Welcome and thank you for joining Rayonier’s Fourth Quarter 2020 Teleconference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today’s conference is being recorded. If you have any objections, you may disconnect at this time. Now, I would like to turn the meeting over to Mr. Collin Mings, Vice President, Capital Markets and Strategic Planning. Sir, you may begin.

Thank you, and good morning. Welcome to Rayonier 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 Form 10-K 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 measure in our earnings release and supplemental materials. With that, let’s start our teleconference with opening comments from Dave Nunes, President and CEO. Dave?

Thanks, Collin, and good morning, everyone. First, I will make some high level comments before turning it over to Mark McHugh, our Senior Vice President and Chief Financial Officer to review our consolidated financial results. And then we will ask Doug Long, Senior Vice President of Forest Resources to comment on our U.S. and New Zealand Timber results. And following the review of our Timber segments, Mark will discuss our real estate results, as well as our outlook for 2021. We finished 2020 with encouraging momentum across all businesses, generating adjusted EBITDA of $75 million and pro forma EPS of $0.08 per share in the fourth quarter. Adjusted EBITDA exceeded the prior year quarter by 15% with favorable results in the Pacific Northwest Timber, New Zealand Timber and Real Estate segments, more than offset a decline in adjusted EBITDA from the Southern Timber segment. As we reflect on 2020 in its entirety, we are pleased with our performance across all our business lines, especially given the significant disruption and uncertainty created by the COVID-19 pandemic. The diversity of our timber markets, the positioning of our real estate portfolio and the resiliency of our people during challenging operating conditions all contributed to our solid performance. Moreover, despite the logistical challenges created by the pandemic, we successfully closed and integrated the Pope Resources acquisition. We continue to believe the assets acquired, as well as the expertise and dedication of the Pope team that are now -- that has now joined Rayonier will play a critical role in our pursuit of long-term value creation for shareholders. For the full year, we generated GAAP EPS of $0.27 per share and pro forma EPS of $0.25 per share. Full year adjusted EBITDA of $267 million, increased 8% versus the prior year. In our Southern Timber…

Thanks, Dave. Let’s start on page five with our financial highlights. Sales for the quarter totaled $206 million, while pro forma sales totaled $196 million. Operating income was $22 million, including $700,000 of costs related to the Pope merger. Net income attributable to Rayonier was $10 million or $0.07 per share. Excluding these costs and adjusting for the operating income attributable to the non-controlling interest in our Timber Fund segment, pro forma operating income was also $22 million. Pro forma net income was $11 million or $0.08 per share. Fourth quarter adjusted EBITDA of $75 million was above the prior year quarter, primarily due to significantly higher results in our Real Estate and Pacific Northwest Timber segments, partially offset by a lower contribution from our Southern Timber segment. On the bottom of page five, we provide an overview of our capital resources and liquidity at year end, as well as a comparison to the prior year. Our cash available for distribution or CAD for the year was $162 million, compared to $149 million in the prior year, primarily due to higher adjusted EBITDA and lower cash taxes, partially offset by higher capital expenditures and higher cash interest. A reconciliation of CAD, the cash provided by operating activities and other GAAP measures is provided on page eight of the financial supplement. Consistent with our nimble approach to capital allocation, we raised over $30 million to our aftermarket or ATM equity offering program during the fourth quarter at an average price of $3.26 per share. As discussed on our last earnings call, we view the ATM program as a cost effective tool to opportunistically raise capital, strengthen our balance sheet and match fund bolt-on acquisitions. In sum, we closed the year with $81 million of cash and $1.3 billion of debt, both of which exclude cash and debt attributable to the Timber Fund segment, which is non-recourse to Rayonier. Our net debt of $1.2 billion represented 23% of our enterprise value based on our closing stock price at year end. I will now turn the call over to Doug to provide a more detailed review of our fourth quarter timber results.

Thanks, Mark. Good morning. Let’s start on page nine with our Southern Timber segment. Adjusted EBITDA in the fourth quarter of $23 million was $5 million below the prior year quarter. The declines in adjusted EBITDA relative to the prior year quarter was largely attributable to lower volumes due to the timing of harvest activity in 2020, as well as lower non-timber sales. For the full year, harvest volumes totaled 6.2 million tons, an increase of 2% from 2019 and consistent with the high end of the revised guidance range we provided in August. However, following notable year-over-year increases during both the second quarter and third quarter, fourth quarter harvest volumes of 1.3 million tons or 15% below the prior year quarter, a decline in volumes in the fourth quarter was partially offset by stronger pricing. Specifically, average sawlog stumpage pricing was roughly $25 a ton, a 10% increase compared to the prior year quarter. We are encouraged to see evidence of increased pricing tension in multiple U.S. South markets during the quarter amid robust lumber markets, growing competition among those for logs and improved demand for expert grade logs in our Coastal markets. Geographic mix also contributed to stronger average pricing. As a contribution from our higher priced Coastal Atlantic markets increased concertedly year-over-year. Pulpwood pricing climbed 6% from the prior year quarter, also reflecting a favorable mix shift towards our Atlantic Coastal markets. Fourth quarter non-timber income of $5 million was $2 million below the prior year quarter. Recall that 2019 marked the record high year for our non-timber income business. Moving to our Pacific Northwest Timber segment on page 10, adjusted EBITDA of $40 million was $6 million above the prior year quarter. The year-over-year improvement was driven by substantially higher sawlog pricing as market dynamics improved…

Thanks, Doug. As detailed on page 13, our Real Estate team capitalized on growing demand for rural land, as well as finished lots and commercial parcels within our development projects. After a very slow start to 2020, given the uncertainty created by the pandemic, we saw a sharp rebound in activity and finished the year with encouraging momentum across our Real Estate categories. In the fourth quarter, sales totaled $32 million or roughly 12,500 acres sold at an average price of over $2,400 per acre. Real Estate adjusted EBITDA was $26 million in the fourth quarter, marking our second strongest quarter since 2018. Sales in the improved development category totaled $6.7 million. Specifically, we sold the parcel in the Belfast Commerce Park Development Project, South of Savannah, Georgia, for $4.6 million and our Wildlight Development Project, North of Jacksonville, Florida we sold 25 residential lots for $1.6 million or $64,000 per lot. In addition, we sold a small development property in Washington State from the Pope Real Estate portfolio for roughly $500,000. In the rural category, fourth quarter sales totaled $14 million or roughly 3,600 acres sold at an average price of $3,900 per acre. Interest in rural recreation and residential lots in the 5 acre to 40 acre size range continues to build as households are planning for more permanent work-from-home arrangements and desire to leave crowded urban and suburban areas. The space, privacy and recreational opportunities offered by these properties are attracting buyers and we believe this momentum will continue into 2021. Timberland and non-strategic sales of $9.6 million comprise just over 8,700 acres in total. These properties were non-strategic to our core timber operations, as they consisted of numerous scattered parcels with a relatively high percentage of non-plantable lands. Overall, we believe favorable tailwinds for our Real…

Thanks, Mark. Reflecting back on our earnings call a year ago, we certainly couldn’t have imagined the events that would unfold in 2020. I am very proud of how our team responded to all the unforeseen and unprecedented challenges associated with the COVID-19 pandemic. We figured out new ways to work together in a safe yet distant manner and rose to the many challenges posed by the pandemic, while at the same time remaining intensely focused on our strategic priorities. As such, I want to take a moment to recap some of the key milestones we achieved in 2020, despite the extraordinary circumstances we faced. Underscoring our focus on always looking to improve our portfolio through active portfolio management we executed several transactions that we believe better position us to create value for our shareholders. First and foremost, in May, we successfully completed the acquisition of Pope Resources announced last January. The addition of these high quality Pacific Northwest Timberlands, as well as an attractive real estate portfolio improved our species mix, smoothed out our age-class distribution and increased our proportion, increased our operational flexibility and market reach within the region. As we welcomed Pope’s outstanding team to the Rayonier family, we are encouraged by the benefits that are already starting to accrue from this transaction. Moreover, we believe the operating structure we employed as part of the transaction has great potential to be used in other Timberland transactions in the future. While dedicating significant resources to ensure Pope’s successful integration, we also executed on some smaller acquisitions throughout the year totaling roughly $25 million. In addition, we executed a large disposition of 67,000 acres in Mississippi for $116 million. These transactions reflect our unwavering commitment to nimble capital allocation and active portfolio management, as well as our focus on…

Thank you. [Operator Instructions] Our first question comes from Anthony Pettinari with Citi. Your line is open.

Good morning, guys. This is actually Randy Toth sitting in for Anthony. I just want to touch on the price improvement in the U.S. South Pacific region sawtimber. I think pricing was up 10% year-over-year and you commented on increased pricing tension in multiple U.S. pulp markets in the prepared comments. I just wanted to maybe a little bit more color on which regions and what’s driving that? Thank you.

Sure. This is Doug. I will be happy to answer that. So, as we mentioned, we did have some geographic shift across from Alabama to our Coastal markets. That was roughly about 15% year-over-year difference. So it wasn’t a major contributor but it was a contributor in there. Where we have seen strength in particular is our Coastal Atlantic markets in Florida and Georgia and while attributable to -- we had a lot of capital investment in that area, but we also have exposures to the export markets in that area. So we have seen pricing tension from demand from China primarily and some to India, and also just that investments we have seen in those markets in sawmills.

Understood. And then maybe moving to guidance, just looking at the EBITDA and harvest guidance, it looks like you are expecting something like 20% to 40% EBITDA per ton improvement in the Northwest and 15% to 30% in New Zealand. So Northwest improvement makes sense given the Pope Resources acquisitions, but I was just wondering if you could comment on what is really driving the improvement in New Zealand? Thank you.

It is Doug and I will take a start at that. So if you recall, we had China facing COVID as they went in December and January of last year and so we saw significant slowdowns in the China economy, which impacted the export markets. And so that caused a lot of price decreases early in the year in New Zealand and then the domestic market followed behind that. As China got control of COVID and New Zealand had their lockdown that came out of that, things started to improve significantly as we move back through the rest of the year and so we have seen significant increases in movement in both pricing and domestic in export. China’s economy is really roaring back and we have seen increased demand. Some -- actually some of the highest demand we have seen in the fourth quarter. So we are feeling strong about that and seeing pricing responding to that also.

Yeah. This is Mark. Recognize as well that we finished the year with lower volume than we anticipated going into the year largely due to the COVID-related shutdowns in the kind of the April timeframe. And so just given that we are kind of -- we are expecting a return to more normalized volume level in 2021, you are getting incremental kind of operational leverage off of those additional tons.

Got it. Understood. Thank you. I will turn it over.

Thank you. Our next question comes from Mark Wilde with BMO Capital Markets. Your line is open.

Hi. This is Jesse Barone sitting on for Mark. First question, can you guys give us kind of an update on the Timber Fund Management business, kind of what your options still are there?

Well, I’d say right now we are still in the process of reviewing the Fund business and all options are on the table, everything from retaining the business to fully exiting the business to partially exiting the business. And so that’s about all we can really speak to at this juncture. But as we have said in earlier calls, everything’s been on the table.

Okay. And then just one follow up, can you just kind of give us more color on what you are seeing in the export log market in the U.S. South?

Sure. This is Doug, again. Yeah. As I mentioned, we are starting to see some real strength in that market, particularly the recent ban with Australia and China has improved demand coming out of South. But even before that we really saw a lot of growth, so we are impressed with what we are seeing. We are on target to basically double roughly what we did in 2020 and about the second yard in that Savannah market. So we are really seeing a lot of growth in that market right now.

Great. I will turn it over. Thanks.

Thank you. Our next question comes from Mark Weintraub with Seaport Global. Your line is open.

Yeah. Hi. This is Salvator Tiano filling in for Mark. So, firstly, following up a little bit on the export markets in the South, you mentioned contracts have doubled your exports. But firstly, how does this compare essentially to where you were before China imposed the tariffs on the U.S. when things were growing at a very high rate as well, are you getting back to those levels? And can you elaborate a little bit also on India, because it seems like more and more companies focused on the export market have been mentioning that as a big source of growth?

Yeah. I’d say, we have -- you are correct. We were -- we have just gotten started in the export markets before the tariffs went in June of 2018. So we were growing fast at that point in time. Obviously, we have taken a pause. But really since Q2 of this year, we have seen a significant ramp up in that and I think we are well above the pace we were at before. So we have seen demand stronger than we saw in 2018. Overall, China demand continues to grow year-over-year just for logs in general. What we see in Europe has put some tailwinds in the market particularly for the Northwest on that construction side. What we are seeing is that the Southern Yellow Pine is being used in peeling for plywood, also being used for treating and other things. So it’s got a niche market there. So the demand continues to increase. So it’s been a strong market for us and we continue to expect it to rise.

Okay. Perfect. And a couple of additional questions, a little bit on the harvest in the Pacific Northwest. You did mention it was a little bit lower year-on-year, you had very strong harvest a year ago. But you also did have Pope Resources, which I think on a normalized basis should be 100,000 tons a quarter. So can you provide a little bit more color of why -- the combined business was still lower?

Sure. We saw -- we had record pricing -- lumber pricing in Q3. We saw it still strong in November. As it moved in December, it took a pause. I think people were very concerned about was it sustainable? What was going on in the economy? The elections things like that? So what we saw was that, while the mills continue to run, they were less likely to speculate is what I would say basically. They were -- they are concerned of what the future look like in Q1. So we took a little bit of a pause and held back some volume in our stumpage markets and waited to see because we thought there was going to be -- we thought the fundamentals were strong. It was just really more kind of social parameters that were causing things. And we have seen just that, since January has come back around, people moved forward, we are seeing the markets return back to extremely high pricing and strong demand again. So it was just a good opportunity to take a pause for a little bit.

And Salvator, this is Mark. Specifically on the quarter-over-quarter decline relative to Q4 of last year. Recognize that we had a much heavier proportion of our harvest volume in Q4 last year relative to this year. And so 2019, I am sorry last year, I mean, 2019 relative to 2020. But in 2019 Q1 through Q3, we averaged about 260,000 tons of volume in the Pacific Northwest and then we did 417,000 tons in Q4. And so this year 2020, we had a kind of more even spread over the quarters and not that sort of very heavy concentration in Q4.

Okay. Perfect. And then last question will be on Real Estate. Clearly, it’s going to be another good year with EBITDA around $80 million. With the improvement in housing, do you believe you can sustain that EBITDA level beyond 2021 and can you breakdown a little bit the profitability between legacy Rayonier and the benefits from the Pope Real Estate operations?

We are not going to get into the specifics around the breakdown between legacy Rayonier and Pope at this juncture, certainly, not with any -- within any particular timeframe. Look, as you know, real estate results can be very lumpy period-to-period. We have seen periods of very, very strong volume and pricing, and we have seen periods where it’s come off. Now if you look over a very long time period, I think that there is some measure of consistency to that business. In general, I mean, first of all, it’s primarily a Southern business at least on the rural land front, development is much more specific to where you are putting capital investment dollars. But on the rural land front, we have generally sold in the vicinity of 1.5% of our Southern land acreage annually and over time the premiums on those sales relative to the underlying Timberland value probably been as tight as 20% in a less opportune market to as high as 100% in a really strong market. And so over time that’s our expectation. I think we are going to sell 25,000 acres annually, give or take, call it, 50% to 75% premium to Timberland value in a kind of normalized market. The last couple of years have been stronger than that, and obviously, we are looking at a pretty attractive market right now. That’s also going to be skewed by the proportion that’s in improved development properties as well, recognizing that when you are putting real dollars into the ground your per acre value realizations are substantially higher than on unimproved land. So, again, hopefully, that gives you a flavor for kind of what our long-term expectation is and happy to kind of walk you through the math around that offline.

The other thing I’d add is keep in mind that the improved development projects have a fairly long entitlement process, and as well as construction. And so we are further along that process in both our Wildlight and Richmond Hill projects relative to where the Pope projects are on their additions to improved development portfolio?

Okay. Thank you very much.

One other point, I think, 2021 is reflective of a quote-unquote more normalized transaction -- level of transaction activity.

Great. Thank you.

Thank you. Our next question comes from Paul Quinn with RBC Capital Markets. Your line is open.

Yeah. Thanks very much. Solid results and a great outlook here. Just -- it looks like the guidance for Pacific Northwest and New Zealand are up quite a bit over 2020. Just trying to attribute that, what portion of the increase is attributable to higher volume and what portion to a higher realized price?

I mean, it’s certainly both. We can -- Paul, if you want to walk off -- talk offline about just kind of the contribution on EBITDA per ton basis, but we are anticipating pricing in both the Pacific Northwest and New Zealand timber being up. Pricing increases tend to be a straight pass-through to the bottomline, whereas the volume increases, you are obviously getting kind of that marginal contribution from the incremental tons. So it’s definitely a mix of both and it’s, I’d say, it’s more heavily weighted towards pricing.

All right. That’s all I had. Best of luck, guys. Thanks.

Thank you. Our last question comes from John Babcock with Bank of America. Your line is open.

Yeah. Thanks for taking my questions. Just right now, you talked a little bit about the wildfires in the Pacific Northwest. So I was wondering if you could gauge how much land that’s harvestable was ultimately damaged by that, it doesn’t sound like it was all that significant, but I was wondering if you could quantify that to some extent.

Yeah. For, Rayonier, as I mentioned, none of our fee ground but approximately 10,000 acres of the Timber Fund business. So that’s for Rayonier. But across the Board, there was hundreds and thousands of acres of that was burned in Oregon, across the industry and the National Forest in the Netherlands, but we are a very small percentage of that overall.

Got you. And now that you have had Pope Resources now for two quarters or so, I was wondering if you could talk about whether or not there are any adjustments that you are making to the harvest plans that they had, any sort of changes on that front that are worth noting?

Yeah. This is Doug, again. I’d say, we are -- nothing I would say is notable. What we are doing is bringing that property into ours, rerunning the harvest schedule, looking for opportunities. There may be cases where we can allow things to grow or just different opportunities to get different grade out of things, so it’s really just optimizing what we have. So it will impact our stance of our harvesting, but not really the volumes that we are looking at.

Got you. With regards to Australia, you talked about the log ban there. Do you have any color on how long that ban might be in place or is it not that specific and then also where are those logs going at this point with that log ban?

Yeah. I don’t have any color on the length. That’s anyone’s guess kind of like the U.S. ban. So, I am sure, but I can tell you that, folks are looking at that being something that’s going to last for a little while. So it’s not just something that happened and going on. It feels like it’s something that’s going to be around for a while. Those logs -- a lot of the logs went to Korea and India. So, immediately, they shift -- the market shifted to those areas. So we have seen a shift away from China into those two markets.

And how have those -- the volume that they pushed into those markets, is that significant to impact the pricing in those regions?

I would say it has some impact, but what we have seen is demand in China has really increased and so when we kind of look at that inventory demand ratio in China, we are sitting -- we kind of look at 1.5 months and 2 months kind of being a good ratio and China really just set the export prices and right now we are seeing at that low end around the 1.5 months. So what we see is overall strength in export prices across kind of Asia and so while it’s having some dampening impact in India, in Korea, those markets are still on the rise, because they are following that overall China trend. So it has had some impact, but overall we are seeing a price increase in all the markets.

Okay. And then I can’t remember if you guys mentioned log inventories in China and where those stand now relative to where they had been over the last couple months?

Yeah. So right now we are tracking roughly about 3.5 million cubic meters to 3.7 million cubic meters in China. But importantly, Radiata is at almost a record low over the last few years. So we are seeing that the Radiata inventories are down and what we are seeing is a big influx at European salvage, I mentioned before, which is primarily that construction lumber. So the good news for New Zealand and the U.S. South is the demand for these other grades that’s used for peeling and other products. But probably the -- a little bit of dampening news for Northwest, which we haven’t doing much exports out of is that construction grade still seeing a lot of competition from European salvage. So but right now really with the Pacific Northwest domestic pricing where it sits, it’s pretty hard to get any volume to go to China right this moment anyhow. It’s just a -- there’s a significant premium to go to the domestic market.

Okay. And then just my last question before I turn it over, I was just wondering if you can talk a little bit of that -- a little bit more about what’s driving the demand in China and also how sustainable you see it? I guess, I was also wondering if there’s how much it -- of this is temporary and we have seen in other commodities that their purchasing is up quite a bit. So I want to kind of get your thoughts there.

Sure. Yeah. So broadly speaking we have seen the demand in Q4, as I mentioned before, was strong with weekly consumption around 800,000 cubic meters and that is historically strong. And it’s really being fueled. They have had a really strong second half economic recovery. And right now, the investments that the government is making, a lot of it is in infrastructure and so we do believe that’s going to last for a long time. It doesn’t appear like it’s just a short-term rebuild of commodities from the prior shutdown when they had it earlier in the year. So all indications we have right now is we are in for a good sustained boom. They are looking at improving economic input. So we are thinking this has some legs to it.

Okay. What was their weekly consumption on average in the kind of last year or so, like what’s more normal consumption there?

More normal might be in the 600,000 cubic meters -- 600,000 cubic meters, 700,000 cubic meters, it’s looking more like 800,000 cubic meters in the fourth quarter. So we have seen a strong increase. We had kind of, you asked about I think before, kind of where are things at. In the beginning of the year, we had inventories almost at 7 million cubic meters sitting in China, obviously that was during the COVID lockdowns. And from there, it’s dropped down, as I mentioned, roughly half of that now, so we have seen a pretty significant decrease. Little bit of a build in January as we expect to see and in February with Chinese New Year, but it’s still well below what we would expect to see, so that drawdown has been having a significant impact.

Okay. Great. Appreciate all the color. Thank you.

Thank you. And we do have another question from Mark Weintraub with Seaport Global. Your line is open.

Hi. Salvator Tiano, again. Thanks for taking the follow up. Just wanted to understand a little bit in the South, you obviously have the year-on-year benefits you mentioned, the export market and mix. However, I am trying to understand, in the same regions kind of like-for-like, are you seeing measurable changes in prices and are there any specific new lumber mill projects that are coming online that you see benefiting your holdings in the South?

Yeah. You are right. We are seeing improvements across different areas as we look, and as I mentioned before, that’s kind of the Florida, Georgia area has significant investments earlier in kind of 2018, 2019. We have been tracking since 2017 I think about 8.3 billion board feet of capacity coming into the South. And roughly half that’s already happened and we have another kind of 4 billion board feet that’s still out in front of us. And particularly for us, the Georgia markets have seen some significant improvements in that area and we are excited to see Klaussner opening up in Florida again. So and one of reasons that was -- Binderholz has bought that mill in Live Oak and it impacts both our Florida and Georgia markets. And along with that GP Albany in the area, so we are seeing a lot of strength in that area. And so if that mill comes back on, that’s about 300 million board feet of capacity coming into that area. So we are seeing a lot of strength in there. So really that that Florida, Georgia and then Alabama also we have seen some strength in that as new mills have come online in that area too. So we are seeing across the Board strengthen those areas, but where we have export and the new capacity simply where we are seeing less price tension.

And keep in mind that these coastal markets have a fairly balanced growth drain relationship. And so as such they are going to be much more -- a much greater price elasticity when we see changes in the market, be it a new mill coming along -- coming on or adding capacity or the export market improving. And so that’s one of the reasons that you are seeing the nice price movement in the South is because of that factor.

Thank you. And at this time, we have no further questions on the audio line.

All right. Thank you. This is Collin Mings. I’d like to thank everyone for joining us. Please contact us with any follow up questions.

That concludes today’s conference. Thank you for participating. You may disconnect at this time.