Rayonier Advanced Materials Inc. · NYSE:RYAM
Rayonier Advanced Materials — Investor Presentation (November 2022)
35 slides from Rayonier Advanced Materials's investor presentation, Nov 28, 2022
Slide 1: Investor Presentation November 2022
Investor Presentation November 2022
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements 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): We are dependent upon attracting and retaining key personnel, the loss of whom could adversely affect our business; Failure to develop new products or discover new applications for our existing products, or our inability to protect the intellec
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures These presentation materials contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted free cash flows, adjusted operating income, adjusted income (loss) from continuing operations and adjusted net debt. These non-GAAP measures are reconcile
Slide 5: Business Highlights
Business Highlights
Slide 6: RYAM Overview
RYAM Overview Business Description Diverse Business Segments High Purity Cellulose Paperboard High-Yield Pulp ◼ Formed in 2014 when Rayonier Inc. separated the • Dissolving Wood Pulp • Kallima® brand performance fibers business from its land resources o Acetate • Packaging • Mechanical business, RYA
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: Update on Near-Term Initiatives
Update on Near-Term Initiatives ◼ Opportunistically refinance Senior Notes maturing in June 2024 — Improved Net Debt to EBITDA ratio to 5.1x ▪ Reduced Net Debt by $16M to $748 million ▪ Increased LTM Adjusted EBITDA by $35 million to $148 million — Expect improved credit metrics to provide greater o
Slide 9: BioFuture Opportunities
BioFuture Opportunities Lignosulfonates Making Renewable to Remarkable a Reality 9
Slide 10: Sustainability Framework
Sustainability Framework Board of Directors Oversight of Sustainability Environmental Social Governance Forest Stewardship Safety Driven Board Sustainability Committee • Access to multiple forestry “Everyone going home safe, every day” • Created in 2021 with specific oversight of certifications acro
Slide 11: Sustainable Value Proposition
Sustainable Value Proposition ◼ Efficient biorefinery process utilizes full value of our natural feedstock from working forests ◼ Opportunities to extract incremental value as consumer demands shift to more renewable Sustainable products Manufacturing ◼ Limited competitors and high barriers to entry
Slide 12: Reducing Net Leverage via EBITDA Growth & Debt Reduction
Reducing Net Leverage via EBITDA Growth & Debt Reduction 12.5x 16.0% 15% 14.0% 10.0x 13% 10.0x 12.0% Net Debt/Adjusted EBITDA 11% 10.0% 10% 10.0% EBITDA Margin 7.5x 8.9% 7.4% 8.0% 5.3x 5.1x 5.0x 6.0% 4.1x 4.0% 2.5x 2.5x $1,095 $937 $880 ~$860 ~$750 2.0% 0.0x 0.0% 2020 Actual 2021 Actual 2022 YTD 202
Slide 13: Drivers of Total Shareholder Return
Drivers of Total Shareholder Return Value Capture Cost Reduction Debt Reduction Innovation ◼ Negotiated double digit price ◼ Invested heavily in H1 2022 ◼ Reduced debt by $59 ◼ Over 95 years of technical increases for CS in 2022 to improve asset reliability million in 2022, inclusive of product deve
Slide 14: Capital Structure & Liquidity
Capital Structure & Liquidity ◼ Adjusted Net Debt of $748 million; $16 million decline from Q2’22 — $725 million target by year end 2022 $128 $283 $132 ◼ $283 million of liquidity, including $132 million of cash million — Working Capital providing greater availability under ABL $23 ◼ 2022 Capital Al
Slide 15: Market Overview
Market Overview
Slide 16: High Purity Cellulose Value Chain
High Purity Cellulose Value Chain Market Pulp Industry: 76 MMT* CS Market Segmentation Dissolving Pulp: Cellulose Specialties* 1.5 MMT Dissolving Pulp: Ethers Commodity Viscose 6 MMT 32% Acetate 35% Fluff Pulp 6 MMT Other CS 33% Increasing Commodity Specialization 62 MMT Market Pulp & Sales Prices 2
Slide 17: High Purity Cellulose Landscape
High Purity Cellulose Landscape Primary Demand Size Products End Markets Competitors Outlook (000s tons) Acetate 0-1% 505 Pulp Ethers Pulp 4-5% 475 Other CS 2-3% 490 Total Cellulose Specialties 1,470 Viscose Various 6-7% 6,200 Pulp Fluff Pulp Various 3-4% 6,300 Total Commodity 12,500 Total High Puri
Slide 18: A Global Leader in High Purity Cellulose
A Global Leader in High Purity Cellulose 775k MT Cellulose Specialties Capacity + 245k MT Commodity Capacity = > 1,000k MT Total Capacity Capacity RYAM Line Wood Tech (kMT) Hardwood/ Jesup A Kraft Softwood 330 Jesup B Hardwood Kraft Jesup C Softwood Kraft 245 Fernandina Softwood Sulfite 155 Temiscam
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 2021 Sales by Geography RYAM ~5% Canada 30% United States 70% RYAM’s Kallima® is a unique 3-ply product with greater surface to weight ratio than North American competitors Source: Fastmarkets (RISI) and company est
Slide 21: High-Yield Pulp Value Chain
High-Yield Pulp Value Chain Market Pulp Industry: 76 MMT* Dissolving Pulp: Cellulose Specialties* 1.5 MMT Dissolving Pulp: Commodity Viscose 6 MMT Other High-Yield Pulp Fluff Pulp 6 MMT Producers 96% RYAM 4.5 million MT 4% High-Yield Pulp Commodity Market 62 MMT Market Pulp RYAM High-Yield Pulp focu
Slide 22: 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 Kallim
Slide 23: Financial Update
Financial Update
Slide 24: Q3'22 Financial Highlights
Q3’22 Financial Highlights ◼ Revenue of $466 million from continuing operations; Revenue by Segment* up $92 million or 25% from Q3 2021 ◼ Operating income from continuing operations of $29 million; 14% up $26 million from Q3 2021 8% $466 ◼ $68 million of Adjusted EBITDA from continuing operations; M
Slide 25: Consolidated Operating Income from Continuing Operations
Consolidated Operating Income from Continuing Operations ($ Millions) Bridge Q3’21 to Q3’22 100 90 80 70 60 50 40 30 29 20 10 3 0 Q3'21 Price Volume / Cost SG&A / Q3'22 Sales Mix Other ◼ Operating income of $29 million; up $26 million from prior year ◼ Improved prices across High Purity Cellulose, P
Slide 26: Market Assessment
Market Assessment ◼ Strong demand remains for High Purity Cellulose albeit tempered by slowing global economy ◼ Average sales prices expected to decline modestly driven by greater mix of High Purity commodity volumes as production and logistics constraints improve Cellulose ◼ Key raw material inflat
Slide 27: Appendix
Appendix
Slide 28: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. EBITDA is a non- GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative
Slide 29: Net Sales and Operating Income by Segment
Net Sales and Operating Income by Segment ($ Millions) Three Months Ended Nine Months Ended September 24, June 25, September 25, September 24, September 25, (in millions) 2022 2022 2021 2022 2021 High Purity Cellulose $ 369 $ 302 $ 288 $ 952 $ 792 Paperboard 66 63 52 183 157 High-Yield Pulp 40 40 42
Slide 30: Consolidated Statements of Operations
Consolidated Statements of Operations ($ Millions) Three Months Ended Nine Months Ended September 24, June 25, September 25, September 24, September 25, 2022 2022 2021 2022 2021 Net Sales $ 466 $ 399 $ 374 $ 1,217 $ 1,034 Cost of Sales (419) (372) (355) (1,138) (972) Gross Margin 47 27 19 79 62 Sell
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet ($ Millions) September 24, 2022 December 31, 2021 Assets Cash and cash equivalents $ 132 $ 253 Other current assets 556 523 Property, plant and equipment, net 1,132 1,146 Other assets 516 523 Total assets $ 2,336 $ 2,445 Liabilities and Stockholders’ Equity Debt due within
Slide 32: Reconciliation of EBITDA by Segment
Reconciliation of EBITDA by Segment ($ Millions) Three Months Ended September 24, 2022 High Purity High-Yield Corporate & Cellulose Paperboard Pulp Other Total Income (loss) from continuing operations $ 23 $ 12 $ 6 $ (23) $ 18 Depreciation and amortization 30 3 — 2 35 Interest expense, net — — — 17
Slide 33: Reconciliation of Adjusted Income
Reconciliation of Adjusted Income ($ Millions) Three Months Ended Nine Months Ended September 24, June 25, September 25, September 24, September 25, 2022 2022 2021 2022 2021 Per Per Per Per Per Diluted Diluted Diluted Diluted Diluted $ Share $ Share $ Share $ Share $ Share Income (loss) from continu
Slide 34: Reconciliation of Adjusted Net Debt
Reconciliation of Adjusted Net Debt ($ Millions) September 24, December 31, 2022 2021 Debt due within one year $ 22 $ 38 Long-term debt 851 891 Total debt 873 929 Debt premium, original issue discount and issuance costs, net 7 8 Cash and cash equivalents (132) (253) Adjusted net debt $ 748 $ 684 34
Slide 35: 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 1,170* 2,200 2,070 1,200 1,105 1,130 1,020 2,000 1,770 940 935 1,800 1,618 1,647 1,640 1,000 905 1,600 800 675 1,400 1,285 1,165 1,200 600 1,000 400 800 Q4 Q1 Q2 Q3 Q4 Q
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