May 07, 2024 4:30 PM
Reaffirms 2024 EBITDA and Increases Free Cash Flow Guidance
“First quarter results exceeded our expectations, driven by lower costs and improved demand for cellulose specialties. We delivered a solid
“The solid first quarter, along with the start-up of the bioethanol facility in Tartas and the April completion of the planned maintenance outage in Jesup, keep us on track to deliver our full-year guidance of
First Quarter 2024 Financial Results
The Company reported a net loss of
The Company operates in the following business segments: High Purity Cellulose, Paperboard and High-Yield Pulp.
Net sales was comprised of the following for the periods presented:
|
Three Months Ended |
||||||||||
(in millions) |
|
|
|
|
|
||||||
High Purity Cellulose |
$ |
307 |
|
|
$ |
347 |
|
|
$ |
374 |
|
Paperboard |
|
53 |
|
|
|
55 |
|
|
|
59 |
|
High-Yield Pulp |
|
34 |
|
|
|
25 |
|
|
|
42 |
|
Eliminations |
|
(6 |
) |
|
|
(5 |
) |
|
|
(8 |
) |
Net sales |
$ |
388 |
|
|
$ |
422 |
|
|
$ |
467 |
|
Operating results were comprised of the following for the periods presented:
|
Three Months Ended |
||||||||||
(in millions) |
|
|
|
|
|
||||||
High Purity Cellulose |
$ |
21 |
|
|
$ |
(49 |
) |
|
$ |
13 |
|
Paperboard |
|
8 |
|
|
|
8 |
|
|
|
10 |
|
High-Yield Pulp |
|
(1 |
) |
|
|
(5 |
) |
|
|
7 |
|
Corporate |
|
(11 |
) |
|
|
(15 |
) |
|
|
(13 |
) |
Operating income (loss) |
$ |
17 |
|
|
$ |
(61 |
) |
|
$ |
17 |
|
High Purity Cellulose
Net sales for the quarter decreased
Operating income for the quarter increased
Compared to the fourth quarter of 2023, net sales declined
Paperboard
Net sales for the quarter decreased
Operating income for the quarter decreased
Compared to the fourth quarter of 2023, operating income was flat as a 4 percent decrease in sales prices, due to market-driven demand declines and mix, was offset by lower unit production costs due to improved production levels in the current quarter.
High-Yield Pulp
Net sales for the quarter decreased
Operating results for the quarter declined
Compared to the fourth quarter of 2023, operating loss decreased
Corporate
Operating loss for the quarter decreased
Compared to the fourth quarter of 2023, operating loss decreased
Non-Operating Income & Expense
Interest expense increased
Included in non-operating other income in the quarter ended
Included in non-operating expense in the quarter ended
Income Taxes
The effective tax benefit rate for the quarter ended
The effective tax rate for the quarter ended
Cash Flows & Liquidity
The Company generated operating cash flows of
The Company used
The Company had
The Company ended the first quarter with
In
As of
2024 Outlook
In
The indefinite suspension of operations at the Temiscaming High Purity Cellulose plant, announced on
On
The Company expects to generate between
The following market assessment represents the Company’s current outlook of its business segments’ future performance.
High Purity Cellulose
Average sales prices for cellulose specialties in 2024 are expected to increase by a low single-digit percentage as compared to average sales prices in 2023 as the Company prioritizes value over volume. Sales volumes for cellulose specialties are expected to be comparable to 2023 driven by increased volumes from the closure of a competitor’s plant and a modest increase in ethers sales, offset by a one-time favorable impact from a change in customer contract terms in the prior year quarter and customer destocking in the acetate markets. Demand for RYAM commodity products remains stable as prices are expected to be flat to 2023, despite a difficult comparison to the first quarter of 2023. Commodity sales volumes are expected to decline in 2024 as the Company suspends operations at its Temiscaming High Purity Cellulose plant for the second half of 2024. Costs are expected to be lower in 2024 driven by lower key input and logistics costs, improved productivity and the indefinite suspension of operations at the Temiscaming High Purity Cellulose plant. The Company’s bioethanol facility in Tartas,
Paperboard
Paperboard prices in 2024 are expected to remain relatively stable compared to the first quarter of 2024, while sales volumes are expected to improve due to improved customer demand. Raw material prices are expected to increase as purchased pulp prices are forecast to increase from the first quarter 2024 levels. Overall, EBITDA is expected to increase sequentially.
High-Yield Pulp
High-Yield Pulp prices are expected to improve slightly in the second quarter and increase further in the second half of 2024, while sales volumes are expected to remain stable sequentially and then increase in the second half of 2024. Overall, the Company expects to generate positive EBITDA from this segment in the coming quarter.
Corporate
Corporate costs are expected to be flat or increase slightly in 2024 as the Company continues its ERP implementation. The project will enhance the Company’s operating and reporting systems and is expected to drive additional improvements and efficiencies beginning in 2025.
Biomaterials Strategy
The Company continues to invest in new products to provide both increased end market diversity and incremental profitability. These new products will target the growing green energy and products markets. The successful shipment of the Company’s first production of 2G bioethanol from its Tartas,
Conference Call Information
RYAM will host a conference call and live webcast at
Investors may listen to the conference call by dialing 877-407-8293, no passcode required. For international parties, dial 201-689-8349. A replay of the teleconference will be available one hour after the call ends until
About RYAM
RYAM is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly used in the production of filters, food, pharmaceuticals and other industrial applications. RYAM’s specialized assets, capable of creating the world’s leading high purity cellulose products, are also used to produce biofuels, bioelectricity and other biomaterials such as bioethanol and tall oils. The Company also manufactures products for the paper and packaging markets. With manufacturing operations in the
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 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,” “target,” “believe,” “intend,” “plan,” “forecast,” “anticipate,” “guidance” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. Forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe 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. All statements made in this earnings release are made only as of the date set forth at the beginning of this release. The Company undertakes no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this release. The Company has not filed its Form 10-Q for the quarter ended
The Company’s operations are subject to a number of risks and uncertainties including, but not limited to, those listed below. When considering an investment in the Company’s securities, you should carefully read and consider these risks, together with all other information in the Company’s Annual Report on Form 10-K and other filings and submissions to the
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 the Company’s filings with the
Non-GAAP Financial Measures
This earnings release and the accompanying schedules contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted free cash flow, adjusted net income, adjusted net debt and net secured debt. The Company believes these non-GAAP financial measures provide useful information to its Board of Directors, management and investors regarding its financial condition and results of operations. Management uses these non-GAAP financial measures to compare its performance to that of prior periods for trend analyses, to determine management incentive compensation and for budgeting, forecasting and planning purposes.
The Company does not consider these non-GAAP financial measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they may exclude significant expense and income items that are required by GAAP to be recognized in the consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures are provided below. Non-GAAP financial measures are not necessarily indicative of results that may be generated in future periods and should not be relied upon, in whole or part, in evaluating the financial condition, results of operations or future prospects of the Company.
|
|||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||
(Unaudited) |
|||||||||||
(in millions, except share and per share information) |
|||||||||||
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
||||||
Net sales |
$ |
388 |
|
|
$ |
422 |
|
|
$ |
467 |
|
Cost of sales |
|
(351 |
) |
|
|
(395 |
) |
|
|
(430 |
) |
Gross margin |
|
37 |
|
|
|
27 |
|
|
|
37 |
|
Selling, general and administrative expense |
|
(21 |
) |
|
|
(17 |
) |
|
|
(19 |
) |
Foreign exchange gain (loss) |
|
3 |
|
|
|
(2 |
) |
|
|
— |
|
Asset impairment |
|
— |
|
|
|
(62 |
) |
|
|
— |
|
Other operating expense, net |
|
(2 |
) |
|
|
(7 |
) |
|
|
(1 |
) |
Operating income (loss) |
|
17 |
|
|
|
(61 |
) |
|
|
17 |
|
Interest expense |
|
(21 |
) |
|
|
(22 |
) |
|
|
(15 |
) |
Other income (expense), net |
|
2 |
|
|
|
1 |
|
|
|
(2 |
) |
Loss before income tax |
|
(2 |
) |
|
|
(82 |
) |
|
|
— |
|
Income tax benefit |
|
— |
|
|
|
21 |
|
|
|
3 |
|
Equity in loss of equity method investment |
|
— |
|
|
|
— |
|
|
|
(1 |
) |
Net income (loss) |
$ |
(2 |
) |
|
$ |
(61 |
) |
|
$ |
2 |
|
|
|
|
|
|
|
||||||
Basic and diluted earnings per common share |
|
|
|
|
|
||||||
Net income (loss) per common share |
$ |
(0.02 |
) |
|
$ |
(0.94 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
||||||
Shares used in determining EPS |
|
|
|
|
|
||||||
Basic EPS |
|
65,447,454 |
|
|
|
65,356,895 |
|
|
|
64,504,200 |
|
Diluted EPS |
|
65,447,454 |
|
|
|
65,356,895 |
|
|
|
66,596,653 |
|
|
|||||
Condensed Consolidated Balance Sheets |
|||||
(Unaudited) |
|||||
(in millions) |
|||||
|
|
|
|
||
Assets |
|
|
|
||
Cash and cash equivalents |
$ |
55 |
|
$ |
76 |
Other current assets |
|
491 |
|
|
499 |
Property, plant and equipment, net |
|
1,058 |
|
|
1,075 |
Other assets |
|
531 |
|
|
533 |
Total assets |
$ |
2,135 |
|
$ |
2,183 |
|
|
|
|
||
Liabilities and Stockholders’ Equity |
|
|
|
||
Debt due within one year |
$ |
23 |
|
$ |
25 |
Other current liabilities |
|
309 |
|
|
351 |
Long-term debt |
|
756 |
|
|
752 |
Non-current environmental liabilities |
|
160 |
|
|
160 |
Other liabilities |
|
145 |
|
|
148 |
Total stockholders’ equity |
|
742 |
|
|
747 |
Total liabilities and stockholders’ equity |
$ |
2,135 |
|
$ |
2,183 |
|
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(Unaudited) |
|||||||
(in millions) |
|||||||
|
Three Months Ended |
||||||
|
|
|
|
||||
Operating Activities |
|
|
|
||||
Net income (loss) |
$ |
(2 |
) |
|
$ |
2 |
|
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
34 |
|
|
|
35 |
|
Other |
|
1 |
|
|
|
5 |
|
Changes in working capital and other assets and liabilities |
|
(21 |
) |
|
|
9 |
|
Cash provided by operating activities |
|
12 |
|
|
|
51 |
|
|
|
|
|
||||
Investing Activities |
|
|
|
||||
Capital expenditures, net of proceeds |
|
(33 |
) |
|
|
(21 |
) |
Cash used in investing activities |
|
(33 |
) |
|
|
(21 |
) |
|
|
|
|
||||
Financing Activities |
|
|
|
||||
Changes in debt |
|
3 |
|
|
|
(9 |
) |
Other |
|
(2 |
) |
|
|
(5 |
) |
Cash provided by (used in) financing activities |
|
1 |
|
|
|
(14 |
) |
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents |
|
(20 |
) |
|
|
16 |
|
Net effect of foreign exchange on cash and cash equivalents |
|
(1 |
) |
|
|
1 |
|
Balance, beginning of period |
|
76 |
|
|
|
152 |
|
Balance, end of period |
$ |
55 |
|
|
$ |
169 |
|
|
||||||||
Sales Volumes and Average Prices |
||||||||
(Unaudited) |
||||||||
|
Three Months Ended |
|||||||
|
|
|
|
|
|
|||
Average Sales Prices ($ per metric ton) |
||||||||
High Purity Cellulose |
$ |
1,299 |
|
$ |
1,248 |
|
$ |
1,322 |
Paperboard |
$ |
1,382 |
|
$ |
1,441 |
|
$ |
1,568 |
High-Yield Pulp (external sales) |
$ |
559 |
|
$ |
504 |
|
$ |
769 |
|
|
|
|
|
|
|||
Sales Volumes (thousands of metric tons) |
||||||||
High Purity Cellulose |
|
219 |
|
|
259 |
|
|
265 |
Paperboard |
|
38 |
|
|
38 |
|
|
38 |
High-Yield Pulp (external sales) |
|
50 |
|
|
40 |
|
|
43 |
|
||||||||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||
(in millions) |
||||||||||||||||||
EBITDA and Adjusted EBITDA by Segment(a) |
||||||||||||||||||
|
Three Months Ended |
|||||||||||||||||
|
High Purity
|
|
Paperboard |
|
High-Yield
|
|
Corporate |
|
Total |
|||||||||
Net income (loss) |
$ |
21 |
|
|
$ |
8 |
|
$ |
(1 |
) |
|
$ |
(30 |
) |
|
$ |
(2 |
) |
Depreciation and amortization |
|
29 |
|
|
|
4 |
|
|
1 |
|
|
|
— |
|
|
|
34 |
|
Interest expense, net |
|
— |
|
|
|
— |
|
|
— |
|
|
|
20 |
|
|
|
20 |
|
Income tax benefit |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
EBITDA and Adjusted EBITDA |
$ |
50 |
|
|
$ |
12 |
|
$ |
— |
|
|
$ |
(10 |
) |
|
$ |
52 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|||||||||||||||||
|
High Purity
|
|
Paperboard |
|
High-Yield
|
|
Corporate |
|
Total |
|||||||||
Net income (loss) |
$ |
(49 |
) |
|
$ |
9 |
|
$ |
(5 |
) |
|
$ |
(16 |
) |
|
$ |
(61 |
) |
Depreciation and amortization |
|
32 |
|
|
|
3 |
|
|
— |
|
|
|
1 |
|
|
|
36 |
|
Interest expense, net |
|
— |
|
|
|
— |
|
|
— |
|
|
|
21 |
|
|
|
21 |
|
Income tax benefit |
|
— |
|
|
|
— |
|
|
— |
|
|
|
(21 |
) |
|
|
(21 |
) |
EBITDA |
|
(17 |
) |
|
|
12 |
|
|
(5 |
) |
|
|
(15 |
) |
|
|
(25 |
) |
Asset impairment |
|
62 |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
62 |
|
Adjusted EBITDA |
$ |
45 |
|
|
$ |
12 |
|
$ |
(5 |
) |
|
$ |
(15 |
) |
|
$ |
37 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|||||||||||||||||
|
High Purity
|
|
Paperboard |
|
High-Yield
|
|
Corporate |
|
Total |
|||||||||
Net income (loss) |
$ |
13 |
|
|
$ |
10 |
|
$ |
7 |
|
|
$ |
(28 |
) |
|
$ |
2 |
|
Depreciation and amortization |
|
31 |
|
|
|
3 |
|
|
1 |
|
|
|
— |
|
|
|
35 |
|
Interest expense, net |
|
— |
|
|
|
— |
|
|
— |
|
|
|
15 |
|
|
|
15 |
|
Income tax benefit |
|
— |
|
|
|
— |
|
|
— |
|
|
|
(3 |
) |
|
|
(3 |
) |
EBITDA |
|
44 |
|
|
|
13 |
|
|
8 |
|
|
|
(16 |
) |
|
|
49 |
|
Pension settlement loss |
|
— |
|
|
|
— |
|
|
— |
|
|
|
2 |
|
|
|
2 |
|
Adjusted EBITDA |
$ |
44 |
|
|
$ |
13 |
|
$ |
8 |
|
|
$ |
(14 |
) |
|
$ |
51 |
|
|
Annual Guidance |
||||||
|
2024 |
||||||
|
Low |
|
High |
||||
Net loss |
$ |
(34 |
) |
|
$ |
(14 |
) |
Depreciation and amortization |
|
140 |
|
|
|
140 |
|
Interest expense, net |
|
75 |
|
|
|
75 |
|
Income tax benefit(b) |
|
(1 |
) |
|
|
(1 |
) |
EBITDA and Adjusted EBITDA |
$ |
180 |
|
|
$ |
200 |
|
_________________________ | |
(a) |
EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for items that management believes are not representative of core operations. EBITDA and Adjusted EBITDA are non-GAAP measures used by management, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under management. |
(b) |
Estimated using the statutory rates of each jurisdiction and ignoring all permanent book-to-tax differences. |
Adjusted Free Cash Flow(a) |
|||||||
|
Three Months Ended |
||||||
|
|
|
|
||||
Cash provided by operating activities |
$ |
12 |
|
|
$ |
51 |
|
Capital expenditures, net |
|
(28 |
) |
|
|
(15 |
) |
Adjusted free cash flow |
$ |
(16 |
) |
|
$ |
36 |
|
|
Annual |
||||||
|
2024 |
||||||
|
Low |
|
High |
||||
Cash provided by operating activities |
$ |
160 |
|
|
$ |
180 |
|
Capital expenditures, net |
|
(80 |
) |
|
|
(80 |
) |
Adjusted free cash flow |
$ |
80 |
|
|
$ |
100 |
|
________________________ | |
(a) |
Adjusted free cash flow is defined as cash provided by (used in) operating activities adjusted for capital expenditures, net of proceeds from the sale of assets and excluding strategic capital expenditures. Adjusted free cash flow is a non-GAAP measure of cash generated during a period which is available for dividend distribution, debt reduction, strategic acquisitions and repurchase of the Company’s common stock. |
Adjusted Net Debt and Net Secured Debt(a) |
|||||||
|
|
|
|
||||
Debt due within one year |
$ |
23 |
|
|
$ |
25 |
|
Long-term debt |
|
756 |
|
|
|
752 |
|
Total debt |
|
779 |
|
|
|
777 |
|
Unamortized premium, discount and issuance costs |
|
19 |
|
|
|
20 |
|
Cash and cash equivalents |
|
(55 |
) |
|
|
(76 |
) |
Adjusted net debt |
|
743 |
|
|
|
721 |
|
Unsecured debt |
|
(22 |
) |
|
|
(23 |
) |
Net secured debt |
$ |
721 |
|
|
$ |
698 |
|
________________________ | |
(a) |
Adjusted net debt is defined as the amount of debt after the consideration of debt premium, discount and issuance costs, less cash. Net secured debt is defined as adjusted net debt less unsecured debt. |
Adjusted Net Income (Loss)(a) |
|||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
|
$ |
|
Per
|
|
$ |
|
Per
|
|
$ |
|
Per
|
||||||||||
Net income (loss) |
$ |
(2 |
) |
|
$ |
(0.02 |
) |
|
$ |
(61 |
) |
|
$ |
(0.94 |
) |
|
$ |
2 |
|
$ |
0.02 |
Asset impairment |
|
— |
|
|
|
— |
|
|
|
62 |
|
|
|
0.95 |
|
|
|
— |
|
|
— |
Pension settlement loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
0.03 |
Tax effect of adjustments |
|
— |
|
|
|
— |
|
|
|
(15 |
) |
|
|
(0.23 |
) |
|
|
— |
|
|
— |
Adjusted net income (loss) |
$ |
(2 |
) |
|
$ |
(0.02 |
) |
|
$ |
(14 |
) |
|
$ |
(0.22 |
) |
|
$ |
4 |
|
$ |
0.05 |
________________________ | |
(a) |
Adjusted net income (loss) is defined as net income (loss) adjusted net of tax for items that management believes are not representative of core operations. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507216185/en/
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