Slide 1: Second Quarter 2016 Financial Presentation Materials
Second Quarter 2016 Financial Presentation Materials
Slide 2: Non-GAAP Financial Measures
Non-GAAP Financial Measures These presentation materials contain certain non-GAAP financial measures, including EBITDA, adjusted free cash flows, pro forma operating income, pro forma net income and adjusted net debt. These non-GAAP measures are reconciled to each of their respective most directly c
Slide 3: 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 performan
Slide 4: Financial Highlights
Financial Highlights ($ Millions) Quarter Ended Six Months Ended 2Q 2016 2Q 2015 2Q 2016 2Q 2015 Sales $ 214 $ 221 $ 431 $ 442 Operating Income 39 8 70 33 Pro Forma Operating Income1 39 34 70 59 Net Income 19 — 40 10 Pro Forma Net Income1 19 16 34 26 EBITDA1 58 29 121 75 Pro Forma EBITDA1 58 55 112
Slide 5: Operating Income - Variance Analysis
Operating Income - Variance Analysis ($ Millions) 12 1 39 Three Months Ended 34 (10) 2 261 Pro Forma 39 Adjustments Operating Income 8 Operating Income 2Q 2015 Price Volume / Costs SG&A and Other 2Q 2016 Sales Mix 5 70 24 59 (22) Six Months Ended 261 Pro Forma 4 Adjustments 70 Operating Income 33 Op
Slide 6: Selected Financial and Operating Information
Selected Financial and Operating Information Three Months Ended Six Months Ended June 25, June 27, June 25, June 27, 2016 2015 2016 2015 Sales Volume, thousands of metric tons Cellulose specialties 113 111 219 219 Commodity products 55 55 130 113 Total 168 166 349 332 Average Sales Price, $ per metr
Slide 7: Transformation Initiative
Cost Improvement Initiatives ($ Millions) 30 Transformation Initiative 35 $90M - $105M 4 Year Total Cost Improvement 2016 Cost Savings $25M - $40M $125M - $140M 25 15 35 2015 Actual 2015 to be realized in 2016 2016 2017* 2018* $58 Million achieved from January 2015 - June 2016 * Breakdown of future
Slide 8: 2016 Full Year Guidance
2016 Full Year Guidance ▪ Cellulose specialties ("CS") prices 6% to 7% below 2015 average prices ▪ CS volumes down 4% to 5% from 2015 ▪ Commodity sales volumes higher than 2015 ▪ Net income expected to be $51 to $57 million ▪ Pro forma EBITDA expected to be $195 to $205 million ▪ Transformation Init
Slide 9: Capital Resources & Liquidity
Capital Resources & Liquidity ($ Millions) Six Months Ended June 25, 2016 June 27, 2015 Cash Provided by Operating Activities $ 151 $ 88 Cash Used for Investing Activities (36) (41) Cash Used for Financing Activities (50) (40) Adjusted Free Cash Flows* 113 47 Debt Principal Payments $ 812 $ 919 Cash
Slide 10: Outlook
Outlook ▪ Cellulose specialties market — Flat acetate growth outlook / destocking continues — Improving demand in ethers, tire cord & filtration — Continued excess capacity — Global currencies vs. US$ benefiting competitors ▪ Anticipate 2017 acetate pricing down approximately 2% from 20161 ▪ 2017 CS
Slide 11: Our Long-Term Growth Strategy
Our Long-Term Growth Strategy ▪ Three-year Transformation Initiative to enhance profitability — Improve costs by $75 to $90 million run-rate over the next three years — Maintain efficient and reliable operations — Optimize assets to match market conditions ▪ Stepping up efforts on Innovation Initiat
Slide 12: Innovation Platform
Innovation Platform : Cellulose generation processing @ cellulose technolo fibers i 7 Breakthroughs , @ from cellulose co-products RAYONIER ): Advanced Materials.
Slide 13: Potential Joint Venture with Borregaard
Potential Joint Venture with Borregaard Partnering with global leader in lignin-based products ▪ Joint venture for the manufacturing, marketing and sale of natural lignin- based products at Fernandina facility ▪ We will be 45% owner in joint venture ▪ Utilizing co-product our manufacturing process,
Slide 14: Appendix
RAYONIER Advanced Materials. Appendix
Slide 15: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the ass
Slide 16: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Six Months Ended June 25, 2016 June 27, 2015 EBITDA Reconciliation Net Income $ 40 $ 10 Depreciation and amortization 42 42 Interest expense, net 17 19 Income tax expense 22 4 EBITDA $ 121 $ 75 Non-cash impairment charge — 28 One-time separation and l
Slide 17: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) June 25, 2016 June 27, 2015 Adjusted Net Debt Reconciliation Current maturities of long-term debt $ 8 $ 8 Long-term debt 795 900 Total debt $ 803 $ 908 Original issue discount and debt issuance costs 9 11 Cash and cash equivalents (166) (73) Adjusted
Slide 18: Reconciliation of Reported to Pro Forma Earnings
Reconciliation of Reported to Pro Forma Earnings ($ Millions, except per share amounts) Three Months Ended Six Months Ended June 25, 2016 March 26, 2016 June 27, 2015 June 25, 2016 June 27, 2015 Per Per Per Per Per Pro Forma Operating Income and Diluted Diluted Diluted Diluted Diluted Net Income: $
Slide 19: Reconciliation of Guided Non-GAAP Measures
Reconciliation of Guided Non-GAAP Measures ($ Millions, except per share amounts) Minimum Maximum 2016 Pro Forma EBITDA Guidance $ 195 $ 205 Gain on debt extinguishment 9 9 2016 EBITDA Guidance 204 214 Income tax expense1 28 32 Interest expense, net 35 35 Depreciation and amortization 90 90 2016 Net
Slide 20: Debt Maturity Schedule
Debt Maturity Schedule Millions $800 $700 253 $600 240 53 $500 $400 $300 506 506 $200 $100 38 4 10 11 3 $0 Total 2016 2017 2018 2019 2020 Thereafter Senior Notes 5.5% Term A-1 Loan Facility Term A-2 Loan Facility Revolver ($250m Line of Credit) 20