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Rayonier's (RYN) Q2 Earnings Surpass Estimates, Revenues Up

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Rayonier Inc. (RYN - Free Report) reported second-quarter 2018 net income per share of 28 cents, comfortably beating the Zacks Consensus Estimate of 20 cents. Further, the bottom line came in higher than the prior-year figure of 20 cents.

Total sales for the quarter came in at $245.9 million, up 22.3% year over year, handily outpacing the Zacks Consensus Estimate of $198.3 million.

Results reflect decent performance of the Southern Timber and Pacific Northwest segments, backed by rise in saw timber prices, as well as higher harvest volumes. Higher demand for rural Higher and Better Uses (“HBU”) properties aided the Real Estate segment’s revenues.  However, the Trading segment put up a lackluster performance.

Segmental Performance

During the reported quarter, operating income in the company’s Southern Timber segment increased to $15.7 million from $9.7 million recorded in the year-ago quarter.

The Pacific Northwest Timber posted operating income of $5.6 million against operating loss of $1.5 million incurred in second-quarter 2017.

New Zealand Timber reported operating income of $17.8 million, down from the prior-year tally of $26.8 million.

Real Estate’s operating income was $18.9 million, higher than the year-ago figure of $16.1 million.

Trading segment’s operating income was $0.2 million, down from the year-earlier figure of $1.1 million.

Lastly, the Corporate and Other segment posted loss of $6.5 million compared with a loss of $5.3 million incurred in the comparable period last year. Increase in overhead allocation, interest expense, and compensation and benefits expense led to the elevated loss figure for this segment.

Liquidity

Rayonier ended the quarter with $106.6 million in cash and cash equivalents, down from $112.7 million recorded as of Dec 31, 2017. Total long-term debt was $972.3 million, significantly down from the figure of $1.02 billion as on Dec 31, 2017.

2018 Outlook

Rayonier expects 2018 earnings per share of 63-68 cents, while net income for the year is projected at $82-$89 million.

Conclusion

Rayonier has been actively repositioning its portfolio, through dispositions and strategic acquisitions. This favors the company’s U.S. South and Pacific Northwest portfolio, which is expected to perform well amid the ongoing U.S. housing recovery.

Nevertheless, the company faces competition from its substitutes and other market players in the timberland sector. Furthermore, lower quarterly harvest volumes and higher stumpage removals are expected to remain headwinds in the next six months of the year.

Rayonier Inc. Price, Consensus and EPS Surprise

Rayonier Inc. Price, Consensus and EPS Surprise | Rayonier Inc. Quote

Currently, Rayonier carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We are now looking forward to the earnings releases of MGM Growth Properties LLC (MGP - Free Report) , CoreCivic, Inc. (CXW - Free Report) and MedEquities Realty Trust, Inc. (MRT - Free Report) . MGM Growth Properties is set to release quarterly figures on Aug 7, while CoreCivic and MedEquities Realty Trust are slated to report their earnings on Aug 8.

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