May 01, 2015 6:30 AM
“Our first quarter results were in line with our expectations. We
generated solid cash flow and were able to reduce net debt by
First Quarter Results
Sales for the first quarter of 2015 were
Interest Expense, Net
Interest expense, net of interest income, was
Income Tax Expense
The first quarter 2015 effective tax rate of 28.2 percent is comparable to the same period in 2014 of 28.6 percent. For the first quarter of 2015, the effective tax rate was below the federal rate of 35 percent primarily due to the benefit of domestic manufacturing tax deduction and state tax credits. The full year effective tax rate is expected to be between 33 and 34 percent.
Cash Flow and Liquidity
The Company generated adjusted free cash flow of
Outlook
“Although cellulose specialties volumes were lower in the first quarter
as expected, we are off to a good start in 2015 driven by our cost
reduction and continuous improvement initiatives. Based on our
performance to date, we believe we will realize our goal of run-rate
savings approaching
Conference Call Information
A conference call will be held on
About
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 Rayonier Advanced Materials’ 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 Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “anticipate” and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. While we believe that these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.
Such risks and uncertainties include, but are not limited to:
competitive pressures in the markets in which we operate; customer
concentration; changes in cellulose specialties product prices; changes
in raw material and energy prices; international operations; changes in
global economic conditions, including currency; the Chinese dumping
duties currently in effect for commodity viscose pulps; litigation with
the Altamaha Riverkeeper relating to our permitted
Other important factors that could cause actual results or events to
differ materially from those expressed in forward-looking statements
that may have been made in this document are described or will be
described in our filings with the
Condensed Consolidated Statements of Income
(millions of dollars, except per share information) |
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Three Months Ended | |||||||||||
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2015 | 2014 | 2014 | |||||||||
Net Sales | |||||||||||
Cellulose specialties | $ | 179 | $ | 214 | $ | 206 | |||||
Commodity products and other | 42 | 34 | 37 | ||||||||
Total Net Sales | 221 | 248 | 243 | ||||||||
Cost of Sales | 184 | 187 | 189 | ||||||||
Gross Margin | 37 | 61 | 54 | ||||||||
Selling and general expenses | 12 | 13 | 8 | ||||||||
Other operating expense, net (a) | 1 | 76 | 3 | ||||||||
Operating Income (Loss) | 24 | (28 | ) | 43 | |||||||
Interest and other expense, net | 9 | 10 | — | ||||||||
Income (Loss) Before Income Taxes | 15 | (38 | ) | 43 | |||||||
Income tax expense (benefit) | 4 | (15 | ) | 12 | |||||||
Net Income (Loss) | $ | 11 | $ | (23 | ) | $ | 31 | ||||
Earnings Per Share of Common Stock | |||||||||||
Basic earnings (loss) per share | $ | 0.25 | $ | (0.55 | ) | $ | 0.73 | ||||
Diluted earnings (loss) per share | $ | 0.25 | $ | (0.55 | ) | $ | 0.73 | ||||
Pro forma net income per share (b) | $ | 0.25 | $ | 0.61 | $ | 0.78 | |||||
Shares used for determining (c) | |||||||||||
Basic EPS | 42,186,130 | 42,185,223 | 42,176,565 | ||||||||
Diluted EPS | 42,204,774 | 42,185,223 | 42,176,565 | ||||||||
(a) Other expenses primarily consist of environmental and one-time separation and legal costs. | |||||||||||
(b) Pro forma net income per share is a non-GAAP measure. See Schedule D for a reconciliation to the | |||||||||||
nearest GAAP measure. | |||||||||||
(c) On June 27, 2014, 42,176,565 shares of our common stock were distributed to Rayonier Inc. | |||||||||||
shareholders in conjunction with the separation of the businesses. For comparative purposes, we have |
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assumed this amount to be outstanding as of the beginning of each period prior to the separation in | |||||||||||
the calculation of Basic Earnings Per Share. | |||||||||||
A |
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Condensed Consolidated Balance Sheets
(millions of dollars) |
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Assets | ||||||||
Cash and cash equivalents | $ | 78 | $ | 66 | ||||
Other current assets | 223 | 254 | ||||||
Property, plant and equipment, net | 841 | 843 | ||||||
Other assets | 140 | 141 | ||||||
$ | 1,282 | $ | 1,304 | |||||
Liabilities and Stockholders’ Deficit |
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Current maturities of long-term debt | $ | 8 | $ | 8 | ||||
Other current liabilities | 114 | 123 | ||||||
Long-term debt | 917 | 936 | ||||||
Non-current liabilities for disposed operations | 147 | 149 | ||||||
Other non-current liabilities | 149 | 150 | ||||||
Total stockholders’ deficit |
(53 | ) | (62 | ) | ||||
$ | 1,282 | $ | 1,304 | |||||
Condensed Consolidated Statements of Cash Flows
(millions of dollars) |
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Three Months Ended | ||||||||
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Cash provided by operating activities: | ||||||||
Net income | $ | 11 | $ | 31 | ||||
Depreciation and amortization | 22 | 21 | ||||||
Other items to reconcile net income to cash provided by | ||||||||
operating activities | 2 | 2 | ||||||
Changes in working capital and other assets and liabilities | 21 | 1 | ||||||
56 | 55 | |||||||
Cash used for investing activities: | ||||||||
Capital expenditures | (24 | ) | (22 | ) | ||||
Other | — | 1 | ||||||
(24 | ) | (21 | ) | |||||
Cash used for financing activities: | ||||||||
Repayment of debt | (20 | ) | — | |||||
Net payments to Parent | — | (34 | ) | |||||
(20 | ) | (34 | ) | |||||
Cash and cash equivalents: | ||||||||
Change in cash and cash equivalents | 12 | — | ||||||
Balance, beginning of year | 66 | — | ||||||
Balance, end of period | $ | 78 | $ | — | ||||
B |
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Reconciliation of Non-GAAP Measures
(millions of dollars) |
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Three Months Ended | ||||||||||||||||
EBITDA (a): |
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Net income | $ | 11 | $ | 31 | ||||||||||||
Depreciation and amortization | 22 | 21 | ||||||||||||||
Interest, net | 9 | — | ||||||||||||||
Income tax expense | 4 | 12 | ||||||||||||||
EBITDA | $ | 46 | $ | 64 | ||||||||||||
One-time separation and legal costs | — | 3 | ||||||||||||||
Pro forma EBITDA | $ | 46 | $ | 67 | ||||||||||||
Three Months Ended | ||||||||
Adjusted Free Cash Flow (b): |
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Cash provided by operating activities | $ | 56 | $ | 55 | ||||
Capital expenditures | (24 | ) | (22 | ) | ||||
Adjusted Free Cash Flow | $ | 32 | $ | 33 | ||||
(a) Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is defined by the | ||||||||
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separation and legal costs. | ||||||||
(b) Adjusted Free Cash Flow is defined as cash provided by operating activities adjusted for capital | ||||||||
expenditures excluding strategic capital. Adjusted Free Cash Flow is a non-GAAP measure of cash | ||||||||
generated during a period that is available for dividend distribution, repurchase of the Company’s | ||||||||
common stock, debt reduction and strategic acquisitions. Adjusted Free Cash Flow is not necessarily | ||||||||
indicative of the Adjusted Free Cash Flow that may be generated in future periods. | ||||||||
C |
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Reconciliation of Non-GAAP Measures (Continued)
(millions of dollars, except per share information) |
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Pro Forma Operating Income and Net Income (a): | |||||||||||||||
Three Months Ended | |||||||||||||||
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$ |
Per |
$ |
Per |
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Operating income (loss) | $ | (28 | ) | $ | 43 | ||||||||||
One-time separation and legal costs | 2 | 3 | |||||||||||||
Environmental reserve and impairment adjustments | 76 | — | |||||||||||||
Insurance settlement | (3 | ) | — | ||||||||||||
Pro forma operating income | $ | 47 | $ | 46 | |||||||||||
Net income (loss) | $ | (23 | ) | $ | (0.55 | ) | $ | 31 | $ | 0.73 | |||||
One-time separation and legal costs, net of tax | 2 | 0.04 | 2 | 0.05 | |||||||||||
Environmental reserve and impairment adjustments, net of tax | 49 | 1.17 | — | — | |||||||||||
Insurance settlement, net of tax | (2 | ) | (0.05 | ) | — | — | |||||||||
Pro forma net income | $ | 26 | $ | 0.61 | $ | 33 | $ | 0.78 | |||||||
(a) Pro Forma Operating Income is defined as operating income adjusted for one-time separation and legal | |||||||||||||||
costs, environmental reserve and impairment adjustments and insurance settlement. Pro Forma Net Income is | |||||||||||||||
defined as net income adjusted net of tax for one-time separation and legal costs, environmental reserve | |||||||||||||||
and impairment adjustments and insurance settlement. | |||||||||||||||
D |
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