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Rayonier Reports Second Quarter 2002 Earnings

July 22, 2002

JACKSONVILLE, Fla., Jul 22, 2002 (BUSINESS WIRE) -- Rayonier (NYSE:RYN) today reported second quarter 2002 income from continuing operations of $17.5 million, or 62 cents per share. This compared to $9 million, or 32 cents per share, in first quarter 2002 and $31.5 million, or $1.14 per share, in second quarter 2001, which included 75 cents per share from a major land sale. Net income of $16.2 million, or 57 cents per share, included a loss from discontinued operations of $1.3 million, or 5 cents per share, related to the sale of New Zealand East Coast timberland operations and associated assets.

Earnings from continuing operations improved compared to first quarter primarily due to lower performance fibers manufacturing costs, increased land sales' margins and higher Northwest U.S. timber volumes. Results were lower than second quarter 2001 primarily due to the major land sale in last year's quarter and lower Southeast U.S. timber volumes, partially offset by higher Northwest U.S. timber volumes.

Sales of $269 million were essentially flat compared to first quarter but down $67 million from second quarter 2001, which included $59 million from the large land sale.

Lee Nutter, Chairman, President and CEO said: "Despite a sluggish global economy, we posted solid results due to continued strong demand for cellulose specialties and our ongoing land sales program. We continued to use our strong cash flow to reduce debt and increase financial flexibility."

EBITDA (defined in Exhibit A) was $78 million, or $2.74 per share, compared to $73 million, or $2.60 per share, in first quarter 2002 and $131 million, or $4.74 per share, in second quarter 2001. Free cash flow (defined in Exhibit A) was $30 million compared to $26 million in first quarter 2002 and $68 million in second quarter 2001. Debt at quarter-end was $768 million. Net debt (debt less cash invested) at quarter-end was $738 million, $57 million lower than the first quarter and $136 million below second quarter 2001. The net debt-to-capital ratio of 50.2 percent reflects a decline of 2.2 and 5.0 percentage points from first quarter 2002 and second quarter 2001, respectively.

Performance Fibers

Sales of $124 million were $5 million below first quarter primarily due to reduced volume while operating income improved $4 million to $11 million driven by lower manufacturing costs. Prices for both cellulose specialties and absorbent materials (primarily fluff pulp) remained steady. Compared to second quarter 2001, sales and operating income declined by $22 million and $3 million, respectively, largely due to lower cellulose specialties volume and fluff pulp prices.

Timber and Land

Sales of $58 million were $3 million below the first quarter while operating income of $32 million was up $2 million primarily due to increased land sales' margins. Compared to second quarter 2001, sales and operating income were down $52 million and $24 million, respectively, due to the $59 million land sale last year, which contributed $33 million in operating income. Excluding that transaction, operating income improved due to higher routine land sales.

Wood Products and Trading

Sales of $91 million were $10 million above first quarter and operating income was essentially at break-even, an improvement of $2 million due to higher trading margins and lumber prices. Compared to second quarter 2001, sales improved $9 million while operating income was essentially flat.

Other Items

Corporate and other expense of $3 million was $3 million and $1 million below first quarter 2002 and second quarter 2001, respectively, primarily due to lower stock price-based incentive compensation and the favorable impact of balance sheet related foreign exchange translation.

Interest expense of $15 million was slightly less than first quarter and $2 million below second quarter 2001 due to lower debt.

The effective tax rate of 27.8 percent was essentially in line with the first quarter but below the second quarter 2001 rate of 33.8 percent due to lower taxes on foreign operations.

Outlook

"We continue to see strong demand for our high value cellulose specialty products and fluff pulp pricing appears to be improving," Nutter said. "However, third quarter earnings are expected to be lower than second quarter primarily due to seasonal declines in timber volume."

Rayonier is the world's premier supplier of high performance specialty cellulose fibers and has 2.2 million acres of timberland in the U.S. and New Zealand. Approximately half of Rayonier's sales are outside the U.S. to customers in nearly 60 countries.

Comments about market trends and anticipated prices and earnings are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The following important factors, among others, could cause actual results to differ materially from those expressed in the forward-looking statements: changes in global market trends and world events that could impact customer demand; interest rate and currency movements; fluctuations in demand for cellulose specialties, absorbent materials, timber, and wood products; the impact of such market factors on the company's timber sales in the U.S. and New Zealand; adverse weather conditions; changes in production costs for wood products and performance fibers, particularly for raw materials such as wood, energy and chemicals; unexpected delays in the closing of land sale transactions or collection of proceeds from installment sales; and implementation or revision of governmental policies and regulations affecting the environment, import and export controls and taxes. For additional factors that could impact future results, please see the company's most recent Form 10-K on file with the Securities and Exchange Commission.

A conference call will be held on Tuesday, July 23 at 4:15 p.m. EDT to discuss these results. Interested parties are invited to listen to the live webcast by logging onto www.rayonier.com and following the link. Supplemental materials will be available at the website. A replay will also be available on the site shortly after the call. Also, investors may access the "listen only" conference call by dialing 913-981-5584.

For further information, visit the company's web site at http://www.rayonier.com. Complimentary copies of Rayonier press releases and other financial documents are also available by mail or fax by calling 1-800-RYN-7611.

                               RAYONIER
                       FINANCIAL HIGHLIGHTS (1)
                       JUNE 30, 2002 (unaudited)
          (millions of dollars, except per share information)
                           Three Months Ended        Six Months Ended
                     ----------------------------- -------------------
                      June 30, March 31,  June 30,  June 30,  June 30,
                        2002     2002       2001      2002      2001
                     --------- --------- --------- --------- ---------
Profitability
 Sales                $ 269.3   $ 268.7   $ 336.7   $ 538.0   $ 606.0
 Operating income     $  39.5   $  27.4   $  64.4   $  66.9   $ 101.9
 Income from
  continuing
  operations          $  17.5   $   9.0   $  31.5   $  26.5   $  43.6
 Discontinued
  operations          $  (1.3)  $   0.4   $     -   $  (0.9)  $   0.1
 Net income (after
  disc. ops)          $  16.2   $   9.4   $  31.5   $  25.6   $  43.7
 Diluted earnings per
  share:
   Continuing
    operations        $  0.62   $  0.32   $  1.14   $  0.94   $  1.58
   Net income (after
    disc. ops)        $  0.57   $  0.33   $  1.14   $  0.90   $  1.59
 Operating income as
  a percent of sales    14.7%     10.2%     19.1%     12.4%     16.8%
 ROE (annualized) (a)    8.2%      3.3%      9.1%      6.3%      9.4%
Capital Resources and
Liquidity
 EBITDA (b)           $  77.8   $  72.9   $ 130.7   $ 150.7   $ 207.1
 Free cash flow (c)   $  29.8   $  26.0   $  67.7   $  55.8   $  98.7
 Decrease in
  borrowings          $  47.2   $  35.0   $  64.8   $  82.2   $  93.8
 Debt                 $ 768.4   $ 814.7   $ 879.2   $ 768.4   $ 879.2
 Net debt (d)         $ 737.6   $ 794.2   $ 873.2   $ 737.6   $ 873.2
 Net debt / capital     50.2%     52.4%     55.2%     50.2%     55.2%
(a) From continuing operations; major land sales are not annualized.
(b) EBITDA is defined as earnings from continuing operations before
    significant non-recurring items, provision for dispositions,
    interest expense, income taxes, depreciation, depletion,
    amortization and the non-cash cost of land sales.
(c) Free cash flow is defined as EBITDA plus or minus significant
    non-recurring items, changes in working capital and long-term
    assets and liabilities (excluding the non-cash costs of land
    sales), less income taxes, interest expense, custodial capital
    spending and prior-year dividend levels.
(d) Net debt is defined as debt less cash invested of $30.8, $20.5 and
    $6.0, at 6/30/02, 3/31/02, and 6/30/01, respectively.
	   (1) Prior period amounts were reclassified to reflect the New
        Zealand East Coast operations as discontinued operations.
                                  -A-
                               RAYONIER
                 STATEMENTS OF CONSOLIDATED INCOME (2)
                       JUNE 30, 2002 (unaudited)
          (millions of dollars, except per share information)
                           Three Months Ended        Six Months Ended
                     ----------------------------- -------------------
                      June 30, March 31,  June 30,  June 30,  June 30,
                        2002     2002       2001      2002      2001
                     --------- --------- --------- --------- ---------
Sales                 $ 269.3   $ 268.7   $ 336.7   $ 538.0   $ 606.0
                     --------- --------- --------- --------- ---------
Costs and expenses
 Cost of sales          220.9     229.2     262.7     450.1     487.4
 Selling and general
  expenses               10.3      11.5       9.6      21.8      17.2
 Other operating
  expense (income)       (1.4)      0.6         -      (0.8)     (0.5)
                     --------- --------- --------- --------- ---------
Operating income         39.5      27.4      64.4      66.9     101.9
Interest expense        (15.1)    (15.2)    (17.5)    (30.3)    (36.4)
Interest and
 miscellaneous income
 (expense), net             -       0.3       0.7       0.3       0.2
                     --------- --------- --------- --------- ---------
Income from continuing
 operations before
 income taxes            24.4      12.5      47.6      36.9      65.7
Income tax expense       (6.9)     (3.5)    (16.1)    (10.4)    (22.1)
                     --------- --------- --------- --------- ---------
Income from continuing
 operations           $  17.5   $   9.0   $  31.5   $  26.5   $  43.6
Discontinued
 operations, net         (1.3)      0.4         -      (0.9)      0.1
                     --------- --------- --------- --------- ---------
Net income (after
 disc. ops)           $  16.2   $   9.4   $  31.5   $  25.6   $  43.7
                     ========= ========= ========= ========= =========
Net income per Common
Share
 Basic EPS
  From continuing
   operations         $  0.64   $  0.33   $  1.16   $  0.97   $  1.61
                     ========= ========= ========= ========= =========
  Net income (after
   disc. ops)         $  0.59   $  0.34   $  1.16   $  0.93   $  1.61
                     ========= ========= ========= ========= =========
 Diluted EPS
  From continuing
   operations         $  0.62   $  0.32   $  1.14   $  0.94   $  1.58
                     ========= ========= ========= ========= =========
  Net income (after
   disc. ops)         $  0.57   $  0.33   $  1.14   $  0.90   $  1.59
                     ========= ========= ========= ========= =========
Weighted average
Common Shares used
for determining
 Basic EPS      27,728,798 27,526,125 27,166,182 27,628,014 27,145,778
                ========== ========== ========== ========== ==========
 Diluted EPS    28,324,784 28,085,833 27,584,236 28,208,579 27,558,542
                ========== ========== ========== ========== ==========
	   (2) Prior period amounts were reclassified to reflect the New
        Zealand East Coast operations as discontinued operations.
                                  -B-
                               RAYONIER
            BUSINESS SEGMENT SALES AND OPERATING INCOME (3)
                       JUNE 30, 2002 (unaudited)
                         (millions of dollars)
                           Three Months Ended        Six Months Ended
                     ----------------------------- -------------------
                      June 30, March 31,  June 30,  June 30,  June 30,
                        2002     2002       2001      2002      2001
                     --------- --------- --------- --------- ---------
Sales
 Performance Fibers
  Cellulose
   specialties        $  86.6   $  90.6   $  95.9   $ 177.2   $ 185.9
  Absorbent materials    37.5      38.7      49.9      76.2      98.9
                     --------- --------- --------- --------- ---------
    Total Performance
     Fibers             124.1     129.3     145.8     253.4     284.8
                     --------- --------- --------- --------- ---------
 Timber and Land
  Timber                 45.4      42.3      47.7      87.7     108.0
  Land                   12.6      19.1      62.2      31.7      63.4
                     --------- --------- --------- --------- ---------
    Total Timber and
     Land                58.0      61.4     109.9     119.4     171.4
                     --------- --------- --------- --------- ---------
 Wood Products and
  Trading                91.3      81.6      82.6     172.9     159.2
 Intersegment
  eliminations           (4.1)     (3.6)     (1.6)     (7.7)     (9.4)
                     --------- --------- --------- --------- ---------
    Total sales       $ 269.3   $ 268.7   $ 336.7   $ 538.0   $ 606.0
                     ========= ========= ========= ========= =========
Operating income
(loss)
 Performance Fibers   $  10.7   $   6.6   $  13.2   $  17.3   $  27.9
 Timber and Land
  Timber                 20.9      20.7      21.3      41.6      56.7
  Land                   10.7       8.6      34.4      19.3      35.2
                     --------- --------- --------- --------- ---------
    Total Timber and
     Land                31.6      29.3      55.7      60.9      91.9
 Wood Products and
  Trading                   -      (2.4)     (0.3)     (2.4)     (7.0)
 Corporate and other     (2.8)     (6.1)     (4.2)     (8.9)    (10.9)
                     --------- --------- --------- --------- ---------
    Total operating
     income           $  39.5   $  27.4   $  64.4   $  66.9   $ 101.9
                     ========= ========= ========= ========= =========
	   (3) Prior period amounts were reclassified to reflect the New
        Zealand East Coast operations as discontinued operations.
                                  -C-
                               RAYONIER
                        FUNDS FLOW SUMMARY (4)
                       JUNE 30, 2002 (unaudited)
                         (millions of dollars)
                                                     Six Months Ended
                                                    ------------------
                                                    June 30,  June 30,
                                                      2002      2001
                                                   --------- ---------
Income from continuing operations                   $  26.5   $  43.6
Depreciation, depletion and amortization               80.2      96.8
Non-cash cost of land sales                             3.3       8.2
                                                   --------- ---------
       Subtotal                                       110.0     148.6
Capital expenditures                                  (35.6)    (38.8)
Working capital changes                               (10.9)     (3.1)
Dividends                                             (19.9)    (19.6)
Proceeds from stock options exercised                  13.6       4.0
Share repurchases                                      (1.1)        -
All other                                               9.1       2.1
                                                   --------- ---------
       Subtotal                                        65.2      93.2
Cash provided by discontinued operations               17.0       0.6
                                                   --------- ---------
       Decrease in borrowings                       $  82.2   $  93.8
                                                   ========= =========
	   (4) Prior period amounts were reclassified to reflect the New
        Zealand East Coast operations as discontinued operations.
                                  -D-
                               RAYONIER
               SELECTED SUPPLEMENTAL FINANCIAL DATA (5)
                       JUNE 30, 2002 (unaudited)
          (millions of dollars, except per share information)
                           Three Months Ended        Six Months Ended
                     ----------------------------- -------------------
                      June 30, March 31,  June 30,  June 30,  June 30,
                        2002     2002       2001      2002      2001
                     --------- --------- --------- --------- ---------
Geographical Data
(Non-U.S.)
 Sales
  New Zealand         $  17.5   $  19.8   $  16.6   $  37.3   $  33.4
  Other                  11.5      13.3      13.2      24.8      25.2
                     --------- --------- --------- --------- ---------
    Total             $  29.0   $  33.1   $  29.8   $  62.1   $  58.6
                     ========= ========= ========= ========= =========
 Operating income
 (loss)
  New Zealand         $   2.5   $  (0.6)  $  (0.2)  $   1.9   $  (4.6)
  Other                   0.4      (1.4)     (0.3)     (1.0)     (0.8)
                     --------- --------- --------- --------- ---------
    Total             $   2.9   $  (2.0)  $  (0.5)  $   0.9   $  (5.4)
                     ========= ========= ========= ========= =========
Timber and Land
 Sales
  Northwest U.S.      $  21.3   $  17.3   $  13.5   $  38.6   $  38.2
  Southeast U.S.         33.0      35.6      91.8      68.6     123.9
  New Zealand             3.7       8.5       4.6      12.2       9.3
                     --------- --------- --------- --------- ---------
    Total             $  58.0   $  61.4   $ 109.9   $ 119.4   $ 171.4
                     ========= ========= ========= ========= =========
Operating income
(loss)
 Northwest U.S.       $  15.6   $  12.8   $   8.7   $  28.4   $  28.8
 Southeast U.S.          16.0      17.2      45.8      33.2      59.9
 New Zealand                -      (0.7)      1.2      (0.7)      3.2
                     --------- --------- --------- --------- ---------
    Total             $  31.6   $  29.3   $  55.7   $  60.9   $  91.9
                     ========= ========= ========= ========= =========
EBITDA per Share
 Performance Fibers   $  1.04   $  0.86   $  1.18   $  1.90   $  2.40
 Timber and Land         1.67      1.91      3.59      3.58      5.56
 Wood Products and
  Trading                0.14      0.04      0.12      0.18         -
 Corporate and other    (0.11)    (0.21)    (0.15)    (0.32)    (0.44)
                     --------- --------- --------- --------- ---------
    Total             $  2.74   $  2.60   $  4.74   $  5.34   $  7.52
                     ========= ========= ========= ========= =========
	   (5) Prior period amounts were reclassified to reflect the New
        Zealand East Coast operations as discontinued operations.
                                  -E-
                               RAYONIER
                  SELECTED OPERATING INFORMATION (6)
                       JUNE 30, 2002 (unaudited)
                           Three Months Ended        Six Months Ended
                     ----------------------------- -------------------
                      June 30, March 31,  June 30,  June 30,  June 30,
                        2002     2002       2001      2002      2001
                     --------- --------- --------- --------- ---------
Performance Fibers
 Sales Volume
  Cellulose
   specialties, in
   thousands of metric
   tons                   101       104       110       205       213
  Absorbent materials,
   in thousands of
   metric tons             66        70        75       136       147
  Production as a
   percent of capacity   99.5%     96.3%     98.1%     98.0%     98.4%
Timber and Land
 Sales volume - Timber
  Northwest U.S., in
   millions of board
   feet                    80        70        49       150       137
  Southeast U.S., in
   thousands of short
   green tons           1,191     1,241     1,611     2,432     3,186
  New Zealand, in
   thousands of metric
   tons (7)               168       121       174       289       338
Timber sales volume -
 Intercompany
  Northwest U.S., in
   millions of board
   feet                    19        15         6        34        35
  Southeast U.S., in
   thousands of short
   green tons               3         5        16         8        30
  New Zealand, in
   thousands of metric
   tons (7)                10        13         9        23        25
Acres sold              3,995    18,900    57,858    22,895    58,273
Wood Products and
Trading
 Lumber sales volume,
  in millions of board
  feet                     86        79        63       165       120
 Medium-density
  fiberboard sales
  volume, in thousands
  of cubic meters          41        36        39        77        76
 Log trading sales
 volume
  North America, in
   millions of board
   feet                    32        27        37        59        86
  New Zealand, in
   thousands of cubic
   meters                  85        75        74       160       162
  Other, in thousands
   of cubic meters         86       118       109       204       232
	   (6) Prior period amounts were reclassified to reflect the New
        Zealand East Coast operations as discontinued operations.
	   (7) 2001 volume restated from cubic meters to metric tons
                                  -F-
CONTACT: Rayonier Inc., Jacksonville
Media Contact:
Jay A. Fredericksen, 904/357-9106
or
Investor Contact:
Parag Bhansali, 904/357-9155


Contact

Mark McHugh

Senior Vice President and Chief Financial Officer

Phone: (904) 357-9100

investorrelations@rayonier.com

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