RYAM - Earnings call transcript Q2 2022 | Rayonier Advanced Materials Inc.

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Operator

Good morning, and welcome to the Rayonier Advanced Materials Second Quarter 2022 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. you. Thank Mr. begin. may you Walsh,

Michael Walsh

you, operator, Rayonier and Welcome to morning, and Materials Second good Advanced Call everyone. Quarter again Thank XXXX Webcast. Earnings

our Officer; on De Senior Chief Vice me call Finance. President and Bloomquist, and of Joining Financial Officer Chief Marcus and today's Executive President Moeltner, our Lyle are

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

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

De Lyle Bloomquist

since Chairman Still a Board joining and of Thank the Director RYAM. I'm this my in company's on you XXXX. Board, be X conference I morning, years first RYAM you, including as have to of for as good of new Mickey, excited been the role, call CEO everyone. as the with

calls finance, on in experience -- financial and was sectors. and logistics, the improving including functions the sales cellulose companies have expanding of for my as grow leading involved Before creating balance performance and other marketing, with our and tenure us Board, RYAM's I planning into which sheet, production, including many roles, in distribution I my strategic capabilities our I industrial and to my chemical our solutions. legacy in career of and CEO. RYAM, focused high-purity with our management, have been strategy, improve general Because bio-based global tenure on position

cash our focus As CEO, on increasing will leverage. the and reducing continue near-term EBITDA, flow I

X. Page to Turning

strides We make objectives. us will help continue to important near-term our that strategic realize

we First refinancing we XXXX. and June senior credit in growth repaid Forest which sold million To the ownership the Products of end seek in our improve foremost, EBITDA we on best we put us and GreenFirst are to position focused quarter, opportunistically of Canada. metrics our possible Subsequent senior this to $XX via reduction. debt mature remaining objective, in In our to in and accomplish notes, $XX million the quarter, of second debt repaid for then the $XX also million notes.

to the year reduce of maintenance and improved and as planned outages sales focused reliability. arise. through look will manufacturing results. which expect half increased second We drive EBITDA production balance volumes To mill of increasing to area our debt opportunities The our focus will is the remainder of increasing extensive continue the by sales year growth, of time, were leading financial economies the scale, and we completed volumes that production all improving facilities at in on of our we to first productive increase

remains Our are products, offerings. strong. product receiving strength. value immediate commodity from for current market we respect our is Demand third of unique our area for value capturing to fair focus the With products our

saw the a not small increase that of under effective X. recently, we And on Most Regarding surcharge as volume increases products, our we effective for we $XXX XXXX. we price continued. April XX% implementing specialty significant implemented pressures are August inflationary a contract cellulose as surcharge the volume maintain sales accelerate, cost inflation negotiated per cost and cellulose ton and X are specialties

a forward, updating the us manage specialty pricing inflation are that more Going contracts within standard language effectively term. also flexibility cost cellulose to allow in greater contract's our will we

are the we challenges. effectively Finally, responding to current supply and environment inflationary chain

help surcharge we offset extraordinary the input already, a key costs. to experiencing inflation noted on As are we implemented cost

also significant avenues all to We managing help while exploring transportation, wood, options increases, are in supply seeking we're specifically these offset also discretionary spending. our chemicals, alternative

example, manage and reliable maintain customers leveraging to the multiple to specific carriers our logistical For shipping modes transportation, costs. channels, we and to delays, shipping are services shipment reduce

summary demand, a the increase strong and year paperboard products. Turning to our prior Sales Slide segments, increase quarter. XX% XX% for XX% driven for across $XXX to I cellulose all results to want million, from for including X. increased of price a products financial a increases by provide the with specialty our

million, was which the offset Our costs. year consolidated increases surcharge and to inflation $XX to EBITDA extraordinary price the as our the prior flat was adjusted cost

than the Additionally, High maintenance costs and planned sequential allows X prior loss to by driven Overall, partial year of impacted extensive results update X the higher XXXX outages our exchange sale on Purity $XXX million completion Cellulose of exceed compensation by higher facilities. Corporate was of to to due favorable improving financial during quarter year, CEO rates. us shares transition, a the GreenFirst the the a of were foreign guidance from with EBITDA. stock full offset at our

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

Marcus Moeltner

High Purity you, Slide De on with Cellulose X. Starting Lyle. Thank

Net negotiated million metric EBITDA as primarily costs, for and sales, driven XX% $XX for sales million or cost by per any energy included bio-based segment sales were supply segment chain increase the sales by XX% XXX,XXX This quarter wood, prices. to XX% of expenses. First tons. million, million up a our from other $XX energy including Sales lignin. $X to driven also CS input million higher slightly declined by this and chemicals, reflects $XX a in increase volumes $XXX contracts to increased surcharge. in pricing

Slide X. to Turning

than partially XX% decline by a Paperboard higher increase sales prices grew in Our sales million prices, EBITDA costs. volumes. by to $XX offset sales doubled the higher $X the segment more driven segment in for offset as sales a million XX%

high-yield increased by this our a reflecting declined helped increases for Slide higher pricing, year, sales Turning driven the million $X Pulp costs. to strong in market from prior the for demand XX% pulp. to breakeven segment X. price EBITDA improvement slightly by segment as on global Sales quarter for offset

primarily sales chain SG&A prior XX and segment due stock across to million Slide income on to variable year were improvements other loss Turning and supply costs each million, by CEO impacted costs severance increased increased price $X key compensation recent Operating by on constraints. consolidated $X declined a basis. the a as and million inflation from driven to transitions. input $X

repaid XX, $XX of on million, the $XXX Slide declined senior as proceeds cash Lastly, liquidity sale of offset of million by in $XXX million to shares GreenFirst. including notes, we

$XX $XX million. million, second As our approximately by $XXX guidance payment, of debt on working capital. ended today, up to an slightly principal are million our of interest in a $XX driven quarter our timing the year of Net $XXX full down repayment cogen to debt million cash million balances Canada and compared

we CapEx. the deferred maintenance million million, completion With on $XX planned and maintenance in of $XXX all expenses $XX outages, million spent approximately the including

year. year, the forward, remainder the expect for in Going million we $XXX cash significant a EBITDA by flow our driven the of improvement guidance free full for

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

improved to remainder remain balance results company's We expect that, which which we acceptable sheet refinancing confident profile back We year. the of the further will going and will the that like to I'd notes the deliver in deleverage Lyle. call the to year, for of expect over XXXX. an the With obtain the in improve back our we De complete turn credit prior to to half current

De Lyle Bloomquist

Marcus. you, Thank

strong Page products. prices implemented for quarter. versus second the surcharge volumes to the increased contract our provide demand, Purity we Sales pricing respect each on quarter continue Turning the business, to I to XX, our want in the core thus to plus driven our sales increased update cost cellulose Cellulose in specialties an year, our for With High businesses. negotiated by of see prior second XX%

expect cost place coming at to the input stubborn the for elevated remain this surcharge given costs. quarter, We in least

as cellulose products quarter constrained. products We supply fluff remains commodity this and in expect these for to remains high-purity stable realize higher coming prices products for demand on

However, we third going chain the quarter. cautious constraints into about are supply

As the in previously facilities noted, half we first X our successfully planned XXXX. maintenance executed outages at of the

are We productivity second experiencing result packaging expect for we and will demand strong for XXXX. print year, to improve reliability the of products. which for results commercial remainder and in Paperboard, half In of improved the the significantly

offset positive and that production high-yield maintain we realize Thus, will in and pulp, for higher the expect supply and expect constraints. prices. strong inflation. in quarter. moderate sales prices The will also expect EBITDA business We stable to be a realize will the higher we EBITDA Overall, coming quarter. In to volumes on this we dependent become coming we costs chain will will

our be of expect remain to expenses full annual while the million corporate We for corporate nature the is these expected $XX given between approximately volatility high. year, quarters to expenses,

within remain committed our for $XXX million also capital We million to managing our $XXX guidance to the expenditures year. to full

year. expect million still tax to refunds this we of receive Finally, $XX

gas go XXXX. Another compared our our questions. as report towards We that, emissions we call reduce to by reduced still reducing our by please We're is XXXX this target year, emissions was the goal open more between to XXXX Earlier X% greenhouse key proud gas greenhouse set to RYAM operator, our and emissions. reduction a realizing first of greenhouse an have to XXXX XX% but this gas initiative XXXX. step. that With important in we total to

Operator

Instructions]. [Operator

question Bank from Our from first America. comes John Babcock of

John Babcock

about some I the it commentary demand. from lot talk seems guess mean Could being there's a in there specialties now? marketplace. color just about you on I decent there. hesitancy like seeing quickly pretty just Europe you're I just want kind of get of out in to right you cellulose what

De Lyle Bloomquist

our strong. be call. we're this for as to are thanks being as still cellulose business, HPC specialty seeing John, and Lyle, our De continue well on volumes relatively the Overall, they're is

whether of in our really demand continues we it's And do as indications on is issue but getting is we Europe energy, hanging well our to are are talking strong currently, constantly our as watching there. things decent something about to cautious The seeing go is base we One we're it -- that. underlying still business again, demand But we daily still customers we're whether will hope somewhat a determine that that that to is to the and almost around strong. and basis. the watch -- and customers in and the we're it continue from

John Babcock

very increase by impacted they on the regards to price Can helpful. And That's Okay. volumes. earlier that me, just surcharge latest you noncontracted year? were remind announced you the then with just this

De Lyle Bloomquist

they were. Yes,

day, the of products. in to is to So addition fair believe it our really, And our is at end is surcharge. we for value this what us the try the capture

John Babcock

Okay. was second And about clarity in what that overall, and add I of that earnings I gave that gives even that when talk light and bit maintenance the just see in wondering, of in mean, the the little we you about exists? you'll confidence could costs just macro back, you you talked inflection particularly a there. half challenges

De Lyle Bloomquist

the of was Well, the if outages a significant the a over of not facilities at if for mean year. month. I look a the down took you good of in them took part down, fairly of the that we we impact month, first some half

the you'll the increase all the first the in second for the had half. the My flat facilities will is the year, versus be that the as my rest more, of obviously, running volume volumes the first fact out production and will, year. in the having sales will a half in of what therefore, should so facilities those all in not second if probably an see of operating of relative half guess increase to result and we the XX%, in opinion, half sales And

John Babcock

you kind pricing. and I maintain RYAM. been Okay. before just over. I Pulp benefit from has of business I per to over whole mixed makes relatively question some this sense seen the it has mean the it see to it from to I turn how and seems last seems I as you get performance wanted as to of just color that core years. is to And And then a business mean how higher segment important overall, to how sense get on like it. limited whether want you it just it RYAM kind like pretty view

De Lyle Bloomquist

we Well, will it's with a going into view for strategic I are think personally, result, I core the our the and our strategy. There business I as And and latch it future. -- that something to respect significant fluff view business. grow as it long-term to onto tailwinds demand to going forward

business. something to that view grow it continue on to focus I the we will as So

Marcus Moeltner

John, it's Marcus.

Just that Paperboard, integrated pricing. of bulk lag the an realized your with it comment that's on an to And three-ply is has chain, pricing, to on It added with on length right? the sheet the in high well regarded comment piece effect play yield. supply attributes there marketplace. the really creates a given the And

So itself quarters. will again, show that But certainly, the lag you're not seeing future now. it in right

Operator

next our Quinn And Capital comes question from Partners. from Paul RBC

Paul Quinn

guess a up follow pulp. I just this high-yield on

positive expecting we're be in So this here? to QX

De Lyle Bloomquist

Paul, yes, we are.

Paul Quinn

be the on price should that inflation so expect more And increases guidance on as than Okay. you offset that Paperboard essentially, that to the positive well?

De Lyle Bloomquist

correct, That's yes.

Paul Quinn

guide -- sorry, go we ahead. yes, then, And just if can

De Lyle Bloomquist

remain will high I consistent pricing just expect to through well we and relatively the remain as volumes the got No, was period. should say that

Paul Quinn

this Okay. cost And $XXX, or surcharge diving the And into specialties cellulose portion, on And high volume? specialty, just that's that all of on cellulose purity. right? was business the it cellulose then specialties just on

De Lyle Bloomquist

only it's all specialty Yes, on and on volumes. cellulose business it's

Paul Quinn

$XX it sustainable One was Okay. I do and side. on two, crazy in -- I commodity the levels And on seen coming between especially, is? we tracked about here dissolving we've a just think And I premium terms the capacity I think -- we're on fluff NBSK. number that of over $XXX. are It over years. go of in question got then the you that where XX prices commodity of lot differential you've seeing know, is and how to fluff side a business, mean, don't what now

market feeling wondering Just going about how that you're forward.

De Lyle Bloomquist

on Well, prices commodity both the index. expect as to that viscose -- softwood. probably therefore, seeing prices peak is down coming And QX on expect Relative most premium I on that and those we fluff go the thereafter, seeing fluff. is we're coming believe pricing hardwood. as the of the new our capacity starting so play to we'll well of in and question the and your for to really start primarily

the to the And because more some so we're we though that our new end believe being premium, be capacity. in at softwood, somewhat focus of there of of day, therefore, the exposed even the may protected narrowing less

Paul Quinn

market. bit that then seeing guys, commentary And from a we're hearing in weakness Okay. downstream on with customers? of acetate consistent is of some the little you're the the the guys Is what your

De Lyle Bloomquist

not No, really.

In some the inventory itself last with down one in actually out, so. and He was growth that or customers fact, of just I thinks week our expecting going forward. pull the modest played has essentially he's

will So few over we quarters. that next actually increasing think the coming to acetate be flat

Operator

Spitz And of question comes our next Roger from Bank America. from

Roger Spitz

of you XX related with debt of how X.Xs intend as X if secured you carry debt. do view capacity to have and question is, either you refi or under to secured X/Xs Marcus, incur a your And a to months. June your unsecured do XX, much have

Marcus Moeltner

Yes.

to right, and Mickey the options our all keeping on $XX but basket. -- capacity, and extra we're and million the leverage have open, we I And the test do again, some Roger, markets. So X.X stay close

our open. So And add to there is again, capacity keeping some. options we're

Roger Spitz

looking addition Got tax here. cash it. And in the XXXX is expectation -- outflows? at some and refund? is flow does tax What cash just your to that million or that cash $XX include any Or items

Marcus Moeltner

the from U.S. a refund $XX the million is So tax

taxable are We in France.

some So we payments have there.

a million of to range think $X number $X So the in of million.

Roger Spitz

outflow Of for And XXXX does capital it. you? the inflow Got outflow? working how or look

Marcus Moeltner

QX and the million. $XXX gave for million net our $XXX right, guidance, debt we ended we at So at

spoke And We can about and talked you're supply if of working we're the that you And your that we're the being refund. positively capital. on CapEx. cautious remaining the managing. one into could back have the then million. interest model, Lyle we items as but chain then at $XX tax some EBITDA looking Roger, So right, number impact to De

the year earlier bill working of shuts. certainly, because here So the the had in see vis-a-vis of the balance for the as a capital, we year that we benefit

Operator

Misra comes our question And from next Berenberg. Paretosh from

Paretosh Misra

full plus. So year then if second at I implies million look half your the $XXX guidance, EBITDA

of maintenance way come some the costs some year. next back to So rate? about pricing Because think get sustainable I right will but XXXX or what's more guess you'll kind these your run of

to more So like year's way about what's best or rate? just earnings a the next think wondering, sustainable run

De Lyle Bloomquist

Paretosh, this De Lyle. is

forward, think and $XXX So I'll our hit HX, HX, I'll I looking start and with then as is to XXXX. you to guidance. expand around million noted, it right

strength that be year. year. the going we do we think a same we minuses likely per number extended commodity believe be And XXXX, outages be for specialty our in believe, have some are may we And higher, but that million had control Volumes $XX There facilities better have given will pluses roughly that believe that with that much year. So will in our going rate. is some forward, some prices, won't on throughout the significantly cellulose our and quarter to spending. run do we a also we There the there be into that degradation pricing. good this we

So this target And the think be I to guidance I be range. next mid-cycle, in we've we I believe and in for year. that going given mid-cycle, the that's EBITDA think our do past, should

Paretosh Misra

can in on serious Got update the project And provide you permitting it. France? great That's bioethanol color. delays? an are How then these

De Lyle Bloomquist

were delays new What environment the -- permitting considering delays, that of got I think a was were there we don't the a very we've that cause great the couple the I to facility on. sensitive specific think of the solution were, to. species building

so XXXX, facility. we'll be early forth get disrupt to that, able the to We permits XXXX have And is soon and don't receiving indications thereafter, be constructing the late current permits. start that the the that and we the environment able redesigned should and we resubmitted so regulators have from we're

Operator

our And Quinn Instructions]. from RBC question next Markets. Capital [Operator Paul from comes

Paul Quinn

asked Just couple of sorry, acetate. a asked I follow-ups. -- ethers on on I

shaping mean real one that Just who ethers is of time, reasons saw the up. wondering how is why this product. pretty and we is of a the ethers market bought at global characteristics leader Tembec, growth the I good Rayonier in

Just wondering through. it's if actually followed

De Lyle Bloomquist

with bullish Paul, and still that rates ethers, very in prospects respect we growth business. long-term to on the are the

going But was softness growth the primary on bullish we're Short of bit we're on the particular we reasons I construction one very made think in segment. what's of respect In Europe. fact, for with term, it that Tembec. of seeing term, little to a market the acquisition still in again, market long the

Paul Quinn

Okay. referenced you And maintenance XXXX. then in lower

what Just -- wondering into that -- of there and is the schedules first the still you 'XX? in it quantify more that -- half if year? Or is could through heavily balanced that is maintenance

De Lyle Bloomquist

It's still be in Fernandina will would on definitely in and schedule, year. half pretty first of QX, respect the May. Temiscaming, part the QX QX. will of be maintenance Jesup the Tartas still will month the to later the with be the as -- year, always, will of heavily I QX. say, focused be

know, done facilities the second three year. of you we as into we'll before the get have the of half So

there's of lot next In daylight of total maintenance, a maintenance terms expense, between year. now and

a terms needs special activity, some at year in again, of of influenced key lower on a facilities. to this inflation. by we year what that actually up of the in maintenance our will it will So think I catching was transpire be be on is that going focused lot But because,

Paul Quinn

Okay.

how good. lower? The is is much lower So question

De Lyle Bloomquist

now, How Roger. much I'm to to and Yes, lower? commit right going not

Paul Quinn

Paul. it's worries, No

De Lyle Bloomquist

Paul, sorry.

Paul Quinn

lastly -- no Listen, just gets it the partner time. And all on my wrong worries. then

the now number And number Rayonier, but So changes, past through CFO missed I gone joined has a I because CEO have side. one. and years, just both this leadership of over of late, changes, last might

see you with that things you wondering, the and change direction any Just you Materials at are in of company What opportunities the you see how -- see Rayonier Advanced going do as forward? De up what do Lyle, keep night? the

De Lyle Bloomquist

That's a pretty broad question.

the what and I've got the can. I improve could well, right couple quarters the really, me that, focus it I next delever now, its as profile respect is as refinancing to night up a XXXX. answer efficiently that see into And XXXX at as which -- primary One activities. we And couple as me talked But right achieve if focus keeps EBITDA, market continue as we've pricing. focus sales to debt. be there, also to of Let the to think operate try the to about, With credit that now the we'll able is debt that it's also my if is over enter the debt. doing primary to taking volumes both company around of objectives we're us, to the that the it's turns paying advantage -- one obviously is of improving the things long-term increasing sustainably well resilience down to about of so when on more my different company market that down pay of business. improve I And

that's growing expanding I at level. on that of also objectives down leverage have the paying business focused the be for kind products, the now. I'm think our on. short-term on to But a then growth right also but -- again, solutions that at competitive very bio a term, strong looking So we keeping going we Longer and by reasonable advantage other focusing core into opportunities the debt

core and looking through adjacent So businesses. the growing we'll business be through at those our

Operator

more I Lyle Bloomquist. this questions. turn are no Sir? floor At there the to would to like back now you. Thank De time, over

De Lyle Bloomquist

is joining know you. Well, And you all I is season thank your I of a know busy for for time us. all dear. of this time

did spend us. with appreciative very you I'm time that of so the And

With got thank out for in free you've for you. if I there's We'll feel to you a day, can and future wish or If us. we your time. there that, reach be questions any do, the you anything great to available

Operator

thank your conference. today's you participation. conclude We Thank you. This does for

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

Rayonier Advanced Materials (RYAM) 6 Aug 222022 Q2 Earnings call transcript