Rayonier Advanced Materials Inc.

05/06/2026 | Press release | Distributed by Public on 05/06/2026 11:42

Quarterly Report for Quarter Ending March 28, 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 15-Segments for further information.
Recent Business Developments
•In April 2026, an isolated fire occurred at our HPC plant in Jesup, Georgia during a scheduled annual maintenance outage. See Note 1-Nature of Operations and Basis of Presentation for further information.
•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.
•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.
The USDOC has initiated antidumping and countervailing duty investigations. Preliminary determinations are being issued on a rolling basis, with additional determinations expected in the second quarter of 2026. Final determinations by the USDOC and the USITC are currently expected by the fourth quarter of 2026.
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.
Business Outlook
In 2026, we remain focused on execution, cash discipline and measurable improvement across the portfolio. Our priorities are to deliver positive free cash flow, strengthen our leadership in CS and drive year-over-year EBITDA improvement across the business.
Based on our first quarter results, we continue to expect full year EBITDA to be higher than 2025 and to generate positive free cash flow. Although macroeconomic conditions remain challenging and execution of our CS leadership initiative is ongoing, we believe our strategy is positioning RYAM for improved performance.
High Purity Cellulose
We expect improvement to be driven by disciplined commercial execution, including CS pricing actions that reflect the value of our products. CS volumes are expected to be lower in 2026 as customers adjust ordering and inventory positions, with improvement over the year. CC market conditions have been challenging, though fluff and viscose pricing have recently stabilized and are expected to improve modestly throughout the year. CC volumes are expected to be higher because of the CS actions and market dynamics. Our biomaterial products are expected to generate year-over-year improvement through improved feedstock and stable performance. Input costs are presently under inflationary pressure, which may persist throughout the year if the conflict in the Middle East persists. We are pursuing cost surcharges, where possible, to mitigate the impact of inflationary pressures.
Paperboard & High Yield Pulp
We expect year-over-year improvement to be driven by new product commercialization, volume growth and continued expansion into higher-value end markets. We also expect pricing to stabilize as supply and demand dynamics improve, supported by ongoing operational and cost discipline.
Corporate & Other
We will maintain strict control of discretionary spending and continue driving structural efficiencies, with a focus on supporting cash generation and execution across the businesses.
Capital allocation
We remain committed to disciplined capital allocation and liquidity management. We will prioritize and reduce capital expenditures with a focus on near-term cash generation and deleveraging, and will continue to evaluate capital return options within our capital allocation framework as performance and financial flexibility improve.
Results of Operations
Three Months Ended
(in millions, except percentages) March 28, 2026 March 29, 2025
Net sales $ 319 $ 353
Cost of sales (327) (329)
Gross margin (8) 24
Selling, general and administrative expense (19) (23)
Foreign exchange gain (loss) 1 (1)
Temiscaming HPC permanent idling charges (41) -
Other operating income (expense), net 2 (15)
Operating loss (65) (15)
Interest expense (23) (24)
Other income, net - 2
Loss before income tax (88) (37)
Income tax benefit 7 5
Net loss (81) (32)
Net income attributable to redeemable noncontrolling interest - -
Net loss attributable to RYAM $ (81) $ (32)
Gross margin % (2.5) % 6.8 %
Operating margin % (20.4) % (4.2) %
Effective tax rate 8.2 % 15.0 %
Net Sales
Three Months Ended
(in millions) March 28, 2026 March 29, 2025
High Purity Cellulose $ 263 $ 279
Paperboard & High Yield Pulp 56 74
Net sales $ 319 $ 353
Net sales for the quarter ended March 28, 2026 decreased $34 million, or 10%, compared to the prior year quarter, driven by lower average sales prices in CC, PBD and HYP, and lower sales volumes in CS, PBD and HYP. These decreases were partially offset by a higher average sales price in CS and higher CC sales volume. See Operating Results by Segment below for further discussion.
Operating Income (Loss)
Three Months Ended
(in millions) March 28, 2026 March 29, 2025
High Purity Cellulose $ (43) $ 20
Paperboard & High Yield Pulp (10) (9)
Corporate & Other (12) (26)
Operating loss $ (65) $ (15)
Operating loss for the quarter ended March 28, 2026 increased $50 million, or 333%, compared to the prior year quarter, driven by the decrease in net sales and non-cash permanent idling charges of $41 million in the current quarter as a result of the decision to permanently cease DWP production at the Temiscaming HPC plant. Partially offsetting these decreases were lower energy, wood and purchased pulp costs, lower environmental remediation expense, favorable foreign exchange rates and an insurance recovery of $4 million related to the 2024 Jesup plant fire. See Operating Results by Segment below for further discussion.
Non-Operating Income & Expense
Included in "other income, net" in the quarter ended March 28, 2026 was a $2 million increase to our liability related to the quarterly fair value remeasurement of the SWEN put option.
Comparing the current quarter to the prior year quarter, foreign exchange rate fluctuations favorably impacted results by $1 million.
Income Taxes
The effective tax rate for the quarter ended March 28, 2026 was a benefit of 8.2%. This rate differed from the federal statutory rate of 21% primarily due to changes in valuation allowances and different statutory tax rates in foreign jurisdictions.
The effective tax rate for the quarter ended March 29, 2025 was a benefit of 15.0%. This rate differed from the federal statutory rate of 21% primarily due to changes in the valuation allowance on disallowed interest deductions, different statutory tax rates in foreign jurisdictions, U.S. tax credits and nondeductible executive compensation.
Operating Results by Segment
High Purity Cellulose
Three Months Ended
(in millions, unless otherwise stated) March 28, 2026 March 29, 2025
Net sales $ 263 $ 279
Operating income (loss) $ (43) $ 20
Average sales price ($ per MT)
Total Cellulose $ 1,219 $ 1,371
Cellulose Specialties $ 2,040 $ 1,750
Cellulose Commodities $ 770 $ 863
Sales volume (thousands of MTs)
Total Cellulose 205 195
Cellulose Specialties 72 111
Cellulose Commodities 133 84
Net Sales
Three Months Ended March 29, 2025
Changes Attributable to:
Three Months Ended March 28, 2026
(in millions) Price Volume/Mix/Other
Cellulose Specialties $ 195 $ 20 $ (67) $ 148
Cellulose Commodities 73 (17) 46 102
Biomaterials and other 11 1 1 13
HPC net sales $ 279 $ 4 $ (20) $ 263
Net sales of our High Purity Cellulose segment for the quarter decreased $16 million, or 6%, compared to the prior year quarter, driven by:
•Cellulose sales volume increase of 5%, driven by mix that included a 58% increase in CC sales volume that was partially offset by a 35% decrease in CS sales volume.
-CC sales volume increased as we executed our CS leadership initiatives and shifted production toward commodity products.
-CS sales volume declined as we executed our CS leadership initiatives, with the decline further impacted by elevated inventory levels in the acetate market and softer demand in the ethers market.
•Cellulose average sales price decrease of 11%, including an 11% decrease in CC average sales price that was partially offset by a 17% increase in CS average sales price.
-CS average sales price increase was driven by improved pricing of newly negotiated contracts. We remain on track to securing value-based pricing for our 2026 CS portfolio.
-CC average sales price decline was due to softer global commodity pricing.
•Partially offsetting the decreases above was an increase in biomaterials and other net sales from $11 million to $13 million, primarily driven by 2G bioethanol fuel and lignosulfonates.
Operating Income (Loss)
Three Months Ended March 29, 2025
Gross Margin Changes Attributable to:
Three Months Ended March 28, 2026
(in millions, except percentages)
Sales Price
Sales Volume/Mix/Other(a)
Cost SG&A and other
HPC operating income (loss) $ 20 $ 4 $ (39) $ 6 $ (34) $ (43)
Operating margin % 7.2 % 1.3 % (14.2) % 2.3 % (12.9) % (16.3) %
(a)Computed based on contribution margin.
Operating results of our High Purity Cellulose segment for the quarter declined $63 million, or 315%, compared to the prior year quarter, driven by:
•Non-cash permanent idling charges of $41 million in the current quarter as a result of the decision to permanently cease DWP production at the Temiscaming HPC plant.
•Decrease in net sales discussed above, primarily the decrease in variable margin resulting from the lower CS sales volumes.
•Higher labor and maintenance costs.
These decreases were partially offset by:
•Lower wood costs.
•Insurance recovery of $4 million related to the 2024 Jesup plant fire.
•Lower energy costs, driven by a $3 million higher benefit from sales of excess emission allowances in the current quarter compared to the prior year quarter.
Paperboard & High Yield Pulp
Three Months Ended
(in millions, unless otherwise stated) March 28, 2026 March 29, 2025
Net sales $ 56 $ 74
Operating loss $ (10) $ (9)
Average sales price ($ per MT)
PBD & HYP $ 884 $ 870
Paperboard $ 1,194 $ 1,321
High Yield Pulp $ 504 $ 518
Sales volume (thousands of MTs)
PBD & HYP 63 85
Paperboard 35 37
High Yield Pulp 28 48
Net Sales
Three Months Ended March 29, 2025
Changes Attributable to:
Three Months Ended March 28, 2026
(in millions) Price Volume/Mix
Paperboard $ 49 $ (4) $ (3) $ 42
High Yield Pulp 25 (1) (10) 14
PBD & HYP net sales $ 74 $ (5) $ (13) $ 56
Net sales of our Paperboard & High Yield Pulp segment for the quarter decreased $18 million, or 24%, compared to the prior year quarter, driven by:
•Total sales volume decrease of 26%, due to 5% and 42% decreases for PBD and HYP, respectively.
•Total average sales price increase of 2%, despite 10% and 3% decreases for PBD and HYP, respectively, due to a higher mix of PBD sales.
These decreases were driven by:
•Increased competitive activity in PBD due to the startup of new U.S. capacity in mid-year 2025.
•Continued oversupply of domestic HYP in Asia.
•Weaker demand for paper and packaging materials due to global economic uncertainty.
Partially offsetting these decreases were higher sales of folding packaging PBD grades due to increased focus on this market segment.
Operating Loss
Three Months Ended March 29, 2025
Gross Margin Changes Attributable to:
Three Months Ended March 28, 2026
(in millions, except percentages)
Sales Price
Sales Volume/Mix(a)
Cost SG&A and other
PBD & HYP operating loss $ (9) $ (5) $ (2) $ 4 $ 2 $ (10)
Operating margin % (12.2) % (8.1) % (8.3) % 7.1 % 3.6 % (17.9) %
(a)Computed based on contribution margin.
Operating loss of our Paperboard & High Yield Pulp segment for the quarter increased $1 million, or 11%, compared to the prior year quarter, driven by:
•Decrease in net sales discussed above.
•Increase in logistics costs due to higher ocean freight rates for shipments to Asia as a result of the current geopolitical environment.
•Impact of market downtime taken in the current quarter.
Partially offsetting these decreases were:
•Lower energy costs due to higher offsetting electricity production and sales.
•Lower purchased pulp costs.
Corporate & Other
Three Months Ended
(in millions)
March 28, 2026 March 29, 2025
Operating loss $ (12) $ (26)
The Corporate & Other operating loss for the quarter improved $14 million, or 54%, compared to the prior year quarter, driven by:
•Lower environmental remediation expense driven by the $12 million charge incurred in the prior year quarter.
•Favorable foreign exchange rates in the current quarter compared to unfavorable rates in the prior year quarter.
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 of 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 liquidity and capital resources are summarized below:
(in millions, except ratios) March 28, 2026 December 31, 2025
Cash and cash equivalents $ 68 $ 75
Availability under ABL Credit Facility(a)(b)
$ 88 $ 72
Availability under short-term factoring facility(b)
$ 4 $ 10
Total debt(b)
$ 763 $ 779
Stockholders' equity $ 229 $ 317
Total capitalization (total debt plus stockholders' equity) $ 992 $ 1,096
Debt to capital ratio 77 % 71 %
(a)Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At March 28, 2026, we had $161 million of gross availability and net available borrowings of $88 million after taking into account the facility's quarter end balance of $20 million, outstanding letters of credit of $29 million and required availability of $24 million to avoid triggering the facility's fixed charge coverage ratio covenant.
(b)See Note 6-Debt and Finance Leases to our Financial Statements for further information.
As of March 28, 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 March 28, 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 quarter ended March 28, 2026.
Cash Flows
Three Months Ended
(in millions) March 28, 2026 March 29, 2025
Cash flows provided by (used in):
Operating activities $ 32 $ 40
Investing activities $ (20) $ (38)
Financing activities $ (18) $ (1)
Cash provided by operating activities decreased $8 million compared to the prior year quarter primarily due to the decline in operating results and lower working capital inflows.
Cash used in investing activities decreased $18 million compared to the prior year quarter due to lower custodial and strategic capital spend, as well as current year proceeds from our insurance claim related to the 2024 fire at our Jesup plant.
Cash outflows from financing activities increased $17 million compared to the prior year quarter primarily due to net repayments of short- and long-term 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.
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.
Net income (loss) is reconciled to EBITDA and Adjusted EBITDA by segment, as follows:
Three Months Ended March 28, 2026
(in millions)
High Purity Cellulose Paperboard & High Yield Pulp Corporate & Other Total
Net loss $ (45) $ (9) $ (27) $ (81)
Net income attributable to redeemable noncontrolling interest - - - -
Net loss attributable to RYAM (45) (9) (27) (81)
Depreciation and amortization 28 4 1 33
Temiscaming HPC permanent idling charges - accelerated depreciation 35 - - 35
Interest expense, net - - 22 22
Income tax benefit - - (7) (7)
EBITDA attributable to RYAM 18 (5) (11) 2
Temiscaming HPC permanent idling charges - other asset adjustments 6 - - 6
Adjusted EBITDA attributable to RYAM $ 24 $ (5) $ (11) $ 8
Three Months Ended March 29, 2025
(in millions)
High Purity Cellulose Paperboard & High Yield Pulp Corporate & Other Total
Net income (loss) $ 20 $ (8) $ (44) $ (32)
Net income attributable to redeemable noncontrolling interest - - - -
Net income (loss) attributable to RYAM 20 (8) (44) (32)
Depreciation and amortization 26 6 (1) 31
Interest expense, net - - 23 23
Income tax benefit - - (5) (5)
EBITDA and Adjusted EBITDA attributable to RYAM $ 46 $ (2) $ (27) $ 17
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 quarter ended March 29, 2025 has been recalculated according to this new definition.
Cash provided by operating activities is reconciled to Adjusted Free Cash Flow as follows:
Three Months Ended
(in millions) March 28, 2026 March 29, 2025
Cash provided by operating activities $ 32 $ 40
Capital expenditures, net(a)
(20) (38)
Adjusted Free Cash Flow $ 12 $ 2
(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 $5 million and $8 million for the quarters ended March 28, 2026 and March 29, 2025, respectively.
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