Welcome and thank you for joining Rayonier’s Third Quarter 2024 Conference 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 will turn the meeting over to Mr. Collin Mings, Vice President, Capital Markets and Strategic Planning. You may go ahead.

Thank you and good morning. Welcome to Rayonier’s investor teleconference covering third 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 2 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 materials. With that, let’s start our teleconference with opening comments from Mark McHugh, our President and CEO. Mark?

Thanks Collin. Good morning, everyone. Before reviewing our results for the third quarter, I’d like to first discuss the timberland dispositions we announced concurrent with our earnings release yesterday afternoon. Then I’ll make some high level comments on the quarter before turning it over to April Tice, Senior Vice President and Chief Financial Officer, to review our consolidated financial results. We’ll then ask Doug Long, Executive Vice President and Chief Resource Officer, to comment on our U.S. and New Zealand timber results. And following the review of our timber segments, April will discuss our real estate results and our outlook for the balance of the year. Yesterday afternoon, as part of our previously announced asset disposition and capital structure realignment plan, we announced completed and pending timberland dispositions totaling 200,000 acres for an aggregate purchase price of $495 million. The total value represents an implied EBITDA multiple of 45 times the trailing three-year average EBITDA from these properties, illustrating what we continue to believe is a significant disconnect between private market timberland values and the valuation implied by the company’s share price. We expect that the timberland dispositions will generate pro forma CAD per share accretion of approximately 9%, while also further concentrating our portfolio in markets with the strongest cash flow attributes and the most favorable long-term growth prospects. The timberlands were sold through four separate transactions to high caliber institutional investors and consist of approximately 91,000 acres in Southeast Oklahoma and 109,000 acres on the Olympic Peninsula in Northwest Washington. Three of these deals, which collectively comprised roughly 75% of the total proceeds, have already closed during the fourth quarter and the remaining transaction is expected to close before the end of the year. Importantly, these dispositions are generating significant proceeds for deleveraging, pro forma for the dispositions,…

Thanks, Mark. Moving to the financial highlights on Page 5 of the supplement. Sales for the third quarter totaled $195 million, while operating income was $28 million and net income attributable to Rayonier was $29 million or $0.19 per share. On a pro forma basis, net income was $18 million or $0.12 per share. Pro forma items in the third quarter included a $12 million net recovery on legal settlements, $900,000 of costs related to our disposition plan, and a $300,000 pension settlement charge. Adjusted EBITDA was $72 million in the third quarter, down from $79 million in the prior year period. On the bottom of Page 5, we provide an overview of our capital resources and liquidity. Our cash available for distribution or CAD for the first nine months of the year was $106 million versus $115 million in the prior year period. The decrease was driven by lower adjusted EBITDA partially offset by lower net cash interest paid. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on Page 8 of the financial supplement. We closed the third quarter with $74 million of cash and roughly $1.3 billion of debt. Our net debt to trailing 12 months adjusted EBITDA was approximately 4.5 times. At quarter end, our weighted average cost of debt was approximately 2.9% and the weighted average maturity of 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 20%. As Mark discussed, pro forma for the completed and pending dispositions, we estimate that the reduction in leverage will imply net debt to pro forma adjusted EBITDA of approximately 2.8 times, subsequent to quarter end, we used $90 million of the disposition proceeds to pay off our only unhedged floating rate debt, which reduced our weighted average cost of debt to approximately 2.7%. Within the supplemental presentation posted to our website, we detail the key aspects of the Oklahoma and Washington dispositions as well as provide an overview of our pro forma capital structure and debt maturity profile. I’ll now turn the call over to Doug to provide a more detailed review of our Timber results.

Thanks, April. Let’s start on Page 9 with our Southern Timber segment. Adjusted EBITDA in the third quarter of $38 million was comparable to the prior year quarter as lower harvest volumes, lower net stumpage realizations and slightly higher costs were offset by higher non-timber revenue. Total harvest volumes fell 13% versus a strong prior year quarter due to wet ground conditions that constrained production in our Atlantic region as well as softer demand from lumber mills. Meanwhile, non-timber revenue increased $6.8 million versus the prior year period driven by higher pipeline easement revenues and growth in our land based solutions business. Average sawlog stumpage pricing was $27 per ton, a 5% decrease compared to the prior year period due to weaker grade markets and a geographic mix shift away from the relatively higher priced Atlantic region. Pulpwood net stumpage pricing was 4% higher than the prior year quarter at roughly $17 per ton. Overall, weighted average stumpage prices in the third quarter decreased 3% versus the prior year quarter to roughly $21 per ton. Stable end market demand and reduced residual sawmill chip supply availability translated into improved pulpwood pricing across most of our markets in the U.S. South. Market pulp prices have improved over the past year and containerboard operating rates have rebounded following the inventory destocking cycle that weighed heavily on demand in 2023. Turning to grade markets, log demand was soft throughout the third quarter due to continued weakness in Southern yellow pine lumber demand. Encouragingly, there has been a significant rebound in Southern yellow pine lumber prices recently, which are now up 18% from September lows when lumber producers responded to weak market conditions with mill curtailments and reduced production levels. That said, the overall demand picture for lumber remains challenged by continued softness in…

Thanks, Doug. As detailed on Page 12, the contribution from our real estate segment during the third quarter was slightly higher as compared to the prior year period. Real estate revenue totaled $30 million on roughly 2,900 acres sold at an average price of $8,800 per acre. The strong average price per acre reflects the higher proportion of improved development sales closed during the period. Real Estate segment adjusted EBITDA in the third quarter was $20 million. Drilling down, sales in the improved development category totaled $12 million. In our Wildlight development project north of Jacksonville, Florida, we completed two residential pod sales totaling 104 acres for $7.7 million or $74,000 per acre. We also had two small non-residential sales in Wildlight totaling $200,000. In our Heartwood development project south of Savannah, Georgia, sales consisted of 8.8 acres for $3.6 million or $410,000 per acre. We also sold an industrial use parcel in Kitsap County, Washington for $500,000 or $266,000 per acre. There continues to be healthy interest from home builders in both our Wildlight and Heartwood projects as the pace of sales at both remains on a favorable trajectory. In Wildlight, we remain encouraged by the pipeline of future opportunities and expect the first sales within phase two of the project to close next year. In Heartwood, the Hyundai Mobis manufacturing facility recently opened and we continue to see a long runway of future demand in response to continued economic growth in the area. Despite the continued momentum at both projects, as we discussed last quarter, some commercial deals are taking longer to materialize due to the challenges that developers are contending with in the relatively higher interest rate environment. Turning to the rural category. Third quarter sales totaled $14 million consisting of approximately 2,800 acres at an average…

Thanks, April. As we conclude today’s call, I’d like to recognize our team’s unrelenting focus on advancing the important strategic initiatives that we’ve communicated over the past year. These initiatives include executing on our asset disposition and capital structure realignment plan, advancing our land-based solutions business and unlocking the value embedded in our real estate development platform. We’ve made significant strides on each of these fronts, despite also having to contend with difficult headwinds facing our timber businesses. I’m very proud of how our team has risen to this challenge. While improved supply demand dynamics for Pulpwood in the U.S. South have been a relative bright spot in 2024, this has been more than offset by continued weakness in saw timber markets across our footprint. Although macroeconomic headwinds continue to adversely impact end market demand, I’m pleased by how our team has navigated through these challenges to achieve optimal results. I’m also optimistic that an undersupplied U.S. housing market coupled with further rate cuts should translate to a relatively improved operating environment as we move into 2025. On the real estate front, we’re poised to finish the year with a very strong quarter based on our anticipated pipeline of closing activity. Our team continues to generate significant premiums to timberland values through the sale of both rural properties and entitled acreage in our development projects, and we remain optimistic that more favorable financing conditions could further bolster the demand we’re seeing across our real estate categories. Meanwhile, consistent with the ambitions we detailed at our Investor Day earlier this year, we have continued to make significant strides in advancing our land-based solutions business. Specifically, we now have approximately 76,000 acres under lease for carbon capture and storage and expect to have over 40,000 acres under option for solar development by year-end. Our team continues to build a strong pipeline of additional opportunities with high quality counterparties as we diligently work toward the 2027 and 2030 EBITDA targets that we communicated in February. And lastly, as I detailed at the start of the call, we’re very encouraged by the progress we’ve made toward our $1 billion disposition target. Consistent with the goals that we laid out when we announced the plan last November, the dispositions completed to date have allowed us to capitalize on the significant disconnect between public and private timberland values, strengthen our balance sheet, return capital to shareholders and improve our long term growth profile. We’ve further been able to execute the plan in a manner that is accretive to both CAD and NAV per share. In sum, notwithstanding the transitory market headwinds our team continues to navigate, I remain quite optimistic that Rayonier is well positioned to enhance shareholder value and execute on future growth opportunities as we move forward. That concludes our prepared remarks and I’ll now turn the call back to the operator for questions.

Thank you. [Operator Instructions] Our first question comes from Matthew McKellar with RBC Capital Markets. You may go ahead.

Hi, good morning. Thanks for all the detail and congratulations on the transactions. Could you maybe first provide a bit of color on where your process is around evaluating strategic alternatives for your stake in the New Zealand business? And maybe more holistically, how are you evaluating your options for further dispositions to bring you toward the $1 billion target? Thanks.

Yes, hi, Matthew, this is Mark. I’ll take that one. First of all, as it relates to the status of the New Zealand evaluation, as we discussed on prior calls, we’ve been engaged in a full evaluation of strategic alternatives with respect to our joint venture interest in New Zealand. That process is ongoing and we don’t really have anything new to report on that front at this point. Recall that we previously indicated that the New Zealand evaluation process would be a much longer process given the governance provisions in the joint venture agreement there. So again, we’re still working through that process, but we’re not in a position to comment much further at this point in time. As it relates to kind of the broader plan and any kind of future dispositions that we may evaluate, as discussed on prior calls, it was a general matter we don’t comment on M&A until there’s a closed transaction or some type of definitive contract. But we recognize that there is an elevated level of interest and speculation around our disposition plans given the $1 billion target that we laid out last year. So we have been very transparent as it relates to what options have been under consideration over the past year. Given where we’re at now, having completed three quarters of our original target and still evaluating alternatives in New Zealand, we’re not planning to provide any further details around other alternatives that might be under consideration at this time. We’ve essentially achieved much of what we set out to do with the original plan. So we intend to be very opportunistic as it relates to our consideration of any additional dispositions at this point, including New Zealand.

Great. Thanks for that color. Maybe next, could you comment on your expectations for how the log market in China evolves into 2025? On the supply side, are you seeing reduction in supply from Europe as their beetle affected harvest wanes? [Ph] And then on the demand side, what do you expect in terms of stimulus measures in China and how those flow through to demand? Thanks.

Sure. This is Doug. I’ll take that one. Excuse me. Yes, as you mentioned on the supply side, we have seen reduction in supply from Europe in particular and New Zealand has taken up a much greater share of the incoming supply into China. Right now, as mentioned before, kind of the demand is relatively stable at this point in time, but the supply has come down. So we’re seeing some positive price movement there. But this past quarter, we did see increased shipping rates that worked against us. The stimulus, as you talked about, the government has pumped more stimulus in and has done what they’ve created the wait list for housing. And so that’s given us some short-term opportunistic – opportunities for people. And we’re hoping that goes forward, but it’s been really unclear as to how long that will go forward. So right now we’re working on the assumptions we’ve had with improvements, but it’s kind of steady as it goes. But basically the New Zealand volume has taken up the majority of that volume that’s coming in now. So that’s been positive for pricing for our New Zealand operations.

Great. Thanks very much for the color. I’ll turn it back.

Thank you. Our next question is from Anthony Pettinari with Citi. You may go ahead.

Hi, good morning, everyone. This is Gregory on for Antony this morning. Just a quick one on the dispositions. So I’m taking a look at the slide deck. Now you included a helpful slide on the impact to the Pacific Northwest portfolio, site index, mix, commercial acreage, operable acreage. I’m wondering how we should think about the impact of the Oklahoma sale on the Southern portfolio quality. Granted, it’s a much smaller piece of the pie there or if we should expect any log price tailwinds into next year if that land is lower on a dollar per ton basis?

Yes, no, it’s a good question. And we didn’t include a pro forma impact on the Southern portfolio, recognizing that that is a much smaller portion of the overall portfolio. With respect to the Washington dispositions, we were talking about 25%, 30% of the overall portfolio. So there were some pretty material impacts to what that residual portfolio looked like. With respect to Oklahoma, that’s kind of 5% of our overall Southern portfolio, so that the impact just wouldn’t be all that pronounced. That said, as a general matter, Oklahoma properties tend to transact at a much lower per acre value than the broader U.S. South. Productivity tends to be much lower there, markets are certainly thinner, and there’s less HBU upside or alternatives in Oklahoma. So again, wouldn’t really see it as driving a significant impact on the overall business as it relates to log pricing, just given how small a piece of the overall portfolio it is. But certainly as it relates to how it impacts a residual portfolio, we certainly view it as an upgrade and kind of addition through subtraction.

Understood. Thank you for that. Maybe just one more on Timberland’s cost specifically. So I’m looking at the year-over-year EBIT bridges for the south and the Pacific Northwest. And you had costs flat year-over-year in the South and maybe a slight tailwind in the Pacific Northwest. So wondering if you can kind of breakdown the moving pieces there and how we should think about your cost bucket into the fourth quarter?

Sure. What you’re seeing, like you said is relatively stable in the U.S. South and in the Pacific Northwest, we have seen some reduction in those costs. The operations we had in Oregon in particular higher cost operations than we had in our Washington operations. So those had an impact – a positive impact on reducing costs as well as we’ve seen some fuel reductions and the operations that we’ve just recently announced, the disposition there are also in some of our steeper, higher ground country. And so we also expect some opportunities there for cost reductions as we change operations.

Thank you very much. I’ll turn it over.

Thank you. [Operator Instructions] Our next question is from Mark Weintraub with Seaport Research Partners. You may go ahead.

Thank you. Congrats on the progress on the disposition program. One real quick follow up on that is you mentioned, obviously I understand the CAD, accretive to CAD. You also said accretive to NAV per share. What did you mean by that exactly?

As a general matter, one of the key theses underlying this disposition program is that we are seeing much stronger valuations of timberland assets in the private market versus the public market. And so obviously we are monetizing properties in the public market and using those proceeds to deploy internally, for example, into share buybacks. We generally think that that would translate into NAB accretion. And so that was really more kind of a statement of the overall impact of the plan and how we’re approaching capital allocation around deployment of proceeds.

Got it. So it was a statement basically relative to what you would say the implied valuations. The public markets were putting on it, as opposed to you getting a higher value than per se, what you perhaps internally were putting on it. That was sort of the clarification I was just trying to get?

That’s absolutely right. Yes.

Okay. Very good. And then recognizing you’re not going to be providing specifics on incremental dispositions, et cetera, but is it fair to say that obviously you’re – as you say, roughly 75% to that $1 billion target? Does that necessarily preclude the possibility of transactions that might take you meaningfully above the billion? And if that were to be the case, would you then look to be reinvesting them into other acquisition opportunities? Or how should we be thinking about that?

Yes. That’s a great question. And we touched on this in prior calls just in terms of our appetite to potentially overshoot the target, because obviously as you deduced, being sort of three-quarters of the way through the original $1 billion target, still considering New Zealand, were we to do something around New Zealand that would certainly take us over that. And look, I generally think our view on that relative to how we’ve talked about it in prior calls, hasn’t really changed. While we’re not deliberately looking to overshoot the $1 billion target, we’re certainly not averse to doing so if we’re able to achieve compelling values on the assets that we’ve taken to market or might take to market in the future. And if we were to exceed our target, we do have some flexibility to redeploy those proceeds into other timberland acquisitions through, like, kind exchange transactions for Example. Alternatively we could look to further delever or return incremental capital to shareholders, particularly if we see a compelling buyback opportunity. Look, we’ve always operated with this mindset of nimble capital allocation and active portfolio management really with a view towards building long-term value per share. And we intend to adhere to that mindset as we continue to consider other alternatives going forward.

Okay, great, very helpful. And then two last quick ones. One, so how much EBITDA this year was associated with the properties being part of the disposition?

Yes, we haven’t disclosed the contribution this year just because Ian, again recognize that any sort of short term period with respect to a particular property of that scale isn’t going to be all that relevant just given seasonality of harvest patterns in different areas and the like. And so rather we showed that on a three-year look back and then compared that multiple to similarly situated multiples in the NAREIT [ph] indices. But as a general matter we indicated that that three year average was $11 million that we generally ceased harvesting around midyear. So as a general matter, you can kind of think of it as roughly half of that $11 million contribution is how we were thinking about the partial year contribution.

Got it, helpful. Thank you. And then lastly, you mentioned 76,000 CCS, 40,000 solar by the end of the year. Do you expect any of these projects, particularly in solar, potentially being exercised, beginning to come to fruition next year or are those still a little further down the road?

Yes, this is Doug, I’ll take that question. Yes, as we’ve talked about before, these options typically take two or three years at least before or before going into being exercised. And right now I think we’re still in that process of looking at where those go. So I don’t see anything immediate that’s going to be turning into a lease, but there are some developments in basically the solar area that give us some confidence that we’ll see some improvement going forward and pretty excited about. So the Federal Energy Regulatory Commission issued an order that basically is going to reduce some of the backlog. Right now there’s about a 26-month backlog in the queue for getting these things processed. And they’ve implemented this new order and it’s going to improve the process as we go forward. And what it really does is aims to make sure people have done the due diligence before they enter into it. And so that’s been a key challenge before is folks just essentially got control of some land and then said here we are, here’s our plan. But the new order it focuses on, are you ready? Do you have everything in place? And so it implements basically a deposit at the time they start. So you got to put some money up front when you go in, a penalty if you withdraw, and then also if you miss deadlines to the process, penalties. So we expect that this kind of temporary backlog will start to work through more quickly and hope to see some of these shift over from options into exercising into leases here in the next year or so. But we still do have a backlog there that we’re working through at this point in time. But we see this as very positive for the sector and opportunity to reduce that amount as well as we believe the conversion rates should improve as you go forward. Before we talked about kind of in that 25% to 35% was the rate that we’d seen as an industry average, thinking we’re going to be on the higher end of that. But with this now that folks have to put down a lot more money and the penalties and these penalties, depending on the size of project and the millions of dollars, we think that’s going to reduce that backlog and also improve conversion rates.

Yes, Mark, I’ll just add on to that. I mean, what we’ve seen really in the last year is that, the process to get properties under option is quite a bit more arduous. Again, like Doug referred to, based on these Q reforms that have occurred, a lot more of that due diligence work is now occurring at the front end. But the byproduct of that is that we expect that that conversion rate will be considerably higher than what we anticipated a year ago. I think at our Investor Day, we communicated 25% to 40% is our estimate of that conversion rate. We’re certainly anticipating that to be higher. Given what’s happened with Q reform.

Would that apply to your existing backlog or would that just be for anything that comes in the future?

Yes, I feel good about the bulk of our existing backlog. So we really have been focusing on high quality developers and large scale. So we believe the folks we’ve been working with already have good projects in line. And we entered in some options very early in 2017 that have now rolled off and are no longer on our books, but that we’re probably more in the developer space. But now we’re working with these large, kind of producers of electricity. There could also be consumers of electricity and sellers. And so we feel good about where we’re at. So that conversion rate we believe will be applied to it doesn’t mean there still won’t be some that do roll off. But the bulk of what we have now, we feel strongly about that they have good conversion rates.

Much appreciated. Thank you.

Thank you. And there are no further questions at this time. I will turn the call back to Collin Mings for closing remarks.

All right, this is Colin Mings. I’d like to thank everybody for joining us. Please contact us with any follow up questions.

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