Welcome and thank you for joining Rayonier's First Quarter 2025 Conference 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.

Thank you and good morning. Welcome to Rayonier's investor teleconference covering first 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 informs 10-K and 10-Q, followed by the SEC, with 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 2 of our financial supplement. Throughout these presentations, we will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measures in our earnings release and supplemental materials. With that, let’s start our teleconference with opening comments from Mark McHugh, our President and CEO. Mark?

Thanks, Colin. Good morning, everyone. First, I'll make some high-level comments before turning it over to April Tice, Senior Vice President and Chief Financial Officer to review our consolidated financial results. Then Doug Long, Executive Vice President and Chief Resource Officer will comment on our Timber results. And following a review of our Timber segments, April will discuss our real estate results and our outlook for the balance of the year. Before turning to our first quarter results, I'd like to touch on the pending sale of our New Zealand business. On March 10th, we announced that we had entered into an agreement to sell the entities holding our New Zealand joint venture interest to the Rohatyn Group or TRG for $710 million subject to closing adjustments. Our decision to exit New Zealand was not made lightly. Rayonier's presence in New Zealand dates back to 1988, when the company first set up an export operation in the region. Over time, the value of our New Zealand portfolio has appreciated considerably, and the joint venture has contributed meaningfully to Rayonier's growth and success. That said, the New Zealand business lacks meaningful synergies with our core U.S. operations. And we further believe that, the value of our business hasn't been fully appreciated in the public markets. Therefore, we determined that it would be best for our shareholders to sell our ownership interest in the New Zealand joint venture and to focus our efforts on future growth opportunities within the United States. TRG is a well-regarded manager of forestry assets in the region, and we look forward to transferring the stewardship of this business to their organization in the coming months. The transaction remains on track to close in 2025, subject to the receipt of regulatory approvals and the satisfaction of other closing conditions. Consistent with the large dispositions we completed in 2023 and 2024, the New Zealand sale aligns with our previously-stated goal of enhancing shareholder value by capitalizing on the disconnect between public and private timberland values, and reducing leverage in a higher interest rate environment. Further, exiting New Zealand will concentrate our capital in core U.S. timberland markets with favorable long-term growth prospects, reduce our exposure to log export markets and simplify and streamline our portfolio, financial reporting and overall value proposition. As we shared in March, we anticipate using at least 50% of the sale proceeds from the New Zealand transaction to reduce leverage and return capital to shareholders, through a combination of share repurchases and a special dividend. The remaining proceeds are expected to be deployed opportunistically to fund capital allocation priorities, including additional share buybacks and potential reinvestment into synergistic acquisitions. As it relates to the special dividend, we currently anticipate distributing $1 to $1.4 per share in connection with the transaction, the details of which will be announced later this year following the closing of the sale. Similar to the special dividend we declared in December 2024, we expect that it will be paid in a combination of cash and common shares. With the announcement of the New Zealand transaction, we have now completed or announced pending dispositions totaling $1.45 billion, significantly exceeding our original $1 billion target. By successfully executing on the asset disposition and capital structure realignment plan, we've strengthened our financial position, reduced our leverage, streamlined our portfolio and better positioned Rayonier for future growth. Moving to our first quarter financial results. Excluding the contribution from New Zealand, which we are now classifying as discontinued operations, we generated adjusted EBITDA of $27 million and a pro forma net loss of $3 million or $0.02 per share. The 39% decline in adjusted EBITDA versus the prior year quarter reflects lower results in our Southern Timber and Real Estate segments, partially offset by stronger results in our Pacific Northwest Timber segment. First quarter results were negatively impacted by several factors, including the timing of real estate closings, challenging timber market conditions in the U.S. South and reduced harvest volumes due to our 2024 disposition activities. In our Southern Timber segment, we generated first quarter adjusted EBITDA of $27 million, down from the prior year period, as harvest volumes declined 21% and weighted average net stumpage realizations were down 19%. First quarter results reflect softer demand from mills, the continued impact of salvage volume in our Atlantic region, a shift in geographic mix to lower-priced regions and reduced volume due to the large disposition we completed in Oklahoma during the fourth quarter of 2024. Overall, it's been a challenging start to the year for our U.S. South Timber operations, due in part to our sizable presence in regions impacted by Hurricane Helene, which led to a spike in salvage volume on the market over the last two quarters. However, we expect that both volumes and pricing will improve in the second half of the year, as salvage efforts moderate and operating conditions normalize. In our Pacific Northwest Timber segment, first quarter adjusted EBITDA of $6 million increased versus the prior year quarter, as lower costs and higher net stumpage realizations more than offset, an 18% decrease in harvest volumes, due to the Washington dispositions we completed at the end of last year. Overall, we are pleased to see an increase in adjusted EBITDA in our Pacific Northwest Timber segment despite a significant reduction in acreage and volume due to our recent dispositions, which underscores the relative quality of our residual portfolio there. In our Real Estate segment, closing activity was very light to start the year, consistent with our prior guidance. Our Real Estate segment generated adjusted EBITDA of $2 million in the first quarter, down $3 million from the prior year period. The lower contribution was driven by fewer acres sold, partially offset by higher weighted average prices. Turning to our outlook for the balance of 2025. As April will discuss in greater detail later in the call, we are updating our full year adjusted EBITDA guidance to $215 million to $235 million, which excludes our New Zealand operations. Despite the relatively slow start to the year, we still anticipate consolidated full year adjusted EBITDA results generally in line with our prior guidance, after adjusting for the reclassification of our New Zealand business to discontinued operations. With that, let me turn it over to April for more details on our first quarter financial results.

Thanks, Mark. As noted in our press release, due to the pending sale of our New Zealand business, the contribution from these operations are now reflected, as discontinued operations on our consolidated financial statements, and all prior periods have been retrospectively adjusted. Moving to the financial highlights on Page 5 of the supplement. For the first quarter, sales totaled $83 million, while operating income was breakeven, and the net loss attributable to Rayonier was $3 million or $0.02 per share. On a pro forma basis, the net loss was likewise $3 million or $0.02 per share as pro forma items largely offset one another. Pro forma items in the first quarter included $2.5 million from discontinued operations, $1.7 million of costs associated with legal settlements and $1.1 million of restructuring charges. Our adjusted EBITDA was $27 million in the first quarter, down from $45 million in the prior year period. Moving to our capital resources and liquidity at the bottom of Page 5. Our cash available for distribution or CAD for the first quarter was $20 million versus $31 million in the prior year period. The decrease was primarily driven by lower adjusted EBITDA, partially offset by higher cash interest received and lower capital expenditures. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on Page 7 of the financial supplement. As Mark discussed in his opening comments, we believe that share repurchases continue to represent a compelling use of capital at our current stock price. During the first quarter, we've repurchased 95,000 shares at an average price of $27.61 per share or $3 million in total. During April, we repurchased another 404,000 shares at an average price of $24.75 per share or $10 million in total pursuant to a 10b5-1 plan. As of April 30th, we had roughly $287 million remaining on our current share repurchase authorization and are well-positioned to continue opportunistic repurchases, as we focus on creating long-term value for our shareholders. We closed the first quarter with $216 million of cash and roughly $1.1 billion of debt. At quarter end, our weighted average cost of debt was approximately 2.4%, and the weighted average maturity on our debt portfolio was approximately four years with no debt maturities until 2026. Our net debt to enterprise value, based on our closing stock price at the end of the quarter, was 16%. Pro forma for the New Zealand disposition, which should generate net proceeds of nearly $700 million, our net debt would be less than 1x the midpoint of our revised adjusted EBITDA guidance, which should afford us significant capital allocation flexibility as we move forward. I'll now turn the call over to Doug to provide a more detailed review of our timber results.

Thanks, April. Let's start on Page 8 with our Southern Timber segment. Adjusted EBITDA in the first quarter of $27 million was below the prior year quarter due to lower harvest volumes and net stumpage realizations. Total harvest volumes fell 21% versus the prior year quarter due to softer demand from both sawmills and pulp mills, the availability of salvage volume on the market in our Atlantic Region, and the disposition of our Oklahoma acreage in the fourth quarter of 2024. Meanwhile, non-timber revenue was flat as compared to the prior year period as growth in our Land-Based Solutions business was offset by lower pipeline easement revenue. Average sawlog stumpage pricing was $26 per ton, a 16% decrease compared to the prior year period, primarily due to reduced demand from sawmills, competing log supply from salvaged timber, and an unfavorable shift in geographic mix. Pulpwood net salvage pricing was 17% lower than the prior year quarter at roughly $14 per ton, driven by a combination of competing salvage volume on the market, extended spring maintenance downtime at pulp mills and an unfavorable shift in geographic mix. Overall, weighted-average salvage prices in the first quarter decreased 19% versus the prior year quarter to roughly $19 per ton. As it relates to salvage operations from last year's hurricanes, as we have discussed previously, the direct impact for our portfolio was relatively minor. However, the availability of salvage volume in our Atlantic markets has continued to be a headwind in early 2025. We anticipate that this dynamic will likely weigh on both saw timber and pulpwood pricing in the first half of the year, before tapering off into the third quarter. Moreover, in grade markets, cautious near-term outlooks from lumber producers weighed on demand and pricing during the quarter. In our Gulf markets, dry weather conditions led to ample log supply, which also weighed on pricing. While there is an elevated level of near-term economic uncertainty, we believe that the outlook for grade markets will improve over the balance of the year, as the availability of salvage volume declines and as U.S. lumber production likely ramps up in response to higher duties on Canadian lumber. To this end, we've been encouraged in recent weeks by increased demand for green logs from sawmills as supply of salvage timber has declined, and some customers are growing increasingly wary of contending with operating disruptions from processing these lower-quality salvage logs. Shifting to pulpwood. Ample supply from hurricane salvage operations in the Atlantic Region, continued dry ground conditions in the Gulf Region, and spring maintenance shutdowns all contributed to elevated mill inventories and constrained pricing during the quarter. As pulp mills ramp back up production following extended maintenance shutdowns, we are cautiously optimistic that pricing tension for pulpwood will improve in some markets. However, we also believe that tariff-related uncertainty could serve as an overhang on some customers at least over the near term. Moving to our Pacific Northwest Timber segment on Page 9. First quarter adjusted EBITDA of $6 million was above the prior year quarter, as higher net stumpage realizations and lower costs more than offset lower harvest volumes. Total harvest volumes decreased 18% in the first quarter, as compared to the prior year period, reflecting the impact of the Washington dispositions we completed in the fourth quarter. At $91 per ton, average delivered domestic sawlog pricing in the first quarter increased 7% from the prior year period, due to stronger demand from sawmills, as lumber pricing improved. Meanwhile, at $30 per ton, pulp pricing was up 3% versus the prior year quarter. Demand from domestic lumber mills improved during the first quarter, as lumber prices moved higher in response to the threat of tariffs on Canadian lumber. While lumber prices have leveled out in recent weeks, we believe that lumber producers in the region are well-positioned to benefit from potential further reductions in Western SPF supply, as higher countervailing and antidumping duties on Canadian lumber are expected later this year. Meanwhile, export markets were soft in the Pacific Northwest during the first quarter. We are cautiously optimistic there will continue to be competition for higher grade logs from Japan and Korea. However, with China banning log imports in the United States in early March, we expect less competition for lower-grade logs, as the supply is likely to flow to domestic mills, while trade tensions with China remain elevated. Due to the pending sale of our New Zealand ownership, the financial contributions from this business are now considered discontinued operations, which is detailed on Page 19 of our financial supplement. I'll now turn it back over to April to cover our Real Estate results.

Thanks, Doug. As detailed on Page 10, the contribution from our Real Estate segment during the first quarter was relatively light, consistent with our expectations entering the year. Real estate revenue totaled $10 million on roughly 1,000 acres sold at an average price of $8,300 per acre. The strong average price per acre reflects both the relatively high proportion of development sales closed, as well as the strong premiums above Timberland value that our team continues to realize on rural land sales. Real Estate segment adjusted EBITDA in the first quarter was $2 million. Drilling down, sales in the improved development category totaled $3 million with activity focused in our Heartwood development project south of Savannah, Georgia. Sales included two residential pods, totaling 78 acres for $3 million or $42,000 per acre. In addition to the upfront revenue on these sales, similar to many of our other residential land transactions, we will also benefit over time from true-up payments based on the final selling price of the homes as they are sold. Despite the increased macroeconomic uncertainty over the past few months, interest from homebuilders in both our Wildlife and Heartwood projects remain healthy, and the pace of residential sales continue to trend favorably. While we anticipate some commercial deals will take longer in the current interest rate environment, we remain pleased with the overall momentum at both projects. Turning to the rural category. First quarter sales totaled $5 million, consisting of approximately 1,000 acres at an average price of roughly $5,500 per acre. We experienced a lighter quarter for closings, following an exceptionally strong fourth quarter in 2024. However, we are optimistic that the second half of 2025, given how our transaction pipeline has been building since the start of the year. Buyer interest remains robust, despite broader economic uncertainties, and we are pleased with the momentum in our key rural land sale markets, as well as the continued interest from conservation-oriented buyers. Now turning on to our outlook for the balance of 2025. Page 12 of our supplement shows our financial guidance by segment, and Schedule G of our earnings release provides a reconciliation of our guidance from net income attributable to Rayonier to adjusted EBITDA. For full year 2025, we expect to achieve adjusted EBITDA of $215 million to $235 million; net income attributable to Rayonier of $424 million to $458 million; earnings per share of $2.71 to $2.93; and pro forma EPS of $0.34 to $0.41. Our revised guidance assumes a year end 2025 closing date for the New Zealand transaction and excludes any contribution from this business in adjusted EBITDA and pro forma EPS. Our revised adjusted EBITDA guidance reflects a slight decrease at the midpoint versus prior guidance after adjusting for the impact of reclassifying our New Zealand operations to discontinued operations. With respect to our individual segments, starting with the Southern Timber segment, we expect to achieve full year harvest volumes of 6.9 million to 7 million tons toward the lower end of our prior guidance range as we continue to opportunistically flex volume in response to market conditions. As it relates to pricing, the salvage volume entering the market following Hurricane Helene in 2024, continues to negatively impact some of our operating areas. However, we anticipate that, prime stumpage realizations will trend higher from first quarter levels, as salvage efforts moderate and operating conditions begin to normalize over the next several months. Lastly, we continue to expect a modest decrease in non-timber income for full year 2025 as compared to the prior year, which benefited from significant pipeline easement activity. Overall, we expect full year adjusted EBITDA of $135 million to $140 million, down modestly at the midpoint from our prior year guidance. In our Pacific Northwest Timber segment, we remain on track to achieve full year harvest volumes of approximately 900,000 tons. Further, we expect that full year weighted average log pricing will increase modestly versus the prior year due to higher lumber prices, healthy demand from domestic sawmills, and the anticipated impact of increased duties on Canadian lumber in the second half of the year. Overall, we expect full year adjusted EBITDA of $22 million to $26 million up slightly at the midpoint of our prior guidance. Turning to our Real Estate segment, we are encouraged by our transaction pipeline for the balance of the year, but expect closing activity will be heavily concentrated in the third and fourth quarters. We currently expect an adjusted EBITDA contribution of $5 million to $10 million in the second quarter. Overall, we now expect full year adjusted EBITDA of $90 million to $100 million, up modestly at the midpoint from our prior full year guidance. As a reminder, our revised full year 2025 guidance excludes any contribution from the New Zealand operations in adjusted EBITDA, capital expenditures and pro forma EPS. Further, the revised financial guidance assumes no financial contribution from the potential redeployment of sale proceeds. For illustrative purposes, we have also provided pro forma 2025 financial guidance on Page 13 of the financial supplement, which incorporates the pro forma impact of the New Zealand joint venture sale proceeds on the company's 2025 interest income and implied CAD, assuming that the transaction had closed on December 31, 2024. Lastly, in an effort to provide additional transparency and to better manage expectations around the quarter-to-quarter variability of Real Estate segment results, we plan to provide high-level quarterly guidance to overall adjusted EBITDA and EPS moving forward. As it relates to the second quarter, we currently expect net income attributable to Rayonier of $3 million to $8 million EPS of $0.02 to $0.05 pro forma EPS of $0.01 to $0.04 and adjusted EBITDA of $30 million to $40 million. I'll now turn the call back to Mark for closing comments.

Thanks, April. While the economic backdrop remains challenging and uncertain, our team continues to focus on creating long-term value for our shareholders throughout the economic cycle. To this end, I'm proud of how our team has navigated market headwinds while advancing important strategic initiatives designed to build long-term value per share. In the U.S. South, we ratcheted back volume in response to weaker mill demand coupled with excess supply due to ongoing salvage operations. However, as we move through the balance of the year, we are optimistic that market conditions will improve, as the impact of hurricane salvage volume subsides and as U.S. lumber production likely ramps up in response to higher duties on Canadian lumber. Meanwhile, in the Pacific Northwest, we expect timber pricing will likewise trend higher into the back half of the year in response to healthy demand from domestic sawmills and the impact of higher duties on Canadian lumber. While near-term trade policy continues to evolve, we believe that an undersupplied U.S. housing market and an eventual recovery in repair and remodel activity will be long-term positives for our timber business. Turning to real estate, despite a relatively quiet first quarter, we remain encouraged by our transaction pipeline and expect a very active second half of 2025. Overall, despite the current challenging and uncertain market environment, the longer-term outlook for our business remains promising. In addition, we continue to focus on optimizing our portfolio value by monetizing HBU properties, as well as transitioning select acreage to higher value land uses. To this end, we remain intently focused on growing our Land-Based Solutions business, and we're optimistic about the role that Rayonier can play in supporting the energy transition as the need for land, power, and decarbonization solutions continues to grow. Lastly, we're looking forward to closing the New Zealand transaction later this year, which will leave us very well positioned with significant balance sheet flexibility to allocate capital toward value-enhancing uses. In sum, while timber markets continue to face headwinds, our team is navigating the current environment with a long-term mindset, and we anticipate stronger financial results during the second half of the year. We expect to finish 2025 with a more streamlined and synergistic asset base that will be well positioned to capture outsized growth in cash flows and shareholder value over the long-term. That concludes our prepared remarks. And I'll now turn the call back to the operator for questions.

Thank you. Our first question comes from Matthew McKellar from RBC Capital Markets.

Hi, good morning. Thanks for taking my questions. I'd like to ask, first, how significant are labor constraints in logging and hauling today? How much of a bottleneck could labor be if higher duties and potential tariffs on Canadian lumber later this year do end up driving higher lumber production in the U.S?

Sure. Good morning. This is Doug. I'll start with that. Yes, I mean, labor is a constant concern. It's been our industry for quite a few years. But that said, we've also seen improvements in productivity with the equipment as time moves on. So I think we typically see that there's still enough labor out there to meet the current demand and potentially some more. But if we were to see a major increase in demand ramp up, then I believe the companies like ourselves who have long-term relationships with the logging force will see a competitive advantage at that point in time, because having access to those loggers. And I do believe that the loggers, if they saw that continued ability to have more opportunity, they can make some investments to increase their production. So I think net, net, we're in a reasonable place right now with logging capacity versus removals. But if we were to see a larger increase in removals to come forward, I do think the folks that have long-term relationships, like ourselves and others that have longstanding relationships, could see those loggers increase their capacity to meet that and would be a positive for us.

That's great. Thanks very much. Next for me, repurchase activity certainly picked up in the month of April. And I think April also mentioned that you view share repurchases continue to be attractive here. Could you maybe just provide a little bit more color around the relative attractiveness of your options for the New Zealand proceeds that you've already talked about in your opening remarks?

Yes. As noted in the remarks in the earnings release, we did buy back some stock in the last several months. Given where the stock currently sits, we think buybacks continue to represent a very compelling use of capital. So since the start of the year, we've repurchased roughly $13 million worth of stock. But recognize as well that our ability to be active in the buyback market has been somewhat constrained in recent quarters, just based on the status of the various M&A transactions that we've been working on. That said, as we discussed in the prepared remarks, we did recently enter into a 10b5-1 plan, which is a tool that allows for repurchases during periods that we might otherwise be restricted from trading. So we expect that we'll continue to be active and opportunistic in our share repurchase activity, recognizing that we have over $280 million remaining on our current repurchase authorization. And we expect to have, as you noted, significant capital allocation capacity after we close the New Zealand transaction. We'd certainly like to see our stock price higher, but we feel as though we're well-positioned to build NAV per share with our buyback program as long as this public-private disconnect continues to persist.

Great. Thanks very much. And if I could just sneak one last one in. You're expecting lower non-timber income in the South in 2025 compared to 2024. I think you'd all stuck with that previously. You mentioned pipeline easement revenues being lower, but if we set that item aside, could you maybe just walk us through what the other moving parts look like year-on-year?

Yes. The largest component of our non-timber income tends to be our hunting and recreational licenses in our Southern business. Obviously, Land-Based Solutions has been the area that we've been most focused on growing here in recent years. Pipeline easements, we had a very strong year last year in pipeline easements. So that's really the driver of that anticipated year-over-year decline in non-timber income is that we're not anticipating quite as strong of a year in pipeline easements following a very strong year last year.

Our next question comes from Anthony Pettinari from Citigroup.

Good morning. You referenced lumber customers ramping production in response to higher Canadian import duties. And would you expect that to boost log prices in 3Q or is it having an impact now? I think the duties go into effect maybe later in the summer. And just generally, when you talk to sawmill customers, are you seeing concrete steps to add shifts and ramp production in response to the duties? I'm just trying to get a sense of whether this is sort of a general sentiment or whether it's something where you're seeing customers really taking concrete steps and making investments if there's kind of any additional color you can give there?

Sure. This is Doug. I handle many of those customer interactions. I would describe the sentiment as positive. We've noticed some increased capacity, with various mills looking to secure more volumes. They've taken incremental steps to achieve this, and there have been discussions about implementing second shifts. However, what we've mainly seen so far is an expansion of existing shift work, making better use of current capabilities. While there are requests for additional labor, I haven't observed any mills committing to adding an extra shift at this point. It mostly involves maximizing productivity with what they already have. The current market uncertainty has made companies cautious, as they prefer to see how things develop before adding shifts. Nonetheless, we have witnessed real price increases in recent negotiations and sales over the last couple of weeks as sawmills aim to increase their volume.

Is that more in the Pacific Northwest or the South or both or...

Yes. Where we've seen probably the greatest change in capacity has been the South actually. So I think the Pacific Northwest had already stepped up with some of the reductions that had happened now with Canada on the prior increase in tariffs back later last year. And so, we're seeing most of this momentum now has been in the U.S. South.

Got it. And then switching gears in Southern Timberlands, you talked about the negative impact of salvage volumes in the Atlantic region. And then, you also talked about kind of a negative mix shift within regions. And I'm sorry if I missed this, but can you just remind us what that negative mix shift was within, I guess, the sub-regions? And does that reverse itself in the second half or third quarter or what is that specifically?

Sure. I can give a little more detail on that also. So yes, as you mentioned, as we talked about before that the Land of Woodbaskets really had been suffering from that glut of salvage logs in those markets. And so for example, that Southeast Georgia market, which holds our largest concentration of acres, experienced greater than 25% kind of price decline for both pulpwood and sawlogs over the past few quarters. While not as quite as drastic, the neighboring wood baskets experienced declines roughly half of that. So, we really have seen where the hurricane came through, a significant reduction. And then around that, you get that ripple effect from there. So product price decreases made up about half of that year-over-year decline in the pricing, just to give you a sense of there. Then on top of that, our products mix, as you mentioned, shifted both heavier to pulpwood overall, as we chose to hold larger sawlog stands on the stump, anticipating improved lumber markets, and shifted to a heavier percentage of thinning, which yielded a product mix impact of about 15%. So of that delta, you roughly had another 15% of that. And then, finally, not wanting to flood the Atlantic markets with just more volume when we already had plenty from salvage. We did shift some of our harvest over to the Gulf Region, but those drier conditions last to make up some deferred thinning and also some clear cuts in the normally wet areas. So as a percentage of our overall Southern harvest, the historically lower-priced Gulf Region was up 12% for pulp and 24% for sawlog volumes. In total, this yielded an impact of approximately 30% on that net stumpage decline we had year-over-year. So you can see there were a lot of moving pieces over the quarter, as we chose to defer harvest on some of our Atlantic sawlog sales, capturing that value that we believe is going to come later half in the year with the kind of improved demand that we were talking about. And we've been encouraged by those recent sawlog sales, I mentioned before. So I do see this as something that's winding down. What was unique in this hurricane is, you typically, you have initial impact of salvaging the timber that's fallen on the ground and getting that. And that typically lasts a couple of months before it goes and you can't use that anymore. And so we anticipated that, as we've mentioned before in calls. But what's also happened with this hurricane is kind of maybe a little bit different or at least the scale has been a bit different, is there was quite a bit of stands that were partially damaged and had leaning trees. And the state of Georgia is offering a $550 per acre reforestation tax credit, and they also suspended the harvest tax payments. So we're seeing is a lot of landowners chose to go in and clear cut partially damaged stands to take advantage of these. That hasn't happened in the past. So this was really good for private landowners and really is good for the forest industry in the long term to get that resource back, but it created a short-term drag kind of on price recovery. Based on our field assessments and recent mill negotiations I just mentioned, we do believe that these second salvage operations that were more than we expected, they are winding down during this quarter and do expect to see some reversal in the latter half of the year.

And Anthony, I'd just add to that that we are reasonably optimistic that, coming out of this, we could see the inverse effect where you have constrained supply in that area and that causes a sharper bounce back in pricing. I mean, without a doubt, we've been pretty severely impacted by the impact of the salvage volume on certain market areas, as well as that shift in geographic mix that Doug talked about. When we moved to those Gulf States, for pulpwood pricing in particular, the prices there are quite a bit lower. And so that geographic and product mix has caused roughly half of that overall price decline. And so the headline price declines, I'd say the reality on the ground isn't quite as dire given that a good portion of that is really just due to that shift in geographic mix. Another portion of it, we think, is pretty specifically attributable to the salvage volume, which we think we're going to be working through over the course of the next several months. So we are optimistic that going into the back half of the year, as that salvage volume gets worked through and we potentially couple that with a nice tailwind around increase in lumber duties that the setup for the second half could be quite a bit more constructive in those particular market areas.

Okay. That's very helpful. I'll turn it over.

Our next question comes from Ketan Mamtora from BMO Capital Markets.

Good morning and thanks for taking my question. Just coming back to Southern Timber, I mean, you laid out some of the factors that could help demand and pricing in the back half of the year, and I think those are all fair points. On the other hand, we're also seeing kind of a housing demand environment, which is kind of weaker than what people were expecting at the start of the year. So how do you kind of think about that? And are sawmill owners sort of recalibrating how they think about demand? Because clearly, at the start of the year, expectations was that rate cuts will happen and demand will improve, but hasn't really happened. So curious kind of how you balance those two things?

Yes, a lot to unpack in there, Ketan, because recognize there are a lot of moving pieces here. Look, these last couple of quarters in particular have been pretty challenging. But recognize that some of these headwinds that we're contending with right now, we do think will be transitory in nature. As we talked about, specifically the impact of salvage volume following Hurricane Helene, has pretty significantly weighed on pricing in some of what are our largest market areas. So as we discussed in the prepared remarks, we expect that this overhang is going to moderate over the next several months. And again, as we just discussed, geographic mix was also a pretty significant driver, as we shifted our harvest into those Gulf States where pricing is lower. That translated to some of that price decline as well. With all that said, the longer-term pricing trends in the South, as you noted, certainly haven't materialized as most market observers would have anticipated in, call it, last 5, 10, 15 years. We did see a pretty significant uptick in timber pricing in the wake of the pandemic, but those pricing gains certainly haven't sustained here. I think part of the reason for this, and I believe we talked about this in the last call as well. In the wake of the pandemic, there's also quite a bit of market dislocation, including the mortgage lock-in effect that really translated to a dearth of resale activity, as well as the repair and remodel pull forward effect in the midst of the pandemic, where we saw a lot of that R&R activity getting pulled ahead. So all of that translated to a relatively lackluster repair and remodel market over the last couple of years, which did disproportionately impact Southern Yellow Pine pricing. It certainly felt like markets were beginning to normalize to some degree. And I think we've seen some evidence of this in the pricing gains that we've seen in Southern Yellow Pine over the last several months as well as the convergence in pricing that we've seen in Southern Yellow Pine and SPF. We recognize that part of the effect of that pandemic dislocation was we saw a pretty wide disconnect develop between SYP and SPF lumber pricing. Of course, more recently, we've seen markets rocked by tariff uncertainty, and it's still unclear how this might more broadly impact mortgage rates, home affordability, and ultimately new construction activity. Overall, we're still very optimistic that long-term fundamentals, including what we see as a significantly under-built and aging housing stock, those fundamentals should support growth in housing starts, lumber demand, and ultimately timber pricing over the long term. But at least for now, I think we're going to have to wait and see how trade policy and the overall economic outlook evolve in the coming months before we have much visibility into the likely near-term trajectory of timber prices.

Yes. I would just add kind of on a local flare to one of your questions about saw millers and how they're potentially rebalancing. The uncertainty kind of on tariffs that Mark mentioned, I think we've mentioned this for all some calls. But with regards to kind of offshore lumber imports, so excluding Canada, nearly one-fourth of those imports come in the State of Florida and about half of it comes to the South Atlantic market. So we're seeing sawmill owners in this area, particularly kind of Southeast Georgia, Northeast Florida, who are anticipating that there will be action taken against lumber coming out of Europe. And that would really benefit quite a few of our customers. Right now, that lumber comes in, as mentioned before, kind of the middle part of the States and has a freight advantage going once it lands here in the States. And so, we've seen kind of a balancing, where they're concerned and there's that kind of tempered, as I mentioned before, about how the starts look like. But there's that same opportunity where, well, if less wood does come in and just the threat of tariffs seems to have slowed down, we've seen a slowdown in those offshore lumber imports coming in, that creates new opportunities too. So we talk about the South not being homogeneous and consistent. There's cases where that's also the case depending on where different imports and things come in and out. So it's a lot of moving parts at this point in time to understand how it looks, just a little bit of local flavor to those sawmill decisions they're making.

Yes. That's a very helpful perspective. And just my follow-up, curious any kind of update you guys have for us with regard to the natural climate solution, whether that is solar or carbon capture?

Yes, sure. Typically, we'll provide updates when we have large things that have happened. I think, as we mentioned before, we're very happy we sit with 154,000 acres in CCS lease and still work on new opportunities going forward there. So we remain optimistic about the CCS. And I guess it's not something that's directly impacted us yet, but what we've seen is, important in the industry is kind of the pulp and paper area. We're seeing this building push for incorporating carbon capture storage and mineral operations in the U.S. and this has been going on for over a year, these discussions. But we're really encouraged by Microsoft's announcement in April that they're pre-purchasing 3.7 million tons of carbon dioxide from a pulp mill in Louisiana. And the magnitude of those CDR or carbon dioxide removal credits as well as potentially for the 45 tax credit that can amount to simply an increase in the mill's EBITDA. And the reason we're able to do this is that the carbon dioxide is biogenic that's coming from the fiber as part of that pulping process. And this technology is directly transferable to pulp and paper mills across the United States, but particularly where there's that positive geology. So we think this is really a positive development for the industry. It helps diversify the mill's revenue stream and provides us potential customers for our CCS program. So that's kind of a newer area of growth, although like I said, negotiations have been going on for a long time. But to see that first deal come through, I think is important for the industry and is a good step. So, on balance, we feel good about the progress being made on the land that we leased and the prospect of getting additional acres under. We're moving those forward as we go. So really as we discussed before that, the lease payments are great, but that step change in economics that occurs once injection start happening and that's still several years away. On the solar front, no significant changes relative to where we stood at year end, but the acres under option for lease have continued to trend in the right direction to start the year, and we've added a couple of thousand more acres in the first quarter. And we're still continuing to see momentum build across our footprint. So kind of no matter how you look at it, solar capacity continues to grow pretty significantly as to meet the projected energy demands that we've seen for the future basically. And I think most folks agree we need an all-of-the-above approach. So we're still seeing strong interest in the pipeline in that area also.

Got it. That's very helpful. I'll turn it over. Good luck.

I'm showing no further questions at this time.

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

That concludes today's conference. Thank you for participating. You may disconnect at this time.