22 slides from Rayonier Inc. Reit's conference presentation, June 2017
Slide 1: Investor Presentation
June 2017 Investor Presentation Mike Covey Chairman & Chief Executive Officer Jerry Richards Vice President & Chief Financial Officer Investor Presentation
Slide 2: Forward-Looking Statements & Non-GAAP Measures
Forward-Looking Statements & Non-GAAP Measures FORWARD-LOOKING 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 futur
Slide 3: Potlatch Highlights
Potlatch Highlights • Highest leverage to lumber prices of timber REITs Timber REIT best positioned to capitalize on the • Long-term economic fundamentals are positive housing recovery • Preliminary countervailing duties were announced in the Canadian lumber import trade case in Q2 2017 • Largest pr
Slide 4: Potlatch Portfolio
Potlatch Portfolio We own ~ 1.4 million acres of certified timberland and are a top 10 lumber manufacturer in the U.S. Timberlands, acres as of March 31, 2017 Idaho 615,000 Sawmill Production, MMBF Arkansas 409,000 Warren, AR 195 Minnesota 154,000 Gwinn, MI 183 Mississippi 97,000 St. Maries, ID 181
Slide 5: Highest Leverage to Lumber Prices
Highest Leverage to Lumber Prices Potlatch has more direct leverage to lumber prices than any other timber REIT. This comes from both a lumber manufacturing business and indexed log prices in Idaho. A $30/mbf change in lumber prices represents about $25 million of annual EBITDDA. Competitors Weyerha
Slide 6: Softwood Lumber Trade Case
Softwood Lumber Trade Case We were pleased with the preliminary countervailing duty (“CVD”) and look forward to the anti-dumping duty announcement (“AD”) near the end of June. We expect lumber prices will remain volatile as the trade case progresses. • Canadian lumber imports were managed under an a
Slide 7: Lumber Capacity Utilization vs. Price
Lumber Capacity Utilization vs. Price Lumber prices are correlated with manufacturing capacity utilization, which is increasing. Western SPF lumber prices increased $73/MBF recently and are up $114/MBF compared to a year ago.(1) REAL PRICE (2015 dollars) W. SPF 2x4 HISTORICAL W. SPF 2X4 PRICES (US$)
Slide 8: 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 45 (in thousands) (billion board feet) Actual(1) Fore
Slide 9: Southern Sawlog Price
Southern Sawlog Price Southern sawlog prices are normally correlated to lumber production and are well below trend levels. SOUTHERN PINE SAWTIMBER STUMPAGE PRICE VS. LUMBER PRODUCTION 20 $45 Lumber Production, Billion Board Feet US South Soft Lumber Production Pine Sawtimber Stumpage, $/ton 18 $40 U
Slide 10: 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. Selected capacity expansions Demand(1) Description Location
Slide 11: North American Log & Lumber Exports
North American Log & Lumber Exports The volume of wood exported from North America to China grew materially in the last decade and remains at a meaningful level. U.S. WEST COST LOG EXPORTS NORTH AMERICAN SOFTWOOD LUMBER EXPORTS (billion board feet – lumber scale) (billion board feet) 4.5 Actual Fore
Slide 12: Canada's Ability to Supply Lumber is Constrained
Canada’s Ability to Supply Lumber is Constrained Canadian supply has declined almost 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 boa
Slide 13: Resource: Segment Overview
Resource: Segment Overview Resource is a stable and significant source of cash. RESOURCE PERFORMANCE • Increased EBITDDA driven by Northern EBITDDA in millions(1) recovery of Northern sawlog prices Southern EBITDDA in millions(1) Northern Sawlog price per ton(2) Southern Sawlog price per ton(2) • So
Slide 14: 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. We plan to harvest 4.2 million tons in 2017. ACTUAL ANNUAL HARVEST PROJECTED AVERAGE ANNUAL HARVEST RANGE (millions of tons) (millions of tons)(3) 5.3 Max.
Slide 15: 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. 2017 Land Base Value Optimization Strategic Management / Lon
Slide 16: Wood Products: Segment Overview
Wood Products: Segment Overview Competitive mills will benefit from an improving housing market. WOOD PRODUCTS PERFORMANCE • We operate four sawmills that can produce EBITDDA in millions(1) 680 – 715 million board feet of lumber Lumber Price (MBF) annually, depending on market conditions $392 $402 $
Slide 17: Capital Structure
Capital Structure As of March 31, 2017 Unaudited, $ in millions • $249 million is available on our revolver Market capitalization(1) $1,885 • Maturity: February 2020 • Accordion: $250 million Net debt(2) 482 Enterprise Value $2,367 • Refinancing and repayments completed in 2016 reduced interest run
Slide 18: Dividend History
Dividend History • We grew our dividend 20% in 2013 and 2014(1) • Our current dividend yield is 3.2%(2) DIVIDEND PAID PER SHARE (dollars) $1.50 $1.50 $1.425 $1.28 $1.24 2012 2013 2014 2015 2016 (1) The dividend increased 13% in Q4 2013 and 7% in Q4 2014. (2) Based on June 1, 2017 closing stock price
Slide 19: Summary
Summary • High quality, well managed portfolio of assets • Softwood lumber trade case could provide near term catalyst • Long-term industry trends are favorable • U.S. housing starts recovering to long-term trend • North American exports to China tension U.S. market • Canadian lumber capacity is dec
Slide 20: Appendix
Appendix Investor Presentation
Slide 21: EBITDDA & Segment EBITDDA Reconciliation
EBITDDA & Segment EBITDDA Reconciliation ($ in millions) Fiscal Year 2012 2013 2014 2015 2016 RESOURCE Northern Resource operating income $33 $53 $65 $59 $65 Depreciation, depletion and amortization 15 16 15 15 10 Northern Resource EBITDDA $48 $69 $80 $74 $75 Southern Resource operating income $16 $
Slide 22: 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