Prompt:
Human: The non-GAAP financial measures provided should not be utilized in isolation or considered as a substitute for measures of financial performance prepared in accordance with GAAP.
Also note that the content of this conference call contains time-sensitive information that is accurate only as of today.
The company does not intend and undertakes no obligation to update this information to reflect subsequent events or circumstances.
Finally, today's call is being recorded and will be available on the company's website later today.
Though we are closely monitoring the latest Delta variant of the coronavirus, the entire organization has been energized to see the reopening of the economy, continued strength in the housing market and exceptional performance and growth in our business.
Strong operating income and rising portfolio valuations drove exceptional financial results for the second quarter, including GAAP earnings of $0.66 per diluted share, well in excess of our $0.18 per share dividend for the second quarter.
This contributed to a 6.5% increase in our GAAP book value to $11.46 per share at June 30th.
The results we've generated thus far in 2021 are reflective of a business that can expand profitably, while successfully serving it's mission of making quality housing accessible to all American households.
As you know this mission emphasizes borrowers whose needs are not well served by government loan programs or potentially not at all.
Our residential and business purpose lending teams together target the non-agency mortgage market, the segment of the market that many who recently ignored in large part due to the absence of Federal Reserve stimulus.
The non-agency market represents the residential mortgage universe outside of government-backed mortgage programs.
By targeting this market rather than a specific borrower profile as we had in the past, our business is not tied to the direction of the homeownership rate.
Instead Redwood now offers a comprehensive product mix that serves both non used to be consumers and housing investors alike, and it's a big market.
Many of forecasted residential non-agency origination volumes have significantly increased in 2021 from the $435 billion of originations in 2020.
That's only beginning to reflect the potential from a regulatory pullback for non-owner occupied loans, something that can provide a significant tailwind to our sector going forward.
Our results remain strong in the second quarter despite market conditions that were significantly more challenging than they were in the first quarter.
Rising interest rates reemerged in the residential lending space, largely as the result of uncertainty and whether the Fed will alter it's support for the agency mortgage market.
The sharp competitive forces that arose as a result along with the corresponding decline in refinance activity triggered a contraction in margins across the industry.
Exaggerating the effects of strong competition were signs of pro-cyclical and supply chain inflation with the shift in yield curve driving significant hedging and execution costs for those managing large mortgage pipelines including for us.
Against this backdrop, in the second quarter, we still locked close to $4 billion of jumbo loans at margins in the high end of our historical target range.
The business purpose lending market also became more crowded in the second quarter with new competitor using the rate sheet to buy their way into the space, particularly for lower balance bridge and rental loan products.
The shift out of apartment living and toward single family detached homes as a trend had shown no sign of ebbing despite the recent reopening of most major metros.
This has led to a shortage of high quality homes with aggressive demand from both investors and consumers alike.
In many regions rent growth has been significantly outstripped by home price appreciation highlighting the scarcity value of quality housing in the multiple constituencies focused on acquiring single-family homes.
Leveraging a well-earned reputation as a nimble and reliable lifecycle lender, CoreVest our BPL platform eclipse $500 million of fundings for the quarter and a balance of single family rental and bridge originations.
The sustained performance through this challenging backdrop showcased our strategic foundation and is the essence of what makes Redwood unique.
Our mortgage banking businesses offer highly complementary products that drive durable earning streams.
And our investment portfolio continues to offer significant upside as the economy recovers.
Our credit discipline and ability to create our own assets remain key differentiators.
Our strategic foundation has facilitated returns that are significantly outpacing our growing dividends.
In the first half of 2021 approximately 70% of Redwood's adjusted revenue was driven by our mortgage banking operations with the remaining 30% from our investment portfolio.
We expect mortgage banking and by extension our taxable subsidiaries to continue to be a strong earnings driver going forward.
The revenue generated through mortgage banking is nearly double the percentage contribution of recent years and highlights the ongoing shift in our business model as we adapt to changing market conditions.
It also supports continued expansion of book value over time, the retain earnings acting as a zero cost avenue for capital formation that has reduced our marginal need for funding and stands in contrast to others in the space, manage their balance sheets.
By continuing to reinvest in our infrastructure, both organically and through partnerships our path to realizing transformative scale is clear.
Across our enterprise, we've cultivated a talented and inspired workforce, we have embraced technology to serve our customers more quickly than ever before.
One great example of this approach is last quarter's launch of our early stage investment platform RWT Horizons.
This is something Dash will touch on in more detail.
As we look ahead, we continue to raise our game, invest in our people and infrastructure and attack our markets with the service standard that continues to separate us from our competition.
We're excited by recent changes in the regulatory landscape that have made the non-agency mortgage market more relevant than it's been in many years.
Our goal is to build a business that serves an important public mission and scale profitably and generates a very attractive return profile for our shareholders.
Our second quarter results reflect continued strategic progress and strong operating momentum.
While our comprehensive non-agency market footprint benefited from ongoing strength in the housing and credit markets, we coupled these macro tailwinds with homegrown ingredients, both new and familiar.
Our team's usual crisp execution was complemented by meaningful progress with our technology infrastructure, both organic and through new partnerships already bearing fruit.
In sum, the final product was another quarter of significant outperformance.
As Chris referenced, benchmark rates remain an area of acute focus for the markets.
The uptick in rates during the second quarter has almost fully retraced, however, uncertainty around the level of government support for agency mortgages may very well moderate the amount of borrower refinance activity, we typically see in this kind of rally.
Against this backdrop, it's important to unpack the key drivers of profitability across our platforms.
As Chris noted, the markets we serve continue to grow as the path of home prices, evolution and consumer demand for housing, and important regulatory trends are driving an expansion of non-agencies true potential footprint.
And while we're not immune from moves in MBS prices versus benchmark rates, our diverse distribution channels and unique product mix allow us to benefit from different drivers of demand.
Case in point, while margins compressed elsewhere in the market during the second quarter we enjoyed durability in our margins with sustained strength in volume across both residential and business purpose lending.
In fact an ebb in demand for agency mortgages represents another potential tailwind for our business.
Mortgage originators are still ramping up capacity to address the pent-up demand from jumbo borrowers, and as home price appreciation has increased nationwide along with consumer preference for single-family detached rental housing, our suite of BPL offerings remains in high demand and our residential business geographic footprint continues to expand.
Our equity is now at its highest level in at least a decade pushing more loan demand above the conforming loan limits and into Redwood's addressable market.
As we note in our updated investor supplement, there are now 13 states in which we have a lot more loans year-to-date than in each of the two years prior to the pandemic.
Collectively, locks in these states represent 35% of our year-to-date volume, a trend we continue to track with great interest.
Overall market observers now forecast single family home price appreciation for 2021 to be 14% and 16% for existing and new homes respectively.
Even if this moderates is expected into 2022 we expect the trend to continue of more locations across the country evolving into non-agency markets.
Another key driver is the regulatory environment.
The evolving rules are likely to meaningfully increase the Qualified Mortgage or QM cohort a significant boon for high quality expanded credit borrowers.
Furthermore, caps in place since earlier this year on GSE purchases of non owner-occupied loans could expand on non-agency market by an estimated $25 to $35 billion per year.
And there is likely more of the non-agency market can do to help address broader access to credit and the associated impact on first time homebuyers and low-to-moderate income borrowers overall.
Also critical to the equation is the availability of high quality rental housing including single family detached, an issue solved in part by an increase in custom built projects.
As we discussed on prior calls, housing supply has not kept up with demand and building material costs moderating remain high contributing to significant price escalation on home.
Single-family homes for rent can meet the demand for expanded space in desirable neighborhood at a monthly payment that more consumers can afford.
Reflecting these supply demand dynamics, single-family rental occupancy rates remain at record highs with a weighted average of 95% for all US single-family rental homes, and single-family rents have remain meaningfully more than multifamily rents since early last year.
Our second quarter results reinforce this broader backdrop.
Operating highlights for the quarter included reaching our second highest level of jumbo locks ever and our highest BPL volume since late 2019.
As Brooke will elaborate on book value increased 6.5% driven by a mix of asset appreciation through fair value changes and retained earnings from mortgage banking income earned at our taxable REIT subsidiary.
Collectively, our platforms distributed $3.6 billion of loans through direct loan sales and 4 securitizations.
Following a historic first quarter, our residential business registered $3.9 billion of lock volume in Q2.
As anticipated, purchase money loans were a key driver and represented a 60% share of the quarter lock volume.
Despite the interest rate backdrop and competitive pressures impacting GSE eligible production, the business delivered margins at the high end of our historical target range of 75 to 100 basis points reflecting the diversity of our distribution channels and strength of our pipeline management amid broader market volatility.
During the second quarter, we sold $1.8 billion of loans and completed 3 Sequoia securitizations for $1.5 billion.
While we saw moves in rates during the quarter and a dramatic flattening of the yield curve after the June Fed meeting, the end-to-end coordination and efficiency with which our teams function remain a true competitive advantage.
The flexibility of our securitization program coupled with whole-loan distribution facilitates further scale as collectively they allow us to be in the market consistently.
During the second quarter, we were once again faster to market than the competition and distributing our pipeline.
Another encouraging metric was the contribution that Redwood Choice, our expanded prime product made to volumes.
Choice represented 15% of our locks in the second quarter, up materially from 5% in Q1.
Choice represented as much as 40% of our locks pre-pandemic, a reminder of how meaningful this channel can be.
In recent public remarks we continue to emphasize changes to the QM rules that we believe will be a key tailwind to Choice's reemergence.
If adopted safely the new roles focus on mortgage rate as the determinant of QM status will allow another sleeve of high quality borrowers to qualify more easily for competitive rates, an important step that underscores the true potential of the non-agency market to serve a deeper bench of consumers.
We are actively engaging with our seller base to bring this to fruition.
These macro trends also reflect meaningful talents for CoreVest, our business purpose lending platform.
The second quarter was particularly productive in BPL as we advanced several key initiatives, most notably completing our strategic investment in Churchill Finance.
CoreVest originated $527 million overall in the second quarter, up 37% from Q1.
Our funding mix consisted of $312 million of single family rental loans and $215 million of bridge loans.
Bridge production was up over 60% from Q1, an increase for the fourth consecutive quarter driven by increased usage by borrowers on lines of credit and several build-for-rent and multifamily loans coming online for funding.
The origination mix for BPL.
In the second quarter reflects the strength of our multi-product strategy, which results in high levels of repeat borrowers, including those that utilize more than one of our loan products.
In all, 67% of total originations in the second quarter were from repeat customers and the pipeline remains strong with a consistent mix of new loans and refinance opportunities.
SFR production remains strong in the second quarter with fundings up 23% from Q1.
As we discussed on our last call, the pipeline remains robust and execution has benefited from increasingly constructive securitization market.
We completed our first broadly syndicated CoreVest securitization of the year in April.
achieving all time tights on credit spreads with a deep bench of investors.
That record proved short-lived.
Last week's follow on transaction once again priced at all time tights including a spread of 57 basis points on the AAA-rated securities.
As we've seen many times before, this type of execution inevitably breeds additional competition, which we view as an opportunity for CoreVest to continue differentiating itself as the BPL market's lender of choice.
We have high expectations for our forthcoming refresh client portal, especially it's new user interface, which will make it even easier for our clients to upload documents and track progress of their loans.
Additionally, we continue to press our advantages as a nimble lifecycle lender, we're finding a product suite to continue serving the end-to-end needs of a deepening cohort of sophisticated housing investors.
Highlighting this progress is our partnership with Churchill which we expect will diversify our sourcing channels with a particular emphasis on smaller balanced single-family rental and bridge loans.
We have now closed our first purchase of bridge loans and SFR loans from Churchill and see an attractive near-term pipeline to complement our direct lending products.
In periods of increased competition, it's important to reinforce the value of an institutional platform like CoreVest in a market that in many ways is still developing.
We have now completed optional calls on two CoreVest securitizations, refinancing many of the underlying loans with a platform made 5 or more years ago.
Many borrowers have now been with the platform for at least that long as CoreVest continues to support their growth and evolution.
That sort of track record matters and has immense intangible value on the field of play.
Our newest initiative RWT Horizons is doing its part and keeping pace with our enterprisewide progress.
Since formally launching Horizons earlier this year, we have completed 5 investments in our assessing an exciting pipeline of new opportunities.
Most recently our direct investments include liquid mortgage, a platform focused on leveraging blockchain technology to bring efficiencies to the non-agency market, and a tech enabled residential construction management firm.
At this early stage, it's exciting to witness tangible progress with our new partners.
Liquid mortgage recently procured a key patent covering the vast majority of its business plan, a big step in our collective efforts to apply blockchain technology to the non-agency ecosystem.
Rent room and rent butter also both had productive quarters and are meeting or exceeding their planned product development and rollout initiatives.
Most critically these partnerships reflect the intellectual collaboration that drive true alpha for all parties involved.
We are engaging directly with liquid mortgage and developing the work streams required to safely put mortgages on blockchain, and together are working to engage other key stakeholders across the industry.
For rent room and rent butter two investments sourced through CoreVest borrower network, we are facilitating synergies with our broader client base.
We're thrilled to be working shoulder to shoulder with those standing on the frontier of innovation in our markets.
As previously noted, our second quarter 2021 results reflect the durability of our model and continued strength across our entire platform.
We reported GAAP book value per share of $11.46 at June 30th, a 6.5% increase relative to the prior quarter end.
The primary drivers of the $0.70 increase in book value per share or GAAP earnings of $90 million or $0.77 per basic share, partially offset by our quarterly dividend of $0.18 per share.
We are pleased to have maintained a strong momentum for the first quarter, generating a total economic return on book value of 19% for the first half of 2021.
Our economic return spotlights not only our growth in book value, but also to our growth in our dividend which we raised by another 13% in the second quarter.
These are particularly strong results this quarter from our business purpose mortgage banking operations, which delivered a 52% after-tax operating return on capital with the net operating contribution of $20 million, which is up 80% from Q1 on a 37% increase in origination volumes.
Income from residential mortgage banking operations decreased from historic first quarter level while still delivering an after-tax operating return of 17%.
Even as loan purchase commitments were down 22% Q2 still marks our second highest volume on record.
To reiterate Dash's point, gross margins remained at the high end of our historical target range despite a challenging macro backdrop the impacted securitization execution and increased hedging costs relative to the first quarter.
Turning to the investment portfolio, we had $49 million of positive investment fair value changes primarily from our RPL assets, even further spread tightening, and improved credit performance this quarter which I'll expand upon shortly.
Net interest income increased approximately 20% or nearly $5 million from the first quarter of 2021 due to higher average balance of loans and inventory at our operating businesses, higher yield maintenance income from SFR securities, growth in our bridge loan portfolio and a decline in interest expense from our investment portfolio.
Shifting to the tax side, we had retaxable income of $0.11 per share versus $0.09 in the first quarter, primarily on higher net interest income.
Our taxable REIT subsidiaries earned $0.27 per share in Q2, down from $0.47 in Q1.
The decrease was primarily driven by lower mortgage banking income, partially offset by lower operating expenses and resulted in a $5 million lower tax provision for the quarter.
On a combined basis, our operating businesses generated an annualized after-tax return of over 28% in Q2, utilizing $483 million of average capital.
As a reminder, these earnings can either be reinvested back into our operating businesses or paid as a dividend to the REIT.
This quarter we continued our focus on higher margin businesses that produced strategic asset for our investment portfolio.
Specifically, we deployed $45 million of capital to Brisbane during the quarter and $50 million to SFR securities in core loans.
Year-to-date we've net reduced the size of our third party investment portfolio through opportunistic sales.
Working capital for our mortgage banking businesses represented less than 30% of our allocated capital, but produced approximately 65% of our adjusted revenue for the second quarter.
As Chris mentioned, the proportion of adjusted revenue from our mortgage banking operations has been growing in recent years and has facilitated returns that are significantly outpacing our growing dividends.
Total portfolio returns rose by a combination of improved credit and faster prepayment speeds on securities we hold at a discount to face value.
Higher prepayment speeds continue to benefit these portfolios and allow us to accelerate our call options within Sequoia and CoreVest Securities.
We settled the call rights on three Sequoia securitizations and one capital securitization during the second quarter, acquiring $83 million of seasoned jumbo loans and $45 million of seasoned SFR loans all at par, which benefited book value by $0.05 per share.
We estimate about $250 million to $300 million of expected call activity across capital and Sequoia through the remainder of the year and we estimate at current market conditions the underlying loans can generally be sold or resecuritized well above their par value creating further potential upside to earnings and book value of approximately $0.68 per share for 2021.
Furthermore, we project another $2 billion of loans that could become callable by the end of 2024 with the majority of those currently expected to occur by the end of 2022, and that could potentially add another $0.63 to $0.65 per share on average to book value depending on execution.
Net delinquencies in our portfolio continue to improve with new forbearance requests near zero.
Specifically Choice and RPL securities experience improved 90-day delinquencies during the quarter with select remaining flat from Q1 and absolute low levels of 80 basis points.
It's worth noting the improved delinquency trends with our RPL securities portfolio experiencing 60-day delinquencies now below pre-COVID levels, and voluntary prepayment speeds continue to well exceed our original modeled expectations.
LTVs in the portfolio are low and continue to improve or hold stable and average coupons aren't excess of our current mortgage rate which should provide options to help distressed borrowers and keep actual losses low.
At quarter-end, our balance sheet and funding profile were in excellent shape following several liability and capital management actions taken during the quarter.
We added over $750 million of financing capacity to support growth of our operating platforms including the refinance of a $242 million bridge loan financing which contributed to a roughly 100 basis point cost of funds improvement for our overall investment portfolio.
Importantly, the second quarter marked another record for Redwood with combined $3.3 billion of residential whole loan sales and securitizations underscoring our ability to source and distribute in side.
Our recourse leverage was marginally higher at 2.2 times at the end of the second quarter as we incurred additional warehouse borrowings to finance higher loan inventory.
At June 30th our unrestricted cash was $421 million, which is over half the size of our outstanding marginable debt, and at quarter end, our investable capital was $175 million, not including $100 million of incremental capital generated from a secured term financing we closed in early July.
I'll close with an update on our 2021 financial outlook.
We continue to see upside potential in our book value from here both from anticipated call activity in our investment portfolio and through our ability to grow and retain earnings at our taxable REIT subsidiary.
We encourage you to review the supplemental quarterly materials we published earlier today, which provide more detailed and refresh guidance for the remainder of the year to highlight some of the key inputs that support our financial narrative.
Confidence in our ability to achieve our guidance of grounded in a sustainable trend we're seeing across our businesses.
As Chris and Dash have outlined, the key themes that will drive our performance include, increasing our wallet share using technology to drive efficiency, allocating more capital to our higher ROE operating platforms, continuing to create value through the investment portfolio and using partnerships M&A and other growth strategies to further efforts in our target markets.
As we look ahead, we remain on track to keep pace with the robust volumes we've seen through the first half of the year anticipating another $6 to $8 billion of jumbo lock and approximately $1 billion of BPL originations for the second half of the year, which would have nearly doubled the volume of that business year-over-year.
For perspective, the second half volumes on the residential front approach our full year volume just a couple of years ago.
We've demonstrated our ability to successfully grow not only our origination volume, but also our market share and we believe we can continue to do that across our platform and in each of their underlying channel.
Small changes in market share can have a meaningful impact to our overall profitability and scale and that's what we're planning to do over time.
For the remainder of the year, we anticipate generating an adjusted return on allocated capital between 20% to 25% from our mortgage banking operations, and 10% to 12% for the investment portfolio.
As credit spreads have tightened fairly significantly and fair values have since increased this forward yield on the investment portfolio, which is in line with our forecast at the beginning of the year reflects improvements in our financing costs and capital optimization.
And finally, in terms of the potential sources and book value upside we began the year with $444 million of net accretable discount in our portfolio, and even after growing book value of $1.55 per share or roughly $175 million since that time we have approximately $2.60 per share or $300 million of remaining discount in the portfolio that we have the potential to recognize over time.
 Assistant:

Chosen response:
q2 gaap earnings per share $0.66.
gaap book value per common share was $11.46 at june 30, 2021, up 6.5% from march 31, 2021.


Prompt:
Human: They are also referenced on Page 2 of our financial supplement.
With that, let's start our teleconference with opening comments from Dave Nunes, President and CEO.
First, I'll make some high-level comments before turning it back over to Mark McHugh, Senior Vice President and Chief Financial Officer to review our consolidated financial results.
Then I'll ask Doug Long, our Senior Vice President of 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 outlook for the balance of 2021.
We are pleased to report that the encouraging momentum we experienced across all our businesses to start 2021 continued into the second quarter.
Specifically, we generated adjusted EBITDA of $95 million and pro forma earnings per share of $0.22 per share.
Adjusted EBITDA exceeded the prior-year quarter by 21%, as favorable results in each of our timber segments more than offset lower adjusted EBITDA in the real estate segment.
As we reflect on the second quarter, the operating environment was markedly improved as compared to the prior year period.
We're pleased with how our team continues to capitalize on strong domestic lumber markets improving, real estate market trends and export market opportunities.
As Mark will discuss in greater detail based on our solid first half results and our expectations for the balance of the year, we are modestly raising our 2021 adjusted EBITDA guidance.
Drilling down to our different operating segments, our Southern Timber segment generated adjusted EBITDA of $31 million for the quarter, which was 16% above the prior year second quarter.
Net stumpage prices increased 14% which more than offset a 4% reduction in harvest volumes as weather conditions impacted productions across the South.
In our Pacific Northwest Timber segment, we achieved adjusted EBITDA of $14 million, an improvement of $10 million versus the prior year quarter.
This sharp increase in adjusted EBITDA was driven by a 30% increase in delivered saw timber prices stemming from favorable domestic lumber markets and increased log export demand as well as higher volumes following the merger with Pope Resources.
In our New Zealand Timber segment.
Second quarter adjusted EBITDA nearly triple to $28 million.
The year-over-year increase in adjusted EBITDA was due to both significantly higher harvest volumes as the second quarter of 2020 was severely impacted by COVID 19 related headwinds and weighted average log prices and increased 51% as a result of robust export and domestic log demand.
In our Real Estate segment, we generated adjusted EBITDA of $29 million, down from $45 million in an exceptionally strong period last year.
The decline versus the prior year quarter was driven by a 61% reduction in acres sold, partially offset by significantly higher per acre prices.
Importantly, our real estate team closed significant transactions in both our Wildlight and Belfast Commerce Park development projects during the quarter.
Switching gears from second quarter results, I'd like to provide an update on the Timber Fund business that we acquired last year through our merger with Pope Resources.
Two weeks ago we announced that we had sold the rights to manage to -- of the Timber Funds, as well as our co-investment stake in both of these funds.
The aggregate purchase price was $35.9 million and the transaction will be reflected in our third quarter financial results.
As we had previously communicated the private equity timber funds business was not a long-term strategic fit for Rayonier.
We believe this transaction reflects a favorable outcome for our shareholders.
As it allows us to simplify our operations and allocate capital to other strategic priorities.
Following this transaction, we continue to manage, as well as own 20% co-investment stake in one Timber Fund comprising 31,000 acres in the Pacific Northwest.
Since this fund is at the end of its investment term it was not included in the sale transaction rather we have commenced a process to liquidate the assets from this fund, which if successful will complete our exit from the fund business.
Let's start on Page 5 with our financial highlights.
Sales for the quarter totaled $291 million, while operating income was $84 million and net income attributable to Rayonier was $57 million or $0.41 per share.
On a pro forma basis, net income was $31 million or $0.22 per share.
Pro forma adjustments for the quarter were primarily associated with a large disposition in the Pacific Northwest, as well as a series of debt actions that I will discuss momentarily.
As Dave touched on second quarter adjusted EBITDA of $95 million was above the prior year period as higher results across all of our timber segments more than offset a lower contribution from our Real Estate segment.
On the bottom of Page 5, we provide an overview of our capital resources and liquidity at quarter-end as well as a comparison to year-end, our cash available for distribution or CAD for the first half of the year was $111 million versus $80 million in the prior-year period, primarily due to higher adjusted EBITDA, 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 8 of the financial supplement.
Consistent with our nimble approach to capital allocation, we raised $81 million through our at-the-market equity offering program during the second quarter an average price of $36.79 per share.
As previously discussed, we view the ATM program as a cost-effective tool to opportunistically raise capital strengthen our balance sheet and match fund bolt-on acquisitions.
We are also active in the debt market during the quarter taking steps to address our 2022 bond maturity, improve our debt maturity profile and lower our weighted average borrowing cost.
Specifically in May, we issued $450 million or 2.75% senior notes due 2031.
Additionally while currently remains undrawn.
We executed a credit agreement for a delayed-draw term loan for up to $200 million, which if utilized would mature in 2029.
We also obtained an amendment to lower the interest rate on the term loan we have maturing in 2026 and amended the terms of the debt we assumed in the Pope acquisition to make this debt, unsecured.
Furthermore, we also lowered the pricing of our revolving credit facility as well as extended its maturity by year to April 2026.
A portion of the proceeds from the May debt offering were used to completely repay a $250 million term loan that was due in 2025.
Additionally, given our strong cash position, following the large disposition completed during the quarter we prepaid $100 million of the term loan that matures in 2026 reducing the outstanding balance to $200 million.
In conjunction with these actions, we recorded a $2.2 million loss associated with the termination of an interest rate swap as well as cost of $1.1 million related to debt extinguishments and modifications.
Collectively, these items translated the $0.02 per share, a pro forma adjustments in the quarter.
Looking ahead, we believe the actions taken during the quarter help to facilitate an optimal capital structure and leave us with ample liquidity to fund the repayment of our 2022 bond maturity early next year.
Pro forma for the repayment of our 2022 bond maturity, we expect that our weighted average cost of debt will drop below 3% and our weighted average maturity will extend to roughly seven years.
Moreover, almost all of our term debt has been swapped to fixed, which gives us strong visibility on our forecasted interest expense.
Lastly, by tapping into the bond markets at an advantageous time we preserved additional debt capacity within the farm credit system providing us with increased future financing flexibility.
In sum, we closed the quarter with $310 million of cash and $1.4 billion of debt, both of which exclude cash and debt attributable to the Timber Funds segment which is non-recourse to Rayonier.
Our net debt of $1.1 billion represented 17% of our enterprise value based on our closing stock price at the end of the second quarter.
Let's start on Page 9 with our Southern Timber segment.
Adjusted EBITDA in the second quarter of $31 million was $4 million above the prior year quarter.
The year-over-year improvement was largely attributable to higher net stumpage pricing albeit partially offset by lower harvest volumes.
The 4% decline in volume during the second quarter was largely due to wet weather resulting in lost production days.
This modest decline in volume though was more than offset by higher prices.
Specifically, average sawlog stumpage pricing was roughly $28 per ton, a 10% increase compared to the prior year quarter.
Improved pricing strong demand from sawmills as well as improved export log demand in certain markets.
Pulpwood pricing climbed 14% from the prior year quarter, reflecting robust customer demand, coupled with tighter supply due to wet weather conditions.
A favorable mix shift toward our Coastal Atlantic markets also contributed to the strong year-over-year comparison.
Overall weighted average pine stumpage prices increased 14% versus the prior year quarter due to higher sawtimber and pulpwood prices as well as a more favorable mix of sawtimber.
We are encouraged by the pricing gains registered during the quarter.
Which underscore the importance of local timber market dynamics across the USL and the construction of our portfolio across those markets.
Moving to our Pacific Northwest Timber segment on Page 10.
Adjusted EBITDA of $14 million was $10 million above the prior year quarter.
The year-over-year increase was largely attributable to significantly improved pricing due to strong domestic lumber markets and the incremental pension created by healthcare export demand.
Second quarter harvest volume was 4% above the prior year quarter due to additional volume from last year's merger with Pope Resources.
At $98 per ton, our average delivered sawlog price during the second quarter was up 30% from the prior year quarter.
Strong pricing was sustained throughout the quarter.
Even as lumber prices preceded from the record levels set in May.
In part due to the pricing support created by stronger export market demand meanwhile pulpwood pricing fell 21% in the second quarter relative to prior year quarter.
As sawmill residuals remain plentiful and that increased lumber production.
As it relates to the export market in Pacific Northwest improved demand we discussed on our last call has continued into recent months.
The constricted flow of European Spruce salvage logs, the ban on Australian log exports to China and an improvement in Japanese demand have all contributed to a favorable environment for log exports from the region.
And we have seen more inventories in China rise in recent weeks.
We believe these forces continues for healthy demand for log exports Pacific Northwest.
We've continued strong demand for domestic sawmills as well as the attention created by the flow of Pacific Northwest marks in the export market will translate into a relatively stable pricing environment in the second half of the year.
While we are closely monitoring the correction in lumber prices, we believe the underlying log demand remains healthy.
In particular, demand for green logs remained robust given the supply disruptions caused by wildfires, and other regions.
On that note, I'd also like to offer a few comments regarding the risk wildfires across parts of the Western United States.
Thus far, none of our properties have been seriously threatened by the fires that have impacted the region in 2021.
As a reminder, none of our fee timber properties were impacted by last year's fires, either on the roughly 10,000 acres of timber fund properties sustained fired image.
While there continues to be upward pressure on higher cost in the areas that have been directly impacted by fires over the past year, our operations have not been materially impacted from the salvage efforts conducted by others.
Page 11 shows results and key operating metrics for our New Zealand Timber segment.
Adjusted EBITDA in the second quarter of $28 million was nearly triple the $10 million that we reported in the prior year quarter.
The increase in adjusted EBITDA was driven by a much stronger pricing and then more normalized level of harvest activity versus the prior year period constrained by COVID 19 disruptions.
Increased volumes and pricing were partially offset by reduced carbon credit sales.
We continue to defer credit sales during the quarter as we expect that the value of these credits this poised for further price appreciation.
Turning to pricing, average delivered prices for export sawtimber jumped 50% in the second quarter from the prior year period to $148 per tonne, reflecting improved China demand the ban on a strain log exports in China and the reduced flow of European Spruce salvage logs into China.
As we've previously noted, prior to the ban Australia was applying approximately 10% of the total volume imported by China.
Furthermore shipments of European Spruce salvage logs in the China may constrained by higher transportation costs and the lack of container availability.
These constraints on the flow of logs into China.
When coupled with the healthy demand translated an exceptionally strong export pricing in New Zealand.
Underscoring the favorable pricing environment A grade log export prices to China surpassed previous record highs during the second quarter.
As reaching record levels, though there has been a pullback in pricing in recent weeks as demand for Radiata logs has softened in response to higher log inventories in China.
Shifting to the New Zealand domestic market average delivered sawlog prices increased 27% in the prior year period to $85 per ton.
The increase in US dollar pricing was driven primarily by foreign exchange rates and New Zealand domestic pricing improved by more modest 9% in the second quarter versus the prior year quarter.
Average domestic pulpwood pricing declined 35% as compared to the prior year quarter.
In sum, while we expect lower pricing over the balance of the year, our New Zealand operations continue to generate strong net stumpage realizations.
We believe we are well positioned to continue to capture market share from Australia and Europe and the export market as well as benefit from strong domestic demand.
I'll now briefly discuss the results from our Timber Funds segment.
Highlight on Page 12 Timber Funds segment generated consolidated EBITDA of $8 million in the second quarter on harvest volume of 185,000 tons.
Adjusted EBITDA, which reflects the look through contribution from the Timber Funds was $1 million.
As discussed earlier, we are in the process of extinguish Timber Funds business expect contribution from this segment will be negligible moving forward.
Lastly, in our Trading segment we reported $400,000 of adjusted EBITDA in the second quarter.
As a reminder, our trading activities typically generate low margins in our primarily designed to provide additional economies of scale for fee timber export business.
As detailed on Page 13, our Real Estate segment delivered strong results in the second quarter, second quarter real estate sales totaled $75 million on roughly 17,000 acres sold, which included a large disposition in Washington consisting of roughly 8500 acres.
Excluding this transaction, second quarter sales totaled $39 million on roughly 8,000 acres sold at an average price of $4900 per acre.
Adjusted EBITDA for the quarter was $29 million.
Sales in the Improved Development category totaled a record high $19 million in the second quarter as we closed significant transactions within both our Wildlight and Belfast Commerce Park development projects.
In our Wildlight development project north of Jacksonville, Florida sales included a $9.1 million sale of 130 acres to a national homebuilder for the first phase of an active adult community.
Due to post closing obligations roughly $5 million of revenue from this transaction was deferred and will be recognized in future periods.
The addition of an active adult community is a significant milestone for the Wildlight project as it adds a complementary market segment, which we believe will help to catalyze additional downstream demand.
In addition, we closed on 36 residential lots in our Wildlight project for $2.3 million or $65 per lot.
Meanwhile, in our Belfast Commerce Park development project south of Savannah, Georgia, we sold 153 acre parcel to a national developer of industrial properties for $7.9 million or $51,000 per acre.
Overall, we are pleased with the demand for entitled infrastructure served land that is translating into additional momentum across our development projects.
We remain encouraged by the pipeline of opportunities in Wildlight, Richmond Hill and the West Puget Sound area of Washington.
In the rural category sales totaled roughly 7700 acres at an average price of just over $2600 per acre, a nearly 100-acre sale in Georgia to the Conservation Fund comprise the bulk of our second quarter activity.
More broadly, demand for rural land remains healthy as the space privacy and recreational opportunities offered by these properties continue to attract buyers.
We are well positioned to capitalize on these demand trends moving forward and remain focused on achieving price realizations well above timberland values.
We also closed on a conservation easement sale covering 18 acres in Washington for $4 million in the second quarter.
The property covered by this easement was in the Town of Port Gamble, which was acquired as part of the merger with Pope Resources.
Lastly, if we closed on a large disposition in Western Washington during the quarter for $6 million roughly $100 per acre.
This roughly 8500-acre property was a relatively less strategic holding for us in the region and was sold through a competitive bid process.
Now moving on to our outlook for the year.
Based on our solid first half results and our expectations for the balance of the year, we are raising our full-year adjusted EBITDA guidance to range of $300 million to $320 million, which reflects a 3% increase at the midpoint from our original guidance.
In our Southern Timber segment, we now expect full year harvest volumes of $5.9 million to $6.1 million tons as production has been constrained by regional weather conditions and trucking availability.
We expect that weighted average pricing will remain above prior year levels, driven by continued strong demand from domestic pulp and lumber mills, as well as improving export demand in select US South markets.
However, we are seeing higher trucking costs which could limit the upside and net stumpage realizations over the balance of the year, we are taking measures to mitigate the upward pressure on these costs by optimizing whole distances on our deliberate log sales and targeting stumpage sales to customers with great advantages.
Overall, we expect full-year adjusted EBITDA of $118 to $122 million and our Southern Timber segment a modest increase from prior guidance.
In our Pacific Northwest Timber segment we are maintaining our full year volume guidance of $1.7 million to $1.8 million tons, along with our full-year adjusted EBITDA guidance of $50 million to $55 million.
We expect pricing in the region, we remain relatively stable as long demand across both the domestic and export markets remains favorable.
In our New Zealand Timber segment, we are maintaining our full year volume guidance of $2.6 million to $2.8 million tons.
Given the robust start to 2021, we now expect full-year adjusted EBITDA of $78 million to $82 million.
That said, we expect relatively lower export pricing over the second half of the year as log inventories in China have increased significantly in recent weeks.
Further, we anticipate that shipping and demurrage costs will remain elevated.
In our Real Estate segment, we now expect full-year adjusted EBITDA of $78 million to $86 million.
We expect a strong second half of the year in this segment given the healthy demand for residential and commercial properties within our real estate development projects, as well as continued strength in rural land sales activity.
Overall, we're very pleased with the quarter and optimistic about our outlook for the balance of the year.
As I reflect on the last 18 months.
I'm very proud of how our team has successfully navigated pandemic related disruptions and integrated Pope Resources, while also continuing to execute on several other strategic priorities.
To this end, in the second quarter, we continue to improve our portfolio through both addition and subtraction.
We opportunistically recycled capital out of a non-strategic timberland holding in Washington State while also closing on a total of $22 million of bolt-on acquisitions.
These portfolio moves have helped us improve our positioning in the strongest softwood log markets in the US and New Zealand, which should help us grow both cash flows and value per share over time.
Subsequent to quarter end, we also closed on the sale of two Timber Funds, an important step toward exiting a private equity fund business that is not a strategic fit for Rayonier.
Meanwhile, the benefits of the strategic investments we've made on the real estate front, are being increasingly realized as quarterly improved development real estate sales reached a record high in the second quarter.
Furthermore, we took steps to optimize our cost of capital and better position our balance sheet for long-term growth by accessing both the debt and equity markets during the quarter.
In addition to achieving important operational and financial goals, we also continue to embrace the increased interest from stakeholders in our environmental social and governance practices.
As previously discussed, we believe our mission of providing industry-leading returns while serving as a responsible steward of the lands is well aligned with key ESG principles that we're looking to advance.
Building on the inaugural carbon report we published earlier this year, we are planning to release a comprehensive sustainability report in the coming weeks, which will further enhance our ESG disclosures.
Overall I continue to be impressed by the dedication and focus of our employees as they work together to better position Rayonier for long-term success.
 Assistant:

Chosen response:
q2 pro forma earnings per share $0.22.
q2 earnings per share $0.41.
anticipate full-year net income attributable to rayonier of $98 to $106 million, earnings per share of $0.69 to $0.75.
anticipate full-year pro forma earnings per share of $0.51 to $0.57, and adjusted ebitda of $300 to $320 million.


Prompt:
Human: They are also referenced on page two of our financial supplement.
With that, let's start our teleconference with opening comments from Dave Nunes, President and CEO.
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.
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 updated guidance.
We're very pleased to report our strongest quarterly adjusted EBITDA result since our separation into a pure-play timberland REIT in 2014.
We Specifically, we generated adjusted EBITDA of $115 million and pro forma earnings per share of $0.35 per share during the third quarter.
Adjusted EBITDA exceeded the prior year quarter by 71%, fueled by solid contributions across our timber segments as well as an outsized contribution from our Real Estate segment due to the closing of two significant development transactions.
We continue to capitalize on healthy domestic timber demand in the U.S., favorable log export pricing in New Zealand, and robust real estate market trends in the third quarter.
However, wet weather conditions and trucking shortages in the U.S. South constrained production during the quarter, while production in New Zealand was negatively impacted by a government-mandated shutdown in response to an outbreak of COVID-19.
Given these headwinds, we were very pleased with the results delivered by our team.
As Mark will discuss in greater detail.
Based on our performance over the first nine months of the year and our outlook for the balance of the year, we're modestly raising our full year 2021 adjusted EBITDA guidance to a range of $320 million to $330 million.
Drilling down to our different operating segments.
Our Southern Timber segment generated adjusted EBITDA of $24 million for the quarter, which was 7% below the prior year quarter.
We were encouraged to see net stumpage prices increase by 16%, but this lift in pricing was more than offset by 20% reduction in harvest volumes due to wet weather conditions and trucking shortages.
In our Pacific Northwest Timber segment, we achieved adjusted EBITDA of $13 million, an improvement of 38% from the prior year quarter.
This increase in adjusted EBITDA was driven by a 15% increase in sawmill (sic) sawtimber prices as domestic lumber markets remained favorable.
In our New Zealand Timber segment, third quarter adjusted EBITDA increased 10% year-over-year to $20 million.
Favorable pricing more than offset, a significant increase in export shipping costs as well as 14% lower production volumes due to the government-mandated shutdown, which prohibited harvest activity throughout the country during a two-week period in August.
In our Real Estate segment, we generated record adjusted EBITDA of $64 million, up from $22 million in the prior year period, as we closed on a $38 million Unimproved Development sale in Kingston, Washington, and a $25 million improved development transaction in our Belfast Commerce Park project south of Savannah, Georgia.
Switching gears from the third quarter results, I'd like to provide an update on our Timber Fund business, which we acquired last year through our merger with Pope Resources.
As we previously communicated, the private equity timber funds business was not a good long-term strategic fit for Rayonier.
I am pleased to report that we have now completed our exit from the timber fund business.
During the third quarter, as previously announced, we sold the rights to manage Timber Funds, III and IV, as well as our co-investment stake in both funds for an aggregate purchase price of roughly $36 million.
We subsequently entered into three separate agreements to sell the remaining Fund II Timberland assets for an aggregate purchase price of $157 million.
Note that one of these transactions closed on September 30, and is reflected in our third quarter financial results, while the other two transactions, closed on October five and November 1, respectively, and will be reflected in our fourth quarter financial results.
All said, based on Rayonier's 20% ownership interest in Fund II, and factoring in the repayment of Fund II debt, proceeds to Rayonier from the sale of Fund II assets, will be roughly $24 million.
In addition, we expect to receive a carried interest incentive fee with respect to Fund II of approximately $14 million.
Overall, we view this as a favorable result for the sale process, particularly given the negative impact that last year's forest fires had on roughly 10,000 acres of Fund II and Fund IV properties, in Oregon.
We believe, the successful sale of our co-investments in Funds III and IV, and as well as the properties in Fund II, represent a positive outcome for our shareholders as the wind down of the fund business allows us to simplify our operations, and allocate capital to other strategic priorities.
Let's start on page five with our financial highlights.
Sales for the quarter totaled $365 million, while operating income was $123 million, and net income attributable to Rayonier was $76 million or $0.53 per share.
On a pro forma basis, net income was $50 million or $0.35 per share.
Pro forma adjustments for the quarter were primarily associated with a large disposition in the Pacific Northwest, as well as the actions taken to exit the fund business.
As Dave touched on, third quarter adjusted EBITDA of $115 million was considerably above the prior year period, as an exceptionally strong contribution from our Real Estate segment, and year-over-year improvements in the contributions from our Pacific Northwest and New Zealand Timber segments more than offset a modestly lower contribution from our Southern Timber segment.
On the bottom of page five, we provide an overview of our capital resources and liquidity at quarter end, as well as a comparison to year-end.
Our cash available for distribution, or CAD, for the first nine months of the year was $204 million versus $124 million in the prior year period, primarily due to higher adjusted EBITDA, partially offset by higher cash taxes 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 $52 million through our at-the-market equity offering program during the third quarter at an average price of $37.26 per share.
As previously discussed, we view the ATM program as a cost-effective tool to opportunistically raise capital, strengthen our balance sheet, and match fund bolt-on acquisitions.
Also building upon the actions taken in the second quarter to improve our debt maturity profile, and lower our weighted average borrowing cost.
In September, we opportunistically repaid the $45 million outstanding under our credit facility with Northwest Farm Credit Services, which previously -- which we had previously assumed in the Pope Resources transaction.
In sum, we closed the third quarter with $420 million of cash and $1.4 billion of debt, both of which exclude cash and debt attributable to the Timber Funds segment, which is nonrecourse to Rayonier.
Our net debt of $957 million represented 15% of our enterprise value based on our closing stock price at the end of the third quarter.
Let's start on page nine with our Southern Timber segment.
Adjusted EBITDA in the third quarter of $24 million was $2 million below the prior year quarter.
The year-over-year decline was primarily driven by lower harvest volumes, partially offset by higher net stumpage pricing.
More specifically, volume declined 20% during the third quarter as wet weather conditions, and constraints on trucking availability, hindered production throughout most of the region.
This decline in volume was partially offset by a 12% increase in average sawlog stumpage pricing compared to the prior year quarter.
At slightly over $20 per ton, third quarter pricing reflected the highest average sawlog pricing, we have registered since early 2015.
The improved pricing reflects strong demand from sawmills weather-related constraints on supply, upward pressure on ship and sell pricing, due to increased competition from pulp mills, and improved export log demand in certain markets.
Likewise, Pulpwood pricing was also at its highest level since early 2015.
Specifically, our prices climbed 23% from the prior year quarter in response to strong domestic demand, constrained supply due to wet weather conditions, and an increase in pulpwood exports to China.
Overall, weighted-average pine stumpage prices increased 16% year-over-year, despite a shift toward a higher mix of pulpwood sales as compared to the prior year quarter.
We are encouraged by the pricing gains registered during the quarter, albeit fueled in part by the wet weather conditions.
Moving forward, we believe certain southern markets are poised for stronger pricing, and believe our results continue to underscore, the relative strength of local timber market dynamics, across our footprint in the region, including proximity to the dominant work serving log export markets.
Moving to our Pacific Northwest Timber segment on page 10.
Adjusted EBITDA of $13 million was $3 million above the prior year quarter.
The year-over-year increase was largely attributable to favorable domestic lumber markets, coupled with increased export demand relative to a year ago.
As the third quarter harvest volume was flat versus the prior year quarter.
At nearly $108 per ton, our average delivered selling price during the third quarter was up 15% from the prior year quarter.
Strong pricing was generally sustained throughout the quarter as underlying log demand remained healthy, even as lumber prices receded from the record level set earlier in the year.
Meanwhile, pulpwood pricing fell 2% in the third quarter relative to prior year quarter as sawmill residuals remain plentiful, amid strong lumber production.
While domestic demand remains healthy in the Pacific Northwest, we have seen export demand from China soften over the past few months.
This softness is largely attributable to elevated log inventories in China, concerns about the country's near-term economic outlook and supply chain disruptions.
We expect some choppiness in demand for log exports from the region to continue over the near term.
However, we believe the reduced harvest of European spruce salvage logs, the continued ban on Australian log exports to China, and the ban on Russian log exports beginning in 2022, will support continued demand for logs from Pacific Northwest, particularly as inventory levels in China normalize.
I'd also like to offer a few comments regarding the wildfires that have impacted parts of the Western U.S. this year.
Fortunately, none of our properties were seriously threatened by the fires.
That said, the availability of pulpwood has constrained pricing in some areas, and there has been upward pressure on hauling costs in areas that have been directly impacted by fires.
Consistent with our previous updates on this front, our operations have not been materially impacted from the salvage efforts conducted by others, which are generally winding down.
page 11 shows results and key operating metrics for our New Zealand Timber segment.
Adjusted EBITDA in the third quarter of $20 million was $2 million above the prior year quarter.
The increase in adjusted EBITDA, was driven by much stronger domestic and export pricing, largely offset by lower harvest volumes, higher cost and reduced carbon credit sales.
Volume declined 14% in the third quarter as compared to the prior year quarter.
As the government shut down all nonessential activity across New Zealand from August 18 through August 31 due to COVID-19.
Our team in New Zealand was generally able to resume harvest operations in September, but there were some regions where restrictions continued as the government aimed to limit the spread of the delta variant.
Harvest operations have now resumed across the country, but full year 2021 volumes are expected to be modestly lower than we had previously anticipated due to the disruptions encountered in the third quarter.
Average delivered prices for export sawtimber jumped 59% in the third quarter from the prior year to $150 per ton, reflecting solid demand from China, the ban on Australian log exports to China, and the reduced level European spruce salvage logs into China.
While net stumpage realizations on export volumes were well above the prior year period levels, favorable export pricing was largely offset by a significant increase in shipping costs, as supply chain issues drove freight, and emerged costs higher.
Since reaching record levels a few months ago, there has been a pullback in pricing for radiata pine logs in response to elevated log inventories in China.
A slowdown in construction activity, adverse weather conditions, and power shortages in China, have collectively reduced the offtake from ports and resulted in pricing pressure on log exports.
While we anticipate pricing will remain favorable from a historical perspective, we expect relatively lower export pricing over the balance of the year.
We generally expect that net stumpage realizations on export volume will decline in the fourth quarter as we've seen only limited relief in shipping costs.
Shifting to the New Zealand domestic market.
Demand remains very strong, albeit constrained to some degree by COVID-related restrictions and the availability of labor.
During the third quarter, average delivered sawtimber prices increased 21% from the prior year period to $85 per ton.
Excluding the impact of foreign exchange rates, domestic sawtimber prices improved 14% 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 25% as compared to the prior year quarter.
As it relates to carbon credits, we continue to defer sales during the quarter.
The value of carbon credits has roughly doubled over the past year.
Moving forward, we will continue to be opportunistic in our sale of carbon credits based on our market outlook.
In sum, we are pleased with third quarter results in the New Zealand Timber segment, especially given the COVID-related disruptions, and cost pressures we encountered.
Moving forward, we remain well positioned to continue to capture market share from Australia, and Europe, in the export market as well as benefit from strong domestic demand.
However, we do anticipate a relatively lower contribution from our New Zealand operations in the fourth quarter as compared to the first three quarters of the year.
I'll now briefly discuss the results from our Timber Funds segment.
Highlighted on page 12, the Timber Funds segment generated consolidated EBITDA of $4 million in the third quarter on harvest volume of 61,000 tons.
Adjusted EBITDA, which reflects the look-through contribution from the timber funds was less than $1 million.
As Dave discussed earlier, we recently completed our exit from the Timber Funds business.
Lastly, in our Trading segment, we generated breakeven results in the third quarter, -- As a reminder, our trading activities typically generate low margins and are primarily designed to provide additional economies of scale to our feed timber export business.
As detailed on page 13, our Real Estate segment delivered exceptionally strong results in the third quarter.
Third quarter real estate sales totaled $93 million on roughly 12,000 acres sold which included a large disposition in Washington, consisting of roughly 8,100 acres.
Excluding this transaction, third quarter sales totaled $73 million on roughly 4,100 acres sold at an average price of over $17,000 per acre.
Adjusted EBITDA for the quarter was $64 million.
As Dave mentioned earlier, excluding gain on the large disposition, third quarter real estate sales -- third quarter real estate results that are record for pro forma sales, pro forma operating income, and adjusted EBITDA, since our separation into a pure-play timberland REIT in 2014.
Sales in the improved development category totaled a record high $28 million in the third quarter.
In our Richmond Hill development project, South of Savannah, Georgia, we closed a $25 million transaction for three entitled industrial parcels at the Belfast Commerce Park near the new Interstate 95 interchange that is adjacent to our property.
This transaction, coupled with the sale of a 153-acre parcel to a national industrial developer last quarter, underscores the strong demand for shovel-ready sites strategically positioned near transportation corridors and in this case, the Port of Savannah.
Meanwhile, within our Wildlight development project north of Jacksonville, Florida, we closed on 42 residential lots, to three different homebuilders, for $2.8 million in total or $66,000 per lot.
Unimproved development sales of $38 million consisted of a 359-acre sale in Kingston, Washington, for roughly $105,000 per acre.
This property known as Arborwood is a well-positioned entitled land parcel accessible by passenger ferry to Downtown Seattle, which was sold to two national homebuilders.
The property was acquired through our merger with Pope Resources last year, and we are very pleased to have successfully completed the sale at an attractive value.
The benefits of the strategic investments we've made on the real estate front over the last several years, are being increasingly realized.
The location and maturity of our development projects have allowed us to capitalize on favorable migration and demographic trends.
And looking ahead, the pipeline of future opportunities in Wildlight, Richmond Hill, and the West Puget Sound area of Washington, remains strong.
In the rural category, sales totaled just under 3,300 acres at an average price of roughly $2,100 per acre.
As we close out 2021 and look toward 2022, demand for rural land remains healthy as the space, privacy, and recreational opportunities, offered by these properties continue to attract buyers.
Lastly, we closed on a large disposition, comprising roughly 8,100 acres in Washington state during the quarter for $20 million or nearly $2,500 per acre.
This property was a nonstrategic holding, sold through a competitive bid process to a conservation-oriented buyer.
Now moving on to our outlook for the year.
Based on our strong results through the first nine months of 2021, and our expectations for the balance of the year.
We are raising our full year adjusted EBITDA guidance to a range of $320 million to $330 million, which reflects a 5% increase at the midpoint from our previous guidance, and an 8% increase at the midpoint from the original 2021 guidance we've provided in February.
In our Southern Timber segment, we now expect full year harvest volumes of 5.7 million to 5.8 million tons, as production has been constrained by regional weather conditions and trucking availability.
However, we expect that improved pricing will largely offset the decline in volumes.
Overall, we expect full year adjusted EBITDA of $118 million to $120 million in our Southern Timber segment, a slight decrease at the midpoint from prior guidance.
In our Pacific Northwest Timber segment, we are maintaining our full year volume guidance of 1.7 million to 1.8 million tons.
We expect that weighted average log pricing in the region will be lower in the fourth quarter, as compared to the exceptionally strong pricing realized during the third quarter, but will be fairly consistent with the pricing achieved, during the first half of the year.
We now expect full year adjusted EBITDA of $53 million to $55 million, a modest increase at the midpoint from prior guidance.
In our New Zealand Timber segment, we now expect full year harvest volumes of 2.5 million to 2.6 million tons as we do not expect to fully recover production loss during the third quarter due to the COVID-19 shutdown.
We further expect lower export pricing during the fourth quarter as log inventories in China remain elevated.
Overall, we now expect full year adjusted EBITDA of $75 million to $78 million, a decrease from prior guidance.
In our Real Estate segment, we now expect full year adjusted EBITDA of $101 million to $104 million, a significant increase from prior guidance.
As previously discussed, the successful completion of the Arborwood sale in Washington is the primary driver for this favorable revision.
Following an extraordinarily strong third quarter, we expect real estate closings for the balance of the year will be relatively light.
Even with lower EBITDA in the fourth quarter, the full year contribution from Real Estate segment in 2021, is poised to be well above historical levels in this segment.
While we expect continued favorable tailwinds in this business, we believe it's prudent to remind everyone, that we do not expect these outsized results in 2021, to be repeated in 2022.
Overall, we're very pleased with our financial performance through the first nine months of 2021, and believe we are well positioned to benefit from continued strength in U.S. housing market, and favorable long-term export market demand trends.
That said, we're not immune from the supply chain, and inflationary pressures, that are impacting many parts of the global economy.
Significant constraints on trucking availability, as well as higher fuel costs, and a considerable increase in fertilizer costs, are among the headwinds our industry is facing in the current environment.
We expect these challenges will likely persist into 2022.
However, our team continues to work diligently to optimize haul distances leverage our scale in both domestic, and export markets, and make prudent silviculture investment decisions tied to localized supply demand dynamics.
Further, we believe our focus on local timber market dynamics, and active portfolio management, leave us well positioned to navigate logistical challenges, and recoup the impact of cost increases in our log pricing.
On that note, active portfolio management remains central to our view of how best to create value for shareholders.
We have continued to improve our portfolio through both addition and subtraction this year.
We opportunistically recycled capital out of nonstrategic timberland holdings in Washington state and exited the timber fund business, while also closing on a total of $52 million on bolt-on acquisitions through September.
Moving forward, our balance sheet is well positioned for future growth, particularly following the actions we have taken this year, to reduce leverage, extend our debt maturity profile, and optimize our cost of capital.
I would also note that we continue to advance many of our ESG-related initiatives.
In August, we published our sustainability report as well as an updated carbon report.
With COP26 currently underway in Europe, I want to reiterate, the important role working for us can play as a natural climate change solution.
As discussed within our sustainability report, we believe the myriad environmental and social benefits offered by our lands, and the products made from our trees, leave Rayonier uniquely well positioned for a low-carbon economy.
In sum, I remain extremely grateful for the dedication of our employees, and their ability to adapt to ever-evolving market conditions, and business opportunities.
Our team remains committed to maximizing the potential of our assets, and creating long-term shareholder value through growing cash flows, and value per share over time.
 Assistant:

Chosen response:
compname reports q3 earnings per share of $0.53.
q3 pro forma earnings per share $0.35.
q3 earnings per share $0.53.
expects full-year adjusted ebitda for new zealand timber segment of $75 million to $78 million, a decrease from prior guidance .


Prompt:
Human: With me on the call today are Chris Brickman, President and Chief Executive Officer; and Marlo Cormier, Chief Financial Officer.
We hope that you are all safe and well.
At SBH, we are fortunate to have an incredible community of team members customers and partners that continue to help us navigate this dynamic environment.
In the first quarter, our associates across the organization delivered strong execution despite the ongoing challenges of the pandemic.
During a time of significant retail disruption, they remain focused on safely serving our customers and continue to implement the key initiatives we outlined on our year-end earnings call in November.
This allowed us to deliver strong gross margins, profitability and cash flow despite top line headwinds caused by the pandemic.
Indeed, for much of the quarter, especially in the latter weeks, we were operating against the backdrop of temporary store closures, capacity restrictions, salon shutdowns and an acceleration in COVID rates that most certainly impacted traffic in our open locations.
As a result, enterprise same-store sales declined 3.7%.
For added perspective at the end of the quarter, approximately 45% of our store locations were under some level of capacity restriction or closure across the globe.
During the quarter, we saw ongoing strength in hair color, which is our chief recruitment vehicle for new customers, both for the retail consumer and the professional stylist.
Hair care is closely linked to color while other categories like nails, skin and wax are incremental and drive additions to the basket.
Despite the top line disruptions, hair color was up 19% at Sally U.S. and Canada.
In addition, vivid colors remained on trend and delivered another quarter of strong performance, up approximately 50% at Sally U.S. and Canada over the prior year.
In Q1, vivid accounted for 25% of our total color sales and they continue to attract a new and younger customer to our stores.
Finally, nails were up 7% at Sally U.S. and Canada and salon supplies were up over 50% at BSG compared to the prior year.
Although we were operating under challenging circumstances, our expanded digital capabilities enabled us to serve our customers through multiple fulfillment options.
These include buy online/pick up in-store, curbside pickup and ship from store at Sally Beauty and same-day delivery and curbside pickup at BSG stores.
Additionally, our e-commerce business achieved strong growth, up 48% versus a year ago.
Despite the external pressures of the macro environment, our teams also did an excellent job on margin and expense control, which resulted in first quarter adjusted earnings per share of $0.50, up 6% on a year-on-year basis.
We ended the quarter with inventory down 10% compared to the prior year and approximately $538 million of cash on the balance sheet.
Subsequent to the close of the quarter, we made the strategic decision to repay the outstanding balance on our fixed rate term loan, making further progress toward deleveraging our balance sheet.
More on this from Marlo later in the call.
As we reflect back on the investments we've made and the hard work of our teams over the past 3.5 years, today, we have a business that is well positioned from a strategic, operational and financial perspective.
During our successful transformation journey, we accomplished a number of objectives that set us up to scale over the long term.
One, we refocused the business on owning professional hair color and care for both the DIY enthusiasts and the professional stylists.
Two, we improved our retail fundamentals.
Three, we advanced our digital commerce capabilities.
Four, we modernized our supply chain.
Five, we improved the shopping experience, both in-store and online.
And six, we strengthened our retail leadership team.
Today, we are executing against a well-defined operating strategy and growth plan.
In fiscal 2021, we are focusing on three major priorities.
By the end of the year, we expect to have completed the key elements of our transformation, including the full implementation of JDA and the replatforming of our BSG e-commerce site.
Second, we expect to be leveraging all of our new capabilities and tools in service of our mission to recruit and retain color customers.
And third, we expect to further reduce our debt leverage ratio closer to our target of 2.5.
From a tactical perspective, in fiscal 2021, our teams are working to optimize the transformation investments we've made and unlock more robust functionality across retail fundamentals, digital commerce and supply chain.
Let me take you through our key initiatives.
First is our expanded delivery service model.
As I mentioned earlier, our new capabilities are enabling us to serve our customers with multiple fulfillment options, which we believe will ultimately foster greater customer loyalty and stickiness.
It's early days but adoption rates are growing fast.
For example, At Sally U.S. and Canada, BOPIS accounted for 11% of our e-commerce sales for the quarter after launching nationwide in November.
And BOPIS sales surpassed 20% of our e-commerce sales for the month of December, while ship from store represented 31% of our e-commerce sales during the quarter.
On the BSG side, same-day delivery is adding tremendous value to our professional stylists by providing them with the flexibility to quickly react to the needs of their customers and adeptly manage their business.
In the second half, we'll be adding the rollout of BOPIS to the BSG segment, providing another element of convenience for our stylists.
The second initiative is replatforming the BSG digital storefront, which is on track for completion in early Q3.
This new, more robust platform will enable deeper and more effective digital engagement with our stylists as we move along the customer funnel from recruitment to transaction.
The digital journey begins with a focus on education, innovation and tools that enable them to more effectively and profitably run their business, including features like product reorders, easy bulk orders, simplified tax reporting and navigation enhancements.
Turning now to our third area of focus, loyalty and CRM.
We are rapidly gaining traction on the rollout of our Private Label Rewards Credit Card to both Sally and BSG customers in the U.S. At the end of the first quarter, we had 163,000 cardholders.
And our rewards card accounted for 2% of sales in the Sally segment and 5% in the BSG segment.
We're capturing critical insights into customer needs and purchasing behavior and expect this program to grow significantly in the coming months and quarters.
In addition, we have bolstered our marketing team in recent months and now have the talent to exploit this data and utilize CRM to develop highly targeted digital programs and strengthen the connected shopping experience across marketing, commerce and service.
We expect loyalty to become another critical differentiator for SBH and something that further expands our competitive moat.
The fourth key initiative for fiscal 2021 is completing the rollout of JDA, our new merchandising and supplying platform.
Both JDA and our new North Texas distribution center are running smoothly in the initial months.
And our teams are working to bring JDA to our remaining DCs in the latter part of this year.
This will be a significant milestone as it represents the final step in our multiyear transformation journey.
Through our thoughtful investments and strategic repositioning over the past three to four years, we have evolved SBH into a market leader with a solid infrastructure and robust digital capabilities that position us to own professional hair color and care.
Underlying this is our continued focus on generating strong profitability and cash flow and returning value to shareholders.
There is certainly more work to do as we shift from the heavy lifting of our transformation to a new phase of growth that will see us optimize and drive scale.
We believe our ability to generate strong cash flow, carefully manage inventories and prudently control discretionary spending will allow us to continue to strategically invest in capabilities, tools and teams in support of our mission to recruit and retain color customers.
As we move through the first half of fiscal 2021, it is clear that the environment will continue to be choppy, creating additional top line headwinds at least in the near term.
Today, we are operating under mandated store closures in Europe, Canada and Latin America, capacity restrictions in several domestic markets and reduced capacity at salons in California, which were closed for most of January.
Because these disruptions are continuing and there is still a great deal of uncertainty related to potential restrictions going forward, we expect net sales to decline in our second fiscal quarter, softening modestly from Q1 levels.
During this time, we are remaining agile and our teams are running the business with operational and financial rigor to preserve profitability and prudently manage cash.
Most importantly, with our transformation journey nearing completion, we feel highly confident in our competitive positioning, the strong foundation we've built and the capabilities we've established and the ability of our teams to execute.
In short, we believe SBH is positioned for a return to consistent top line growth when pandemic headwinds abate.
Before turning the call to Marlo, I want to express my appreciation to all of our team members and associates around the globe for playing an important role in our successful transformation and continuing to work tirelessly in service of our customers as we navigate the dynamic COVID environment.
I also want to say how pleased we are to have Marlo in the role of Chief Financial Officer.
After joining us last spring as Senior Vice President of Finance, she has quickly and seamlessly transitioned to the new position and serves as a valuable member of our executive team.
Now over to Marlo to discuss the financials.
I've been with the company now for 10 months.
So I was really able to hit the ground running when I assumed the CFO position in November.
I've enjoyed the opportunity to speak with some of you at recent virtual conferences and marketing days and look forward to continuing to get to know our SBH shareholders.
Turning now to the financials.
You heard from Chris that COVID disruptions put tremendous pressure on the top line this quarter.
After a strong start in October, new restrictions set in during November.
And by the end of Q1, approximately 45% of our stores globally were operating under capacity restrictions or closures.
This resulted in a consolidated same-store sales decline of 3.7%.
In our open locations, traffic was choppy and declined on a year-over-year basis.
Despite lower traffic, we saw increases in average ticket, units per transaction and average unit retail versus the first quarter of fiscal 2020.
Our global e-commerce business remained strong in Q1 with consolidated sales up 48% versus one year ago.
As we continue to optimize our new digital capabilities, we expect e-commerce to become an increasingly larger part of the overall business over time.
Looking now at gross profit.
Our fewer, bigger, deeper strategy continues to drive underlying margin strength.
First quarter gross margin came in at 50.3%, up 190 basis points to last year.
The year-over-year increase reflects strength in the Sally segment particularly in the U.S. and Canada.
This was partially offset by margin pressure at BSG as lower inventory levels drove higher capitalized costs.
Looking at the remainder of fiscal 2021.
We anticipate that our targeted promotional strategy will allow us to continue to deliver strong consolidated gross margin in the range of 50%.
SG&A expenses totaled $366 million in Q1, down $12 million versus last year.
The savings can primarily be traced to lower field labor and advertising costs and reflects our ability to pull expense levers as needed while pandemic headwinds persist.
As we expected, as a percentage of sales, SG&A deleveraged on a year-over-year basis, coming in at 39.1%, up 50 basis points from Q1 of 2020 due to lower sales volume.
Looking at Q2, we expect SG&A dollars to be flat to up slightly on a sequential basis from Q1.
This primarily reflects investments in digital marketing in both the Sally and BSG segments as well as IT spending as we continue to deploy and scale our new tools and capabilities.
These investments will be partially offset by lower field labor costs and variable expenses.
On a full year basis, we expect SG&A dollars to increase versus fiscal 2020 with spending primarily directed toward additional marketing and IT spend in the back half of the year.
As a reminder, we will also be lapping last year's furloughs and rent abatements.
As Chris said, we are pleased with the success of our transformation journey.
And the investments we have made to date are clearly bearing fruit.
If we began to see pandemic headwinds abating, we will make selective investments in other key growth areas during the latter part of the year.
Our solid gross margins and careful cost controls allowed us to deliver strong performance across operating income, EBITDA and EPS.
In Q1, adjusted operating margin was up 130 basis points to 11.2%.
Adjusted EBITDA increased 5% to $134 million and adjusted diluted earnings per share grew 6% to $0.50.
Moving to segment results.
I'll start with Sally Beauty.
The first quarter same-store sales decline of 3.3% can largely be traced to extensive closures and restrictions in Europe and Latin America.
In the U.S. and Canada, same-store sales declines were less than 1%.
And gross margin remained strong, reflecting the effectiveness of our new promotional strategy.
This drove a significant increase in segment operating margin, which expanded 440 basis points to 17.4%.
E-commerce remained strong, up 46% versus one year ago.
In our BSG segment, same-store sales declines of 4.6% and primarily reflect restrictions on store capacity across several territories in the U.S. and Canada and salon closures in California and parts of Canada.
E-commerce remained strong, delivering growth of 51% over the prior year.
Gross margin decreased by 40 basis points, reflecting higher capitalized costs due to lower inventory purchases.
Looking at the balance sheet and cash flow.
We ended the first quarter with $538 million of cash on the balance sheet and a zero balance on our $600 million revolving line of credit.
Inventories at quarter end totaled $896 million.
That's down 10% versus one year ago and reflects our efforts to return to more optimal levels.
As we talked about on our Q4 earnings call, we exited the year with a focus on rebuilding inventories.
We made good progress and significantly improved our in-stocks during Q1.
That said, we did face some COVID disruptions and port delays particularly in the BSG segment.
As a result, first quarter cash flow from operations came in better than we anticipated at $39 million.
And we anticipate this will pressure cash flow in Q2.
Capital expenditures totaled $15 million and were deployed mostly toward store repair and maintenance and digital capabilities, most notably buy online/pick up in-store.
which, as you heard from Chris, is gaining good traction.
Free cash flow was $24 million for the quarter.
At the end of Q1, our leverage ratio stood at 2.78 times.
For comparison purposes, the leverage ratio that we often cite, as defined in our loan agreement, where the impact of cash on hand is capped at $100 million for net debt calculation purposes was 3.73 times.
After the close of the quarter, we further reduced our debt levels by another $213 million in early January, which is consistent with our philosophy to deleverage the balance sheet.
Going forward, we expect to continue to utilize excess cash to reduce debt and return value to shareholders.
In fiscal 2021, we expect to make additional progress toward bringing our debt leverage ratio closer to our target of 2.5 times.
As we look at the balance of the year, we expect the environment to remain choppy as COVID disruptions persist.
With closures and restrictions continuing thus far into the second quarter, we anticipate that Q2 net sales trends will soften moderately from Q1 levels.
Until we see a definitive shift in the macro factors affecting our top line, we will continue to operate prudently and remain focused on the operating initiatives Chris talked about, which we believe are setting us up to achieve consistent growth and long-term success.
And now we'll ask the operator to open the call to Q&A.
 Assistant:

Chosen response:
compname posts q1 gaap earnings per share $0.50.
q1 gaap earnings per share $0.50.
qtrly adjusted diluted earnings per share of $0.50.
qtrly consolidated same store sales decreased 3.7%,.
will not be providing formal guidance at this time.