Rayonier Advanced Materials (RYAM) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales reached $401 million, up 9% year-over-year, driven by High Purity Cellulose (HPC) price and volume gains, despite lower Paperboard prices and commodity volumes.

• Adjusted EBITDA for Q3 2024 was $51 million, up 113% year-over-year, with margins nearly doubling to 12.7%.

• Net loss from continuing operations was $33 million, including a $25 million non-cash impairment and $7 million in suspension charges related to Temiscaming.

• Major events included a $700 million term loan refinancing, a fire at the Jesup plant with a $10 million EBITDA impact, and indefinite suspension of Temiscaming HPC operations.

• Strategic initiatives improved liquidity, reduced debt, and reduced non-HPC commodity exposure to 4% of revenue.

Financial highlights

• Adjusted free cash flow year-to-date was $99 million, up from $27 million in the prior year period.

• Gross margin for Q3 2024 was $44 million (11% of sales), up from $9 million (2.4%) in Q3 2023.

• Net secured leverage ratio stood at 2.8x covenant EBITDA; liquidity at $281 million.

• Total debt at quarter-end was $773 million; net secured debt was $622 million.

• Operating cash flow for the nine months ended September 28, 2024 was $149 million.

Outlook and guidance

• 2024 Adjusted EBITDA guidance remains $205–$215 million, including the Jesup fire impact.

• 2024 Adjusted Free Cash Flow guidance increased to $115–$125 million.

• Cellulose specialties prices expected to rise low single digits in 2024 and up to 10% in 2025; volumes to increase due to competitor closure.

• Paperboard and High-Yield Pulp prices expected to decline in Q4 2024, with EBITDA from these segments under pressure.

• Suspension of Temiscaming HPC plant expected to improve free cash flow by $30–$35 million in 2024; one-time charges of $14 million incurred.