Rayonier Advanced Materials Inc. · NYSE:RYAM
Rayonier Advanced Materials — Q3 2018 Earnings Presentation
22 slides from Rayonier Advanced Materials's earnings presentation, Nov 6, 2018
Slide 1: Third Quarter 2018 Financial Presentation Materials
Third 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: Third Quarter & YTD Financial Highlights
Third Quarter & YTD Financial Highlights Benefiting from greater scale and integrated portfolio Q3 Revenue: $544 million Q3 Revenue by Segment** Q3 Operating Income: $56 million; Q3 Adjusted EBITDA: $99 million — $31 million decline in revenue with $3 million decrease in Adjusted 15% EBITDA from
Slide 5: High Purity Cellulose – 3Q'18 Results & Outlook
High Purity Cellulose – 3Q’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 – 3Q'18 Results & Outlook
Forest Products – 3Q’18 Results & Outlook Overview: • Seven facilities with total capacity of 770 million board feet • 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
Slide 7: Pulp – 3Q'18 Results & Outlook
Pulp – 3Q’18 Results & Outlook Overview: • Footprint comprised of two Canadian facilities • Total capacity is 570,000 MT of high-yield pulp Results: Quarter Ended Sales and EBITDA increased $9 million due to 17% Sep 29, Jun 30, Sep 23, 2018 2018 2017* increase in high-yield pulp prices driven by s
Slide 8: Paper – 3Q'18 Results & Outlook
Paper – 3Q’18 Results & Outlook Overview: • Footprint comprised of two Canadian facilities • Total capacity is 180,000 MT of paperboard and 205,000 MT of newsprint • Paperboard focuses on coated printing bristols for graphical end-uses in the Northeast, Midwest and Canada Results: Quarter Ended Sep
Slide 9: Financial Highlights
Financial Highlights ($ Millions) Quarter Ended Combined* 3Q 2018 3Q 2017 3Q 2017 Sales $ 544 $ 210 $ 575 • 5% decline in combined sales driven by: — 6% decline in CS volumes Operating Income 56 19 — 5% decline in CS prices — 18% decline in lumber volumes Adjusted Operating Partially offset by: Inco
Slide 10: Capital Resources & Allocation
Capital Resources & Allocation ($ Millions) Nine Months Ended September 29, September 23, 2018 2017 Cash Provided by Operating Activities $ 160 $ 118 Cash Used for Investing Activities (76) (44) Balanced Allocation of Cash Used for Financing Activities (73) (21) Adjusted Free Cash Flow Change in Cas
Slide 11: Perspective on Market Conditions
Perspective on Market Conditions Market Condition Management Perspective Chinese Tariffs • 5% tariff on Cellulose Specialties sales impacts Full • 5% tariff currently imposed by China on High Year EBITDA by ~$2 million per quarter Purity Cellulose products from U.S. — Minimal impact expected on Comm
Slide 12: 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 13: Strategic Pillars Tracking
Strategic Pillars Tracking ~$155 million EBITDA* opportunity by end of 2020 $40 million captured through 9 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 14: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation Cash Flow From Operations Maintain Assets $100-110 million of annual capex Adjusted Free Cash Flow Reduce Leverage Target 2.5x Net Leverage Value Driven Approach Focused on Risk Adjusted Returns on Invested Capital Investment in the External Strategic Return
Slide 15: Appendix
RAYONIER Advanced Materials. Appendix
Slide 16: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the ass
Slide 17: Basis of Presentation for Combined Financial Information
Basis of Presentation for Combined Financial Information Combined net sales and operating income (loss) represents the combination of Tembec’s net sales and operating earnings for the related periods, adjusted to reflect the estimated conversion from International Financial Reporting Standards to U.
Slide 18: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Forest High Purity Corporate Three Months Ended: Products Pulp Paper Cellulose & Other Total September 29, 2018 Net Income $ 8 $ 26 $ 16 $ 40 $ (52) $ 38 Depreciation and amortization 2 1 4 30 — 37 Interest expense, net — — — — 15 15 Income tax expens
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Forest High Purity Corporate Nine Months Ended: Products Pulp Paper Cellulose & Other Total September 29, 2018 Net Income $ 35 $ 76 $ 30 $ 97 $ (122) $ 116 Depreciation and amortization 5 3 13 86 1 108 Interest expense, net — — — — 44 44 Income tax ex
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) September 29, September 23, 2018 2017 Adjusted Net Debt Reconciliation Current maturities of long-term debt $ 12 $ 267 Long-term debt & capital lease obligation 1,192 513 Total debt $ 1,204 $ 780 Original issue discount, premiums and debt issuance cos
Slide 21: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings ($ Millions, except per share amounts) Three Months Ended Nine Months Ended September 29, September 23, September 29, September 23, 2018 June 30, 2018 2017 2018 2017 Per Per Per Per Per Adjusted Operating and Net Diluted Diluted Diluted Diluted Diluted
Slide 22: Key Production & Pricing
Key Production & Pricing Q3’18 Q2’18 Q1’18 Average Average Average Product Index* Index Price Index Price Index Price Cellulose • None • N/A • N/A • N/A Specialties High Purity • Bleached Kraft Fluff • $1,328 • $1,288 • $1,223 Commodity • Viscose Pulp delivered to China • $930 • $940 • $920 • 2x4 Ra
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