Slide 1: Fourth Quarter 2017 Financial Presentation Materials
Fourth Quarter 2017 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: A Global Leader of Cellulose-Based Technologies
A Global Leader of Cellulose-Based Technologies Well Positioned to Drive EBITDA Growth Acquisition of Tembec completed on November 17, 2017 creates: Stronger, more balanced business with greater scale to drive growth Product and geographic diversification creates a more balanced CS portfolio Strateg
Slide 5: Rayonier Advanced Materials at a Glance
Rayonier Advanced Materials at a Glance Combination of Two Best-in-Class Organizations with Complementary Products Global leader in high purity Cellulose Specialties; #1 or #2 in all product segments Pro Forma 2017 Revenue: $2.1 billion* Pro Forma Adjusted 2017 EBITDA: $369 million* Three business s
Slide 6: Global Footprint
Global Footprint Matane, QC Kapuskasing, ON Hearst, ON Cochrane, ON London, UK La Sarre, QC Tokyo, Japan Chapleau, ON Bearn, QC Shanghai, China Longueuil, QC Temiscaming, QC Montreal, QC Tartas, France Huntsville, ON Rayonier Advanced Materials Toledo, OH Global Headquarters Canadian Headquarters Hi
Slide 7: High Purity Cellulose – Segment Overview
High Purity Cellulose – Segment Overview • Four facilities with six manufacturing lines span an international footprint (US/Canada/France) • Cellulose Specialties capacity of 775,000 MT with additional 245,000 MT of Commodity capacity+ • Ranks as the #1 or #2 manufacturer of acetates, ethers, MCC, t
Slide 8: Forest Products – Segment Overview
Forest Products – Segment Overview • Seven facilities with Total capacity of 770,000 MBF • Produces a range of commodity forest products used primarily for residential and commercial construction • Integrated facilities provide chip capacity to supply raw material fiber needs to Canadian pulp assets
Slide 9: Pulp & Paper – Segment Overview
Pulp & Paper – Segment Overview • Footprint comprised of four facilities located in Canada • Total capacity is 180,000 MT of paperboard, 570,000 MT of high-yield pulp, and 205,000 MT of newsprint • Paperboard focus on coated printing bristols for graphical end-uses in the Northeast, Midwest and Cana
Slide 10: Financial Highlights
Financial Highlights ($ Millions) Quarter Ended Twelve Months Ended 4Q 2017 4Q 2016 4Q 2017 4Q 2016 Sales $ 349 $ 231 $ 961 $ 869 Operating Income — 26 57 138 Adjusted Operating Income1 44 26 114 138 Net Income 295 11 325 73 Adjusted Net Income1 29 11 57 67 EBITDA1 342 50 480 235 Adjusted EBITDA1 77
Slide 11: Operating Income - Variance Analysis
Operating Income - Variance Analysis ($ Millions) Adjustments1 26 44 1 (15) 39 8 million 3 44Forma Pro 3 Adjustments Operating Income 13 Operating Income 291 Pro Forma Adjustments (12) (21) Adjustments1 26 114 (17) No Change Operating Income 1 See Appendix for non-GAAP adjustments detail and reconci
Slide 12: Capital Resources & Liquidity
Capital Resources & Liquidity ($ Millions) Twelve Months Ended December 31, 2017 December 31, 2016 Cash Provided by Operating Activities $ 130 $ 232 Cash Used for Investing Activities (277) (87) Cash Used for Financing Activities (84) 80 Adjusted Free Cash Flows* 91 147 Debt Principal Payments $ 1,2
Slide 13: Efficient Tax Structure
Efficient Tax Structure Anticipated tax rate of 25-30% with cash taxes of ~10% over the next three years U.S. Tax reform expected to provide significant benefits Canadian NOLs generated by Tembec from integrated business model maintained through acquisition Efficient tax structure supports increased
Slide 14: 2018 Outlook
2018 Outlook Cellulose Specialties – Expect pricing down 4-5% with flat volume Driven by pricing declines in acetate, partially offset by gains in ethers and other CS High Purity 2018 acetate pricing now consistent with competition Total impact of ~$40 million Commodities– Expect pricing flat over f
Slide 15: 3-Year Outlook
3-Year Outlook ~$155 million EBITDA* opportunity by end of 2020 including $50 million target in 2018 $200 $150 $25 $15 $100 $15 $75 Synergy $50 $25 Legacy $0 Investments/ Cost Transformation Market Optimization New Products Acquisitions *Cost improvements before inflation and changes in commodity pr
Slide 16: Significant Synergy Opportunity
Significant Synergy Opportunity Increased target to $75 million from $50 million SG&A/Public Company Costs Sales & Marketing General corporate cost Optimization reductions 15% Optimize sales channel 20% Consolidation of duplicate distribution systems and spending Regional customer alignment $75 mill
Slide 17: Total Cost Transformation with Synergies
Total Cost Transformation with Synergies Expect Legacy Cost Transformation Benefits of $25 million in 2018 Targeting Acquisition Synergies of $75 million by 2020 Total Incremental Cost Transformation of $100 million by 2020 $250 $140 million from Legacy Cost Transformation $75 million from Synergies
Slide 18: Market Optimization
Market Optimization Position production to maximize value Optimize production at lowest cost line within our markets for each grade Cellulose Acetate Ethers Viscose Commodity Specialty End Markets End Markets Ability to Capture Value Fluff Acetate Film Viscose Cost to Produce Plastics Filament Aceta
Slide 19: New Products - Pipeline
New Products - Pipeline Priority 1 Priority 2 Priority 3-4 Stage O Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Ideas Idea development Proof of concept Lab Pilot/Mill Trials Industrial Commercial OptiSilk Biofloc XV20 Sapphire 1 2 3 4 5 19
Slide 20: 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 21: Strategic Capital Projects Under Review
Strategic Capital Projects Under Review Sizable Opportunity for Attractive Re-Investment $60,000 $50,000 Pulp & Paper $40,000 $30,000 Forest Products $20,000 $10,000 High Purity $0 <= 1 year <= 2 years > 2 years Payback Period ~$90 million of High Return Capital Projects currently under consideratio
Slide 22: Return of Capital to Shareholders
Return of Capital to Shareholders Dividend Policy and Share Buyback Authorization 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 buyback Company is committed to growing and maximizing long-term shar
Slide 23: Appendix
RAYONIER ) Advanced Materials. Appendix
Slide 24: Key Production & Pricing
Key Production & Pricing 2017 Average Annualized Annual YTD Sep 2017 Dec 2017 Product Sales* Capacity Index** Index Price Index Price Cellulose • 652k MT • 775k MT • None • $1,381**** • N/A Specialties High Purity • Bleached Kraft Fluff • $1,085 • $1,190 • 292k MT • 245k MT Commodity • Viscose Pulp
Slide 25: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the ass
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) Twelve Months Ended December 31, 2017 2016 EBITDA Reconciliation Net Income $ 325 $ 73 Depreciation and amortization 97 88 Interest expense, net 38 35 Income tax expense 20 39 EBITDA $ 480 $ 235 Acquisition related costs 34 — Inventory write-up to fai
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ($ Millions) December 31, December 31, 2017 2016 Adjusted Net Debt Reconciliation Current maturities of long-term debt $ 9 $ 9 Long-term debt & capital lease obligation 1,232 774 Total debt $ 1,241 $ 783 Original issue discount, premiums and debt issuance costs 5
Slide 28: Reconciliation of Reported to Adjusted Earnings
Reconciliation of Reported to Adjusted Earnings ($ Millions, except per share amounts) Three Months Ended Twelve Months Ended September 23, December 31, 2017 2017 December 31, 2016 December 31, 2017 December 31, 2016 Per Per Per Per Per Adjusted Operating and Net Diluted Diluted Diluted Diluted Dilu