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Rayonier Reports Strong First Quarter Results

  Rayonier Reports Strong First Quarter Results

Business Wire

JACKSONVILLE, Fla. -- April 25, 2013

Rayonier (NYSE:RYN) today reported first quarter income from continuing
operations of $103 million, or 79 cents per share, compared to $52 million, or
41 cents per share, in the prior year period.

First quarter net income was $148 million, or $1.13 per share and included
income from discontinued operations of $45 million, or 34 cents per share,
primarily due to the $43 million net gain resulting from the sale of the Wood
Products business. For the comparable 2012 period, net income was $53 million,
or 42 cents per share, which included income from discontinued operations of
$1 million, or 1 cent per share.

Cash provided by operating activities was $90 million compared to $111 million
in the first quarter 2012. Cash available for distribution (CAD) ^ 1 was $67
million versus $87 million in 2012. Both first quarter cash flow from
operating activities and CAD were reduced by the Company’s election to pay $70
million to exchange alternative fuel mixture credits (AFMC) for cellulosic
biofuel producer credits (CBPC). This resulted in a $19 million discrete tax
benefit in the current period and will reduce future cash tax payments by $89
million, with approximately $60 million during the remainder of 2013 and $29
million in the first half of 2014.

The following table summarizes the current quarter and comparable prior period
results:

(millions of dollars, except      First Qtr. 2013      First Qtr. 2012
earnings per share (EPS))
                                     $        EPS         $        EPS
Income from continuing               $ 107     $ 0.82      $ 70      $ 0.55
operations before income taxes
Income tax expense                    (4  )    (0.03 )    (18 )    (0.14 )
Income from continuing                 103       0.79        52        0.41
operations
Discontinued operations (Wood         45      0.34      1       0.01  
Products sale), net
Net income                           $ 148    $ 1.13     $ 53     $ 0.42  
                                                                             

“We are pleased with our continued strong performance in 2013. In Performance
Fibers, the cellulose specialties market remains strong and in Forest
Resources, sales increased reflecting higher volumes and prices due to
somewhat improved sawlog demand,” said Paul G. Boynton, Chairman, President
and CEO.

Forest Resources

Sales of $57 million and operating income of $13 million each increased $5
million from the prior year period. In the Atlantic and Gulf regions, prices
increased due to moderately improved demand and a shift in sales volume from
pulpwood to sawtimber. Volumes in the Atlantic region were accelerated into
the first quarter as additional tracts were made available to capture
improving prices. In the Northern region and New Zealand, increased earnings
reflected strengthening domestic and Asian export demand, primarily from
China.

Real Estate

Sales of $24 million and operating income of $17 million each increased $11
million from the prior year period, primarily due to higher prices and volumes
for non-strategic properties, which included a 5,400 acre sale at $3,673 per
acre. Partially offsetting these results was a decline in rural volumes as the
prior year period included two large sales totaling 3,900 acres.

Performance Fibers

Sales of $284 million were $33 million above the prior year period, while
operating income of $92 million was $11 million higher. Cellulose specialties
price and volume increases more than offset higher wood cost and a decline in
absorbent materials prices due to weaker market conditions.

Other Items

Corporate and other operating expenses of $7 million were $4 million below the
prior year period primarily due to lower stock-based compensation and a
foreign currency forward contract gain. Interest and other expenses were $4
million below the prior year period due to lower borrowing rates and higher
capitalized interest related to the cellulose specialties expansion project.

The first quarter effective tax rate from continuing operations before
discrete items was 23.4 percent compared to 26.5 percent in 2012. The lower
tax rate was due to proportionately higher earnings from REIT operations in
2013.

Including discrete items, the first quarter effective tax rate from continuing
operations was 4.1 percent versus 25.8 percent in 2012, primarily reflecting
the $19 million benefit from the exchange of the AFMC for the CBPC.

In April, Rayonier acquired an additional 39 percent ownership interest in its
New Zealand joint venture (JV) for $140 million. This acquisition positions
the Company to further benefit from expected increasing demand for wood fiber
in Asia. As a 65 percent owner, the Company will be required to consolidate
100 percent of the JV’s results of operations and record the non-controlling
partner’s 35 percent interest.

Outlook

“With this strong first quarter, we are off to an excellent start in 2013,”
added Boynton. “In Forest Resources, the early stages of an improving housing
market are being reflected in increasing sawlog demand and prices, and Asian
export markets have strengthened. In Real Estate, we are encouraged by higher
demand for our non-strategic properties and increased interest in our
development properties. In this transition year for Performance Fibers,
cellulose specialties markets continue to be strong and we remain on schedule
to complete our cellulose specialties expansion project mid-year.”

“Consistent with our earlier guidance, we expect 2013 earnings from continuing
operations to be weighted more heavily toward the first half of the year with
the benefit of the tax credits recognized in the first quarter and the impact
of the CSE project phase-in on the second half. Overall, excluding the results
of the Wood Products business and gain on sale, we continue to expect 2013
operating income and EPS to be slightly above 2012,” concluded Boynton.

Further Information

A conference call will be held on Thursday, April 25, 2013 at 2 p.m. EDT 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 50 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 business; 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 real estate investment trust (“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

March31, 2013 (unaudited)

(millions of dollars, except per share information)
                              
                                Three Months Ended
                                 March 31,      December 31,   March 31,
                                 2013            2012            2012
Sales                            $   393.7      $   412.7      $   336.6   
Costs and expenses
Cost of sales                    266.0           292.2           235.7
Selling and general expenses     16.1            16.3            19.3
Other operating income, net      (3.8        )   (8.3        )   (1.1        )
Operating income                 115.4           112.5           82.7
Interest expense                 (7.7        )   (8.8        )   (11.8       )
Interest and other income, net   —              0.2            —           
Income from continuing           107.7           103.9           70.9
operations before taxes
Income tax expense               (4.4        )   (30.5       )   (18.3       )
Income from continuing           103.3           73.4            52.6
operations
Discontinued operations, net
Income from discontinued
operations, net of income tax    44.4           2.2            0.8         
expense of $22.3, $1.1 and
$0.4
Net income                       $   147.7      $   75.6       $   53.4    
Net Income per Common Share:
Basic
Continuing Operations            $   0.83        $   0.60        $   0.43
Discontinued Operations          0.36           0.01           0.01        
Net Income                       $   1.19       $   0.61       $   0.44    
Diluted
Continuing Operations            $   0.79        $   0.57        $   0.41
Discontinued Operations          0.34           0.02           0.01        
Net Income                       $   1.13       $   0.59       $   0.42    
                                                                 
Dividends per share              $   0.44       $   0.44       $   0.40    
                                                                 
Weighted Average Common
Shares used for determining
Basic EPS                        124,479,865    123,185,024    122,352,435 
Diluted EPS                      130,436,888    128,965,733    127,932,129 
                                                                             
A
                                                                             


RAYONIER INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS

March31, 2013 (unaudited)

(millions of dollars)

CONDENSED CONSOLIDATED BALANCE SHEETS
                                                 March 31,       December 31,
                                                  2013            2012
Assets
Cash and cash equivalents                         $  266.0        $  280.6
Current deferred tax assets                       66.5            15.8
Other current assets                              258.3           270.0
Timber and timberlands, net of depletion and      1,565.8         1,573.3
amortization
Property, plant and equipment                     1,872.7         1,887.3
Less - accumulated depreciation                   (1,112.5    )   (1,180.3   )
Net property, plant and equipment                 760.2           707.0
Investment in New Zealand JV                      73.8            72.4
Other assets                                      211.7          203.9      
                                                  $  3,202.3     $  3,123.0 
Liabilities and Shareholders' Equity
Current maturities of long-term debt              $  50.0         $  150.0
Other current liabilities                         210.7           157.8
Long-term debt                                    1,150.5         1,120.1
Non-current liabilities for dispositions and      71.8            73.6
discontinued operations
Other non-current liabilities                     180.1           183.5
Shareholders' equity                              1,539.2        1,438.0    
                                                  $  3,202.3     $  3,123.0 
                                                                  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  Three Months Ended March 31,
                                                  2013            2012
Cash provided by operating activities:
Net income                                        $  147.7        $  53.4
Depreciation, depletion, amortization             36.0            30.4
Non-cash basis of real estate sold                0.6             1.4
Tax benefit of AFMC for CBPC exchange             (18.8       )   —
Gain on sale of discontinued operations, net      (42.7       )   —
Other items to reconcile net income to cash       4.9             14.7
provided by operating activities
Changes in working capital and other assets and   32.3            11.5
liabilities
Payment to exchange AFMC for CBPC                 (70.3       )   —          
                                                  89.7           111.4      
Cash provided by (used for) investing
activities:
Capital expenditures                              (32.7       )   (42.1      )
Purchase of timberlands                           (1.6        )   (8.7       )
Jesup mill cellulose specialties expansion
(gross purchases of $57.7 and $41.1, net of       (36.7       )   (26.0      )
purchases on account of $21.0 and $15.1)
Proceeds from disposition of Wood Products        83.7            —
business
Change in restricted cash                         10.0            (5.6       )
Other                                             1.8            8.7        
                                                  24.5           (73.7      )
Cash (used for) provided by financing
activities:
Changes in debt, net of issuance costs            (70.0       )   171.4
Dividends paid                                    (57.7       )   (49.2      )
Issuance of common shares                         4.1             2.1
Repurchase of common shares                       (11.3       )   (7.8       )
Excess tax benefits on stock-based compensation   6.2            3.9        
                                                  (128.7      )   120.4      
Effect of exchange rate changes on cash           (0.1        )   (0.1       )
Cash and cash equivalents:
Change in cash and cash equivalents               (14.6       )   158.0
Balance, beginning of year                        280.6          78.6       
Balance, end of period                            $  266.0       $  236.6   
                                                                             
B
                                                                             

  
      RAYONIER INC. AND SUBSIDIARIES

      BUSINESS SEGMENT SALES AND OPERATING INCOME (LOSS)

      March31, 2013 (unaudited)

      (millions of dollars)
                                   
                                          Three Months Ended
                                          March 31,  December 31,  March 31,
                                          2013        2012           2012
      Sales
      Forest Resources                    $ 57.1      $  65.3        $ 52.2
      Real Estate                         24.3        19.5           12.6
      Performance Fibers
      Cellulose specialties               246.9       255.1          212.1
      Absorbent materials                 37.3       44.6          38.8    
      Total Performance                   284.2      299.7         250.9   
      Fibers
      Other Operations                    28.2        28.7           21.1
      Intersegment                        (0.1    )   (0.5      )    (0.2    )
      Eliminations
      Total sales                         $ 393.7    $  412.7      $ 336.6 
                                                                     
      Operating income/(loss)
      Forest Resources                    $ 13.3      $  18.5        $ 8.0
      Real Estate                         16.8        11.1           6.5
      Performance Fibers                  91.7        93.5           80.6
      Other Operations                    0.2         0.1            (0.9    )
      Corporate and other                 (6.6    )   (10.7     )    (11.4   )
      Operating income                    $ 115.4    $  112.5      $ 82.8  
                                                                             
C
                                                                             


RAYONIER INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

March31, 2013 (unaudited)

(millions of dollars)
                                                  
CASH AVAILABLE FOR
DISTRIBUTION (a):
                              Three Months Ended
                              March 31,                  March 31,
                              2013                       2012
Cash provided by              $     89.7                 $     111.4
operating activities
Capital expenditures          (32.7          )           (42.1           )
(b)
Change in committed           0.5                        4.6
cash
Excess tax benefits on
stock-based                   6.2                        3.9
compensation
Other                         3.0                       8.8             
Cash Available for            $     66.7                $     86.6      
Distribution
                                                                         
(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 three months ended
March 31, 2013, strategic capital totaled $57.7 million for the Jesup mill
cellulose specialties expansion and $1.6 million for timberland acquisitions.
For the three months ended March 31, 2012, strategic capital totaled $41.1
million for the Jesup mill cellulose specialties expansion and $8.7 million
for timberland acquisitions.

D


Contact:

Rayonier
Investors:
Ed Kiker, 904-357-9186
or
Media:
Russell Schweiss, 904-357-9100
 
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