Rayonier Advanced Materials Inc. (RYAM) reported a net loss of $17 million, or $(0.26) per diluted share, for the quarter ended July 1, 2023, compared to a net loss of $23 million, or $(0.36) per diluted share, for the prior year quarter. Loss from continuing operations for the quarter ended July 1, 2023 was $16 million, or $(0.24) per diluted share, compared to a loss from continuing operations of $25 million, or $(0.39) per diluted share, for the prior year quarter.
“Results for the Q2 reflected shifting market conditions across several key end markets. Despite facing volume pressure due to destocking in certain areas of our Cellulose Specialties and Paperboard businesses, we successfully increased prices by 13% and 4%, respectively, from the previous year, demonstrating our commitment to prioritizing value over volume. Moreover, we are experiencing downward pressure on commodity prices across all our segments, which intensified during the quarter. We are reacting by taking downtime at our High-Yield Pulp plant to reduce costs, minimize losses and monetize inventories. We are also reviewing strategic options with respect to our non-fluff High Purity Cellulose commodity businesses, specifically including viscose and paper pulp products,” said De Lyle W. Bloomquist, RYAM’s President and CEO. “Consequently, we are revising down our 2023 Adjusted EBITDA guidance, but raising our free cash flow guidance as we reduce capital expenditures and monetize additional working capital. The lower EBITDA guidance is driven primarily by a softer outlook for commodity pricing and lower sales volumes in Cellulose Specialties and Paperboard. Overall, reductions in commodity prices are impacting our 2023 EBITDA guidance by approximately $45 million, which we expect to partially offset with proactive cost reduction measures of nearly $40 million that is expected to be realized in the second half of the year.”
High Purity Cellulose
Net sales for the Q2 2023 decreased $2 million, or 1%, to $300 million compared to the same prior year quarter. Included in the current and prior year quarters were $22 million and $24 million, respectively, of other sales primarily from bio-based energy and lignosulfonates.
Operating income for the three and six months ended July 1, 2023 decreased $7 million and increased $14 million, respectively, compared to the same prior year periods. The current quarter decrease was driven by the lower cellulose specialties sales volumes and commodity products sales prices and increased labor and maintenance costs due to inflation, partially offset by higher cellulose specialties sales prices and commodity products sales volumes and decreased costs of certain inputs.
Paperboard
Net sales for the Q2 2023 decreased $15 million, or 24%, to $48 million compared to the same prior year quarter. Net sales for the six months ended July 1, 2023 decreased $10 million, or 9%, to $107 million compared to the same prior year period.
Operating income for the three and six months ended July 1, 2023 decreased $4 million and was flat, respectively, compared to the prior year periods. The current quarter decrease was driven by the lower sales volumes, partially offset by the higher sales prices. In the year-to-date period, the higher sales prices were offset by the lower sales volumes and higher purchased pulp, chemicals and energy costs.
High-Yield Pulp
Net sales for the Q2 2023 increased $4 million, or 10%, to $44 million compared to the same prior year quarter. Net sales for the six months ended July 1, 2023 increased $24 million, or 39%, to $86 million compared to the same prior year period.
Operating results for the three and six months ended July 1, 2023 improved $3 million and $10 million, respectively, compared to the prior year periods, driven by the higher sales prices and sales volumes. In the year-to-date period, the higher sales prices and sales volumes were partially offset by increased wood and logistics costs and higher labor and maintenance costs due to inflation.
RYAM is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly used in the production of filters, food, pharmaceuticals and other industrial applications. The Company also manufactures products for paper and packaging markets.
