate segment adjusted EBITDA in the fourth quarter was $63 million, the strongest quarterly contribution in over three years.

Drilling down, sales in the improved development category totaled $14 million with activity primarily focused in our Heartwood development project south of Savannah, Georgia. The largest transaction was a 37-acre build-for-rent residential parcel that sold for $9.1 million or $244,000 per acre.

This project will bring more homes to the Village Center and will enhance Heartwood's diverse mix of industrial, commercial, and residential uses. In addition, we also closed a 37-acre residential pod for $2 million or $54,000 per acre, as well as a 7-acre industrial parcel for $1.7 million or $240,000 per acre.

In our Wildlight development project, we closed the sale of a 0.9-acre commercial parcel for the development of a credit union for roughly $900,000. Entering 2025, there continues to be healthy interest from home builders in both our Wildlight and Heartwood projects as the pace of residential sales continues to trend favorably.

While the timeline for some commercial deals has extended as developers contend with the current interest rate environment, we continue to be pleased with the overall momentum at both projects. In our unimproved development category, sales totaled $12.4 million as we sold an 1,100-acre property directly east of exit one off Interstate 95 in St.

Marys, Georgia. The buyer plans to construct a highly amenitized master-planned community including a golf course totaling about 1,300 residential units. Similar to many of our land sales to home builders, we will also benefit from true-up payments based on the final selling price of the homes in the community as they are sold.

We expect that this master-planned community will catalyze demand for our adjacent land holdings, including over 300 acres nearby with improved entitlements for a mix of commercial and residential uses.

Turning to the rural category, fourth quarter sales totaled $43 million consisting of approximately 6,600 acres at an average price of roughly $6,500 per acre. We had an exceptionally strong finish to the year as the conversion of our rural transaction pipeline exceeded our expectations heading into year-end.

Despite interest rates remaining relatively elevated, we have been encouraged by increased buyer interest over the last several months and continue to see favorable demand and pricing for our rural property.

In addition, we continue to see strong interest from conservation-focused buyers, which contributed meaningfully to the sales activity during the fourth quarter.

Moving forward, we remain optimistic about the long-term outlook for our real estate business and expect that historically low unemployment, the housing supply shortage, favorable demographic and migration trends, and the prospect of lower interest rates should spur further demand for both development and rural properties as we progress through 2025.

Now moving on to our outlook for 2025. Page fourteen of our supplement shows our financial guidance by segment and schedule G of our earnings release provides a reconciliation of our guidance from net income attributable to Rayonier Inc. to adjusted EBITDA.

For full-year 2025, we expect to achieve adjusted EBITDA of $270 to $300 million, net income attributable to Rayonier Inc. of $79 to $100 million, and earnings per share of $0.51 to $0.64. Our guidance excludes the potential impact of any additional asset sales as part of our previously announced $1 billion disposition plan.

With respect to our individual segments, starting with our Southern Timber segment, we expect to achieve full-year harvest volumes of 6.9 to 7.1 million tons, a modest increase versus the prior year primarily due to the carryover of some planned 2024 volume into 2025, partially offset by reduced volume from the Oklahoma disposition.

As it relates to pricing, while we expect pine stumpage realizations to trend higher as the year progresses, we anticipate that full-year realizations will be slightly lower versus the prior year due in part to the continued impact of salvage volume into the market.

Lastly, we expect a modest decrease in non-timber income for full-year 2025 as compared to the prior year, which benefited from significant pipeline easement activity. Overall, we expect full-year adjusted EBITDA of $141 to $149 million, slightly below full-year 2024 results.

In our Pacific Northwest Timber segment, we expect to achieve full-year harvest volumes of approximately 900,000 tons. The anticipated decrease relative to the prior year reflects the reduction in our Pacific Northwest sustainable yield resulting from the recent dispositions in Washington.

Further, we expect that full-year weighted average log pricing will increase modestly versus the prior year as a result of improving demand conditions. Based on these factors, we expect full-year adjusted EBITDA of $21 to $26 million, comparable to the full-year 2024 results.

In our New Zealand segment, we expect full-year harvest volumes of 2.5 million to 2.7 million tons. As it relates to pricing, we expect improving supply-demand dynamics to drive modest increases in both domestic and export timber pricing relative to the full-year pricing achieved in 2024.

We also anticipate a modest increase in carbon credit sales in 2025 as pricing has stabilized following a period of unusual market volatility. Overall, we expect full-year adjusted EBITDA of $54 to $60 million, up modestly versus full-year 2024 results.

Turning to our real estate segment, we are encouraged by the continued strong demand and value realizations for HBU properties. Our current pipeline suggests another solid year for both our rural land sales program as well as our improved development projects.

However, similar to 2024, we anticipate very light closing activity in the first quarter with a corresponding low adjusted EBITDA of less than $10 million. Overall, we expect full-year adjusted EBITDA of $86 million to $96 million, down modestly from the exceptionally strong full-year 2024 results.

Our 2025 guidance also reflects expected cost savings following recent actions we took to realign our organizational structure and reduce overhead costs in light of recent disposition activity. Since November 2023, we have completed dispositions totaling approximately 255,000 acres, roughly 11% of our total US acreage.

This led us to make difficult but necessary adjustments to maintain an efficient overhead structure in light of the reduced scale of the company, while also reallocating resources to focus on important strategic growth initiatives.

Overall, these actions translated to a roughly 10% reduction in our US workforce and resulted in $1.1 million of restructuring charges in the fourth quarter for estimated severance-related expenses. I'll now turn the call back to Mark for closing comments..

Thanks, April. Before concluding today's call, I'd like to recognize the exceptional effort displayed by our team in advancing several important strategic initiatives throughout 2024, while simultaneously navigating the difficult headwinds facing our timber businesses.

On the land-based solutions front, we are pleased to recently announce a new pore space easement agreement with an affiliate of Reliant Carbon Capture and Storage covering approximately 104,000 acres in Alabama.

More broadly, our team continues to advance discussions with a number of high-quality counterparties to build a strong pipeline of future opportunities given the favorable attributes of our portfolio.

In total, as of year-end, we had approximately 154,000 acres under carbon capture and storage lease and approximately 39,000 acres under option for solar development.

Continuing to grow our land-based solutions business is a key strategic priority for Rayonier Inc., and we are encouraged by the financial contributions that are beginning to materialize as we build toward the 2027 and 2030 adjusted EBITDA targets that we communicated at our Investor Day last February.

As I discussed earlier, we also made tremendous progress on our disposition and capital structure realignment plan in 2024. We've now closed on roughly $737 million of dispositions, capitalizing on the disconnect between public and private Timberland values in a manner that has been accretive to both CAD and NAV per share.

Looking forward, we continue to advance our evaluation of strategic alternatives with respect to our joint venture interest in New Zealand, as well as other potential asset sales, with a view toward further streamlining our portfolio, improving our balance sheet positioning, and capitalizing on the public-private disconnect.

Throughout 2024, our team demonstrated remarkable agility, adjusting to local market dynamics, severe weather events, and an ever-evolving macroeconomic environment. Further, as April discussed, we've recently taken actions to realign our organizational structure for our smaller footprint.

While such decisions were difficult, they'll position us to operate more efficiently while remaining ready to advance our strategic priorities and capture emerging opportunities.

Looking ahead, we remain optimistic that an undersupplied US housing market and an expected recovery in repair and remodel demand will translate into improving end market conditions.

Further, we anticipate the potential constraints on the supply of Canadian lumber into the US market from continued production cuts, higher duty rates, and the prospect of new tariffs may likewise translate to improving operating conditions as more North American lumber production shifts into the US.

Lastly, on the real estate front, as I detailed earlier, we finished the year with an exceptionally strong quarter in terms of both sales volume and premiums achieved to Timberland values.

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

In sum, I'm proud of how our team was able to navigate challenging market conditions throughout the year to deliver strong financial results, while also maintaining a relentless focus on driving shareholder value creation..

That concludes our prepared remarks, and I'll now turn the call back to the operator for questions..

Thank you, sir. At this time, if you would like to ask a question, you may press star one. To withdraw your question, one moment, please. Matthew McKellar from RBC. You may go ahead. Matthew McKellar, your line is open, sir..

Thanks very much. Please correct me if I heard this wrong. It sounds like you're wrapping up your own salvage operations.

Do you expect other salvage volumes through maybe the first half of the year? Does this imply anything about your own volumes through the year, and maybe specifically, should we also be expecting relatively stronger volumes from Rayonier Inc.

in the south in the second half of the year as the salvage operations wrap up?.

Sure. This is Doug. I'll start with that. So, yeah, Hurricane Helene obviously was a large hurricane. It was a category four coming across from Florida's Big Bend and into Georgia, and then all the way to North Carolina. And so we really saw something that I haven't seen in my career.

So it's had a significant impact, and to your point, it's definitely impacted the stumpage markets in that area. So, over ten million acres of forestland were impacted in Florida and Georgia.

And while we only had a couple thousand acres, and we've pretty much cleaned that up, we're still seeing a lot of other people working through that backlog, basically. And so we do expect that that's going to create some headwinds going into the first half of the year. You can imagine based on that scale, there's a lot of salvage operations underway.

And most of the crews pivoted to that salvage of damaged timber both within the path and then also neighboring wood baskets.

So while the impact to us was small, we're really seeing this influx of unexpected volume that led to a steep drop in pricing in much of our Georgia wood basket, as Timberland owners were price takers in order to try to clean up their wood that was damaged. So it reduces higher restoration costs.

We contended with that pricing dynamic for the entirety of Q4, and originally thought that it would be winding down sooner, but what we've seen is that there's a lot of wood on the market there from the length of that. And so people continue on with their salvage operations.

And so we do see that being a headwind going into at least the first half of 2025 and think it should wrap up sometime in that first half. So to your point, we're staging our volumes and working around that. With the geographic diversity we have, we are able to harvest in other areas.

So we're trying not to exacerbate the problem by putting more volume into particular areas. But we will continue to pretty much have a steady run rate as we go because we have the ability to flex across geographic areas as we go forward. We do think this is going to weigh on our geographic pricing.

So we still do have volume we're moving in that area to meet commitments we have with mills and things like that. So there are going to be some headwinds to start the year for us across our southern footprint, but we will move volume around geographically as we can..

Hey, Matt. I just add to that that like Doug said, this was a pretty significant factor in the fourth quarter. And really the biggest driver of that year-over-year or, you know, this quarter relative to the prior year quarter, that decline in overall stumpage pricing.

Unfortunately, we expected that it's going to be a transitory impact, but, you know, we're anticipating well, we had one quarter of impact, as it relates to 2024. We're anticipating two quarters of impact as it relates to 2025.

So, you know, again, that's one of the major factors if not the main factor that's constraining our outlook for pricing gains in the US South in 2025. Hopefully, as the market works through that glut of stumpage volume, we'll start to see a pickup in pricing with the pickup in lumber production on the back half of the year.

And really to the extent that that coincides in the south due to increased duties on Canadian lumber, which I believe everybody's anticipating, we think we could see a pretty nice tailwind in the second half. But again, the ongoing impact that salvage volume has certainly muted our overall expectations for full-year pricing gains in the South..

Great. Thanks very much for that color.

Next for me, just in terms of a general outlook, what are your expectations for what the Timberlands M&A market looks like in 2025?.

This is Mark. I'll take that. Okay. You know, overall, I'd say that the demand in the M&A market has continued to outstrip supply, especially with respect to higher quality properties. We estimate that there is about $3 to $4 billion of capital available for Timberland acquisitions.

I think a significant portion of those funds are specifically targeting carbon or climate-focused investments.

You know, with all that said, there hasn't been a whole lot of property on the market recently, but we're still seeing successful transaction outcomes and certainly very strong values being paid for the assets that we have seen come to market, particularly those higher quality assets.

You know, for example, there have been several, you know, smaller to medium-sized deals over the past couple of years in the US South where we've seen value per acre in excess of $3,000.

So, you know, overall, we think the market is still, you know, quite competitive, especially for higher quality assets, as well as, again, assets with that unique carbon angle. But, you know, again, relatively limited volume on the market right now.

Is it really set our appetite for Timberland acquisitions, you know, given our debt financing costs as well as our overall cost of capital, it's really tough to make math work right now on buying Timberland assets.

Again, the Timberland M&A market is highly competitive, especially for those higher quality assets, which are generally the ones that we would be pursuing, and we continue to see those per acre values move up.

You know, for example, the Nacreep South, average acre per acre value in the US South currently sits about $2,240 per acre, which is up roughly 5% from year-end 2023. So, you know, with all that said, we haven't seen that same value momentum for Timberland assets reflect in our share price.

So, you know, rather than buying assets, as you know, we've been selling assets over the past year with a view towards, you know, both improving our balance sheet positioning as well as putting ourselves in a position to take advantage of share buyback opportunities.

So in short, I'd say that we think the best place and certainly the cheapest place for us to buy Timberland assets right now is in the public market by buying back our own stock..

Thanks very much. Turn it back..

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

Thank you. I was hoping to get a little bit more color on the very, very strong values you got on some of the rural land sales.

How much of that was the specifics of the properties you were selling versus anything that you feel might be happening in the market you own these lands more generally?.

Hey, Mark. This is Mark. I'd start by saying, you know, kudos to our real estate team for pulling together what was really an exceptional quarter. We knew entering the year that our pipeline was going to be heavily back-end loaded.

The team worked very hard to close several major transactions in the fourth quarter, which contributed to those very strong results. So overall, we've been very pleased with the pricing we've been able to achieve, particularly in the fourth quarter. And we really think that that reflects the quality of our HBU portfolio.

You know, we continue to generate what we think are industry-leading pricing and premiums on our HBU real estate transactions. And we also think that this is a big part of our value creation story. It's also part of our story that we don't really think is fully appreciated by the market.

Again, for context, as you noted, you know, we sold about 8,000 acres of rural HBU and unimproved development properties in the fourth quarter and achieved a weighted average price per acre of $7,200. So again, very pleased and impressed with what the team was able to accomplish there.

And we continue to see that momentum build within our HBU portfolio..

And, Mark, was it a certain portion that was extremely high that took that average up, or did you see that the averages across the swath of what you were selling tended to be higher?.

Well, there were a number of major transactions. Again, as we've said in the past, you know, those real estate results tend to be lumpy. They tend to be heavily driven by, you know, one or two transactions that can really move the dial.

And that's why, ultimately, you know, going into the quarter, we had more muted expectations for real estate in the fourth quarter. We ended up converting on more of those transactions that were in the pipeline than we anticipated. There was one transaction in particular, an unimproved development transaction that was in excess of $10,000 per acre.

I think that was just over 1,000 acres in total. So, again, when you have those types of transactions, that's certainly going to skew the average. And you don't get those every quarter. But again, overall, very pleased with the results we're seeing in our rural HBU business..

Gotcha. Thank you. And then appreciated the comments on alternative land and solar in particular.

Do you anticipate that you're going to see any meaningful revenue pickup in solar this year, or are we still thinking it's more a year, two years away? If you could provide any update on expected timelines?.

Yeah, Mark, I'll take that. So we were really pleased about the financial contribution from Land Based Solutions in 2024. So as you saw on the supplement, it was almost $15 million this year. And we're happy about the growth that we had in the acres under option for solar and under lease for CCS over the course of the year.

We do expect the contribution to grow over time, and that's why we broke it out in the supplement so you could provide the visibility and see how we're progressing. The bulk of our land sales solution revenue is in the solar option payments and the base rents for CCS leases. And so we're growing those revenues right now off a small base.

We still have a relatively limited number of counterparties, and there's inherently going to be churns in the portfolio as it ramps up. So at this point, at least not yet, we're at a point where it would be fair to assume a run rate for any quarter or year going forward.

Especially given some of the NDAs associated with the agreements, we really can't get into the impact of any particular lease or the individual moving pieces. But overall, I would say that we believe that we're on the trajectory that we communicated in the investor day of about $30 million of EBITDA by 2027..

Again, Mark, I just reiterated that, you know, as we discussed at Investor Day, we really anticipate that that pickup contribution from land-based solutions will occur beyond 2027. Recognize that essentially all of the major contributors to our land-based solutions pipeline right now or most of them are certainly in that CCS and solar arena.

Those tend to be fairly long permitting timetables associated with those projects. So call it, you know, three, four years in solar, probably, you know, more like four to six years in CCS. And so the last two years have been the bulk of activity in really building up that pipeline.

And I think it's probably two years from now where you really start to see that converting over, you know, solar options into leases and CCS leases into injection royalties, converting over with some higher degree of regularity.

But where we'd like to get is that you have kind of a stabilized base of options in the solar arena where some portion of that is converting into leases annually, and that becomes a more predictable source of cash flow growth. CCS is going to be more binary around those injection permits, which, again, can be fairly complex to achieve.

But, you know, again, very happy with how that pipeline is building, but we really expect to see that ramp start to occur in a more significant way a couple of years out..

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

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

Yes. Thank you, Mark. Abel calling for taking my questions. Just are you at this point, are you finished with your corporate realignment or is there more to come? And are you continuing to pursue and I guess that's the first question.

Second question would be, are there other ways that you're looking to drive efficiency throughout your portfolio?.

Yeah. I'll take that. So, you know, at this point, we've done the realignment. But I would say from a corporate examination, we're always looking at ways to keep a close eye on expenses in general, particularly given our current operating environment. And so, you know, we do anticipate looking at that.

I mean, recall that, you know, over the last eighteen months, the large dispositions have reduced our asset base by almost eleven percent. And so, of course, we took a fresh look at how we were, you know, organized our field operations in both the US South and the Pacific Northwest. I would say that, you know, that's a continuous effort.

We're always looking for ways to be efficient. We not only did that in the US in our operations, but we also did that in the corporate. Looked at ways to reduce our overhead cost and streamline our processes.

And really looking at how we were allocating our resources, and making sure that we were putting it to the areas where we wanted to grow, and particularly land-based solutions. And so, you know, that's not a one and done. We're always looking for ways to be more efficient.

But from this point, that's we've taken those actions and the impact for this year..

Got it. Thank you, April. And then just secondly, you know, it looks like US Gypsum is gonna make use of IP's closed site of our Texas. I think you had some Timberland acreage around there. So can you talk about any potential benefit from Rayonier Inc.

as US Gypsum takes over the site?.

Sure. This is Doug. I'll answer that. Yeah. We were happy to see that announcement about US Gypsum in that mill.

We're still waiting to learn more about the plans for that mill, understand that they intend to use some recycled fiber, and we're not haven't been basically brought in the loop yet to understand what percent will be recycled fiber versus virgin fiber. So it's a little too early yet to be able to address that question.

So we're actually waiting to find out once they've completed that and where this goes..

Got it. Doug, this say there could be some upside. You regard to they probably will use some virgin fiber is your sense..

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

Gotcha. Thank you. Very much. And the last question, Scott, nope. I'm with you. Appreciate that. And then one last question before turning over. Just on Land Based Solutions, obviously, I've met them Kudos to you for driving that.

Just any concerns about the new administration and what they're looking to do in terms of curbing disbursements from the IRA obviously, you guys got that ink that bump in the credits. To eighty, eighty-five most of the time from fifty dollars a ton.

So and you and so if they if new administration curtails disbursements from the IRA if they, let's say, suspend approvals for certain things, like, if they've expected suspended approvals for wind, both onshore and offshore. I think New Jersey just stopped one project they were looking to do.

So long story short, just any concerns, reservations you have about the new administration and what they're doing around ESG land-based solutions? Thank you..

Sure. This is Doug again. Yeah. It's still early days for the administration, and I think we all know every day there's a lot of unknowns as it relates to how soon executive orders are gonna play out. Some go in, some come out within twenty-four hours.

So we're watching how it goes, but that said, it's been well documented that the initiatives you mentioned, you know, related to, like, electric vehicles offshore wind are not favored. That's been pretty clear. Continue to think that it would be very complex and unpopular to repeal the IRA in its entirety.

Really meaningfully rolled back some of the key provisions that are driving growth in our land-based solutions business. Particularly given the impact that this legislation has had on job creation and particularly in a lot of those rural southern states.

From what I've read recently, approximately eighty-five percent of IRA investments and sixty-eight percent of newly created jobs were in Republican congressional districts based on the state we read about last year. So a lot of that money is flowing into the south and rural south in particular.

And focusing on carbon capture and storage, particularly, you mentioned some of those credits, you know. President Trump signed the use it act in the law during his first term that forty-five q tax credits for carbon capture storage including class six wells and made two pipelines eligible for streamline permitting via this fast act.

A lot of multinational oil and gas companies have made significant investments in this technology. You know, under the IRA, but also, you know, going forward. And look to promote the expansion of the fossil fuels, you know, it does align with that.

So the ability, as you think about the multinationals and made commitments, you know, that are outside the US, it fits well with kind of the mantra we've heard from drill, baby, drill. So by capturing carbon capture storage, it continues to allow the use of those fossil fuels.

We still think that carbon capture storage is still well positioned in the current political landscape. And, you know, we closed on the reliable one that Mark mentioned post elections. So we've had good comments and feedback from people we're working with. And on solar, there's no doubt that our incentives, you know, amplified solar developments.

As we laid out our investor day last year, solar development was already on a steep growth curve. Even for the IRA. Given the strong and growing demand we're seeing from clean energy. Hungry Tech in the industry, we see a lot of interest from them. So we expect solar and ESG will remain on a favorable growth trajectory in the coming years..

Got it. Thank you, Doug. Appreciate all the color and to look in twenty-five..

Thank you. And our next caller is Anthony Pettinari with Citi. You may go ahead, sir..

Hi. Good morning. Just looking at the guide for Pacific Northwest, I think you're expecting kind of EBITDA to be relatively flattish to down a little bit despite kind of a much larger reduction in harvest and I think kind of modest price appreciation.

Is there anything kind of bridging the gap there in whether it's non-timber activity or something with costs or and then can you just talk about kind of plans to export out of the Pacific Northwest in twenty-five and any kind of quantification of the impact of the Washington disposition on kind of the average Pacific Northwest soft timber pricing? Maybe that we'll see this year?.

Hey, Anthony. We couldn't hear the first part of that question. So I'm sorry. Could you repeat it? It was just really muted..

Oh, sorry. Just in terms of Pacific Northwest, I think you're expecting EBITDA to be kind of flattish to down modestly year over year despite looks like a pretty big reduction in harvest. And maybe modest price appreciation. So just to understand if there's anything else there that is bridging the gap..

No. I really think it's a function of, you know, expectation of some improvement in pricing. I don't think that we're underwriting any material growth there in non-timber income, which tends to be relatively small in the Pacific Northwest.

So, yeah, despite, you know, again, even though that guide is relatively flat to 2023, you know, recognize that we sold about 25% of our overall asset base there. So that certainly implies, you know, expectation of higher pricing in 2025 relative to 2024..

Yeah. The only thing I'd add to that is that based on the dispositions we have had, we do expect to have some lower cost, which respect to our logging operations. So we sold some of the higher steeper ground and some of the farther out.

So we will, in addition to seeing that price increase that Mark mentioned, we also are looking at cost savings based on the residual footprint that we had postdate dispositions. So, certainly, if you look at that on an EBITDA per acre basis, we're anticipating a pretty material pickup.

Again, on EBITDA per acre given the reduced acreage relative to last year..

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

I mean, those properties that we sold were a bit heavier to Hemlock than the portfolio average. And like Doug said, they generally had a higher operating cost just given the topography.

And so, you know, as we discussed at the time that we announced those dispositions, you know, we felt as though those dispositions were improving the overall quality of our Pacific Northwest portfolio given both, you know, that percentage of Douglas fir, which is going to trade at a premium to Hemlock, as well as just the overall operating cost across the portfolio..

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

I mean, we're certainly not anticipating any direct impact given that we're not manufacturing lumber. Look, like a lot of other companies, we're closely monitoring the tariff situation right now.

You know, clearly, a 25% universal tariff on Canadian goods into the US would likely lead to higher lumber prices as well as incremental lumber production shifting to the US, at least in the short term. Yeah.

The prevailing view is that this would certainly be a positive for lumber producers and there would be a corollary to, you know, being a positive for Timberland owners.

You know, that said, it's worth noting that whether or not new tariffs come into play, you know, the existing duty rates currently being assessed on lumber from Canada are expected to reset significantly higher in the latter half of this year.

So assuming this occurs, we would expect that it would similarly translate to both higher lumber prices as well as higher operating rates at US mills, which would likewise benefit solid pricing in the US.

You know, this dynamic is certainly a contributing factor to kind of how we think about that improvement in log prices as we move through the year, especially in the Pacific Northwest, which more directly competes with western SPF from Canada.

With all that said, I think we also need to be mindful of the potential knock-on effects that could counteract this phenomenon.

You know, for example, if increased prices for building products or, you know, interest rate increases further strained housing affordability, this could potentially translate to a broader pullback of demand, both in new home construction as well as repair and remodel.

So, you know, again, overall, we expect there could be some puts and takes here as it relates to tariffs. But on balance, you know, kind of a net short-term positive, certainly for lumber producers, as well as Timberland owners like Rayonier Inc..

Okay. That's very helpful. I'll turn it over..

Thank you. And once again, if you would like to ask a question, you may press star one. Our next caller is Ketan Mamtora with BMO Capital Markets. Sir, you may go ahead..

Thank you. First question on the asset disposition program. You know, clearly, you've made a lot of progress on the balance sheet side with the net leverage.

As we sit here today, do you think you need to do more from a balance sheet standpoint or any further sales will be, you know, focused more on, you know, kind of what kind of values you can capture and the disparity that you guys talk about?.

Yeah. Ketan, this is Mark. You know, as we discussed on prior calls, we're very pleased with what we've been able to achieve on the disposition front to date. When we first announced the plan fifteen months ago, recall that we had two objectives. You know, first was to reduce our net leverage to three times net debt to EBITDA or lower.

And the second was to capitalize on this, you know, public-private disconnect that we saw in the market by monetizing assets or private market values and returning a portion of that capital to shareholders. Since then, we've completed almost $740 million of Timberland dispositions at a weighted average EBITDA multiple of about forty-five times.

And our current pro forma net debt to EBITDA is around 2.9 times or pro forma for the recent special dividend. I'm sorry. 2.6 times at year-end pro forma for the special dividend I believe it's about 2.9 times. So, you know, putting all that together, yeah, I'd say we've gone a very long way towards achieving what we set out to do with the plan.

And we think we've generated significant value accretion for our shareholders along the way..

You know, in terms of where we go from here, I'd say that we're still focused on getting to that $1 billion disposition target. You know, but I think we have the luxury of being very patient and opportunistic in our approach. We're sitting at a very advantageous position right now in terms of our capital structure and our debt profile.

So, you know, again, we can afford to be patient here. Ultimately, we're only going to pursue additional dispositions if we think they enhance our strategic positioning and maximize value for our shareholders. We still think that that opportunity exists. But, again, we're going to be opportunistic as we assess options going forward..

Understood, Mark. That's helpful. But there's nothing in this where, you know, $1 billion is kind of a, you know, sort of a cap.

Right? If you find something where you get exceptionally strong values, would you be open to overshooting that $1 billion number that you all have kind of targeted?.

Yeah. Look. Again, we're not deliberately looking to overshoot the $1 billion target, but we're certainly not averse to doing so if we're able to achieve compelling values on the various assets that we're still considering.

And if we were to exceed that target, you know, we have some flexibility to redeploy those proceeds into other growth opportunities or, you know, Timberland acquisitions in particular, potentially through like-kind exchange transactions, which would give us some more flexibility around the potential distribution.

You know, alternatively, we could look to further delever and return capital to shareholders, especially if we see a compelling buyback opportunity, which I certainly think that's how we feel now, kind of getting more of the stock is.

We've always operated with that mindset of nimble capital allocation and active portfolio management, really with a view towards building long-term value per share. So we're going to continue to adhere to that mindset as we consider additional disposition..

Understood. And then one other question, and perhaps Doug can chime in here as well. If you look at US South, you know, over the last ten years, we've seen significant increase in lumber production in the US now. Right? Call it from fifteen billion board feet to twenty-two billion board feet roughly.

If you look at dozen log prices and pulpwood prices, in the same sort of ten year, they are actually down not just because of an average, but also some of the coastal markets like, you know, Florida and Georgia.

So, you know, I'm curious as you look at that sort of ten-year period and as we sit here today, what gives you confidence that as more lumber production comes in the US South that we will see, you know, increase in saw and log prices..

Yeah. There's a lot to unpack in that question, Ketan. Look, I think there have been a lot of dynamics and shifting dynamics over the last several years that have caused lumber, I'm sorry, timber prices in the south to not move higher as much as had been anticipated.

One of those dynamics right now and certainly over the last, you know, call it eighteen months has been this disconnect that we've seen develop between Southern Yellow Pine lumber prices and SPF lumber prices. Again, I think that there's been a fair amount of discussion around why that exists and why that's persisted here recently.

Some of that, you know, is driven by just the preferred end use for those different types of lumber. So, for example, SPF tends to have a preferred use in single-family construction. Southern Yellow Pine tends to have a preferred use in repair and remodel.

And so with the pullback in repair and remodel activity, we think that that's really been one of the big drivers of that disconnect that's developed between SPF lumber and SYP lumber.

So, yeah, the thesis had been historically that as we continue to see capacity come out of Canada and more of that production shifted to the US South, or the thought was that more of that production would shift to the US South, that that would translate to, you know, higher prices for saw logs.

But, you know, the issue that we have right now or that I'd say the market has right now is that given that disconnect between SPF and SYP, Southern Mills just haven't been as profitable as would have been expected in this type of, you know, demand environment. Again, we think that some of these issues are transitory.

I do think that we expect or the market expects that repair and remodel should pick up. You know, we've kind of been suffering from this lock-in effect of the, you know, following the rapid rise in mortgage rates where essentially people, you know, couldn't afford to move. And really, it's that resale activity that drives R&R spending.

People tend to remodel a home either right before they sell it or right after they buy it. And, again, that resale activity has been pretty limited. So we think the market is starting to normalize. We think we're going to see a pickup in R&R activity. We think we should see some, you know, more normalization of SYP lumber prices relative to SPF.

And on balance, we think that that should drive, you know, both SYP lumber prices as well as saw and log prices higher. And again, I think if you couple that with what's anticipated to be a pretty meaningful uptick in lumber duties after midyear, kind of irrespective of any new tariffs, could come into play.

Again, we think that that could create a pretty meaningful tailwind for saw log pricing in the south.

But, you know, hear your point that it hasn't materialized on the timetable that many would have expected at different points in time over the last, you know, five, ten years, but it does feel as though we're kind of entering an inflection point here in the coming years..

Thanks, Mark. That's very helpful. I appreciate the Thank you..

Thank you. And our last question comes from Mark Weintraub with Seaport. Please go ahead, sir..

Thank you. I hope this is a fair question. A financial adviser to help evaluate the strategic alternatives for New Zealand.

Has that process largely played out at this point? Or is there anything any color you can give us how we should be thinking about that given that, you know, that was a year ago when that was announced or almost a year ago?.

Yeah. We don't have anything specific to report on New Zealand at this point other than to say that we are still actively engaged in that evaluation of strategic alternatives there. You know, that process is not concluded.

Recall the one we initially announced that review of strategic alternatives for New Zealand, we indicated that we expected that process to be a very lengthy process given some of the complexities of our joint venture structure there. So again, we're still working through it, but we're not in a position to comment further at this point..

Very good. And thank you..

At this time, I am showing no further questions, sir..

Alright. This is Collin Mings. I'd like to thank everybody for joining us. Please contact us with any follow-up questions..

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