RYAM - Earnings call transcript Q3 2018 | Rayonier Advanced Materials Inc.

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Operator

Good morning, and welcome to the Rayonier Advanced Materials Third Quarter 2018 Earnings Conference Call. [Operator Instructions].

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

Mickey Walsh

Thank you, Rayonier Call Welcome to morning, webcast. and Materials Third good Advanced Conference everyone. Quarter again Operator, XXXX and Earnings

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

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

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

to Now Paul. I'll over the turn call

Paul Boynton

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

X. Page on summarized As

of volatile our million driven delivered of pillars, $XX imposed tariffs. and $XXX market through the a and on demonstrating is strength execution benefits combined therefore experienced recently with quarter, able conditions, adjusted business more For continued improved in achieved the strategic more of like the Tembec. lumber the better the diversity on Chinese third pulp, we we in million, recently to that and balanced, withstand the of XXXX we've strong scale by acquisition EBITDA business Today, revenues our with

the significant delivered year-to-date EBITDA was opportunity incremental the of In a Along the through $XX balance we we those business, cost quarter successful a deliver the the our to to improved key we and of in Tembec's highlight as significant the million. $XX growth synergies progress operations, to million integrating strategic have execution of that quarter, also addition savings pillars. third achieved our lines, of bringing total

our success, of target $XX of year-end end our we raised million, to to ability of million by transformation the incremental achieve $XXX delivering also our EBITDA goal have Given by our of continued confidence cost from incremental demonstrates million which in XXXX. XXXX $XX EBITDA

of another Our strong cash free solid flow quarter in execution generation. resulted

We free an which yield flow, have share cash price. current $XX delivered million on represents cash based attractive of our equity year-to-date on adjusted free

leverage Importantly, have by balanced of million, as allocation X.Xx our maintain reduced we continue and target capital will debt-to-EBITDA. total debt diversified we we strategy. to $XX net a Year-to-date,

We the shareholders total deliver to have our against of pulp provide buybacks, through and million including to projects, dividends strategic and stock And for on cash repurchases million optimistic incremental high-purity share we $XX We our and business. capital million $XXX will power outlook cellulose, markets in a significant authorization. prospects business million strategic position in our returned invested the are into the plan, our remain in given generation. $XX positive capital strong our repurchase we've share confident which and to $XX of earnings ability

also stock additional repurchases. share depressed currently plan our and confidence to explore this price, Given we aggressively

of discussion over me the financial turn to our Frank for further let a third call results. Now quarter

Frank Ruperto

outlook be of be and the results comparisons quarterly XXXX will our to the All a third segments. noted on reviewing Comparisons business will basis. by start for to the of combined I'll comparable each prior-year Paul. you, quarter otherwise. unless Thank period

and commodity on increase quarter prices saw quarter was from year-ago XX% on The $XX million decline representing in and CS volumes volumes, increased a prices prices driven of prior-year primarily a second the primarily line from to higher sequentially declined for expectations X% to $XX the $XX million, cellulose, market a segment, sales Adjusted a lower EBITDA due by chemicals As combined was basis. costs. the wood the period. largely customer outlined sales CS decrease with year-over-year our Year-over-year of high-purity acetate $XXX resins sale impacted as results impact than and lower by segment X%. anticipated the million X, and to high-purity of driven from X%, by specialty declined cellulose higher due decline largest decline lower the the volumes, by in production. a result also Slide The were our was demand the combined with inclement costs at in X% business. commodity EBITDA sales lower million while in weather

began higher continue productivity, $X as up. operating to fully Importantly, as loss we We cost and expect in quarter, were through able well until transformation increased realized third would I ramps to Florida a we joint input note production offset which lignin synergy our production. the that million venture the also statements.

which we for producers. X% modestly our higher of to the the X% from our of customer and in X%, the tariffs expect expected quarter volumes on X% forward, lower from than anticipated by U.S. in primarily CS market, sales business. tariffs Looking on of below a decline demand Chinese to remains resins primarily as driven wood decline as EBITDA are CS are impacts costs, sale domestic expectations, while approximately expected the year result a adjusted to third fourth be acetate prices quarter, result to line with XXXX, full to

headlines, only approximately sales million $X dominate China to we XXXX. tensions for trade estimate impact our specialty between on While tariffs continued the be to and of the cellulose U.S.

Slide to Turning X.

represented by XXXX, capital a softer projects, of with volumes. the largely which declined X% drove a impacted $XX the deliver decline primarily EBITDA sales decline by EBITDA taken to $XX in quarter's products, EBITDA, to the million Forest third Volumes million of driven This incremental million quarter implement saw conditions. only $XX XX% expect compared were in to we Combined in year-ago market XXXX. to quarter. in downtime as to XX%

sold was $X into impacted of for Third by United quarter the duties EBITDA paid States. lumber million

the Looking the U.S. quarter, starts housing level prices growth we to lumber the driven of the strong GDP depressed in by U.S. in expect current forward remain strengthening, near-term before to fourth and

now EBITDA recent we to reduce said, at EBITDA With actions EBITDA incremental to benefits That XXXX. for in fourth expect quarter. during lumber our estimate XXXX. in for this and capital a prices, drive modest business cost reduction year million we duties roughly we by expect worst, the loss or decrease Overall, investments breakeven $XX the full continued

Turning given to by a increased Pulp strong XX% export high and $XX sales $X remains demand, higher to The to which for a X. Slide XX% in EBITDA results $XX segment drove by quarter, solid million million pulp, had strong. million, were driven another yield prices production increase which These as year-over-year.

enough China recycled constructive expect markets strong. the market continues supply we and coming from limit global entering remained to pulp pulp for or in forward, additions dynamics demand until pulp no XXXX. country, there Looking the online from XXXX significant are

prices near through expect high quarter. this, levels Given remain we to fourth historically the

higher in The million, newsprint. Turning Slide volumes, provincial million volume decreased Sales curtailment million declined $XX from Overall, by to versus had minimal stronger driven relatively partially order the the decline requirements. increased This decline $XX segment of prices. newsprint $X offset in quarter Paper million on to XX% the previously our decline paperboard, the segment were expensed support profitability. by on year-ago quarter, volume is prices as prices stable energy a reversal to EBITDA X. due in $X quarter impact duties volumes downtime to increased primarily newsprint of modestly. by in In assisted and

downward newsprint quarter, the minimal in we the impact expect newsprint to duties, reversal prices fourth to profitability. adjust given to baseline Looking with

paperboard, quarter high continue given impact third prices. energy pulp volumes in relatively recover stable, expect not quarter. be repeat curtailment remain In the to expect to margins also downtime levels expected the we fourth which taken, We to to is as from prices

due incremental free further portfolio opportunities create Importantly, becoming about supply paperboard China Canadian the the from to on of through the achieved our concerned demonstrate tariffs U.S. our Chinese our potential diversity to our to increasingly market. customers for benefits acquisition serve Tembec. are This of and of scale the have U.S. operations of which goods, the the

CS and lumber X. expected strong primarily CS came the for sales volumes, decreased $XXX prices offset driven the in partially third a at Turning newsprint. high-yield Slide the from to pulp, with million. consolidated in and combined pricing, lower basis, in decline Sales quarter of XXXX, On X% by by lumber quarter

million the combined was from XXXX adjusted to quarter Third $XXX increased million year-ago the achieved from $XX on down EBITDA a million basis Corporate million, $X expenses quarter. $XX in X% prior-year driven a organization. synergies. be lower the compensation, continues high costs by from flow the offset expense for partially by and variable disposed quarter, for increased operations to based Cash priority

flow months of on million, $XX free $XXX strategic first $XX million XX, of through $XX shown including X operating adjusted expenditures capital. cash of XXXX. million capital Slide cash million and we of flow As generated the were Year-to-date

guidance our to the For expect due capital the of be timing $XXX full expenditures million year, we now below spend. to modestly

to additional an resins of providing million to value the chemical capital $XX non-core our while with allocation the business. asset, cash generated with incremental fair framework. cash petroleum-based divest of sale through We The stockholders the also us our allowed sale and redeployed be our

see, debt across can return the free for investments, strategic you X cash was capital As and shareholders. of to capital months allocation flow balanced repayments first

and the including under $X.X and revolving credit. liquidity at EBITDA our last our X.Xx. into for debt taking $XXX XXXX $XXX third at to million million million stood account of year outstanding the was quarter third our Interest With at of million. $XX announced credit our $XX in of total net $XXX expense run facility end was with balance available line sheet. the our after EBITDA months to the debt million, Turning solid of rate quarter billion. performance, XX full of letters advance Meanwhile, Net cash

back and to over on We turn balanced the continued ratio allocation disciplined we will to of evaluate towards like call I'd decisions target leverage X.Xx, basis. Paul. that, to With capital operate a a and net

Paul Boynton

you, Frank. Thank Okay.

month price the announcements or Over company. past stock no despite so, decline have seen XX% we by the approximately public from our

U.S. combination our As in two these our on it issues adverse lumber helpful our policy potential a relative including I on driven if tariffs retaliatory believe China perspective exports prices external factors, seemingly to our to decline in you rapid prices. be and from to will I company. thought the the provide other drop share or trade we such, by the of exposure

Slide X% noted a China cellulose U.S. from products As XX, has on on the imposed high-purity tariff

the million company, $XXX in of XXXX both any pulps, commodity impact revenue. viscose expect $XX annual from significant see don't of tariffs. For these fluff which from sales to we are about comprised million the of and sales

in fluff volume For vast U.S. of pulp, this is the the majority produced

them firm. very Southeast for and remains the market

seeing such, being the absorbed the into As price, we are tariffs transferred. therefore, the burden and being

viscose these for of market For X% pulp, sum, technical been is driven by the leader of without revenue, years in our pulp, expect the million, don't now for of place high-purity and tariffs. from in acetate been negative XX% the sales quality tariff clear impact see on we sales China a products. any $XXX has The commodity years. cellulose balance significant In to we've consequences XX where mainly for

to expect that our As work we product. supply they have customers a of with continuous ensure our such, to

equating working We U.S. while are currently operations, And our quarter. reposition supply per tariff, absorbing are production $X with about these U.S., necessary. to we the products these our the outside X% if to customers products we from million of

decline on of the stock prices. rapid The second from area our is potential lumber recent impact of

perspective in a our EBITDA approximately of third lumber quarter that of keep relatively our X% was portfolio. small part results, First,

$XX due low strong even EBITDA current solid prices, price GDP. to investments level and this should Second, over is more production to that believe reasonable resolution a roughly which segment overcorrection, five assets, the our the and and while asset of negative And sales keep chips million total reached we our from curtail loss. significant at into drop efforts or U.S. improve that which see pulp while current facilities. worst, we will capital further the across are we of months able to United XXXX, of levels quarter, mind returned we paid a expect of enhanced improvement supply upon in Absent competitive we of to recognize past position given housing an our the so the breakeven lastly, at a be in the price profitability. base the starts second prices, a reduce cost far lumber these And we return EBITDA And modest XX% any dispute. the duties maintaining to lumber on unsustainable the in quality deliver peak States, contributions, beginning

Slide XX. to Turning

Our since and Tembec of earnings acquisition our company. benefits the results the integrated the the of portfolio demonstrate of potential

of strategic to pillars such, our remain plan, our continue progress of total of million against synergies the as growth EBITDA XXXX make solid we our delivering by of incremental of Additionally, confident integration in and $XX and four $XXX million goal of end a growth. through

Slide to Turning XX.

the categorized including as manufacturing $XXX elimination EBITDA specialties duplicate our We captured cellulose have million $XX practices million and corporate of various are enhanced these positions, million of through of operations. of identified incremental activities, savings procurement synergies across streamlined processes growth. captured $XX our

of million first of $XX legacy million. we're us track confidence savings our also capture cost million Overall, our to X-year by strategic our to $XX XXXX cost $XXX through of transformation It from great months improvement year-end total to X that traction demonstrates million. on Another well our gives comes transformation target goal $XX raise actions. our the

Lastly, We Slide a strategy, committed on maximizing centered to risk-adjusted allocation on and disciplined remain balanced turning to capital our capital. return XX.

outlook as Our high-purity Tembec leading is a markets. business a The is We on performing integration And the in of maintain we have well. pulp proceeding positive cellulose. position planned.

we believe significantly based is undervalued decline our strategic as our earnings the the potential pillars. in price, stock share of on the and we benefits the achieve our from portfolio Given

As open you call repurchases a questions. morning. plan Thank to share result, the again your additional time please aggressively up operator, would we quarter. explore the this in if for And fourth to you

Operator

Instructions]. [Operator

comes from Misra of Berenberg. question first with Our line Paretosh the

Paretosh Misra

the commodity business, guidance the couple your in A of down questions. cellulose One, X%. for year,

I So higher. looking that on Is bit that apples-to-apples Am right? imply it quite a basis? XQ should an be at

Paul Boynton

Yes. Yes.

looking business, as think on down the the level. be our HBC we've I at slightly you're guidance right commodity on should it noted, about X% volume,

Paretosh Misra

we price in I year? just And last again commodity Or again, quarter. year? Okay. year, pricing effect product then was of your similar business, kind Should expect down in down the was fourth mean year? seasonality cellulose went in the last that that market this something that or average mix quarter there happen this might went fourth

Paul Boynton

related that's probably any there, noise should a just model. and seeing think of think that you're I in mix I bit we don't into build that

Paretosh Misra

business. seeing on it. on for And pricing cellulose kind you that of of terms do you're Got the lastly, part again in business, either in visibility of XXXX market? of the that the just have volume What any

Paul Boynton

we've past. full results, I year mentioned do time February typically a the full this we'll on look, of on pleased our see XXXX segments area, the is we other that, perspective of increase when call say, pricing to in to as time. that the coming stable We We give the other of We - to and well so slightly. in do kind this in the opportunity year-end we're Yes. overall, But an you acetate have see can think that a give guidance more at that. pricing the opportunity kind volumes we'll that

the details February year. the business of you let give we to me get overall, So call. about when positive going new into our But feel on the we that

Operator

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

Roger Spitz

quarter? principal repurchase the amount? if in was you Did so, what And bonds past the

Frank Ruperto

last repurchase not bonds quarter. did the we No, in

Roger Spitz

we couple you quarters your of flat. it. for pricing mean, QX about as Should being EBITDA talked that past flattish expectation? about think is the EBITDA well? being And pulp Got what I

Frank Ruperto

the segment, talking pulp yield Roger? high You're about

Roger Spitz

correct. Correct,

Frank Ruperto

so we Yes, see changes, the right relatively I don't think in be being yes, fourth pricing we're around stable where think see quarter, I any I or minus. plus will it material at.

Roger Spitz

and in provide And volume can played each the you remarks? CS pricing Perfect. out what and granularity prepared lastly, further of any you've said how to integrate in addition on acetate

Paul Boynton

don't there of talked comments our beyond by I producer anything bit that. can by that, a hampered down don't area of to all, between at really about because driven numbers and We it aggregate bit Roger. so specialty to noted you domestic of Frank, break countries, sales too, typically the a have add. the results of that side their the acetate being Then that to see comes there. Again, been the U.S. dispute we China in somewhat No. And cellulose in ramifications when else for felt dampened a sales. quarter the as acetate, the on the X had we you But of and

Operator

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

Steven Chercover

of corporate First explain happened in wondering has and could spiked all, if QX, really you just expense there. I'm what

Frank Ruperto

the think in Steve, they're the you million $XX average, from the Well, we to maybe the On corporate had million this way. our number And $XX $XX that to about a to best the roughly to bridge is million way, - number. expenses million $XX quarter. XX QX

things Now number and of there are a minus timeframe. impact that over that that plus

Then to million were start the mostly associated I had plans, pension QX, FX of of million if expense the in we've $X with $X So spent company. with the in a prior of $XX functions which the remeasurement, first negative all, severance also administrative quarter. the restructuring had the variance million we

on in slightly for incentive plans, portion finally, variable variance had of small a comp which of long-term $X then have a disposed that's then of which also higher the another million pickup expense an And are nature. we ops We certain we accruals. so so had million not that we $X that $X variance. had did would And insurance million, in lowered get, QX

expenses stock So QX be to of the slightly price end at higher. the caused those high

Paul Boynton

all But million. add where typically first were $XX below get we is, we about back that quarter in we roughly you second your the take quarter, think $XX to the some broadly you if see. million, and So way to that benefits had you so and would

opposite those there. $XX a severance of variability, plus that this the expense the number functions Some speaking, quarter, that there's on one-time, administrative million to on get will And of And quarter-to-quarter things a lot see basis. direction so minus But had are went above. million. you'll $XX to a we we from the roughly cause

Steven Chercover

to million $XX we quarterly should model? is But of the $XX rate million run kind

Paul Boynton

million seldom others a they things unfortunately, $XX are these basis. Right. our And to million under us which not control necessarily $XX will be impact and there that different because quarter-to-quarter are from

Steven Chercover

Okay.

end So the switching serves, bit. XX%, XX% if ratio memory gears At expected a of you QX, my for a EBITDA?

Paul Boynton

Correct.

Steven Chercover

half, First half. base to changed? second Or it that is to going So lumber that appear surprise? that's and duties It doesn't transpire has what's

Frank Ruperto

take in the Yes, back, so XX%, to XX% segment. cellulose you high-purity

time. higher that segment than guidance fourth that we resin. that and we EBITDA X so the we prices the - X wood things from only gave envisioned we quarter sale is X for. of at X So we - the is that. had have that are sale impacted were is And tariffs, the One is be resin, and won't have have getting resin, of

So we'll segment. this the be in modestly EBITDA below high-purity quarter's

So instead it that maybe that, or something below slightly be of will XX%, XX%, in XX% XX%, ballpark. a

Steven Chercover

resin high-purity reported that that in you was business cellulose? So sold the

Frank Ruperto

Correct.

Steven Chercover

have Are that that. don't we other of know aware about even though you that wasn't like I business? that there Okay. gems any

Paul Boynton

within $X there. in year million so relatively - number. that's small typically, to No. business $X have is million And done EBITDA, a again, a That small it's

Steven Chercover

ahead. Sorry, spiked? the go And

Paul Boynton

would Frank here, half of factors the the cost, business first year that to the is going that guided second the we be is the stronger of tariffs, The this than out rest deal. listed on half

XX% of bit guidance about XX%, Our it a little and call that just shifted it XX%.

Steven Chercover

think wood the hurricane in attribute to don't was Was of wood or the costed, you whatsoever? mean an would spike there saturation were there maybe hurricanes? that any impact impact specifically in the but I beach Jesup And up I past, from baskets?

Frank Ruperto

in hurricane it weather the But call came would than here just the I specifically the say wouldn't that through that. we've broadly recently. patterns more I had that U.S. that

and what since therefore restricted Southeast we we are just the slowly kind that wet just accumulated anticipated. summer through would come of now in have really the driven a that cost up And seeing beyond harvesting third late of some spring, quarter. and

Steven Chercover

sense? And of for you of if it turn perpetual, And long other a do one duties in and have touched two capabilities If, about other the can I'll Okay. kind and Tartas over. time question qualified on acetate they're was it facilities get you Temiscaming. or fact, it, persist makes but at to I those these it

Paul Boynton

short XX and answer had relationship as and believe we got together so. teams know, We've you years. out The We've there this, on our we've got working great the in experts a in certainly, technical there. for China. Steve, to often ground

we in of, got processes their well. processes completely both in use in to, we're know a terms customers We've something happen and try that to we products We our Canada Temiscaming with U.S., and well. that need and with operations of so know the make So in can let's are working their east, two set aligned they on portfolio. us case on outside them France, also Tartas,

we're But hope So contingency it's be hope don't to really, that we now. necessary. on plan really we successful. to go it's a have working unless that again, We

Steven Chercover

bit switch and supply. ultimately they tariffs you'd so to if decided beyond little These are Yes. pay both would your customers your understand pay a grade grade,

Paul Boynton

are this. got our right, and so loyal customers they set full happens. their closely for whatever and beyond of be we're we engagement are incredibly we'll again cooperative what prepared control, can only need Look, they whatever make all a do and to can on good we these we with control, to are tariffs And make working them you're They've happen.

Operator

Quinn from question of RBC with Paul line the next Capital Markets. Our

Paul Quinn

a Was duties in QX? Just the on impact. question there any paid tariffs

Frank Ruperto

I XX, September No, think. it didn't kick into

Paul. no, basically, So

Paul Quinn

quite And just viscose the and commodity fluff, on the then volumes. okay. side, Okay, confused I'm

And which a huge I amount have hit in the you QX. is XXXX going XXX,XXX XX,XXX up do, tons be a to I able from is the down, and you've of see did implies in in to year-over-year QX, guided So did XXX,XXX it you that sort to you're X% X% to that tons that tons suspect down, comparison.

getting I wrong am what So here?

Paul Boynton

to going that's was I on. the you're really math say, that working

Paul Quinn

math is then? So the right

Frank Ruperto

what Based yes. see, we on

Paul Quinn

Okay.

because of more in one in I a sales bit specialty you'd with was both I the commodity little like I or be commodity products the missed I that independent? to your on thought would quarter assumption side. volumes, thought volumes going So the this the higher decline are things on Should produce be think have they able I side forward,

Paul Boynton

Yes.

think of we I you've will some talked Paul, production had seen is quarter, couple what commodity first in the quarters, the first about in issues typically impact we our so volumes. production issues

a So sales at commodity that volume slower starts it to point, up. seen which you saw little pick you've

Paul Quinn

some just trying XX% energy just And took a volume, the to understand Okay. But newsprint on comment think that downtime, downtime meet the I'm drop impact there an made wasn't requirements. you EBITDA? that. in the to I you Ontario

Paul Boynton

Go Paul. Yes, ahead.

Frank Ruperto

Okay?

Paul Boynton

Yes, Frank, go ahead.

Frank Ruperto

the you when work the very look teams have of energy at it, that facility. to closely of we Paul, manage consumption to

we and curtailment down we like. negative energy And don't an with so deal when variance negative a to we that, time material will perspective. from EBITDA take energy the do have or variance And typically

Paul Quinn

are So time? [indiscernible] down for you taking

Paul Boynton

obviously. use Yes. so therefore, province that, do we'll an they and that demands to down when benefit there's to in our help for peak it's us get of and energy I out the slow the and opportunity for us way, a there's consumption, mean

Paul Quinn

of number Québec. around in and just mills I then on you. curtailments if seen Ontario big BC not lumber side. anything the appreciate just that, your wondering But a seen And you've that's a business Okay. turning we've for

Paul Boynton

capital had some of little a a again on obviously We've took projects, eastern market full the But had on not bit, significant advantage drawdown sales small going fact as I robust quarter seen of haven't capital we on the significant in, anything for that on a we we market just say part result. down country. the a We've Paul, seen based we as sales wasn't some so the the our Also, Yes. the bit ourselves. part worked slowed a amount. the and so no, wouldn't projects

Operator

of America Bank the comes of question John from Merrill from line Babcock Lynch. next The

John Babcock

I your along at of just tag usage facility? much the adjust DA to commentary. actually have from notice advance How some energy the

Paul Boynton

gets make, typically, a we and response we we support, new some may looking say, think it's could and that guys, program. in of based very type the this rather user what in John, call you're Well, Ontario be is a in So same and the on right? large look, a have days low quick get peak afternoon, we to need at, is

within short less So amount a we few of have hours. responded time, a very than

John Babcock

So do you keep inventories that? compensate on hand for to

Paul Boynton

Yes. than I then downtimes up. be I are wrap less and could these again, and we're quick hours mean XX back these it

John Babcock

whole? into of would expectations then And to a And just And on XXXX things. thinking inflation you side What the also, far your as Okay. are as there? XXXX? heading XQ that then as are what compare how

Frank Ruperto

But some such an about speaking, as stage could early that key it's think and X%, we've and that in was it good the a but Yes. off costs put Inflation the input we that's this modestly quarter, were materially though business, would again, more overall inflation be of biggest We X.X% than inflation, commodities. even were wildcard as it. in weather-driven event, specifically that this year can would were up just our versus in wood the terms that's at year of commodities high things. quite globally in third believe caustic, because our year. said the year. up this is I change won't saw so chemicals, this wood call But uptick in - before I last generally across the to we was lower

John Babcock

a inflation dollar Okay. way put Is figure a what is there on year? to so this far

Frank Ruperto

so that and get in back. look I let's don't into front me, that have of

John Babcock

Okay.

decline the How Sounds of products. on then downtime the good. from And much a forest follow-up volumes in was there?

Frank Ruperto

the through I'm so think not downtime, downtime. decline out exactly broken it's considerable the volumes a amount that but The of we've it I sure way, in

John Babcock

you're just pricing? then What like assumptions it And around maybe a also, segment, loss underlying expecting modest particularly breakeven seems profitability or on on Okay. temp that, the there. are your

Paul Boynton

breakeven in so EBITDA the at of and or plus drop out very comment, the lot is at this reached seeing start if the be pricing, look think we a had benefit should wouldn't John, a we in assumption operating and messages peak is bit that that a year, business. we've the that were low, little going the more it that made. obviously would kind incremental, the the our modest you is there, bottom here of and we're to over without through loss thought we I to So lumber we've looking some, week's positive level have the change us there from this which obviously Obviously, last at - we rebound of this XX% quarter basically of earlier comment

John Babcock

Okay.

So maybe would of from flattish here little a bit slightly up kind reasonable? flat, a to be

Paul Boynton

we it than [indiscernible]. better have there what If That's that, Yes. obviously, now. does in

John Babcock

Okay. And over. I last it turn question just before then

how still XQ? carrying that they think in quarter? in the from completing about we a XQ? then impact completed Just earnings were capital during over capital in of into the other So you And also, words, of or improvements, any should improvements are is these cusp

Frank Ruperto

the improvements on going capital throughout year. got We've

so We've continue said with quick think we've strategic in don't a projects, capital, million to you'll it this of projects So we'll well. year something of And this as year. I modestly $XXX number million see we all maintenance. another but that similar reported investment below and forecast as through got magnitude strategic million returns book in $XXX the projects for and of in be fact, so before, probably $XX this we'll capital. capital million on I year capital that, to spend or of think in $XX order projects

range expenditures going So I probably that million in reasonable capital that, rough level $XXX-ish still think is of forward. the

John Babcock

segment the was I products sorry, to forest there. I'm just actually referring I'm

Frank Ruperto

about cellulose and weighted capital, Sorry will continue of products The year. high-purity roughly next spending this roughly, they're Yes. see our is segment in - both products year equally our that. roughly forest and products into strategic and into forest forest to that we

Paul Boynton

year. lot benefit these projects builds see And the have of John, model your gone and you'll you this as capital - full a late

and you will you're see should it coming to are forest in So accumulate speed, in benefit to into here, the a the and And you they're they are quarter see benefit going XXXX then the so XXXX. of significant in see up beyond. products amount going fourth but not

them in should we're be benefit again, the again, going back see the So you'll half on of just year forward. in and rolling that the here getting of XXXX

Operator

Instructions]. [Operator

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

Salvator Tiano

in sitting Dillon. Tiano for Salvator Chip is This

bit closed happen these it acquisition? initiatives think I item later. closer why would should than you is nonrecurring So you details you payment, a very I bit a on my line? And is if XX transaction the have that some your if medium bridge, related as tables, more I'm expense, question us the EPS. considered rather little I to are EPS we from corporate correctly adjusted from to exclude ago severance with on assume little the that these a essentially trying the detailed of months to almost one-time the And understand again would first exactly of a noise Because the But when give provided Tembec year year there. can understand a day

So that's my first question.

Frank Ruperto

Okay.

is really associated had with relative so year there to organization last year, organization. CFO to this an had their our senior go Tembec, So the of What we and the we through was the analysis CEO do of leadership. some, to

are and central to then we and decentralized, centralized be a the very Tembec the project office through relocate We line. we to G&A a on where jobs identified and a so tended that organization. could went like, we in we very what down consolidation that in communicated mostly identify the And and HR. IT and what that, the the the around of at decision look organization August, we end finance made would

that is those that So behind functions. within organization X G&A really us

So functions. in reorganization general and - why we through the this see further quarter we administrative why is that's and any that don't it coming see that's

Salvator Tiano

on sense. should what a quarterly is makes we I of yearly split between benefit, allocated and that will corporate guess, or assume expense? SG&A And these kind be would initiatives And segments how and the starting in QX? That I think from

Frank Ruperto

jobs see So jobs run will see first next full a be rolling QX, move in these lot a of a will million of were QX, we will be year. The rate the you and These it's the in and the as off, that. year, benefits like through $X lot through that so eliminated in immediately. quarter of roughly is won't corporate, actually of because, the this, it not you'll eliminated in - you of will importantly, most They benefit of that corporate. forward be quarter it

Salvator Tiano

and X% out how just of on a guidance again year in to guidance especially you for QX that commodity you the provide, lower, - bit the quarter remaining, X% say detailed I'd versus decline I to entire given trying guess, guidance don't is XXXX? decline don't X% for know would Is subspecialties. your extrapolating to manage in you an now this cellulose versus QX? purity a gears the should we one in in flat products QX specifically little volumes, I and decline full And say from about Perfect. did stemming this I for I alone expect think to essentially assume what it But XQ think we volume year. X% results. And as understand - switch loans. cellulose how the products take XQ versus in high means in until for change QX X% XXXX. But effect change in QX from what that expect experience we much you And already saw it commodity

Paul Boynton

make - and to the question that, let further as heard want just I ask So I may answer for sure clarification. Sal, me you

of to our year-end, X%. not with to negligible going that talking were we're guidance up a where at XXXX and water percent you very lot out down volume honest the amount. even be with - be is freight if volume, all, we're trying so ocean To can with anything you, again that very we be small below XXXX, it it's for quarter. slightly tons find don't we is. of on an but commodity guidance. This on to be caught about, First the going The came fourth It's into so a back we're what not a

terms how in a try earlier a in commodities XXXX. in ran is it into regard. comment is and read this the So lot projected wouldn't perhaps I year It's than of anything how more of that we else on bit a

that. into read wouldn't I So

volume to Second do push subspecialties really or year we decline high-purity focused declined very to on a customer the commodity business. is It that on into volume just what's particular side the China than in and amount a we back for principally, it's are the that. our expectations decrease of cellulose heightened a bit and the a few translated sorry, talked experiencing all, that's customers, of relatively nothing of again from the prior of and the into - focused also of have about, bit directly they as on our we back year a little and sells balance as more

Salvator Tiano

the high-yield And actually. Perfect. just question on pulp last

a past few chemical in bit, did about you seen think a been detail into segment, we've in bit benchmarks percent high-purity backs? potential tariffs QX see the when and But I Chinese than the a on talked months, you about your that on You sequential about expect we comment it's can little I more cellulose. bit can And over in little benchmarks have of you volume issues as in seen the the effect more What goes Because look China? for teams little you tell effect that drifting so the pricing. a lower on like there? net But stable realizations a what think far. and we tariffs in us bit from little your may decline

can - So information on what provide you that? what can you

Paul Boynton

few make high-yield they're to dispute. producers up China do make are I ask comment. a a U.S. not Paul caught not Frank Canadian just producers in the These comments so

that. tariff issues to no there's So related

mainly the countries So the to with regions the X it's top of that's question. to high-yield products, or that the pulp. not for Korea, sell When by part again X, we ask these you markets Europe, China,

tariffs, no Frank, again, you'd... So anything are top countries. the those else

Frank Ruperto

think haven't And I going just that's have potential their that since from they year. beginning said And continue forecasts perspective. of roughly fair. pricing. selling stable we dips benchmarks these that And outward Yes. Remember the adjust those the to forward been since happened,

be dip. So modest some there a that is there could thoughts

And high seen in perspective well yield. shipment haven't We through it a from necessarily remember, point. at this we're QX

won't dips the of transpire, continue lot see if a which the our we future impact in markets. in to in most So strength they, QX some fact,

Operator

There in hand Mr. back no closing further to call like I'd questions comments. the to queue. Boynton for the are

Paul Boynton

driving incremental we're joining you, today. us we're Okay. Look, making that Thanks strategic and remain value to our steady progress everyone. for initiatives, on pleased Well, shareholders. we thank for our with the committed

Thank as in manner to we you. our progress So timely a look forward, we forward move talk and to on soon. we'll you updating you

Operator

your Ladies participation. teleconference. and you conclude does today's for this gentlemen, Thank

time, may have You lines at day. disconnect and your this a wonderful

Rayonier Advanced Materials (RYAM) 6 Nov 182018 Q3 Earnings call transcript