Rayonier Advanced Materials (NYSE:RYAM) FY Conference Summary Company Overview - Rayonier Advanced Materials has been in operation for nearly a century, specializing in natural cellulose fibers used globally in various products [2][3] - The company operates four facilities located in Florida, Georgia, France, and Canada [2] Business Segments - The company operates in five segments: 1. **Cellulose Specialties**: Core business segment 2. **Cellulose Commodities**: Includes fluff used in baby diapers and personal hygiene products 3. **Biomaterials**: Future growth area focusing on energy, ethanol, and lignin [3][6] 4. **Non-core Paperboard**: Includes packaging products like lottery tickets and gum wrappers 5. **High Yield Pulp**: Facing challenges this year, particularly in printing and writing [6][7] Financial Performance and Guidance - Initial guidance for the year was $215-$235 million, but current guidance has been revised to $135-$140 million due to various challenges [9] - The company aims for a baseline EBITDA of $195 million, with a target to double EBITDA to $315 million by the end of 2027 [11][12] - Price increases in cellulose specialties are expected to grow at 4%-6% annually, with potential for higher increases in 2026 [12][13] Market Dynamics - The cellulose specialties market is dominated by three players holding about 80% market share, operating at 90% utilization [12][14] - No new capacity is expected in the market until at least 2029, supporting pricing power [14] Tariffs and Currency Impact - The company has seen a shift in tariffs, with zero tariffs on sales to China and Europe, and a 10% tariff on fluff sales to China [10][11] - The strengthening U.S. dollar is expected to provide a competitive advantage [11] Biomaterials Growth Opportunities - The company is focusing on leveraging existing assets to develop new products, including: - A bioethanol plant in France expected to generate $8-$10 million annually [17] - A biomass facility in Georgia projected to generate $100 million of EBITDA [18] - Additional projects in prebiotics and crude tall oil with minimal capital investment [20][19] Balance Sheet and Debt Management - The company maintains adequate liquidity with $140 million globally, despite a challenging year [23] - A target of reducing net leverage to 2-2.5 times is set, with plans to refinance high-cost debt [24][26] - The company aims to generate over $140 million of free cash flow annually, prioritizing debt reduction and reinvestment [27] Future Outlook - The company believes that short-term challenges are behind them, with a positive outlook for core cellulose specialties and biomaterials growth [28] - Current trading multiples suggest a compelling investment opportunity, with potential for significant stock price appreciation [28][29] Conclusion - Rayonier Advanced Materials is positioned for growth with a focus on cellulose specialties and biomaterials, while managing financial challenges and leveraging market dynamics to enhance profitability and shareholder value [28][30]

Financial Performance & Guidance - Q3 2025 revenue was $353 million, a decrease of $48 million compared to Q3 2024[39] - Adjusted EBITDA for Q3 2025 was $42 million, down $9 million from Q3 2024[39] - The company projects Q4 2025 Adjusted Free Cash Flow to be between $25 million and $30 million[39] - 2025 Adjusted EBITDA guidance is $135-140 million[39] Segment Performance - Cellulose Specialties Q3 2025 Adjusted EBITDA was $66 million with a 32% margin[39, 40] - Biomaterials Q3 2025 Adjusted EBITDA was $1 million with a 13% margin[39, 45] - Cellulose Commodities Q3 2025 Adjusted EBITDA was negative $3 million with a negative 4% margin[39, 48] - Paperboard Q3 2025 Adjusted EBITDA was $1 million with a 3% margin[39, 54] - High-Yield Pulp Q3 2025 Adjusted EBITDA was negative $9 million with a negative 38% margin[39, 60] Strategic Initiatives - The company aims to restore Temiscaming profitability with $10 million annual EBITDA improvement through cost reduction and $10 million annual EBITDA improvement by improving Paperboard Operational Equipment Efficiency (OEE)[20] - The company expects Biomaterials to contribute approximately $31 million of proportional run-rate EBITDA in 2027 and approximately $80 million including proportional AGE EBITDA in 2028[34]

Financial Performance & Challenges - RYAM reported Q2 2025 revenue of $340 million, a decrease of $79 million compared to Q2 2024[59] - The company's Adjusted EBITDA for Q2 2025 was $28 million, down $40 million from Q2 2024[59] - RYAM faces an Adjusted Free Cash Flow deficit of $(52) million year-to-date[59] - The company's 2025 EBITDA guidance is projected to be in the range of $150 million to $160 million[14, 59] Segment Performance - Cellulose Specialties reported Q2 2025 sales of $208 million with an Adjusted EBITDA of $46 million, representing a 22% margin[60] - Cellulose Commodities experienced a negative Adjusted EBITDA of $(2) million on sales of $59 million, with a margin of (3%)[69] - Paperboard sales were $47 million with an Adjusted EBITDA of $5 million, resulting in an 11% margin[75] - High-Yield Pulp reported sales of $29 million and a negative Adjusted EBITDA of $(7) million, with a margin of (24%)[80] Strategic Initiatives & Outlook - RYAM aims to restore Temiscaming's profitability, targeting a $35 million improvement and positioning it for potential divestiture in 2026[22] - The company anticipates a 2027 run-rate EBITDA of $308 million for its core business, excluding the AGE project[26] - RYAM expects to generate approximately $30 million of cumulative incremental EBITDA by 2027 by capturing Cellulose Specialties market growth[35] - BioNova is expected to invest $110 million to generate ~$39 million in EBITDA, implying a build multiple of 28X[41]