RYN earnings call transcript, November 4, 2026

Good morning, everyone. Before turning to our third quarter results, I'd like to provide a brief update on our merger of vehicles with Potlatch Delta. We continue to make strong progress on the merger integration. We have optimized our organizational structure, captured operational efficiencies, and continued to advance the integration of systems. processes across the combined organization. We have now achieved more than $20 million of run rate synergies. We remain on track to achieve our $40 million synergy target by the second anniversary of the merger closing. At the same time, our team has made good progress bringing our organizations together around a shared culture, and we're looking forward to opening our new corporate headquarters in Atlanta early next year. I'm very pleased with what we've accomplished so far, and I remain confident that the combination will create significant long-term value for our shareholders. I want to commend our team for their focus and dedication in advancing our integration efforts while also delivering strong operational results in a challenging market environment. Moving on. to our third quarter results. I'll start with a review of our overall results, as well as our segment level performance, after which Wayne will review key liquidity and balance sheet metrics, as well as our outlook for the balance of the year. For the third quarter, Rainier reported gap earnings.

earnings of $123 million for 41 cents per share. Results included $91 million of income related to the large disposition in Washington, which is part of the like kind exchange transaction with RMS that we announced. August. As a reminder, the exchange consisted of the sale of approximately 36,000 acres in Southwest Washington for $145 million and the concurrent acquisition of approximately 57,000 acres. In Texas and Alabama, for $146 million. Excluding pro forma items, which included the large disposition, as well as $7 million of merger-related costs, net income was $40 million, or 13 cents per share. The EBITDA in the third quarter was $145 million, which was well above the prior year period, primarily due to the contributions from the Potlatch-Deltic operations, along with solid operational performance across our segments. Moving on to our segment results, let's start on page 9 with our Southern Timber segment. Adjusted EBITDA in the third quarter of $52 million was 23% above the prior year quarter, as increased harvest volumes more than offset lower pricing. Total harvest volumes increased 56% versus the prior year quarter, primarily due to the addition of roughly 1.4 million tons of volume from the Potlatch Deltic Timberlands. Turning to pricing in the Southern Timber segment, as a reminder, starting this year, our Southern Timber's pricing reflects delivered log prices rather than net stumpage, as it is now the predominant method of sale following the merger. In saw log markets, demand was steady during the quarter, supported by healthy lumber prices and production in the U.S. South.

Average delivered saw log prices of $45 per ton were 5% lower than standalone Rainier prices in the prior year quarter, but up 2% sequentially from the second quarter. While lumber prices have moderated recently, southern sawmills continue to gain market. share from Canadian producers, and we expect that this trend will continue to drive higher mill operating rates and stronger saw log demand across our U.S. south footprint over time. Turning to pulpwood, delivered pulpwood prices of $31 per ton were 15% lower than standalone Rainier prices in the prior year quarter, but we're up 3% sequentially from the second quarter. While pulpwood markets remained challenging, we continue to believe that prices have generally stabilized in our primary market areas. Moving on to our northwest timber segment on page 10. Third quarter adjusted EBITDA of $32 million was significantly above the $6 million reported in the prior year quarter. Harvest volumes more than doubled. In the third quarter as compared to the prior year period, primarily due to the contribution of nearly 370,000 tons of incremental harvest volume from the potlatch-deltic Idaho timberlands. Healthy lumber prices also helped propel solid prices higher in Idaho in the quarter. as a significant portion of our saw log sales in the state are indexed to lumber prices. Delivered saw log prices of $129 per ton were up 29% from the prior year quarter and 8% from the second quarter, primarily due to higher pricing on Idaho.

saw logs. Turning to wood products on page 11, this segment generated $27 million of adjusted EBITDA in the third quarter, a slight improvement from the prior quarter and the strongest quarterly adjusted EBITDA result that this segment has registered since potlatch. Deltic's third quarter of 2022. Our average lumber price realization was $528 per MBF and shipments totaled 327 million board feet in line with our prior guidance. Our average lumber price realization increased by roughly 5% versus the second quarter, which more than offset higher per-unit manufacturing costs. The improvement in lumber markets during the third quarter was largely driven by supply-side factors, as Milker Town industry-wide transportation challenges, and tariffs on Canadian imports limited supply. As we discussed last quarter, our team was proactive in navigating transportation challenges by leveraging rail transportation alongside our established trucking network. Lumber prices have generally trended lower since peaking in July, a decline that continued through October as demand softened due to both seasonality and growing macroeconomic uncertainty, particularly around housing markets. We are currently maintaining a steady order file, albeit at lower prices relative to our Q3 average. Moving to our real estate segment on page 12. In the third quarter, real estate revenue totaled $208 million on approximately 43,000 acres sold.

Which included the large disposition in Washington. Excluding this transaction, pro forma third quarter sales totaled $63 million on roughly 7,000 acres sold at an average price of $8,000 per acre. Sales fell from the prior year quarter due to a lower number of acres sold, which was partially offset by a significantly higher average price per acre. Real estate segment Jesse Bidon the third quarter was $49 million, which was well above our prior. guidance range of $25 to $35 million due to some accelerated closing activity. In improved development, sales totaled $12 million. Our Chenal Valley project in Little Rock contributed over $6 million of sales. During the quarter, it remains well positioned to provide a steady stream of cash flow moving forward. Activity also continues to trend favorably at our wildlife and heartwood development projects, reflecting the investments we've made over the past several years. In entitlements, infrastructure, and market development. In addition, we completed a 1,700-acre unimproved development sale in Florida for $19 million, or roughly $11,000 per acre. Moving to the rural category, third quarter sales totaled $26 million, consisting of nearly 5,100 acres sold at an average price of roughly $5,000 per acre. Overall sentiment in the rural land market remains positive, and we continue to achieve strong premiums above timberland value in our rural

HBU business. I'll now turn the call over to Wayne to cover key liquidity and balance sheet metrics, as well as our outlook for the balance of the year.

Moving to our capital resources and liquidity. Are cash available for distribution? or CAD was $287 million through the first nine months of 2026 versus $154 million in the prior year period. The significant increase in CA was primarily driven by the contribution from the Potlatch Deltic businesses, coupled with significantly improved real estate results. As a reminder, our CAD excludes the large disposition of $140 million. $45 million that Mark discussed earlier. A reconciliation of CAD to cash provided by operating activities and other gap measures is provided on page eight of the supplement. During the third quarter, we repurchased a proxy. 2.8 million shares at an average price of $21 per share or $60 million in total. We have been very active on this front during 2026, repurchasing 7.8 million. shares through the first nine months of the year for a total of $163 million. At the end of the third quarter, we had $66 million remaining on our prior share repurchase authorization. We continue to believe that our stock is trading at a significant discount to net asset value. Accordingly, our board approved a $300 million increase to our share repurchase authorization this week. We remain active under the program as we view buybacks as a compelling use of capital and one of the most attractive opportunities to create value for our shareholders in the near term. Turning to our balance sheet, we continue to maintain a conservative leverage profile.

and significant capital allocation flexibility. We finished the third quarter with $361 million of cash and roughly $1.9 billion of debt. Our net debt to enterprise value based on our closing stock price at the end of the quarter was 22%. Moving to our outlook, as a reminder, full-year metrics reflect a pro rata contribution from the Potlatch-Deltic operations starting on January 31st. With respect to our individual segments, starting with our southern timber segment, we expect to achieve foliar harvest volumes of 12.2 to 12.4 million tons, with anticipated harvest volumes of 3 to 3.2 million tons in the fourth quarter. We expect regional saw timber and pulpit prices to remain relatively stable for the fourth quarter compared to the third quarter. However, as previously discussed, full year and quarterly average pine prices for the combined company's southern timber segment are expected to be lower than legacy Rainier prices, based on geographic mix of the combined portfolio. In our northwest timber segment, we expect to achieve full year harvest volumes of 2 to 2.1 million tons, with anticipation for the next year. We anticipated harvest volumes of approximately 500 to 550,000 tons in the fourth quarter. We expect overall saw timber prices to be lower in the fourth quarter compared to the third quarter, primarily due to lower index. Saw log prices in Idaho. We continue to expect that full year 2026 average log pricing for the combined company's northwest timber segment will be higher than the standalone pricing for Rainier in the prior year.

In our wood product segment, we continue to expect lumber shipments to total approximately 1.1 billion board feet for the 11 months of contribution in 2026, including approximately 295 to 305 million board feet in the fourth. We expect fourth quarter lumber realizations to be lower than the third quarter, reflecting softer market conditions and typical seasonal demand patterns. As of October month end, our average quarter-to-date lumber price realization was roughly 6% lower than our average price realization in the third quarter. Lumber prices have continued to soften recently with the current random lengths composite pricing 12% lower than the third quarter average. In a real estate segment, we see continued momentum and maintain a healthy pipeline of rural and improved development land sale opportunities. Based on our current transaction pipeline and sales closed quarter to date, we expect an adjusted EBITDA contribution in the fourth quarter of $60 to $70 million, which would result in full-year real estate adjusted EBITDA toward the upper end of our prior guidance range of $180 to $200 million. To assist with modeling, we note that the third quarter results include purchase accounting adjustments related to prior quarters. In aggregate, these adjustments increased depletion, depreciation, and anonymization, or DDNA, by $8 million. for the quarter. By segment, they increased DDNA by $8.3 million in northwest timber, $3.3 million in wood products, and half a million dollars in real estate.

And reduced DDNA by $4.1 million in southern timber. These non-reoccurring adjustments should be excluded when estimating future DDNA run rates. I'll now turn the call back to Mark for closing comments.

As we wrap up today... On today's call, I'd like to reiterate our current capital allocation priorities, given the significant disconnect between private market Timberland values and the valuation currently implied by our share price. Over the last several years, we've demonstrated our commitment... ...to creating shareholder value through nimble capital allocation, active portfolio management, and a disciplined approach to our balance sheet. We've remained focused on executing this strategy in 2026. Through the end of September, we've repurchased $163 million... ...of shares, were paid over $220 million of debt, and closed a strategic like-kind exchange transaction that we expect will be accretive to cash flow. As we noted when we announced the merger, one of the key benefits... ...of combining our two organizations was the opportunity to further optimize our asset base through value-enhancing dispositions while retaining the advantages of scale. At today's share price, repurchasing our stock effectively allows us to acquire our own high-quality timberland port. ...at a meaningful discount to private market values. Given this ongoing dynamic, we intend to pursue additional timberland dispositions over the next 12 to 18 months to further enhance our flexibility to lean into share... ...purchases, incrementally reduce leverage, and fund other capital allocation priorities. While creating value through asset sales and buybacks is a high priority in the current environment, our team also continues to advance initiatives that will position the...

...company for long-term growth. We remain encouraged by the growing opportunity set for land-based solutions, as well as structural shifts in North American lumber supply that should position our assets more favorably over time. A successful... ...compined with a capital allocation approach that adapts to evolving market conditions will be central to capitalizing on these opportunities over the long-term. In sum, I remain optimistic that Rainier is well... ...position to build value per share throughout the economic cycle. That concludes our prepared remarks and I'll now turn the call back to the operator for questions. We will now begin the question and answer.

Your first question comes from the line of Mike Roxland with Truist Securities.

Your line is open.

Markets. Please go ahead.