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Mar 28, 2020
Rayonier AM Q1 2020 Earnings Report
Rayonier AM's first quarter performance reflected a loss from continuing operations, but EBITDA improved due to lower costs and operational reliability, despite being disrupted by the COVID-19 outbreak.
Key Takeaways
Rayonier Advanced Materials reported a first-quarter loss from continuing operations of $25 million, comparable to the prior year. EBITDA improved by $17 million to $27 million, driven by lower costs from improved reliability. The company maintains solid liquidity at $145 million and expects second-quarter 2020 results to be well above the prior year.
Established safety protocols in response to COVID-19, including remote work and enhanced sanitation.
Operations were curtailed for products with significantly reduced demand, and annual maintenance outages were delayed.
Maintained a strong focus on cost reductions and streamlined capital expenditures.
EBITDA improved by $17 million driven by lower costs from improved reliability.
Rayonier AM
Rayonier AM
Rayonier AM Revenue by Segment
Revenue by Segment
Paperboard Revenue
CapyFin.comHigh-Yield Pulp Revenue
CapyFin.com Forward Guidance
The Company expects varying impacts across its segments due to COVID-19. High Purity Cellulose sees modest impact, Forest Products manages production balancing lumber demand and wood chip availability, Paperboard experiences limited impact, and Pulp & Newsprint sees positive pricing momentum for high yield pulp but declining demand for newsprint.
Positive Outlook
- Strength in food and pharmaceutical end-markets is mostly offsetting weakness in the automotive and certain industrial segments for High Purity Cellulose.
- The Company has realized significant pricing momentum in absorbent materials (fluff pulp) markets with strong demand globally.
- Remodeling activity remains robust as demand for stud lumber products from lumber retailers continues above expectations for Forest Products.
- Paperboard profitability has benefited from lower input costs.
- The Company is experiencing positive pricing momentum for its high yield pulp products with weakness in Europe being more than offset by increased demand in China.
Challenges Ahead
- Customers are beginning to experience weakness in acetate industrial and textile applications.
- Viscose pulp markets remain extremely weak due to tariffs and stay-at-home directives.
- Lumber sales prices had fallen 35 percent below the prior six-week levels due to buyer reaction to the potential impact of COVID-19.
- Demand for newsprint products has declined significantly, an estimated 12 percent from prior year and accelerating into April.
- The outlook for the balance of the year is far from certain due to COVID-19.
Revenue & Expenses
Visualization of income flow from segment revenue to net income