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Rayonier (RYN) Surpasses Q2 Earnings & Revenue Estimates

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Rayonier Inc. (RYN - Free Report) recorded second-quarter 2020 pro forma net income per share of 11 cents, which surpassed the Zacks Consensus Estimate of a cent. The company’s better-than-expected performance reflects increase in operating income in the real estate and trading segments. However, the figure is down from the 14 cents per share reported in the year-ago period.

Revenues were up 5.8% year over year to $195.6 million. Moreover, the revenue figure outpaced the Zacks Consensus Estimate of $147.9 million.

During the second quarter, the company closed the acquisition of Pope Resources. Moreover, management remains encouraged by the resiliency of the company’s business and commented that “Housing construction and repair and remodeling activity have rebounded sharply, driving record highs for wood products prices throughout the U.S.”

Segmental Performance

The company has revised its reportable business segments, adding one additional segment, referred as the "Timber Funds” segment. This is because of the Pope Resources acquisition. This new segment represents the operations of the three private equity timber funds included in the transaction – Fund II, Fund III and Fund IV. Rayonier owns 20% of Fund II, 5% of Fund III and 15% of Fund IV, and is also the managing member of the Funds.

During the second quarter, operating income at the company’s Southern Timber segment came in at $11.2 million, down from the prior-year quarter’s $14.7 million. This downside resulted from lower non-timber income, net-stumpage prices, and higher indirect and overhead expenses. However, these downtrends were partially offset by higher volumes and lower depletion rates.

The Pacific Northwest Timber segment reported an operating loss of $6.7 million, much wider than the operating loss of $3.8 million posted in second-quarter 2019. This was mainly due to lower net stumpage prices, non-timber income and higher depletion rates, overhead costs and other variable costs.

The New Zealand Timber segment recorded operating income of $5 million, down from the year-earlier number of $12.8 million. Results indicate lower net stumpage prices, volumes and unfavorable foreign-exchange impact partly negated by lower depletion rates, roading costs, overhead costs and higher non-timber income.

Real Estate’s operating income of $24.8 million was significantly up from the year-ago figure of $15.5 million. This chiefly resulted from a higher number of acres sold, partially muted by a decrease in weighted average prices.

The Trading segment recorded an operating income of $0.1 million in the quarter, against an operating loss of $0.2 million reported in the year-ago quarter.

Liquidity

Rayonier ended the second quarter with $94.8 million in cash and cash equivalents, up from $68.7 million recorded as of Dec 31, 2019. Total long-term debt was $1.3 billion, up 38.3% from $973.1 million as on Dec 31, 2019.

Outlook

The company now projects current-year net income attributable to Rayonier of $38-$43 million, earnings per share of 27-31 cents, pro forma earnings per share of 17-21 cents and adjusted EBITDA of $240-$260 million. The revised full-year Adjusted EBITDA outlook reflects anticipated partial-year contribution of $17-$20 million from the acquired Pope Resources assets.

Managament had earlier estimated this year’s net income attributable to Rayonier of $33-$46 million and adjusted EBITDA of $200-$230 million.

Currently, Rayonier sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rayonier Inc. Price, Consensus and EPS Surprise

Rayonier Inc. Price, Consensus and EPS Surprise

Rayonier Inc. price-consensus-eps-surprise-chart | Rayonier Inc. Quote

Performance of Other REITs

PS Business Parks, Inc. (PSB - Free Report) reported second-quarter 2020 core FFO per share of $1.59, missing the Zacks Consensus Estimate of $1.66. Moreover, the reported figure decreased 9.5% year over year.

Extra Space Storage, Inc. (EXR - Free Report) delivered second-quarter 2020 core FFO per share of $1.24. The figure comes in 6.9% higher than the prior-year quarter’s $1.16. The Zacks Consensus Estimate for the same was $1.16.

Mack-Cali Realty Corp’s (CLI - Free Report) second-quarter 2020 core FFO per share of 28 cents missed the Zacks Consensus Estimate of 31 cents. Moreover, the figure compared unfavorably with the year-ago quarter’s reported number of 40 cents.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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