Rayonier Advanced Materials Reports Second Quarter 2014 Results
July 30, 2014 - Rayonier Advanced Materials Inc. (RYAM) today reported financial results for the second quarter of 2014.
On June 27, 2014, Rayonier Advanced Materials Inc. (the "Company") was spun-off from Rayonier Inc. The Company’s financial statements for the three and six months ended 2014 were prepared on a "carve-out" basis, reflecting an allocation of costs incurred by its former parent company. The carve-out financials are not indicative of the expected cost structure or future financial results of Rayonier Advanced Materials as an independent company.
"With the spin-off completed, we will now focus our attention on pursuing long-term growth opportunities, expanding our specialty chemical business, and increasing shareholder value," said Paul G. Boynton, Chairman, President and CEO.
Second quarter and year-to-date 2014 sales of $213 million and $456 million were $42 million and $83 million below the prior year periods, respectively, reflecting the previously announced lower cellulose specialties prices and the timing of sales orders. Pro forma operating income of $43 million and $89 million for the three and six months ended 2014 were $32 million and $73 million below the prior year periods, respectively, due to the decline in sales as well as continued higher wood, energy and depreciation costs. Year-to-date results also reflect additional manufacturing costs related to equipment issues at the Jesup plant.
On May 22, 2014, the Company issued $550 million ten-year senior notes at an interest rate of 5.5% in a private placement with institutional investors. Prior to separation from Rayonier Inc., the Company also secured additional financing through a five-year $110 million term loan, a seven-year $290 million term loan and a five-year $250 million revolving credit facility. Available liquidity as of June 28, 2014 totaled $243 million in cash and debt facilities.
Committed cellulose specialties sales volumes for 2014 remain consistent with 2013, despite the previously announced loss of volume from a 2013 customer. The Company continues to seek the previously targeted 30,000 tons of incremental cellulose specialties volumes, but intends to feather this into the market only as it is ready to be absorbed. Additionally, through the first half of 2014, costs have exceeded budgeted projections and will likely remain somewhat elevated through the remainder of the year. The higher costs and continued inability to place the incremental tons will cause the Company to be approximately 25 percent below 2013 segment EBITDA, or 10 percentage points below the previous guidance.
"As the market remains in transition, we will continue to focus on operational excellence and build stronger partnerships with our customers. Going forward, as the market grows, our newly converted line positions us well to grow with future demand and diversify without additional investment," stated Boynton.
Rayonier Advanced Materials is the leading global supplier of high-purity, cellulose specialties products, a natural polymer for industrial and consumer uses. To learn more, please visit: www.rayonieram.com
SOURCE: Rayonier Advanced Materials Inc.