Q1 2025 Rayonier Inc Earnings Call

Yes.

Operator: I'm sorry, Courtney, did you have something to add?

Speaker Change: I'm, sorry did you say something about them and thank you for joining ran era's first quarter 2025 conference call. At this time all participants are in a listen only mode. During the question and answer session. Please press star one on your telephone Keypad. Today's conference is being recorded if you have any objections you may disconnect at this time now.

Collin Mings: Welcome and thank you for joining Rayonier's first quarter 2025 conference call. At this time, all participants are in a listen-only mode. During the question and answer session, please press star 1 on your telephone. Today's conference is being recorded.

Operator: If you have any objections, you may disconnect at this time.

Collin Mings: Now I will turn the meeting over to Mr. Collin Mings, Vice President, Capital Markets and Strategic Planning. Thank you and good morning. Welcome to Rayonier's Investor Teleconference, covering first quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rayonier.com. I would like to remind you that in these presentations, we include forward-looking statements made pursuant to the safe harbor provisions of federal securities. 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.

Speaker Change: 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 first quarter earnings our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rate in your dot com.

Speaker Change: I'd like to remind you that in these presentations. We include forward looking statements made pursuant to the safe Harbor provisions of Federal Securities laws, Our earnings release, and Form 10-K, and 10-Q filed with the SEC, whereas some of the factors that may cause actual results to differ materially from the forward looking statements. We make they're also referenced on page two of our financial supplement throughout this.

Collin Mings: They're also referenced on page 2 of our financial... 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.

Speaker Change: Presentation, 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.

Mark Mchugh: With that, let's start our teleconference with opening comments from Mark McHugh, our President and CEO. Thanks, Collin. Good morning, everyone.

Speaker Change: With that let's start our teleconference with opening comments from Mark Mchugh, our president and CEO Mark.

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 timber results and following a review of our timber segments April disk.

Mark Mchugh: First, I'll make some high-level comments before turning it over to April Tice, Senior Vice President and Chief Financial Officer, to review our consolidated financial...

Douglas Long: Then Doug Long, Executive Vice President and Chief Resource Officer, will comment on our timber results.

April Tice: And following a review of our timber segments, April will discuss our real estate results and our outlook for the balance of the year.

Speaker Change: Our real estate results and our outlook for the balance of the year.

Mark Mchugh: Before turning to our first quarter results, I'd like to touch on the pending sale of our New Zealand. On March 10th, we announced that we had entered into an agreement to sell the entities holding our New Zealand joint venture interest to the Rahatan Group, or TRG, for $710 million, subject to closing adjustments. Our decision to exit New Zealand was not made lightly. Rayonier's presence in New Zealand dates back to 1988, when the company first set up an export operation in the region. Over time, the value of our New Zealand portfolio has appreciated considerably, and the joint venture has contributed meaningfully to Rayonier's growth and success.

Speaker Change: Before turning to our first quarter results I'd like to touch on the pending sale of our New Zealand business on March 10, we announced that we had entered into an agreement to sell the entities holding our New Zealand joint venture interest to their heart and group or T. R. G. Four $710 million subject to closing adjustments our decision to exit New Zealand was not.

Speaker Change: Made lightly Rangers presence in New Zealand dates back to 1988, when the company first set up an export operation in the region over time the value Barney's. The owned portfolio is appreciated considerably and the joint venture has contributed meaningfully to <unk> growth and success that said, the New Zealand business slacks meaningful synergies with.

Mark Mchugh: That said, the New Zealand business lacks meaningful synergies with our core U.S. operations, and we further believe that the value of this business hasn't been fully appreciated in the public markets. Therefore, we determined that it would be best for our shareholders to sell our ownership interest in the New Zealand joint venture and to focus our efforts on future growth opportunities within the United States. TRG is a well-regarded manager of forestry assets in the region, and we look forward to transferring the stewardship of this business to their organization in the coming months. The transaction remains on track to close in 2025, subject to the receipt of regulatory approvals and the satisfaction of other closing conditions.

Speaker Change: Our core U S operations and we further believe that the value of this business hasn't been fully appreciated in the public markets. Therefore, we determined that it would be best for our shareholders to sell our ownership interest in the New Zealand joint venture and to focus our efforts on future growth opportunities within the United States T. R. G is a well regarded manager of forestry assets.

Speaker Change: In the region and we look forward to transferring the stewardship of this business to their organization in the coming months.

Speaker Change: The transaction remains on track to close in 2025 subject to the receipt of regulatory approvals and the satisfaction of other closing conditions.

Speaker Change: Consistent with the large dispositions, we completed in 2023 and 'twenty 'twenty four.

Mark Mchugh: Consistent with the large dispositions we completed in 2023 and 2024, the New Zealand sale aligns with our previously stated goal of enhancing shareholder value by capitalizing on the disconnect between public and private Timberland values and reducing leverage in a higher interest rate environment. Further, exiting New Zealand will concentrate our capital in core U.S. Timberland markets with favorable long-term growth prospects, reduce our exposure to log export markets, and simplify and streamline our portfolio, financial reporting, and overall value profit. As we shared in March, we anticipate using at least 50% of the sale proceeds from the New Zealand transaction to reduce leverage and return capital to shareholders through a combination of sharer purchases and a special dividend.

Speaker Change: Zealand sale aligns with our previously stated goal of enhancing shareholder value by capitalizing on the disconnect between public and private timberland values and reducing leverage in a higher interest rate environment.

Speaker Change: Further exiting New Zealand will concentrate our capital and core U S timberland markets with favorable long term growth prospects reduce our exposure to log export markets and simplify and streamline our portfolio financial reporting and overall value proposition.

Speaker Change: As we shared in March we anticipate using at least 50% of the sale proceeds from the New Zealand transactions to reduce leverage and return capital to shareholders through a combination of share repurchases and a special dividend the remaining proceeds.

Mark Mchugh: The remaining proceeds are expected to be deployed opportunistically to fund capital allocation priorities, including additional share buybacks and potential reinvestment into synergistic acquisition. As it relates to the special dividend, we currently anticipate distributing $1 to $1.40 per share in connection with the transaction, the details of which will be announced later this year following the closing of the sale. Similar to the special dividend we declared in December 2024, we expect that it will be paid in a combination of cash and common shares.

Speaker Change: Proceeds are expected to be deployed Opportunistically to fund capital allocation priorities, including additional share buybacks and potential reinvestment into synergistic acquisitions.

Speaker Change: As it relates to the special dividend, we currently anticipate distributing $1 to $1 40 per share in connection with the transaction the details of which will be announced later this year. Following the closing of the sale similar.

Speaker Change: Similar to the special dividend, we declared in December 'twenty 'twenty four we expect that it will be paid in a combination of cash and common shares.

Mark Mchugh: with the announcement of the New Zealand transaction.

Speaker Change: With the announcement of the New Zealand transaction.

Mark Mchugh: We have now completed or announced pending dispositions totaling $1.45 billion, significantly exceeding our original $1 billion target. By successfully executing on the Asset Disposition and Capital Structure Realignment Plan, we've strengthened our financial position, reduced our leverage, streamlined our portfolio, and better positioned Rayonier for future growth.

Speaker Change: We have now completed or announced pending dispositions totaling $1.45 billion significantly exceeding our original $1 billion target by successfully executing on the asset disposition and capital structure realignment plan, we strengthened our financial position reduce our leverage streamlined our portfolio and better position.

Speaker Change: Rainier for future growth.

Speaker Change: Moving to our first quarter financial results, excluding the contribution from New Zealand, which we are now classifying as discontinued operations, we generated adjusted EBITDA of $27 million and a pro forma net loss of $3 million or <unk> <unk> per share to 39% decline in adjusted EBITDA versus the prior year quarter.

Mark Mchugh: Moving to our first quarter financial results. Excluding the contribution from New Zealand, which we are now classifying as discontinued operations, we generated adjusted EBITDA of $27 million and a pro forma net loss of $3 million, or $0.02 per share. The 39% decline in adjusted EBITDA versus the prior year quarter reflects lower results in our southern timber and real estate segments, partially offset by stronger results in our Pacific Northwest timber sector. First quarter results were negatively impacted by several factors, including the timing of real estate closings, challenging timber market conditions in the U.S. South and reduced harvest volumes due to our 2024 disposition activity.

Speaker Change: <unk> reflects lower results in our southern timber and real estate segments, partially offset by stronger results in our Pacific Northwest timber segment first.

Speaker Change: First quarter results were negatively impacted by several factors, including the timing of real estate closings challenging timber market conditions in the U S south and reduced harvest volumes due to our 'twenty 'twenty four disposition activities.

Speaker Change: In our southern timber segment, we generated first quarter adjusted EBITDA of $27 million down from the prior year period as harvest volumes declined 21% and weighted average net stumpage realizations were down 19%.

Douglas Long: In our Southern Timber segment, we generated first quarter adjusted EBITDA of $27 million, down from the prior year period as harvest volumes declined 21 percent and weighted average net stumpage realizations were down 19 percent. First quarter results reflect softer demand from milk. the continued impact of salvage volume in our Atlantic region, a shift in geographic mix to lower priced regions, and reduced volume due to the large disposition we completed in Oklahoma during the fourth quarter of 2024. Overall, it's been a challenging start to the year for our US South timber operations, due in part to our sizable presence in regions impacted by Hurricane Helene, which led to a spike in salvage volume on the market over the last two quarters.

Speaker Change: First quarter results reflect softer demand from mills.

Speaker Change: Impact of salvage volume in our Atlantic region, a shift in geographic mix to lower priced regions and reduced volumes due to the large disposition, we completed in Oklahoma during the fourth quarter of 'twenty 'twenty four overall.

Speaker Change: Overall, it's been a challenging start to the year for our U S. South timber operations due in part to our sizable presence in regions impacted by Hurricane Halloween, which led to a spike in salvage volume on the market over the last two quarters. However, we expect that both volumes and pricing will improve in the second half of the year our salvage efforts.

Douglas Long: However, we expect that both volumes and pricing will improve in the second half of the year as salvage efforts moderate and operating conditions normal.

Speaker Change: The rate and operating conditions normalize.

Douglas Long: In our Pacific Northwest Timber Segment, first quarter adjusted EBITDA of $6 million increased versus the prior year quarter, as lower costs and higher net stumpage realizations more than offset an 18% decrease in harvest volumes due to the Washington dispositions we completed at the end of last year. Overall, we are pleased to see an increase in adjusted EBITDA in our Pacific Northwest Timber Segment, despite a significant reduction in acreage and volume due to our recent dispositions, which underscores the relative quality of our residual portfolio.

Speaker Change: In our Pacific Northwest timber segment first quarter, adjusted EBITDA of $6 million increased versus the prior year quarter as lower costs and higher net stumpage realizations more than offset an 18% decrease in harvest volumes due to the Washington dispositions, we completed at the end of last year.

Speaker Change: Overall, we are pleased to see an increase in adjusted EBITDA in our Pacific Northwest timber segment. Despite a significant reduction in acreage in volume due to our recent dispositions, which underscores the relative quality of our residual portfolio there.

Speaker Change: Now our real estate segment closing activity was very light to start the year consistent with our prior guidance our real estate segment generated adjusted EBITDA of $2 million in the first quarter down $3 million from the prior year period. The lower contribution was driven by fewer acres sold partially offset by higher weighted average price.

April Tice: In our real estate segment, closing activity was very light to start the year, consistent with our prior guidance. Our real estate segment generated a justity bidot of $2 million in the first quarter, down $3 million from the prior year period. The lower contribution was driven by fewer acres sold, partially offset by higher weighted average prices.

Speaker Change: Yes.

Mark Mchugh: Turning to our outlook for the balance of 2025, as April will discuss in greater detail later in the call, we are updating our full-year Adjusted EBITDA guidance to $215 to $235 million, which excludes our New Zealand operations. Despite the relatively slow start to the year, we still anticipate consolidated full-year Adjusted EBITDA results generally in line with our prior guidance after adjusting the reclassification of our New Zealand business to discontinued operations.

Speaker Change: Turning to our outlook for the balance of 2025 as April will discuss in greater detail later in the call. We are updating our full year adjusted EBITDA guidance to $215 million to $235 million, which excludes our new Zealand operations. Despite the relatively slow start to the year, we still anticipate consolidated full year.

April Ties: Adjusted EBITDA results generally in line with our prior guidance after adjusting for the reclassification of our New Zealand business to discontinued operations.

April Tice: With that, let me turn it over to April for more details on our first quarter financial Thanks, Mark. As noted in our press release, due to the pending sale of our New Zealand business, the contribution from these operations are now reflected as discontinued operations on our consolidated financial statements, and all prior periods have been retrospectively adjusted. Moving to the financial highlights on page 5 of the supplement, for the first quarter sales totaled $83 million while operating income was break-even and the net loss attributable to Rayonier was $3 million or 2 cents per share. On a pro forma basis, the net loss was likewise $3 million or 2 cents per share as pro forma items largely offset one another.

April Ties: With that let me turn it over to April for more details on our first quarter financial results.

April Ties: Thanks Mark.

April Ties: As noted in our press release due to the pending sale of our New Zealand business. The contribution from these operations are now reflected as discontinued operations on our consolidated financial statements and all prior periods have been retrospectively adjusted.

April Ties: Moving to the financial highlights on page five of the supplement for the first quarter sales totaled $83 million, while operating income was breakeven and the net loss attributable to rain here with $3 million or two cents per share.

April Ties: On a pro forma basis, the net loss was likewise $3 million or 2 million set two cents per share as pro forma items largely offset one another.

April Tice: Pro forma items in the first quarter included $2.5 million from discontinued operations, $1.7 million of costs associated with legal settlements, and $1.1 million of restructuring charges.

April Ties: Pro forma items in the first quarter included $2 $5 million from discontinued operations $1 $7 million of costs associated with legal settlements and $1.1 million of restructuring charges.

April Tice: Our adjusted EBITDA was $27 million in the first quarter, down from $45 million in the prior year period.

April Ties: Our adjusted EBITDA was $27 million in the first quarter down from $45 million in the prior year period.

April Ties: Moving to our capital resources and liquidity at the bottom of page five our cash available for distribution or C. A D for that first quarter was $20 million versus $31 million in the prior year period.

April Tice: Moving to our capital resources and liquidity at the bottom of page 5. Our cash available for distribution, or CAD, for the first quarter was $20 million versus $31 million in the prior year period. The decrease was primarily driven by lower adjusted EBITDA, partially offset by higher cash interest received and lower capital expenditures.

April Ties: The decrease was primarily driven by lower adjusted EBITDA, partially offset by higher cash interest received and lower capital expenditures.

April Tice: A reconciliation of CAD to cash provided by operating activities and other gap measures is provided on page 7 of the financial supplement.

April Ties: Reconciliation of C. A D to cash provided by operating activities and other GAAP measures is provided on page seven of the financial supplement.

April Tice: As Mark discussed in his opening comments, we believe share repurchases continue to represent a compelling use of capital at our current stock price. During the first quarter, we repurchased 95,000 shares at an average price of $27.61 per share, or $3 million in total. During April, we repurchased another 404,000 shares at an average price of $24.75 per share, or $10 million in total, pursuant to a 10B51 plan. As of April 30th, we had roughly $287 million remaining on our current share repurchase authorization and are well positioned to continue opportunistic repurchases as we focus on creating long-term value for our shareholders.

Speaker Change: As Mark discussed in his opening comments, we believe share repurchases continue to represent a compelling use of capital at our current stock price during the first quarter, we repurchased 95000 shares at an average price of 21, $27 61 per share or $3 million in <unk>.

April Ties: Total.

April Ties: During April we repurchased another 404000 shares at an average price of 24 75 per share or $10 million in total pursuant to a <unk> five one plan.

April Ties: As of the April 30th we had roughly $287 million remaining on our current share repurchase authorization and are well positioned to continue opportunistic repurchases as we focus on creating long term value for our shareholders.

April Ties: We closed the first quarter with $216 million of cash and roughly $1.1 billion of debt at quarter end, our weighted average cost of debt was approximately two 4% and the weighted average maturity on our debt portfolio was approximately four years with no debt.

April Tice: We closed the first quarter with $216 million of cash and roughly $1.1 billion of debt. At quarter end, our weighted average cost of debt was approximately 2.4%, and the weighted average maturity on our debt portfolio was approximately four years, with no debt maturities until 2026. Our net debt-to-enterprise value, based on our closing stock price at the end of the quarter, was 16 percent.

April Ties: Charities until 2026.

April Ties: Our net debt to enterprise value based on our closing stock price at the end of the quarter was 16%.

April Tice: Pro forma for the New Zealand disposition, which should generate net proceeds of nearly $700 million, our net debt would be less than one times the midpoint of our revised adjusted EBITDA guidance, which should afford us significant capital allocation flexibility as we move forward.

Doug Long: Pro forma for the New Zealand disposition, which was which should generate net proceeds of nearly $700 million, our net debt would be less than one times the midpoint of our revised adjusted EBITDA guidance, which should afford us significant capital allocation flexibility as we move forward I'll now turn the call over to Doug.

Douglas Long: I'll now turn the call over to Doug to provide a more detailed review of our timber results. Thanks, April. Let's start on page eight with our Southern Timber The adjusted EBITDA in the first quarter of $27 million was below the prior quarter due to lower harvest volumes and net stomach realization. Total harvest volumes fell 21 percent versus the prior year quarter due to softer demand from both sawmills and pulp mills.

Doug Long: To provide a more detailed review of our timber results.

April Ties: Yeah.

Doug Long: Thanks April.

Doug Long: Let's start on page eight with our southern timber segment.

Speaker Change: Adjusted EBITDA in the first quarter of $27 million was below the prior year quarter due to lower harvest volumes and that stomach realizations.

Speaker Change: Total harvest volumes fell 21% versus the prior year quarter due to softer demand from both sawmills and pulp mills.

Douglas Long: the availability of salvage volume on the market in our Atlantic region and the disposition of our Oklahoma acreage in the fourth quarter of 2020. Meanwhile, non-timber revenue was flat as compared to the prior year period, as growth in our land-based solutions business was offset by lower pipeline easement revenue. Average saw log stomach pricing was $26 per ton, a 16% decrease compared to the prior year period, primarily due to reduced demand from sawmills, competing log supply from salvaged timber, and an unbearable shift in geographic Pulpwood Net salvage pricing was 17% lower than the prior quarter at roughly $14 per ton driven by a combination of competing salvage volume on the market, extended spring maintenance downtime at pulp mills, and an unfavorable shift in geographic Overall, Weighted Average Stomach Prices in the first quarter decreased 19% versus the prior quarter to roughly $19 per ton.

Speaker Change: They'll ability of salvage volume on the market and our Atlantic region, and the disposition of our Oklahoma acreage in the fourth quarter of 2024.

Speaker Change: Meanwhile, non timber revenue was flat as compared to the prior year period as growth our land based solutions business was offset by lower pipeline easement revenue.

Speaker Change: Average saw log stumpage pricing was $26 per ton, a 16% decrease compared to the prior year period, primarily due to reduced demand from sawmills competing log supply from salvage timber and an unfavorable shift in geographic mix pulp.

Speaker Change: Pulpwood stumpage pricing was 17% lower than the prior year quarter at roughly $14 per ton driven by a combination of competing salvage volume on the market extended spring maintenance downtime at pulp mills and an unfavorable shift in geographic mix.

Speaker Change: Overall weighted average stomach prices in the first quarter decreased 19% versus the prior year quarter, it's roughly $19 per ton.

Speaker Change: As it relates to salvage operations from last year's Hurricanes as we've discussed previously the direct impact of our portfolio was relatively minor however, the availability of salvage volume and our Atlantic markets has continued to be a headwind in early 2025.

Douglas Long: As it relates to salvage operations from last year's hurricanes, as we have discussed previously, the direct impact to our portfolio was relatively minor. However, the availability of salvage volume in our Atlantic markets has continued to be a headwind in early 2025. We anticipate that this dynamic will likely weigh on both salt timber and pulpwood pricing to the first half of the year before tapering off into the third quarter.

Speaker Change: We anticipate that this dynamic will likely weigh on both saw timber and pulpwood pricing to the first half of the year before tapering off in the third quarter.

Speaker Change: Moreover, in great markets cautious near term outlook for lumber producers weighed on demand and pricing during the quarter.

Douglas Long: Moreover, in gray markets. Cautious near-term outlooks from lumber producers weighed on demand and pricing during the quarter. In our Gulf markets, dry weather conditions led to ample log supply, which also weighed on prices. While there is an elevated level of near-term economic uncertainty, we believe the outlook for grey markets will improve over the balance of the year as the availability of salvage volume declines and as U.S. lumber production likely ramps up in response to higher duties on Canadian lumber. To this end, we've been encouraged in recent weeks by increased demand for green logs from sawmills as the supply of salvaged timber has declined and some customers are growing increasingly weary of contending with operating disruptions from processing these lower quality salvaged logs.

Speaker Change: And our golf markets dry weather conditions, but the ample log supply, which also weighed on pricing.

Speaker Change: Well there is an elevated level of near term economic uncertainty, we believe the outlook for grain markets will improve over the balance of the year as availability of salvage volume declines and as U S lumber production likely ramps up in response to higher duties on Canadian lumber.

To this end we've been encouraged in recent weeks by increased demand for green logs from sawmills as supply of salvage timber has declined and some customers are growing increasingly wary of continuing with operating disruptions from processing these lower quality salvage logs.

Speaker Change: Shifting to pulpwood ample supply from hurricane salvage operations in the Atlantic region continued dry ground conditions in the Gulf region, and spring maintenance shutdowns, all contributed to elevated inventories and constrained pricing during the quarter.

Douglas Long: Shifting to pulpwood, ample supply from hurricane salvage operations in the Atlantic region, continued dry ground conditions in the Gulf region, and spring maintenance shutdowns all contributed to elevated mill inventories and constrained pricing during the quarter. As pulp mills ramp back up production, following extended maintenance shutdowns, we are cautiously optimistic that pricing tension for pulpwood will improve in some markets. However, we also believe tariff-related uncertainty could serve as an overhang on some customers, at least over the near term.

Speaker Change: As pulp mills ramp back up production for an extended maintenance shutdowns, we are cautiously optimistic that pricing tension for pulpwood will improve in some markets.

Speaker Change: However, we also believe tariff related uncertainty could serve as an overhang on some customers at least over the near term.

Speaker Change: Okay.

Speaker Change: Moving to our Pacific Northwest timber segment on page nine <unk>.

Douglas Long: Moving to our Pacific Northwest Timber segment on page 9. First quarter adjusted EBITDA of $6 million was above the prior quarter as higher net stumpage realizations and lower costs more than offset lower harvest volumes. Total harvest volumes decreased 18% in the first quarter as compared to the prior year period, reflecting the impact of the Washington dispositions we completed in the fourth quarter. At $91 per ton, average delivered domestic saw log pricing in the first quarter increased 7% from the prior year period due to stronger demand from sawmills as lumber pricing improved. Meanwhile, at $30 per ton, pulpit pricing was up 3% versus the prior year quarter.

Speaker Change: First quarter adjusted EBITDA of $6 million was above the prior year quarter as higher net stumpage realizations and lower costs more than offset lower harvest volumes.

Speaker Change: Harvest volumes decreased 18% in the first quarter as compared to the prior year period, reflecting the impact of the Washington dispositions, we completed in the fourth quarter.

Speaker Change: $91 per ton average delivered domestic solid pricing in the first quarter increased 7% from the prior year period due.

Speaker Change: Due to stronger demand from sawmills as lumber pricing improved.

Speaker Change: Meanwhile, at $30 per ton pulpwood pricing was up 3% versus the prior year quarter.

Speaker Change: Demand from domestic lumber mills improved during the first quarter as lumber prices moved higher in response to the threat of tariffs on Canadian lumber.

Douglas Long: Demand from domestic lumber mills improved during the first quarter as lumber prices moved higher in response to the threat of tariffs on Canadian lumber. While lumber prices have leveled out in recent weeks, we believe lumber producers in the region are well positioned to benefit from potential further reductions in Western SPF supply, as higher countervailing and anti-dumping duties on Canadian lumber are expected later this year. Meanwhile, export markets were soft in the Pacific Northwest during the first quarter. We are cautiously optimistic there will continue to be competition for higher grade logs from Japan and Korea.

Speaker Change: While lumber prices have leveled out in recent weeks, we believe lumber producers in the region are well positioned to benefit from potential further reductions in western SPF supply.

Speaker Change: Higher countervailing and antidumping duties on Canadian lumber are expected later this year.

Speaker Change: Meanwhile, export markets were soft and Pacific northwest during the first quarter.

Speaker Change: We are cautiously optimistic that there will continue to be competition for higher grade logs from Japan and Korea.

Douglas Long: However, with China banning log imports from the United States in early March, we expect less competition for lower-grade logs, as the supply is likely to flow to domestic mills while trade tensions with China remain elevated.

Speaker Change: However, with China banning log imports in the United States in early March we expect less competition for lower grade logs as this supply is likely to flow to domestic mills, while trade tensions with China remain elevated.

Douglas Long: Due to the pending sale of our New Zealand ownership, the financial contributions from this business is now considered discontinued operations, which is detailed on page 19 of our financial supplement.

Speaker Change: Due to the pending sale of our New Zealand ownership the financial contributions from this business is not necessary just can sheet operations, which detailed on page 19, our financial supplement.

April Ties: I'll now turn it back over to April to cover our real estate results.

April Tice: I'll now turn it back over to April to cover our real... Thanks Doug. As detailed on page 10, the contribution from our real estate segment during the first quarter was relatively light, consistent with our expectations entering the year. Real estate revenue totaled $10 million on roughly 1,000 acres sold at an average price of $8,300 per acre. This strong average price per acre reflects both the relatively high proportion of development sales closed, as well as the strong premiums above Timberland value that our team continues to realize on rural land sales. Real estate segment adjusted to EBITDA in the first quarter with $2 million.

April Ties: Thanks, Doug.

April Ties: As detailed on page 10, the contribution from our real estate segment. During the first quarter was relatively light consistent with our expectations entering the year real estate revenue totaled $10 million on roughly a thousand acres sold at an average price of $8300 per acre.

April Ties: The strong average price per acre of reflects the relatively high proportion of development sales closed as well as the strong premiums about timberland values that our team continues to be alive on rural land sales.

April Ties: Real estate segment adjusted EBITDA in the first quarter was $2 million.

April Tice: Drilling down, sales in the improved development category totaled $3 million, with activity focused in our Heartwood development project south of Savannah, Georgia. Sales included two residential pods totaling 78 acres for $3 million or $42,000 per acre. In addition to the upfront revenue on these sales, similar to many of our other residential land transactions, we will also benefit over time from true up payments based on the final selling price of the homes as they are sold. Despite the increased macroeconomic uncertainty over the past few months, interest from home builders in both our wildlife and heartwood projects remain healthy, and the pace of residential sales continue to trend favorably.

April Ties: Drilling down sales in the improved development category totaled $3 million with activity focused in our heart what development project South of Savannah, Georgia.

April Ties: Sales included two residential pods totaling 78 acres for $3 million or $42000 per acre.

April Ties: In addition to the upfront revenue on these sales similar to many of our other residential land transactions. We will also benefit over time from true up payments based on the final selling price of the homes as they are sold.

April Ties: Despite the increased macroeconomic uncertainty over the past few months interest from homebuilders and both our wildlife and heartwood projects remain healthy and the pace of residential sales continue to trend favorably.

April Tice: While we anticipate some commercial deals will take longer in the current interest rate environment, we remain pleased with the overall momentum at both projects.

April Ties: We anticipate some commercial deals will take longer than the current interest rate environment. We remain pleased with the overall momentum at both projects.

April Ties: Turning to the role of category.

April Tice: Turning to the Rural Category. First quarter sales totaled $5 million, consisting of approximately 1,000 acres at an average price of roughly $5,500 per acre. We experienced a lighter quarter for closings following an exceptionally strong fourth quarter in 2024. However, we are optimistic that the second half of 2025, given how our transaction pipeline has been building since the start of the year. Buyer interest remains robust despite broader economic uncertainties, and we are pleased with the momentum in our key rural land sale markets, as well as the continued interest from conservation-oriented buyers.

April Ties: First quarter sales totaled $5 million, consisting of approximately a thousand acres at an average price of roughly $5500 per acre.

April Ties: We experienced a lighter quarter for clothing, it's following an exceptionally strong fourth quarter. In 2024. However, we are optimistic that the second half of 2025, given how our transaction pipeline has been building since the start of the year.

April Ties: Buyer interest remains robust despite broader economic uncertainties and we are pleased with the momentum in our key rural land sale markets as well as the continued interest from conservation oriented buyers.

April Ties: Now turning on to our outlook for the balance of 'twenty 'twenty five page 12 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 Tice: Now turning on to our Outlook for the balance of 2025. Page 12 of our supplement shows our financial guidance by segment, and Schedule G of our earnings release provides a reconciliation of our guidance from net income attributable to Rayonier to adjusted EBITDA. For full year 2025, we expect to achieve adjusted EBITDA of $215 to $235 million, net income attributable to Rayonier of $424 to $458 million, earnings per share of $271 to $293, and pro forma EPS of $0.34 to $0.41. Our revised guidance assumes a a year-end 2025 closing date for the New Zealand transaction and excludes any contribution from this business in adjusted EBITDA and pro forma EPS.

April Ties: For full year 'twenty 'twenty five we expect to achieve adjusted EBITDA of $215 million to $235 million net income attributable to Rainier at $424 million to $458 million earnings per share of $2 71 to $2 90.

April Ties: Three and pro forma EPS of <unk> 34 cents to 41 cents.

April Ties: Our revised guidance assumes a.

April Ties: At year end 2025 closing date for the New Zealand transaction and excludes any contribution from this business in adjusted EBITDA and pro forma EPS.

April Tice: Our revised adjusted EBITDA guidance reflects a slight decrease at the midpoint versus prior guidance after adjusting for the impact of reclassifying our New Zealand operations to discontinued operations. With respect to our individual segments, starting with southern timber segments, we expect to achieve full year harvest volumes of 6.9 to 7 million tons toward the lower end of our prior guidance range as we continue to opportunistically flex volume in response to market conditions. As it relates to pricing, the salvage volume entering the market following Hurricane Helene in 2024 continues to inadequately impact some of our operating areas.

April Ties: Our revised adjusted EBITDA guidance reflects a slight decrease at the midpoint versus prior guidance after adjusting for the impact of Reclassifying, Our New Zealand operations to discontinued operations.

April Ties: With respect to our individual segments, starting with southern timber segment, we expect to achieve full year harvest volumes of six nine to 7 million tonnes towards the lower end of our prior guidance range as we continue to Opportunistically flex volume in response to market conditions.

As it relates to pricing the salvage volume entering the market following hurricane Helene in 'twenty 'twenty four continues to negatively impact some of our operating areas.

April Tice: However, we anticipate that prime stumpage realizations will trend higher from first quarter levels as salvage efforts moderate and operating conditions begin to normalize over the next several months. Lastly, we continue to expect a modest decrease in non-timber income for full year 2025 as compared to the prior year, which benefited from significant pipeline easement activity. Overall, we expect full-year adjusted EBITDA of $135 to $140 million, down modestly at the midpoint from our prior year guidance.

April Ties: However, we anticipate the pine stumpage realizations will trend higher from first quarter levels as salvage efforts moderate and operating conditions begin to normalize over the next several months.

April Ties: Lastly, we continue to expect a modest decrease in non timber income for full year 'twenty 'twenty five as compared to the prior year, which benefited from significant pipeline easement activity.

April Ties: Overall, we expect full year, adjusted EBITDA of $135 million to $140 million down modestly at the midpoint from our prior year guidance.

April Ties: In our Pacific Northwest timber segment, we remain on track to achieve full year harvest volumes of approximately <unk> 9 million tonnes.

April Tice: In our Pacific Northwest timber segment, we remain on track to achieve full year harvest volumes of approximately 0.9 million tons. Further, we expect that full-year weighted average log pricing will increase modestly versus the prior year due to higher lumber prices, healthy demand from domestic sawmills, and the anticipated impact of increased duties on Canadian lumber in the second half of the year. Overall, we expect full-year adjusted EBITDA of $22 to $26 million, up slightly at the midpoint of our prior guidance.

April Ties: Further we expect that full year weighted average log pricing will increase modestly versus the prior year.

April Ties: Due to higher lumber prices healthy demand from domestic sawmills and the anticipated impact of increased duties on Canadian lumber in the second half of the year.

April Ties: Overall, we expect full year, adjusted EBITDA of $22 million to $26 million up slightly at the midpoint of our prior guidance.

April Ties: Turning to our real estate segment, we are encouraged by our transaction pipeline for the balance of the year, but expect closing activity will be heavily concentrated in the third and fourth quarters. We currently expect an adjusted EBITDA contribution of $5 million to $10 million in the second.

April Tice: Turning to our real estate segment, we are encouraged by our transaction pipeline for the balance of the year, but expect closing activity will be heavily concentrated in the third and fourth quarters. We currently expect an adjusted EBITDA contribution of $5 to $10 million in the second quarter. Overall, we now expect full-year adjusted EBITDA of $90 to $100 million, up modestly at the midpoint from our prior full-year guidance. As a reminder, a revised full year 2025 guidance excludes any contribution from the New Zealand operations in adjusted EBITDA, capital expenditures, and pro forma EPS. Further, the revised financial guidance assumes no financial contribution from the potential redeployment of sale proceeds.

<unk> overall, we now expect full year, adjusted EBITDA of $90 million to $100 million up modestly at the midpoint from our prior full year guidance.

April Ties: As a reminder, our revised full year 2025 guidance excludes any contribution from the New Zealand operations and adjusted EBITDA capital expenditures and pro forma EPS.

April Ties: Further the revised financial guidance assumes no financial contribution from the potential redeployment of sale proceeds for.

April Tice: For illustrative purposes, we have also provided Pro Forma 2025 Financial Guidance on page 13 of the Financial Supplement, which incorporates the pro forma impact of the New Zealand Joint Venture Sale proceeds on the company's 2025 interest income and implied CAD, assuming that the transaction had closed on December 31, 2024.

April Ties: For illustrative purposes. We have also provided pro forma 2025 financial guidance on page 13 of the financial supplement which incorporates the pro forma impact of the New Zealand joint venture sale proceeds on the company's 2025 of interest income and implied C. A D assuming.

April Ties: That the transaction had closed on December 31st 2024.

April Ties: Lastly, in an effort to provide additional transparency and to better manage expectations around the quarter to quarter variability our real estate segment results. We plan to provide high level quarterly guidance to overall, adjusted EBITDA and EPS moving forward.

April Tice: Lastly, in an effort to provide additional transparency and to better manage expectations around the quarter-to-quarter variability of real estate segment results, we plan to provide high-level quarterly guidance to overall adjusted EBITDA and EPS moving forward. As it relates to the second quarter, we currently expect net income attributable to Rayonier of $3 to $8 million, EPS of $0.02 to $0.05, pro forma EPS of $0.01 to $0.04, and adjusted EBITDA of $30 to $40 million.

April Ties: As it relates to the second quarter. We currently expect net income attributable to Rainier, a $3 million to $8 million EPS of two to five cents pro forma EPS of one to four cents and adjusted EBITDA of 40 $30 million to $40 million.

Mark Mchugh: I'll now turn the call back to Mark for closing comments. While the economic backdrop remains challenging and uncertain, our team continues to focus on creating long-term value for our shareholders throughout the economic cycle. To this end, I'm proud of how our team has navigated market headwinds while advancing important strategic initiatives designed to build long-term value per share.

Mark Mchugh: Now I'll turn the call back to Mark for closing comments.

April Ties: Yeah.

Mark Mchugh: Thanks April while the economic backdrop remains challenging and uncertain. Our team continues to focus on creating long term value for our shareholders throughout the economic cycle to this and I'm proud of how our team has navigated market headwinds, while advancing important strategic initiatives designed to build long term value per share.

Mark Mchugh: In the U.S. South, we ratcheted back volume in response to weaker mill demand coupled with excess supply due to ongoing salvage operations. However, as we move through the balance of the year, we are optimistic that market conditions will improve as the impact of hurricane salvage volume subsides and as U.S. lumber production likely ramps up in response to higher duties on Canadian lumber. Meanwhile, in the Pacific Northwest, we expect timber pricing will likewise trend higher into the back half of the year in response to healthy demand from domestic sawmills and the impact of higher duties on Canadian lumber.

Mark Mchugh: In the U S. South we ratcheted back volume in response to weaker mill demand, coupled with excess supply due to ongoing salvage operations. However, as we move through the balance of the year. We are optimistic that market conditions will improve as the impact of hurricane salvage volume subsides and as U S lumber production likely ramps up in response to her.

Mark Mchugh: Duties on Canadian lumber. Meanwhile, in the Pacific Northwest, we expect timber pricing will likewise trend higher into the back half of the year in response to healthy demand from domestic sawmills and the impact of higher duties on Canadian lumber.

Mark Mchugh: While near-term trade policy continues to evolve, we believe that an undersupplied U.S. housing market and eventual recovery in repair and remodel activity will be long-term positives for our timber business.

Mark Mchugh: Near term trade policy continues to evolve we believe that in under supplied U S housing market and an eventual recovery and repair and remodel activity will be long term positives for our timber business turning to real estate. Despite a relatively quiet first quarter. We remain encouraged by our transaction pipeline and expect a very active second half of 'twenty two.

Mark Mchugh: Turning to real estate, despite a relatively quiet first quarter, we remain encouraged by our transaction pipeline and expect a very active second half of 2025. Overall, despite the current challenging and uncertain market environment, the longer term outlook for our business remains promising. In addition, we continue to focus on optimizing our portfolio value by monetizing HBU properties as well as transitioning select acreage to higher value land use. To this end, we remain intently focused on growing our land-based solutions business, and we're optimistic about the role that Rayonier can play in supporting the energy transition as the need for land, power, and decarbonization solutions continues to grow.

Mark Mchugh: Five.

Mark Mchugh: Overall, despite the current challenging and uncertain market environment the longer term outlook for our business remains promising. In addition, we continue to focus on optimizing our portfolio value by monetizing HBU properties as well as transitioning select acreage to higher value land uses to this end we remain intently.

Mark Mchugh: Focused on growing our land based solutions business and we're optimistic about the role that rayonier can play in supporting the energy transition as the need for land power and de Carbonization solutions continues to grow.

Mark Mchugh: Lastly, we're looking forward to closing the New Zealand transaction later this year, which will leave us very well positioned with significant balance sheet flexibility to allocate capital toward value-enhancing units. In sum, while timber markets continue to face headwinds, our team is navigating the current environment with a long-term mindset, and we anticipate stronger financial results during the second half of the year. We expect to finish 2025 with a more streamlined and synergistic asset base that will be well-positioned to capture outsized growth in cash flows and shareholder value over the long term.

Mark Mchugh: Lastly, we're looking forward to closing the New Zealand transaction later, this year, which will leave us very well positioned with significant balance sheet flexibility to allocate capital toward value enhancing uses.

Speaker Change: In sum while timber market.

Speaker Change: <unk> markets continue to face headwinds our team is navigating the current environment with a long term mindset and we anticipate stronger financial results. During the second half of the year, we expect to finish 2025 with a more streamlined and synergistic asset base that will be well positioned to capture outsized growth and cash flows and shareholder value over the long term.

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

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

Speaker Change: Thank you if you would like to ask a question. Please press star one and record your name if you need to withdraw your question Press Star two.

Operator: If you would like to ask a question, please press star 1 and record your name. If you need to withdraw your question, press star 2.

Matthew Mckellar: Our first question comes from Matthew McKellar from RBC Capital Markets. Hi, good morning. Thanks for taking my questions.

Speaker Change: Our first question comes from Matthew Mckellar from RBC capital markets.

Matthew Mckellar: Hi, good morning, Thanks for taking my questions.

Douglas Long: I'd like to ask first, how significant are labor constraints in logging and hauling today? And how much of a bottleneck could labor be if higher duties and potential tariffs on Canadian lumber later this year do end up driving higher lumber production in the U.S.? Sure.

Matthew Mckellar: I'd like to ask first how significant their labor constraints in logging and only today and how much of a bottleneck and maybe be as higher duties and potential tariffs on Canadian lumber later this year.

Matthew Mckellar: Do end up driving higher lumber production in the U S.

Doug Long: Sure. Good morning, this is Doug I'll start with that.

Douglas Long: Good morning. This is Doug. I'll start with that. Yeah, I mean, you know, labor is a constant concern. It's been our industry for quite a few years. And but that said, we've also seen improvements in productivity with the equipment as time moves on. So I think we typically see that there's still enough labor out there to meet the current demand and potentially some more. But if we were to see a major increase in demand ramp up, then I believe the companies like ourselves who have long-term relationships with the logging force will see a competitive advantage at that point in time because having access to those loggers.

Doug Long: Yeah, I mean, you know labor is a constant concern it's been our industry for quite a few years and but that said we've also seen improvements in productivity with the equipment as time moves on so I think we typically see that theres still enough labor out there to meet the current demand and potentially some more but if we were to see a major increase in and demand ramp up.

Doug Long: I believe the companies like ourselves, who have long term relationships with the logging force, we'll see a competitive advantage at that point in time, because having access to those does loggers and do you believe that the loggers. If they saw that continued ability to have more opportunity. They can make some investments to increase their their production. So I think net net we're we're a REIT.

Matthew Mckellar: And I do believe that the loggers, if they saw that continued ability to have more opportunity, they can make some investments to increase their production. So I think net-net, we're a reasonable place right now with the logging capacity versus removals. But if we were to see a larger increase in removals to come forward, I do think the folks that have long-term relationships, you know, like ourselves and others that have decade-long relationships could see those loggers increase their capacity to meet that, and it would be a positive for us. That's great. Thanks. Thanks very much.

Doug Long: And we'll place right now with lung capacity versus removals, but if we were to see a larger increase in and removals to come forward I do think the folks at long term relationships, you know like ourselves and others that have taken long relationships could see those lager has increased our capacity to meet that and it would be a positive force.

Speaker Change: That's great. Thanks, Thanks very much.

Doug Long: Next to me.

Matthew Mckellar: Next for me, repurchase activity certainly picked up in the month of April. And I think April also mentioned that you view sherry purchases as continuing to be attractive here.

Speaker Change: Purchase activity has certainly picked up in the month of April.

And I think April also mentioned you view share repurchases as continues to be attractive here.

April Tice: Can you maybe just provide a little bit more color around the relative attractiveness of your options for the New Zealand proceeds that you would have talked about in your opening remarks? Yeah. You know, as noted in the remarks in the earnings release, you know, we did buy back some stock in the last several months. You know, given where the stock currently sits, we think buybacks continue to represent a very compelling use of capital. So, you know, since the start of the year, we've repurchased roughly $13 million worth of stock, but recognize as well that our ability to be active in the buyback market has been somewhat constrained in recent quarters just based on the status of the various M&A transactions that we've been working on.

Speaker Change: Can you, maybe just provide a little bit more color around the relative attractiveness of your options for the New Zealand proceeds.

Speaker Change: So back to your opening remarks.

Speaker Change: Yeah, you know as noted in the remarks in the earnings release, we did buy back some stock in the last several months given where the stock. Currently says we think buybacks continue to represent a very compelling use of capital.

Speaker Change: So you know since the start of the year, we repurchased roughly $13 million worth of stock but.

Speaker Change: But recognize as well that our ability to be active in the buyback back market has been somewhat constrained in recent quarters, just based on the status of the various M&A transactions that we've been working on that.

April Tice: You know, that said, as we discussed in the prepared remarks, we did recently enter into a 10B51 plan, which is a tool that allows for repurchases during periods that we might otherwise be restricted from trading. So, you know, we expect that we'll continue to be active and opportunistic in our share of purchase activity. Recognize that we have over $280 million remaining on our current repurchase authorization, and we expect to have, as you noted, significant capital allocation capacity after we close the New Zealand transaction. You know, we'd certainly like to see our stock price higher, but we feel as though we're well positioned to build NAV per share with our buyback program as long as this public-private disconnect continues to persist.

Speaker Change: That said as we discussed in the prepared remarks, we did recently enter into a <unk> five one plan, which is a tool that allows for repurchases during periods that we might otherwise be restricted from trading. So we expect that will continue to be active and opportunistic in our share repurchase activity I recognize that we have over $280 million.

Speaker Change: Our remaining on our current repurchase authorization and.

Speaker Change: And we expect to have as you noted significant capital allocation capacity. After we close the New Zealand transaction.

Speaker Change: Yeah, we'd certainly like to see our stock price higher but.

Speaker Change: But we feel as though we're well positioned to build NAV per share with our buyback program as long as this public private disconnect continues to persist.

Speaker Change: Great. Thanks, very much and if I could just sneak one last one in.

Matthew Mckellar: Great, thanks very much.

Matthew Mckellar: And if I could just sneak one last one in. You're expecting lower non-TIMR income in the south in 2025 compared to 2024. I think you'd also talked about that previously.

Speaker Change: Yeah, Youre expecting lower non non timber income in the south and 25 as compared to 24, I think you'd also talked about that previously.

April Tice: You mentioned pipeline easement revenues being lower, but if we set that item aside, can you just walk us through what the other moving parts look like year-on-year? Yeah, the largest component of our non-timber income tends to be our hunting and recreational licenses in our southern business. Obviously, land-based solutions has been the area that we've been most focused on growing here in recent years. Pipeline easements, we had a very strong year last year in pipeline easements, so that's really the driver of that anticipated year-over-year decline in non-timber income is that we're not anticipating quite as strong of a year in pipeline easements following a very strong year last year.

Speaker Change: You mentioned pipeline decent revenues to be lower but if we set that out on this side can you maybe just walk us through what the other moving parts it looks like year on year.

Speaker Change: Yes, the largest component of our non timber income tends to be our hunting and recreational licenses in our southern business. Obviously land based solutions has been the area that we've been most focused on growing here in recent years on pipeline easements, we had.

Speaker Change: A very strong year last year in pipeline easement. So that's really the driver of that anticipated year over year decline in non timber income is that we're not anticipating quite a strong of a year and pipeline easements. Following a very strong year last year.

Speaker Change: Okay, great. Thanks, very much I'll turn it back.

Matthew Mckellar: Okay, great. Thanks very much.

Operator: I'll turn it back.

Speaker Change: And as a reminder, if you would like to ask a question. Please press star one.

Operator: And as a reminder, if you would like to ask a question, please press star 1.

Anthony Pettinari: Our next question comes from Anthony Pettinari from Citigroup. Good morning. Mark, you referenced lumber customers ramping production in response to higher Canadian import duties. And would you expect that to boost log prices in 3Q, or is it having an impact now? I think the duties go into effect maybe later in the summer. And just generally, when you talk to sawmill customers, are you seeing concrete steps to add shifts and ramp production in response to the duties? I'm just trying to get a sense of whether this is sort of a general sentiment or whether it's something where you're seeing customers really taking concrete steps and making investments, if there's kind of any additional color you can give there.

Operator: Our next question comes from Anthony Pettinari from Citigroup.

Anthony Pettinari: Hi, good morning.

Operator: Hum.

Operator: You referenced hey, you referenced lumber customers ramping production in response to higher Canadian import duties and would you expect that to boost log prices in <unk> or is it having an impact now I think the duties go into effect, maybe later in the summer and just generally when you talk to saw mill customer.

Operator: <unk> are you seeing concrete steps to add shifts and ramp production in response to the duties I'm just trying to get a sense of whether this is sort of a general sentiment or whether it's something where you're seeing customers really taking concrete steps and making investments. If there's any additional color you can give there.

Sure. This is Doug I'll I'll stop them with that one because I have more of those interactions with those customers you know I would describe it as positive sentiment you know kind of the latter part of that we have seen some increased capacity. So we have seen some mills looking to secure more volume. So they have taken some incremental steps to actually procure more volume there.

Douglas Long: Sure, this is Doug. I'll step in with that one because I have more of those interactions with those customers. You know, I would describe it as positive sentiment, you know, to kind of your latter part of that. We have seen some increased capacity, so we have seen some mills looking to secure more volume, so they have taken some incremental steps to actually secure more volume. They have – I've heard of discussions around trying to, you know, work on like second shifts and things like that, but to date what we've seen is really expansion of current shift work.

Operator: They have I've heard of discussions around trying to work on like second shifts and things like that but to date. What we've seen is really expansion of current shift work. So utilizing the current ship they haven't and doing more with where they were so there's talk about that and I've seen actually some.

Douglas Long: So, you know, utilizing the current shift they have and doing more with where they were. So there's talk about that, and I've seen actually some, you know, requests out there looking for people for additional labor, but I haven't actually seen a mill say we're adding an additional shift right now. It's more getting better out of what they have with the current ones. I do think, you know, the current market uncertainty has things a bit tempered, so before somebody adds an additional shift they want to see where things go. But we have seen, you know, real price increases in recent negotiations and recent sales just in the last couple weeks as sawmills have looked to secure more volume.

Operator: Request out there looking for people for additional labor.

Labor, but I haven't actually seen the mill say, we're adding an additional shift right now it's more getting better out of what they have with the current ones I do think you know the current market uncertainty has things a bit tempered. So before somebody adds an additional ship they want to see where things go but we have seen real price increases and recent negotiations and recent sales just in the last couple of weeks our saw mills.

Operator: Tableau to turn more volume.

Speaker Change: Is that more in the Pacific northwest or the south or or both or.

Douglas Long: Is that more in the Pacific Northwest, or the South, or both? Yeah, where we've seen probably the greatest change in capacity has been the South, actually. So I think the City of Northwest had already stepped up, you know, with some of the reductions that had happened out of Canada on the prior increase in tariffs back later last year. And so where we've seen most of this momentum now has been in the U.S. South. Got it, got it.

Speaker Change: Yeah, where we've seen probably the greatest change in capacity has been the south actually so I think the six northwest had already stepped up.

Speaker Change: With some of the reductions that had happened out of 10 in Canada on the prior increase in tariffs back out later last year and so are we seeing most of that momentum now has been in yourself.

Speaker Change: Got it got it.

Douglas Long: And then switching gears, in Southern Timberlands, you talked about, you know, the negative impact of salvage volumes in the Atlantic region. And then you also talked about kind of a negative mix shift within regions.

Speaker Change: And then switching gears in southern timber ones you talked about you know the negative impact of salvage volumes in the Atlantic region. And then you also talked about kind of a negative mix shift within regions and I'm sorry, if I missed this but can you just.

Douglas Long: And I'm sorry if I missed this, but can you just remind us what that negative mix shift was within, I guess, the sub regions and Does that reverse itself in the second half or third quarter or what is that specifically? Sure, I can give a little more detail on that also. So, yeah, as you mentioned, as we talked about before, that the Atlantic wood baskets really have been suffering from that glut of salvaged logs in those markets. And so, for example, that Southeast Georgia market, which holds our largest concentration of acres, experienced greater than a 25% kind of price decline for both pulpwood and saw logs over the past few quarters.

Speaker Change: Remind us what that negative mix shift was within I guess, the subregions in and.

Speaker Change: Does that reverse itself in the second half of third quarter or.

Speaker Change: Or what is that specifically.

Speaker Change: Sure I can give little more detail that also so yeah. As you mentioned as we talked about for that Atlantic with baskets really had been suffering from that glut of salvage logs in those markets and so for example that southeast, Georgia market, which holds our large concentration of acres experience greater than 25% kind of price decline for both pulpwood and saw logs or the past few quarters.

Douglas Long: While not quite as drastic, the neighboring wood baskets experienced declines roughly half of that. So we really have seen where the hurricane came through a significant reduction. And then around that, you get that ripple effect from there. So product price decreases made up about half of that year over year decline in the pricing, just to kind of give you a sense of there. Then on top of that, our product mix, as you mentioned, shifted both heavier to pulpwood overall, as we chose to hold larger saw log stands on the stump, anticipation of improved lumber markets, and shifted to a heavier percentage of thinnings, which yield a product mix impact of about 15%.

Speaker Change: Well not quite as drastic the neighboring wood baskets expense declines roughly half of that so we really have seen you know where the hurricane came through a significant reduction and then around that you get that ripple effect from there so product priced product price decreases made up about half of that year over year decline in the pricing just kind of get a sense of there that on top of that our product mix.

Speaker Change: You mentioned shifted both heavier to pulpwood overall as we chose to hold larger saw log stands on the stump anticipation of improved lumber markets and shifted to a heavier percentage of things, which you had a product mix impact of about 15%. So of that Delta you roughly had another 15% of that.

Douglas Long: So of that delta, you roughly had another 15% of that. And then finally, not wanting to flood the Atlantic markets with just more volume when it already had plenty from salvage, we did shift some of our harvest over the Gulf region where those drier conditions allow us to make up some deferred thinnings and also some clear cuts in normally wet areas. So as a percentage of our overall Southern harvest, the historically lower priced Gulf region was up 12% for pulp and 24% for saw log volumes. And in total, this yielded an impact of approximately 30% on that net stumpage decline we had year over year.

Speaker Change: And then finally not wanting to flood the Atlantic markets with just more volume when it already had playing from salvage we did shift some of our harvest over the Gulf region, where those drier conditions last to make up some deferred things and also some clear cut some would be normally what areas. So as a percentage of our overall southern harvest the historically lower price Gulf region was up 12% for pulp and 24.

Speaker Change: Solid volumes and in total this yield an impact of approximately 30% on that net stumpage decline, we had year over year.

Douglas Long: So you can see there were a lot of moving pieces over the quarter as we chose to defer harvest on some of our Atlantic saw log sales, capturing that value that we believe is going to come later half of the year with the kind of improved demand that we were talking about. And we've been encouraged by those recent saw log sales I mentioned before.

Speaker Change: So you can see there were a lot of moving pieces over the quarter as we chose to defer harvest on some of our Atlantic saw log sales capturing that value that we believe can come later half of the year with the kind of improved demand that we were talking about and we've been encouraged by this recent salt life sales I mentioned before so I do see this as something that's winding down what was unique in this hurricane is you typically.

Douglas Long: So I do see this as something that's winding down. What was unique in this hurricane is you typically you have, you know, initial impact of salvaging the timber that's fallen on the ground and getting that, and that typically lasts a couple of months before before it goes and you can't use that anymore. And so we anticipated that, as we've mentioned, foreign calls. But what's also happened with this hurricane is kind of maybe a little bit different, or at least the scale has been a bit different, is there was quite a bit of stands that were partially damaged and had leaning trees.

Speaker Change: You have initial impact of salvaging the timber that's fallen on the ground and getting that in that typically lasts a couple of months before where it goes in you can't use it anymore and so we anticipated that as we mentioned foreign calls, but what's also happened with hurricane is kind of maybe a little bit different or at least the skill has been a bit different as there was quite a bit of.

Speaker Change: Stands that were partially damage it had leaning trees and the state of Georgia is offering a $550 per acre reforestation tax credit and they also suspended the harvest tax payments. So we're seeing is a lot of landowners chose to go in and clear cut partially damage stance to take advantage of these that hasn't happened in the past. So this was really good for private landowners and.

Douglas Long: And the state of Georgia is offering a $550 per acre reforestation tax credit. And they also suspended the harvest tax payments. So we're seeing is a lot of landowners chose to go in and clear cut partially damaged stands, take advantage of these. That hasn't happened in the past. So this was really good for private landowners and really is good for the forest industry in the long term to get that resource back. But it created a short term drag kind of on price recovery. You know, based on our field assessments and recent mill negotiations, I just mentioned, we do believe that these kind of the second salvage operations that were more than we expected, they are winding down during this quarter and do expect to see some reversal in the later half of the year.

Speaker Change: Really it's good for the fourth century in the long term to get that resource back, but it create a short term drag kind of a price recovery.

Speaker Change: Based on our field assessments and recent Moe negotiations I just mentioned, we do believe that these are kind of the second salvage operations that were more than we expected. They are winding down during this quarter and do you expect to see some reversal in the later half of the year.

Mark Mchugh: And Anthony, I'd just add to that that, you know, we are reasonably optimistic that coming out of this, that we could see the inverse effect where you have constrained supply in that area, and that causes kind of a sharper bounce back in pricing. I mean, without a doubt, we've been, you know, pretty severely impacted by the impact of the, I'm sorry, the salvage volume on certain market areas, as well as that, you know, shift in geographic mix that Doug talked about. When we move to those Gulf states, for pulpwood pricing in particular, the prices there are quite a bit lower.

Speaker Change: One thing I'd, just add to that that you know we are reasonably optimistic that coming out of this.

Speaker Change: That we could see the inverse effect, where you have constrained supply in that area and that causes kind of a sharper bounce back in pricing I mean without a doubt we've been pretty severely impacted by the impact of that.

Speaker Change: Sorry, the salvage volume on certain market areas as well as that shift in geographic mix that Doug talked about we moved those Gulf States for pulpwood pricing in particular, the prices there are quite a bit lower and so that geographic and product mixes caused you know roughly half of that overall price decline. So the headline price declines I'd say.

Mark Mchugh: And so, you know, that geographic and product mix has caused, you know, roughly half of that overall price decline. And so, the headline price declines, I'd say that the reality on the ground isn't quite as dire, given that a good portion of that, you know, is really just due to that shift in geographic mix. Another portion of it, you know, we think is pretty specifically attributable to the salvage volume, which we think we're going to be working through over the course of the next several months. So, you know, we are optimistic that going into the back half of the year, as that salvage volume gets worked through, and we potentially couple that with a nice tailwind around increase in lumber duties, that the setup for the second half could be quite a bit more constructive in those particular market areas.

Speaker Change: The the reality on the ground isn't quite as dire given that a good portion of that you know it was really just due to that shift in geographic mix. Another portion of it we think it's pretty specifically attributable to the salvage volume, which we think we're going to be working through over the course of next several months. So yeah. We are optimistic that going into the back half of the year.

Speaker Change: Is that salvage volume gets worked through and we potentially coupled out with a nice tailwind around increase in lumber duties, but the setup for the second half could be quite a bit more constructive than in those particular market areas.

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

Anthony Pettinari: Okay, that's very helpful.

Operator: I'll turn it over.

Speaker Change: Our next question comes from Kian, Ma'am Toura from BMO capital markets.

Ketan Mamtora: Our next question comes from Ketan Mamtora from BMO Capital Markets. Good morning, and thanks for taking my question. I'm just coming back to Southern Timber. I mean, you laid out some of the factors that could help demand and pricing in the back half of the year, and I think those are all fair points. On the other hand, we're also seeing kind of a housing demand environment, which is kind of weaker than what people were expecting at the start of the year. So, how do you kind of, you know, think about that, and, you know, are sawmill owners sort of recalibrating how they think about demand, because clearly, you know, at the start of the year, expectations was that, you know, rate cuts will happen and demand will improve, but hasn't really happened.

Speaker Change: Good morning, and thanks for taking my question.

Speaker Change: Sure.

Speaker Change: Just coming back to southern timber I mean, you laid out some of the factors that could have.

Speaker Change: Imagine pricing in the back half of the Oh, I can do $1 at that point.

Speaker Change: On the other hand, we are also seeing kind of a housing demand environment, which is kind of bigger than what people were expecting at the start of the year. So how do you kind of you know.

Speaker Change: Think about that.

Speaker Change: You know as our sawmill owners are recalibrating, how to think about demand.

Speaker Change: It is clearly not the start of the our expectations are that <unk> got some heartburn and demand will improve but hasn't really happened. So can you just kind of how you balance those two things.

Ketan Mamtora: So, I'm curious kind of how you balance those.

Speaker Change: Yeah, you know a lot to unpack in their K times recognize there there are a lot of moving pieces here.

Mark Mchugh: Yeah, you know, a lot to unpack in there, Ketan. I just recognize there are a lot of moving pieces here. You know, look, these last couple of quarters in particular have been, you know, pretty challenging. But recognize that some of these headwinds that we're contending with right now, you know, we do think will be transitory in nature. You know, as we talked about, you know, specifically the impact of salvage volume following Hurricane Helene has pretty significantly weighed on pricing and some of what are our largest market areas. So as we discussed in the prepared remarks, you know, we expect that this overhang is going to moderate over the next several months.

Look these last couple of quarters in particular have been.

Speaker Change: And you know pretty challenging but recognize that some of these headwinds we are contending with right now we do think will be transitory in nature.

Speaker Change: As we talked about specifically the impact of salvage volume following hurricane Helene its pretty significantly weighed on pricing and some of them what are our largest market areas. So as we discussed in the prepared remarks, we expect that this overhang is going to moderate over the next several months and again as we just discussed and geographic mix was also a.

Mark Mchugh: And again, as we just discussed, you know, geographic mix was also a pretty significant driver as we shifted our harvest into those Gulf states where pricing is lower. That that translated to some of that price decline as well. You know, with all that said, the longer term pricing trends in the South, you know, as you noted, you certainly haven't materialized as most market observers would have anticipated and call it last five, you know, 10, 15 years. You know, we did see a pretty significant uptick in timber pricing in the wake of the pandemic. But those pricing gains certainly haven't sustained here.

Speaker Change: Pretty significant significant drivers, we shifted our harvest into those Gulf States, where pricing is lower that translated to some of that price decline as well.

Speaker Change: With all that said the longer term pricing trends in the South you know as you noted and you know certainly havent materializes most market observers would have anticipated and call. It last 510 15 years.

Speaker Change: We did see a pretty significant uptick in timber pricing in the wake of the pandemic, but.

Speaker Change: But those pricing gains are certainly haven't sustained here and I think part of the reason for this and I believe we talked about this in the last call as well you know in the wake of the pandemic. There's also quite a bit of market dislocation, including the mortgage lock in effect that really translated to a dearth of resale activity as well as the repair and remodel.

Mark Mchugh: You know, I think part of a reason for this, and I believe we talked about this in last call as well, you know, in the wake of the pandemic, there's also quite a bit of market dislocation, you know, including the mortgage lock in effect that really translated to a dearth of resale activity, as well as the repair and remodel pull forward effect in the midst of the pandemic, where we saw a lot of that R&R activity getting getting pulled ahead. So all of that translated to a relatively lackluster repair and remodel market over the last couple of years, you know, which did disproportionately impact Southern Yellow Pine pricing.

Speaker Change: All forward effect in the midst of the pandemic, where we saw a lot of that R&R activity getting getting pulled ahead. So all of that translated to a relatively lackluster repair and remodel market over the last couple of years, which did disproportionately impact southern yellow pine pricing.

Mark Mchugh: You know, it certainly felt like markets were beginning to normalize to some degree. And I think we've seen some evidence of this in the pricing gains that we've seen in Southern Yellow Pine over the last several months, as well as the convergence in pricing that we've seen in Southern Yellow Pine and SPF, because we recognized that part of the effect of that that pandemic dislocation was we saw a pretty wide disconnect developed between SYP and SPF lumber pricing. You know, of course, more recently, we've seen, you know, markets rocked by tariff uncertainty, and it's still unclear how this might more broadly impact mortgage rates, home affordability and ultimately new construction activity.

Speaker Change: It certainly felt like markets, we're beginning to normalize to some degree and I think we've seen some evidence of this in the pricing gains that we've seen in our southern yellow pine over the last several months as well as a convergence in pricing that we've seen in <unk>.

Speaker Change: Southern yellow pine in SPF was recognized at a party the effect of that that pandemic dislocation was we saw a pretty wide disconnect developed between S y P at SPF lumber pricing.

Speaker Change: Of course, more recently, we've seen markets ER, Iraq Bye bye bye tariff uncertainty and it's still unclear how this might more broadly impact mortgage rates home affordability and ultimately new construction activity.

Mark Mchugh: You know, overall, we're still very optimistic that long term fundamentals, including what we see is a significantly underbuilt and aging housing stock. Those fundamentals should support growth and housing starts, lumber demand and ultimately timber pricing over the long term. But at least for now, I think we have to wait and see how trade policy and the overall economic outlook evolve in the coming months before we have much visibility into the likely near term trajectory of timber pricing.

Speaker Change: Overall, we're still very optimistic that that long term fundamentals, including what we see is a significantly under built an aging housing stock those fundamentals should support growth in housing starts a lumber demand and ultimately timber pricing over the long term, but at least for now I think we will have to wait and see how how trade policy and the overall economic outlook.

Speaker Change: Evolve in the coming months before we have much visibility into the likely near term trajectory of of timber prices.

Douglas Long: Yeah, I would, I would just add kind of on a local flair to one of your questions about sawmillers and how they're potentially rebalancing the uncertainty kind of around tariffs that Mark mentions. I think, you know, we've mentioned this before also in calls, but with regards to kind of offshore lumber imports, so excluding Canada, nearly a quarter of those imports come in the state of Florida and about half it comes at South Atlantic market. So we're seeing sawmill owners in this area, particularly kind of Southeast Georgia, Northeast, Northeast Florida, who are anticipating that there will be action taken against lumber coming out of Europe.

Speaker Change: Yeah, I would just add kind of on a local flair to one of your questions about <unk> and how their potential rebalancing the uncertainty around tariffs and Mark mentioned I think we've mentioned before all phone calls, but with regards to kind of offshore lumber imports. So excluding Canada, maybe a corner those imports come in the state of Florida and about half of it comes at South Atlantic market.

Speaker Change: So we're seeing Osama loners in this area, particularly kind of that southeast, Georgia northeast Northeast, Florida, who are anticipating that there will be action taken against lumber coming out of Europe, and that would really benefit quite a few of our customers you're right now that number comes in as much for kind of the middle part of the state and has a freight advantage going once it Lance Lance here in the states and so.

Douglas Long: And that would really, you know, benefit quite a few of our customers who right now that lumber comes in, as mentioned before, kind of the middle part of the state and has a freight advantage going once it lands, lands here in the states. And so we've seen kind of a balancing where they're, to your point, they're concerned and there's that, you know, kind of tempered, as I mentioned before, about what housing starts look like, but there's that same opportunity where, well, if less wood does come in and just the threat of tariffs seems to have slowed down, we've seen a slowdown in that, those offshore lumber imports coming in, that creates new opportunities too.

Speaker Change: So we've seen kind of a balancing where there is to your point, they're concerned and there's that kind of tempered as I mentioned before about where housing starts look like but there's that same opportunity aware well if les wood does come in and just the threat of tariffs seems have slowed down we've seen a slowdown in that those offshore lumber imports coming in that creates new opportunities too. So it when we talk about this.

Douglas Long: So it, we talk about the South not being homogenous and consistent. There's, there's, there's cases where that's also the case, depending on where different imports and things come in and out. So it's a lot of moving parts at this point in time to understand how, how it looks just a little bit of local kind of flavor to those sawmill decisions they're making.

Speaker Change: Ralph not being homogenous and consistent there's there's there's cases, where that's also the case, depending on where different important thing come in and out. So it's a lot of moving parts at this point in time to understand how outlook, just a little bit of local kind of flavor to the saw mill decisions, we're making.

Ketan Mamtora: Yes, no, that's a very helpful perspective.

Speaker Change: Yes, no that's a that.

Speaker Change: Very helpful perspective.

Mark Mchugh: And just my follow-up, do you have any kind of update you guys have for us with regard to the natural climate solutions, whether it is solar or carbon capture? And this technology is directly transferable to pulp and paper mills, you know, across the United States, but particularly where there's that positive geology. So we think this is really a positive development for the industry, you know, helps diversify the mills revenue stream and provides this potential customers for our CCS program. So that's kind of a newer area of growth, although, like I said, negotiations have been going on for a long time, but to see that first deal come through, I think is important for the industry and is a good step.

Speaker Change: My follow up.

Speaker Change: Do you have any kind of update you guys have for us to that goal.

Speaker Change: The macro climate solutions, so that is so lower our carbon capture.

Speaker Change: Yeah sure.

Speaker Change: Well typically we will provide updates when we have large things that happened you know I think as we mentioned before we're very happy where we sit with 154000 acres in Ccs leasing and still work on new opportunities going forward. There. So we're we remain optimistic about the Ccs and I guess, it's not so much directly impacted us yet, but what we've seen is as important in the industry is kind of.

Speaker Change: Pulp and paper area, we're seeing this building push for incorporating carbon capture storage in the operations in the U S. And this has been going on for over a year. These discussions.

Speaker Change: But we're really encouraged by Microsoft announcement in April that they're pre purchasing 3.7 million tons of carbon dioxide from a pulp mill in Louisiana, and you know the magnitude of those those C D. Our carbon dioxide removal credits as well as potentially for the 45 tax credits.

Speaker Change: That can amount to an increase in the mills EBITA and the reason I will do this is that the carbon dioxide as biogenic is coming from the fiber is part of that pulping process.

Speaker Change: And this technology is directly transferable to pulp and paper mills across the United States, but particularly where there's that positive geology. So we think this is really a positive development for the industry. You'll helps diversify the mills revenue stream and provides us potential customers for Ccs program. So that's kind of a newer area of growth. Although I've said negotiations have been going on for a long time, but.

Speaker Change: To see that first deal come through I think it is important for the industry and it's a good step so on balance we feel good about the progress being made on Atlanta, we leased and the prospect of getting additional acres under where we're moving those forward as we go. So you know really as we've discussed before that the lease payments are great, but it's a step change in economics that occurs once injection start happening and Thats still.

Mark Mchugh: So on balance, we feel good about the progress being made, you know, on the land that we leased and the prospect of, you know, getting additional acres under, we're moving those forward as we go. So, you know, really, as we discussed before, the lease payments are great, but that step change in economics that occurs once injections start happening, and that's still several years away.

Speaker Change: Several years away.

Mark Mchugh: On the solar front, no significant changes relative to where we stood at year-end, but acres under option for lease have continued to trend in the right direction to start the year and we've added a couple thousand more acres in the first quarter. And we're still continuing to see momentum build across our footprint, so no matter how you look at it, solar capacity continues to grow pretty significantly, you know, to meet the projected energy demands that we've seen for the future, basically, and I think most folks agree we need an all-of-the-above approach, so we're still seeing strong interest in the pipeline in that area.

Speaker Change: On the solar front no significant changes road, where we stood at year end, but the acres under option for lease you know have continued trend the right direction to start the year and we got a couple of thousand more acres in the first quarter and we're still continue to see momentum build across our footprint. So no matter. How you look at it sort capacity continues to grow pretty significantly.

Speaker Change: The projected energy demands that we've seen for the future basically and I think most folks agree with you and all of the above approach. So we're still seeing strong interest in the pipeline in that area also.

Speaker Change: Got it that's very helpful. I'll turn it over good luck.

Ketan Mamtora: Got it. That's very helpful.

Operator: I'll turn it over. Good luck.

Speaker Change: I'm showing no further questions at this time.

Operator: I'm showing no further questions at this time.

This is colin ranks I'd like to thank everybody for joining us please contact us with any follow up questions.

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

Speaker Change: Yeah.

Operator: That concludes today's conference. Thank you for participating.

Speaker Change: That concludes today's conference. Thank you for participating you may disconnect at this time.

Operator: You may disconnect.

Speaker Change: Okay.