Rayonier (RYN) Q2 Earnings & Revenues Miss Estimates, Fall Y/Y
Rayonier Inc. RYN reported second-quarter 2023 pro-forma net income per share of 5 cents, missing the Zacks Consensus Estimate of 9 cents. The figure declined 68.8% from the prior-year quarter’s 16 cents.
The quarterly results reflect lower-than-anticipated revenues. The pro-forma operating income declined in almost all segments, except trading.
Quarterly revenues came in at $208.9 million, marginally missing the Zacks Consensus Estimate of $209.9 million. On a year-over-year basis, revenues fell 15.2%.
According to David Nunes, CEO of Rayonier, “While overall market sentiment has improved versus the first quarter of this year, our second quarter results reflect ongoing macroeconomic challenges and weaker end-market demand as compared to the prior year. The total Adjusted EBITDA generated by our Timber segments collectively declined 13% relative to the second quarter of 2022, as favorable results in our Southern Timber segment were more than offset by lower Adjusted EBITDA in our Pacific Northwest Timber and New Zealand Timber segments.”
Segmental Performance
In the second quarter, the pro-forma operating income at the company’s Southern Timber segment came in at $21.7 million, which decreased 10% from the prior-year quarter’s $24.1 million. Our estimate for the metric was $20.5 million. The decline was due to a fall in net stumpage realizations, higher depletion rates, and higher overhead and other costs, partially offset by higher volumes and higher non-timber income.
The Pacific Northwest Timber segment reported a pro-forma operating loss of $2.4 million against an income of $2.9 million a year ago. Our estimate for the metric was an operating income of $2.2 million. The decline was attributable to lower net stumpage realizations, decreased volumes and higher costs, partially offset by higher non-timber income and lesser depletion rates.
The New Zealand Timber segment recorded pro-forma operating income of $2.4 million, down from the year-earlier quarter’s $8 million. This was due to lower carbon credit sales, lower net stumpage realizations, unfavorable foreign exchange impacts and lower volumes, partially offset by lesser depletion rates. Our estimate for the metric was $6 million.
Real Estate’s pro-forma operating income was $8.6 million, lower than the year-ago period of $11 million. The lower number of acres sold was partially offset by a marginal increase in weighted average prices. Our estimate for the metric was $9.6 million.
The Trading segment reported a $0.1 million pro-forma operating income in the second quarter against a loss of $0.4 million in the prior-year quarter. The rise was due to improved margins, partially offset by reduced trading volumes. Our estimate for the metric was $0.2 million.
Balance Sheet
Rayonier exited the second quarter of 2023 with $88.4 million in cash and cash equivalents, down from $114.3 million as of Dec 31, 2022.
2023 Guidance
For 2023, Rayonier expects pro-forma earnings per share to be in the range of 30-40 cents. The Zacks Consensus Estimate for the same is pegged at 36 cents.
Management projects adjusted EBITDA to be between $275 million and $300 million.
Rayonier Inc. Price, Consensus and EPS Surprise
Rayonier Inc. price-consensus-eps-surprise-chart | Rayonier Inc. Quote
Currently, Rayonier carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
SBA Communications Corporation SBAC reported second-quarter 2023 adjusted funds from operations per share of $3.24, beating the Zacks Consensus Estimate of $3.14. However, the figure reflects a rise of 5.5% from the prior-year quarter.
SBAC’s site-leasing revenues improved year over year on healthy leasing activity amid elevated tower space demand. Moreover, it has continued to benefit from the addition of sites to its portfolio. The company also raised its 2023 outlook.
Digital Realty Trust DLR reported second-quarter 2023 core funds from operations (FFO) per share of $1.68, beating the Zacks Consensus Estimate of $1.65.
DLR's results reflect better-than-anticipated revenues aided by strong enterprise leasing activity, robust renewal spreads and healthy organic growth.
Prologis, Inc. PLD reported a second-quarter 2023 core FFO per share of $1.83, beating the Zacks Consensus Estimate of $1.68. The figure also compared favorably with the year-ago quarter’s figure of $1.11.
Results of this industrial REIT, which announced the acquisition of industrial properties from opportunistic real estate funds affiliated with Blackstone worth $3.1 billion in June, reflect robust leasing activity and solid rent growth. PLD also raised the midpoint of its 2023 core FFO per share guidance.
Note- Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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