RYAM - Earnings call transcript Q1 2022 | Rayonier Advanced Materials Inc.

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Operator

Good morning. Welcome to Rayonier Advanced Materials First Quarter of 2022 Earnings 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 the instructions to follow at that time.

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

Mickey Walsh

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

today's Vice Vito Consiglio, on President Executive of and our Financial Chief are Moeltner, Marcus Finance. and our call Officer me President Chief Joining Officer, and Senior

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

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

Vito Consiglio

double-digit XX% million X, increases across the order the for price our quarter efforts price manage reliability to report including everyone. EBITDA am for to advanced we by driven Starting on increases sales and strong business inflationary cellulose to our products. for that demand, had and Mickey, morning, significantly growth. specialties’ improve Thank position I good $XXX costs Slide all in you, to segments, with increased pleased

we EBITDA extraordinary focused slowly results outages started on these the costs. communicated, maintenance as and managed year historic inflationary previously the As

Jesup Slide coming at boiler. in recently made quarter. build executed the X, decision quarter. to momentum, our facility We made To that outages and from assets recovery second progress investments have outage the maintenance the XX-year second large maintenance Témiscaming's a in productivity outage original the on fourth These current mitigate with planned company. the with disruptions. in the further rebuilding this reliability supply we Tartas's outage outages online history our of impacts will Fernandina Turning help beginning of to operate outages position and accelerate along of we chain to into strategic longest second the with significant quarter we plan each made our from some productivity, were on largest the increase planned great quarter including and This greater to back

our offset Additionally, all we allow recently inflation impacts to of financial and These products and results. to mitigate help supply specialties on are surcharge cellulose service costs. We generate doing our best us challenges. customers a the cost to implemented the will absorb better actions chain inflationary and improved

in whereby executed entitled the the culmination certain original price initiative. our participate plan company XX% to and lumber This Forest track protection and announced nearly premium EBITDA higher further we of transaction for to in in week, and consideration our final we GreenFirst XXXX. above the also ago. guidance this deliver optimization circumstances. the It such, purchase appreciation newsprint The is sale represents price the for on EBITDA we Products to sale $XX contains reaffirm As year a sale assets a represents second agreement remain also of our generate stock the in shares under of a the Earlier quarter portfolio improved the million. clause

on Now, to like to to and market will Marcus additional the then come I perspective for financial back business quarter. provide I Marcus? us would the through the take details ask our outlook.

Marcus Moeltner

Thank for X, XX% increased sales you, chemicals, by to improved or supply sales Net chain driven million increase CS. High million, energy, million pricing included in a primarily costs and constraints, lower other by higher $XX lignin. towards CS offset declined prices. mix earned expenses. a bio-based negotiated million Cellulose of reflected supply chain volumes decline Vito. driven per first-quarter double-digit $XXX sales, Purity by to $XX and across $XX inputs, $XX XX%, on in including with also EBITDA This Slide production, by wood, sales Starting the energy sales increase contracts, in segment driven from a million X% and key

costs sales segment increase by Paperboard for flat X, sales Slide million by at to offset a by X% grew driven offset increased decline for X a partially in pulp. sales prices in EBITDA by million, sales were higher Turning purchase XX prices, the held volumes. segment as XX%

Slide supply and Pulp prior a on million sales High X, primarily our chain by in to to segment from due constraints. decline $X driven volumes, Turning Yield sales production year, XX% declined

volume increased segment market price declined strong helped EBITDA as break to sales driven declines. pulp. by prices slightly further increases even quarter for the While XX% demand global to offset the for the

higher across XX from income impacted $XX each Slide a year improvements million operating were costs declined supply loss a $XX as million price prior to on chain input constraints. by segment and Turning to basis, consolidated

improved solid by including CapEx million drive be and on additional cash. cash to of investments implemented Lastly, the of After majority working of balance of the along $XXX to for first annual we in CapEx in capital The half both the With XX, infrastructure of $XXX outages quarter, expect of reliability $XX flow to constraints. half elevated million inflationary million first XXXX, to in expect impacted our the the million making despite and of planned spent in with year. quarter, extraordinary outages maintained second improved supply of chain planned these $XXX Slide we the maintenance the liquidity, in year. increase critical the extensive the a $XXX company offset the costs actions

markets refinance monitor which and prepared XXXX. are mature senior our capital to we Lastly, June in of opportunistically to X.X% notes continue

We the results year expect the company's deleverage balance profile. the further improve our of improved credit will which to deliver and remainder sheet for

that We obtain company the appropriate refinancing to turn are an the over Vito. back acceptable I'd confident to will that, like at With the call time.

Vito Consiglio

Thank you, Marcus.

our each to Turning update provide I of want outlook. Page and market XX. a an to on businesses

see are strong to inflationary focusing for users. own costs planned. quarter announced end securing to cellulose the key Customers on The cost implemented their on specialty this our continue as We been passing volume successfully earlier products. surcharge demand has and

for realize coming Additionally, products High to quarter prices commodity demand products stable products higher for Cellulose we for Purity and constrained. expect supply in remained as is fluff the these

remain constraints and cautious supply outlook we resurgence about the in COVID-XX. uncertain to However, China chain related of a

and we our as expect sequentially print improved to full outages our commercial results year and for benefits Overall, significantly reliability productivity. are executing products. Paperboard, profitability As maintenance HPC In we key to realize improve the packaging for XXXX experiencing strong the drive demand also of planned discussed, previously we and produce better we're initiatives.

in prices coming High quarter prices quarter. higher higher realize most recent the volumes to Similarly, generate in generate inflation EBITDA. along higher improved and profitability to realize expect outpace from to with to improved Yield expect Pulp, we the We

disruptions uncertain. greater However, in which to supply this currently China, from are and chain segment related demand risk there are

expenses, quarter increase to the On year. million we normalizing the before around in corporate an for expect the full $XX coming

$XXX $XXX the our Given continued we to planned volatility. within year. outages corporate expenses, focused million on nature our for of full guidance executing these expect the We remain CapEx

the sale GreenFirst As million in noted, we and to refunds of related the recently our million within receive expect of year. to received we $XX tax shares $XX

we unique assets embarking we're RYAM. on into and sustainable a With updated drive new coming brand excited expect science future website be renewable will out that to our rolling signage. new the our nature. Lastly, bio-future, Slide remarkable. a bio-refinery vision to In quarter, we're business the on very represents XX, and an Coming to applying journey the of about model, soon,

will RYAM we our company forward, to Going image. and refer distinguish to as the simplify

call years sustainable into our bio-future. build history upon we to the continue as that, questions. will With XX open to We the Operator, please of grow

Operator

[Operator Instructions].

America. with Our of John first proceed. Bank Babcock question is from Please

John Babcock

thanks expected you're initial guidance gave growth a and having back whether I same overall? assume review had you get start guess, pricing, could ultimately, for just was But if then. sense, now when out. for offset. XXXX are thinking just I questions. want my to I about more how this an around morning the I you costs guess, good quarter Hey, time or you more I for relative than guidance wondering taking pricing last to -- specifically, you're not

largely more about offsetting just to and to wondering if year you're last might line that if thinking this growth if you able So, also just I in in given was quarter it's balance relative broadly, all EBITDA be factors?

Vito Consiglio

your highlight in few great of things fill the and good in and of have blanks Well, Marcus I'll question. items. I appreciate morning, those participation a I'll a John. then couple

bit first that We have the had year. the that been a in we start was to quarter the flow of and from pricing through prior because diluted seeing some the little fact carryover

realization. to starting that's to So come

that the second in come quarter. more see through You'll

pricing came the in extraordinary helping first the it's quarter. and in that that that marketplace, heavy surcharge to into we've very the with us surcharge incurred Additionally, cost mitigate put costs that we've

second and I had prior that's the second our in don't we feel right not now to you year our the start outlook be this that the will deliver in of the in growth prior changing I'm standpoint, quarter. year really here see pick noted a will position half we in we that from So, that confident good confident we're should and call EBITDA the better higher position some anything Marcus. see from market. as the on and in which impeding communications; we up

Marcus Moeltner

comments, seen the John, as pricing to business, that announced on Just by you've the others. Vito's on probably some Paperboard. businesses marketplace, maybe just build In such in

increases business and seeing with tend certainly, seeing good along price High a So demand been where we're has BEK well. and and to Yield further well as in as product markets, move increases the we that Pulp that's

on So, there's certainly that that pricing context the environment in of but some Vito positive mentioned. inflationary signs

John Babcock

you. cellulose, Got the your side specialty then the is And on question things. next of

tow you that - I side, there. about also the across You the market, on your how the that the mentioned expecting. first seeing from than was delineate and different might be think, people a you less especially could GDP bit But wondering in numbers able is now, acetate right exposure talk broadly pretty if since conflict, robust, in I particularly if probably then economy you're the demand been impact Europe, have given Russia were broader Ukraine faring quarter just is to demand the broadly categories also strong.

Vito Consiglio

the Europe, [Indiscernible] experts. that why to there one importantly, really and me couple looked been interruption securing some successful the there opportunity of a reasons let little of enable again, of very and comment And this we're materials make our extraordinary key fill we're a accelerate which challenges the has we've Marcus we terms opportunistically. to challenges Jesup asked in Specific at yet, smoothly. you securing John, support the having shutdowns and more materials to in have sure the in albeit blanks is plan in factors Fernandina, that with of bit, running I'll haven't without in-house Two there, both us had additional here.

is nice job segments of we're Overall, that. strong the managing our think within I all demand doing now. a through right So, very

vessel because there's will really a throughout that now, supply an so that continue through significant demand constraints our we've encounter, deliveries I driving customer seen think are chain and the acceleration think in base, strong Marcus. right delays I portfolio. of

Marcus Moeltner

certainly have seeing chemical gas higher manifest has manufacturing where on given touching Ammonia. that theme, that John, an on in some And impact of cost on maybe trucking certainly gone costs Europe, in Vito the matters pricing mentioned, that inputs, energy given of the think well. in logistics Vito, as the inputs, again, diesel

So the inflationary yes, of inputs. certainly affecting operating pressures some

John Babcock

that say before last specialties. went able that that the it also then and or as that I magnitude sense And when through? don't just full does and were successful, Okay. turn getting you're it it provide know if announced, mean I And on some you that. surcharge cellulose of question and there any to as in over, just was of challenges

Vito Consiglio

encountering What by have they that John. need releases indices. incurred understand we is the and The evidence been are say earnings industry increases witnessed impacts. clear would the and our chemical inflationary and for in surcharge Okay, customers I all cost the similar the market recent

pretty customers been alignment in strong have and our partnerships We and with path our forward. our that's instrumental

and the that. with are So, first Marcus. so did from we're on grow we've that upon far, perspective, realized happy we going to April results to and implement that we continue

Marcus Moeltner

surcharges separately. Enjoying our invoices those, that cost denoted on

discussed very mentioned, So, Vito as customers. openly and transparent with our it's

John Babcock

details. all great. Okay, for the Thanks

Vito Consiglio

Thank you, John.

Operator

Paretosh Berenberg, please question is Misra next from proceed. Our with

Paretosh Misra

specialty Good we year? into get price progression some reflect morning. get pushed might the about price Can QX the cellulose pricing pricing announced think QX? you your that -- through the all just specialty price quarterly about will QX cellulose the QX's you versus of QX? -- that talk in have hikes versus should or How Is -- in

Vito Consiglio

Good morning, thanks your participation. Paretosh, for and much very

Regarding the -- we to impact get will very of don't if strong I CS pricing, full know should a -- going see that. you we but acceleration in the QX, we're

of diluted through surcharge. of we of from pricing standpoint We will realization last earlier drizzled it implemented kind And acceleration the see cost was QX. strong on about a that additionally, the talked year,

acceleration get an also this quarter. as of we So, through see I begin to think that you'll

standpoints, full see don't So, from going you're realization. both the think I to

a you through full we marketplace now AR. into get but of of evidence in we've terms receiving will realization QX, see because invoicing right QX our definitely and accordingly the that see when and You'll coming been

you good from in position. additional Marcus, if So, a I standpoint, comments. have think that any we're pretty

Marcus Moeltner

actively how with It's situation. a lens due strong, And long Vito's long this inflation pricing to is -- on a dynamic this improvement this, initiatives. how comments, very So, watching does on these all got a Paretosh, definitely consistent have we're continue right? it's inflation sequentially, but to we call stays

Paretosh Misra

for higher commodity QX QX are hold, Fluff, if Viscose right? current the on than you expecting the be And it. to conditions so pricing market Got cellulose, and

Vito Consiglio

increases the very in much [Indiscernible] and have been sustained that I the marketplace Yes, that to this morning a report there. We've seen think market the evidence so. some even out issued denoting of

So, of we're seeing the same that evidence Paretosh ourselves.

Paretosh Misra

the product? -- covered your for And that any I what thanks. you're updates me, seeing in kind of on know and one if remarks don't but that any Great, last TemSilk prepared you've opportunities for

Vito Consiglio

that there a are would right I of lot feedback develop to say about have of continuing there. we comments made some haven't and We now, stay tuned to the we

you As pandemic in to right the for some mitigated know, have order some situation. of do us been by of marketplace the business

seen only area the we've a by that and not right is now or amount an been it's conditions So marketplace. of mitigated the that tremendous because of subsidize development

I any So, comments don't we'll provide if an you next Marcus? have update on know the for that, you Q. additional in

Marcus Moeltner

Paretosh, comments back modeling. That one, your fluff. on is note No, maybe pricing, but not should highlight something on take on in that just you to on of your

North Given the recent was ton. $X,XXX announcements by [Indiscernible], the April index just for fluff America in a under

$XXX around metric again. Just ton per increase

Paretosh Misra

I that's guys, Thanks Interesting. all had.

Vito Consiglio

Thank you, Paretosh.

Operator

Instructions]. As a reminder [Operator

Our next question Jefferies, is proceed. from Richard Close please with

Richard Close

questions my quick ones here. of couple just a Taking

And much of to expect in was maintenance then terms In how in how of CS you QX? that do in QX? EBITDA impact cost, much

Vito Consiglio

the to Marcus. question. participation. your Good volley your he's morning, really know that Richard and I to appreciate for thanks you got one I'm that over I going could if details because so Marcus on

Marcus Moeltner

Good morning, Richard.

facility. would were focused the maintenance our of actually deploy CS are we on those And to activities time our amortized costs activities. over support the ago majority those So, cash Jesup Georgia

of a XX-month and number million, quarter of around P&L. hit amortized period think that be over $XX first would the So, shutdown the next then a to in our

Richard Close

it. Got

year-over-year big. decline? So, in really guys that that the of impact EBITDA there EBITDA wasn't QX, priced drove that maintenance truth, in really the cost was the the you It shuts had impact

Vito Consiglio

logistic manufacturing supply much Very Yeah. wood, and chemicals, chain history mentioned? inputs, energy, cost of our we the costs

Marcus Moeltner

absolutely. Yes,

Richard Close

I Okay. understand.

Vito Consiglio

on on X, Richard, you And that's largely if at the $XX million, cost that was bridge, look Page inputs.

Richard Close

like million QX compared in just And it. for that had what then QX, cost $XX that QX? does you terms look to in Got Yeah. the of

Vito Consiglio

and a million [Indiscernible] in of will less, disbursement that slightly it's one has amortized. then on its range be QX, the major would emphasis major of $XX be that think in outage the So, and cash

Richard Close

you addressing Understood to you of second you contingency lastly, it, half how think the how plans structure? the to and say guide, then do as thinking structure year? Got get the you are Let's look cap maybe about for me, cap about your guys the for don't

Vito Consiglio

really So a of again, for -- we're looking us. it's focus area key

to with actively our credit improve in profile. very we using approaching really that the strategy and that refinancing profile staying And this to million. on structure us. opportunistic, dialogue our with Our future, sizing something recent GreenFirst sequentially, the operational a demonstrate the some improved and mentioned results with next further improved -- momentum that be advisors refunds close in tax we're and our going focused total we developments. we're right then of said close would Vito on will and deleverage to feel the is Forest mentioned and the time ourselves capital see to the we're sale We've then at the block at We time, executing markets shares, $XX credit and at in same right

Richard Close

it. Okay. I got

Vito Consiglio

at to shutdowns. of continue and time, right second half so occurring in And out that going strongly you'll the we've momentum year. got position real to that we're now, past all we're that on home, good already in And us XX% Richard, a at of the and be fully of hitting see our

Richard Close

see. I

Okay. questions. Thank you for appreciate taking the I it.

Vito Consiglio

you participation. very for much Thank your

Operator

is next Capital from proceed. RBC please Quinn Paul question with Markets, Our

Paul Quinn

much. very guys. Thanks Morning,

cost charge. this trying to Just clarify or

So like the or your XXX-XXX thousand [Indiscernible] a stuff the year months. is for on Purity that High XXX XXX so, to just nine

similar be million the in So, it should $XX range?

Vito Consiglio

on. and right that terms guidance going Yeah. morning, to, probably that's give We here. Paul. areas exactly the of in figured you'd Listen, questions your appreciate what to focused and I'm you're Good range looking inside we in you're specific that of that where amount now, going to focus your on not we're on but the

which actually be terms but that drive strong through. our going we pretty in of implement and be what a already to executed going coming it's through ability to upon to feel we've there's So, of flux

changed Now, make we'll if the to listen adjustments market accordingly. conditions have dynamically,

So, modeling. terms you I your down up to that in say would or have that could and be of consider

Paul Quinn

just volume the over year you but specialties the improved. mix it's Okay. then on mentioned And X% year down

the guess that So, could is more. were down and if with it split volumes commodity commodity, Purity -- you I from down Cellulose High the Purity up High less was the

Vito Consiglio

going details. get I Marcus, think -- Yeah, those you I'm to

that. you could provide If

Marcus Moeltner

definitely more, down Yes, Paul. were the volumes commodity

on spot CS negligible. comments and You're was your

Vito Consiglio

just a X%. Yes, it was bit, CS I was think little

Paul Quinn

And helpful. that's what some Okay, of then seeing. just you're

interesting lot these be wondering on increases, I've it's really strong side, that you're seen in is, volume coming of to fluff a the never referenced DP You but it'll it sustainable pricing, see in so how seeing what which just market.

Vito Consiglio

it's Yes, demand has exacerbated Paul, us constraints. for the by a good tremendous really that's point, chain now, the been and supply I right think

we're the for make So, at we we demand better more, see point. a a good us, this into provide high-quality and could be tremendously position. marketplace, material think in If in I we position, really the a extraordinary have we'd

Paul Quinn

commodity the the you're on because builds pulp extra side, up? of So, side, coming from in seeing volume not weakness dissolving of some any new the these

Vito Consiglio

Uh, what the mentioned South in Africa is, flooding of we the Paul, certainly saw supply. hardwood effecting did you see

sale and they're You're ASTRA the see the probably started they're line that BK DWP so start coming was producing I've [Indiscernible] softwood. on we're seen materials, Brazil starting new again up to on of now. And signs the from and up in same reading mainly everything into back

Paul Quinn

the give energy that Could is noting an out difficulty securing trouble much. but Okay. a to trying and project us to move so Europe have mean, you've security self-sufficiency then wasn't longer-term on green in additionally and like to moved up idea try there put things good. energy gone having they people just prices That's I schedule into materials materials, up then cited understand on And you energy you you last Tartas that most these are maintenance, that year. trying just and the facility,

Vito Consiglio

Sure, make comments couple that. Paul. on I'll a of

a approach and us customer a where that We some critical team the together and concerned shutdowns. execute, were for task demands. to about look it team that available members For And one to now, we've We now in region the all through at advantage can now. these there point we continuing also, now, had standpoint if is thing can that go the through we've year to helps to thought [Indiscernible] opportunity things difficult really flux of from take it. resources a through right are the has is we us advantage right way read us a to rather the got a and available delaying that of you than take force personnel great during the because been if great That available execute situations greater but of advantage this having our the got we're that put we we got the are some [Indiscernible] enhancements running that to

that's of So from in and we a one that it at address to looked forward. standpoint good allowed pulled that's and how birds -- why two position it its it with we stone. pretty We're us kind

of it. that's So advantage Marcus. why we took

Marcus Moeltner

to Yeah, question Paul, you energy your side. maybe had on the

as electrical far based France load, portion of rest the electricity is that on the fixed As rate and load a floats. in

of and not you this of some gas and but producer portion electricity mitigate -- a rates our fully use in in to we certainly these we're exposed exposure totality, us quarter electricity, that actually the of saw we're headwinds credits as the seeing carbon to ability gas monetize some then have we're so that where we on So, well

Paul Quinn

Right.

Marcus Moeltner

at really kind look because should of move energy as offset whole, which that they together. -- a

Vito Consiglio

And also make that to to as that's for we're in noted, you've positive investments going us. continue Paul, been area, so

Paul Quinn

Okay.

you're right I is of it, right? -- higher understand a now, so net so be this a it just should to -- at in you, producer energy regime Tartas benefit So energy

Marcus Moeltner

country. floating rate -- from to France the in producer exposure that has is in right? any Aside So, increased, the the there

Paul Quinn

still I'm -- you're confused. But Right.

you're producer of a a net be to higher though beneficiary a [Indiscernible] going You're so

Marcus Moeltner

the and to that. rate then you're right? compress that of part have on be the that market tend and to going fixed contracts you're gaining, rate generation might indexed But exposure Remember, still then

Paul Quinn

Okay.

Vito Consiglio

selling. you're and You're purchasing

aren't have So and extraordinary situations. when other you of it the that's we much kind but as one where impacted mitigates

Paul Quinn

Okay.

that. trouble Sorry for understanding having

Marcus Moeltner

fault, No, that's Paul. our

Paul Quinn

repaying note, what The your flexibility June flexibility XX is that? opportunistically around in this

Marcus Moeltner

what -- clarify by flexibility, you can And your

Paul Quinn

Is next there two Can on that at the right any any over all debt in away? years? restrictions come the that apply cash you on you

Marcus Moeltner

Certainly. We've doing something always holistic. thought of

something So at nothing else. there's refi than a in call address par other the to full ability June,

Paul Quinn

I all That's Thanks, guys. had. Okay.

Marcus Moeltner

Good.

Vito Consiglio

appreciate Thank so much. you it you very your great much, Paul. participation. We Thank was Again, questions.

Operator

the session. end I our have like of back question-and-answer turn comments. reached would to Vito closing over conference We to the for

Vito Consiglio

for profitability to thank so again time initiatives ability on We're in in our improved to and RYAM. to we're like of I'd confident today. XXXX drive Thanks you your near-term our execute excited about BioFuture the much.

Operator

you. conclude conference. Thank does today's This

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

Rayonier Advanced Materials (RYAM) 4 May 222022 Q1 Earnings call transcript