Rayonier Advanced Materials Inc. · NYSE:RYAM
Rayonier Advanced Materials — Investor Presentation (June 2018)
31 slides from Rayonier Advanced Materials's investor presentation, Jun 27, 2018
Slide 1: Investor Presentation June 2018
Investor PresentationJune 2018
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: Granite Overview: A Global Leader of Cellulose-Based Technologies
Granite Considerations---Granite Overview A Global Leader of Cellulose-Based Technologies Acquisition of Tembec completed on November 17, 2017 creates:Stronger, more balanced business with greater scale to drive growthProduct and geographic diversification creates a more balanced CS portfolioStrateg
Slide 5: Rayonier Advanced Materials at a Glance
Granite Considerations---Granite Overview 5 Rayonier Advanced Materials at a Glance Global leader in high purity Cellulose Specialties; #1 or #2 in all product segments2017 Pro Forma Revenue: $2.1 billion 2017 Combined Adjusted EBITDA: $386 million Four business segments – High Purity Cellulose, For
Slide 6: Global Footprint
Global Footprint Rayonier Advanced Materials Global Headquarters Facilities Capacity Forest Products* Bearn, QC 110,000 MBF Chapleau, ON 135,000 MBF Cochrane, ON 160,000 MBF Hearst, ON 110,000 MBF Huntsville, ON 15,000 MBF Kapuskasing, ON 105,000 MBF La Sarre, QC 135,000 MBF Facilities Capacity Hi
Slide 7: High Purity Cellulose – Segment Overview
High Purity Cellulose – Segment Overview 7 Core Products End Markets Acetate Pulp Tow, High Impact Plastics, Optical Screens Ethers Pulp Construction Material, Food Thickeners, Pharma Other Cellulose Specialties Pulp Filtration, Tirecord, Sausage Casings, Nitrocellulose Viscose Textiles Absorbent Ma
Slide 8: Forest Products – Segment Overview
2017 Sales by Geography* Forest Products – Segment Overview 8 Core Products End Markets Studs Random Length Lumber Specialty Hardwood Residual Chips for Pulp Seven facilities with Total capacity of 770,000 MBFProduces a range of commodity forest products used primarily for residential and commercial
Slide 9: Pulp & Paper – Segment Overviews
Pulp & Paper – Segment Overviews 9 Core Products End Markets Paperboard Lightweight board, Packaging and Cardstock High-Yield Pulp Writing Materials, Packaging Newsprint Newspapers Footprint comprised of four facilities located in CanadaTotal capacity is 180,000 MT of paperboard, 570,000 MT of high-
Slide 10: Consolidated 1Q'18 Financial Highlights
Quarter Ended Quarter Ended Combined* Pro Forma2 1Q 2018 1Q 2018 1Q 2017 1Q 2017 1Q 2017 1Q 2017 Sales $ 522 $ 201 $ 502 Operating Income 46 27 58 EBITDA 86 48 90 Diluted Earnings per Share $ 0.38 $ 0.15 $ — * Non-GAAP measures (see Appendix for definitions and reconciliations). See Basis of Present
Slide 11: Capital Resources & Allocation
Capital Resources & Allocation 11 ($ Millions) Three Months Ended Three Months Ended March 31, 2018 March 31, 2018 March 25, 2017 March 25, 2017 Cash Provided by Operating Activities $ 33 $ 38 Cash Used for Investing Activities (29 ) (14 ) Cash Used for Financing Activities (12 ) (5 ) Change in Cash
Slide 12: Stable and Balanced Capital Structure
Stable and Balanced Capital Structure As of Q1’18 Outstanding Leverage Interest Rate Maturity Cash 89 Debt Term Loan A-1 180 LIBOR +2.25% November 2022 Term Loan A-2 449 LIBOR +2.00%* November 2024 Other Secured Debt 107 Avg. 5.8% 2018-2028 Total Secured Debt 736 1.9x Senior Notes 506 5.50% June 202
Slide 13: Efficient Tax Structure
Granite Considerations---Granite Overview Efficient Tax Structure U.S. Tax reform expected to provide significant benefitsCanadian NOLs generated by Tembec from integrated business model maintained through acquisitionEfficient tax structure supports increased cash flow generationUltimate tax rate to
Slide 14: 2018 Outlook by Segment
Cellulose Specialties – Expect pricing down 4-5% with flat to slightly lower volumeDriven by pricing declines in acetate, partially offset by gains in ethers and other CS2018 acetate pricing now consistent with competitionTotal impact of ~$40 millionCommodities– Expect pricing flat over full year; v
Slide 15: 3-Year Outlook
3-Year Outlook 15 *Cost improvements before inflation and changes in commodity prices ~$155 million EBITDA* opportunity by end of 2020including $40 million target in 2018 $25 Legacy $75 Synergy Investments/ Acquisitions
Slide 16: Significant Synergy Opportunity
Granite Considerations---Granite Overview 16 Significant Synergy Opportunity SG&A/Public Company CostsGeneral corporate cost reductionsConsolidation of duplicate systems and spending Supply Chain & ProcurementLeverage combined spendingReduce transportation costs Operational/ManufacturingApply contin
Slide 17: Total Cost Transformation with Synergies
Total Cost Transformation with Synergies Expect Legacy Cost Transformation Benefits of $25 million in 2018Targeting Acquisition Synergies of $75 million by 2020Total Incremental Cost Transformation of $100 million by 2020 17 *Cost Transformation improvements before inflation and changes in commodity
Slide 18: Market Optimization
Market Optimization Position production to maximize value within our markets Ability to Capture Value Market Attractiveness Cellulose Specialty End MarketsAcetate FilmPlasticsAcetate TowYarnCasingsCMCFiltrationMCCNitro.Tire CordEthers CommodityEnd MarketsFluffViscoseFilament Drive towards higher val
Slide 19: New Products Pipeline
New Products Pipeline 19 Stage 1Idea development Stage 2Proof of concept Stage 3Lab Stage 4Pilot/Mill Trials Stage 5Industrial Stage 6Commercial 1 2 3 4 5 Priority 1 Priority 2 Priority 3-4 OptiSilk Sapphire Stage OIdeas Biofloc XV20 19
Slide 20: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation Maintain Assets $100-110 million of annual capex Adjusted Free Cash Flow Return of Capital to Shareholders Stock buybacks and dividends to maximize long-term shareholder returns External Strategic Investments Acquisitions and other investments to complement
Slide 21: Strategic Capital Projects
Strategic Capital Projects Sizable Opportunity for Attractive Re-Investment $75 million of High Return Capital Projects approved out of $90 million being evaluatedFocused on strongest returns, primarily in core markets 21
Slide 22: Return of Capital to Shareholders
Granite Considerations---Granite Overview Return of Capital to Shareholders RYAM currently pays a $0.07 quarterly dividend per share of common stock On January 29, 2018, the Board of Directors authorized a $100 million share buybackCompany is committed to growing and maximizing long-term shareholder
Slide 23: Appendix
RAYONIER Advanced Materials. Appendix
Slide 24: Definitions of EBITDA and Adjusted Free Cash Flows
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under management. Adjusted EB
Slide 25: Basis of Presentation: Combined Financial Information
Combined net sales and operating income (loss) represents the combination of Tembec’s net sales and operating earnings for the respective periods presented, adjusted to reflect the estimated conversion from International Financial Reporting Standards to U.S. Generally Accepted Accounting Principles
Slide 26: 2017 Historical Combined Financial Information
2017 Historical Combined Financial Information Q1 Q2 Q3 Q4 2017 Revenue High Purity Cellulose 301 303 334 312 1,250 Forest Products 83 84 99 80 346 Pulp 64 73 80 81 298 Paper 72 76 81 70 299 Corporate (18) (15) (19) (19) (71) Total 502 521 575 524 2,122 Operating Income High Purity Cellulose 50 43 5
Slide 27: 2017 Historical Combined Price & Volume by Segment
2017 Historical Combined Price & Volume by Segment Q1 Q2 Q3 Q4 2017 High Purity Cellulose Cellulose Specialties Price ($/MT) 1,372 1,366 1,396 1,421 1,388 Cellulose Specialties Volume (000 MT) 158 158 173 152 641 Commodity Price ($/MT) 779 814 788 711 771 Commodity Volume (000 MT) 75 70 74 88 307 Fo
Slide 28: Key Production & Pricing
28 Key Production & Pricing * Indices provide directional relationship between products and pricing; contractual arrangements and mix will determine actual pricing** Alterative Index includes Bleached Chemi-Thermo Mechanical Pulp (BCTMP), which more closely reflects production capabilities*** Index
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 29 ($ Millions) Three Months Ended: Forest Products Forest Products Pulp Pulp Paper Paper High Purity Cellulose High Purity Cellulose Corporate & Other Corporate & Other Total Total March 31, 2018 Net Income $ 10 $ 23 $ 5 $ 25 $ (39 ) $ 24 Depreciation and amortiz
Slide 30: Reconciliation of Non-GAAP Measures: Adjusted Net Debt
Reconciliation of Non-GAAP Measures 30 ($ Millions) March 31, 2018 March 31, 2018 March 25, 2017 March 25, 2017 Adjusted Net Debt Reconciliation Current maturities of long-term debt $ 11 $ 10 Long-term debt & capital lease obligation 1,226 771 Total debt $ 1,237 $ 781 Original issue discount, premiu
Slide 31: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings 31 (a) Adjusted operating income and adjusted net income are not necessarily indicative of results that may be generated in future periods. ($ Millions, except per share amounts) Three Months Ended Three Months Ended March 31, 2018 March 31, 2018 Decem
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