What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-01 · 53 added, 39 removed, 188 unchanged (33% of the section changed)

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Our high-yield pulp is used by paperboard producers, as well as in traditional printing, writing and specialty paper manufacturing.

Strategic Growth Investments

We focus our strategic investments in projects that optimize and align our assets to meet the ever-growing demand for renewable products.

These projects include renewable energy projects at our Temiscaming facility in Quebec, Canada and our Tartas, France facility;

Anomera, a manufacturer of CNC, a patented, biodegradable product used as an ingredient in cosmetics and various industrial materials;

and our most recent investment at our Tartas facility to produce 2G bioethanol, intended to help meet the demand for Europe’s fast-growing biofuels market and further improve the sustainability of our operating model.

With production anticipated to begin in 2024, we expect to be among the first in France to produce wood-based 2G bioethanol fuel, a product that should help petrochemical companies improve the climate profile of their energy offerings in the European market.

We are also developing a prebiotic for enhanced gut health in poultry and swine, which is expected to support sustainable poultry and swine farming and provide a healthy alternative nutrient to enhance gut health.

Our portfolio is aligned with sustainability drivers, including the European Union Green Deal for the Renewable Energy Directive II.

Our ongoing projects include:

• Our investment in Anomera, who manufactures CNC, a patented, biodegradable product used as an ingredient in cosmetics and various industrial materials, at our Temiscaming facility;

• Development of a prebiotic for enhanced gut health in poultry and swine at our Jesup facility, which is expected to support sustainable poultry and swine farming and provide a healthy alternative nutrient to enhance gut health;

• Production of 2G bioethanol fuel at our Tartas facility, intended to help meet the demand for Europe’s fast-growing biofuels market and further improve the sustainability of our operating model.

With production expected to begin in the first quarter of 2024, we will be among the first in France to produce wood-based 2G bioethanol fuel, a product that is noncompetitive to the human food supply and is expected to help petrochemical companies improve the climate profile of their energy offerings in the European market;

• Production of 2G bioethanol fuel at our Fernandina facility, a multi-year project expected to have similar carbon impacts as our Tartas bioethanol facility and may be used in additional market segments, including as a feedstock for sustainable aviation fuel;

• Our involvement with Altamaha Green Energy, a start-up entity bidding on an annual contract with Georgia Power to sell green electricity from a new plant to be constructed adjacent to our Jesup facility.

The multi-year project offers significant potential long-term benefits to RYAM.

Our strategic investment approach unlocks the capabilities of our facilities and capitalizes on the sustainably harvested trees that we use as our primary feedstock.

Our Sustainability Profile

We have four production facilities, located in the U.S., Canada and France.

We operate four production facilities strategically located in the U.S., Canada and France.

Our Fernandina Beach and Tartas facilities are ISCC PLUS and ISCC EU certified, respectively, underscoring our commitment to independently audited sustainability standards and processes within our supply chain.

Moreover, all our production facilities hold certification in both the Forest Stewardship Council and Programme for the Endorsement of Forest Certification Chain of Custody standards.

We believe this dual certification reinforces our dedication to responsible and sustainable forestry practices throughout our manufacturing processes.

Our fluff pulp, produced at our Jesup facility, carries the distinction of being certified as an “Inspected Raw Material” by Nordic Swan Ecolabeling.

This label signifies adherence to rigorous environmental requirements at every stage of manufacturing, assuring consumers and commercial buyers of our product’s sustainable and environmentally friendly nature.

In 2021, we set an ambitious goal of achieving at least a 40 percent reduction in overall Scope 1 and Scope 2 GHG emissions, on both an absolute and intensity basis, by 2030, using 2020 as a baseline.

We are on track to meet this objective, with external verification confirming total reductions of 15 percent and 10 percent in absolute and intensity emissions, respectively, for 2021 and 2022.

This translates to an aggregate goal achievement for absolute and intensity emissions of approximately 40 percent and 25 percent, respectively.

We continue to actively monitor and pursue additional opportunities for sustainability.

Our 2023 results are pending confirmation.

Our facilities are energy intensive;

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The remaining energy consumed is primarily sourced from natural gas.

We previously announced a goal of at least 40% reduction in overall Scope 1 and Scope 2 (aggregated) GHG emissions, on both an absolute and intensity basis, by 2030, using 2020 as a baseline.

We are on track to achieve this objective and routinely monitor other opportunities.

External verification of our 2021 results confirmed an 8% reduction in absolute and a 5% reduction in intensity emissions.

Our 2022 results have not yet been confirmed.

Water is utilized during various stages of our production cycle, including wood chip digestion, pulp washing and screening and fiber handling and transportation.

Water is also necessary for steam and on-site power generation, air emissions control, process cooling and equipment cleaning.

Each gallon of water gets used and reused multiple times in our process and 98 out every 100 gallons we use are treated and returned to natural water sources in keeping with stringent government-issued permit limitations.

The remaining 2 gallons are either captured in the final product or evaporated during manufacturing.

Each gallon of water gets used and reused multiple times in our process and 98 out of every 100 gallons we use are treated and returned to natural water sources in keeping with stringent government-issued permit limitations.

The remaining two gallons are either captured in the final product or evaporated during manufacturing.

Our facilities are designed to minimize waste.

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See Note 20—Segment and Geographical Information to our Financial Statements for further information.

In October 2023, we announced that we engaged a financial advisor to explore the potential sale of our Paperboard and High-Yield Pulp assets located at our Temiscaming site.

The process is ongoing for this strategic review, which is consistent with our commitment to align our portfolio with our long-term growth strategy and providing flexibility to pay down debt, reduce leverage and minimize earnings volatility.

High Purity Cellulose

The High Purity Cellulose segment, and in particular, cellulose specialties products, is the primary driver of our profitability.

Our High Purity Cellulose segment, and in particular, cellulose specialties products, is the primary driver of our profitability.

Cellulose specialties are natural polymers, used as raw materials to manufacture a broad range of consumer-oriented products such as liquid crystal displays, impact-resistant plastics, thickeners for food products, pharmaceuticals, cosmetics, cigarette filters, high-tenacity rayon yarn for tires and industrial hoses, food casings, paints and lacquers.

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Our 2G bioethanol project, for example, will capture residual sugars from our existing pulp process, which we will then use in the production of wood-based 2G bioethanol fuel.

Commercial sales of this 2G bioethanol are targeted to begin in 2024 under a long-term offtake agreement with a large international petrochemicals company.

Our Tartas bioethanol facility is expected to be operational in the first quarter of 2024.

Our four production facilities have a combined annual production capacity of 1,045,000 MTs of cellulose specialties and commodity products.

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Generally, a tree’s mass is comprised of 50 percent water and 50 percent “dry solids.” Dry solids are comprised of roughly 40 percent cellulose and 60 percent other chemical compounds, including hemicellulose, lignin, sugars and other extractives.

These chemical compounds can be utilized to produce sustainable biomaterials.

For example, we currently generate and sell lignosulfonates and tall oil soap using these compounds.

These chemical compounds can be utilized to produce sustainable biomaterials, including lignosulfonates, biofuels, prebiotics, crude tall oil, turpentine and bioelectricity.

We currently generate and sell lignosulfonates and tall oil soap using these compounds.

Lignosulfonates are used to produce a variety of products, including construction materials, dispersants, plant nutrients, leather tanning and fungicides, and tall oil soap is used as feedstock for producing crude tall oil.

We also produce bio-generated electricity utilizing renewable biomass.

Finally, we are also making good progress on our Tartas bioethanol facility.

When complete, this facility will produce second-generation bioethanol, a non-food-based ethanol to be utilized as an environmentally friendly fuel blend supporting transport decarbonization.

Our Tartas bioethanol facility is expected to be operational in the first quarter of 2024.

When complete, this facility will produce 2G bioethanol, a non-food-based ethanol to be utilized as an environmentally-friendly fuel blend supporting transport decarbonization.

Commercial sales of this 2G bioethanol are targeted to begin in the first quarter of 2024 under a long-term offtake agreement with a large international petrochemicals company.

Cellulose Specialties

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We compete with both domestic and foreign producers in cellulose specialties.

Our major competitors include GP Cellulose, Borregaard, Bracell, Sappi, Nippon, Cosmo Specialty Fibers, AustroCel and Aditya Birla Group.

Some of our competitors use both wood and cotton linter fibers as a source of cellulose fibers.

Our major competitors include Bracell and Borregaard.

Our multiple manufacturing lines, processes and intellectual property allow us to compete in more segments of the cellulose specialties market than any of our competitors.

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Although cellulose specialties can generally be sold to meet commodity viscose demand, the reverse is not typically true.

Our major competitors for commodity viscose pulp include Sappi, AustroCel and Bracell.

For absorbent materials, our major competitors include GP Cellulose, Domtar, International Paper, Klabin and Suzano.

Our major competitors for commodity viscose pulp include April/Bracell, Sappi, Lenzing, Aditya Birla Group and Sun Paper.

For absorbent materials, our major competitors include International Paper, GP Cellulose, Paper Excellence Group, Klabin and Stora Enso.

Competition in this space is limited, driven by capital investment, technical expertise and sustainable feedstock that are needed to produce these materials.

Each biomaterial product has its own unique market drivers.

The primary global market driver for bioethanol is the regulatory agenda towards production of bioethanol with an active participation of GHG emission reduction and the positive impact on climate change.

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Pricing for biomaterials that we currently produce is based on the market dynamics of supply and demand.

We supply Renewable Energy Directive II bioethanol, which is produced with nonhuman food chain inputs and trades at a premium in Europe.

Significant biomaterials competitors in the lignosulfonates market include Borregaard and Domsjö Aditya Birla.

The 2G bioethanol that we expect to supply beginning in the first quarter of 2024 trades at a premium in Europe.

Our major biomaterials competitors in the lignosulfonates market include Borregaard and Domsjö Aditya Birla and in the bioethanol market include Borregaard and AustroCel Hallein.

We manufacture paperboard in the Temiscaming plant in Quebec, Canada.

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To a lesser extent, quality and service are also competitive determinants.

Significant paperboard competitors include WestRock, Graphic Packaging, Metsa Group, Clearwater Paper and Sappi.

Our major paperboard competitors include WestRock, Graphic Packaging, Clearwater Paper, Sappi, Metsa Group and Billerud.

High-Yield Pulp

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Pricing for high-yield pulp is typically referenced to published indices marketed through our internal sales team and is impacted by the balance between supply and demand, as affected by global economic conditions, changes in consumption and capacity, the level of customer and producer inventories and fluctuations in currency exchange rates.

Significant high-yield pulp competitors include Millar Western, West Fraser, Paper Excellence, Estonia Cell, Sappi and Winstone Pulp.

Our major high-yield pulp competitors include Winstone Pulp, Sappi, Millar Western, West Fraser, Paper Excellence, SCA and Estonia Cell.

Raw Materials and Input Costs

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Additionally, our High Purity Cellulose and High-Yield Pulp segments’ manufacturing processes require significant amounts of chemicals.

These raw materials and input costs are subject to significant changes in prices as a result of weather conditions, supply and demand.

To control cost, we continually pursue reductions in usage and costs of key supplies, services and raw materials.

These raw materials and input costs are subject to significant changes in price as a result of weather conditions, supply and demand.

To control cost, we continually pursue reductions in usage and cost of key supplies, services and raw materials.

We procure wood chips for our high purity cellulose and high-yield pulp plants through the purchase of chips from lumber producers or the production for chips from roundwood at our own wood chipping facilities.

Prices for wood are impacted by various factors, including supply and demand, weather events, transportation costs for delivery and overall economic conditions.

The price for wood is impacted by various factors, including supply and demand, weather events, transportation costs for delivery and overall economic conditions.

Chemicals, which include caustic soda (sodium hydroxide), sulfuric acid, ammonia, sodium chlorate and various specialty chemicals, are purchased under negotiated supply agreements with third parties.

The prices for these chemicals are impacted by various factors including supply and demand, environmental regulation, energy prices and overall economic conditions.

The price for these chemicals is impacted by various factors, including supply and demand, environmental regulation, energy prices and overall economic conditions.

Our energy is primarily produced through the burning of lignin and other residual biomass in recovery and power boilers located at our plants.

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Substantially all of our intellectual property relates to our High Purity Cellulose segment.

We own patents, trademarks and trade secrets, and have developed significant expertise, particularly in the production of high purity cellulose, but also in the production of paperboard, which we deem vital to our operations.

We own patents, trademarks and trade secrets, and have developed significant expertise, particularly in the production of high purity cellulose, which we deem vital to our operations, and also in the production of paperboard.

We intend to protect our intellectual property, including, when appropriate, through the filing of patent applications for inventions that we deem important to our business and operations.

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Our operating results may be materially affected by seasonal changes and the related impact on energy prices.

No single customer accounted for 10 percent or more of total sales for the years ended December 31, 2022 and 2021.

One customer in the High Purity Cellulose segment represented 10 percent of total sales for the year ended December 31, 2023.

No single customer accounted for 10 percent or more of total sales during the years ended December 31, 2022 and 2021.

Research and Development

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Our R&D efforts are directed at further developing products and technologies, improving the quality of cellulose fiber grades, improving manufacturing efficiency and environmental controls and reducing fossil fuel consumption.

We continue to focus our R&D activities to develop and market additional new products and applications.

We spent $7 million on R&D during each of the years ended December 31, 2022, 2021 and 2020.

We also focus our R&D activities on the development and marketing of new products and applications.

During the years ended December 31, 2023, 2022 and 2021, our R&D spend totaled $6 million, $7 million and $7 million, respectively.

Environmental Matters

Our manufacturing operations are subject to stringent federal, state, provincial and local environmental laws and regulations concerning air emissions, wastewater discharges, waste handling and disposal, and assessment and remediation of environmental contamination, which impact our current ongoing operations and approximately 20 former operating facilities or third party-owned sites classified as disposed operations.

Our manufacturing operations are subject to stringent federal, state, provincial and local environmental laws and regulations concerning air emissions, wastewater discharges, waste handling and disposal and assessment and remediation of environmental contamination, which impact our current ongoing operations and approximately 20 former operating facilities and third party-owned sites classified as disposed operations.

These laws and regulations include the Clean Air Act, the Clean Water Act, the RCRA, the CERCLA and similar state laws and regulations impacting U.S.

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We are committed to our vision of every employee returning home every day injury-free and we continue to make progress each year.

While no injury is acceptable, our company-wide injury rate decreased eight percent from 2020 to 2021, and decreased an additional five percent in 2022.

While no injury is acceptable, our company-wide injury rate decreased 8 percent, 5 percent and 17 percent in 2021, 2022 and 2023, respectively.

We drive towards our vision of injury-free operations by focusing on five leading safety metrics:

housekeeping, leadership engagement, corrective action closure, gas emissions and life safety programs.

We continuously track and measure our progress against these metrics and have safety subcommittees, composed of leaders from across our company, that are accountable for each respective metric and report to an overall safety steering team chaired by our CEO.

We continuously track and measure our progress against these metrics at the individual plant level, with each plant accountable for their respective metrics and reporting to the Safety Steering Committee chaired by our CEO.

Employee Engagement

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Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 14 of the Exchange Act are made available to the public free of charge in the Investor Relations section of our website www.ryam.com shortly after we electronically file such material with, or furnish them to, the SEC.

All reports we file with or furnish to the SEC are also available free of charge on the SEC’s website https://www.sec.gov .

Our corporate governance guidelines, including the Standard of Ethics and Code of Corporate Conduct, and charters of all committees of our Board of Directors are also available on our website.

All reports we file with or furnish to the SEC are also available free of charge on the SEC’s website http://www.sec.gov .

Our corporate governance guidelines, including the Standard of Ethics and Code of Corporate Conduct, and charters of all standing committees of our Board of Directors are also available on our website.

Our website and the information posted thereon are not incorporated into this 2023 Form 10-K or any current or other periodic report that we file with or furnish to the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business