Rayonier Inc. Reit · NYSE:RYN
Rayonier Inc. Reit — Potlatch — Raymond James 37th Annual Institutional Investors Conference (March 2016)
24 slides from Rayonier Inc. Reit's conference presentation, March 2016
Slide 1: Investor Presentation
March 2016 Investor Presentation Mike Covey Chairman & Chief Executive Officer Jerry Richards Vice President & Chief Financial Officer
Slide 2: Forward-Looking Statement & Non-GAAP Measures
Forward-Looking Statement & Non-GAAP Measures FORWARD-LOOKNG STATEMENTS This presentation contains certain forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended, including without limitation, statements about long-term economic fundamentals and future
Slide 3: Potlatch Highlights
Potlatch Highlights Timber REIT best positioned to capitalize on the • Highest leverage to lumber prices of timber REITs housing recovery • Long-term economic fundamentals are positive • Largest private landowner in Idaho Geographically diverse, high-quality timberlands • Southern timberlands well p
Slide 4: Potlatch Portfolio
Potlatch Portfolio We own ~ 1.6 million acres of certified timberland and are a top 10 lumber manufacturer in the U.S. • We’ve grown our dividend 20% the last two years • Our current dividend yield is 4.8% Timberlands, acres as of December 31, 2015 Idaho 790,000 Arkansas 415,000 Minnesota 169,000 Mi
Slide 5: Resource: Segment Overview
Resource: Segment Overview Resource is a stable and significant source of cash RESOURCE PERFORMANCE • Increased EBITDDA driven by recovery of EBITDDA in millions(1) Northern sawlog prices Northern Sawlog price per ton(2) Southern Sawlog price per ton(2) $103 $105 $92 • Southern pine sawlog prices ha
Slide 6: Resource: Long-Term Harvest Profile
Resource: Long-Term Harvest Profile Our strategy is to maximize net present value while managing our timberlands sustainably over the long term ANNUAL HARVEST PROJECTED AVERAGE ANNUAL HARVEST RANGE (millions of tons) (millions of tons) 5.5 Max. 4.8 Max. 4.8 Max. 4.8 Max. 4.9 Max. 4.5 Min. 4.4 4.0 Mi
Slide 7: Real Estate Business
Real Estate Business Part of our ownership is worth more for uses other than growing trees. Parcels are segmented by product, then competitively marketed for sale at the highest overall price. We expect to sell about 20,000 acres annually. 2016 Land Base Value Optimization Strategic Management / Lon
Slide 8: Wood Products: Segment Overview
Wood Products: Segment Overview Competitive mills will benefit from improving housing market WOOD PRODUCTS PERFORMANCE • We operate four sawmills that produce about EBITDDA in millions(1) 650 million board feet of lumber annually Lumber Price (MBF) $392 $402 $342 $346 $65 • Our industrial-grade plyw
Slide 9: U.S. Housing Starts & Lumber Demand are Increasing
U.S. Housing Starts & Lumber Demand are Increasing • U.S. housing starts are recovering to long-term trend • The incremental wood needed to supply increasing demand will come from the U.S. South U.S. HOUSING STARTS U.S. LUMBER SUPPLY – RISI 2,500 (in thousands) 45 (billion board feet) Actual(1) Fore
Slide 10: Lumber Capacity Utilization vs. Price
Lumber Capacity Utilization vs. Price Lumber prices are correlated with manufacturing capacity utilization, which is increasing. 2015 2014 Source: RBC Capital Markets from Random Lengths, RISI, and RBC Capital Markets estimates. Investor Presentation 10
Slide 11: Southern Sawlog Price
Southern Sawlog Price Southern sawlog prices are well below trend levels SOUTHERN PINE SAWTIMBER STUMPAGE PRICE VS. LUMBER PRODUCTION 20 $45 US South Soft Lumber Production US South Pine Sawtimber Price 18 $40 Pine Sawtimber Stumpage, $/ton (nominal) Lumber Production, Billion Board Feet 16 $35 14 $
Slide 12: Increasing Investments in our Southern Wood Baskets
INCREASING Investments in our Southern Wood Baskets • Manufacturers are investing in our Southern wood baskets, which will translate to higher sawlog prices. • Our Southern wood baskets have more price upside than other parts of the South. PINE SAWLOG PRICE CHANGE (2010 TO 2014) Potlatch Landholding
Slide 13: North American Log & Lumber Exports
North American Log & Lumber Exports The volume of wood exported from North America to China has grown materially in the last decade U.S. WEST COST LOG EXPORTS NORTH AMERICAN SOFTWOOD LUMBER EXPORTS (billion board feet – lumber scale) (billion board feet) 3.5 Actual Forecast Actual Forecast 8 Rest of
Slide 14: Canada's Ability to Supply Lumber is Constrained
Canada’s Ability to Supply Lumber is Constrained Canadian supply has declined about 10 billion board feet due to the mountain pine beetle and a reduction in allowable cut CANADA SOFTWOOD LUMBER PRODUCTION (billion board feet) Actual Forecast 40 British Columbia Rest of Canada 35 ≈10 billion 30 board
Slide 15: Capital Structure
Capital Structure Amounts as of December 31, 2015 DEBT MATURITIES FOR THE NEXT FIVE YEARS Unaudited, $ in millions (in millions) $190 Market capitalization(1) $1,085 Net debt(2) 626 $46 $0 $11 $14 Enterprise Value $1,711 2016 2017 2018 2019 2020 Net debt to enterprise value 37% Consolidated leverage
Slide 16: Dividend History
Dividend History • We’ve grown our dividend 20% the last three years(1) • Our current dividend yield is 5.6%(2) FUNDS AVAILABLE FOR DISTRIBUTION(3) DIVIDEND PAID PER SHARE (in millions) (dollars) $98 $1.50 $77 $1.425 $57 $53 $61 $13 $52 $58 $1.28 $50 $1.24 $44 2012 2013 2014 2015 2012 2013 2014 2015
Slide 17: Arbitrage Opportunity
Arbitrage Opportunity The current dislocation between private and public market valuation of timberlands makes repurchasing our shares compelling. The value implied in our current stock price is about $900 per acre. PRIVATE TIMBERLAND TRANSACTIONS POTLATCH STOCK PRICE CHART 1,500 $3,500 PCH 26.67 45
Slide 18: Summary
Summary • High quality, well managed portfolio of assets • Long-term industry trends are favorable • U.S. housing starts recovering to long-term trend • North American exports to China tension U.S. market • Canadian lumber capacity is declining • Lumber and Southern sawlog prices will recover • Curr
Slide 19: Appendix
4\ Potlatch. | Appendix www.potlatchcorp.com
Slide 20: Southern Sawlog Demand by State
Southern Sawlog Demand by State Comparison of historical sawlog demand across 11 southern states. Several states (GA, NC, TX, SC) now have sawlog demand approaching or at pre-recession levels. Demand is still relatively sluggish in our wood baskets in AR, AL, and MS (dotted lines). 14 Millions AR 12
Slide 21: Southern Sawlog Price Trends by State
Southern Sawlog Price Trends by State Comparison of historical sawlog pricing across 10 southern states. Pricing appears to bottom in most markets in 2012 with great disparity across the region (e.g. TX @ $31/ton and AR at $24/ton). $50 $50 AL $45 $45 GA MS Stumpage Price, $/ton SC $40 AR $40 TX FL
Slide 22: EBITDDA & Segment EBITDDA Reconciliation
EBITDDA & Segment EBITDDA Reconciliation ($ in millions) Fiscal Year 2011 2012 2013 2014 2015 CONSOLIDATED Net income $40 $43 $71 $90 $32 Adjustments: Income tax (benefit) provision 4 17 14 20 (6) Interest expense (1) 28 26 23 23 33 Depreciation, depletion and amortization 26 23 25 25 36 Basis of re
Slide 23: Potlatch Net Debt & FAD Reconciliations
Potlatch Net Debt & FAD Reconciliations ($ in millions) Net Debt At December 31, 2012 2013 2014 2015 Long-term debt $349 $320 $606 $599 Current installments on long-term debt 8 - 23 5 Current notes payable - - - 30 Cash (17) (6) (5) (8) Short-term investments (63) (52) (26) - Net Debt $277 $262 $598
Slide 24: Definitions
Definitions EBITDDA is a non-GAAP measure and is calculated as net income (loss) adjusted for interest expense, provision (benefit) for income taxes, depreciation, depletion and amortization, basis of real estate sold and non-cash asset impairment and eliminations. Segment EBITDDA from continuing op
Potlatch — Raymond James 37th Annual Institutional Investors Conference (March 2016) on 6ix