Rayonier AM Q3 2020 Earnings Report
Key Takeaways
Rayonier Advanced Materials reported income from continuing operations of $29 million for the quarter ended September 26, 2020, compared to a loss of $14 million for the same prior year quarter. The positive results were driven by strong lumber prices, better reliability in High Purity Cellulose, and a focus on reducing costs.
Third quarter income from continuing operations was $29 million, $43 million better than comparable quarter in 2019
Third quarter Adjusted EBITDA of $55 million, up $19 million from comparable quarter in 2019 primarily driven by higher lumber prices, improved reliability in High Purity Cellulose operations and lower costs
Generated $34 million of Free Cash Flow through the third quarter driven by reduced capital expenditures and improved working capital
Improved liquidity of $196 million, excluding a $33 million cash tax refund expected in fourth quarter plus an additional $22 million expected over the next twelve months
Rayonier AM
Rayonier AM
Rayonier AM Revenue by Segment
Forward Guidance
The full year outlook for each of the Company’s segments remains difficult to provide due to the uncertainty of the magnitude and timing of economic recovery due to the COVID-19 pandemic and the risk of supply chain disruptions beyond the control of the Company. As such, the Company has determined to suspend its guidance.
Positive Outlook
- viscose prices have improved from lows and are expected to continue into the fourth quarter, with price increases for both October and November, marking the first increase in two years.
- Overall, the Company expects higher commodity sales in the fourth quarter due to shipping delays and strong production in the third quarter.
- Market prices reached all-time highs in September before trailing off in October.
- The Company expects strong volumes in the fourth quarter with historically high sales prices.
- Prices have recently increased, while overall input costs have remained stable and the Company expects to produce at normal levels for the near future with elevated sales volumes in the fourth quarter due to improved logistics.
Challenges Ahead
- weakness in the industrial, automotive and construction markets
- cellulose specialties is highly dependent on the global economic recovery, which will likely continue to be impacted by the pandemic for the foreseeable future.
- fluff pulp prices have declined modestly.
- Demand for newsprint products has declined approximately 31 percent since the beginning of the year, primarily due to COVID-19, resulting in reduced sales prices and volumes.
- Paperboard for packaging and lottery markets have been generally resilient, while commercial printing has shown weakness.
Revenue & Expenses
Visualization of income flow from segment revenue to net income