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Item 7. Management’s Discussion and Analysis

2023-02-24 compared with 2022-02-25 · 180 added, 249 removed, 501 unchanged (46% of the section changed)

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Our revenues, operating income and cash flows are primarily derived from the following core business segments:

Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate and Trading.

Southern Timber, Pacific Northwest Timber, New Zealand Timber, Real Estate and Trading.

We own or lease under long-term agreements approximately 2.4 million acres of timberland and real estate in Alabama, Arkansas, Florida, Georgia, Louisiana, Oklahoma, Oregon, South Carolina, Texas and Washington.

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Across our timberland management segments, we sell standing timber (primarily at auction to third parties) and delivered logs.

Sales from our timber segments include all activities related to the harvesting of timber and other value-added activities such as the licensing of properties for hunting and the leasing of properties for mineral extraction and cell towers.

Sales from our timber segments include all activities related to the harvesting of timber and other value-added activities such as the licensing of properties for hunting, the leasing of properties for mineral extraction and cell towers, as well as nature based solutions such as carbon credit sales.

We believe we are the second largest publicly-traded timberland REIT and the fourth largest private timberland owner in the United States.

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For additional information on acquisitions, see Note 4 - Timberland Acquisitions .

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 segment relies primarily on

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

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.

Our New Zealand Timber segment sells timber to domestic New Zealand wood products mills and also exports a significant portion of its volume to markets in China, South Korea and India.

Our New Zealand Timber segment sells timber to domestic New Zealand wood products mills and also exports a significant portion of its volume to markets in China, South Korea and Taiwan.

In addition to market dynamics in the Pacific Rim, the New Zealand Timber segment is subject to foreign exchange fluctuations, which can impact the operating results of the segment in U.S.

dollar terms.

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.

During 2022, global log and lumber markets experienced increased volatility due in part to Russia’s invasion of Ukraine and subsequent sanctions placed on Russia.

While we do not expect our operations to be directly impacted by the conflict at this time, changes in global wood and commodity flows could impact the markets in which we operate.

In 2022, pricing in the U.S.

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 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.

South improved versus the prior year, with increases in both pulpwood and sawtimber prices in response to favorable local market supply and demand dynamics.

While pricing can be influenced by macroeconomic factors, including residential construction activity, prices can vary considerably on a local level based on weather, the available inventory of logs, mill demand, and export market access.

In the Pacific Northwest, average log prices for 2022 were higher when compared to the prior year, driven by a combination of improved sawtimber pricing resulting from strong domestic demand from lumber mills, as well as higher pulpwood pricing resulting from strong end-market demand and supply constraints.

In New Zealand, average log prices for 2022 were lower than the prior year, which reflected the decline in the NZ$/US$ exchange rate, as well as the COVID lockdowns and construction market headwinds in China which constrained export market demand.

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.

In 2022, each of our timber segments experienced upward pressure on these cost components, with the most significant increase experienced in logging and transportation costs in our Southern 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.

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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.

In Real Estate, overall demand and pricing for HBU properties remained exceptionally strong in 2021.

This was driven in part by historically low mortgage rates coupled with higher demand for rural land since the outset of the pandemic.

In addition, we saw increased interest in our improved development properties, specifically Wildlight, our development project north of Jacksonville, Florida, and Richmond Hill, our development project south of Savannah, Georgia.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

In Real Estate, overall demand and pricing for HBU properties remained strong in 2022.

While higher interest rates caused demand for certain rural properties to moderate during the second half of 2022, favorable migration and demographic trends continue to benefit our improved development properties, specifically Wildlight, our development project north of Jacksonville, Florida, and Heartwood, our development project south of Savannah, Georgia.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements requires us to establish accounting policies and make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses, and to disclose contingent assets and liabilities in our Annual Report on Form 10-K.

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Actual results may differ from these estimates.

CAPITALIZED COSTS INCLUDED IN TIMBER BASIS

Timber is stated at the lower of cost or market value.

Costs relating to acquiring, planting and growing timber, including real estate taxes, site preparation and direct support costs relating to facilities, vehicles and supplies, are capitalized.

A portion of timberland lease payments are capitalized based on the proportion of acres with merchantable timber volume remaining to be harvested under the lease term, and the residual portion of the lease payments are expensed as incurred.

Payroll costs are capitalized for time spent on timber growing activities, while interest or any other intangible costs are not capitalized.

MERCHANTABLE INVENTORY AND DEPLETION COSTS AS DETERMINED BY TIMBER HARVEST MODELS

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Pre-merchantable records are maintained for each planted year age class, including acres planted, stems per acre and costs of planting and tending.

For more information, see Discussion of Timber Inventory and Sustainable Yield in Item 1 - Business .

Significant assumptions and estimates are used in the recording of timber inventory and depletion costs.

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

During 2022, we acquired 141,000 acres of timberlands in Alabama, Florida, Georgia, Louisiana, Texas, Washington and New Zealand.

These acquisitions did not have a material impact on 2022 depletion rates.

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See Note 18 — Employee Benefit Plans for additional information.

IMPAIRMENT OF LONG-LIVED ASSETS

We review the carrying amount of long-lived assets whenever an event or a change in circumstances indicates that the carrying value of the asset or asset group may not be recoverable through future operations.

If we evaluate recoverability, we are required to estimate future cash flows and residual value of the asset or asset group.

The evaluation of future cash flows requires the use of assumptions that include future economic conditions such as construction costs and sales values that may differ from actual results.

An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value.

See Note 1 — Summa ry of Significant Accounting Policies for additional information.

DEFERRED TAX ITEMS

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income taxation.

We expect any variability in our effective tax rate and the amount of cash taxes to be paid to be driven primarily by our New Zealand Timber and Trading segments, as our other business operations are conducted within our U.S.

REIT subsidiaries.

However, the assessment of the ability to realize certain deferred tax assets, or estimate deferred tax liabilities, remains subjective .

We expect any variability in our effective tax rate and the amount of cash taxes to be paid to be driven primarily by our New Zealand Timber and Trading segments.

Rayonier’s taxable REIT subsidiary is subject to U.S.

federal and state income taxes.

Deferred tax expense or benefit is recognized in the financial statements according to the changes in deferred tax assets and liabilities between years.

Valuation allowances are established to reduce deferred tax assets when it becomes more likely than not that such assets will not be realized.

See Note 20 — Income Taxes for additional information about our unrecognized tax benefits.

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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.

At December 31, 2022, the total amount of liabilities recorded on our Consolidated Balance Sheets related to environmental contamination and Natural Resource Damages was $15.6 million, which reflected an increase in liabilities related to revised environmental and natural resources damage cost estimates recorded in the fourth quarter of 2022.

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

We account for business combinations using the acquisition method of accounting, under which all assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values as of the acquisition date.

The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill.

The preliminary allocation of purchase price in a business combination uses significant assumptions and estimates.

Critical estimates include, but are not limited to, future expected cash flows, including revenues and expenses, and applicable discount rates.

While we believe our estimates and assumptions to be reasonable, they are subject to change as we obtain additional information related to those estimates during the applicable measurement periods (up to one year from the acquisition date).

Pursuant to ASC 805, our financial statements are not retrospectively adjusted for any changes to the recorded values that occur in subsequent periods.

Rather, we recognize any change in recorded values during the reporting period in which the adjustments are determined.

We also record, in the same period’s financial statements, the effect on earnings of changes in depletion, depreciation, amortization, or other income effects, if any, as a result of any change to the recorded values, calculated as if the accounting had been completed at the acquisition date.

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

For more information, see Governmental Regulations and Environmental Matters in Item 1 - Business , Note 1 — Summary of Significant Accounting Policies and Note 12 — Environmental Remediation Liabilities .

RESULTS OF OPERATIONS

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Rural 59.5 43.1 67.2

Timberlands & Non-Strategic - U.S.

Conservation Easements 3.9 3.1 —

Timberland & Non-Strategic.

Conservation Easement — 3.9 3.1

Deferred Revenue/Other (b) 1.2 (2.4) 0.9

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(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) 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.

(c) The year ended December 31, 2022 includes $16.0 million of equity income from the sale of a multi-family apartment complex in Bainbridge Island, Washington and $16.6 million from Large Dispositions.

The years ended December 31, 2021 and December 31, 2020 include income of $44.8 million and $28.7 million, respectively, from Large Dispositions.

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

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Total Volume) (a) 2 % 5 % 3 %

Net Stumpage Prices (dollars per ton)

Net Stumpage Prices (dollars per ton) (b)

Pine Pulpwood $22.45 $19.09 $15.83

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Operating Income $96.6 $66.1 $41.3

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

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

(+) Depreciation, depletion and amortization 60.3 54.1 61.8

Adjusted EBITDA (c) $120.2 $109.1 $119.7

Adjusted EBITDA (d) $156.9 $120.2 $109.1

Year-End Acres (in thousands) 1,919 1,798 1,733

(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.

(b) Pulpwood and sawtimber product pricing for composite stumpage sales is estimated based on market data.

(c) 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.

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

Pacific Northwest Timber Overview 2022 2021 2020

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Total Volume 1,585 1,669 1,603

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

% Delivered Volume (vs.

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Cut and Haul (62.7) (55.3) (54.6)

Port and Freight (2.8) — —

Net Stumpage Sales $91.1 $81.8 $62.0

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Operating Income (Loss) $15.2 $6.8 ($10.0)

(+) Timber write-off resulting from casualty events (b) 0.7 — —

(+) Depreciation, depletion and amortization 48.0 50.5 47.1

Adjusted EBITDA (b) $57.3 $37.1 $16.7

Adjusted EBITDA (c) $63.9 $57.3 $37.1

Year-End Acres (in thousands) 474 490 507

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

Northwest Sawtimber (in dollars per MBF) (d) $849 $748 $666

(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 .

(b) Timber write-off resulting from casualty events includes the write-off of merchantable and pre-merchantable timber volume related to a fire casualty event.

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

New Zealand Timber Overview 2022 2021 2020

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Timber Funds Overview 2021 2020 2019

Sales Volume (in thousands of tons)

Pulpwood 28 27 —

Sawtimber 374 288 —

Total Volume 402 315 —

Summary Financial Data (in millions of dollars)

Timber Sales $38.8 $26.0 —

Cut and Haul (16.5) (10.2) —

Net Stumpage Sales $22.4 $15.8 —

Fund II Timberland Dispositions (a) $156.8 — —

Non-Timber Sales 0.5 0.1 —

Timberland Management Fees 3.3 3.4 —

Total Sales $199.4 $29.6 —

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 (d) $2.3 $1.8 —

Year-End Acres (in thousands) — 141 —

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

(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)

NZ 705 959 1,106

Total Volume 706 960 1,107

Summary Financial Data (in millions of dollars)

Trading Sales $93.6 $87.6 $114.6

Non-Timber Sales 1.7 1.4 0.8

Total Sales $95.4 $89.0 $115.4

Operating Income (Loss) $0.1 ($0.5) —

Adjusted EBITDA (a) $0.1 ($0.5) —

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

Real Estate Overview 2022 2021 2020

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Timberland & Non-Strategic 11.4 — 19.3

Conservation Easements 3.9 3.1 —

Conservation Easement — 3.9 3.1

Deferred Revenue/Other (b) 1.2 (2.4) 0.9

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(+) Non-cash cost of land and improved development 28.4 25.0 30.4

(–) Gain associated with the multi-family apartment complex sale attributable to NCI (f) (11.5) — —

(–) Large Dispositions (c) (16.6) (44.8) (28.7)

Adjusted EBITDA (f) $100.7 $91.4 $59.5

Adjusted EBITDA (g) $72.7 $100.7 $91.4

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

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(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) 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 .

(f) Gain associated with the multi-family apartment complex sale attributable to NCI represents the gain recognized in connection with the sale of property by the Bainbridge Landing joint venture attributable to noncontrolling interests.

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

Trading Overview 2022 2021 2020

Sales Volume (in thousands of tons)

NZ 460 705 959

Total Volume 559 706 960

Summary Financial Data (in millions of dollars)

Trading Sales $69.3 $93.6 $87.6

Non-Timber Sales 1.7 1.7 1.4

Total Sales $71.0 $95.4 $89.0

Operating Income (Loss) $0.4 $0.1 ($0.5)

Adjusted EBITDA (a) $0.4 $0.1 ($0.5)

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

Capital Expenditures By Segment 2022 2021 2020

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Real Estate 0.3 0.2 0.4

Corporate — — 0.6

Total Capital Expenditures $74.8 $73.2 $64.2

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Southern Timber $457.8 $168.2 $24.2

Pacific Northwest Timber (b) — — 7.3

New Zealand Timber 0.7 10.9 0.5

Total Timberland Acquisitions $458.5 $179.1 $24.7

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

Real Estate Development Investments (b) $13.7 $12.5 $6.5

(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.

(b) Represents investments in master infrastructure or entitlements in our real estate development projects.

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

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Foreign exchange (a) — — (7.5) — — — — (7.5)

Other 2.3 (b) 0.7 (b) 48.1 (c) 168.8 (d) (60.1) (e) — (0.1) (f) 159.7

Other 18.0 (b) 12.3 (b) 16.5 (c) (199.4) (24.9) (d) (0.2) 3.3 (e) (174.4)

2022 $264.2 $162.2 $274.1 — $138.0 $71.0 ($0.4) $909.1

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(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.

(d) Includes a $25.6 million decrease in Large Dispositions in addition to Conservation Easements sales in 2021.

(e) Includes a 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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(b) Net of currency hedging impact.

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.

(c) Real Estate primarily includes Large Dispositions and equity income from joint venture entities, including the gain from the sale of the multi-family apartment complex in Bainbridge Island, Washington.

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

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(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.

(d) Pacific Northwest Timber includes a $1.4 million timber reservation sale to a conservation group.

SOUTHERN TIMBER

Full-year sales of $264.2 million increased $59.8 million, or 29%, 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.

Harvest volumes increased 10% to 6.28 million tons versus 5.69 million tons in the prior year.

Average pine sawtimber stumpage prices increased 22% to $34.36 per ton versus $28.27 per ton in the prior year, while average pine pulpwood stumpage prices increased 18% to $22.45 per ton versus $19.09 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) .

The increase in average pine pulpwood prices was primarily due to strong domestic demand.

The increase in average pine sawtimber prices was primarily due to strong domestic lumber demand, as well as upward pressure on chip-n-saw pricing due to increased competition from pulp mills.

Operating income of $96.6 million increased $30.5 million versus the prior year due to higher net stumpage realizations ($25.7 million), higher volumes ($7.5 million), and higher non-timber income ( $2.5 million ), partially offset by higher costs ( $4.5 million ) and higher depletion rates ( $0.7 million) .

Full-year Adjusted EBITDA of $156.9 million was $36.7 million above the prior year.

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Full-year sales of $162.2 million increased $19.2 million, or 13%, versus the prior year.

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).

Harvest volumes decreased 5% to 1.59 million tons versus 1.67 million tons in the prior year.

Average delivered sawtimber prices increased 15% to $112.44 per ton versus $97.87 per ton in the prior year, reflecting relatively strong customer demand and a favorable species mix, as a higher proportion of Douglas-fir sawtimber was harvested.

Average delivered pulpwood prices increased 61% to $50.83 per ton versus $31.65 per ton in the prior year, primarily driven by supply constraints amid strong end-market demand.

Operating income of $15.2 million improved $8.4 million versus the prior year, primarily due to higher net stumpage realizations ($11.3 million) and a timber reservation sale to a conservation group ($1.4 million), partially offset by higher costs ($2.2 million), lower volumes ($1.1 million), a timber write-off resulting from casualty events ($0.7 million), and lower non-timber income ($0.3 million).

Full-year Adjusted EBITDA of $63.9 million was $6.6 million above the prior year.

NEW ZEALAND TIMBER

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 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.

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.

Full-year sales of $274.1 million decreased $7.1 million, or 3%, versus the prior year.

Harvest volumes increased 1% to 2.62 million tons versus 2.60 million tons in the prior year driven by slightly higher export demand versus the prior year period that was negatively impacted by COVID-19 related headwinds.

Average delivered prices for export sawtimber decreased 10% to $124.91 per ton versus $138.84 per ton in the prior year, while average delivered prices for domestic sawtimber decreased 14% to $71.87 per ton versus $83.19 per ton in the prior year.

The decrease in export sawtimber prices primarily reflected constrained export market demand due to COVID lockdowns and construction market headwinds in China.

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

dollar terms) was primarily driven by the NZ$/US$ exchange rate (US$0.64 per NZ$1.00 versus US$0.71 per NZ$1.00).

Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 4% from the prior year, reflecting slowing domestic market demand and additional supply due to export market headwinds.

Operating income of $30.6 million decreased $20.9 million versus the prior year due to lower net stumpage realizations ($37.5 million), unfavorable foreign exchange impacts ($2.1 million), and higher forest management costs ($1.9 million), partially offset by lower depletion rates ($0.5 million), higher volumes ($0.4 million), and higher non-timber income ($19.7 million).

Full-year Adjusted EBITDA of $54.5 million was $24.0 million below the prior year.

During 2021, we sold the rights to manage Fund III and Fund IV, as well as our ownership interests in both funds, and we completed the liquidation of Fund II timberland assets.

As such, we had no sales, operating income or Adjusted EBITDA in 2022 in the Timber Funds segment.

Full-year sales of $138.0 million decreased $51.9 million versus the prior year, while operating income of $58.5 million decreased $54.0 million versus the prior year.

Sales and operating income in the current year included $30.5 million and $16.6 million, respectively, from Large Dispositions.

Current year operating income also included an $11.5 million gain attributable to noncontrolling interests from the sale of a multi-family apartment complex in Bainbridge Island, Washington.

Prior year sales and operating income included $56.0 million and $44.8 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 $95.4 million increased $6.4 million versus the prior year due to higher prices, partially offset by lower volumes.

Sales decreased primarily due to lower volumes (28,323 acres sold versus 32,371 acres sold in the prior year) and lower weighted average prices ($4,829 per acre versus $5,820 per acre in the prior year).

Full-year Adjusted EBITDA of $72.7 million was $28.0 million below the prior year.

Full-year sales of $71.0 million decreased $24.4 million versus the prior year due to lower volumes and prices.

Sales volumes decreased 21% to 559,000 tons versus 706,000 tons in the prior year.

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CORPORATE AND OTHER EXPENSE/ELIMINATIONS

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.

Full-year corporate and other operating expense of $35.5 million increased $4.9 million versus the prior year, primarily due to higher compensation expenses ($3.9 million), higher legal costs ($0.7 million), higher meals and travel expenses ($0.6 million), and higher other overhead costs ($0.4 million), partially offset by lower benefit costs ($0.7 million).

INTEREST EXPENSE

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.

Full-year interest expense of $36.2 million decreased $8.7 million versus the prior year period, as the prior year period included a $2.2 million loss from the termination of a cash flow hedge.

Additionally, full-year interest expense benefited from lower average outstanding debt and a lower weighted-average interest rate as compared to the prior year period.

INTEREST AND OTHER MISCELLANEOUS INCOME, NET

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.

Other non-operating income of $2.6 million increased $2.4 million versus the prior year primarily due to increased interest income and prior year costs related to debt extinguishments and modifications, partially offset by increased environmental and natural resource damage remediation costs.

INCOME TAX EXPENSE

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

Full-year income tax expense of $9.4 million decreased $5.3 million versus the prior year period as a result of lower taxable income.

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

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OUTLOOK FOR 2023

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

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.

In 2023, we expect to achieve full-year harvest volumes in our Southern Timber segment of 6.7 to 7.0 m illion tons.

T he anticipated increase relative to 2022 reflects the additional volume associated with our previously announced acquisitions.

We also anticipate higher non-timber income for full-year 2023 as compared to full-year 2022.

However, we expect that the increase in harvest volumes and non-timber income will be largely offset by lower weighted average stumpage realizations due to softer demand as well as higher harvest and transportation costs.

In our Pacific Northwest Timber segment, we expect to achieve full-year harvest volumes of approximately 1.5 to 1.6 million tons.

The anticipated decrease relative to 2022 reflects recent land sales activity, a more muted domestic demand outlook, and an ongoing mix shift toward Douglas-fir, which has a lower MBF-to-ton conversion ratio.

We further expect weighted average pricing to decline relative to full-year 2022 due to weaker macroeconomic conditions and lower lumber prices.

In our New Zealand Timber segment, we expect to achieve full-year harvest volumes of 2.5 to 2.7 mi llion tons.

We anticipate that stumpage margins will remain under pressure to start the year but are optimistic that export market conditions will gradually improve as the operating environment in China normalizes following the COVID-related disruptions that persisted throughout 2022.

We further expect that favorable carbon credit pricing and volumes will contribute to improved results in 2023.

In our Real Estate segment, we are encouraged by the continued interest in both our development projects and rural properties despite the higher interest rate environment.

However, we anticipate that real estate activity will be significantly weighted to the second half of the year, with relatively limited activity in the first quarter in particular.

Our 2023 outlook is subject to a number of variables and uncertainties, including those discussed at Item 1A — Risk Factors .

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AT-THE-MARKET EQUITY OFFERING PROGRAM (“ATM 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, 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.

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, 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):

On November 4, 2022 we entered into a new 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 (the “2022 ATM Program”).

As of December 31, 2022, $270.7 million remains available for issuance under the 2022 ATM Program.

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

Year Ended December 31,

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

Shares of common stock issued under the ATM Programs 1,579,228 6,357,972

Average price of common stock issued under the ATM Programs $38.05 $37.05

Gross proceeds $60.4 $235.5

Commissions $0.6 $2.4

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):

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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 provided by operating activities decreased $55.9 million versus the prior year primarily due to lower operating results and higher cash taxes paid.

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).

Cash used for investing activities increased $490.1 million versus the prior year primarily due to higher cash used for timberland acquisitions ($279.4 million), prior year net proceeds from the sale of Timber Fund II timberlands ($154.7 million) and Timber Funds III and IV ($31.0 million), lower proceeds from Large Dispositions ($25.2 million) and higher real estate development investments ($1.2 million), partially offset by lower capital expenditures ($1.2 million) and other investing activities ($0.2 million).

CASH USED FOR FINANCING ACTIVITIES

Cash used for financing activities decreased $11.7 million from the prior year due to an increase in net borrowings ($98.6 million), lower distributions to noncontrolling interests in consolidated affiliates ($89.5 million), make-whole fees on debt prepayments in the prior year ($6.2 million), lower debt issuance costs ($4.1 million) and lower distributions to noncontrolling interests in the operating partnership ($0.6 million), partially offset by lower proceeds from the issuance of common shares under the ATM Program ($169.3 million), higher dividends paid on common stock ($12.2 million), lower proceeds from the issuance of common shares under the incentive stock plan ($3.3 million) and increases in share repurchases for tax withholding on vested incentive stock awards ($2.6 million).

FUTURE USES OF CASH

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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.

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

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

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Long-term debt (a) $1,523.1 — $21.9 $501.2 $1,000.0

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 —

Interest payments on long-term debt (b) 388.5 70.0 139.7 115.6 63.2

Operating leases — timberland (c) 194.9 8.8 16.8 15.2 154.1

Operating leases — PP&E, offices (c) 7.3 1.2 1.9 1.0 3.2

Commitments — development projects (d) 32.2 27.0 1.2 0.5 3.5

Commitments — derivatives (e) 5.9 5.5 0.4 — —

Commitments — environmental remediation (f) 15.6 1.2 10.2 1.4 2.8

Commitments — other (g) 1.5 0.8 0.7 — —

Total $2,169.0 $114.5 $192.8 $634.9 $1,226.8

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See Note 7 - 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).

(b) Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of December 31, 2022.

(d) Commitments — development projects primarily consists of payments expected to be made on our Wildlight and Heartwood projects.

(e) Commitments — derivatives represent payments expected to be made on derivative financial instruments (foreign exchange contracts).

See Note 8 — 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.

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

See Note 12 - Environmental and Natural Resource Damage Liabilities for additional information.

(h) Commitments — other includes other purchase obligations.

(g) 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.

We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term.

EXPECTED 2023 EXPENDITURES

Capital expenditures in 2023 are forecasted to be between $85 million and $95 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.

Capital expenditures are expected to primarily consist 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.

Real estate development investments in 2023 are expected to be between $25 million and $28 million, net of anticipated reimbursements.

Expected real estate development investments are primarily related to Wildlight, our mixed-use community development project located north of Jacksonville, Florida and Heartwood, our mixed-use development project located in Richmond Hill just south of Savannah, Georgia.

Our 2023 dividend payments on Rayonier Inc.

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We made no discretionary pension contributions in 2022.

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

We expect to make estimated cash contributions in 2023 of approximately $7.6 million in order to fund the Defined Benefit Plan on a plan termination basis.

Additionally, we anticipate settling the Excess Benefit Plan with lump sum payments upon termination of the Defined Benefit Plan with cash contributions of approximately $1.3 million.

See Note 18 — Employee Benefit Plans for additional information.

Cash income tax payments in 2023 are expected to be between $5 million and $9 million, primarily due to the New Zealand subsidiary.

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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.

See Note 13 — Guarantees for additional information on the letters of credit and surety bonds as of December 31, 2022.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

In March 2012, Rayonier Inc.

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

On May 7, 2020, Rayonier Inc.

contributed its 100% ownership interest in Rayonier Operating Company LLC (the “Contribution”) to Rayonier, L.P.

As a result of the Contribution, Rayonier, L.P.

expressly assumed all the obligations of 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 Senior Notes due 2022.

Rayonier L.P.

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.

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conduct all of our operations.

Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been eliminated in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors.

Rayonier, L.P.’s most significant assets are its interest in operating subsidiaries, which have been excluded in the table below to eliminate intercompany transactions between the issuer and guarantors and to exclude investments in non-guarantors.

As a result, our ability to make required payments on the notes depends on the performance of our operating subsidiaries and their ability to distribute funds to us.

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LIQUIDITY FACILITIES

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.

See Note 7 — 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 2031, Term Credit Agreement, Incremental Term Loan Agreement, 2021 Incremental Term Loan Agreement, 2022 Incremental Term Loan Agreement and Revolving Credit Facility.

RESTRICTED CASH

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.

See Note 21 — Restricted Cash for further information regarding the funds deposited with a third-party intermediary 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 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.

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, timber write-offs resulting from casualty events, gain associated with the multi-family apartment complex sale attributable to noncontrolling interests, costs related to the merger with Pope Resources, 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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Non-cash cost of land and improved development 28.4 25.0 30.4

25.0 30.4 12.6

Timber write-offs resulting from casualty events attributable to Rayonier (a) — 7.9 —

Non-operating income — (0.9) (2.7)

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

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) —

Non-operating expense (income) 0.4 — (0.9)

Timber write-offs resulting from a casualty event attributable to Rayonier (a) 0.7 — 7.9

Gain associated with the multi-family apartment complex sale attributable to NCI (b) (11.5) — —

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

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

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

Large Dispositions (f) (16.6) (44.8) (28.7)

Adjusted EBITDA $314.2 $329.8 $267.4

(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) 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) 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.

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

(b) Gain associated with the multi-family apartment complex sale attributable to noncontrolling interests represents the gain recognized in connection with the sale of property by the Bainbridge Landing joint venture attributable to noncontrolling interests.

(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.

(d) Gain on investment in Timber Funds represents the gain recognized on the sale of rights to manage two timber funds (Funds III and IV) previously managed by the Company’s Olympic Resources Management (ORM) subsidiary, as well as its co-investment stake in both funds.

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

(f) 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):

Southern Timber Pacific Northwest Timber New Zealand Timber Timber Funds Real Estate Trading Corporate

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

Operating income $96.6 $15.2 $30.6 — $58.5 $0.4 ($35.5) $165.8

Depreciation, depletion and amortization 60.3 48.0 23.9 — 13.9 — 1.3 147.3

Non-cash cost of land and improved development — — — — 28.4 — — 28.4

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)

Timber write-offs resulting from a casualty event (a) — 0.7 — — — — — 0.7

Gain associated with the multi-family apartment complex sale attributable to NCI (b) — — — — (11.5) — — (11.5)

Large Dispositions (c) — — — — (16.6) — — (16.6)

Adjusted EBITDA $156.9 $63.9 $54.5 — $72.7 $0.4 ($34.2) $314.2

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

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

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

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

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

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

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

Large Dispositions (c) — — — — (44.8) — — (44.8)

Adjusted EBITDA $120.2 $57.3 $78.5 $2.3 $100.7 $0.1 ($29.4) $329.8

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 (d) — — — 11.6 — — — 11.6

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

Costs related to the merger with Pope Resources (g) — — — — — — 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 (c) — — — — (28.7) — — (28.7)

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

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

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

(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.

(d) 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.

(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.

(e) Gain on investment in Timber Funds represents the gain recognized on the sale of rights to manage two timber funds (Funds III and IV) previously managed by the Company’s Olympic Resources Management (ORM) subsidiary, as well as its co-investment stake in both funds.

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

(g) 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.

17 unchanged sentences

2022 2021 2020

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

Purchase of timberlands ($458.5) ($179.1) ($24.7)

Real Estate development investments (13.7) (12.5) (6.5)

Distributions to noncontrolling interests in consolidated affiliates (19.4) (109.0) (12.6)

(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