A month has gone by since the last earnings report for Rayonier (RYN). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rayonier due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Rayonier’s Q3 Earnings and Revenues Miss Estimates
Rayonier reported a third-quarter 2024 pro-forma net income of 12 cents per share, missing the Zacks Consensus Estimate and the year-ago quarter’s figure of 13 cents.
Total revenues came in at $195.0 million, which lagged the Zacks Consensus Estimate of $222.4 million. On a year-over-year basis, the figure decreased 3.3%. Adjusted EBITDA came in at $71.8 million, down from $78.9 million in the prior-year period. This 9% decrease year over year is due to a lower contribution from its New Zealand Timber segment.
According to Mark McHugh, president and CEO of Rayonier, “We delivered solid operational results in the third quarter, despite macroeconomic challenges that continue to adversely impact our timber businesses.” He also noted, “During the third quarter, we also significantly advanced our $1 billion disposition initiative, which led to the closing of several large transactions following the end of the quarter.”
Concurrent with the earnings release, Rayonier announced completed and pending timberland dispositions aggregating around 200,000 acres for a total purchase price of $495 million. The company also updated its full-year adjusted EBITDA guidance to reflect current outlook and disposition activity.
Rayonier’s Segmental Performance
In the third quarter, the pro-forma operating income in the company’s Southern Timber segment came in at $19.8 million, which increased $1.2 million from the prior-year quarter. Higher non-timber income and lower costs were partly offset by lower volumes, higher depletion expenses and lower net stumpage realizations.
The Pacific Northwest Timber segment reported a pro-forma operating income of $0.8 million compared to a loss of $0.6 million a year ago. This was driven by lower depletion expenses, lower costs and higher volumes, offset by lower net stumpage realizations.
The New Zealand Timber segment recorded pro-forma operating income of $8.9 million, down from the year-earlier quarter’s $17.6 million. This rise was due to lower carbon credit income, lower net stumpage realizations, higher costs and lower volumes, which were partly mitigated by favorable foreign exchange impacts and lower depletion rates.
Real Estate’s pro-forma operating income was $8.6 million, down from $9.2 million reported in the year-ago period. This reflects lower acres sold, offset by higher weighted-average prices.
The Trading segment reported an operating loss of $0.1 million, consistent with the prior-year quarter.
Rayonier’s Balance Sheet
Rayonier exited the third quarter of 2024 with $74.2 million in cash and cash equivalents, down from $141.9 million as of June 30, 2024.
Rayonier’s Outlook
Management expects full-year net income attributable to Rayonier in the band of $343-$359 million, EPS of $2.30 to $2.40, pro forma EPS of 36 to 40 cents and adjusted EBITDA of $275 to $290 million.
The revised expectations for the year reflect slightly lower harvest volumes due to its recently announced timberland dispositions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 5.08% due to these changes.
VGM Scores
At this time, Rayonier has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Rayonier has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Rayonier is part of the Zacks Building Products - Wood industry. Over the past month, Louisiana-Pacific (LPX), a stock from the same industry, has gained 10.2%. The company reported its results for the quarter ended September 2024 more than a month ago.
Louisiana-Pacific reported revenues of $722 million in the last reported quarter, representing a year-over-year change of -0.8%. EPS of $1.22 for the same period compares with $1.62 a year ago.
For the current quarter, Louisiana-Pacific is expected to post earnings of $0.69 per share, indicating a change of -2.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Louisiana-Pacific. Also, the stock has a VGM Score of D.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
