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Rayonier Advanced Materials Reports Third Quarter Results

The following excerpt is from the company's SEC filing.

Raises 2015 pro forma EBITDA guidance to

approximately $230 million

Continues progress toward $40 million cost-reduction initiative

Reduces net debt by $86 million through first nine months and $136 million since separation

JACKSONVILLE, Fla., Oct. 28, 2015 - Rayonier Advanced Materials Inc. (NYSE:RYAM) (the “Company”) today reported net income for the third quarter 2015 of

$32 million

, and

diluted earnings per share, compared to net income of

$19 million

diluted earnings per share for the same period in 2014.

Pro forma net income for th e third quarter 2015 was

$33 million

per share compared to

$22 million

per share for the prior year period. Year-to-date pro forma net income was

$60 million

$80 million

per share, for the prior year period.

“Our year-to-date results reflect the significant progress we have made on our initiatives to reduce cost and improve operational efficiency. Our execution in these areas over the last nine months has positively impacted our operating performance and allows us to raise 2015 pro forma EBITDA guidance to

,” said Paul Boynton, Chairman, President and Chief Executive Officer.

Third Quarter and Year-to-Date Results

Sales of

$257 million

for the quarter were comparable to third quarter 2014. Sales for the nine months ended

September 26, 2015

$700 million

, were also comparable to the prior year period. As expected, cellulose specialties prices were down 6 percent and

7 percent

from the prior year three month and nine month periods, respectively, reflecting the results of our 2015 price negotiations. Cellulose specialties sales volumes for the three months were slightly higher and, for the nine months, slightly lower compared to the prior year periods. Commodity product sales volumes increased significantly reflecting improved production efficiency and more operating days in 2015.

Pro forma operating income was

for the third quarter, up 28 percent from the prior year, as stronger cellulose specialties and commodity volumes combined with lower costs more than offset lower cellulose specialties sales prices. Costs were lower due to cost reduction activities and favorable wood, chemical and energy prices. Year-to-date, pro forma operating income was

$118 million

, down 13 percent from the prior year period as lower cellulose specialties sales prices and volumes were partially offset by lower costs and higher commodity sales volumes. In addition, the year-to-date 2014 period reflects carve-out accounting treatment for the first six months of the year. As such, the selling and general expenses are not comparable to the stand-alone company’s costs.

During the quarter, the Company continued to make progress on its $40 million annualized cost-savings initiative. Year-to-date savings of roughly

$21 million

are reflected in operating results. The Company is currently targeting at least $

million in permanent cost savings to be realized in 2015 operating results with an annualized run-rate approaching $40 million by year-end.


1301 Riverplace Boulevard Suite 2300 Jacksonville, FL 32207

904.357.4600 fax 904.357.9101

Exhibit 99.1

Interest Expense, Net

Interest expense, net of interest income, was

$27 million

reflecting the debt issued to effect the separation.

Income Tax Expense

The 2015 year-to-date effective tax rate was 33 percent, compared to 30 percent for the same period in the prior year. The prior year period reflects the reversal of a tax reserve. The full year effective tax rate is expected to be between 33 and 34 percent.

The year-to-date effective tax rate was below the federal rate of 35 percent primarily due to the benefit of the domestic manufacturing tax deduction and state tax credits, partially offset by an adjustment to the state deferred tax rate. The impact of the manufacturing deduction on the effective tax rate is greater in periods that include expenses that reduce pre-tax income but are not currently deductible for income tax purposes.

Cash Flow and Liquidity

Year-to-date, the Company generated $183 million of pro forma EBITDA and

$92 million

of adjusted free cash flow; as a result, net debt has been reduced by $86 million since December 31, 2014. As of

, the Company had

$336 million

of liquidity including $236 million available under its revolving credit facility after taking into account outstanding letters of credit.


“The persistent imbalance of supply and demand, coupled with other global economic headwinds, including a...