Rayonier Advanced Materials (NYSE:RYAM) reported higher second-quarter sales and adjusted EBITDA, while management said its strategic review remains active and is expected to conclude with a clear path forward in the fourth quarter.
In his first earnings call as president and chief executive officer, Dan Krawczyk said his appointment does not change the company’s strategic-review process. He said the board’s mandate is to maximize shareholder value while maintaining operational performance during the review.
Krawczyk said the company has seen constructive engagement from interested parties and expects to communicate a clear path forward during the fourth quarter. He also said the company is pursuing reliability, productivity, energy-efficiency, process-optimization and automation initiatives intended to improve earnings and cash generation.
Second-Quarter Results Improve Sequentially
Chief Financial Officer Marcus Moeltner said second-quarter net sales totaled $376 million, up 18% sequentially and 11% from the prior-year quarter. The company reported a loss from continuing operations of $33 million, improving from an $81 million loss in the first quarter. The second-quarter loss included a $13 million non-cash asset impairment charge related to High-Yield Pulp.
Adjusted EBITDA, a non-GAAP measure, increased to $40 million from $8 million in the first quarter and $28 million a year earlier. The year-over-year increase reflected a $12 million improvement in High Purity Cellulose adjusted EBITDA and an $8 million improvement in corporate and other expenses, partly offset by weaker results in Paperboard and High-Yield Pulp.
- High Purity Cellulose sales rose to $301 million, up $38 million sequentially and $29 million year over year.
- High Purity Cellulose adjusted EBITDA increased to $57 million, compared with $24 million in the first quarter and $45 million in the prior-year period.
- Paperboard and High-Yield Pulp sales rose to $75 million, but adjusted EBITDA was negative $10 million, compared with negative $5 million in the first quarter and negative $2 million a year earlier.
Within High Purity Cellulose, Cellulose Specialties pricing increased 8% sequentially and 21% year over year, while sales volumes rose 19% from the first quarter. Moeltner said year-over-year volumes remained lower as the company continued value-based pricing efforts. Cellulose Commodities pricing improved 6% sequentially but remained 11% below the prior-year level, while volumes nearly doubled from a year earlier as operating rates improved and production shifted toward commodity grades.
Moeltner attributed the segment’s EBITDA improvement to higher Cellulose Specialties pricing, improved operating rates, and lower wood and fixed costs. Those gains were partly offset by lower Cellulose Specialties volumes, a higher commodity mix, and inflation.
Paperboard, High-Yield Pulp Remain Under Pressure
Paperboard and High-Yield Pulp sales increased both sequentially and year over year, but the segment’s adjusted EBITDA loss widened. Moeltner said higher volumes were more than offset by lower pricing, planned maintenance, and market-related downtime.
Paperboard pricing increased 3% from the first quarter and volumes improved 11%, with tighter market conditions supporting a firmer pricing outlook. However, pricing remained below the prior-year quarter. High-Yield Pulp volumes nearly doubled sequentially and rose 29% from a year earlier, primarily because of shipment timing, while pricing remained under pressure.
Krawczyk said a return to improved performance in the business will depend substantially on commercial execution, including the rollout of higher-value freezer board, oil- and grease-resistant grades, high-yield wrappers, and rolled softwood high-yield pulp for absorbent applications.
Liquidity, Cash Flow and Refinancing Focus
RYAM ended the quarter with $145 million of total liquidity, including $57 million of cash, $76 million of availability under its North American asset-based lending facility, and $12 million under its France factoring facility. Adjusted net debt was $755 million and net secured debt was $726 million.
Net secured leverage was 4.2 times covenant EBITDA, compared with a 4.75 times covenant test, and the company remained in compliance with all debt covenants. Year-to-date operating cash flow was $37 million, resulting in adjusted free cash flow of negative $8 million. That represented a $57 million improvement from negative $65 million in the prior-year period.
Management reiterated its expectation to generate positive free cash flow for full-year 2026. Moeltner said the company expects Cellulose Specialties volumes to improve by roughly 10% to 15% in the second half compared with the first half, while maintaining favorable pricing and mix. He said working-capital management, discretionary spending, commodity pricing, and improved Paperboard and High-Yield Pulp performance will also be important to reaching the cash-flow target.
Management said operating performance, capital-market conditions, and the outcome of the strategic review will influence potential refinancing alternatives. Krawczyk said the company aims to enter 2027 with a stronger earnings run rate and greater financial flexibility.
Trade Developments and Specialty Opportunities
Krawczyk said the U.S. Trade Representative announced final Section 301 actions that include an aggregate 37.5% tariff on Brazilian dissolving wood pulp imports and a 12.5% tariff on Norwegian dissolving wood pulp imports. Preliminary antidumping duties on imports from Brazil and Norway, as well as preliminary countervailing duties on Brazilian imports, remain active, with final determinations expected later this year.
He said the ultimate impact will depend on downstream trade programs and other regulatory mechanisms, but added that sustained actions could create fairer competitive conditions for qualified U.S. suppliers.
The company is also monitoring tariffs on certain Canadian-origin products. Krawczyk said approximately 75% of RYAM’s paperboard volume is sold into the United States and that tariffs could materially affect the economics of the Paperboard and High-Yield Pulp business. RYAM is working with policymakers and customers on commercial and operational responses.
Krawczyk also highlighted RYAM’s position as the sole remaining U.S. supplier of dissolving wood pulp for nitrocellulose applications, which are used in defense and industrial markets. He said the company is seeking to qualify additional grades across its facilities to provide supply flexibility for U.S. and NATO-related supply chains.
About Rayonier Advanced Materials (NYSE:RYAM)
Rayonier Advanced Materials, Inc is a publicly traded specialty bioproducts company focused on the production of high-purity cellulose and engineered wood products. Headquartered in Jacksonville, Florida, the company operates a network of manufacturing facilities across North America, New Zealand and Europe. Its cellulose specialties business produces dissolving pulps and high-purity fibers that serve a range of end markets, including food and beverage, personal care, pharmaceuticals and textiles.
