RYAM - Earnings call transcript Q2 2018 | Rayonier Advanced Materials Inc.

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Operator

Good morning, and welcome to the Rayonier Advanced Materials Second Quarter 2018 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be open for questions with instructions to follow at that time.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Vice Investor and Advanced for Treasurer Materials. Walsh, President Relations of Rayonier Mickey you. Thank Mr. begin. Walsh, you may

Mickey Walsh

Thank morning, call and second you, good quarter Advanced to XXXX Materials Rayonier earnings conference and everyone. webcast. Welcome again

Chief Senior today's call our Boynton, President, Frank Joining me of Executive Officer Finance are and and on Officer; Financial President our Paul Chairman, and Vice Chief Strategy. Ruperto, and

that on were in our include made and laws. release of evening last earnings to will issued remind presentation, federal presentation like today's materials you at we forward-looking website pursuant are Safe Our rayonieram.com. to securities I'd available Harbor and statements the provisions

We XX non-GAAP measures of measures presentation. directly financial included Our but earnings to be their an measures, our considered of measures and material. not forward-looking presentation. GAAP turn slide Today's may X certain make. XX which SEC, factors may to measures presentation the release cause referenced reference non-GAAP provide of financial for call They alternative actual management now over GAAP our on these are believe on the most useful A X should statements with through we also investors, noted differ as reconciliation on the as information filings results slide presentation some from the slide of our lists also comparable slide financial measures. of our to are non-GAAP I'll as will to well materially Paul.

Paul G. Boynton

to the review financial strategy call then morning, I'm value Hey, an drive highlights on today will it our before shareholders. thank and going conclude quarter the Frank growth our to update with the to you, the to Mickey for for our I with start company over of results. everyone. and good turning

quarter. the X% quarter $XXX second to second a as million on million a compared increase on to we the reported summarized page X prior in XX% increase revenues in for EBITDA XXXX, years' $XXX As to

was pulp also High largely successfully performance with our quarter. while from for and specialty improved for demand the high-yield in strong our producing planned our Cellulose executed driven shutdowns the quarter, also Purity maintenance pricing In combined facilities, cellulose lumber productivity four Our three of and results segment. robust prior regular by improved we

As quarter we discussed in consistent our the pleased delivering our facility team's results is at on maintenance through and heavy call, management our this first with focus execution I'm quarter.

Cellulose this their reminder our weighted a Purity of is typical, we the expect earnings accretion our demonstrate As Tembec. that as towards back we acquired the well we as envisioned when quarter and business clearly EBITDA potential diversity be earnings results as our and Overall, for the business, half of to High year. combined

detail. in the Importantly, cost now bringing million estimate synergy Throughout our our our incremental balanced to cost pillars, strategy. which more six other demonstrated later discuss EBITDA we've diversified that of of proceed we're in the pillar, XXXX I'll deliver on with $XX strategic of our Tembec's capital allocation to commitment to million. savings the $XX from an integration line additional delivered EBITDA in incremental we from to savings million year-to-date in million of operations exceed and as $XX plus past months, quarter, the in transformation $XX expectations, continue a track We

our by at leverage We target have million, we debt times reduced our total as debt-to-EBITDA. X.X $XX net

$XX strategic share power million of to provide incremental million capital business. buybacks, in which of including and through shareholders million we've capital And earnings $XX invested returned repurchases. dividends projects stock the have We $XX will to

were and our off in quarter quarter start. our a remain Frank second to I confident forward, Looking the results as strong very great to is deliver year. discuss more our on ability plan in And the for detail, will third

to Frank over me call let turn Now, further the for discussion.

Frank A. Ruperto

quarterly the on and set reviewing business I'll results combined on XXXX a Thank will Comparisons of forth for basis the by each XX outlook period quarter segment. page be second our of the materials. you, presentation as for Paul. start of

on by prices Cellulose, X%, a year largely the Adjusted the X% in $XX decrease of compared ago negatively was $XX million, CS volumes year were decline in million million prices million sales by solid the Purity driven by segment, saw As a fluff. a period. the volumes, The minimize commodity sales quarter. from outlined to this impact to increased prices. and basis. pricing X% $XX $XXX X, while primarily material High decline raw the of X% timing prior impacted cost sales, of driven timing were represented expectation year the as full High for and decline largest in in quarter slide combined while lower our commodity X% driven segment segment from higher helped reductions to sales X% declines our EBITDA Purity CS declined on price year-over-year The by improvements the

CS prices which decline CS Commodity X% expect is to in the XXXX. are we a of forecast, prior forward, at our XXXX volumes while better volumes are expected to to period. expected of to from end sales, X% low mix the Looking reflecting approximately year be original comparable decline

full first of we XX%. roughly half second represent year expected EBITDA of Additionally, XX% the seasonality XXXX half normal the expect year this roughly and representing with to

this the driven the Paul in as the seasonality all X. in stronger half, first typically our July by is successfully maintenance by from shipments reminder, effect As outages mentioned, we're customer combined which a half, annual completed second largely with

remind our in the subject to sales, annual you trade discussions total $X China. is That million than currently China not between making in billion $XXX is Given U.S. produced of approximately I U.S. and to and sold the duty. more headlines, recent that will

High primarily some in of All are Purity commodity our these in our products sales CS with (XX:XX). in segment, Cellulose

our We have explore potential have the customers an any with dialog in to mitigate avenues engaged and of open long-term relationships to impacts duty.

partially in largely of segment Products the sold our transportation driven The lumber products. duties rose due a Forest for to increase in $XX drove $X This the by EBITDA in $XX increase sales second XX% price costs XXXX, X million and the approximately quarter slide offset million a $XX million and XX% improvement in currency. to of to to to Turning million into lumber was million by quarter compared year the wood increased U.S., for paid and $X quarter. ago by as second

Additionally, downtime impacted facilities. unplanned due volumes our were to one primarily at of

expect levels lumber to from forward third quarter. the the second normalized more to in with recent for the line we to Looking volumes in pricing and strong environment the peaks quarter, be decline

the market is volumes, remain housing expected profitability outlook for and demand continue. favorable to However, the long-term pricing from as solid U.S.

with discussed impact we impact segment sales XX% EBITDA first expect duties call, As million the of on quarter $XX reduce we volumes. our on during XXXX, will roughly roughly expected sales, no by which

deliver to that Additionally, Forest high to we the anticipate investment and Products in in plan we beyond. projects return during implement year segment second XXXX the the of benefits half

increased Turning to drove XX% driven to higher to million, due the pulp Pulp to EBITDA by demand. slide million. in which as segment $XX These XXX% X, $XX high-yield for had strong a by export million prices quarter were strong increase $XX sales another results

with demand from Additionally, impacting in which in to for the strength along the lingering the positively have entering This supply materials China dynamic, key commodity limit country, pulp commodity constraints drivers industry, the markets. been continues pulp grades. recycled for is

supply coming the Europe Asia in markets pulp future. expect and strong continue additions to no demand we and from online forward, the near Looking significant in

With supply-demand these quarter end. high historically we expect to year third prices strong by through near but dynamics, moderate the remain levels may

combined $X versus by as million sales continued Paper increased million in slightly were our of X, increases XX% on modestly. external higher with higher cost a quarter, $X while to up to due to by were million newsprint volumes, we the decline third slide remain expect flat. offset prices pricing segment paperboard duties paperboard. profitability as newsprint elevated to in in volumes the $XX newsprint expect price and newsprint was year-ago relatively and Turning duties primarily In million, $XX EBITDA the prices pulp driven increase quarter

paperboard, prices. prices could remain our segment expect material newsprint increases or resulting to offset we paperboard. in the relatively be we higher supply additional pulp to Overall, impacted continue as than to raw in tariffs prices stable demand high Pulp price However, U.S. impact results. profits more reduced negatively anticipate by In from

to sales and quarter X, basis, increased the Tembec, with second basis from came combined a a higher On on pulp quarter by for Turning sales primarily the consolidated in million. driven in slide lumber. high-yield XXXX, at X% $XXX of prices

the million, Second ago adjusted $XX million combined was the EBITDA quarter a from on achieved basis year XX% quarter. up in XXXX $XXX

our to target. high of $XX to the Importantly, million Cash a improvements million track remain cost we continues and the $XX second on priority for organization. quarter have be exceed year XXXX full through flow captured

additional incremental months the first planned by million, million cash higher operating into the while of cash $XX impacted the million $XX earned million in to of of an strategic through six purity drive working generated $XX related Accrued cash due for we working adjusted from our customer was spending and we million first million projects increased year, goods the primarily by cellulose and on XX, by million, $XX growth. maintenance the flow incremental slide six paperboard. finished of Inventory XXXX. costs impacted flow half $XX impacted We negatively negatively will outages rebates in free which to on shown invested months. capital by capital. prior Free $XX working As flow high $XX capital of sales capital year future first

stock and taking expense an debt of down billion. million the the outstanding $XX capital Interest second the by year repurchases credit credit. was of our the cash $XX dividends stood our under authorization. million, and represents ago Net to available of at hired of which balances year-to-date interest for debt market facility associated and buyback of million million end repurchases, liquidity $X of shareholders quarter million $XXX financing on including from million also letters $X.XX million total at after rates our $XX into $XX Tembec. returned the was of driven debt second XXXX of including open our through paid increase $XXX of revolving of with million, stock Meanwhile, quarter million total $XX and quarter, We $XXX acquisition account we

line run of rate last expense two $XX As to full in the continues year over quarters. the discussed in million be have that we such, with interest interest expense

stands X.X strong by now EBITDA months XX EBITDA at last to times debt commodity primarily driven performance. net Our

will capital net We continue and balanced allocation X.X a to and ratio on of disciplined target basis. decisions a times towards leverage operate we evaluate

see, can back As over first the of allocation to like I'd six you return for and turn cash call to capital that, free across repayments balanced With debt the to was shareholders. capital investments, strategic Paul. flow months

Paul G. Boynton

Frank. Hey. Thank you,

our expectations and from and results integration acquisition of of our of portfolio confident earnings expanded the end quarter in the of our demonstrate by of with to company of strategic of incremental XX, our second synergies the million benefits integrated line million our and our pillars in through a we slide total growth of growth resulting remain four XXXX The $XXX potential proceeding Tembec. Turning goal our delivering plan. is the $XX EBITDA of and

will achieving Turning across savings are million track captured million. $X categorized $XX million we to captured our three-year of of the exceed our first pillar EBITDA first months gives and in positions, and where have cost actions. practices goal specialties capture our from including duplicate The $XXX comes traction of of through confidence million our million activities Overall, procurement $XXX incremental well operations. streamline savings remaining our we as slide of of million enhanced synergies manufacturing transformation, various XX, XXXX these growth. improvement goal on cost we're cost us our $XX total to through six legacy identified the $XX of that cellulose cost elimination corporate the of savings

In developed team accelerate addition, to our benefits. plans integration global has synergy

XXXX additional of and slide in investments. make products million synergy $XX captured other We've benefits now an million the progress from original $X new $XX also As we are shown from on the strategic to in million our continued increasing million goal. by XX, $X having estimate pillars

than capital to the period have majority targeted to Our million years. investments Year-to-date, for the beginning be in through we of less and approximately than projects XX benefit are expect come return of more an investment of deployed beyond. payback to average in early XXXX results $XX XXXX net and capital with two high produce we capital

on As Cellulose slide Forest in and Product are our focused these projects High shown on segments. Purity XX,

Purity maintenance to our from in High invest the to incremental in projects the energy in of we invest example, our projects our in we will leverage that commodity manufacturing will and value assets more Difficulty] [Technical increase the operations. the highest investments more our operations optimize For technology sawmills Overall, a In other stability platform business will and to allow achievable. Projects in supply include new conditions Canada. our (XX:XX) scanning strong Products, segment value to a latest technology cost capture market digesters such cutting as as Cellulose ensure make across Purity Forest critical the lumber log costs, improvements reduce profit and chip competitive varying reliable. while sawmills will for our viscose our by capacity business annual our High better grade lumber in across the the base Cellulose our of in

these I return, capital that discussed. invested capital, $XX provide versus updates on high of goal. Year-to-date, capital incremental will just in payback towards EBITDA our strategic much $XX these projects been gross we've proceed, projects progress As quick we this million deployed our has approximately million

on been in past couple for However, one that LignoTech commenced project June. the of we've years, operations working Florida

$XX XX, to facility. LignoTech construction a is natural-based phase investment strategic capital $XX venture in our million the past at over applications. used We June, and manufacture Florida time joint and slide product approximately strategic the JV construction, a in XXXX. of to agricultural completed final invested industrial on Lignin Fernandina In officially XX under lignin with months the late million is a Turning Beach in budget. the

the ramping air have months next over require. JV ability with XXX,XXX as produce Our or tons, lignin tons will of the dry initially conditions to XX market metric up production

remains market solid. the American lignin has recently, While North under the market pressure some global been

giving second the because deliver forward, capital we increase our or only base envisioned more Fernandina using investment energy plant it of by strong a but XX,XXX phase flexibility of additional was specialties the for us As for as implemented, reliable for Beach in our tons. it as facility XXXX, if will cellulose the returns the a JV. also production which, capabilities is XXXX by raw high-teens, further material lignin an makes business will the or important a not look This our

disciplined allocation framework, slide business capital as XX, our deleveraging sheet dividends over to a EBITDA buybacks growth-oriented to allocate our well strategy as and return Turning balanced other capital. to times Within our shareholders de-levering, as By in through towards we X.X adjusted reach we on of risk this maximizing ratio we order time. investments balance committed and a leverage expenditures, remain capital centered target on capital return will acquisitions capital to to complement and core appropriate. net

During part we the $XX second back we from $XXX quarter, believe bought as portfolio achieve We of based undervalued authorization. our stock of million pillars. as stock on potential repurchase of our million the strategic benefits remains our earnings stock the

expect to benefits. business and we continue stock and As the from as proceeding solid well our a shareholders, regular financial conclude, is The To diversification is through result, capital of dividends. scale acquisition to the to performing and is Tembec integration repurchases providing planned. return

at and pulp and our as our half profitability in We that stronger typical. historical the to quarter lumber in expect will results elevated purity the high-yield trends businesses relative produce business second the through pricing of third year and levels the high to remain

please in this open Lastly, Thank million operator we remain you time capital by for are to if call our goal a you, EBTIDA don't delivering disciplined mind and of of confident questions. growth morning your strategy. the committed and XXXX allocation to balanced and again $XXX up

Operator

Certainly.

of D.A. the Davidson. from first Our with question line comes Steve Chercover

Steven Pierre Chercover

everyone. Thanks. Good morning,

Paul G. Boynton

Good Hey. Steve. morning,

Steven Pierre Chercover

first night. business, to duties of Department if the of not the on newsprint Commerce I'm revised zero not all, core last mistaken So but your

do a when? the you can much that's expect and that? how case, confirm you So refund And of if

Paul G. Boynton

duties two revised, final U.S. with determination and imports duties, on the Department Steve, yes, duties, U.S. and down groundwood for to of So, newsprint, the us ADD the the uncoated X.X%. CVD, into a Commerce the made the on a for anyway yesterday, zero, (XX:XX) anti-dumping countervailing

is through our means have a Obviously, look So on process, a this night. obviously and positive a timing. with International their separate But – September. though, I'll in last terms they've change. customers taking got details Trade and that as just to in fact it the a it's at that Keep ITC in substantial mind that work this overall of what message. hearing in goes got and in well the

take (XX:XX) look of U.S. the And injury any they'll that rescinded. if imports will if – industry. the see to a decides harmed and so, inside that no these place, And duties entirely ITC took be

to a positive still we obviously to So, been would it good we're go like any see which at is think think zero, we again but X.X% because injury. I don't now there's movement,

exact that? know has I what far, been the numbers. of terms if up got built Frank, don't so have I you In

Frank A. Ruperto

It's Remember you the million in so piece and that have that still we've one the in we paid place, $X roughly X% million. duty place, $X in referenced. million to remains duties $X one

Paul G. Boynton

Okay. Very good. you. Thank

helps that Steve? you hopefully So,

Steven Pierre Chercover

you've you've Yeah. and freight No you most chemicals of secondly, far might That's of And benefits cost that it'll inflation then achieved in the so flat? but XXXX, that cuts do good. that that structure think on your cost next CapEx endured in we the plus year, guarantees the kind subside keeping mitigate your know in XXXX. words some other of inflation

Frank A. Ruperto

Yes.

to that's generate that, here goal do savings think cost to that. transformation I the is

relatively half and first that mitigating of that. at the in piece in we've of the chemical successful the year least with think wood I on been inflation the

Steven Pierre Chercover

Okay.

Paul G. Boynton

[Multiple So (XX:XX) I Speaker] think ...

Steven Pierre Chercover

Sorry. Go Paul. ahead,

Paul G. Boynton

synergies as good that's effect. See, in XXXX base that as expect we guided pretty for inflationary in XXXX, that you we across there now say, there can a million and $XX against chunk

Steven Pierre Chercover

absolutely. Yeah,

I I'm lumber The Coast don't company Bottom that But it and producing could your didn't last. last a tailwind Lumber of you program an a wondering, I'll been for really think the that something was on and want tariff lumber? little West (XX:XX), that kind has At Black have alternatively ages, alternative reasonable the be called here really of turn there's ugly, chip you'd but and question, that you the then got can to supply expect has And replicate mills, people mills, if coast if for even on Okay. to obviously, or kind just is over. so nice chip east you have lumber your there with

Paul G. Boynton

making in overly lumber a Ontario Steve. as details referencing program some in not think we with you're make about investment conditions. the facilities there things; I'm more some know varying there, we've familiar way two one, our of Québec. it, put But market the capital we're look, the So, over in to return them opportunity got to think great and We profitable a you

So one Cellulose as run because to Purity integrated those. supply of us, Québec. two, we that's facility important you part important into But to know our it's in as it's High plan our chain

on it's equation. sides important of So, both the

goal we're So, can sure conditions, that our we've real make to we've towards. got in where market nice opportunities with paybacks working And so mills is to that and happen. we that that's short make some got some fortunately, any run term

Steven Pierre Chercover

you, Paul. All right. Thank

Operator

is America. of line next the Babcock question Bank coming John with from Our of

John P. Babcock

Good Hey. morning.

the Just on on wanted trade actually here. tensions commentary follow the up to

that, there wondering of just a think exposures exposure, exposed wondering mentioned that and if be separately essentially also you any that of just your that exposure, there a of if indirectly kind you that's great? I would and potentially $XXX if color buy customers was I to product additional you that be there sales if is sell was China, you that was direct kind exposed is also commentary about direct provide China. may to that's have to may million through what may

Paul G. Boynton

is clarify within The creates us indirectly. of coming out China. part last question to just help into not lot exposure the position a we your our on So, an put guidance there or directly that

U.S. China about As of subject the that any look, $XXX to we duties. million we've revenue said, is not of currently to got from kind

working duties to about And And to not sales have kind so our our we've trying X% we're way, is, all had our if dialogue into in any of long-term and if that's total we're at get at if China. look $X.X dialogue well we're comes actions well look, as $X.X them both into as and billion, all look you there main across our play. customers point duties anything and the that prepared go to China with currently potential in billion revenues short-term is subject with of of mitigation we'll

you kind So sales aren't frame total that just of the it's of into our to again, X% we're trying about any to currently again China. to subject that U.S. duties it from

John P. Babcock

sense Okay. your And has for do sort of exposure. customers' product you a by much that though of have chance how

you do market? wondering sell that clearly, they not whether was front guys on much So particularly (XX:XX) just I into or that

Paul G. Boynton

No.

there that think it's little small. there is maybe very I a but exposure small, relatively

John P. Babcock

pulled areas separately you XXXX coming with about that Okay. regards that synergies forward that's were to That's could into then the helpful. And from from? the XXXX, talk

Paul G. Boynton

that, middle what areas. as Yeah, multifunctional John the result think a they is, process where we we as it's where areas we get before, to across we've the – than of XXXX the as project-by-project thought across of we we do the have see opportunities. said across all more we can a a we that's act have they to board and the And on And I before. basis business. quickly year, opportunities could identify just we identify start And

in still time of opportunities. we was supply with for gave (XX:XX) break And that line heavily weighted more so, it's to manufacturing acquisition and say and rough operational parameters the at would chain the which I down

John P. Babcock

Products, you believe the then just And if then at downtime get did to the of improve have and sense invest that? more a of reliability want for to any you the I in first bit really there's before just I mills? bit need And potentially mills, little of you quarter next some also, Okay. to was capital just could the a whether CS over, Forest downtime wondering a on little unplanned turn mean in elaborate it on I

Paul G. Boynton

of we're to lumber basically is our and some safety. one again investing last point, related set facility board, Yeah, improve in downtime certainly that's facility, have Ontario of here. your it reliability Well, to at capital, part we across initiatives the

shut facility are safety safely. be facility aren't just we and we we are they comfortable that where practices Our until actually down operating that should the

to If you year, for levels. type lumber look at return near to our again expect in the volume, we where we're John, volumes going to to be historical

we should to page be appendix balance that close last I on year think the last your feet did look of million we've year. that coming XXX there the board of the it got as and we at year this

So be. here, we'll it's where a purposeful get deliberate, our pick to downtime it up just very needed back but safety very to

John P. Babcock

Okay.

Operator

next comes Dan Our go Jacome ahead. of from line question the with Sidoti & Company. Please

Daniel Jacome

Good morning.

Paul G. Boynton

Hey, morning. Dan. Good

Daniel Jacome

couple Impressive quarter. A questions on capacity.

the going So for facility market running. of congrats estimate up on Once what fully, of is are one. my control? getting best American the running in much up capacity was first and it's lignin you your That and terms to North how lignin

Paul G. Boynton

A difficult question.

you we and we're they sales and partner and at are XX% marketing our that As at our XX% have, partnership of on know the this in is arm relationship.

amount for undersupplied. volume out will I terms they've that put Obviously, the into there is a but take market North of of discussion. that let this has look this market a in American you been of coming lignin meaningful things some market, at So really is the

great So, we opportunity. think this is a

As going next we're to few this layer going over the we're in we said, years. to

recordings if you (XX:XX). point going else disclosed in look or out it's again you as I think what we take anything the their I a they've data percent that time, some to past of this be at they have here. it at again, but can't think matched well So give comes in in exactly

Daniel Jacome

Yeah.

pretty be to going it's material. think I

in limited on paperboard incremental these What's the just my paperboard, years? next for America to question, is Second access (XX:XX) the North quite capacity in expectation days. two

Paul G. Boynton

to paperboard most Just the the in be for (XX:XX) is coated where side clear, part. we on compete

thinner smaller, see. a paperboard that's that So you

only is some that next we There capacity the but don't the in, coming play again three we We are in several significantly the in manufacturer coming over currently than Maine markets the see that more U.S. capacity online. in on ply quarters,

Daniel Jacome

know capacity single-digits, market, is what terms in of it high that anything? low Okay. of single-digit, is overall percentage Do you

Frank A. Ruperto

but that of we'll top get have the head, number I that off out. don't my

Daniel Jacome

Okay. up guys. Yes. follow Thank you. I'll with you

Paul G. Boynton

Thanks, Dan.

Operator

Our of question the of line next Spitz from Roger Bank with comes America.

Roger N. Spitz

morning. Thanks, and good

Paul G. Boynton

morning. Good

Roger N. Spitz

million sales product $XXX China? little or Is bit China, that to the sales company just to I U.S. line? Regarding sales didn't break your that a that your total China, catch you to that. by can down And is

Paul G. Boynton

Yeah.

$XXX that in a is total going – it's Roger, from U.S. China. revenue to million, So, from and

China. So that's to not our total sales

Roger N. Spitz

Yes.

Paul G. Boynton

That duty. kind is that isn't under of currently to U.S. China any

you remember, duty pulp viscose out about is of the XX% if of already a under So, U.S.

that that got, or is is they that the just Most part if that volume this cellulose minority we've of out pulp. So material of absorbed exposure of a is that potential will. could specialties, there we is said be you fluff

Roger N. Spitz

any Got these headroom some to Tardus, capacity about mid-term, legacy it. to of sense thinking sort than ether ether make that And is enough you along it, there more the capacity changing thoughts of of lines? your at acetate Témiscaming do in CS or does have start and mean, that I

Paul G. Boynton

got different specialty a six different assets. make right that flexible four we've can Look we've High product. (XX:XX), and lines type They are Cellulose you're – fairly facilities, Well. got Purity

And around logistics for optimization go makes the ahead or really is move financially market our can see of we got things how we're part running So to now if product move sense that things to ability we've and a key forth. (XX:XX) across after back and just more those. that's

we've So feel the with and forward. ethers right to at that a the that there, got growth of market opportunities capability got that we around. going in But lot as things now, good capability move pretty growing we've Roger, the look of we

Roger N. Spitz

see do coming driving down? lumber with you that lastly down, And what Okay. prices

Paul G. Boynton

side, prices point. kind on I of certainly Well, had our – any historical above we think go well, had customer we well up to

most level. at and not just a that's it we it, sustainable as like look thought people about So it's

level. to So used we this come is, back the be of I this run when above mills of down stabilization, retreating. should of Rayonier, the legacy this and there think in stabilize all at come near-term. of year should at part time it And we'll the year saw we levels saw year. is back actually all And down coming we assumed that well us to of in it's prior the time think for out got it it health We and

So...

Frank A. Ruperto

Yeah.

transportation there the think of some some tightened other I up Roger, which constraints producers first in a and year Additionally, on of the the half Western supply was the bit. little

Paul G. Boynton

And keep a nature, in mind, it's right. speculative

of wait announcement everybody of out feel housing the is I and pricing see kind So and price level. the at than higher saying, before. in once think return going just to prices we a what you're that I had albeit were versus orders going kind levels, well but June that I'm more below are And this had gave bit stable calms this building settled here stable, I pause, I see inventory they right. that lower think starts where and to Customers period we've again prior down the think more of announced a at to little

Roger N. Spitz

much where some been there I more to we is than some I of Random like of what's Stud, And sort loosening have I the ascribed in see if on Right. thinking And here? think and starting was Random there's of part that the up really at of publications. part that to I guess mean, my are so, if went up correct? than think might more Stud fires looking B.C., going

Paul G. Boynton

Yeah.

certainly, availability and flowed more to but again readily help saw be and tightness I you think back science the you more that intuition volume natural B.C. has Random think that and that kind than Canada, more that lot the furnish normalized, is of able do exact up out you're make And it B.C., more your of (XX:XX) area I right the I was out to Lengths in Random Canada. is Eastern that Lengths issues has and seeing was we Random you're think of of which of get coming not become certainly there that have drive a see again little transportation wood in that's out here you seeing I think bit Lengths down. of

where were levels, think So again, that off a equation kind we're sustainable just run they we part I back I were now is that to had we still above think of I think not seeing. we're ease seeing ago. the think But but year that are more ups what reasonable would of and well that

Roger N. Spitz

Perfect. Thank you very much.

Paul G. Boynton

Thanks, Yeah. Roger.

Operator

comes Vertical Our next Research Partners. with from Dillon Chip of question line

Chip Dillon

a Frank. us the I question Hi. Good This question. little Paul future. had help might a housekeeping and morning, just in

look you X obviously, gives XX specific a number slide slide X XX, at and the (XX:XX). slide DD&A If very

the depreciation $XX the distance business, saying high operating when high business, Cellulose, between million slide EBITDA High take is HPC And Purity there just $XX the million. adjusted and of yet, X, it's sorry. Let's alpha-cellulose, and look at alpha income I amortization

variation So, segments is that wondering too. and occurs other $X why there that billion in I was

be Just to helpful that. would know

Frank A. Ruperto

Chip. That's typically FX movements,

Chip Dillon

EBITDA. was when the I at is in included Okay. All that that interest looks the you page obvious X I release, million the look you sizable think one – There and question on other earnings called item second $X a right. have. it's And pretty then income pretty is it

Just help $X knowing million wanted that some on what was?

Frank A. Ruperto

Yes.

So there's $X a (XX:XX) million, and interest expenses? income number other

Chip Dillon

Other expenses, yes – sorry, yeah.

Frank A. Ruperto

interest don't EBITDA. I income into believe and we other expenses include Chip,

Chip Dillon

Okay. (XX:XX)

Frank A. Ruperto

some have cash. Yeah. I FX then can tell And our It's on income on interest our debt. what basically we you is. intercompany number the

Chip Dillon

going how bounce Should should about or then at it kind of around? level that it stay And that we Okay. will think forward.

Frank A. Ruperto

there on mentioned bargain the Chip, there's gain purchase too. the also

the bargain new to us we'll the obviously, during from the on So that happens gain as the because quarter will things adjusting describe period that be and FX, time number the around bounce of on on the quarter we FX. bit on came some from quarter the that, through happens to it. one-year little adjust the it's hard and what purchases because, FX, we I'm of what sorry, a gain accounting on pieces, the based

move around So, on those little factors. will bit two that a mostly depending number

Chip Dillon

Paper we then might guess I now? us million but mean assume much the that I had paying at a been how you we told away segment, And the about duties have much you look quarter, – this, pretty and when that goes Okay. $X.X

Frank A. Ruperto

We've paid quarter $X quarter, million that in was the first a rate. second $X in on million XX% and million; $X the combined

last We ruling. will part went with the of an continue because the pay to X% only away rate, duties

or of maybe a go roughly that's more away. little two-thirds so, bit will than that two-thirds So,

Chip Dillon

Got you.

run of of going equal. reason we to the and rate, thinking a tune second if to things wouldn't, we're forward, use being going the $X quarter all then help the basically million So, we quarter why checking you that's

Frank A. Ruperto

estimate. good a That's Yes.

Chip Dillon

you're from get in from you $XX the addressed Okay. have (XX:XX) to would to might to gotten the expect target million you And I words, get but in $XX $XX this. extra Did synergy raise going you think you effectively have other In XXXX, million still million. what XXXX?

Frank A. Ruperto

No. We not slid the forward, we moved have so overall number.

from So, had million if year raised that – I $XX call, the we first million. you on remember, number to $XX on the believe end up,

Chip Dillon

Okay.

Frank A. Ruperto

of XXXX. some we're into that just shifting Now

So, at $XX total we're million there. looking still

Chip Dillon

much. you. very Got right. All Okay. Thanks

Frank A. Ruperto

You're welcome.

Paul G. Boynton

Chip. Thanks,

Operator

Paretosh comes from Our Please with Misra next go question Berenberg. of line ahead.

Paretosh Misra

couple I've you. questions. got a Thank of Hi.

quickly flow that contracts everything on term your on prices follow-up inflation. for are (XX:XX) wood a place? do and some or First, spot is you caustic – market buy there in do longer cost How through P&L

Paul G. Boynton

Yeah.

we've some got are they as contracts term up in longer market place a typically So percent but index.

feel immediate, the that it pretty month So not in we the month. in see market but be what and it's may is maybe following

the of term So movement matter. in terms chemicals it's in for of our real most pretty caustic that and

Paretosh Misra

noticing Thank Then you. so strong. might or on we've much? been your have products that you Does cotton not competitive next, in about quite Can maybe talk cellulose-based impact your make maybe been that Understood. the it what prices have more business. China

Paul G. Boynton

Yeah.

into in as thinking the ramifications has it you're increases as an about as different going there for certainly provide viscose demand ways which into – our obviously rayon going certainly Asian noted the fiber when it's helps that as is as product you only alternative price So we well because as cotton us pulp well. that market well but

cotton we've of get broader relative into in that mind, So swept it kind we very starts volume-wise And if that. small amount to will lifting keep is market. the a a up that benefit

Paretosh Misra

A buyback. was your price? Last or were question How many one for me. the average share on shares what purchased

Frank A. Ruperto

$XX.XX and was price average The Sure. we XXX,XXX roughly repurchased shares.

Paretosh Misra

Thank Great. you.

Paul G. Boynton

Thank you.

Operator

question the Please next from go Paul Quinn with is ahead. RBC. Our of line

Paul Quinn

very much, Thanks good morning, and guys. Yeah.

Paul G. Boynton

Hey. Good Paul. morning,

Paul Quinn

missed what's just for CS the some on looks What XX happening I viscose. but around this, that months like have and six looking I next the I months? over in so jumped some markets was late in of color might to also specifically happening what's

Paul G. Boynton

Yeah.

too we and really didn't Paul. it we provide So much it haven't either, really on commented

anything area. there don't viscose. terms I'll steady in in see It's relatively miss see a just if will in movement We in of of start this up pricing. you down didn't of or the terms out you what with market. lot So staying we

them. keep half Now back the year, in in our mind year we the you we the when in first you and the all the don't our of if specific shutdowns commodity, half look had of remember have at volume

volume So guided roughly High pick these so the commodity flat, you're our in see pickup there. to pretty going And going business. year-to-year up substantially to parts you're bit a see quite a Purity to that we've volume Cellulose of again, is be going

that right our a going I we X% look said But they're On again XX,XXX on you patterns, I last time tons, the down of relatively watching on just if or And of market tons area. look specifically to the X% retreat, And talking Most track, in that said the cellulose it's we their order plus steady. down. customer specialty we year-to-year are tons, that's little a year particularly acetate again, volume year. saying said we we're time, see patterns. but for last been bit be side customers guess slightly again and at just, XX,XXX order and our think you're is XXX,XXX

So we're watching carefully into reflecting that guidance. just that I'm our full-year

we order, order we're say, now X% just customers just on originally it going out down. and calling taking what were we're right look, and hopefully, come but said to So that going back a to we

Paul Quinn

Okay...

Paul G. Boynton

we're... Overall

Paul Quinn

Sorry, overall...

Paul G. Boynton

overall as all just declining or which overall market are some said to communicated No, segments. continue we've And opportunities we've the growth kind other the flat just prior though most markets segment. in we've of slightly to in what segments, high see talked as of quarters, past purity the we'd nice about whether in the Yeah. terms it's the acetate ethers we're seeing in

Paul Quinn

Okay.

So really that bit slowed tons that don't XXXX? it we XX,XXX or switch in in a customer is the can't XX,XXX just for or that loss growth X% in you acetate over ether ethers tons the have to or

Paul G. Boynton

going area Well. may to segments we're customer serve. but see out the let's for else we're for that. the said we we're they're that's that of patterns flow saying, get order not contracted what primarily you Paul know, of do of the based so first and the go ahead say consistent that nothing we is business guidance communicate year we on saying, as of other again in may go you for the just in year. and half changed just and of that, has It's what and we watching the the the most this it, the in we're And year know that that that to year, off area pretty acetate that our

majority in top fact, the you well So the there doing there. glad have segments. producers, communicate all they're have we're I ethers of that there's doing or at ethers customers nothing in the in would the five if maybe the global vast other expansions. in six our say well. and capacity most They're of plans area, capacity out look And expansion

communicated that X% area and good in we grow X% (XX:XX) going to to we've and that us is encouragement gives that to that market continue growth. that's again So, in the participate

Paul Quinn

a in got get Tariff time if program that XX% to then to me could life And remind a to money over it this be Okay. that i.e. of Québec, to L rebate? have invested is you the access certain just span period

Frank A. Ruperto

by Yeah. The to money be invested needs XXXX.

Paul Quinn

By Thanks of lots results. Gives you Great XXXX. time. guys.

Paul G. Boynton

Paul. Hey. Thanks

Operator

next of with of Our Bank from question line America. John the comes Babcock

John P. Babcock

that or that it of started Hey. the acetate more and I just quickly is follow-up in recently something Paul's shown has more do causing this something to is you want kind recently? in actually up What believe is year earlier retreat the questionnaire. from

Paul G. Boynton

of which Again the to beginning at guided the now we're the on customers is we originally they they first look the saying In year beginning our the they and call based originally which patterns communicated what to here to it's on that saying quarter, these you, is we going to an may down still communication, their stated us year. here we're at to their Again said, across be are year-over-year. watching all we'll order the volumes it slightly we get flat are customers aggregate that be what of going expect business be X% roughly down. said

where I our just and we're saying conservative that call the we it had more Cellulose approach of down acetate going I'm Purity on most that and just total a area. we're little X% slightly taking to in And is think specialties. that's saying High

John P. Babcock

Okay. ... And then

Paul G. Boynton

other no on then color And than it, that. John,

So...

John P. Babcock

Okay. well are as out the market were or you to And at shares – able July that were just then point? able repurchase lastly in you you to of

Paul G. Boynton

July. in market the of out were We

John P. Babcock

Okay.Thank you.

Paul G. Boynton

Yes. Thanks.

Operator

end the the floor turn closing reached We've of management our you. would Thank for now I to back to comments. question-and-answer session. like

Paul G. Boynton

create day. excited like no we this joining time, Have on If thank thank as we're to today. opportunity move and I'd a you Well, are our us everybody value Again, good the to there more forward shareholders we about at for progress for questions look to updating forward. you. our

Operator

teleconference. concludes This today's

You may your time. disconnect your at Thank for you this participation. lines

Rayonier Advanced Materials (RYAM) 3 Aug 182018 Q2 Earnings call transcript