Q2 2025 Rayonier Inc Earnings Call

The objections. You may disconnect at this time. Now I would like to turn the meeting over to Colin Ming's vice president Capital markets, and strategic planning.

Thank you and good morning. Welcome to Reign yours. Investor teleconference covering second quarter earnings. Our earning statements and financial supplement were released yesterday afternoon and are available on our website at ray.com.

I would like to remind you that these presentations. We include 4 looking statements, made pursuant to the safe harbor, provisions of federal Securities, laws, earnings release and forms 10K and 10 Q followed by the SEC. But some of the factors that may cause actual results to differ materially from the forward-looking statements, we may make. They're also referenced on page 2 of our financial supplement.

Throughout these presentations, we will also discuss non-gaap Financial measures which are defined in reconciled to the nearest Gap measures in our earnings release and supplemental materials with that. Let's start our teleconference with opening comments from Mark McHugh, our president and CEO mark.

Thanks, Colin. Good morning, everyone. First, I'll make some high-level comments before turning it over to April Ty, 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 the review of our Timber segments. April will discuss our real estate results and our outlook for the balance of the year.

Before turning to our second quarter results, I'd like to briefly touch on the sale of our New Zealand business on June 30th. We closed on the previously allowed sale of our New Zealand joint venture interest to the rotten group or TRG 4710 million marking a significant milestone in our asset disposition. And capital structure. Realignment plan, I want to once again, extend our appreciation to the team in New Zealand for their diligence, and professionalism throughout this process, as well as for the outstanding job that they did in these apps for Value creation, over the 30, plus years of Reign Year's ownership in the region.

We are pleased to transfer the stewardship of this business to TRG a well-regarded manager of Forestry Assets in the region.

With the closing of the New Zealand transaction. We have now completed dispositions totaling 1.45 billion dollars significantly. Exceeding our original 1 billion dollar Target. The success of this plan has allowed us to achieve our new leverage Target in a manner that has been accretive to both Cad and NAB, per share, as well as better position. Rineer to create long-term value for our shareholders going forward,

As previously, discussed, we anticipate using at least 50% of the sale proceeds from the New Zealand transaction to reduce leverage and return Capital to shareholders through share repurchases and a special dividend details of which will be announced later this year.

The remaining proceeds will be be deployed opportunistically to fund other Capital allocation priorities, including additional share BuyBacks, or potentially investment into synergistic Acquisitions. With that said, given where the stock currently sits. We Believe sharir purchases represent the most compelling use of capital to this end. We completed 35 million of BuyBacks during the second quarter.

Moving to our second quarter Financial results, excluding the contribution from New Zealand which were reported as discontinued operations, we generated adjusted, Bop of 45 million and preform and net income of 10 million dollars or 6 cents per share.

Adjusted EBITDA increased 35% versus the prior year quarter, reflecting improved results in our specific Northwest Timber and real estate segments, as well as reduced overhead. This was partially offset by lower results in our segment.

In our Southern Timber segment, we generated second quarter adjusted IBA of $28 million, down from the prior year period, as harvest volumes decreased 5% and weighted average net stumpage realizations were down 14%. The availability of salvage volume in certain markets, coupled with extended mill downtime, continued to weigh on timber prices. During the second quarter, however, the markets most impacted by salvage operations are normalizing, and we expect both volume and pricing in the segment to improve in the second half of the year.

Turning to the Pacific Northwest Timber segment. Second quarter, Jesse Bop of 7 million dollars increased 17% versus the prior year quarter as lower costs and higher log prices more than offset, a 15% decline in Harvest volumes due to the Washington dispositions. We completed. At the end of last year,

we are pleased to generate higher adjusted Ava in the Pacific Northwest, despite the reduction in acreage and volume underscoring, the relative quality of our residual portfolio in the region.

Accelerated timing of several transactions.

Turning to our outlook for the balance of 2025, we remain on track to achieve our full-year adjusted EBITDA guidance. As we anticipate a significantly stronger second half, fueled by higher contributions from our Southern Timber and real estate segments, as we'll discuss later in the call, we're optimistic that increased lumber production at U.S. Mills, as a result of higher duties on Canadian lumber, coupled with a reduction in salvage volume in our Atlantic region, should provide a tailwind through the second half of the year. With that, let me turn it over to April for more details on our second quarter financial results.

Thanks Mark.

As we discussed last quarter, the contribution from our New Zealand business prior to its sale on. June 30th is reflected in discontinued operations on our Consolidated financial statements for the second quarter as well as all prior periods.

Moving to the financial highlights on page 5 of the supplement.

For the second quarter sales totaled, 107 million while operating income with 15 million dollars, and net income attributable to raineer, was 409 million or $2.63 per share.

On a pro forma basis, net income was $9 million, or $0.06 per share.

Pro-forma items in the quarter included, a 404 million gain related to the sale of our New Zealand joint venture interest and a 600,000 loss from discontinued operations.

Our adjusted IBA was $45 million in the second quarter, up from $33 million in the prior-year period.

Moving to our capital resources and liquidity at the bottom of page 5, our cash available for distribution or CAD for the first half of the year was 47 million versus 38 million in the prior year period.

Lower adjusted ibida was more than offset by lower cash interest and capital expenditures.

A Reconciliation of CAD to cash provided by operating activities and other gap, measures is provided on page, 8 of the financial supplement.

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 quarter. We repurchased 1.5 million shares at an average price of $33.71 per share or 35 million in total.

As of June 30th, we had 262 million remaining on our current share repurchase authorization and our position to continue opportunistic, repurchases, as we focus on creating long-term value for our shareholders,

We close the second quarter with 892 million of cash and roughly 1.1 billion dollars 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 4 years

Our net debt to Enterprise Value based on our closing stock price at the end of the quarter was 4% and our net debt is less than 1 time. The midpoint of our adjusted ibida guidance.

On that note, we were pleased to that our current credit rating from the S&P was recently upgraded from Triple B minus to Triple B following the closing of the New Zealand transaction.

I'll now turn the call over to Doug to provide a more detailed review of our Timber results.

Thanks, April. Let's start on page 9 with our Southern Timber segment. Adjusted ibida in the second quarter of 28 million with 16% below the prior quarter due to lower Harvest volumes and net stomachs realizations. Total Harvest volumes decreased 5% versus the prior quarter due to softer demand, from both Sawmills and Pulp Mills. The availability of Salvage volume on the market and our Atlantic region and the disposition of our Oklahoma acreage in the fourth quarter of 2024,

Meanwhile, non-timber revenue was slightly higher compared to the prior year period due to a higher contribution from our land-based solutions businesses.

Average saw log, stumpage pricing was $7 per ton, a 9% decrease compared to the prior year period due to reduced demand from Sawmills and an unfavorable shift in Geographic mix.

Hopewood, net. Stumpage pricing was 25% lower than the prior quarter at roughly $13 per ton.

Driven by the continued impact of Salvage, volume on the market.

Softer demand from Pulp Mills due to maintenance allergies, and tariff uncertainty and an unfavorable shift in giraffe. Mix

Second quarter fell 14% versus the prior year quarter to roughly $19 per ton.

As we have discussed on the last few calls, we have contended with significant Salvage. Volume in our Atlantic markets, in recent quarters.

Stemming from last year's hurricanes.

The availability of Salvage. Volume was a considerable headwind in the first half of 2025.

Constraining demand for green logs and Weighing on pricing.

Encouragingly, as we start the third quarter conditions are normalizing and the markets most impacted by Salvage efforts, we're seeing Mills, increasingly shift, their procurement efforts to more green logs.

In grade markets, soft and market demand, coupled with ample Lumber inventories LED, some Sawmills, to reduce production. During the second quarter negatively, impacting salt, more demand and pricing

Moving forward. We are optimistic. That Lumber production in the US will ramp up over the balance of the year, in response to higher duties on Canadian Lumber Imports.

Specifically, the sixth administrative review of anti-dumping. Duties, has resulted in anti-dumping duties on most Canadian producers rising to 20.6% up from 7.7%.

Countervailing, Duties, are expected to increase as well, which will likely result in average combined Duty rates climbing to roughly 35% for most companies up from 14.4%.

Further, if new tariffs are implemented on Lumber and other Wood Products upon the section, 232 investigation that began in March.

This would likely serve as an additional Catalyst to drive a plumber prices and US Lumber production higher which should in turn bolster salt and prices in the US.

Shifting to Pulpit markets. The pricing pressure created by the availability of Salvage. Volume was exacerbated by reduced production, at Mills in Atlantic region. During the second quarter due to maintenance outage related issues and tear uncertainty.

Additionally, market conditions in the Gulf region were negatively impacted by recent milk closures.

While Tiff related uncertainty could continue to weigh on some of our customers. We Believe market conditions for pulpwood will improve over the balance of the Year, based on a number of factors.

Specifically, we believe that increased me operating rates, less Salvage volume on the market and some improved visibility on trade policy, but on the recently announced trade deals with the UK and EU should collectively translate to improved market conditions for pulpwood in the second half of the year.

Moving to our Pacific Northwest Timber segment on page 10.

Second quarter adjusted Eva of 7 million dollars was 17% above the prior quarter, as lower costs and higher log, prices more than offset lower, Harbors volumes and non-timber income.

Total Harvest volumes decreased 15% in the second quarter as compared to the prior period reflecting the impact of the Washington dispositions we completed last year.

At 96 per ton average delivered domestic solid pricing and the second quarter. Increased 6% from the prior year period, due to improved demand from domestic, Lumber Mills and a favorable Geographic mix shift.

Meanwhile, at 32 per ton hopewood pricing was up 4% versus the prior quarter.

Despite the pullback and lumber prices during the second quarter and some localized solo over Supply demand from domestic. Lumber Mills in the Pacific Northwest held fairly steady, anticipation, of a reduction in Canadian SPF Lumber Supply

The lumber produced at the Mills in the region more directly competes with Canadian Lumber Imports.

Leading Pacific, Northwest Mills, well, positioned to benefit from a further decline in Canadian Supply as higher countervailing, and anti-dumping. Duties, come into effect,

Similar to the US South. We also believe domestic Lumber producers and sent Northwest stand to benefit. The extent, new tariffs are implemented. As a result of the section, 232 investigation on Wood Products.

While we are upbeat about the outlook for domestic Salter demand. In the region, we expect demand from the export Market to remain fairly limited over the near term due to the Chinese ban on us login ports.

That said we're encouraged to see the man from Japan, gradually improving with your opening of a major Sal that was previously closed due to a fire in 2023.

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

Thanks DC.

As detailed on page 11, the contribution from our real estate segment. During the second quarter with above our expectations, due to continued strong demand, and the accelerated timing of several transactions.

Real estate Revenue, total 29 million on roughly 3,300. Acre sold at an average price of 8,300 per acre.

The strong average price per acre, reflects both the proportion of development sales, closed, as well as the healthy premiums above Timberland value, that our team is realizing on rural land sales.

5 to 10 million dollars.

Drilling down sales in our improved development category, totaled 8 million with our Heartwood development, pro project, contributing 5 million and our Wildlife development project contributing.

Sales and Heartwood consisted of a 23 acre commercial, parcel for 5 million or 225,000 per acre.

A multi-tenant retail project is expected to be developed on this parcel.

Meanwhile, sales and Wildlife consisted of 2 commercial Parcels totaling 3.1 Acres. That were sold at an average price above a million dollars, per acre reflecting the strong demand for Prime locations within this project.

Moving forward, we remain encouraged by the strong interest and home builder. Activity at both projects in Heartwood. We believe that opening of the New Richmond Hill, High School, this month located on the same campus as the previously. Opened elementary and middle schools will serve as an additional Catalyst to attract families to Heartwood and it's highly regarded school system.

Despite continued softness, in the National housing market demand remains robust for our master plan communities in Florida and Georgia.

Both Wildlife and Heartwood continue to benefit from strong positioning in their respective markets. Based on project maturity, favorable amenities, a diverse mix of uses, healthy migration, and relatively affordable price points.

Unimproved development sales and our real estate segment, consisted of a 311 acre transaction in Flagler County Florida for 3 million dollars or 9,63.

In the rural category, second quarter sales totaled, 16 million dollars consisting of approximately 2,900 Acres at an average price of roughly 5,458 per acre.

We experienced a solid quarter of closing a relatively light, first quarter, and have a strong transaction pipeline for the second, half of 2025.

Momentum in our rural land sales business remains robust. As we continue to see interests from conservation. Oriented buyers High, net worth individuals, seeking investment diversification and Recreation driven buyers.

Now, turning to our outlook for the balance of 2025, as Mark discussed earlier, we remain on track to achieve full year adjusted IBA of 215, to 235 million and pro-forma, EPS of 34 cents to 41 cents consistent with our prior guidance range.

With respect to our individual segments.

Starting with our Southern Timber segment. We expect full year, Harvest volumes toward the lower end of our prior guidance range. Although we expect materially higher volumes and the second half versus the first half of the year.

we further expect that Pine net stumpage realizations will be modestly higher in the second half of the year as compared to the first half due to reduced Salvage volume on the market, more normalized, demand conditions, following several extended Mill outages, and a favorable Geographic mix

Overall, we anticipate significantly higher results and the second half versus the first half of the year with full year adjusted ibida near the lower end of our prior guidance range.

In our Pacific Northwest Timber segment, we expect to achieve full-year harvest volumes consistent with our prior guidance.

We further expect that weighted average log pricing will be modestly higher in the second half of the year as compared to the first half due to the anticipated effect of increased duties on Canadian Lumber Imports

Overall, we anticipate full year adjusted ibida consistent with our prior guidance range.

Turning to our real estate segment. We remain encouraged by our transaction Pipeline and expect significant closing activity over the balance of the year.

We currently expect an adjusted IBA contribution of 50 to 65 million in the third quarter.

However, given the magnitude of certain anticipated closings, it is possible that a substantial portion of this contribution could shift to the fourth quarter.

The high-end of our prior guidance range.

Similar to last quarter and an effort to provide additional transparency and to better manage expectations around the quarter to quarter variability. We are also providing high-level quarterly guidance for all overall adjusted IBA and eps.

As it relates to the third quarter, we currently expect net income attributable, to raineer of 29 to 44 million.

EPS of 18 cents to 28 cents and adjusted EVA of $80 to $100 million.

I'll now turn the call back to mark for closing comments.

Thanks April, as I reflect on the first half of the year, I'm proud of the perseverance. Displayed by our team in the face of continued economic uncertainty, our team focused on controlling the controllables within our operations, amid challenging Timber market conditions. While also advancing important, strategic priorities aimed at building long-term value per share.

Although housing starts and repair and remodel activity, have underwhelmed thus far in 2025, we believe that a combination of factors will result in relatively improved Timber market conditions. During the second half of the year as Doug discussed earlier, the headwinds created by Hurricane Salvage operations, within some of our larger Us South markets are subsiding and demand. For green logs is normalizing.

Further the supply of lumber entering, the US market is poised to decline in response to higher Duty rates being assessed on Canadian Lumber Imports.

In turn us Sawmills should gain market. Share leading to better operating conditions for Timberland owners.

Further the potential for new tariffs stemming from the section, 232 investigation on Wood Products could potentially serve as an additional Catalyst for increased US. Lumber production

These factors coupled with the prospect of interest rate Cuts later this year, give us reasons for optimism regarding the near-term outlook for our Timber business.

Turning to real estate demand for our rural properties remains strong and we continue to see favorable momentum at both our wildlife and Heartwood development projects.

As discussed earlier. We expect a significantly stronger contribution from the real estate segment during the second half of the Year versus the first half. And we now expect that full year, results will be at, or modestly above the high end of our prior guidance range.

On the land-based solutions front, our team continues to advance solar carbon capture and storage. And carbon offset project opportunities. With high-quality counterparties, although policy initiatives and certain incentives at the federal level have evolved. We believe our land portfolio remains uniquely well positioned to support. The growing demand for power and decarbonization solutions.

Specifically, with respect to the recent passage of the 1, big beautiful, bill act. I'd offer the following thoughts on his impact to our land-based Solutions business first with, with respect to solar, we continue to see a tremendous growth trajectory for utility scale, solar and share, the view of many industry. Participants that solar will continue to grow at a pace exceeding preira projections.

The rapid deployment of AI and the data centers needed to support. This technology are driving significant growth in energy, demand, and utility solar remains poised to play. A major role in meeting the need for cost-effective renewable energy.

While all else being equal, the IRA incentives, boosted, the return profile of these projects. The economics of solar stand on their own and they are competitive with other forms of energy generation even without these incentives.

Moreover, with the lead times for new gas turbines reportedly extending beyond 5 years, we expect that solar could have a timing advantage as well. We anticipate that some developer timelines may shift forward or backward as recent policy initiatives are digested. We remain optimistic about the long-term trajectory of our solar leasing opportunities.

Turning to carbon capture and storage as we've discussed in the past. Economics of these projects are relatively more dependent on government incentives. However, as expected the 45q tax credit was preserved in the recent legislation, in our counterparties are continuing to advance their CCS projects. We currently have 154,000 acres under lease for ccs and encouragingly nearly half of these acres are now represented in various class 6. Well, permit applications.

As we move forward, we are optimistic that the additional Clarity provided on the 452. Credits will provide both current and future counterparties with more conviction around their CCS related ambitions,

Based carbon offsets and we don't see this being impacted by the recent legislation as this Market continues to mature. And as credit pricing becomes more competitive with traditional Forest Products markets. We expect that rain and ear will participate in the forest carbon Market over time.

For wrapping up. I also want to take a moment to commend our team for their extraordinary efforts and determination. In executing our asset, disposition plan over the past 18 months. The recent closing of the New Zealand transactions leaves us, well, positioned with considerable balance sheet, flexibility, moving forward.

By successfully executing on our asset disposition and capital structure realignment plan, we've strengthened our balance sheet, streamlined our portfolio, and better positioned Rayonier for future growth and shareholder value creation.

In some while Timber markets, continue to face some headwinds, our team is navigating the current environment with a long-term perspective and we're looking forward to what we expect will be better market conditions and stronger Financial results. In the second half of the year in closing. I remain highly optimistic about the long-term value creation potential that we see ahead for our portfolio and I believe that we're very well positioned to capitalize on future growth opportunities in our business.

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

Thank you, sir.

For your question. You may press star 2 1 moment, please, Mike, roxland will choose security. You may go ahead, sir.

Yeah, thank you Mark. April, Doug calls taking my questions and congrats on all the significant progress.

Um, thank you.

Yeah, first question is, you know Saw Timber prices in the in the Pacific Northwest better than we expected. Are you starting to see some increase in tension due to the upcoming Canadian duties?

Yeah, sure. This is Doug. I'll take that. Yeah, as you noticed, um, we did see him improve pricing during the during the quarter, I would say that, um, in anticipation of that, we're we're seeing folks that are, they're looking towards that, but it's been relatively steady as as we go on, we've actually seen interestingly enough. Was that Whitewood pricing also came up during during that time, so there's anticipation. But I, I wouldn't say that that's been a a significant increase yet, but we're hearing a lot of chatter about that going forward.

Am I keep in mind that some of that is a function of just the residual portfolio uh following the disposition of the uh the properties in in Calum. Uh the the residual portfolio is just a better portfolio. So that's reflected in the pricing achieved in this most recent quarter.

Yeah, I appreciate the color that makes it. Not that makes sense. Um, what do you see? Currently, just out of curiosity, in terms of of prices, have you seen? So, if 2q there was a residual from the portfolio and, and it's, um, you're seeing, um, Trends as you as you outlined them. Are you seeing anything more? Currently with respect to pricing being tensioned? Because the add was announced

Yeah, this is again, I'll take that. You know, I I would say right now it's it's pretty much still Steady As She Goes with the expectation that um we'll see. Things are still are ample log supplies out there, right? This minute. So I think folks are really waiting to see how this how this impacts things, but we have seen some Mills that are increasing demand. So there there is that opportunity out there and we expect that will come forward as, as we see things. But I think it's just too early to really say that we've seen prices respond immediately. But, you know, expectations are definitely that as the Canadian Lumber starts to to slow down, um, coming in with these extra duties, that we will see that response typically in the past we've seen is that there has been a, you know, additional shipment of lumber from Canada pre pre pre increases in duties in the United States. So you don't normally see it just immediately respond at the announcement of the duties. There's usually a little bit of a lag time between when that happens, and that product starts to clear out this, this Supply channels,

Can I appreciate it? And what 1 final question? Just um, you know, Mark now that you've completed your transformation that paid it down is has notable you know what's next for the company. Um you know in recent calls you've mentioned that you're better positioned for growth so help us frame how you expect to accomplish that growth.

Particularly given comments you've made around elevated Timberland values and really is your is it more just you're going to run the business as it stands today and just use Sherry purchases to drive na accretion any color. You can provide around, you know, growth and how you expect to drive that. Thank you.

Debt, as we wanted to, uh, improve our, our balance sheet positioning, uh, we don't go into any period with prescriptive Capital allocation targets. We, we really try to play the hand. We're dealt, uh, to create value for shareholders, you know? Right now, we're certain focused on share BuyBacks given the significant disconnect, uh, that we see between our share price and, and our view of nav. Um, but we're not afraid to Pivot when it makes sense to do. So, um, you, of course, we we've indicated that we intend to maintain a leverage Target below 3 times, net debt. Uh, so some of our cash will invariably be earmarked for, uh, for Debt Pay down, uh, but that that still leaves about $50 million or over 500 million dollars, uh, that we have available to deploy opportunistically. So again, we're going to just continue to think about that in terms of uh how do we build long-term value per share? Timberland. Acquisitions are obviously challenging on this Market environment relative to uh, to our cost of capital. Um, but but that could change that Dynamic could change over time.

Got it. Thank you.

Thank you. Our next caller is Buckhorn with Raymond James. You may go ahead.

Hey thanks. Good morning, guys and congrats on on the New Zealand sale and all the progress here to date. Um,

Great job. And, um,

Curious about your thoughts on just the upcoming hurricane season, as it relates to the US South and, and you've been dealing with the, uh, the Salvage volume, overhang for the past, couple of quarters. Uh, but we've got another hurricane season where the, you know, forecast is, is for an, you know, above average, um, number of storms in 3 to 5 kind of major hurricanes projected. How do you look at the, um, you know, the the landscape in terms of, you know, if we did have a couple of major storms is, you know, are the, I mean, these hard question to answer, but are the timber strands that are out there the, in the wood baskets more or less, and vulnerable to, uh, damages or Salvage. Uh, you know, or or, you know, some sort of Salvage activity if we did. Have, you know, another couple of major storms, hit the region.

Yeah, as you say that is that is a hard 1 to to predict or forecast going forward to, to your point. Um, you know, what I would say is is you're right there are predicting, you know, potentially additional but what we've seen so far is the setup is that they they're not necessarily aimed at the southeast United States, right? This minute, which is, which is good news as we go forward. So it's been a little bit slow to start and I'm going to knock on some wood that that continues and and that they don't, they don't form that formation, you know, as, with respect to our own assets. You know, we for the last few years we've been thinking about this quite a bit, we think about kind of adapting for climate change, things like that. So we've been doing less thinning within a certain distance from a, from the, um, coastlines basically. And, and I know that other folks are also selling starting to follow through with that also. So I

I think you're seeing Forest owners starting to basically often what happens is recently it then stands that really take a beating when a hurricane comes through. And so we're seeing folks start to to think about those similarly, as we go across. So I I would say in some respects, you know, over time we're going to see that hardening off but it it really is impossible to just to tell kind of the duration the impact of a hurricane and how it's going to impact an area and and just what might happen, you know, hurricane haleem was was definitely a unique 1 that we haven't seen. Before we started in Florida, went all the way up to North Carolina, um, praying. We don't see another 1 like that but um you know our own assets like I said we're we're we're adapting to um things we're seeing changes in the climate and kind of what I call hardening off and and being ourselves you know, less susceptible to those things. And I'm seeing that elsewhere also

That's great. I appreciate the call over there, thank you. Um and on the real estate side, you know, looking at head to the third quarter with, you know, the the projections and and the pipeline looks very robust. I mean is there any

You know, is there any particular group of buyers that is is get getting more active? Um, whether that's the rural or the conservation side or or is there is there a a noticeable uptick? Um, in terms of just, you know, how sustainable this, this level of of demand for higher and better. Use real estate is going forward

I might say we've generally continued to see pretty strong demand across, you know, all the different categories of of real estate uh sales. Um you know, recognized as as we discussed in in the prepared remarks. Um,

You know, real estate sales are invariably lumpy in nature and we and we do have a um, uh, you know, pretty strong second half uh, plan for. Um, and that's really just driven by a number of of relatively large transactions that we anticipate are going to close in the third quarter. So you know again overall demand environment uh continues to be strong but really the uh the strong 3Q and H2 is really driven by a handful of uh significant transactions.

Got it. All right. Thanks for the caller. Good luck guys.

Thank you. Our next caller is Anthony Piner with City Research. You may go ahead, sir.

uh, comments, but I'm just wondering if you could dig a little bit deeper on 1, big, beautiful Bill, uh, impact if any to uh, solar and market and kind of conversations you've had with partners and

and customers um uh, since the bill was passed

Yeah, I'll let comment on that. Sure I'm happy to comment on that. You know, for our Solar Development pipeline, we continue to be encouraged by the level of activity that we're seeing a new projects being identified and and negotiated put our option agreements cross your South footprint. So kind of despite that uncertainty from the, the 1, big, beautiful, bill act that you mentioned. We're still seeing our best activity and driving new projects forward toward development and securing new properties for for post tax incentive, you know, kind of window development. And as we've seen in Mark mentioned kind of industry reports, show a broad range of expected impacts. You know to the level of new utility scale Solar Development over the next 5 to 10 years. But still most are estimating that that residual level of growth is going to be above the priority levels.

And so we currently have solar options covering um, about 40,00 Acres a little bit over that um, in the US South and we've seen a modest number of options expire, but we've also seen those be offset by new options that were um, put in place over the last quarter. So we feel good about where we're sitting right this minute, you know, I, as we mentioned before we still think it's got a good growth rate and our option pipeline remains strong. We've got more than 10 projects currently in negotiation or um, consideration with with high-quality counterparties. So we have seen some move off but we've also seen those been replaced in the last quarter.

Okay, that that's very helpful and then and the 100% bonus depreciation. Does that have any impact um, to your customers or sort of project timelines? And is there anything else from 1 big beautiful bill? That is uh you know, an investor should keep in mind when we think about raineer.

I think we tried to cover kind of the key highlights around that in in in prepared remarks. And so those are the what we really see is the key drivers that are going to affect us as we look forward. And again it's mainly around our Our Land base Solutions, business and opportunities there

Okay, that's helpful. I'll turn it over.

Thank you. Our next caller is Mark Wein from Seaport Research Partners. You may go ahead.

Thank you, and and congrats on on completing the asset disposition program. Uh, first first the, the mark, you mentioned, the 500 million, um, of cash for opportunistic. Um, actions does, does is a portion of that going to be, um, used for distribute, for for distribution. I know you have some flexibility on how you can do that distribution, but is is, does that include some? That would be a part of that distribution. And if so, is there a minimum amount that would be, um, cash in the distribution?

Yes, as it relates to the distribution, our our guidance that we indicated, at the time that we announced New Zealand transaction. Um, our expectation is it still that we'll have a 1 dollar $140 per share, uh, special distribution, uh, for this year that will be paid in some combination, um, of, of cash in stock. Uh, so we haven't, uh, yet identified, the specific amount of that or kind of what the uh, um, what the breakdown would be between cash and stock, but we do anticipate announcing that later this year, uh, recognize that that distribution is driven not just by the gain, on the New Zealand transaction. Uh, but also the, the ret taxable income from from operations. And so we want to get a little bit further into the year and kind of see where we expect that to shake out uh, before we declare that special,

Understood and then presumably like last time you'd have some flexibility on how much of it is Cash. Versus how much is a a stock dividend is that.

Correct, that's right.

Okay. All right so we can do the math then um so then uh so you know obviously the the development business seems to be doing uh very well. I'm I'm just curious so 18 months ago. Um you you had your investor day very thorough presentation on. You know what you saw, as potential there has that evolved at all or, or would you say that that's still sort of the blueprint, uh, that we can look back at to to see the likely trajectory from your perspective?

To be lumpy quarter to quarter and year to year, um, but I'd say we've been very pleased with the overall trajectory um of both of those projects over the past few years. Our our team has really put a lot of attention uh into uh placemaking and and really trying to build a strong brand among homebuilders. And, and we're seeing that uh, that activity within those projects ramp up, um, to put things in perspective. Wildlife had about uh, 30 Holmes entering 2020. Uh, we're on Pace to finish the year with over 750, uh, project to date residential closings in in wildlife. And we expect that pace of residential, closings are going to continue to ramp up, um, over the next few years, we expect to get to, uh, you know, up up upwards of 400 closings annually, which would put Wildlife up there among, uh, the top 50 MPCs in in the country. So, you know, suffice it to say, we're still in the early Innings on these projects. Um, overall we've sold, you know, 10% of the Acres that we have entitled, it Wildlife, uh, in less than 15% of the acreage at Heartwood. Um, but again, we're

We're we're really uh looking forward to a long runway for Value creation here.

Okay, Superman to real fast ones. Have you repurchased any stocks since, uh, the end of, uh, the quarter. So since June 30th and and the second um,

So so you mentioned on, so I I guess in some cases because, you know, there are still there are, uh, you can get the, uh, the tax incentives, you know, on development spend, if you hurry it up, but it doesn't sound like you're seeing any acceleration from any of the, uh, situations where you're involved. Um, and then just on CCS, you know, you have 1 competitor who's talking about, you know, maybe they could see meaningful Revenue. Starting 2029 20, uh, sorry, 2029 or 20 30? Uh, is, do you? Do you have any time line of when that might be a meaningful Revenue contributor for you guys?

Yeah, maybe you take the first question and then I'll I'll turn it over to uh to Doug. Um, we have bought back uh some additional stock posts. The end of the quarter, um, you know, not going to get into the details of of that right now, we'll plan to just make those disclosures in line with our, our quarterly earnings release. Um, but again, we continue to see a real opportunity with that, disconnect between private Market values and and where the stock trades

Yeah, and I'll pick up first on. I believe your question came around solar and and development credit. And um, yeah. What we have seen some potential for a couple of our counterparties to speed up within the existing options we already had and and conversions. So you know, several of them anticipating the the tariffs have bought ahead enough, enough equipment basically for for a year or more. And so we're seeing them, you know, talking about moving forward, on that. So and and in some cases 1 of the options that dropped off was was 1. They're saying, we're going to, we're going to put our attention on this other 1 and focus on that. So we are seeing some some Focus

On that I can't say that you know when they're going to go into into place yet but we have seen some people speeding up on on that kind of option to lease process. So that is something that's on people's minds for sure in the Solar

And on the carbon capture and storage, you know, is we mentioned our prepared comments. We're we're really pleased to have made the progress. We have with almost you know nearly half of our 15400 acres under CCS lease.

And those are now moving through different stages of the class 6 Underground injection control parting process and that's for up to 53 Wells right now. So it's it's impressive. Number of Wells that are currently in the permitting process.

And and we're really encouraged by Continuum of work. We have with several other parties on new projects.

And 1 of the things that um, didn't come out of the, the obba, but but it's kind of come out some recently, take actions as you know the current regime has been supportive of ccs and and really on on improving things. Uh getting things processed more quickly and so they're they're the committing technology action plan. The administration is aiming to see that the classics Wills get uh permitted within 2 years and that's through promoting State privacy and also streamlining regulatory reviews.

So I think that's a positive. These were getting stuck in in 3 to 4 year permitting processes before. So um that that is hopefully if they're able to achieve the goals they have their then as we kind of mentioned our investor day. You know, we talked about these are are 3 to 5 year kind of projects from the time that you you get something under lease and when it gets through permitting and and can get in the build. So with respect to the time and you mentioned before, I can't predict when something's going to happen based on, still got to go through that government permitting, but it does seem positive. That it seems like we're seeing that um kind of acceleration closer than what was happening before.

I appreciate the color.

Thank you. Our next caller, is Keaton mentora. With BMO Capital markets, you may go ahead, sir.

Uh, good morning and thanks for taking my question. Um,

Maybe coming back to Southern Timber, excluding kind of you know the the Salvage um activity that's been going on for the last couple of quarters.

Are you seeing sort of signs, uh, that you know, sort of things are stabilizing? Um, and and sort of, you know, demand is improving. Uh, I mean, if you look from a housing standpoint, you know, the recent data points, haven't been great. So I'm just curious. What are you hearing from your customers in terms of their, uh, approach towards the back? Half as it relates to both s locks and pulford,

Sure, this is Doug Austin. I'll start with that. You know, I'd say, um, even in light of the tough conditions, we've seen particularly from the Salvage. If you look our um, Pine salt and bra pricing was still up 3% um quarter of a quarter. So while we uh, you know, are still contending with with really tough conditions, we did see Improvement overall across the US South, and our operations. And to see that Pine salt and pricing coming up. So, I think, you know, where we sit right now, we've seen it. It's it's very dependent on on the customer and how they're thinking. We've recently seen Mills that are procuring additional salt Timber and are looking to gear up talking about additional shifts in the US South in particular. Um, and then we've seen customers who are taking a wait and see. So it's it's there's just a lot.

Lot of uncertainty still? I wish I could tell you exact answer that but what's been positive is that we have seen customers returning from their their harvesting operations, as Mark mentioned, kind of normalizing, we talk our prepared comments, we had Florida customers, um, who are up harvesting basically pulpwood, Salvage in Georgia.

Primarily most of what we're aware of, they've returned back to Florida and they've been active in recent, stumpage sales and really looking at increasing salt, Timber production. And so we've seen um, pricing improve and, and our stumpage sales as we've sold things. So, I, I think we're seeing, you know, the early hints of, of, of improvement there. It's it's, it's a positive positive momentum as we go through that. But in the quarter, we still suffered from that as we mentioned, kind of last time, you know, about a 20%, um, price decline in that in that primary Market of our of our SouthEast Georgia area. Um, but as we get outside of that, um, we've been pleased with what we've seen so far and and you know, pricing was was more than stable it. It increased by 3% on the, on the sawlog side and and we are seeing increased talk about demand. I think people are still waiting to see how things go as I mentioned before. You know, there's usually additional Lumber and Supply Chain free. The duty is getting imposed and so I think folks don't want to get caught out but uh, they're definitely the right momentum. Talking about opportunity to add add Crews and increase increased production. So it's it's a positive signal, I'd say overall. But I think folks,

Are still just, you know, being careful in the in the current situation and primarily interestingly enough, it's been more on the Sun, yellow, pine side, that we've seen that than it has been in the, the Northwest mainly because I think most of our Northwest Mills were already operating near capacity. And where I mentioned earlier, what we've seen is the the white wood Mills which are have been had lower pricing. Those are the ones that we've seen some, um, improved pricing really in the last, the last quarter, kind of in relation to that. So we're seeing that kind of substitution effect as we go forward. So really, really think there's going to be positive momentum here once the duties, take bite, and, and that supply chain starts to clear out some

No, that's very helpful perspective. I'll jump back in the queue. Good luck.

Thank you, there are no further questions. I'll now turn the call back over to Colin Mings. You may go ahead, sir.

Thanks, this is Colin Mings. I'd like to thank everybody for joining us. Please contact us with any follow-up questions.

Thank you, this concludes today's conference call. You may go ahead and disconnect at this time.