- Financial improvement from prior quarter due to greater
reliability and reduced costs
- Successfully negotiated covenant package in September 2019 to
provide flexibility to navigate challenging markets
- Executing Cellulose Specialties Go-to-Market strategy to
improve margins; Price increases announced on Cellulose Specialties
products in October 2019 or as contracts allow
- Net proceeds of approximately $150 million received from the
sale of Matane high-yield manufacturing facility in November
2019
Rayonier Advanced Materials Inc. (the “Company”) (NYSE:RYAM)
today reported a net loss from continuing operations for the third
quarter of $14 million, or $(0.29) per diluted common share,
compared to income from continuing operations of $30 million, or
$0.47 per diluted common share, for the prior year quarter.
Adjusted net loss from continuing operations for the 2019 third
quarter was $15 million, or $(0.29) per diluted common share,
compared to adjusted net income from continuing operations of $27
million, or $0.41 per diluted common share, for the prior year
quarter.
The net loss from continuing operations for the third quarter
2019 improved $5 million compared to the second quarter 2019.
Adjusted net loss from continuing operations improved $3 million
for the same periods.
The net loss from continuing operations for the nine months
ended September 28, 2019 was $62 million, or $(1.36) per diluted
common share, compared to income from continuing operations of $93
million, or $1.45 per diluted common share, for the prior year
period. The adjusted net loss from continuing operations for the
nine months ended September 28, 2019 was $61 million, or $(1.36)
per diluted common share, compared to adjusted net income of $75
million, or $1.17 per diluted common share, for the prior year
period.
See Schedule G for a reconciliation of the results from
continuing operations to adjusted amounts.
“The increased EBITDA over prior quarters demonstrates the
progress we are making on our initiatives to overcome these
difficult market conditions. Price declines in commodity segments
alone accounted for a $97 million decline in operating income,”
said Paul Boynton, Chairman, President and Chief Executive Officer.
“With our immediate covenant issue resolved as a result of our loan
amendment, we are focused on lowering costs, managing working
capital and reducing capital expenditures to generate cash and
improve our balance sheet.”
Third Quarter 2019 and YTD Operating Results
As a result of the sale of the Matane facility on November 3,
2019, its operating results have been classified as discontinued
operations. Prior period amounts related to the Matane operations
have been reclassified to conform to the presentation of
discontinued operations. Unless otherwise stated, information
herein relates to continuing operations.
Net sales comprised the following for the periods presented:
Three Months Ended
Nine Months Ended
Net sales
(in millions)
September 28, 2019
June 29, 2019
September 29, 2018
September 28, 2019
September 29, 2018
High Purity Cellulose
$
268
$
269
$
308
$
822
$
876
Forest Products
65
81
86
222
282
Pulp
26
40
46
95
133
Paper
74
74
78
218
238
Eliminations
(17
)
(14
)
(17
)
(50
)
(53
)
Total net sales
$
416
$
450
$
501
$
1,307
$
1,476
Operating results comprised the following for the periods
presented:
Three Months Ended
Nine Months Ended
Operating income (loss)
(in millions)
September 28, 2019
June 29, 2019
September 29, 2018
September 28, 2019
September 29, 2018
High Purity Cellulose
$
7
$
7
$
34
$
11
$
83
Forest Products
(5
)
(16
)
8
(27
)
35
Pulp
(2
)
3
13
3
37
Paper
—
3
13
1
24
Corporate
(8
)
(12
)
(25
)
(39
)
(48
)
Total operating income (loss)
$
(8
)
$
(15
)
$
43
$
(51
)
$
131
High Purity Cellulose
Operating income for the three and nine months ended September
28, 2019 decreased $27 million and $72 million, respectively, when
compared to the same prior year periods. The decreases were driven
by a 1 percent and 3 percent decline in cellulose specialties sales
prices in the three and nine month periods, respectively, primarily
as a result of duties on products sold into China. Cellulose
specialties volumes declined by 16 percent and 7 percent in the
three and nine month periods, respectively, due to demand weakness
in acetate, automotive and construction markets driven primarily by
a slowdown in global economies and customers aggressively manage
inventory. Additionally, approximately half of the three month
comparison period decline was due to strong sales volumes in the
third quarter of 2018. Both periods benefited from higher commodity
sales volumes due to lower cellulose specialties demand and
improved production. Costs for both periods were higher as wood and
maintenance costs were partially offset by lower chemical prices,
primarily caustic, and reduced labor costs.
The 2018 three and nine month periods include operating income
of $2 million and $5 million, respectively, from the resins
business, which was sold in September of 2018.
Compared to the second quarter of 2019, operating income was
flat as higher commodity product sales volumes due to higher
production, higher cellulose specialties sales prices due to mix,
and lower wood and maintenance costs were offset by lower commodity
sales prices and lower cellulose specialties sales volumes, both
due to weaker markets.
Forest Products
Operating income decreased $13 million and $62 million for the
three and nine months ended September 28, 2019, respectively, when
compared to the same prior year periods. The decreases were
primarily driven by 25 percent and 26 percent lower lumber sales
prices, in the three and nine month periods, respectively. For the
three month period, costs were lower driven by a $5 million
reversal of the net realizable inventory reserve as a result of
price increases in the period.
Compared to the second quarter of 2019, the operating loss
improved by $11 million. The improvement was driven by 3% higher
lumber sales prices and lower costs primarily driven by a $5
million reversal of the net realizable inventory reserve as a
result of price increases in the period.
Pulp
Operating income decreased $15 million and $34 million during
the three and nine months ended September 28, 2019, respectively,
when compared to the same prior year periods. The decreases were
primarily driven by 32 percent and 22 percent lower high-yield pulp
sales prices in the three and nine month periods, respectively, due
to weaker markets. For the nine month period, both pulp sales
volumes and costs were impacted by lower production due to
market-related downtime and reliability issues at the Temiscaming
plant in the first quarter, as previously reported.
Compared to the second quarter of 2019, operating income
decreased $5 million. This decrease was primarily driven by 16%
lower pulp sales prices and 30 percent lower volumes due to weaker
markets partially offset by reduced costs primarily due to lower
transportation expenses.
Paper
Operating income decreased $13 million and $23 million during
the three and nine months ended September 28, 2019, respectively,
when compared to the same prior year periods. Results were
negatively impacted by 2 percent and 3 percent lower paperboard
sales prices in the three and nine month periods, respectively, as
a result of increased competition and lower newsprint sales prices.
Additionally, newsprint sales volumes for both periods decreased as
a result of lower production. For the three month period, costs
increased due to lower newsprint production levels, partially
offset by lower market pulp prices for the production of
paperboard. In addition, the 2018 three month period was favorably
impacted by the reversal of $5 million of duties on newsprint
exported to the U.S. For the nine month period, costs increased due
to lower newsprint production levels, higher maintenance and
transportation costs, partially offset by lower market pulp costs
for the production of paperboard and lower energy costs.
Compared to the second quarter of 2019, operating income
decreased $3 million. The decrease was driven by higher energy
costs and partially offset by lower transportation, maintenance and
raw material pulp costs for the production of paperboard.
Corporate
The operating loss improved $17 million and $9 million for the
three months and nine month periods ended September 28, 2019 when
compared to the same prior year periods. The improvements were
primarily driven by lower incentive compensation, severance costs
and environmental liabilities expense as well as an insurance
recovery partially offset by loan amendment costs and other
non-recurring expenses associated with the review of Company’s
commodity asset portfolio.
Compared to the second quarter of 2019, the operating loss
improved $4 million. The improvements were primarily driven by the
insurance recovery and favorable foreign exchange rate changes
partially offset by loan amendment costs and non-recurring expenses
associated with the review of Company’s commodity asset
portfolio.
Non-Operating Expenses
Interest expense increased slightly from $14 million and $42
million to $15 million and $43 million for the third quarter and
year-to-date periods, respectively. Overall debt levels were higher
during the period ended September 28, 2019. The Company’s increased
interest margin was partially offset by the lower LIBOR rates,
resulting in slightly higher interest rates on variable debt.
Income Tax (Expense) Benefit
The year-to-date 2019 effective tax rate was a benefit of 30
percent compared to an expense of 24 percent for the same period in
2018. The difference in the periods effective tax rate is primarily
driven by mix of results in taxable jurisdictions. The effective
tax rate benefit differs from the federal statutory rate of 21
percent primarily due to tax credits, excess tax deductions on
vested stock compensation, and different statutory tax rates of
foreign operations.
Discontinued Operations
As previously discussed, the Company has presented the operating
results for its Matane operations as discontinued operations for
all periods presented herein. The decline in discontinued
operations during the 2019 periods is principally driven from lower
sales prices when compared to the same prior year periods. Included
in discontinued operations is allocated interest expense for $100
million of debt that is required to be repaid upon completion of
the sale. The 2019 periods presented also includes professional
fees to sell the operation.
Cash Flows and Liquidity
In the nine months ended September 28, 2019, the Company’s
operations provided cash flows of $5 million. Year-to-date working
capital used $30 million, an improvement of $39 million compared to
$69 million for the 2018 period. This was primarily driven by
efforts to reduce inventory levels.
For the first nine months of 2019, the Company invested $81
million in capital expenditures, which included approximately $18
million of strategic capital. Additionally, the Company incurred
net borrowings of $43 million to fund its operations and ended the
quarter with adjusted net debt of $1,174 million which includes $63
million of cash.
Outlook
High Purity Cellulose
For full year 2019, the Company continues to expect cellulose
specialties prices to be lower by approximately 1 to 2 percent, as
previously guided, excluding the impact on sales prices of any
Chinese duties the Company incurs. Cellulose specialties volumes
are expected to be down approximately 6 percent versus 2018 due to
demand weakness in acetate, automotive and construction markets, as
customers aggressively manage inventory levels. Commodity product
(primarily viscose and fluff pulp) sales prices are expected to be
significantly lower in the fourth quarter due to weakness in the
broad paper pulp markets as global trade issues persist. For the
full year, the Company anticipates High Purity Cellulose EBITDA of
approximately $140 million.
Forest Products
U.S. housing starts and remodeling activity are the key drivers
for lumber demand and have remained relatively flat in 2019; Low
interest rates provide positive market environment. Announced
production curtailments should positively impact future pricing
once inventories have been reduced. Duties on lumber sales from
Canada into the U.S. will continue to impact financial results. To
date, the Company has paid approximately $53 million of lumber
duties.
Pulp
High-yield pulp prices continued to weaken in the third quarter
due to lower demand for paper pulp products. However, the Company
believes Chinese high-yield pulp markets have stabilized resulting
in modest increases in regional pricing from September levels.
European market prices continue to decline as they come into closer
alignment with the Chinese pricing. The weaker demand has held
inventory levels relatively high and continue to pressure global
pulp prices.
Paper
North American paperboard prices will remain under pressure
primarily due to increased competition. In newsprint, demand
continues to decline as industry production capacity remains
stable, resulting in continued pricing pressure.
Capital Allocation and Investment
Due to market conditions and increased leverage, the Company is
reducing its capital spending across all segments. The Company
currently expects capital spending to be $120 million for the full
year 2019, down $10 million from its original $130 million
estimate, and continues to evaluate further actions.
On September 6, 2019, the Company announced that its Board of
Directors determined to suspend the Company’s quarterly common
stock dividend to improve cash flow.
On November 3, 2019, the Company sold its Matane facility for
$175 million. The Company received approximately $150 million, net
of fees, expenses, working capital and other adjustments related to
the sale. Proceeds from the sale will be used to repay $100 million
of debt with the remainder for general corporate purposes,
including enhancing liquidity.
Amendment
On September 30, 2019, the Company amended its Senior Secured
Credit Agreement. The amendment relaxes financial covenants through
2021. The Company believes it now has the runway to manage the
business through these challenging economic conditions enabling it
to emerge financially stronger and able to realize the earnings
potential of the business.
Conclusion
“With our initiatives to lower costs and improve cash flows and
liquidity, combined with the completion of our loan amendment and
the sale of Matane, we are taking aggressive action to manage the
current challenging market conditions,” added Boynton. “We are
focused on increasing price and margins through our Go-to-Market
strategy, reducing costs with our Strategic Pillars and reducing
earnings volatility as we conclude our Portfolio Evaluation
process. We believe our short-term efforts and long-term strategy
position us for improved profitability and sustained value
creation.”
Conference Call Information
Rayonier Advanced Materials Inc. (NYSE:RYAM) will host a
conference call and live webcast at 9:00 a.m. ET on November 5,
2019 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
Tuesday, November 19, 2019. The replay dial-in number within the
U.S. is 877-660-6853, international is 201-612-7415, Conference ID:
13696111.
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 cell phones,
computer screens, filters and pharmaceuticals. 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 approximately 4,200 people and generates
approximately $2 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: 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 represent approximately 35% of our 2018 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; 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; 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; The inability to effectively integrate the
Tembec acquisition and meet our financial objectives therefrom, and
any future acquisitions we may make, may affect our results; and,
While the Company has entered into an amendment (the “Amendment”)
to its Senior Secured Credit Facilities (as amended by the
Amendment, the “Credit Agreement”) to address the risk of potential
non-compliance with certain covenants at the end of the third
quarter of 2019, there can be no assurances that the Company will
continue in full compliance with the amended covenants provided in
the Credit Amendment through December 31, 2021, which is the date
covenant relief granted under the Amendment expires.
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 on Schedules D - G 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)
September 28, 2019
(Unaudited)
(millions of dollars, except per
share information)
Three Months Ended
Nine Months Ended
September 28, 2019
June 29, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Net Sales
$
416
$
450
$
501
$
1,307
$
1,476
Cost of Sales
(399
)
(432
)
(419
)
(1,265
)
(1,237
)
Gross Margin
17
18
82
42
239
Selling, general & administrative
expenses
(23
)
(20
)
(30
)
(72
)
(78
)
Duties
(5
)
(7
)
(1
)
(16
)
(21
)
Other operating income (expense), net
3
(6
)
(8
)
(5
)
(9
)
Operating Income (Loss)
(8
)
(15
)
43
(51
)
131
Interest expense
(15
)
(14
)
(14
)
(43
)
(42
)
Interest income and other, net
4
—
2
6
12
Gain on bargain purchase
—
—
6
—
21
Income (Loss) From Continuing
Operations Before Income Taxes
(19
)
(29
)
37
(88
)
122
Income tax (expense) benefit
5
10
(7
)
26
(29
)
Income (Loss) from Continuing
Operations
$
(14
)
$
(19
)
$
30
$
(62
)
$
93
Income (loss) from discontinued
operations, net of taxes
—
4
8
10
23
Net Income (Loss) Attributable to the
Company
(14
)
(15
)
38
(52
)
116
Mandatory convertible stock dividends
(2
)
(3
)
(3
)
(8
)
(10
)
Net Income (Loss) Available to Common
Stockholders
$
(16
)
$
(18
)
$
35
$
(60
)
$
106
Basic Earnings Per Common
Share:
Income (loss) from continuing
operations
$
(0.29
)
$
(0.46
)
$
0.52
$
(1.36
)
$
1.61
Income from discontinued operations
—
0.09
0.16
0.20
0.46
Net income per common share -
Basic
$
(0.29
)
$
(0.37
)
$
0.68
$
(1.16
)
$
2.07
Diluted Earnings Per Common
Share:
Income (loss) from continuing
operations
$
(0.29
)
$
(0.46
)
$
0.47
$
(1.36
)
$
1.45
Income from discontinued operations
—
0.09
0.13
0.20
0.37
Net income per common share -
Diluted
$
(0.29
)
$
(0.37
)
$
0.60
$
(1.16
)
$
1.82
Shares Used for Determining:
Basic EPS
56,089,839
49,572,055
50,603,498
51,576,123
51,005,206
Diluted EPS
56,089,839
49,572,055
63,245,424
51,576,123
63,678,075
A
Rayonier Advanced Materials
Inc.
Condensed Consolidated Balance
Sheets
September 28, 2019
(Unaudited)
(millions of dollars)
September 28, 2019
December 31, 2018
Assets
Cash and cash equivalents
$
63
$
109
Other current assets
610
607
Property, plant and equipment, net
1,327
1,364
Other assets
597
599
$
2,597
$
2,679
Liabilities and Stockholders’
Equity
Current maturities of long-term debt
$
21
$
15
Other current liabilities
292
355
Long-term debt and finance lease
obligations
1,212
1,173
Non-current environmental liabilities
148
149
Other non-current liabilities
285
280
Total stockholders’ equity
639
707
$
2,597
$
2,679
B
Condensed Consolidated
Statements of Cash Flows
September 28, 2019
(Unaudited)
(millions of dollars)
Nine Months Ended
September 28, 2019
September 29, 2018
Operating Activities:
Net income (loss)
$
(51
)
$
116
Income from discontinued operations
(10
)
(23
)
Adjustments:
Gain on bargain purchase
—
(19
)
Depreciation and amortization
112
106
Other items to reconcile net income to
cash provided by operating activities
(8
)
45
Changes in working capital and other
assets and liabilities
(38
)
(83
)
Cash provided by (used for) operating
activities-continuing operations
5
141
Cash provided by (used for) operating
activities-discontinued operations
19
19
Cash Provided by (Used for) Operating
Activities
24
160
Investing Activities:
Capital expenditures
(81
)
(90
)
Other
—
16
Cash used for investing
activities-continuing operations
(81
)
(74
)
Cash used for investing
activities-discontinued operations
(2
)
(2
)
Cash Used for Investing Activities
(83
)
(76
)
Financing Activities:
Changes in debt
43
(34
)
Dividends paid
(19
)
(21
)
Common stock repurchased
(6
)
(18
)
Cash provided by (used for) financing
activities-continuing operations
18
(73
)
Cash provided by (used for) financing
activities-discontinued operations
—
—
Cash Provided by (Used for) Financing
Activities
18
(73
)
Cash and Cash Equivalents:
Change in cash and cash equivalents
(41
)
11
Net effect of foreign exchange on cash and
cash equivalents
(5
)
(1
)
Balance, beginning of year
109
96
Balance, end of period
$
63
$
106
C
Rayonier Advanced Materials
Inc.
Sales Volumes and Average
Prices
September 28, 2019
(Unaudited)
Three Months Ended
Nine Months Ended
September 28, 2019
June 29, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Average Sales Prices:
High Purity Cellulose
($ per metric ton):
Cellulose Specialties
$
1,317
$
1,310
$
1,333
$
1,303
$
1,344
Commodity Products
$
768
$
792
$
807
$
803
$
813
Forest Products
($ per thousand board feet):
Lumber
$
366
$
356
$
487
$
370
$
500
Pulp
($ per metric ton):
High-Yield pulp
$
455
$
539
$
673
$
524
$
671
Paper
($ per metric ton):
Paperboard
$
1,097
$
1,117
$
1,120
$
1,105
$
1,136
Newsprint
$
532
$
508
$
633
$
542
$
590
Sales Volumes:
High Purity Cellulose
(thousands of metric tons):
Cellulose Specialties
137
146
163
432
466
Commodity Products
88
71
70
246
188
Forest Products
(millions of board feet):
Lumber
134
180
141
462
457
Pulp
(thousands of metric tons):
High-Yield pulp
45
64
59
145
168
Paper
(thousands of metric tons):
Paperboard
49
45
45
137
131
Newsprint
38
47
44
123
151
D
Rayonier Advanced Materials
Inc.
Reconciliation of Non-GAAP
Measures
September 28, 2019
(Unaudited)
EBITDA by Segment (a):
Three Months Ended September
28, 2019
Forest Products
Pulp
Paper
High Purity Cellulose
Corporate & Other
Total
Income (loss) from continuing
operations
$
(5
)
$
(2
)
$
3
$
8
$
(18
)
$
(14
)
Depreciation and amortization
2
1
4
33
—
40
Interest expense, net
—
—
—
—
15
15
Income tax expense
—
—
—
—
(5
)
(5
)
EBITDA
(3
)
(1
)
7
41
(8
)
36
Loan amendment costs
—
—
—
—
3
3
Insurance recovery
—
—
—
—
(4
)
(4
)
Adjusted EBITDA
$
(3
)
$
(1
)
$
7
$
41
$
(9
)
$
35
Three Months Ended September
29, 2018
Forest Products
Pulp
Paper
High Purity Cellulose
Corporate & Other
Total
Income (loss) from continuing
operations
$
8
$
13
$
16
$
40
$
(47
)
$
30
Depreciation and amortization
2
1
4
30
—
37
Interest expense, net
—
—
—
—
14
14
Income tax expense
—
—
—
—
7
7
EBITDA
10
14
20
70
(26
)
88
Gain on bargain purchase
—
—
—
(7
)
1
(6
)
Severance expense
—
—
—
—
4
4
Adjusted EBITDA
$
10
$
14
$
20
$
63
$
(21
)
$
86
(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
September 28, 2019
(Unaudited)
EBITDA by Segment (a):
Nine Months Ended September
28, 2019
Forest
Products
Pulp
Paper
High Purity Cellulose
Corporate & Other
Total
Income (loss) from continuing
operations
$
(27
)
$
3
$
8
$
10
$
(56
)
$
(62
)
Depreciation and amortization
7
2
13
90
—
112
Interest expense, net
—
—
—
—
43
43
Income tax expense
—
—
—
—
(26
)
(26
)
EBITDA
(20
)
5
21
100
(39
)
67
Non-recurring expense (b)
—
—
—
—
1
1
Loan amendment costs
—
—
—
—
3
3
Insurance recovery
—
—
—
—
(4
)
(4
)
Adjusted EBITDA
$
(20
)
$
5
$
21
$
100
$
(39
)
$
67
Nine Months Ended September
29, 2018
Forest Products
Pulp
Paper
High Purity Cellulose
Corporate & Other
Total
Income (loss) from continuing
operations
$
35
$
37
$
31
$
97
$
(107
)
$
93
Depreciation and amortization
5
2
13
86
—
106
Interest expense, net
—
—
—
—
41
41
Income tax expense
—
—
—
—
28
28
EBITDA
40
39
44
183
(38
)
268
Gain on bargain purchase
—
—
—
(10
)
(11
)
(21
)
Severance expense
—
—
—
—
4
4
Adjusted EBITDA
$
40
$
39
$
44
$
173
$
(45
)
$
251
(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.
(b) Non-recurring expenses are
related to the Company’s review of its commodity asset
portfolio.
F
Rayonier Advanced Materials
Inc.
Reconciliation of Non-GAAP
Measures (Continued)
September 28, 2019
(Unaudited)
(millions of dollars, except per
share information)
Nine Months Ended
Adjusted Free Cash Flows (a):
September 28, 2019
September 29, 2018
Cash provided by operating activities of
continuing operations
$
5
$
141
Capital expenditures
(63
)
(58
)
Adjusted Free Cash Flows
$
(58
)
$
83
(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):
September 28, 2019
December 31, 2018
Current maturities of long-term debt
$
21
$
15
Long-term debt & finance lease
obligation
1,212
1,173
Total debt
1,233
1,188
Original issue discount, premiums and debt
issuance costs
4
5
Cash and cash equivalents
(63
)
(109
)
Adjusted Net Debt
$
1,174
$
1,084
(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.
G
Rayonier Advanced Materials
Inc.
Reconciliation of Non-GAAP
Measures (Continued)
September 28, 2019
(Unaudited)
(millions of dollars, except per
share information)
Three Months Ended
Nine Months Ended
September 28, 2019
June 29, 2019
September 29, 2018
September 28, 2019
September 29, 2018
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)
$
(8
)
$
(15
)
$
43
$
(51
)
$
131
Severance expense
—
—
4
—
4
Non-recurring expense (b)
—
—
—
1
—
Loan amendment costs
3
—
—
3
—
Insurance recovery
(4
)
—
—
(4
)
—
Adjusted Operating Income
(Loss)
$
(9
)
$
(15
)
$
47
$
(51
)
$
135
Income (Loss) from Continuing
Operations
$
(14
)
$
(0.29
)
$
(19
)
$
(0.46
)
$
30
$
0.47
$
(62
)
$
(1.36
)
$
93
$
1.45
Severance expense
—
—
—
—
4
0.06
—
—
4
0.06
Gain on bargain purchase
—
—
—
—
(6
)
(0.10
)
—
—
(21
)
(0.33
)
Non-recurring expense (b)
—
0.01
1
0.01
—
—
1
0.02
—
—
Loan amendment costs
3
0.06
—
—
—
—
3
0.06
—
—
Insurance recovery
(4
)
(0.07
)
—
—
—
—
(4
)
(0.08
)
—
—
Tax effects of adjustments
—
—
—
—
(1
)
(0.02
)
—
—
(1
)
(0.01
)
Adjusted Income (Loss) from Continuing
Operations
$
(15
)
$
(0.29
)
$
(18
)
$
(0.45
)
$
27
$
0.41
$
(61
)
$
(1.36
)
$
75
$
1.17
(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,
loan amendment costs, insurance recovery received, and severance
expense. Adjusted income (loss) from continuing operations is
defined as income (loss) from continuing operations adjusted net of
tax for non-recurring costs related to the Company’s review of its
commodity asset portfolio, loan amendment costs, insurance recovery
received, severance expense and the gain on bargain purchase.
Adjusted operating income (loss) and income (loss) from continuing
operations are not necessarily indicative of results that may be
generated in future periods.
(b) Non-recurring expenses are related to
the Company’s review of its commodity asset portfolio.
H
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191104005990/en/
Media: Eric Johnson, 904-357-9134 Investors: Mickey Walsh,
904-357-9162
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