☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $0.01 par value | RYAM | New York Stock Exchange |
Large accelerated filer | o | Accelerated filer | x | |||||||||||
Non-accelerated filer | o | Smaller reporting company | ☐ | |||||||||||
Emerging growth company | ☐ |
Item | Page | ||||||||||
Part I — Financial Information | |||||||||||
1. | |||||||||||
2. | |||||||||||
3. | |||||||||||
4. | |||||||||||
Part II — Other Information | |||||||||||
1. | |||||||||||
1A. | |||||||||||
2. | |||||||||||
6. | |||||||||||
Part I. | Financial Information |
Item 1. | Financial Statements |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
Net Sales | $ | 399,220 | $ | 341,019 | $ | 750,936 | $ | 659,697 | |||||||||||||||
Cost of Sales | (372,525) | (318,740) | (718,314) | (616,994) | |||||||||||||||||||
Gross Margin | 26,695 | 22,279 | 32,622 | 42,703 | |||||||||||||||||||
Selling, general and administrative expenses | (28,029) | (18,235) | (48,137) | (34,075) | |||||||||||||||||||
Foreign exchange gains (losses) | 1,950 | (2,127) | 1,454 | (2,733) | |||||||||||||||||||
Other operating expense, net | (3,513) | (540) | (4,629) | (4,992) | |||||||||||||||||||
Operating Income (Loss) | (2,897) | 1,377 | (18,690) | 903 | |||||||||||||||||||
Interest expense | (16,687) | (16,470) | (32,885) | (31,819) | |||||||||||||||||||
Interest income and other, net | 3,155 | (939) | 2,642 | (1,733) | |||||||||||||||||||
Other components of pension and OPEB, excluding service costs | (109) | (66) | 901 | 742 | |||||||||||||||||||
Gain (loss) on GreenFirst equity securities | (3,703) | — | 5,197 | — | |||||||||||||||||||
Loss from Continuing Operations Before Income Taxes | (20,241) | (16,098) | (42,835) | (31,907) | |||||||||||||||||||
Income tax (expense) benefit (Note 16) | (3,656) | 24,656 | (5,052) | 24,564 | |||||||||||||||||||
Equity in loss of equity method investment | (1,046) | (261) | (1,436) | (570) | |||||||||||||||||||
Income (loss) from Continuing Operations | (24,943) | 8,297 | (49,323) | (7,913) | |||||||||||||||||||
Income from discontinued operations, net of taxes (Note 2) | 1,676 | 113,931 | 1,205 | 103,114 | |||||||||||||||||||
Net Income (Loss) | $ | (23,267) | $ | 122,228 | $ | (48,118) | $ | 95,201 | |||||||||||||||
Basic Earnings Per Common Share (Note 13) | |||||||||||||||||||||||
Income (loss) from continuing operations | $ | (0.39) | $ | 0.13 | $ | (0.77) | $ | (0.12) | |||||||||||||||
Income from discontinued operations | 0.03 | 1.79 | 0.02 | 1.62 | |||||||||||||||||||
Net income (loss) per common share-basic | $ | (0.36) | $ | 1.92 | $ | (0.75) | $ | 1.50 | |||||||||||||||
Diluted Earnings Per Common Share (Note 13) | |||||||||||||||||||||||
Income (loss) from continuing operations | $ | (0.39) | $ | 0.13 | $ | (0.77) | $ | (0.12) | |||||||||||||||
Income from discontinued operations | 0.03 | 1.76 | 0.02 | 1.62 | |||||||||||||||||||
Net income (loss) per common share-diluted | $ | (0.36) | $ | 1.89 | $ | (0.75) | $ | 1.50 | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
Net Income (Loss) | $ | (23,267) | $ | 122,228 | $ | (48,118) | $ | 95,201 | |||||||||||||||
Other Comprehensive Income (Loss), net of tax (Note 11): | |||||||||||||||||||||||
Foreign currency translation adjustments | (9,582) | 3,046 | (15,864) | (6,221) | |||||||||||||||||||
Unrealized gain (loss) on derivative instruments | 77 | (1,585) | 157 | (2,853) | |||||||||||||||||||
Net gain from pension and postretirement plans | 1,948 | 3,363 | 3,896 | 6,664 | |||||||||||||||||||
Total other comprehensive income (loss) | (7,557) | 4,824 | (11,811) | (2,410) | |||||||||||||||||||
Comprehensive Income (Loss) | $ | (30,824) | $ | 127,052 | $ | (59,929) | $ | 92,791 |
Six Months Ended | |||||||||||
June 25, 2022 | June 26, 2021 | ||||||||||
Operating Activities | |||||||||||
Net income (loss) | $ | (48,118) | $ | 95,201 | |||||||
Income from discontinued operations | (1,205) | (103,114) | |||||||||
Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities: | |||||||||||
Depreciation and amortization | 61,144 | 65,728 | |||||||||
Stock-based incentive compensation expense | 6,728 | 317 | |||||||||
Deferred income tax expense (benefit) | 1,536 | (23,290) | |||||||||
Gain on GreenFirst equity securities | (5,197) | — | |||||||||
Net periodic benefit cost of pension and other postretirement plans | 2,972 | 5,163 | |||||||||
Loss from sale/disposal of property, plant and equipment | 2,756 | — | |||||||||
Unrealized gain on derivative instruments | — | (3,885) | |||||||||
Unrealized loss from foreign currency | (2,729) | 5,236 | |||||||||
Other | 3,645 | (145) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Receivables | (31,100) | (13,283) | |||||||||
Inventories | (13,156) | (25,231) | |||||||||
Accounts payable | 12,248 | 6,126 | |||||||||
Accrued liabilities | 14,478 | 27,555 | |||||||||
All other operating activities | (36,625) | 12,943 | |||||||||
Contributions to pension and other postretirement plans | (3,659) | (3,535) | |||||||||
Cash (Used in) Provided by Operating Activities-continuing operations | (36,282) | 45,786 | |||||||||
Cash Provided by Operating Activities-discontinued operations | — | 140,633 | |||||||||
Cash (Used in) Provided by Operating Activities | (36,282) | 186,419 | |||||||||
Investing Activities | |||||||||||
Capital expenditures, net | (86,675) | (47,048) | |||||||||
Proceeds from sale of assets | 86 | — | |||||||||
Investment in equity method investment | — | (4,013) | |||||||||
Cash Used for Investing Activities-continuing operations | (86,589) | (51,061) | |||||||||
Cash Provided by (Used for) Investing Activities-discontinued operations | 43,288 | (5,758) | |||||||||
Cash Used for Investing Activities | (43,301) | (56,819) | |||||||||
Financing Activities | |||||||||||
Other borrowings | 5,569 | — | |||||||||
Repayment of long-term debt | (25,215) | (4,651) | |||||||||
Short-term financing, net | (1,720) | (1,296) | |||||||||
Common stock repurchased | (304) | (1,423) | |||||||||
Debt issue costs | — | (449) | |||||||||
Cash Used for Financing Activities | (21,670) | (7,819) | |||||||||
Cash and Cash Equivalents | |||||||||||
Change in cash and cash equivalents | (101,253) | 121,781 | |||||||||
Net effect of foreign exchange on cash and cash equivalents | (4,306) | (695) | |||||||||
Balance, beginning of period | 253,307 | 93,653 | |||||||||
Balance, end of period | $ | 147,748 | $ | 214,739 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
Net sales (a) | $ | — | $ | 212,376 | $ | — | $ | 358,838 | |||||||||||||||
Cost of sales | 326 | (86,961) | 153 | (169,688) | |||||||||||||||||||
Gross margin | 326 | 125,415 | 153 | 189,150 | |||||||||||||||||||
Selling, general and administrative expenses and other | 1,953 | (10,428) | 1,495 | (18,894) | |||||||||||||||||||
Operating income | 2,279 | 114,987 | 1,648 | 170,256 | |||||||||||||||||||
Interest expense (b) | — | (2,703) | — | (5,317) | |||||||||||||||||||
Other non-operating income | (4) | 368 | (9) | 713 | |||||||||||||||||||
Income from discontinued operations before income taxes | 2,275 | 112,652 | 1,639 | 165,652 | |||||||||||||||||||
Income tax benefit (expense) | (599) | 1,279 | (434) | (62,538) | |||||||||||||||||||
Income from discontinued operations, net of taxes | $ | 1,676 | $ | 113,931 | $ | 1,205 | $ | 103,114 | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
Depreciation and amortization | $ | — | $ | — | $ | — | $ | 3,173 | |||||||||||||||
Capital expenditures | $ | — | $ | 2,326 | $ | — | $ | 5,814 |
June 25, 2022 | December 31, 2021 | ||||||||||
Accounts receivable, trade | $ | 175,874 | $ | 131,371 | |||||||
Accounts receivable, other (a) | 33,426 | 51,007 | |||||||||
Allowance for expected credit losses | (1,299) | (774) | |||||||||
Total accounts receivable, net | $ | 208,001 | $ | 181,604 |
June 25, 2022 | December 31, 2021 | ||||||||||
Finished goods | $ | 179,383 | $ | 175,832 | |||||||
Work-in-progress | 6,696 | 6,533 | |||||||||
Raw materials | 49,767 | 41,974 | |||||||||
Manufacturing and maintenance supplies | 6,819 | 6,352 | |||||||||
Total inventory | $ | 242,665 | $ | 230,691 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||||||
Operating Leases | ||||||||||||||||||||||||||
Operating lease expense | $ | 1,917 | $ | 1,423 | $ | 3,848 | $ | 2,838 | ||||||||||||||||||
Finance Leases | ||||||||||||||||||||||||||
Amortization of ROU assets | 94 | 87 | 185 | 173 | ||||||||||||||||||||||
Interest | 35 | 42 | 72 | 85 | ||||||||||||||||||||||
Total | $ | 2,046 | $ | 1,552 | $ | 4,105 | $ | 3,096 |
Balance Sheet Classification | June 25, 2022 | December 31, 2021 | |||||||||||||||
Right-of-use assets | $ | 15,904 | $ | 18,316 | |||||||||||||
Lease liabilities, current | $ | 6,013 | $ | 6,050 | |||||||||||||
Lease liabilities, non-current | $ | 10,113 | $ | 12,551 | |||||||||||||
June 25, 2022 | |||||
Remainder of 2022 | $ | 4,100 | |||
2023 | 6,194 | ||||
2024 | 2,697 | ||||
2025 | 1,746 | ||||
2026 | 1,118 | ||||
Thereafter | 5,222 | ||||
Total minimum lease payments | $ | 21,077 | |||
Less: imputed interest | (4,950) | ||||
Present value of future minimum lease payments | $ | 16,127 |
June 25, 2022 | December 31, 2021 | ||||||||||
Accrued customer incentives | $ | 30,132 | $ | 26,726 | |||||||
Accrued payroll and benefits | 23,902 | 13,363 | |||||||||
Accrued interest | 19,449 | 19,153 | |||||||||
Accrued income taxes | 7,910 | 9,210 | |||||||||
Accrued property and other taxes | 7,644 | 4,074 | |||||||||
Deferred revenue (a) | 23,361 | 22,518 | |||||||||
Other current liabilities | 35,834 | 41,080 | |||||||||
Total accrued and other current liabilities | $ | 148,232 | $ | 136,124 |
June 25, 2022 | December 31, 2021 | |||||||||||||
ABL Credit Facility due 2025, $108 million available, bearing interest of approximately 1.63% LIBOR plus 2.25%, interest rate of 3.88% at June 25, 2022 | $ | — | $ | — | ||||||||||
Senior Secured Notes due 2026 at a fixed interest rate of 7.625% | 475,000 | 475,000 | ||||||||||||
Senior Notes due 2024 at a fixed interest rate of 5.5% | 349,185 | 369,185 | ||||||||||||
Canadian dollar, fixed interest rate term loans with rates ranging from 5.5% to 6.86% and maturity dates ranging from July 2022 through April 2028, secured by certain assets of the Temiscaming mill | 60,167 | 65,451 | ||||||||||||
Other loans (a) | 21,150 | 18,280 | ||||||||||||
Short-term factoring facility-France | 5,398 | 7,118 | ||||||||||||
Finance lease obligation | 1,965 | 2,138 | ||||||||||||
Total debt principal payments due | 912,865 | 937,172 | ||||||||||||
Less: Debt premium, original issue discount and issuance costs, net | (7,412) | (8,461) | ||||||||||||
Total debt | 905,453 | 928,711 | ||||||||||||
Less: Debt due within one year | (34,966) | (37,680) | ||||||||||||
Long-term debt | $ | 870,487 | $ | 891,031 | ||||||||||
(a) Loans for energy and bioethanol projects in France. |
Debt Principal Payments | |||||
Remainder of 2022 | $ | 30,111 | |||
2023 | 10,527 | ||||
2024 | 360,320 | ||||
2025 | 11,174 | ||||
2026 | 485,563 | ||||
Thereafter | 13,205 | ||||
Total principal payments | $ | 910,900 |
Balance, December 31, 2021 | $ | 171,222 | |||
Increase in liabilities | 1,599 | ||||
Payments | (1,626) | ||||
Foreign currency adjustments | (222) | ||||
Balance, June 25, 2022 | 170,973 | ||||
Less: Current portion | (11,291) | ||||
Long-term environmental liabilities | $ | 159,682 |
Three Months Ended June 26, 2021 | ||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Gain (Loss) Recognized in OCI on Derivative | Gain (Loss) Reclassified from AOCI into Income | Location on Statement of Income | |||||||||||||||||
Foreign exchange forward contracts | $ | — | $ | 2,260 | Cost of sales | |||||||||||||||
Foreign exchange forward contracts | $ | — | $ | (102) | Interest income and other, net | |||||||||||||||
Six Months Ended June 26, 2021 | ||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Gain (Loss) Recognized in OCI on Derivative | Gain (Loss) Reclassified from AOCI into Income | Location on Statement of Income | |||||||||||||||||
Foreign exchange forward contracts | $ | — | $ | 4,088 | Cost of sales | |||||||||||||||
Foreign exchange forward contracts | $ | — | $ | (202) | Interest income and other, net |
June 25, 2022 | December 31, 2021 | |||||||||||||
Foreign exchange cash flow hedges | $ | (690) | $ | (847) |
June 25, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Carrying Amount | Fair Value (b) | Carrying Amount | Fair Value (b) | ||||||||||||||||||||||||||||||||
Assets: | Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||||||||||||||
Cash and cash equivalents | |||||||||||||||||||||||||||||||||||
Cash | $ | 145,643 | $ | 145,643 | $ | — | $ | 253,307 | $ | 253,307 | $ | — | |||||||||||||||||||||||
Money market funds | 2,105 | 2,105 | — | — | — | — | |||||||||||||||||||||||||||||
Investment in GreenFirst equity securities | — | — | — | 38,510 | — | 38,510 | |||||||||||||||||||||||||||||
Liabilities (a): | |||||||||||||||||||||||||||||||||||
Fixed-rate long-term debt | $ | 898,091 | $ | — | $ | 852,923 | $ | 919,455 | $ | — | $ | 964,308 | |||||||||||||||||||||||
December 31, 2021 | At closing of transaction | |||||||||||||
Expected Term | 0.16 years | 0.5 years | ||||||||||||
Risk-free rate | 0.10 | % | 0.20 | % | ||||||||||
Dividend yield | — | — | ||||||||||||
Volatility | 73.77 | % | 92.04 | % | ||||||||||
DLOM | 6.77 | % | 14.38 | % |
Six Months Ended | |||||||||||
June 25, 2022 | June 26, 2021 | ||||||||||
Unrecognized components of employee benefit plans, net of tax: | |||||||||||
Balance, beginning of year | $ | (76,849) | $ | (146,614) | |||||||
Other comprehensive gain (loss) before reclassifications | — | — | |||||||||
Income tax on other comprehensive loss | — | — | |||||||||
Reclassifications to earnings: (a) | |||||||||||
Pension settlement loss | — | 111 | |||||||||
Amortization of losses | 4,976 | 8,169 | |||||||||
Amortization of prior service costs | 17 | 276 | |||||||||
Income tax on reclassifications | (1,097) | (1,892) | |||||||||
Net comprehensive gain on employee benefit plans, net of tax | 3,896 | 6,664 | |||||||||
Balance, end of period | (72,953) | (139,950) | |||||||||
Unrealized gain (loss) on derivative instruments, net of tax: | |||||||||||
Balance, beginning of year | (847) | 1,834 | |||||||||
Reclassifications to earnings: (b) | |||||||||||
Foreign exchange contracts | 181 | (3,886) | |||||||||
Income tax on reclassifications | (24) | 1,033 | |||||||||
Net comprehensive loss on derivative instruments, net of tax | 157 | (2,853) | |||||||||
Balance, end of period | (690) | (1,019) | |||||||||
Foreign currency translation adjustments: | |||||||||||
Balance, beginning of year | (6,774) | 11,145 | |||||||||
Foreign currency translation adjustment, net of tax of $0 and $0 | (15,864) | (6,221) | |||||||||
Balance, end of period | (22,638) | 4,924 | |||||||||
Accumulated other comprehensive income (loss), end of period | $ | (96,281) | $ | (136,045) |
Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Par Value | ||||||||||||||||||||||||||||||||||
For the six months ended June 25, 2022 | |||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 63,738,409 | $ | 637 | $ | 408,834 | $ | 489,342 | $ | (84,470) | $ | 814,343 | ||||||||||||||||||||||||
Net income (loss) | — | — | — | (48,118) | — | (48,118) | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | (11,811) | (11,811) | |||||||||||||||||||||||||||||
Issuance of common stock under incentive stock plans | 294,936 | 3 | (3) | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 6,728 | — | — | 6,728 | |||||||||||||||||||||||||||||
Repurchase of common shares (a) | (62,179) | (1) | (302) | — | — | (303) | |||||||||||||||||||||||||||||
Balance, June 25, 2022 | 63,971,166 | $ | 639 | $ | 415,257 | $ | 441,224 | $ | (96,281) | $ | 760,839 | ||||||||||||||||||||||||
For the three months ended June 25, 2022 | |||||||||||||||||||||||||||||||||||
Balance, March 26, 2022 | 63,849,150 | $ | 638 | $ | 410,788 | $ | 464,491 | $ | (88,724) | $ | 787,193 | ||||||||||||||||||||||||
Net income (loss) | — | — | — | (23,267) | — | (23,267) | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | (7,557) | (7,557) | |||||||||||||||||||||||||||||
Issuance of common stock under incentive stock plans | 122,016 | 1 | (1) | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 4,470 | — | — | 4,470 | |||||||||||||||||||||||||||||
Balance, June 25, 2022 | 63,971,166 | $ | 639 | $ | 415,257 | $ | 441,224 | $ | (96,281) | $ | 760,839 | ||||||||||||||||||||||||
For the six months ended June 26, 2021 | |||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 63,359,839 | $ | 633 | $ | 405,161 | $ | 422,928 | $ | (133,635) | $ | 695,087 | ||||||||||||||||||||||||
Net income (loss) | — | — | — | 95,201 | — | 95,201 | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | (2,410) | (2,410) | |||||||||||||||||||||||||||||
Issuance of common stock under incentive stock plans | 509,713 | 5 | (5) | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 385 | — | — | 385 | |||||||||||||||||||||||||||||
Repurchase of common shares (a) | (132,196) | (1) | (1,421) | — | — | (1,422) | |||||||||||||||||||||||||||||
Balance, June 26, 2021 | 63,737,356 | $ | 637 | $ | 404,120 | $ | 518,129 | $ | (136,045) | $ | 786,841 | ||||||||||||||||||||||||
For the three months ended June 26, 2021 | |||||||||||||||||||||||||||||||||||
Balance, March 27, 2021 | 63,597,356 | $ | 636 | $ | 403,086 | $ | 395,901 | $ | (140,869) | $ | 658,754 | ||||||||||||||||||||||||
Net income (loss) | — | — | — | 122,228 | — | 122,228 | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | 4,824 | 4,824 | |||||||||||||||||||||||||||||
Issuance of common stock under incentive stock plans | 140,000 | 1 | (1) | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 1,038 | — | — | 1,038 | |||||||||||||||||||||||||||||
Repurchase of common shares (a) | — | — | (3) | — | — | (3) | |||||||||||||||||||||||||||||
Balance, June 26, 2021 | 63,737,356 | $ | 637 | $ | 404,120 | $ | 518,129 | $ | (136,045) | $ | 786,841 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
Income (loss) from continuing operations | $ | (24,943) | $ | 8,297 | $ | (49,323) | $ | (7,913) | |||||||||||||||
Income from discontinued operations | 1,676 | 113,931 | 1,205 | 103,114 | |||||||||||||||||||
Net income (loss) available for common stockholders | $ | (23,267) | $ | 122,228 | $ | (48,118) | $ | 95,201 | |||||||||||||||
Shares used for determining basic earnings per share of common stock | 63,898,761 | 63,654,278 | 63,837,292 | 63,545,599 | |||||||||||||||||||
Dilutive effect of: | |||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||
Performance and restricted stock | — | 1,159,735 | — | — | |||||||||||||||||||
Shares used for determining diluted earnings per share of common stock | 63,898,761 | 64,814,013 | 63,837,292 | 63,545,599 | |||||||||||||||||||
Basic per share amounts | |||||||||||||||||||||||
Income (loss) from continuing operations | $ | (0.39) | $ | 0.13 | $ | (0.77) | $ | (0.12) | |||||||||||||||
Income from discontinued operations | 0.03 | 1.79 | 0.02 | 1.62 | |||||||||||||||||||
Net income (loss) | $ | (0.36) | $ | 1.92 | $ | (0.75) | $ | 1.50 | |||||||||||||||
Diluted per share amounts | |||||||||||||||||||||||
Income (loss) from continuing operations | $ | (0.39) | $ | 0.13 | $ | (0.77) | $ | (0.12) | |||||||||||||||
Income from discontinued operations | 0.03 | 1.76 | 0.02 | 1.62 | |||||||||||||||||||
Net income (loss) | $ | (0.36) | $ | 1.89 | $ | (0.75) | $ | 1.50 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
Stock options | 78,660 | 122,525 | 78,660 | 122,525 | |||||||||||||||||||
Performance and restricted stock | 3,372,498 | 655,540 | 3,372,498 | 2,286,865 | |||||||||||||||||||
Total anti-dilutive instruments | 3,451,158 | 778,065 | 3,451,158 | 2,409,390 |
Stock Options | Restricted Stock Units | Performance-Based Stock Units | |||||||||||||||||||||||||||||||||
Options | Weighted Average Exercise Price | Awards | Weighted Average Grant Date Fair Value | Awards | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
Outstanding at January 1, 2022 | 111,124 | $ | 39.47 | 927,556 | $ | 8.72 | 1,459,716 | $ | 6.51 | ||||||||||||||||||||||||||
Granted | — | — | 1,328,931 | 5.50 | 1,284,535 | 8.24 | |||||||||||||||||||||||||||||
Forfeited | — | — | (161,708) | 5.79 | (1,159,319) | 6.71 | |||||||||||||||||||||||||||||
Exercised or settled | — | — | (307,213) | 11.08 | — | — | |||||||||||||||||||||||||||||
Expired or cancelled | (32,464) | 38.24 | — | — | — | — | |||||||||||||||||||||||||||||
Outstanding at June 25, 2022 | 78,660 | $ | 39.94 | 1,787,566 | $ | 6.18 | 1,584,932 | $ | 7.77 |
Pension | Postretirement | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||||
Components of Net Periodic Benefit Cost | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
Service cost | $ | 2,171 | $ | 2,600 | $ | 352 | $ | 363 | |||||||||||||||
Interest cost | 4,597 | 4,446 | 215 | 176 | |||||||||||||||||||
Expected return on plan assets | (8,379) | (9,673) | — | — | |||||||||||||||||||
Amortization of prior service cost | 39 | 177 | (30) | (38) | |||||||||||||||||||
Amortization of losses | 2,473 | 4,086 | 15 | 2 | |||||||||||||||||||
Pension settlement loss | 1,179 | 890 | — | — | |||||||||||||||||||
Total net periodic benefit cost | $ | 2,080 | $ | 2,526 | $ | 552 | $ | 503 | |||||||||||||||
Pension | Postretirement | ||||||||||||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||||||||||||
Components of Net Periodic Benefit Cost | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
Service cost | $ | 4,347 | $ | 5,181 | $ | 705 | $ | 725 | |||||||||||||||
Interest cost | 9,203 | 8,851 | 431 | 351 | |||||||||||||||||||
Expected return on plan assets | (16,707) | (19,279) | — | — | |||||||||||||||||||
Amortization of prior service cost | 78 | 352 | (61) | (76) | |||||||||||||||||||
Amortization of losses | 4,946 | 8,163 | 30 | 6 | |||||||||||||||||||
Pension settlement loss | 1,179 | 890 | — | — | |||||||||||||||||||
Total net periodic benefit cost | $ | 3,046 | $ | 4,158 | $ | 1,105 | $ | 1,006 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | ||||||||||||||||||||
High Purity Cellulose | $ | 6,489 | $ | 10,623 | $ | (1,315) | $ | 17,051 | |||||||||||||||
Paperboard | 10,447 | 2,441 | 16,286 | 8,196 | |||||||||||||||||||
High-Yield Pulp | (1,365) | 1,079 | (1,736) | 538 | |||||||||||||||||||
Corporate | (18,468) | (12,766) | (31,925) | (24,882) | |||||||||||||||||||
Total operating income (loss) | $ | (2,897) | $ | 1,377 | $ | (18,690) | $ | 903 |
June 25, 2022 | December 31, 2021 | ||||||||||
High Purity Cellulose | $ | 1,663,932 | $ | 1,579,300 | |||||||
Paperboard | 118,638 | 114,391 | |||||||||
High-Yield Pulp | 48,523 | 38,147 | |||||||||
Corporate and other | 551,048 | 713,186 | |||||||||
Total identifiable assets | $ | 2,382,141 | $ | 2,445,024 |
June 25, 2022 | June 26, 2021 | ||||||||||
Interest paid | $ | 29,430 | $ | 13,394 | |||||||
Income taxes paid (received) | $ | 6,331 | $ | (21,032) | |||||||
Capital assets purchased on account | $ | 29,518 | $ | 15,704 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Financial Information | Three Months Ended | % | Six Months Ended | % | |||||||||||||||||||||||||||||||
(in millions, except percentages) | June 25, 2022 | June 26, 2021 | Change | June 25, 2022 | June 26, 2021 | Change | |||||||||||||||||||||||||||||
Net Sales | $ | 399 | $ | 341 | 17% | $ | 751 | $ | 660 | 14% | |||||||||||||||||||||||||
Cost of Sales | (372) | (319) | (718) | (617) | |||||||||||||||||||||||||||||||
Gross Margin | 27 | 22 | 23% | 33 | 43 | (23)% | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | (28) | (18) | (48) | (34) | |||||||||||||||||||||||||||||||
Foreign exchange losses | 2 | (2) | 1 | (3) | |||||||||||||||||||||||||||||||
Other operating expense, net | (4) | (1) | (5) | (5) | |||||||||||||||||||||||||||||||
Operating Income (Loss) | (3) | 1 | NA | (19) | 1 | NA | |||||||||||||||||||||||||||||
Interest expense | (16) | (16) | (33) | (32) | |||||||||||||||||||||||||||||||
Interest income and other, net | 3 | (2) | 3 | (2) | |||||||||||||||||||||||||||||||
Net periodic pension and OPEB income, excluding service costs | — | — | 1 | 1 | |||||||||||||||||||||||||||||||
Realized (loss) gain on GreenFirst equity securities | (4) | — | 5 | — | |||||||||||||||||||||||||||||||
Loss From Continuing Operations Before Income Taxes | (20) | (17) | (18)% | (43) | (32) | (34)% | |||||||||||||||||||||||||||||
Income tax benefit (expense) | (4) | 25 | (5) | 25 | |||||||||||||||||||||||||||||||
Equity in loss of equity method investment | (1) | — | (1) | (1) | |||||||||||||||||||||||||||||||
Income (Loss) from Continuing Operations | $ | (25) | $ | 8 | NA | $ | (49) | $ | (8) | NA | |||||||||||||||||||||||||
Loss from discontinued operations, net of taxes | 2 | 114 | 1 | 103 | |||||||||||||||||||||||||||||||
Net Income (Loss) | $ | (23) | $ | 122 | $ | (48) | $ | 95 | |||||||||||||||||||||||||||
Gross Margin % | 7 | % | 7 | % | 4 | % | 6 | % | |||||||||||||||||||||||||||
Operating Margin % | (1) | % | — | % | (2) | % | — | % | |||||||||||||||||||||||||||
Effective Tax Rate % | (18) | % | 153 | % | (12) | % | 77 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
Net sales (in millions) | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
High Purity Cellulose | $ | 302 | $ | 255 | $ | 583 | $ | 504 | |||||||||||||||
Paperboard | 63 | 57 | 117 | 105 | |||||||||||||||||||
High-Yield Pulp | 40 | 37 | 62 | 64 | |||||||||||||||||||
Eliminations | (6) | (8) | (11) | (13) | |||||||||||||||||||
Total net sales | $ | 399 | $ | 341 | $ | 751 | $ | 660 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
Operating income (loss) (in millions) | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
High Purity Cellulose | $ | 7 | $ | 11 | $ | (1) | $ | 17 | |||||||||||||||
Paperboard | 10 | 2 | 16 | 8 | |||||||||||||||||||
High-Yield Pulp | (2) | 1 | (2) | 1 | |||||||||||||||||||
Corporate | (18) | (13) | (32) | (25) | |||||||||||||||||||
Total operating income (loss) | $ | (3) | $ | 1 | $ | (19) | $ | 1 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
(in millions) | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
Net Sales | $ | 302 | $ | 255 | $ | 583 | $ | 504 | |||||||||||||||
Operating income (loss) | $ | 7 | $ | 11 | $ | (1) | $ | 17 | |||||||||||||||
Average Sales Prices ($ per metric ton): | |||||||||||||||||||||||
High Purity Cellulose | $ | 1,355 | $ | 1,128 | $ | 1,288 | $ | 1,086 | |||||||||||||||
Sales Volumes (thousands of metric tons): | |||||||||||||||||||||||
High Purity Cellulose | 206 | 204 | 414 | 421 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
(in millions) | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
Net Sales | $ | 63 | $ | 57 | $ | 117 | $ | 105 | |||||||||||||||
Operating income | $ | 10 | $ | 2 | $ | 16 | $ | 8 | |||||||||||||||
Average Sales Prices ($ per metric tons): | |||||||||||||||||||||||
Paperboard | $ | 1,439 | $ | 1,150 | $ | 1,384 | $ | 1,132 | |||||||||||||||
Sales Volumes (in thousands of metric tons): | |||||||||||||||||||||||
Paperboard | 44 | 49 | 85 | 92 |
Three Months Ended | June 26, 2021 | Changes Attributable to: | June 25, 2022 | ||||||||||||||||||||
Net Sales (in millions) | Price | Volume/Mix | |||||||||||||||||||||
Paperboard | $ | 57 | $ | 12 | $ | (6) | $ | 63 |
Six Months Ended | June 26, 2021 | Changes Attributable to: | June 25, 2022 | ||||||||||||||||||||
Net Sales (in millions) | Price | Volume/Mix | |||||||||||||||||||||
Paperboard | $ | 105 | $ | 21 | $ | (9) | $ | 117 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
(in millions) | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
Net Sales | $ | 40 | $ | 37 | $ | 62 | $ | 64 | |||||||||||||||
Operating income (loss) | $ | (2) | $ | 1 | $ | (2) | $ | 1 | |||||||||||||||
Average Sales Prices ($ per metric ton): | |||||||||||||||||||||||
High-Yield Pulp (a) | $ | 603 | $ | 539 | $ | 586 | $ | 510 | |||||||||||||||
Sales Volumes (in metric tons): | |||||||||||||||||||||||
High-Yield Pulp (a) | 55 | 55 | 85 | 99 | |||||||||||||||||||
(a) Average sales prices and volumes for external sales only. For each of the three month periods ended June 25, 2022 and June 26, 2021, the High-Yield Pulp segment sold 17,000 metric tons of high-yield pulp for $7 million to the Paperboard segment. For the six months ended June 25, 2022 and June 26, 2021, the High-Yield Pulp segment sold 31,000 metric tons and 34,000 metric tons of high-yield pulp for $13 million and $14 million, respectively, to the Paperboard segment. |
Three Months Ended | June 26, 2021 | Changes Attributable to: | June 25, 2022 | ||||||||||||||||||||
Net Sales (in millions) | Price | Volume/Mix | |||||||||||||||||||||
High-Yield Pulp Net Sales | $ | 37 | $ | 3 | $ | — | $ | 40 | |||||||||||||||
Six Months Ended | June 26, 2021 | Changes Attributable to: | June 25, 2022 | ||||||||||||||||||||
Net Sales (in millions) | Price | Volume/Mix | |||||||||||||||||||||
High-Yield Pulp Net Sales | $ | 64 | $ | 6 | $ | (8) | $ | 62 | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
Operating Income (Loss) (in millions) | June 25, 2022 | June 26, 2021 | June 25, 2022 | June 26, 2021 | |||||||||||||||||||
Operating loss | $ | (18) | $ | (13) | $ | (32) | $ | (25) |
June 25, 2022 | December 31, 2021 | ||||||||||
Cash and cash equivalents (a) | $ | 148 | $ | 253 | |||||||
Availability under the ABL Credit Facility (b) | 108 | 103 | |||||||||
Total debt (c) | 905 | 929 | |||||||||
Stockholders’ equity | 761 | 814 | |||||||||
Total capitalization (total debt plus equity) | $ | 1,666 | $ | 1,743 | |||||||
Debt to capital ratio | 54 | % | 53 | % |
Cash Flows Provided by (Used for): | June 25, 2022 | June 26, 2021 | |||||||||
Operating activities-continuing operations | $ | (36) | $ | 46 | |||||||
Operating activities-discontinued operations | $ | — | $ | 141 | |||||||
Investing activities-continuing operations | $ | (87) | $ | (51) | |||||||
Investing activities-discontinued operations | $ | 43 | $ | (6) | |||||||
Financing activities | $ | (22) | $ | (8) |
Three Months Ended: | High Purity Cellulose | Paperboard | High-Yield Pulp | Corporate & Other | Total | ||||||||||||||||||||||||
June 25, 2022 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 6 | $ | 11 | $ | (1) | $ | (41) | $ | (25) | |||||||||||||||||||
Depreciation and amortization | 30 | 3 | 1 | — | 34 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | 16 | 16 | ||||||||||||||||||||||||
Income tax expense (benefit) | — | — | — | 4 | 4 | ||||||||||||||||||||||||
EBITDA from continuing operations | $ | 36 | $ | 14 | $ | — | $ | (21) | $ | 29 | |||||||||||||||||||
Pension settlement loss | — | — | — | 1 | 1 | ||||||||||||||||||||||||
Severance | — | — | — | 4 | 4 | ||||||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 36 | $ | 14 | $ | — | $ | (16) | $ | 34 | |||||||||||||||||||
June 26, 2021 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 11 | $ | 3 | $ | 1 | $ | (7) | $ | 8 | |||||||||||||||||||
Depreciation and amortization | 27 | 4 | 2 | 33 | |||||||||||||||||||||||||
Interest expense, net | — | — | — | 17 | 17 | ||||||||||||||||||||||||
Income tax expense (benefit) | — | — | — | (25) | (25) | ||||||||||||||||||||||||
EBITDA from continuing operations | $ | 38 | $ | 7 | $ | 1 | $ | (13) | $ | 33 | |||||||||||||||||||
Pension settlement loss | — | — | — | 1 | 1 | ||||||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 38 | $ | 7 | $ | 1 | $ | (12) | $ | 34 | |||||||||||||||||||
Six Months Ended: | High Purity Cellulose | Paperboard | High-Yield Pulp | Corporate & Other | Total | ||||||||||||||||||||||||
June 25, 2022 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (1) | $ | 17 | $ | (1) | $ | (64) | $ | (49) | |||||||||||||||||||
Depreciation and amortization | 53 | 7 | 1 | — | 61 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | 32 | 32 | ||||||||||||||||||||||||
Income tax expense (benefit) | — | — | — | 5 | 5 | ||||||||||||||||||||||||
EBITDA from continuing operations | $ | 52 | $ | 24 | $ | — | $ | (27) | $ | 49 | |||||||||||||||||||
Pension settlement (gain) loss | — | — | — | 1 | 1 | ||||||||||||||||||||||||
Severance | — | — | — | 4 | 4 | ||||||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 52 | $ | 24 | $ | — | $ | (22) | $ | 54 | |||||||||||||||||||
June 26, 2021 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 18 | $ | 9 | $ | 1 | $ | (36) | $ | (8) | |||||||||||||||||||
Depreciation and amortization | 55 | 8 | 1 | 2 | 66 | ||||||||||||||||||||||||
Interest expense, net | — | — | — | 32 | 32 | ||||||||||||||||||||||||
Income tax expense (benefit) | — | — | — | (25) | (25) | ||||||||||||||||||||||||
EBITDA from continuing operations | $ | 73 | $ | 17 | $ | 2 | $ | (27) | $ | 65 | |||||||||||||||||||
Pension settlement loss | — | — | — | 1 | 1 | ||||||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 73 | $ | 17 | $ | 2 | $ | (26) | $ | 66 |
Six Months Ended | |||||||||||
Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation | June 25, 2022 | June 26, 2021 | |||||||||
Cash provided by (used for) operating activities - continuing operations | $ | (36) | $ | 46 | |||||||
Capital expenditures (a) | (71) | (43) | |||||||||
Adjusted Free Cash Flows - continuing operations | $ | (107) | $ | 3 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Part II. | Other Information |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased (b) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) | |||||||||||||||||||
March 27 to April 30 | — | $ | — | — | $ | 60,294,000 | |||||||||||||||||
May 1 to May 28 | — | $ | — | — | $ | 60,294,000 | |||||||||||||||||
May 29 to June 25 | — | $ | — | — | $ | 60,294,000 | |||||||||||||||||
Total | — | — |
Item 6. | Exhibits |
Amended and Restated Certificate of Incorporation of Rayonier Advanced Materials Inc. | Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on June 30, 2014 | ||||||||||
Certificate of Designations of 8.00% Series A Mandatory Convertible Preferred Stock of Rayonier Advanced Materials Inc., filed with the Secretary of State of the State of Delaware and effective August 10, 2016 | Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 10, 2016 | ||||||||||
Amended and Restated Bylaws of Rayonier Advanced Materials Inc | Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Form 8-K filed on June 30, 2014 | ||||||||||
Certificate of Designations of Series A Junior Participating Preferred Stock | Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on March 21, 2022 | ||||||||||
Rights Agreement dated as of March 21, 2022, between Rayonier Advanced Materials Inc. and Computershare Trust Company, N.A., which includes the form of Certificate of Designations as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C | Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on March 21, 2022 | ||||||||||
Letter Agreement, dated May 28, 2022 between Rayonier Advanced Materials Inc. and De Lyle W. Bloomquist** | Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on May 31, 2022 | ||||||||||
Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||||||||||
Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||||||||||
Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished herewith | ||||||||||
101 | The following financial information from our Quarterly Report on Form 10-Q for the three and six months ended June 25, 2022 formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Six Months Ended June 25, 2022 and June 26, 2021; (ii) the Condensed Consolidated Balance Sheets as of June 25, 2022 and December 31, 2021; (iii) the Condensed Consolidated Statements of Cash Flows for the Six months Ended June 25, 2022 and June 26, 2021 and (iv) the Notes to Condensed Consolidated Financial Statements | Filed herewith | |||||||||
104 | Cover Page Interactive Data File - formatted as Inline XBRL and contained in Exhibit 101 |
Rayonier Advanced Materials Inc. | ||||||||
(Registrant) | ||||||||
By: | /s/ MARCUS J. MOELTNER | |||||||
Marcus J. Moeltner Chief Financial Officer and Senior Vice President, Finance (Duly Authorized Officer and Principal Financial Officer) |
/s/ DE LYLE W. BLOOMQUIST | |||||
De Lyle W. Bloomquist President and Chief Executive Officer | |||||
Rayonier Advanced Materials Inc. |
/s/ MARCUS J. MOELTNER | |||||
Marcus J. Moeltner Chief Financial Officer and Senior Vice President, Finance | |||||
Rayonier Advanced Materials Inc. |
/s/ DE LYLE W. BLOOMQUIST | /s/ MARCUS J. MOELTNER | |||||||
De Lyle W. Bloomquist | Marcus J. Moeltner | |||||||
President and Chief Executive Officer Rayonier Advanced Materials Inc. | Chief Financial Officer and Senior Vice President, Finance Rayonier Advanced Materials Inc. |