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RYAM announces improved results for Q1 of 2024
May 7, 2024 By P&PC Staff/RYAM
Rayonier Advanced Materials (RYAM) reported results for its first quarter ended March 30, 2024.
“First quarter results exceeded our expectations, driven by lower costs and improved demand for cellulose specialties. We delivered a solid $52 million in Adjusted EBITDA to maintain a net secured debt ratio of 4.4 times covenant EBITDA,” stated De Lyle Bloomquist, president and CEO of RYAM. “We also increased capital expenditures to support growth in our Biomaterials strategy and increased net debt to boost inventory levels in preparation for Jesup’s annual outage.”
“The solid first quarter, along with the start-up of the bioethanol facility in Tartas and the April completion of the planned maintenance outage in Jesup, keep us on track to deliver our full-year guidance of $180 to $200 million in Adjusted EBITDA. As a result of the indefinite suspension of operations of our Temiscaming High Purity Cellulose plant and the sale of refund rights to our softwood lumber duties to OCP Lumber LLC, our 2024 Adjusted Free Cash Flow guidance is increased to $80 to $100 million. The suspension at Temiscaming will also reduce our exposure to the volatile commodity viscose market. The potential sale of the Temiscaming Paperboard and High-Yield Pulp facilities is progressing, albeit slower than originally expected, as we manage buyers through the complexity of carving out these assets. While the suspension and asset sale decisions affecting the Temiscaming site have been approached and carried out independently, we believe the suspension will bring clarity to the asset sale diligence process by validating that these assets can be efficiently run separately. Updates on these processes will be provided as appropriate. In the meantime, we are focused on reducing debt with lower earnings volatility as we plan to refinance our senior secured notes prior to them becoming current in early 2025,” concluded Bloomquist.
Highlights include the following:
- Net sales for the first quarter of $388 million, down $79 million from prior year quarter
- Net loss for the first quarter of $2 million, a decline of $4 million from prior year quarter
- Adjusted EBITDA for the first quarter of $52 million, up $1 million from prior year quarter
- Total debt of $779 million; Net Secured Debt of $721 million with a net secured debt ratio of 4.4 times
- 2024 Adjusted EBITDA guidance of $180 million to $200 million
- 2024 Adjusted Free Cash Flow guidance increased to $80 million to $100 million
High purity cellulose
Net sales for the quarter decreased $67 million, or 18 percent, to $307 million compared to the prior year quarter. Included in each of the current and prior year quarters were $23 million of other sales primarily from bio-based energy and lignosulfonates. Despite a two percent increase in cellulose specialties prices, total sales prices decreased two percent due to an 11 percent decrease in commodity prices. Total sales volumes decreased 17 percent driven by 16 percent and 18 percent decreases in cellulose specialties and commodity volumes, respectively. Increased cellulose specialties sales volumes resulting from the closure of a competitor’s plant in late 2023 and an uptick in ethers sales were more than offset by customer destocking in acetate products and the one-time favourable impact from a change in customer contract terms in the prior year quarter. The decrease in commodity sales volumes was primarily driven by lower production in favour of cellulose specialties production as the Company built inventory ahead of Jesup’s second quarter planned maintenance outage.
Operating income for the quarter increased $8 million compared to the prior year quarter driven by the higher cellulose specialties sales prices, decreased key input and logistics costs and improved productivity, partially offset by the lower cellulose specialties sales volumes, lower commodity sales prices and volumes and $7 million of energy cost benefits in the prior year quarter from sales of excess emission allowances that did not repeat in the current quarter.
Compared to the fourth quarter of 2023, net sales declined $40 million due to a 15 percent decrease in total sales volumes, including a 10 percent decrease in cellulose specialties volumes driven by customer destocking in acetate products that offset an uptick in ethers sales, and a 21 percent decrease in commodity volumes due to lower production in favor of cellulose specialties production. Operating results improved $70 million primarily due to the $62 million non-cash asset impairment recorded in the fourth quarter. Also contributing to the improvement in results was a 4 percent increase in total sales prices, including 1 percent and 3 percent increases in cellulose specialties and commodity prices, respectively, and a decrease in key input costs. Partially offsetting these improvements were the lower sales volumes and higher production costs driven by the impact of fourth quarter annual planned maintenance and market-related production outages.
Paperboard
Net sales for the quarter decreased $6 million, or 10 percent, to $53 million compared to the prior year quarter driven by a 12 percent decrease in sales prices due to market-driven demand declines and mix, partially offset by a slight increase in sales volumes.
Operating income for the quarter decreased $2 million compared to the prior year quarter driven by the lower sales prices, partially offset by lower purchased pulp costs.
Compared to the fourth quarter of 2023, operating income was flat as a 4 percent decrease in sales prices, due to market-driven demand declines and mix, was offset by lower unit production costs due to improved production levels in the current quarter.
High-yield pulp
Net sales for the quarter decreased $8 million, or 19 percent, to $34 million compared to the prior year quarter driven by a 27 percent decrease in sales prices due to market supply dynamics in China, partially offset by a 16 percent increase in sales volumes.
Operating results for the quarter declined $8 million compared to the prior year quarter driven by the lower sales prices, partially offset by the higher sales volumes and lower logistics costs.
Compared to the fourth quarter of 2023, operating loss decreased $4 million driven by 11 percent and 25 percent increases in sales prices and volumes, respectively, lower logistics and unit production costs due to improved production levels in the current quarter.
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