Rayonier Advanced Materials Inc. Reports Full Year 2023 Results and Improved 2024 Outlook
Net Sales: $1,643 million in 2023, a decrease of $74 million from the previous year.
Loss from Continuing Operations: $102 million in 2023, including a $62 million non-cash impairment.
Adjusted EBITDA: $139 million for 2023, with a guidance of $180 to $200 million for 2024.
Cash Flow: Operating activities generated $136 million in cash for the year.
Debt Reduction: Total debt reduced by $76 million to $777 million.
Adjusted Free Cash Flow: Generated $53 million year-to-date.
Net Secured Debt Ratio: Remained in compliance with debt covenants at 4.2 times Adjusted EBITDA.
On February 27, 2024, Rayonier Advanced Materials Inc (NYSE:RYAM) released its 8-K filing, disclosing its financial results for the fourth quarter and full year of 2023, and providing an improved outlook for 2024. The company, a global leader in high-purity cellulose production, faced a challenging year with net sales declining to $1,643 million, a $74 million drop from the prior year. The loss from continuing operations was significant at $102 million, which included a substantial non-cash impairment charge.
RYAM operates primarily in High Purity Cellulose, Paperboard, and High-Yield Pulp segments, with the majority of its revenue generated from the High Purity Cellulose segment. The company's products are integral to various applications, including cigarette filters, LCDs, paints, pharmaceuticals, and food, and are largely sold in the United States.
Performance and Challenges
The company's performance in 2023 was impacted by soft demand for cellulose ethers products due to weak construction activity, lower than anticipated demand in Paperboard, and weak pricing in High-Yield Pulp and commodity pulp products. In response, RYAM implemented cost-cutting measures and strategically scheduled market-driven downtime across all segments. The focus shifted to generating free cash flow, predominantly through improvements in working capital and adherence to lending commitments.
Despite these challenges, RYAM concluded the year with $139 million in Adjusted EBITDA and generated $53 million of free cash flow, while maintaining compliance with its original debt covenants. The net secured debt ratio stood at 4.2 times Adjusted EBITDA.
Financial Achievements and Importance
RYAM's financial achievements in a difficult year underscore its resilience and the effectiveness of its strategic measures. The reduction in total debt by $76 million to $777 million and the generation of $53 million in Adjusted Free Cash Flow are particularly noteworthy. These achievements are crucial for the company's financial health and its ability to invest in growth opportunities, reduce leverage, and minimize earnings volatility in the highly competitive and cyclical chemicals industry.
Key Financial Metrics
Important metrics from the financial statements include:
"Year-to-date cash provided by operating activities of $136 million; total debt of $777 million, a reduction of $76 million."
These metrics are vital as they reflect the company's ability to generate cash from its core operations and manage its debt levels effectively.
Analysis and Outlook
Looking ahead to 2024, RYAM anticipates better results with an Adjusted EBITDA guidance of $180 to $200 million, expected to drive $20 to $40 million of Adjusted Free Cash Flow. This improved outlook is supported by higher pricing for key cellulose specialties products, lower unit production costs due to improved productivity, and lower key input and logistics costs. Additionally, the new bioethanol facility is expected to commence operations in the first quarter of 2024, contributing to the positive outlook.
RYAM's President and Chief Executive Officer, De Lyle Bloomquist, commented on the outlook:
"With an improving outlook aided by a competitors closure, coupled with our sales priority of value over volume, we anticipate better results for 2024."
The company's biomaterials strategy, including the commissioning of the bioethanol facility, is a significant step towards diversifying its end market and enhancing profitability.
For more detailed information on Rayonier Advanced Materials Inc's financial results and outlook, investors and interested parties are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Rayonier Advanced Materials Inc for further details.
This article first appeared on GuruFocus.
