Q3 2024 Rayonier Inc Earnings Call
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Speaker Change: Welcome and thank you for joining Rayonier's third quarter 2020 for conference call. At this time, all participants are in a listen only mode.
Speaker Change: During the question and answer session, please press star 1 on your telephone keypad.
Speaker Change: Today's conference is being recorded. If you have any objections, you may disconnect at this time.
Speaker Change: Now, I will turn the meeting over to Mr. Colin Mings, Vice President, Capital Markets and Strategy.
Strategic Planning
You may go ahead.
Speaker Change: I would like to remind you that in these presentations, we include forward-looking statements made pursuant to the safe-harb provisions of federal securities laws.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: With that, let's start our teleconference with opening comments from Mark McHugh, our President and CEO. Mark?
Mark Mchugh: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 Timmerland values and the valuation implied by the company's share price.
Speaker Change: 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.
Speaker Change: 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
Speaker Change: Three of these deals, which collectively comprise 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.
Speaker Change: Pro forma for the dispositions, we expect that leverage will decline to approximately 2.8 times net debt to pro forma adjusted EBITDA.
Speaker Change: We have already used $90 million of the proceeds to pay down our only unhedged floating rate debt, and the remaining proceeds will be used to further reduce leverage, return capital to shareholders, or fund other capital allocation priorities.
Speaker Change: As a result of these dispositions, we expect to make a special distribution to meet our REIT taxable income distribution requirements. We plan to announce the details of the special distribution before the end of the year.
Speaker Change: Since introducing our initiatives to enhance shareholder value last November, we have now completed or announced pending Timberland dispositions totaling $737 million, roughly three-quarters of our original $1 billion target.
Speaker Change: Our execution of this plan underscores our relentless focus on nimble capital allocation, active portfolio management, and prudent balance sheet management. Additional details regarding the dispositions and the pro forma impact for REINEAR are provided in a supplemental presentation posted to our website.
Speaker Change: Now let's move on to our third-quarter results. Overall, we generated third-quarter adjusted EBITDA of $72 million and pro forma net income of $18 million, or 12 cents per share. The decline in adjusted EBITDA versus the prior year period was primarily attributable to a lower contribution from our New Zealand timber segment.
Drilling down further on our timber segment operating results.
Speaker Change: Our southern timber segment generated third quarter adjusted EBITDA of $38 million, which was comparable to the prior year period as significantly higher non-timber income was largely offset by a 13 percent decline in harvest volumes and 3 percent lower weighted average net stumpage realizations.
Speaker Change: In our Pacific Northwest Timber Segment, 3rd Quarter Adjusted EBITDA of $9 million increased $1 million versus the prior year quarter, as a 10% increase in harvest volumes and favorable costs were partially offset by a 7% decrease in weighted average net stumpage realizations.
Speaker Change: Turning to our New Zealand timber segment, third quarter Adjusted EBITDA of $15 million decreased $9 million versus the prior year quarter. The decrease in Adjusted EBITDA was driven by lower carbon credit sales and a 16% decline in weighted average net stumpage realizations, primarily due to elevated shipping costs.
Speaker Change: In our real estate segment, we generated third quarter adjusted EBITDA of $20 million, up $1 million from the prior year period, as higher average per acre prices were partially offset by lower acres sold.
Speaker Change: This revision largely reflects the impact of the completed and pending dispositions discussed earlier as we generally ceased harvesting operations on these Timberlands around mid-year ahead of the sales process.
Speaker Change: With that, let me turn it over to April for more details on our third quarter financial results.
Thanks, Mark.
April Tice: Moving to the financial highlights on page 5 of the supplement.
Speaker Change: Sales for the third quarter totaled $195 million, while operating income was $28 million, and net income attributable to rain year was $29 million, or 19 cents per share.
Speaker Change: On a pro forma basis, net income was $18 million or $0.12 per share.
Speaker Change: 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.
Speaker Change: Adjusted EBITDA was $72 million in the third quarter, down from $79 million in the prior year period.
Speaker Change: 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 9 months of the year was $106 million versus $115 million in the prior year period.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: At quarter end, our weighted average cost of debt was approximately 2.9%, and the weighted average maturity of our debt portfolio was approximately 4 years with no significant debt maturities until 2026.
Speaker Change: Our net debt to enterprise value based on our closing stock price at the end of the quarter was 20%.
Speaker Change: 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.
Speaker Change: 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%.
Speaker Change: 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 proforma capital structure and debt maturity profile.
Speaker Change: I'll now turn the call over to Doug to provide a more detailed review of our timber results.
Thanks, April.
Speaker Change: 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.
Let's start on page 9 with our southern timber segment.
Speaker Change: Adjusted EBITDA in the third quarter of $38 million was comparable to the prior year quarter as lower harvest volumes, lower net stomach realizations, and slightly higher costs were offset by higher non-timber revenue.
Speaker Change: Total harvest volumes fell 13% versus a strong prior year quarter due to wet ground conditions that constrained production and our Atlantic region as well as softer demand from lumber mills.
Speaker Change: Total harvest volumes fell 13% versus a strong prior year quarter due to wet ground conditions that constrain production in our Atlantic region as well as softer demand from lumber mills.
Speaker Change: Meanwhile, non timber revenue increased $6 $8 million versus the prior year period, driven by higher pipeline is revenues and growth in our land based solutions business.
Speaker Change: Meanwhile, non-timber revenue increased 6.8 million dollars versus the prior year period, driven by higher pipeline easement revenues and growth in our land- based solutions business.
Speaker Change: Average saw log 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.
Speaker Change: Average saw log stomach 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.
Speaker Change: Pulpwood stumpage pricing was 4% higher than the prior year quarter at roughly $17 per ton.
Speaker Change: Hopewood net stumpage pricing was 4% higher than the prior year quarter at roughly $17 per ton.
Speaker Change: Overall weighted average stumpage prices in the third quarter decreased 3% versus the prior year quarter to roughly $21 per ton.
Speaker Change: Overall, weighted average stumpage prices in the third quarter decreased three percent versus the prior quarter to roughly $21 per ton.
Speaker Change: Stable end market demand and reduced residual sawmill chip supply availability.
Speaker Change: Stable in-market demand and reduced residual sawmill chip supply availability translated into improved pulpwood pricing across most of our markets in the U.S. South.
Speaker Change: <unk> and to improve pulpwood pricing across most of our markets and yourself.
Speaker Change: 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.
Speaker Change: Market pulp prices have improved over the past year and container board operating rates have rebounded following the inventory de-stocking cycle that weighed heavily on demand in 2023.
Speaker Change: Yeah.
Speaker Change: Turning to grain markets log demand was soft throughout the third quarter due to continued weakness in southern yellow pine lumber demand incur.
Speaker Change: Turning to grade markets, log demand was soft throughout the third quarter due to continued weakness in the Southern Yellow Pine lumber demand.
Speaker Change: 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 no curtailments and reduced production levels.
Speaker Change: Encouragingly, there has been a significant rebound in sudden-yield pine lumber prices recently, which are now up 18% from September lows when lumber producers responded to weak market conditions with milk curtailments and reduced production levels.
Speaker Change: That said the overall demand picture for lumber remains challenged by continued softness in housing and repair and remodel markets.
Speaker Change: That said, the overall demand picture for lumber remains challenged by continued softness in housing and repair and remodel markets.
Speaker Change: As it relates to the Hurricanes impacted the yourself during September and October the direct impact to our portfolio was minor.
Speaker Change: As it relates to the hurricanes that impacted the U.S. South during September and October, the direct impact to our portfolio was minor.
Speaker Change: We currently estimate that roughly 4000 acres of our timberlands across Florida, and Georgia suffered some degree of damage as a result of hurricane Helene.
Speaker Change: We currently estimate that roughly 4,000 acres of our timberlands across Florida and Georgia suffered some degree of damage as a result of Hurricane Helene.
Speaker Change: We have started to salvage operations on the more severely impacted tracks some of which were in the process of being thinned and will now be clear cut.
Speaker Change: We have started salvage operations on the more severely impacted tracks, some of which were in the process of being thinned and will now be clear-cut.
Speaker Change: We expect salvage operations to be largely completed by the end of Q4.
Speaker Change: We expect salvage operations to be largely completed by the end of Q4.
Speaker Change: With respect to Hurricane Milton There was no notable damage to our timberlands, but the storm did contribute to already what operating conditions across some of our Florida ownership.
Speaker Change: With respect to Hurricane Milton, there was no notable damage to our Timberlands, but the storm did contribute to already wet operating conditions across some of our Florida ownership.
Speaker Change: In the short term there was some minimal impacts to harvest activity and production at our customers' mills due to the wet weather events.
Speaker Change: In the short term, there were some minimal impacts to harvest activity and production at our customers' mills due to the wet weather events.
Speaker Change: But operations normalize fairly quickly.
Speaker Change: However, we expect salvage operations a winter on timber throughout parts of Georgia, and Florida will contribute to elevated supply in these areas for the next couple of quarters.
But operations normalized fairly quickly.
Speaker Change: However, we expect that salvage operations of wind-thrown timber throughout parts of Georgia and Florida will contribute to elevated supply in these areas over the next couple quarters.
Speaker Change: Yeah.
Speaker Change: Moving to our Pacific Northwest timber segment on page 10 adjusted.
Speaker Change: Adjusted EBITDA of $9 million was $1 million above the prior year quarter. The year over year increase was primarily driven by higher harvest volumes as lower net stumpage realizations, largely offset by lower costs.
Moving to our Pacific Northwest timber segment on page 10.
Speaker Change: Adjusted EBITDA of $9 million was $1 million above the prior year quarter. The year-over-year increase was primarily driven by higher harvest volumes, as lower net stumpage realizations were largely offset by lower costs.
Speaker Change: Volumes increased 10% in the third quarter as compared to prior year period.
Speaker Change: Volumes increased 10% in the third quarter as compared to prior year period.
Speaker Change: At $95 per ton average delivered domestic solid pricing in the third quarter decreased 12% in the prior year period due.
Speaker Change: At $95 per ton, average delivered domestic solid pricing in the third quarter decreased 12% in the prior year period due to a combination of weaker demand from domestic lumber mills and reduced export market tension.
Speaker Change: Due to a combination of weaker demand from domestic lumber mills and reduced export market tension.
Speaker Change: As well as a lower proportion of Douglas fir volumes.
Speaker Change: Meanwhile, at $30 per ton pulpwood pricing has remained fairly stable thus far in 2024, but was down 9% versus the prior year quarter.
as well as a lower proportion of Douglas fir volumes.
Speaker Change: Meanwhile, at $30 per ton, pulpwood pricing has remained fairly stable thus far in 2024, but was down 9% versus the prior year quarter.
Speaker Change: The Pacific Northwest log market continued to face headwinds during the third quarter for both challenging domestic lumber markets and reduced demand for log exports. However, we are optimistic that as lumber prices continue to recover from the lows reached earlier this year should translate to higher log prices as we move into 2025.
Speaker Change: The Pacific Northwest log market continued to face headwinds during the third quarter from both challenging domestic lumber markets and reduced demand for log exports.
Speaker Change: However, we are optimistic that as lumber prices continue to recover from the lows reached earlier this year, this should translate to higher log prices as we move into 2025.
Speaker Change: Yes.
Speaker Change: Moving to New Zealand.
Speaker Change: Page 11 shows results and key operating metrics for our New Zealand timber segment.
http://www.youtube.com
Moving to New Zealand.
Speaker Change: Page 11 shows results and key operating metrics for our New Zealand timber segment.
Speaker Change: Adjusted EBITDA in the third quarter of $15 million was $9 million below the prior year quarter.
Speaker Change: Adjusted EBITDA in the third quarter of $15 million was $9 million below the prior year quarter.
Speaker Change: The decrease in adjusted EBITDA compared to the prior year period was primarily driven by lower carbon credit sales and lower net stumpage realizations.
Speaker Change: The decrease in adjusted EBITDA compared to the prior year period was primarily driven by lower carbon credit sales and lower net stumpage realizations.
Speaker Change: Average delivered export sawtimber prices of $104 per ton increased 10% compared to the prior year quarter.
Speaker Change: Average delivered export saw timber prices of $104 per ton increased 10% compared to the prior quarter.
Speaker Change: But these pricing gains were more than offset by higher pork and freight costs.
Speaker Change: But these pricing gains were more than offset by higher pork and freight costs.
Speaker Change: In October offtake from Chinese ports was approximately 70000 cubic meters per day.
Speaker Change: In October, offtake from Chinese ports was approximately 70,000 cubic meters per day.
Speaker Change: Although up slightly from prior year levels, the demand environment remains challenged.
Speaker Change: Although up slightly from prior levels, the demand environment remains challenged.
Speaker Change: Inventory levels have generally adjusted to the weaker demand environment due to ongoing softness in chinas property sector.
Speaker Change: Inventory levels have generally adjusted to the weaker demand environment due to ongoing softness in China's property sector.
Speaker Change: As of early November softwood log inventories at Chinese ports stood at approximately 2.7 million cubic meters comparable to where they were a year ago.
Speaker Change: As of early November, softwood log inventories at Chinese ports stood at approximately 2.7 million cubic meters, comparable to where they were a year ago.
Speaker Change: Shifting to the New Zealand domestic market.
Speaker Change: Third quarter average delivered solid prices increased 2% from the prior year period.
Shifting to the New Zealand domestic market.
Speaker Change: Third quarter average delivered saw log prices increased 2% from the prior year period.
Speaker Change: While economic headwinds in New Zealand persist, we are encouraged by signs of property market stabilization and increased consumer confidence as interest rates have eased.
Speaker Change: While economic headwinds in New Zealand persist, we are encouraged by signs of property market stabilization and increased consumer confidence as interest rates have eased.
Speaker Change: Third quarter non timber income in New Zealand of $9 million decreased $6 million relative to the prior year period.
Speaker Change: Third quarter non-timber income in New Zealand of $9 million decreased $6 million relative to the prior year period.
Speaker Change: The year over year decrease reflects lower carbon credit sales in the current year period.
Speaker Change: The year-over-year decrease reflects lower carbon credit sales in the current year period as sales in the third quarter of 2023 were elevated because we had deferred sales from earlier in the year.
Speaker Change: Sales in the third quarter of 2023 were elevated because we had deferred sales from earlier in the year.
Speaker Change: We anticipate that we will remain active and then as your own car market over the remainder of 'twenty 'twenty four as pricing has firmed. Following the announcement of a reduction in the amount of auction credits available in 2025.
Speaker Change: We anticipate that we will remain active in the New Zealand car market over the remainder of 2024 as pricing is firmed following the announcement of a reduction in the amount of auction credits available in 2025.
Speaker Change: Lastly, in our timber and our trading segment, we registered a breakeven result in the third quarter.
Speaker Change: Lastly, in our trading segment, we registered a break-even result in the third 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.
Speaker Change: As a reminder, our trading activities typically drink low margins now apparently designed to provide additional economies of scale to our fee timber export business.
Speaker Change: I'll now turn it back over to April to cover our real estate results.
I'll now turn it back over to April to
April Tice: Thanks, Doug.
April Tice: Detailed on page 12, the contribution from our real estate segment during the third quarter with slightly higher as compared to the prior year period.
Thanks Doug.
April Tice: 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.
April Tice: Real estate revenue totaled $30 million and roughly 2900 acres sold at an average price of $8800 per acre. This strong average price per acre reflects the higher proportion of improved development sales closed during the period.
Speaker Change: Real estate revenue totaled $30 million on roughly 2,900 acres sold at an average price of $8,800 per acre. This strong average price per acre reflects the higher proportion of improved development sales closed during the period.
Speaker Change: Real estate segment adjusted EBITDA in the third quarter with $20 million.
Speaker Change: Real estate segment adjusted EBITDA in the third quarter with $20 million.
Speaker Change: Drilling down sales in the improved development category totaled $12 million.
Speaker Change: Drilling Down, Sales in the Improved Development Category totaled $12 million.
Speaker Change: And our Wildlife development project North of Jacksonville, Florida, We completed two residential pod sales totaling 104 acres for $7.7 million or <unk> $74000 per acre.
Speaker Change: In our wildlife development project north of Jacksonville, Florida, we completed two residential pod sales totaling 104 acres for $7.7 million, or $74,000 per acre.
Speaker Change: We also had two small nonresidential sales and wildlife totaling $200000.
Speaker Change: We also had two small non-residential sales in wildlife totaling $200,000.
Speaker Change: And our Heartland development project South of Savannah, Georgia sales consisted of $8 eight acres for $3 $6 million or $410000 per acre.
Speaker Change: In our Heartwood development project south of Savannah, Georgia, sales consisted of 8.8 acres for $3.6 million, or $410,000 per acre.
Speaker Change: We also saw it in industrial use parcel in Kitsap County, Washington for hot $500000 or $266000 per acre.
Speaker Change: We also sold an industrial-use parcel in Kitsap County, Washington for $500,000 or $266,000 per acre.
Speaker Change: There continues to be healthy interest from homebuilders and both our wildlife and heartwood projects at the pace of sales at both remains on a favorable trajectory.
Speaker Change: There continues to be healthy interest from homebuilders 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 2 of the project to close next year.
Speaker Change: And wildlife we remain encouraged by the pipeline of future opportunities and expect the first sales within phase two of the project close next year.
Speaker Change: And heartwood, the Hyundai <unk> manufacturing facility recently opened and we continue to see a long runway of future demand in response to continued economic growth in the area.
Speaker Change: In Hartwood, the Hyundai Mobus manufacturing facility recently opened, and we continue to see a long runway of future demand in response to continued economic growth in the area.
Speaker Change: Despite the continuing 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 and the relatively higher interest rate environment.
Speaker Change: Despite the continuing 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.
Speaker Change: Turning to the rural category.
Speaker Change: Third quarter sales totaled $14 million, consisting of approximately 2800 acres at an average price of roughly $4900 per acre.
Speaker Change: Turning to the rural category, third quarter sales totaled $14 million, consisting of approximately 2,800 acres at an average price of roughly $4,900 per acre.
Speaker Change: The overall demand and pricing for rural properties remains favorable and we have been encouraged to see increased buyer interest in certain markets. In recent months. In addition, we continue to see strong interest from a conservation focus buyers, which contributed to sales activity during the quarter and remains in.
Speaker Change: The overall demand and pricing for rural properties remains favorable, and we have been encouraged to see increased buyer interest in certain markets in recent months.
Speaker Change: In addition, we continue to see strong interest from conservation-focused buyers, which contributed to sales activity during the quarter and remains an important component of our sales pipeline as we approach 2025.
Speaker Change: Important component of our sales pipeline as we approach 2025.
Speaker Change: That said continued economic uncertainty coupled with relatively elevated interest rates continue to impact the willingness of some buyers Chitra in fact.
Speaker Change: That said, continued economic uncertainty coupled with relatively elevated interest rates continue to impact the willingness of some buyers to transact.
Speaker Change: Overall, we are pleased with the momentum in our real estate business as we head into year end and are optimistic that lower interest rates in 2025 will spur further demand for both development and rural properties.
Speaker Change: Overall, we are pleased with the momentum in our real estate business as we head into year-end and are optimistic that lower interest rates in 2025 will spur further demand for both development and real properties.
Speaker Change: Now moving onto our outlook for the balance of 'twenty 'twenty four.
Speaker Change: Now moving on to our outlook for the balance of 2024. Based on our year-to-date results, recent disposition activity, and our expectations for the fourth quarter, we now expect that full-year adjusted EBITDA will be in the range of 275 to 290 million dollars.
Speaker Change: On our year to date results recent disposition activity and our expectations for the fourth quarter. We now expect that full year adjusted EBITDA will be in the range of $275 million to $290 million.
Speaker Change: We further expect full year net income attributable to rayonier, a $343 million to $359 million.
Speaker Change: We further expect full-year net income attributable to Rainier of $343 to $359 million.
Speaker Change: Earnings per share of $2.30 to $2 40 sets and pro forma earnings per share of 36 to 40 cents.
Speaker Change: Earnings per share of $2.30 to $2.40 and pro forma earnings per share of $0.36 to $0.40.
Speaker Change: Our revised guidance reflects the reduced volume from the disposition properties as harvest operations generally ceased around mid year and preparation for the sales process.
Speaker Change: A revised guidance reflects the reduced volume from the disposition properties as harvest operations generally ceased around mid-year in preparation for the sales process.
Speaker Change: As a reminder, our prior financial guidance excluded the potential impact of 'twenty 'twenty four asset sales as part of the deposition plan.
Speaker Change: As a reminder, our prior financial guidance excluded the potential impact of 2024 asset sales as part of the disposition plan.
Speaker Change: With respect your individual segments.
Speaker Change: In our southern timber segment, we expect full year harvest volumes of approximately 7 million tons, which is slightly below the lower end of our prior guidance range due to the Oklahoma disposition as well as weather related impacts in certain markets.
with respect to our individual segments.
Speaker Change: In our southern timber segment, we expect full-year harvest volumes of approximately 7 million tons, which is slightly below the lower end of our prior guidance range due to the Oklahoma disposition as well as weather-related impacts in certain markets.
Speaker Change: Further we anticipate that pine stumpage realizations will be slightly lower in the fourth quarter as compared to the third quarter due to less favorable geographic mix lower saw log prices and the impact of salvage volume in Florida and Georgia.
Speaker Change: Further, we anticipate that pine stumpage realizations will be slightly lower in the fourth quarter as compared to the third quarter due to less favorable geographic mix, lower saw log prices, and the impact of salvage volume in Florida and Georgia.
Speaker Change: Lastly, we remained encouraged by the momentum in our land based solutions business and we continue to expect higher non timber income for full year 'twenty 'twenty four relative to the full year 2023.
Speaker Change: Lastly, we remained encouraged by the momentum in our land-based solutions business, and we continue to expect higher non-timber income for full year 2024 relative to full year 2023.
Speaker Change: Overall, we anticipate full year southern timber adjusted EBITDA slightly below the lower end of our prior guidance range.
Speaker Change: Overall, we anticipate full-year southern timber adjusted EBITDA slightly below the lower end of our prior guidance range.
Speaker Change: In our Pacific Northwest timber segment, we now expect full year harvest volumes of approximately 1.2 million tonnes, which is below our prior guidance due to the disposition of approximately 109000 acres in Washington.
Speaker Change: In our Pacific Northwest timber segment, we now expect full-year harvest volumes of approximately 1.2 million tons, which is below our prior guidance due to the disposition of approximately 109,000 acres in Washington.
Speaker Change: We further expect modestly lower sawtimber price realizations as compared to the third quarter.
Speaker Change: We further expect modestly lower saw timber price realizations as compared to the third quarter.
Speaker Change: Overall, we expect full year Pacific northwest timber adjusted EBITDA to be slightly below the lower end of our prior guidance range.
Speaker Change: Overall, we expect full-year Pacific Northwest timber-adjusted EBITDA to be slightly below the lower end of our prior guidance range.
Speaker Change: And our New Zealand timber segment, we are on track to achieve our full year volume guidance of $2 four to $2 5 million tons. However, we expect full year, New Zealand timber adjusted EBITDA to fall modestly below our prior guidance range due to lower carbon credit sales softer export.
Speaker Change: In our New Zealand Timber Segment, we are on track to achieve our full year volume guidance of 2.4 to 2.5 million tons.
Speaker Change: However, we expect full year New Zealand Timber Adjusted EBITDA to fall modestly below our prior guidance range due to lower carbon credit sales, softer export markets, and elevated shipping costs.
Speaker Change: Our cats and elevated shipping costs.
Speaker Change: And our real estate segment, we continue to expect strong fourth quarter closing activity and full year adjusted EBITDA within our prior guidance range contingent on the timing of several large transactions.
Speaker Change: In our real estate segment, we continue to expect strong fourth quarter closing activity and full year adjusted EBITDA within our prior guidance range, contingent on the timing of several large transactions. I'll now turn the call back to Mark for closing comments.
Speaker Change: Now I'll turn the call back to Mark for closing comments.
Mark Mchugh: 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 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.
Speaker Change: 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 communicated over the past year. These initiatives include executing on our asset disposition and capital structure realignment plan, advancing our land based solutions business.
Speaker Change: Added 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.
Speaker Change: 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.
Speaker Change: I'm very proud of how our team has risen to this challenge.
Speaker Change: While improved supply demand dynamics for pulpwood in the U S. South had been a relative bright spot in 2024. This has been more than offset by continued weakness in soft timber markets across our footprint, although macroeconomic headwinds continue to adversely impact and market demand I'm pleased by how our team has navigated through these challenges to achieve optimal results.
Speaker Change: I'm also optimistic that an under supply U S housing market, coupled with further rate cuts should translate to a relatively improved operating environment as we move into 2025 on.
Speaker Change: 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 bolstered the dip.
Speaker Change: And we're seeing across our real estate categories means.
Speaker Change: Meanwhile, consistent with the ambitions, we detailed at our Investor Day earlier. This year, we've continued to make significant strides in advancing our land based solutions business. Specifically, we now have approximately 76000 acres under lease for carbon capture and storage and expect to have over 40000 acres under option for solar development by year end.
Speaker Change: Our team continues to build a strong pipeline of additional opportunities with high quality Counterparties as we diligently work towards the 2027 and 2030 EBITDA targets that we communicated in February and.
Speaker Change: 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 rich.
Speaker Change: <unk> capital to shareholders and improve our long term growth profile, we further been able to execute the plan in a manner that is accretive to both see a D and NAV per share in Sun notwithstanding the transitory market headwinds our team continues to navigate I remain quite optimistic that rainier is well positioned to enhance shareholder value.
Speaker Change: <unk> and execute on future growth opportunities as we move forward.
Speaker Change: That concludes our prepared remarks, and I'll now turn the call back to the operator for questions.
Speaker Change: Thank you at this time, if you would like to ask a question. Please ensure that your phone is on muted press star one and record your name clearly when prompted if you would need to withdraw your request you May press star two again to ask a question that is star one one.
Speaker Change: One moment for our first question.
Speaker Change: Our first question comes from Matthew Mckellar with RBC capital markets. You May go ahead.
Speaker Change: Hi, good morning, Thanks for all the detail and congratulations on the transactions.
Speaker Change: Could you maybe first provide a bit of color on where your processes around evaluating strategic alternatives for your stake in the New Zealand business.
Speaker Change: And they'd be more holistically.
Speaker Change: How are you evaluating options for further dispositions to bring you towards the $1 billion target.
Speaker Change: Yeah.
Speaker Change: Yeah.
Mark Mchugh: Yeah, Hi, Matthew this is mark I'll take that one first of all as it relates to the status of the New Zealand evaluation.
Mark Mchugh: 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 I recall that we previously indicated that the New Zealand evaluation process what would.
Mark Mchugh: 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.
Mark Mchugh: It relates to kind of a broader plan in any kind of future dispositions. We may evaluate you know yeah as discussed on prior calls as a general matter, we don't comment on M&A until there's a closed transaction or some type of a definitive contract you know, but we are who we recognize that there is an elevated level of interest and.
Mark Mchugh: Asian around our disposition plans given the $1 billion target that we laid out last year. So you know we have been very transparent as it relates to what options had 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 now we're not planning to provide any further.
Mark Mchugh: Tails around other alternatives that might be under consideration at this time you know 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.
Speaker Change: Great Thanks for that color.
Speaker Change: Maybe next could you comments on your expectations for how the log market in China with all of this into 2025.
Speaker Change: On the supply side here, you see a reduction in supply from Europe as a beetle affected harvest wanes and then on the demand side.
Mark Mchugh: What do you expect in terms of stimulus measures in China, and how those flow through to demand. Thanks.
Mark Mchugh: Sure. This is Doug I'll take that one excuse me yeah. As you mentioned on the supply side, we have seen a reduction of supply from Europe in particular and in New Zealand has taken up a much greater share of the incoming supply into into China.
Mark Mchugh: Right now as it was mentioned for kind of the the demand is.
Mark Mchugh: Relatively stable at this point in time, but the supply has come down. So we're seeing some positive in price price movement, there, but this past quarter. We did see increased shipping rates, so that that worked against us. This.
Mark Mchugh: The stimulus that you talked about you know the government has pumps more stimulus N and has done what they've created a waitlist for for housing and so that's given us. Some short term you know opportunistic opportunities for people and we're hoping that goes forward, but it's been really I'm unclear as to how long that will go forward. So right now where we're working on and the assumptions we've had with improvements.
Mark Mchugh: But it's kind of steady as she goes but basically the New Zealand <unk>.
Mark Mchugh: Volume has taken up a majority of that volume is coming in now so that's been positive for pricing for our New Zealand operations.
Speaker Change: Great. Thanks, very much for the color I'll turn it back.
Speaker Change: Thank you. Our next question is from Anthony Pettinari with Citi. You May go ahead.