Slide 1: Fourth Quarter 2018 Financial Presentation Materials
Fourth Quarter 2018 Financial Presentation Materials
Slide 2: Safe Harbor
Safe Harbor 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 performa
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures These presentation materials contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted free cash flows, adjusted operating income, adjusted net income, adjusted net income per share, adjusted diluted earnings per shar
Slide 4: 2018 Financial Highlights
2018 Financial Highlights 2018 Revenue: $2.1 billion Revenue* 2018 Operating Income: $198 million; Adjusted EBITDA: $364 million 16% — Driven by strong pulp prices and Cost Transformation offset by inflation and reliability — High Purity impacted by 4% price and 3% volume declines in Cellulose 1
Slide 5: High Purity Cellulose – Results & Outlook
High Purity Cellulose – Results & Outlook Segment Overview: 2018 Results: • 4 facilities with 6 manufacturing lines in the U.S., Canada and France Sales decreased $58 million from 2017 driven by CS price • Cellulose Specialties (“CS”) capacity of 775,000 MT with additional 245,000 MT of commodity
Slide 6: Forest Products – Results & Outlook
Forest Products – Results & Outlook Segment Overview: 2018 Results: • Seven facilities with total capacity of 770 million board feet Sales increased $10 million from prior year driven by a • Produces a range of lumber products primarily for residential and commercial construction 13% increase in l
Slide 7: Pulp – Results & Outlook
Pulp – Results & Outlook Segment Overview: 2018 Results: • Footprint comprised of two Canadian facilities Sales increased $48 million from prior year driven by a • Total capacity is 570,000 MT of high-yield pulp 21% increase in prices offset by volume declines of 4% Adjusted EBITDA increased $44
Slide 8: Paper – Results & Outlook
Paper – Results & Outlook Segment Overview: 2018 Results: • Footprint comprised of two Canadian facilities Sales increased $11 million from prior year driven by a • Total capacity is 180,000 MT of paperboard and 205,000 MT of newsprint 25% increase in newsprint price partially offset by lower volu
Slide 9: Financial Highlights
Financial Highlights ($ Millions) Year Ended Combined* 2018 2017 2017 Sales $ 2,134 $ 961 $ 2,122 • 1% increase in combined sales driven by: — 21% increase in high-yield pulp Operating Income 198 61 prices — 25% increase in newsprint prices Adjusted Operating — 13% increase in lumber prices Income*
Slide 10: Capital Resources & Allocation
Capital Resources & Allocation ($ Millions) Year Ended December 31, December 31, 2018 2017 Cash Provided by Operating Activities $ 247 $ 130 Cash Used for Investing Activities (116) (277) Balanced Allocation of Cash Used for Financing Activities (116) (84) Adjusted Free Cash Flow Change in Cash Bala
Slide 11: 2019 Outlook
2019 Outlook Cellulose Specialties – Expect stability with price and volume declines of 1% due to acquired contract, excluding impact of duties, and weak acetate demand High Purity Commodities– Expect increase in volumes of 75,000 MT with improving prices Cellulose Segment Adjusted EBITDA expe
Slide 12: Legacy Cost Transformation Complete
Legacy Cost Transformation Complete $140 million of Cost Transformation acheived from 2015-2018 $150 $25 $100 $30 $50 $50 $35 $0 2015 2016 2017 2018 *Cost Transformation improvements before inflation and changes in commodity prices 12
Slide 13: Strategic Pillars Tracking
Strategic Pillars Tracking $155 million EBITDA* opportunity by end of 2020 $61 million captured in year 1 of 3 year plan $45 million targeted in 2019 $200 $100 $15 $15 $25 GOAL million million million million $150 $1 million $100 $6 million Captured $1 million Captured ---- Captured $10 million $50
Slide 14: 2018 Strategic Pillar Highlights
2018 Strategic Pillar Highlights $61 million* generated in 2018; On Track to Deliver $155* million from 2018-2020 Cost Transformation New Products ▪ Reduced costs by $53 million ▪ 2 commercialized products — $25 million from legacy plan brought to market — $28 million from synergies — Optisilk – low
Slide 15: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation Cash Flow From Operations Maintain Assets $100-110 million of annual capex Adjusted Free Cash Flow Reduce Leverage Target 2.5x Net Leverage Value Driven Approach Focused on Risk Adjusted Returns on Invested Capital Investment in the External Strategic Return
Slide 16: Investor Day Thursday, March 7, 2019
RAYONIER ) Advanced Materials. INVESTOR DAY THURSDAY, MARCH 7, 2019
Slide 17: Appendix
RAYONIER Advanced Materials. Appendix
Slide 18: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the ass
Slide 19: Basis of Presentation for Combined Financial Information
Basis of Presentation for Combined Financial Information Combined net sales and operating income (loss) represents the combination of Tembec’s net sales and operating earnings for the related periods, adjusted to reflect the estimated conversion from International Financial Reporting Standards to U.
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Forest High Purity Corporate Three Months Ended: Products Pulp Paper Cellulose & Other Total December 31, 2018 Net Income $ (13) $ 20 $ 10 $ 20 $ (24) $ 13 Depreciation and amortization 2 1 4 34 — 41 Interest expense, net — — — — 15 15 Income tax expe
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Forest High Purity Corporate Twelve Months Ended: Products Pulp Paper Cellulose & Other Total December 31, 2018 Net Income $ 22 $ 96 $ 40 $ 118 $ (148) $ 128 Depreciation and amortization 7 4 18 119 — 148 Interest expense, net — — — — 60 60 Income tax
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) December 31, December 31, 2018 2017 Adjusted Net Debt Reconciliation Current maturities of long-term debt $ 15 $ 9 Long-term debt & capital lease obligation 1,173 1,232 Total debt $ 1,188 $ 1,241 Original issue discount, premiums and debt issuance cos
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) December 31, December 31, 2018 2017 Adjusted Free Cash Flows: Cash provided by operating activities 247 130 Capital expenditures (95) (65) Adjusted Free Cash Flows $ 152 $ 65 23
Slide 24: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings ($ Millions, except per share amounts) Three Months Ended Twelve Months Ended December 31, September 29, December 31, December 31, December 31, 2018 2018 2017 2018 2017 Per Per Per Per Per Adjusted Operating and Net Diluted Diluted Diluted Diluted Dilu
Slide 25: Key Production & Pricing
Key Production & Pricing Q4’18 Q3’18 Q2’18 Q1’18 Average Average Average Average Product Index* Index Price Index Price Index Price Index Price Cellulose • None • N/A • N/A • N/A • N/A Specialties High Purity • Bleached Kraft Fluff • $1,363 • $1,328 • $1,288 • $1,223 Commodity • Viscose Pulp deliver