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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.</li><li>Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.</li><li>WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.</li></ul>

We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.

Water Tower Hour Recap -  2023 Review and 2024 Outlook

<ul><li>Changes to WTR-CMI. Following the completion of Livent’s merger of equals with Allkem, the new company, with the new name Arcadium Lithium plc, is now trading under the symbols ALTM-NYSE and LTM-ASX, and has replaced LTHM in our index.</li><li>WTR-CMI last week. The S&amp;P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.</li><li>Our WTR-CMI Index declined 1.2%, dragged down by double-digit losses in lithium stocks and the continuing decline in the value of synthetic graphite maker EAF. </li></ul>

Changes to WTR-CMI. Following the completion of Livent’s merger of equals with Allkem, the new company, with the new name Arcadium Lithium plc, is now trading under the symbols ALTM-NYSE and LTM-ASX, and has replaced LTHM in our index.WTR-CMI last week. The S&amp;P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.Our WTR-CMI Index declined 1.2%, dragged down by double-digit losses in lithium stocks and the continuing decline in the value of synthetic graphite maker EAF. 

Mat-Chem Notes - For the Week Ended January 19, 2024

Equity Bottom-Up

Rayonier Advanced Materials / Equity Bottom-Up

<ul><li>Portfolio strength and market weakness. At a recently held Investor Day, RYAM management highlighted its cellulose product portfolio, the company’s biomaterials initiative, and the current state of the industry in the wake of the G-P closure announcement.</li><li>RYAM also provided an update on 2023 guidance and a look at 2024 and 2027 EBITDA bridges.</li><li>Asset evaluation proceeding to the next round. Following the Investor Day, RYAM announced that it engaged Houlihan Lokey as its financial advisor to explore the potential sale of its paperboard and high-yield pulp (HYP) assets located at its Temiscaming site, as it advances its initiative to expand into higher-growth, higher-margin specialty businesses and reduce its exposure to commodity cellulose markets.</li></ul>

Portfolio strength and market weakness. At a recently held Investor Day, RYAM management highlighted its cellulose product portfolio, the company’s biomaterials initiative, and the current state of the industry in the wake of the G-P closure announcement.RYAM also provided an update on 2023 guidance and a look at 2024 and 2027 EBITDA bridges.Asset evaluation proceeding to the next round. Following the Investor Day, RYAM announced that it engaged Houlihan Lokey as its financial advisor to explore the potential sale of its paperboard and high-yield pulp (HYP) assets located at its Temiscaming site, as it advances its initiative to expand into higher-growth, higher-margin specialty businesses and reduce its exposure to commodity cellulose markets.

Rayonier Advanced Materials, Inc. - Investor Day Highlights "Specialty" In Specialty Cellulose

<div><div><div><div><ul style="list-style-type: disc;"><li><p>We are initiating coverage of Rayonier Advanced Materials, Inc. (RYAM), a leading supplier of wood- derived products and specialty materials, such as specialty cellulosics, paperboard, and high-yield pulp, to the industrial and consumer markets.</p></li><li><p>The company is currently focused on deleveraging the balance sheet and investing in the growth of higher-value biomaterial products, while improving operations and profitability of cash generative, but slower-growing, legacy operations.</p></li><li><p>FCF generation in a weak operating environment. With 2Q23 seeing downward pressure on commodity prices, as they retreat from the post-pandemic spike, and volumes, affected by customer destocking, management raised its free cash flow (FCF) generation goal to $55-70 million from $40-65 million in 2023 in order to accelerate debt paydown, toward the 2.5x net debt to EBITDA target level.</p></li></ul></div></div></div></div>

We are initiating coverage of Rayonier Advanced Materials, Inc. (RYAM), a leading supplier of wood- derived products and specialty materials, such as specialty cellulosics, paperboard, and high-yield pulp, to the industrial and consumer markets.The company is currently focused on deleveraging the balance sheet and investing in the growth of higher-value biomaterial products, while improving operations and profitability of cash generative, but slower-growing, legacy operations.FCF generation in a weak operating environment. With 2Q23 seeing downward pressure on commodity prices, as they retreat from the post-pandemic spike, and volumes, affected by customer destocking, management raised its free cash flow (FCF) generation goal to $55-70 million from $40-65 million in 2023 in order to accelerate debt paydown, toward the 2.5x net debt to EBITDA target level.

Rayonier Advanced Materials, Inc. - Mature Business Growing New Shoots

United States

Rayonier Advanced Materials Inc operates as a performance fibers business. The company produces specialty cellulose fibers using proprietary cellulose chemistry knowledge and manufacturing processes.

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Rayonier Advanced Materials (RYAM US)

Water Tower Hour Recap - 2023 Review and 2024 Outlook

WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the...

Water Tower Research

Mat-Chem Notes - For the Week Ended January 19, 2024

WTR-CMI last week. The S&P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.

Water Tower Research

Rayonier Advanced Materials, Inc. - Investor Day Highlights "Specialty" In Specialty Cellulose

At a recently held Investor Day, RYAM management highlighted its cellulose product portfolio, the company’s biomaterials initiative

Water Tower Research

Rayonier Advanced Materials, Inc. - Mature Business Growing New Shoots

The company is currently focused on deleveraging the balance sheet and investing in the growth of higher-value biomaterial products, while...

Water Tower Research

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