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Rayonier Inc. 2025 Annual Report (10-K) Summary

Business Context and Reporting Period

This report covers the fiscal year ended December 31, 2025, for Rayonier Inc. and its Operating Partnership, Rayonier, L.P. Rayonier is a leading timberland Real Estate Investment Trust (REIT) operating primarily in the U.S. South and Pacific Northwest. The company operates through three core segments: Southern Timber, Pacific Northwest Timber, and Real Estate.

Key Strategic Developments:

• Discontinued Operations: In June 2025, Rayonier completed the sale of its 77% interest in its New Zealand joint venture, classifying these operations as discontinued.
• Merger with PotlatchDeltic: On January 30, 2026 (subsequent to the reporting period), Rayonier completed a merger-of-equals with PotlatchDeltic Corporation. This transaction significantly expanded the timberland portfolio and added wood products manufacturing capabilities. The 2025 financial results presented herein exclude the impact of this merger.
• Segment Realignment: Effective Q3 2025, log trading activities were realigned into the Southern and Pacific Northwest Timber segments based on geography.

Key Financial Metrics (2025)

Note: Net Income for 2025 includes a $404.4 million gain on the sale of discontinued operations (New Zealand). Adjusted EBITDA excludes this gain and other non-recurring items.

Material Changes vs. Prior Period

• Revenue Decline: Total sales decreased 51% to $484.5 million, primarily driven by the absence of $495.0 million in "Large Dispositions" (timberland sales) recorded in 2024 and the exit from New Zealand operations.
• Net Income Increase: Despite lower operating revenue, Net Income increased 32% to $474.4 million. This was largely due to the $404.4 million gain on the sale of the New Zealand joint venture, which offset lower operating income from continuing operations.
• Segment Performance:
  • Southern Timber: Sales decreased 9% to $228.3 million due to lower stumpage realizations (prices down 12% year-over-year) despite stable harvest volumes.
  • Pacific Northwest Timber: Sales decreased 23% to $83.6 million, driven by lower harvest volumes following large dispositions in 2024, though operating income improved from a loss to a profit of $1.9 million.
  • Real Estate: Sales dropped significantly to $172.6 million (excluding large dispositions) as the company shifted focus from large asset sales to recurring timber and development income.
• Liquidity Improvement: Cash and cash equivalents more than doubled to $842.9 million, fueled by $688.3 million in net proceeds from the New Zealand sale and lower debt repayments. Consequently, the Net Debt to Adjusted EBITDA ratio improved dramatically from 3.2x to 0.8x.

Guidance, Outlook, and Risks

2026 Outlook (Combined Company): Following the PotlatchDeltic merger, Rayonier provided initial pro forma guidance for 2026:

• Southern Timber: Expected harvest volumes of 12.1 to 12.6 million tons. Average pine stumpage realizations are expected to be lower than standalone Rayonier 2025 levels due to the geographic mix of the combined entity.
• Northwest Timber: Expected harvest volumes of 2.0 to 2.3 million tons. Pricing is expected to be higher than standalone Rayonier 2025 levels, driven by improved demand and a higher sawtimber mix.
• Wood Products: Lumber shipments expected to total approximately 1.1 billion board feet for the 11-month contribution period.
• Capital Expenditures: Expected to range between $104 million and $108 million (excluding strategic acquisitions).

Key Risks and Contingencies:

• Merger Integration: Risks associated with realizing projected synergies, retaining key personnel, and managing the complexities of the larger, integrated business.
• Environmental Liabilities: Ongoing remediation at the Port Gamble, Washington site (acquired via Pope Resources). A liability of $9.3 million was accrued as of year-end, with costs subject to change based on restoration progress.
• Market Cyclicality: Exposure to fluctuations in lumber and pulpwood prices, housing starts, and global trade policies (including tariffs on softwood lumber).
• REIT Compliance: Risk of losing REIT status, which would subject the company to corporate income taxes, though management believes it remains in compliance.

Investor Verification Checklist

• Merger Accounting: Verify the final purchase price allocation and pro forma financial impact of the PotlatchDeltic merger in the Q1 2026 10-Q filing, as initial accounting was incomplete at the time of this 10-K.
• Discontinued Operations: Confirm that the $404.4 million gain on the New Zealand sale is correctly excluded from recurring operating metrics (Adjusted EBITDA) when analyzing core business performance.
• Debt Structure: Review the terms of the new $1.81 billion credit agreement entered into in connection with the merger to understand future leverage ratios and covenants.
• Environmental Accruals: Monitor updates on the Port Gamble remediation costs, as the $9.3 million liability is an estimate subject to potential increases.
• Dividend Sustainability: Assess the ability to maintain the $0.26 quarterly dividend rate given the dilution from the merger (issuance of ~140.9 million new shares) and the shift in capital allocation priorities.