- Net sales for 2023 of $1,643 million, down $74 million from the
prior year
- Loss from continuing operations for 2023 of $102 million
inclusive of a $62 million non-cash impairment, down $75 million
from the prior year
- Adjusted EBITDA from continuing operations for 2023 of $139
million
- Year-to-date cash provided by operating activities of $136
million; total debt of $777 million, a reduction of $76
million
- Adjusted Free Cash Flow year-to-date generation of $53 million;
Net Secured Debt of $698 million
- Remained in compliance with our debt covenants with a net
secured debt ratio of 4.2 times
- 2024 Adjusted EBITDA guidance of $180 million to $200 million
expected to drive $20 million to $40 million of Adjusted Free Cash
Flow
Rayonier Advanced Materials Inc. (NYSE:RYAM) (the “Company”)
today reported results for the fourth quarter and full year
2023.
“Our EBITDA results for 2023 fell short of expectations
reflecting soft demand for cellulose ethers products driven by weak
construction activity, lower than expected demand in Paperboard and
weak pricing in High-Yield Pulp and commodity pulp products. In
response to weaker markets, we implemented cost-cutting measures
and strategically scheduled market-driven downtime across all
segments. Our primary focus shifted to generating free cash flow,
driven predominantly by improvements in working capital and
adhering to our lending commitments,” said De Lyle Bloomquist,
RYAM’s President and Chief Executive Officer. “As a result, we
concluded the year with $139 million in Adjusted EBITDA and $53
million of free cash flow and remained in compliance with our
original debt covenants with a net secured debt ratio of 4.2 times
Adjusted EBITDA.
“With an improving outlook aided by a competitor’s closure,
coupled with our sales priority of value over volume, we anticipate
better results for 2024. Higher pricing for our key cellulose
specialties products, along with lower unit production costs for
our High Purity Cellulose business, driven by improved productivity
and lower key input and logistics costs, are expected to generate
higher earnings for this segment. Furthermore, our new bioethanol
facility is expected to commence operations in the first quarter of
2024. Paperboard and High-Yield Pulp are also expected to deliver
improved results due to lower costs and higher production due to
normalized demand. In total, we project an Adjusted EBITDA of $180
to $200 million and free cash flow of $20 to $40 million in 2024,”
concluded Mr. Bloomquist.
Fourth Quarter 2023 Financial Results
The Company reported a net loss of $102 million, or $(1.57) per
diluted share, for the year ended December 31, 2023, compared to a
net loss of $15 million, or $(0.23) per diluted share, for the
prior year. Loss from continuing operations for the year ended
December 31, 2023 was $102 million, or $(1.57) per diluted share,
compared to a loss from continuing operations of $27 million, or
$(0.42) per diluted share, for the prior year.
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
Year Ended
(in millions)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
High Purity Cellulose
$
347
$
292
$
384
$
1,313
$
1,336
Paperboard
55
57
67
219
250
High-Yield Pulp
25
25
58
136
160
Eliminations
(5
)
(5
)
(9
)
(25
)
(29
)
Net sales
$
422
$
369
$
500
$
1,643
$
1,717
Operating results were comprised of the following for the
periods presented:
Three Months Ended
Year Ended
(in millions)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
High Purity Cellulose
$
(49
)
$
(6
)
$
10
$
(42
)
$
31
Paperboard
8
13
9
37
37
High-Yield Pulp
(5
)
(6
)
12
(3
)
16
Corporate
(15
)
(15
)
(15
)
(57
)
(58
)
Operating income (loss)
$
(61
)
$
(14
)
$
16
$
(65
)
$
26
High Purity Cellulose
Net sales for the year ended December 31, 2023 decreased $23
million, or 2 percent, to $1,313 million compared to the prior
year. Included in the current and prior years were $98 million and
$115 million, respectively, of other sales primarily from bio-based
energy and lignosulfonates. Despite an 11 percent increase in
cellulose specialties prices, total sales prices decreased 4
percent during the current year due to a 13 percent decrease in
commodity prices. Total sales volumes increased 4 percent during
the current year driven by a 39 percent increase in commodity
volumes, partially offset by an 18 percent decrease in cellulose
specialties volumes. Despite a significant increase in volume in
the first quarter of 2023 due to improved customer contract terms,
overall 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 fourth quarter decreased $37 million, or 10
percent, to $347 million compared to the same prior year quarter.
Included in the current and prior year quarters were $25 million
and $31 million, respectively, of other sales primarily from
bio-based energy and lignosulfonates. Despite an 8 percent increase
in cellulose specialties prices, total sales prices decreased 6
percent during the current quarter due to a 22 percent decrease in
commodity prices. Total sales volumes decreased 2 percent during
the current quarter, driven by an 11 percent decrease in cellulose
specialties volumes, partially offset by a 7 percent increase in
commodity volumes. Sales volumes for cellulose specialties were
negatively impacted by persistent customer destocking and
market-driven demand declines, particularly in construction
markets.
Operating results for the quarter and year ended December 31,
2023 declined $59 million and $73 million, respectively, compared
to the same prior year periods driven by a $62 million non-cash
impairment recorded in the fourth quarter of 2023 as a result of
the optimization and realignment of the Company’s High Purity
Cellulose assets. This realignment reflects a strategic decision
expected to reduce commodity exposure and earnings volatility
through the consolidation of commodity viscose production into the
Temiscaming, Quebec plant and fluff production into the Jesup,
Georgia plant’s C Line and allow the Company to better manage
excess capacity of cellulose specialties by operating assets based
on current demand for each end market.
Year over year, the higher cellulose specialties sales prices
and commodity sales volumes and decreased key input and logistics
costs were offset by the lower cellulose specialties sales volumes
and commodity sales prices and higher labor costs due to inflation.
Also contributing to the year-over-year decline in operating
results were $8 million of energy cost offsets in 2022 from sales
of energy savings certificates associated with Tartas, France
operations, compared to only $1 million in 2023. In addition, the
Company earned income on its investment in LTF in 2023 as compared
to a loss in 2022.
In the current quarter, the higher cellulose specialties sales
prices and commodity sales volumes, decreased key input, logistics
and labor costs and the impact of the timing and extent of
maintenance outages were offset by the lower cellulose specialties
sales volumes and commodity sales prices.
Compared to the third quarter of 2023, the operating loss
increased $43 million, primarily due to the $62 million non-cash
impairment recorded in the fourth quarter and higher labor costs.
Partially offsetting these charges was a 19 percent increase in
total sales volumes, driven by a 29 percent increase in cellulose
specialties volumes, as demand improved in the fourth quarter and
volume increased after the closure of a competitor’s facility, and
a 13 percent increase in commodity volumes, primarily fluff. Total
sales prices increased 3 percent due to product mix, with near flat
changes in both cellulose specialties and commodity prices. Lower
key input and logistics costs and the impact of the timing and
extent of maintenance outages during the year further offset the
loss on impairment.
Paperboard
Net sales for the year ended December 31, 2023 decreased $31
million, or 12 percent, to $219 million compared to the prior year
driven by a 13 percent decrease in sales volumes due to customer
destocking. Sales prices increased slightly year over year. Net
sales for the fourth quarter decreased $12 million, or 18 percent,
to $55 million compared to the same prior year quarter driven by 7
percent and 12 percent decreases in sales prices and sales volumes,
respectively, due to market-driven demand declines.
Operating income for the quarter and year ended December 31,
2023 decreased $1 million and was flat, respectively, compared to
the same prior year periods. Year over year, lower purchased pulp,
maintenance and logistics costs and the impact of maintenance and
market-driven shutdowns were offset by the lower sales volumes. The
current quarter decrease was driven by the lower sales prices and
sales volumes that were largely offset by lower purchased pulp
costs.
Compared to the third quarter of 2023, operating income
decreased $5 million, driven by 1 percent and 3 percent decreases
in sales prices and sales volumes, respectively, partially offset
by lower purchased pulp costs.
High-Yield Pulp
Net sales for the year ended December 31, 2023 decreased $24
million, or 15 percent, to $136 million compared to the prior year
driven by 12 percent and 5 percent decreases in sales prices and
sales volumes, respectively. Net sales for the fourth quarter
decreased $33 million, or 57 percent, to $25 million compared to
the same prior year quarter driven by 37 percent and 34 percent
decreases in sales prices and sales volumes. These quarter and
year-over-year decreases were due to lower demand.
Operating results for the quarter and year ended December 31,
2023 declined $17 million and $19 million, respectively, compared
to the same prior year periods. The quarter and year-over-year
declines were driven by the lower sales prices and sales volumes
and increased wood costs. The current quarter decreases were
partially offset by lower logistics costs.
Compared to the third quarter of 2023, operating results
improved $1 million, driven by 3 percent increases in both sales
prices and sales volumes due to improved market demand, partially
offset by higher key input and logistics costs.
Corporate
Operating loss for the quarter and year ended December 31, 2023
was flat and decreased $1 million, respectively, compared to the
same prior year periods. Quarter and year-over-year improvements
included lower variable compensation and other benefit costs that
were largely offset by unfavorable foreign exchange rates in the
current year as compared to favorable rates in the prior year.
Additionally, higher costs were recognized related to ERP
transformation project expenditures, discounting and financing fees
incurred to facilitate working capital enhancements and advisory
and professional expenses related to the Company’s senior notes
refinancing. Also contributing to the year-over-year improvement
were one-time severance costs incurred in the prior year. Compared
to the third quarter of 2023, the operating loss was flat.
Non-Operating Income & Expense
Interest expense increased $5 million and $8 million during the
quarter and year ended December 31, 2023, respectively, compared to
the same prior year periods driven by an increase in the average
effective interest rate on debt, partially offset by a decrease in
the average outstanding balance of debt. Total debt decreased $76
million from December 31, 2022 to December 31, 2023.
Interest income increased $3 million during the year ended
December 31, 2023 compared to the prior year 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 year ended
December 31, 2023 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 year ended
December 31, 2022 was a $5 million net gain associated with the
monetization of the GreenFirst common shares received in connection
with the sale of the Company’s lumber and newsprint assets in
2021.
Income Taxes
The effective tax rate on the loss from continuing operations
for the quarter and year ended December 31, 2023 was a benefit of
26 percent and 24 percent, respectively. The 2023 effective tax
rates differed from the federal statutory rate of 21 percent
primarily due to different statutory tax rates in foreign
jurisdictions, U.S. tax credits, return-to-accrual adjustments
related to previously filed tax returns and changes in the
valuation allowance on disallowed interest deductions.
The effective tax rate on the income from continuing operations
for the quarter ended December 31, 2022 was a benefit of 130
percent. The effective tax rate on the loss from continuing
operations for the year ended December 31, 2022 was an expense of 4
percent. The most significant items 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, nondeductible executive compensation, U.S. tax credits,
tax return-to-accrual adjustments on filed returns and interest
received from tax overpayments.
Discontinued Operations
During the year ended December 31, 2023, the Company recorded a
pre-tax gain of $2 million related to a reduction in the rates
applied to Canada softwood lumber exports to the U.S. during 2021
and a $2 million loss related to the settlement of a claim pursuant
to the representations and warranties in the asset purchase
agreement.
During the year ended December 31, 2022, the Company recorded a
pre-tax gain of $16 million related to a reduction in the rates
applied to Canada softwood lumber exports to the U.S. during 2020.
Cumulative through December 31, 2023, the Company has recorded
total gains of $40 million related to 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 year ended December 31, 2023, the Company generated
operating cash flows of $136 million, which were driven by
increased cash inflows from working capital, partially offset by
payments on income taxes and deferred energy liabilities associated
with Tartas plant operations.
For the year ended December 31, 2023, the Company used $128
million in its investing activities related to net capital
expenditures, which included $45 million of strategic capital
spending focused on the investment in the 2G bioethanol plant in
Tartas, advancement of the Company’s ERP transformation project,
which will enhance its operating and reporting systems, and
improved cost efficiency throughout the Company.
For the year ended December 31, 2023, the Company used $87
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 year with $199 million of global
liquidity, including $76 million of cash, borrowing capacity under
the ABL Credit Facility of $118 million and $5 million of
availability under the France factoring facility.
In January 2024, the Company amended the 2027 Term Loan to
increase the maximum consolidated secured net leverage ratio that
it must maintain in the fourth quarter of 2023 and through its 2024
fiscal year. The amendment provides the Company with the
operational flexibility to execute its strategic initiatives in
2024. In addition, should the Company exceed the 4.50 to 1.00
maximum ratio established by the original agreement in any of these
quarters, it will incur a fee of 0.25% of the principal balance
outstanding at the end of the applicable quarter. The Company
incurred total fees of $3 million related to this amendment,
including $1 million in legal and advisory fees recorded to
selling, general and administrative expense in the fourth quarter
of 2023, and $2 million in lender fees that will be recorded as
deferred financing costs in the first quarter of 2024 and amortized
to interest expense over the remaining term of the loan.
As of the fourth quarter, the Company’s consolidated secured net
leverage ratio was 4.2 times.
2024 Outlook
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. The
process is ongoing for this strategic review, which is consistent
with the Company’s commitment to align its portfolio with its
long-term growth strategy and provide flexibility to pay down debt,
reduce leverage and minimize earnings volatility.
Excluding any assets sales, the Company expects to generate
between $180 and $200 million of Adjusted EBITDA in 2024.
The following market assessment represents the Company’s current
outlook of its business segments’ future performance.
High Purity Cellulose
Average sales prices for cellulose specialties in 2024 are
expected to increase by a low single-digit percentage as compared
to average sales prices in 2023. Sales volumes for cellulose
specialties are expected to remain flat compared to 2023 as
increased volumes from the closure of a competitor’s plant are
offset by a favorable change in customer contract terms in the
first quarter of 2023 that is not expected to repeat in 2024.
Demand for RYAM cellulose specialties will be mixed. Acetate is
expected to experience moderate destocking. Ethers volumes are
anticipated to improve albeit at lower than historical levels.
Other cellulose specialties volumes will benefit from the closure
of a competitor’s facility. Demand for RYAM commodity products
remains resilient with fluff and viscose prices expected to improve
from the fourth quarter of 2023, however not to the level of
realized prices in early 2023. Commodity sales volumes are expected
to increase in 2024 as the Company focuses on improving
productivity, with fluff volume expected to improve due to higher
demand and both viscose and paper pulp sales volume expected to
decrease. Raw material input and logistics costs are expected to be
lower in 2024. Additionally, the Company expects to commission its
bioethanol facility in Tartas, France in the first quarter of 2024.
With a gradual ramp up, the Company expects to deliver $4 million
of EBITDA from bioethanol in 2024, growing to $8 million to $10
million beginning in 2025. Overall, EBITDA is expected to remain
relatively flat in the first quarter of 2024 compared to the fourth
quarter of 2023, with a strong finish in the back half of 2024.
Paperboard
Paperboard prices in 2024 are expected to decrease slightly as
compared to the fourth quarter of 2023, while sales volumes are
expected to improve as production is ramped up to meet improved
customer demand. Raw material prices are expected to increase as
purchased pulp prices are forecast to increase from fourth quarter
2023 levels. Overall, EBITDA is expected to remain flat
sequentially.
High-Yield Pulp
High-yield pulp prices are expected to increase in the first
quarter of 2024 as the Company captures the value of higher index
pricing from the latter part of the fourth quarter of 2023. Sales
volumes are also expected to increase in the first quarter as
production is ramped up to meet customer demand. Overall, the
Company expects to generate positive EBITDA from this segment in
the coming quarter.
Corporate
Corporate costs are expected to be flat or increase slightly in
2024 as the Company completes the final year of its multi-year ERP
implementation. The project will enhance the Company’s operating
and reporting systems and is expected to drive additional
improvements and efficiencies beginning in 2025.
Biomaterials Strategy
As previously announced at the Company’s Investor Day in October
2023, the Company is investing in new products to provide both
increased end market diversity and incremental profitability. These
new products will target the growing green energy and products
markets. The commissioning of the bioethanol facility is a
significant milestone towards the Company’s goal of generating $42
million of annual EBITDA from these new products by 2027. The
Company is progressing several other initiatives and expects to
make announcements on the progress of these initiatives throughout
the year.
Conference Call Information
RYAM will host a conference call and live webcast at 9:00 a.m.
ET on Wednesday, February 28, 2024 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, March 13,
2024. The replay dial-in number within the U.S. is 877-660-6853,
international is 201-612-7415, Conference ID: 13743743.
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 generated an
estimated $1.6 billion of revenue in 2023. 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 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,” “target,”
“believe,” “intend,” “plan,” “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. 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 that these expectations will
be attained, and it is possible that 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-K for the year ended December
31, 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-K.
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 occur, the Company’s
business, financial condition, operating results and cash flows, 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 geopolitical conflicts and related impacts. The Company
is subject to risks associated with epidemics and pandemics, which
could 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 the availability and price of raw materials and energy 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 2023 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 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 production facilities, and
the cost to repair or replace equipment, as well as the associated
downtime, could materially adversely affect the Company’s business.
The Company faces substantial asset risk, including the potential
for impairment related to long-lived assets and the potential
impact to the value of recorded deferred tax assets. 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 a cybersecurity incident 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.
Covenants in the Company’s debt agreements may impair its ability
to operate its business. 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’ 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
financial 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
Year Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31,
2022
Net sales
$
422
$
369
$
500
$
1,643
$
1,717
Cost of sales
(395
)
(360
)
(456
)
(1,555
)
(1,594
)
Gross margin
27
9
44
88
123
Selling, general and administrative
expense
(17
)
(22
)
(23
)
(76
)
(91
)
Foreign exchange gain (loss)
(2
)
1
—
(3
)
4
Asset impairment
(62
)
—
—
(62
)
—
Other operating expense, net
(7
)
(2
)
(5
)
(12
)
(10
)
Operating income (loss)
(61
)
(14
)
16
(65
)
26
Interest expense
(22
)
(21
)
(17
)
(74
)
(66
)
Gain on GreenFirst equity securities
—
—
—
—
5
Other income, net
1
4
3
7
11
Income (loss) from continuing operations
before income tax
(82
)
(31
)
2
(132
)
(24
)
Income tax (expense) benefit
21
5
2
32
(1
)
Equity in loss of equity method
investment
—
(1
)
—
(2
)
(2
)
Income (loss) from continuing
operations
(61
)
(27
)
4
(102
)
(27
)
Income from discontinued operations, net
of tax
—
2
—
—
12
Net income (loss)
$
(61
)
$
(25
)
$
4
$
(102
)
$
(15
)
Basic earnings per common share
Income (loss) from continuing
operations
$
(0.94
)
$
(0.41
)
$
0.06
$
(1.57
)
$
(0.42
)
Income from discontinued operations
—
0.02
—
—
0.19
Net income (loss) per common share
$
(0.94
)
$
(0.39
)
$
0.06
$
(1.57
)
$
(0.23
)
Diluted earnings per common share
Income (loss) from continuing
operations
$
(0.94
)
$
(0.41
)
$
0.05
$
(1.57
)
$
(0.42
)
Income from discontinued operations
—
0.02
—
—
0.19
Net income (loss) per common share
$
(0.94
)
$
(0.39
)
$
0.05
$
(1.57
)
$
(0.23
)
Shares used in determining EPS
Basic EPS
65,356,895
65,343,418
63,983,818
65,108,397
63,910,010
Diluted EPS
65,356,895
65,343,418
66,213,467
65,108,397
63,910,010
Rayonier Advanced Materials
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in millions)
December 31,
2023
2022
Assets
Cash and cash equivalents
$
76
$
152
Other current assets
499
538
Property, plant and equipment, net
1,075
1,151
Other assets
533
507
Total assets
$
2,183
$
2,348
Liabilities and Stockholders’
Equity
Debt due within one year
$
25
$
14
Other current liabilities
351
340
Long-term debt
752
839
Non-current environmental liabilities
160
160
Other liabilities
148
166
Total stockholders’ equity
747
829
Total liabilities and stockholders’
equity
$
2,183
$
2,348
Rayonier Advanced Materials
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(in millions)
Year Ended December
31,
2023
2022
Operating Activities
Net loss
$
(102
)
$
(15
)
Adjustments to reconcile net loss to cash
provided by operating activities:
Income from discontinued operations
—
(12
)
Depreciation and amortization
140
135
Asset impairment
62
—
Other
(22
)
12
Changes in working capital and other
assets and liabilities
58
(51
)
Cash provided by operating activities
136
69
Investing Activities
Capital expenditures, net of proceeds
(128
)
(138
)
Cash used in investing
activities-continuing operations
(128
)
(138
)
Cash provided by investing
activities-discontinued operations
1
44
Cash used in investing activities
(127
)
(94
)
Financing Activities
Changes in debt
(71
)
(73
)
Other
(16
)
—
Cash used in financing activities
(87
)
(73
)
Net decrease in cash and cash
equivalents
(78
)
(98
)
Net effect of foreign exchange on cash and
cash equivalents
2
(3
)
Balance, beginning of period
152
253
Balance, end of period
$
76
$
152
Rayonier Advanced Materials
Inc.
Sales Volumes and Average
Prices
(Unaudited)
Three Months Ended
Year Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Average Sales Prices ($ per metric
ton)
High Purity Cellulose
$
1,248
$
1,215
$
1,331
$
1,273
$
1,330
Paperboard
$
1,441
$
1,459
$
1,557
$
1,491
$
1,478
High-Yield Pulp (external sales)
$
504
$
489
$
802
$
606
$
685
Sales Volumes (thousands of metric
tons)
High Purity Cellulose
259
217
265
955
918
Paperboard
38
39
43
147
169
High-Yield Pulp (external sales)
40
39
61
182
191
Rayonier Advanced Materials
Inc.
Reconciliation of Non-GAAP
Measures
(Unaudited)
(in millions)
EBITDA and Adjusted EBITDA by
Segment(a)
Three Months Ended December
31, 2023
High Purity Cellulose
Paperboard
High-Yield Pulp
Corporate
Total
Income (loss) from continuing
operations
$
(49
)
$
9
$
(5
)
$
(16
)
$
(61
)
Depreciation and amortization
32
3
—
1
36
Interest expense, net
—
—
—
21
21
Income tax benefit
—
—
—
(21
)
(21
)
EBITDA-continuing operations
(17
)
12
(5
)
(15
)
(25
)
Asset impairment
62
—
—
—
62
Adjusted EBITDA-continuing
operations
$
45
$
12
$
(5
)
$
(15
)
$
37
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 December
31, 2022
High Purity Cellulose
Paperboard
High-Yield Pulp
Corporate
Total
Income (loss) from continuing
operations
$
11
$
10
$
12
$
(29
)
$
4
Depreciation and amortization
34
4
1
—
39
Interest expense, net
—
—
—
15
15
Income tax benefit
—
—
—
(2
)
(2
)
EBITDA-continuing operations
45
14
13
(16
)
56
Gain on debt extinguishment
—
—
—
(1
)
(1
)
Adjusted EBITDA-continuing
operations
$
45
$
14
$
13
$
(17
)
$
55
Year Ended December 31,
2023
High Purity Cellulose
Paperboard
High-Yield Pulp
Corporate
Total
Income (loss) from continuing
operations
$
(41
)
$
39
$
(3
)
$
(97
)
$
(102
)
Depreciation and amortization
123
13
2
2
140
Interest expense, net
—
—
—
69
69
Income tax benefit
—
—
—
(32
)
(32
)
EBITDA-continuing operations
82
52
(1
)
(58
)
75
Asset impairment
62
—
—
—
62
Pension settlement loss
—
—
—
2
2
Adjusted EBITDA-continuing
operations
$
144
$
52
$
(1
)
$
(56
)
$
139
Year Ended December 31,
2022
High Purity Cellulose
Paperboard
High-Yield Pulp
Corporate
Total
Income (loss) from continuing
operations
$
33
$
39
$
17
$
(116
)
$
(27
)
Depreciation and amortization
117
14
2
2
135
Interest expense, net
—
—
—
64
64
Income tax expense
—
—
—
1
1
EBITDA-continuing operations
150
53
19
(49
)
173
Pension settlement loss
—
—
—
1
1
Severance
—
—
—
4
4
Gain on debt extinguishment
—
—
—
(1
)
(1
)
Adjusted EBITDA-continuing
operations
$
150
$
53
$
19
$
(45
)
$
177
Annual Guidance
2024
Low
High
Loss from continuing operations
$
(34
)
$
(14
)
Depreciation and amortization
140
140
Interest expense, net
75
75
Income tax benefit(b)
(1
)
(1
)
EBITDA and Adjusted EBITDA-continuing
operations
$
180
$
200
__________________________
(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
items that management believes are not representative of core
operations. 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 Flow -
Continuing Operations(a)
Year Ended December
31,
2023
2022
Cash provided by operating
activities-continuing operations
$
136
$
69
Capital expenditures, net
(83
)
(104
)
Adjusted free cash flow-continuing
operations
$
53
$
(35
)
Annual Guidance Range
2024
Low
High
Cash provided by operating
activities-continuing operations
$
105
$
125
Capital expenditures, net
(85
)
(85
)
Adjusted free cash flow-continuing
operations
$
20
$
40
__________________________
(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 and Net
Secured Debt(a)
December 31,
2023
2022
Debt due within one year
$
25
$
14
Long-term debt
752
839
Total debt
777
853
Unamortized premium, discount and issuance
costs
20
6
Cash and cash equivalents
(76
)
(152
)
Adjusted net debt
721
707
Unsecured debt
(23
)
(327
)
Net secured debt
$
698
$
380
__________________________
(a)
Adjusted net debt is defined as the amount
of debt after the consideration of debt premium, discount and
issuance costs, less cash. Net secured debt is defined as the
amount of debt after the consideration of debt premium, discount
and issuance costs, less cash and unsecured debt.
Adjusted Income (Loss) from
Continuing Operations(a)
Three Months Ended
Year Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
$
Per Diluted Share
$
Per Diluted Share
$
Per Diluted Share
$
Per Diluted
Share
$
Per Diluted
Share
Income (loss) from continuing
operations
$
(61
)
$
(0.94
)
$
(27
)
$
(0.41
)
$
4
$
0.05
$
(102
)
$
(1.57
)
$
(27
)
$
(0.42
)
Asset impairment
62
0.95
—
—
—
—
62
0.96
—
—
Pension settlement loss
—
—
—
—
—
—
2
0.04
1
0.01
Severance
—
—
—
—
—
—
—
—
4
0.06
(Gain) loss on debt extinguishment
—
—
1
0.01
(1
)
(0.01
)
—
—
(1
)
(0.01
)
Tax effect of adjustments
(15
)
(0.23
)
—
—
—
—
(15
)
(0.24
)
—
—
Adjusted income (loss) from continuing
operations
$
(14
)
$
(0.22
)
$
(26
)
$
(0.40
)
$
3
$
0.04
$
(53
)
$
(0.81
)
$
(23
)
$
(0.36
)
__________________________
(a)
Adjusted income (loss) from continuing
operations is defined as income (loss) from continuing operations
adjusted net of tax for items that management believes are not
representative of core operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227639214/en/
Media Ryan Houck 904-357-9134
Investors Mickey Walsh 904-357-9162
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