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Rayonier's (RYN) Q1 Net Income Beats Estimates, Revenues Fall

Zacks Equity Research

Rayonier Inc. RYN reported first-quarter 2019 pro-forma net income per share of 19 cents, surpassing the Zacks Consensus Estimate of 10 cents. The bottom line benefited from higher operating income in the company’s Southern Timber and Trading segments.

However, both net income and revenues witnessed year-over-year declines. The company reported net income per share of 31 cents in the year-ago quarter. Total sales for the quarter came in at $191.5 million, falling nearly 5.8% year over year.
Also, it missed the Zacks Consensus Estimate of $193.2 million.

Rayonier’s performance was affected by lower operating income in the New Zealand Timber segment and the Real Estate segment. Further, the Pacific Northwest Timber and corporate and other segments witnessed net loss during the quarter.

Segmental Performance

During the reported quarter, operating income in the company’s Southern Timber segment came in at $21.5 million, soaring 76.2% from the year-ago tally of $12.2 million.

The Pacific Northwest Timber posted operating loss of $3.7 million as against $4.7 million of operating income recorded in first-quarter 2018.

The New Zealand Timber reported operating income of $15.7 million, down 1.8% from the year-earlier tally.

Real Estate’s operating income was $10 million, 64.4% lower than the year-ago figure of $28.1 million.

The Trading segment’s operating income was $0.5 million, up from the year-earlier figure of $0.1 million.

Lastly, the Corporate and Other segment posted operating loss of $5.5 million, wider than loss of $4 million reported in the year-earlier quarter.

Liquidity

Rayonier ended the first quarter with $154.6 million in cash and cash equivalents, up from $148.4 million recorded as of Dec 31, 2018. Total long-term debt was $972.7 million, up from $972.6 million as on Dec 31, 2018.

2019 Outlook

In its Southern Timber segment, Rayonier anticipates lower quarterly harvest volumes for the rest of the year. Nonetheless, the company expects to achieve its full-year volume guidance as it experienced above-average stumpage removals in the first quarter. It also believes average pricing in Southern Timber will improve modestly.

In the Pacific Northwest Timber segment, the company expects to achieve its full-year volume guidance with increased harvest volumes in the second half of the year. It expects any prospective pricing improvements to be largely dependent on resolution of the U.S.-China trade dispute.

Further, in its New Zealand Timber segment, the company expects to achieve the full-year volume guidance with increased quarterly harvest volumes for the rest of the year. It projects year-over-year pricing to be relatively stable with some fluctuations from quarter to quarter.

Finally, Rayonier expects to achieve its full-year adjusted EBITDA guidance in the Real Estate segment. However, quarterly results may vary.

Conclusion

The company’s international footprint makes its earnings susceptible to foreign-exchange fluctuations. Also, heightening competition and regulatory requirements remain key concerns. Nevertheless, it has upgraded its portfolio through strategic acquisitions and is expected to gain from the recovery in the nation’s housing sector.

Rayonier Inc. Price, Consensus and EPS Surprise

 

Rayonier Inc. Price, Consensus and EPS Surprise | 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

Duke Realty Corporation’s DRE first-quarter 2019 core FFO per share of 33 cents surpassed the Zacks Consensus Estimate of 32 cents. Results reflected overall improved operations as well as increased investments in new industrial properties.

Highwoods Properties’ HIW first-quarter FFO per share of 72 cents missed the Zacks Consensus Estimate of 84 cents. The company’s performance was hit by the sudden closure of the company’s tenant Laser Spine Institute.

SITE Centers Corp. SITC posted first-quarter 2019 operating FFO per share of 32 cents, outpacing the Zacks Consensus Estimate of 29 cents. Results suggested growth in same-store net operating income.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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