Session. This is the Rayonier presentation. My name's Buck Horne. I'm the Raymond James Housing, Timber, and Residential Analyst. Really thrilled to be able to bring back Rayonier. I think it's a very timely idea. In fact, we've added it to our analyst current favorites list. It's one of the most compelling value stories that I've got on my entire coverage list right now. Post the completion of the PotlatchDeltic merger. We've got Wayne Wasechek, the new CFO of Rayonier, the former CFO of Potlatch here. Mark McHugh is the CEO to my left as well. Collin Mings, who's a great friend of the firm as well. Happy to run through the story here, all the different news items from the merger, as well as just wanna highlight for you the valuation of this story in particular. It is the second-largest landholder in the United States, over 4.1 million acres, as well as a top 10 U.S. lumber producer, which you get entirely for free. Basically, if you just value the landholdings alone, it is less than, I think, $1,900 an acre for some of the most prime U.S. forestry in the continent. With that, I will hand it over to Mark, and we'll run through the story. All right. Thanks, Buck, and thanks, everybody, for joining us today. I'm gonna give a brief intro on Rayonier, referencing a few slides from the investor presentation that we posted to our website earlier this week, and then we'll open it up for Q&A. Let's start on page four, which summarizes the rationale for our recent merger with PotlatchDeltic. Really the key theme here is that we believe the combination creates a much stronger enterprise, and we expect to realize benefits from this transaction that really neither of us could've achieved independently. In terms of the strategic benefits, the deal significantly expands and diversifies our timberland portfolio, which now comprises about 4.1 million acres. The merger also enhances our platform to execute on real estate opportunities as well as land-based solutions. Lastly, we now have exposure to a very well-positioned wood products manufacturing business, which we think gives us another lever with which to optimize our overall portfolio value. In terms of the financial benefits, first and foremost, we expect annual run rate synergies of $40 million. We also believe that the larger scale and better trading liquidity of the combined company will translate to an improved cost of capital over time. Lastly, from a balance sheet perspective, the combined company is very well- positioned with a conservative leverage profile and significant capital allocation flexibility. Skipping ahead to Slide 6. Here we provide an overview of the asset profile of the combined company. Again, we now own about 4.1 million acres of timberland, including roughly 3.2 million acres in the U.S. South and about 930,000 acres in the Northwest, primarily in Idaho and Washington. In addition, we own six sawmills with total capacity of 1.2 billion board feet annually, as well as one plywood facility. On the real estate side, we now have three real estate development projects, including Wildlight, Heartwood, and Chenal Valley. We also have what we believe is the, is really the market-leading rural HBU platform. Lastly, within land-based solutions, the combined company now has 80,000 acres under option for solar development, about 154,000 acres under lease for carbon capture and storage. We're also very well-positioned to participate in the carbon offset market going forward, given the much larger footprint of land that we have. Slide 7 highlights some of the key trends that we're seeing driving value creation opportunities within the portfolio. They all generally center around transitioning land use to a higher value purpose, such as rural HBU, real estate development, or land-based solutions. Rural HBU is a business that's long been part of our strategy. We generally sell 1%- 1.5% of our southern acreage annually into higher and better use markets, typically at premiums ranging from 50% to over 100% above timberland value. That's a business that's been a very steady contributor for us over time. Land-based solutions and real estate development, that's really where we see the significant growth opportunity for the company going forward. Our land-based solutions business includes activities such as leasing land for solar development, leasing land or really, subsurface pore space rights for carbon capture and storage, or monetizing the carbon stored in standing timber through the carbon offset market. Our real estate development business involves investing in entitlements and horizontal infrastructure improvements, really with a view towards significantly enhancing the value of very select portions of our land base, as well as some of the adjacent lands within our portfolio. This next slide illustrates why we're really excited about these new growth opportunities. What this chart shows is the potential value uplift per acre that we believe can be achieved by transitioning land use from core timberland into one of these higher value uses. You know, we generally think of southern timberland as being valued in the range of $2,000-$3,000 per acre. But if we're able to transition that acre of timberland into a CCS lease or a solar lease or development use, that has the potential to increase the value of that acre by as much as 15x. You know, again, we see significant value creation potential from optimizing our land use, and we're spending a lot of time, you know, looking through the portfolio and identifying these types of opportunities that we can really execute on. Slide 9 provides an overview of the combined companies. Timberland portfolio, again, roughly 3.2 million acres in the U.S. South, about 930,000 acres in the Northwest. As you can see from this visual, the portfolio is very well diversified in both regions. As we've discussed in the past, timber supply-demand dynamics are highly localized in nature, we think our shareholders will really benefit from this diversification impact of the merger. Skipping ahead to Slide 11, we provided a snapshot of the company's wood products manufacturing operations. As I noted earlier, we have roughly 1.2 billion board feet of lumber capacity across six sawmills, which positions the company as a top 10 lumber producer in the United States. Of course, Rayonier didn't own any manufacturing assets prior to the merger, but we're really excited about the opportunity to integrate this, you know, very large scale, low-cost lumber platform into the portfolio. Skipping ahead to Slide 14, I'll just touch briefly on our real estate business and some of the trends that we're seeing here. Over the last decade, both Rayonier and PotlatchDeltic have seen significant increases in our HBU value realizations. Both companies have also seen a shift in their sales mix towards these higher value development sales. We're certainly encouraged by the fact that land values have continued to appreciate despite some challenges that we've seen in timber markets over the past couple of years. You know, again, really excited about combining these operations and leveraging our HBU platform over a larger land base. Skipping ahead to Slide 16, here we provide an overview of some of our focus areas within the land-based solutions business. We've been working really hard over the past few years to build up a pipeline of opportunities in land-based solutions. This pipeline should translate to meaningful cash flow growth in the coming years. You know, as I noted earlier, we have about 80,000 acres under option for solar development, over 150,000 acres under lease for carbon capture and storage. As we start to see some of these solar options convert into solar leases, and as we start to see some of these CCS leases convert over to injection royalties over time, this should really drive significant growth in cash flow per acre relative to what we're able to achieve on those acres through our timberland operations. You, again, see a lot of upside potential here. We're also really excited about carbon markets going forward. You know, key buyers of carbon offsets are increasingly looking for very large-scale projects to meet their net zero ambitions. We feel like the combined company is going to be much better positioned with the larger footprint to be a supplier of choice into that market. Skipping ahead to Slide 18, I just wanna touch briefly on some of our capital allocation priorities. One of the key factors that really allowed this merger to come together is that both companies shared a very similar philosophy around capital allocation. Our mantra on capital allocation at Rayonier has always been to be nimble and opportunistic with a view towards building long-term value per share, we're absolutely going to employ the same mindset going forward as a combined company. Specifically, we plan to focus on maintaining our investment-grade credit ratings, returning capital to shareholders through sustainable dividends, repurchasing our shares opportunistically, and continuing to make strategic investments in the business when it makes sense to do so. With all that said, as we discussed on our recent earnings call, we certainly see share buybacks as very compelling right now, the bar for external growth is pretty high. I would note that we have been active in the buyback market here recently. That's a quick flyover of the newly merged company as well as some of the opportunities that we see ahead. Really excited about the value creation of the merger and looking forward to working through the integration here in the coming months. Yeah. With that, happy to open it up to Q&A. Sounds good. Thanks. Let me back away from this amplifier. Thanks, Mark. appreciate that. Let me start with, you know, your thoughts on, you know, as you've completed the merger a little bit sooner than expected, I think ahead of schedule, but as you've gone through the process in integrating these companies and really getting to know the Potlatch assets, is there anything that's, you know, come to your attention that is kinda surprising or getting you excited that you may not have fully appreciated, you know, in that portfolio or how it fits into the Rayonier scheme? What have you learned as you've gone through the process? Yeah, I mean, we're all of about four weeks removed from closing the transaction. You know, no major surprises thus far. I would say, you know, probably the biggest upside surprise has really been just the culture, cultural compatibility of the two organizations. I've been really pleased with just the shared corporate values, again, shared philosophy around shareholder value creation. I think the new leadership team has really hit the ground running, has integrated very well. We had our first board meeting as a combined company two weeks ago, and again, really pleased with the board chemistry and how everybody's really kind of rowing in the same direction. You know, no major surprises, but overall, really pleased with how the companies are integrating. I'm really pleased with, again, that cultural compatibility of the two organizations. That sounds good. You know, one of the things we've kind of struggled with is trying to, you know, figure out how, you know, both all these timber REITs fit into the public markets longer term, try to close these NAV gaps, relative to private market valuations, and it seems like that gap has only widened even further, even post-merger. So I'm just, you know... What are you thinking? How does this get addressed going forward? You've mentioned you're active on the buyback already. Can you maybe talk through, you know, the dry powder you have post-merger to, you know, what's the strategy there and, you know, what else, what else do you wanna do to kind of close this NAV gap? Yeah, no, it's a great question. look, the, the timber asset class has been in the public markets for, you know, 25+ years, and we've certainly seen these periods of dislocation where, you know, public market values have been below. we've also seen periods of time when, you know, public market values have traded at a premium to private market values. Obviously, we can't control the stock market dynamics. All we can really do is try to kinda capitalize on those opportunities when we see them. you know, our mantra around capital allocation, again, is always to be nimble and opportunistic. you know, when the stock price was very strong, we were active under the at-the-market equity issuance program, and we were, you know, acquisitive buying timberland. On here more recently, we've been active in the buyback market, trying to capitalize on that discount that we see. You know, we believe right now the cheapest place that we can buy timberland is in the public market by buying back our own stock. You know, like I said, that bar for external growth is pretty high right now, but we don't think that we'll be here perpetually. We've seen these cycles before. I will say that this most recent disconnect has probably been more pronounced and longer dated than we've seen in the past. Again, for the time being, we're gonna try to capitalize on it. We do think that longer term. You know, look, I still believe in efficient markets. I don't think you should be able to buy timberland assets at a big discount in the public market versus what they cost in the private market. Again, we're gonna continue to focus on closing that gap and sort of controlling the controllables to get there. No, it's remarkable, and it's just relative to basically any other what I'd consider a store of value asset class, gold or silver, and particularly other land asset classes compared to agricultural and farmland values, which seem to keep increasing every day and every week now. timberland- Again, just on that point, I mean, we've certainly seen that dynamic in the private market. We made the point on our last earnings call that land values and higher and better use values have continued to trend positive. You know, we just haven't seen it in the stock market. You know, again, we're gonna lean in when we have those types of opportunities to monetize land at, you know, significant premiums to both, you know, what we believe it's worth as timberland, but also what we're, you know, the implied value that we see in, in the public market and continue to try to take advantage of those opportunities. Yeah. No, absolutely. You, you've highlighted the various categories of alternate uses, solar, carbon capture. You know, obviously, there's residential possibilities, commercial land leasing possibilities. You know, if we think longer term, you know, if you're kind of thinking through the path of development for all your categories of land, you know, what realistically, you know, what kind of percentage of the portfolio could fall into one of these higher, better use categories over a 10-year time horizon? I don't know if that's a hard question to answer, but. Yeah, that's a really tough question to answer. I guess I'd take a step back. I mean, as we think about the magnitude of value lift that we believe can be achieved, you know, by transitioning land use into these, you know, again, much higher value uses, you don't need to transition a whole lot of acreage before it really starts to impact your portfolio value. Again, when you think about the prospect of converting, you know, 3%, 4%, or 5% of your land into a use that's 10x more valuable, you do the math, and that, you know, translates into 30%, 40%, 50% value lift for the entire company. You know, just for some context there, again, we have 80,000 acres under option for solar development, 150,000 acres under lease for carbon capture and storage. Again, not all of those acres will ultimately get converted into solar land leases or injection royalties. You know, what we're really focused on right now is kind of building up that pipeline of opportunities. On the real estate development side, again, that's an arena in which we see even more meaningful value lift, you know, relative to underlying timberland value. We have a very unique and high-value portfolio, particularly in this Northeast Florida area. You know, essentially, you go north from downtown Jacksonville. You get to the intersection of I-95 and A1A. Rayonier owns a good portion of the land at the northeast and northwest quadrant of that intersection. You know, again, for those that have been on a timberland tour, I often tell people, you know, "You've probably never been on a timberland tour that's 15 mi from an international airport and 15 mi from a The Ritz-Carlton on the beach." That's really what we own there in that area of Northeast Florida. Again, the play for us in that area has always been, you know, really to catalyze value creation over a much larger land base. If we owned 1,000 acres there, we never would've undertaken the Wildlight development project. you know, we own 50,000 acres within a 10-mi radius of the epicenter of that project. really, the play for us has always been to, you know, create that catalyst for growth, create that catalyst for value creation, and then realize the benefits of that over a very large footprint of land. That's great. I wanted to just ask a little bit more about solar. Just, with the increasing demand for electricity, you know, on the grid, strains on... You know, it seems like that could, you know, have long-term legs for growth possibilities. What's the... You know, you've got the 80,000 under lease now. When does that start to convert to cash? You know, what's the process of getting that hooked up, creating the royalty stream, and then, you know, kinda growing the book of business from there? Yes, we have 80,000 acres under option for solar development. We currently only have about 600 acres that are actually under a solar lease. You know, most of these options, they tend to be, you know, anywhere from five to seven years in duration. The counterparty has to go through the interconnection study. They have to go through the permitting process. It is a pretty long-dated process. We've really been building up that pipeline in earnest for the last, you know, call it, you know, three, four years. Over the course of the next two or three years, we expect more of that option portfolio to start maturing. We'll see some portion of that convert into these long-term land leases. In longer term, we think this is a business that should be a steady contributor to cash flow growth. If you look at projections for utility scale solar development, you know, points to somewhere in the vicinity of 30 GW-40 GW annually. Just for context, 1 MW megawatt of generation capacity requires about 7 acres of solar panels. That 30 GW-40 GW of a projected utility solar development translates to a land need of about 210,000-280,000 acres annually. You know, again, it's a very significant land need. Again, as a large landowner that owns 4 million acres, we think we're really well positioned to, you know, supply land into that purpose. That's great. That's very encouraging. I'm gonna pivot to lumber just a little bit, you know, in terms of, you know, what you're seeing so far with the spring construction season. It feels like we're off the bottom in terms of cash market pricing. Your thoughts on kind of the changing regulatory/tariff environment, how that's playing out with supply into the U.S. market or any, you know, imports, exports from Canada. You know, what's your latest update we can get for the lumber market prognostication? Yeah. We, you know, we have seen a lift here in lumber prices in recent months, and I'd say that that is probably been more supply side driven than demand driven. I'd say demand has been, you know, relatively flat. I think most forecasts for housing starts in 2026 are, you know, pretty flat to 2025, if not, you know, even slightly down. Again, from a supply side standpoint, we've continued to see mill shuts in Canada. That production is being made up for with incremental production in the U.S. Even in a relatively flat demand environment, we think the, you know, supply backdrop is much more constructive for 2026 versus 2025. Again, overall, I think if we continue to see, you know, some relief in mortgage rates, that could also open up some increased R&R spending. Again, people tend to spend on repair and remodel either right after they buy a house or right before they sell a house. So if we can continue to see mortgage rates trending in the right direction, we think that that could also unlock some R&R spending. Yep. Perfect. Can you just remind us, you know, what's the sensitivity level as lumber prices move higher from here? You know, what kind of, you know, cash flow drop through does that bring to the bottom line? Also, you know, what's, you know, think through the, you know, the cost basis or, you know, what's your efficiency level in terms of where you fit in terms of the, your cost to produce relative to some of the competition that's out there? Daryl, why don't you take that? Yeah. Thanks. Thanks, Mark. Yeah. For us, Mark talked about earlier our wood products portfolio. We have six softwood lumber mills. Our annual production capacity is 1.2 billion board feet. For us, a $10 change in lumber pricing equals about $12 million of EBITDA on an annual basis. You can see that really, in an increasing pricing environment, that can have a really good flow-through for our wood products business. Lumber pricing will flow through to the rest of our business as well on the timberland side. I mean, we would see pricing go up in southern timber prices, but especially we have a unique arrangement in our Idaho land holdings. We have a very unique to the industry, given our size in that state. We're the largest private landowner in the state of Idaho. We have over 600,000 acres. Given that relative size to the market, we have the ability to move pricing more, and we have an indexing arrangement. We sell, you know, approximately 75% of our saw logs are indexed to the price of lumber. Along with our wood products business, increase in pricing, you know, on average would have a $10 increase in pricing. We have about a $3 million impact to EBITDA just in that region alone. When we see rising prices, that will certainly elevate EBITDA and profitability across the business. Yeah. I believe so, you know, just for context, everyone, I think current composite lumber prices is around $430 per thousand board feet-ish, something around that range, kind of mixed between yellow pine and, you know, the Northwest species, the pis-- you know, the Doug fir and the hemlock, things like that. Remind me, Daryl, what do you think the Canadian cash cost to produce is? You know, marginal is, like, CAD 550 maybe. Yeah. If you're shipping to the U.S. with a 45% duty, you need about a $550 lumber price. Yeah. Probably well over $100 below break even for the Canadians. Rough math, a $100 change, if we can get back into the mid 500s, that's $120 million-$150 million. Exactly ... of EBITDA. Yep. That's pretty healthy flow through. You know, how do you feel about, you know, your competitive positioning in terms of, like, the efficiency of your mills versus kind of the private competition that's out there? Yeah. Our mills, you know, we're definitely on the lower end of the cost curve. When we, you know, think about the mill set, we look at it in kind of a quadrant. We're in the kind of first and second quartile of sawmills, which is on the lower end of the cost curve. If you We're a top 10 lumber producer. If you match us up against even some of the larger players, you know, our margins, you know, are right in the same range or even better than larger players in the industry. We're definitely on the lower end of the cost curve. Okay. Very competitive from that standpoint. Perfect. Perfect. Can you just maybe pivot a little bit away from lumber to pulpwood and think about, you know, the dynamics of that market in the U.S. South? It's a little different, you know, in terms of the dynamics from the Northwest. What are you kinda seeing in the, you know, Are we stabilizing in the pulp markets? Have we worked through kind of the salvaged timber from the hurricanes? You know, what's, you know, what's the, what's the outlook going forward? Yeah, it certainly feels like things have stabilized, you know, relative to what we saw last year, which recognized, 2025 was something of a perfect storm where you had a really elevated salvage volume in the wake of Hurricane Helene. You had very dry weather conditions which really contributed to additional supply. What happens when you have these, you know, extraordinarily dry weather conditions is it makes, you know, timberland areas that are typically inaccessible easier to access with logging equipment. When you have really dry weather, that tends to translate to a spike in supply as well. You had that against this backdrop of very elevated salvage volume. On top of that, we had some mill shuts, most notably, IP Savannah in that, you know, Atlantic region. You know, again, a lot of moving pieces in 2025 and really challenging environment. I will say that, you know, mill operating rates in the pulpwood side have ticked up a bit. It feels like that overall demand equation has stabilized, and we're optimistic that we'll see some pricing lift in 2026 relative to 2025. Perfect. Perfect. Recognize as well, another point that's worth making is, you know, despite some of the declines we saw in pulpwood in some of our key markets, those are still some of the strongest, if not the strongest, pulpwood markets in the U.S. South. You know, invariably part of the reason that we saw some mill shuts there was the fact that pulpwood pricing was so high in that area. It's still very high on a relative basis if you look across the U.S. South, but again, we have seen some outsized declines there as well. Perfect. Anybody wanna ask a question in the audience? Yeah, go ahead in the back. If you were an investor looking at the space, and the competitive landscape, how would you differentiate Rayonier to competitors and peers like Weyerhaeuser? Well, there are all of two timber REITs now, post the merger with PotlatchDeltic. There were three, and we merged, so there are now two. When we talk about the competitive space on the public side, it's really Weyerhaeuser. You know, look, I think there are a lot of similarities between the companies. I think one thing that's unique about Rayonier and the combined company is really, you know, some of the specific market areas where our land is located. Again, we talked about this development portfolio that we have. Again, that's a very unique, high value portfolio of HBU land that we have. If you look historically, I think Rayonier has a track record of generating some of the strongest HBU premium realizations within the sector. I think that that's certainly a differentiator for the company. I think we're at a size that we can continue to be very nimble and opportunistic around capital allocation, and we can kind of better move the dial versus a much larger enterprise. I think, again, we're really at that sweet spot from a scale standpoint, where I think we have you know, sufficient scale to be very efficient on the cost side, but we also can be, you know, very opportunistic around capital allocation. You know, we have very attractive leverage profile that's, you know, probably better than the competitive peer set. Again, you know, very low cost of debt, which is also very appealing, relative to the peer. All right. Anyone else? Quick ones. I'm just curious, you know, the transaction market for timber is always a little bit opaque for investors on the outside looking in. You know, what are you seeing, you know, that you may, you know, in terms of, you know, portfolios or, you know, other pieces that are out there? What's the appetite right now for bidding on timber? You know, is it still, you know, a robust bidding environment? How competitive is it? Are people taking a step back? What's the, what's the private market for transactions like right now? Yeah, from our perspective, the private market remains very strong. You know, by our count there's, you know, somewhere in the vicinity of $10 billion available for timberland acquisitions. We continue to see very strong prices paid for particularly for high quality timberland assets. Again, the private market has continued to trend up. It's continued to perform very well. There's a lot of capital, you know, really focused on more climate-oriented investments in timberlands, a lot of enthusiasm around this opportunity in land-based solutions in the carbon offset market. Again, a lot of positive momentum still behind the private market we just, you know, haven't seen in the public equities. Yeah. Post-merger, your balance sheet is still amongst the strongest in, you know, almost any public REIT, quite frankly. You're still well below coverage levels for, you know, your credit ratings and whatnot. You know, what kind of flexibility would you have to potentially take leverage up and execute the buyback strategy before you'd even be in the need to think about dispositions or anything else to... Yes, we've guided towards wanting to maintain, we'll certainly maintain our investment-grade credit ratings, but also maintain a net debt to adjusted EBITDA ratio of less than 3x. We talk about that on more of a mid-cycle basis. Obviously lumber is contributing or has contributed, you know, pretty de minimis EBITDA here for the last couple quarters. We think about kinda managing to that 3x target. We're really kinda thinking of more of a mid-cycle contribution from the lumber business. We also said on the last call we expect net debt to settle out around, you know, $1.3 billion-$1.4 billion here at the end of the quarter. Still some moving pieces around transaction costs and whatnot. That kinda gives you some sense of what type of capital capacity we may have. It's also worth noting, you know, we have about $230 million remaining under our prior share repurchase authorization. Again, without getting into specifics, that gives you know, some benchmarks out there in terms of what type of flexibility we might have. Gotcha. Maybe just for clarification, there was a little noise, I think, with the stock dividend and the dividend rate looked, you know, had an appearance of being cut. Can you just walk us through, you know, how that what the dynamics were behind that particular adjustment? Yeah, no. I mean, we really kinda think of it, very much as an adjustment and not a cut. It was also, you know, exactly what we did the last time we had a significant stock dividend, in, I guess it was late 2024. So we had a special distribution. As a REIT, we have to distribute our REIT taxable income. With the large disposition initiative that we've had underway for the last couple years, we had a large special distribution. I believe it was $2 last year, $1.40, this-- or $1.80 last year, $1.40 this year, of which 75% was paid out in stock. When we announced that special dividend, we also announced that we anticipated adjusting the dividend to account for those new shares that were issued. The absolute dividend level remained the same from a dollar standpoint, but we adjusted the dividend to account for the new shares that were issued. We were clear about our intent to do that when we announced the special dividend concurrent with the transaction with PotlatchDeltic back in October. It was the exact same adjustment that we made last year when we had this large special distribution. You know, again, it was really just adjusting that dividend to account for the new shares that were issued. Really on a shareholder level basis, we maintained the dividend. All right, perfect. We'll leave it there. Thank you everyone for joining us. Really appreciate it. Thanks, guys. Thank you.