Rayonier Advanced Materials Inc. · NYSE:RYAM
Rayonier Advanced Materials — Q2 2018 Earnings Presentation
25 slides from Rayonier Advanced Materials's earnings presentation, Aug 3, 2018
Slide 1: Second Quarter 2018 Financial Presentation Materials
Second 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 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 com
Slide 4: Second Quarter & YTD Financial Highlights
Second Quarter & YTD Financial Highlights Benefiting from greater scale and integrated portfolio Q2 Revenue: $542 million Q2 Revenue by Segment** Q2 Operating Income: $66 million; Q2 Adjusted EBITDA: $106 million — 4% increase in Revenue and 23% increase in EBITDA from prior year* 18% driven by
Slide 5: High Purity Cellulose – 2Q'18 Results & Outlook
High Purity Cellulose – 2Q’18 Results & Outlook Overview: • Four facilities with six manufacturing lines in US, Canada and France • Cellulose Specialties (“CS”) capacity of 775,000 MT with additional 245,000 MT of commodity capacity • Ranks as the #1 or #2 global manufacturer of acetate, ethers, MCC
Slide 6: Forest Products – 2Q'18 Results & Outlook
Forest Products – 2Q’18 Results & Outlook Overview: • Seven facilities with total capacity of 770,000 MBF • Produces a range of lumber products primarily for residential and commercial construction • Integrated facilities provide chip capacity to supply raw material fiber to Canadian pulp assets Qua
Slide 7: Pulp – 2Q'18 Results & Outlook
Pulp – 2Q’18 Results & Outlook Overview: • Footprint comprised of two Canadian facilities • Total capacity is 570,000 MT of high-yield pulp Results: Quarter Ended Sales increased $18 million and EBITDA $16 million June 30, March 31, June 24, 2018 2018 2017* from prior year due to 29% increase in h
Slide 8: Paper – 2Q'18 Results & Outlook
Paper – 2Q’18 Results & Outlook Overview: • Footprint comprised of two Canadian facilities • Total capacity is 180,000 MT of paperboard and 205,000 MT of newsprint • Paperboard focuses on coated printing bristols for graphical end-uses in the Northeast, Midwest and Canada Results: Quarter Ended June
Slide 9: Financial Highlights
Financial Highlights ($ Millions) Quarter Ended Combined* 2Q 2018 2Q 2017 2Q 2017 Sales $ 542 $ 201 $ 521 • 4% increase in combined sales: — 29% increase in high-yield pulp Operating Income 66 14 42 prices — 30% increase in lumber prices Adjusted Operating — 35% increase in newsprint prices Income*
Slide 10: Capital Resources & Allocation
Capital Resources & Allocation ($ Millions) Six Months Ended June 30, 2018 June 24, 2017 Cash Provided by Operating Activities $ 89 $ 87 Balanced Allocation of Cash Used for Investing Activities (64) (32) Adjusted Free Cash Flow Cash Used for Financing Activities (41) (12) Change in Cash Balances $
Slide 11: Strategic Pillars of Growth
Strategic Pillars of Growth Well Positioned to Drive EBITDA Growth Strategic Pillars provide a framework to achieve an incremental ~$155 million of EBITDA opportunities by 2020 before cost inflation and changes in commodity sales prices Cost Transformation of $100 million, including $75 million
Slide 12: Strategic Pillars Tracking
Strategic Pillars Tracking ~$155 million EBITDA* opportunity by end of 2020 $21 million captured through 6 months of 3 year plan $200 $150 $25 $15 $100 $15 $50 $75 Synergy $25 Legacy $0 Cost Transformation Market Optimization New Products Investments/ Acquisitions *Cost improvements before inflation
Slide 13: Accelerating Synergies
Accelerating Synergies Synergies expected to exceed $15 million target in 2018 Global Integration Team accelerating 2019 target by $10 million to $40 million On track to deliver $75 million of synergies by 2020 $80 $70 $20 $60 $50 $10 $40 $10 million accelerated from 2020 to 2019 $30 $30 $20 $
Slide 14: Strategic Capital Opportunities
Strategic Capital Opportunities Sizable Opportunity for Attractive Re-Investment Target $65 million, net, of high return capital projects over next three years — Tariff L program* in Quebec helps offset 42% gross capital costs $65 million 56% Focused on strongest returns, primarily in High Purit
Slide 15: LignoTech Florida
LignoTech Florida 45% ownership in partnership with global leader in lignin Successful start-up of 100,000 ADMT lignin manufacturing facility – On-time, under $110 million budget with expected capabilities Marketing plan for natural based lignin product progressing according to expectation – Glo
Slide 16: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation Cash Flow From Operations Maintain Assets $100-110 million of annual capex Adjusted Free Cash Flow Reduce Leverage Target 2.5x Net Leverage Value Driven Approach Focused on Risk Adjusted Returns on Invested Capital Investment in the External Strategic Return
Slide 17: Appendix
RAYONIER Advanced Materials. Appendix
Slide 18: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the ass
Slide 19: Basis of Presentation for Combined Financial Information
Basis of Presentation for Combined Financial Information Combined net sales and operating income (loss) represents the combination of Tembec’s net sales and operating earnings for the related periods, adjusted to reflect the estimated conversion from International Financial Reporting Standards to U.
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Forest High Purity Corporate Three Months Ended: Products Pulp Paper Cellulose & Other Total June 30, 2018 Net Income $ 16 $ 26 $ 9 $ 33 $ (30) $ 54 Depreciation and amortization 2 1 4 26 — 33 Interest expense, net — — — — 15 15 Income tax expense — —
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Forest High Purity Corporate Six Months Ended: Products Pulp Paper Cellulose & Other Total June 30, 2018 Net Income $ 27 $ 49 $ 14 $ 57 $ (69) $ 78 Depreciation and amortization 3 2 9 56 — 70 Interest expense, net — — — — 30 30 Income tax expense — —
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) June 30, 2018 June 24, 2017 Adjusted Net Debt Reconciliation Current maturities of long-term debt $ 10 $ 13 Long-term debt & capital lease obligation 1,214 769 Total debt $ 1,224 $ 782 Original issue discount, premiums and debt issuance costs 5 8 Cash
Slide 23: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings ($ Millions, except per share amounts) Three Months Ended Six Months Ended June 30, 2018 March 31, 2018 June 24, 2017 June 30, 2018 June 24, 2017 Per Per Per Per Per Adjusted Operating and Net Diluted Diluted Diluted Diluted Diluted Income (a): $ Share
Slide 24: 2017 Historical Combined Financial Information
2017 Historical Combined Financial Information Q1 Q2 Q3 Q4 2017 Revenue High Purity Cellulose 301 303 334 312 1,250 Forest Products 83 84 99 80 346 Pulp 64 73 80 81 298 Paper 72 76 81 70 299 Corporate (18) (15) (19) (19) (71) Total 502 521 575 524 2,122 Operating Income High Purity Cellulose 50 43 5
Slide 25: 2017 Historical Combined Price & Volume by Segment
2017 Historical Combined Price & Volume by Segment Q1 Q2 Q3 Q4 2017 High Purity Cellulose Cellulose Specialties Price ($/MT) 1,372 1,366 1,396 1,421 1,388 Cellulose Specialties Volume (000 MT) 158 158 173 152 641 Commodity Price ($/MT) 779 814 788 711 771 Commodity Volume (000 MT) 75 70 74 88 307 Fo
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