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Rayonier (RYN) Surpasses Q3 Earnings & Revenue Estimates

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Shares of Rayonier Inc. (RYN - Free Report) appreciated marginally on better-than-anticipated third-quarter results. The company recorded third-quarter 2020 pro forma net income per share of 6 cents, surpassing the Zacks Consensus Estimate of 4 cents. Results reflect increase in operating income in the real estate segment. Moreover, the figure compares favorably with the loss of 40 cents per share reported in the year-ago period.

Quarterly results also reflect a rise in revenues. However, adverse impact of Hurricane Laura and the Beechie Creek Fire marred results to some extent.

Revenues were up 27.2% year over year to $198.9 million. In addition, the revenue figure outpaced the Zacks Consensus Estimate of $182.3 million.

During the September-end quarter, Rayonier’s Southern Timber and Timber Funds segments were affected by Hurricane Laura and Beechie Creek Fire, respectively. In the Southern Timber segment, the company wrote off timber basis to the amount of $6 million. In the Timber Funds segment, it wrote off timber basis of $9.2 million, of which $1.9 million was attributable to Rayonier.

Segmental Performance

During the third quarter, operating income at the company’s Southern Timber segment came in at $5.1 million, down from the prior-year quarter’s $9.5 million. This downside resulted from the write-offs from Hurricane Laura and lower non-timber income. However, these negatives were partially offset by higher volumes, net stumpage prices and lower depletion rates and lease and other expenses.

The Pacific Northwest Timber segment reported an operating loss of $1.8 million, significantly narrower than the operating loss of $3.6 million posted in third-quarter 2019. This was mainly due to higher net stumpage prices and non-timber income, muted by higher depletion rates, and overhead costs and road maintenance costs to some extent.

The New Zealand Timber segment recorded an operating income of $10.7 million, up from the year-earlier number of $10.1 million. Results indicate higher volumes, carbon credit sales and lower depletion rates, partly negated by lower net stumpage prices and unfavourable foreign-exchange impact.

The Timber Funds segment reported an operating loss of $12.4 million in the third quarter.

Real Estate’s operating income of $9.5 million was significantly up from the year-ago figure of $0.4 million. This chiefly resulted from a higher number of acres sold, partially muted by a decrease in weighted-average prices.

The Trading segment posted an operating loss of $0.6 million during the July-September quarter, flat year on year.

Liquidity

Rayonier ended the third quarter with $78.2 million in cash and cash equivalents, up from $68.7 million recorded as of Dec 31, 2019. However, total long-term debt was $1.38 billion, up 41.7% from $973.1 million as on Dec 31, 2019.

Outlook

Rayonier expects current-year earnings per share to be around the higher end of its prior guidance of 17-21 cents. Further, the company expects full-year Adjusted EBITDA to be slightly higher than the higher end of its previous estimate of $17-$20 million.

Rayonier Inc. Price, Consensus and EPS Surprise

Rayonier Inc. Price, Consensus and EPS Surprise

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

Currently, Rayonier carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other REITS

Boston Properties Inc.’s (BXP - Free Report) third-quarter 2020 FFO per share of $1.57 missed the Zacks Consensus Estimate of $1.64. The reported figure also decreased 4.3% from the year-ago quarter’s $1.64.

SITE Centers Corp.’s (SITC - Free Report) third-quarter operating FFO per share of 23 cents came in line with the Zacks Consensus Estimate. The reported figure, however, declined 23.3% year over year.

Highwoods Properties, Inc. (HIW - Free Report) third-quarter 2020 FFO per share of 86 cents missed the Zacks Consensus Estimate of 88 cents. The figure included 5 cents from debt extinguishment charges and non-cash straight-line credit losses. Nonetheless, the reported figure improved 3.6% from the 83 cents reported in the year-ago period.

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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