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Rayonier Inc. 10-Q Summary: Period Ended June 30, 2026

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026, for Rayonier Inc. and its Operating Partnership, Rayonier, L.P. The Company operates as an umbrella partnership REIT (UPREIT) focused on timberlands, wood products, and real estate. The reporting period is significantly impacted by the completion of the merger with PotlatchDeltic Corporation on January 30, 2026. Consequently, the Company now operates four reportable segments: Southern Timber, Northwest Timber, Wood Products (new), and Real Estate. The New Zealand operations were divested in June 2025 and are reported as discontinued operations.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Sales increased 272% year-over-year for the quarter and 255% year-over-year for the six months, driven primarily by the inclusion of PotlatchDeltic's Wood Products and expanded timber segments.
• Operating Loss: The six-month period resulted in an operating loss of $11.0 million, compared to operating income of $14.6 million in the prior year. This was primarily due to $80.8 million in merger-related costs and increased depreciation/depletion from the step-up in asset values.
• Discontinued Operations: The prior year periods included a $404.5 million gain on the sale of the New Zealand joint venture. No such activity occurred in the current period.
• Debt Profile: Total debt increased to $1.86 billion from $1.05 billion at year-end 2025, reflecting the assumption of PotlatchDeltic's debt obligations. The Company repaid a $200 million term loan in April 2026.
• Income Tax Benefit: A $40.3 million income tax benefit was recognized in the six-month period due to the release of a valuation allowance following the merger.

Guidance, Outlook, and Risks

• Harvest Volumes: Full-year 2026 harvest volume guidance is 12.2 to 12.5 million tons for Southern Timber and 2.0 to 2.2 million tons for Northwest Timber.
• Wood Products: Lumber shipments are expected to total approximately 1.1 billion board feet for the 11 months of contribution in 2026.
• Capital Expenditures: Expected to range between $102 million and $106 million for 2026, excluding strategic acquisitions. Real estate development investments are expected to range between $24 million and $28 million.
• Dividends: The quarterly dividend rate remains $0.26 per share/unit. Total 2026 dividend payments are expected to be approximately $314 million.
• Risks: Key risks include integration challenges with PotlatchDeltic, volatility in lumber and timber prices, potential changes in Canadian softwood lumber duties, and environmental liabilities (specifically Port Gamble, WA).

Investor Verification Checklist

• Merger Integration Costs: Verify the run-rate of the $80.8 million in merger-related costs incurred YTD and the timeline for their completion.
• Asset Valuation Step-Up: Review the preliminary purchase price allocation for PotlatchDeltic, specifically the fair value assigned to timberlands and PP&E, which drives future depreciation and depletion expenses.
• Debt Covenants: Confirm compliance with the new credit agreement covenants, specifically the EBITDA to interest expense ratio (currently 8.7x) and debt-to-capital ratio (28%).
• Inventory Adjustments: Examine the $1.2 million non-cash inventory purchase price adjustment in cost of sales related to the merger.
• Subsequent Events: Note the August 2026 like-kind exchange transactions involving the sale of 36,000 acres in Washington and acquisition of 57,000 acres in Alabama/Texas.