Rayonier Inc. Reit · NYSE:RYN
Rayonier Inc. Reit — Potlatch — Bank Of America Merrill Lynch 2015 Paper, Packaging And Builders Conference
23 slides from Rayonier Inc. Reit's conference presentation, Dec 9, 2015
Slide 1: Investor Presentation
December 2015 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 Sept. 30, 2015 Idaho 791,000 Arkansas 413,000 Minnesota 170,000 Missi
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) $110 Southern Sawlog price per ton(2) $103 $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. 4.5 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. 2015 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 top-quartile sawmills and EBITDDA in millions(1) produce about 650 million board feet of lumber Lumber Price (MBF) annually $392 $402 $366 $342 $65 • Our industria
Slide 9: U.S. Housing Starts & Lumber Demands are Increasing
U.S. Housing Starts & Lumber Demands 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) For
Slide 10: 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 11: 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) Change Descriptions Subs
Slide 12: North American Log & Lumber Exports
North American Log & Lumber Exports The volume of wood exported from North America to China has grown materially U.S. WEST COST LOG EXPORTS NORTH AMERICAN SOFTWOOD LUMBER EXPORTS (billion board feet – lumber scale) (billion board feet) Actual Forecast Actual Forecast 3.5 8 Rest of World Exports to R
Slide 13: 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 14: Capital Structure
Capital Structure Amounts as of September 30, 2015: DEBT MATURITIES FOR THE NEXT FIVE YEARS Unaudited, $ in millions (in millions) $190 Market capitalization(1) $1,386 Net debt(2) 629 $23 $5 $11 $14 Enterprise Value $2,015 2015 2016 2017 2018 2019 Net debt to enterprise value 31% Consolidated levera
Slide 15: Dividend History
Dividend History • We’ve grown our dividend 20% the last two years(1) • Our current dividend yield is 4.4%(2) FUNDS AVAILABLE FOR DISTRIBUTION(3) DIVIDEND PAID PER SHARE (in millions) (dollar per share) FAD Dividend Distribution $98 $1.50 $77 $1.425 $58 $61 $53 $50 $52 $55 $1.28 $1.24 (4) (4) 2012 2
Slide 16: Share Repurchase
Share Repurchase 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 $1,000 per acre. PRIVATE TIMBERLAND TRANSACTIONS POTLATCH STOCK PRICE CHART PCH 34.08 44.00 42.00 40.00
Slide 17: Summary
Summary • High quality, well managed portfolio of assets • Long-term industry trends are very favorable • U.S. housing starts recovering to long-term trend • North American exports to China tension U.S. market • Canadian lumber supply is diminished • Lumber and Southern sawlog prices will recover •
Slide 18: Appendix
4\ Potlatch. | Appendix www.potlatchcorp.com
Slide 19: 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) have sawlog demand approaching prerecession levels. Demand is still relatively sluggish in our wood baskets in AR, AL, and MS (dotted lines). 14 Millions AR 12 MS AL 10 G
Slide 20: 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 $23/ton). $50 AL $45 GA MS SC $40 AR TX FL LA $35 NC Stumpage Price, $/ton TX
Slide 21: EBITDDA & Segment EBITDDA Reconciliation
EBITDDA & Segment EBITDDA Reconciliation ($ in millions) Fiscal Year 2011 2012 2013 2014 LTM CONSOLIDATED Net income $40 $43 $71 $90 $48 Adjustments: Income tax (benefit) provision 4 17 14 20 (4) Interest expense (1) 28 26 23 23 31 Depreciation, depletion and amortization 26 23 25 25 34 Basis of rea
Slide 22: Potlatch Net Debt & FAD Reconciliations
Potlatch Net Debt & FAD Reconciliations ($ in millions) Net Debt At December 31, At Sept. 30, 2012 2013 2014 2015 Long-term debt $349 $320 $629 $630 Current installments on long-term debt 8 - - - Current notes payable - - - - Cash (17) (6) (5) (1) Short-term investments (63) (52) (26) - Net Debt $27
Slide 23: 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
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