Rayonier first quarter income up on demand, pricing
April 24, 2007 (Press Release) - Rayonier today reported first quarter net income of
$35.1 million, or 45 cents per share. This compares to $55.2 million,
or 71 cents per share, in fourth quarter 2006 and $23.2 million, or 30
cents per share, in first quarter 2006. Fourth quarter 2006 results
included special item gains of $9.0 million, or 12 cents per share.
Lee Thomas, President and CEO, said: "First quarter results were
quite good. Demand continued to be very strong and prices increased
for our Performance Fibers products; in Timber, volumes were up as
some customers advanced their harvests to take advantage of strong
U.S. pulp and Northwest log export markets; and Real Estate results
benefited from a sale that had been expected to close later in the
First quarter income was below fourth quarter 2006, excluding
special items, primarily due to lower Real Estate and Performance
Fibers results partly offset by improved earnings in Northwest timber.
Earnings improved compared to first quarter 2006 primarily due to
stronger Performance Fibers and Real Estate results partly offset by
weaker lumber markets.
Sales for the first quarter of $300 million were $29 million below
fourth quarter 2006 but $23 million above first quarter 2006.
Cash provided by operating activities of $52 million was $1
million above first quarter 2006. Cash Available for Distribution
(CAD) of $61 million was $37 million above first quarter 2006 mainly
due to higher operating earnings and lower capital expenditures. (CAD
is a non-GAAP measure defined and reconciled to GAAP in the attached
Debt of $671 million was $12 million above year-end 2006. The
debt-to-capital ratio of 42.0 percent was comparable to year-end 2006.
Cash at March 31, 2007 was $28 million compared to $40 million at
December 31, 2006.
Sales of $65 million and operating income of $26 million were $18
million and $7 million above fourth quarter 2006, respectively,
primarily due to higher timber volumes driven by strong U.S. pulp and
Northwest log export markets. Compared to first quarter 2006, sales
and operating income increased $11 million and $2 million,
respectively, mainly due to stronger U.S. timber volumes. Volumes
compared to both previous quarters also increased due to harvesting on
timberland we acquired last year.
Sales of $21 million and operating income of $15 million were $14
million and $15 million below fourth quarter 2006, respectively,
primarily due to fewer development acres sold, partially offset by an
increase in rural acres sold. Compared to first quarter 2006, sales
and operating income increased $8 million and $5 million,
respectively, mainly due to an increase in rural acres sold and
improved overall prices partly offset by a decrease in development
Due primarily to planned maintenance downtime, sales and operating
income of $166 million and $27 million, respectively, were $30 million
and $6 million below fourth quarter 2006, with lower volumes partially
offset by higher prices for both cellulose specialties and absorbent
materials. The operating income variance was also impacted by a
property tax settlement that benefited fourth quarter 2006 and higher
manufacturing costs in the current quarter. Compared to first quarter
2006, sales and operating income improved $20 million and $17 million,
respectively, largely due to higher prices for both cellulose
specialties and absorbent materials.
Sales of $20 million were $2 million below fourth quarter 2006 due
to a decline in volume, while the operating loss of $3 million was $1
million less than in the fourth quarter due to slightly improved
prices. Compared to first quarter 2006, sales and operating income
declined $12 million and $6 million, respectively, due to
significantly weaker prices partially offset by lower manufacturing
Sales of $28 million were $2 million below fourth quarter 2006 and
$4 million lower than first quarter 2006. The operating loss of $1
million was unfavorable by $2 million compared to fourth quarter 2006
primarily due to the impact of legal settlements in that quarter, and
$1 million below first quarter 2006.
Corporate expenses of $9.1 million were $2.2 million below fourth
quarter 2006 mainly due to decreased business development expenses but
comparable to first quarter 2006.
Interest expense of $13.6 million was essentially unchanged from
fourth quarter 2006. Compared to first quarter 2006, interest expense
increased $1.4 million mainly due to higher debt partially offset by
lower interest rates.
Interest and other income of $1.0 million was $1.5 million and
$1.2 million below fourth quarter and first quarter 2006,
respectively, primarily due to lower interest income.
There was no impact from discontinued operations in first quarter
2007 and 2006, however, fourth quarter 2006 included income of $5.3
million due to a reduction in environmental reserves as a result of
the approval of a more cost-effective remediation plan at a closed
The first quarter effective tax rate, before discrete items, was
16.7 percent, compared to 16.4 percent in first quarter 2006.
Including discrete items, the effective tax rate increased to 17.6
percent compared to 14.6 percent in first quarter 2006.
"Rayonier's mix of core businesses continues to provide us with
strength and balance and we look forward to another good year with
earnings comparable to 2006, excluding special items," Thomas said.
"Although the housing slowdown continues to put pressure on our Timber
and Real Estate businesses, we expect the impact will be offset by the
strength of Performance Fibers.
"However, we are closely monitoring the ongoing wildfires in
Southeast Georgia which have affected about 26,000 acres of our
timberland and are not yet fully contained. Our preliminary estimate
of the impact on second quarter earnings is $5 to $7 million, or 6 to
9 cents per share. Once the area is fully accessible, we will be able
to more accurately assess the damage."
Rayonier is a leading international forest products company with
three core businesses: Timber, Real Estate and Performance Fibers. It
owns, leases or manages 2.7 million acres of timber and land in the
U.S., New Zealand and Australia. The company's holdings include
approximately 200,000 acres with residential and commercial
development potential along the fast-growing Interstate 95 corridor
between Savannah, Georgia, and Daytona Beach, Florida. Its Performance
Fibers business is the world's leading producer of high-value
specialty cellulose fibers. Approximately 40 percent of the company's
sales are outside the U.S. to customers in more than 50 countries.
Rayonier is structured as a real estate investment trust.