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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.

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Rayonier Advanced Materials / Equity Bottom-Up

<ul><li>Strong 3Q24 beat and 2024 EBITDA guidance reiterated.</li><li>RYAM delivered 3Q24 revenue of $401MM, slightly above our $398MM estimate, with EBITDA of $51MM slightly below our $52MM estimate, with both measures exceeding Street expectations.</li><li>More importantly, despite the Jesup fire that shut down production of two specialty cellulose lines for 10 days in October, management reiterated its $205-215MM EBITDA guidance for the year, commenting during the earnings call that prior to the fire, it was considering raising its annual guidance given the strong 3Q24 performance.</li></ul>

Strong 3Q24 beat and 2024 EBITDA guidance reiterated.RYAM delivered 3Q24 revenue of $401MM, slightly above our $398MM estimate, with EBITDA of $51MM slightly below our $52MM estimate, with both measures exceeding Street expectations.More importantly, despite the Jesup fire that shut down production of two specialty cellulose lines for 10 days in October, management reiterated its $205-215MM EBITDA guidance for the year, commenting during the earnings call that prior to the fire, it was considering raising its annual guidance given the strong 3Q24 performance.

RYAM: Strong 3Q24 Results and Debt Refinancing Set the Stage for Solid 2025

<ul><li>Strong 2Q24 results confirm corporate strategy. RYAM delivered a positive surprise when it reported its 2Q24 results earlier this week, driven primarily by stronger sales in HPC and Paperboard and significant margin recovery in HPC, driven by reduced commodity sales and a higher mix of specialties, further benefited by one-time CEWS payments.</li><li>Raised guidance suggests building momentum into 2025. Management raised 2024 EBITDA guidance from $180-200 million to $205-215 million on a strong 2Q24 performance and higher outlook for 2H24.</li><li>Free cash flow guidance was also increased to $100-110 million (previously $80-$100 million), largely a result of lower maintenance capex as a function of the suspension of commodity HPC production at Temiscaming, and a better margin outlook overall.</li></ul>

Strong 2Q24 results confirm corporate strategy. RYAM delivered a positive surprise when it reported its 2Q24 results earlier this week, driven primarily by stronger sales in HPC and Paperboard and significant margin recovery in HPC, driven by reduced commodity sales and a higher mix of specialties, further benefited by one-time CEWS payments.Raised guidance suggests building momentum into 2025. Management raised 2024 EBITDA guidance from $180-200 million to $205-215 million on a strong 2Q24 performance and higher outlook for 2H24.Free cash flow guidance was also increased to $100-110 million (previously $80-$100 million), largely a result of lower maintenance capex as a function of the suspension of commodity HPC production at Temiscaming, and a better margin outlook overall.

Rayonier Advanced Materials, Inc. - Turning the Corner

<ul><li>1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of ($0.19).</li><li>While sales of $388 million fell short of our estimate of $402 million and consensus of $430 million, tight cost controls, lower raw material and transportation costs, and improved operating efficiencies drove EBITDA of $52 million versus our estimate of $39 million and consensus of $49 million.</li><li><p>EBITDA guidance maintained, FCF guidance increased. With market fundamentals stabilizing and most of customer inventory work-downs winding down, management reiterated its EBITDA guidance of $180-200 million and raised its FCF guidance for the year from $20- 40 million to $80-100 million on a higher working capital benefit and $39 million in cash to be realized from the sale of softwood duty refund rights to OCP Lumber LLC.</p></li></ul>

1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of ($0.19).While sales of $388 million fell short of our estimate of $402 million and consensus of $430 million, tight cost controls, lower raw material and transportation costs, and improved operating efficiencies drove EBITDA of $52 million versus our estimate of $39 million and consensus of $49 million.EBITDA guidance maintained, FCF guidance increased. With market fundamentals stabilizing and most of customer inventory work-downs winding down, management reiterated its EBITDA guidance of $180-200 million and raised its FCF guidance for the year from $20- 40 million to $80-100 million on a higher working capital benefit and $39 million in cash to be realized from the sale of softwood duty refund rights to OCP Lumber LLC.

Rayonier Advanced Materials, Inc. - Solid Start to the Year and Progress on Asset Transformation

<ul><li>Light at the end of the tunnel? As RYAM prepares to release its 1Q24 results next Wednesday, it appears that fundamentals are improving across several of its markets, with pulp prices continuing to recover from mid-2023 lows and demand from construction markets stabilizing in the wake of customer inventory drawdowns that reduced RYAM’s opportunities to sell into the market in 2023.</li><li>1Q24 comps likely to struggle, but outlook may improve. Management’s guidance for 1Q24 issued at the 4Q23 report indicated flat Q/Q performance, with modest improvement in prices offset by lower operating rates and residual effects of an inventory correction at the customer level.</li><li>With 1Q23 being RYAM’s strongest quarter last year, revenue and profit may therefore continue to show negative Y/Y comps.</li></ul>

Light at the end of the tunnel? As RYAM prepares to release its 1Q24 results next Wednesday, it appears that fundamentals are improving across several of its markets, with pulp prices continuing to recover from mid-2023 lows and demand from construction markets stabilizing in the wake of customer inventory drawdowns that reduced RYAM’s opportunities to sell into the market in 2023.1Q24 comps likely to struggle, but outlook may improve. Management’s guidance for 1Q24 issued at the 4Q23 report indicated flat Q/Q performance, with modest improvement in prices offset by lower operating rates and residual effects of an inventory correction at the customer level.With 1Q23 being RYAM’s strongest quarter last year, revenue and profit may therefore continue to show negative Y/Y comps.

Rayonier Advanced Materials, Inc. - Market Fundamentals Improving, Albeit Slowly

<ul><li>4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.</li><li>However, adjusted EBITDA of $37 million fell well short of Street expectations and our $48 million forecast on weaker-than-expected paperboard demand and lower-than-anticipated pulp prices.</li><li>Right-sized inventory suggests modest growth. With customer channel destocking largely completed in 4Q23, RYAM’s businesses should see a more stable demand environment throughout 2024 and, combined with modest share-driven volume growth and lower input costs, improved gross and EBITDA margins.</li></ul>

4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.However, adjusted EBITDA of $37 million fell well short of Street expectations and our $48 million forecast on weaker-than-expected paperboard demand and lower-than-anticipated pulp prices.Right-sized inventory suggests modest growth. With customer channel destocking largely completed in 4Q23, RYAM’s businesses should see a more stable demand environment throughout 2024 and, combined with modest share-driven volume growth and lower input costs, improved gross and EBITDA margins.

Rayonier Advanced Materials, Inc. - 2024 Looks Like a Recovery Year with Potential Asset Sale Kicker

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)

RYAM: Strong 3Q24 Results and Debt Refinancing Set the Stage for Solid 2025

RYAM delivered 3Q24 revenue of $401MM, slightly above our $398MM estimate, with EBITDA of $51MM slightly below our $52MM estimate

Water Tower Research

Rayonier Advanced Materials, Inc. - Turning the Corner

Raised guidance suggests building momentum into 2025. Management raised 2024 EBITDA guidance from $180-200 million to $205-215 million on a strong...

Water Tower Research

Rayonier Advanced Materials, Inc. - Solid Start to the Year and Progress on Asset Transformation

1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of...

Water Tower Research

Rayonier Advanced Materials, Inc. - Market Fundamentals Improving, Albeit Slowly

Light at the end of the tunnel? As RYAM prepares to release its 1Q24 results next Wednesday, it appears that fundamentals are improving across...

Water Tower Research

Rayonier Advanced Materials, Inc. - 2024 Looks Like a Recovery Year with Potential Asset Sale Kicker

4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.

Water Tower Research

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