Rayonier Advanced Materials (RYAM) Stifel 2024 Cross Sector Insight Conference summary

Company overview and market position

• Leading global producer of dissolving wood pulp (high purity cellulose) with unique supply redundancy through multiple production lines.

• Largest global supplier of high purity cellulose specialties, operating four facilities in the U.S., Canada, and France.

• Operates in specialty cellulose, paperboard, and high-yield pulp, with non-core assets positioned as cash generators or for sale.

• Captured significant stranded demand and pricing power after a competitor's plant closure, becoming sole supplier in several markets.

• Products serve diverse end markets, including food, pharmaceuticals, industrials, and packaging.

Strategic initiatives and operational changes

• Actively reducing exposure to commodity cellulose by shifting production to higher-margin specialty products and operating assets only when profitable.

• Closed the Temiskaming HPC line to eliminate negative EBITDA, expecting $15–$20 million annual EBITDA and free cash flow benefit.

• Selling non-core paperboard and high-yield pulp businesses to focus on core operations and pay down debt, with process expected to complete in 2024.

• Asset optimization includes monetizing passive assets and working capital from plant closures.

• Cost savings initiatives, automation, and plant efficiencies targeted to enhance margins.

Financial performance and outlook

• 2023 revenue was $1.6 billion, with EBITDA guidance rising from $139 million in 2023 to $180–$200 million in 2024.

• EBITDA margin expected to increase from 9% to nearly 12% by year-end, driven by improved sales mix and competitor exit.

• Free cash flow projected at $80–$100 million for 2024, with net leverage targeted below 2.5x by 2027.

• Committed to paying down $70 million in debt in 2024, aided by asset sales and tax refunds.

• Stable core cellulose specialties business expected to drive EBITDA to $325 million by 2027, with biomaterials contributing $42 million annually.