What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-03 · 253 added, 125 removed, 550 unchanged (41% of the section changed)

32 unchanged sentences

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

As of March 31, 2024, we owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S.

As of June 30, 2024, we owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S.

South (1.85 million acres), U.S.

16 unchanged sentences

For a full description of our environmental matters, see Item 1 - “Business” in our Annual Report on Form 10-K for the year ended December 31, 2023 and our sustainability report located at our Responsible Stewardship webpage.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements requires us to make estimates, assumptions and judgments that affect our assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities.

We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable.

Actual results may differ from these estimates.

For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K.

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

See Note 1 — Basis of Presentation for a summary of recently issued accounting standards.

INDUSTRY AND MARKET CONDITIONS

9 unchanged sentences

Pricing in our timber segments is influenced by macroeconomic factors, including residential construction activity, and can also vary considerably on a local level based on weather, the available inventory of logs, mill demand, and export market access.

In our Southern Timber segment, weather-related constraints on competing supply benefited first quarter harvest volumes and net stumpage realizations.

In our Southern Timber segment, pine pulpwood net stumpage realizations have improved in the first half of the year due to improved demand, while pine sawtimber net stumpage realizations have been constrained by softer demand from lumber mills.

In our Pacific Northwest Timber segment, weighted-average delivered log prices remain under pressure due to weaker domestic demand and reduced export market tension.

8 unchanged sentences

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

CRITICAL ACCOUNTING ESTIMATES

We base these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information we believe are reasonable.

Actual results may differ from these estimates.

For a full description of our critical accounting policies, see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K.

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

See Note 1 — Basis of Presentation for a summary of recently issued accounting standards.

DISCUSSION OF TIMBER INVENTORY AND SUSTAINABLE YIELD

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Southern Timber, Pacific Northwest Timber and New Zealand Timber.

The following tables provide a breakdown of our timberland holdings as of March 31, 2024 and December 31, 2023:

(acres in 000s) As of March 31, 2024 As of December 31, 2023

The following tables provide a breakdown of our timberland holdings as of June 30, 2024 and December 31, 2023:

(acres in 000s) As of June 30, 2024 As of December 31, 2023

Owned Leased Total Owned Leased Total

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

As of March 31, 2024, legal acres in New Zealand consisted of 297,000 plantable acres and 125,000 non-productive acres.

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2023 to March 31, 2024:

As of June 30, 2024, legal acres in New Zealand consisted of 289,000 plantable acres and 121,000 non-productive acres.

The following tables detail activity for owned and leased acres in our timberland holdings by state from December 31, 2023 to June 30, 2024:

(acres in 000s) Acres Owned

December 31, 2023

Acquisitions Sales Other March 31, 2024

Acquisitions Sales Other June 30, 2024

Alabama 250 — — — 250

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December 31, 2023

New Leases Sold/Expired Leases Other (a) March 31, 2024

New Leases Sold/Expired Leases (a) Other (b) June 30, 2024

Alabama 5 — (2) — 3

2 unchanged sentences

Georgia 50 — — — 50

93 — (2) — 91

Pacific Northwest

Washington (b) 4 — — — 4

New Zealand (c) 233 — — 1 234

Washington (c) 4 — (1) — 3

New Zealand (d) 233 — (3) 2 232

Total 330 — (6) 2 326

(a) Includes adjustments for land mapping reviews.

(b) Primarily timber reservations acquired in the merger with Pope Resources.

(a) Includes acres previously under lease that have been harvested and activity for the relinquishment of leased acres.

(b) Includes adjustments for land mapping reviews.

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

RESULTS OF OPERATIONS

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Financial Information (in millions) 2024 2023 2024 2023

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Trading 0.1 0.1 0.2 0.4

Corporate and Other (9.8) (8.6)

Corporate and Other (c) (12.0) (10.3) (21.8) (18.9)

Operating Income 12.4 20.1 28.7 30.7

Interest expense, net (9.8) (12.4) (19.6) (24.1)

Interest and other miscellaneous (expense) income, net (c) (5.0) 9.6

Income tax benefit (expense) (d) 0.8 (1.1)

Interest and other miscellaneous income (expense), net (d) 0.9 11.6 (4.1) 21.2

Income tax (expense) benefit (e) (0.5) (0.2) 0.3 (1.3)

Net Income 3.0 19.1 5.3 26.5

1 unchanged sentence

Net Income Attributable to Rayonier, L.P.

$1.9 $19.3 $3.3 $27.8

Net income attributable to noncontrolling interests in the Operating Partnership — (0.3) — (0.5)

Net Income Attributable to Rayonier Inc.

Adjusted EBITDA (e)

$1.9 $19.0 $3.3 $27.3

Adjusted EBITDA (f)

Southern Timber $33.9 $43.6 $78.7 $86.4

6 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 $2.3 million of timber write-offs resulting from casualty events.

(c) The three months ended March 31, 2024 includes $5.7 million of pension settlement charges and $1.3 million of net costs associated with legal settlements.

The three months ended March 31, 2023 includes $9.1 million of net recoveries associated with legal settlements.

(d) The three months ended March 31, 2024 includes a $1.2 million income tax benefit related to the pension settlement.

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

(b) The six months ended June 30, 2023 includes $2.3 million of timber write-offs resulting from casualty events.

(d) The three months ended June 30, 2024 includes $1.1 million of net costs associated with legal settlements.

The six months ended June 30, 2024 includes $5.7 million of pension settlement charges and $2.4 million of net costs associated with legal settlements.

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

(e) The six months ended June 30, 2024 includes a $1.2 million income tax benefit related to the pension settlement.

(f) 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 2024 2023 2024 2023

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Three Months Ended

June 30, Six Months Ended

Pacific Northwest Timber Overview 2024 2023 2024 2023

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Net Stumpage Sales $12.8 $13.2 $24.9 $28.1

Non-Timber Sales 1.0 0.9

Land-Based Solutions (d) — 1.3 — 1.3

Other Non-Timber Sales 1.4 1.0 2.3 1.9

Total Sales $24.3 $32.3 $49.5 $66.7

1 unchanged sentence

(+) Depreciation, depletion and amortization 7.4 9.2 16.5 19.9

Adjusted EBITDA (d) $4.7 $7.1

Adjusted EBITDA (e) $5.9 $6.9 $10.6 $14.0

Period-End Acres (in thousands) 417 474 417 474

Sawtimber (in dollars per MBF) (e) $650 $730

Sawtimber (in dollars per MBF) (f) $667 $711 $658 $720

(a) Includes volumes sold to third-party exporters.

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

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

(d) Consists primarily of conservation easement sales for habitat protection.

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

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

Three Months Ended

June 30, Six Months Ended

New Zealand Timber Overview 2024 2023 2024 2023

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Total Sales $53.8 $60.9 $99.5 $105.0

Operating Income (Loss) $7.4 ($0.7)

Operating Income $2.9 $2.4 $10.3 $1.7

(+) Timber write-offs resulting from casualty events (c) — — — 2.3

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

(b) Prior period has been restated to reclassify certain export related costs from cut and haul to port and freight.

(b) Prior year periods have been restated to reclassify certain export related costs from cut and haul to port and freight.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Real Estate Overview 2024 2023 2024 2023

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Weighted Average (Adjusted) (c) $1,579 $4,555 $1,961 $4,331

Operating (Loss) Income ($0.1) $0.9

Operating Income $5.8 $8.6 $5.7 $9.5

(+) Depreciation, depletion and amortization 6.7 2.2 8.4 3.7

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Trading Overview 2024 2023 2024 2023

Sales Volume (in thousands of tons)

NZ 49 118 132 209

Total Volume 55 135 160 239

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Three Months Ended

June 30, Six Months Ended

Capital Expenditures By Segment (in millions of dollars) 2024 2023 2024 2023

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Real Estate Development Investments (a)

$4.6 $7.0 $10.1 $14.8

(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, 2024 versus March 31, 2023 (millions of dollars):

The following tables summarize sales, operating income (loss) and Adjusted EBITDA variances for June 30, 2024 versus June 30, 2023 (millions of dollars):

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

Three Months Ended

March 31, 2023

June 30, 2023

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

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Three Months Ended

March 31, 2024

June 30, 2024

$59.3 $24.3 $53.8 $31.0 $5.3 — $173.6

3 unchanged sentences

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

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

Six Months Ended

June 30, 2023

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

Volume (5.1) (4.1) (7.3) 72.3 (9.0) — 46.8

Price (0.9) 1.0 (5.4) (77.5) (1.8) — (84.6)

Non-timber sales (0.8) (0.9) 7.1 — (0.2) — 5.2

Foreign exchange (a) — — (0.6) — — — (0.6)

Other (4.1) (b) (13.2) (b) 0.7 (c) 3.4 (d) 0.1 0.1 (13.0)

Six Months Ended

June 30, 2024

$129.3 $49.5 $99.5 $46.5 $17.1 ($0.1) $341.7

(a) Net of currency hedging impact.

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

(d) 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 (Loss) Southern Timber Pacific Northwest Timber New Zealand Timber Real Estate Trading Corporate and Other Total

Three Months Ended

March 31, 2023

June 30, 2023

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

8 unchanged sentences

Three Months Ended

March 31, 2024

June 30, 2024

$17.1 ($1.5) $2.9 $5.8 $0.1 ($12.0) $12.4

4 unchanged sentences

(d) New Zealand Timber includes $2.3 million of timber write-offs resulting from casualty events in Q1 2023.

(d) Corporate and Other includes $0.7 million of costs related to disposition initiatives.

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

Six Months Ended

June 30, 2023

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

Volume (2.6) (0.3) (1.6) 42.0 — — 37.5

Price (a) (0.9) 1.0 (5.4) (77.5) — — (82.8)

Cost (1.4) (0.2) 0.9 0.9 (0.2) (2.1) (2.1)

Non-timber income (b) (0.4) (0.9) 7.3 — — — 6.0

Foreign exchange (c) — — 4.4 — — — 4.4

Depreciation, depletion & amortization 1.5 0.5 0.7 1.7 — (0.1) 4.3

Non-cash cost of land and improved development — — — 28.7 — — 28.7

Other (d) — — 2.3 0.4 — (0.7) 2.0

Six Months Ended

June 30, 2024

$40.1 ($5.8) $10.3 $5.7 $0.2 ($21.8) $28.7

(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 Southern Timber segment, includes income from carbon capture and storage (“CCS”), solar and wind energy contracts.

For the New Zealand Timber segment, includes income from carbon credit sales.

(d) New Zealand Timber includes $2.3 million of timber write-offs resulting from casualty events in 2023.

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.

Corporate and Other includes $0.7 million of costs related to disposition initiatives.

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

Three Months Ended

March 31, 2023

June 30, 2023

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

6 unchanged sentences

Three Months Ended

March 31, 2024

June 30, 2024

$33.9 $5.9 $7.7 $18.9 $0.1 ($10.9) $55.7

6 unchanged sentences

(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, 2023

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

Volume (5.0) (3.3) (2.2) 72.3 — — 61.8

Price (b) (0.9) 1.0 (5.4) (77.5) — — (82.8)

Cost (1.4) (0.2) 0.9 0.9 (0.2) (2.1) (2.1)

Non-timber income (c) (0.4) (0.9) 7.3 — — — 6.0

Foreign exchange (d) — — 4.2 — — — 4.2

Other (e) — — — 0.9 — — 0.9

Six Months Ended

June 30, 2024

$78.7 $10.6 $19.2 $23.5 $0.2 ($20.2) $111.9

(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.

(c) For the Southern Timber segment, includes income from carbon capture and storage (“CCS”), solar and wind energy contracts.

For the New Zealand Timber segment, includes income from carbon credit sales.

(d) Net of currency hedging impact.

(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.

SOUTHERN TIMBER

First quarter sales of $70.0 million decreased $1.9 million, or 3%, versus the prior year period.

Harvest volumes increased 6% to 2.01 million tons versus 1.89 million tons in the prior year period, as we benefited from weather-related constraints on competing supply.

Average pine sawtimber stumpage realizations decreased 3% to $30.62 per ton versus $31.57 per ton in the prior year period, primarily due to a less favorable geographic mix.

Average pine pulpwood stumpage realizations decreased 2% to $16.89 per ton versus $17.32 per ton in the prior year period, which was also primarily driven by an unfavorable geographic mix.

Overall, weighted-average net stumpage realizations (including hardwood) decreased 4% to $23.07 per ton versus $24.03 per ton in the prior year period.

Second quarter sales of $59.3 million decreased $9.0 million, or 13%, versus the prior year period.

Harvest volumes decreased 17% to 1.67 million tons versus 2.01 million tons in the prior year period, primarily driven by wet ground conditions that constrained production and softer demand from lumber mills.

Average pine sawtimber stumpage realizations increased 1% to $29.28 per ton versus $29.07 per ton in the prior year period, primarily due to improved chip-n-saw pricing in most of our markets.

Average pine pulpwood stumpage realizations increased 10% to $17.38 per ton versus $15.78 per ton in the prior year period, primarily driven by markedly improved demand from pulp mills and a favorable geographic mix.

Overall, weighted-average net stumpage realizations (including hardwood) increased 2% to $22.21 per ton versus $21.85 per ton in the prior year period.

Non-timber sales of $9.4 million decreased 5% versus the prior year period, as lower pipeline easement revenues were partially offset by growth in our land-based solutions business.

Operating income of $23.0 million increased $0.8 million versus the prior year period due to favorable costs ($1.7 million) and higher volumes ($1.5 million), partially offset by lower net stumpage realizations ($1.9 million) and lower non-timber income ($0.5 million).

First quarter Adjusted EBITDA of $44.8 million was 5%, or $2.0 million, above the prior year period.

Operating income of $17.1 million decreased $4.6 million versus the prior year period due to lower volumes ($3.6 million) and higher costs ($3.1 million), partially offset by lower depletion rates ($1.5 million) and higher net stumpage realizations ($0.6 million).

Second quarter Adjusted EBITDA of $33.9 million was 22%, or $9.7 million, below the prior year period.

Year-to-date sales of $129.3 million decreased $10.8 million, or 8%, versus the prior year period.

Harvest volumes decreased 6% to 3.68 million tons versus 3.90 million tons in the prior year period, primarily driven by wet ground conditions and weaker sawtimber demand.

Average pine sawtimber stumpage realizations decreased 1% to $30.04 per ton versus $30.29 per ton in the prior year period, primarily due to softer demand from lumber mills.

Average pine pulpwood stumpage realizations increased 4% to $17.12 per ton versus $16.53 per ton in the prior year period primarily driven by improved demand from pulp mills.

Overall, weighted-average stumpage realizations (including hardwood) decreased 1% to $22.68 per ton versus $22.91 per ton in the prior year period.

Operating income of $40.1 million decreased $3.8 million versus the prior year period due to lower volumes ($2.6 million), higher costs ($1.4 million), lower net stumpage realizations ($0.9 million), and lower non-timber income ($0.4 million), partially offset by lower depletion rates ($1.5 million).

Year-to-date Adjusted EBITDA of $78.7 million was 9%, or $7.8 million, below the prior year period.

PACIFIC NORTHWEST TIMBER

First quarter sales of $25.2 million decreased $9.2 million, or 27%, versus the prior year period.

Second quarter sales of $24.3 million decreased $8.0 million, or 25%, versus the prior year period.

Harvest volumes decreased 12% to 293,000 tons versus 332,000 tons in the prior year period, primarily due to the Large Disposition we completed in Oregon in late 2023.

Average delivered prices for domestic sawtimber decreased 7% to $90.70 per ton versus $97.37 per ton in the prior year period due to a combination of weaker demand from domestic lumber mills, reduced export market tension, and an unfavorable species mix, as a lower proportion of Douglas-fir sawtimber was harvested in the current year period.

Average delivered pulpwood prices decreased 39% to $29.31 per ton versus $48.23 per ton in the prior year period , as supply constraints and strong end-market demand significantly benefited the prior year period.

An operating loss of $4.4 million versus an operating loss of $3.5 million in the prior year period was driven by lower net stumpage realizations ($0.4 million), higher depletion expense ($0.3 million), and lower volumes ($0.2 million).

First quarter Adjusted EBITDA of $4.7 million was 34%, or $2.4 million, below the prior year period.

Average delivered pulpwood prices decreased 17% to $30.20 per ton versus $36.21 per ton in the prior year period, primarily due to softer mill demand in the region.

Despite lower delivered pricing, net stumpage realizations increased 10% due to favorable pricing on stumpage sales and lower per-ton cut and haul costs on delivered volume.

An operating loss of $1.5 million

versus an operating loss of $2.4 million in the prior year period was driven by improved net stumpage realizations ($1.4 million) and lower depletion rates ($0.8 million), partially offset by lower non-timber income ($0.9 million), higher costs ($0.3 million), and lower volumes ($0.1 million).

Second quarter Adjusted EBITDA of $5.9 million was 14%, or $0.9 million, below the prior year period.

Year-to-date sales of $49.5 million decreased $17.3 million, or 26%, versus the prior year period.

Harvest volumes decreased 15% to 610,000 tons versus 716,000 tons in the prior year period, primarily due to the Large Disposition we completed in Oregon in late 2023.

Average delivered prices for domestic sawtimber decreased 8% to $87.57 per ton versus $95.16 per ton in the prior year period due to a combination of weaker demand from domestic lumber mills, reduced export market tension, and an unfavorable species mix.

Average delivered pulpwood prices decreased 31% to $29.74 per ton versus $42.90 per ton in the prior year period due to softer mill demand in the region.

An operating loss of $5.8 million versus an operating loss of $5.9 million in the prior year period was driven by improved net stumpage realizations ($1.0 million) and lower depletion rates ($0.5 million), partially offset by lower non-timber income ($0.9 million), lower volumes ($0.3 million), and higher costs ($0.2 million).

Year-to-date Adjusted EBITDA of $10.6 million was 24%, or $3.3 million, below the prior year period.

NEW ZEALAND TIMBER

First quarter sales of $45.7 million increased $1.6 million, or 4%, versus the prior year period.

Sales volumes of 480,000 tons were relatively flat versus the prior year period.

Average delivered prices for export sawtimber decreased 4% to $108.72 per ton versus $112.97 per ton in the prior year period, driven by weaker construction demand in China.

Second quarter sales of $53.8 million decreased $7.1 million, or 12%, versus the prior year period.

Sales volumes decreased 12% to 592,000 tons versus 673,000 tons in the prior year period, primarily due to softer export sawtimber demand.

Average delivered prices for export sawtimber decreased 2% to $101.86 per ton versus $103.81 per ton in the prior year period, driven by weaker construction activity in China.

Average delivered prices for domestic sawtimber declined 6% to $65.23 per ton versus $69.29 per ton in the prior year period.

1 unchanged sentence

Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 4% versus the prior year period.

First quarter non-timber / carbon

credit sales totaled $3.5 million versus $0.3 million in the prior year period.

Operating income of $7.4 million increased $8.1 million versus the prior year period due to favorable foreign exchange impacts ($3.4 million), higher carbon credit income ($3.3 million), the prior year write-off of timber basis due to a tropical cyclone casualty event ($2.3 million), lower costs ($0.5 million), and lower depletion rates ($0.3 million ), partially offset by lower net stumpage realizations ($1.7 million).

First quarter Adjusted EBITDA of $11.4 million was 88%, or $5.4 million, above the prior year period.

First quarter sales of $15.6 million decreased $0.7 million versus the prior year period, while operating loss of $0.1 million decreased $1.0 million versus the prior year period.

Sales and operating income decreased versus the prior year period due to fewer acres sold (1,933 acres sold versus 2,087 acres sold in the prior year period) and lower weighted-average prices ($5,774 per acre versus $6,200 per acre in the prior year period), partially offset by favorable deferred revenue adjustments.

Improved Development sales of $1.8 million consisted of two transactions in the Heartwood development project south of Savannah, Georgia, including a 3.1-acre multi-tenant retail parcel for $1.0 million ($321,000 per acre) and 18 finished residential lots for $0.8 million (a base price before true-up of $46,000 per lot or $284,000 per acre).

Second quarter non-timber / carbon credit sales totaled $4.6 million versus $0.7 million in the prior year period.

Operating income of $2.9 million increased $0.5 million versus the prior year period due to higher carbon credit income ($4.0 million), favorable foreign exchange impacts ($1.2 million), lower costs ($0.5 million), and lower depletion rates ($0.3 million ), partially offset by lower net stumpage realizations ($4.2 million) and lower volumes ($1.3 million).

Second quarter Adjusted EBITDA of $7.7 million was 7%, or $0.6 million, below the prior year period.

Year-to-date sales of $99.5 million decreased $5.5 million, or 5%, versus the prior year period.

Sales volumes decreased 7% to 1.07 million tons versus 1.15 million tons in the prior year period, primarily due to softer export sawtimber demand.

Average delivered prices for export sawtimber decreased 2% to $104.93 per ton versus $107.31 per ton in the prior year period, driven by weaker construction demand in China.

Average delivered prices for domestic sawtimber decreased 5% to $66.53 per ton versus $70.36 per ton in the prior year period.

The decrease in domestic sawtimber prices was primarily driven by weaker domestic demand and decreased competition from export markets, coupled with the decline in the NZ$/US$ exchange rate (US$0.61 per NZ$1.00 versus US$0.62 per NZ$1.00).

Excluding the impact of foreign exchange rates, domestic sawtimber prices decreased 3% versus the prior year period.

Year-to-date non-timber / carbon credit sales totaled $8.2 million versus $1.0 million in the prior year period.

Operating income of $10.3 million increased $8.6 million versus the prior year period due to higher carbon credit income ($7.3 million), favorable foreign exchange impacts ($4.4 million), the prior year write-off of timber basis due to a tropical cyclone casualty event ($2.3 million), lower costs ($0.9 million), and lower depletion rates ($0.7 million), partially offset by lower net stumpage realizations ($5.4 million) and lower volumes ($1.6 million).

Year-to-date Adjusted EBITDA of $19.2 million was 33%, or $4.8 million, above the prior year period.

Second quarter sales of $31.0 million decreased $1.1 million versus the prior year period, while operating income of $5.8 million decreased $2.9 million versus the prior year period.

Sales and operating income decreased versus the prior year period due to lower weighted-average prices ($1,750 per acre versus $7,489 per acre in the prior year period), partially offset by significantly higher acres sold (14,600 acres sold versus 3,754 acres sold in the prior year period) and favorable deferred revenue adjustments.

Improved Development sales of $2.6 million included $1.6 million from the Heartwood development project south of Savannah, Georgia and $1.0 million from the Wildlight development project north of Jacksonville, Florida.

Sales in Heartwood consisted of two residential pod sales totaling 47 acres for $1.6 million ($34,000 per acre).

Sales in Wildlight consisted of an 8-acre commercial parcel for $1.0 million ($125,000 per acre).

This compares to Improved Development sales of $12.2 million in the prior year period.

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This compares to prior year period sales of $15.6 million, which consisted of 3,411 acres at an average price of $4,582 per acre.

Timberland & Non-Strategic sales of $0.6 million consisted of a 430-acre transaction for $1,421 per acre.

This compares to prior year period sales of $1.6 million, which consisted of a 528-acre transaction for $3,100 per acre.

First quarter Adjusted EBITDA of $4.6 million decreased $2.0 million versus the prior year period.

First quarter sales of $11.8 million decreased $0.8 million versus the prior year period, primarily due to lower prices.

Sales volumes of 105,000 tons remained flat versus the prior year period.

The Trading segment generated breakeven results versus operating income of $0.3 million in the prior year period .

Timberland & Non-Strategic sales of $15.5 million consisted of a 13,106-acre transaction in New Zealand for $1,183 per acre.

This transaction included several geographically-isolated parcels with low plantability (~50%), a relatively young age-class distribution, and above-average operating costs.

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

Second quarter Adjusted EBITDA of $18.9 million decreased $1.4 million versus the prior year period.

Year-to-date sales of $46.5 million decreased $1.8 million versus the prior year period, while operating income of $5.7 million decreased $3.9 million versus the prior year period.

Sales and operating income decreased in the first six months primarily due to lower weighted-average prices ($2,220 per acre versus $7,028 per acre in the prior year period), partially offset by significantly higher acres sold (16,534 acres sold versus 5,841 acres sold in the prior year period) and favorable deferred revenue adjustments.

Year-to-date Adjusted EBITDA of $23.5 million decreased $3.4 million versus the prior year period.

Second quarter sales of $5.3 million decreased $10.1 million versus the prior year period, primarily due to lower volumes and prices.

Sales volumes of 55,000 tons decreased 59% versus the prior year period.

The Trading segment generated operating income of $0.1 million, which was consistent with the prior year period.

Year-to-date sales of $17.1 million decreased $10.9 million versus the prior year period, primarily due to lower volumes and prices.

Sales volumes of 160,000 tons decreased 33% versus the prior year period.

Year-to-date operating income and Adjusted EBITDA of $0.2 million decreased $0.2 million versus the prior year period.

CORPORATE AND OTHER EXPENSE / ELIMINATIONS

First quarter corporate and other operating expenses of $9.8 million increased $1.2 million versus the prior year period, primarily due to higher compensation and benefits expenses and professional services fees.

Compensation and benefits expenses were elevated versus the prior year quarter primarily due to the acceleration of equity compensation expense for retirement-eligible employees.

Second quarter corporate and other operating expenses of $12.0 million increased $1.7 million versus the prior year period, primarily due to $0.7 million of costs related to disposition initiatives, higher compensation and benefits expenses, and higher professional services fees.

Year-to-date corporate and other operating expenses of $21.8 million increased $2.9 million versus the prior year period, primarily due to $0.7 million of costs related to disposition initiatives, higher compensation and benefits expenses, and higher professional services fees.

INTEREST EXPENSE

First quarter interest expense of $9.7 million decreased $2.0 million versus the prior year period, primarily due to lower average outstanding debt.

INTEREST AND OTHER MISCELLANEOUS (EXPENSE) INCOME, NET

First quarter interest and other miscellaneous (expense) income includes a $5.7 million pension settlement charge and $1.3 million of net costs associated with legal settlements.

The prior year period includes $9.1 million of net recoveries associated with legal settlements.

INCOME TAX BENEFIT (EXPENSE)

First quarter net income tax benefit of $0.8 million versus income tax expense of $1.1 million in the prior year period was primarily due to a $1.2 million tax benefit associated with the pension termination and settlement.

In our Southern Timber segment, we anticipate lower quarterly harvest volumes for the remainder of the year.

We expect that pine stumpage realizations will decrease modestly over the remainder of the year due to a less favorable geographic mix and a relatively higher proportion of thinning volume.

Second quarter and year-to-date interest expense of $9.8 million and $19.6 million decreased $2.6 million and $4.6 million, respectively, versus the prior year period, primarily due to lower average outstanding debt.

INTEREST AND OTHER MISCELLANEOUS INCOME (EXPENSE), NET

Second quarter interest and other miscellaneous income of $0.9 million decreased $10.7 million versus the prior year period.

The current year period includes $1.1 million of net costs associated with legal settlements, while the prior year period included $11.4 million of net recoveries associated with legal settlements.

Year-to-date interest and other miscellaneous expense of $4.1 million includes a $5.7 million pension settlement charge and $2.4 million of net costs associated with legal settlements.

This compares to prior year period interest and other miscellaneous income of $21.2 million, which included $20.5 million of net recoveries associated with legal settlements.

INCOME TAX (EXPENSE) BENEFIT

Second quarter income tax expense of $0.5 million increased $0.3 million versus the prior year period.

Year-to-date income tax benefit of $0.3 million versus income tax expense of $1.3 million in the prior year period was primarily due to a $1.2 million tax benefit associated with the pension termination and settlement.

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

In our Southern Timber segment, we expect full-year harvest volumes toward the lower end of prior guidance as we look to opportunistically flex our volume in response to market conditions.

We expect that pine stumpage realizations will be lower in the second half of the year as compared to the first half due to a less favorable geographic mix, lower sawlog prices, and a relatively higher proportion of thinning volume.

Further, we continue to expect higher non-timber income for full-year 2024 relative to full-year 2023 driven by growth in our land-based solutions business.

In our Pacific Northwest Timber segment, we expect harvest volumes to increase during the second half of the year.

We believe that market conditions have generally stabilized, and we expect that end-market demand will improve modestly over the course of the year.

We further expect weighted-average delivered log prices will increase modestly into the second half of the year as mill inventories continue to normalize.

In our New Zealand Timber segment, we anticipate higher quarterly harvest volumes for the remainder of the year.

We expect weighted-average log prices to decline modestly in the near term before rebounding in the second half of the year due to lower expected log supply into China.

Following the recent pull back in carbon credit pricing, we now anticipate the full-year contribution from carbon credit sales to be comparable with the prior year.

In our Real Estate segment, we expect higher transaction volume and operating results in the second quarter.

In our Pacific Northwest Timber segment, we expect to achieve full-year volumes slightly below our prior guidance.

While pricing conditions have been relatively stable thus far in 2024, our ability to increase delivered log prices has been constrained by challenging domestic and export market conditions.

In our New Zealand Timber segment, we remain on track to achieve our full-year volume guidance as we expect relatively higher production during the second half of the year as compared to the first half.

Further, we continue to expect that full-year domestic and export sawtimber pricing will improve modestly relative to the full-year pricing achieved in 2023.

In our Real Estate segment, we continue to see healthy interest in our development projects and rural properties.

We expect that second half transaction closing activity will be heavily concentrated in the fourth quarter.

LIQUIDITY AND CAPITAL RESOURCES

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UPDATE ON INITIATIVES TO ENHANCE SHAREHOLDER VALUE

We are continuing to make progress toward our $1 billion disposition target, and we are actively evaluating several large-scale transactions.

Specifically, we are currently marketing approximately 115,000 acres in Washington state, and we have further identified approximately 100,000 acres in the U.S.

South that may be suitable for disposition.

In addition, we are evaluating strategic alternatives for our New Zealand joint venture interest and have engaged a financial advisor to assist us with this process.

We expect to provide additional information as it becomes available.

We are pleased with the progress we have made on our previously announced $1 billion disposition plan.

Although no transactions were completed during the quarter, we have been encouraged by the interest received from prospective buyers and continue to advance a variety of options to achieve our target.

To this end, we are actively engaged on several significant transactions and expect to be in a position to provide additional information regarding such transactions concurrent with or prior to our third quarter earnings release.

SUMMARY OF LIQUIDITY AND FINANCING COMMITMENTS

March 31, December 31,

June 30, December 31,

(millions of dollars) 2024 2023

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Net debt to enterprise value (b)(c) 22 % 19 %

(a) Total debt as of March 31, 2024 and December 31, 2023 reflects principal on long-term debt, gross of deferred financing costs and unamortized discounts.

(a) Total debt as of June 30, 2024 and December 31, 2023 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 $33.24 and $33.41 as of March 31, 2024 and December 31, 2023, respectively.

“OP” units) plus net debt based on Rayonier’s share price of $29.09 and $33.41 as of June 30, 2024 and December 31, 2023, 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, 2024, $269.7 million remains available for issuance under the 2022 ATM Program.

As of June 30, 2024, $269.7 million remains available for issuance under the 2022 ATM 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

2024 2023 2024 2023

Common shares issued under the ATM program — — — 400

Average price of common shares issued under the ATM program — — — $34.03

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

Commissions — —

The following table summarizes our cash flows from operating, investing and financing activities for the three months ended March 31, 2024 and 2023:

The following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30, 2024 and 2023:

(millions of dollars) 2024 2023

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CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operating activities decreased $11.7 million from the prior year period primarily due to changes in working capital.

Cash provided by operating activities decreased $18.7 million from the prior year period, primarily due to lower operating results and changes in working capital.

CASH USED FOR INVESTING ACTIVITIES

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Cash used for financing activities increased $34.1 million from the prior year period.

This is primarily due to higher dividends paid on common shares ($30.1 million), higher distributions to noncontrolling interests in consolidated affiliates ($1.7 million), and higher distributions to noncontrolling interests in the operating partnership ($0.3 million).

This is primarily due to higher dividends paid on common shares ($30.3 million), higher distributions to noncontrolling interests in consolidated affiliates ($3.8 million), and higher distributions to noncontrolling interests in the Operating Partnership ($0.1 million), partially offset by lower costs associated with the issuance of common shares under the ATM equity offering program ($0.1 million).

FUTURE USES OF CASH

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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, 2024 and excludes the impact of hedging.

(b) Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of June 30, 2024 and excludes the impact of hedging.

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

We made cash contributions in 2024 of $2.7 million in order to fund the Defined Benefit Plan on a plan termination basis.

We made cash contributions of $2.7 million in 2024 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 $1.2 million.

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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 11 — Guarantees for details on the letters of credit and surety bonds as of March 31, 2024.

See Note 11 — Guarantees for details on the letters of credit and surety bonds as of June 30, 2024.

SUMMARY OF GUARANTOR FINANCIAL INFORMATION

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

for the three months ended March 31, 2024 and year ended December 31, 2023 are provided in the table below:

(in millions) March 31, 2024 December 31, 2023

for the six months ended June 30, 2024 and year ended December 31, 2023 are provided in the table below:

(in millions) June 30, 2024 December 31, 2023

Current assets $128.1 $197.5

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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, 2024 and year ended December 31, 2023 are provided in the table below:

(in millions) March 31, 2024 December 31, 2023

for the six months ended June 30, 2024 and year ended December 31, 2023 are provided in the table below:

(in millions) June 30, 2024 December 31, 2023

Cost and expenses ($18.0) ($32.3)

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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, timber write-offs resulting from casualty events and Large Dispositions.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation, depletion, amortization, the non-cash cost of land and improved development, non-operating expense (income), costs related to disposition initiatives, 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.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net Income to Adjusted EBITDA Reconciliation

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Interest, net and miscellaneous income 7.7 12.3 15.4 23.6

Income tax (benefit) expense (a) (0.8) 1.1

Income tax expense (benefit) (a) 0.5 0.2 (0.3) 1.3

Depreciation, depletion and amortization 36.1 39.7 73.2 77.3

Non-cash cost of land and improved development 6.4 9.4 9.4 13.6

Timber write-offs resulting from casualty events (b) — 2.3

Non-operating expense (income) (c) 7.0 (9.1)

Non-operating expense (income) (b) 1.2 (11.5) 8.3 (20.6)

Costs related to disposition initiatives (c) 0.7 — 0.7 —

Timber write-offs resulting from casualty events (d) — — — 2.3

Adjusted EBITDA $55.7 $69.2 $111.9 $124.0

(a) The three months ended March 31, 2024 includes a $1.2 million income tax benefit related to the pension settlement.

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

(c) The three months ended March 31, 2024 includes $5.7 million of pension settlement charges and $1.3 million of net costs associated with legal settlements.

The three months ended March 31, 2023 includes $9.1 million of net recoveries associated with legal settlements.

(a) The six months ended June 30, 2024 includes a $1.2 million income tax benefit related to the pension settlement.

(b) The three months ended June 30, 2024 includes $1.1 million of net costs associated with legal settlements.

The six months ended June 30, 2024 includes $5.7 million of pension settlement charges and $2.4 million of net costs associated with legal settlements.

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

(c) Costs related to disposition initiatives include legal, advisory, and other due diligence costs incurred in connection with the Company’s asset disposition plan, which was announced in November 2023.

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

The following tables provide a reconciliation of Operating Income (Loss) by segment to Adjusted EBITDA by segment for the respective periods (in millions of dollars):

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

March 31, 2024

June 30, 2024

Operating income (loss) $17.1 ($1.5) $2.9 $5.8 $0.1 ($12.0) $12.4

Costs related to disposition initiatives (a) — — — — — 0.7 0.7

Depreciation, depletion and amortization 16.8 7.4 4.8 6.7 — 0.4 36.1

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Adjusted EBITDA $33.9 $5.9 $7.7 $18.9 $0.1 ($10.9) $55.7

March 31, 2023

June 30, 2023

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

Timber write-offs resulting from casualty events (a) — — 2.3 — — — 2.3

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

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

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

(a) Costs related to disposition initiatives include legal, advisory, and other due diligence costs incurred in connection with the Company’s asset disposition plan, which was announced in November 2023.

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

June 30, 2024

Operating income (loss) $40.1 ($5.8) $10.3 $5.7 $0.2 ($21.8) $28.7

Costs related to disposition initiatives (a) — — — — — 0.7 0.7

Depreciation, depletion and amortization 38.6 16.5 8.8 8.4 — 0.9 73.2

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

Adjusted EBITDA $78.7 $10.6 $19.2 $23.5 $0.2 ($20.2) $111.9

June 30, 2023

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

Timber write-offs resulting from casualty events (b) — — 2.3 — — — 2.3

Depreciation, depletion and amortization 42.5 19.9 10.4 3.7 — 0.8 77.3

Non-cash cost of land and improved development — — — 13.6 — — 13.6

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

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

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 $107.6 $126.3

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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)

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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