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Dec 31, 2020
Rayonier AM Q4 2020 Earnings Report
Rayonier AM's financial performance significantly improved in Q4 2020, driven by higher lumber and High Purity Cellulose prices and successful refinancing.
Key Takeaways
Rayonier Advanced Materials reported a net income of $9 million for Q4 2020, a significant improvement compared to the $57 million loss in the same quarter of the previous year. Adjusted EBITDA for the quarter was $53 million, up $44 million year-over-year. The company completed a refinancing to extend maturities, remove financial maintenance covenants, and enhance liquidity.
Income from continuing operations was $9 million, a $66 million increase from Q4 2019.
Adjusted EBITDA from continuing operations increased by $44 million to $53 million, driven by higher lumber and High Purity Cellulose prices.
The company completed refinancing to extend maturities and enhance liquidity.
Free Cash Flow was $73 million through the year ended December 31, 2020.
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 higher prices for both pulp and newsprint in the near-term. Additionally, the Company continues to manage production of its newsprint facility in order to minimize costs and improve sales mix.
Positive Outlook
- Prices for cellulose specialties are expected to decline slightly relative to 2020 while prices for commodity products, fluff and viscose pulps, will increase significantly in the first quarter and are forecasted to remain elevated for the near-term.
- Overall, the Company expects increased pricing from 2020 levels while total volumes and mix for 2021 are expected to remain steady compared to 2020 as increased productivity will be offset by an extended maintenance outage at the Jesup facility in the second quarter.
- Prices for lumber continue to remain near all-time high levels driven by exceptional demand in the U.S with housing starts in January 2021 of 1.6 million units, seasonally adjusted, and building permits of 1.9 million, while repair and remodel activity remains elevated as investment in homes remains attractive.
- Paperboard prices are expected to increase slightly in early 2021 given solid demand for packaging grades and announced price increases from larger competitors in the industry.
- Larger competitors in both pulp and newsprint markets have recently announced price increases, and the Company expects higher prices for both products in the near-term.
Challenges Ahead
- Certain chemical prices are now trending higher and, overall, future input prices and availability of these inputs remain difficult to predict due to the current unprecedented economic conditions.
- Overall profitability is expected to remain flat as price and volume benefits are expected to be offset by increased raw material costs.
- The Company expects lower newsprint volumes in 2021 compared to 2020.
- An extended maintenance outage at the Jesup facility in the second quarter will offset increased productivity.
- There remains no discussion about a full resolution to the softwood lumber dispute which, based on most recent disputes, would likely result in the U.S. returning all or the vast majority of the duties previously paid.
Revenue & Expenses
Visualization of income flow from segment revenue to net income