Rayonier Reports Fourth Quarter and Full Year 2012 Results
JACKSONVILLE, Fla.--(BUSINESS WIRE)--Jan. 24, 2013-- Rayonier (NYSE:RYN) today reported fourth quarter net income of $76 million, or 59 cents per share, compared to $56 million, or 45 cents per share, in the prior year period. The 2011 results included a $4 million increase in a disposition reserve for a closed mill site. Excluding this item, 2011 fourth quarter pro forma net income was $60 million, or 48 cents per share.
Full year 2012 net income totaled $279 million, or $2.17 per share, compared to $276 million, or $2.20 per share, in 2011. In addition to the disposition reserve, the full year 2011 results also included a $16 million tax benefit from the reversal of a reserve relating to the taxability of the 2009 alternative fuel mixture credit (AFMC). Excluding these items, full year 2011 pro forma net income was $264 million, or $2.11 per share.
Cash provided by operating activities was $446 million for 2012 compared to $432 million for 2011. Full year cash available for distribution (CAD)1 was $304 million versus $287 million in 2011.
“Our 2012 results, including a 13 percent increase over last year’s pro forma operating income, reflect the balance and resiliency of our core businesses and our continued focus on operational excellence,” said Paul G. Boynton, Chairman, President and CEO. “Rayonier shareholders benefited with a total return of over 20 percent for last year, including a 10 percent dividend increase supported by our strong cash flow.
“We also made significant progress on our key strategic initiatives, growing our land base to more than 2.7 million acres and staying on schedule to complete our cellulose specialties expansion (CSE) project in Jesup in mid-2013,” added Boynton.
Forest Resources
Fourth quarter sales of $65 million were $13 million above the prior year period, while operating income of $19 million increased $5 million. In the Northern region, increased volume from deferring harvests to the second half of the year was partially offset by lower prices due to sales mix and weaker Asian demand. In the Atlantic region, volumes increased due to favorable logging conditions, while in the Gulf region prices rose due to mix, and volumes benefited from the 2011 acquisitions.
Full year sales of $230 million increased $15 million from 2011, while operating income of $46 million was slightly lower. In the Atlantic region, operating income reflects higher prices as 2011 included fire salvage sales, while earnings in the Gulf region increased due to higher volumes from the 2011 acquisitions and higher non-timber income. Offsetting these increases were lower prices in the Northern region and New Zealand due to weaker Asian demand.
Real Estate
Fourth quarter sales of $20 million were $7 million above the prior year period, while operating income of $11 million improved $4 million, primarily due to higher non-strategic timberland volume and prices. Full year sales of $57 million were $14 million below 2011, and operating income of $32 million declined $15 million as 2011 results included a 6,300 acre non-strategic sale at $3,995 per acre and a $6 million property tax settlement covering several prior years.
Performance Fibers
Fourth quarter sales of $300 million were $19 million above the prior year period, while operating income of $94 million was $17 million higher. Full year sales of $1.1 billion were $73 million above 2011, while operating income of $359 million increased $61 million. For both periods, higher cellulose specialties prices more than offset higher production costs and a decline in absorbent material prices due to market weakness. The 2011 periods were also negatively impacted by a $6 million write-off related to process equipment changes needed for the CSE project.
Other Items
Wood Products sales of $22 million and $88 million for fourth quarter and full year 2012, improved $4 million and $20 million, respectively, versus the prior year periods. Operating income improved $4 million and $12 million comparing the same periods. The increases were primarily due to higher prices. Recently, Rayonier announced the sale of its Wood Products business for $80 million, with closing expected in the first quarter.
Corporate and other operating expenses of $10 million and $35 million for fourth quarter and full year 2012, respectively, were $2 million and $6 million above prior year periods (excluding the previously noted disposition reserve increase). The increases are primarily due to higher benefit and business development costs. Interest and other expenses for the fourth quarter and full year were lower by $4 million and $6 million, respectively, due to higher capitalized interest on the CSE project and lower borrowing rates.
Effective tax rates for the quarter and full year were 29.4 percent and 24.1 percent compared to 18.2 percent and 9.9 percent in 2011, respectively. The effective tax rates for 2012 and 2011 reflect several non-routine items.
Outlook
“We are looking forward to another strong performance in 2013,” added Boynton. “In Forest Resources, we expect an improving housing market and strengthening Asian exports to drive higher sawlog demand and prices. In Real Estate, we anticipate a significantly improved year driven by higher demand for our non-strategic properties and continued solid interest for our rural recreational and conservation properties. In Performance Fibers, 2013 will be a transition year as we bring the CSE project online, begin qualifying our new cellulose specialties product with customers and exit the absorbent materials business. However, we again expect strong results from this business, although below last year’s record results, primarily due to additional costs and lower volumes from the CSE transition, and weaker absorbent materials prices.
“Overall, excluding the impact of the sale of our Wood Products business, we expect operating income and EPS will be slightly above 2012, and that CAD will increase by 5 to 10 percent. A primary focus for 2013 will be successful completion of the CSE project which, along with closing the sale of our Wood Products business, will achieve our manufacturing strategy of exiting commodity markets and focusing operations on cellulose specialties,” concluded Boynton.
Further Information
A conference call will be held on Thursday, January 24, 2013 at 2 p.m. EST
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