Rayonier Inc. (RYN) Earnings Call Transcript & Summary

All right. Thank you very much, everybody. We are live for the 10:00 session. Happy to introduce to you Rayonier Inc. for you. My name is Buck Horne. I'm the housing analyst at Raymond James as well as covering residential real estate. And now all things timber is part of our ongoing holistic approach to housing, and how housing is going to affect, we think, the market for wood products, and timber going forward as part of our -- what we've described as a single-family super cycle that we think is a multiyear runway for increased housing production, which is going to benefit a lot of different things downstream besides just homebuilding, including, we think, the market for timber. And of course, we're happy to introduce to you, Rayonier. They are the best-performing timber REIT year-to-date, second largest timber REIT by market cap in the index that's in the public markets right now. And we've got David Nunes, the CEO of Rayonier; and Mark McHugh, the CFO, here to help run through a few slides. And we'll do a quick company overview and some recent trends highlights to go through with you. We will do a Q&A session right after that. [Operator Instructions] Happy to weave in any of those questions that you may have into the discussion. And we've got about a 40-minute window. So I'm going to stop talking now and hand it over to David, who will dive into the presentation and pick it up from there. So with that, thank you. David?

Great. Thanks, Buck, and for those of you following along, what we're going to do is, in our investor deck, we have an introductory section called Rayonier Today, starting on Slide 2. We've got about half a dozen or so slides. I'll walk you through those fairly briskly. Some of you may be familiar with them, some not. But it will give you a decent sort of background of the company. And then we'll just turn it back over to Buck, and we'll go right into the questions. So I'm starting on Slide 3 of our deck, which is Rayonier at a glance. As buck mentioned, we're a timber REIT. We're the largest REIT that is a pure-play timber, meaning we don't have downstream manufacturing. We have 2.7 million acres in the U.S. and New Zealand. One of the things that is unique about our timber REIT is that we're the only ones that disclose a sustainable yield. And for us, that's 11 million tons. This is the yield that we can produce into perpetuity. And that's a very important thing in terms of managing timber to make sure that what you're harvesting today can be harvested into the future. It's very much a key part of how we think about sustainability. We've been very busy in a number of years. We were involved in a spin-off of Rayonier's downstream pulp business back in 2014. Since that spin-off, we've acquired $1.6 billion of timberland properties with the most noteworthy one being this last year, where we acquired resources in May. We have a total of 400 employees. We've been around nearly 100 years. All of our lands are third-party certified either with SFI in the U.S. for both FSC and PEFC in New Zealand. As a pure-play timber REIT, we've got a fairly balanced distribution of our EBITDA. Last year's adjusted EBITDA of $267 million, had a nice mix of 37% of that in the U.S. South, 13 in the Northwest, 19 in New Zealand. And then the balance was in our Real Estate segment. The Real Estate segment is a key part of our strategy of basically trying to sell lands at above values for timber. And then turn around and recycle that capital into growing our business. We have a very simple mission, and it's really -- it's not to be the biggest, but it's simply to have the best returns across the sector. So turning now to Slide 4. This is a distribution of where our lands are held, the 2.7 million acres. We have 1.7 million of those in the U.S. South, and that's consistent of 4 states in the coastal region of Florida, Georgia, South Carolina and Alabama. And then we have Gulf region, which has Texas, Louisiana, Oklahoma and Arkansas. We also have 0.5 million acres in the Pacific Northwest, with the vast majority of that in Washington and the balance in Morgan. And then we have a little over 400,000 acres in New Zealand that's distributed across 5 geographic regions within New Zealand. We're the only timber REIT with that exposure to New Zealand, which we think is very key as it relates to competing in China. On Slide 5, this looks at what -- when we refer to the pure-play timber REIT, how this is different from a cash flow standpoint. And so you can see there on the left, this looks over a 3-year period 2018 to 2020. Looks at the EBITDA contribution and composition between timber cash flows and other, which for us, is the real estate. And so that's at about a 70-30 mix over that 3 years. And this contrasts with our peer group, which is about a 40-60 mix. And that's really because our 2 largest peers, Weyerhaeuser and Potlatch, a large manufacturing divisions. And while that has been very helpful for them in recent times, keep in mind that those manufacturing cash flows are very volatile. And I think that's one of the things that we feel having a pure-play timber REIT is very advantageous and that you've got a lot less volatility of cash flows going forward, which is important as you think about how to fund a dividend through time. Slide 6 gives you a little bit of our portfolio highlights. Some of the things that we can talk about in more detail in the Q&A. But in the upper left, this looks at our U.S. South EBITDA per ton, which leads the sector, and the reason that it leads the sector really has to do with where our footprint is. Over 60% of our portfolio is in the top quartile markets that have the strongest pricing, and we have no volume or no lands in the bottom quartile markets. And so that's something that we work at very hard in terms of actively managing that portfolio. That's one of the benefits you have as a pure-play, a REIT like this, where you can more actively buy and sell land than you can when you've got a manufacturing facility, and you're trying to hold on to land to source that. On the upper right, we look at our sector-leading HBU realizations. Since we had the spin-off in 2014, we've put a real emphasis on selling lands that are -- have a demonstrable premium over the underlying timberland value. And I think that you can see that here relatively to the peer set, where average values are really more akin to selling timber at timberland prices, whereas we really feel that it makes sense to sell lands when you get a decent premium. On the lower right is our -- lower left, excuse me, is our harvest profile. All the acquisitions that I touched on earlier, the $1.6 billion since spin-off. This has started to translate into a meaningful lift in our sustainable harvest. So we've gone from roughly a 10 million-ton harvest over the last 5 years, and we're shipping to a 11 million-ton harvest over the next 5 years. So we're very excited about that. You can see the impact that the Pope transaction has had as well as our growth in the U.S. South. On the lower right, this is something I think is unique to Rayonier, and that is we have a unique exposure to the China market. And this is really across all 3 of our segments, where nearly 40% of our volume out of New Zealand is sold into that market and roughly 10% out of the Northwest and approaching 5% in the U.S. South. And so we feel like we're very happy heavily levered to the China market. We think that's important. And that China is the largest consumer of softwoods in the world, and we think we're very well positioned to continue to capitalize on that exposure. Slide 7 looks at our strategic priorities. I think that one of the things that we like to stress for folks is that these priorities were established back in 2014 after the spin-off. And they're the same as they were back then. And that makes sense when you think about the fact that we're in a very long-lived asset here. And so your strategic priorities shouldn't change all that much over time. So those 5 elements of that are managing for long-term value. We're very focused on this. We design our harvest strategy around that sustainable yield, as I discussed earlier. We balance off the biological growth, harvest cash flows as well as responsible stewardship in doing so. We have a bias towards acquiring high-quality timberlands. I think there's a lot of hype around just growing a large asset base. And we really have a bias towards having higher quality lands. We feel that that, that derisks your portfolio over time. And in general, you have more optionality when you've got highly productive lands in strong markets. And so we're always looking to improve that. And that gets to the next element, which is optimizing the portfolio value. We're always looking to optimize values and when we see strong pricing, but also looking for opportunities to create value and enhance long-term value through the way we manage our lands, the way we manage our non-timber income. The next element is focusing on quality of earnings. And then the last is the best-in-class stewardship and disclosure. And these are things that we felt very, very passionately about that there's not been -- this is a sector that has generally not had very good disclosure in the past. And we're really trying to change that by having in depth disclosure around our sustained yield, around our inventory and around our markets so that investors can make more informed decisions going forward. And just yesterday, we released our first-ever carbon report. And I'd encourage you to go out to our website and look at that. It's the most comprehensive assessment of carbon to date out of the sector. And we've been working on this for the last year. We're very excited to be finally releasing that to the market. Slide 8 looks at our capital structure and financial policy. We have a very solid balance sheet with a lot of our maturities pushed out. We increased our debt modestly when we acquired the resources asset. We're generally targeting a 4.5x net debt to adjusted EBITDA ratio. You can see on this chart, the extension of the maturities. We have a very advantageous capital cost of 3.1% on a weighted average basis. 100% of our debt is fixed. And so we feel that we're very well positioned down the road for changes in the debt market as a result of that. And then the last slide that I'll touch on is our approach to capital allocation. We feel very strongly that you need to be nimble as it relates to capital allocation. We work very hard within our organization to retain that nimbleness because you really don't know the things that are going to present themselves to you, and you want to be ready. And so just looking at kind of the 5 pillars of capital allocation, investing in our business is the first. We invest $35 million annually in silviculture and regeneration. We have a strong focus around going after the highest IRR type of opportunities. And as well, we make targeted investments to unlock HBU value. And this is really in our Real Estate segment, where we have a few improved development projects that are really designed to add value to our broader portfolio. I touched already on the second pillar of acquisitions of what we've acquired. We really look whenever we have an acquisition to have a complementary age-class profile and that's very important in calculation of your sustained heel, and we're always looking to improve our portfolio, site index and inventory stocking through time. We have participated in both share buybacks and equity issuance in the years since spin-off in 2014. We've issued a total -- or excuse me, we've repurchased a total of 4.7 million shares at a price of $23.84. And then we've issued a total of 6.8 million shares at a weighted average price of $28.15. We have also, as part of the Pope transaction, introduced an UPREIT structure. And this is the first time this has been done within the timber space. As part of that effort, we issued 11.6 million shares of OP units to complete that transaction. So we're very excited about that tool. We think it's a great tool to continue to add to our portfolio. And then the next pillar is dividends. We generally have had a stable dividend. We've increased it modestly by 8% back in 2018. This has really funded from recurring timber cash flows and real estate operations. Cash flows, we exclude our large dispositions from our CAD calculation, and we define large dispositions as any large sale of timberland that doesn't go for demonstrable premium. We strip it out of our EBITDA calculation in our CAD, just to give a more true sense of the cash flow being generated for the business. And then lastly, managing our balance sheet. As I mentioned earlier, all of our debt is fixed at an average rate of 3.1%, and we feel that really helps position us well going forward. So with that, I'm going to turn it back over to Buck, and we'll dive into your questions.

All right. Really appreciate that. It's great over you. Well, let me start the discussion just on the near terms of things that may have happened more recently. So I guess it wouldn't be a timber discussion without a weather update. So we have had some interesting weather across the U.S. South, a lot of snow and ice in Texas, but also just a lot of really, really wet, rainy weather across the Southeast. How is that potentially creating any challenges near term or any operating disruptions that we should be aware of through the first quarter?

Yes. I think, generally, it's been very -- as you say, it's been very wet. It's been wet pretty much across the country. It's not just the South. It's been in the Northwest. We've seen very wet conditions. And those will absolutely have an impact on the ability to operate land. And so we would expect to see some impact from a volume standpoint. But there's a flip side to the weather piece, which is that we invest a lot in our road networks. And so we often -- it sounds somewhat counterintuitive, but we often look for wet weather conditions to put out timber sales because most of our competitors don't have full access to their lands in wet weather conditions and so they're off limit and so mills will get short of supply. And so we regularly have a series of timber sales kind of teed up, and we look for these wet weather events. And we will put volume out to capture that. And that's an area that our stumpage program really works as designed to capture some of those upsides. So certainly, there will be some near-term impacts in terms of just operability across the country, but we don't see it as anything that's going to be very long in duration.

Okay. That's helpful. Great update there. So appreciate the weather update. Let me turn our attention a little bit more to higher-level topic, and I think a lot of the investors are keenly watching these lumber prices as we're breaking new records almost every day now and demand. Certainly, housing demand has gotten off to a roaring start. No signs of any changes there. So you got a lot of, whether it's builders or repair and remodelers, everyone's still going full steam supply chain in the sawmills as tight as probably we've ever seen. But of course, what I think a lot of investors wonder is, when does that really great pricing tension and translate downstream into the actual stumpage in the logs and, of course, the U.S. South. Now you mentioned that you focus on these higher or top quartile submarkets. And I think that's a really important distinction. So when could we see better pricing tension? Or how do you think pricing tension plays out from here in the Rayonier submarkets versus maybe other parts of the U.S. South that still have some biological supply issues?

Yes. And that's -- and you're right. It's -- because it is very differential. And this is one of the things that we have stressed to folks over time, is that your -- the South is not a homogenous market. It added -- it increased its overall inventory from roughly 3 billion tons to 4 billion tons since the GFC. But that was very unevenly distributed. And what we're seeing today, if you fast forward, is there's big differences between the best markets and the worst markets. In the best markets, the top quartile markets are on the coast, the Atlantic Coast region. And part of the reason that they're strong is they've got very strong underlying pulpwood demand. And so if you don't have good pulpwood demand, you're not going to have pressure -- pricing pressure on your other products. And that's one of the reasons that you see in the weaker markets in the interior part of the Gulf South, for example, where you don't have the strong pulpwood takeaway. You see all the pricing pressure sort of removed from the bottom. And so we're fortunate, and it's certainly by design that we have heavier mix of our product mix in those top-quartile markets. 61% is in top few markets in the U.S. South. And that's not an accident. Conversely, we have no volume in the lowest-quartile market. And that's why when we see our results, we're already seeing the price elasticity associated with stronger lumber pricing because those markets are already relatively balanced and a growth terrain sense as well as pricing tension. And then in addition, you have the more recent impacts associated with export markets in the U.S. South. Those export markets are also concentrated in those same strong coastal markets. For us, that's primarily Savannah and Jacksonville. And so those markets are adding additional tension into the southern markets, not unlike what you've seen in the Northwest in Washington state, where you've got a strong export presence there, providing additional tensioning into the market.

Yes. That's a great point. So just to clarify. You think -- pulpwood pricing, do you think pulpwood actually kind of leads on the way up in terms of price elasticity and then sawtimber kind of follows that? Or is it inverted in terms of how you think about demand?

Well, I think what it is, there's been a big focus over years on the sawtimber component. And -- but you don't grow solid -- you don't grow all sawtimber. Sawtimber is a portion of the tree. And if you harvest that tree, and you can't sell the other portions of the tree, the chip and saw, the pulpwood volume, that affects your overall stumpage value that you're getting for that particular stand or that acre. And so I think there's been a disproportionate focus around the sawtimber pricing. People haven't paid as much attention to the pulpwood piece of it, but recognized in the U.S. South, you have a much higher component of overall pulpwood volume, out of your stand than you do say in the Northwest. It's closer to 50-50 versus the Northwest, it's more like 80-20 or 85-15. And so you have to pay attention to that. And I think that, where you have strong pulpwood markets, you are -- it's putting price pressure on your chip and saw, which then puts price pressure on your sawtimber. Conversely, when you go to weaker markets in the U.S. South, we're seeing sawtimber sell for what, is what chip and saw sells for in stronger markets. You're seeing chip and saw sell for what pulpwood is sold in stronger markets. And the pulpwood volume itself is -- goes across the income statement, almost no value. And so that's why we put so much emphasis when -- in terms of instructing people to look at the markets is, you won't have a strong market unless you've got strong underlying pulpwood demand because of the proportion of your mix that, that represents.

Yes. That's a great point. So I really appreciate that clarification. That's a great point. I'd love to dive into one of the unique features of Rayonier, you highlighted your exposure to international export demand in the China markets in particular. What's happening in Asia right now in terms of creating some pricing or adding to pricing tension in New Zealand or the Pacific Northwest? I mean I think there is some sort of standoff between Australia and China right now. And how is that kind of affecting demand out of New Zealand and pricing? And if there's -- just kind of address some of those international trends, and what's happening there.

You bet. And this is an important thing to remember is what's a global commodity, and it flows in lots of different directions. And I think that one of the benefits we have is being a direct seller into the Pacific Rim markets. We have a pretty good sense of how those markets are evolving. And so you've got a number of factors going on right now. You touched on a few of them. But keep in mind, if you go back a year, COVID started in China. So China felt the first effects of shutdown, inventories built up to record levels. And it really wasn't until the latter part of 2020, where we saw those inventories return because while China was the first to shut down, they were also the first to open back up. And so when they did open back up, they drew those inventories down, and we ended last year at a very healthy level of inventories in China, which has translated into strong demand, really across the world. Now at the same time, you had this trade dispute with Australia. And in Australia, keep in mind, has supplied roughly 10% of the volume in -- of softwood log exports -- imports from -- to China come from Australia. So that volume has dried up. There was a ripple effect where that volume had to go to other markets like India or Korea, and that created a lot of opportunities really across the board for filling that void. Also, what has occurred at the same time is, Russia has announced that starting at the end of this year, they will no longer allow log exports into China. So Russia has been a declining source of volume of softwood logs into China, but still a substantial source. And so those are 2 very positive elements, offsetting those is large flows of salvage volume coming from Europe. Europe is now the second leading supplier of softwood logs into the China market. But that's a very temporary feature. We expect this year to be the peak volume of these European supplies. After that, it's going to tail off. And Europe may end up being a source of demand for our logs in the future because it's had a huge effect on a number of forces in Europe. And so you have a lot of moving parts. Now peeling this back a little bit further, you have to look at how the various species are used in different markets. So for example, radiata pine, one of the reasons that is doing so well right now is that it's used in China differently than volume species coming out of the Northwest, about 1/3 of the volume of radiata goes into peeling or plywood [ nears ]. And so that's a market that, for example, the European spruce can't supply. And so another component of radiata is in the furniture components. And so those 2 reasons make radiata demand somewhat unique and uncorrelated in China relative to others. Then you have sort of general construction type usage. And this is where the European volume, the Pacific Northwest volume and to some extent, the Southern volume, they'll all compete with each other at a pricing standpoint. The -- one of the reasons that you're seeing U.S. South exports grow to China in addition to filling the void from Australia is that like the U.S. South those products take treating chemicals very well. So there's a growing treating market in China that is really well tailored to that southern volume. So we're using the expertise that we have developed over the last couple of decades, with our New Zealand joint venture, and we're expanding our export footprint from the U.S. South and the Northwest to try to capitalize on these flows. And it benefits us as a timberland owner because we're adding and introducing pricing tension into our markets, whether it's the U.S. South or the Northwest. So that's why we're very excited to have that expertise in our New Zealand operation, and it benefits not only those lands, but our lands in the U.S. as well.

That's a really thorough and helpful discussion. And that's a great update. I appreciate all the detail there. I think that answers most of my international questions at this point. Let me shift over to kind of the HBU and Real Estate segment. And I'm curious if -- and we've seen such a structural shift in the housing markets. And as a lot of trends are now shifting, whether it's the population migration that's happening into the Sunbelt markets, the suburbanization, people are willing to move further out, not having been so clustered into urban city centers and maybe it increases demand for rural areas or maybe areas that necessarily wouldn't have been developed -- or economic to develop for commercial real estate purposes or otherwise now seem to be on the radar screen. So I'm just wondering how do you see this housing dynamic affecting some of your HBU acreage? Are you getting any interest -- new interest from developers that would look at some of your land on that I95 corridor or otherwise that could be utilized for new projects?

Yes. I mean we're seeing demand really across the spectrum in our Real Estate segment increase. And so keep in mind, we sort of think about our real estate in some different buckets. We have our baseline, higher and better use land sales, rural land sales. And this is where you're taking a piece of land that might be a small ownership. You're sort of selling it as is. It will generally go for either a home site or a recreational site and that demand has been strong. Because of -- it's increased because of COVID. Then kind of moving up the food chain, we have areas where we might have a larger lock of land, but it might have a nice road frontage. And there, we've made modest investments in partializing that land, putting in driveways, doing some things, and we call that a rural places. And that demand, we can't keep those lots in inventory as soon as we put those on the market, they disappeared. And so we've grown that business aggressively over the last number of years and the demand feels very insatiable right now. It's very impressive how fast that is absorbing projects. And we have an improved development. And this is areas where we see justification in making investments in the entitlements. And the entitlement investments tend to take a long time to come to fruition. And where we see an opportunity to make those investments, but not necessarily develop the land, where we recognize that there's enough surrounding development where we then take that entitlement -- that entitled land, and we put it out to market. And again, to your points, those properties, when we have them, those have been absorbed pretty readily into the market. And then the sort of the last piece, which is the smallest from an acreage standpoint, it probably gets a lot of attention is the improved development. And this is really where -- in the South, where we have 2 projects, one north of Jacksonville, one south of Savannah. And reason that we're going into this effort where we're taking that entitled land and actually catalyzing the demand by being the developer is that we have 20,000 acres in a contiguous ownership. It's frankly too large to extract higher and better use across that ownership. So what we're doing is we're developing it on the edge and proving that out. And as we prove it out, that's where we're seeing that incremental demand that you're touching on from the national homebuilders. And so we started that in Wildlight. And we've completed largely the first phase of that. As we get into secondary phases, we're seeing more and more interest. We just announced Wildlight, the transaction with Del Webb, and we're very excited about that. We've been working on that for a few years. Public's just got announced as part of that project as well this past week. And so that project is kind of picking up ahead of steam. And we're seeing much more demand by builders. In our Savannah project, we just opened up a new I95 interchange. We have property on both sides of that interchange. We have an industrial park to the West. We have a mixed-use community to the East. And the opening up of that exchange has really ramped up the interest in the industrial parcels. These are all parcels that serve either by truck or rail to the port of Savannah, which is one of the more competitive ports in the U.S. South. And then we have this mixed-use community, which has very good schools. We donated some land for construction of schools, and we're primed really to capitalize on some of these housing dynamics in that market. And then with the acquisition of Pope Resources, we've added lands and in the Puget Sound. Pope has a strong presence in the West Puget Sound market, west of Seattle. There are projects that are accessible with high-speed passengers-only ferries that are making that west Puget Sound area an affordable suburb of Seattle, and you add all of the COVID overlay, where people are working more from home, and we've seen an explosion of demand in that particular market, which historically, didn't enjoy the same dynamics as the broader Seattle market. So you put all of that together, we feel like our Real Estate segment is really well positioned to capitalize on some of these trends. And as I mentioned earlier, we take these premiums that we get, and we're basically plowing that in to buying more high-quality timber projects over time.

Yes. That's fantastic. Yes. I mean that's lots of good news to talk about there. And how many acres are in Washington or in that Puget Sound area that that could be developed for possible uses. How large of a position is that?

The Pope real estate portfolio was roughly 2,000 acres. And keep in mind that Washington has very restrictive growth management rules. So it's not something that we could take, say, 125,000 acres that Pope owns and say, we can call it real estate. You have very restrictive kind of zoning rules around that. And so -- but that few thousand acres is pretty valuable stuff in part because of those restricted rules. And so really, our task is in unlocking that value over time.

Absolutely. It's incredibly -- the housing, geographically constrained development market in the Seattle area. And of course, demand is still outstanding up there. So that's a great project to keep an eye on. So with the opportunity growing there in terms of being able to maybe sell some assets, recycle capital, and we are starting to see some M&A activity perk up, some transactions are finally flowing again in the timber markets. Maybe it's a function people are able to get out in the field and do a little bit more underwriting. We saw Weyerhaeuser acquired some acreage in Alabama. What do you think, as you look out, I mean, are you seeing some deals that are becoming more attractive at this stage? I mean where would you be looking to buy or sell out of? And what makes some sense in terms of how to look at the portfolio over the next year or so?

Yes. So I think you're right on those points. Clearly, during COVID, we saw an inability to get out and do on-the-ground due diligence on larger transactions. And so we saw a decline in the number of those larger transactions on the market. And now that we're starting to see some easing, we're seeing more of those types of transactions starting to come to market. And so that's a trend that's going to touch on both the Northwest and the U.S. South. And as we look at market -- and I also think this is an important time. A lot of the lumber producers are pretty flush with cash. They're looking to place that. I think right now, though, you've got to be pretty judicious about how you think about where to deploy that capital. And so we still have a bias towards smaller bolt-on type transactions. We think that there's a, less competition for those. We tend to go after things that are very complementary to our existing ownership base, whether it's an age-class structure or an operating footprint. And so we're always on the prowl for those kind of under-the-radar types of transactions and had a pretty steady [ diet ] of those even during this COVID period really across all 3 of our segments, looking for those kind of opportunities. I think the larger opportunities, it's really going to be a function of where does that true inventory sit. And that's where you do need that on-the-ground due diligence. And that will continue to play a pretty important role in discerning a good property from other properties. We're looking really all the time at properties we could sell and properties we could buy and to try to, in a net sense, improve the portfolio. So at any time, we've got in all of -- all 3 of our geographies, sort of a sense of properties that we're looking at potentially selling and properties we're looking at potentially buying for the right reasons. But we're going to stay disciplined. I'd say that for us, the Pope transaction was a fairly large transaction. I wouldn't expect that to be a regular occurrence for a company like ours.

Okay. Perfect. Well, we got about a minute or 2 left. I did want to just ask and make sure we cover with that introduction of this carbon report. Apologies, I haven't glanced at all the highlights myself, but if you could give us maybe the 60-second or 90-second overview of some of the key highlights and findings of that report. And just how you think about the impact of ESG and the environmental standards and how timber plays a role on that. Just, yes, any thoughts on the highlights of that report, I'm sure [indiscernible] would love...

I mean there's been -- this has been a big subject of late. A number of folks have issued, I would say, subset information of their carbon profile. We, kind of consistent with our approach on transparency of our timber assets, we felt it was important to have a very holistic approach on carbon. So this is the most comprehensive assessment of carbon to date within the sector, where we've looked at the carbon that is sequestered really in all aspects of our ownership, the soils, the woody debris, the trees, and we've looked at that across all 3 of our key geographies. And then we've looked at that and what we call a balance sheet sense, a snapshot in time, what did it look like. And this was from 2019 data. We've been working on this for about a year, getting all the science, right? All the science in this is science that is publicly verifiable science. And so we have a very detailed footnote section in this report. And so we have determined that balance sheet out of carbon, over 700 million metric tons in our lands at the end of 2019. And then we looked at the income -- so what we call the income statement approach, which is how much carbon did we sequester in a net sense this last year. So we had -- we sequestered 14 million, 15 million metric tons. But then you have emissions associated with operating those lands, and we were the first one to do a full scope 1, 2 and 3 of those emissions. And then we looked at the carbon that was resident in the products that we removed from those lands, the logs. And then we took that a step further and said, all right, a portion of those product mixes are going into different applications, whether it's lumber or linerboard, all of those have a different profile and time, how much carbon they sequester over time. So we built all of that in, looked at it across a multi rotational sense. And we think that this now represents a good kind of starting point for having a discussion around how to think about carbon. And so in a net sense, we're sequestering a little over 7 million metric tons of carbon per year in addition to the carbon that's resident in the products that we sell to our customers. So we're excited to have this out and to be starting this conversation with the number of [indiscernible]

Yes. A fantastic piece of data and starting point to further this discussion and to be more important going forward. So -- but I'm going to have to leave it there. We're over our time. But thank you, guys, for a wonderful discussion. Thanks to all the investors for joining us. I apologize for going a couple of minutes over, but it's a great discussion to have with a fantastic team. So if you've got questions, please follow with me, and I will hand over and put you directly in touch with David or Mark or the rest of the team. Thanks to everyone. Have a great conference, and have a great day. We'll talk to you soon.