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 | |
