Rayonier Reports First Quarter 2012 Earnings
April 24, 2012 - Rayonier today reported first quarter 2012 net income of $53 million, or 42 cents per share, compared to $58 million, or 47 cents per share, in the prior year period.
Cash provided by operating activities was $111 million compared to $116 million in first quarter 2011. Cash available for distribution (“CAD”)1 was $87 million versus $88 million in first quarter 2011.
"We are pleased with our first quarter results which were better than expected and create a solid base for full year performance," said Paul G. Boynton, President and CEO. "In Forest Resources, we increased harvest volumes to take advantage of stronger pulpwood markets in the Atlantic region and successfully integrated the 320,000 acres of timberlands acquired last year. In Performance Fibers, we implemented our previously announced cellulose specialties price increases, driven by continued strong demand, and executed planned maintenance shutdowns at both of our manufacturing facilities.
"In February, Moody’s Investors Services raised our investment grade debt rating to 'Baa1.' In March, we successfully issued $325 million of 3.75% Senior Notes due in 2022. With our strong liquidity, balance sheet and cash flow, we are well positioned to pursue growth initiatives," added Boynton.
Sales of $52 million were $4 million above the prior year period, while operating income of $8 million decreased $3 million. In the Atlantic region, results improved due to stronger pulpwood demand, while in the Gulf States region earnings increased due to higher volumes from the 2011 timberland acquisitions. In the Northwest U.S. and New Zealand, results declined reflecting lower log shipments to China, as expected. The Northern region results also reflect higher fuel and logging costs.
Sales of $13 million and operating income of $6 million were both $1 million below the prior year period. In first quarter 2012, average price per acre was slightly below the prior year period mainly due to geographic mix.
Sales of $251 million were consistent with the prior year period, while operating income of $81 million was $5 million higher. Cellulose specialties price increases more than offset higher production costs and a decline in absorbent materials prices due to weaker demand. Also impacting 2012 results were lower volumes for both cellulose specialties and absorbent materials due to the timing of customer orders.
Corporate and other operating expenses were $3 million above the prior year period primarily due to the recognition of stock-based compensation expense associated with Lee Thomas’ retirement.
Interest and other expenses were slightly below the prior year period due to lower cost of borrowings and higher capitalized interest related to the cellulose specialties expansion project.
The first quarter effective tax rate was 25.9 percent compared to 21.7 percent in 2011. The increased tax rate was due to expected proportionately higher earnings from our taxable REIT subsidiaries in 2012.
"We are well positioned for another strong operating year in 2012," added Boynton. "In Forest Resources, we will continue capitalizing on local market opportunities in our Atlantic and Gulf regions, while in the Northwest we plan to increase harvest volumes as Asian markets improve. In Performance Fibers, we anticipate another record year driven by strong cellulose specialties markets and we are on track to complete our cellulose specialties expansion project by mid-2013, as planned. We expect full year earnings to be comparable to 2011, excluding special items, and CAD to range from $285 million to $310 million, substantially above our dividend," Boynton concluded.
NOTE: 1 CAD is a non-GAAP measure defined and reconciled to GAAP in the attached exhibits.