Rayonier Q3 Profit Rises on $145 Million Disposition

Rayonier Inc. reported sharply higher third-quarter 2026 revenue and GAAP earnings, supported by a $145 million timberland disposition and a larger operating base following its merger with PotlatchDeltic. Underlying results were more mixed: adjusted EBITDA increased to $144.6 million, while pro forma net income declined from a year earlier.

The timberland real estate investment trust, which trades under the ticker RYN, recorded quarterly sales of $565.6 million, up from $177.5 million in the third quarter of 2025. Excluding the large disposition, pro forma sales were $420.6 million.

Operating income rose to $146.9 million from $41.7 million, while net income attributable to Rayonier increased to $123.3 million, or $0.41 per diluted share, from $43.2 million, or $0.28 per share. The reported results included $90.6 million of income from the large disposition.

On a pro forma basis, operating income was $63.3 million, compared with $48.8 million a year earlier. Pro forma net income fell to $40 million, or $0.13 per share, from $50.2 million, or $0.32 per share. Average diluted shares increased to 299.9 million from 156.4 million following the PotlatchDeltic transaction, which closed on January 30.

Adjusted EBITDA rose 26.5% to $144.6 million from $114.3 million. Higher pricing contributed $37 million to the year-over-year change, and non-timber income added $6.3 million. Those gains were partly offset by a $19.5 million volume impact and $12.5 million of higher costs.

Timber and Wood Products

Southern Timber generated $107.4 million of sales, up from $66.8 million a year earlier. Total sales volume increased to 3.03 million tons from 1.94 million tons, reflecting the expanded post-merger asset base. However, weighted-average delivered log pricing declined, and the segment’s operating income slipped to $20.7 million from $22.5 million. Adjusted EBITDA increased to $52.4 million from $42.7 million as higher volume and non-timber income outweighed weaker pricing and increased costs.

Northwest Timber sales rose to $73.6 million from $19.9 million. Volume increased to 571,000 tons from 210,000 tons, while the weighted-average delivered log price climbed to $125.69 per ton from $89.91. Segment operating income doubled to $3.6 million, and adjusted EBITDA increased to $32.3 million from $6.4 million. Higher depreciation and depletion limited the increase in operating income despite stronger volume and pricing.

Wood Products, introduced as a reporting segment in the first quarter of 2026, posted third-quarter sales of $206.2 million. Lumber shipments totaled 327 million board feet, with price realization of $528 per thousand board feet. The segment produced operating income of $11.6 million and adjusted EBITDA of $27 million, compared with $15.1 million and $25 million, respectively, in the second quarter.

Real Estate and Cash Generation

Real Estate was the largest contributor to reported quarterly earnings. Segment sales reached $208 million, including the $145 million large disposition covering 35,996 acres. Operating income was $134.2 million, compared with $26.4 million a year earlier.

Excluding the disposition and other pro forma items, Real Estate operating income was $43.5 million, up from $33.5 million. Adjusted EBITDA declined to $48.5 million from $73.8 million, as lower sales volume more than offset improved pricing and lower costs. Real estate sales excluding the large disposition totaled $63 million, down from $90.8 million in the prior-year period.

For the first nine months of 2026, cash provided by operating activities increased to $252.2 million from $204.9 million. Cash available for distribution, a non-GAAP measure, rose to $287.4 million from $153.5 million. On a per-share or unit basis, however, CAD was $0.97 compared with $0.99, reflecting the larger share count. Ordinary dividends totaled $0.78 per share or unit for the nine-month period.

Capital expenditures were $70.1 million for the first nine months, double the prior-year amount. Rayonier also recorded $154.3 million of timberland acquisitions, primarily in Southern Timber, although $142.7 million represented timberlands acquired in exchange for properties sold rather than cash spending.

Balance Sheet and Risks

Debt stood at $1.86 billion at September 30, up from $1.05 billion at the end of 2025, while cash declined to $361.4 million from $842.9 million. Net debt increased to $1.50 billion from $207.1 million, and net debt represented 22% of enterprise value, compared with 6% at year-end.

Rayonier incurred $7 million of merger-related costs during the quarter and $87.8 million during the first nine months. The company identified realization of the intended benefits from the PotlatchDeltic merger as a key uncertainty. Other disclosed risks include cyclical forest-products and housing markets, timber and real estate pricing, supply-chain and manufacturing disruptions, weather and wildfire exposure, financing availability, environmental regulation, geopolitical tensions and the company’s continued qualification as a REIT.