Rayonier Advanced Materials Inc. · NYSE:RYAM
Rayonier Advanced Materials — Q4 2022 Earnings Presentation
29 slides from Rayonier Advanced Materials's earnings presentation, Feb 27, 2023
Slide 1: Fourth Quarter & Full Year 2022 Financial Presentation Materials
Fourth Quarter & Full Year 2022 Financial Presentation Materials February 27, 2023
Slide 2: Forward-Looking Statements Safe Harbor
Forward-Looking Statements 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 RYAM’s future events, developments, or financial or operational per
Slide 3: Safe Harbor
Safe Harbor Business and Operational Risks (continued) Unfavorable changes in the availability of, and prices for, wood fiber may have a material adverse impact on the Company’s business, financial condition and results of operations. Substantial capital is required to maintain the Company’s facilit
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures This earnings release and the accompanying schedules contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted free cash flows, adjusted income from continuing operations and adjusted net debt. The Company believes these non-GAAP financial m
Slide 5: 2022 Financial Highlights
2022 Financial Highlights Revenue by Segment/Product* ◼ Revenue of $1,717 million; +$309 million or +22% from 2021 High-Yield Pulp ◼ Operating income of $26 million; +$36 million from 2021 8% ◼ Adjusted EBITDA of $177 million; +$50 million or +39% from Paperboard 15% 2021 — High Purity Cellulose: +$
Slide 6: High Purity Cellulose
High Purity Cellulose $ Millions Operating Income Bridge Quarter Ended Year Ended 300 Key Financials Dec 31, Sep 24, Dec 31, Dec 31, Dec 31, 250 2022 2022 2021 2022 2021 200 ($ millions) 150 Net Sales $384 $369 $299 $1,336 $1,091 100 Operating Income 10 22 1 31 20 50 20 31 Adjusted EBITDA 45 53 33 1
Slide 7: Paperboard
Paperboard Operating Income Bridge Quarter Ended Year Ended $ Millions 70 Key Financials Dec 31, Sep 24, Dec 31, Dec 31, Dec 31, 60 2022 2022 2021 2022 2021 50 ($ millions) 40 37 30 Net Sales $67 $66 $52 $250 $208 20 13 Operating Income 9 12 3 37 13 10 Adjusted EBITDA 14 15 6 53 28 0 2021 Price Volu
Slide 8: High-Yield Pulp
High-Yield Pulp Operating Income Bridge $ Millions Quarter Ended Year Ended 40 Key Financials Dec 31, Sep 24, Dec 31, Dec 31, Dec 31, 35 2022 2022 2021 2022 2021 30 25 ($ millions) 20 16 Net Sales $58 $40 $29 $160 $136 15 Operating Income 12 6 (1) 16 7 10 7 5 Adjusted EBITDA 13 6 0 19 10 0 2021 Pric
Slide 9: Consolidated Operating Income
Consolidated Operating Income ($ Millions) Bridge 2021 to 2022 350 300 250 200 150 100 50 26 (10) 0 (50) 2021 Price Volume / Cost SG&A / 2022 Sales Mix Other ◼ Operating income of $26 million; up $36 million from prior year ◼ Higher prices across High Purity Cellulose, Paperboard and High-Yield Pulp
Slide 10: Capital Structure & Liquidity
Capital Structure & Liquidity Total Liquidity ◼ Adjusted Net Debt of $707 million; $41 million decline from Q3’22 ◼ $301 million of liquidity, including $152 million of cash ◼ Capital Allocation focused on: $130 $301 $152 — $138 million of CapEx in 2022 million ◼$34 million Strategic CapEx in 2022 $
Slide 11: 2023 Initiatives
2023 Initiatives ◼ Opportunistically refinance Senior Notes maturing in June 2024 — Expect Net Debt to LTM Adjusted EBITDA ratio of 3.5x at end of Q1’23, holding relatively stable throughout 2023 ◼ Realizing the benefits from extensive investments in reliability — Resulting in lower fixed costs per
Slide 12: 2023 Guidance
2023 Guidance Positive Free Cash Flow Generation ($ Millions) $200-215 65-70 Capital Allocation decision to repay debt or invest in high return Strategic Capital projects 45 $30-60 $30-55 90-95 25 5 15-20 * Working capital includes AR, Inventory and AP 12
Slide 13: Financial Objectives & Strategic Projects
Financial Objectives & Strategic Projects ◼ Target long term Net Debt Leverage Ratio of 2.5x ◼ Invest in high-return internal Strategic CapEx projects — Payback < 3 years — Return on Equity > 20% ◼ Source low-cost financing and/or grants, where available — Impact on Sustainability goals (Profit, Peo
Slide 14: Market Assessment
Market Assessment ◼ 2023 cellulose specialties price increase of a high single-digit percentage versus 2022 prices ◼ Demand mixed for High Purity Cellulose with strength for acetate, casings, filtration, and nitrocellulose and softness for construction ethers, food additives in MCC, and tire cord Hi
Slide 15: EBITDA Sensitivities
EBITDA Sensitivities Sensitivity per 1% Change ($ Million)* CS Price ~95% fixed contracts Non CS HPC Price 100% indexed Paperboard Price ~65% fixed contracts High-Yield Pulp Price 100% indexed Sales Volume FX $- $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 ◼ Diverse exposures to end markets with ~2/3 of portfolio
Slide 16: Reducing Net Leverage via EBITDA Growth & Debt Reduction
Reducing Net Leverage via EBITDA Growth 12.5x & Debt Reduction 16.0% 15% 14.0% 10.0x 13% 10.0x 12% 12.0% Net Debt/Adjusted EBITDA 10.3% 11% 10.0% EBITDA Margin 7.5x 9.0% 7.4% 8.0% 5.4x 5.0x 6.0% 4.0x $1,095 3.5x $937 4.0% $859 2.5x 2.5x ~$840 ~$750 2.0% 0.0x 0.0% 2020 Actual 2021 Actual 2022 Actual
Slide 17: Appendix
Section Appendix
Slide 18: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. EBITDA is a non- GAAP measure used by our Management, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under
Slide 19: Net Sales and Operating Income by Segment
Net Sales and Operating Income by Segment ($ Millions) Three Months Ended Year Ended December 31, September 24, December 31, December 31, December 31, (in millions) 2022 2022 2021 2022 2021 High Purity Cellulose $ 384 $ 369 $ 299 $ 1,336 $ 1,091 Paperboard 67 66 52 250 208 High-Yield Pulp 58 40 29 1
Slide 20: Consolidated Statements of Operations
Consolidated Statements of Operations Three Months Ended Year Ended ($ Millions) December 31, September 24, December 31, December 31, December 31, 2022 2022 2021 2022 2021 Net sales $ 500 $ 466 $ 374 $ 1,717 $ 1,408 Cost of sales (456) (419) (361) (1,594) (1,333) Gross margin 44 47 13 123 75 Selling
Slide 21: Consolidated Balance Sheet
Consolidated Balance Sheet ($ Millions) December 31, 2022 2021 Assets Cash and cash equivalents $ 152 $ 253 Other current assets 538 523 Property, plant and equipment, net 1,151 1,146 Other assets 507 523 Total assets $ 2,348 $ 2,445 Liabilities and Stockholders’ Equity Debt due within one year $ 14
Slide 22: Reconciliation of EBITDA by Segment
Reconciliation of EBITDA by Segment ($ Millions) Three Months Ended December 31, 2022 High Purity High-Yield Corporate & Cellulose Paperboard Pulp Other Total Income (loss) from continuing operations $ 11 $ 10 $ 12 $ (29) $ 4 Depreciation and amortization 34 4 1 — 39 Interest expense, net — — — 15 1
Slide 23: Reconciliation of EBITDA by Segment
Reconciliation of EBITDA by Segment ($ Millions) Year Ended December 31, 2022 High Purity High-Yield Corporate & Cellulose Paperboard Pulp Other Total Income (loss) from continuing operations $ 33 $ 39 $ 17 $ (116) $ (27) Depreciation and amortization 117 14 2 2 135 Interest expense, net — — — 64 64
Slide 24: Reconciliation of EBITDA Guidance
Reconciliation of EBITDA Guidance ($ Millions) Annual Guidance Range 2023 Low High Income (loss) from continuing operations $ (8) $ 12 Depreciation and amortization 135 135 Interest expense, net(a) 70 65 Income tax expense(b) 3 3 EBITDA and Adjusted EBITDA-continuing operations $ 200 $ 215 24
Slide 25: Reconciliation of Adjusted Free Cash Flow Guidance
Reconciliation of Adjusted Free Cash Flow Guidance ($ Millions) Annual Guidance Range 2023 Low High Cash provided by operating activities-continuing operations $ 145 $ 165 Capital expenditures for continuing operations, net (115) (105) Adjusted free cash flows-continuing operations $ 30 $ 60 25
Slide 26: Reconciliation of Adjusted Net Debt
Reconciliation of Adjusted Net Debt ($ Millions) December 31, 2022 2021 Debt due within one year $ 14 $ 38 Long-term debt 839 891 Total debt 853 929 Debt premium, original issue discount and issuance costs, net 6 8 Cash and cash equivalents (152) (253) Adjusted net debt $ 707 $ 684 26
Slide 27: Reconciliation of Adjusted Income
Reconciliation of Adjusted Income ($ Millions) Three Months Ended Year Ended December 31, September 24, December 31, December 31, December 31, 2022 2022 2021 2022 2021 Per Per Per Per Per Diluted Diluted Diluted Diluted Diluted $ Share $ Share $ Share $ Share $ Share Income (loss) from continuing op
Slide 28: Market Capacity
Market Capacity ◼ Supply & demand in balance for cellulose specialties ◼ New HPC capacity online in 2021 & 2022 added in the Viscose market — Impact to Viscose pulp pricing in late 2022 — RYAM ~1% share of Viscose Market — Viscose ~3% of RYAM total Revenue ◼ Paperboard capacity steady until 2025 ◼ N
Slide 29: Commodity Prices Mixed
Commodity Prices Mixed Price ($ / MT) Viscose Price ($ / MT) Fluff 1,400 Delivered to China 2,400 Delivered to North America 2,230 2,208 1,170 2,200 2,070 1,200 1,105 1,130 1,020 2,000 1,770 940 935 968 * 1,000 905 1,800 1,618 1,647 1,640 1,600 800 1,400 1,285 1,200 600 1,000 400 800 Q1 Q2 Q3 Q4 Q1
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