PRESS RELEASE
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Rayonier Advanced Materials Reports Solid First Quarter Results
-
Q1 2016 pro forma EBITDA of
$54 million -
Transformation initiative targeting
$75 to $90 million cost reduction on-track -
2016 pro forma EBITDA outlook raised by
$10 million to $185 to$200 million -
2016 Adjusted free cash flow outlook raised to
$85 to $95 million
"Our solid first quarter results are a testament to the great effort of
our employees to reduce costs, drive cash flow and invest wisely in our
business," said
First Quarter Operating Results
First quarter 2016 net sales were
For the first quarter of 2016, pro forma operating income was
Interest and Other Expense, Net
Interest expense, net of interest income and other expense, was
The Company recorded a pre-tax gain on the extinguishment of debt of
approximately
Income Tax Expense
The first quarter 2016 effective tax rate was 34.9 percent, compared to 28.2 percent the same period the prior year. The prior year period reflects the increased impact of the benefit of domestic manufacturing tax deduction and state tax credits as a result of lower pre-tax income.
Cash Flow and Liquidity
The Company generated
Outlook
Over the last seven months, the Company renegotiated cellulose specialties contracts with its three largest customers through 2018 and 2019. For 2016, the Company expects cellulose specialties prices to decline 6 to 7 percent and cellulose specialties sales volumes to decline 4 to 5 percent compared to 2015. Based on contractual commitments for the majority of the Company’s acetate volume, 2017 acetate pricing is expected to be approximately 2 percent below 2016.
Cellulose specialties markets continue to face a combination of industry
oversupply and weaker end-market demand which could impact the Company’s
prices and volumes in the future. In response to these market pressures,
the Company began a three-year transformation initiative to
significantly improve its cost structure and enhance cash flows. The
transformation initiative is targeting cost savings of
As a result of solid traction on its 2016 transformation cost savings
and benign inflationary pressure, the Company is raising its 2016
guidance for pro forma EBITDA by
"We remain steadfast in our strategy to permanently reduce our costs, invest in our assets and accelerate our innovation platform to drive value to shareholders. Our progress to date is encouraging and we are pleased to improve our full-year guidance," stated Boynton.
Conference Call Information
A conference call will be held on
About
Forward-Looking Statements
Certain statements in this document regarding anticipated financial,
business, legal or other outcomes including business and market
conditions, outlook and other similar statements relating to
Such risks and uncertainties include, but are not limited to:
competitive pressures in the markets in which we operate, especially
with respect to increases in supply and pressures on demand for our
products, which impact pricing; our ability to complete our announced
cost and debt reduction initiatives and objectives within the planned
parameters and achieve the anticipated benefits; our customer
concentration, especially with our three largest customers; changes in
global economic conditions, including currency; the Chinese dumping
duties currently in effect for commodity viscose pulps; potential legal,
regulatory and similar challenges relating to our permitted air
emissions and waste water discharges from our facilities by
non-governmental groups and individuals; the effect of current and
future environmental laws and regulations as well as changes in
circumstances on the cost and estimated future cost of required
environmental expenditures; the potential impact of future
tobacco-related restrictions; potential for additional pension
contributions; labor relations with the unions representing our hourly
employees; the effect of weather and other natural conditions; changes
in transportation-related costs and availability; the failure to attract
and retain key personnel; the failure to innovate to maintain our
competitiveness, grow our business and protect our intellectual
property; uncertainties related to the availability of additional
financing to us in the future and the terms of such financing; our
inability to make or effectively integrate future acquisitions and
engage in certain other corporate transactions; any failure to realize
expected benefits from our separation from
Other important factors that could cause actual results or events to
differ materially from those expressed in forward-looking statements
that may have been made in this document are described or will be
described in our filings with the
Rayonier Advanced Materials Inc. | |||||||||||
Condensed Consolidated Statements of Income | |||||||||||
March 26, 2016 (Unaudited) | |||||||||||
(millions of dollars, except per share information) | |||||||||||
Three Months Ended | |||||||||||
March 26, | December 31, | March 28, | |||||||||
2016 | 2015 | 2015 | |||||||||
Net Sales | |||||||||||
Cellulose specialties | $ | 165 | $ | 190 | $ | 179 | |||||
Commodity products and other | 53 | 52 | 42 | ||||||||
Total Net Sales | 218 | 242 | 221 | ||||||||
Cost of Sales | 178 | 192 | 184 | ||||||||
Gross Margin | 40 | 50 | 37 | ||||||||
Selling, general and administrative expenses | 7 | 14 | 12 | ||||||||
Other operating expense, net | 1 | 7 | 1 | ||||||||
Operating Income | 32 | 29 | 24 | ||||||||
Interest and other expense, net | 9 | 9 | 9 | ||||||||
Gain on debt extinguishment | 9 | — | — | ||||||||
Income Before Income Taxes | 32 | 20 | 15 | ||||||||
Income tax expense | 11 | 7 | 4 | ||||||||
Net Income | $ | 21 | $ | 13 | $ | 11 | |||||
Earnings Per Share of Common Stock | |||||||||||
Basic earnings per share | $ | 0.50 | $ | 0.30 | $ | 0.25 | |||||
Diluted earnings per share | $ | 0.49 | $ | 0.30 | $ | 0.25 | |||||
Pro forma net income per share (a) | $ | 0.36 | $ | 0.32 | $ | 0.25 | |||||
Shares Used for Determining | |||||||||||
Basic EPS | 42,205,767 | 42,201,778 | 42,186,130 | ||||||||
Diluted EPS | 42,272,536 | 42,273,621 | 42,204,774 | ||||||||
(a) Pro forma net income per share is a non-GAAP measure. See Schedule D for a reconciliation to the nearest GAAP measure. |
Rayonier Advanced Materials Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
March 26, 2016 (Unaudited) | ||||||||
(millions of dollars) | ||||||||
March 26, | December 31, | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 110 | $ | 101 | ||||
Other current assets | 195 | 227 | ||||||
Property, plant and equipment, net | 795 | 804 | ||||||
Other assets | 134 | 147 | ||||||
$ | 1,234 | $ | 1,279 | |||||
Liabilities and Stockholders’ Equity | ||||||||
Current maturities of long-term debt | $ | 8 | $ | 8 | ||||
Other current liabilities | 115 | 124 | ||||||
Long-term debt | 797 | 850 | ||||||
Non-current liabilities for disposed operations | 143 | 145 | ||||||
Other non-current liabilities | 168 | 169 | ||||||
Total stockholders’ equity (deficit) | 3 | (17 | ) | |||||
$ | 1,234 | $ | 1,279 |
Rayonier Advanced Materials Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
March 26, 2016 (Unaudited) | ||||||||
(millions of dollars) | ||||||||
Three Months Ended | ||||||||
March 26, | March 28, | |||||||
2016 | 2015 | |||||||
Cash Provided by Operating Activities: | ||||||||
Net income | $ | 21 | $ | 11 | ||||
Depreciation and amortization | 22 | 22 | ||||||
Increase in liabilities for disposed operations | 2 | — | ||||||
Other items to reconcile net income to cash provided by operating activities | 4 | 2 | ||||||
Changes in working capital and other assets and liabilities | 25 | 21 | ||||||
74 | 56 | |||||||
Cash Used for Investing Activities: | ||||||||
Capital expenditures | (20 | ) | (24 | ) | ||||
(20 | ) | (24 | ) | |||||
Cash Used for Financing Activities: | ||||||||
Changes in debt | (45 | ) | (20 | ) | ||||
(45 | ) | (20 | ) | |||||
Cash and Cash Equivalents: | ||||||||
Change in cash and cash equivalents | 9 | 12 | ||||||
Balance, beginning of year | 101 | 66 | ||||||
Balance, end of period | $ | 110 | $ | 78 |
Rayonier Advanced Materials Inc. | |||||||
Reconciliation of Non-GAAP Measures | |||||||
March 26, 2016 (Unaudited) | |||||||
(millions of dollars) | |||||||
Three Months Ended | |||||||
EBITDA (a): | March 26, | March 28, | |||||
2016 | 2015 | ||||||
Net Income | $ | 21 | $ | 11 | |||
Depreciation and amortization | 22 | 22 | |||||
Interest expense, net | 9 | 9 | |||||
Income tax expense | 11 | 4 | |||||
EBITDA | $ | 63 | $ | 46 | |||
Gain on debt extinguishment | (9 | ) | — | ||||
Pro Forma EBITDA | $ | 54 | $ | 46 |
Three Months Ended | ||||||||
Adjusted Free Cash Flow (b): | March 26, | March 28, | ||||||
2016 | 2015 | |||||||
Cash provided by operating activities | $ | 74 | $ | 56 | ||||
Capital expenditures | (20 | ) | (24 | ) | ||||
Adjusted Free Cash Flow | $ | 54 | $ | 32 |
(a) Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) is defined by the
(b) Adjusted free cash flow is defined by us as cash provided by operating activities adjusted for capital expenditures excluding strategic capital. Adjusted free cash flow is a non-GAAP measure of cash generated during a period which is available for dividend distribution, debt reduction, strategic acquisitions and repurchase of the Company’s common stock. Adjusted free cash flow is not necessarily indicative of the adjusted free cash flow that may be generated in future periods.
Three Months Ended | ||||||
Adjusted Net Debt (a): | March 26, | December 31, | ||||
2016 | 2015 | |||||
Current maturities of long-term debt | 8 | 8 | ||||
Long-term debt | 797 | 850 | ||||
Total debt | 805 | 858 | ||||
Original issue discount and debt issuance costs | 10 | 11 | ||||
Cash and cash equivalents | (110 | ) | (101 | ) | ||
Adjusted net debt | 705 | 768 |
(a) Adjusted net debt is defined by us as the amount of debt after the consideration of the original issue discount and debt issuance costs, less cash. Adjusted net debt is a non-GAAP measure of debt and is not necessarily indicative of the adjusted net debt that may occur in future periods.
Rayonier Advanced Materials Inc. | |||||||||||||||||||||||
Reconciliation of Non-GAAP Measures (Continued) | |||||||||||||||||||||||
March 26, 2016 (Unaudited) | |||||||||||||||||||||||
(millions of dollars, except per share information) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
March 26, | December 31, | March 28, | |||||||||||||||||||||
2016 | 2015 | 2015 | |||||||||||||||||||||
Per | Per | Per | |||||||||||||||||||||
Diluted | Diluted | Diluted | |||||||||||||||||||||
Pro Forma Operating Income and Net Income (a): | $ | Share | $ | Share | $ | Share | |||||||||||||||||
Operating Income | $ | 32 | $ | 29 | $ | 24 | |||||||||||||||||
One-time separation and legal costs | — | 1 | — | ||||||||||||||||||||
Pro Forma Operating Income | $ | 32 | $ | 30 | $ | 24 | |||||||||||||||||
Net Income | $ | 21 | $ | 0.49 | $ | 13 | $ | 0.30 | $ | 11 | $ | 0.25 | |||||||||||
One-time separation and legal costs, net of tax | — | — | 1 | 0.02 | — | — | |||||||||||||||||
Gain on debt extinguishment, net of tax | (6 | ) | (0.13 | ) | — | — | — | — | |||||||||||||||
Pro Forma Net Income | $ | 15 | $ | 0.36 | $ | 14 | $ | 0.32 | $ | 11 | $ | 0.25 |
(a) Pro forma operating income is defined as operating income adjusted for one-time separation and legal costs. Pro forma net income is defined as net income adjusted net of tax for one-time separation and legal costs and gain on debt extinguishment. Pro forma operating income and pro forma net income are not necessarily indicative of results that may be generated in future periods.
Rayonier Advanced Materials Inc. | |||||||
Selected Financial and Operating Information | |||||||
March 26, 2016 (Unaudited) | |||||||
Three Months Ended | |||||||
March 26, | March 28, | ||||||
2016 | 2015 | ||||||
Sales Volume, thousands of metric tons | |||||||
Cellulose specialties | 106 | 107 | |||||
Commodity products | 75 | 58 | |||||
Total | 181 | 165 | |||||
Average Sales Price, $ per metric ton | |||||||
Cellulose specialties | $ | 1,555 | $ | 1,667 | |||
Commodity products | $ | 680 | $ | 686 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160502006236/en/
Source:
Rayonier Advanced Materials Inc.
Media
Russell Schweiss,
904-357-9158
or
Investors
Mickey Walsh, 904-357-9162