Rayonier Advanced Materials (RYAM) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales reached $419 million, up $34 million year-over-year, with net income of $11 million versus a $17 million loss in the prior year quarter, and adjusted EBITDA of $68 million, up $41 million year-over-year, driven by higher cellulose specialties sales, cost reductions, and productivity gains.

• Adjusted Free Cash Flow for Q2 2024 was $69 million, aided by a $39 million sale of softwood lumber duty refund rights.

• Indefinite suspension of the Temiscaming HPC plant began in July 2024, expected to improve free cash flow and Adjusted EBITDA for the year by $25–$30 million, despite one-time charges.

• Full-year 2024 Adjusted EBITDA guidance raised to $205–$215 million; Adjusted Free Cash Flow guidance increased to $100–$110 million.

• Progress made on biomaterials strategy, with the Tartas bioethanol facility operational and expected to contribute $3–$4 million EBITDA in 2024.

Financial highlights

• Q2 2024 gross margin was $48 million, up from $15 million in Q2 2023; operating income was $28 million, a $35 million improvement year-over-year.

• Net income for Q2 2024 was $11 million ($0.12–$0.17 per share), compared to a net loss of $1–$17 million in Q2 2023.

• Adjusted EBITDA for Q2 2024 was $68 million, up from $27 million in Q2 2023.

• CapEx year-to-date was $58 million, including $28 million for strategic projects.

• Net secured debt at quarter-end was $659 million, with a covenant net secured debt ratio of 3.4x.

Outlook and guidance

• 2024 Adjusted EBITDA expected at $205–$215 million; Adjusted Free Cash Flow at $100–$110 million.

• Suspension of Temiscaming HPC plant expected to increase 2024 Adjusted EBITDA and free cash flow by $25–$30 million, despite one-time charges.

• High Purity Cellulose prices projected to rise slightly in 2024; volumes to increase due to competitor closure and pre-suspension sales.

• Paperboard prices expected to decline slightly in H2 2024, with volumes increasing; High-Yield Pulp prices to decline but volumes to rise.

• Actively pursuing refinancing of 2026 Senior Notes before January 2025, with Houlihan Lokey engaged for options.