Rayonier Advanced Materials Inc. · NYSE:RYAM
Rayonier Advanced Materials — Investor Presentation (March 2023)
40 slides from Rayonier Advanced Materials's investor presentation, Mar 3, 2023
Slide 1: Investor Presentation March 2023
Investor Presentation March 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: Business Highlights
Business Highlights
Slide 6: RYAM Overview
RYAM Overview Diverse Business Segments Business Description High Purity Cellulose Paperboard High-Yield Pulp • Dissolving Wood Pulp • Kallima® brand ◼ RYAM is the leading global supplier of high o Acetate • Packaging • Mechanical o Ethers Cellulose Hardwood Products purity cellulose products with g
Slide 7: RYAM Attraction
RYAM Attraction Market Leader in High Purity Cellulose with Best Products and Technical Acumen Unparalleled Security of Supply Offering a Broad and Diversified Portfolio of Cellulose-Based Products & Assets Well Positioned to Manage Economic Cycles Leading R&D Platform with Innovation & BioFuture Op
Slide 8: Sustainability Highlights
Sustainability Highlights Uniquely positioned to meet the rapidly growing demand for renewable materials and sustainable products 8
Slide 9: 2023 Initiatives
2023 Initiatives Adjusted EBITDA of $200-215 million in 2023 ◼ Opportunistically refinance Senior Notes maturing in June 2024 — Expect Net Debt to LTM Adjusted EBITDA ratio of 3.5x at end of Q1’23, holding relatively stable throughout 2023 ◼ Realizing the benefits from extensive investments in relia
Slide 10: 2023 Guidance
2023 Guidance Positive Free Cash Flow Generation ($ Millions) $200-215 Capital Allocation 65-70 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 10
Slide 11: 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 12: Net Debt/Adjusted EBITDA
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 13: 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 14: Market Overview
Market Overview
Slide 15: High Purity Cellulose Value Chain
High Purity Cellulose Value Chain Market Pulp Industry: 76 million metric tons (MT)* CS Market Segmentation Dissolving Pulp: 1.5 Cellulose Specialties* million MT Dissolving Pulp: 6.2 Ethers Commodity Viscose million MT Acetate 33% 33% 6.2 Fluff Pulp million MT Other CS 33% 62 Increasing Commodity m
Slide 16: High Purity Cellulose Landscape
High Purity Cellulose Landscape Primary Demand Size Products End Markets Competitors Outlook (000s tons) Acetate -1-0% 505 Ethers 3-4% 500 Other CS 1-2% 505 Total Cellulose Specialties 1,510 Viscose Various 4-5% 6,175 Fluff Various 4-5% 6,245 Total Commodity 12,420 Total High Purity Cellulose 13,930
Slide 17: A Global Leader in High Purity Cellulose
A Global Leader in High Purity Cellulose 775k MT Cellulose Specialties Capacity 25k MT increase in Commodity capacity from debottlenecking + 270k MT Commodity Capacity Jesup production 1,045,000k MT Total Capacity Capacity RYAM Line Wood Tech (kMT) Hardwood/ Jesup A Kraft Softwood 330 Jesup B Hardwo
Slide 18: Market Capacity - High Purity Cellulose
Market Capacity - High Purity Cellulose ◼ 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 Source: Brian McCla
Slide 19: Customized for each Customer application
The RYAM Recipe Hardwood Softwood Customer application Customized for each Kraft Sulfite Pulping Bleaching Finishing Customer End Uses Acetate Ethers Other CS Filter Plastic LCD/Film Food Pharmaceuticals Industrial Tire Cord Casings Filtration Nitro Best Product Offering • Highest Technical Acumen •
Slide 20: Paperboard Value Chain
Paperboard Value Chain North American Paperboard Industry: 4.5 MMT Market Share RYAM 2022 Sales by Geography RYAM ~5% Canada 30% United States 70% Paperboard capacity steady until 2025 RYAM’s Kallima® is a unique 3-ply product with greater surface to weight ratio than North American competitors Sour
Slide 21: High-Yield Pulp Value Chain
High-Yield Pulp Value Chain Market Pulp Industry: 76 million metric tons (MT)* Dissolving Pulp: 1.5 Cellulose Specialties* million MT Dissolving Pulp: 6.2 Commodity Viscose million MT Other High-Yield 6.2 Pulp Fluff Pulp million MT Producers 96% RYAM 4.5 million MT 4% High-Yield Pulp 62 Market Commo
Slide 22: Market Capacity - High-Yield Pulp
Market Capacity - High-Yield Pulp ◼ New capacity in HYP expected by year-end 2023 — Partially mitigated by previous years capacity declines and reopening of Chinese economy Source: Brian McClay & Associates Capacity Report 22
Slide 23: Paperboard & High-Yield Pulp Overview
Paperboard & High-Yield Pulp Overview Paperboard High-Yield Pulp Location Temiscaming, Quebec Temiscaming, Quebec Capacity 180k MT 290k MT — ~65k MT sold internally to Paperboard Key Raw 80-90k MT of NBHK & NBSK Pulp Hardwood (Maple & Aspen) Materials Chemicals Chemicals & Energy Primary 3-ply Kalli
Slide 24: Financial Update
Financial Update
Slide 25: 2022 Financial Highlights
2022 Financial Highlights Revenue by Segment/Product* ◼ Revenue of $1,717 million; +$309 million or +22% from 2021 ◼ Operating income of $26 million; +$36 million from 2021 ◼ Adjusted EBITDA of $177 million; +$50 million or +39% from 2021 — High Purity Cellulose: +$11 million $1,717 Cellulose Specia
Slide 26: Consolidated Operating Income
Consolidated Operating Income ($ 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 $36 million from prior year ◼ Higher prices across High Purity Cellulose, Paperboard and High-Yield Pulp
Slide 27: Market Assessment
Market Assessment ◼ 2023 cellulose specialties price increase of a high single-digit percentage versus 2022 prices ◼ Demand mixed for High Purity Cellulose with strength for acetate, casings, filtration, and nitrocellulose and softness for construction ethers, food additives in MCC, and tire cord Hi
Slide 28: Appendix
Appendix
Slide 29: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. EBITDA is a non- GAAP measure used by our Management, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under
Slide 30: Net Sales and Operating Income by Segment
Net Sales and Operating Income by Segment ($ 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 31: 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 32: 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 33: 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 34: 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 35: 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 35
Slide 36: 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 36
Slide 37: 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 37
Slide 38: 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 39: 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 $10 ◼ Diverse exposures to end markets with ~2/3 of portfolio
Slide 40: Commodity Prices Mixed
Commodity Prices Mixed Price ($ / 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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