What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-05 · 222 added, 93 removed, 548 unchanged (37% of the section changed)

12 unchanged sentences

FORWARD-LOOKING STATEMENTS

Certain statements in this document regarding anticipated financial outcomes, including our earnings guidance, if any, business and market conditions, outlook, expected dividend rate, our business strategies, including the potential effects of the ongoing global novel coronavirus (“COVID-19”) pandemic, expected harvest schedules, timberland acquisitions and dispositions, the anticipated benefits of our business strategies, and other similar statements relating to our future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.

Certain statements in this document regarding anticipated financial outcomes, including our earnings guidance, if any, business and market conditions, outlook, expected dividend rate, our business strategies, expected harvest schedules, timberland acquisitions and dispositions, the anticipated benefits of our business strategies, and other similar statements relating to our future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.

These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “project,” “anticipate” and other similar language.

17 unchanged sentences

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

As of March 31, 2023, we owned or leased under long-term agreements approximately 2.8 million acres of timberlands located in the U.S.

As of June 30, 2023, we owned or leased under long-term agreements approximately 2.8 million acres of timberlands located in the U.S.

South (1.91 million acres), U.S.

26 unchanged sentences

dollar terms.

In the first quarter, each of our timber segments experienced challenging market conditions due to weaker end-market demand and continued macroeconomic headwinds.

In our Southern Timber segment, weaker demand for pulp and lumber coupled with drier weather conditions led to lower net stumpage prices.

In our Pacific Northwest Timber segment, softer domestic lumber demand and decreased competition from export markets negatively impacted domestic sawtimber prices.

During the first half of 2023, each of our timber segments experienced challenging market conditions due to ongoing market headwinds and weaker end-market demand relative to the prior year.

In our Southern Timber segment, weaker demand for pulp and lumber coupled with drier weather conditions has resulted in lower net stumpage prices.

In our Pacific Northwest Timber segment, softer domestic lumber demand and decreased competition from export markets has negatively impacted domestic sawtimber prices.

In our New Zealand Timber segment, weaker demand in China has driven lower export sawtimber prices.

5 unchanged sentences

Our Real Estate segment is exposed to changes in interest and mortgage rates as higher rates could negatively impact buyer demand for the properties we sell.

However, current demand for our rural and development real estate properties has not been significantly impacted by the rise in interest rates from year ago levels.

However, current demand for our rural and development real estate properties has not been significantly impacted by the higher interest rate environment.

For additional information on market conditions impacting our business, see Results of Operations .

11 unchanged sentences

Southern Timber, Pacific Northwest Timber and New Zealand Timber.

The following tables provide a breakdown of our timberland holdings as of March 31, 2023 and December 31, 2022:

(acres in 000s) As of March 31, 2023

As of December 31, 2022

The following tables provide a breakdown of our timberland holdings as of June 30, 2023 and December 31, 2022:

(acres in 000s) As of June 30, 2023 As of December 31, 2022

Owned Leased Total Owned Leased Total

15 unchanged sentences

(a) Represents legal acres owned and leased by the New Zealand subsidiary, in which we own a 77% interest.

As of March 31, 2023, legal acres in New Zealand consisted of 297,000 plantable acres and 122,000 non-productive acres.

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2022 to March 31, 2023:

As of June 30, 2023, legal acres in New Zealand consisted of 297,000 plantable acres and 122,000 non-productive acres.

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2022 to June 30, 2023:

(acres in 000s) Acres Owned

December 31, 2022

Acquisitions Sales Other March 31, 2023

Acquisitions Sales Other June 30, 2023

Alabama 258 — — — 258

15 unchanged sentences

December 31, 2022

New Leases Sold/Expired Leases (a) Other March 31, 2023

New Leases Sold/Expired Leases (a) Other June 30, 2023

Alabama 14 — (9) — 5

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Financial Information (in millions) 2023 2022 2023 2022

23 unchanged sentences

Net Income Attributable to Rayonier, L.P.

$19.3 $24.7 $27.8 $54.6

Net income attributable to noncontrolling interests in the operating partnership (0.3) (0.6) (0.5) (1.2)

Net Income Attributable to Rayonier Inc.

$19.0 $24.1 $27.3 $53.4

Adjusted EBITDA (d)

7 unchanged sentences

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

(b) The three months ended March 31, 2023 includes a $2.3 million timber write-off resulting from a casualty event.

(b) The six months ended June 30, 2023 includes a $2.3 million timber write-off resulting from a casualty event.

(c) The three and six months ended June 30, 2023 includes $11.4 million and $20.5 million, respectively, of net recoveries associated with legal settlements.

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

Three Months Ended

June 30, Six Months Ended

Southern Timber Overview 2023 2022 2023 2022

31 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Pacific Northwest Timber Overview 2023 2022 2023 2022

33 unchanged sentences

Three Months Ended

June 30, Six Months Ended

New Zealand Timber Overview 2023 2022 2023 2022

23 unchanged sentences

Total Sales $60.9 $78.9 $105.0 $130.3

Operating (Loss) Income ($0.7) $5.4

Operating Income $2.4 $8.0 $1.7 $13.4

(+) Timber write-off resulting from a casualty event (b) — — 2.3 —

7 unchanged sentences

Domestic Sawtimber (in $NZD per tonne) $123.92 $127.50 $124.42 $126.51

(a) Percentage of export volume includes direct exports through our log export program.

(a) Percentage of export volume reflects direct exports through our log export program.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Real Estate Overview 2023 2022 2023 2022

24 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Trading Overview 2023 2022 2023 2022

Sales Volume (in thousands of tons)

NZ 118 182 209 278

Total Volume 135 209 239 320

3 unchanged sentences

Total Sales $15.4 $27.7 $28.0 $41.1

Operating Income $0.3 $0.4

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

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

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

Capital Expenditures By Segment (in millions of dollars) 2023 2022 2023 2022

25 unchanged sentences

Real Estate Development Investments (a)

$7.0 $2.9 $14.8 $6.0

(a) 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.

The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for March 31, 2023 versus March 31, 2022 (millions of dollars):

The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for June 30, 2023 versus June 30, 2022 (millions of dollars):

Sales Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Intersegment Eliminations Total

Three Months Ended

March 31, 2022

June 30, 2022

$66.3 $39.2 $78.9 $34.4 $27.7 ($0.1) $246.3

5 unchanged sentences

Three Months Ended

March 31, 2023

June 30, 2023

$68.3 $32.3 $60.9 $32.0 $15.4 ($0.1) $208.9

2 unchanged sentences

Sales Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Intersegment Eliminations Total

Six Months Ended

June 30, 2022

$143.0 $85.4 $130.3 $68.6 $41.1 ($0.1) $468.4

Volume 13.0 (9.3) (6.4) (37.0) (10.2) — (49.9)

Price (15.5) (12.9) (1.5) 11.0 (3.1) — (22.0)

Non-timber sales 5.5 0.8 (4.1) — 0.2 — 2.4

Foreign exchange (a) — — (2.4) — — — (2.4)

Other (5.8) (b) 2.7 (b) (10.9) (c) 5.7 — (0.1) (8.5)

Six Months Ended

June 30, 2023

$140.2 $66.7 $105.0 $48.3 $28.0 ($0.2) $387.9

(a) Net of currency hedging impact.

(b) Includes variance due to stumpage versus delivered sales.

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

Three Months Ended

March 31, 2022

June 30, 2022

$24.1 $2.9 $8.0 $11.0 ($0.4) ($10.1) $35.5

8 unchanged sentences

Three Months Ended

March 31, 2023

June 30, 2023

$21.7 ($2.4) $2.4 $8.6 $0.1 ($10.3) $20.1

3 unchanged sentences

(d) New Zealand Timber includes a $2.3 million timber write-off resulting from a casualty event.

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

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

Six Months Ended

June 30, 2022

$54.4 $9.5 $13.4 $21.2 ($0.1) ($17.7) $80.8

Volume 8.2 (3.4) (1.2) (20.2) — — (16.6)

Price (a) (15.5) (12.9) (1.5) 11.0 — — (18.9)

Cost (2.7) (1.5) (0.8) (3.1) 0.4 (1.1) (8.8)

Non-timber income (b) 4.7 0.8 (4.1) — 0.1 — 1.5

Foreign exchange (c) — — (2.0) — — — (2.0)

Depreciation, depletion & amortization (5.2) 1.6 0.2 1.6 — (0.1) (1.9)

Non-cash cost of land and improved development — — — (5.1) — — (5.1)

Other (d) — — (2.3) 4.1 — — 1.7

Six Months Ended

June 30, 2023

$43.9 ($5.9) $1.7 $9.5 $0.4 ($18.9) $30.7

(a) For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs).

For Real Estate, price is presented net of cash closing costs.

(b) For the New Zealand Timber segment, includes carbon credit sales.

(d) New Zealand Timber includes a $2.3 million in timber write-offs resulting from a casualty event.

Real Estate includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

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

Three Months Ended

March 31, 2022

June 30, 2022

$38.7 $14.3 $14.9 $25.4 ($0.4) ($9.8) $83.0

6 unchanged sentences

Three Months Ended

March 31, 2023

June 30, 2023

$43.6 $6.9 $8.3 $20.3 $0.1 ($9.9) $69.2

4 unchanged sentences

(d) Net of currency hedging impact.

(e) New Zealand Timber includes a $2.3 million timber write-off resulting from a casualty event.

(e) Real Estate includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

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

Six Months Ended

June 30, 2022

$87.1 $35.8 $25.3 $50.1 ($0.1) ($17.0) $181.1

Volume 12.8 (8.2) (1.8) (37.0) — — (34.2)

Price (b) (15.5) (12.9) (1.5) 11.0 — — (18.9)

Cost (2.7) (1.5) (0.8) (3.1) 0.4 (1.1) (8.8)

Non-timber income (c) 4.7 0.8 (4.1) — 0.1 — 1.5

Foreign exchange (d) — — (2.7) — — — (2.7)

Other (e) — — — 5.9 — — 5.9

Six Months Ended

June 30, 2023

$86.4 $14.0 $14.4 $26.9 $0.4 ($18.1) $124.0

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

(b) For Timber segments, price reflects net stumpage realizations (i.e., net of cut and haul and shipping costs).

For Real Estate, price is presented net of cash closing costs.

(d) Net of currency hedging impact.

(e) New Zealand Timber includes a $2.3 million in timber write-offs resulting from a casualty event.

Real Estate includes deferred revenue adjustments, revenue true-ups and marketing fees related to Improved Development sales in addition to residential and commercial lease revenue.

SOUTHERN TIMBER

First quarter sales of $71.8 million decreased $4.9 million, or 6%, versus the prior year period.

Harvest volumes of 1.89 million tons were flat versus the prior year period.

Second quarter sales of $68.3 million increased $2.0 million, or 3%, versus the prior year period.

Harvest volumes increased 32% to 2.01 million tons versus 1.52 million tons in the prior year period, primarily driven by the additional volume contribution from the U.S.

South acquisitions completed at the end of 2022.

Average pine sawtimber stumpage realizations decreased 15% to $29.07 per ton versus $34.09 per ton in the prior year period, primarily due to drier weather conditions, weaker demand from sawmills, and decreased competition from pulp mills for chip-n-saw volume.

Average pine pulpwood stumpage realizations decreased 26% to $15.78 per ton versus $21.46 per ton in the prior year period as weaker end-market demand, drier weather conditions, and extended maintenance outages at pulp mills all contributed to softer market conditions.

Overall, weighted-average stumpage realizations (including hardwood) decreased 14% to $21.85 per ton versus $25.55 per ton in the prior year period.

Operating income of $21.7 million decreased $2.4 million versus the prior year period due to lower net stumpage realizations ($7.4 million), higher depletion rates ($2.6 million), and higher overhead and other costs ($1.0 million), partially offset by higher volumes ($7.6 million) and higher non-timber income ($1.0 million).

Second quarter Adjusted EBITDA of $43.6 million was 13%, or $4.9 million, above the prior year period.

Year-to-date sales of $140.2 million decreased $2.9 million, or 2%, versus the prior year period.

Harvest volumes increased 14% to 3.90 million tons versus 3.42 million tons in the prior year period driven by the additional volume contribution from the U.S.

South acquisitions completed at the end of 2022.

Average pine sawtimber stumpage realizations decreased 13% to $30.29 per ton versus $34.86 per ton in the prior year period, primarily due to drier weather conditions, softer demand from sawmills, and decreased competition from pulp mills for chip-n-saw volume.

1 unchanged sentence

Overall, weighted-average stumpage realizations (including hardwood) decreased 15% to $22.91 per ton versus $26.87 per ton in the prior year period.

Operating income of $22.2 million decreased $8.1 million versus the prior year period due to lower net stumpage realizations ($7.4 million), higher depletion rates ($2.6 million), and higher lease expense and other costs ($1.8 million), partially offset by higher non-timber income ($3.7 million).

First quarter Adjusted EBITDA of $42.8 million was 12%, or $5.6 million, below the prior year period.

Operating income of $43.9 million decreased $10.5 million versus the prior year period due to lower net stumpage realizations ($15.5 million), higher depletion rates ($5.2 million), and higher overhead and other costs ($2.7 million), partially offset by higher volumes ($8.2 million) and higher non-timber income ($4.7 million).

Year-to-date Adjusted EBITDA of $86.4 million was 1%, or $0.7 million, below the prior year period.

PACIFIC NORTHWEST TIMBER

First quarter sales of $34.4 million decreased $11.9 million, or 26%, versus the prior year period.

Harvest volumes decreased 24% to 384,000 tons versus 505,000 tons in the prior year period as some planned harvests were deferred in response to market conditions.

Average delivered prices for domestic sawtimber decreased 12% to $93.12 per ton versus $105.82 per ton in the prior year period due to softer domestic demand and less competition from export markets.

Second quarter sales of $32.3 million decreased $6.8 million, or 17%, versus the prior year period.

Harvest volumes decreased 11% to 332,000 tons versus 376,000 tons in the prior year period as some planned harvests were deferred in response to soft market conditions.

Average delivered prices for domestic sawtimber decreased 19% to $97.37 per ton versus $120.44 per ton in the prior year period due to weaker domestic and export market demand.

Average delivered pulpwood prices decreased 20% to $36.21 per ton versus $45.17 per ton in the prior year period as the prior year period benefited from much more favorable end-market demand.

An operating loss of $2.4 million versus operating income of $2.9 million in the prior year period was driven by lower net stumpage

realizations ($5.9 million), lower volumes ($0.8 million) and higher costs ($0.5 million), partially offset by higher non-timber income ($1.1 million) and lower depletion rates ($0.8 million).

Second quarter Adjusted EBITDA of $6.9 million was 52%, or $7.4 million, below the prior year period.

Year-to-date sales of $66.7 million decreased $18.7 million, or 22%, versus the prior year period.

Harvest volumes decreased 19% to 716,000 tons versus 881,000 tons in the prior year period as some planned harvests were deferred in response to soft market conditions.

Average delivered prices for domestic sawtimber decreased 15% to $95.16 per ton versus $111.97 per ton in the prior year period due to weaker export markets and softer domestic demand.

Average delivered pulpwood prices increased 3% to $42.90 per ton versus $41.83 per ton in the prior year period due to lower sawmill operating rates and increased competition for a limited supply of smaller-sized logs.

however, pulpwood prices in the first quarter were well below the extraordinarily high levels realized in the second half of 2022.

An operating loss of $3.5 million versus operating income of $6.6 million in the prior year period was primarily due to lower net stumpage realizations ($7.0 million), lower volumes ($2.5 million), higher costs ($1.1 million), and lower non-timber income ($0.2 million), partially offset by lower depletion rates ($0.7 million).

First quarter Adjusted EBITDA of $7.1 million was 67%, or $14.4 million, below the prior year period.

Operating loss of $5.9 million decreased $15.4 million versus the prior year period due to lower net stumpage realizations ($12.9 million), lower volumes ($3.4 million), and higher costs ($1.5 million), partially offset by lower depletion rates ($1.6 million) and higher non-timber income ($0.8 million).

Year-to-date Adjusted EBITDA of $14.0 million was 61%, or $21.8 million, below the prior year period.

NEW ZEALAND TIMBER

First quarter sales of $44.1 million decreased $7.3 million, or 14%, versus the prior year period.

Harvest volumes decreased 7% to 481,000 tons versus 515,000 tons in the prior year period, primarily due to lost production days resulting from Cyclone Gabrielle.

Average delivered prices for export sawtimber decreased 11% to $112.97 per ton versus $127.59 per ton in the prior year period, driven by weaker demand in China.

Second quarter sales of $60.9 million decreased $18.0 million, or 23%, versus the prior year period.

Harvest volumes decreased 4% to 673,000 tons versus 703,000 tons in the prior year period, as some planned harvests were deferred in response to soft market conditions.

Average delivered prices for export sawtimber decreased 26% to $103.81 per ton versus $140.44 per ton in the prior year period, driven by increased salvage volume from Cyclone Gabrielle and weaker demand in China;

however, export sawtimber net stumpage realizations were relatively flat due to significantly lower port and freight costs versus the prior year period.

Average delivered prices for domestic sawtimber declined 10% to $69.29 per ton versus $76.82 per ton in the prior year period.

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

dollar terms) was primarily driven by the decline in the

NZ$/US$ exchange rate (US$0.63 per NZ$1.00 versus US$0.67 per NZ$1.00).

Excluding the impact of foreign exchange rates, domestic sawtimber prices remained flat versus the prior year period.

An operating loss of $0.7 million versus operating income of $5.4 million in the prior year period was primarily due to a timber write-off resulting from a tropical cyclone casualty event ($2.3 million), lower carbon credit sales ($1.3 million), unfavorable foreign exchange impacts ($0.9 million), higher costs ($0.8 million), and lower volumes ($0.8 million).

First quarter Adjusted EBITDA of $6.1 million was 41%, or $4.3 million, below the prior year period.

First quarter sales of $16.3 million decreased $17.9 million versus the prior year period, while operating income of $0.9 million decreased $9.3 million versus the prior year period.

Sales and operating income decreased versus the prior year period due to a significantly lower number of acres sold (2,087 acres sold versus 8,734 acres sold in the prior year period), partially offset by a substantial increase in weighted-average prices ($6,200 per acre versus $3,815 per acre in the prior year period).

Improved Development sales of $4.8 million consisted of a 27-acre multifamily apartment site for $4.5 million ($169,000 per acre) and 6 residential lots for $0.3 million ($50,000 per lot or $297,000 per acre) in our Heartwood development project south of Savannah, Georgia.

dollar terms) was primarily driven by the decline in the NZ$/US$ exchange rate (US$0.62 per NZ$1.00 versus US$0.66 per NZ$1.00).

Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 3% versus the prior year period, reflecting weaker domestic demand and decreased competition from export markets.

Operating income of $2.4 million decreased $5.6 million versus the prior year period due to lower carbon credit sales ($2.8 million), lower net stumpage realizations ($1.5 million), unfavorable foreign exchange impacts ($1.0 million), and lower volumes ($0.5 million), partially offset by lower depletion rates ($0.2 million).

Second quarter Adjusted EBITDA of $8.3 million was 44%, or $6.6 million, below the prior year period.

Year-to-date sales of $105.0 million decreased $25.3 million, or 19%, versus the prior year period.

Harvest volumes decreased 5% to 1,154,000 tons versus 1,217,000 tons in the prior year period, primarily due to lost production days resulting from Cyclone Gabrielle in the first quarter and deferred planned harvests in response to soft market conditions.

Average delivered prices for export sawtimber decreased 21% to $107.31 per ton versus $135.13 per ton in the prior year period, driven by weaker demand in China.

Average delivered prices for domestic sawtimber decreased 8% to $70.36 per ton versus $76.48 per ton in the prior year period.

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

dollar terms) was primarily driven by the decline in the NZ$/US$ exchange rate (US$0.62 per NZ$1.00 versus US$0.67 per NZ$1.00).

Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 2% versus the prior year period, reflecting weaker domestic demand and decreased competition from export markets.

Operating income of $1.7 million decreased $11.7 million versus the prior year period as a result of lower carbon credit sales ($4.1 million), a timber write-off resulting from a tropical cyclone casualty event ($2.3 million), unfavorable foreign exchange impacts ($2.0 million), lower net stumpage realizations ($1.5 million), lower volumes ($1.2 million), and higher costs ($0.8 million), partially offset by lower depletion rates ($0.2 million).

Year-to-date Adjusted EBITDA of $14.4 million was 43% or $10.9 million, below the prior year period.

Second quarter sales of $32.0 million decreased $2.4 million, or 7%, versus the prior year period, while operating income of $8.6 million decreased $2.4 million versus the prior year period.

Sales and operating income decreased versus the prior year period primarily due to a lower number of acres sold (3,754 acres sold versus 4,694 acres sold in the prior year period), partially offset by a slight increase in weighted-average prices ($7,489 per acre versus $7,453 per acre in the prior year period).

Improved Development sales of $12.2 million included $6.9 million from the Heartwood development project south of Savannah, Georgia and $5.3 million from the Wildlight development project north of Jacksonville, Florida.

Sales in Heartwood consisted of a 101-acre parcel for $3.0 million ($30,000 per acre) sold to a national

homebuilder for the first phase of an active-adult community, two residential pod sales totaling 62 acres for $1.8 million ($29,000 per acre), and 47 finished residential lots for $2.1 million ($44,000 per lot or $258,000 per acre).

Sales in Wildlight consisted of a 97-acre parcel for $5.3 million ($55,000 per acre) sold to a national homebuilder for the second phase of an active-adult community.

This compares to Improved Development sales of $11.6 million in the prior year period.

2 unchanged sentences

Timberland & Non-Strategic sales of $0.3 million consisted of a 76-acre transaction for $3,344 per acre.

This compares to prior year period sales of $11.4 million, which consisted of 3,966 acres at an average price of $2,874 per acre.

First quarter Adjusted EBITDA of $6.6 million was $18.1 million below the prior year period.

First quarter sales of $12.6 million decreased $0.9 million versus the prior year period due to lower volumes and prices.

There were no Timberland & Non-Strategic sales in the prior year period.

Second quarter Adjusted EBITDA of $20.3 million decreased $5.1 million, or 20%, versus the prior year period.

Year-to-date sales of $48.3 million decreased $20.3 million versus the prior year period, while operating income of $9.5 million decreased $11.7 million versus the prior year period.

Sales and operating income decreased in the first six months primarily due to lower volumes (5,841 acres sold versus 13,428 acres sold in the prior year period), partially offset by higher weighted-average prices ($7,028 per acre versus $5,087 per acre in the prior year period).

Year-to-date Adjusted EBITDA of $26.9 million decreased $23.2 million versus the prior year period.

Second quarter sales of $15.4 million decreased $12.3 million versus the prior year period due to lower volumes and prices.

Sales volumes decreased 35% to 135,000 tons versus 209,000 tons in the prior year period.

The Trading segment generated operating income and Adjusted EBITDA of $0.3 million versus $0.4 million in the prior year period.

The Trading segment generated operating income of $0.1 million versus an operating loss of $0.4 million in the prior year period as improved margins more than offset reduced trading volume.

Second quarter Adjusted EBITDA of $0.1 million increased $0.5 million versus the prior year period.

Year-to-date sales of $28.0 million decreased $13.2 million versus the prior year period due to lower volumes and prices.

Sales volumes decreased 25% to 239,000 tons versus 320,000 tons in the prior year period.

The Trading segment generated operating income of $0.4 million versus an operating loss of $0.1 million in the prior year period.

Year-to-date Adjusted EBITDA of $0.4 million increased $0.5 million versus the prior year period.

CORPORATE AND OTHER EXPENSE / ELIMINATIONS

First quarter corporate and other operating expenses of $8.6 million increased $1.0 million versus the prior year period, primarily due to higher compensation and benefits expense ($0.4 million) and higher IT and other expenses ($0.6 million).

Second quarter corporate and other operating expenses of $10.3 million increased $0.2 million versus the prior year period, primarily driven by higher compensation and benefits expense ($0.8 million) and higher travel and transportation costs ($0.2 million), partially offset by lower legal expenses ($0.8 million).

Year-to-date corporate and other operating expenses of $18.9 million increased $1.3 million versus the prior year period, primarily due to higher compensation and benefits expense ($1.1 million), higher IT related expenses ($0.5 million), higher travel and transportation expense ($0.3 million) and higher other overhead expenses ($0.4 million), partially offset by lower legal expenses ($1.0 million).

INTEREST EXPENSE

First quarter interest expense of $11.7 million increased $3.4 million versus the prior year period, primarily due to higher average outstanding debt and a higher weighted-average interest rate.

Second quarter and year-to-date interest expense of $12.4 million and $24.1 million increased $3.4 million and $6.7 million, respectively, versus the prior year period, primarily due to higher average outstanding debt and a higher weighted-average interest rate.

INTEREST AND OTHER MISCELLANEOUS INCOME (EXPENSE), NET

First quarter interest and other miscellaneous income, net of $9.6 million, includes $9.1 million of a net recovery associated with a legal settlement .

Second quarter and year-to-date interest and other miscellaneous income included $11.4 million and $20.5 million, respectively, of net recoveries associated with legal settlements .

INCOME TAX EXPENSE

First quarter income tax expense of $1.1 million decreased $4.5 million versus the prior year period.

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

Second quarter and year-to-date income tax expense of $0.2 million and $1.2 million decreased $1.1 million and $5.6 million, respectively, versus the prior year period, primarily due to lower anticipated full-year results from our New Zealand subsidiary, which is the primary driver of income tax expense.

In our Southern Timber segment, we now expect full-year harvest volumes of 7.2 to 7.4 million tons as dry weather conditions have contributed to stronger-than-expected production levels.

However, we anticipate lower quarterly harvest volumes for the remainder of 2023 compared to the first half of the year.

We further expect a modest decline in weighted-average net stumpage realizations during the second half of 2023 compared to the second quarter driven by geographic mix and a seasonal increase in the proportion of thinning volume.

We continue to anticipate higher non-timber income for full-year 2023 as compared to full-year 2022, driven by growth in our Nature-Based Solutions businesses.

In our Pacific Northwest Timber segment, we now expect full-year harvest volumes of 1.4 to 1.5 million tons as we have deferred some planned harvests in response to soft market conditions.

We anticipate modestly higher weighted-average delivered log prices in the second half of 2023 compared to the first half based on improved end-market demand and lumber prices.

In our New Zealand Timber segment, we now expect full-year harvest volumes of 2.3 to 2.5 million tons as we have deferred some planned harvest volume in response to unfavorable market conditions.

Over the balance of the year, we anticipate that weighted-average delivered log prices will be modestly lower as compared to the first half of 2023, primarily due to weaker demand in both export and domestic markets as well as increased supply from Cyclone Gabrielle salvage operations.

However, we expect that lower port and freight costs will partially offset these headwinds.

Further, while we have tempered our full-year expectations for carbon credit sales based on significant market volatility and limited transaction activity in the first half of the year, we expect to be more active in the carbon market in the second half of the year following the recent uptick in NZU pricing in response to governmental action to stabilize the market.

In our Real Estate segment, the demand for HBU properties and timberland assets has remained remarkably strong despite the higher interest rate environment.

Based on the timing of anticipated closings, we expect that second half transaction volume and operating results in the Real Estate segment will be heavily weighted to the fourth quarter.

LIQUIDITY AND CAPITAL RESOURCES

5 unchanged sentences

SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS

March 31, December 31,

June 30, December 31,

(millions of dollars) 2023 2022

6 unchanged sentences

Net debt to enterprise value (b)(c) 23 % 22 %

(a) Total debt as of March 31, 2023 and December 31, 2022 reflects principal on long-term debt, gross of deferred financing costs and unamortized discounts.

(a) Total debt as of June 30, 2023 and December 31, 2022 reflects principal on long-term debt, gross of deferred financing costs and unamortized discounts.

(b) Net debt is calculated as total debt less cash and cash equivalents.

“OP” units) plus net debt based on Rayonier’s share price of $33.26 and $32.96 as of March 31, 2023 and December 31, 2022, respectively.

“OP” units) plus net debt based on Rayonier’s share price of $31.40 and $32.96 as of June 30, 2023 and December 31, 2022, respectively.

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

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 March 31, 2023, $270.7 million remains available for issuance under the program.

As of June 30, 2023, $270.7 million remains available for issuance under the program.

The following table outlines common share issuances pursuant to our ATM program (dollars in millions):

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

Shares of common stock issued under the ATM program — — 400 726,248

1 unchanged sentence

Gross proceeds from common shares issued under the ATM program — — — $30.1

The following table summarizes our cash flows from operating, investing and financing activities for the three months ended March 31, 2023 and 2022:

The following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30, 2023 and 2022:

(millions of dollars) 2023 2022

4 unchanged sentences

CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operating activities increased $14.3 million from the prior year period primarily due to changes in working capital, offset by lower operating results.

Cash provided by operating activities decreased $22.2 million from the prior year period primarily due to lower operating results and changes in working capital.

CASH USED FOR INVESTING ACTIVITIES

Cash used for investing activities increased $13.3 million from the prior year period due to higher timberland acquisitions ($5.9 million), higher real estate development investments ($4.6 million), and higher capital expenditures ($3.1 million), partially offset by other investing activities ($0.3 million).

Cash used for investing activities increased $22.0 million from the prior year period due to higher timberland acquisitions ($6.1 million), higher real estate development investments ($8.7 million), higher capital expenditures ($6.5 million), and lower proceeds from other investing activities ($0.7 million).

CASH USED FOR FINANCING ACTIVITIES

Cash used for financing activities decreased $93.9 million from the prior year period.

This is primarily due to lower net borrowings ($122.9 million), lower distributions to consolidated affiliates ($2.7 million), and lower share repurchases ($0.2 million), partially offset by lower net proceeds from the issuance of common shares under the ATM equity offering program ($30.9 million), higher dividends paid on common shares ($2.7 million), and lower proceeds from the issuance of common shares under the Company’s incentive stock plan ($0.6 million).

This is primarily due to lower net repayments ($124.9 million), lower distributions to consolidated affiliates ($6.7 million), and lower distributions to noncontrolling interests in the operating partnership ($0.2 million), partially offset by lower net proceeds from the issuance of common shares under the ATM equity offering program ($32.0 million), higher dividends paid on common shares ($3.4 million), and lower proceeds from the issuance of common shares under the Company’s incentive stock plan ($2.6 million).

FUTURE USES OF CASH

9 unchanged sentences

Operating leases — PP&E, offices (c) 6.3 0.6 2.0 0.9 2.8

Commitments — development projects (d) 29.1 24.7 0.5 0.5 3.4

Commitments — derivatives (e) 4.3 3.7 0.6 — —

Commitments — environmental remediation (f) 15.5 1.1 10.2 1.4 2.8

Commitments — other (g) 10.2 0.6 9.6 — —

Commitments — real estate projects 40.0 22.7 7.2 2.3 7.8

Commitments — derivatives (d) 5.1 3.1 1.8 0.2 —

Commitments — environmental remediation (e) 15.3 1.2 10.0 1.2 2.9

Commitments — other (f) 11.0 0.7 10.2 0.1 —

Total $2,194.6 $75.7 $235.3 $656.6 $1,227.0

1 unchanged sentence

See Note 6 - Debt for additional information.

(b) Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of March 31, 2023.

(b) Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of June 30, 2023.

(d) Commitments — developmental 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).

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

See Note 7 — 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 N o t e 1 0 - E n v i r o n m e n t a l a n d N a t u r a l R e s o u r c e D a m a g e L i a b i l i t i e s for additional information.

(g) Commitments — other includes $8.9 million related to pension plan termination.

See Note 15 - Employee Bene fit Plans for additional information.

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

See Note 10 - Environmental and Natural Resource Damage Liabilities for additional information.

(f) Commitments — other includes $8.9 million related to pension plan termination.

See Note 15 - Employee Benefit Plans for additional information.

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.

10 unchanged sentences

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.

Full-year 2023 cash tax payments are expected to be between $5.0 million and $7.0 million, primarily related to the New Zealand subsidiary.

Full-year 2023 cash tax payments are expected to be bet ween $3.5 million and $5.5 million, primarily related 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.

compensation self-insurance programs.

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

1 unchanged sentence

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 11 — Guarantees for details on the letters of credit and surety bonds as of March 31, 2023.

See Note 11 — Guarantees for details on the letters of credit and surety bonds as of June 30, 2023.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

16 unchanged sentences

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

for the three months ended March 31, 2023 and year ended December 31, 2022 are provided in the table below:

(in millions) March 31, 2023 December 31, 2022

for the six months ended June 30, 2023 and year ended December 31, 2022 are provided in the table below:

(in millions) June 30, 2023 December 31, 2022

Current assets $85.3 $112.2

4 unchanged sentences

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

for the three months ended March 31, 2023 and year ended December 31, 2022 are provided in the table below:

(in millions) March 31, 2023 December 31, 2022

for the six months ended June 30, 2023 and year ended December 31, 2022 are provided in the table below:

(in millions) June 30, 2023 December 31, 2022

Cost and expenses ($15.8) ($28.9)

9 unchanged sentences

CAD is a non-GAAP measure of cash generated during a period that is available for common share 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.

CAD is defined as cash provided by operating activities adjusted for capital spending (excluding timberland acquisitions and real estate development investments) and working capital and other balance sheet changes.

CAD is defined as cash provided by operating activities

adjusted for capital spending (excluding timberland acquisitions and real estate development investments) and working capital and other balance sheet changes.

CAD is not necessarily indicative of the CAD that may be generated in future periods.

2 unchanged sentences

It excludes specific items that management believes are not indicative of the Company’s ongoing operating results.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, and timber write-offs resulting from casualty events.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating income and expense, timber write-offs resulting from casualty events and Large Dispositions.

We reconcile Adjusted EBITDA to Net Income for the consolidated Company and to Operating Income for the segments, as those are the most comparable GAAP measures for each.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net Income to Adjusted EBITDA Reconciliation

7 unchanged sentences

Adjusted EBITDA $69.2 $83.0 $124.0 $181.1

(a) The three months ended March 31, 2023 includes a $9.1 million net recovery associated with a legal settlement.

(a) The three and six months ended June 30, 2023 includes $11.4 million and $20.5 million, respectively, of net recoveries associated with legal settlements.

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

1 unchanged sentence

Three Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate

March 31, 2023

June 30, 2023

Operating income (loss) $21.7 ($2.4) $2.4 $8.6 $0.1 ($10.3) $20.1

Depreciation, depletion and amortization 21.9 9.2 5.9 2.2 — 0.4 39.7

Non-cash cost of land and improved development — — — 9.4 — — 9.4

Adjusted EBITDA $43.6 $6.9 $8.3 $20.3 $0.1 ($9.9) $69.2

June 30, 2022

Operating income (loss) $24.1 $2.9 $8.0 $11.0 ($0.4) ($10.1) $35.5

Depreciation, depletion and amortization 14.7 11.3 6.9 2.6 — 0.3 35.8

Non-cash cost of land and improved development — — — 11.8 — — 11.8

Adjusted EBITDA $38.7 $14.3 $14.9 $25.4 ($0.4) ($9.8) $83.0

Six Months Ended Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate

June 30, 2023

Operating income (loss) $43.9 ($5.9) $1.7 $9.5 $0.4 ($18.9) $30.7

Timber write-off resulting from a casualty event (a) — — 2.3 — — — 2.3

2 unchanged sentences

Adjusted EBITDA $86.4 $14.0 $14.4 $26.9 $0.4 ($18.1) $124.0

March 31, 2022

Operating income $30.3 $6.6 $5.4 $10.2 $0.4 ($7.6) $45.3

June 30, 2022

Operating income (loss) $54.4 $9.5 $13.4 $21.2 ($0.1) ($17.7) $80.8

Depreciation, depletion and amortization 32.7 26.2 11.9 11.7 — 0.6 83.2

3 unchanged sentences

The following table provides a reconciliation of Cash Provided by Operating Activities to Adjusted CAD (in millions of dollars):

Three Months Ended March 31,

Six Months Ended June 30,

Cash provided by operating activities $126.3 $148.5

6 unchanged sentences

Cash used for financing activities ($91.0) ($184.9)

(a) Capital expenditures exclude timberland acquisitions of $8.7 million and $2.8 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

(a) Capital expenditures exclude timberland acquisitions of $9.3 million and $3.2 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

The following table provides supplemental cash flow data (in millions of dollars):

Three Months Ended March 31,

Six Months Ended June 30,

Purchase of timberlands ($9.3) ($3.2)

5 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis