Updates 2023 EBITDA and Raises Free Cash
Flow Guidance
- Loss from continuing operations for the third quarter of $27
million, down $45 million from prior year quarter
- Adjusted EBITDA from continuing operations for the third
quarter of $24 million
- Year-to-date cash provided by operating activities of $82
million; total debt of $749 million
- Adjusted Free Cash Flow year-to-date generation of $27 million;
Net Debt of $743 million
- Updates 2023 Adjusted EBITDA guidance to approximately $150
million
- Raises 2023 Adjusted Free Cash Flow guidance to $65 million to
$75 million with additional deleveraging from potential sale of
passive assets
Rayonier Advanced Materials Inc. (NYSE:RYAM) (the “Company”)
reported a net loss of $25 million, or $(0.39) per diluted share,
for the quarter ended September 30, 2023, compared to net income of
$30 million, or $0.45 per diluted share, for the prior year
quarter. Loss from continuing operations for the quarter ended
September 30, 2023 was $27 million, or $(0.41) per diluted share,
compared to income from continuing operations of $18 million, or
$0.28 per diluted share, for the prior year quarter.
“Results for the third quarter reflected continued weak demand
across many of our product categories. We are responding by
reducing costs and taking opportunistic downtime across all
segments. As previously announced, we have taken downtime at our
High-Yield Pulp facility in the third and fourth quarters and
expect to take downtime in Paperboard and at the High Purity
Cellulose plant in Tartas in the fourth quarter,” said De Lyle W.
Bloomquist, RYAM’s President and Chief Executive Officer.
“Consequently, we are revising down our 2023 Adjusted EBITDA
guidance to approximately $150 million while raising our free cash
flow guidance to $65 to $75 million. The decline in year-to-date
free cash flow in the quarter was primarily driven by planned
increases in working capital. As we finish the year, we expect
working capital to benefit free cash flow. Additionally, we are
reviewing options to monetize passive assets to drive further net
debt reduction.”
“Beyond the short-term challenges, we are optimistic about the
future of RYAM. Our non-viscose and paper pulp businesses are
expected to generate over $250 million in EBITDA before corporate
charges this year. The recent closure of a competitor’s plant is
expected to yield a favorable mix shift for RYAM, thus adding to
these strong results in the relatively near term. Additionally, we
are in the process of consolidating the vast majority of our
commodity viscose production into the Temiscaming High Purity
Cellulose plant, which is home to our lowest variable cost line. We
have also begun the process of a potential sale of the Paperboard
and High-Yield Pulp assets. If successful, proceeds will be used to
accelerate debt repayment and reduce fixed charges ahead of our
2026 debt maturities. Lastly, we are continuing with our
investments to grow our Biomaterials businesses, which will provide
faster growth with greater customer and end market diversification.
Overall, these actions are expected to provide more stable and
consistent earnings for the Company,” concluded Mr. Bloomquist.
Third Quarter 2023 Operating Results from Continuing
Operations
The Company operates in the following business segments: High
Purity Cellulose, Paperboard and High-Yield Pulp.
Net sales was comprised of the following for the periods
presented:
Three Months Ended
Nine Months Ended
(in millions)
September 30,
2023
July 1, 2023
September 24,
2022
September 30,
2023
September 24,
2022
High Purity Cellulose
$
292
$
300
$
369
$
966
$
952
Paperboard
57
48
66
164
183
High-Yield Pulp
25
44
40
111
102
Eliminations
(5
)
(7
)
(9
)
(20
)
(20
)
Net sales
$
369
$
385
$
466
$
1,221
$
1,217
Operating results were comprised of the following for the
periods presented:
Three Months Ended
Nine Months Ended
(in millions)
September 30,
2023
July 1, 2023
September 24,
2022
September 30,
2023
September 24,
2022
High Purity Cellulose
$
(6
)
$
—
$
22
$
7
$
21
Paperboard
13
6
12
29
28
High-Yield Pulp
(6
)
1
6
2
4
Corporate
(15
)
(14
)
(11
)
(42
)
(43
)
Operating income (loss)
$
(14
)
$
(7
)
$
29
$
(4
)
$
10
High Purity Cellulose
Net sales for the third quarter decreased $77 million, or 21
percent, to $292 million compared to the same prior year quarter.
Included in the current and prior year quarters were $28 million
and $33 million, respectively, of other sales primarily from
bio-based energy and lignosulfonates. Sales prices decreased 13
percent during the current quarter, driven by a 22 percent decrease
in commodity products prices, partially offset by a 6 percent
increase in cellulose specialties prices. Total sales volumes
decreased 10 percent during the current quarter, driven by a 36
percent decrease in cellulose specialties volumes, partially offset
by a 37 percent increase in commodity products volumes. Sales
volumes for cellulose specialties were negatively impacted by
significant customer destocking and market-driven demand declines,
particularly in construction markets.
Net sales for the nine months ended September 30, 2023 increased
$14 million, or 1 percent, to $966 million compared to the same
prior year period. Included in the current and prior year
nine-month periods were $73 million and $84 million, respectively,
of other sales primarily from bio-based energy and lignosulfonates.
Sales prices decreased 4 percent during the current period, driven
by an 8 percent decrease in commodity products prices, partially
offset by a 12 percent increase in cellulose specialties prices.
Total sales volumes increased 7 percent during the current period,
driven by a 57 percent increase in commodity products volumes,
partially offset by a 21 percent decrease in cellulose specialties
volumes. Sales volumes for cellulose specialties were negatively
impacted by significant customer destocking and market-driven
demand declines, particularly in construction markets.
Operating income for the quarter and nine months ended September
30, 2023 decreased $28 million and $14 million, respectively,
compared to the same prior year periods. The current quarter
decrease was driven by the lower cellulose specialties sales
volumes and commodity products sales prices, partially offset by
the higher cellulose specialties sales prices and commodity
products sales volumes and decreased input, logistics and
maintenance costs. The year-to-date decrease was driven by the
lower cellulose specialties sales volumes and commodity products
sales prices, higher labor costs due to inflation and the impact of
the extended maintenance outage in the prior year, partially offset
by the higher cellulose specialties sales prices and commodity
products sales volumes and decreased input and logistics costs.
Compared to the second quarter of 2023, operating loss increased
$6 million. Total sales prices decreased 7 percent, driven by a 3
percent decrease in cellulose specialties prices, due to sales mix,
and a 7 percent decrease in commodity products prices. Total sales
volumes increased 1 percent, driven by an 8 percent increase in
commodity products volumes, partially offset by a 6 percent
decrease in cellulose specialties volumes that was due to
market-driven demand declines. Higher costs related to the impact
of second quarter maintenance outages were partially offset by
lower input costs. The second quarter also included $5 million of
sales of excess emission allowances related to the Company’s
operations in Tartas, France.
Paperboard
Net sales for the third quarter decreased $9 million, or 14
percent, to $57 million compared to the same prior year quarter,
driven by 8 percent and 5 percent decreases in sales prices, due to
product mix, and sales volumes, due to market-driven demand
declines, respectively. Net sales for the nine months ended
September 30, 2023 decreased $19 million, or 10 percent, to $164
million compared to the same prior year period, driven by a 13
percent decrease in sales volumes due to customer destocking in the
first half of 2023, partially offset by a 4 percent increase in
sales prices, driven by continued demand for sustainable
packaging.
Operating income for both the quarter and nine months ended
September 30, 2023 increased $1 million compared to the same prior
year periods. The current quarter increase was driven by lower
purchased pulp costs that were largely offset by the lower sales
prices and sales volumes. In the year-to-date period, the higher
sales prices and lower purchased pulp and maintenance costs were
largely offset by the lower sales volumes.
Compared to the second quarter of 2023, operating income
increased $7 million, driven by a 22 percent increase in sales
volumes and lower purchased pulp costs, partially offset by a 3
percent decrease in sales prices.
High-Yield Pulp
Net sales for the third quarter decreased $15 million, or 38
percent, to $25 million compared to the same prior year quarter,
driven by 31 percent and 13 percent decreases in sales prices and
sales volumes, respectively, due to lower demand and opportunistic
downtime taken in response to market conditions. Net sales for the
nine months ended September 30, 2023 increased $9 million, or 9
percent, to $111 million compared to the same prior year period,
driven by 1 percent and 9 percent increases in sales prices and
sales volumes, respectively, due to stronger demand and easing
logistics constraints.
Operating results for the quarter and nine months ended
September 30, 2023 declined $12 million and $2 million,
respectively, compared to the same prior year periods. The current
quarter decline was driven by the lower sales prices and sales
volumes. In the year-to-date period, the higher sales prices and
sales volumes were more than offset by increased wood costs and
higher labor costs due to inflation.
Compared to the second quarter of 2023, operating results
declined $7 million, driven by 23 percent and 35 percent decreases
in sales prices and sales volumes, respectively, due to lower
demand and opportunistic downtime taken in response to market
conditions, partially offset by lower logistics, maintenance and
input costs.
Corporate
Operating loss for the quarter and nine months ended September
30, 2023 increased $4 million and decreased $1 million,
respectively, compared to the same prior year periods. The current
quarter increase was driven by less favorable foreign exchange
rates in the current quarter compared to the prior year quarter. In
the year-to-date period, lower stock compensation and severance
costs were largely offset by unfavorable foreign exchange rates in
the current year as compared to favorable rates in the prior year.
Compared to the second quarter of 2023, the operating loss
increased $1 million.
Non-Operating Income & Expense
Interest expense increased $5 million and $3 million during the
quarter and nine months ended September 30, 2023, respectively,
compared to the same prior year periods, driven by an increase in
the average interest rate on debt, partially offset by a decrease
in the average outstanding balance of debt. Debt principal
outstanding decreased $109 million from September 24, 2022 to
September 30, 2023.
Interest income increased $2 million and $3 million during the
quarter and nine months ended September 30, 2023, respectively,
compared to the same prior year periods, primarily due to the
timing of the receipt of the 2027 Term Loan proceeds and their
subsequent use in the repayment of the 2024 Notes.
Also included in non-operating other income in the quarter ended
September 30, 2023 was a $1 million net loss on debt
extinguishment. Included in the current nine-month period was a $2
million gain on a passive land sale and a pension settlement loss
of $2 million.
Included in non-operating other income in the nine months ended
September 24, 2022 was a $5 million net gain associated with the
GreenFirst common shares received in connection with the sale of
the Company’s lumber and newsprint assets.
Income Taxes
The effective tax rate on the loss from continuing operations
for the quarter and nine months ended September 30, 2023 was a
benefit of 17 percent and 22 percent, respectively. The 2023
effective tax rates differed from the federal statutory rate of 21
percent primarily due to disallowed interest deductions in the U.S.
and nondeductible executive compensation, offset by U.S. tax
credits, return-to-accrual adjustments related to previously filed
tax returns, changes in the valuation allowance on disallowed
interest deductions and interest received on overpayments of tax
from prior years. The effective tax rate for the nine-month period
was also impacted by an excess tax benefit on vested stock
compensation.
The effective tax rate on the income from continuing operations
for the quarter ended September 24, 2022 was a benefit of 11
percent. The effective tax rate on the loss from continuing
operations for the nine months ended September 24, 2022 was an
expense of 13 percent. The most significant item creating a
difference between the 2022 effective tax rates and the statutory
rate of 21 percent were changes in the valuation allowance on
disallowed interest deductions in the U.S.
Discontinued Operations
During the third quarter of 2023, the USDOC completed its fourth
administrative review of duties applied to Canada softwood lumber
exports to the U.S. during 2021 and reduced applicable rates to a
combined 8.05 percent. In connection with this development, the
Company recorded a pre-tax gain of $2 million. During the nine
months ended September 30, 2023, the Company also incurred a $2
million loss related to the settlement of a claim pursuant to the
representations and warranties in the asset purchase agreement.
During the third quarter of 2022, the USDOC completed its third
administrative review of duties applied during 2020 and reduced
applicable rates to a combined 8.6 percent, for which the Company
recorded a pre-tax gain of $16 million. Cumulative through
September 30, 2023, the Company has recorded total gains of $40
million related to the USDOC administrative reviews, which are
included as a long-term receivable within “other assets” in the
Company’s consolidated balance sheets.
Cash Flows & Liquidity
For the nine months ended September 30, 2023, the Company
generated operating cash flows of $82 million, which were driven by
increased cash inflows from working capital, partially offset by
payments on deferred energy liabilities associated with Tartas
plant operations.
For the nine months ended September 30, 2023, the Company used
$95 million in its investing activities related to net capital
expenditures, which included $40 million of strategic capital
spending focused on enhancing reliability and cost efficiency.
For the nine months ended September 30, 2023, the Company used
$112 million in its financing activities primarily for the
redemption of its 2024 senior notes and repayment of borrowings
under its credit facility and other long-term debt, the payment of
issuance costs related to new term loan financing and the
repurchase of common stock to satisfy tax withholding requirements
related to the issuance of stock under Company incentive stock
plans. These outflows were partially offset by the net proceeds
received from the new term loan financing and borrowings under the
credit facility.
The Company ended the quarter with $147 million of global
liquidity, including $27 million of cash, borrowing capacity under
the ABL Credit Facility of $112 million and $8 million of
availability under the factoring facility in France.
In the third quarter of 2023, the Company secured term loan
financing of $250 million and received net proceeds of $243 million
after original issue discount. The net proceeds, together with cash
on hand of $89 million, were used to redeem the $318 million
outstanding principal balance and accrued interest of its senior
unsecured notes due 2024 and pay issuance costs of $10 million that
will be amortized over the term of the loan. The term loan matures
in July 2027 and bears interest at an annual rate equal to
three-month Term SOFR plus 8.00 percent.
Market Assessment
In October 2023, the Company announced that it engaged a
financial advisor to explore the potential sale of its Paperboard
and High-Yield Pulp assets located at its Temiscaming site. This
strategic move is aligned with the Company’s commitment to
enhancing its operational and financial performance, optimizing its
portfolio to align with its long-term growth strategy and providing
flexibility to pay down debt and reduce leverage.
The following market assessment represents the Company’s best
current estimate of its business segments’ future performance.
High Purity Cellulose
Average sales prices for cellulose specialties in 2023 are
expected to be in the high single-digit percent higher than average
2022 sales prices, while sales volumes are expected to decrease
from prior year due to softness in sales orders driven principally
by significant customer destocking and market-driven demand
declines. Market demand for commodity products remains resilient
with fluff and viscose prices bottoming in the third quarter and a
slight uptick expected in the fourth quarter. Commodity sales
volumes are expected to continue to increase through the end of
2023. The prices for certain inputs have come off the 2022 highs
but are expected to remain significantly elevated versus pre-COVID
pandemic levels. The Company expects to take downtime at its Tartas
facility at the end of 2023 due to market conditions and to improve
working capital.
The Company recently began plans towards a realignment of its
High Purity Cellulose assets to optimize production mix, including
a consolidation of its commodity products production into the
Temiscaming plant. The Company is currently evaluating the
potential impact of this realignment on its consolidated financial
statements and disclosures.
Paperboard
Paperboard prices are expected to rebound slightly in the fourth
quarter, remaining elevated from 2022 levels, while sales volumes
are expected to improve in the second half of the year as customer
inventories return to more normal levels. Raw material prices are
expected to increase slightly as purchased pulp prices are forecast
to increase in the fourth quarter. The Company expects to take
downtime in the coming quarter due to market conditions and to
improve working capital.
High-Yield Pulp
High-yield pulp prices have declined due to soft demand and new
paper pulp capacity ramping up. Prices are expected to decline
overall in 2023 despite an expected uptick in the fourth quarter,
in line with industry forecasts for the global paper pulp market.
The Company expects to take downtime in the coming quarter due to
market conditions and to improve working capital.
2023 Guidance
Overall, loss from continuing operations is expected to be
approximately $45 million, with Adjusted EBITDA of approximately
$150 million for 2023. The Company expects to spend approximately
$85 million on custodial capital expenditures and approximately $35
million on discretionary strategic capital expenditures, net of
financing. Strategic capital may be modulated as necessary to
support Adjusted Free Cash Flow. The Company is targeting $85 to
$95 million of benefit from working capital to support Adjusted
Free Cash Flow for the year. Overall, the Company expects to
generate $65 to $75 million of Adjusted Free Cash Flow in 2023.
A Sustainable Future
The Company’s portfolio is aligned with sustainability drivers
in the European Green Deal for the Renewable Energy Directive (RED
II) and the second generation (2G) bio-fuel that is noncompetitive
to human food supply. The Company’s 2G bioethanol facility at its
Tartas, France plant is near completion and is anticipated to be
operational in the first quarter of 2024. The total estimated cost
of the project is approximately $40 million, with $22 million to be
spent in 2023. The Company plans to utilize $28 million of low-cost
green loans to help fund the project, including $10 million already
borrowed, and $4 million in grants. The project is expected to
provide $8 million to $10 million of annual incremental EBITDA,
depending on current exchange rates, beginning in 2025.
Conference Call Information
RYAM will host a conference call and live webcast at 9:00 a.m.
ET on Wednesday, November 8, 2023 to discuss these results.
Supplemental materials and access to the live audio webcast will be
available at www.RYAM.com. A replay of this webcast will be
archived on the company’s website shortly after the call.
Investors may listen to the conference call by dialing
877-407-8293, no passcode required. For international parties, dial
201-689-8349. A replay of the teleconference will be available one
hour after the call ends until 6:00 p.m. ET on Wednesday, November
22, 2023. The replay dial-in number within the U.S. is
877-660-6853, international is 201-612-7415, Conference ID:
13742400.
About RYAM
RYAM is a global leader of cellulose-based technologies,
including high purity cellulose specialties, a natural polymer
commonly used in the production of filters, food, pharmaceuticals
and other industrial applications. The Company also manufactures
products for paper and packaging markets. With manufacturing
operations in the U.S., Canada and France, RYAM employs
approximately 2,500 people and generated $1.7 billion of revenues
in 2022. More information is available at www.RYAM.com.
Forward-Looking Statements
Certain statements in this document regarding anticipated
financial, business, legal or other outcomes including business and
market conditions, outlook and other similar statements relating to
RYAM’s future events, developments, or financial or operational
performance or results, are “forward-looking statements” made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and other federal securities laws.
These forward-looking statements are identified by the use of words
such as “may,” “will,” “should,” “expect,” “estimate,” “believe,”
“intend,” “forecast,” “anticipate,” “guidance,” and other similar
language. However, the absence of these or similar words or
expressions does not mean a statement is not forward-looking. While
we believe these forward-looking statements are reasonable when
made, forward-looking statements are not guarantees of future
performance or events and undue reliance should not be placed on
these statements. Although we believe the expectations reflected in
any forward-looking statements are based on reasonable assumptions,
we can give no assurance these expectations will be attained and it
is possible actual results may differ materially from those
indicated by these forward-looking statements due to a variety of
risks and uncertainties. All statements made in this earnings
release are made only as of the date set forth at the beginning of
this release. The Company undertakes no obligation to update the
information made in this release in the event facts or
circumstances subsequently change after the date of this release.
The Company has not filed its Form 10-Q for the quarter ended
September 30, 2023. As a result, all financial results described in
this earnings release should be considered preliminary, and are
subject to change to reflect any necessary adjustments or changes
in accounting estimates, that are identified prior to the time the
Company files its Form 10-Q.
The Company’s operations are subject to a number of risks and
uncertainties including, but not limited to, those listed below.
When considering an investment in the Company’s securities, you
should carefully read and consider these risks, together with all
other information in the Company’s Annual Report on Form 10-K and
other filings and submissions to the SEC, which provide more
information and detail on the risks described below. If any of the
events described in the following risk factors actually occur, the
Company’s business, financial condition or operating results, as
well as the market price of the Company’s securities, could be
materially adversely affected. These risks and events include,
without limitation: Macroeconomic and Industry Risks The
Company’s business, financial condition and results of operations
could be adversely affected by disruptions in the global economy
caused by the ongoing conflict between Russia and Ukraine or other
geopolitical conflicts. The Company is subject to risks associated
with epidemics and pandemics, including the COVID-19 pandemic,
which has had, and may continue to have, a material adverse impact
on the Company’s business, financial condition, results of
operations and cash flows. The businesses the Company operates are
highly competitive and many of them are cyclical, which may result
in fluctuations in pricing and volume that can materially adversely
affect the Company’s business, financial condition, results of
operations and cash flows. Changes in raw material and energy
availability and prices, and continued inflationary pressure, could
have a material adverse effect on the Company’s business, financial
condition and results of operations. The Company is subject to
material risks associated with doing business outside of the United
States. Foreign currency exchange fluctuations may have a material
adverse impact on the Company’s business, financial condition and
results of operations. Restrictions on trade through tariffs,
countervailing and anti-dumping duties, quotas and other trade
barriers, in the United States and internationally, could
materially adversely affect the Company’s ability to access certain
markets. Business and Operational Risks The Company’s ten
largest customers represented approximately 40 percent of 2022
revenue, and the loss of all or a substantial portion of revenue
from these customers could have a material adverse effect on the
Company’s business. A material disruption at any of the Company’s
major manufacturing plants could prevent the Company from meeting
customer demand, reduce sales and profitability, increase the cost
of production and capital needs, or otherwise materially adversely
affect the Company’s business, financial condition and results of
operations. Unfavorable changes in the availability of, and prices
for, wood fiber may have a material adverse impact on the Company’s
business, financial condition and results of operations.
Substantial capital is required to maintain the Company’s plants,
and the cost to repair or replace equipment, as well as the
associated downtime, could materially adversely affect the
Company’s business. The Company depends on third parties for
transportation services and unfavorable changes in the cost and
availability of transportation could materially adversely affect
the Company’s business. Failure to maintain satisfactory labor
relations could have a material adverse effect on the Company’s
business. The Company is dependent upon attracting and retaining
key personnel, the loss of whom could materially adversely affect
the Company’s business. Failure to develop new products or discover
new applications for existing products, or inability to protect the
intellectual property underlying new products or applications,
could have a material adverse impact on the Company’s business.
Loss of Company intellectual property and sensitive data or
disruption of manufacturing operations due to cyberattacks or
cybersecurity breaches could materially adversely impact the
business. Regulatory and Environmental Risks The Company’s
business is subject to extensive environmental laws, regulations
and permits that may materially restrict or adversely affect how
the Company conducts business and its financial results. The
potential longer-term impacts of climate-related risks remain
uncertain at this time. Regulatory measures to address climate
change may materially restrict how the Company conducts business or
adversely affect its financial results. Financial Risks The
Company may need to make significant additional cash contributions
to its retirement benefit plans if investment returns on pension
assets are lower than expected or interest rates decline, and/or
due to changes to regulatory, accounting and actuarial
requirements. The Company has debt obligations that could
materially adversely affect the Company’s business and its ability
to meet its obligations. Challenges in the commercial and credit
environments may materially adversely affect the Company’s future
access to capital. The Company may require additional financing in
the future to meet its capital needs or to make acquisitions, and
such financing may not be available on favorable terms, if at all,
and may be dilutive to existing stockholders. Common Stock and
Certain Corporate Matters Risks Stockholders’ percentage of
ownership in RYAM may be diluted. Certain provisions in the
Company’s amended and restated certificate of incorporation and
bylaws, and of Delaware law, could prevent or delay an acquisition
of the Company, which could decrease the price of its common
stock.
Other important factors that could cause actual results or
events to differ materially from those expressed in forward-looking
statements that may have been made in this document are described
or will be described in the Company’s filings with the U.S.
Securities and Exchange Commission, including the Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. The Company assumes
no obligation to update these statements except as is required by
law.
Non-GAAP Financial Measures
This earnings release and the accompanying schedules contain
certain non-GAAP financial measures, including EBITDA, adjusted
EBITDA, adjusted free cash flows, adjusted income from continuing
operations and adjusted net debt. The Company believes these
non-GAAP financial measures provide useful information to its Board
of Directors, management and investors regarding its financial
condition and results of operations. Management uses these non-GAAP
financial measures to compare its performance to that of prior
periods for trend analyses, to determine management incentive
compensation and for budgeting, forecasting and planning
purposes.
The Company does not consider these non-GAAP financial measures
an alternative to financial measures determined in accordance with
GAAP. The principal limitation of these non-GAAP financial measures
is that they may exclude significant expense and income items that
are required by GAAP to be recognized in the consolidated financial
statements. In addition, they reflect the exercise of management’s
judgment about which expense and income items are excluded or
included in determining these non-GAAP financial measures. In order
to compensate for these limitations, reconciliations of the
non-GAAP financial measures to their most directly comparable GAAP
measures are provided below. Non-GAAP financial measures are not
necessarily indicative of results that may be generated in future
periods and should not be relied upon, in whole or part, in
evaluating the financial condition, results of operations or future
prospects of the Company.
Rayonier Advanced Materials
Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
(in millions, except share and
per share information)
Three Months Ended
Nine Months Ended
September 30,
2023
July 1,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Net sales
$
369
$
385
$
466
$
1,221
$
1,217
Cost of sales
(360
)
(370
)
(419
)
(1,160
)
(1,138
)
Gross margin
9
15
47
61
79
Selling, general and administrative
expense
(22
)
(18
)
(20
)
(59
)
(68
)
Foreign exchange gain (loss)
1
(2
)
3
(1
)
4
Other operating expense, net
(2
)
(2
)
(1
)
(5
)
(5
)
Operating income (loss)
(14
)
(7
)
29
(4
)
10
Interest expense
(21
)
(16
)
(16
)
(52
)
(49
)
Gain on GreenFirst equity securities
—
—
—
—
5
Other income, net
4
4
4
6
8
Income (loss) from continuing
operations before income taxes
(31
)
(19
)
17
(50
)
(26
)
Income tax (expense) benefit
5
3
2
11
(3
)
Equity in loss of equity method
investment
(1
)
—
(1
)
(2
)
(2
)
Income (loss) from continuing
operations
(27
)
(16
)
18
(41
)
(31
)
Income (loss) from discontinued
operations, net of taxes
2
(1
)
12
1
12
Net income (loss)
$
(25
)
$
(17
)
$
30
$
(40
)
$
(19
)
Basic earnings per common share
Income (loss) from continuing
operations
$
(0.41
)
$
(0.24
)
$
0.29
$
(0.62
)
$
(0.48
)
Income (loss) from discontinued
operations
0.02
(0.02
)
0.18
—
0.20
Net income (loss) per common
share-basic
$
(0.39
)
$
(0.26
)
$
0.47
$
(0.62
)
$
(0.28
)
Diluted earnings per common
share
Income (loss) from continuing
operations
$
(0.41
)
$
(0.24
)
$
0.28
$
(0.62
)
$
(0.48
)
Income (loss) from discontinued
operations
0.02
(0.02
)
0.17
—
0.20
Net income (loss) per common
share-diluted
$
(0.39
)
$
(0.26
)
$
0.45
$
(0.62
)
$
(0.28
)
Shares used in determining EPS
Basic EPS
65,343,418
65,226,344
63,971,166
65,024,654
63,882,920
Diluted EPS
65,343,418
65,226,344
65,520,107
65,024,654
63,882,920
Rayonier Advanced Materials
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in millions)
September 30,
2023
December 31,
2022
Assets
Cash and cash equivalents
$
27
$
152
Other current assets
491
538
Property, plant and equipment, net
1,132
1,151
Other assets
526
507
Total assets
$
2,176
$
2,348
Liabilities and Stockholders’
Equity
Debt due within one year
$
19
$
14
Other current liabilities
315
340
Long-term debt
730
839
Non-current environmental liabilities
159
160
Other liabilities
167
166
Total stockholders’ equity
786
829
Total liabilities and stockholders’
equity
$
2,176
$
2,348
Rayonier Advanced Materials
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(in millions)
Nine Months Ended
September 30,
2023
September 24,
2022
Operating Activities
Net loss
$
(40
)
$
(19
)
Adjustments to reconcile net loss to cash
provided by operating activities:
Income from discontinued operations
(1
)
(12
)
Depreciation and amortization
104
96
Other
(3
)
10
Changes in working capital and other
assets and liabilities
22
(68
)
Cash provided by operating activities
82
7
Investing Activities
Capital expenditures, net
(95
)
(114
)
Cash used in investing
activities-continuing operations
(95
)
(114
)
Cash provided by investing
activities-discontinued operations
—
44
Cash used in investing activities
(95
)
(70
)
Financing Activities
Changes in debt
(97
)
(51
)
Other
(15
)
—
Cash used in financing activities
(112
)
(51
)
Net decrease in cash and cash
equivalents
(125
)
(114
)
Net effect of foreign exchange on cash and
cash equivalents
—
(7
)
Balance, beginning of period
152
253
Balance, end of period
$
27
$
132
Rayonier Advanced Materials
Inc.
Sales Volumes and Average
Prices
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
2023
July 1,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Average Sales Prices ($ per metric
ton)
High Purity Cellulose
$
1,215
$
1,301
$
1,402
$
1,282
$
1,329
Paperboard
$
1,459
$
1,498
$
1,587
$
1,508
$
1,450
High-Yield Pulp (external sales)
$
489
$
633
$
712
$
635
$
630
Sales Volumes (thousands of metric
tons)
High Purity Cellulose
217
214
240
696
653
Paperboard
39
32
41
109
126
High-Yield Pulp (external sales)
39
60
45
142
130
Rayonier Advanced Materials
Inc.
Reconciliation of Non-GAAP
Measures
(Unaudited)
(in millions)
EBITDA and Adjusted EBITDA by
Segment(a)
Three Months Ended September
30, 2023
High
Purity
Cellulose
Paperboard
High-Yield
Pulp
Corporate
Total
Income (loss) from continuing
operations
$
(5
)
$
14
$
(6
)
$
(30
)
$
(27
)
Depreciation and amortization
32
3
1
—
36
Interest expense, net
—
—
—
19
19
Income tax benefit
—
—
—
(5
)
(5
)
EBITDA-continuing operations
27
17
(5
)
(16
)
23
Loss on debt extinguishment
—
—
—
1
1
Adjusted EBITDA-continuing
operations
$
27
$
17
$
(5
)
$
(15
)
$
24
Three Months Ended July 1,
2023
High
Purity
Cellulose
Paperboard
High-Yield
Pulp
Corporate
Total
Income (loss) from continuing
operations
$
—
$
6
$
1
$
(23
)
$
(16
)
Depreciation and amortization
28
4
—
1
33
Interest expense, net
—
—
—
14
14
Income tax benefit
—
—
—
(3
)
(3
)
EBITDA-continuing operations
28
10
1
(11
)
28
Gain on debt extinguishment
—
—
—
(1
)
(1
)
Adjusted EBITDA-continuing
operations
$
28
$
10
$
1
$
(12
)
$
27
Three Months Ended September
24, 2022
High
Purity Cellulose
Paperboard
High-Yield
Pulp
Corporate
Total
Income (loss) from continuing
operations
$
23
$
12
$
6
$
(23
)
$
18
Depreciation and amortization
30
3
—
2
35
Interest expense, net
—
—
—
17
17
Income tax benefit
—
—
—
(2
)
(2
)
EBITDA and Adjusted EBITDA-continuing
operations
$
53
$
15
$
6
$
(6
)
$
68
Nine Months Ended September
30, 2023
High
Purity
Cellulose
Paperboard
High-Yield
Pulp
Corporate
Total
Income (loss) from continuing
operations
$
8
$
30
$
2
$
(81
)
$
(41
)
Depreciation and amortization
91
10
2
1
104
Interest expense, net
—
—
—
48
48
Income tax benefit
—
—
—
(11
)
(11
)
EBITDA-continuing operations
99
40
4
(43
)
100
Pension settlement loss
—
—
—
2
2
Adjusted EBITDA-continuing
operations
$
99
$
40
$
4
$
(41
)
$
102
Nine Months Ended September
24, 2022
High
Purity
Cellulose
Paperboard
High-Yield
Pulp
Corporate
Total
Income (loss) from continuing
operations
$
22
$
29
$
5
$
(87
)
$
(31
)
Depreciation and amortization
83
10
1
2
96
Interest expense, net
—
—
—
49
49
Income tax expense
—
—
—
3
3
EBITDA-continuing operations
105
39
6
(33
)
117
Pension settlement loss
—
—
—
1
1
Severance
—
—
—
4
4
Adjusted EBITDA-continuing
operations
$
105
$
39
$
6
$
(28
)
$
122
Annual Guidance
2023
Loss from continuing operations
$
(43
)
Depreciation and amortization
140
Interest expense, net
70
Income tax benefit(b)
(17
)
EBITDA and Adjusted EBITDA-continuing
operations
$
150
__________________________
(a)
EBITDA-continuing operations is defined as
income (loss) from continuing operations before interest, taxes,
depreciation and amortization. Adjusted EBITDA-continuing
operations is defined as EBITDA-continuing operations adjusted for
the settlement of certain pension plans, (gain) loss on debt
extinguishment and other items. EBITDA and Adjusted EBITDA are
non-GAAP measures used by Management, existing stockholders and
potential stockholders to measure how the Company is performing
relative to the assets under management.
(b)
Estimated using the statutory rates of
each jurisdiction and ignoring all permanent book-to-tax
differences.
Adjusted Free Cash Flows -
Continuing Operations(a)
Nine Months Ended
September 30,
2023
September 24,
2022
Cash provided by operating
activities-continuing operations
$
82
$
7
Capital expenditures, net
(55
)
(92
)
Adjusted free cash flows-continuing
operations
$
27
$
(85
)
Annual Guidance Range
2023
Low
High
Cash provided by operating
activities-continuing operations
$
150
$
160
Capital expenditures, net
(85
)
(85
)
Adjusted free cash flows-continuing
operations
$
65
$
75
__________________________
(a)
Adjusted free cash flows-continuing
operations is defined as cash provided by (used in) operating
activities-continuing operations adjusted for capital expenditures,
net of proceeds from the sale of assets and excluding strategic
capital expenditures. Adjusted free cash flows is a non-GAAP
measure of cash generated during a period which is available for
dividend distribution, debt reduction, strategic acquisitions and
repurchase of the Company’s common stock.
Adjusted Net Debt(a)
September 30,
2023
December 31,
2022
Debt due within one year
$
19
$
14
Long-term debt
730
839
Total debt
749
853
Unamortized debt premium, discount and
issuance costs
21
6
Cash and cash equivalents
(27
)
(152
)
Adjusted net debt
$
743
$
707
__________________________
(a)
Adjusted net debt is defined as
the amount of debt after the consideration of debt premium,
discount and issuance costs, less cash.
Adjusted Income (Loss) from
Continuing Operations(a)
Three Months Ended
Nine Months Ended
September 30,
2023
July 1,
2023
September 24,
2022
September 30,
2023
September 24,
2022
$
Per
Diluted
Share
$
Per
Diluted
Share
$
Per
Diluted
Share
$
Per
Diluted
Share
$
Per
Diluted
Share
Income (loss) from continuing
operations
$
(27
)
$
(0.41
)
$
(16
)
$
(0.24
)
$
18
$
0.28
$
(41
)
$
(0.62
)
$
(31
)
$
(0.48
)
Pension settlement loss
—
—
—
—
—
—
2
0.04
1
0.02
Severance
—
—
—
—
—
—
—
—
4
0.06
(Gain) loss on debt extinguishment
1
0.01
(1
)
(0.01
)
—
—
—
—
—
—
Tax effect of adjustments
—
—
—
—
—
—
—
—
—
—
Adjusted income (loss) from continuing
operations
$
(26
)
$
(0.40
)
$
(17
)
$
(0.25
)
$
18
$
0.28
$
(39
)
$
(0.58
)
$
(26
)
$
(0.40
)
__________________________
(a)
Adjusted income (loss) from
continuing operations is defined as income (loss) from continuing
operations adjusted net of tax for the settlement of certain
pension plans, (gain) loss on debt extinguishment and other
items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107106293/en/
Media Ryan Houck 904-357-9134
Investors Mickey Walsh 904-357-9162
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