Q4 2024 Rayonier Inc Earnings Call
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Speaker Change: Welcome and thank you for joining linear sports quarter in full year 'twenty 'twenty four conference call. At this time all participants are in a listen only mode. During the question answer session. Please press star one on your telephone Keypad today's conference is being right.
Speaker Change: Corded, 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.
Speaker Change: Thank you and good morning, welcome to Rangers Investor Teleconference, covering fourth quarter earnings our earnings statements and financial supplement released yesterday afternoon and are available on our website at <unk> Dot 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.
Speaker Change: <unk> 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're also referenced on page two of our financial supplement throughout these presentations. We will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measures in our earnings release and supplemental materials.
Speaker Change: With that let's start our teleconference with opening comments from Mark Mchugh, our president and CEO.
Speaker Change: <unk>.
Speaker Change: Thanks, Colin Good morning, everyone first I'll make some high level comments before turning it over to April ties Senior Vice President and Chief Financial Officer to review our consolidated financial results, then Doug long Executive Vice President and Chief Resource Officer will comment on our U S and New Zealand timber results and following the review of our timber.
Speaker Change: Segments April will discuss our real estate results and our outlook for 2025.
Speaker Change: We were pleased to finish 'twenty 'twenty, four with better than expected fourth quarter financial results, which allowed us to deliver all your adjusted EBITDA of $299 million roughly 3% above the high end of our prior guidance range and slightly above the prior year full year pro forma net income was $70 million or <unk> 47 per share.
Speaker Change: These full year results demonstrate our resilience and nimble execution amid persistent market headwinds in.
Speaker Change: In the fourth quarter, we generated adjusted EBITDA of $115 million and pro forma net income of $41 million or 27 cents per share the 23% increase in adjusted EBITDA versus the prior year quarter was driven primarily by significantly improved results in our real estate and New Zealand timber segment.
Speaker Change: Our real estate segment delivered adjusted EBITDA of $63 million up $10 million from the prior year period. The increased contribution from our real estate business was bolstered by an extraordinarily strong weighted average price per acre of roughly $7200, excluding improved development and large dispositions demonstrating our team's ability to opt in.
Speaker Change: The value of our portfolio by generating significant HBU premiums above timberland value.
Speaker Change: Shifting to our timber segment operating results, our southern timber segment generated fourth quarter, adjusted EBITDA of $35 million up modestly from the prior year period, a significantly higher non timber income was largely offset by a 3% decline in harvest volumes and 15% lower weighted average net stumpage realizations the decline in <unk>.
Speaker Change: <unk> prices was driven in large part by the impact of salvage volume on the market throughout the quarter following hurricane Helene.
Speaker Change: Yeah.
Speaker Change: Our Pacific Northwest timber segment fourth quarter, adjusted EBITDA of $6 million was flat versus the prior year quarter as a 3% decrease in harvest volumes and a 9% decrease in average delivered log prices were largely offset by lower cost and higher non timber income.
Speaker Change: Turning to our New Zealand timber segment fourth quarter, adjusted EBITDA of $20 million increased $8 million versus the prior year quarter. The increase in adjusted EBITDA was driven by favorable foreign exchange impacts higher volume higher net stumpage realizations and lower cost, partially offset by lower carbon credit sales and.
Speaker Change: In addition to the strong finish to the year operationally, we successfully closed on $495 million, a previously announced large dispositions totaling approximately 200000 acres during the fourth quarter.
Speaker Change: As discussed on our November earnings calls these transactions have allowed us to reduce leverage and return capital to shareholders. While also generating accretion to see 80 per share.
Speaker Change: To date, we've now closed on roughly $737 million of dispositions approximately 74% of our original $1 billion target, which has allowed us to reduce net leverage to below three times and returned over $110 million of capital to shareholders in the form of cash special dividends and share repurchases, including $15 million.
Of share repurchases in the fourth quarter.
Speaker Change: Turning to our outlook for 2025 as April will discuss in greater detail later in the call. We're providing full year adjusted EBITDA guidance of $270 million to $300 million the slight decline at the midpoint relative to 2024 adjusted EBITDA reflects the dispositions completed in the fourth quarter as well as modestly lower expectations are real estate sector.
Speaker Change: Following the extraordinarily strong results realized last year.
Speaker Change: Overall as we move into the new year, we are cautiously optimistic that timber prices will gradually improve along with end market demand.
Speaker Change: In addition, we expect another strong contribution from our real estate platform. This year given the continued favorable demand trends for our rural HBU and development properties. Lastly, we remain encouraged by the pipeline of opportunities to continue to build on the land based solutions front, especially as it relates to solar and carbon capture and storage, which we expect will drive meaning.
Speaker Change: For cash flow growth in the coming years.
Speaker Change: With that let me turn it over to April for more details on our fourth quarter financial results.
April Ties: Thanks Mark.
April Ties: Moving to the financial highlights on page five of the supplement for.
April Ties: For the fourth quarter sales totaled $726 million, while operating income was $346 million and net.
April Ties: Net income attributable to rainier with $327 million or $2.15 per share on.
April Ties: On a pro forma basis, net income was $41 million or 27 cents per share pro forma items in the fourth quarter included $291 million of income from large dispositions.
April Ties: 1.6 million dollar gain from a terminated cash flow hedge $1.6 million of costs associated with legal settlements and one $1 million of restructuring charges.
April Ties: Our adjusted EBITDA was $115 million in the fourth quarter up from $94 million in the prior year period.
April Ties: Moving onto capital resources and liquidity at the bottom of page five our cash available for distribution or C. A D for the year was $184 million versus $164 million in the prior year period.
April Ties: The increase was driven by higher adjusted EBITDA, lower net cash interest paid and lower capital expenditures.
April Ties: Partially offset by slightly higher cash taxes paid.
A reconciliation of C. A D to cash provided by operating activities and other GAAP measures is provided on page eight of the financial supplement.
April Ties: As a result of the taxable gains arising from the timberland dispositions completed during the fourth quarter, we declared a $1.80 per share special dividend in early December which was paid on January 30th and a combination of cash and shares in aggregate the special dividend.
April Ties: And resulted in $68 million of cash and $7 7 million common shares in a P units being distributed following year end.
April Ties: For modeling purposes, we now have approximately 156 1 million shares and $2 1 million LP units outstanding following the special dividend.
April Ties: By issuing shares to meet part of our REIT taxable income distribution requirement, we have retained significant flexibility to further reduce debt execute on share repurchases are fun to other future capital allocation priorities.
April Ties: To this end we continue to believe that share repurchases represent a compelling use of capital at the current stock price during.
April Ties: During the fourth quarter, we repurchased 488000 shares at an average price of roughly $30 per share.
April Ties: Notably our fourth quarter share repurchases occurred prior to the ex dividend date with respect to the dollar and 80 cents per share special dividend and.
April Ties: In December our board approved a new $300 million share repurchase program, which affords us significant capacity to act opportunistically as it relates to share repurchases moving forward.
April Ties: Proceeds from our disposition plan has also allowed us to meaningfully reduce leverage after paying off a total of $190 million of debt during the quarter, we closed the fourth quarter with $323 million of cash and roughly $1.1 billion of debt.
April Ties: Our net debt to trailing 12 months adjusted EBITDA was approximately 2.6 times at quarter end, our two nine times pro forma for the cash component of the special dividend that we paid last week.
April Ties: At quarter end, our weighted average cost of debt was approximately two 7% and the weighted average maturity on our debt portfolio was approximately four years with no significant debt maturities until 'twenty 'twenty six.
April Ties: Our net debt to enterprise value based on our closing stock price at the end of the quarter was 17%.
April Ties: I will also note that we declared our first quarter dividend yesterday after the market closed the four 4% adjustment in the quarter leaf dividend to <unk> 27, and a quarter cents per share from 28, and a half cent per share reflects a five 1% increase in shares and units outstanding.
April Ties: As a result of the recent special dividend and consent and is consistent with our previous communications regarding its anticipated impact on our ordinarily.
April Ties: Quarterly dividend.
April Ties: I'll turn now the call over to Doug to provide a more detailed review of our timber results.
Doug Long: Thanks April let's.
Doug Long: Let's start on page nine with our southern timber segment adjusted EBITDA in the fourth quarter of $35 million was above the prior year quarter as higher non timber revenue and lower costs more than offset lower harvest volumes and net stumpage realizations.
Doug Long: Harvest volumes fell 3% versus the prior year quarter due to the disposition of our Oklahoma acreage as well as production constraints, resulting from some contractors temporarily shifting to salvage operations on properties impacted by Hurricane Helene.
Doug Long: Meanwhile, non timber revenue increased $7 million versus prior year period driven.
Doug Long: Driven by growth in our land based solutions business and higher pipeline easement revenues.
Doug Long: Average saw log stumpage pricing was $25 per ton, a 14% decrease compared to the prior year period due to a less favorable geographic mix and the availability of low priced salvage timber in the Atlantic region.
Doug Long: Pulp wood net stumpage pricing was 9% lower than the prior year quarter at roughly $16 per ton also due to geographic mix and the buildup of salvage volume.
Doug Long: Overall weighted average so much prices in the fourth quarter decreased 15% versus the prior year quarter to roughly $19 per ton.
Doug Long: And great markets Green log demand was relatively soft in the Atlantic region during the quarter with mills shifting their procurement to establish logs.
Doug Long: And our golf markets dry weather conditions led to ample supply.
Doug Long: Also weighed on pricing.
Doug Long: Encouragingly southern yellow pine lumber prices ended the fourth quarter on an upward trend and currently sit near their highest levels in three quarters.
Doug Long: Overall, we believe the outlook for grain markets will improve and southern yellow pine lumber continues to gain share in the overall north American market and the availability of salvage volume declines and the Atlantic region.
Doug Long: Shifting to pulpwood.
Doug Long: Well, we have been encouraged by sustained improvements in end market demand for our pulp customers.
Doug Long: Ample supply from Hurricane salvage operations.
Doug Long: The Atlantic region, and dry ground conditions in the Gulf region.
Doug Long: Elevated mill inventories and quota implementations during the quarter, which weighed on pulpwood prices.
Doug Long: As it relates to salvage operations.
Doug Long: Impact to our portfolio in the most recent hurricane season was relatively minor in our salvage operations are now largely complete.
Doug Long: However, the availability of salvage volume and our Atlantic markets has certainly been a headwind over the last several months, we expect that this dynamic will likely persist through the first half of 2025, which may continue to weigh on pricing.
Doug Long: Moving to our Pacific Northwest timber segment on page 10.
Doug Long: Fourth quarter adjusted EBITDA of $6 million was in line with the prior year quarter as lower net stumpage realizations and harvest volumes were largely offset by lower costs and higher non timber income.
Doug Long: Total harvest volumes decreased 3% in the fourth quarter as compared to the prior year period, reflecting the impact of our recent dispositions in Washington.
Doug Long: At $89 per ton average delivered domestic solid pricing in the fourth quarter decreased 5% from the prior year period due.
Doug Long: Due to a combination of weaker demand from lumber mills, and an unfavorable product mix as a higher proportion of chip and salt was harvested in the current year period.
Doug Long: Meanwhile, at $30 per ton pulpwood pricing was up 4% versus the prior year quarter.
Doug Long: While demand from both domestic lumber mills and export markets remain soft and civic northwest during the fourth quarter as we look toward 2025, there are indications that market conditions are gradually improving.
Doug Long: So this in lumber prices have begun to show positive momentum with producers in the region well position to benefit from potential further reductions in western SPF supply, okay and producers and.
Doug Long: In addition, we are cautiously optimistic attention from the export market will gradually reemerge response to signs of stabilization in the Chinese property market and anticipate a recovery in demand for Douglas fir logs in Japan.
Doug Long: Moving to New Zealand page.
Doug Long: Page 11 shows our results and key operating metrics for the segment.
Doug Long: Adjusted EBITDA in the fourth quarter of $20 million to $20 million was $8 million above the prior year quarter.
Doug Long: The increase in adjusted EBITDA compared to the prior year period was driven by favorable foreign exchange impacts higher volumes higher net stumpage realizations and lower costs, partially offset by lower carbon credit income.
Doug Long: Average delivered export sawtimber prices of $108 per ton increased 7% compared to the prior year quarter.
Doug Long: However, these pricing gains were largely offset by higher pork and freight costs with net stumpage realizations, increasing only 1% versus the prior year quarter.
Doug Long: In December offtake from Chinese ports was approximately 57000 cubic meters per day.
Doug Long: So up slightly from prior year levels log demand remains relatively soft.
Doug Long: Inventory levels have generally adjusted to the weaker demand environment as China's property sector remained sluggish.
Doug Long: At the end of December softwood log inventories at Chinese ports stood at approximately $2 6 million cubic meters slightly higher than they were a year ago.
Doug Long: Shifting to the New Zealand domestic market fourth quarter average delivered solid prices increased 6% from the prior year period, while economic headwinds in New Zealand persist. We are encouraged by signs of property market stabilization and increased consumer confidence as the reserve Bank of New Zealand has lowered its official cash rate.
Doug Long: 125 basis points since August of last year.
Doug Long: The lower interest rate environment is anticipated to contribute to improved demand in the domestic market in 2025.
Doug Long: Fourth quarter non timber income in New Zealand of $6 million decreased $2 million relative to the prior year period.
Doug Long: The year over year decrease primarily reflects a lower volume of carbon credit sold as well as a modestly lower pricing as compared to the prior year period.
Doug Long: Positively carbon prices and New Zealand have generally stabilized falling policy decisions announced in August.
Doug Long: Lastly, in our trading statement, we registered a slight operating loss in the fourth quarter.
Doug Long: 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.
April Ties: I'll now turn it back over to April to cover our real estate results.
Doug Long: Thanks, Doug.
April Ties: As detailed on page 12, the contribution from our real estate segment during the fourth quarter was considerably above the prior year period.
April Ties: Real estate revenue totaled $567 million on roughly 207300 acres sold which included roughly 200000 acres of large dispositions completed during the quarter.
April Ties: Excluding these transactions fourth quarter sales totaled $72 million on roughly 7800 acres sold at an average price of $8900 per acre.
April Ties: Strong average price per acre reflects both a higher proportion of development sales closed during the period as well as the significant premiums about timberland value that our team achieved on rural land sales.
April Ties: Real estate segment adjusted EBITDA in the fourth quarter with $63 million.
April Ties: The strongest quarterly contribution in over three years.
April Ties: Drilling down sales in the improved development category totaled $14 million with activity, primarily focused in our hardware development project South of Savannah, Georgia.
April Ties: The largest transaction with a 37 acre built for rent residential parcel that sold for $9 $1 million or $244000 per acre.
April Ties: This project will bring more homes to the village center and will enhance hardwoods diverse mix of industrial commercial and residential uses. In addition, we also closed a 37 acre residential pod for $2 million or $54000 per acre as well as a seven acre industrial.
April Ties: Powerful for $1.7 million or $240000 per acre.
April Ties: In our Wildlife development project, we closed the sale of a 0.9 acre commercial parcel, but the depth element of a credit union for roughly $900000.
April Ties: Entering 2025, there continues to be healthy interest from homebuilders and both our wildlife and heartwood projects S.
April Ties: The pace of residential sales continues to trend favorably.
April Ties: While the timeline for some commercial deals has extended as dealt with developers to contend with the current interest rate environment. We continue to be pleased with the overall momentum at both projects.
April Ties: And our unimproved development category sales totaled $12 $4 million as we sold a 1100 acre property directly east of exit one of Interstate 95, and St Marys, Georgia.
April Ties: The buyer plans to construct a highly monetized master plan community, including our golf course totaling about 1300 residential units.
April Ties: Similar to many of our land sales to homebuilders, we will also benefit from true up payments based on the final selling price of the homes in the community as they are sold.
April Ties: We expect that this master planned community will catalyze demand for adjacent land holdings, including over 300 acres nearby with improved entitlements for a mix of commercial and residential uses.
April Ties: Turning to the rural category.
April Ties: Fourth quarter sales totaled $43 million, consisting of approximately 6600 acres and average price of roughly $6500 per acre.
April Ties: We had an exceptionally strong finish to the year as the conversion of our rural transaction pipeline, a seed exceeded our expectations heading into year end.
April Ties: Despite interest rates remaining relatively elevated we have been encouraged by increased buyer interest over the last several months and continue to see favorable demand and pricing for our rural properties.
April Ties: In addition, we continue to see strong interest from conservation focus buyers, which contributed meaningfully to the sales activity during the fourth quarter.
April Ties: Moving forward, we remain optimistic about the long term outlook for our real estate business and expect that historically low unemployment the housing supply shortage favorable demographic migration trends and the prospect of lower interest rates.
April Ties: Should spur further demand for both development and rural properties as we progressed through 2025.
April Ties: Now moving onto our outlook for 2025.
April Ties: Page 14 of our supplement shows our financial guidance by segment and schedule G of our earnings release provides a reconciliation of our guidance from net income attributable to Rainier to adjusted EBITDA.
April Ties: For full year 2025, we expect to achieve adjusted EBITDA of $270 million to $300 million net.
April Ties: Net income attributable to Rainier of $79 million to $100 million and earnings per share of 51 to 64 set.
April Ties: Our guidance excludes the potential impact of any additional asset sales as part of our previously announced 1 billion dollar disposition plan.
April Ties: With respect to our individual segments.
April Ties: Starting with our southern timber segment, we expect to achieve full year harvest volumes of six nine to 7.1 million tonnes.
April Ties: Modest increase versus the prior year, primarily due to the carryover of some planned 'twenty 'twenty four volume into 2025, partially offset by reduced volume from the Oklahoma disposition.
April Ties: As it relates to pricing, while we expect kind stumpage realizations to trend higher as the year progresses, we anticipate that full year realizations will be slightly lower versus the prior year.
April Ties: Due in part to the continued impact of salvage volume into the market.
April Ties: Lastly, we expect a modest decrease in non timber income for full year 2025, as compared to the prior year, which benefited from significant pipeline easement activity.
April Ties: Overall, we expect full year, adjusted EBITDA of $141 million to $149 million slightly below our full year 2024 result.
April Ties: In our Pacific Northwest timber segment, we expect to achieve full year harvest volumes of approximately 900000 tonnes.
April Ties: We anticipated decrease relative to the prior year reflects the reduction in our Pacific northwest sustainable yield, resulting from the recent dispositions in Washington.
April Ties: Further we expect that full year weighted average log prices will increase modestly versus the prior year as a result of improving demand conditions.
April Ties: Based on these factors, we expect full year, adjusted EBITDA of $21 million to $26 million comparable to the full year 'twenty 'twenty four a result.
April Ties: And our New Zealand segment.
April Ties: We expect full year harvest volumes of two five to 2.7 million tonnes.
April Ties: As it relates to pricing, we expect improving supply demand dynamics to drive modest increases in both domestic and export saw timber pricing relative to the full year pricing achieved in 'twenty 'twenty four.
April Ties: We also anticipate a modest increase in carbon credit sales in 'twenty 'twenty five as pricing has stabilized following a period of unusual market volatility.
April Ties: Overall, we expect full year, adjusted EBITDA of $54 million to $60 million up modestly versus full year 2024 result.
April Ties: Turning to our real estate segment.
April Ties: We are encouraged by the continued strong demand and value realizations for HBU properties.
April Ties: Our current pipeline suggest another solid year for both our rural land sales program as well as our improved development projects. However, similar to 2024, we anticipate very like closing activity in the first quarter with a corresponding Lee low adjusted EBITDA of less than $10 million.
April Ties: Overall, we expect full year, adjusted EBITDA of $86 million to $96 million down modestly from the exceptionally strong full year 'twenty 'twenty four result.
April Ties: Our 2025 guidance also reflects expected cost savings. Following recent actions, we took to realign our organizational structure and reduce overhead costs in light of recent disposition activity.
April Ties: Since November 2023, we have completed dispositions totaling approximately 255000 acres are Russell roughly 11% of our total U S acreage.
This led us to make difficult, but necessary adjustments to maintain an efficient overhead structure in light of the reduced scale of the company. While also reallocating resources to focus on important strategic growth initiatives.
April Ties: Overall these actions these actions translated to a roughly 10% reduction in our U S workforce and resulted in $1.1 million of restructuring charges in the fourth quarter for estimated severance related expenses.
Mark Mchugh: Now I'll turn the call back to Mark for closing comments.
Mark Mchugh: Thanks April before concluding today's call I'd like to recognize the exceptional effort displayed by our team in advancing several important strategic initiatives throughout 2024, while simultaneously navigating the difficult headwinds facing our timber businesses.
Mark Mchugh: On the land based solutions front, we were pleased to recently announce a new poor space easement agreement with an affiliate of reliant carbon capture and storage covering approximately 104000 acres in Alabama.
Mark Mchugh: More broadly our team continues to advance discussions with a number of high quality Counterparties and build a strong pipeline of future opportunities given the favorable attributes of our portfolio.
Mark Mchugh: In total as of year end, we had approximately 154000 acres under carbon capture and storage leased and approximately 39000 acres under option for solar development continues.
Mark Mchugh: Continuing to grow our land based solutions business is a key strategic priority for Rayonier and we are encouraged by the financial contributions that are beginning to materialize as we build toward the 2027 and 2030 adjusted EBITDA targets that we communicated at our Investor Day last February.
Mark Mchugh: As I discussed earlier, we also made tremendous progress on our disposition and capital structure realignment plan in 2024, we've now closed on roughly $737 million of dispositions capitalizing on the disconnect between public and private timberland values in a manner that its been accretive to both <unk> and NAV per share.
Mark Mchugh: Looking forward, we continue to advance our evaluation of strategic alternatives with respect to our joint venture interest in New Zealand as well as other potential asset sales with a view toward furbished streamlining our portfolio, improving our balance sheet positioning and capitalizing on the public private disconnect.
April Ties: Throughout 2024, our team demonstrated remarkable agility adjusting to local market dynamics severe weather events in an ever evolving macroeconomic environment. Further as April discussed we've recently taken actions to realign our organizational structure for our smaller footprint.
April Ties: While such decisions were difficult they will position us to operate more efficiently or meaning ready to advance our strategic priorities and capture emerging opportunities.
April Ties: Looking ahead, we remain optimistic that an under supplied U S housing market and an expected recovery in repair and remodel demand will translate into improving end market conditions. Further we anticipate the potential constraints on the supply of Canadian lumber into the U S market from continued production cuts higher duty rates in the prosper.
April Ties: Active new tariffs may likewise translate to improving operating conditions is more north American lumber production shifts into the U S.
April Ties: Lastly on the real estate front as I detailed earlier, we finished the year with an exceptionally strong quarter in terms of both sales volume and premiums achieved to timberland values.
April Ties: Looking ahead, we believe that more favorable financing conditions could further bolster them the demand we're seeing across our real estate categories, and we were especially encouraged by the positive momentum that continues to build across our improved development platform in.
April Ties: In sum I am proud of how our team was able to navigate challenging market conditions throughout the year to deliver strong financial results. While also maintaining a relentless focus on driving shareholder value creation.
April Ties: That concludes our prepared remarks, and I'll now turn the call back to the operator for questions.
Speaker Change: Thank you Sir at this time, if he would like to ask a question you May Press Star one to withdraw your question you May Press star two one on muscle.
Matthew Mckellar: Matthew Mckellar from RBC you May go ahead.
Speaker Change: Okay.
Speaker Change: Matthew Mckellar your line is open Sir.
Speaker Change: Thanks very much.
Speaker Change: Correct me if I heard this wrong it sounds like you're ramping up your own salvage operations do you expect other salvage volumes of the market to continue to put pressure on price through.
Speaker Change: Maybe the first half of the year.
Speaker Change: Does this imply anything about your own volumes in Marcellus through the year and maybe specifically should we also be expecting relatively stronger volumes from Randy on the shelf in the second half of the year as the salvage operations.
Speaker Change: So I'll wrap up.
Doug Long: Sure. This is Doug I'll I'll start with that so yeah Hurricane Helene, obviously was a large hurricane is a cat four come across from Florida to dig down and into Georgia, and then all we have in North Carolina. So we we really saw something that I haven't seen in my career. So it's had a significant impact and to your point, it's definitely impacted the stump.
Doug Long: That market in that in that area. So you know over 10 million acres, Unfortunately, where we're impacted in Florida, and Georgia and while we only had a couple of thousand acres and we've pretty much cleaned that up we're still seeing a lot of other people working through that backlog basically and so we do expect that that's going to create some headwinds going into the to the first half of the year you can imagine based on that scale.
Doug Long: A lot of self operations underway and most of the cruise pivoted that salvage of damaged timber from both within the past and then also neighboring wood baskets, so while the impact to us with small we're really seen this influx of unexpected volume that led to a steep drop in pricing in much of our Georgia Wood basket is tomorrow timberland owners, we're price takers in order to try to clean up there with the weather it was damaged so I'm curious.
Doug Long: It's hard for you for station costs.
Doug Long: So we we contended with that pricing dynamic for the entirety of Q4 and you know originally thought that it would be winding down sooner, but what we've seen is that there's a lot of wood on the market there from the length of that and so people continue on with their salvage operations and so we do see that.
Doug Long: Being a headwind going into at least the first half first half of 2025 and think it should wrap up sometime in that first half so to your point, where we're staging our volumes and working around that as you know what the geographic diversity. We have we are able to harvest in other areas. So we're trying not to exacerbate the problem by putting more volume in two particular areas.
Doug Long: We will continue to pretty much have a steady run rate as we go because we have the ability to flex across geographic areas. As we go forward, but we do think this is going to weigh on our our geographic pricing because we still do have volume that we're moving in that area to meet commitments, we have with mills and things like that so it's going to be some headwinds to start the year force across our southern footprint, but we will move volume around geographically as we can.
Doug Long: Hey, Matt I, just I'd, just add to that that like Doug said this was a pretty significant factor in the fourth quarter and really the biggest driver of that year over year or this quarter relative to the prior year quarter that decline in overall stumpage pricing. Unfortunately, we expect that it's going to be a transitory impact, but you know what.
Doug Long: We're gonna anticipating well, we had one quarter of impact as it relates to 2024, we're anticipating two quarters of impact as it relates to 2025. So you know again, that's one of the major factors if not be main factor that's training our outlook for pricing gains in the U S. South in 2025, hopefully as the market works through that glut of stumpage volume it will.
Doug Long: Starting to see a pickup in pricing in the back half of the year and it really to the extent that that coincides with the pickup in lumber production in the south due to increased duties on Canadian lumber, which I believe everybody is anticipating we think we could see a pretty nice tailwind in the second half, but again the ongoing impact that salvage volume has certainly muted our our overall.
Doug Long: Our expectations for full year pricing gains in the south.
Speaker Change: Great. Thanks, very much for that color.
Speaker Change: Extra me just in terms of general outlook, what are your expectations for what the timberlands M&A market looks like in 2025.
Speaker Change: Yeah. This is Marc I'll take that.
Speaker Change: Overall, I'd say that the demand on the M&A market has continued to outstrip supply, especially with respect to higher quality properties. We estimate that there is about $3 billion to $4 billion of capital available for timberland acquisitions.
Speaker Change: And we think a significant portion of those funds are specifically targeting carbon or climate focused investments.
Speaker Change: With all that said there hasn't been a whole lot of property on the market recently, but we're still seeing successful transaction outcomes and certainly very strong values being paid for the assets that we have seen come to market, particularly those higher quality assets.
Speaker Change: For example, there have been several smaller to medium size deals over the past couple of years in the U S South where we've seen a value per acre and in excess of a 3000 dollar. So overall, we think market is still quite competitive, especially for higher quality assets as well as again assets without unique carbon angle, but again relatively.
Speaker Change: Relatively limited volume on the market right now as it relates to our appetite for timberland acquisitions, you know given our debt financing costs as well as our overall cost of capital, it's really tough to make the math work right now on buying timberland assets again, the timberland M&A market is highly competitive, especially for those higher quality assets, which are generally the one.
Speaker Change: And is that are we will be pursuing and we've continued to see those per acre values move up you know for example, the ne creep south.
Speaker Change: On average our acre per acre value in the US South currently sits about $22 40 per acre, which is up roughly 5% from year end 2023, So you know.
With all that said, we haven't seen that same value momentum for timberland assets reflected in our share price so rather than buying assets. As you know we've been selling assets over the past year with a view towards both improving our balance sheet positioning as well as putting ourselves in a position to take advantage of share buyback opportunity. So in short I'd say that we think the best places.
Speaker Change: The cheapest place for us to buy timberland assets right now is in the public market by buying back our own stock.
Speaker Change: Thanks, very much I'll turn it back.
Speaker Change: Thank you our next caller is mark Weintraub with Seaport, Sir you May go ahead.
Mark Weintraub: Thank you I was hoping to get a little bit more color on the very very strong values you got on some of the rural land sales how much of that was the specifics of the properties you were selling versus anything that you feel might be happening in the markets, where you own these lands more generally.
Speaker Change: Yeah, Mark this is mark I'd start by saying you know kudos to our real estate team for pulling together what was really an exceptional quarter. We knew entering the year that our pipeline was going to be heavily backend loaded on the team worked very hard to close several major transactions in the fourth quarter, which contributed to those very strong results.
Speaker Change: Salt. So overall, we've been very pleased with the pricing we've been able to achieve you know, particularly in the fourth quarter and we really think that that reflects the quality of our HBU portfolio.
Speaker Change: Yeah, we continue to generate what we think our industry leading pricing.
Speaker Change: And premiums on our HB real estate transactions and we also think that this is a big part of our value creation story. It's also part of our story, but we don't really think is fully appreciated by the market.
Speaker Change: Again for context as you noted you know we sold about 8000 acres of rural HBU and unimproved development properties in the fourth quarter achieved a weighted average price per acre of $7200. So again very pleased and impressed with what the team was able to accomplish there.
Speaker Change: We continue to see that momentum build within our within our HBU portfolio.
Mark Weintraub: And Mark what where was it a certain portion that was extremely high that that took that average up or did you see that the average is.
Speaker Change: Cross the swath of what you were selling tended to be higher.
Speaker Change: Well there were a number of major transactions again as we've said in the past you know those real estate results tend to be lumpy they tend to be.
You are heavily driven by you know one or two transactions that can really move the dial and that's why ultimately going into the quarter, we had more muted expectations for real estate in the fourth quarter. We ended up converting more of those transactions that they were in the pipeline than we anticipated. There was one transaction in particular, an unimproved development transaction.
Speaker Change: There was an excess of $10000 per acre I think that was just over a thousand acres in total. So again when you have those types of transactions that certainly going to skew the average and you don't get those every quarter.
Speaker Change: But again overall very pleased with the results we're seeing in our in our rural HBU business.
Speaker Change: Got you. Thank you and then I appreciated the comments on.
Speaker Change: Alternative laden and solar in particular do you anticipate that you're going to see any meaningful revenue pick up in solar. This year are we still thinking it's more a year or two years away. If you could any update on expected timelines.
Speaker Change: Yeah, Mark I'll take that so we were really pleased about the financial contribution from land based solutions in 2024. So as you saw on the supplement it with almost $15 million. This year and we're happy about the growth that we had in the acres under option for solar and under lease for C. C. S over the course of the year.
Speaker Change: Do you expect the contribution to grow over time and that's why we started we broke that out in the supplement so you could provide the visibility and see how we're progressing.
Speaker Change: The bulk of our land sales solution revenue is in the solar option payments and the base rents for C. C. S leases and so we're growing those revenues right now off a small base.
Speaker Change: We still have a relatively limited number of counterparties and there's inherently and gotta be churn in the portfolio as it ramps up.
Speaker Change: So at this point at least not yet.
Speaker Change: We're at a point, where we be fair to assume a run rate for any quarter or a year going forward, especially given some of the N D. A associated with the agreements, we really can't get into the impact of any particular lease or the individual amazing pieces, but overall I would say that we believe that we're on the trajectory that we communicated in Investor day.
Speaker Change: $30 million of EBITDA by 2027, and again Mark I, just reiterated that you know as we discussed at Investor Day, we really anticipate that that a pick up in contribution from land based solutions will occur beyond 2027 recognized that essentially all of the major contributors to two <unk>.
Speaker Change: Our land based solutions pipeline right now or most of them are certainly in that Ccs and solar arena those tend to be.
Speaker Change: They're there tend to be fairly long permitting timetables associated with those those projects so call it three or four years and solar.
Speaker Change: Probably more like four to six years and in Ccs and so the last two years has been the bulk of activity and really building up that pipeline.
Speaker Change: It's probably two years from now you're where you really start to see that converting over you know solar options into leases and Ccs leases into injection of royalties converting over with some higher degree of regularity, but where we'd like to get to is that you have kind of a stabilized base of options and are in the solar arena, where.
Speaker Change: Are there some portion of that is converting into leases annually and that becomes a more predictable source of cash flow growth Ccs is going to be more binary around those at those injection permits, which again can be fairly complex to achieve but again very happy with how that pipeline is building, but we really expect to see that ramp start to occur.
Speaker Change: In a more significant way a couple of years out.
Speaker Change: Okay. Thank you I'll get back with you I have a follow up but I'll, let others jump on first thank you.
Speaker Change: Thank you our next caller is Mike Roslyn with Truest you May go ahead Sir.
Speaker Change: Yes. Thank you Mark April comps, taking my questions.
Speaker Change: Are you at this point are you finished with your corporate realignment to or is there more to come and or are you continuing to pursue it.
Speaker Change: That's the first question second question would be are you are there other ways that you're looking to drive efficiency throughout your portfolio.
Speaker Change: Yeah I'll take that so you know at this point, we've done the realignment, but I would say from a corporate.
Speaker Change: Emanation, we're always looking at ways to keep a close eye on expenses in general, particularly given our current operating environment and so you know we do anticipate looking at that I mean recall that you know over the last 18 months the large dispositions have reduced our asset base by almost 11%.
Speaker Change: And so of course, we took a fresh look at how we are you.
Speaker Change: You know organized our op field operations in both the U S South and the Pacific Northwest.
Speaker Change: I would say that you know that's a continuous effort, we're always looking for ways to be efficient.
Speaker Change: Not only did that in the U S and our operations, but we also did that in corporate.
Speaker Change: Looked at ways to reduce our overhead costs and streamline our processes.
And really looking at how we were allocating our resources and making sure that we are putting it to the areas, where we wanted to grow and particularly land based solutions and so you know that's not a one and done we're always looking for ways to be more efficient but.
Speaker Change: But from this point that we've taken those actions and the impact for this year.
Speaker Change: Got it. Thank you April and then just secondly, it looks like.
Speaker Change: U S. Gypsum is going to make use of Ip's closed plant and Orange, Texas I think you had some some timberland acreage around there. So can you talk about any potential benefit from rayonier as U S chips and takes over the property and starts to bring up operations.
Speaker Change: Sure. This is Doug I'll answer that yeah. We we were happy to see that announcement about U S. Gypsum and in that mill were still willing to learn more about the their plans for that mill I understand that they intend to use from recycled fiber and we we're not we're not haven't been basically broaden the loopnet to understand what person will be recycled fiber versus with the Virgin fiber.
Speaker Change: So it's a little too early yet to be able to address that question. So we're actually waiting to find out once they've completed that and where this goes.
Speaker Change: Got it Doug.
Speaker Change: Could be some upside.
Speaker Change: They probably will use something similar to the fiber or is your sense.
Speaker Change: Right now it's just it's purely for me to know at this point in time.
Speaker Change: If they do use Virgin fiber that that would be definitely positive for that market, but we're not sure yet what the what the plans are.
Speaker Change: Thank you very recently last question Scott.
Speaker Change: Thank you.
Speaker Change: Appreciate that and then one last question before turning it over just a land based solutions and obviously a lot of momentum kudos to you.
Speaker Change: For driving that just any concerns about the new administration and their what they're looking to do in terms of curbing disbursements from the IRS and obviously you guys got that bump in the credits to 80 85 most of the time.
Speaker Change: $50 until then.
Speaker Change: So.
Speaker Change: So.
Speaker Change: If the new administration curtails.
Speaker Change: Disbursements from DRA, if they let's say suspend.
Speaker Change: <unk> for certain things like this.
Speaker Change: So spending accruals for when both onshore and offshore I think New Jersey, just just stopped one project. They were looking to do so long story short I think concerns reservations you have about the new administration and what they're doing around ESG and land based solutions.
Doug Long: Sure sure Doug again, Yeah, it's still early days for the New administration and I think we all know every day, there's a lot of unknowns as how it relates to how it was exactly where it's going to play out. Some go in some come out within 24 hours. So we're watching that and how that goes but that said, it's been well documented that the initiatives. You mentioned you know related to like electric.
Speaker Change: Vehicles offshore wind are not favorite that that's been pretty clear.
Speaker Change: But we continue to think that it would be very complex and unpopular to repeal the IRA and its entirety would really meaningfully rolled back some of the key provisions that are driving growth in our land based solutions business, particularly given the impact of this legislation has had on job creation and particularly in a lot of those rural Southern states from from what I've read recently, approximately 85% of the IRA investments and six 8% of the new the create jobs.
Speaker Change: Republican congressional districts based on say, we read about last year. So a lot of that money is flowing into the into the south into the rural South in particular.
Speaker Change: And focusing on carbon capture and storage, particularly you mentioned about some of these credits you know President Trump signed the they use it act in the law. During his first term and extend the 45 to your tax credits for carbon capture storage, including classics Wells and C. O two pipelines eligible for streamlined permitting via his fast Act.
Speaker Change: And a lot of multinational oil and gas companies amid significant investments since technology under.
Speaker Change: Under the IRA, but also you know going forward and look to promote the expansion of the fossil fuels you know it doesn't align with that so the ability as you think about the multinationals and made commitments you know they're outside the U S. It fits well with kind of the mantra, we've heard from drill baby drill so by capturing carbon capture storage. It continues allowed the use of those fossil fuels. So.
Speaker Change: So we still think that carbon capture storage is still well positioned in the current political landscape and you know we closed on the reliable one that Mark mentioned post the elections. So we've had good comments and feedback from people who are working with.
Speaker Change: And on solar Theres, no doubt that our incentives amplifiers for development, because we laid out at our Investor day last year sort of element was already on a steep growth curve, even before the IR a.
Speaker Change: Particularly given the strong and growing demand, we're seeing from clean energy hungry Tech industry, we see a lot of a lot of interest from them. So we expect so orange will remain on favorable grocery over the coming years.
Speaker Change: Got it. Thank you Doug I appreciate all the color and good luck in 2000.
Speaker Change: Thank you. Thank you.
Speaker Change: And our next caller is Anthony Anthony Pettinari with Citi. You May go ahead Sir.
Anthony Pettinari: Hi, good morning.
Anthony Pettinari: Just looking at the guide for Pacific Northwest, I think you're expecting kind of EBITDA it would be relatively flattish to down a little bit.
Anthony Pettinari: Despite kind of a.
Anthony Pettinari: A much larger reduction in harvest and I think kind of modest price appreciation is there anything kind of bridging the gap there.
Anthony Pettinari: Whether it's non timber activity or something with costs.
Anthony Pettinari: And then can you just talk about kind of plans to export out of the Pacific northwest in 'twenty, five and any kind of quantification of the impact of the Washington disposition.
Anthony Pettinari: Hum.
Anthony Pettinari: Average Pacific Northwest Sawtimber pricing, maybe that we'll see this year.
Speaker Change: Hey, Anthony we couldn't hear the first part of that question. So I'm sorry could you repeat it. It was it was just a really a muted.
Anthony Pettinari: Oh, sorry, just in terms of Pacific Northwest I think youre expecting EBITDA to be kind of flattish to down modestly year over year, Despite what looks like a pretty big reduction in harvest and maybe modest price appreciation. So just understand wanted to understand if there's anything else there that is bridging the gap.
Anthony Pettinari: No I really think it's a function of your expectation of some improvement in in pricing I don't I don't think that we're underwriting any material growth there in non timber income, which tends to be a relatively small contributor in the Pacific northwest.
Anthony Pettinari: Despite you know again, even though that that guide is relatively flat to 2023 recognize that I'm. Sorry, 2024 are recognized that we sold about 25% of our overall asset base. There. So that's certainly implies.
Speaker Change: Our expectation of higher pricing in 2025 relative to 'twenty four yeah. The only thing I'd add to that is that to them based on the dispositions. We have had we do expect to have some lower cost with respect to our logging operations. So we saw some of the higher steeper ground in some of the farther out. So we will in addition to seeing that price increase that Marc mentioned, we also are looking at cost savings based on.
Speaker Change: On the residual footprint that we have posted the dispositions yeah.
Speaker Change: So certainly if you look at that on an EBITDA per acre basis, we're anticipating a pretty material pickup again.
Speaker Change: Again on EBITDA per acre given the reduced acreage relative to last year.
Yes.
Speaker Change: The bill the disposition in terms of sort of average.
Speaker Change: Sawtimber pricing versus the regional coverage is it is it pretty close or how much of a mix impact is there.
Speaker Change: I mean, those properties that we sold were a bit heavier to hemlock than the portfolio average and like Doug said, they generally had a higher operating cost just given the topography and so you know as we discussed at the time that we announced those dispositions.
Speaker Change: Yeah, we felt as though those dispositions were improving the overall quality of our Pacific northwest portfolio given both.
Speaker Change: The percentage of Douglas fir, and she is going to trade at a premium to hemlock as well as just the overall operating cost across the portfolio.
Speaker Change: Okay. Okay. That's helpful and then Mark in your prepared remarks, I think you mentioned tariffs I'm just wondering if you could any any kind of finer point on maybe direct or maybe indirect impact of tariffs on your three regions.
Mark: Yeah, I mean, we're certainly not.
Mark: Anticipating any any direct impact given that we're not we're not manufacturing lumber looked like like a lot of other companies. We're closely monitoring the tariff situation right now.
Mark: Clearly a 25% universal tariff on Canadian goods into the U S would likely lead to higher lumber prices as well as incremental lumber production.
Mark: <unk> to the U S at least in the short term.
Mark: The prevailing view is that this would certainly be a positive force for lumber producers and there will be a corollary to our you know.
Mark: Being a positive for timberland owners.
Mark: That said, it's worth, noting that whether or not new tariffs come into play the existing duty rates currently being assessed on lumber from Canada are expected to reset significantly higher in the latter half of this year. So assuming this occurs we would expect that it would similar similarly translate to both higher lumber prices as well as higher.
Mark: Operating rates at U S Mills, which would likewise benefits toll on pricing in the U S.
Mark: This dynamic is certainly a contributing factor to kind of how we think about that improvement in log prices as we move through the year, especially in the Pacific northwest, which more directly compete with western SPF from Canada with all that said I think we also need to be mindful of the potential knock on effects.
Mark: Interact this phenomenon you for example, if it increased prices for building products or interest rate increases further strained housing affordability.
Mark: Could potentially translate to a broader pullback of demand both in new home construction as well as repair and remodel. So again overall, we expect there could be some puts and takes here as it relates to tariffs, but on balance you know kind of a net short term positive certainly for lumber producers as well as timberland owners like rain here.
Mark: Okay. That's very helpful I'll turn it over.
Mark: Yes.
Speaker Change: Thank you and once again, if you would like to ask a question you May Press Star one our next caller is keaton mentor with BMO capital markets. Sir you May go ahead.
Speaker Change: Thank you.
Speaker Change: One question on.
Speaker Change: On the asset disposition program now clearly you've made a lot of progress on the balance sheet side, the net leverage as we sit here today do.
Speaker Change: Do you think youll need to do more from a balance sheet standpoint, or any of those deals will be you know walk us more on kind of what kind of values you can capture on the disparity that you guys talked about.
Speaker Change: Yeah, Hey, John This is mark as we discussed on prior calls we're very pleased with what we've been able to achieve on the disposition front to date when we first announced the planned 15 months ago recall that we had we had two objectives first was to reduce our net leverage.
Speaker Change: It's a three times net debt to EBITDA or lower and the second was to capitalize on this public private disconnect. Although we saw on the market by by monetizing assets or private market values and returning a portion of that capital to shareholders. Since then we've completed almost $740 million of timberland dispositions at a.
Speaker Change: Weighted average EBITDA multiple multiple about 45 times and our current pro forma net debt to EBITDA is.
Speaker Change: It was around two nine times or pro forma for the recent special dividend I'm, sorry, $2 six times at year end pro forma for the special dividend I believe it's about two nine times, so putting all that together I'd say, we've got a very long way towards achieving what we set out to do with the plan and we think we've generated significant value accretion.
Speaker Change: Accretion for our shareholders along the way.
In terms of where we go from here I'd say that we're still focused on getting to that $1 billion disposition target.
Speaker Change: But I think we have the luxury of being very patient and opportunistic in our approach and we're sitting at a very advantageous position right now in terms of our capital structure and our debt profile. So you know again, we can afford to be patient here.
Speaker Change: Ultimately, we're only going to pursue additional dispositions, if we think they enhance our strategic positioning.
Speaker Change: And Mac to maximize value for our shareholders, we still think that that opportunity exists, but again, we're going to be opportunistic as we assess our options going forward.
Speaker Change: Understood that's helpful, but there's nothing in there as well.
Speaker Change: 1 billion is kind of you know.
Speaker Change: The cap rate, if you're flying something where you'd get exceptionally strong values would you be opened we're shooting that 1 billion number that they all have kind of targeted.
Speaker Change: Yes look again, we're not deliberately looking to overshoot, the $1 billion target, but we're certainly not averse to doing so if we're able to achieve compelling values on on the various assets that were still considering.
Speaker Change: And if we were to exceed that target you know we have some flexibility to redeploy those proceeds.
Speaker Change: Into other growth opportunities or timberland acquisitions in particular potentially through like kind exchange transactions, which should give us some more flexibility around the potential distribution.
Speaker Change: Alternatively, we could look to further delever and return capital to shareholders, especially if we see a compelling buyback opportunity, which I certainly think that's how we feel right now kind of given where the stock is we've always operated with that mindset of nimble capital allocation and active portfolio management I really with a view towards building long term.
Speaker Change: <unk> per share and so we're going to continue to adhere to that mindset as we consider additional dispositions.
Speaker Change: Understood and then on the question.
And perhaps duct and chime in here as well if you look at U S South.
Speaker Change: You know over the last 10 years.
Speaker Change: We've seen significant increase in lumber production in the U S. All right I'll, let from 15 billion board feet with 22 billion board feet roughly yes, if we look at southern log prices I'm pulpwood prices and the savings are actually down not just because on average but also in some of the coastal markets like Florida and Georgia.
Speaker Change: I'm curious as you look at that sort of 10 year PDR that and as we sit here today.
Speaker Change: What gives you confidence that as more lumber production comes in the U S. Now that you will see increase in southern log prices.
Speaker Change: Yes, there's a lot to unpack in that and that question Caitlin.
Speaker Change: I think there've been a lot of dynamics in shifting dynamics over the last several years.
Speaker Change: That have caused lumber I'm, sorry timber prices in the south to not move.
Speaker Change: Move higher as much as had been anticipated one of those dynamics right now and certainly over the last call. It 18 months. There's been this disconnect that we've seen develop between southern yellow pine lumber prices and SPF lumber prices and again I think that theres been a fair amount of discussion around why that exists and why.
Speaker Change: That's persisted here recently some of that is driven by just the preferred end use for those different types of lumber. So for example, SPF tends to have a preferred use in single family construction southern yellow pine tends to have a preferred use and repair and remodel and so with the pull back in our repair and remodel activity. We think that that's really been one of those.
Speaker Change: The big drivers of that disconnect. That's developed between SPF lumber that's why P. Lumber. So yeah. The thesis had been historically that as we continue to see capacity come out of Canada and more of that production shifted to the U S south or the thought was it more of that production would shift to the U S south that would translate to higher.
Speaker Change: <unk> prices for saw logs, but the issue that we have right now are that I'd say the market has right now is that given that disconnect between S. P. F. N S Y P. Southern mills, just haven't been as profitable as would've been expected.
Speaker Change: And in this type of demand environment again, we think that some of these issues are transitory I do think that we expect for the market expects that repair and remodel should pick up we've kind of been suffering from this lock in effect of the following the rapid rise in mortgage rates were essentially people couldn't afford to move and <unk>.
Speaker Change: Really it's that resale activity that drives R&R spending people tend to remodel a home.
Speaker Change: Right before they sell it or right after they buy it.
Speaker Change: And again that resale activity has been pretty limited. So we think the market is starting to normalize we think we're going to see a pickup in R&R activity. We think we should see some.
Speaker Change: More normalization of of S y P lumber prices relative to S. P S and on balance we think that that should drive both lump that's why Pete lumber prices as well as our southern saw log prices higher.
Speaker Change: And again I think if you if you couple that with what's anticipated to be a pretty meaningful uptick in and in lumber duties. After mid year kind of irrespective of any new tariffs that could come into play again, we think that that could create a pretty meaningful tailwind for solid pricing in the south but hear your point that it hasnt.
Speaker Change: Realize on the timetable that many would have expected it.
Speaker Change: Points in time over the last you know 510 years, but it does feel as though we're kind of entering an inflection point here in the coming years.
Mark: Thanks Mark.
Speaker Change: I appreciate the perspective, thank you.
Speaker Change: Thank you and our last question comes from Mark Weintraub with Seaport. Please go ahead Sir.
Mark Weintraub: Thank you I hope this is a fair question I'll try and keep it really starts to a year ago you hired.
Mark Weintraub: A financial advisor to help evaluate the strategic alternatives for New Zealand.
Mark Weintraub: How is that process largely played out at this point or is there anything any color you can give us how we should be thinking about that given that you know that was a year ago, when that was announced almost a year ago.
Mark Weintraub: Yeah, we don't have anything specific to report on New Zealand at this point other than to say that we are still actively engaged in that evaluation of strategic alternatives. There you know that process is not concluded.
Mark Weintraub: Call. The when we initially announced that review of strategic alternatives for New Zealand.
Mark Weintraub: We indicated that we expected that process could be a a very lengthy process given some of the complexities of our joint venture structure. There. So again, we're still working through it but we're not in a position to comment further at this point very good and thank you.
Mark Weintraub: And at this time I am showing no further questions Sir.
Collin Mings: Alright. This is Collin mings I'd like to thank everybody for joining us please contact us with any follow up questions.
Speaker Change: Thank you. This concludes today's conference call you May go ahead and disconnect at this time.