Second Quarter 2020
Highlights
- Second quarter loss from continuing operations was $13 million,
$6 million better than comparable quarter in 2019 driven by certain
tax benefits, improved reliability and lower costs offset by demand
weakness related to COVID-19
- Second quarter EBITDA of $19 million, down $2 million from
comparable quarter in 2019 as impacts from COVID-19 and non-cash
Corporate expenses more than offset improvements in Forest Products
and Paperboard
- High Purity Cellulose segment improved from first quarter of
2020 driven by higher commodity volumes and lower costs
- $16 million of Free Cash Flow generated in the second quarter
driven by reduced capital expenditures and improved working capital
added to improved liquidity of $166 million; well within financial
debt covenant compliance
- Expecting $31 million cash refund in fourth quarter from 2019
taxes, primarily related to CARES Act benefits
Rayonier Advanced Materials Inc. (NYSE:RYAM) (the “Company”)
reported a loss from continuing operations for the quarter ended
June 27, 2020 of $13 million or $0.20 per diluted share, compared
to a loss of $19 million or $0.46 per diluted share for the same
prior year quarter.
Year-to-date net loss from continuing operations for the six
months ended June 27, 2020 was $38 million, or $0.60 per diluted
common share, compared to a net loss of $47 million, or $1.10 per
diluted common share for the same prior year period. The decrease
in the diluted loss per share was due primarily to the conversion
of the Company’s preferred stock into approximately 13 million
shares of common stock in August of 2019.
“Second quarter results were below expectations primarily driven
by the impacts of COVID-19,” said Paul Boynton, President and Chief
Executive Officer. “High Purity Cellulose was impacted from reduced
demand for textile, automotive and construction related products
and ocean carrier delays, while newsprint demand was adversely
affected, severely impacting price realizations and volumes.
Despite the market challenges, we continued to focus on operating
reliably to meet the needs of our customers, minimizing our costs
and improving our cash flow. In addition, we amended our bank debt
covenants and increased liquidity, providing us with incremental
financial flexibility to manage through the pandemic.”
Second Quarter 2020 Operating Results
Net sales comprised the following for the periods presented:
Three Months Ended
Six Months Ended
Net sales (in millions)
June 27, 2020
March 28, 2020
June 29, 2019
June 27, 2020
June 29, 2019
High Purity Cellulose
$
255
$
250
$
269
$
505
$
555
Forest Products
70
82
81
153
156
Paperboard
43
50
50
94
97
Pulp & Newsprint
43
47
65
90
115
Eliminations
(15
)
(19
)
(14
)
(34
)
(32
)
Total net sales
$
397
$
410
$
450
$
807
$
891
Operating results comprised the following for the periods
presented:
Three Months Ended
Six Months Ended
Operating income (loss) (in
millions)
June 27, 2020
March 28, 2020
June 29, 2019
June 27, 2020
June 29, 2019
High Purity Cellulose
$
7
$
(5
)
$
7
$
2
$
4
Forest Products
(4
)
(1
)
(16
)
(5
)
(22
)
Paperboard
6
5
1
11
(2
)
Pulp & Newsprint
(6
)
(6
)
6
(11
)
8
Corporate
(19
)
(5
)
(12
)
(24
)
(31
)
Total operating income (loss)
$
(15
)
$
(12
)
$
(15
)
$
(27
)
$
(43
)
High Purity Cellulose
Operating results for the three and six month periods ended June
27, 2020 were comparable and down $2 million, to the respective
prior year periods. Higher commodity product sales volumes and
lower costs, primarily driven by lower wood and chemical prices,
were offset by a decrease of 16 percent and 17 percent in cellulose
specialties sales volumes for the three and six month periods,
respectively. Additionally, improved reliability provided benefits
to the current six-month period. Cellulose specialties sales
volumes were below original expectations primarily due to COVID-19
related demand weakness in automotive, industrial and construction
end-markets in addition to delays in ocean shipments. Commodity
product sales prices decreased 22 percent and 26 percent for the
three and six month periods, respectively, driven by COVID-19 and
China trade dispute related demand impacts on the larger commodity
pulp and textile markets.
Compared to the first quarter of 2020, operating income improved
by $12 million primarily from higher commodity product sales prices
and volumes, and overall lower costs.
Forest Products
The operating loss for the three and six months ended June 27,
2020 improved $13 million and $16 million, respectively when
compared to the same prior year periods, primarily due to the 10
percent and 8 percent increases in lumber prices, respectively, and
lower costs driven by the curtailments of production. Gains were
partially offset by lower sales volumes as a result of market
downtime taken due to lower demand resulting from the COVID-19
pandemic. The Company incurred $12 million of duties in both the
six months ended June 27, 2020 and June 29, 2019.
Compared to the first quarter of 2020, the operating loss
increased by $3 million. The decline was driven by a 5 percent
lower lumber sales volumes and a 4 percent decline in lumber prices
primarily as a result of reduced demand early in the quarter due to
the COVID-19 pandemic, partially offset by lower costs.
Paperboard
Operating income improved $6 million and $13 million for the
three and six months ended June 27, 2020, respectively, when
compared to the same prior year periods primarily due to lower raw
material pulp prices.
Compared to the first quarter of 2020, operating income improved
$1 million primarily due to lower transportation costs.
Pulp & Newsprint
Operating income for the three and six months ended June 27,
2020 declined $11 million and $19 million, respectively, when
compared to the same prior year periods. The decline was primarily
driven by decreases in high-yield pulp and newsprint sales prices
during both the three and six months periods ended June 27, 2020
compared to the same prior year periods. In addition, newsprint
sales volumes decreased by 43 percent and 21 percent during the
three and six month periods ended June 27, 2020, respectively, due
to weak demand and market related downtime resulting from the
COVID-19 pandemic.
The operating loss was similar to the first quarter of 2020,
with lower newsprint sales volumes offset by higher pulp sales
prices.
Corporate
The operating loss for the three months ended June 27, 2020 was
unfavorable by $7 million primarily due to higher non-cash
amortization of technology costs and stock-based compensation
expenses and an unfavorable change in the foreign exchange rates
when compared to the same prior year quarter. The operating loss
for the six months ended June 27, 2020, improved $7 million when
compared to the same prior year period primarily due to overall
reduced spending and a favorable change in the foreign exchange
rates.
Compared to the first quarter of 2020, the operating loss was
$14 million higher during the second quarter ended June 27, 2020.
This was primarily driven by an unfavorable change in foreign
exchange rates and the remeasurement of certain liabilities in
Canada.
Non-Operating Expenses
Interest expense for the three and six months ended June 27,
2020, increased $1 million and $3 million, respectively, when
compared to the same prior year periods, principally driven by
increased interest margin related to the September 2019 amendment
to the credit facilities, partially offset by lower debt
levels.
Income Taxes
The second quarter 2020 and 2019 effective tax rate from
continuing operations was a benefit of 59 percent and 34 percent,
respectively. The 2020 effective tax rate benefit differs from the
federal statutory rate of 21 percent primarily due to the release
of certain valuation allowances related to nondeductible interest
expense, benefits from the CARES Act, return to accrual
adjustments, and tax credits, partially offset by nondeductible
interest expense in the U.S., taxable income generated from the
2020 credit agreement amendment, increases to uncertain tax
position reserves, nondeductible executive compensation, and lower
tax deductions on vested stock compensation.
Cash Flows & Liquidity
For the three and six months ended June 27, 2020, the Company’s
operations provided cash flows of $24 million and $11 million,
respectively. Year-to-date working capital used $27 million,
primarily due to an increase in the income tax receivable as a
result of the CARES Act. Operating cash flows improved $37 million
from the first quarter 2020.
For the three and six months ended June 27, 2020, the Company
invested $10 million and $23 million respectively, in capital
expenditures, which included approximately $5 million of strategic
capital year-to-date.
The Company ended the second quarter of 2020 with $166 million
of liquidity globally, including $49 million of cash, $98 million
revolver availability in the U.S. and $19 million of availability
on a factoring facility in France. Liquidity for the quarter
improved $21 million, driven by a $10 million increase in revolver
availability resulting from an amendment to the credit agreement
and a $6 million improvement in cash driven by $16 million of Free
Cash Flow in the quarter.
The Company remains well within compliance with its second
quarter covenants, including a Gross Secured Leverage Ratio of 4.8
times EBITDA compared to a covenant of less than 6.2 times and an
Interest Coverage Ratio of 2.0 times compared to a covenant 1.6
times.
Market Assessment
A full year outlook for each of the Company’s segments is
difficult to provide due to the uncertainty of the magnitude and
timing of economic recovery due to the COVID-19 pandemic and the
risk of supply chain disruptions beyond the control of the Company.
As such, the Company has determined to suspend its guidance. The
market assessment represents the Company’s best current estimate of
each business in this environment.
High Purity Cellulose
During the second quarter, as a direct result of the COVID-19
pandemic, the Company experienced a reduction in overall demand for
its cellulose specialties products, driven by weakness in the
automotive, industrial and construction end-markets, while demand
for acetate tow, food and pharmaceutical end-markets remained
relatively stable. The Company believes its diversified
end-markets, and its customers’ focus on security of supply,
provide greater earnings stability during times of uncertainty but
do not eliminate the risk associated with the demand impact of
COVID-19 on its end markets. The outlook for sales of cellulose
specialties is highly dependent on the recovery of economic growth
as the world emerges from the pandemic. For its commodity products,
the pricing momentum of absorbent materials, primarily fluff pulp,
experienced in the second quarter has dissipated and modest
decreases have recently been experienced. Viscose pulp markets
remain extremely weak as the U.S. tariffs on Chinese textiles
combined with the global "stay at home" directives have
significantly reduced demand for textiles and clothing.
Certain costs, specifically wood, energy and commodity chemical
prices have declined from prior year levels. However, future input
prices and availability of chemicals are difficult to predict due
to the current unprecedented economic conditions. The Company is
seeing increasing pressure on certain chemical and transportation
costs. Logistics delays, especially as it relates to ocean
transportation, could result in the variability of revenue
recognition. Operations at all four high purity cellulose mills are
running at or near normal levels. The Company will continue to
optimize its commodity profile to maximize profitability and, if
necessary, will curtail production to minimize impacts of reduced
demand.
Forest Products
Early in the second quarter, stemming from the COVID-19
pandemic, lumber demand and prices declined rapidly causing
producers to curtail approximately 30 percent (at peak) of North
American lumber production capacity. Later in the quarter, the
demand for lumber improved significantly while North American
production rates have been slower to restart, resulting in a supply
and demand imbalance. As a result, lumber sales prices have surged.
Repair and remodel activity is the main catalyst for this market
resurgence with strong demand for stud lumber, resulting in a rare
premium for stud products above random length lumber. U.S. housing
starts in June 2020 were approximately 1.2 million units,
seasonally adjusted, which is an improvement from lows in April of
0.9 million units, but still 25 percent below the pre-COVID-19
February 2020 seasonally adjusted levels. As a result of the
improved pricing, the Company is currently operating its lumber
assets near full capacity.
As announced in January by the U.S. Department of Commerce, the
Company expects duties on softwood lumber imported into the U.S. to
be reduced from 20 percent to 8 percent later in 2020 or early
2021. Since 2017, the Company has paid approximately $72 million in
duties.
Paperboard
COVID-19 has had a muted impact on Paperboard sales and
profitability has benefited from lower input costs offset by some
sales mix decline. Paperboard for packaging and lottery markets
have been generally resilient, while commercial printing has shown
weakness. The Company expects stable sales volumes and to operate
the paperboard assets at normal levels going forward.
Pulp & Newsprint
After significant improvements in high yield pulp demand and
pricing at the beginning of the year, the weakness in the broader
paper pulp market caused by the COVID-19 pandemic is now negatively
impacting pricing of high yield pulp products. Overall input costs
have remained stable and the Company expects to produce at normal
levels for the near future. However, a further deterioration of
markets could require modest downtime to control inventory
levels.
Demand for newsprint products has declined approximately 23
percent since the beginning of the year resulting in reduced sales
prices and volumes, while input costs have remained stable. In
response, North American producers have announced production
downtime, resulting in reduced newsprint production capacity of
approximately 33 percent. The Company intends to manage its
production based on demand to maximize profitability and optimize
cash flows until the market stabilizes.
Conclusion
"Despite the challenges from COVID-19, we believe that our core
High Purity Cellulose segment represents a solid foundation to grow
our business as we emerge from the unprecedented challenges and
uncertainties in the global economy. With the earnings potential of
our assets well above current levels, we continue to focus on
operating safely, reducing costs and improving cash flow and
liquidity. We believe that our business is resilient and the
actions we have taken to increase financial flexibility in the near
term will allow us to realize our potential in the post-pandemic
world.” concluded Mr. Boynton.
Conference Call Information
Rayonier Advanced Materials will host a conference call and live
webcast at 9:00 a.m. ET on Wednesday, August 5, 2020 to discuss
these results. Supplemental materials and access to the live audio
webcast will be available at www.rayonieram.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, August
19, 2020. The replay dial-in number within the U.S. is
877-660-6853, international is 201-612-7415, Conference ID:
13707294.
About Rayonier Advanced Materials
Rayonier Advanced Materials is a global leader of
cellulose-based technologies, including high purity cellulose
specialties, a natural polymer commonly found in filters, food,
pharmaceuticals and other industrial applications. The Company also
manufactures products for lumber, paper and packaging markets. With
manufacturing operations in the U.S., Canada and France, Rayonier
Advanced Materials employs just over 4,000 people and generates
approximately $1.8 billion of revenues. More information is
available at www.rayonieram.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
Rayonier Advanced Materials’ 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.
Our operations are subject to a number of risks and
uncertainties including, but not limited to, those listed below.
When considering an investment in our securities, you should
carefully read and consider these risks, together with all other
information in our Annual Report on Form 10-K and our other filings
and submissions to the SEC, which provide much more information and
detail on the risks described below. If any of the events described
in the following risk factors actually occur, our business,
financial condition or operating results, as well as the market
price of our securities, could be materially adversely affected.
These risks and events include, without limitation: Business and
Operating Risks Our businesses we operate are highly
competitive and many of them are cyclical, especially in commodity
markets, which may result in fluctuations in pricing and volume
that can adversely impact our business, financial condition and
results of operations; Our ten largest customers represented
approximately 33% of our 2019 revenue, and the loss of all or a
substantial portion of our revenue from these large customers could
have a material adverse effect on us; A material disruption at one
of our major manufacturing facilities could prevent us from meeting
customer demand, reduce our sales and profitability, increase our
cost of production and capital needs, or otherwise adversely affect
our business, financial condition and results of operation; Changes
in raw material and energy availability and prices could affect our
results of operations and financial condition; The availability of,
and prices for, wood fiber may significantly impact our business,
results of operations and financial condition; We are subject to
risks associated with manufacturing and selling products and
otherwise doing business outside of the United States; Our
operations require substantial capital for ongoing maintenance,
repair and replacement of existing facilities and equipment;
Currency fluctuations may have a negative impact on our 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, especially with respect to China, Canada and as a
result of “Brexit”, could adversely affect our ability to access
certain markets and otherwise impact our results of operations; We
depend on third parties for transportation services and increases
in costs and the availability of transportation could adversely
affect our business; Our business is subject to extensive
environmental laws, regulations and permits that may restrict or
adversely affect our ability to conduct our business; The impacts
of climate-related initiatives remain uncertain at this time; Our
failure to maintain satisfactory labor relations could have a
material adverse effect on our business; We are dependent upon
attracting and retaining key personnel, the loss of whom could
adversely affect our business; Failure to develop new products or
discover new applications for our existing products, or our
inability to protect the intellectual property underlying such new
products or applications, could have a negative impact on our
business; Risk of loss of the Company’s intellectual property and
sensitive business information, or disruption of its manufacturing
operations, in each case due to cyberattacks or cyber security
breaches, could adversely impact the Company; we may need to make
significant additional cash contributions to our 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; and Public
health crises such as epidemics or pandemics could have a material
adverse effect on our financial condition, liquidity or results of
operations - specifically, we are subject to risks associated with
the COVID-19 pandemic and related impacts, which have had, and we
expect will continue to have, a material adverse effect on our
business, the nature and extent of which are highly uncertain and
unpredictable Debt-Related Risks While the Company has
entered into an amendment (the “Amendment”) to its Senior Secured
Credit Facilities (as amended by the Amendment, the “Credit
Agreement”), there can be no assurances that the Company will
continue in full compliance with the amended covenants provided in
the Credit Amendment; We have significant debt obligations that
could adversely affect our business and our ability to meet our
obligations; The phase-out of LIBOR as an interest rate benchmark
could result in an increase to our borrowing costs; Challenges in
the commercial and credit environments may materially adversely
affect our future access to capital; and we may need additional
financing in the future to meet our 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.
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 our filings with the U.S. Securities and
Exchange Commission, including our Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. Rayonier Advanced Materials 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 operating income,
adjusted net income and adjusted net debt. These non-GAAP measures
are reconciled to each of their respective most directly comparable
GAAP financial measures beginning on Schedule D of this earnings
release. We believe these non-GAAP measures provide useful
information to our board of directors, management and investors
regarding certain trends relating to our financial condition and
results of operations. Our management uses these non-GAAP measures
to compare our performance to that of prior periods for trend
analyses, purposes of determining management incentive compensation
and budgeting, forecasting and planning purposes.
We do not consider these non-GAAP measures an alternative to
financial measures determined in accordance with GAAP. The
principal limitations of these non-GAAP financial measures are that
they may exclude significant expenses and income items that are
required by GAAP to be recognized in our consolidated financial
statements. In addition, they reflect the exercise of management’s
judgment about which expenses and income items are excluded or
included in determining these non-GAAP financial measures. In order
to compensate for these limitations, management provides
reconciliations of the non-GAAP financial measures we use to their
most directly comparable GAAP measures. Non-GAAP financial measures
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 Income (Loss) June 27,
2020 (Unaudited) (millions of dollars, except per share
information)
Three Months Ended
Six Months Ended
June 27,
2020
March 28,
2020
June 29,
2019
June 27,
2020
June 29,
2019
Net Sales
$
397
$
410
$
450
$
807
$
891
Cost of Sales
(377
)
(399
)
(432
)
(776
)
(866
)
Gross Margin
20
10
18
31
26
Selling, general & administrative
expenses
(22
)
(20
)
(20
)
(43
)
(49
)
Duties
(6
)
(6
)
(7
)
(12
)
(12
)
Foreign exchange gains (losses)
(4
)
6
(2
)
2
3
Other operating income (expense), net
(4
)
(2
)
(4
)
(5
)
(11
)
Operating Income (Loss)
(15
)
(12
)
(15
)
(27
)
(43
)
Interest expense
(16
)
(15
)
(14
)
(31
)
(28
)
Interest income and other, net
(1
)
1
—
—
2
Income (Loss) From Continuing
Operations Before Income Taxes
(32
)
(26
)
(29
)
(58
)
(69
)
Income tax benefit (expense)
19
2
10
21
21
Income (Loss) from Continuing
Operations
$
(13
)
$
(25
)
$
(19
)
$
(38
)
$
(47
)
Income (loss) from discontinued
operations, net of taxes
—
1
4
1
10
Net Income (Loss) Attributable to the
Company
(13
)
(24
)
(15
)
(37
)
(37
)
Mandatory convertible stock dividends
—
—
(3
)
—
(7
)
Net Income (Loss) Available to Common
Stockholders
$
(13
)
$
(24
)
$
(18
)
$
(37
)
$
(44
)
Basic Earnings Per Common
Share:
Income (loss) from continuing
operations
$
(0.20
)
$
(0.39
)
$
(0.46
)
$
(0.60
)
$
(1.10
)
Income from discontinued operations
—
0.01
0.09
0.01
0.21
Net income (loss) per common share -
Basic
$
(0.20
)
$
(0.38
)
$
(0.37
)
$
(0.59
)
$
(0.89
)
Diluted Earnings Per Common
Share:
Income (loss) from continuing
operations
$
(0.20
)
$
(0.39
)
$
(0.46
)
$
(0.60
)
$
(1.10
)
Income from discontinued operations
—
0.01
0.09
0.01
0.21
Net income (loss) per common share -
Diluted
$
(0.20
)
$
(0.38
)
$
(0.37
)
$
(0.59
)
$
(0.89
)
Shares Used for Determining:
Basic EPS
63,235,151
62,982,735
49,572,055
63,111,058
49,282,418
Diluted EPS
63,235,151
62,982,735
49,572,055
63,111,058
49,282,418
A
Rayonier Advanced Materials
Inc. Condensed Consolidated Balance Sheets June 27, 2020
(Unaudited) (millions of dollars)
June 27,
2020
December 31,
2019
Assets
Cash and cash equivalents
$
49
$
64
Other current assets
546
510
Property, plant and equipment, net
1,267
1,316
Other assets
583
590
$
2,445
$
2,480
Liabilities and Stockholders’
Equity
Current maturities of long-term debt
$
14
$
19
Other current liabilities
291
267
Long-term debt and finance lease
obligations
1,061
1,063
Non-current environmental liabilities
159
160
Other non-current liabilities
271
288
Total stockholders’ equity
649
683
$
2,445
$
2,480
B
Condensed Consolidated
Statements of Cash Flows June 27, 2020 (Unaudited) (millions of
dollars)
Six Months Ended
June 27,
2020
June 29,
2019
Operating Activities:
Net income (loss)
$
(37
)
$
(37
)
Income from discontinued operations
(1
)
(10
)
Adjustments:
Depreciation and amortization
73
71
Other items to reconcile net income to
cash provided by operating activities
11
(8
)
Changes in working capital and other
assets and liabilities
(35
)
(11
)
Cash provided by (used for) operating
activities- continuing operations
11
4
Cash provided by (used for) operating
activities- discontinued operations
—
14
Cash Provided by (Used for) Operating
Activities
11
18
Investing Activities:
Capital expenditures
(23
)
(59
)
Cash provided by (used for) investing
activities-continuing operations
(23
)
(59
)
Cash provided by (used for) investing
activities-discontinued operations
—
(1
)
Cash Provided by (Used for) Investing
Activities
(23
)
(60
)
Financing Activities:
Changes in debt
—
44
Dividends paid
—
(15
)
Common stock repurchased, net of
issuances
—
(6
)
Debt issuance costs
(3
)
—
Cash provided by (used for) financing
activities-continuing operations
(4
)
23
Cash provided by (used for) financing
activities-discontinued operations
—
—
Cash Provided by (Used for) Financing
Activities
(4
)
23
Cash and Cash Equivalents:
Change in cash and cash equivalents
(15
)
(19
)
Net effect of foreign exchange on cash and
cash equivalents
—
—
Balance, beginning of year
64
109
Balance, end of period
$
49
$
90
C
Rayonier Advanced Materials
Inc. Sales Volumes and Average Prices June 27, 2020
(Unaudited)
Three Months Ended
Six Months Ended
June 27,
2020
March 28,
2020
June 29,
2019
June 27,
2020
June 29,
2019
Average Sales Prices:
High Purity Cellulose ($ per metric
ton):
Cellulose Specialties
$
1,309
$
1,306
$
1,310
$
1,307
$
1,297
Commodity Products
$
620
$
590
$
792
$
606
$
822
Forest Products ($ per thousand board
feet):
Lumber
$
391
$
407
$
356
$
399
$
371
Paperboard ($ per metric ton):
Paperboard
$
1,091
$
1,107
$
1,117
$
1,100
$
1,109
Pulp & Newsprint ($ per metric
ton):
Pulp
$
493
$
463
$
539
$
478
$
555
Newsprint
$
412
$
417
$
508
$
415
$
546
Sales Volumes:
High Purity Cellulose (thousands of metric
tons):
Cellulose Specialties
123
123
146
246
295
Commodity Products
122
113
71
234
158
Forest Products (millions of board
feet):
Lumber
142
149
180
290
328
Paperboard (thousands of metric tons):
Paperboard.
40
46
45
85
88
Pulp & Newsprint (thousands of metric
tons):
Pulp
53
52
64
105
100
Newsprint
27
40
47
67
85
D
Rayonier Advanced Materials
Inc. Reconciliation of Non-GAAP Measures June 27, 2020
(Unaudited)
EBITDA by Segment (a):
Three Months Ended June 27,
2020
Forest
Products
Paperboard
Pulp &
Newsprint
High Purity
Cellulose
Corporate
& Other
Total
Income (loss) from continuing
operations
$
(4
)
$
6
$
(5
)
$
5
$
(16
)
$
(13
)
Depreciation and amortization
2
4
1
26
2
35
Interest expense, net
—
—
—
—
16
16
Income tax expense
—
—
—
—
(19
)
(19
)
EBITDA
$
(2
)
$
10
$
(4
)
$
31
$
(17
)
$
19
Three Months Ended June 29,
2019
Forest
Products
Paperboard
Pulp &
Newsprint
High Purity
Cellulose
Corporate
& Other
Total
Income (loss) from continuing
operations
$
(16
)
$
1
$
7
$
6
$
(17
)
$
(19
)
Depreciation and amortization
2
4
1
28
—
35
Interest expense, net
—
—
—
—
14
14
Income tax expense
—
—
—
—
(10
)
(10
)
EBITDA
(14
)
5
8
34
(13
)
20
Non-recurring expense
—
—
—
—
1
1
Adjusted EBITDA
$
(14
)
$
5
$
8
$
34
$
(12
)
$
21
EBITDA by Segment (a):
Six Months Ended June 27,
2020
Forest
Products
Paperboard
Pulp &
Newsprint
High Purity
Cellulose
Corporate
& Other
Total
Income (loss) from continuing
operations
$
(5
)
$
11
$
(10
)
$
—
$
(35
)
$
(38
)
Depreciation and amortization
5
8
2
57
2
73
Interest expense, net
—
—
—
—
31
31
Income tax expense
—
—
—
—
(21
)
(21
)
EBITDA
$
—
$
19
$
(8
)
$
57
$
(22
)
$
46
Six Months Ended June 29,
2019
Forest
Products
Paperboard
Pulp &
Newsprint
High Purity
Cellulose
Corporate
& Other
Total
Income (loss) from continuing
operations
$
(22
)
$
(1
)
$
11
$
2
$
(38
)
$
(47
)
Depreciation and amortization
4
8
2
57
—
71
Interest expense, net
—
—
—
—
28
28
Income tax expense
—
—
—
—
(21
)
(21
)
EBITDA
$
(18
)
$
7
$
13
$
59
$
(31
)
$
30
Non-recurring expense
—
—
—
—
1
1
Adjusted EBITDA
$
(18
)
$
7
$
13
$
59
$
(30
)
$
31
(a)
EBITDA is defined as income (loss)
from continuing operations before interest, taxes, depreciation and
amortization. EBITDA is a non-GAAP measure used by our Chief
Operating Decision Maker, existing stockholders and potential
stockholders to measure how the Company is performing relative to
the assets under management. Adjusted EBITDA is
defined as EBITDA adjusted for items management believes do not
represent core operations. Management believes this measure is
useful to evaluate the Company's performance.
E
Rayonier Advanced Materials
Inc. Reconciliation of Non-GAAP Measures (Continued) June 27, 2020
(Unaudited) (millions of dollars, except per share
information)
Six Months Ended
Adjusted Free Cash Flows (a):
June 27,
2020
June 29,
2019
Cash provided by operating activities of
continuing operations
$
11
$
4
Capital expenditures
(17
)
(50
)
Adjusted Free Cash Flows
$
(7
)
$
(46
)
(a)
Adjusted free cash flows is defined as
cash provided by (used for) operating activities from continuing
operations adjusted for capital expenditures excluding strategic
capital. 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 our common stock. Adjusted free cash flows is not
necessarily indicative of the adjusted free cash flows that may be
generated in future periods.
Adjusted Net Debt (a):
June 27,
2020
December 31,
2019
Current maturities of long-term debt
$
14
$
19
Long-term debt & finance lease
obligation
1,061
1,063
Total debt
1,075
1,082
Original issue discount, premiums and debt
issuance costs
8
6
Cash and cash equivalents
(49
)
(64
)
Adjusted Net Debt
$
1,035
$
1,024
(a)
Adjusted net debt is defined as the amount
of debt after the consideration of the original issue discount,
premiums, and debt issuance costs, less cash. Adjusted net
debt is a non-GAAP measure of debt and is not necessarily
indicative of the adjusted net debt that may occur in future
periods.
F
Rayonier Advanced Materials
Inc. Reconciliation of Non-GAAP Measures (Continued) June 27, 2020
(Unaudited) (millions of dollars, except per share
information)
Three Months Ended
Six Months Ended
June 27,
2020
March 28,
2020
June 29,
2019
June 27,
2020
June 29,
2019
Adjusted Operating Income (Loss) and
Income (Loss) from Continuing Operations (a):
$
Per
Diluted
Share
$
Per
Diluted
Share
$
Per
Diluted
Share
$
Per
Diluted
Share
$
Per
Diluted
Share
Operating Income (Loss)
$
(15
)
$
(12
)
$
(15
)
$
(27
)
$
(43
)
Non-recurring expense (a)
—
—
1
—
1
Adjusted Operating Income
(Loss)
$
(15
)
$
(12
)
$
(14
)
$
(27
)
$
(42
)
Income (Loss) from Continuing
Operations
$
(13
)
$
(0.20
)
$
(25
)
$
(0.39
)
$
(19
)
$
(0.46
)
$
(38
)
$
(0.60
)
$
(47
)
$
(1.10
)
Non-recurring expense (a)
—
—
—
—
1
0.02
—
—
1
0.02
Tax effects of adjustments
—
—
—
—
—
—
—
—
—
—
Adjusted Income (Loss) from Continuing
Operations
$
(13
)
$
(0.20
)
$
(25
)
$
(0.39
)
$
(18
)
$
(0.44
)
$
(38
)
$
(0.60
)
$
(46
)
$
(1.08
)
(a)
Adjusted Operating Income (Loss) is
defined as operating income adjusted for non-recurring costs
related to the Company’s review of its commodity asset portfolio.
Adjusted income (loss) from Continuing Operations is defined as net
income (loss) from Continuing Operations adjusted net of tax for
non-recurring costs related to the Company’s review of its
commodity asset portfolio. Adjusted operating and net income (loss)
are not necessarily indicative of results that may be generated in
future periods.
G
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200804006090/en/
Media Ryan Houck 904-357-9134
Investors Mickey Walsh 904-357-9162
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