Welcome, and thank you for joining Rayonier's Fourth Quarter and Year-End 2021 Teleconference Call. At this time, all participants are in a listen-only mode. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I will turn the meeting over to Mr. Collin Mings, Vice President, Capital Markets and Strategic Planning. Please go ahead.

Thank you, and good morning. Welcome to Rayonier's investor teleconference covering fourth quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rayonier.com. I would like to remind you that, in these presentations, we include forward-looking statements made pursuant to the Safe Harbor provisions of federal securities laws. Our earnings release and Form 10-K filed with the SEC list some of the factors that may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on page two of our financial supplement. Throughout these presentations, we will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measure in our earnings release and supplemental materials. With that, let's start our teleconference with opening comments from Dave Nunes, President and CEO. Dave?

Thanks, Collin. Good morning, everyone. First, I'll make some high-level comments, before turning it over to Mark Mchugh, Senior Vice President and Chief Financial Officer, to review our consolidated financial results. And then we'll ask Doug Long, Senior Vice President, Forest Resources, to comment on our U.S. and New Zealand timber results. And following the review of our Timber segments, Mark will discuss our real estate results, as well as our guidance for 2022. We concluded 2021 with solid operational results, and are very pleased with our overall full-year financial performance. We achieved record full-year adjusted EBITDA results in both our Southern Timber and Pacific Northwest Timber segments, despite contending with increased costs, as well as volume constraints driven by inclement weather conditions. Our New Zealand Timber segment achieved our third highest ever full-year adjusted EBITDA result despite navigating a myriad of export market challenges and COVID-related headwinds during the course of the year. Meanwhile, in our Real Estate segment, we achieved the second-highest adjusted EBITDA result and highest weighted average pricing since our separation into a pure-play timber REIT, underscoring our focus on optimizing our portfolio and maximizing HBU premiums. We further achieved record improved development sales of roughly $52 million for the year. Overall, for the full-year, we generated GAAP EPS of $1.08 per share, pro forma EPS of $0.67 per share, and adjusted EBITDA of $330 million. While the pandemic continued to pose challenges throughout the year, we were able to achieve very strong results across the company, due in large part due to the unwavering focus of our people, the relative strength of our markets, and our nimble approach to operational decision-making. These factors, coupled with improving end market demand, are setting the foundation for another strong year in 2022. As Mark will discuss in greater detail, we're providing full-year 2022 adjusted EBITDA guidance of $310 million to $340 million. Notably, the midpoint of our initial 2022 guidance is down only slightly from 2021, despite our expectation that the contribution from real estate activity will return to a more normalized level this year. Stepping back to the fourth quarter, we generated total adjusted EBITDA of $50 million, and pro forma EPS of $0.01 per share. Drilling down to our different operating segments, our Southern Timber segment generated adjusted EBITDA of $34 million for the quarter, which was 44% above the prior year fourth quarter. We were encouraged to see net stumpage prices increase by 25%, as well as a 14% increase in harvest volumes. In our Pacific Northwest Timber segment, we achieved adjusted EBITDA of $13 million, down 8% from the prior year quarter. The year-over-year decrease was primarily attributable to higher costs, partially offset by higher net stumpage prices and higher non-timber income. In our New Zealand Timber segment, fourth quarter adjusted EBITDA fell to $10 million, down from $17 million in the prior year quarter, as higher pricing was more than offset by 9% lower production volumes, and compressed margins due to significantly higher shipping costs. In our Real Estate segment, we generated adjusted EBITDA of $3 million, down significantly from $26 million in the prior year period as the 90% reduction in acres sold was partially offset by a significant increase in weighted average prices. The moderation in real estate activity to end 2021 was anticipated following an exceptionally strong third quarter. Switching gears from fourth quarter results, I'd like to highlight the active quarter we had on the portfolio management front. As previously disclosed, we closed the final two transactions associated with our sale of the timber funds business during the fourth quarter, and have now completely exited this business. In sum, we generated total proceeds to Rayonier of approximately $73 million through our divestiture of the Timber Funds business. We're very pleased to have successfully exited this business as it allows us to simplify our corporate structure and financial reporting. We're further pleased to have returned significant capital from this non-core asset at a favorable valuation relative to our initial underwriting in 2020. Additionally, we closed the acquisition of 66,800 acres in Texas and Georgia for $124 million, or roughly $1,860 per acre during the fourth quarter. These properties are positioned in strong timber markets with a diverse customer base and we expect that they will generate a sustainable harvest of approximately 220,000 tons annually. The opportunistic use of our aftermarket equity offering program, as well as proceeds from the sale of the Timber Funds business provided us with ample balance sheet flexibility to fund this acquisition with cash on hand. With that, let me turn it over to Mark for more details on our fourth quarter financial results.

Thanks, Dave. Let's start on page five, with our financial highlights. Sales for the quarter totaled $262 million, while operating income was $34 million, and net income attributable to Rayonier was $9 million, or $0.06 per share. On a pro forma basis, net income was $2 million or $0.01 per share. Pro forma adjustments for the quarter were primarily associated with the actions taken to exit the Timber Funds business. We generated fourth quarter adjusted EBITDA of $50 million, which was down from the prior year period primarily due to a much smaller contribution from our Real Estate segment. For the full-year, adjusted EBITDA, of $330 million, increased significantly over 2020 adjusted EBITDA of $267 million as each of our key operating segments registered meaningful year-over-year improvements. On the bottom of page five, we provide an overview of our capital resources and liquidity at year-end, as well as a comparison to the prior year. Our cash available for distribution, or CAD, for the full-year was $208 million, versus $162 million in the prior year, primarily driven by higher adjusted EBITDA which was partially offset by higher cash taxes, interest expense, and capital expenditures. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on page eight of the financial supplement. Consistent with our nimble approach to capital allocation, we raised $66 million through our aftermarket equity offering program during the fourth quarter at an average price of $39.70 per share. As previously discussed, we view the ATM program as a cost-effective tool to opportunistically raise equity capital, strengthen our balance sheet, and match-fund bolt-on acquisitions. We closed the quarter with $359 million of cash and $1.4 billion of debt. Our net debt of $1 billion represented 14% of our enterprise value based on our closing stock price at the end of the year. Subsequent to quarter-end, as previously announced, we redeemed $325 million of senior notes due 2022 with cash on hand and proceeds from the $200 million delayed draw term loan executed in mid-2021. Pro forma for these financing actions, our weighted average cost of debt declined to roughly 2.7%, while our weighted average maturity was extended to roughly seven years. I'll now turn the call over to Doug to provide a more detailed review of our fourth quarter timber results.

Thanks, Mark. Good morning. Let's start on page nine with our Southern Timber segment. Adjusted EBITDA in the fourth quarter of $34 million was $10 million above the prior year quarter. The year-over-year improvement was primarily driven by significant increases in net stumpage pricing and higher harvest volumes, partially offset by higher costs. More specifically, volume climbed 14% during the fourth quarter as dryer conditions enabled customers to ramp up production to meet demand. Despite ongoing constraints on trucking availability, sawlog stumpage pricing rose 21% versus the prior year quarter. At nearly $31 per ton, fourth quarter pricing reflected the highest average Southern sawlog realizations we have registered since our separation into a pure-play timberland REIT in 2014. Improved pricing reflects strong demand from sawmills, the impact of weather-related constraints on supply, upward pressure on chip-n-saw pricing due to increased competition from pulp and pellet mills as well as export log demand in certain markets. Pulpwood pricing also improved significantly increasing 34% from the prior year quarter, primarily driven by strong domestic demand and constrained supply due to wet weather conditions leading into the fourth quarter. Overall, weighted average stumpage prices improved 25% year-over-year. We are pleased with the pricing gains we achieved during the quarter, and are encouraged that this positive momentum has continued into the New Year as customer demand across our Southern footprint remains very robust even as weather conditions have normalized. Moving to our Pacific Northwest Timber segment on page 10, adjusted EBITDA of $13 million was $1 million below the prior year quarter. The year-over-year decrease was attributable to slightly lower harvest volumes and higher costs partially offset by higher net stumpage prices and higher non-timber income. Volume declined 2% in the fourth quarter as compared to the prior year quarter as unfavorable weather conditions impacted harvest activity. Turning to pricing, at roughly $98 per ton, our average delivered sawlog price during the fourth quarter was up 2% from the prior year quarter. Strong pricing was generally sustained throughout the quarter with positive price momentum in early 2022 amid the recent surge in lumber prices and improving export market demand. Meanwhile, pulpwood pricing increased 9% in the fourth quarter relative to the prior year quarter due to improved demand as pulp mills in the region resumed full production. Page 11 shows results and key operating metrics for our New Zealand Timber segment. Adjusted EBITDA in the fourth quarter of $10 million was $7 million below the prior year quarter. The decline in adjusted EBITDA was driven by lower harvest volumes, higher freight and emerged costs, higher logging costs, and lower carbon credit sales partially offset by stronger delivered log prices and favorable foreign exchange impacts. Volume declined 9% in the fourth quarter as compared to the prior year quarter primarily due to above average production in the prior quarter following COVID-related disruptions earlier in the year. Turning to pricing, average delivered prices for export sawtimber increased 27% in the fourth quarter from the prior year quarter to nearly $133 per ton. The improvement in export sawtimber prices versus the prior year period reflected our ability to pass on some of the higher costs we are experiencing to customers as well as the restriction on competing log imports into China from Australia. However, as compared to the previous two quarters, the pricing environment for radiata pine logs weakened during the fourth quarter in response to elevated log inventories in China and softer demand. A slowdown in construction activity, adverse weather conditions, and power shortages in China collectively reduced the off-take from ports resulted in pricing pressure on log exports. That said, we believe pricing likely bottomed in December. We have seen pricing improve to start '22, reduced flow of European Spruce salvage logs into China, the continued ban on Australian log imports by China, and the ban on Russian log exports are collectively translating into improving supply-demand dynamics ahead of the Lunar New Year. We expect log inventories in China to normalize as demand picks up following the holiday which should translate into improved export pricing. Shifting to the New Zealand domestic market, demand remains healthy albeit constrained to some degree by COVID-related restrictions and the availability of labor. During the fourth quarter, average delivered sawlog prices increased 10% from the prior year period to $81 per ton. Excluding the impact of foreign exchange rates, domestic sawtimber prices improved 6% versus the prior year period following the upward trend in the export market. As a reminder, domestic sawtimber pricing normally follows export pricing with a lag. Average domestic pulpwood pricing climbed 20% as compared to the prior year quarter. As it relates to carbon credits, we continue to defer sales during the quarter. However, we have resumed carbon credit sales in 2022 following a doubling of carbon pricing over the past year. Moving ahead, we will continue to remain opportunistic in our sale of carbon credits depending on market conditions. I'll now briefly discuss the results from our Timber Funds segment. Highlighted on page 12, the Timber Funds segment registered slightly negative consolidated EBITDA in the fourth quarter on harvest volume of only 22,000 tons. Adjusted EBITDA, which reflects the look-through contribution from the Timber Funds, was also slightly negative. As Dave discussed earlier, we have completed our exit from the Timber Funds business and will discontinue reporting this segment next quarter. Lastly, in our Trading segment, we posted a slight operating loss in the fourth quarter. As a reminder, our trading activities typically generate low margins and are primarily designed to provide additional economies of scale to our fee timber export business. I'll now turn it back over to Mark to cover our real estate results.

Thanks, Doug. As detailed on page 13, as expected the contribution from our Real Estate segment was relatively light during the fourth quarter compared to the exceptionally strong results posted in the third quarter. Fourth quarter real estate sales totaled $11 million on roughly 12,000 acres sold at an average price of over $86,000 per acre. Adjusted EBITDA for the quarter was $3 million. Sales in the improved development category totaled $4 million in the fourth quarter. In our Richmond Hill development project, South of Savannah, Georgia, we closed $3 million of sales including our first non-industrial parcels which consisted of two residential lots and a 5-acre commercial property. We also completed an industrial sale consisting of 12 acres. Meanwhile, within our Wildlight development project north of Jacksonville, Florida, we closed on roughly 5 acres of commercial property for approximately $2 million. While the timing of development related land sales will remain lumpy quarter to quarter, the location and increasing maturity of our projects offer us a strong foundation to capitalize on the migration demographic trends that we believe will benefit our land holdings in Wildlight, Richmond Hill, and the West Puget Sound area of Washington for years to come. Turning to the rural category, sales totaled roughly $6 million consisting of 1200 acres at an average price of just over $5100 per acre. Thus far in 2022, demand for rural land remains healthy as the space, privacy and recreational opportunities offered by these properties continue to attract buyers. We remain intently focused on achieving significant premiums to timberland volumes through activities of our real estate platform and are encouraged by the pipeline of sales we are building for the year ahead. Now moving on to our outlook for '22, page 15 shows our financial guidance by segment, and schedule G of our earnings release provides reconciliation of our adjusted EBITDA guidance to our net income attributable to Rayonier as well as EPS. For full-year '22, we expect to achieve adjusted EBITDA of 310 to $340 million, net income attributable to Rayonier of 83 to $92 million, and EPS of $0.57 to $0.64. In our Southern Timber segment, we expect to achieve full year harvest volumes of 6.3 to 6.6 million tons. The anticipated increase relative to the prior year reflects a rebound in harvest activity following the wet weather conditions and supply chain constraints that negatively impacted full-year 2021 volumes as well as the expected contribution from recent acquisitions. We also expect a meaningful improvement in weighted average stumpage realizations relative to full-year '21 driven by strong demand partially offset by higher harvest and transportation costs. Notably our guidance range also contemplates the near-term uncertainty associated with Southern log exports to China due to the recently implemented pinewood nematode policies. All said, we expect full-year adjusted EBITDA of 145 to $153 million in our Southern Timber segment. In our Pacific Northwest Timber segment, we expect full-year harvest volumes of 1.7 to 1.8 million tons. We have seen improved domestic log demand following the recent increase in lumber prices. We are also seeing signs of increased export demand to start '22 and expect continued momentum as reduced flow of logs from other markets drives increased export demand in the Pacific Northwest. Based on these supply-demand dynamics, we expect that weighted average log pricing will increase modestly relative to full-year 2021. However, we expect that higher delivered prices will be largely offset by increased harvest and transportation costs. Overall, we expect full-year adjusted EBITDA of 55 to $60 million. In our New Zealand Timber segment, we expect full-year harvest volumes of 2.6 million to 2.8 million tons. While current log pricing remains below 2021 average levels, we expect the pricing will improve as log inventories in China normalize and export demand picks up following the Lunar New Year. For the full-year, we expect that average export and domestic pricing will be only modestly below 2021 levels. That said, we expect that increased harvest and transportation costs will continue to put pressure on net stumpage realizations. Lastly, as Doug noted earlier, we expect that our New Zealand Timber segment will benefit from the resumption of carbon credit sales in 2022. Overall, we expect full-year adjusted EBITDA of $68 million to $75 million. However, due to seasonally lower volumes, continued supply chain disruptions, and lower current pricing relative to the levels we expect for the full-year, we expect a lower adjusted EBITDA contribution from the segment in the first-half versus the second-half of the year. In our Real Estate segment, we expect full-year adjusted EBITDA of $70 million to $80 million. As previously discussed, following exceptionally strong real estate results in 2021, we anticipate more normalized transaction activity in 2022. More details regarding our 2022 guidance can be found on page three of the earnings release, as well as page 15 of the financial supplement. In summary, the market backdrop generally remains positive across our businesses. That said, as discussed last quarter, we are not immune from the supply chain and inflationary pressures that are impacting many parts of the global economy. We expect these challenges will likely persist through at least 2022. However, our team continues to work diligently to optimize haul distances, leverage our scale and dependability in both domestic and export markets, and make prudent silviculture investment decisions tied to localized supply-demand dynamics. Overall, we believe we are well-positioned to navigate logistical challenges and largely recoup the impact of cost increases in our log pricing. I will now turn the call back to Dave for closing comments.

Thanks, Mark. As I reflect on 2022, I'm proud of both our exceptional financial performance as well as our team's relentless focus on executing against our strategic priorities in what was a challenging and ever-evolving operating environment. Following a very tumultuous 2020, with the introduction of vaccines early in 2021, we were hopeful that we would return to some form of normalcy as the year progressed. However, with the emergence of two new variants, the operating environment remained challenged by periodic COVID-related disruptions and supply chain constraints. We further had to contend with labor shortages and persistent wet weather in many of our regions, which when combined with the challenges posed by COVID, reduced our harvest volumes versus our original plan. Despite these headwinds, our team worked diligently to adapt to fast-changing market conditions and logistical challenges to capitalize on the favorable pricing environment and post excellent financial results. Our real estate team also did a stellar job in 2021 of capitalizing on market opportunities and successfully leveraging the breadth of product offerings across our portfolio. Due in part to the general shortage of residential logs within our markets, we made a strategic decision to sell undeveloped lots in both Wildlight and the Pacific Northwest. Meanwhile, the favorable momentum associated with the expansion of the Port of Savannah as well as the new I95 Interchange in Richmond Hill allowed us to accelerate the absorption of industrial parcels. In sum, real estate results benefited from both strong pricing and faster absorption. Looking ahead, we are encouraged by the momentum across our development projects and believe that they're ideally positioned for further success. Beyond our favorable full-year financial performance, we tackled a number of important initiatives in 2021. In the wake of the Pope Resources transaction, a major initiative this past year was to create some added balance sheet capacity for future growth. To this end, we successfully sold over 16,600 acres of less strategic holdings in Washington State, as well as completed our exit of the timber funds business at a value that exceeded our initial underwriting. Further, we opportunistically issued a total of $236 million in equity to our ATM program in 2021, at a weighted average price of $37.05 per share, as well as restructured our debt portfolio to a series of actions that extended our weighted average maturity and lowered our weighted average cost of debt. These portfolio and balance sheet moves allowed us to remain nimble and active, acquiring Timberland in 2021, as we closed nine acquisitions in the U.S. and New Zealand, totaling 102,000 acres for $179 million. With year-end net debt to adjusted EBITDA of 3.1 times, we believe we are well-positioned to execute on future high-quality growth opportunities and other capital allocation priorities. While this was a very busy year on the operational, capital markets, and transaction fronts, we also made significant strides in advancing ESG-related initiatives. We believe Rayonier is uniquely well-positioned for a low carbon economy, and we're proud to publish our first-ever carbon report covering 2019 data earlier this year. We followed this report in August with the publication of our 2020 carbon report, as well as our inaugural sustainability report. Beyond the publication of these reports, I would also note that we continue to advance many other ESG-related initiatives and have further set out ambitious ESG objectives for 2022. As we enter 2022, I'm encouraged by strong end market demand, and believe we have the team and portfolio to capitalize on favorable pricing momentum across many of our timber markets, as well as continued strong interest in rural land and entitled development properties. The resiliency and dedication of our employees over the past two years demonstrates their ownership mentality. As market conditions and opportunities continue to evolve, I'm confident this collective mindset will continue to drive long-term value creation for our shareholders. This concludes our prepared remarks. And I'll now turn the call back over to the operator for questions.

Thank you. We will now begin the question-and-answer session. Our first question is from Anthony Pettinari with Citi. You may go ahead.

Good morning.

Morning.

In real estate, in the last year, you generated $100 million in EBITDA, which was well above the guidance you initially gave for the year. And, I think, in 2020, you did $90 million, which was at the high end of the initial guidance, even with the pandemic hitting. So, when we think about the '22 guide of $70 million to $80 million, I'm just wondering if you could talk or help us sort of frame the dynamics in that business which is, obviously, lumpy, but has been beating expectations in recent years. And is there a level of conservatism in the guide just given how hot land markets in the south appear to be?

Thank you, Anthony. This is Mark, and I'll address that. It's quite challenging to forecast this business due to the nature of the transactions being binary; they either happen or they don't. Last year, for example, we had the Arborwood transaction in the Pacific Northwest, which amounted to $37.5 million and significantly positively impacted our results. Occasionally, we encounter such transactions, and they can greatly alter your outlook for the year, especially if they are unexpected, as was the case with the Arborwood deal in 2021. Generally, we've performed well in real estate, particularly in the current hot market. We've established a pipeline of development properties, which tend to be more predictable as they need to be at the right stage to go to market. However, it's the rural and unimproved developments where we sometimes achieve unexpected successes that we didn’t foresee at the beginning of the year. We prefer not to rely too heavily on anticipating such activity, as failing to see it can lead to significant underperformance of our expectations. Thus, we tend to be conservative in our yearly outlook and aim to surpass it rather than fall short. From a long-term view, we model this business based on our historical data. Over the past 15 years, we've typically sold around 25,000 acres annually in the highest and best use market, usually at premiums of 50% to 100% above Timberland value. Last year was notably stronger than that, but for the long-term steady-state of our business, that's where we gauge ourselves. For next year, our guidance aligns well with that historical performance, while also leaning towards higher value opportunities, especially in development.

Okay, that's very helpful. And then, last year, your weighted Southern Timberland pricing was up, I think, 15%. I know there's a lot in there with mix, and weather, and higher cost, but looking to '22, your outlook for U.S. pricing seems upbeat or maybe a little bit more upbeat than peers. Just wondering from a big picture perspective, if you could talk about your sort of degree of visibility or degree of confidence in pricing momentum in the south in '22 maybe compared to previous years?

Yes, Anthony, this is Dave. I'll give some intro, and Doug can kind of pick up. I mean, this is something that we've been talking about for a long time, as you know. I think an element of this is certainly geographic mix. And keep in mind, as we've discussed, the majority of our southern ownership is in wood baskets with balanced growth relationships. And so, these create greater price elasticity during times of rising lumber markets. And so, I think that fact gives us a fair bit of bullishness as we think about those markets. And we've certainly seen that this last year, and starting this year. I think another nuance to kind of keep in mind is, as a pure-play timber REIT, we have a fair bit of flexibility in the form of sale and we pride ourselves in that. Some people like to say they're all delivered. We believe in a mix of delivered sales and stumpage sales, which we think gives us a nimble sales posture where we don't have internal mills to feed. We feel like we can pull that lever and extract value from time to time. And then thirdly, I think a breadth of product offerings. We vary our species to species, region to region, some where we're heavier to saw timber, others where we're heavier to pulpwood markets, trying to capitalize on what the market gives us. And then I think lastly is the role that exports play. And we feel that helps tension markets in the south on the margin, and really that's how prices are ultimately determined. Maybe Doug can provide some additional color to your question.

Yes, I would agree with. I mean, Dave said it very well. I think the key thing we see, particularly we've been talking about is the increased capacity of sawmills in our operating area, and particularly along the Atlantic coast. And so, we've really seen those come to play. In the past few years, we've seen about 500 million board feet come into the Florida markets, another 1.3 billion in the Georgia markets, and 700 million in the South Carolina, another, call it, 1.5 billion board feet in the Alabama market. And so, we're really seeing a lot of growth in those areas, a lot of competition for sawlogs. And so, we're really seeing demand, even as weather normalized, we've just seen increased demand and in pricing in those markets. So, we're really seeing that reaction that Dave mentioned to the supply-demand there, and really pleased that in all of our areas, except for Arkansas, we saw meaningful price improvement across all of our grades. So, really, just the one lag that we had in that area, and thankfully, we're about done with our harvesting in that area, and we're moving on past those. So, it was a really strong year for us. And we see that continuing into this year, as Dave mentioned, capitalizing on those stumpage sales program early in the year.

Okay, that's very helpful. I'll turn it over.

Thank you. The next question is from Mark Wilde with BMO Capital Markets. You may go ahead.

Good morning, guys. It's Jesse Barone on for Mark. I guess just to start, could you give your outlook for Timberland M&A activity in 2022, kind of what valuations look like and kind of what you're seeing on the ESG front, how that's impacting those valuations?

Yes, I think we're definitely in a mode where the markets are pretty strong right now. We're seeing a fair bit of capital continue to flow into those markets. And I think that's translated into some compressed discount rates in terms of behavior. It's always hard to predict fully, in a year, a forward sense the level of transactions activity. I can't say that we're active in all three of our primary geographic segments looking at properties. But at the same time, we're being careful to stay disciplined, and really looking for those opportunities that are nice bolt-on fits. We're a believer in sort of smaller is better in terms of complimentary fit. And so, we just continue to kind of plug away in that respect.

And then just one other for me, on the southern export side, can you just give more detail around kind of what those volumes look like, where they could eventually get to in a couple of years, and how much of an impact they've really had on pricing on the short-term? Thanks.

Yes, this is Doug, and I’ll take that. As mentioned earlier, I won’t go into specific volumes for competitive reasons, but I can provide an overview of our current observations. With the pinewood policies implemented in China, we've seen a number of exporters exit the market; in fact, over a dozen along the Atlantic Coast have ceased exports to China. We anticipate a sharp decline in exports to China in the first quarter. Specifically, between October and November, which typically continues through the New Year, we experienced a 50% decrease. To offset this, we've learned that Chinese importers have acquired three Panamax vessels from Uruguay for Q1. Uruguay has traditionally been a significant supplier of Southern Yellow Pine to India, and their shift from India to China has opened up opportunities for Southern Yellow Pine in India. We are actively working on increasing our volumes there in Q1. While we assess the new supply side regulations in China, we are also aiming to grow our business in China and Vietnam. We recognize that there will be a reduction in overall exports in the first half of the year as companies adapt to the market changes, but this trend may benefit larger exporters as we position ourselves in various markets.

Great, thanks. I'll turn it over.

Thank you. The next question is from Mark Weintraub with Seaport Research Partners. You may go ahead.

Thank you. So, just following up a little bit on this, the notion of more lumber production in the south helping your business, it's sort of interesting, if you actually look at the data, it doesn't seem like there was that much more lumber production in the south this year overall. But maybe it's been different in your specific markets. And I guess there, there's a good and a bad interpretation of that. On the one hand, I may ask the question, was it weather or more demand that was helping pricing in the south to date? And then I guess the follow-up would be, if we didn't have that production increase show up, do we have a big step up that's ahead of us, and obviously that could be a positive, I would think. So, any thoughts or color around those observations?

Yes, I'll start there. We certainly experienced a wet summer, which impacted various aspects of our operations. However, in the fourth quarter, conditions improved and dried out, resulting in performance that was actually below last year as we entered the first quarter. Although wet weather affected us, there has also been a noticeable increase in demand from the mills. I can't provide specifics about the mills' production levels, but we saw a wet weather impact followed by moderation, and we continue to observe heightened demand every time we offer wood for sale, leading to negotiations for delivery.

Yes, Mark, I'd add to that, keep in mind that you have fairly long ramp-ups on some of these CapEx announcements on the sawmill side, and then that's been exacerbated by COVID outbreaks from time to time. And so, I think that's acted, those two things plus general backlog on equipment that's been ordered for part of these new facilities, I do think you're going to see kind of a gradual increase in southern production as those things kind of get ironed out over time. But I think to Doug's point, we're encouraged that we're seeing that already in a demand sense, even though we've got a ways to go to get to those kind of nameplate production levels.

I was trying to understand if there is a possibility for a quicker increase in production due to the COVID-related issues you mentioned that may have hindered the industry from achieving its full production capability. As supply chain challenges and absenteeism potentially decrease, do you feel from your customers that a significant increase in production might be on the horizon, or do you believe it will likely be more gradual? I just wanted to clarify that point a bit.

Yes, I'll take this, Doug. I have some anecdotal evidence from customer discussions. We are aware that many mills have had to take one to two weeks of downtime due to COVID. As Dave mentioned, there will be additional capacity coming online and continuing to work. I can't predict whether there will be a rapid increase or not, but we are seeing sustained price momentum and growth. I believe there will be increased demand because many of the mills we supply have had downtime, especially on the sawmill side over the past year.

Okay, great. And one quick other follow-up on the Timberlands question, so based on your comments and what we've heard from some others, it sounds like the market is heating up, the discount rates are low again, etc. And yet you're selective. I mean, how hard is it going to be for you to get the type of opportunities to grow the business at the prices that make sense to you? Are you feeling at all discouraged at this point, given what's going on? Or, conversely, are there reasons for optimism?

I mean it certainly is competitive; I don't want to sort of mislead you there. But I'd say also we purchased 102,000 acres last year, which is not insignificant. We tend to put a fair bit of emphasis on negotiated bolt-on sales that tend to get less visibility, so we like that posture. And we're happy with the growth that we've had. We've placed $179 million into those transactions, all of which were bolt-ons. And we added lands in strong markets, roughly a quarter in Florida and Georgia, roughly a half in Texas, and the balance, a small amount in New Zealand. And so, we think these are all very nice from a complimentary fit with our existing land base, nice quality lands, they're not encumbered by wood supply agreements, so we think that gives us lots of optionality going forward. And in this recently announced transaction that had lands in about roughly 52,000 acres in Texas, that's within three hours of two of the nation's top 10 single-family housing markets. And so, we're excited about kind of the strategic location of that and the fit with our existing operations in Texas.

Okay, great, thanks. Appreciate the color and the insights.

Thank you. The next question is from Paul Quinn with RBC Capital Markets. You may go ahead.

Yes, thank you. Good morning, everyone. I’d like to start with Timberlands. I was expecting a more optimistic projection for the Pacific Northwest and New Zealand due to the log export ban in Russia. I’m curious about the current log inventories in China, when we can expect them to stabilize, and why there isn’t more potential for price increases.

Sure, this is Doug. I’ll begin by discussing the current inventory levels in China, which are approximately 5.4 million cubic meters, down from December, indicating a positive trend for us. Demand in December and early January ahead of the Lunar New Year exceeded our expectations, operating around 8,000 cubic meters per day in December and averaging 45,000 cubic meters per day in January, considering the holiday shutdowns. This reflects strong demand during the holidays, and our customers are starting to recognize the future impacts of reduced softwood log supply from Russia, diminished European spruce salvage, the ongoing ban on Australian products, and uncertainties regarding U.S. Southern Yellow Pine due to nematode policies, along with robust domestic demand in the U.S. However, we faced a real estate correction that affected the markets in late Q3 and early Q4, resulting in a decline compared to 2021. Fortunately, with government intervention to restructure debts and bring more state-owned entities into play, we are witnessing a reduction in these issues. The government has lifted some constraints on mortgage borrowers and reduced ratios for bankers, contributing to increased liquidity in the market. Additionally, investments in infrastructure projects signal potential growth, which is encouraging for our lumber and plywood customers, helping to offset some of the downturn in housing. We anticipate strong demand from China post-Lunar New Year. One significant challenge we still face is shipping, as prices remain exceedingly high. While shipping conditions are improving, we are still vulnerable to individual port lockdowns due to strict COVID policies in China, causing delays, with vessels sometimes sitting idle for 30 to 40 days. Despite the strong demand we've identified, we remain cautious about supply chain challenges, especially given the 25% decrease in lumber imports in 2021 due to strengthening markets in the U.S. and Europe. Overall, we are optimistic about demand but wary of supply chain constraints currently affecting the market.

Okay, that's great information. Thanks. Regarding the carbon aspect in North America, I wanted to ask how you view the monetization of your carbon sequestration efforts on your timberlands, especially as your competitors have begun to set long-term goals.

Hey, this is Mark. I believe the market opportunity in this area is still quite speculative. We maintain that carbon presents a significant opportunity for our industry, enabling us to contribute to addressing climate change while also enhancing the economic viability of our forests. Achieving net-zero emissions will necessitate negative emissions. The critical issue moving forward is the accounting for negative emissions and the evolution of the market for them over time. In 2020, demand for carbon offsets in the voluntary market was about 100 million units. Various projections indicate that this demand could increase by 10 to 15 times by 2030 and by 50 to 100 times by 2050. This suggests an implied demand for negative emissions of at least 5 billion metric tons of CO2 equivalents by 2050, with a rapidly increasing trajectory leading up to that point. To give some context, the global industrial roundwood harvest in 2019 was around 2 billion tons. There’s a substantial gap between the demand for carbon and the fiber supply available to meet that demand within the forestry market. We see this as a significant opportunity for our sector. Currently, we have access to the most readily available and cost-effective technology to generate negative emissions, though there are other methods like direct carbon capture and storage that will require much stronger economic incentives, such as higher offset pricing, to become viable. Additionally, aside from carbon uses, there are numerous other potential applications for wood fiber in the pathway to net zero, including sustainable aviation fuels, biomass energy, and mass timber. As we consider the broader economic opportunities related to ESG, any of these applications could greatly influence the demand for wood, fiber, and land use, particularly if they scale significantly. Overall, we find the potential role of working forests in combating climate change compelling, though estimating its future value is quite challenging. Currently, the voluntary market prices for carbon are not at levels that will drive significant behavioral changes in our industry. Therefore, it's crucial for the market to grow and for carbon prices to rise over time so that we can better understand the impact on our industry.

Yes, I would just add to that, kind of on the New Zealand experience, and our participation in the emissions in New Zealand gives unique perspective as it relates to monetizing carbon, and the New Zealand government implemented changes to the program in 2020 that we believe will significantly increase the value of carbon and then actually did result in doubling the prices to currently over $7. So, those changes included a floor and a cost containment cap of $70 in 2022 to help reduce price volatility. And we believe that's obviously written as a market, so we starting to optimistically selling in that market. And that's example of Mark said where there are still things working up trying to understand, but the value that we see there is a lot more opportunity in New Zealand and that pricing that we saw compared to what the current voluntary markets are. And we have seen New Zealand prices move a lot as it got regulated over time. So, I think we have to be careful as we think about how we move into this market. Even the secondary market in New Zealand right now is trailing above that cost containment cap, which we also saw in 2021. So, based on individuals' needs, there are opportunities for price improvement even in the market where we have cost containment caps. Though it's a very fluid market with a lot of potential upside, and we participate in the New Zealand market and that gives us a lot of insight when we think about North American processes. Suffice to say, we are spending a lot of time looking at this and thinking about it right now and looking to scale up resources to really tackle this. We think it's a bit premature to start to put out a financial forecast around what we think is achievable in the near term.

All right, thanks for your help. That's all I had.

Thank you. And that was our final question. I will now turn it back to the speakers for any closing remarks.

All right. Thank you. This is Collin Mings. I'd like to thank everybody for joining us. Please contact us with any follow-up questions.

Thank you. And that does conclude today's conference. Thank you all for participating. You may disconnect at this time.