Rayonier Inc. Reit · NYSE:RYN
Rayonier Inc. Reit — Potlatch — 2016 REITWeek Conference
25 slides from Rayonier Inc. Reit's conference presentation, Jun 8, 2016
Slide 1: Investor Presentation
June 2016 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 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 ~ 1.4 million acres of certified timberland and are a top 10 lumber manufacturer in the U.S. Timberlands, acres as of March 31, 2016 Idaho 619,000(1) Arkansas 412,000 Minnesota 167,000 Mississippi 99,000 Alabama 99,000 TOTAL: 1,396,000 (1) Pro forma to remove 172,000 acres
Slide 5: Resource: Segment Overview
Resource: Segment Overview Resource is a stable and significant source of cash RESOURCE PERFORMANCE • Increased EBITDDA driven by EBITDDA in millions(1) Northern Sawlog price per ton(2) recovery of Northern sawlog prices Southern Sawlog price per ton(2) $103 $105 $92 • Southern pine sawlog prices ha
Slide 6: Central Idaho Timberland Sale: Benefits to Potlatch
CENTRAL IDAHO TIMBERLAND SALE: Benefits to Potlatch We sold 172,000 acres of central Idaho timberlands for $114 million in April. The funds will be used to take advantage of the low public equity valuation of the company’s stock, reduce debt and increase financial flexibility. • Leverage strong dema
Slide 7: Central Idaho Timberland Sale: Valuation Metrics
CENTRAL IDAHO TIMBERLAND SALE: Valuation Metrics As indicated in the table below, our northern Idaho timberlands are considerably more productive than our central Idaho acres. This supports a significantly higher valuation for our northern Idaho timberlands. North Central As of and for the year ende
Slide 8: 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 2016. ANNUAL HARVEST PROJECTED AVERAGE ANNUAL HARVEST RANGE (millions of tons)(1) (millions of tons) 5.3 Max. 4.6 Ma
Slide 9: 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 10: 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 EBITDDA in millions(1) about 650 million board feet of lumber $392 $402 Lumber Price (MBF) annually $342 $346 $65 $59 • Our industrial-grade
Slide 11: 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 12: 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 12
Slide 13: 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 14: 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 15: 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 16: 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 17: Capital Structure
Capital Structure Pro forma as of March 31, 2016 • $249 million is available on our revolver Unaudited, $ in millions • Maturity: February 2020 Market capitalization(1) $1,360 • Accordion: $250 million Net debt(2) 508 • Received cash of $112 million on sale of Enterprise Value $1,868 central Idaho t
Slide 18: Dividend History
Dividend History • Funds Available for Distribution from recurring sources covers the dividend in 2016 • We’ve grown our dividend 20% the last three years(1) • Our current dividend yield is 4.5%(2) FUNDS AVAILABLE FOR DISTRIBUTION(3) DIVIDEND PAID PER SHARE (in millions) (dollars) $98 $1.50 $77 $1.4
Slide 19: 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 20: Appendix
Appendix Investor Presentation
Slide 21: 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 22: 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 $40 TX FL
Slide 23: EBITDDA & Segment EBITDDA Reconciliation
EBITDDA & Segment EBITDDA Reconciliation ($ in millions) Fiscal Year 2011 2012 2013 2014 2015 CONSOLIDATED Net income $40 $43 $71 $90 $32 Adjustments: Income tax (benefit) provision 4 17 14 20 (6) Interest expense (1) 28 26 23 23 33 Depreciation, depletion and amortization 26 23 25 25 36 Basis of re
Slide 24: Potlatch FAD Reconciliation
Potlatch FAD Reconciliation ($ in millions) FAD Fiscal Year 2012 2013 2014 2015 Net income $43 $71 $90 $32 Bond discounts and deferred loan fees 3 2 2 2 Depreciation, depletion and amortization 23 25 25 36 Basis of real estate sold 5 3 9 7 Non-cash asset impairment & eliminations - - - 1 Capital exp
Slide 25: 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