Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the RYAM First Quarter 2023 Earnings Conference Call.

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

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

As a reminder, this conference is being recorded.

I would now like to turn the call over to your host, Mr. Vice Investor and Treasurer Walsh, President Relations. of Mickey you. Thank Mr. Walsh, you begin. may

Mickey Walsh

again and and first good you, to webcast. morning. call Thank conference Welcome RYAM's earnings quarter XXXX

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

presentation issued website release last ryam.com. Our at are They and earnings evening. materials were our available on

provisions will of to you Securities the that include we forward-looking remind presentation, to statements like I'd Safe today's Harbor Federal Laws. pursuant made in

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

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

Lyle. I'll call the over to now De turn

De Lyle Bloomquist

Thank morning. you, Mickey, and good

update, review of on our call quarter capital will this opening with Marcus will and up for an guidance XXXX before update financial details an segment I provide initiatives Marcus' call provide our I key the turning on highlights structure from additional start liquidity. the the provide the a update before to and to call each questions. on After business and

increased positive year cash momentum stronger volumes, X. XX% We Slide and XXXX overall improved million, productivity. $XXX all by and on Revenue by products to driven price $XXX million operational EBITDA revenue, prior solid increases or our turn continued driven with from flow. now to across Let's started

up delivered prior EBITDA higher XXX% price than gain and the $XX $XX the higher year or million of realized volume versus Pulp Largest delivered an Adjusted million to High costs. as adjusted offset was EBITDA by from we Purity year EBITDA in prior million led $XX more segment. increases increased quarter of our or This with High-Yield EBITDA from $XX prior as another the contributed and million million prices EBITDA, additional XXX% million of $X Paperboard quarter. $XX year. solid Cellulose

expenses $XX million a prior-year Corporate year sale to gain our from period of million increased $X shares. GreenFirst due last of the from

results, increasing year, to to of we deliver By track our remain are million to million $XXX delivering $XX our cash and $XXX we flow free positive full billion. the for on these million guidance to on EBITDA $XX

like through I'd the over meeting for Now, the turn us take Marcus to quarter. to details financial the to

Marcus Moeltner

you, Thank De Lyle.

Purity or $XXX biomaterials the sales, quarter driven and logistics was year. mix maintenance of increase from CS improved annual higher lignin. partially impact sales contract prices increase the segment a segment for terms. an EBITDA customer to expenses primarily higher $XX production, of the The volumes due prior prices. in Sales Cellulose improved chemical to million X% sales offset along of in for also in million included High by Starting $XX energy XX% on quarter Sales by increased X. green the enhanced million. of with $XX Sales impact XXX,XXX metric higher the and with and for million and $XX to costs XX% the including to commodity increased tons Slide prices, million, XX% volumes an

as by in increased more $X segment than grades, Paperboard costs X. EBITDA a million, sales a million decline for was an $XX higher sales volumes due XX% and to $X Turning segment million purchase sales sales or increase prices the volumes of to as in for which packaging the and the to result chemicals offset XX% pulp. demand prices grew time. lower sales Slide grew offset for partially X%

Pulp to segment logistics. due Sales sales increase the $XX improved million XX% to XX% the EBITDA Cost $X X. in and sales to stronger increases as to demand a prices Turning a volumes on in were and and primarily chemicals higher prior increased prior the in compared Slide breakeven related improved High-Yield increase by segment external year, logistics. million for reflecting year. from

to to $XX across a offset $XX segment chemicals, increases costs impact operating purchase pulp is with were HPC which the up higher from and margins in income in of points price essentially XXXX first improvements million $XX improved for consolidated basis On over basis, X. each million. and year. and High-Yield more the for Turning of Slide quarter volume the quarter EBITDA for than prior along Sales the first and Pulp logistics quarter to prior expense XX%, flat XXX nearly the expense quarter. of million maintenance annual the

declined debt same reduction a of the $XXX $XX in to from million Turning XXXX. period to XX. million, Net Slide

notes continued including We $X of the senior $XX notes first of senior repay unsecured April. million in in secured and million quarter debt, to

continue debt, preserving to still repay we we're As strong liquidity.

excess quarter Liquidity our activities. recently refinancing million, cash. provides including $XXX million $XXX purchased of trade liquidity flexibility will an credit for $XX million. which We additional at ended by liquidity increase upcoming This insurance, the

CapEx benefits to production. the recent are capturing now improve of reliability, the focus on maintenance our Given improved increased we

range are our approximately lowering As we from $XXX down our $XXX CapEx to a original outlook $XXX million million, for XXXX result, of million guidance. in to a

will high-return reduce benefits incremental focused we to our projects, we capital, business. were invest expect which to able $XX still the million and $XX to maintenance million immediate to primarily While strategic provide CapEx, on of

syndicated including June and and our an and at our at the debt X.Xx ahead engaged help our in expect X.Xx, of notes, loans the We of placed for which With expectations. terms improvement in Sachs high-yield to mature on loans. lower to advise quarter. XXXX, Net structure Goldman recently the coming in initial acceptable quarter privately credit us best we refinancing ended X.X% the notes, of metrics, unsecured leverage improving senior quarter refinance

balances expense. impact interest existing further allow and cash and free Our cash flow higher debt minimize to of gross us expected will reduce the

call like back I'd over that, the to De Lyle. With to turn

De Lyle Bloomquist

Thank you, Marcus.

XX, we are XXXX first million to the $XX Slide we $XXX $XXX in initiatives. for of the on With deliver on quarter, generated between million EBITDA to year. to track making progress remain solid Turning full million

with CapEx Free annual achieved $XX in free inventory cash primarily this the also flow from million was initiatives, generated quarter. working capital generation was with managed the $XX the strong $XX lower to executed maintenance million of while was from outage in million Tartas cash quarter. flow

and free cash realized million improve our $XX flow now have million increase we we maintenance to million initial million $XX expect $X guidance reliability, to $XX operational As from CapEx estimate. XXXX, to our to an to in reduce increase of

results $XXX continuing down expect reduce X.Xx our financial quarter balances million further The to the second in cash drive net to debt. strong and while increased leverage improvement to quarter. helped we We

this improved noted, with a cash balance with increase Marcus As refinancing will efforts. credit strong coupled metrics flexibility significantly the our

due The have this senior just focused notes are Consequently, that's rates we year. quarter. with a the underlying to coming maturity the over interest in of The coming continued refinancing debt type help liquidity Reserve impact of increase Federal strong to unsecured active. keenly remain on and in to position our debt markets expect minimize We actions, recent interest the to open the the are on currently flexible utilize expense. but and

drive two we value. on remain key to areas Operationally, focused

we to volumes operational production fixed and including are and realizing unit our First, improve investments lower from reliability, costs. benefits increased increased sales

sales XX% volumes the increased total year. for business Our HPC prior from

significant outages, realizing annual annual a a increased outages, as timing maintenance the X% of increase versus in we this year, If volumes the inventories. efficiency. production we of increase significant we during maintenance normalize While quarter portion goods prior are relates the overall operational finished to even reduced for

a CapEx $X assets million spent in in with strategic $XX invest to the of including total continue million, We our capital. quarter,

a normalized CapEx However, $XX expect approximately to continue to million $XX we to on we in while reduce to million our $XX million, XXXX. CapEx catch-up execute

For year, our weighting million of with around now full to million custodial CapEx outages. a on a spend maintenance the expect annual greater to $XXX spend $XXX we

from largest quarter. complete products With market demand facilities continue match the remaining to Temiscaming Our assets Jesup two second outages in operate soft, annual will our demand. their will to and we some in

Second, our we are products. capturing a higher-value for

driven new prices are pulp prioritize products coming is XXXX, over viscose the balanced supply the the as In value year. hardware captured and and from volumes. will to not will X% period, impact specialty expected cellulose viscose markets, cellulose fluff markets prices to cellulose The contractual our from specialty prior continue remain our of online negotiations up specialty grades. we we higher XX% in cellular the prior-year Our by specialty

We in in XX% and prices XX% quarter. also increases Paperboard High-Yield Pulp realized the in increases

remain volumes. prices elevated commodity expected While in products for to expected prices the are are steady but to coming quarter, Paperboard decline

million. improvement to our guidance reflects of quarter $XX guidance XXXX $XX our that to Notably, made significant the energy offset XX, free cash for Slide flow target progress flow. million against chart free and against for includes liability. million France by we updated benefits, cash working our of million $XX capital $XX waterfall flow cash for Note our in present the payments higher EBITDA free Turning for the

were we in debt projects, As first and/or free strategic in repay quarter. which attractive discussed, our invest used both be cash will to flow accomplished either the

and remains Demands additional to purity are price prices many CS levels. the other provide on are volumes second have but strength as to in for high-single cycles. to and but digit grades industry remain prices slightly further have at will our increase expected increase the softness the logistic we are increase and raised expected in each XXXX businesses. expect costs we XX, by prices with Page mixed, Certain we and HPC high Viscose these color floor to construction constraints. Fluff half. acetate XXXX. expected are additives. productivity input ease gains prior versus food in specialty are forecasters elevated business expected cellulose On Commodity of versus offsetting realize stabilized percentages moderating, decline, sales ethers our

our on of plant first continue biomaterials track to incremental We in growth investments will in bioethanol the remains begin business, The Tartas company. make provide the production to which we for strategic believe half XXXX. in

this ethanol at to million $X company. facility is the benefit produced $XX a to expected EBITDA generation second million to annual provide The

to In remain to due to XXXX lower Paperboard, prices levels. compared will slightly but elevated the decline are material balance purchase raw moderate are over as to prices prices. while year, of the remain steady, Volumes expected expected

to volumes slightly Pulp, and logistics prices and new improve be are economic into with capacity productivity. by the market. slowdown expected the both coming impacted higher expected High-Yield are global In to eased Sales

implementation expected be not FX expenses ERP Corporate to expenses associated to with the XXXX and benefits to XXXX are due repeat in XXXX. that expected higher are than

the and quarter at our planned full a be we of largest to customer of million EBITDA due We EBITDA remain restart to $XXX million year. expect from Tartas outages deliver the Overall, outage, in facilities: we maintenance range two on-track $XXX the that for calendarization for second $XX believe to low the our some outages. the million to annual slower-than-anticipated

realized next including reduce year, progression for full to the year, to of benefit three leverage costs. improve and X.Xx expected second improved five of the both leverage the relatively are XX, we've decline. operational is EBITDA Net we Turning ratio XX% towards our net our to years. the range margin over efficiencies hold depict toward leverage our value as expected XX% the products, our Slide net for the a we to to captured and from target drive the slight to quarter steady continue Margins full as growth for

call the open to questions. please operator, that, With

Operator

Thank you.

a question-and-answer be will Instructions] you. We conducting [Operator session. Thank now

with from question. Our comes first Please with proceed Bank your question Staphos of America. George

George Staphos

timing Good or the as million $X question Paperboard that I first the for about And you, recall. do in $X you I million you I get morning, guess it think that everybody. in talk XQ? impact I mentioned, I sales presume, details. from was benefit what was? Thanks Can had,

low you a Lyle, And the EBITDA for million in $XXs relatedly, De and quarter. then, Marcus talk about

towards we One I factors Tartas, mentioned start the XQ I the you in million through low in other of that was there things cadence expect to should XQ range? heard segments go up a the EBITDA $XX and the slower earnings across correctly. if think you Can

De Lyle Bloomquist

Lyle. Good George. De is This morning,

George Staphos

De Lyle. Hey,

De Lyle Bloomquist

heard seeing the really destocking on sales from lower you've question our calls, number story and Paperboard times which first million, a of many probably $X million of The is to we half. on we as expect in of the first is further believe going the picking get QX. around -- $X up that we as quarter it's and get start a second -- levels historical go into then we'll we wane -- destocking And to growth probably into that some the around

George Staphos

Okay.

that get about how some in assuming you're projections? fair $XX me? excuse to Or that that build Is sorry up terms sequentially it of back that -- the you you of XQ XQ of million-s, not -- De versus the fair it So, low is in Lyle. terms $XX million your in

De Lyle Bloomquist

have so the destocking itself yes, versus completely in QX, We're we'll stronger of a and pickup but see QX -- say expecting, that we a we're that to little relative I the then we of don't going you'll think again, bit in would volumes believe, versus in start to thing But in little out, will half. I QX, bit uptick, see seeing played an has a QX. second volume

George Staphos

And segments, other we've of XQ to the would terms great. broadly, in should covered sequentially just the segments or across Paperboard, the XQ Okay. expect we cadence be trend if already

De Lyle Bloomquist

principally I that first the first were issues, with also think we quarter. Yeah, China the in of some High-Yield but again, I there impact type of demand destocking, saw in some the part Paperboard, think same

first in production the will our We outlined Paperboard. to reasons do light. I be the volumes that capacity we'll then out the fill for we and of pick for sell rest expect And for forward the year. able QX again think was our quite that So, quarter same up going

Marcus Moeltner

as High-Yield, cadence, so trading know, pricing sequential on (ph) is just does that pulp, down follow expect paper erosion. George, price [BEK] you And so in High-Yield

we're was and down be CS as from. facility specialty and CS Jesup, And that for acetate again volume, two -- other we because taking will actually largest light, our QX around us. some app of us as decent quarter plants, on applications for QX was our then, make robust including casings very filtration nitrocellulose. the halfway Again, well

So we that'll back -- QX. be what And will then, have in QX light in and to pick it QX. to for up experienced QX close

And but increased our we're be With as is in demands this and will Purity lower going and in ether mix going see you'll respect bit again to of the the for We're in in we on activity viscose second in a QX CS sales higher-value see commodity little in High business relating QX. see believe production half this grades. -- side to see for volumes we the actually change products. to the make pickup, around then in a to and to specialty our second business, make commodity sales other fluff, some than the we Europe, the half increase wheel lower these demand production construction our improving room of room as -- a our

George Staphos

mentioned businesses fluff, that guidance you commodity hardwood dropped of year? has your for because filter it's whether Understood. it's this it, of Thank And it grades, you I'll How your terms this. already mean, you kind Can what's into China for a I you. does covered or I you about over one. a turn after know however, it directionally, to at of qualitatively, on viscose in pricing want -- talk embedded High-Yield, but the provide the ton. $XXX to difficult expectations over commodity call, prices sort

De Lyle Bloomquist

so start coming QX If the to it I And on High-Yield, you expect a fairly a And the average QX, and some leveling think roughly, QX I'll average demand pick got increasing qualitative will that pricing we're is little that that. dropping $XXXs. allude, of then -- for XX%, the China lag you as up on guidance bit. month see and of one Yeah. We're that as a say, in through for to we our with got actually and remember it pricing roughly, out mid-$XXXs QX. down, sales further our support get prices expecting I to then in it give has you the we and market will go in let's in QX. be sales the mean, substantially speaking see on up pricing the we we primarily

In contract. in there our going call is to had Paperboard mentioned that static. again, think under business we last be We of is Paperboard the relatively two-thirds roughly earnings

spot We are business seeing there. on we some softness the that have

pricing is relative that Paperboard expected lower note, offsetting to second that continue will business decline because what's potential from QX in so for earnings expect our that, to important that strong. be half. pulp we we will to will and and benefit prices, in business what But the it's we So, the experienced the

side business, it's cellulose the strong. the very CS On it, of

As be the noted in we've to 'XX up the expect pricing will that we the to 'XX high-single and relative digits strong in throughout stay year.

probably around On the fluff QX. be will we the and business, commodity pricing the around pricing before to on start QX low we into seeing viscose the stabilize start that fluff point improve and expect

George Staphos

color. you Thank for so Okay. much the

De Lyle Bloomquist

Yeah.

Operator

RBC comes with Thank proceed from with question Quinn Markets. Paul you. [Operator next Our Please question. Capital your Instructions]

Paul Quinn

Good thanks, Yeah, morning. guys.

holistic your press referenced in refinancing release. You

and Just wondering refinancing you're to component you, what equity? in in the whether that any means looking of for

De Lyle Bloomquist

-- given looking not, the Hey, our at three ago. doing. is, Paul, just second obviously, get that in and Lyle. able we improved price, market is your which believe open. is part than interested we'll not at that that question, are be we're is And absolutely credit I'll the a a of equity, that metrics, that at were the markets in first find We this debt months reasonable right higher a we to level De to believe we're is something answer the if use

we'll this that as or debt. But a a syndicated a of with are strongly those structures, it's be consequence, whether we have because But be that refinance able we our able here result loans. privately all to to kinds looking of it's our we are, as of different because at accrued actually debt placed options, we at debt -- going be that, believe whether is to looking high-yield, loans we're metrics credit indicative credit. we metrics tact of our and B -- credit believe we And where

Marcus Moeltner

know, this interest again to you that been so business balance stay we we're can rate messaging we on in. And committed consciously refinancing, the our to that the our to we're as your to have currently going -- a resize with to environment higher cash as manage approach look comment Paul, flexibility operating we've next refinancing such we been has that holistic,

on So, I think it's refi. the something smaller

De Lyle Bloomquist

the thing but or probably use million balance we ways on amount we ABL, that given use $XX more Right. the a the importantly debt other And note have, to conclusion here. sheet that to rise the we on can -- to the our cash proper downsize have offering capacity get of to as it to is

believe we liquidity, a than just So, better three have sufficient had even we much position credit months we ago.

Paul Quinn

Okay.

So that do that million? somewhere the refinancing you'll $XXX around assumes

De Lyle Bloomquist

I needed Well, is what's consider. I'm what that a don't lower refinance directionally the of -- options but going certainly again, to to and will we level, to not to go downsize out one that's if it, commit at level

Paul Quinn

it. Okay. I get

over difficult turning specific and Just the on end-markets High-Yield, really particularly that here. High-Yield I to all appreciate looks your color

wondering going the operation production the of at Just Paperboard? run Is decision for when back to basically just in Temiscaming close the QX? scale and that

De Lyle Bloomquist

hard raised production, our look But we cash pricing questions. to obviously gets we shut reduce to that will very maybe if You or two. down realized our cost, variable a a line down

two open or we -- down below our find other keep continue will line lines But pricing line the gets So, probably our know, those feed to variable one can High-Yield. shut feeds down, cost. assume that if you Paperboard business, As have Temiscaming, and one right? of in business to lines Paperboard near we of we

Paul Quinn

luck. Best of color. it. for Thanks Got the

Operator

Thank you.

comes George Staphos Bank question Please proceed question. America. Our your from of with with next

George Staphos

A to Hey, couple here. me from finish up guys.

companies affects like mean, finding in it demand? last getting the maybe this, that the sure given you overtime? term, customers plastic been for extent talking outlook I of expectations frequently whether I'm business terms volatility, how not to anything would, one. near certainly you are customers' the that's for terms market your Are seeing benefit? that I quarter but of are and fiber the number in usage That's talk the changed substitution, any about pulp but products in you're direct improving you to of mean, with that's you've the as So, and normally obviously what

what Number you? flexibility What do gives this credit then you you insurance follow-ons. do two. had have means? me bit And of couple tell a it? purchase a Can about to little Why I

De Lyle Bloomquist

believe fuel the based as the to around respect story products, getting changes only and on Europe, of only on the has and story is away strengthening. fossil with fuel replacing particularly bioenergy Okay. we've call moves sustainability I demand and that any again think more so we With fiber the world, particularly and States arena from products toward well-positioned United fuels that that with we the sustainable fossil based that strengthened, -- heard may with sources. story And bioethanol. whether into we're And say that

sales other from particularly customers Now, products. other start in plastics were that is customers and -- applications of seeing I into going some in with to impact around the around bioethanol of the really and Maybe, when think translate more you're we that from But developing bring at who in plant Tartas. -- type pull-through the particularly with Eastman some XXXX? 'XX, some on acetate also those our going to

The question... second

Marcus Moeltner

I can that take George.

trade advance credit expands on foreign rates customers. effectively the insurance for So, receivables our

end trade on to up I that we credit basis expansion in with this million where an our of to a ABL quarter. of $XX million comparable think $XX So, insurance,

George Staphos

questions then last me. from two I see. And

in First million whether how global to the is energy scenario some project? sensitive unaffected are outlook? you're energy $XX relatively or price it is that $X lower, we your the by -- affect that overall have generally of a all, higher, the Is on extent million to under it's to couple on that's million that, energy million to $XX I you, okay, the that $X levels dollars Does bioethanol million seeing slowdown energy pressure. we on expecting prices moved return at some down recession, think to So, all what or are coming pricing? projects of the generate, and

your recognizing in to that And any then, it -- from dissolving, whether grade it's mostly you projects just hardwood, luck can any the the quarter. the any seeing markets impact, in seeing extent, good capacity? you Thanks capacity on -- sort seeing guys, us are we're increase paper you're of of has what into in new projects encroachment and this but swing update

De Lyle Bloomquist

All the Thank a bioethanol. off, multinational corporation we got the contract with to major business George, Yeah, respect five-year to right. our you. bioethanol -- the first with buy

George Staphos

it. Got

De Lyle Bloomquist

basis. a on pay or take Essentially

to bioethanol second plant EU. What the generation use that on a that is and from non-food make bioethanol source, produced The actually making that is that it's point mandated. of second it's actually bioethanol. being is is is this The a means this the mandated by

And of what generation so mandates the you generation in call as look bioethanol. -- a at and when if tighter. relative see the second stable, would is not premium relatively it's tighter the get increasing bioethanol, at pricing significant I fact pricing to one And

we million generate to of to still that on $X business an the annualized million continue basis. think the will $XX EBITDA So,

What your second of was question? the part

George Staphos

about you have of fair that. Yes, any markets? you but there's in. dissolving sorry to it's Yes, It's start swing all Is do of paper hardwood just lots a Thank mostly encroach that's I And and that guys. amount capacity [indiscernible] had. your grade, coming capacity. on of

De Lyle Bloomquist

technically to going don't foreseeing it into any Yeah, We comes the make. very down we difficult see to actually are make value fact that not and that we that, that we're for the products, where swing products are our gain to over markets of capacity very that really best the George. think come and we're are customized, looking to

acetate want it business market, the the don't to in capability just the because there." that knowledge to be and and And plastic market that I up think pulp saying, "Hey, to the acetate matter a into product, it's move in so, I'm paper of is just from production, and in that -- I going

Marcus Moeltner

know, think, X% I just our you enterprise of maybe George, sales. highlight, to viscose, as

small differentiate we comparison, softwood capacity ourselves on well. and So this in hardwood versus as

George Staphos

Very you, luck good, and quarter. Thank the good in guys.

De Lyle Bloomquist

Thank you.

Operator

over at are Lyle I for the and back turn time. President closing no De CEO, would to like There to Bloomquist, further you. Thank questions comments. floor this

De Lyle Bloomquist

time thank for all Well, you today. your

achieving that to right our our next I and continue forward on look August. we leverage, of we goals. the reduce year our our efforts strategic I and to company the and our proud in improve financial within will noted, our started all As confident to profitability of am coming update and the path

here us. there's feel between So, out free questions, reach any to then, and if to

Operator

concludes today's teleconference. Thank you. This

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

Rayonier Advanced Materials (RYAM) 10 May 232023 Q1 Earnings call transcript