Rayonier AM Q3 2023 Earnings Report
Key Takeaways
Rayonier Advanced Materials Inc. reported a net loss of $25 million for the quarter ended September 30, 2023, compared to a net income of $30 million in the prior year quarter. The company is revising down its 2023 Adjusted EBITDA guidance to approximately $150 million but raising its free cash flow guidance to $65 to $75 million.
Loss from continuing operations for Q3 was $27 million, a decrease of $45 million year-over-year.
Adjusted EBITDA from continuing operations for Q3 was $24 million.
Year-to-date cash provided by operating activities totaled $82 million, with total debt at $749 million.
The company updated its 2023 Adjusted EBITDA guidance to approximately $150 million and raised its 2023 Adjusted Free Cash Flow guidance to $65 million to $75 million.
Rayonier AM
Rayonier AM
Rayonier AM Revenue by Segment
Forward Guidance
Rayonier Advanced Materials anticipates a loss from continuing operations of approximately $45 million for 2023, with an Adjusted EBITDA of approximately $150 million. The company expects to spend approximately $85 million on custodial capital expenditures and approximately $35 million on discretionary strategic capital expenditures, net of financing. Overall, the Company expects to generate $65 to $75 million of Adjusted Free Cash Flow in 2023.
Positive Outlook
- Market demand for commodity products remains resilient with fluff and viscose prices bottoming in the third quarter and a slight uptick expected in the fourth quarter.
- Commodity sales volumes are expected to continue to increase through the end of 2023.
- Paperboard prices are expected to rebound slightly in the fourth quarter, remaining elevated from 2022 levels, while sales volumes are expected to improve in the second half of the year as customer inventories return to more normal levels.
- The Company is targeting $85 to $95 million of benefit from working capital to support Adjusted Free Cash Flow for the year.
- The Company’s 2G bioethanol facility at its Tartas, France plant is near completion and is anticipated to be operational in the first quarter of 2024.
Challenges Ahead
- Average sales prices for cellulose specialties in 2023 are expected to be in the high single-digit percent higher than average 2022 sales prices, while sales volumes are expected to decrease from prior year due to softness in sales orders driven principally by significant customer destocking and market-driven demand declines.
- The prices for certain inputs have come off the 2022 highs but are expected to remain significantly elevated versus pre-COVID pandemic levels.
- High-yield pulp prices have declined due to soft demand and new paper pulp capacity ramping up.
- Prices are expected to decline overall in 2023 despite an expected uptick in the fourth quarter, in line with industry forecasts for the global paper pulp market.
- The Company expects to take downtime at its Tartas facility at the end of 2023 due to market conditions and to improve working capital.
Revenue & Expenses
Visualization of income flow from segment revenue to net income