Rayonier Advanced Materials Inc.
11/04/2026 | Press release | Distributed by Public on 11/04/2026 14:05
Quarterly Report for Quarter Ending September 26, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of our financial condition and results of operations should be read in conjunction with our Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q and with our 2025 Form 10-K and information contained in subsequent Forms 8-K and other reports filed with the SEC.
Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q regarding anticipated financial, business, legal or other outcomes, including business and market conditions, outlook and other similar statements relating to future events, developments or financial or operational performance or results, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as "may," "will," "should," "could," "expect," "estimate," "target," "believe," "intend," "plan," "forecast," "anticipate," "project," "guidance" and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking.
Forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to various risks and uncertainties. The risk factors contained in Item 1A-Risk Factors of our 2025 Form 10-K, among others, could cause actual results or events to differ materially from our historical experience and those expressed in forward-looking statements made in this report.
Forward-looking statements are only as of the date of the filing of this Quarterly Report on Form 10-Q, and we undertake no duty to update forward-looking statements except as required by law. You are advised to review any disclosures that we have made or may make in our filings and other submissions to the SEC, including those on Forms 10-K, 10-Q, 8-K and other reports.
Business Overview
RYAM is a global leader of high purity cellulose commonly used in the production of filters, food, pharmaceuticals, high performance plastics, propellants and various other industrial applications. Our specialized assets, capable of creating the world's leading cellulose specialties products, are also used to produce cellulose viscose pulp, cellulose fluff pulp, paperboard, high yield pulp and various value-added co-products, including biofuels, bioelectricity and lignin.
New Segment Structure
Beginning in January 2026, we reorganized our segment structure and now operate in two segments:
•High Purity Cellulose: formerly the segments of Cellulose Specialties, Cellulose Commodities and Biomaterials
•Paperboard & High Yield Pulp: formerly the segments of Paperboard and High Yield Pulp
Prior period segment results have been recast to align with this new segment reporting structure. See Note 16-Segments for further information.
Recent Business Developments
•As announced on September 30, 2026, construction is underway on AGE's 70 MW biomass cogeneration project, in which we hold a 14% equity interest. See Note 1-Nature of Operations and Basis of Presentation for further information.
•In August 2026, Section 338 tariffs went into effect, which imposed a 50% U.S. tariff on Canadian paperboard. The resulting reduction in projected cash flows led to the recognition of $212 million in non-cash impairments of our Temiscaming plant assets. We paid $2 million in tariff-related costs during the third quarter. The tariffs rendered continued paperboard and high yield pulp production uneconomic and operations were economically idled on October 3, 2026. See Note 2-Temiscaming Operations and Business Outlook below for further details.
•In August 2025, RYAM and USW jointly filed petitions with the USITC and the USDOC alleging that certain Brazilian and Norwegian producers of high purity dissolving pulp are selling into the U.S. market at unfairly low prices and/or benefiting from government subsidies, resulting in material injury to the U.S. industry. In September 2025, the USITC issued an affirmative preliminary injury determination, allowing the investigations to proceed.
During the second quarter of 2026, the USDOC issued affirmative preliminary antidumping duty determinations with respect to imports from Brazil and Norway and an affirmative preliminary countervailing duty determination with respect to imports from Brazil.
On October 8, 2026, a hearing on final injury determination occurred in front of a panel of five commissioners at the USITC. A final decision is expected to be made in early November.
While the outcome of these proceedings remains uncertain, we believe the petitions are an important step toward addressing alleged unfair trade practices and supporting more stable and competitive market conditions in the U.S.
Separately, during the third quarter of 2026, the Office of the United States Trade Representative announced final Section 301 actions applicable to imports from Brazil and Norway, including an aggregate 37.5% tariff on Brazilian imports of DWP (HTS Code 4702) and a 12.5% tariff on Norwegian imports of DWP. However, the ultimate impact of these actions will depend on a number of factors, including the extent to which downstream customers are able to utilize available trade programs and other regulatory mechanisms applicable to exported products.
•In 2025, we signed Memoranda of Understanding with Verso Energy to explore eSAF opportunities at both our Jesup and Tartas facilities. In March 2026, a grant agreement was signed with the European Climate, Infrastructure and Environmental Executive Agency that positions Verso's ReSTart project (Renewable e-SAF Tartas) to become one of the first large-scale synthetic aviation fuel production plants in Europe through the capture of biogenic CO2 emissions from our Tartas HPC plant. The project aims to contribute to and accelerate the achievement of the aviation sector's decarbonization targets for 2030 to 2050 as established by various European Union regulatory mandates.
Business Outlook
HPC earnings and total cellulose shipments improved sequentially in the third quarter, building on the progress made since the first quarter. HPC performance remains consistent with our full-year expectations. Our priorities are to grow CS volumes, capture product value and achieve a production mix more heavily weighted toward CS, while improving operating performance, generating cash and maintaining disciplined capital allocation.
We continue to advance the strategic review with interested parties. U.S. tariffs on Canadian paperboard and the resulting economic idling at Temiscaming have slowed the process as parties assess the site's path forward and its implications for the broader business. We are actively providing additional information to support that assessment and discussing strategic alternatives to strengthen the CS franchise more quickly. Interested parties remain engaged and our objective remains to pursue the path that maximizes shareholder value. We are targeting a conclusion of the strategic review in Q1 2027.
High Purity Cellulose
Third-quarter results exceeded our expectations, benefiting from favorable shipment timing and energy credits. We expect CS volumes to exit 2026 at or near a run rate of 100,000 MT per quarter, consistent with previous expectations. Our second-half earnings outlook remains unchanged.
Full-year CS volumes are expected to remain below prior-year levels as certain customers continue to manage inventories and ordering patterns, particularly in acetate and ethers. Second-half volumes are expected to continue to improve compared with the first half of the year.
As we engage with customers on 2027 commitments, we remain focused on growing CS volumes and capturing the value our products and technical expertise bring to their products and processes. A production mix more heavily weighted toward CS and continued operating improvements remain priorities for reducing commodity losses and strengthening HPC's overall results.
CC volumes are expected to remain elevated in the near term.
Biomaterials results are expected to improve year over year, supported by improved feedstock availability and stable operating performance at Tartas.
Chemicals, logistics and other input costs remain subject to inflationary and geopolitical pressures.
Paperboard & High Yield Pulp
Paperboard and high yield pulp production at Temiscaming was economically idled on October 3, 2026, and remains idled. Despite mitigation efforts during the third quarter, the 50% U.S. tariff on Canadian paperboard, effective August 22, made continued operations uneconomic. We paid $2 million in tariff-related costs during the third quarter.
Prior to the idling, capacity rationalization had tightened North American paperboard market conditions. We also advanced commercialization of TemCare, our HYP fluff product, gaining market acceptance and securing a number of global customers.
With production idled, we estimate ongoing site carrying costs of $2 million to $3 million per month and are focused on managing these costs. As we evaluate all options for the site through our strategic review, we acknowledge the interest publicly expressed by a local management buyout group.
Corporate & Other
We will continue to maintain disciplined control of discretionary spending and pursue structural efficiencies across the organization. Subject to variability in foreign exchange rates, incentive compensation and strategic review costs, the Corporate & Other Adjusted EBITDA loss is expected to approximate $42 million in 2026, compared with $72 million in 2025.
Capital Allocation
We generated $29 million of cash from operating activities in the third quarter, bringing year-to-date operating cash flow to $66 million. Cash increased to $61 million from $57 million at the end of the second quarter and quarter-end global liquidity was $143 million.
We remain focused on preserving liquidity and financial flexibility while supporting safe and reliable operations. We will continue to prioritize capital expenditures for essential maintenance and reliability, along with initiatives that support near-term cash generation and offer attractive risk-adjusted returns.
Cash generation and deleveraging remain important priorities. Through year end, we will continue to actively manage working capital, capital spending and operating costs, including Temiscaming's ongoing carrying costs, with a focus on maintaining appropriate liquidity and compliance with our debt covenants.
Results of Operations
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions, except percentages) | September 26, 2026 | September 27, 2025 | September 26, 2026 | September 27, 2025 | |||||||||||||||||||
| Net sales | $ | 383 | $ | 353 | $ | 1,078 | $ | 1,049 | |||||||||||||||
| Cost of sales | (345) | (319) | (1,025) | (967) | |||||||||||||||||||
| Cost of sales - Temiscaming inventory and other asset impairment | (23) | - | (23) | - | |||||||||||||||||||
| Gross margin | 15 | 34 | 30 | 82 | |||||||||||||||||||
| Selling, general and administrative expense | (20) | (24) | (56) | (65) | |||||||||||||||||||
| Foreign exchange gain (loss) | - | 1 | 2 | (4) | |||||||||||||||||||
| Temiscaming HPC permanent idling charges | - | - | (41) | - | |||||||||||||||||||
| Asset impairment | (189) | - | (202) | - | |||||||||||||||||||
| Suspension charges | - | 1 | (1) | - | |||||||||||||||||||
| Other operating expense, net | (2) | (3) | - | (20) | |||||||||||||||||||
| Operating income (loss) | (196) | 9 | (268) | (7) | |||||||||||||||||||
| Interest expense | (25) | (25) | (73) | (72) | |||||||||||||||||||
| Impairment of Anomera loan receivable | (8) | - | (8) | - | |||||||||||||||||||
| Other income, net | 3 | 1 | 5 | 1 | |||||||||||||||||||
| Loss from continuing operations before income tax | (226) | (15) | (344) | (78) | |||||||||||||||||||
| Income tax (expense) benefit | (2) | 11 | 3 | (323) | |||||||||||||||||||
| Equity in loss of equity method investment | (1) | - | (2) | (1) | |||||||||||||||||||
| Loss from continuing operations | (229) | (4) | (343) | (402) | |||||||||||||||||||
| Income from discontinued operations, net of tax | - | - | - | 3 | |||||||||||||||||||
| Net loss | (229) | (4) | (343) | (399) | |||||||||||||||||||
| Net income attributable to redeemable noncontrolling interest | 1 | - | 1 | - | |||||||||||||||||||
| Net loss attributable to RYAM | $ | (230) | $ | (4) | $ | (344) | $ | (399) | |||||||||||||||
| Gross margin % | 3.9 | % | 9.6 | % | 2.8 | % | 7.8 | % | |||||||||||||||
| Operating margin % | (51.2) | % | 2.5 | % | (24.9) | % | (0.7) | % | |||||||||||||||
| Effective tax rate | (0.9) | % | 72 | % | 0.9 | % | (416) | % | |||||||||||||||
Net Sales
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions) | September 26, 2026 | September 27, 2025 | September 26, 2026 | September 27, 2025 | |||||||||||||||||||
| High Purity Cellulose | $ | 313 | $ | 296 | $ | 877 | $ | 850 | |||||||||||||||
| Paperboard & High Yield Pulp | 70 | 57 | 201 | 199 | |||||||||||||||||||
| Net sales | $ | 383 | $ | 353 | $ | 1,078 | $ | 1,049 | |||||||||||||||
Net sales for the quarter ended September 26, 2026 increased $30 million, or 8%, compared to the same prior year quarter driven by a higher average sales price in CS and higher sales volumes in CC, PBD and HYP. These increases were partially offset by lower average sales prices in CC and PBD and lower sales volume in CS.
Net sales for the nine months ended September 26, 2026 increased $29 million, or 3%, compared to the same prior year period driven by a higher average sales price in CS and higher sales volumes in CC and PBD, partially offset by lower average sales prices in CC, PBD and HYP and lower sales volume in CS.
See Operating Results by Segment below for further discussion.
Operating Income (Loss)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions) | September 26, 2026 | September 27, 2025 | September 26, 2026 | September 27, 2025 | |||||||||||||||||||
| High Purity Cellulose | $ | 43 | $ | 38 | $ | 29 | $ | 78 | |||||||||||||||
| Paperboard & High Yield Pulp | (224) | (14) | (261) | (30) | |||||||||||||||||||
| Corporate & Other | (15) | (15) | (36) | (55) | |||||||||||||||||||
| Operating income (loss) | $ | (196) | $ | 9 | $ | (268) | $ | (7) | |||||||||||||||
Operating results for the quarter ended September 26, 2026 declined $205 million compared to the same prior year quarter, driven by current-quarter $212 million non-cash impairments of PBD & HYP assets, unfavorable CS and CC product mix, higher chemicals costs and unfavorable foreign exchange rates. Partially offsetting these negative impacts were the increase in CS average sales price and a current-quarter insurance recovery of $3 million related to the 2024 Jesup plant fire.
Operating loss for the nine months ended September 26, 2026 increased $261 million compared to the same prior year period, driven by the current-quarter PBD & HYP non-cash asset impairments of $212 million, first-quarter non-cash HPC permanent idling charges of $41 million, second-quarter HYP non-cash asset impairment of $13 million, unfavorable CS and CC product mix, higher costs for current period PBD & HYP planned maintenance outage and market-driven downtime and higher chemicals costs. Partially offsetting these negative impacts were the increase in CS average sales price, lower wood costs, lower environmental remediation expense, a current-period insurance recovery of $8 million related to the 2024 Jesup plant fire and favorable foreign exchange rates.
See Operating Results by Segment below for further discussion. See also Note 2-Temiscaming Operations, Note 6-Accrued and Other Current Liabilities and Note 8-Environmental Liabilities to our Financial Statements for further details on the permanent idling charges and asset impairments, insurance recovery and environmental reserves charges, respectively.
Non-Operating Income & Expense
During the quarter and nine months ended September 26, 2026, we recognized an $8 million impairment of our loan receivable from Anomera. See Note 9-Fair Value Measurements to our Financial Statements for further details.
Other income, net for the quarter ended September 26, 2026 increased $2 million compared to the same prior year quarter, driven by a $3 million decrease in the quarterly fair value remeasurement of the SWEN put option, partially offset by an unfavorable $1 million impact of foreign exchange rates.
Other income, net for the nine months ended September 26, 2026 increased $4 million compared to the same prior year period, driven by a favorable $2 million impact of foreign exchange rates, a $1 million decrease in pension and OPEB net periodic benefit costs, excluding service costs, and a $1 million decrease in the fair value remeasurement of the SWEN put option. See Note 9-Fair Value Measurements to our Financial Statements for further details of the put option revaluation.
Income Taxes
The effective tax rates on the loss from continuing operations for the quarter and nine months ended September 26, 2026 were an expense of 0.9% and a benefit of 0.9%, respectively. These rates differed from the federal statutory rate of 21% primarily due to changes in valuation allowances and different statutory tax rates in foreign jurisdictions. The permanent idling charges and impairments related to Temiscaming operations that were recorded in the first, second and third quarters of 2026 have a net zero tax impact due to the full valuation allowance on our Canadian DTAs (see below).
The effective tax rate on the loss from continuing operations for the quarter ended September 27, 2025 was a benefit of 72%, which differed from the federal statutory rate of 21% primarily due to valuation allowances on nondeductible U.S. interest expense, state taxes, return-to-accrual adjustments and different statutory tax rates in foreign jurisdictions.
The effective tax rate on the loss from continuing operations for the nine months ended September 27, 2025 was not meaningful as a result of the full write-off of our Canadian DTAs (see Note 15-Income Taxes to our Financial Statements for further details). Also driving the difference between the effective tax rate and the federal statutory rate of 21% were different statutory tax rates in foreign jurisdictions, valuation allowances on nondeductible U.S. interest expense, U.S. tax credits and nondeductible executive compensation.
Discontinued Operations
During the nine months ended September 27, 2025, we recorded pre-tax income from discontinued operations of $4 million related to our remaining CEWS benefit claims deferred since 2021. See Note 3-Discontinued Operations to our Financial Statements for further details.
Operating Results by Segment
High Purity Cellulose
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions, unless otherwise stated) | September 26, 2026 | September 27, 2025 | September 26, 2026 | September 27, 2025 | |||||||||||||||||||
| Net sales | $ | 313 | $ | 296 | $ | 877 | $ | 850 | |||||||||||||||
| Operating income | $ | 43 | $ | 38 | $ | 29 | $ | 78 | |||||||||||||||
| Average sales price ($ per MT) | |||||||||||||||||||||||
| Total Cellulose | $ | 1,377 | $ | 1,413 | $ | 1,327 | $ | 1,419 | |||||||||||||||
| Cellulose Specialties | $ | 2,227 | $ | 1,873 | $ | 2,160 | $ | 1,812 | |||||||||||||||
| Cellulose Commodities | $ | 825 | $ | 893 | $ | 803 | $ | 887 | |||||||||||||||
| Sales volume (thousands of MTs) | |||||||||||||||||||||||
| Total Cellulose | 218 | 198 | 633 | 567 | |||||||||||||||||||
| Cellulose Specialties | 86 | 105 | 244 | 326 | |||||||||||||||||||
| Cellulose Commodities | 132 | 93 | 389 | 241 | |||||||||||||||||||
Net Sales - Three Months Ended
|
Three Months Ended September 27, 2025
|
Changes Attributable to: |
Three Months Ended September 26, 2026
|
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| (in millions) | Price | Volume/Mix/Other | |||||||||||||||||||||
| Cellulose Specialties | $ | 196 | $ | 30 | $ | (34) | $ | 192 | |||||||||||||||
| Cellulose Commodities | 83 | (8) | 34 | 109 | |||||||||||||||||||
| Biomaterials & Other | 17 | - | (5) | 12 | |||||||||||||||||||
| HPC net sales | $ | 296 | $ | 22 | $ | (5) | $ | 313 | |||||||||||||||
Net sales of our High Purity Cellulose segment for the third quarter increased $17 million, or 6%, compared to the same prior year quarter, driven by:
•Total Cellulose sales volume increase of 10%, including a 42% increase in CC sales volume that was offset by an 18% decrease in CS sales volume.
-CC sales volume increased due to lower orders for CS products and resulting production shifts to CC, as well as higher uses of inventory in the current quarter.
-CS sales volume declined as we executed our CS leadership initiatives and also experienced weaker demand for ethers and other CS end uses.
•Total Cellulose average sales price decrease of 3%, including an 8% decrease in CC average sales price that was partially offset by a 19% increase in CS average sales price.
-CS average sales price increase was driven by higher pricing through CS leadership initiatives in 2026.
-CC average sales price decline was due to softer global commodity pricing and product mix within the commodity portfolio.
•Decrease of $5 million in Biomaterials & Other driven by a prospective reclass, beginning in 2026, of electricity sales from "net sales" to "cost of sales."
Net Sales - Nine Months Ended
|
Nine Months Ended September 27, 2025
|
Changes Attributable to: |
Nine Months Ended September 26, 2026
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| (in millions) | Price | Volume/Mix/Other | |||||||||||||||||||||
| Cellulose Specialties | $ | 591 | $ | 85 | $ | (148) | $ | 528 | |||||||||||||||
| Cellulose Commodities | 214 | (35) | 133 | 312 | |||||||||||||||||||
| Biomaterials & Other | 45 | - | (8) | 37 | |||||||||||||||||||
| HPC net sales | $ | 850 | $ | 50 | $ | (23) | $ | 877 | |||||||||||||||
Net sales of our High Purity Cellulose segment for the nine months ended September 26, 2026 increased $27 million, or 3%, compared to the same prior year period, driven by:
•Total Cellulose sales volume increase of 12%, including a 61% increase in CC sales volume that was partially offset by a 25% decrease in CS sales volume.
-CC sales volume increased due to lower orders for CS products and resulting production shifts to CC, as well as higher operating rates at our plants compared to the prior period.
-CS sales volume declined as we executed our CS leadership initiatives. Partially offsetting this decline was lower CS sales volume in the prior period as Chinese customers delayed orders due to the geopolitical uncertainty with Chinese and U.S. tariffs.
•Total Cellulose average sales price decrease of 6%, including a 9% decrease in CC average sales price that was partially offset by a 19% increase in CS average sales price.
-CS average sales price increase was driven by higher pricing through CS leadership initiatives in 2026.
-CC average sales price decline was due to softer global commodity pricing and product mix within the commodity portfolio.
•Decrease of $8 million in Biomaterials & Other driven by a $12 million prospective reclass of electricity sales from "net sales" to "cost of sales" that was partially offset by higher bioethanol and lignosulfonates sales.
Operating Income - Three Months Ended
|
Three Months Ended September 27, 2025
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Gross Margin Changes Attributable to: |
Three Months Ended September 26, 2026
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(in millions, except percentages)
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Sales Price |
Sales Volume/Mix/Other(a)
|
Cost | SG&A and other | |||||||||||||||||||||||||||||||
| HPC operating income | $ | 38 | $ | 22 | $ | (21) | $ | 2 | $ | 2 | $ | 43 | |||||||||||||||||||||||
| Operating margin % | 12.8 | % | 6.0 | % | (6.3) | % | 0.6 | % | 0.6 | % | 13.7 | % | |||||||||||||||||||||||
(a)Computed based on contribution margin.
Operating income of our High Purity Cellulose segment for the third quarter increased $5 million, or 13%, compared to the same prior year quarter, driven by:
•Increase in CS average sales price.
•Lower wood costs.
•Lower logistics costs.
•Lower maintenance and other service costs due to reduced discretionary spending.
•Insurance recovery of $3 million in the current quarter related to the 2024 Jesup plant fire.
Partially offsetting these income drivers were:
•Lower CS sales volumes and mix resulting from higher CC sales.
•Lower CC pricing and mix.
•Higher chemicals costs.
•Higher energy costs.
Operating Income - Nine Months Ended
|
Nine Months Ended September 27, 2025
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Gross Margin Changes Attributable to: |
Nine Months Ended September 26, 2026
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(in millions, except percentages)
|
Sales Price |
Sales Volume/Mix/Other(a)
|
Cost | SG&A and other | |||||||||||||||||||||||||||||||
| HPC operating income | $ | 78 | $ | 50 | $ | (65) | $ | (4) | $ | (30) | $ | 29 | |||||||||||||||||||||||
| Operating margin % | 9.2 | % | 5.0 | % | (7.0) | % | (0.5) | % | (3.4) | % | 3.3 | % | |||||||||||||||||||||||
(a)Computed based on contribution margin.
Operating income of our High Purity Cellulose segment for the nine months ended September 26, 2026 decreased $49 million, or 63%, compared to the same prior year period, driven by:
•Non-cash permanent idling charges of $41 million in the current period as a result of the decision to permanently cease DWP production at the Temiscaming HPC plant.
•Lower CS sales volumes and mix resulting from higher CC sales.
•Lower CC pricing and mix.
•Higher chemicals costs.
Partially offsetting these negative impacts were:
•Increase in CS average sales price.
•Lower wood costs.
•Lower maintenance and other service costs due to reduced discretionary spending.
•Improved operating rates.
•Lower energy costs driven by a $4 million higher benefit from sales of excess emission allowances and certificates of energy savings associated with Tartas operations in the current period compared to the prior period.
•Insurance recovery of $8 million in the current period related to the 2024 Jesup plant fire.
Paperboard & High Yield Pulp
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions, unless otherwise stated) | September 26, 2026 | September 27, 2025 | September 26, 2026 | September 27, 2025 | |||||||||||||||||||
| Net sales | $ | 70 | $ | 57 | $ | 201 | $ | 199 | |||||||||||||||
| Operating loss | $ | (224) | $ | (14) | $ | (261) | $ | (30) | |||||||||||||||
| Average sales price ($ per MT) | |||||||||||||||||||||||
| PBD & HYP | $ | 839 | $ | 854 | $ | 835 | $ | 870 | |||||||||||||||
| Paperboard | $ | 1,204 | $ | 1,256 | $ | 1,210 | $ | 1,310 | |||||||||||||||
| High Yield Pulp | $ | 501 | $ | 501 | $ | 496 | $ | 510 | |||||||||||||||
| Sales volume (thousands of MTs) | |||||||||||||||||||||||
| PBD & HYP | 83 | 66 | 240 | 229 | |||||||||||||||||||
| Paperboard | 40 | 31 | 114 | 103 | |||||||||||||||||||
| High Yield Pulp | 43 | 35 | 126 | 126 | |||||||||||||||||||
Net Sales - Three Months Ended
|
Three Months Ended September 27, 2025
|
Changes Attributable to: |
Three Months Ended September 26, 2026
|
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| (in millions) | Price | Volume/Mix | |||||||||||||||||||||
| Paperboard | $ | 39 | $ | (2) | $ | 11 | $ | 48 | |||||||||||||||
| High Yield Pulp | 18 | - | 4 | 22 | |||||||||||||||||||
| PBD & HYP net sales | $ | 57 | $ | (2) | $ | 15 | $ | 70 | |||||||||||||||
Net sales of our Paperboard & High Yield Pulp segment for the third quarter increased $13 million, or 23%, compared to the same prior year quarter, driven by:
•Total sales volume increase of 26%, including 29% and 23% increases for PBD and HYP, respectively, due to:
-Higher sales of folding packaging PBD grades due to increased focus on this market segment.
-Higher sales of lottery PBD grades.
-Increased demand for our HYP maple grade in Asia.
-Challenges with HYP supply from Indonesia due to concerns about forestry practices.
Partially offsetting these sales drivers were:
•Total average sales price decrease of 2%, including a 4% decrease for PBD and a flat average sales price for HYP, driven by product mix in PBD.
Net Sales - Nine Months Ended
|
Nine Months Ended September 27, 2025
|
Changes Attributable to: |
Nine Months Ended September 26, 2026
|
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| (in millions) | Price | Volume/Mix | |||||||||||||||||||||
| Paperboard | $ | 135 | $ | (11) | $ | 14 | $ | 138 | |||||||||||||||
| High Yield Pulp | 64 | (1) | - | 63 | |||||||||||||||||||
| PBD & HYP net sales | $ | 199 | $ | (12) | $ | 14 | $ | 201 | |||||||||||||||
Net sales of our Paperboard & High Yield Pulp segment for the nine months ended September 26, 2026 increased slightly compared to the same prior year period, driven by:
•Total sales volume increase of 5%, including an 11% increase for PBD and flat volume for HYP, due to:
-Higher sales of folding packaging PBD grades due to increased focus on this market segment.
-Higher sales of lottery PBD grades.
Partially offsetting these sales drivers were:
•Total average sales price decrease of 4%, including 8% and 3% decreases for PBD and HYP, respectively, due to:
-Increased competitive activity in PBD due to the startup of new U.S. capacity in mid-year 2025.
-Product mix in HYP.
Operating Loss - Three Months Ended
|
Three Months Ended September 27, 2025
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Gross Margin Changes Attributable to: |
Three Months Ended September 26, 2026
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(in millions, except percentages)
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Sales Price |
Sales Volume/Mix(a)
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Cost | SG&A and other | |||||||||||||||||||||||||||||||
| PBD & HYP operating loss | $ | (14) | $ | (2) | $ | 3 | $ | (23) | $ | (188) | $ | (224) | |||||||||||||||||||||||
| Operating margin % | (24.6) | % | (4.5) | % | 10.5 | % | (32.9) | % | (268.5) | % | (320.0) | % | |||||||||||||||||||||||
(a)Computed based on contribution margin.
The 50% U.S. tariff on Canadian paperboard, effective August 22, 2026, resulted in $2 million of tariff-related costs during the third quarter. Despite mitigation efforts, the tariff rendered continued paperboard and high yield pulp production at Temiscaming uneconomic and operations were economically idled on October 3, 2026.
Operating loss of our Paperboard & High Yield Pulp segment for the third quarter increased $210 million compared to the same prior year quarter, driven by:
•PBD & HYP non-cash asset impairments of $210 million.
•Decrease in PBD average sales price discussed above.
•Higher wood costs.
•Higher chemicals costs.
•Higher logistics costs.
Partially offsetting these negative impacts were:
•Increases in PBD and HYP sales volumes discussed above.
•Lower costs due to prior year market-driven downtime with no similar downtime in the current quarter.
Operating Loss - Nine Months Ended
|
Nine Months Ended September 27, 2025
|
Gross Margin Changes Attributable to: |
Nine Months Ended September 26, 2026
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|||||||||||||||||||||||||||||||||
|
(in millions, except percentages)
|
Sales Price |
Sales Volume/Mix(a)
|
Cost | SG&A and other | |||||||||||||||||||||||||||||||
| PBD & HYP operating loss | $ | (30) | $ | (12) | $ | 4 | $ | (25) | $ | (198) | $ | (261) | |||||||||||||||||||||||
| Operating margin % | (15.1) | % | (7.4) | % | 3.5 | % | (12.4) | % | (98.5) | % | (129.9) | % | |||||||||||||||||||||||
(a)Computed based on contribution margin.
Operating loss of our Paperboard & High Yield Pulp segment for the nine months ended September 26, 2026 increased $231 million compared to the same prior year period, driven by:
•Third-quarter PBD & HYP non-cash asset impairments of $210 million.
•Second-quarter HYP non-cash asset impairment of $13 million.
•Decreases in average sales prices, primarily PBD, discussed above.
•Higher costs for the planned maintenance outage and market-driven downtime taken in the current period compared to the market-driven downtime taken in the prior year.
•Increase in logistics costs due to higher ocean freight rates for shipments to Asia as a result of the current geopolitical environment.
•Higher wood costs.
•Higher chemicals costs.
Partially offsetting these negative impacts were:
•Increase in PBD sales volume discussed above.
•Lower energy costs due to higher offsetting electricity production and sales.
•Lower purchased pulp costs.
Corporate & Other
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
|
(in millions)
|
September 26, 2026 | September 27, 2025 | September 26, 2026 | September 27, 2025 | |||||||||||||||||||
| Operating loss | $ | (15) | $ | (15) | $ | (36) | $ | (55) | |||||||||||||||
The Corporate & Other operating loss for the third quarter was flat compared to the same prior year quarter as a $2 million impairment of our PBD & HYP assets, higher legal fees and unfavorable foreign exchange rates in the current quarter compared to favorable rates in the prior quarter were offset by lower variable compensation costs and professional fees.
The Corporate & Other operating loss for the nine months ended September 26, 2026 improved $19 million, or 35%, compared to the same prior year period, driven by lower environmental remediation expense due to a $12 million charge incurred in the prior period, favorable foreign exchange rates in the current period compared to unfavorable rates in the prior period and lower variable compensation costs and professional fees. These improvements were partially offset by the $2 million impairment of our PBD & HYP assets and higher legal fees.
Liquidity and Capital Resources
Overview
Cash flows from operations, primarily driven by operating results, have historically been our primary source of liquidity and capital resources. As operating cash flows can be negatively impacted by fluctuations in market prices for our commodity products and changes in demand for all our products, we maintain a key focus on cash, managing working capital closely and optimizing the timing and level of our capital expenditures. We believe our future cash flows from operations, availability under our ABL Credit Facility and our ability to access the capital markets, if necessary or desirable, will be adequate to fund our operations and anticipated long-term funding requirements, including capital expenditures, defined benefit plan contributions and repayment of debt maturities.
Our Board of Directors suspended our quarterly common stock dividend in September 2019. No dividends have been declared since. The declaration and payment of future common stock dividends, if any, will be at the discretion of our Board of Directors and dependent upon our financial condition, results of operations, capital requirements and other factors that the Board of Directors deems relevant. In addition, our debt facilities place limitations on the declaration and payment of future dividends.
In January 2018, our Board of Directors authorized a $100 million common stock share buyback program. We have not repurchased shares under this program since 2018 and do not expect to utilize any of the remaining $60 million in unused authorization in the future.
Our global liquidity as of September 26, 2026 was $143 million and is summarized with our capital resources below:
| (in millions, except ratios) | September 26, 2026 | December 31, 2025 | |||||||||
| Cash and cash equivalents | $ | 61 | $ | 75 | |||||||
|
Availability under ABL Credit Facility(a)(b)
|
$ | 66 | $ | 72 | |||||||
|
Availability under short-term factoring facility(b)
|
$ | 16 | $ | 10 | |||||||
|
Total debt(b)
|
$ | 771 | $ | 779 | |||||||
| Stockholders' equity (deficit) | $ | (35) | $ | 317 | |||||||
| Total capitalization (total debt plus stockholders' equity) | $ | 736 | $ | 1,096 | |||||||
| Debt to capital ratio | 105 | % | 71 | % | |||||||
(a)Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At September 26, 2026, we had $160 million of gross availability and net available borrowings of $66 million after taking into account the facility's quarter end balance of $33 million, outstanding letters of credit of $37 million and required availability of $24 million to avoid triggering the facility's fixed charge coverage ratio covenant.
(b)See Note 7-Debt and Finance Leases to our Financial Statements for further information.
As of September 26, 2026, we were in compliance with all financial and other covenants under our debt agreements.
Other Sources of Cash
Asset Financing Obligation
In March 2026, we entered into a sale-leaseback agreement for the equipment of our chip mills located in Georgia and our ERP systems for net proceeds of $20 million. The arrangement has an initial term of 33 months with monthly rental payments of $0.7 million. We retain a one dollar ($1.00) purchase option at the end of the lease term.
SWEN Investment
In 2024, we secured €30 million to be provided by SWEN in return for a 20% preferred equity interest in BioNova. We received €15 million from SWEN in 2024. Subsequent funding is contingent on the achievement of certain project milestones.
BioNova Term Loan
In 2024, we entered into a credit agreement that authorizes up to €37 million in seven- and eight-year secured term loan tranches. Drawdowns may be made through November 2026 and are restricted to capital expenditures and development activities related to the BioNova platform. As of September 26, 2026, no borrowings were outstanding under the BioNova Term Loan. We may evaluate alternatives with respect to the facility if it is not utilized prior to the end of the availability period and arrange for an amendment of the credit agreement.
Cash Requirements
Contractual Commitments
Our principal contractual commitments include standby letters of credit, surety bonds, guarantees, purchase obligations and leases. We utilize arrangements such as standby letters of credit and surety bonds to provide credit support for certain suppliers and vendors in case of their default on critical obligations, collateral for certain of our self-insurance programs and guarantees for the completion of our remediation of environmental liabilities. As part of our ongoing operations, we also periodically issue guarantees to third parties. Our primary purchase obligation payments relate to natural gas, electricity and wood chips purchase contracts. There have been no material changes outside the ordinary course of business to the purchase obligations presented in our 2025 Form 10-K during the nine months ended September 26, 2026.
Cash Flows
| Nine Months Ended | |||||||||||
| (in millions) | September 26, 2026 | September 27, 2025 | |||||||||
| Cash flows provided by (used in): | |||||||||||
| Operating activities | $ | 66 | $ | (8) | |||||||
| Investing activities | $ | (64) | $ | (97) | |||||||
| Financing activities | $ | (14) | $ | 47 | |||||||
Cash provided by operating activities increased $74 million driven by working capital inflows in the current period compared to outflows in the prior period, lower payout on our short-term incentive plan in 2026 compared to 2025 and lower interest paid on long-term debt due to the timing of payments.
Cash used in investing activities decreased $33 million primarily due to lower custodial and strategic capital spend.
Cash outflows for financing activities increased $61 million primarily due to net repayments of debt in the current period, inclusive of the $20 million net proceeds received for the sale-leaseback transaction, compared to net borrowings in the prior period, partially offset by lower repurchases of common stock to satisfy tax withholding requirements related to stock-based compensation.
Performance and Liquidity Indicators
The discussion below is presented to enhance the reader's understanding of our operating performance, liquidity and ability to generate cash and satisfy rating agency and creditor requirements. This information includes the non-GAAP financial measures of EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow. These measures are not defined by GAAP and our discussion of them is not intended to conflict with or change any of our GAAP disclosures provided in this report.
We believe these non-GAAP financial measures provide useful information to our Board of Directors, management and investors regarding our financial condition and results of operations. Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses, to determine management incentive compensation and for budgeting, forecasting and planning purposes. Our management considers these non-GAAP financial measures, in addition to operating income, to be important in estimating our enterprise and stockholder values and for making strategic and operating decisions. In addition, analysts, investors and creditors use these non-GAAP financial measures when analyzing our operating performance, financial condition and cash-generating ability. We use EBITDA and Adjusted EBITDA as performance measures and Adjusted Free Cash Flow as a liquidity measure.
We do not consider non-GAAP financial measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they may exclude significant expense and income items that are required by GAAP to be recognized in our Financial Statements. In addition, they reflect the exercise of management's judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. To compensate for these limitations, reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures are provided below. Non-GAAP financial measures are not necessarily indicative of results that may be generated in future periods and should not be relied upon, in whole or part, in evaluating our financial condition, results of operations or future prospects.
We do not provide a reconciliation of forward-looking Adjusted EBITDA to its most directly comparable GAAP financial measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. These amounts may be material and could result in the projected GAAP financial measure being materially different than the projected non-GAAP measure. As such, a reconciliation for our forward-looking non-GAAP financial measure is not available without unreasonable effort.
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for items that management believes are not representative of our core operations.
Income (loss) from continuing operations is reconciled to EBITDA and Adjusted EBITDA from continuing operations by segment, as follows:
|
Three Months Ended September 26, 2026
|
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|
(in millions)
|
High Purity Cellulose | Paperboard & High Yield Pulp | Corporate & Other | Total | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 44 | $ | (222) | $ | (51) | $ | (229) | |||||||||||||||
| Depreciation and amortization | 29 | 3 | 2 | 34 | |||||||||||||||||||
| Interest expense, net | - | - | 24 | 24 | |||||||||||||||||||
| Income tax expense | - | - | 2 | 2 | |||||||||||||||||||
| EBITDA-continuing operations | 73 | (219) | (23) | (169) | |||||||||||||||||||
| Asset and investment impairments | - | 210 | 11 | 221 | |||||||||||||||||||
| Suspension charges | - | - | - | - | |||||||||||||||||||
| Adjusted EBITDA-continuing operations | $ | 73 | $ | (9) | $ | (12) | $ | 52 | |||||||||||||||
|
Three Months Ended September 27, 2025
|
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|
(in millions)
|
High Purity Cellulose | Paperboard & High Yield Pulp | Corporate & Other | Total | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 37 | $ | (13) | $ | (28) | $ | (4) | |||||||||||||||
| Depreciation and amortization | 28 | 5 | 1 | 34 | |||||||||||||||||||
| Interest expense, net | - | - | 24 | 24 | |||||||||||||||||||
| Income tax benefit | - | - | (11) | (11) | |||||||||||||||||||
| EBITDA-continuing operations | 65 | (8) | (14) | 43 | |||||||||||||||||||
| Suspension charges | (1) | - | - | (1) | |||||||||||||||||||
| Adjusted EBITDA-continuing operations | $ | 64 | $ | (8) | $ | (14) | $ | 42 | |||||||||||||||
|
Nine Months Ended September 26, 2026
|
|||||||||||||||||||||||
|
(in millions)
|
High Purity Cellulose | Paperboard & High Yield Pulp | Corporate & Other | Total | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 28 | $ | (258) | $ | (113) | $ | (343) | |||||||||||||||
| Depreciation and amortization | 84 | 11 | 4 | 99 | |||||||||||||||||||
| Temiscaming HPC permanent idling charges - accelerated depreciation | 35 | - | - | 35 | |||||||||||||||||||
| Interest expense, net | - | - | 71 | 71 | |||||||||||||||||||
| Income tax benefit | - | - | (3) | (3) | |||||||||||||||||||
| EBITDA-continuing operations | 147 | (247) | (41) | (141) | |||||||||||||||||||
| Asset and investment impairments | - | 223 | 11 | 234 | |||||||||||||||||||
| Temiscaming HPC permanent idling charges - other asset adjustments | 6 | - | - | 6 | |||||||||||||||||||
| Suspension charges | 1 | - | - | 1 | |||||||||||||||||||
| Adjusted EBITDA-continuing operations | $ | 154 | $ | (24) | $ | (30) | $ | 100 | |||||||||||||||
|
Nine Months Ended September 27, 2025
|
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|
(in millions)
|
High Purity Cellulose | Paperboard & High Yield Pulp | Corporate & Other | Total | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 77 | $ | (29) | $ | (450) | $ | (402) | |||||||||||||||
| Depreciation and amortization | 78 | 17 | 1 | 96 | |||||||||||||||||||
| Interest expense, net | - | - | 70 | 70 | |||||||||||||||||||
| Income tax expense | - | - | 323 | 323 | |||||||||||||||||||
| EBITDA-continuing operations | 155 | (12) | (56) | 87 | |||||||||||||||||||
| Suspension charges | - | - | - | - | |||||||||||||||||||
| Adjusted EBITDA-continuing operations | $ | 155 | $ | (12) | $ | (56) | $ | 87 | |||||||||||||||
Adjusted Free Cash Flow
Adjusted Free Cash Flow is a non-GAAP financial measure of cash generated during a period that is available for debt reduction, acquisitions and repurchases of our common stock. Beginning in the fourth quarter of 2025, Adjusted Free Cash Flow is defined as cash provided by operating activities less capital expenditures, net of proceeds from the sale of property, plant and equipment and insurance claims. Adjusted Free Cash Flow for the nine months ended September 27, 2025 has been recalculated according to this new definition.
Cash provided by (used in) operating activities is reconciled to Adjusted Free Cash Flow as follows:
| Nine Months Ended | |||||||||||
| (in millions) | September 26, 2026 | September 27, 2025 | |||||||||
| Cash provided by (used in) operating activities | $ | 66 | $ | (8) | |||||||
|
Capital expenditures, net(a)
|
(64) | (95) | |||||||||
| Adjusted Free Cash Flow | $ | 2 | $ | (103) | |||||||
(a)Net of proceeds from the sale of property, plant and equipment and insurance claims. Included in capital expenditures, net were strategic capital expenditures of $10 million and $20 million for the nine months ended September 26, 2026 and September 27, 2025, respectively.
Rayonier Advanced Materials Inc. published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 20:05 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]