Rayonier Advanced Materials (RYAM) Gabelli Funds' 16th Annual Specialty Chemicals Symposium summary

Business overview and strategy

• Focuses on high-purity cellulose (HPC), which accounts for 75% of revenues, with specialty cellulose as the largest segment at 54% of total revenues.

• Actively reducing exposure to low-margin commodity cellulose and optimizing asset mix toward higher-margin specialty products.

• Paperboard business leverages lightweight, high-yield pulp for sustainable packaging, with inherent 4%-5% annual growth.

• Revenue has been stable, but industry changes and supply chain disruptions have led to strategic shifts in production.

• Potential sale of non-core Paperboard and High-Yield Pulp businesses is under consideration to maximize debt paydown.

Financial performance and capital allocation

• 2024 revenue reached $1.63B, with adjusted EBITDA of $222M and free cash flow of $128M, both significantly improved from 2023.

• 2024 EBITDA margins increased 60% year-over-year, driven by exiting negative-margin commodity sales.

• Leverage reduced to 2.7x, with a target of 2.5x and a long-term goal to bring total debt below $500 million.

• Capital allocation prioritizes projects with at least 30% ROE and two-year payback; $100M+ planned for biomaterials, $39M for cellulose specialties cost reduction.

• 2024 EBITDA guidance of $215–$235M includes worst-case tariff impacts and mitigation plans.

Growth initiatives and innovation

• Biomaterials business leverages cellulose waste streams to produce bioethanol, biodiesel feedstocks, and prebiotic animal feed.

• First bioethanol plant in France operational since April 2024, with $8–$10M expected EBITDA this year and plans for a similar plant in Florida.

• Access to low-cost green capital in the EU supports further biomaterials expansion.

• Innovations target sustainable packaging and enhanced cellulose products, such as odor-control fluff for hygiene applications.

• By 2029, aims to grow EBITDA by $80M+ through high-return projects and margin expansion.