RAYONIER ADVANCED MATERIALS INC. Q4 FY2024 earnings call

• 2024 was a year of execution, resilience, and strategic progress with EBITDA growth, improved free cash flow, and balance sheet strengthening.
• Key initiatives for 2025 include new segment reporting, debt reduction (limited due to market uncertainties), reducing commodity exposure, advancing biomaterials projects (AGE project, BioNova initiatives), and evaluating strategic capital investments for biomaterials and cellulose cost efficiency with high ROE and short payback.
• 2025 EBITDA guidance ranges $215M-$235M, adjusted free cash flow $25M-$45M, with biomaterials expected to contribute $8M-$10M, paperboard $15M, etc.

High Purity Cellulose (HPC): 2024 sales declined by $11 million to $1.3 billion. Despite a 5% net increase in overall HPC pricing (driven by higher mix of cellulose specialties), total sales volumes fell by 5% (10% rise in CS sales offset by 19% decline in commodity sales). EBITDA rose by $93 million to $237 million, with EBITDA margins improving from 11% to 18.2%. Paperboard: Sales grew by $9 million to $228 million. EBITDA declined by $4 million to $48 million, mainly due to lower pricing, higher labor costs, and custodial site costs, though margins declined to 21.1%. High Yield Pulp: Sales declined by $9 million to $127 million. Segment EBITDA declined by $4 million to a $5 million loss, affected by lower prices, higher labor costs, and custodial site costs.

• 2025 EBITDA expected in range $215M-$235M, subject to tariffs.
• Adjusted free cash flow expected $25M-$45M.
• Biomaterials projects expected to generate $55M EBITDA once full production.
• Cellulose specialties projected EBITDA $255M-$265M, paperboard $15M, high yield pulp negative $15M.

• Tariffs on paperboard sales, potential retaliatory measures in cellulose specialties and commodities.
• Oversupply in high yield pulp and new paperboard capacity impacting prices.
• Uncertainty around trade environment affecting financial and operational performance.

Q: Regarding capital allocation and sale of paperboard/high yield pulp assets, any update on cadence of spend and market for assets?

A: Maintenance CapEx heavier in first half due to outages; strategic CapEx likely heavier in second half. Sale of assets delayed due to oversupply, new capacity, and tariff uncertainty.

Q: Outlook for CS volumes and ethers demand?

A: Acetate destocking global, mid-single-digit decline; ethers demand improving due to restocking and end uses like food/pharma.

Q: One-time benefits in HPC 2024 and tariff impact/biomaterials EBITDA?

A: ~$15M one-time benefits in 2024 (SEWS, Temiscaming suspension). Tariff impact on paperboard mitigated by Canadian sales conversion. Biomaterials EBITDA to increase with AGE project and other initiatives, expecting higher run rate by 2028.