RYAM - Earnings call transcript Q1 2020 | Rayonier Advanced Materials Inc.

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Operator

Good morning and welcome to the Rayonier Advanced Materials First Quarter 2020 Earnings Conference Call.

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

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

As a reminder this conference is being recorded.

I would now like to turn the call 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 good conference operator, Materials you, and first Rayonier again quarter Advanced to XXXX earnings call webcast. morning, and everyone. Welcome

Purity on Businesses. Ruperto, Chief Officer; and our President and Senior Executive me Chairman, Financial of President High our Executive today’s Boynton, Vice Marcus Paul Joining our & are Finance, Cellulose President Vice Chief Moeltner, High Yield Officer call and of Frank

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

list to the actual make. Our slide may of cause materially some differ They which on X earnings statements presentation as the our of are as release factors, we results well the our from material. forward-looking filings referenced may also SEC with

on slides our measures, also should financial will provide for presentation Today’s but non-GAAP to these management are through comparable financial and their We non-GAAP directly useful GAAP noted reference considered GAAP alternative of presentation. measures of XX information on investors, non-GAAP financial our presentation. believe measures as slide certain X A measures reconciliation most included XX an not measures. be of measures to

now will over the turn Paul. I to call

Paul Boynton

including going industrial of for our a way the and have The interact business good of into work, products offices essential morning. It food, while has the we important the our customers they disrupted changed pandemic plants way customers and remain with COVID-XX And Mickey, pharmaceuticals Thanks, the Okay. partners. strategic and we aspects applications. we we and our operate many and and lives. use products for has produce variety our changed, way our everyone's

with of We utmost the security products the our focus supply, safety on will our to and best serve while employees. continue the customers of maintaining

I'm say our met COVID-XX on. safety paramount team new to proud company, at of cultural a that has our been facilities. has on the brought challenges has cornerstone As always head safety

been We the early outbreak year. the from very have virus monitoring in the of

And calls crisis. established force implications key organization its task conference staffed mitigate daily its to leaders and the we in employees to to to ways We COVID-XX across and create with impact. guidelines January, operate set protocols for started during the understand

including functions wearing to possible, we safety actions work distancing as equipment office Key and don't where In place. operations and of implemented sanitation physical our outside sites our the entering remotely, other Moved to strict have all support put social were barriers. possible protocols, interface our limiting remotely work option where requiring contractors established in visitors employees enhancing practices including additional and practices. PPE, from installed

stepped operations employees way say none ensure safe impacted. the quality I have up customers. locations both of of production our manufacturing am XX and proud R&D been directly office the have centers fortunate for that sites, our and to our very to We're

beyond the otherwise. recognize these will do maintain However, risk. we we to ongoing practices therefore, well requirements And, so

improved driving and our flow newsprint facilities and before expenditures Last lumber working improvements losses. announced costs reducing and cash we capital already at were pandemic. to production lower we front, month, financial curtailed through the minimize On capital the

liquidity. well-positioned $XXX are with of We million

pandemic. manage ensure of the have we that banks with the given discussions However, lead impact in the through to uncertain the future, we to our have been flexibility

results to positive year While first were when the challenges quarter have ahead, prior results. we compared

we most of to our see momentum businesses. As expected, good across started

reliability Results costs, Cellulose High by of businesses. the delivered $XX we and EBITDA X, Paperboard Purity improved our significantly were from primarily quarter improvement lower million slide million on million on operational noted EBITDA a sales, $XXX year. and of As in $XX prior in driven

in momentum pricing Additionally, we positive from benefited Products. Forest

while were challenged. working lows to High reduced focus, prices to we Typically cash yield significant requirements. improved are first by capital pulp quarter our seasonal year prior with million with expenses. remain newsprint and prices capital able operations flows due But the free quarter improve rebounded fourth from lower $XX flow from cash

and to Now our Marcus and I'm details review changes going the provide assessment ask questions. first to will quarter to Marcus? I then the up opening market before results governance corporate share of call

Marcus Moeltner

on Starting Thank you, Paul. Cellulose with High-Purity slide X.

CS primarily sales driven decreased million in viscose pricing, XX% by decline decline $XX commodity and from First by in XX% a volumes. an pulp quarter

the to XXXX. As decision, expected decline shared by sales reductions volume timing and February, not favorable a was driven pursue lower-margin business with you due to in in certain

offset partially input commodity were up in costs X% a were volume prices. improved offset and million, segment declines $XX CS $X million and The was in lower reliability. by wood sales improved year a XX% a the driven and EBITDA price declines chemical volumes increase by ago. from These by than more increase productivity and production for

million products. $X of slide first increase X% increase Sales to quarter a our Turning a Products by driven lumber from segment and X% Forest volume X. XXXX, for improved primarily price EBITDA pricing, for the by by in million to a partially for related sales million positive driven $X duties offset to the sales $X the segment by to U.S. stronger increased higher costs,

total quarter. in Since reminder, million. duties As $XX plus of into shipments paid softwood XXXX, accrued on start duties U.S. we lumber the include a a of have million in interest $X results of the million EBITDA of duties paid for the $X the

tariffs The from historically all these preliminary results the vast X%, to trade finalized. once a of this Canadian the have later majority to recovered of resolution. expected on process upon is will as determination or the Based come step XX% prior in duties decline producers next disputes, the are year

EBITDA raw by the sales sales in X. slide driven to for improvement $X Paperboard by a million X% Turning volumes. sales volumes. million increased material driven improved increased and segment $X segment costs lower

on Pulp declined segment due prices. to decline Sales million pulp slide prior $X year XX% Turning to our high-yield X. from & Newsprint a in

prices, decreased $X the to million offset newsprint decline million a $X by sales prices. Additionally, a by lower the in an loss volumes. for sales XX% in partially results by were segment driven increase impacted EBITDA by

from $XX increased lower lower commodity in million partially year were sequential The operating income of the This in benefits and negatively by costs. currency Turning pulp. impacted was On Sequentially, million to sales and fourth production favorable HPC, charge quarter. the by decline was XX% the $XX XX% and quarter benefits driven in impacts operating costs XX. these by prices SG&A newsprint consolidated These that operating and in environmental SG&A improvements, to improved improved prior in spending slides taken price high and productivity, a volumes, offset declines million. income including improvement XX% commodity by XXXX. cost XX due $XX income of of basis, in yield

Total to XX. Turning slide at billion. $X.X debt remained

times X.X net a X.X more of leverage times. compared Our to ratio than secured not finished covenant requirement at

covenant. of While a XX% the the ratio the million at and quarter times, million on cushion cash, available ended facility revolving interest facility $XX a coverage $XX with factoring ended to on $XX credit our million covenant of X.XX in compared France. including of $XXX times a the quarter to We new X.X liquidity million

debt we operate provides adequate that have We significant our as business to maturities. liquidity this are no near-term cushion comfortable

over like that, turn to I'd the back With Paul. call to now

Paul Boynton

Thanks, Marcus.

out update some you Before with getting on that our XX. into to an we're market changes want provide assessment, slide on our as to corporate making I laid governance

experience. our our shareholder over back alignment As Board and previously three of the compensation half of to heard XX% out the to We Board solicit of XXXX, management of shared the consistent roles reached refreshment, to Chairman better and shareholders themes CEO separation in feedback. and

qualified will individuals mid-May been an Effective Mariano to Ivona we Board be the will and successful at two industry who significantly for contribute history our Smith as owner our Neucel makeup Wellspring David of Capital, of many Blackstone has Directors adding to and highly CEO and a of Ernst Board. Rayonier experience David Materials of former investor our including He Advanced Young. stock & at of a years. in has

XXXX. Ivona will with I'd as Brown who from their Restoration and Gaumond Ernst and I Peabody guidance, thank Young. management ethical a in financial Citigroup, our publicly roles to take incredible Kidder May Mark for this as in highest Capital, the their the and best in comes Rayonier Board the from retiring since wish professionalism all & Inc. standard. serving them to thank investing, like future to I be company well and before support, at David us including in opportunity background after separation them

Board I In DeLyle has and on separation navigate Chairman XXXX a and addition become that and these our changes, to of Bloomquist brings CEO. value DeLyle I DeLyle we the and of challenging May Chair role emerge shareholders. a been this we these as of knowledge announced times of years career Board role CEO my to stronger effective General his also in the goal since the forward Chemicals. will after we Non-Executive a Chemical our industry XX. as President our will as on with Director company to roles continue over XX a CEO to and leveraging will experience of separate Tata returning and through look

committee, our closely the executive align environment. with our restructured Lastly, more compensation current our along team, in compensation of members key to with management interest shareholders'

XX% of of and is shareholder compensation been directly for modified, to the company their reduced incentive the that compensation the has senior the management total long-term of result, majority been the a As so long-term CEO targeted has tied plan returns.

and in out available statement filed our the website. of the plan details our on Additional with SEC laid proxy are

turning and and Prices as X% modest In the upon seen contractual volumes of provide cellulose Now timing remain only markets and COVID-XX X%, to sales to the after to XX. the viewed are want to on price specialties XXXX. expectations. lens XX% XX% basis in the to decline volumes our increase as line in through agreed expected between and you with pandemic, high-purity cellulose, with a impact of of original assessment I slide expected while from favorable an are X% impacts has pandemic.

weakness Acetate on end We stable. in food With of have focus for diversified supply, automotive strength while industrial and industrial relatively textile who, and certain pharmaceutical and segments. this demand applications. environment, end acetate and in tow potential we weakness markets security markets in been has key demand these see products remained customers stable, in and see

of However, we remain cautious about the balance XXXX.

our strong For demand. in to seeing positive fluff products HPC momentum due are commodity price we

textiles shoppers see the pulp maintain as has catalyst for to response to weak, these or near-term in prices COVID-XX. XXXX. to viscose expect not in home further We with reverse the We Meanwhile, do demand staying decreased grow demand weakness many extremely market market. a at this for remains through

to As we profitability towards and the continue extent will such, shift maximize to paper to fluff grade pulps production possible. more

recent We of chemical in beneficiary quarters. have also and favorable wood, energy been the pricing

as impact could have profitability. inputs markets material key We closely, significant price are watching future a raw our availability of these and to

due lumber for Products we restrictions constructions In business, activity. future to start dramatic a Forest decline demand housing seen of our concerns on have residential in and

As such, in pricing momentum quickly eroded. quarter the positive saw we the first

lumber we these operating return for on chips wood of levels. balancing mills, to market-driven and until profitability demand are maximize optimize facilities for cash with markets normal a We flows more our availability from a sales from as softwood as the Later lumber reaches United down lumber duties. of this determination U.S. Canada final for year, expect into the the on reduction X% we duties to States a basis, XX%

impact business on improved COVID-XX. limited from mix lower degradation sales. by Margins seen from have We offset costs, are due raw Paperboard our to some material COVID-XX

levels. We asset normal expect to run at this

count. sales our in are a for our High-yield optimizes and for manner quarter. been newsprint newspaper employees operate pricing early and continue since our that weeks, We significantly, declined in newsprint of and demand idle times profitability. momentum has lower to the it with demand mill best positive these beginning we'll to Meanwhile, the uncertain the for know has due year. page bright lower second shareholders. pulp And spot, We another solid two

will We conditions. take And to have market manage businesses, to And our necessary through protect taken. we our these employees. actions

due I to our impact to of both and China undervalued, the now negative believe believe the are value business. not temporal these of issues the and company trade the fundamental attributable is pandemic. dispute We the COVID-XX significantly nature in

viscose $XXX High-Purity per price there been to XX for the of commodity a alone, the and months. Cellulose in ton past fluff commodity decrease pulp, just Within products has $XXX

level. With EBITDA commodity on, in leverage costs meantime these normalized approximately will HPC operations. focused these reliable XXX,XXX more cash, executing we a preserving tons and products, there prices commodities controlling return. of on as In is are they significant to And return the

merge a company. and more persist will resilient We stronger

that please over operator, with turn questions. call the to And

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] you. Thank

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

Steve Chercover

Thanks. morning Good everyone.

Paul Boynton

Good Hey. Steve. morning,

Steve Chercover

mean you I refine You QX mean, in half cut most So that think Does the that, what can EBITDA statement your be mean? is that breakeven the does QX us? encouraging loss release that doubles? But for well XXXX. will hit I above by

Paul Boynton

I and to is be quarter, But well, environment. saw the where sitting we What HPC was volume let which for look, looking the is Frank continued our Yeah. anticipate as you what full year. Marcus expand here of on below comments the stronger for that forward Steve. a can we're in to first volume well

So, to folding start of that's balance going the the quarter. into

lined receive up So for second orders the quarter. we can the

it's stronger by EBITDA stronger lot out of and driven a flat just business. So, in a that HPC

Marcus Moeltner

Yeah and Steve, to last know its as the year a was start products year. you Marcus, forest difficult

that see as change a you'll year-over-year, deliver So when well. that you compare

Steve Chercover

year the start Well, say a Nomas I was to boiler situation in south. going down, to the difficult the arch last is was HPC then and year with Temiscaming the

improvement? play into that does So how the

Marcus Moeltner

Steve. lot -- QX was That of in was that a

have would been reflected QX-over-QX. that So,

environment what and cost So the on quarter-over-quarter. the operational getting offsetting commodities it back the in pricing piece saw wood really weak improvements you to of is

Paul Boynton

in the in to And Steve for Chinese get government China a as you the know March, duties. mechanism exemption provided from producers an

our year-over-year well. So a for core nice that's as business pickup

Steve Chercover

Okay.

get would XXXX? than last with let's the you put your coverage your them? banks. that How And does more you little as today ugly proactive talk to really So Are you the summer? bit quarters they in the of, a start amicable characterize about lap first quarter up conversations covenant easier

Marcus Moeltner

Steve, Yeah, it's Marcus.

we And lead of in saw the And buffer, to maintain given of call in uncertainty a that are we're you pre-emptive. the of cushion range the as the our markets, it a best release, XX%. So mind was it, or with operating with dialogue be our obviously, banks.

And you all it's mentioned, as flexibility. about

just sure the And navigate to have amendment to would to be is through continue it we a flexibility covenant. we And markets. dialogue. last is just there dialogue, make Our dialogue best down good a a the step in that these that thought to have

Paul Boynton

get And It's been But your Steve positive. look, and add quality just we've Yeah. it there. to in high-quality lenders think them. saying got and I is good having with tone I we're Marcus very conversations

So, we appropriate. look it's forward to when updating you

Steve Chercover

Okay. Thanks.

So couple the noting, developments any product last side? segment on to of cellulose the are just my there worth specialty new switching questions for

Paul Boynton

I the the us from Look, within that have partners on. actually at some we are recent down we'll in at past, as three we that don't -- building R&D we nothing more this where them, good I our we But time, product point can too, think efforts on we're to in in time, but next the dialogue in that we've the appropriate we've in think a update you. that got I are given And to new talked our with narrowed think really about have a with the the the lot underway, ones we've now past years. right benefit And of trade. impactful, momentum it's share from

Frank Ruperto

second half would in the those we from products I this see And of benefits you tell some believe Steve, new we'll year.

Steven Chercover

the are running part. back up then And Fine. for the Thanks. and most Okay. sawmills

well are studs. suited mills particularly to produce your think I

on your did So and that? impact chip And for your comment paper pulp can assets? Canadian downtime the supply you

Marcus Moeltner

Good Yeah. Hi, Steve. Marcus. It's question.

mentioned, stud we're and XX% you XX% random. As around

market had the sales when at demand in So stud taking and balance the we better two were for in in and and our we with downtime, mills. we context that the we given the of addition, pretty our so box are And chip the seeing into the it big kind stud. our random planning look market, paper obviously we're stores pulp supply disclosure mills between has clear our and program pull-through,

Steven Chercover

basically And to killed Got iPads kindles. get COVID, and which advertising. just off you it. challenged thanks newsprint then then finally And is was

this first So I the matter? I tablets for it still ask think even spacing? I that mill? mean about always prognosis is does what's a quartile And

Paul Boynton

off an matter. Yes, now, think Well, Look Yeah. in But doesn't first that. terms it and in industry decline is industry still year. point market's thought for we're the what going this is And a market is for was I now about estimating that in experience we for two whole high-quality its noted on XX% estimating about in XX%. was the cost of good the quarter first newsprint to -- we're in the down already to second quartile is the that mill your right of it be XX% that operating right perspectives there. the I had

the So talking you in XX% back the of year. got XXXX, to that back get down XX% of the in half you're XX%, a so half

do Steve. there how regardless that the your to when you're point, manage just of what demand it's And you in, difficult not is quartile

first the that So quarter. couple about we production. at of our the facility the to take demand talked We're continue second as down match in going to we did of and it beginning weeks

to a market that's as very going focused that. a if we're well. tons decline be right you've XX% million out, of se plus now X on on per There's right? demand impacting got a other Again, lot facilities about ton million So one take you decline

least that have And in right would got stay now on but at downtime going it you've currently, down. to

you're to we I So make going have And back. forward, to this destruction some work, back. anticipated assets the of get to will there's we're in sure beyond think ultimate of business demand don't that the the out what because going I close come think see XX% to that balance to going pricing just never for way any see

I but going process to assets the see you're think rebound and that come of balance has for in is what now that right past to been happen, have new Steve as in on phenomenon. quite to do you And just the expect acceleration and back XXXX. have to Now that a you in It's XXXX. shut This and accelerated not time. we right some prices this going know just is happened has

Steven Chercover

to mills is situated cost. it But best your of it markets low or is to end How the knowledge? other

Paul Boynton

Yes. quartile a a It the It is is at little first cost. mill.

always factor to to out to transportation is customers on go the as and have say Of course, variable your And there that monitor, what's got got we on what's customer? customers, distance? your in cost. thing that's the you where the And right? continue that one you impact the to then to I think is next And well

facility So the achieved our we campus got that's particular casing. at balance in

Steven Chercover

Got you.

stay and Thanks safe. Okay.

Paul Boynton

Yeah. Steve. Thanks

Operator

proceed comes question next Bank John of Lynch. line Our Please Merrill question. of from with the Babcock your with America

John Babcock

wanted I kind guess I and some morning. evolved just High-Purity I market Paul you And Good seen start end in to particularly and May? extent in Cellulose trends lumber talk in could about then if of to you've out generally, guess, kind April? how of that what also

Frank Ruperto

is on side. I'll This the Frank So start. HPC

So a very market with the the stable. been differently. to which acetate outlook reporting been the tow is has this customers each still end part business, our specialties, starting of consistent good very that tow, cellulose we've significant reacted date. have for has and with market acetate The All demand seen

The Textiles weakness acetate plastics been a industrial we the stable. the and part bit of with smaller It's for have business, some those which a look but textiles Tow business, and been forward markets facing end as has again here. seen has softer than

cautious et with of COVID cetera. consumption. we side, half board segment strong, look demand the the year the the construction here, food second that we obviously ether patterns by in driven strong strong about and pharma the been been going construction But given as has across what's see the are we being on at On relatively even it's

construction our work some But people again. to through way focused on going are economies industry get back sources putting as of a projects to

automotive biggest optimistic customers the half about in could year our that cautious look what Where so or And have the of market. end although negatives been the like. seen we've second

declines by outlook, filtration So strength had other significant seen tire offset have been we've and in some which the of date. in the to sectors cord has products

So that's the cellulose specialty.

we But to forecast. patterns stable So look will pretty because it. economies like to order when here. other and cautious are don't what open and very that, But we move good relatively feel saying things the about know-how date, up, as forward we these we about outlook,

price market has people increases sectors, it will commodity significantly of materials believe solid in go markets. end pricing, believe through and summer absorbent through some year. that the seen the very longer may the those fluff go strong demand In our the Most this of and customers that

where So we'll keep an absorbent have on materials eye just that to are.

itself you by and March of the the retail been many and market our you In that's at at China, challenging in down are Europe it's the some look been viscose and downtime the just textiles in far Viscose use stores -- roughly utilization of When significantly manufacturers even capacity textiles U.S., of customers in of areas India clothing most manifested many like or seen look I'll XX%. Staple to segment. sales U.S. the lower clothing But sale when some in that's was in in Fiber government-mandated extent. where And manufacturers certain closures VSF. we've

that our has demand keeping is entertaining far the by been it at market So we are but up, weakest the moment.

all just across our our So caution probably spot. quickly and going be again, is we to with and in flexible to patterns have different for changes around visibility difficult know segments. and biggest both move demand us thing to we're market one customers But the I this is the deal that's in in that soft

John Babcock

Thank you. Okay.

Paul Boynton

the right? maybe of So we've helpful. remodeling the somewhat hopefully the but products And the and that's has maybe strong. noted repair added lumber, question as surprising, just -- been John not forest the about very that business in you side even

your Home are retail Depot your these buyers, So Lowe's.

buy. So those have customers to continued

that benefited that are So about focused product. in basically our facilities half of of is type stud on

So time that's frame. this through been actually strong whole

the that's So good news.

facilities kind so a bit which housing of is if on starts a little less little and you will dependent new Our more construction. length random

side of good business. our had is been demand that's But the of that drag stud the good on business. So for kind we've the

Frank Ruperto

cycle. temporal are growth thing long-term with add we look viscose is significant is The good across We're markets. one those of there. products including the when bottom would I a the Paul our at issue dealing the

our that So tons have strengthened even commodity those levels got mentioned, of well as what normalized in will believe are be. we've of sales off We their XXX,XXX Paul portfolio. about

of the start year quarter year these next when question more So of normalized to it's this if. is The some early happen. Whether more than see levels. historical will the rebound of to or turn markets fourth as we

Paul Boynton

Absolutely, Frank.

And there. so factor leverage a huge

Marcus Moeltner

this reopening John construction. the seeing probably are And signs markets well in you're newspapers we the on and as states lumber of seeing

Pennsylvania and opened Just Texas up. last week

And drive western should to better some that to stabilized for demand. the has pricing justify quick at industry So been respond has based benchmark the least lumber. which

John Babcock

That's Okay. helpful.

on of weaken of standpoint? from sort wondering side kind talk Just I CS mean, what it flex I by contract for wondering could of the are depends if contracts about allow okay. to price clearly you those things. was were more I pricing that of market, how kind guess customers to become is much if I might was is allowed -- obviously, kind materially in of end scenario? flex se the and things in stress seem adjustments things a mean there but I per to in

Frank Ruperto

for plans adjustments plan everyone prices in our market. to price CS for year. and the We don't see the we for customers the for typically, Yes, fixed plan and be

that is usually So reasonable.

many market won't for think a are not but from that they many hit, clearly no demand that. the demand. is to if for their lower takes cases, they ability demand, them as the to there are There's bigger end taking of I tons significant abilities there be incentives risk some customers have if in

not -- likely side. not that's weakness So in see volume the where price in would the you the is

John Babcock

remind to kind with kind the you you've is of to then question of any have I had sense following discussions the about to just on what EBITDA if clear of have of level be the could me of some are And the also the Steve's of with just covenants? kind And kind able just lead higher mean, next can this that that? thinking regards costs ultimately to make Okay. do you you you for that kind company? the How to step banks. covenant

Marcus Moeltner

Yeah, it's Marcus.

– be As we said, best we thought was preemptive. uncertain we markets, it the given to

our for can you're commenting bit on that the So relative John. stress down right know, our that business again, But amendment EBITDA, a like maintaining been still looking in But step start the construction. the we're it's on to positive to now. disclosed covenant we the early to reasonable LTM have as has you I'd a covenants plan specifics but to I cushions dialogue does that cushion we're in a

John Babcock

was was improvements? company then wondering, just seems cost was last I a like mean, lower And I positive turn I during pretty Thanks. the raw How materials of good quarter. from before it cost question that generally the over. for Okay. cost it versus much

Paul Boynton

Just can kind you of Marcus? a John, second if here, ballpark, a we give

Marcus Moeltner

Yeah, again. Marcus it's

you our at look wood. you if year challenges last HPC So had as segment know we on

So year-over-year as as that's input. global have as energy a big down pricing GDP chemical has we contracted seen change. And coming well

inputs direct reduced. So you're of lot a seeing being

So, the ones and key chemicals being wood, energy.

I careful think you well. have it to be though mentioned looking Frank forward

on based of demand. turn such chemical supply and again can some as times those uncertain these inputs Given

this FX then as related it But you you A of reflected change in is well. improvements the focus year, as and to of is based some some million $X related. the temiscaming million portion reliable there. like segment, highlight discretionary in operations lastly, showing is That's more challenges on last variable also this FX. compensation with Energy on that we to a expense, there's at spending then a $X And are there. year. around and Island that is corporate savings signs delivering $XX I'd some We're we're million. Then seeing And know saw the had – much probably

John Babcock

Yeah. Thanks. have. That's all I

Paul Boynton

that between Marcus well. as start as just fortunately a Yeah, year balance terrible was operational didn't a we benefiting And last cost again. noted Steve good wood, to John. that improvements chemicals Thanks and said, repeat the all year

the between good two. a balance So

Operator

[Operator line Please Instructions] proceed Our RBC. question. next the with with of question Paul comes your from Quinn

Paul Quinn

Yeah. guys. Thanks, good morning,

Paul Boynton

morning, Paul. Good

Paul Quinn

here Hey, on commodity question just side. on just a the HPC

shift you if want month just could You've shift you your mix do? you could of current got us how give to then fluff, to exposure any a it from quite a to viscose of been bit much and

Frank Ruperto

Yeah.

last our or dedicate to you we're this as Paul, said year we've dedicate beginning it year to think the when as fluff year, try So our line to going at the much possible. sea strategy was to about of

line push line market. of of amount can much pretty we So sea sea the predominant into all the or fluff the

talked So facility we've XXX,XXX-plus that's about that before. a

there. that's There's So line also some it to Fernandina. opportunity other in do in one

see. again the as is exploring at there. we're mitigation to distant advantage viscose the have so in that we And we see if grade – to that market looking it In that. in now can take we past, that of plans, and not we're But weakness regards made

been a that little do it difficult in opportunity there product, things. see Obviously in bit market the more do but not hasn't given – we to it's some

have number we our assets. a in flexibility of So

we're so going And maximize, what out. really, try to unlimited to as it's flexibility you not point but that's

Paul Quinn

Okay.

to be you're So of but going still day? more be viscose at to the moving the majority of it end fluff,

Frank Ruperto

it relatively think balanced. will I be

Paul Quinn

Okay.

Frank Ruperto

balanced. some make relatively all grades, But other We in, Paul. commodity it's

Paul Quinn

Yeah. Frank. Thanks Forest maybe for Products. that, And then on just

and to you're reduced. files mills You current differ that are rates mentioned and working random rate mills? What's what order stud operating like the between and

Marcus Moeltner

it's Yeah, Marcus. Paul,

that demand going box as given see coming side gap seeing with the converged the then on a there it market, forward, weeks bit our So adjust to longer demand we're at sales. sawmills took and is pricing taking we a But good studs, in. the to and we stud big mentioned, on were we business in stud of we good as way random we has to obviously on and three at downtime weeks. the down two will And some April, adjust where our say look kind

a that. this But look market continue higher you we'll obviously weighting So to in to expect would random. at

Paul Quinn

sales, bankers are And that? just you Okay. idea of the pursuing lastly discussing still then posed asset your you

Marcus Moeltner

Yes.

were look process extensive last Paul So in we you year. as an know

so not at as and in Matane. always Obviously, successful. process. far imagine happening that good an HPC -- anything company sale value side -- of on it for market But can to But core we're we're going sale on you opportunistically believe this the were in We going a the one of any I our we think, as lot concluded at and as look forward. I we we business good there's know.

Paul Quinn

all All right. questions. have. That’s all I That’s my

Marcus Moeltner

Thanks, Paul.

Operator

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

Steve Chercover

for that just out will the should that Thanks mix, how Well, for into follow-up. question. be of the we better? your Yes. incorporate things in indicating prompted my With Paul Matane QX guidance

Paul Boynton

I'm question. that I QX? think… about we How thinking incorporate Steve do your into Sorry,

Steve Chercover

in Is that Matane we had year-over-year QX? the profitability performance? including in profitability Are

Paul Boynton

Yes.

apples-to-apples comparison Matane that we'd we're here. comparing look and at think anything in exclude an I

we Frank year-over-year the So Products, Forest HPC. mentioned spoke to

that given other that business market business partial The year-over-year opposite. is Paperboard -- would down experiencing pulp that's the our benefits right is is be

Steve Chercover

Okay.

out be the So still absent mix Matane going you'll and we concerned try that better lack being Matane that despite present shouldn't it's it be to of and of the

Paul Boynton

million You last it at for -- a I QX I $XX and year at could Matane think analysis look would and Matane your be quarter. you'd Steve our without for just normalize

Steve Chercover

million. $XX So

Paul Boynton

Last EBITDA Matane. year take it you and normalize adjusted if for -- year last then

Steve Chercover

the company. that's whole And

Paul Boynton

Correct. Yes.

Steve Chercover

you. Thank Okay.

Paul Boynton

Yes.

Operator

Misra from comes question the next with of Our with proceed line Paretosh Berenberg. question. your Please

Paretosh Misra

morning. Good Thanks.

that? So for material already is second or cost or less Would maybe say quarter known in? locked how much raw than it's you XXX%, of your

Marcus Moeltner

you tend site call chemicals of our it days. materials raw for to obviously days to storage Yeah, have some XX XX on

So of of greater Certainly, in Energy that control in market. locked somewhat have pricing supply a something forever. is wood will you follow Canada. isn't lot the

bit a mix. So a of

Paul Boynton

Yes.

it's of some Paretosh in around yes, you're getting out and potential at particularly chemicals is volatility So maybe sulfur, we which of coming the caustic see crude. is certainly the question refining

for make got one So we've to sure facility. an right back our quarter is appropriate talking but June it's about certainly on we're largely got on we're we covered supply second half as to some And exposure there's cost May, the in given we're watching So one Marcus where of in we've in make run to certainly. today the toes And year, the are sure that that carefully. our right? to

Paretosh Misra

also And cost of electricity your is it. structure? part big a Got

Marcus Moeltner

to such the as Yes. those actually a export low-cost the France operation electricity for know certainly Certainly, And and at But grid. at then in And that. of we fortunately -- electricity. would but newsprint higher in mechanical consumers jurisdictions be for energy mills high-yield well. operate you pulp, and as sell we as Temiscaming,

Paretosh Misra

that would see. and And both the if some I color more that guess, could you're I provide is seeing lastly is be pricing that then, fluff great. on And strength market volume? you the maybe

Marcus Moeltner

Sorry, question? repeat that

Paretosh Misra

you both seeing is way is saw market that of in in the that and volumes? could the QX -- you're for strength fluff QX or that some in the any on pricing So still or and basis? mostly seeing that year-over-year And -- volume quantify just a

Frank Ruperto

our and pricing should be Yes, in It yes. higher got volumes -- year. higher we've for the fluff products

the We the been year. part been has little increasing we up sea bit and have pricing that effect through. to the as of has it through line year out because been see a flow haven't Jesup a in is this broken There for more But lag people month-over-month. pricing but we historically, of it first both fluff dedicating of volume going

Paul Boynton

And is say Frank, the you'd strong. order book

Frank Ruperto

strong and bit. book order out is The a

feeling quarter good at next about we're fluff. this and So, least

Paul Boynton

index increases. go April. supply given is RISI concentrated saw up the leases And in more those did bodes $XX price probably better you that And for

Paretosh Misra

Thanks it. guys. Got

Operator

Bank line Lynch. of your Our the John America next question Babcock Merrill with proceed comes from Please questions. of with

John Babcock

Hey guys.

Just a quick here. follow-up

capital. working on Just

usage wondering what in about then XQ. and had XQ? happened about I also think you of how could a decent there if You pretty was we kind talk should

Marcus Moeltner

Sure Marcus. John. It's

and you components. that some focused their Canada. trade capital line. at them obviously capital we're build in did year-end seasonal slowdown address our the working percent in our we working back We on If to dues inventory in on on accounts see of through coming bringing look receivable, I'll over those went The and out logs

given receivable act the a we carry see million there, other Cares can for actually the we our had $XX that NOLs in development And is as that, established you'll that the disclosure well. and back and that's thing some

see shutdowns. given that QX some timing say would Capex the of I we'll forward, higher Looking QX,

that CapEx we're lower our feel uncertain obviously for we Cabot it. working on was usual. You to saw But looking slightly be in market than on And One focused level or capital this we're negative. currently slightly neutral

John Babcock

Okay.

Paul Boynton

of around we'd and just driven And which think in of So out shutdowns now of your yes that can now through is one took some just in we running and again the all back that February, business move gave to is talked things. Marcus question for if and guidance them our behind efforts moving which our John about right how track. on agree. -- and act for stated in four we the our you and we I we're we We're capital. components add that could around log And plan working reasons

mind the track. in on improvement there right keep also reduction, also elimination; which on Operating say right other are I'd track. we're cost Corporate right But we're three components, cost on track. right? CapEx

I'd we're to benefit about of make guidance back on say right. plans that tax I you're right We're in on on. four But provided and the on -- the talking sure of can components we're reiterate need track to And you be and three on maybe get going just Marcus that track So, well. capital. got those as we working off you path the we to that to later we're we've

Marcus Moeltner

Yes.

back related of As Act, I path to million $XX July the once our $XX secure year. return, the mentioned, in that forward is so on the that the million tax to be should Cares end file able we the income we refund

end. our improve that in on So will situation the obviously that back

John Babcock

Okay.

show will up show the up that that flow. statement income So at cash all? on in Does

Marcus Moeltner

But in in reflect a is quarter difference given cash. rates, was is the first statutory versus the benefit million the mainly there spoke -- the $XX to XX%. tax There's a XX% the to the -- I

John Babcock

I all had. That’s thanks. Okay,

Marcus Moeltner

Thanks, John.

Operator

for turn over now the comments. to question-and-answer have closing reached of We the end floor to back the session. would management like I

Paul Boynton

everybody got customers; of focused the top of are time value ensure stockholders of employees company. And at we security right we our for for future certainly, the on; our all two, for the And one three, we've of the that actions and our is are our safety supply priorities. challenging Well, taking as to but thanks these got operator your markets, today. and we recognize, thanks

and to giving appreciate focus we Thank updated next questions you forward look and you. again your we guidance So, your quarter.

Operator

Ladies this conclude and today's does gentlemen, teleconference.

disconnect a may Thank at day. your have wonderful your You for you time. lines and this participation

Rayonier Advanced Materials (RYAM) 6 May 202020 Q1 Earnings call transcript