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Item 7. Management’s Discussion and Analysis

2022-02-25 compared with 2021-02-22 · 324 added, 278 removed, 426 unchanged (59% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The objective of the Management’s Discussion and Analysis is to detail material information, events, uncertainties and other factors impacting the Company and the Operating Partnership and to provide investors an understanding of “Management’s perspective.” Item 7, Management’s Discussion and Analysis (MD&A) highlights the critical areas for evaluating the Company’s performance which includes a discussion on the reportable segments, liquidity and capital, and critical accounting estimates.

The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and notes.

EXECUTIVE SUMMARY

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We own or lease under long-term agreements approximately 2.7 million acres of timberland and real estate in Alabama, Arkansas, Florida, Georgia, Louisiana, Oklahoma, Oregon, South Carolina, Texas and Washington.

Additionally, we act as a managing member in a private equity timber fund business with three funds comprising approximately 141,000 acres in Oregon, Washington and California.

On a “look-through” basis, our ownership in the timber fund business equates to approximately 17,000 acres.

We also have a 77% ownership interest in Matariki Forestry Group, a joint venture (“New Zealand subsidiary”), that owns or leases approximately 419,000 gross acres (296,000 net plantable acres) of timberlands in New Zealand.

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Our Trading segment, primarily consisting of activity by the New Zealand subsidiary, markets and sells timber owned or acquired from third parties in New Zealand and Australia.

We also engage in log trading activities from the U.S.

South and U.S.

Pacific Northwest.

CURRENT YEAR DEVELOPMENTS

During 2020, we acquired approximately 15,000 acres of timberlands for $24.7 million, excluding the merger with Pope Resources.

During 2021, we acquired approximately 103,000 acres of timberlands for $179.1 million.

For additional information on acquisitions, see Note 5 - Timberland Acquisitions .

For additional information related to the Pope Resources merger, see Note 2 - Merger with Pope Resources .

Additionally, as discussed in Note 7 - Noncontrolling Interests , we sold the rights to manage Timber Fund III & IV, as well as our ownership interests in both funds.

We also completed the liquidation of Fund II timberland assets.

As a result, Timber Fund III and IV balance sheets and results of operations are only included in our consolidated financial statements through the date of the sale.

As of December 31, 2021, we continue to manage and maintain a 20% ownership interest in Fund II, which is scheduled to terminate in March 2023.

Prior to the termination of Fund II, the remaining capital will be distributed to Fund II investors.

See Note 7 - Noncontrolling Interests and Note 8 - Variable Interest Entities for additional information.

INDUSTRY AND MARKET CONDITIONS

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With a higher proportion of pulpwood, our Southern Timber segment relies heavily on downstream markets for pulp and paper, and to a lesser extent wood pellet markets.

Our Pacific Northwest Timber and Timber Funds segments rely primarily on domestic customers but also export a significant volume of timber, particularly to China.

The Southern Timber, Pacific Northwest Timber and Timber Fund segments rely on the strength of U.S.

Our Pacific Northwest Timber segment relies primarily on

domestic customers but also exports a significant volume of timber, particularly to China.

The Southern Timber and Pacific Northwest Timber segments rely on the strength of U.S.

lumber markets as well as underlying housing starts.

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dollar terms.

As the current novel coronavirus (“COVID-19”) pandemic continues to evolve, the expected duration and the extent of economic disruption it may ultimately cause remain uncertain.

On March 19, 2020, the U.S.

Department of Homeland Security issued a memorandum identifying the forest products industry as a “critical infrastructure industry,” which led to continued operations in 2020.

Our New Zealand operations remained fully-operational during the remainder of the year after a government-mandated shutdown halted production from March 25, 2020 to April 27, 2020.

Local, state and federal governments continue to evaluate policies and restrictions in order to mitigate the spread of COVID-19.

Additional government-mandated shutdowns or shelter-in-place orders in markets in which we operate could negatively impact our results.

Further, prolonged periods of lower overall business activity as a result of COVID-19 could cause significant damage to the underlying economy, which would likely impact U.S.

timber markets.

We will continue to monitor COVID-19 and its impact on the markets in which we operate going forward.

As the current COVID-19 pandemic continues to evolve, the expected duration and the extent of economic disruption it may ultimately cause remain uncertain.

Local, state and national governments continue to evaluate policies and restrictions in order to mitigate the spread of COVID-19.

Government-mandated shutdowns or shelter-in-place orders in markets in which we operate could negatively impact our results.

Further, prolonged periods of lower overall business activity as a result of COVID-19 could cause significant damage to the underlying economy, which would likely impact timber markets.

In 2021, pricing in the U.S.

South remained relatively flat versus the prior year, with a slight decrease in pulpwood prices offset by improved sawtimber prices.

South improved versus the prior year, with increases in both pulpwood and sawtimber prices.

Both pulpwood and sawtimber pricing tend to be driven by local market supply and demand dynamics, which vary considerably based on the available inventory of logs, local market mill demand, and access to export markets.

In the Pacific Northwest, average log prices for 2020 were higher when compared to the prior year, primarily driven by improved sawtimber pricing resulting from pandemic-induced housing construction and repair and remodeling activity.

In New Zealand, average log prices for 2020 were lower than the prior year, driven primarily by the buildup of log inventories in China as a result of COVID-19 lockdowns in the early part of the year.

However, export prices were notably higher in the fourth quarter of 2020 due to a restriction on competing log imports to China from Australia amid escalating political and trade tensions between the two countries.

We are also subject to the risk of price fluctuations in our major cost components.

The primary components of our cost of sales are the cost basis of timber sold (depletion), the cost basis of real estate sold and logging and transportation costs (cut and haul).

Depletion includes the amortization of capitalized costs (site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll costs).

In the Pacific Northwest, average log prices for 2021 were higher when compared to the prior year, primarily driven by improved sawtimber pricing resulting from strong domestic demand and increased market tension due to higher levels of export activity to China.

In New Zealand, average log prices for 2021 were higher than the prior year, which reflected strong domestic demand, the ability of log exporters to pass higher costs on to customers as well as the restriction on competing log imports into China from Australia.

We are subject to the risk of price fluctuations in certain of our cost components, primarily logging and transportation (cut and haul), ocean freight and demurrage costs.

In 2021, each of our timber segments experienced upward pressure on these cost components, with the most significant increase experienced in ocean freight and demurrage costs in our New Zealand Timber segment.

Other major components of our cost of sales are the cost basis of timber sold (depletion) and the cost basis of real estate sold.

Depletion includes the amortization of capitalized site preparation, planting and fertilization, real estate taxes, timberland lease payments and certain payroll costs.

The cost basis of real estate sold includes the cost basis in land and costs directly associated with the development and construction of identified real estate projects, such as infrastructure, roadways, utilities, amenities and/or other improvements.

Other costs include amortization of capitalized costs related to road and bridge construction and software, depreciation of fixed assets and equipment, road maintenance, severance and excise taxes, fire prevention and real estate commissions and closing costs.

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Factors that can impact timber volume include weather changes, losses due to natural causes, differences in actual versus estimated growth rates and changes in the age when timber is considered merchantable.

A 3% company-wide change in estimated standing merchantable inventory would have caused an estimated change of approximately $4.7 m illion to 2020 depletion expense.

A 3% company-wide change in estimated standing merchantable inventory would have caused an estimated change of approximately $3.9 million to 2021 depletion expense.

Merchantable standing timber inventory is estimated by our land information services group annually, using industry-standard computer software.

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The determination is based on the geographic location of the new timber, the customers/markets that will be served and species mix.

During 2020, we acquired 15,000 acres of timberlands in Alabama, Georgia, Louisiana and New Zealand.

During 2021, we acquired 103,000 acres of timberlands in Florida, Georgia, Texas and New Zealand.

These acquisitions did not have a material impact on 2021 depletion rates.

Through our merger with Pope Resources, we acquired 124,000 acres of timberlands in Washington, which had an $11.1 million impact on depletion expense in the Pacific Northwest Timber segment.

Also as a result of the merger with Pope Resources, we are now the managing member in a private equity timber fund business comprising approximately 141,000 acres in Washington, Oregon and California.

New depletion pools have been established for this volume, resulting in no impact on previously existing depletion rates.

REVENUE RECOGNITION

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The qualified and unfunded plans are closed to new participants.

In 2020, we recognized $0.1 million of pension and postretirement benefit cost due to interest costs and amortization of losses, primarily offset by the expected return on plan assets.

Effective December 31, 2016, we froze benefits for all employees participating in the pension plans.

In 2021, we recognized $0.3 million of pension and postretirement benefit credit due to the expected return on plan assets offsetting interest costs and amortization of losses.

Numerous estimates and assumptions are required to determine the proper amount of pension and postretirement liabilities and annual expense to record in our financial statements.

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Different assumptions, as well as actual versus expected results, would change the periodic benefit cost and funded status of the benefit plans recognized in the financial statements.

Effective December 31, 2016, we froze benefits for all employees participating in the pension plans.

The changes in our discount rate and expected return on plan assets have an inverse relationship with our projected benefit obligation and pension expense, respectively.

A hypothetical 25 basis point increase/decrease in our pension plan’s discount rate would result in a decrease/increase in the projected benefit obligation of approximately $3.1 million and $3.3 million, respectively.

A hypothetical 25 basis point increase/decrease in our pension plan’s expected return on plan assets assumption would result in a decrease/increase in pension expense of approximately $0.2 million.

See Note 20 — Employee Benefit Plans for additional information.

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See Note 22 — Income Taxes for additional information about our unrecognized tax benefits.

ENVIRONMENTAL AND NATURAL RESOURCE DAMAGE LIABILITIES

We determine the costs of environmental remediation for areas we have been named potentially liable parties based on evaluations of current law and existing technologies.

Inherent uncertainties exist in such evaluations primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability and emerging remediation technologies.

At December 31, 2021, the total amount of liabilities recorded on our Consolidated Balance Sheets related to environmental contamination and Natural Resource Damages was $10.8 million.

This is management’s best estimate of the costs for remediation and restoration, however, management will continue to monitor the cleanup process and make adjustments to the liability as needed.

For more information, see Governmental Regulations and Environmental Matters in Item 1 - Business .

BUSINESS COMBINATIONS

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New Zealand Timber 281.2 202.3 241.9

Timber Funds 29.6 — —

Timber Funds (a) 199.4 29.6 —

Improved Development 51.7 14.5 5.9

Unimproved Development 37.5 8.4 19.5

Rural (a) 67.2 47.7 46.3

Rural 43.1 67.2 47.7

Timberlands & Non-Strategic - U.S.

(a) 19.3 1.3 47.4

Timberlands & Non-Strategic - N.Z.

Conservation Easement 3.1 — —

Conservation Easements 3.9 3.1 —

Deferred Revenue/Other (b) (2.4) 0.9 0.5

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New Zealand Timber 51.5 30.0 48.0

Timber Funds (13.2) — —

Real Estate (c) 72.0 38.7 76.2

Timber Funds (a) 63.3 (13.2) —

Real Estate (b)(c) 112.5 72.0 38.7

Trading 0.1 (0.5) —

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Income tax expense (14.6) (7.0) (12.9)

Net Income (c) 29.8 67.7 117.3

Net loss (income) attributable to noncontrolling interest in consolidated affiliates 7.8 (8.6) (15.1)

Net Income 210.5 29.8 67.7

Net (income) loss attributable to noncontrolling interests in consolidated affiliates (d) (53.4) 7.8 (8.6)

Net Income Attributable to Rayonier, L.P.

Net income attributable to noncontrolling interest in the Operating Partnership (0.5) — —

$157.1 $37.6 $59.1

Net income attributable to noncontrolling interests in the operating partnership (4.5) (0.5) —

Net Income Attributable to Rayonier Inc.

Adjusted EBITDA (d)

$152.6 $37.1 $59.1

Adjusted EBITDA (e)

Southern Timber $120.2 $109.1 $119.7

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Corporate and other (29.4) (26.6) (23.9)

Total Adjusted EBITDA (d) $267.4 $247.8 $337.7

(a) The years ended December 31, 2019 and December 31, 2018 reflect the reclassification of certain real estate sales between the Rural and Timberland & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales.

See Note 3 - Revenue for additional information.

Total Adjusted EBITDA (e) $329.8 $267.4 $247.8

(a) The year ended December 31, 2021 includes sales and operating income of $156.8 million and $51.5 million, respectively, from Fund II Timberland Dispositions.

(b) Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

(d) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(c) The years ended December 31, 2021 and December 31, 2020 include income of $44.8 million and $28.7 million, respectively, related to Large Dispositions.

(d) The year ended December 31, 2021 includes a $41.2 million gain from Fund II Timberland Dispositions.

The year ended December 31, 2020 includes a $7.3 million loss related to timber write-offs resulting from casualty events.

(e) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

Southern Timber Overview 2021 2020 2019

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Total Volume 5,694 6,199 6,066

Percentage Delivered Sales 41 % 33 % 30 %

Percentage Stumpage Sales 59 % 67 % 70 %

% Delivered Volume (vs.

Total Volume) 40 % 41 % 33 %

% Pine Sawtimber Volume (vs.

Total Pine Volume) 36 % 37 % 38 %

% Export Volume (vs.

Total Volume) (a) 5 % 3 % 3 %

Net Stumpage Prices (dollars per ton)

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Timber Sales $179.8 $170.2 $159.2

Cut, Haul & Freight (50.6) (41.0) (33.1)

Cut and Haul (43.6) (45.4) (36.4)

Port and Freight (9.4) (5.2) (4.6)

Net Stumpage Sales $126.9 $119.6 $118.2

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Operating Income $66.1 $41.3 $57.8

(+) Timber write-offs resulting from casualty events (a) 6.0 — —

(+) Timber write-offs resulting from casualty events (b) — 6.0 —

(+) Depreciation, depletion and amortization 54.1 61.8 61.9

Adjusted EBITDA (b) $109.1 $119.7 $102.8

Adjusted EBITDA (c) $120.2 $109.1 $119.7

Year-End Acres (in thousands) 1,798 1,733 1,835

(a) Timber write-offs resulting from casualty events include the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events which cannot be salvaged.

(b) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(a) Estimated percentage of export volume which includes volumes sold to third-party exporters in addition to direct exports through our log export program.

(b) Timber write-offs resulting from casualty events include the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events which cannot be salvaged.

Pacific Northwest Timber Overview 2021 2020 2019

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Total Volume 1,669 1,603 1,211

Sales Volume (converted to MBF)

Pulpwood 28,184 24,109 28,307

Sawtimber 169,715 126,717 132,795

Total Volume (converted to MBF) 207,114 197,899 150,826

% Delivered Volume (vs.

Total Volume) 88 % 90 % 94 %

Percentage Delivered Sales 90 % 94 % 86 %

Percentage Sawtimber Sales 82 % 79 % 77 %

% Sawtimber Volume (vs.

Total Volume) 83 % 82 % 79 %

% Export Volume (vs.

Total Volume) (a) 16 % 10 % 17 %

Delivered Log Pricing (in dollars per ton)

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Total Sales $143.0 $120.8 $85.4

Operating (Loss) Income ($10.0) ($12.4) $8.1

Operating Income (Loss) $6.8 ($10.0) ($12.4)

(+) Depreciation, depletion and amortization 50.5 47.1 29.2

Adjusted EBITDA (a) $37.1 $16.7 $40.9

Adjusted EBITDA (b) $57.3 $37.1 $16.7

Year-End Acres (in thousands) 490 507 379

Sawtimber (in dollars per MBF) (b) $666 $587 $725

Estimated Percentage of Export Volume 10 % 17 % 23 %

(a) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(b) Delivered Sawtimber excluding chip-n-saw.

Sawtimber (in dollars per MBF) (c) $748 $666 $587

(a) Estimated percentage of export volume which includes volumes sold to third-party exporters in addition to direct exports through our log export program.

(b) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

New Zealand Timber Overview 2021 2020 2019

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Total Volume 2,602 2,488 2,731

% Delivered Volume (vs.

Total Volume) 100 % 100 % 100 %

% Sawtimber Volume (vs.

Total Volume) 76 % 76 % 77 %

% Export Volume (vs.

Total Volume) (a) 58 % 54 % 53 %

Delivered Log Pricing (in dollars per ton)

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(+) Depreciation, depletion and amortization 27.0 25.0 27.8

Adjusted EBITDA (a) $55.0 $75.8 $90.8

Adjusted EBITDA (b) $78.5 $55.0 $75.8

New Zealand Dollar to U.S.

Dollar Exchange Rate (b) 0.6522 0.6615 0.6935

Dollar Exchange Rate (c) 0.7090 0.6522 0.6615

Net Plantable Year-End Acres (in thousands) 296 296 295

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Domestic Sawtimber (in $NZD per tonne) $129.07 $118.69 $129.46

(a) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(b) Represents the period average rates for each year.

(a) Estimated percentage of export volume which includes volumes sold to third-party exporters in addition to direct exports through our log export program.

(b) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

Timber Funds Overview 2021 2020 2019

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Net Stumpage Sales $22.4 $15.8 —

Fund II Timberland Dispositions (a) $156.8 — —

Non-Timber Sales 0.5 0.1 —

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Total Sales $199.4 $29.6 —

Operating Loss ($13.2) — —

Operating loss attributable to NCI in Timber Funds 11.6 — —

(+) Timber write-offs resulting from casualty events attributable to Rayonier (a) 1.8 — —

Operating Income (Loss) $63.3 ($13.2) —

Operating (income) loss attributable to NCI in Timber Funds (45.6) 11.6 —

(-) Fund II Timberland Dispositions attributable to Rayonier (a) (10.3) — —

(-) Gain on investment in Timber Funds (b) (7.5) — —

(+) Timber write-offs resulting from casualty events attributable to Rayonier (c) — 1.8 —

(+) Depreciation, depletion and amortization (“Look-through”) 2.4 1.6 —

Adjusted EBITDA (b) $1.8 — —

Adjusted EBITDA (d) $2.3 $1.8 —

Year-End Acres (in thousands) — 141 —

“Look-through” Year-End Acres (in thousands) — 17 —

(a) Timber write-offs resulting from casualty events attributable to Rayonier include the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events which cannot be salvaged.

(b) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(a) Fund II Timberland Dispositions represents the disposition of Timber Fund II timberland assets, which we managed and owned a co-investment stake in.

Fund II Timberland Dispositions attributable to Rayonier represents the proportionate share of Fund II Timberland Dispositions that are attributable to Rayonier.

(b) Gain on investment in Timber Funds reflects the gain recognized on Fund II carried interest incentive fees in the fourth quarter of 2021 as well as the gain recognized on the sale of Timber Funds III & IV in the third quarter of 2021.

(c) Timber write-offs resulting from casualty events attributable to Rayonier include the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events which cannot be salvaged.

(d) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

Trading Overview 2021 2020 2019

Sales Volume (in thousands of tons)

Pacific Northwest 1 1 —

NZ Trading - Domestic 28 67 90

NZ Trading - Export 931 1,039 1,221

NZ 705 959 1,106

Total Volume 706 960 1,107

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Total Sales $95.4 $89.0 $115.4

Operating (Loss) Income ($0.5) — $1.0

Operating Income (Loss) $0.1 ($0.5) —

Adjusted EBITDA (a) $0.1 ($0.5) —

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Unimproved Development 37.5 8.4 19.5

Rural (b) 67.2 47.7 46.3

Timberland & Non-Strategic - U.S.

(b) 19.3 1.3 47.4

Timberland & Non-Strategic - N.Z.

Conservation Easement 3.1 — —

Deferred Revenue/Other (d) 0.9 0.5 —

Rural 43.1 67.2 47.7

Timberland & Non-Strategic — 19.3 1.3

Conservation Easements 3.9 3.1 —

Deferred Revenue/Other (b) (2.4) 0.9 0.5

Large Dispositions (c) 56.0 116.0 —

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Unimproved Development 359 570 1,196

Rural (b) 22,437 15,089 11,427

Timberland & Non-Strategic - U.S.

(b) 20,701 821 16,396

Timberland & Non-Strategic - N.Z.

(e) — — 4,996

Rural 14,565 22,437 15,089

Timberland & Non-Strategic 34 20,701 821

Large Dispositions (c) 16,622 66,946 —

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Unimproved Development 104,579 14,780 16,290

Rural (b) 2,993 3,158 4,050

Timberland & Non-Strategic - U.S.

(b) 930 1,629 2,889

Timberland & Non-Strategic - N.Z.

Rural 2,958 2,993 3,158

Timberland & Non-Strategic 1,297 930 1,629

Large Dispositions (c) 3,372 1,733 —

Weighted Average (Total) (f) $2,483 $4,335 $4,121

Weighted Average (Adjusted) (g) $2,170 $4,002 $3,878

Weighted Average (Total) (d) $8,403 $2,483 $4,335

Weighted Average (Adjusted) (e) $5,391 $2,170 $4,002

Total Sales (Excluding Large Dispositions) $133.9 $113.3 $74.9

Operating Income $112.5 $72.0 $38.7

(+) Depreciation, depletion and amortization - U.S.

17.7 8.2 19.1

(+) Depreciation, depletion and amortization - N.Z.

(+) Non-cash cost of land and improved development - U.S.

30.4 12.6 23.6

(+) Depreciation, depletion and amortization 7.9 17.7 8.2

(+) Non-cash cost of land and improved development 25.0 30.4 12.6

(–) Large Dispositions (c) (44.8) (28.7) —

Adjusted EBITDA (h) $91.4 $59.5 $123.4

Adjusted EBITDA (f) $100.7 $91.4 $59.5

(a) Reflects land with capital invested in infrastructure improvements.

(b) The years ended December 31, 2019 and December 31, 2018 reflect the reclassification of certain real estate sales between the Rural and Timberland & Non-Strategic sales categories to better align with the way management internally evaluates real estate sales.

See Note 3 - Revenue for additional information.

(b) Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

(c) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value.

In 2021, we completed two dispositions of approximately 17,000 acres in total.

In June 2021, we completed a disposition of approximately 9,000 acres in Washington for a sales price and gain of approximately $36.0 million and $30.3 million, respectively.

In July 2021, we completed a second disposition of approximately 8,000 acres in Washington, for a sales price and gain of approximately $20.0 million and $14.5 million, respectively.

In 2020, we completed the disposition of approximately 67,000 acres located in Mississippi for a sales price and a gain of approximately $116.0 million and $28.7 million, respectively.

(d) Includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

(e) New Zealand Timberland & Non-Strategic represents productive acres.

(f) Excludes Large Dispositions.

(g) Excludes Improved Development and Large Dispositions.

(h) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(d) Excludes Large Dispositions.

(e) Excludes Improved Development and Large Dispositions.

(f) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

Capital Expenditures By Segment 2021 2020 2019

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Southern Timber $168.2 $24.2 $98.9

Pacific Northwest Timber — 7.3 —

Pacific Northwest Timber (b) — — 7.3

New Zealand Timber 10.9 0.5 36.0

Total Timberland Acquisitions $179.1 $24.7 $142.3

Real Estate Development Investments (b) $6.5 $6.8 $9.5

(a) The year ended December 31, 2020 excludes $2.3 million of capital expenditures attributable to noncontrolling interests in Timber Funds.

(b) The years ended December 31, 2020 and December 31, 2019 include $1.0 million and $3.7 million, respectively, of reimbursements from community development bonds.

Real Estate Development Investments (c) $12.5 $6.5 $6.8

(a) The years ended December 31, 2021 and December 31, 2020 exclude $2.8 million and $2.3 million, respectively, of capital expenditures attributable to noncontrolling interests in Timber Funds.

(b) The year ended December 31, 2020 excludes the Pope Resources acquisition.

See Note 2 - Merger with Pope Resources for additional information.

Real Estate Development Investments are amortized as the underlying properties are sold and included in Non-Cash Cost of Land and Improved Development.

RESULTS OF OPERATIONS, 2021 VERSUS 2020

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(d) Timber Funds was a new segment in Q2 2020.

(e) Includes $116.0 million related to Large Dispositions in addition to Conservation Easement sales, residential and commercial lease revenue, and deferred revenue adjustments.

(f) Includes $3.4 million of Intersegment eliminations related to timberland management fees paid by the timber funds and reported as sales within the Timber Funds segment.

(d) Timber Funds includes an increase in sales attributable to noncontrolling interests of $136.3 million, $31.4 million related to Fund II Timberland Dispositions attributable to Rayonier, sales related to timberland investment management fees paid to us by the timber funds, and a variance due to stumpage versus delivered sales.

(e) Includes a $60.0 million decrease in Large Dispositions in addition to Conservation Easements sales, residential and commercial lease income, marketing fees related to Improved Development sales, equity income from joint venture entities and deferred adjustments.

(f) Includes a $0.1 million decrease in Intersegment eliminations related to timberland management fees paid by the timber funds and reported as sales within the Timber Funds segment.

Operating Income Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate and Other Total

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2021 $66.1 $6.8 $51.5 $63.3 $112.5 $0.1 ($30.6) $269.8

(a) For Timber segments, price reflects net stumpage (i.e.

(a) For Timber segments, price reflects net stumpage realizations (i.e.

net of cut and haul and shipping costs).

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(b) Net of currency hedging impact.

Timber Funds was a new segment in Q2 2020 and includes $9.2 million in timber write-offs resulting from casualty events (of which $1.8 million was attributable to Rayonier).

Real Estate includes $28.7 million from Large Dispositions in addition to Conservation Easement sales, residential and commercial lease income and marketing fees related to Improved Development sales, partially offset by deferred adjustments and equity losses from joint venture entities.

Corporate and Other includes $17.2 million in costs related to the merger with Pope Resources.

Timber Funds includes an increase in operating income attributable to noncontrolling interests of $57.1 million, a $10.3 million gain related to Fund II Timberland Dispositions, $3.7 million related to the gain on sales of Funds III and IV, a $3.8 million gain on Fund II carried interest incentive fees, $1.8 million of timber write-offs from casualty events attributable to Rayonier in the prior year and timberland investment management fees paid to us by the timber funds.

Real Estate includes a $16.1 million increase in operating income from Large Dispositions in addition to Conservation Easements sales, residential and commercial lease income, marketing fees related to Improved Development sales, equity income from joint venture entities and deferred adjustments.

Corporate and Other includes $17.2 million in costs related to the merger with Pope Resources in 2020.

Adjusted EBITDA (a) Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate and Other Total

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(a) Adjusted EBITDA is a non-GAAP measure defined and reconciled in Item 7 - Performance and Liquidity Indicators .

(b) For Timber segments, price reflects net stumpage (i.e.

(b) For Timber segments, price reflects net stumpage realizations (i.e.

net of cut and haul and shipping costs).

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(d) Timber Funds was a new segment in Q2.

Real Estate includes Conservation Easement sales, residential and commercial lease income and marketing fees related to Improved Development sales, partially offset by deferred adjustments and equity losses from joint venture entities.

(d) Timber Funds includes timberland investment management fees paid to us by the timber fund.

Real Estate includes Conservation Easements sales, residential and commercial lease income, marketing fees related to Improved Development sales, equity income from joint venture entities and deferred adjustments.

SOUTHERN TIMBER

Full-year sales of $191.8 million decreased $2.3 million, or 1%, versus the prior year, including a decrease in non-timber sales of $13.3 million versus the prior year.

Harvest volumes increased 2% to 6.20 million tons versus 6.07 million tons in the prior year.

Average pine sawtimber stumpage prices increased 3% to $25.72 per ton versus $24.86 per ton in the prior year, while average pine pulpwood stumpage prices decreased 4% to $15.83 per ton versus $16.42 in the prior year.

The decrease in average pine pulpwood prices was primarily due to an increase in available log supply resulting from drier ground conditions in the first half of 2020 versus the prior year, while the increase in average pine sawtimber prices was primarily due to strong lumber markets and continued price tension between domestic and export markets.

Operating income of $41.3 million decreased $16.5 million versus the prior year due to lower non-timber income ( $13.4 million ), the write-off of timber basis as a result of Hurricane Laura ($6.0 million) and lower prices ($1.2 million), partially offset by lower costs ( $1.4 million ), lower depletion rates ($1.4 million) and higher volumes ($1.3 million) .

Full-year Adjusted EBITDA of $109.1 million was $10.6 million below the prior year.

Full-year sales of $204.4 million increased $12.6 million, or 7%, versus the prior year, including an increase in non-timber sales of $3.0 million versus the prior year.

Harvest volumes decreased 8% to 5.69 million tons versus 6.20 million tons in the prior year.

Average pine sawtimber stumpage prices increased 10% to $28.27 per ton versus $25.72 per ton in the prior year, while average pine pulpwood stumpage prices increased 21% to $19.09 per ton versus $15.83 in the prior year.

The increase in average pine pulpwood prices was primarily due to strong domestic demand, constrained supply due to wet weather conditions and an increase in pulpwood exports to China.

The increase in average pine sawtimber prices was primarily due to strong domestic lumber demand, upward pressure on chip-n-saw pricing due to increased competition from pulp mills and a strengthening export market along the east coast.

Operating income of $66.1 million increased $24.9 million versus the prior year due to higher net stumpage realizations ($17.0 million), the prior year write-off of timber basis as a result of Hurricane Laura ($6.0 million), higher non-timber income ( $3.2 million ), lower depletion rates ($2.7 million) and lower costs ( $0.6 million ), partially offset by lower volumes ($4.7 million) .

Full-year Adjusted EBITDA of $120.2 million was $11.1 million above the prior year.

PACIFIC NORTHWEST TIMBER

Full-year sales of $143.0 million increased $22.2 million, or 18%, versus the prior year.

Harvest volumes increased 32% to 1.60 million tons versus 1.21 million tons in the prior year, primarily due to improved sawtimber demand and approximately 221,000 tons of incremental volume from the acquired Pope Resources timberlands.

Average delivered sawtimber prices increased 8% to $84.93 per ton versus $78.41 per ton in the prior year, primarily due to gradually improving domestic lumber markets throughout 2020 coupled with a higher percentage of Douglas fir sawtimber.

Average delivered pulpwood prices decreased 14% to $35.51 per ton versus $41.09 per ton in the prior year, driven primarily by excess supply resulting from a weaker pulp export market and higher lumber mill residuals.

Operating loss of $10.0 million improved $2.4 million versus the prior year, primarily due to higher prices ($13.2 million) and higher non-timber income ($1.5 million), partially offset by higher depletion rates ($8.6 million) and higher costs ($3.7 million).

Harvest volumes increased 4% to 1.67 million tons versus 1.60 million tons in the prior year, primarily due to incremental volume from the Pope Resources acquisition.

Average delivered sawtimber prices increased 15% to $97.87 per ton versus $84.93 per ton in the prior year, as favorable domestic lumber markets coupled with increased export demand drove higher log prices.

Average delivered pulpwood prices decreased 11% to $31.65 per ton versus $35.51 per ton in the prior year, as increased lumber production resulted in an increased supply of competing sawmill residuals.

Operating income of $6.8 million improved $16.8 million versus the prior year, primarily due to higher net stumpage realizations ($17.3 million), higher non-timber income ($1.7 million) and higher volumes ($0.1 million), partially offset by higher depletion rates ($1.4 million) and higher costs ($0.9 million).

Full-year Adjusted EBITDA of $57.3 million was $20.2 million above the prior year.

NEW ZEALAND TIMBER

Full-year sales of $202.3 million decreased $39.5 million, or 16%, versus the prior year.

Harvest volumes decreased 9% to 2.49 million tons versus 2.73 million tons in the prior year primarily driven by the 33 day COVID-19 shutdown in 2020.

Average delivered prices for export sawtimber decreased 7% to $98.47 per ton versus $105.65 per ton in the prior year, while average delivered prices for domestic sawtimber decreased 10% to $70.37 per ton versus $77.85 per ton in the prior year.

The decrease in export sawtimber prices was primarily driven by lower demand resulting from the COVID-19 lockdown in China and increased competition from lower-cost log and lumber imports into China.

The decrease in domestic sawtimber prices (in U.S.

Full-year sales of $281.2 million increased $78.8 million, or 39%, versus the prior year.

Harvest volumes increased 5% to 2.60 million tons versus 2.49 million tons in the prior year driven by strong export and domestic demand versus the prior year period that was negatively impacted by COVID-19 related headwinds.

Average delivered prices for export sawtimber increased 41% to $138.84 per ton versus $98.47 per ton in the prior year, while average delivered prices for domestic sawtimber increased 18% to $83.19 per ton versus $70.37 per ton in the prior year.

The increase in export sawtimber prices was driven primarily by the restriction on competing log imports into China from Australia in the current year, as well as the ability of log exporters to pass higher costs along to customers.

The increase in domestic sawtimber prices (in U.S.

dollar terms) was driven in part by the NZ$/US$ exchange rate (US$0.71 per NZ$1.00 versus US$0.65 per NZ$1.00).

Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 8% from the prior year, generally lagging the negative trend of the export market.

Operating income of $30.0 million decreased $18.1 million versus the prior year due to lower prices ($10.3 million), lower volumes ($6.0 million), lower non-timber income ($2.0 million), and higher forest management costs ($0.2 million), which were partially offset by favorable foreign exchange impacts ($0.3 million), and lower depletion rates ($0.2 million).

Full-year Adjusted EBITDA of $55.0 million was $20.8 million below the prior year.

Following the May 8, 2020 merger with Pope Resources, the Timber Funds segment generated sales of $29.6 million on harvest volumes of 315,000 tons and an operating loss of $13.2 million.

The operating loss reported for 2020 includes timber write-offs of $9.2 million resulting from fires in Oregon.

For the period from May 8, 2020 to December 31, 2020, Adjusted EBITDA was $1.8 million.

Real Estate Sales Category Reclassification

Effective April 1, 2020, we changed the composition of our Rural and Timberland & Non-Strategic Real Estate sales categories to better align with the way management internally evaluates real estate sales.

The Rural category now includes all real estate sales (excluding development sales) representing a demonstrable premium above timberland value.

The Timberland & Non-Strategic category now includes all real estate sales representing little to no premium to timberland value.

This category consists primarily of sales of property that management views as non-strategic to our long-term portfolio as well as sales of property for capital allocation purposes that do not fit the definition of a Large Disposition.

All prior period amounts have been reclassified to reflect the new composition of these two sales categories.

The Improved Development, Unimproved Development and Large Disposition categories remain unchanged, and this reclassification had no impact on overall segment results.

Excluding the impact of foreign exchange rates, domestic sawtimber prices increased 9% from the prior year, following the upward trend in the export market.

Operating income of $51.5 million increased $21.5 million versus the prior year due to higher net stumpage realizations ($22.7 million), favorable foreign exchange impacts ($3.7 million), higher volumes ($2.1 million) and lower depletion rates ($1.5 million), which were partially offset by lower non-timber income ($7.3 million) and higher forest management costs ($1.2 million).

Full-year Adjusted EBITDA of $78.5 million was $23.5 million above the prior year.

Full-year sales of $199.4 million increased $169.8 million versus the prior year, while operating income of $63.3 million increased $76.5 million versus the prior year.

Sales and operating income for 2020 includes $116.0 million and $28.7 million, respectively, from a Large Disposition.

Sales and operating income increased primarily due to higher volumes (110,984 acres sold versus 17,151 acres sold in the prior year), partially offset by lower weighted average prices ($2,031 per acre versus $4,335 per acre in the prior year).

Full-year sales and operating income included $156.8 million and $51.5 million, respectively, from the Fund II Timberland Dispositions.

Full-year operating income also included a $3.7 million gain on the sale of Timber Funds III and IV and a $3.8 million gain on Fund II carried interest incentive fees.

The prior year period included timber write-offs of $9.2 million resulting from two fires in Oregon.

Harvest volumes increased 28% to 402,000 tons versus 315,000 tons in the prior year period.

The prior year period reflected results for only a portion of the year following the closing of the Pope Resources acquisition on May 8, 2020, while the current year reflects activity through July 21 for Timber Funds III and IV and limited activity in Fund II during the fourth quarter due to the liquidation of it’s timberland assets.

Full-year Adjusted EBITDA of $2.3 million was $0.5 million above the prior year period.

Full-year sales of $189.9 million decreased $39.5 million versus the prior year, while operating income of $112.5 million increased $40.6 million versus the prior year.

Sales and operating income in the current year included $56.0 million and $44.8 million, respectively, from Large Dispositions.

Prior year sales and operating income included $116.0 million and $28.7 million, respectively, from Large Dispositions.

Sales decreased primarily due to lower volumes (32,371 acres sold versus 110,984 acres sold in the prior year), partially offset by higher weighted average prices ($5,820 per acre versus $2,031 per acre in the prior year).

Full-year Adjusted EBITDA of $100.7 million was $9.3 million above the prior year.

Full-year sales of $89.0 million decreased $26.5 million versus the prior year due to lower volumes and prices.

Full-year sales of $95.4 million increased $6.4 million versus the prior year due to higher prices, partially offset by lower volumes.

Sales volumes decreased 26% to 706,000 tons versus 960,000 tons in the prior year.

Average prices decreased 12% to $91.26 per ton versus $103.49 per ton in the prior year.

Operating income and Adjusted EBITDA decreased $0.5 million versus the prior year.

Operating income and Adjusted EBITDA increased $0.6 million versus the prior year.

CORPORATE AND OTHER EXPENSE/ELIMINATIONS

Full-year corporate and other operating expense of $45.2 million increased $20.1 million versus the prior year due to costs related to the Pope Resources merger ($17.2 million) and higher employee benefit costs ($3.0 million).

Full-year corporate and other operating expense of $30.6 million decreased $14.6 million versus the prior year, which included $17.2 million of costs related to the Pope Resources merger.

This positive variance was partially offset by higher overhead expenses.

INTEREST EXPENSE

Full-year interest expense of $38.8 million increased $7.1 million versus the prior year due to higher outstanding debt following the Pope Resources merger.

Full-year interest expense of $44.9 million increased $6.1 million versus the prior year due to higher average outstanding debt and a $2.2 million loss from the second quarter termination of a cash flow hedge related to the voluntary repayment of $100 million of term loans.

INTEREST AND OTHER MISCELLANEOUS INCOME, NET

Other non-operating income of $1.2 million decreased $4.1 million versus the prior year primarily due to the prior year gain on Pope securities held prior to the merger and a decrease in interest income.

Other non-operating income of $0.2 million decreased $0.9 million versus the prior year primarily due to favorable mark to market adjustments on marketable equity securities and carbon options in the prior year, and costs related to debt extinguishments and modifications in the current year, partially offset by favorable periodic pension costs.

INCOME TAX EXPENSE

Full-year income tax expense of $7.0 million decreased $5.9 million versus the prior year period primarily due to lower taxable income.

Full-year income tax expense of $14.7 million increased $7.7 million versus the prior year.

The New Zealand subsidiary is the primary driver of income tax expense.

RESULTS OF OPERATIONS, 2020 VERSUS 2019

Refer to Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for the results of operations discussion for the fiscal year ended December 31, 2019 compared to the fiscal year ended December 31, 2018.

Refer to Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contained in our Annual Report on Form 10-K for the year ended December 31, 2020 for the results of operations discussion for the fiscal year ended December 31, 2020 compared to the fiscal year ended December 31, 2019.

OUTLOOK FOR 2022

In 2022, we expect to achieve full-year harvest volumes in our Southern Timber segment of 6.3 to 6.6 million tons.

We expect a modest improvement in weighted average pricing relative to full-year 2020 driven by strong sawtimber demand and a higher mix of sawtimber, partially offset by an increased proportion of planned harvest volume from relatively lower-priced markets.

In our Pacific Northwest Timber segment, we expect to achieve harvest volumes of 1.7 to 1.8 million tons, bolstered by a full-year contribution from the Pope Resources acquisition.

We also anticipate higher average sawtimber prices as compared to full-year 2020 given strong domestic demand trends and favorable lumber pricing.

In our New Zealand Timber segment, we expect to achieve harvest volumes of 2.6 to 2.8 million tons, up modestly year-over-year following the operational disruptions imposed by the COVID-19 pandemic in 2020.

We further expect that strong demand from China coupled with strong local markets will lead to improved export and domestic pricing.

T he anticipated increase relative to 2021 reflects a rebound in harvest activity following the wet weather conditions and supply chain constraints that negatively impacted full-year 2021 volumes, as well as the expected contribution from recent acquisitions.

We also anticipate an improvement in weighted average stumpage realizations relative to full-year 2021 driven by strong sawtimber and pulpwood demand, partially offset by higher harvest and transportation costs.

In our Pacific Northwest Timber segment, we expect to achieve harvest volumes of 1.7 to 1.8 million tons.

We anticipate weighted average pricing to increase modestly relative to full-year 2021 driven by continued strong demand.

However, we expect that higher prices will be largely offset by increased harvest and transportation costs.

In our New Zealand Timber segment, we expect to achieve harvest volumes of 2.6 to 2.8 million tons.

For the full-year, we anticipate modestly lower export pricing relative to the full-year pricing achieved in 2021.

However, as log inventories in China normalize and demand picks up following the Lunar New Year, we anticipate export pricing to increase from current levels.

Seasonally lower volumes, supply chain disruptions and lower pricing are generally expected to produce lower operating results from this segment in the first half versus the second half of the year.

In the Real Estate segment, we remain focused on opportunistically unlocking the long-term value of our HBU development and rural property portfolio.

Following exceptionally strong Real Estate results in 2021, we currently anticipate more normalized transaction activity in 2022.

We further anticipate that real estate activity will be heavily weighted to the second half of the year, with relatively limited activity in the first quarter in particular.

Our 2022 outlook is subject to a number of variables and uncertainties, including those discussed at Item 1A — Risk Factors .

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Short-term borrowings have helped fund working capital needs, while acquisitions of timberlands generally require funding from external sources or Large Dispositions.

AT-THE-MARKET (“ATM”) EQUITY OFFERING PROGRAM

On September 10, 2020, we entered into a distribution agreement with a group of sales agents through which we may sell common shares, from time to time, having an aggregate sales price of up to $300 million.

During the year ended December 31, 2020, the Company sold 1.1 million shares under the ATM Program at an average price of $30.26 per share, generating aggregate gross proceeds of $33.4 million, excluding $0.3 million of commissions.

As of December 31, 2020, $266.6 million remains available for issuance under the program.

The following table outlines the common stock issuance pursuant to our ATM program (dollars in millions):

Year Ended December 31,

Shares of common stock issued under the ATM program 1,103,012 —

Gross proceeds $33.4 —

We continuously evaluate our capital structure.

Our strategy is to maintain a weighted-average cost of capital competitive with other timberland REITs and TIMOs, while maintaining an investment grade debt rating as well as retaining the flexibility to actively pursue capital allocation opportunities as they become available.

Overall, we believe we have adequate liquidity and sources of capital to run our businesses efficiently and effectively and to maximize the value of our timberland and real estate assets under management.

CREDIT RATINGS

Both our ability to obtain financing and the related costs of borrowing are affected by our credit ratings, which are periodically reviewed by the rating agencies.

As of December 31, 2021, our credit ratings from S&P and Moody’s were “BBB-” and “Baa3,” respectively, with both agencies listing our outlook as “Stable.”

SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS

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Total debt (excluding Timber Funds) (a) 1,376.1 1,294.9 1,057.0

Noncontrolling interest in the Operating Partnership 130.1 — —

Noncontrolling interests in the operating partnership 133.8 130.1 —

Shareholders’ equity 1,815.6 1,862.6 1,537.6

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Net debt to enterprise value (c)(d) 14 % 23 % 19 %

(a) Total debt as of December 31, 2020, 2019 and 2018 reflects the principal on long-term debt, net of fair market value adjustments and gross of deferred financing costs of $2.5 million, $1.9 million and $2.4 million, respectively.

(a) Total debt as of December 31, 2021, 2020 and 2019 reflects the principal on long-term debt, net of fair market value adjustments and gross of deferred financing costs and unamortized discounts of $8.3 million, $2.5 million and $1.9 million, respectively.

(b) For a reconciliation of Adjusted EBITDA to net income see Management’s Discussion and Analysis of Financial Condition and Results of Operations—Performance and Liquidity Indicators .

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“OP” units) plus net debt based on Rayonier’s share price of $40.36, $29.38, and $32.76 as of December 31, 2021, 2020 and 2019, respectively.

AT-THE-MARKET EQUITY OFFERING PROGRAM (“ATM Program”)

During the year ended December 31, 2021, the Company sold 6.4 million shares under the ATM Program at an average price of $37.05 per share, generating aggregate gross proceeds of $235.5 million, excluding $2.4 million of commissions.

As of December 31, 2021, $31.1 million remains available for issuance under the program.

The following table outlines the common stock issuance pursuant to our ATM program (dollars in millions):

Year Ended December 31,

Shares of common stock issued under the ATM program 6,357,972 1,103,012

Gross proceeds $235.5 $33.4

The following table summarizes our cash flows from operating, investing and financing activities for each of the three years ended December 31 (in millions of dollars):

2021 2020 2019

Total cash provided by (used for):

Operating activities $325.1 $204.2 $214.3

Investing activities (26.3) (213.6) (219.4)

Financing activities (16.3) 27.0 (79.6)

Effect of exchange rate changes on cash (0.9) (0.1) (1.8)

Change in cash, cash equivalents and restricted cash $281.7 $17.5 ($86.5)

CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operating activities increased $120.9 million versus the prior year primarily due to higher operating results and $17.2 million of merger-related costs in the prior year.

CASH USED FOR INVESTING ACTIVITIES

Cash used for investing activities decreased $187.4 million versus the prior year primarily due to the net cash consideration transferred in our merger with Pope Resources in the prior year ($231.1 million), net proceeds from the sale of Fund II timberlands ($154.7 million), net proceeds from the sale of Timber Funds III and IV ($31.0 million) and other investing activities ($1.5 million), partially offset by an increase in timberland acquisitions ($154.4 million), lower proceeds from Large Dispositions ($61.0 million), higher capital expenditures ($9.5 million) and higher real estate development investments ($6.0 million).

CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES

Cash used for financing activities of $16.3 million compares to cash provided by financing activities of $27.0 million in the prior year.

This is primarily due to a decrease in net borrowings ($141.6 million), higher distributions to consolidated affiliates ($96.3 million), higher dividends paid on common stock ($7.2 million), make-whole fees on debt prepayments in the current year ($6.2 million), higher debt issuance costs ($2.4 million) and higher distributions to noncontrolling interests in the operating partnership ($0.7 million), partially offset by higher proceeds from the issuance of common shares under the ATM equity offering program ($198.3 million), noncontrolling interests in consolidated affiliates redemption of shares in the prior year ($5.1 million), higher proceeds from the issuance of common shares under the incentive stock plan ($4.6 million) and decreases in share repurchases ($3.1 million).

FUTURE USES OF CASH

We expect future uses of cash to include working capital requirements, principal and interest payments on long-term debt, lease payments, capital expenditures, real estate development investments, timberland acquisitions, dividends on Rayonier Inc.

common shares and distributions on Rayonier, L.P.

units, distributions to noncontrolling interests, repurchases of the Company’s common shares and to satisfy other commitments.

Significant long-term uses of cash include the following (in millions):

Future uses of cash (in millions) Total Payments Due by Period

2022 2023-2024 2025-2026 Thereafter

Long-term debt (a) $1,251.1 $200.0 — $251.1 $800.0

Current maturities of long-term debt (b) 125.0 125.0 — — —

Interest payments on long-term debt (c) 185.6 30.4 48.1 44.0 63.1

Operating leases — timberland (d) 182.1 8.0 15.0 13.4 145.7

Operating leases — PP&E, offices (d) 6.0 1.4 2.2 1.4 1.0

Commitments — development projects (e) 19.3 14.3 0.5 0.5 4.0

Commitments — derivatives (f) 49.2 13.9 21.9 8.8 4.6

Commitments - environmental remediation (g) 10.8 0.7 7.7 1.4 1.0

Commitments — other (h) 1.4 0.8 0.5 0.1 —

Total $1,830.5 $394.5 $95.9 $320.7 $1,019.4

(a) The book value of long-term debt, net of deferred financing costs and unamortized discounts, is currently recorded at $1,242.8 million on our Consolidated Balance Sheets, but upon maturity the liability will be $1,251.1 million.

See Note 10 - Debt for additional information.

(b) The book value of current maturities of long-term debt, net of deferred financing costs is currently recorded at $125.0 million on our Consolidated Balance Sheets, and upon maturity the liability will be $125.0 million.

See Note 10 - Debt for additional information.

(c) Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of December 31, 2021.

(d) Excludes anticipated renewal options.

(e) Commitments — developmental projects primarily consists of payments expected to be made on our Wildlight and Richmond Hill projects.

(f) Commitments — derivatives represent payments expected to be made on derivative financial instruments (interest rate swaps and forward-starting interest rate swaps).

See Note 11 — Derivative Financial Instruments and Hedging Activities for additional information.

(g) Commitments — environmental remediation represents our estimate of potential liability associated with environmental contamination and Natural Resource Damages in Port Gamble, Washington.

See Note 15 - Environmental and Natural Resource Damage Liabilities for additional information.

(h) Commitments — other includes other purchase obligations.

We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, the remaining issuances available under the Company’s ATM Program, Large Dispositions and the use of our revolving credit facilities.

EXPECTED 2022 EXPENDITURES

Capital expenditures in 2022 are forecasted to be between $80 million and $85 million, excluding any strategic timberland acquisitions we may make.

Capital expenditures are expected to be primarily comprised of seedling planting, fertilization and other silvicultural activities, property taxes, lease payments, allocated overhead and other capitalized costs.

Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.

Real estate development investments in 2022 are expected to be between $22 million and $25 million, net of anticipated reimbursements from community development bonds.

Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, Florida;

Richmond Hill, our mixed-use development project located south of Savannah, Georgia;

development properties in the town of Port Gamble, Washington;

and development projects in Gig Harbor, Kingston and Bremerton, Washington.

Our 2022 dividend payments on Rayonier Inc.

common shares and distributions to Rayonier, L.P.

unitholders are expected to be approximately $157.5 million and $3.6 million, respectively, assuming no change in the quarterly dividend rate of $0.27 per share or material changes in the number of common shares or partnership units outstanding.

Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.

We made no discretionary pension contributions in 2021.

We have no pension contribution requirements in 2022 but may make discretionary contributions in the future.

Cash income tax payments in 2022 are expected to be between $18 million and $22 million, primarily due to the New Zealand subsidiary.

OFF-BALANCE SHEET ARRANGEMENTS

We utilize off-balance sheet arrangements to provide credit support for certain suppliers and vendors in case of their default on critical obligations, and collateral for outstanding claims under our previous workers’ compensation self-insurance programs.

These arrangements consist of standby letters of credit and surety bonds.

As part of our ongoing operations, we also periodically issue guarantees to third parties.

Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts.

See Note 16 — Guarantees for further discussion.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

In March 2012, Rayonier Inc.

issued $325 million of 3.75% Senior Notes due 2022 (the “2022 Notes”).

issued $325 million of 3.75% Senior Notes due 2022 (the “Senior Notes due 2022”).

On May 7, 2020, Rayonier Inc.

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expressly assumed all the obligations of Rayonier Inc.

with respect to the outstanding 2022 Notes and Rayonier Inc.

with respect to the outstanding Senior Notes due 2022 and Rayonier Inc.

agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P.

under the Indenture, including the 2022 Notes.

under the Indenture, including the Senior Notes due 2022.

Rayonier L.P.

is the current issuer of the 2022 Notes.

The subsidiary guarantor, Rayonier TRS Holdings Inc ., and parent guarantor, Rayonier Inc., have guaranteed the notes fully and unconditionally on a joint and several basis.

As general partner of Rayonier, L.P., Rayonier Inc.

is the current issuer of the Senior Notes due 2022.

See the subsequent events section of Note 1 - Summary of Significant Accounting Policies for information about the repayment of our Senior Notes due 2022.

In May 2021, Rayonier, L.P.

issued $450 million of 2.75% Senior Notes due 2031 (the “Senior Notes due 2031”).

Rayonier TRS Holdings Inc., together with Rayonier Inc.

and Rayonier Operating Company LLC agreed to irrevocably, fully and unconditionally guarantee jointly and severally, the obligations of Rayonier, L.P.

in regards to the Senior Notes due 2031.

As a general partner of Rayonier, L.P., Rayonier Inc.

consolidates Rayonier, L.P.

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There are no material restrictions on dividends from the operating subsidiaries.

The summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P.

for the twelve months ended December 31, 2020 and year ended December 31, 2019 are provided in the table below:

The following table contains the summarized balance sheet information for the consolidated obligor group of debt issued by Rayonier, L.P.

for the two years ended December 31:

(in millions) December 31, 2021 December 31, 2020

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Due to non-guarantors 570.4 596.7

The summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P.

for the twelve months ended December 31, 2020 and year ended December 31, 2019 are provided in the table below:

The following table contains the summarized results of operations information for the consolidated obligor group of debt issued by Rayonier, L.P.

for the two years ended December 31:

(in millions) December 31, 2021 December 31, 2020

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LIQUIDITY FACILITIES

See Note 8 — Debt for information on liquidity facilities and other outstanding debt, as well as for information on covenants that must be met in connection with our Senior Notes, Term Credit Agreement, Incremental Term Loan Agreement, 2020 Incremental Term Loan Agreement and Revolving Credit Facility, as well as our NWFCS Credit Facility and the Timber Funds’ Mortgages Payable.

The following table summarizes our cash flows from operating, investing and financing activities for each of the three years ended December 31 (in millions of dollars):

2020 2019 2018

Total cash provided by (used for):

Operating activities $204.2 $214.3 $310.1

Investing activities (213.6) (219.4) (132.9)

Financing activities 27.0 (79.6) (193.7)

Effect of exchange rate changes on cash (0.1) (1.8) 0.6

Change in cash, cash equivalents and restricted cash $17.5 ($86.5) ($15.9)

CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operating activities decreased $10.1 million versus the prior year primarily due to $17.2 million of merger-related costs, changes in working capital and other assets and liabilities ($6.7 million) and other items ($5.8 million), partially offset by higher Adjusted EBITDA ($19.6 million).

CASH USED FOR INVESTING ACTIVITIES

Cash used for investing activities decreased $5.8 million versus the prior year primarily due to proceeds from a Large Disposition ($115.7 million), a decrease in timberland acquisitions ($117.6 million), lower real estate development investments ($0.3 million) and other investing activities ($5.8 million), partially offset by the net cash consideration transferred in our merger with Pope Resources ($231.1 million) and higher capital expenditures ($2.5 million).

CASH PROVIDED BY FINANCING ACTIVITIES

Cash provided by financing activities increased $106.6 million versus the prior year primarily due to an increase in net borrowings ($86.0 million), proceeds from the issuance of common shares under the ATM equity offering program ($32.6 million) and decreases in share repurchases ($7.9 million), partially offset by higher dividends paid on common stock ($5.3 million), distributions to consolidated affiliates ($3.5 million), distributions to noncontrolling interests in the Operating Partnership ($3.6 million), noncontrolling interests in consolidated affiliates redemption of shares ($5.1 million) and increases in debt issuance costs ($2.4 million).

See Note 10 — Debt for information on liquidity facilities and other outstanding debt, as well as for information on covenants that must be met in connection with our Senior Notes due 2022, Senior Notes due 2031, Term Credit Agreement, Incremental Term Loan Agreement, 2021 Incremental Term Loan Agreement and Revolving Credit Facility.

RESTRICTED CASH

See Note 23 — Restricted Cash for further information regarding funds in escrow and deposited with a third-party intermediary and cash held in escrow for real estate development obligations.

CREDIT RATINGS

Both our ability to obtain financing and the related costs of borrowing are affected by our credit ratings, which are periodically reviewed by the rating agencies.

As of December 31, 2020, our credit ratings from S&P and Moody’s were “BBB-” and “Baa3,” respectively, with both agencies listing our outlook as “Stable.”

We continuously evaluate our capital structure.

EXPECTED 2021 EXPENDITURES

Capital expenditures in 2021 are forecasted to be between $70 million and $75 million, excluding capital expenditures related to noncontrolling interests in the Timber Funds and any strategic timberland acquisitions we may make.

Aside from capital expenditures, we may also acquire timberland as we actively evaluate acquisition opportunities.

Real estate development investments in 2021 are expected to be between $13 million and $17 million, net of anticipated reimbursements from community development bonds.

Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, Florida;

Richmond Hill, our mixed-use development project located south of Savannah, Georgia;

development properties in the town of Port Gamble, Washington;

and development projects in Gig Harbor, Kingston and Bremerton, Washington.

Our 2021 dividend payments on Rayonier Inc.

common shares and distributions to Rayonier, L.P.

unitholders are expected to be approximately $148.7 million and $4.8 million, respectively, assuming no change in the quarterly dividend rate of $0.27 per share or material changes in the number of common shares or partnership units outstanding.

Future share repurchases, if any, will depend on the Company’s liquidity and cash flow, as well as general market conditions and other considerations including capital allocation priorities.

We made $2.9 million of required pension contributions in 2020.

We have no pension contribution requirements in 2021 but may make discretionary contributions in the future.

Cash income tax payments in 2021 are expected to be between $13 million and $15 million, primarily due to the New Zealand subsidiary.

See Note 24 — Restricted Cash for further information regarding the portion of proceeds from Fund II Timberland Dispositions required to be distributed to noncontrolling interests and cash held in escrow.

PERFORMANCE AND LIQUIDITY INDICATORS

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These measures should not be considered in isolation from, and are not intended to represent an alternative to, our results reported in accordance with GAAP.

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, operating loss attributable to noncontrolling interest in Timber Funds, costs related to the merger with Pope Resources, timber write-offs resulting from casualty events, and Large Dispositions.

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, operating income (loss) attributable to noncontrolling interests in Timber Funds, costs related to the merger with Pope Resources, timber write-offs resulting from casualty events, the gain on investment in Timber Funds, Fund II Timberland Dispositions and Large Dispositions.

Below is a reconciliation of Net Income to Adjusted EBITDA for the three years ended December 31 (in millions of dollars):

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Net Income $210.5 $29.8 $67.7

Operating loss attributable to NCI in Timber Funds 11.6 — —

Operating (income) loss attributable to NCI in Timber Funds (45.6) 11.6 —

Interest, net attributable to NCI in Timber Funds 0.3 0.5 —

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Costs related to the merger with Pope Resources (b) — 17.2 —

Large Dispositions (c) (28.7) — —

Gain on investment in Timber Funds (c) (7.5) — —

Fund II Timberland Dispositions attributable to Rayonier (d) (10.3) — —

Large Dispositions (e) (44.8) (28.7) —

Adjusted EBITDA $329.8 $267.4 $247.8

1 unchanged sentence

(b) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.

(c) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value.

(c) Gain on investment in Timber Funds reflects the gain recognized on Fund II carried interest incentive fees in the fourth quarter of 2021 as well as the gain recognized on the sale of Timber Funds III & IV in the third quarter of 2021.

(d) Fund II Timberland Dispositions represent the disposition of Fund II Timberland assets, which we managed and owned a co-investment stake in.

Fund II Timberland Dispositions attributable to Rayonier represents the proportionate share of Fund II Timberland Dispositions that are attributable to Rayonier.

(e) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value.

The following tables provide a reconciliation of Operating Income (Loss) by segment to Adjusted EBITDA by segment for the three years ended December 31 (in millions of dollars):

1 unchanged sentence

Operating income (loss) $66.1 $6.8 $51.5 $63.3 $112.5 $0.1 ($30.6) $269.8

Operating loss attributable to NCI in Timber Funds (a) — — — 11.6 — — — 11.6

Timber write-offs resulting from casualty events attributable to Rayonier (b) 6.0 — — 1.8 — — — 7.9

Costs related to the merger with Pope Resources (c) — — — — — — 17.2 17.2

Depreciation, depletion and amortization 54.1 50.5 27.0 2.4 7.9 — 1.2 143.2

Non-cash cost of land and improved development — — — — 25.0 — — 25.0

Operating income attributable to NCI in Timber Funds (a) — — — (45.6) — — — (45.6)

Gain on investment in Timber Funds (b) — — — (7.5) — — — (7.5)

Fund II Timberland Dispositions attributable to Rayonier (c) — — — (10.3) — — — (10.3)

Large Dispositions (d) — — — — (44.8) — — (44.8)

1 unchanged sentence

Operating income (loss) $41.3 ($10.0) $30.0 ($13.2) $72.0 ($0.5) ($45.2) $74.4

Operating loss attributable to NCI in Timber Funds (a) — — — 11.6 — — — 11.6

Timber write-offs resulting from casualty events attributable to Rayonier (e) 6.0 — — 1.8 — — — 7.9

Costs related to the merger with Pope Resources (f) — — — — — — 17.2 17.2

Depreciation, depletion and amortization 61.8 47.1 25.0 1.6 17.7 — 1.4 154.7

Non-cash cost of land and improved development — — — — 30.4 — — 30.4

Large Dispositions (d) — — — — (28.7) — — (28.7)

Adjusted EBITDA $109.1 $37.1 $55.0 $1.8 $91.4 ($0.5) ($26.6) $267.4

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Adjusted EBITDA $119.7 $16.7 $75.8 — $59.5 — ($23.9) $247.8

(a) Timber Funds includes $7.3 million related to timber write-offs resulting from casualty events.

(b) Timber write-offs resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events which cannot be salvaged.

(c) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.

(a) The year ended December 31, 2021 includes $41.2 million of income from Fund II Timberland Dispositions.

The year ended December 31, 2020 includes a $7.3 million loss related to timber write-offs resulting from casualty events.

(c) Fund II Timberland Dispositions represent the disposition of Fund II Timberland assets, which we managed and owned a co-investment stake in.

Fund II Timberland Dispositions attributable to Rayonier represents the proportionate share of Fund II Timberland Dispositions that are attributable to Rayonier.

(d) Large Dispositions are defined as transactions involving the sale of timberland that exceed $20 million in size and do not have a demonstrable premium relative to timberland value.

Cash Available for Distribution (CAD) is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and real estate development investments), CAD attributable to noncontrolling interest in Timber Funds and working capital and other balance sheet changes.

CAD is a non-GAAP measure of cash generated during a period that is available for common stock dividends, distributions to noncontrolling interest in the Operating Partnership, distributions to the New Zealand minority shareholder, repurchase of the Company’s common shares, debt reduction, timberland acquisitions and real estate development investments.

In compliance with SEC requirements for non-GAAP measures, we reduce CAD by mandatory debt repayments, which results in the measure entitled “Adjusted CAD.” CAD and Adjusted CAD generated in any period is not necessarily indicative of the CAD that may be generated in future periods.

(e) Timber write-offs resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume destroyed by casualty events which cannot be salvaged.

(f) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.

Cash Available for Distribution (CAD) is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and real estate development investments), CAD attributable to noncontrolling interests in Timber Funds, and working capital and other balance sheet changes.

CAD is a non-GAAP measure of cash generated during a period that is available for common stock dividends, distributions to operating partnership unitholders, distributions to noncontrolling interests, repurchase of the Company's common shares, debt reduction, timberland acquisitions and real estate development investments.

In compliance with SEC requirements for non-GAAP measures, we reduce CAD by mandatory debt repayments, which results in the measure entitled “Adjusted CAD.” CAD and Adjusted CAD generated in any period are not necessarily indicative of the CAD that may be generated in future periods.

Below is a reconciliation of Cash Provided by Operating Activities to Adjusted CAD for the three years ended December 31 (in millions):

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CAD $207.8 $162.4 $149.4

Mandatory debt repayments (c) — (82.0) —

Mandatory debt repayments (325.0) — (82.0)

Adjusted CAD ($117.2) $162.4 $67.4

Cash used for investing activities ($26.3) ($213.6) ($219.4)

Cash provided by (used for) financing activities $27.0 ($79.6) ($193.7)

Cash (used for) provided by financing activities ($16.3) $27.0 ($79.6)

(a) Capital expenditures exclude timberland acquisitions and real estate development investments.

(b) Costs related to the merger with Pope Resources include legal, accounting, due diligence, consulting and other costs related to the merger with Pope Resources.

The following table provides supplemental cash flow data for the three years ended December 31 (in millions):

2021 2020 2019

Purchase of timberlands ($24.7) ($142.3) ($57.6)

Purchase of timberlands (a) ($179.1) ($24.7) ($142.3)

Real Estate Development Investments (12.5) (6.5) (6.8)

Distributions to noncontrolling interests in consolidated affiliates (a) (12.6) (9.2) (14.4)

(a) Includes debt repayments on the New Zealand subsidiary noncontrolling interest shareholder loan.

OFF-BALANCE SHEET ARRANGEMENTS

These arrangements consist of standby letters of credit and surety bonds.

As part of our ongoing operations, we also periodically issue guarantees to third parties.

Off-balance sheet arrangements are not considered a source of liquidity or capital resources and do not expose us to material risks or material unfavorable financial impacts.

See Note 14 — Guarantees for further discussion.

CONTRACTUAL FINANCIAL OBLIGATIONS

In addition to using cash flow from operations, proceeds from our ATM program and proceeds from Large Dispositions, we finance our operations and acquisitions through the issuance of debt and by entering into leases.

These financial obligations are recorded in accordance with accounting rules applicable to the underlying transaction, with the result that some are recorded as liabilities on the Consolidated Balance Sheets, while others are required to be disclosed in the Notes to Consolidated Financial Statements and Management’s Discussion and Analysis.

The following table aggregates our contractual financial obligations as of December 31, 2020 and anticipated cash spending by period:

Contractual Financial Obligations (in millions) Total Payments Due by Period

2021 2022-2023 2024-2025 Thereafter

Long-term debt, excluding Timber Funds (a) $1,294.9 — $325.0 $284.9 $685.0

Long-term debt, Timber Funds (b) 57.4 — 43.0 14.4 —

Interest payments on long-term debt, excluding Timber Funds (c) 144.3 32.6 46.9 36.5 28.3

Interest payments on long-term debt, Timber Funds 5.9 2.0 3.4 0.5 —

Operating leases — timberland (d) 185.8 8.3 15.3 14.1 148.1

Operating leases — PP&E, offices (d) 7.4 1.6 2.2 1.9 1.7

Commitments — derivatives (e) 103.3 13.8 34.8 25.5 29.2

Commitments - environmental remediation (f) 11.6 1.0 3.7 4.2 2.7

Commitments — other (g) 16.7 11.3 1.0 0.5 3.9

Total contractual cash obligations $1,827.3 $70.6 $475.3 $382.5 $898.9

(a) The book value of long-term debt, excluding Timber Funds, net of deferred financing costs and fair market value adjustments, is currently recorded at $1,300.3 million on our Consolidated Balance Sheet, but upon maturity the liability will be $1,294.9 million.

See Note 8 - Debt for additional information.

(b) The book value of long-term debt for the Timber Funds, net of fair market value adjustments, is currently recorded at $60.2 million on our Consolidated Balance Sheet, but upon maturity the liability will be $57.4 million.

See Note 8 - Debt for additional information.

(c) Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of December 31, 2020.

(d) Excludes anticipated renewal options.

(e) Commitments — derivatives represent payments expected to be made on derivative financial instruments (interest rate swaps and forward-starting interest rate swaps).

See Note 16 — Derivative Financial Instruments and Hedging Activities for additional information.

(f) Commitments — environmental remediation represents our estimate of potential liability associated with environmental contamination and Natural Resource Damages in Port Gamble, Washington.

See Note 13 - Environmental and Natural Resource Damage Liabilities for additional information.

(g) Commitments — other includes payments expected to be made on our Wildlight, Richmond Hill and West Puget Sound development projects, payments made on timberland deeds and other purchase obligations.

Distributions to noncontrolling interests in consolidated affiliates (109.0) (12.6) (9.2)

(a) The year ended December 31, 2020 excludes the Pope Resources acquisition.

See Note 2 - Merger with Pope Resources for additional information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis