Rayonier Advanced Materials : Financial Documents

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RYAM Announces Second Quarter 2022 Results

Updating Full Year Adjusted EBITDA Guidance to Exceed $160 million

• Revenues for the second quarter of $399 million, up 17 percent from prior year quarter
• Net loss from continuing operations for the second quarter of $25 million
• Adjusted EBITDA from continuing operations was $34 million, comparable to the same quarter in 2021
• Higher prices across all segments were partially offset by inflation on key input costs

JACKSONVILLE, Fla., August 3, 2022 - Rayonier Advanced Materials Inc. (NYSE:RYAM) (the "Company") reported a net loss of $23 million or $(0.36) per diluted share for the quarter ended June 25, 2022, compared to net income of $122 million or $1.89 per diluted share for the same prior year quarter. The net loss from continuing operations for the quarter ended June 25, 2022, was $25 million or $(0.39) per diluted share, compared to net income from continuing operations of $8 million or $0.13 per diluted share for the same prior year quarter. The Company sold its lumber and newsprint assets in the third quarter of 2021, and as a result, presents the results of those operations as discontinued operations. Net income from continuing operations in the prior year quarter included a $25 million tax benefit resulting from remeasuring the Company's Canadian deferred tax assets at a higher tax rate following the announcement of the disposal. Unless otherwise stated, information in this press release relates to continuing operations.

"With the successful completion of the planned maintenance outages at each of our four manufacturing sites in the first half of 2022, we are well-positioned to increase productivity, profitability and cash flow." said De Lyle W. Bloomquist, President and Chief Executive Officer. "Demand for all of our products remains strong. We are updating our full year Adjusted EBITDA guidance to exceed $160 million. With these expected stronger financial results and continued improvement in working capital, we expect to generate significant cash flow in the back half of the year which will allow us to further reduce our debt levels."

CORPORATE HEADQUARTERS

1301 Riverplace Boulevard Suite 2300 Jacksonville, FL 32207 904.357.4600 fax [phone] www.RYAMglobal.com

Second Quarter 2022 Operating Results from Continuing Operations

The Company operates in the following business segments: High Purity Cellulose, Paperboard, High-Yield Pulp and Corporate.

Net sales comprised the following for the periods presented:

				Three Months Ended				Six Months Ended
	Net sales	June 25, 2022		March 26, 2022		June 26, 2021		June 25, 2022		June 26, 2021
	(in millions)
	High Purity Cellulose		$	302		$	281		$	255		$	583		$	504
	Paperboard		63			54			57			117			105
	High-Yield Pulp			40			22			37			62			64
	Eliminations		(6)			(5)			(8)			(11)			(13)
	Total net sales		$	399		$	352		$	341		$	751		$	660

Operating results comprised the following for the periods presented:

				Three Months Ended				Six Months Ended
	Operating income (loss)	June 25, 2022		March 26, 2022		June 26, 2021		June 25, 2022		June 26, 2021
	(in millions)
	High Purity Cellulose		$	7		$	(8)		$	11		$	(1)		$	17
	Paperboard		10			6			2			16			8
	High-Yield Pulp			(2)			-			1			(2)			1
	Corporate		(18)			(14)			(13)			(32)			(25)
	Total operating income (loss)		$	(3)		$	(16)		$	1		$	(19)		$	1

High Purity Cellulose

Net sales for the quarter increased $47 million or 18 percent to $302 million compared to the prior year period. Net sales for the six months ended June 25, 2022, increased $79 million or 16 percent to $583 million compared to the prior year period. Included within net sales for the three- and six- months periods ended June 25, 2022, was $24 million and $51 million of other sales, respectively, primarily from biobased energy and lignin. Sales prices increased 20 percent and 19 percent during the three-month and six-month periods, respectively, when compared to the same prior year period, driven by an increase for cellulose specialties prices of 20 percent and 15 percent, respectively, and an increase in commodity prices of 10 percent and 21 percent, respectively. Total volumes increased 1 percent and declined 2 percent during the current three-month and six-month periods, respectively. Operating results for the three and six months ended June 25, 2022, declined $4 million and $18 million, respectively, when compared to the prior year. Costs increased compared to the prior year periods driven by inflation on key inputs, including chemicals, wood fiber and energy costs, and higher supply-chain expenses. Energy costs for the three and six months ended June 25, 2022, are partially offset by $5 million and $10 million favorable impact, respectively, of excess emission allowances sales associated with the operations in Tartas, France.

Compared to the first quarter of 2022, operating income increased by $15 million driven by higher cellulose specialties sales prices due to the cost surcharge and higher sales volumes partially offset by higher key input costs. Total sales volumes declined by 1 percent driven by lower commodity sales volumes. Sales volumes continue to be impacted by supply chain constraints.

Paperboard

Net sales for the quarter increased $6 million or 11 percent to $63 million compared to the prior year period. Net sales for the six months ended June 25, 2022, increased $12 million or 11 percent to $117 million compared to the prior year period. Sales prices increased 25 percent and 22 percent during the three-month and six-month periods, respectively, when compared to the same prior year period, driven by strong demand. Sales volumes decreased 10 percent and 8 percent during the three -month and six- month periods, respectively, when compared to the same prior year period, driven primarily by lower productivity. Operating

CORPORATE HEADQUARTERS

1301 Riverplace Boulevard Suite 2300 Jacksonville, FL 32207 904.357.4600 fax [phone] www.RYAMglobal.com

results for both the three and six months ended June 25, 2022, increased $8 million when compared to the same periods in the prior year, driven by higher sales prices partially offset by higher raw material pulp input costs and lower sales volumes.

Compared to the first quarter of 2022, operating income improved by $4 million driven by a 9 percent increase in sales prices and a 7 percent increase in sales volumes.

High-Yield Pulp

Net sales for the three months ended June 25, 2022, increased $3 million or 8 percent to $40 million compared to the prior year period, driven by a 12 percent increase in sales prices. Net sales for the six months ended June 25, 2022, decreased $2 million or 3 percent to $62 million compared to the prior year period, driven by a 14 percent decline in sales volumes partially offset by a 15 percent increase in sales prices. Operating results for the three months ended June 25, 2022, declined by $3 million when compared to the same period in the prior year due to higher sales prices more than offset by lower productivity and higher input and supply chain costs. Operating results for the six months ended June 25, 2022, declined by $3 million when compared to the same period in the prior year due to higher sales prices more than offset by lower productivity and higher input and supply chain costs.

Operating results decreased by $2 million when compared to the first quarter of 2022 driven by higher volumes and higher sales prices more than offset by higher input and supply chain costs.

Corporate

The operating loss for the three-month period ended June 25, 2022, increased by $5 million to $18 million, when compared to the same prior year period, driven by an increase in severance and variable stock-based compensation costs partially offset by favorable foreign exchange impacts. The operating loss for six-month period ended June 25, 2022, increased by $7 million to $32 million when compared to the same prior year period driven by an increase in severance and variable stock-based compensation costs partially offset by favorable foreign currency impacts.

Compared to the first quarter of 2022, the operating loss increased by $4 million, to $18 million, driven primarily by an increase in severance and variable stock-based compensation costs.

Non-Operating Expenses

Interest expense for the three and six months ended June 25, 2022, was flat and increased by $1 million, respectively, when compared to the same prior year period. Interest expense during the three months ended June 25, 2022, was flat when compared to the first quarter of 2022.

Included in non-operating expenses, for the three-month and six-month period ended June 25, 2022, is a $4 million loss and $5 million gain, respectively, associated with the shares of GreenFirst Forest Products, Inc. ("GreenFirst"). The shares were received in connection with the sale of lumber and newsprint assets in August 2021 and were sold in May 2022 for $43 million.

Income Taxes

The effective tax rate on the loss from continuing operations for the three and six months ended June 25, 2022, was an expense of 18 percent and 12 percent, respectively, compared to a benefit of 153 percent and 77 percent, respectively, for the same periods in the prior year. The 2022 effective tax rate differs from the statutory rate of 21 percent primarily due to disallowed interest deductions in the U.S. and nondeductible executive compensation, partially offset by US tax credits and tax return to accrual adjustments. The 2021 effective tax rates differ from the statutory rate of 21 percent primarily due to a tax benefit recognized by remeasuring the Company's Canadian deferred tax assets at a higher blended statutory tax rate in Canada. The statutory tax rate is higher as a result of changing the allocation of income between the Canadian provinces after the sale of Forest Products and Newsprint was completed.

CORPORATE HEADQUARTERS

1301 Riverplace Boulevard Suite 2300 Jacksonville, FL 32207 904.357.4600 fax [phone] www.RYAMglobal.com

Discontinued Operations

As a result of the sale of lumber and newsprint assets, the Company is presenting prior year results for the Forest Products and Newsprint segments as discontinued operations.

The sale was completed on August 28, 2021. The cash received at closing was preliminary and subject to final purchase price and other sale-related adjustments. During the first quarter of 2022, the Company trued-up certain sale-related items with GreenFirst for a total net cash outflow of $3 million, as previously disclosed. No changes occurred during the second quarter of 2022 to the previously recorded gain on sale. Pursuant to the terms of the asset purchase agreement, GreenFirst and the Company continue efforts to finalize the closing inventory valuation adjustment.

Cash Flows & Liquidity

For the six-month period ended June 25, 2022, the Company used $36 million in its operating activities from continuing operations. The operating cash outflows include the impact of working capital, which decreased $32 million during the period primarily driven by the extensive planned maintenance outages through the second quarter.

For the six-month period ended June 25, 2022, the Company used $87 million in its investing activities for continuing operations. The investing cash outflows related to capital expenditures, net of proceeds from sale of assets, including approximately $16 million of strategic capital spending focused on enhancing reliability and productivity.

For the six-month period ended June 25, 2022, the Company used $22 million in its financing activities for continuing operations for payments of long-term debt offset by borrowing related to the Tartas bioethanol projects.

The Company ended the quarter with $274 million of liquidity globally, including $148 million of cash, borrowing capacity of $108 million under the ABL Credit Facility and $18 million of availability on the factoring facility in France. The Company expects to receive $21 million from a U.S. federal tax refund in 2022.

With its next significant maturity in early 2024, the Company continues to monitor the capital markets and is prepared to opportunistically refinance its Senior Notes due June 1, 2024, at the appropriate time considering market conditions and all other relevant factors. The Company is confident that by executing on its strategy to improve its credit profile in the back half of 2022 it can obtain a refinancing at acceptable terms based on market conditions. The Company may also use a portion of its cash balances to opportunistically repay debt or assist in a holistic refinancing of its capital structure.

Market Assessment

The market assessment represents the Company's best current estimate of each business segment in this environment.

Overall, the Company expects to exceed $160 million of Adjusted EBITDA for 2022, subject to ongoing supply chain constraints. Additionally, the Company expects to reduce its Net Debt to $725 million by the end of the year. As the Company reduces this leverage ratio, it expects to refinance its Senior Notes due in June 2024.

High Purity Cellulose

Demand for cellulose specialties and commodity products remain strong. As such, average sales prices are expected to remain elevated in the third quarter. Sales volumes are expected to increase significantly as the Company increases productivity with the completion of all of its planned maintenance outages in the first half of 2022. However, total sales volumes remain dependent on managing ongoing supply-chain constraints. Overall, Adjusted EBITDA for the segment is expected to grow significantly in the third quarter compared to second quarter and for the full year compared to 2021. The Company is also updating standard cellulose specialties contracts to allow for greater flexibility.

Paperboard

CORPORATE HEADQUARTERS

1301 Riverplace Boulevard Suite 2300 Jacksonville, FL 32207 904.357.4600 fax [phone] www.RYAMglobal.com

Paperboard prices continue to increase driven by strong demand in both commercial printing and packaging segments. Price increases are expected to offset raw material cost increases in the third quarter, while sales volumes are expected to stay consistent with prior quarter. As a result, Adjusted EBITDA is anticipated to remain stable in the coming quarter.

High-Yield Pulp

High-yield pulp markets remain positive with realized prices expected to increase in the third quarter. Sales volumes remain dependent on production and supply chain constraints, while costs are expected to moderate slightly. Overall, Adjusted EBITDA is anticipated to improve in the coming quarter.

A Sustainable Future

For over 95 years, the Company has invested in renewable product offerings. As consumers demand sustainable products, the Company's biorefinery model provides a platform to grow existing and new products to address needs of the changing economy. The Company remains enthusiastic about growing its biobased product offering. In the first six months of 2022, non-pulp sales in the High Purity Segment were $51 million primarily from sales of bioelectricity and lignin. The Company is investing in expanding its biomaterial product offering and expects to grow these sales and increase overall margins over time.

The Company's investment into a bioethanol facility at its Tartas, France facility was expected to be operational in mid-2023. Given permitting delays the project is currently behind schedule. Further updates will be provided as the schedule is finalized.

The Company also remains committed to further managing its environmental impact. Earlier this year, the Company established a goal to reduce carbon emissions by 40 percent by 2030, using 2020 as a base year.

Conference Call Information

RYAM will host a conference call and live webcast at 9:00 a.m. ET on Thursday, August 4, 2022 to discuss these results. Supplemental materials and access to the live audio webcast will be available at www.RYAMglobal.com. A replay of this webcast will be archived on the company's website shortly after the call.

Investors may listen to the conference call by dialing 888-645-4404, no passcode required. For international parties, dial 404- 267-0371. A replay of the teleconference will be available one hour after the call ends until 6:00 p.m. ET on Thursday, August 18, 2022. The replay dial-in number within the U.S. is 877-660-6853, international is 201-612-7415, Conference ID: 13731224.

About RYAM

RYAM is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly found in filters, food, pharmaceuticals and other industrial applications. The Company also manufactures products for paper and packaging markets. With manufacturing operations in the U.S., Canada and France, RYAM employs just over 2,500 people and generated $1.4 billion of revenues in 2021. More information is available at www.RYAMglobal.com.

CORPORATE HEADQUARTERS

1301 Riverplace Boulevard Suite 2300 Jacksonville, FL 32207 904.357.4600 fax [phone] www.RYAMglobal.com