Rayonier (RYN) Q2 Earnings Top Estimates, Revenues Sink

Rayonier Inc. (NYSE:RYN) reported second-quarter 2017 pro forma net income per share of 20 cents, comfortably beating the Zacks Consensus Estimate of 11 cents. Also, the bottom line came in higher than the prior-year quarter figure of 7 cents.

Total sales for the quarter came in at $194.7 million, plunging 25.6% year over year. However, the figure handily surpassed the Zacks Consensus Estimate of $152.88 million.

Results reflect disappointing performance in the Southern Timber and Pacific Northwest Timber segment, primarily due to a drop in the sawtimber and pulpwood stumpage prices.

Rayonier Inc. Price, Consensus and EPS Surprise

Segmental Performance

During the reported quarter, pro forma operating income at the company’s Southern Timber segment declined to $9.7 million from $11.1 million recorded a year ago.

The Pacific Northwest Timber posted pro forma operating loss of $1.5 million. Pro forma operating income in second-quarter 2016 was $1.1 million.

New Zealand Timber posted pro forma operating income of $26.8 million, significantly up from the prior-year quarter figure of $10 million.

Real Estate posted pro forma operating income of $16.1 million, indicating remarkable growth from the year-ago figure of $4.4 million.

Trading segment posted pro forma operating income of $1.1 million, up from the year-ago figure of $0.6 million.

Lastly, pro forma operating loss at the Corporate and Other segment narrowed to $5.3 million from a loss of $6.3 million incurred in second-quarter 2016.

Liquidity

Rayonier ended the quarter with $136.6 million in cash and cash equivalents, up from $85.9 million recorded at the end of fourth-quarter 2016. Total long-term debt was $1.03 billion, reflecting a slight decrease from the Dec 31, 2016 tally.

Our Viewpoint

Rayonier owns or leases around 2.7 million acres of timberlands in some of the most productive timber-growing regions. These timberlands are strategically located near the pulpwood consuming mills. Recent developments in the field of biogenetics and consistent cash flow bode well for Rayonier over the long run.

However, the company faces competition from its substitutes and other market players in the timberland sector. Rayonier has to comply with strict regulatory requirements which are subject to frequent changes. This adversely affects its business. In the reported quarter, the company experienced a dip in stumpage prices in its primary markets amid crippling demand and additional supply.

Currently, Rayonier carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has gained 8.4% year to date, underperforming 12.1% growth recorded by the industry it belongs to.

We now look forward to the earnings releases of other companies from the same industry like Armstrong Flooring inc. (NYSE:AFI) , JELD-WEN Holding, Inc (NYSE:JELD) and The Home Depot, Inc. (NYSE:HD) . While Armstrong Flooring is scheduled to announce results on Aug 7, JELD-WEN Holding and Home Depot are slated to report Q2 numbers on Aug 8 and Aug 15, respectively.

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