Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2024 reached $51 million, a $27 million or 113% increase year-over-year, with margins nearly doubling to 12.7% [7] - Year-to-date adjusted free cash flow stands at $99 million, indicating strong cash generation capabilities [7] - Net debt decreased by $90 million from the same period in 2023, ending the quarter at $653 million, with net secured leverage at 2.8 times [18] Business Segment Data and Key Metrics Changes - High Purity Cellulose (HPC) segment saw EBITDA rise by $32 million or 119%, driven by higher specialty prices and volumes [8] - Paperboard segment experienced a $6 million EBITDA decline due to reduced sales prices and increased pulp costs [8] - High-Yield Pulp segment improved by $6 million in EBITDA, attributed to higher prices and productivity, despite a decrease in sales volumes [8][16] Market Data and Key Metrics Changes - HPC segment sales increased by $33 million or 11% to $325 million, with pricing up 13% [14] - Paperboard sales decreased by $2 million, driven by lower demand, with EBITDA margins reducing to 20% [15] - High-Yield Pulp sales increased by $3 million, with a 14% rise in sales prices, although sales volumes declined by 3% [16] Company Strategy and Development Direction - The company aims to optimize its balance sheet and explore the sale of non-core businesses while focusing on enhancing the earnings power of its core HPC business [28] - A key initiative includes reducing commodity exposure, with non-fluff commodity revenue dropping to 4% in Q3 2024 from 14% the previous year [30] - The company is advancing its biomaterials strategy, with the Fernandina bioethanol plant project expected to commence operations in late 2026 [31] Management's Comments on Operating Environment and Future Outlook - Management reiterated adjusted EBITDA guidance for the year at $205 million to $215 million, despite a $10 million impact from a fire incident [33] - The company expects cash interest expense for 2024 to be approximately $93 million, with a projected annual cash expense of just over $80 million post-refinancing [34] - Management anticipates lower overall costs in 2024, driven by reduced key input and logistics expenses, although some costs will rise due to maintenance and recovery efforts from the fire [40] Other Important Information - The company successfully refinanced its debt, raising $700 million in secured term loan financing, enhancing financial flexibility [19] - Corporate expenses increased by $5 million due to unfavorable foreign exchange rates and higher variable compensation [9] - The company received a $15 million IRS tax refund and $39 million from the sale of lumber duty rights, which will be partially offset by the impact of the Temiscaming HPC plant suspension [36] Q&A Session Summary Question: Exposure to China and European Construction Demand - Management noted that approximately 20% of total enterprise sales are exposed to China, primarily in acetate and some commodities [48] - Acetate demand remains stable, while the company is reducing exposure to viscose [50] - There is a modest uptick in ethers demand in Europe, attributed to restocking and underlying demand improvements [54] Question: Demand Environment for Acetates and CS - Acetate is expected to remain stable, while other cellulose specialties may see improved demand due to competitor shutdowns [58] - The company is working on price increases for cellulose specialties, but specifics on implementation are still early [60] Question: Spending on Jesup Repairs - Management indicated it is too early to estimate repair costs for the Jesup facility, as investigations are ongoing [63] Question: Temiscaming Plant Closure Impact - The benefit from bridge sales during the Temiscaming plant shutdown has diminished, but some uplift is expected in Q4 [66] Question: Growth in Biomaterials - The biomaterials strategy is central to the company's ESG objectives, leveraging existing resources to produce renewable products [70]

Third Quarter 2024 Financial Presentation Materials November 6, 2024 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 performance or results, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform A ...

Company Performance - Rayonier Advanced Materials reported a quarterly loss of $0.12 per share, better than the Zacks Consensus Estimate of a loss of $0.18, and an improvement from a loss of $0.41 per share a year ago, representing an earnings surprise of 33.33% [1] - The company posted revenues of $401 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.72%, but showing an increase from year-ago revenues of $369 million [2] - Over the last four quarters, Rayonier Advanced Materials has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Rayonier Advanced Materials shares have increased approximately 100.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 19.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.47 on revenues of $430.7 million, and -$0.48 on revenues of $1.65 billion for the current fiscal year [7] Industry Outlook - The Paper and Related Products industry, to which Rayonier Advanced Materials belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, indicating a challenging environment [8] - The outlook for the industry can materially impact the stock's performance, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Financial Performance - Net sales for Q3 2024 were $401 million, an increase of $32 million or 8.7% from the prior year quarter[1]. - Adjusted EBITDA from continuing operations for Q3 2024 was $51 million, up $27 million or 112% from the prior year quarter[1]. - The company reported a net loss of $33 million, or $(0.49) per diluted share, compared to a net loss of $25 million, or $(0.39) per diluted share, in the prior year quarter[5]. - The company reported a net loss of $33 million for the nine months ended September 28, 2024, compared to a net loss of $40 million for the same period in 2023[60]. - Adjusted EBITDA for the nine months ended September 28, 2024, was $175 million, up from $171 million for the same period last year[68]. - Adjusted income (loss) from continuing operations for the three months ended September 28, 2024, was $(0.12) per diluted share, compared to $(0.40) per diluted share for the same period in 2023[76]. - Adjusted income (loss) from continuing operations for the nine months ended September 28, 2024, was $(0.58) per diluted share[76]. - The company experienced a total adjusted loss of $(39) million for the nine months ended September 28, 2024[76]. Debt and Financing - Total debt stood at $773 million, with a net secured debt of $622 million and a covenant net secured leverage ratio of 2.8 times[1]. - The company successfully raised $700 million in secured term loan financing to refinance its capital structure[1]. - Non-operating interest expense increased by $10 million for the nine months ended September 28, 2024, due to a rise in the average effective interest rate on debt[19]. - The Company has secured commitments for a five-year $175 million ABL credit facility, initially priced at Term SOFR plus a spread of 2%[30]. - Total debt as of September 28, 2024, was $773 million, a slight decrease from $777 million as of December 31, 2023[75]. - Adjusted net debt decreased to $653 million as of September 28, 2024, from $721 million at the end of 2023, reflecting improved financial health[75]. Cash Flow and Liquidity - The company generated $99 million of Adjusted Free Cash Flow, which supported a $37 million reduction in net secured debt during the quarter[2]. - Cash provided by operating activities for the nine months ended September 28, 2024, was $149 million, compared to $82 million for the same period last year, indicating an increase of 81.7%[71]. - The Company generated operating cash flows of $149 million during the nine months ended September 28, 2024, driven by proceeds of $39 million from the sale of softwood lumber duty refund rights[27]. - The Company ended the third quarter with $281 million of global liquidity, including $136 million of cash and $135 million of borrowing capacity under the ABL Credit Facility[31]. - Adjusted Free Cash Flow guidance for 2024 has been increased to $115 million to $125 million[1]. - The company expects annual adjusted free cash flow guidance for 2024 to be between $115 million and $125 million[72]. Sales and Pricing - Price increases of up to 10% for cellulose specialties products were announced, expected to improve margins in 2025[4]. - Average sales price for High Purity Cellulose was $1,369 per metric ton for the three months ended September 28, 2024, compared to $1,215 for the same period last year, reflecting a 12.7% increase[62]. - Sales volume of High Purity Cellulose was 218,000 metric tons for the three months ended September 28, 2024, a slight decrease from 225,000 metric tons in the previous quarter[62]. - The average sales price for Paperboard was $1,400 per metric ton for the three months ended September 28, 2024, down from $1,459 in the same period last year, representing a decrease of 4.0%[62]. - High-Yield Pulp external sales price averaged $559 per metric ton for the three months ended September 28, 2024, compared to $489 for the same period last year, marking a 14.3% increase[62]. Operational Challenges - The Company incurred a $14 million one-time operating charge related to the indefinite suspension of operations at its Temiscaming HPC plant[33]. - The Company anticipates a decline in EBITDA from the Paperboard segment in the coming quarters due to market pressure from new competitive supply[38]. - High-Yield Pulp prices are expected to decline in the fourth quarter, while sales volumes are projected to increase significantly due to timing of shipments[39]. - The company incurred asset impairment charges of $25 million during the nine months ended September 28, 2024[60]. - Asset impairment charges amounted to $0.38 million for the three months ended September 28, 2024[76]. - Indefinite suspension charges were $0.12 million for the three months ended September 28, 2024, compared to $0.10 million for the previous quarter[76]. Future Outlook - 2024 Adjusted EBITDA guidance is reiterated at $205 million to $215 million, despite an estimated $10 million impact from a fire at the Jesup plant[3]. - The bioethanol facility in Tartas, France is expected to deliver approximately $3 million to $4 million of EBITDA in 2024, growing to $8 million to $10 million beginning in 2025[36]. - The company may require additional financing in the future to meet capital needs or make acquisitions, which may not be available on favorable terms[51]. - The company is exploring the potential sale of its Paperboard and High-Yield Pulp assets located at its Temiscaming site[32].

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks. Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being unde ...

Rayonier Advanced Materials (RYAM) came out with quarterly earnings of $0.19 per share, beating the Zacks Consensus Estimate of a loss of $0.07 per share. This compares to loss of $0.25 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 371.43%. A quarter ago, it was expected that this maker of cellulose products would post a loss of $0.01 per share when it actually produced a loss of $0.02, delivering a surprise of -100%. Over ...

The Zacks Paper and Related Products industry is set to benefit from increased packaging demand from rising e-commerce activities. Sustained demand from consumer-oriented sectors, such as food, beverages and healthcare, lends further support. The industry's growth is propelled by the escalating consumer inclination toward paper as an environmentally friendly packaging choice amid rising environmental awareness. Key players, such as Stora Enso Oyj (SEOAY) , Sylvamo (SLVM) and Rayonier Advanced Materials (RYA ...

Mickey Walsh - Treasurer and VP of IR De Lyle Bloomquist - President and CEO Marcus Moeltner - CFO and SVP, Finance Good morning, and welcome to the RYAM First Quarter 2024 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded. Company Participants Daniel Harriman - Sidoti & Company Matthew McKellar - RBC ...

RYAM Announces Improved First Quarter 2024 Results Reaffirms 2024 EBITDA and Increases Free Cash Flow Guidance JACKSONVILLE, Fla., May 7, 2024 - Rayonier Advanced Materials Inc. (NYSE:RYAM) (the "Company") today 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," ...

FORM 10-K Filing Information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides key identification details for Rayonier Advanced Materials Inc, its stock exchange listing, and confirms its SEC filing status - Rayonier Advanced Materials Inc (RYAM) is incorporated in **Delaware** with IRS Employer Identification No 46-4559529; its common stock is traded on the **New York Stock Exchange** under the symbol **RYAM**[1](index=1&type=chunk)[2](index=2&type=chunk) - The aggregate market value of common stock held by non-affiliates as of July 1, 2023, was **$270,254,732**, with **65,398,056 shares** outstanding as of February 27, 2024[3](index=3&type=chunk)[4](index=4&type=chunk) Registrant Filing Status | Status | Indication | | :--- | :--- | | Well-known seasoned issuer | No | | Required to file reports | Yes | | Filed all required reports | Yes | | Submitted Interactive Data | Yes | | Accelerated filer | Yes | Table of Contents Glossary [Terms and Abbreviations](index=4&type=section&id=Terms%20and%20Abbreviations) This section defines key financial, regulatory, operational, and sustainability terms and abbreviations used throughout the 2023 Form 10-K - The glossary defines financial instruments such as **'2024 Notes' ($550 million, due June 2024)**, **'2026 Notes' ($500 million, due January 2026)**, and **'2027 Term Loan' ($250 million, maturing July 2027)**[11](index=11&type=chunk) - Key operational and regulatory terms include **'ABL Credit Facility'**, **'EBITDA'**, **'GAAP'**, **'SEC'**, and various environmental acts like **'CERCLA'** and **'RCRA'**[11](index=11&type=chunk)[12](index=12&type=chunk) - Sustainability-related terms such as **'GHG' (Greenhouse gas)**, **'ISCC EU'**, and **'ISCC PLUS'** are also defined, highlighting the company's focus on environmental standards[11](index=11&type=chunk) Forward-Looking Statements [Disclaimer on Future Performance](index=6&type=section&id=Disclaimer%20on%20Future%20Performance) This section cautions that forward-looking statements are subject to risks and uncertainties and advises against undue reliance on them - Forward-looking statements, identified by words like 'may,' 'will,' 'expect,' and 'believe,' are **not guarantees of future performance** and are subject to risks and uncertainties[15](index=15&type=chunk)[16](index=16&type=chunk) - Actual results may differ materially from expectations due to various risks, including those outlined in **Item 1A—Risk Factors**[16](index=16&type=chunk) - The company undertakes **no duty to update** forward-looking statements except as required by law, advising readers to review subsequent SEC filings[17](index=17&type=chunk) Part I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Rayonier Advanced Materials Inc is a global leader in specialty cellulose materials, focusing on strategic investments in renewable products and exploring the potential sale of its Paperboard and High-Yield Pulp assets - The company is a global leader in specialty cellulose materials, producing **high-purity cellulose pulp**, a unique **multi-ply paperboard**, and a bulky, **high-yield pulp** product[18](index=18&type=chunk) - Strategic investments are focused on optimizing assets for renewable products, including projects like **Anomera (CNC)**, prebiotic development, and **2G bioethanol production** at its Tartas and Fernandina facilities[19](index=19&type=chunk)[22](index=22&type=chunk) - The company has set an ambitious goal to achieve at least a **40% reduction in Scope 1 and Scope 2 GHG emissions by 2030** (2020 baseline), with **40% absolute** and **25% intensity reductions** achieved to date[22](index=22&type=chunk) - In October 2023, the company announced it is exploring the potential sale of its **Paperboard and High-Yield Pulp assets** at its Temiscaming site to align with its long-term growth strategy and reduce debt[29](index=29&type=chunk) [Strategic Growth Investments](index=7&type=section&id=Strategic%20Growth%20Investments) - Investments are focused on projects that optimize assets to meet demand for renewable products, aligning with sustainability drivers like the **European Union Green Deal** for the Renewable Energy Directive II[19](index=19&type=chunk) - Key projects include investment in **Anomera for CNC production**, development of a prebiotic for poultry/swine gut health, and production of **2G bioethanol fuel** at Tartas (expected Q1 2024) and Fernandina facilities[22](index=22&type=chunk) [Our Sustainability Profile](index=7&type=section&id=Our%20Sustainability%20Profile) - Four production facilities (US, Canada, France) are **ISCC PLUS/EU certified** and hold Forest Stewardship Council and Programme for the Endorsement of Forest Certification Chain of Custody standards[20](index=20&type=chunk) - Fluff pulp from the Jesup facility is certified as an **'Inspected Raw Material' by Nordic Swan Ecolabeling**, indicating adherence to rigorous environmental requirements[21](index=21&type=chunk) - The company aims for a **40% reduction in Scope 1 and Scope 2 GHG emissions by 2030** (2020 baseline), having achieved approximately **40% in absolute** and **25% in intensity** emissions reductions for 2021-2022[22](index=22&type=chunk) - **Over 75% of energy** consumed by facilities is derived from renewable sources, primarily biomass, using production process residuals rather than harvesting living trees for energy[23](index=23&type=chunk) - Water is extensively reused in production, with **98% treated and returned** to natural sources, and waste generation is minimized through recycling and co-product generation[24](index=24&type=chunk)[25](index=25&type=chunk) [Business Operations](index=8&type=section&id=Business%20Operations) - The company became an independent publicly-traded entity in **June 2014**, following its separation from Rayonier Inc, and acquired Tembec Inc in November 2017[26](index=26&type=chunk) - In August 2021, the lumber and newsprint assets acquired from Tembec were sold, with their operating results presented as **discontinued operations**[27](index=27&type=chunk) - Current business segments include **High Purity Cellulose**, **Paperboard**, and **High-Yield Pulp**[28](index=28&type=chunk) - A strategic review is ongoing to explore the potential sale of **Paperboard and High-Yield Pulp assets** at the Temiscaming site, aiming to align the portfolio with long-term growth and reduce earnings volatility[29](index=29&type=chunk) [High Purity Cellulose](index=8&type=section&id=High%20Purity%20Cellulose) - This segment is the **primary driver of profitability**, manufacturing cellulose specialties used in diverse consumer products like LCDs, pharmaceuticals, and textiles, tailored to precise customer specifications[30](index=30&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - The company's four production facilities have a combined annual capacity of **1,045,000 MTs**, with **270,000 MTs** dedicated to commodity products (absorbent materials and viscose pulp)[33](index=33&type=chunk) - Wood fiber, chemicals, and energy constitute approximately **50% of the per MT cost of sales** for this segment[34](index=34&type=chunk) - The company leverages its global manufacturing asset base and proprietary processes to offer supply chain security and customized product functionality, being the **only producer with flexibility across hardwood/softwood fibers** and cooking processes[37](index=37&type=chunk) - Biomaterials production, including **2G bioethanol (Tartas facility expected Q1 2024)**, is a core priority to meet demand for renewable materials and sustainable products[32](index=32&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Competition in cellulose specialties is characterized by **high barriers to entry**, with major competitors including Bracell and Borregaard, while commodity products compete primarily on price[43](index=43&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Paperboard](index=11&type=section&id=Paperboard) - The Temiscaming plant in Quebec, Canada, has an annual production capacity of **180,000 MTs** of multi-ply paperboard, used for packaging, printing, and lottery tickets[51](index=51&type=chunk)[52](index=52&type=chunk) - Wood pulp, chemicals, and energy account for approximately **80% of the per MT cost of sales** in this segment[51](index=51&type=chunk) - Competition is primarily based on price and product performance, with major competitors including **WestRock**, **Graphic Packaging**, and **Sappi**[53](index=53&type=chunk)[54](index=54&type=chunk) [High-Yield Pulp](index=11&type=section&id=High-Yield%20Pulp) - The Temiscaming plant produces **290,000 MTs** of high-yield pulp annually, with approximately **65,000 MTs** used internally for paperboard production[55](index=55&type=chunk) - This segment primarily uses hardwood aspen, maple, and birch species to produce a bulky, high-yield pulp for paperboard, packaging, and printing papers[57](index=57&type=chunk) - Wood fiber, chemicals, and energy represent about **40% of the per MT cost of sales**[56](index=56&type=chunk) - Competition is mainly price-driven, though higher quality can command a premium, with major competitors including **Winstone Pulp**, **Sappi**, and **Paper Excellence**[58](index=58&type=chunk)[59](index=59&type=chunk) [Raw Materials and Input Costs](index=12&type=section&id=Raw%20Materials%20and%20Input%20Costs) - Manufacturing operations require significant amounts of wood fiber (logs or chips), chemicals (caustic soda, sulfuric acid), and energy, all subject to **significant price volatility** due to supply, demand, and weather[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - **Over 75% of the company's energy** is derived from renewable biomass, using production process residuals[23](index=23&type=chunk) [Intellectual Property](index=12&type=section&id=Intellectual%20Property) - Substantially all intellectual property relates to the **High Purity Cellulose segment**, including patents, trademarks, trade secrets, and expertise in high purity cellulose and paperboard production[64](index=64&type=chunk) [Seasonality](index=12&type=section&id=Seasonality) - Operating results may be materially affected by **seasonal changes** and their impact on energy prices[65](index=65&type=chunk) [Customers](index=12&type=section&id=Customers) - One customer in the High Purity Cellulose segment accounted for **10% of total sales** for the year ended December 31, 2023[66](index=66&type=chunk) [Research and Development](index=12&type=section&id=Research%20and%20Development) - R&D activities are primarily focused on the **High Purity Cellulose segment**, aiming to develop new products/technologies, improve cellulose fiber grades, enhance manufacturing efficiency, and reduce fossil fuel consumption[67](index=67&type=chunk) R&D Spend (2021-2023) | Year | R&D Spend (Millions USD) | | :--- | :--- | | 2023 | $6 | | 2022 | $7 | | 2021 | $7 | [Environmental Matters](index=13&type=section&id=Environmental%20Matters) - Manufacturing operations are subject to **stringent federal, state, provincial, and local environmental laws** and regulations concerning air emissions, wastewater discharges, and waste handling[68](index=68&type=chunk) - Compliance with these laws and permits often requires **significant expenditures**, and future spending could change based on new legislation or stricter interpretations[68](index=68&type=chunk)[69](index=69&type=chunk) - Management believes the company is in **material compliance** with current environmental requirements[69](index=69&type=chunk) [Human Capital](index=13&type=section&id=Human%20Capital) - The company employs approximately **2,800 people** across the US, Canada, and France, with **61% belonging to labor unions**[71](index=71&type=chunk) - Employee safety is a top priority, with the company-wide injury rate **decreasing by 17% in 2023**, driven by a focus on five leading safety metrics[72](index=72&type=chunk) - Efforts to attract, retain, and develop employees include partnerships with colleges, scholarships, internships, and an **Early Career Development (ECD) program**[73](index=73&type=chunk) - The company upholds a Human Rights Policy and a Standard of Ethics and Code of Corporate Conduct, emphasizing safe workplaces, anti-corruption, fair compensation, and diversity and inclusion[74](index=74&type=chunk)[75](index=75&type=chunk) [Availability of Reports and Other Information](index=14&type=section&id=Availability%20of%20Reports%20and%20Other%20Information) - Annual, quarterly, and current reports, proxy statements, and corporate governance guidelines are available **free of charge** on the company's investor relations website and the SEC's website[76](index=76&type=chunk) [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from macroeconomic challenges, operational disruptions, regulatory changes, and financial obligations - Macroeconomic risks include disruptions from geopolitical conflicts, epidemics/pandemics (eg, COVID-19's impact on costs and supply chains), and the **highly competitive and cyclical nature** of the company's businesses, leading to price and volume fluctuations[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - Operational risks encompass potential manufacturing disruptions from unexpected outages, raw material shortages, transportation failures, natural disasters, labor interruptions, and **cybersecurity incidents**[96](index=96&type=chunk) - Regulatory and environmental risks include stringent and evolving environmental laws, potential interventions from environmental groups, and significant liabilities for environmental remediation at current and former sites, with estimated exposure **up to $85 million** beyond recorded liabilities[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[418](index=418&type=chunk) - Financial risks are substantial, with total indebtedness of **$777 million** as of December 31, 2023, and covenants in debt agreements that could impair business operations, alongside potential needs for additional financing[125](index=125&type=chunk)[126](index=126&type=chunk)[130](index=130&type=chunk) - International operations, which generated **67% of revenue in 2023**, expose the company to foreign currency fluctuations, trade protection laws (eg, China tariffs, Canadian softwood lumber duties), and political/economic instability[87](index=87&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Macroeconomic and Industry Risks](index=15&type=section&id=Macroeconomic%20and%20Industry%20Risks) - Geopolitical conflicts and public health crises (like COVID-19) can negatively impact the global economy, leading to **input material shortages**, **increased costs**, and **reduced demand**[78](index=78&type=chunk)[79](index=79&type=chunk) - The company operates in **highly competitive and cyclical markets**, with demand fluctuations and increased competitor capacity potentially leading to lower sales prices, particularly for cellulose specialties and high-purity commodity products[80](index=80&type=chunk) - Raw material and energy costs are **significant and volatile**, susceptible to rapid increases due to factors like weather, political unrest, and supply/demand, with limited ability to pass on these costs in some contracts[85](index=85&type=chunk)[86](index=86&type=chunk) - International sales accounted for **67% of revenue in 2023**, exposing the company to risks from foreign laws, trade protection measures (eg, China tariffs, Canadian softwood lumber duties), and currency exchange rate fluctuations[87](index=87&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Business and Operational Risks](index=18&type=section&id=Business%20and%20Operational%20Risks) - The top ten customers represented approximately **40% of 2023 revenue**, making the company vulnerable to significant revenue loss or unfavorable contract changes[94](index=94&type=chunk) - **Material disruptions** at manufacturing facilities (eg, unscheduled outages, raw material interruptions, natural disasters, labor issues, cybersecurity incidents) could prevent meeting demand and increase costs[96](index=96&type=chunk) - Unfavorable changes in **wood fiber availability and prices**, influenced by regulatory developments, environmental litigation, and natural conditions, could materially increase costs[98](index=98&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company's **capital-intensive business** requires substantial investment for maintenance, repair, and replacement of facilities, with potential for significant costs and downtime[103](index=103&type=chunk) - A non-cash impairment of **$62 million** was recorded in Q4 2023 related to certain assets at the Temiscaming and Jesup facilities due to asset optimization and realignment[105](index=105&type=chunk) - Dependence on third-party transportation services and potential failures in R&D or intellectual property protection also pose significant business risks[106](index=106&type=chunk)[110](index=110&type=chunk) - **Cybersecurity incidents** could lead to loss of intellectual property, sensitive data, or disruption of manufacturing operations, despite established policies and controls[111](index=111&type=chunk) [Regulatory and Environmental Risks](index=21&type=section&id=Regulatory%20and%20Environmental%20Risks) - Extensive environmental laws and regulations, which are constantly changing and becoming more restrictive, may require **significant capital expenditures** and limit operations[112](index=112&type=chunk)[113](index=113&type=chunk) - Environmental groups and Indigenous communities may intervene in regulatory processes or file lawsuits, causing **delays, restrictions, and increased costs**[114](index=114&type=chunk) - The company faces substantial environmental remediation liabilities at current and former operating sites, with accrued liabilities of **$170 million** at December 31, 2023, and reasonably possible additional liabilities **up to $85 million**[115](index=115&type=chunk)[286](index=286&type=chunk)[410](index=410&type=chunk)[418](index=418&type=chunk) - **Climate-related risks**, including regulatory measures (eg, carbon pricing, new disclosure requirements like the EU's Corporate Sustainability Reporting Directive), transition risks to a low-carbon economy, and physical risks from extreme weather, could materially impact business and financial results[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Financial Risks](index=23&type=section&id=Financial%20Risks) - The company may need to make **significant additional cash contributions** to retirement benefit plans if investment returns are lower than expected or interest rates decline[124](index=124&type=chunk) - Total indebtedness was **$777 million** as of December 31, 2023, which could require a substantial portion of cash flows for interest payments, increase vulnerability to adverse economic conditions, and limit financial flexibility[125](index=125&type=chunk) - Debt agreements contain **covenants that limit actions** like incurring debt, making investments, or paying dividends, and a breach could accelerate debt repayment[126](index=126&type=chunk)[127](index=127&type=chunk) - In January 2024, the 2027 Term Loan agreement was amended to **increase the maximum consolidated secured net leverage ratio** through fiscal year 2024 to address potential non-compliance[128](index=128&type=chunk) - Challenges in commercial and credit environments may adversely affect **future access to capital**, and additional financing, if required, may not be available on favorable terms or could be dilutive to stockholders[129](index=129&type=chunk)[130](index=130&type=chunk) [Common Stock and Certain Corporate Matters Risks](index=25&type=section&id=Common%20Stock%20and%20Certain%20Corporate%20Matters%20Risks) - Future equity issuances for acquisitions, capital market transactions, or employee awards could **dilute stockholders' ownership interest** and adversely affect earnings per share[131](index=131&type=chunk) - Provisions in the company's certificate of incorporation and bylaws, and Delaware law, could **prevent or delay an acquisition**, potentially decreasing the common stock price[132](index=132&type=chunk) [Item 1B. Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are **no unresolved staff comments**[133](index=133&type=chunk) [Item 1C. Cybersecurity](index=25&type=section&id=Item%201C.%20Cybersecurity) The company integrates cybersecurity risk management into its overall risk framework, with oversight provided by the Audit Committee - Cybersecurity risk management is **integrated into the company's overall risk management system**, with risks identified and addressed through internal teams and external consultants[134](index=134&type=chunk) - The company utilizes proactive cybersecurity reviews, annual risk assessments, tabletop exercises, and infiltration testing to safeguard against, detect, and manage cyber threats[135](index=135&type=chunk) - The **Audit Committee**, which includes a member with significant cybersecurity consulting experience, is responsible for oversight of cybersecurity risks, receiving quarterly reports from senior management[137](index=137&type=chunk) - A CEO-chaired **Enterprise Risk Management team** and a **Cybersecurity Governance Committee** assess and mitigate risks, ensuring effective strategy execution and cyber readiness[138](index=138&type=chunk) [Item 2. Properties](index=26&type=section&id=Item%202.%20Properties) The company's material properties include owned manufacturing facilities in the US, Canada, and France, with ongoing capital investments and asset realignment Material Properties and Annual Production Capacity (as of Dec 31, 2023) | Location by Segment | Annual Production Capacity | Owned/Leased | | :--- | :--- | :--- | | **High Purity Cellulose Facilities** | | | | Jesup, Georgia, United States | 330,000 MTs (cellulose specialties/commodity) | Owned | | | 270,000 MTs (commodity products) | | | Fernandina Beach, Florida, United States | 155,000 MTs (cellulose specialties/commodity) | Owned | | Temiscaming, Quebec, Canada | 150,000 MTs (cellulose specialties/commodity) | Owned | | Tartas, France | 140,000 MTs (cellulose specialties/commodity) | Owned | | **Paperboard Facilities** | | | | Temiscaming, Quebec, Canada | 180,000 MTs of paperboard | Owned | | **High-Yield Pulp Facilities** | | | | Temiscaming, Quebec, Canada | 290,000 MTs of high-yield pulp | Owned | | **Corporate and Other** | | | | Jacksonville, Florida, United States | Corporate Headquarters | Leased | - The company is undertaking a **realignment of its High Purity Cellulose assets** to optimize production mix, consolidating commodity viscose production into the Temiscaming plant and fluff production into the Jesup plant's C Line[140](index=140&type=chunk) [Item 3. Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, with details incorporated by reference from its Financial Statements - Information regarding legal proceedings is incorporated by reference from **Note 21—Commitments and Contingencies** to the Financial Statements[141](index=141&type=chunk) Part II [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE under RYAM; dividends were suspended in 2019, and no shares were repurchased under the authorized buyback program in 2023 - The company's common stock is traded on the **New York Stock Exchange** under the symbol **'RYAM'**, with 3,116 record holders as of February 27, 2024[143](index=143&type=chunk) - Quarterly common stock dividends were **suspended in September 2019**, and no dividends have been declared since, with future payments dependent on financial condition and debt facility limitations[144](index=144&type=chunk) - As of December 31, 2023, **$60 million remained unused** under the $100 million share buyback program authorized in January 2018, with **no repurchases under this program in 2023, 2022, or 2021**[145](index=145&type=chunk)[189](index=189&type=chunk) Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | October 1 to November 4 | — | $— | — | $60,294,000 | | November 5 to December 2 | — | $— | — | $60,294,000 | | December 3 to December 31 | 15,964 | $348 | — | $60,294,000 | | **Total** | **15,964** | | **—** | | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company experienced a decline in net sales and operating income in 2023 due to lower commodity prices, reduced volumes, and a significant asset impairment, though strategic initiatives are progressing - In January 2024, the **2027 Term Loan agreement was amended** to increase the maximum consolidated secured net leverage ratio through fiscal year 2024, providing operational flexibility[164](index=164&type=chunk) - A **$62 million non-cash asset impairment** was recorded in Q4 2023 due to the optimization and realignment of High Purity Cellulose assets, aimed at reducing commodity exposure and earnings volatility[164](index=164&type=chunk) - The company secured **$250 million in term loan financing** in July 2023, using the proceeds to redeem the **$318 million principal balance of the 2024 Notes**[164](index=164&type=chunk) Consolidated Financial Summary (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | Net sales | $1,643 | $1,717 | $(74) | | Cost of sales | $(1,555) | $(1,594) | $39 | | Gross margin | $88 | $123 | $(35) | | Operating income (loss) | $(65) | $26 | $(91) | | Net loss | $(102) | $(15) | $(87) | | Gross margin % | 54% | 72% | (18)% | | Operating margin % | (40)% | 15% | (55)% | | Effective tax rate | 244% (benefit) | (38)% (expense) | 282% | Adjusted EBITDA and Adjusted Free Cash Flows (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | EBITDA-continuing operations | $75 | $173 | $(98) | | Adjusted EBITDA-continuing operations | $139 | $177 | $(38) | | Adjusted free cash flows-continuing operations | $53 | $(35) | $88 | [Overview of Operations](index=30&type=section&id=Overview%20of%20Operations) - The company operates in three business segments: **High Purity Cellulose**, **Paperboard**, and **High-Yield Pulp**[151](index=151&type=chunk) - High Purity Cellulose is the leading global producer of cellulose specialties, with **1,045,000 MTs** combined annual capacity, and **50% of cost of sales** from wood fiber, chemicals, and energy[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Paperboard has an annual capacity of **180,000 MTs**, with **80% of cost of sales** from wood pulp, chemicals, and energy[155](index=155&type=chunk) - High-Yield Pulp has an annual capacity of **290,000 MTs**, with **40% of cost of sales** from wood fiber, chemicals, and energy[156](index=156&type=chunk)[157](index=157&type=chunk) [Recent Business Developments](index=31&type=section&id=Recent%20Business%20Developments) - In January 2024, the 2027 Term Loan agreement was amended to **increase the maximum consolidated secured net leverage ratio** through fiscal year 2024, incurring a 025% fee if the original ratio is exceeded[164](index=164&type=chunk) - A **$62 million non-cash asset impairment** was recorded in Q4 2023 at the Temiscaming and Jesup plants due to the optimization and realignment of High Purity Cellulose assets[164](index=164&type=chunk) - The company secured **$250 million in term loan financing** in July 2023, using the proceeds to redeem the **$318 million principal balance of the 2024 Notes** in August 2023[164](index=164&type=chunk) - Debt repurchases in 2023 included **$10 million of 2026 Notes for $9 million cash** in April and **$5 million of 2024 Notes for $5 million cash** in March[164](index=164&type=chunk) [2024 Outlook](index=31&type=section&id=2024%20Outlook) - The company is exploring the potential sale of its **Paperboard and High-Yield Pulp assets** at Temiscaming to align with long-term growth and reduce debt[160](index=160&type=chunk) - For High Purity Cellulose, average sales prices are expected to **increase by a low single-digit percentage** in 2024, with flat sales volumes and improving commodity prices from Q4 2023 levels[162](index=162&type=chunk) - The Tartas bioethanol facility is expected to be commissioned in Q1 2024, projected to deliver **$4 million EBITDA in 2024**, growing to **$8-10 million by 2025**[162](index=162&type=chunk) - Paperboard prices are expected to decrease slightly, but sales volumes should improve, while High-Yield Pulp prices and volumes are expected to increase, leading to **positive EBITDA** for the segment[163](index=163&type=chunk)[164](index=164&type=chunk) - Corporate costs are expected to remain flat or increase slightly in 2024 due to the final year of ERP implementation, which is anticipated to drive efficiencies from 2025[165](index=165&type=chunk) [Biomaterials Strategy](index=32&type=section&id=Biomaterials%20Strategy) - The company is investing in new products targeting green energy and products markets, with a goal of generating **$42 million in annual EBITDA** from these products by 2027[166](index=166&type=chunk) - The commissioning of the bioethanol facility is a **significant milestone** in this strategy[166](index=166&type=chunk) [Results of Operations: Year Ended December 31, 2023 versus December 31, 2022](index=32&type=section&id=Results%20of%20Operations%3A%20Year%20Ended%20December%2031%2C%202023%20versus%20December%2031%2C%202022) - Net sales **decreased by $74 million** in 2023, driven by lower sales prices in commodity products and High-Yield Pulp, and reduced sales volumes in cellulose specialties, Paperboard, and High-Yield Pulp[169](index=169&type=chunk) - Operating results **declined by $91 million**, primarily due to a **$62 million non-cash asset impairment** in High Purity Cellulose and decreased net sales across all segments[170](index=170&type=chunk) - Interest expense **increased by $8 million** due to a higher average effective interest rate, partially offset by a decrease in average outstanding debt balance[171](index=171&type=chunk) - The effective tax rate for continuing operations was a **benefit of 24% in 2023**, compared to an expense of 4% in 2022, influenced by foreign statutory rates, US tax credits, and valuation allowance changes[174](index=174&type=chunk)[175](index=175&type=chunk) - Discontinued operations recorded a pre-tax gain of **$2 million in 2023** related to reduced Canadian softwood lumber export duties, compared to **$16 million in 2022**[177](index=177&type=chunk)[178](index=178&type=chunk) Consolidated Statements of Operations (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | Net sales | $1,643 | $1,717 | $(74) | | Cost of sales | $(1,555) | $(1,594) | $39 | | Gross margin | $88 | $123 | $(35) | | Selling, general and administrative expenses | $(76) | $(91) | $15 | | Foreign exchange gain (loss) | $(3) | $4 | $(7) | | Asset impairment | $(62) | — | $(62) | | Other operating expense, net | $(12) | $(10) | $(2) | | Operating income (loss) | $(65) | $26 | $(91) | | Interest expense | $(74) | $(66) | $(8) | | Components of pension and OPEB, excluding service costs | $0 | $5 | $(5) | | Gain on GreenFirst equity securities | — | $5 | $(5) | | Other income, net | $7 | $6 | $1 | | Loss from continuing operations before income tax | $(132) | $(24) | $(108) | | Income tax (expense) benefit | $32 | $(1) | $33 | | Equity in loss of equity method investment | $(2) | $(2) | $0 | | Loss from continuing operations | $(102) | $(27) | $(75) | | Income from discontinued operations, net of tax | $0 | $12 | $(12) | | Net loss | $(102) | $(15) | $(87) | | Gross margin % | 54% | 72% | (18)% | | Operating margin % | (40)% | 15% | (55)% | | Effective tax rate | 244% | (38)% | 282% | [Operating Results by Segment](index=34&type=section&id=Operating%20Results%20by%20Segment) - High Purity Cellulose net sales **decreased $23 million**, with an **11% increase in cellulose specialties prices** offset by a **13% decrease in commodity prices**; sales volumes increased 4% due to a **39% rise in commodity volumes**, partially offset by an **18% drop in cellulose specialties volumes**[180](index=180&type=chunk) - Operating results for High Purity Cellulose **declined $73 million**, primarily due to the **$62 million non-cash asset impairment**, lower cellulose specialties volumes, and higher labor costs, partially offset by higher cellulose specialties prices and commodity volumes[181](index=181&type=chunk) - Paperboard net sales **decreased $31 million** due to a **13% decrease in sales volumes** from customer destocking, while operating income remained flat due to lower costs offsetting reduced volumes[182](index=182&type=chunk)[183](index=183&type=chunk) - High-Yield Pulp net sales **decreased $24 million**, driven by **12% lower sales prices** and **5% lower sales volumes** due to reduced demand, resulting in a **$19 million decline in operating results**[184](index=184&type=chunk)[185](index=185&type=chunk) - Corporate operating loss **decreased $1 million** in 2023, primarily due to lower variable compensation and one-time severance costs in 2022, partially offset by unfavorable foreign exchange rates and higher ERP transformation project expenditures[186](index=186&type=chunk) High Purity Cellulose Segment Performance (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | Net sales | $1,313 | $1,336 | $(23) | | Operating income (loss) | $(42) | $31 | $(73) | | Average sales prices ($/MT) | $1,273 | $1,330 | $(57) | | Sales volumes (thousands MTs) | 955 | 918 | 37 | Paperboard Segment Performance (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | Net sales | $219 | $250 | $(31) | | Operating income | $37 | $37 | $0 | | Average sales prices ($/MT) | $1,491 | $1,478 | $13 | | Sales volumes (thousands MTs) | 147 | 169 | (22) | High-Yield Pulp Segment Performance (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | Net sales | $136 | $160 | $(24) | | Operating income (loss) | $(3) | $16 | $(19) | | Average sales prices ($/MT) | $606 | $685 | $(79) | | Sales volumes (thousands MTs) | 182 | 191 | (9) | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash flows from operations are the primary source of liquidity, with the company believing future cash flows, ABL Credit Facility availability, and capital market access will be adequate[187](index=187&type=chunk)[190](index=190&type=chunk) - The 2027 Term Loan was amended in January 2024 to **increase the maximum consolidated secured net leverage ratio**, providing operational flexibility[191](index=191&type=chunk) - Total noncancellable unconditional purchase obligations amounted to **$728 million** as of December 31, 2023, primarily for natural gas, steam energy, and wood chips[194](index=194&type=chunk)[491](index=491&type=chunk) Liquidity and Capital Resources Summary (as of Dec 31) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $76 | $152 | | Availability under the ABL Credit Facility | $118 | $130 | | Total debt | $777 | $853 | | Stockholders' equity | $747 | $829 | | Total capitalization | $1,524 | $1,682 | | Debt to capital ratio | 51% | 51% | Cash Flows (2023 vs 2022) | Activity | 2023 (Millions USD) | 2022 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | Cash provided by operating activities | $136 | $69 | $67 | | Cash used in investing activities-continuing operations | $(128) | $(138) | $10 | | Cash used in financing activities | $(87) | $(73) | $(14) | [Performance and Liquidity Indicators](index=38&type=section&id=Performance%20and%20Liquidity%20Indicators) - EBITDA from continuing operations **decreased by $98 million** in 2023, primarily due to the **$62 million non-cash asset impairment**, lower net sales, and increased labor/wood costs[205](index=205&type=chunk) - Adjusted free cash flows from continuing operations **increased by $88 million**, driven by changes in working capital and lower capital expenditures[207](index=207&type=chunk) EBITDA and Adjusted EBITDA (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | | :--- | :--- | :--- | | Loss from continuing operations | $(102) | $(27) | | Depreciation and amortization | $140 | $135 | | Interest expense, net | $69 | $64 | | Income tax expense (benefit) | $(32) | $1 | | **EBITDA-continuing operations** | **$75** | **$173** | | Asset impairment | $62 | — | | Pension settlement loss | $2 | $1 | | Severance | — | $4 | | Gain on debt extinguishment | — | $(1) | | **Adjusted EBITDA-continuing operations** | **$139** | **$177** | Adjusted Free Cash Flows (2023 vs 2022) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | | :--- | :--- | :--- | | Cash provided by operating activities-continuing operations | $136 | $69 | | Capital expenditures, net | $(83) | $(104) | | **Adjusted free cash flows-continuing operations** | **$53** | **$(35)** | [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) - Revenue is recognized when performance obligations are satisfied, typically upon delivery, and measured based on contractual arrangements or published indices, with variable consideration like sales volume-based rebates estimated and recorded[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - Property, plant, and equipment depreciation uses the **units-of-production method** for manufacturing assets and straight-line for others, with useful lives and salvage values based on historical experience and future expectations[212](index=212&type=chunk) - Long-lived assets are reviewed annually for impairment, with recoverability measured by net undiscounted cash flows; a **$62 million non-cash impairment** was recognized in Q4 2023 due to High Purity Cellulose asset realignment[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Environmental liabilities, totaling **$170 million** at December 31, 2023, are estimated based on current laws, specialist advice, and management experience, with potential for reasonably possible additional liabilities **up to $85 million**[216](index=216&type=chunk)[410](index=410&type=chunk)[418](index=418&type=chunk) - Defined benefit pension and postretirement plans require numerous estimates and assumptions (discount rate, return on assets, salary increases) to determine liabilities and annual expense, with the weighted average discount rate **decreasing from 495% in 2022 to 471% in 2023**[217](index=217&type=chunk)[218](index=218&type=chunk) - Income tax expense, deferred tax assets/liabilities, and unrecognized tax benefits involve significant judgments and estimates, particularly regarding the realizability of deferred tax assets (mostly in Canada) and the impact of the Tax Cuts and Jobs Act on US cash taxes[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[228](index=228&type=chunk)[484](index=484&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from interest rates, foreign currency, and commodity prices, with policies in place to minimize their impact - The company is exposed to market risks from changes in **interest rates, foreign currency, and commodity prices**, and may use derivatives to minimize their economic impact[229](index=229&type=chunk)[230](index=230&type=chunk) - Prices, sales volumes, and margins of commodity products (High Purity Cellulose, High-Yield Pulp) are **cyclically affected** by economic shifts, capacity fluctuations, and currency exchange rates[231](index=231&type=chunk) - Key input costs like **wood fiber, chemicals, and energy** are subject to significant price fluctuations, which the company may mitigate through commodity forward contracts[232](index=232&type=chunk) - As of December 31, 2023, the company had **$255 million of variable rate debt**, where a hypothetical **one percent change in interest rates** would result in a **$2 million annual change** in interest expense[233](index=233&type=chunk) Fixed Rate Debt Fair Value (as of Dec 31) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | | :--- | :--- | :--- | | Carrying amount of fixed rate debt | $536,393 | $847,591 | | Fair value of fixed rate debt | $497,563 | $838,502 | [Item 8. Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's financial statements and supplementary data by reference from Part IV Item 15 - The required financial statements and supplementary data, including reports of the independent registered accounting firm, are incorporated by reference from **Part IV Item 15**[235](index=235&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=43&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were **no changes in or disagreements with accountants** on accounting and financial disclosure[236](index=236&type=chunk) [Item 9A. Controls and Procedures](index=43&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that the design and operation of the company's disclosure controls and procedures were **effective** as of December 31, 2023[239](index=239&type=chunk) - The company's internal control over financial reporting was assessed as **effective** as of December 31, 2023, based on the COSO framework, and received an **unqualified opinion** from Grant Thornton LLP[240](index=240&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[294](index=294&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter ended December 31, 2023, that would materially affect it[241](index=241&type=chunk) [Item 9B. Other Information](index=43&type=section&id=Item%209B.%20Other%20Information) The company reported no adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by any director or officer - **No director or officer** adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended December 31, 2023[242](index=242&type=chunk) [Item 9C. Disclosure regarding Foreign Jurisdictions that Prevent Inspections](index=43&type=section&id=Item%209C.%20Disclosure%20regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company stated that this item is not applicable - This item is **not applicable**[243](index=243&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=45&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement - Information on directors, executive officers, and corporate governance is **incorporated by reference from the Proxy Statement**, including details on corporate governance best practices and audit committee financial experts[246](index=246&type=chunk) - The company's **Standard of Ethics and Code of Corporate Conduct**, applicable to principal executive, financial, and accounting officers, is available on its website[247](index=247&type=chunk) [Item 11. Executive Compensation](index=45&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive compensation are incorporated by reference from the company's Proxy Statement - Information on executive compensation is **incorporated by reference from the Proxy Statement**, covering compensation discussion and analysis, committee reports, and director compensation[248](index=248&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=45&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership and equity compensation plans is incorporated by reference from the company's Proxy Statement - Details on security ownership of beneficial owners and management, as well as equity compensation plan information, are **incorporated by reference from the Proxy Statement**[249](index=249&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=45&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related person transactions and director independence is incorporated by reference from the company's Proxy Statement - Information on certain relationships, related person transactions, and director independence is **incorporated by reference from the Proxy Statement**[250](index=250&type=chunk) [Item 14. Principal Accounting Fees and Services](index=45&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information concerning principal accounting fees and services is incorporated by reference from the company's Proxy Statement - Information on principal accounting fees and services is **incorporated by reference from the Proxy Statement**[251](index=251&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=46&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the 2023 Form 10-K - The section includes a list of **financial statements and financial statement schedules**, as detailed on page F-1 of the 2023 Form 10-K[253](index=253&type=chunk)[254](index=254&type=chunk) - Numerous exhibits are filed, including the Separation and Distribution Agreement, Arrangement Agreement, Amended and Restated Certificate of Incorporation and Bylaws, and various **incentive stock plans**[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk) - Key financial agreements such as the **Revolving Credit Agreement**, **Term Loan Credit Agreement**, and related amendments are also listed as exhibits[258](index=258&type=chunk) - **Certifications from the Chief Executive Officer and Chief Financial Officer** (pursuant to Rule 13a-14(a)/15d-14(a) and Section 302 of Sarbanes-Oxley Act) and a Certification of Periodic Financial Reports Under Section 906 are included[259](index=259&type=chunk) Signatures [Officer and Director Signatures](index=52&type=section&id=Officer%20and%20Director%20Signatures) This section contains the duly authorized signatures of the company's officers and Board of Directors, affirming their responsibility for the 2023 Form 10-K - The report is signed by **Marcus J Moeltner (Chief Financial Officer)**, **De Lyle W Bloomquist (Chief Executive Officer, President, and Director)**, and **Gabriela Garcia (Chief Accounting Officer)** on February 29, 2024[264](index=264&type=chunk)[265](index=265&type=chunk) - The Board of Directors, including **Lisa M Palumbo (Chair)** and other directors, also signed the report on various dates in January 2024[269](index=269&type=chunk) - A **Power of Attorney** grants Marcus J Moeltner and R Colby Slaughter authority to sign and file the Annual Report on Form 10-K and any amendments[267](index=267&type=chunk) Index to Financial Statements [Financial Statements and Schedules](index=54&type=section&id=Financial%20Statements%20and%20Schedules) This index provides a comprehensive list of the financial statements and schedules included in the 2023 Form 10-K - The index lists Management's Report on Internal Control over Financial Reporting, Reports of Independent Registered Public Accounting Firm, Consolidated Statements of Operations, Comprehensive Income (Loss), Balance Sheets, Stockholders' Equity, and Cash Flows[271](index=271&type=chunk) - It also includes the **Notes to Financial Statements** and **Schedule II—Valuation and Qualifying Accounts**[271](index=271&type=chunk)[273](index=273&type=chunk) Management's Report on Internal Control over Financial Reporting [Effectiveness of Internal Controls](index=55&type=section&id=Effectiveness%20of%20Internal%20Controls) Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework - Management is responsible for establishing and maintaining **adequate internal control over financial reporting**, designed to provide reasonable assurance regarding financial reporting reliability[275](index=275&type=chunk) - As of December 31, 2023, management concluded that the company's internal control over financial reporting was **effective**, based on the 2013 Internal Control—Integrated Framework issued by COSO[277](index=277&type=chunk) - Grant Thornton LLP, the independent registered public accounting firm, audited and issued an **unqualified report** on the effectiveness of the company's internal control over financial reporting as of December 31, 2023[278](index=278&type=chunk)[282](index=282&type=chunk)[294](index=294&type=chunk) Reports of Independent Registered Public Accounting Firm [Opinion on Financial Statements and Internal Control](index=56&type=section&id=Opinion%20on%20Financial%20Statements%20and%20Internal%20Control) Grant Thornton LLP issued an unqualified opinion on the company's financial statements and internal controls, highlighting critical audit matters related to environmental liabilities and asset impairment - Grant Thornton LLP issued an **unqualified opinion** on the company's consolidated financial statements as of December 31, 2023 and 2022, and for the three years ended December 31, 2023, in conformity with GAAP[281](index=281&type=chunk) - An **unqualified opinion** was also expressed on the company's internal control over financial reporting as of December 31, 2023, based on the COSO framework[282](index=282&type=chunk)[294](index=294&type=chunk) - Critical audit matters identified include accruals for **environmental liabilities (totaling $170 million** at December 31, 2023) due to significant estimates and specialized knowledge required[285](index=285&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk) - Another critical audit matter is the **impairment of long-lived assets**, specifically a **$25 million charge** related to High Purity Cellulose assets at Temiscaming, which involved significant management judgment in estimating fair value[289](index=289&type=chunk)[290](index=290&type=chunk) Consolidated Statements of Operations [Financial Performance Overview](index=59&type=section&id=Financial%20Performance%20Overview) The company reported a net loss of $1018 million in 2023, a significant increase from $149 million in 2022, driven by a $623 million asset impairment and lower gross margin - Net sales **decreased by $74 million** from $1,7173 million in 2022 to $1,6433 million in 2023[302](index=302&type=chunk) - The company reported a gross margin of **$882 million in 2023**, down from $1231 million in 2022[302](index=302&type=chunk) - Operating income shifted from a gain of $261 million in 2022 to a **loss of $653 million in 2023**, largely due to a **$623 million asset impairment**[302](index=302&type=chunk) - The net loss for 2023 was **$1018 million**, compared to a net loss of **$149 million in 2022**[302](index=302&type=chunk) Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net sales | $1,643,330 | $1,717,267 | $1,407,558 | | Cost of sales | $(1,555,176) | $(1,594,184) | $(1,332,836) | | Gross margin | $88,154 | $123,083 | $74,722 | | Selling, general and administrative expense | $(75,712) | $(91,475) | $(75,789) | | Foreign exchange gain (loss) | $(2,999) | $4,726 | $875 | | Asset impairment | $(62,300) | — | — | | Other operating expense, net | $(12,407) | $(10,199) | $(10,253) | | Operating income (loss) | $(65,264) | $26,135 | $(10,445) | | Interest expense | $(73,810) | $(66,183) | $(66,394) | | Components of pension and OPEB, excluding service costs | $98 | $4,960 | $(4,337) | | Gain (loss) on GreenFirst equity securities | — | $5,197 | $(3,597) | | Other income, net | $6,502 | $6,069 | $1,901 | | Loss from continuing operations before income tax | $(132,474) | $(23,822) | $(82,872) | | Income tax (expense) benefit | $32,311 | $(902) | $34,688 | | Equity in loss of equity method investment | $(1,984) | $(2,653) | $(1,585) | | Loss from continuing operations | $(102,147) | $(27,377) | $(49,769) | | Income from discontinued operations, net of tax | $312 | $12,458 | $116,183 | | Net income (loss) | $(101,835) | $(14,919) | $66,414 | | Basic and Diluted earnings per common share: | | | | | Loss from continuing operations | $(157) | $(042) | $(078) | | Income from discontinued operations | — | $019 | $183 | | Net income (loss) | $(157) | $(023) | $105 | Consolidated Statements of Comprehensive Income (Loss) [Comprehensive Income (Loss) Analysis](index=60&type=section&id=Comprehensive%20Income%20(Loss)%20Analysis) The company reported a comprehensive loss of $839 million in 2023, an improvement from the net loss due to positive other comprehensive income components - The company reported a net loss of **$1018 million in 2023**, which was partially offset by total other comprehensive income of **$179 million**, resulting in a comprehensive loss of **$839 million**[305](index=305&type=chunk) - Other comprehensive income in 2023 included a **$75 million foreign currency translation adjustment gain** and a **$102 million net gain on employee benefit plans**[305](index=305&type=chunk) Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net income (loss) | $(101,835) | $(14,919) | $66,414 | | Other comprehensive income (loss), net of tax: | | | | | Foreign currency translation adjustment | $7,530 | $(12,763) | $(17,919) | | Unrealized gain (loss) on derivative instruments | $194 | $280 | $(2,681) | | Net gain on employee benefit plans | $10,157 | $33,155 | $69,765 | | Total other comprehensive income (loss) | $17,881 | $20,672 | $49,165 | | Comprehensive income (loss) | $(83,954) | $5,753 | $115,579 | Consolidated Balance Sheets [Financial Position Overview](index=61&type=section&id=Financial%20Position%20Overview) Total assets decreased to $2,1827 million in 2023, primarily due to reductions in cash, accounts receivable, and inventory, while total liabilities also decreased - Total assets **decreased by $1648 million**, from $2,3475 million in 2022 to $2,1827 million in 2023[308](index=308&type=chunk) - Cash and cash equivalents **decreased by $76 million**, from $1518 million in 2022 to $758 million in 2023[308](index=308&type=chunk) - Property, plant and equipment, net, **decreased by $762 million**, from $1,1513 million in 2022 to $1,0751 million in 2023[308](index=308&type=chunk) - Total debt (current and long-term) **decreased by $757 million**, from $8531 million in 2022 to $7775 million in 2023[308](index=308&type=chunk) - Total stockholders' equity **decreased by $829 million**, from $8293 million in 2022 to $7464 million in 2023[308](index=308&type=chunk) Consolidated Balance Sheets (in thousands, except share amounts) | Asset/Liability/Equity Category | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $75,768 | $151,803 | | Accounts receivable, net | $197,457 | $211,526 | | Inventory | $207,474 | $265,334 | | Total current assets | $575,058 | $689,530 | | Property, plant and equipment, net | $1,075,105 | $1,151,268 | | Deferred tax assets | $345,181 | $322,164 | | Total assets | $2,182,700 | $2,347,528 | | **Liabilities** | | | | Accounts payable | $186,226 | $163,962 | | Accrued and other current liabilities | $154,488 | $164,369 | | Debt due within one year | $25,283 | $14,617 | | Total current liabilities | $375,830 | $353,680 | | Long-term debt | $752,174 | $838,508 | | Non-current environmental liabilities | $160,458 | $159,949 | | Total liabilities and stockholders' equity | $2,182,700 | $2,347,528 | | **Stockholders' Equity** | | | | Total stockholders' equity | $746,447 | $829,313 | Consolidated Statements of Stockholders' Equity [Stockholders' Equity Changes](index=62&type=section&id=Stockholders'%20Equity%20Changes) Total stockholders' equity decreased to $7464 million at year-end 2023, primarily driven by a net loss and common stock repurchases - Total stockholders' equity **decreased by $829 million**, from $8293 million at December 31, 2022, to $7464 million at December 31, 2023[310](index=310&type=chunk) - The **net loss of $1018 million** and **common stock repurchases of $54 million** were the primary drivers of the decrease in equity[310](index=310&type=chunk) - Other comprehensive income, net of tax, contributed **$179 million**, and stock-based compensation added **$65 million** to equity in 2023[310](index=310&type=chunk) Consolidated Statements of Stockholders' Equity (in thousands, except share data) | Metric | December 31, 2023 | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | | Balance at beginning of year | $829,313 | $814,343 | $695,087 | | Net income (loss) | $(101,835) | $(14,919) | $66,414 | | Other comprehensive income, net of tax | $17,881 | $20,672 | $49,165 | | Issuance of common stock under incentive stock plans | — | — | — | | Stock-based compensation | $6,507 | $9,650 | $5,099 | | Repurchase of common stock | $(5,419) | $(433) | $(1,422) | | Balance at end of year | $746,447 | $829,313 | $814,343 | Consolidated Statements of Cash Flows [Cash Flow Analysis](index=63&type=section&id=Cash%20Flow%20Analysis) Cash from operations increased significantly in 2023 due to improved working capital, while cash used in financing increased due to debt repayments - Cash provided by operating activities **increased significantly by $675 million**, from $688 million in 2022 to $1363 million in 2023, primarily due to increased cash inflows from working capital[198](index=198&type=chunk)[312](index=312&type=chunk) - Cash used in investing activities of continuing operations **decreased by $101 million**, from $1386 million in 2022 to $1285 million in 2023, mainly due to lower capital spending[199](index=199&type=chunk)[312](index=312&type=chunk) - Cash used in financing activities **increased by $138 million**, from $731 million in 2022 to $869 million in 2023, driven by debt redemptions and issuance costs, partially offset by new term loan proceeds[200](index=200&type=chunk)[312](index=312&type=chunk) - The cash and cash equivalents balance at the end of 2023 was **$758 million**, down from $1518 million in 2022[312](index=312&type=chunk) Consolidated Statements of Cash Flows (in thousands) | Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net income (loss) | $(101,835) | $(14,919) | $66,414 | | Cash provided by operating activities-continuing operations | $136,274 | $68,813 | $73,686 | | Cash provided by operating activities-discontinued operations | — | — | $159,538 | | Cash provided by operating activities | $136,274 | $68,813 | $233,224 | | Cash used in investing activities-continuing operations | $(128,450) | $(138,602) | $(97,359) | | Cash provided by investing activities-discontinued operations | $1,169 | $44,428 | $182,750 | | Cash provided by (used in) investing activities | $(127,281) | $(94,174) | $85,391 | | Cash used in financing activities | $(86,947) | $(73,115) | $(156,662) | | Net increase (decrease) in cash and cash equivalents | $(77,954) | $(98,476) | $161,953 | | Balance, end of period | $75,768 | $151,803 | $253,307 | Notes to Financial Statements [1. Nature of Operations and Basis of Presentation](index=65&type=section&id=1.%20Nature%20of%20Operations%20and%20Basis%20of%20Presentation) The company operates in three business segments, with financial statements prepared under GAAP and reflecting discontinued operations - The company operates in three business segments: **High Purity Cellulose**, **Paperboard**, and **High-Yield Pulp**[316](index=316&type=chunk) - High Purity Cellulose manufactures cellulose specialties and commodity products (absorbent materials, viscose pulp) across four facilities in the US, Canada, and France[317](index=317&type=chunk) - Paperboard and High-Yield Pulp are manufactured at a Canadian facility, serving packaging, printing, and other paper product markets[318](index=318&type=chunk)[319](index=319&type=chunk) - Financial statements are prepared in accordance with GAAP, requiring management to make estimates and assumptions, and present the results of lumber and newsprint operations as discontinued[321](index=321&type=chunk)[323](index=323&type=chunk) - A subsequent event in January 2024 involved an **amendment to the 2027 Term Loan** to increase the maximum consolidated secured net leverage ratio[325](index=325&type=chunk) [2. Significant Accounting Policies and Recent Accounting Developments](index=66&type=section&id=2.%20Significant%20Accounting%20Policies%20and%20Recent%20Accounting%20Developments) This note details significant accounting policies for foreign currency, revenue recognition, and asset valuation, and discusses recent accounting standard updates - Assets and liabilities of foreign subsidiaries are translated using balance sheet date exchange rates, while revenues and expenses use average rates, with translation gains/losses reported in AOCI[326](index=326&type=chunk) - Property, plant, and equipment are depreciated using the **units-of-production method** for manufacturing assets and straight-line for others; a **$62 million non-cash impairment** was recorded in Q4 2023 related to High Purity Cellulose assets[330](index=330&type=chunk)[333](index=333&type=chunk) - The company capitalizes certain software costs, amortizing them over 5 years, and defers major maintenance shutdown costs, amortizing them over the period benefited (12-18 months)[335](index=335&type=chunk)[336](index=336&type=chunk) - Revenue is recognized when performance obligations are satisfied, typically u