Breaking News

Tweet TWEET

Rayonier Reports Fourth Quarter and Full Year 2012 Results

  Rayonier Reports Fourth Quarter and Full Year 2012 Results

Business Wire

JACKSONVILLE, Fla. -- January 24, 2013

Rayonier (NYSE:RYN) today reported fourth quarter net income of $76 million,
or 59 cents per share, compared to $56 million, or 45 cents per share, in the
prior year period. The 2011 results included a $4 million increase in a
disposition reserve for a closed mill site. Excluding this item, 2011 fourth
quarter pro forma net income was $60 million, or 48 cents per share.

Full year 2012 net income totaled $279 million, or $2.17 per share, compared
to $276 million, or $2.20 per share, in 2011. In addition to the disposition
reserve, the full year 2011 results also included a $16 million tax benefit
from the reversal of a reserve relating to the taxability of the 2009
alternative fuel mixture credit (AFMC). Excluding these items, full year 2011
pro forma net income was $264 million, or $2.11 per share.

Cash provided by operating activities was $446 million for 2012 compared to
$432 million for 2011. Full year cash available for distribution (CAD)^1 was
$304 million versus $287 million in 2011.

“Our 2012 results, including a 13 percent increase over last year’s pro forma
operating income, reflect the balance and resiliency of our core businesses
and our continued focus on operational excellence,” said Paul G. Boynton,
Chairman, President and CEO. “Rayonier shareholders benefited with a total
return of over 20 percent for last year, including a 10 percent dividend
increase supported by our strong cash flow.

“We also made significant progress on our key strategic initiatives, growing
our land base to more than 2.7 million acres and staying on schedule to
complete our cellulose specialties expansion (CSE) project in Jesup in
mid-2013,” added Boynton.

Forest Resources

Fourth quarter sales of $65 million were $13 million above the prior year
period, while operating income of $19 million increased $5 million. In the
Northern region, increased volume from deferring harvests to the second half
of the year was partially offset by lower prices due to sales mix and weaker
Asian demand. In the Atlantic region, volumes increased due to favorable
logging conditions, while in the Gulf region prices rose due to mix, and
volumes benefited from the 2011 acquisitions.

Full year sales of $230 million increased $15 million from 2011, while
operating income of $46 million was slightly lower. In the Atlantic region,
operating income reflects higher prices as 2011 included fire salvage sales,
while earnings in the Gulf region increased due to higher volumes from the
2011 acquisitions and higher non-timber income. Offsetting these increases
were lower prices in the Northern region and New Zealand due to weaker Asian
demand.

Real Estate

Fourth quarter sales of $20 million were $7 million above the prior year
period, while operating income of $11 million improved $4 million, primarily
due to higher non-strategic timberland volume and prices. Full year sales of
$57 million were $14 million below 2011, and operating income of $32 million
declined $15 million as 2011 results included a 6,300 acre non-strategic sale
at $3,995 per acre and a $6 million property tax settlement covering several
prior years.

Performance Fibers

Fourth quarter sales of $300 million were $19 million above the prior year
period, while operating income of $94 million was $17 million higher. Full
year sales of $1.1 billion were $73 million above 2011, while operating income
of $359 million increased $61 million. For both periods, higher cellulose
specialties prices more than offset higher production costs and a decline in
absorbent material prices due to market weakness. The 2011 periods were also
negatively impacted by a $6 million write-off related to process equipment
changes needed for the CSE project.

Other Items

Wood Products sales of $22 million and $88 million for fourth quarter and full
year 2012, improved $4 million and $20 million, respectively, versus the prior
year periods. Operating income improved $4 million and $12 million comparing
the same periods. The increases were primarily due to higher prices. Recently,
Rayonier announced the sale of its Wood Products business for $80 million,
with closing expected in the first quarter.

Corporate and other operating expenses of $10 million and $35 million for
fourth quarter and full year 2012, respectively, were $2 million and $6
million above prior year periods (excluding the previously noted disposition
reserve increase). The increases are primarily due to higher benefit and
business development costs. Interest and other expenses for the fourth quarter
and full year were lower by $4 million and $6 million, respectively, due to
higher capitalized interest on the CSE project and lower borrowing rates.

Effective tax rates for the quarter and full year were 29.4 percent and 24.1
percent compared to 18.2 percent and 9.9 percent in 2011, respectively. The
effective tax rates for 2012 and 2011 reflect several non-routine items.

Outlook

“We are looking forward to another strong performance in 2013,” added Boynton.
“In Forest Resources, we expect an improving housing market and strengthening
Asian exports to drive higher sawlog demand and prices. In Real Estate, we
anticipate a significantly improved year driven by higher demand for our
non-strategic properties and continued solid interest for our rural
recreational and conservation properties. In Performance Fibers, 2013 will be
a transition year as we bring the CSE project online, begin qualifying our new
cellulose specialties product with customers and exit the absorbent materials
business. However, we again expect strong results from this business, although
below last year’s record results, primarily due to additional costs and lower
volumes from the CSE transition, and weaker absorbent materials prices.

“Overall, excluding the impact of the sale of our Wood Products business, we
expect operating income and EPS will be slightly above 2012, and that CAD will
increase by 5 to 10 percent. A primary focus for 2013 will be successful
completion of the CSE project which, along with closing the sale of our Wood
Products business, will achieve our manufacturing strategy of exiting
commodity markets and focusing operations on cellulose specialties,” concluded
Boynton.

Further Information

A conference call will be held on Thursday, January 24, 2013 at 2 p.m. EST to
discuss these results. Presentation materials and access to the live webcast
will be available at www.rayonier.com. Investors may also choose to access the
conference call by dialing (888) 989-7543, password: Rayonier. A replay of
this webcast will be available on the Company’s website shortly after the
call. Complimentary copies of Rayonier press releases and other financial
documents are also available by calling 1-800-RYN-7611.

^1 CAD is a non-GAAP measure defined and reconciled to GAAP in the attached
exhibits.

Rayonier is a leading international forest products company with three core
businesses: Forest Resources, Real Estate and Performance Fibers. The company
owns, leases or manages 2.7 million acres of timber and land in the United
States and New Zealand. The company's holdings include approximately 200,000
acres with residential and commercial development potential along the
Interstate 95 corridor between Savannah, GA and Daytona Beach, FL. Its
Performance Fibers business is one of the world's leading producers of
high-value specialty cellulose fibers, which are used in products such as
filters, pharmaceuticals and LCD screens. Approximately 45 percent of the
company's sales are outside the U.S. to customers in approximately 40
countries. Rayonier is structured as a real estate investment trust. More
information is available atwww.rayonier.com.

Certain statements in this document regarding anticipated financial outcomes
including earnings guidance, if any, business and market conditions, outlook
and other similar statements relating to Rayonier's future financial and
operational performance, 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," "anticipate" and other similar language.
Forward-looking statements are not guarantees of future performance and undue
reliance should not be placed on these statements.

The following important factors, among others, could cause actual results to
differ materially from those expressed in forward-looking statements that may
have been made in this document: the cyclical and competitive nature of the
industries in which we operate; fluctuations in demand for, or supply of, our
forest products and real estate offerings; entry of new competitors into our
markets; changes in global economic conditions and world events, including
political changes in particular regions or countries; the uncertainties of
potential impacts of climate-related initiatives; changes in energy and raw
material prices, particularly for our Performance Fibers and wood products
businesses; impacts of the rising cost of fuel, including the cost and
availability of transportation for our products, both domestically and
internationally, and the cost and availability of third party logging and
trucking services; unanticipated equipment maintenance and repair requirements
at our manufacturing facilities; the geographic concentration of a significant
portion of our timberland; our ability to identify, finance and complete
timberland acquisitions; changes in environmental laws and regulations,
including laws regarding air emissions and water discharges, remediation of
contaminated sites, timber harvesting, delineation of wetlands, and endangered
species, that may restrict or adversely impact our ability to conduct our
business, or increase the cost of doing so; adverse weather conditions,
natural disasters and other catastrophic events such as hurricanes, wind
storms and wildfires, which can adversely affect our timberlands and the
production, distribution and availability of our products and raw materials
such as wood, energy and chemicals; interest rate and currency movements; our
capacity to incur additional debt, and any decision we may make to do so;
changes in tariffs, taxes or treaties relating to the import and export of our
products or those of our competitors; the ability to complete like-kind
exchanges of property; changes in key management and personnel; our ability to
meet all necessary legal requirements to continue to qualify as a REIT and to
fund distributions using cash generated through our taxable REIT subsidiaries,
and changes in tax laws that could reduce the benefits associated with REIT
status.

In addition, specifically with respect to our Real Estate business, the
following important factors, among others, could cause actual results to
differ materially from those expressed in forward-looking statements that may
have been made in this document: the cyclical nature of the real estate
business generally, including fluctuations in demand for both entitled and
unentitled property; the current downturn in the housing market; the lengthy,
uncertain and costly process associated with the ownership, entitlement and
development of real estate, especially in Florida, which also may be affected
by changes in law, policy and political factors beyond our control; the
potential for legal challenges to entitlements and permits in connection with
our properties; unexpected delays in the entry into or closing of real estate
transactions; the existence of competing developers and communities in the
markets in which we own property; the pace of development and the rate and
timing of absorption of existing entitled property in the markets in which we
own property; changes in the demographics affecting projected population
growth and migration to the Southeastern U.S.; changes in environmental laws
and regulations, including laws regarding water withdrawal and management and
delineation of wetlands, that may restrict or adversely impact our ability to
sell or develop properties; the cost of the development of property generally,
including the cost of property taxes, labor and construction materials; the
timing of construction and availability of public infrastructure; and the
availability of financing for real estate development and mortgage loans.

Additional factors are described in the company's most recent Form 10-K and
10-Q reports on file with the Securities and Exchange Commission. Rayonier
assumes no obligation to update these statements except as is required by law.

RAYONIER INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

December31, 2012 (unaudited)

(millions of dollars, except per share information)
                                                           
              Three Months Ended                              Year Ended
              December 31,   September 30,  December 31,    December 31,   December 31,
              2012            2012            2011            2012            2011
Sales         $   434.3      $   409.0      $   388.4      $  1,571.0     $  1,488.6  
Costs and
expenses
Cost of       310.3           278.7           287.3           1,104.8         1,073.7
sales
Selling and
general       16.7            15.8            18.4            68.4            66.5
expenses
Other
operating
(income)      (8.4        )   1.3            1.4            (13.7       )   (7.9        )
expense,
net (a)
Operating     115.7           113.2           81.3            411.5           356.3
income (a)
Interest      (8.8        )   (8.3        )   (12.5       )   (45.0       )   (50.8       )
expense
Interest
and other
income        0.2            0.3            (0.1        )   0.6            0.9         
(expense),
net
Income
before        107.1           105.2           68.7            367.1           306.4
taxes
Income tax    (31.5       )   (24.6       )   (12.5       )   (88.4       )   (30.4       )
expense (b)
Net income    $   75.6       $   80.6       $   56.2       $  278.7       $  276.0    
Net Income
per Common
Share:
Basic
Net Income    $   0.61       $   0.66       $   0.46       $  2.27        $  2.27     
Diluted
Net Income    $   0.59       $   0.62       $   0.45       $  2.17        $  2.20     
Pro forma
Net Income    $   0.59       $   0.62       $   0.48       $  2.17        $  2.11     
(c)
                                                                              
Dividends     $   0.44       $   0.44       $   0.40       $  1.68        $  1.52     
Per Share
                                                                              
Weighted
Average
Common
Shares used
for
determining
Basic EPS     123,185,024    122,848,705    121,783,843    122,711,802    121,662,985 
Diluted EPS   128,965,733    129,959,666    125,474,349    128,702,423    125,394,291 
(d)
                                                                                          
(a) The quarter and year ended December 31, 2011 included a $6.5 million increase in a
disposition reserve.

(b) The year ended December 31, 2011 included a tax benefit of $16.0 million from the
reversal of a reserve related to the taxability of the alternative fuel mixture credit
(AFMC).

(c) Pro forma net income is a non-GAAP measure. See Schedule D for a description of items
and a reconciliation to the nearest GAAP measure.

(d) The increase in dilutive shares in 2012 is primarily due to the potential dilutive
impact of the Senior Exchangeable Notes due in 2012 and 2015 and the warrants related to
those Notes.

A

RAYONIER INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS

December31, 2012 (unaudited)

(millions of dollars)
                                                               
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                   December 31,   December 31,
                                                   2012           2011
Assets
Cash and cash equivalents                          $  280.6       $  78.6
Other current assets                               285.7          265.8
Timber and timberlands, net of depletion and       1,573.3        1,503.7
amortization
Property, plant and equipment                      1,889.6        1,619.2
Less - accumulated depreciation                    (1,180.3   )   (1,157.6   )
Net property, plant and equipment                  709.3          461.6
Investment in New Zealand JV                       72.4           69.2
Other assets                                       202.6         190.4      
Total Assets                                       $  3,123.9    $  2,569.3 
Liabilities and Shareholders' Equity
Current maturities of long-term debt               $  150.0       $  28.1
Current liabilities                                157.7          150.1
Long-term debt                                     1,120.1        819.2
Non-current liabilities for dispositions and       73.6           80.9
discontinued operations
Other non-current liabilities                      187.7          167.9
Shareholders' equity                               1,434.8       1,323.1    
Total Liabilities and Shareholders' Equity         $  3,123.9    $  2,569.3 
                                                                  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   Year Ended December 31,
                                                   2012           2011
Cash provided by operating activities:
Net income                                         $  278.7       $  276.0
Depreciation, depletion, amortization              148.7          135.7
Non-cash basis of real estate sold                 4.7            4.3
Other items to reconcile net income to cash        41.6           29.0
provided by operating activities
Changes in working capital and other assets and    (27.8      )   (12.7      )
liabilities
                                                   445.9         432.3      
Cash used for investing activities:
Capital expenditures                               (157.6     )   (144.5     )
Purchase of timberlands (a)                        (106.5     )   (320.9     )
Jesup mill cellulose specialties expansion (b)     (201.4     )   (42.9      )
Change in restricted cash                          (10.6      )   8.3
Other                                              3.2           11.4       
                                                   (472.9     )   (488.6     )
Cash provided by (used for) financing
activities:
Changes in debt, net of issuance costs             410.3          (41.1      )
Dividends paid                                     (206.6     )   (185.3     )
Issuance of common shares                          25.5           13.5
Repurchase of common shares                        (7.8       )   (7.9       )
Excess tax benefits from equity-based              7.6           5.7        
compensation
                                                   229.0         (215.1     )
Effect of exchange rate changes on cash            —             0.5        
Cash and cash equivalents:
Change in cash and cash equivalents                202.0          (270.9     )
Balance, beginning of year                         78.6          349.5      
Balance, end of year                               $  280.6      $  78.6    

(a) Total timberland acquisitions for 2011 of $425.9 million included $105.0
million of notes assumed.
(b) Includes purchases on account of $3.0 million and $9.3 million for 2012
and 2011, respectively.

B

RAYONIER INC. AND SUBSIDIARIES

BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)

December31, 2012 (unaudited)

(millions of dollars)
                                                  
                 Three Months Ended                  Year Ended
                 December   September  December    December     December
                 31,         30,         31,         31,           31,
                 2012        2012        2011        2012          2011
Sales
Forest           $ 65.3      $ 59.9      $ 52.5      $ 230.1       $ 215.0
Resources
Real Estate      19.5        13.0        12.6        56.9          70.5
Performance
Fibers
Cellulose        255.1       247.2       230.3       934.6         824.1
specialties
Absorbent        44.6       41.0       50.5       158.7        196.2     
materials
Total
Performance      299.7      288.2      280.8      1,093.3      1,020.3   
Fibers
Wood Products    21.6        22.8        17.4        87.5          67.7
Other            28.7        26.3        26.7        105.4         121.5
Operations
Intersegment     (0.5    )   (1.2    )   (1.6    )   (2.2      )   (6.4      )
Eliminations
Total sales      $ 434.3    $ 409.0    $ 388.4    $ 1,571.0    $ 1,488.6 
                                                                   
Pro forma
operating
income/(loss)
(a)
Forest           $ 18.5      $ 11.2      $ 13.5      $ 46.0        $ 47.2
Resources
Real Estate      11.1        8.4         6.9         32.0          47.3
Performance      93.5        101.5       76.5        359.3         298.2
Fibers
Wood Products    2.9         1.6         (1.1    )   9.6           (2.3      )
Other            0.1         (0.4    )   0.5         (0.1      )   1.5
Operations
Corporate and    (10.4   )   (9.1    )   (8.5    )   (35.3     )   (29.1     )
other (a)
Pro forma
operating        $ 115.7    $ 113.2    $ 87.8     $ 411.5      $ 362.8   
income (a)
                                                                             
(a) For the quarter and year ended December 31, 2011, Corporate and other
excluded a $6.5 million increase in a disposition reserve. Pro forma operating
income is a non-GAAP measure. See Schedule D for a reconciliation.

C

RAYONIER INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

December31, 2012 (unaudited)

(millions of dollars, except per share information)
                                                              
CASH AVAILABLE FOR DISTRIBUTION (a):
                                                  Year Ended
                                                  December 31,   December 31,
                                                  2012           2011
Cash provided by operating activities             $  445.9       $  432.3
Capital expenditures (b)                          (157.6    )    (144.5    )
Change in committed cash                          5.6            (6.1      )
Excess tax benefits on stock-based compensation   7.6            5.7
Other                                             2.2           (0.8      )
Cash Available for Distribution                   $  303.7      $  286.6  

(a) Cash Available for Distribution (CAD) is defined as cash provided by
operating activities adjusted for capital spending, the change in committed
cash, and other items which include cash provided by discontinued operations,
proceeds from matured energy forward contracts, excess tax benefits on
stock-based compensation and the change in capital expenditures purchased on
account. CAD is a non-GAAP measure of cash generated during a period that is
available for dividend distribution, repurchase of the Company's common
shares, debt reduction and strategic acquisitions. CAD is not necessarily
indicative of the CAD that may be generated in future periods.

(b) Capital expenditures exclude strategic capital. For the year ended
December 31, 2012, strategic capital totaled $106.5 million for timberland
acquisitions and $201.4 million for the Jesup mill cellulose specialties
expansion. For the year ended December 31, 2011, strategic capital totaled
$425.9 million for timberland acquisitions (including notes assumed of $105.0
million) and $42.9 million for the Jesup mill cellulose specialties expansion.

PRO FORMA OPERATING INCOME AND NET INCOME:             
                                                         Three Months Ended
                                                         December 31, 2011
                                                                  
                                                           $       Per Diluted
                                                                   Share
Operating Income                                         $ 81.3
Increase in disposition reserve                          6.5
Pro Forma Operating Income                               $ 87.8
                                                                   
Net Income                                               $ 56.2    $    0.45
Increase in disposition reserve, net of tax              4.1       0.03
Pro Forma Net Income                                     $ 60.3    $    0.48
                                                                   
                                                         Year Ended
                                                         December 31, 2011
                                                         $         Per Diluted
                                                                   Share
Operating Income                                         $ 356.3
Increase in disposition reserve                          6.5
Pro Forma Operating Income                               362.8
Interest and other, net                                  (50.0   )
Pro Forma Income Before Tax                              $ 312.8
                                                                   
Income tax expense as reported                           $ (30.4 )
Reversal of reserve related to the taxability of the     (16.0   )
AFMC
Tax benefit on increase in disposition reserve           (2.3    )
Pro Forma Income Tax Expense                             $ (48.7 )
                                                                   
Pro Forma Net Income                                     $ 264.1   $    2.11
                                                                   
Pro Forma Items (AFMC, disposition reserve)              11.9      0.09
Net Income                                               $ 276.0   $    2.20
                                                                        
D

Contact:

Rayonier
Investors
Ed Kiker, 904-357-9186
or
Media
Ed Frazier, 904-357-9100
 
Press spacebar to pause and continue. Press esc to stop.