What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-08 compared with 2023-11-08 · 177 added, 241 removed, 349 unchanged (54% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Net sales $ 387,656 $ 466,761

4 unchanged sentences

Other operating expense, net ( 1,522 ) ( 678 )

Operating income (loss) ( 14,440 ) 28,529 ( 4,302 ) 9,839

Operating income 17,075 16,594

Interest expense ( 20,855 ) ( 15,496 )

Other components of pension and OPEB, excluding service costs (Note 14) 501 1,009 ( 834 ) 1,910

Gain on GreenFirst equity securities (Note 2) — — — 5,197

Components of pension and OPEB, excluding service costs (Note 12) 920 ( 1,734 )

Other income, net 1,270 306

Income (loss) from continuing operations before income taxes ( 31,673 ) 17,222 ( 50,191 ) ( 25,612 )

Income tax (expense) benefit (Note 15) 5,392 1,824 11,227 ( 3,230 )

Loss before income taxes ( 1,590 ) ( 330 )

Income tax benefit (Note 13) 472 2,586

Equity in loss of equity method investment ( 452 ) ( 649 )

Income (loss) from continuing operations ( 26,540 ) 18,355 ( 40,555 ) ( 30,969 )

Income from discontinued operations, net of taxes (Note 2) 1,440 11,252 312 12,458

Net income (loss) $ ( 1,570 ) $ 1,607

Basic earnings per common share (Note 12)

Income (loss) from continuing operations $ ( 0.41 ) $ 0.29 $ ( 0.62 ) $ ( 0.48 )

Income from discontinued operations 0.02 0.18 — 0.20

Net income (loss) per common share-basic $ ( 0.39 ) $ 0.47 $ ( 0.62 ) $ ( 0.28 )

Diluted earnings per common share (Note 12)

Income (loss) from continuing operations $ ( 0.41 ) $ 0.28 $ ( 0.62 ) $ ( 0.48 )

Income from discontinued operations 0.02 0.17 — 0.20

Net income (loss) per common share-diluted $ ( 0.39 ) $ 0.45 $ ( 0.62 ) $ ( 0.28 )

Basic and Diluted earnings per common share (Note 10)

Net income (loss) per common share $ ( 0.02 ) $ 0.02

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Net income (loss) $ ( 1,570 ) $ 1,607

Other comprehensive loss, net of tax (Note 10)

Other comprehensive income (loss), net of tax (Note 9)

Foreign currency translation adjustment ( 4,481 ) 4,212

Unrealized gain on derivative instruments 41 55

Net gain (loss) on employee benefit plans ( 65 ) 1,948 ( 2,432 ) 5,844

Total other comprehensive loss ( 5,230 ) ( 12,682 ) ( 3,391 ) ( 24,493 )

Net loss on employee benefit plans ( 14 ) ( 127 )

Total other comprehensive income (loss) ( 4,454 ) 4,140

Comprehensive income (loss) $ ( 6,024 ) $ 5,747

3 unchanged sentences

(in thousands, except share and par value amounts)

September 30, 2023 December 31, 2022

March 30, 2024 December 31, 2023

Current assets

2 unchanged sentences

Inventory (Note 3) 228,050 207,474

Income tax receivable 18,698 19,455

Prepaid and other current assets 61,152 74,904

33 unchanged sentences

Shares Par Value

Three months ended September 30, 2023

Balance at July 1, 2023

65,343,418 $ 654 $ 416,042 $ 459,280 $ ( 61,959 ) $ 814,017

Net loss — — — ( 25,100 ) — ( 25,100 )

Other comprehensive loss, net of tax — — — — ( 5,230 ) ( 5,230 )

Stock-based compensation — — 1,990 — — 1,990

Balance at September 30, 2023

65,343,418 $ 654 $ 418,032 $ 434,180 $ ( 67,189 ) $ 785,677

Three months ended September 24, 2022

Balance at June 25, 2022

63,971,166 $ 639 $ 415,257 $ 441,224 $ ( 96,281 ) $ 760,839

Net income — — — 29,607 — 29,607

Other comprehensive loss, net of tax — — — — ( 12,682 ) ( 12,682 )

Stock-based compensation — — 1,959 — — 1,959

Balance at September 24, 2022

63,971,166 $ 639 $ 417,216 $ 470,831 $ ( 108,963 ) $ 779,723

Nine months ended September 30, 2023

Three months ended March 30, 2024

Balance at December 31, 2023

6 unchanged sentences

( 81,710 ) ( 1 ) ( 452 ) — — ( 453 )

Balance at September 30, 2023

Balance at March 30, 2024

65,554,837 $ 655 $ 420,448 $ 371,018 $ ( 50,371 ) $ 741,750

Nine months ended September 24, 2022

Three months ended April 1, 2023

Balance at December 31, 2022

64,020,761 $ 640 $ 418,048 $ 474,423 $ ( 63,798 ) $ 829,313

Net loss — — — ( 18,511 ) — ( 18,511 )

Other comprehensive loss, net of tax — — — — ( 24,493 ) ( 24,493 )

Net income — — — 1,607 — 1,607

Other comprehensive income, net of tax — — — — 4,140 4,140

Issuance of common stock under incentive stock plans 1,700,494 17 ( 17 ) — — —

2 unchanged sentences

( 614,907 ) ( 6 ) ( 5,103 ) — — ( 5,109 )

Balance at September 24, 2022

Balance at April 1, 2023

65,106,348 $ 651 $ 414,406 $ 476,030 $ ( 59,658 ) $ 831,429

4 unchanged sentences

(in thousands)

Nine Months Ended

September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Operating activities

Net loss $ ( 40,243 ) $ ( 18,511 )

Adjustments to reconcile net loss to cash provided by operating activities:

Income from discontinued operations ( 312 ) ( 12,458 )

Net income (loss) $ ( 1,570 ) $ 1,607

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization 33,283 35,257

Stock-based compensation expense 1,780 1,478

Deferred income tax expense (benefit) ( 8,130 ) 372

Gain on GreenFirst equity securities — ( 5,197 )

Net periodic benefit cost of pension and other postretirement plans 755 921

Unrealized (gain) loss on foreign currency ( 1,899 ) 267

(Gain) loss on disposal of property, plant and equipment ( 1,085 ) 2,917

Other 3,062 2,152

8 unchanged sentences

Investing activities

Capital expenditures, net ( 95,203 ) ( 114,159 )

Capital expenditures, net of proceeds ( 32,561 ) ( 21,180 )

Investment in equity method investment — ( 168 )

Cash used in investing activities-continuing operations ( 95,618 ) ( 114,159 )

Cash provided by investing activities-discontinued operations — 44,428

Cash used in investing activities ( 32,561 ) ( 21,348 )

5 unchanged sentences

Repurchase of common stock ( 453 ) ( 5,109 )

Cash used in financing activities ( 111,772 ) ( 50,982 )

Net decrease in cash and cash equivalents ( 125,251 ) ( 113,265 )

Cash provided by (used in) financing activities 927 ( 13,589 )

Net increase (decrease) in cash and cash equivalents ( 20,369 ) 16,452

Net effect of foreign exchange on cash and cash equivalents ( 791 ) 1,147

10 unchanged sentences

Basis of Presentation

RYAM is a global leader of specialty cellulose materials with a broad offering of high purity cellulose specialties, a natural polymer used in the production of a variety of specialty chemical products, including liquid crystal displays, filters, textiles and performance additives for pharmaceutical, food and other industrial applications.

The Company’s specialized assets are also used to produce biofuels, bioelectricity and other biomaterials such as bioethanol and tall oils.

The Company also produces a unique, lightweight multi-ply paperboard product, which is used for production in the commercial printing, lottery ticket and high-end packaging sectors, and a bulky, high-yield pulp product that is used by paperboard producers, as well as in traditional printing, writing and specialty paper manufacturing.

The unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with GAAP for interim financial information and in accordance with the rules and regulations of the SEC.

1 unchanged sentence

These statements and notes should be read in conjunction with the consolidated financial statements and supplementary data included in the Company’s 2023 Form 10-K.

As a result of the sale of its lumber and newsprint assets in August 2021, the Company presents the results for those operations and any associated impacts as discontinued operations.

Unless otherwise stated, information in these notes to consolidated financial statements relates to continuing operations.

See Note 2—Discontinued Operations for further information on the sale.

Recent Accounting Developments

Change in Accounting Policy

On January 1, 2024, the Company changed the method of valuation of its finished goods, work-in-process and raw materials inventories from first-in first-out to average cost.

The Company believes the average cost method is preferable because it provides better matching of revenue and expense trends and is a better reflection of periodic income from operations.

This change was not retrospectively applied to prior periods presented, as the overall effect of the change is not deemed material to the Company’s consolidated financial statements.

Accounting Pronouncements

There have been no new or recently adopted accounting pronouncements impacting the Company’s consolidated interim financial statements.

The Company continues to evaluate the impacts of ASU 2023-05 “Business Combinations—Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement,” ASU 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” and ASU 2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” as previously disclosed in its 2023 Form 10-K.

Subsequent Events

The Company recently began plans towards a realignment of its High Purity Cellulose assets to optimize production mix, including a consolidation of its commodity products production into the Temiscaming plant.

The Company is currently evaluating the potential impact of this realignment on its consolidated financial statements and disclosures.

Discontinued Operations

In August 2021, the Company completed the sale of its lumber and newsprint facilities and certain related assets located in Canada to GreenFirst for $ 232 million, which included 28.7 million shares of GreenFirst common stock with a deemed fair value of $ 42 million.

In the second quarter of 2022, the Company sold the GreenFirst common shares for $ 43 million.

Prior to the sale of shares, the GreenFirst common shares were accounted for at fair value, with changes in fair value recorded in the consolidated statements of operations.

The shares sale agreement contains a purchase price protection clause whereby the Company is entitled to participate in further share price appreciation under certain circumstances until December 2023.

As part of the sale of the lumber assets, the Company retained all rights and obligations to softwood duties generated or incurred through the closing date of the sale.

In total, the Company paid $ 112 million in softwood lumber duties from 2017 through August 2021, and expects to receive all or the vast majority of these duties upon final resolution of the dispute between the USDOC and Canada.

During the third quarter of 2023, the USDOC completed its fourth administrative review of duties applied to Canada softwood lumber exports to the U.S.

during 2021 and reduced rates applicable to the Company to a combined 8.05 percent.

In connection with this development, the Company recorded a pre-tax gain of $ 2 million in “income from discontinued operations, net of taxes” and increased the long-term receivable related to USDOC administrative reviews to $ 40 million.

During the third quarter of 2022, the USDOC completed its third administrative review of duties applied to Canada softwood lumber exports during 2020 and reduced applicable rates to a combined 8.6 percent, for which the Company recorded a pre-tax gain of $ 16 million.

During the nine months ended September 30, 2023, the Company incurred a $ 2 million loss related to the settlement of a claim pursuant to the representations and warranties in the asset purchase agreement.

Indefinite Suspension of Operations of Temiscaming High Purity Cellulose Plant

On April 29, 2024, the Company announced that it will suspend operations at its Temiscaming High Purity Cellulose plant, effective July 2, 2024, for an indefinite period.

The decision does not affect the Temiscaming paperboard and high-yield pulp plants that support the Company’s High-Yield Pulp and Paperboard operating segments, which will continue to operate at full capacity while remaining part of an ongoing, previously announced, sales process.

The effective date was determined as the latest possible date allowing enough lead time for the Company to properly execute the shutdown prior to the arrival of winter in the region.

The High Purity Cellulose plant will be idled in a safe and environmentally sound manner.

The Company will assess on an annual basis the possibility of restarting the Temiscaming High Purity Cellulose plant.

The indefinite suspension of operations will result in approximately 275 layoffs.

In connection with the suspension of operations, the Company expects to incur one-time operating charges in 2024 of approximately $ 30 million, including mothball, severance and other employee costs.

Further, the Company also expects to incur non-cash charges in 2024 related to impairments, the amounts of which will be assessed.

While most 2024 cash costs associated with the suspension of operations will be incurred and paid in the third and fourth quarters, severance and other restructuring costs are expected to be paid over a period of time.

From 2021 through 2023, average maintenance capital expenditures for the Temiscaming High Purity Cellulose plant was $ 15 million.

In 2023, the High Purity Cellulose plant incurred an operating loss of $ 60 million, including a non-cash asset impairment of $ 25 million.

Working capital for the High Purity Cellulose plant was $ 31 million at the end of 2023.

Rayonier Advanced Materials Inc.

1 unchanged sentence

(in thousands unless otherwise stated)

Income from discontinued operations was comprised of the following:

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Cost of sales $ — $ — $ — $ 155

Gross margin — — — 155

Selling, general and administrative expense and other operating income, net 1,957 15,313 424 16,808

Operating income 1,957 15,313 424 16,963

Non-operating expense — ( 4 ) — ( 13 )

Income from discontinued operations before income taxes 1,957 15,309 424 16,950

Income tax expense ( 517 ) ( 4,057 ) ( 112 ) ( 4,492 )

Income from discontinued operations, net of taxes $ 1,440 $ 11,252 $ 312 $ 12,458

Sale of Softwood Lumber Duty Rights

In August 2021, the Company completed the sale of its lumber and newsprint facilities.

As part of the sale, the Company retained all refund rights, including interest, to softwood lumber duties paid by the Company from 2017 through 2021, and has accumulated a $ 40 million receivable as a result of USDOC administrative reviews.

On May 6, 2024, the Company announced the sale of these rights, including all accrued interest, for $ 39 million, with the opportunity for additional sale proceeds in the future contingent upon the timing and terms of the ultimate outcome of the trade dispute between the USDOC and Canada.

Accounts Receivable, Net

Accounts receivable, net included the following:

September 30, 2023 December 31, 2022

March 30, 2024 December 31, 2023

Accounts receivable, trade $ 152,938 $ 166,137

5 unchanged sentences

Inventory included the following:

September 30, 2023 December 31, 2022

March 30, 2024 December 31, 2023

Finished goods $ 170,222 $ 147,930

4 unchanged sentences

The Company’s operating and finance leases are primarily for corporate offices, warehouse space, rail cars and equipment.

As of September 30, 2023, the Company’s leases have remaining lease terms of less than one year to 13.1 years with standard renewal and termination options available at the Company’s discretion.

As of March 30, 2024, the Company’s leases have remaining lease terms of less than one year to 12.6 years with standard renewal and termination options available at the Company’s discretion.

Certain equipment leases have purchase options at the end of the term of the lease, which are not included in the ROU assets, as it is not reasonably certain that the Company will exercise such options.

1 unchanged sentence

The Company uses its incremental borrowing rate in determining the present value of lease payments unless the lease provides an implicit or explicit interest rate.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Financial and other information related to the Company’s operating and finance leases follow:

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Operating lease cost $ 1,710 $ 1,694

3 unchanged sentences

Total lease cost $ 1,839 $ 1,823

Balance Sheet Classification September 30, 2023 December 31, 2022

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Balance Sheet Location March 30, 2024 December 31, 2023

Operating leases

5 unchanged sentences

Lease liabilities Long-term debt 1,250 1,355

Nine Months Ended

September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Operating cash flows - cash paid for amounts included in the measurement of operating lease liabilities $ 1,675 $ 1,581

Operating lease ROU assets obtained in exchange for lease liabilities 1,194 ( 80 )

Finance lease cash flows were immaterial during each of the three and nine months ended September 30, 2023 and September 24, 2022.

September 30, 2023 December 31, 2022

Finance lease cash flows were immaterial during each of the three months ended March 30, 2024 and April 1, 2023.

March 30, 2024 December 31, 2023

Operating leases

4 unchanged sentences

Weighted average discount rate 7.0 % 7.0 %

Operating lease maturities as of March 30, 2024 were as follows:

Remainder of 2024 $ 4,619

Thereafter 4,094

Total minimum lease payments 23,988

imputed interest ( 5,034 )

Present value of future minimum lease payments $ 18,954

Rayonier Advanced Materials Inc.

3 unchanged sentences

Accrued and other current liabilities included the following:

September 30, 2023 December 31, 2022

March 30, 2024 December 31, 2023

Accrued customer incentives $ 33,792 $ 30,036

8 unchanged sentences

Accrued and other current liabilities $ 141,908 $ 154,488

(a) Included at both September 30, 2023 and December 31, 2022 was CAD $ 25 million (USD $ 19 million) associated with funds received in 2021 for CEWS.

(a) Included at March 30, 2024 and December 31, 2023 was CAD $ 25 million (USD $ 18 million and $ 19 million, respectively) associated with funds received in 2021 for CEWS.

All CEWS claims are subject to mandatory audit.

The Company will recognize amounts from these claims in income at the time there is sufficient evidence that it will not be required to repay such amounts.

(b) Included at September 30, 2023 and December 31, 2022 was $ 17 million and $ 30 million, respectively, of energy-related payables associated with Tartas facility operations.

(b) Included at March 30, 2024 and December 31, 2023 were $ 14 million and $ 13 million, respectively, of energy-related payables associated with Tartas facility operations.

Debt and Finance Leases

Debt and finance leases included the following:

September 30, 2023 December 31, 2022

ABL Credit Facility due 2025:

$ 112 million available, bearing interest of 7.42 % ( 5.42 % adjusted SOFR plus 2.00 % margin) at September 30, 2023

Term Loan due 2027:

bearing interest of 13.33 % ( 5.33 % three-month Term SOFR plus 8.00 % margin) at September 30, 2023

7.625 % Senior Secured Notes due 2026

March 30, 2024 December 31, 2023

ABL Credit Facility due December 2025:

$ 131 million net availability, bearing interest of 7.42 % ( 5.42 % adjusted SOFR plus 2.00 % margin) at March 30, 2024

Term Loan due July 2027:

bearing interest of 13.30 % ( 5.30 % three-month Term SOFR plus 8.00 % margin) at March 30, 2024

248,750 250,000

5.50 % Senior Unsecured Notes due 2024

5.50 % CAD-based term loan due 2028

7.625 % Senior Secured Notes due January 2026

464,640 464,640

5.50 % CAD-based term loan due April 2028

28,074 30,479

Other loans (a)

51,783 44,754

Short-term factoring facility-France 1,292 3,773

Short-term factoring facility 3,493 5,292

Finance lease obligations 1,250 1,355

Total principal payments due 797,990 796,520

unamortized debt premium, discount and issuance costs ( 20,600 ) ( 6,266 )

unamortized premium, discount and issuance costs ( 19,308 ) ( 19,063 )

Total debt 778,682 777,457

1 unchanged sentence

Long-term debt $ 755,626 $ 752,174

(a) Consist of loans for energy and bioethanol projects in France.

In July 2023, the Company secured term loan financing of $ 250 million in aggregate principal amount and received net proceeds of $ 243 million after original issue discount.

In addition, the Company incurred issuance costs of $ 10 million, which, together with the original issue discount, were recorded in “long-term debt” in the consolidated balance sheets and will be amortized to “interest expense” in the consolidated statements of operations over the term of the loan.

The net proceeds, together with cash on hand, were used to redeem the 2024 Notes and pay transaction costs.

The 2027 Term Loan matures in July 2027, bears interest at an annual rate equal to three-month Term SOFR (or, if greater, 3.00 percent) plus 8.00 percent and requires quarterly principal payments of $ 1.25 million.

The Company may voluntarily make prepayments at any time, subject to customary breakage costs and, if within the first three anniversaries of closing, an additional make-whole premium.

(a) Consist of loans for energy projects and other loans intended for use in biomaterials projects in France.

In January 2024, the Company amended the 2027 Term Loan to increase the maximum consolidated secured net leverage ratio that it must maintain in the fourth quarter of 2023 and through its 2024 fiscal year (see below).

In addition, should the Company exceed the 4.50 to 1.00 maximum ratio established by the original agreement in any of these quarters, it will incur a fee of 0.25 % of the principal balance outstanding at the end of the applicable quarter.

The Company incurred total fees of $ 3 million related to this amendment, including $ 1 million in legal and advisory fees recorded to “selling, general and administrative expense” in the consolidated statements of operations in the fourth quarter of 2023, and $ 2 million in lender fees recorded as deferred financing costs in the first quarter of 2024 that will be amortized to “interest expense” over the remaining term of the loan.

Rayonier Advanced Materials Inc.

1 unchanged sentence

(in thousands unless otherwise stated)

The agreement governing the 2027 Term Loan contains various customary covenants that limit the ability of the Company and its restricted subsidiaries, as defined by the term loan agreement and in particular the Company’s French subsidiaries, to take certain specified actions, subject to stated exceptions, including:

incurring debt or liens, making investments, entering into mergers, consolidations, and acquisitions, paying dividends and making other restricted payments.

The Company will be required to maintain a consolidated secured net leverage ratio, based on covenant EBITDA, of no greater than 4.50 to 1.00.

Additionally, the 2027 Term Loan contains customary affirmative covenants and customary events of default (subject, in certain cases, to customary grace or cure periods), including, without limitation, late payment, breach of covenant, bankruptcy, judgment and defaults under certain other indebtedness and changes in control.

In April 2023, the Company repurchased $ 10 million of its 2026 Notes through open-market transactions and retired the notes for cash of $ 9 million.

A gain on extinguishment of $ 1 million for the repurchase was recorded to “other income, net” in the consolidated statements of operations.

In August 2023, the Company redeemed the $ 318 million principal balance and accrued interest of $ 4 million of the 2024 Notes.

A loss on extinguishment of $ 1 million related to the redemption was recorded to “other income, net” in the consolidated statements of operations.

Prior to the full redemption of its 2024 Notes, in March 2023, the Company repurchased $ 5 million of the 2024 Notes through open-market transactions and retired the notes for cash of $ 5 million.

An immaterial gain on extinguishment for the repurchase was recorded to “other income, net” in the consolidated statements of operations.

As of September 30, 2023, the Company’s debt principal payments, excluding finance lease obligations, were due as follows:

The Company is required to maintain various financial covenants, including a consolidated secured net leverage ratio, based on covenant EBITDA, as follows:

• 5.25 to 1.00 for the fourth quarter of 2023 through the second quarter of 2024;

• 5.00 to 1.00 for the third fiscal quarter of 2024;

• 4.75 to 1.00 for the fourth fiscal quarter of 2024;

• 4.50 to 1.00 for each fiscal quarter thereafter.

At March 30, 2024, the Company was in compliance with all covenants under its debt agreements.

As of March 30, 2024, the Company’s debt principal payments, excluding finance lease obligations, were due as follows:

Remainder of 2024 $ 18,713

2 unchanged sentences

Environmental Liabilities

The Company’s environmental liabilities balance changed as follows during the nine months ended September 30, 2023:

The Company’s environmental liabilities balance changed as follows during the three months ended March 30, 2024:

Balance at December 31, 2023

2 unchanged sentences

Foreign currency adjustments ( 108 )

Balance at September 30, 2023

Balance at March 30, 2024

current portion ( 9,829 )

Non-current environmental liabilities $ 160,211

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

In addition to these estimated liabilities, the Company is subject to the risk of reasonably possible additional liabilities in excess of the established reserves due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations;

In addition to these estimated liabilities, the Company is subject to the risk of reasonably possible additional liabilities in excess of the established liabilities due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations;

changes in governmental agency personnel, direction, philosophy or enforcement policies;

4 unchanged sentences

and changes in accounting rules or interpretations.

Based on information available as of September 30, 2023, the Company estimates this exposure could range up to approximately $ 85 million, although no assurances can be given that this amount will not be exceeded given the factors described above.

Based on information available as of March 30, 2024, the Company estimates this exposure could range up to approximately $ 85 million, although no assurances can be given that this amount will not be exceeded given the factors described above.

These potential additional costs are attributable to several sites and other applicable liabilities.

1 unchanged sentence

Subject to the previous paragraph, the Company believes its estimates of liabilities are sufficient for probable costs expected to be incurred over the next 20 years with respect to its environmental liabilities.

However, no assurances are given that these estimates will be sufficient for the reasons described above and additional liabilities could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

However, no assurance is given that these estimates will be sufficient for the reasons described above and additional liabilities could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

Fair Value Measurements

The following table presents the carrying amount, estimated fair values and categorization under the fair value hierarchy for financial instruments held by the Company, using market information and what management believes to be appropriate valuation methodologies:

September 30, 2023 December 31, 2022

Amount Fair Value Carrying

Amount Fair Value

Level 1 Level 2 Level 1 Level 2

Cash and cash equivalents

Cash $ 17,484 $ 17,484 $ — $ 127,288 $ 127,288 $ —

Money market and similar funds 9,643 9,643 — 24,515 24,515 —

Fixed-rate long-term debt (a)

$ 513,004 $ — $ 439,787 $ 847,591 $ — $ 838,502

(a) Excludes finance lease obligations.

The Company uses the following methods and assumptions in estimating the fair value of its financial instruments:

Cash and cash equivalents — Cash and cash equivalents are highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase and the carrying amount is equal to fair market value.

The Company measures its investments in money market and similar funds using level 1 inputs.

Debt — The fair value of fixed rate debt is based upon quoted market prices for debt with similar terms and maturities.

Variable rate debt adjusts with changes in the market rate and so carrying value approximates fair value.

The carrying amounts of the Company’s cash, receivables and payables approximate fair value due to the short-term nature of those instruments.

The carrying amount of borrowings outstanding under the ABL Credit Facility, 2027 Term Loan and short-term factoring facility approximate fair value due to their variable interest rates.

Rayonier Advanced Materials Inc.

1 unchanged sentence

(in thousands unless otherwise stated)

The fair value of the Company’s fixed rate debt is estimated using quoted market prices for debt with similar terms and maturities, which are Level 2 inputs, and was as follows:

March 30, 2024 December 31, 2023

Carrying amount of fixed rate debt (a)

$ 541,455 $ 536,393

Fair value of fixed rate debt 501,587 497,563

(a) Excludes finance lease obligations.

Accumulated Other Comprehensive Loss

Nine Months Ended

September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Unrecognized components of employee benefit plans, net of tax

Balance, beginning of period $ ( 33,537 ) $ ( 43,694 )

Other comprehensive loss before reclassifications ( 3,034 ) —

Income tax on other comprehensive loss 804 —

Reclassifications to earnings (a)

Amortization of (gain) loss ( 531 ) 7,466

Amortization of gain ( 196 ) ( 176 )

Amortization of prior service cost 181 13

Income tax on reclassifications 1 36

Net comprehensive gain (loss) on employee benefit plans, net of tax ( 2,432 ) 5,844

Net comprehensive loss on employee benefit plans, net of tax ( 14 ) ( 127 )

Balance, end of period ( 33,551 ) ( 43,821 )

Unrealized gain (loss) on derivative instruments, net of tax

Unrealized loss on derivative instruments, net of tax

Balance, beginning of period ( 373 ) ( 567 )

13 unchanged sentences

(c) Foreign currency translation is net of tax effects of $ 0 for all periods presented, as the French operations are taxed on the foreign functional currency, not the translated reporting currency.

Stockholders’ Equity

Stockholder Rights Plan

In March 2022, the Company adopted a stockholder rights plan whereby a significant penalty is imposed upon any person or group which acquires beneficial ownership of 10 % or more of the Company’s common stock without the approval of the Board of Directors.

On the same date, the Board of Directors declared a dividend of one preferred share Purchase Right for each outstanding share of common stock of the Company, par value $ 0.01 per share, which was paid to Company stockholders of record as of March 31, 2022.

On March 20, 2023, the Purchase Rights expired.

Rayonier Advanced Materials Inc.

3 unchanged sentences

The following table provides the inputs to the calculations of basic and diluted earnings per common share (share amounts not in thousands):

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Income (loss) from continuing operations $ ( 26,540 ) $ 18,355 $ ( 40,555 ) $ ( 30,969 )

Income from discontinued operations 1,440 11,252 312 12,458

Three Months Ended

March 30, 2024 April 1, 2023

Net income (loss) available for common stockholders $ ( 1,570 ) $ 1,607

1 unchanged sentence

Dilutive effect of:

Stock options — 531

Performance and restricted stock — 2,091,922

1 unchanged sentence

Anti-dilutive instruments excluded from the computation of diluted earnings per share included (not in thousands):

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Stock options — 162,171

3 unchanged sentences

Stock-based compensation expense was as follows:

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

Stock-based compensation expense

$ 1,780 $ 1,478

The Company made new grants of restricted stock units, performance-based stock units and performance-based cash awards during the first and second quarters of 2023.

The Company made new grants of restricted stock units, performance-based stock units and performance-based cash awards during the first quarter of 2024.

The 2024 restricted stock unit awards cliff vest after three years .

The 2024 performance-based awards cliff vest after three years and are based equally on TSR relative to peers and three-year cumulative adjusted EBITDA.

Participants can earn between 0 and 200 percent of the target award.

Performance below the threshold for the TSR would result in zero payout for the TSR metric.

The performance-based cash award is measured using the same objectives as the performance-based stock unit award but is paid and accounted for separately.

Performance-based cash awards are classified as a liability and remeasured to fair value at the end of each reporting period until settlement.

In March 2023, the performance-based stock units granted in 2020 were settled with the issuance of 1,257,015 shares of common stock, including incremental shares of 370,366 , based on performance results.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Participants can earn between 0 percent and 200 percent of the target award for each of the TSR and adjusted EBITDA metrics.

Performance below threshold for each metric would result in zero payout.

The performance-based cash award is paid in cash and is classified as a liability and remeasured to fair value at the end of each reporting period until settlement.

In March 2024, the performance-based awards granted in 2021 vested without meeting the performance thresholds, resulting in no stock units or cash being awarded.

The following table summarizes the 2024 activity of the Company’s incentive stock awards:

7 unchanged sentences

Expired or cancelled ( 46,798 ) 29.52 — — — —

Outstanding at September 30, 2023

Outstanding at March 30, 2024

— $ — 1,989,756 $ 5.04 1,645,623 $ 6.12

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Employee Benefit Plans

4 unchanged sentences

These estimates are based on historical information and certain assumptions about future events.

During the nine months ended September 24, 2022, the Company recorded a $ 1 million loss related to the final asset surplus distribution to the plan participants of certain wound-up Canadian pension plans.

During the nine months ended September 30, 2023, the Company recorded a $ 2 million loss related to the final asset surplus distribution to the plan participants of certain other wound-up Canadian pension plans.

The settlements were recognized in “other components of pension and OPEB, excluding service costs” in the Company’s consolidated statements of operations.

The following tables present the components of net periodic benefit costs of these plans:

During the three months ended April 1, 2023, the Company recorded a $ 2 million loss related to the final asset surplus distribution to the plan participants of certain wound-up Canadian pension plans.

The settlement was recognized in “components of pension and OPEB, excluding service costs” in the Company’s consolidated statements of operations.

The following table presents the components of net periodic benefit costs of these plans:

Pension Postretirement

Three Months Ended Three Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Service cost $ 1,223 $ 2,150 $ 293 $ 352

Interest cost 7,204 4,561 352 215

Expected return on plan assets ( 7,967 ) ( 8,258 ) — —

Amortization of prior service cost (credit) 111 38 ( 24 ) ( 31 )

Amortization of (gain) loss ( 123 ) 2,473 ( 54 ) 17

Pension settlement loss — ( 25 ) — —

Net periodic benefit cost $ 448 $ 939 $ 567 $ 553

Pension Postretirement

Nine Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Service cost $ 1,537 $ 1,217 $ 138 $ 287

2 unchanged sentences

Amortization of prior service cost (credit) 205 37 ( 24 ) ( 24 )

Amortization of (gain) loss ( 369 ) 7,419 ( 162 ) 47

Amortization of gain ( 11 ) ( 122 ) ( 185 ) ( 54 )

Pension settlement loss — 2,317 — —

Net periodic benefit cost $ 578 $ 2,672 $ 177 $ 566

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Service cost is included in “cost of sales” or “selling, general and administrative expense” in the consolidated statements of operations, as appropriate.

Interest cost, expected return on plan assets, amortization of prior service cost (credit) and amortization of (gain) loss are included in “other components of pension and OPEB, excluding service costs” in the consolidated statements of operations.

Interest cost, expected return on plan assets, amortization of prior service cost (credit) and amortization of gain are included in “components of pension and OPEB, excluding service costs” in the consolidated statements of operations.

Effective Tax Rate

The Company’s effective tax rates were as follows:

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Income (loss) from continuing operations

Three Months Ended

March 30, 2024 April 1, 2023

Loss before income taxes

$ ( 1,590 ) $ ( 330 )

Effective tax rate 29.7 % 783.6 %

The 2023 effective tax rates differed from the federal statutory rate of 21 percent primarily due to disallowed interest deductions in the U.S.

and nondeductible executive compensation, offset by U.S.

tax credits, return-to-accrual adjustments related to previously filed tax returns, changes in the valuation allowance on disallowed interest deductions and interest received on overpayments of tax from prior years .

The effective tax rate for the nine-month period was also impa cted by an excess tax benefit on vested stock compensation.

The effective tax rate for the three months ended September 24, 2022 differed from the federal statutory rate of 21 percent primarily due to changes in the valuation allowance on disallowed interest deductions in the U.S.

and interest received on overpayments of tax from prior years, partially offset by unfavorable tax return-to-accrual adjustments.

The effective tax rate for the nine months ended September 24, 2022 differed from the federal statutory rate primarily due to changes in the valuation allowance on disallowed interest deductions in the U.S.

and nondeductible executive compensation, partially offset by interest received on overpayments of tax from prior years, U.S.

tax credits and favorable tax return-to-accrual adjustments.

The effective tax rate for the three months ended March 30, 2024 differed from the federal statutory rate of 21 percent primarily due to the release of certain tax reserves, partially offset by return-to-accrual adjustments, excess deficit on vested stock compensation and changes in the valuation allowance on disallowed interest deductions.

The effective tax rate for the three months ended April 1, 2023 was not meaningful due to near break-even pretax income for the period, which results in any discrete tax adjustments significantly impacting the rate.

The largest adjustments creating a difference between the effective tax rate and the federal statutory rate of 21 percent were an excess tax benefit on vested stock compensation and return-to-accrual adjustments related to previously filed tax returns.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Deferred Taxes

As of both September 30, 2023 and December 31, 2022, the Company’s net DTA included $ 17 million of disallowed U.S.

As of March 30, 2024 and December 31, 2023, the Company’s net DTA included $ 14 million and $ 15 million, respectively, of disallowed U.S.

interest deductions that the Company does not believe will be realized.

8 unchanged sentences

Intersegment sales prices are at rates that approximate market for the respective operating area.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Net sales, disaggregated by product line, was comprised of the following:

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

High Purity Cellulose

8 unchanged sentences

Net sales $ 387,656 $ 466,761

(a) Include sales of bioelectricity, lignosulfonates and other by-products to third parties.

(a) Included sales of bioelectricity, lignosulfonates and other by-products to third parties.

Operating income (loss) by segment was comprised of the following:

Three Months Ended Nine Months Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Three Months Ended

March 30, 2024 April 1, 2023

High Purity Cellulose $ 20,741 $ 12,934

4 unchanged sentences

Identifiable assets by segment were as follows:

September 30, 2023 December 31, 2022

March 30, 2024 December 31, 2023

High Purity Cellulose $ 1,485,599 $ 1,510,076

3 unchanged sentences

Total assets $ 2,135,046 $ 2,182,700

Commitments and Contingencies

The Company had no material changes to the purchase obligations presented in its 2022 Form 10-K that were outside the normal course of business during the nine months ended September 30, 2023.

The Company’s purchase obligations continue to primarily consist of commitments for the purchase of natural gas, steam energy and wood chips.

The Company leases certain buildings, machinery and equipment under various operating and finance leases.

See Note 5—Leases for further information.

Rayonier Advanced Materials Inc.

1 unchanged sentence

(in thousands unless otherwise stated)

Commitments and Contingencies

The Company had no material changes to the purchase obligations presented in its 2023 Form 10-K that were outside the normal course of business during the three months ended March 30, 2024.

The Company’s purchase obligations primarily consist of commitments for the purchase of natural gas, electricity and wood chips.

The Company leases certain buildings, machinery and equipment under various operating and finance leases.

See Note 4—Leases for further information.

Litigation and Contingencies

2 unchanged sentences

from Canada .

In connection with these exports, the Company paid approximately $ 112 million for softwood lumber duties between 2017 and August 28, 2021, including $ 1 million of ancillary fees, which were recorded as expense in the periods incurred.

In connection with these exports, the Company paid approximately $ 112 million of softwood lumber duties between 2017 and August 2021, including $ 1 million of ancillary fees, which were recorded as expense in the periods incurred.

As part of the sale of its lumber assets, the Company retained all rights and obligations to softwood duties generated or incurred through the closing date of the sale.

As of September 30, 2023 , the Company had a $ 40 million long-term receivable associated with the USDOC’s determinations of the revised rates for the 2017, 2018, 2019, 2020 and 2021 periods.

As of March 30, 2024 , the Company had a $ 40 million long-term receivable associated with the USDOC’s determinations of the revised duty rates for 2017 through 2021.

This amount does not include interest, which will be due on any amounts refunded.

The Company estimates interest earned on the total amount of softwood lumber duties paid to be approximately $ 6 million.

Cash is not expected to return to the Company until final resolution of the softwood lumber dispute, which remains subject to legal challenges.

The Company estimates that interest earned on the total amount of softwood lumber duties paid will exceed $ 10 million.

In addition to the above, the Company is engaged in various legal and regulatory actions and proceedings and has been named as a defendant in various lawsuits and claims arising in the ordinary course of business.

While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its businesses, the Company has, in certain cases, retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance, business interruption and general liability.

While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its business, the Company has, in certain cases, retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance, business interruption and general liability.

These other lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

1 unchanged sentence

The Company provides financial guarantees as required by creditors, insurance programs and various governmental agencies.

As of September 30, 2023, the Company had net exposure of $ 34 million from various standby letters of credit, primarily for financial assurance relating to environmental remediation, credit support for natural gas and electricity purchases and guarantees related to foreign retirement plan obligations.

As of March 30, 2024, the Company had net exposure of $ 34 million from various standby letters of credit, primarily for financial assurance relating to environmental remediation, credit support for natural gas and electricity purchases and guarantees related to foreign retirement plan obligations.

These standby letters of credit represent a contingent liability;

1 unchanged sentence

The standby letters of credit have various expiration dates and are expected to be renewed as required.

The Company had surety bonds of $ 90 million as of September 30, 2023, primarily to comply with financial assurance requirements relating to environmental remediation and post closure care, to provide collateral for the Company’s workers’ compensation program and to guarantee taxes and duties for products shipped internationally.

The Company had surety bonds of $ 89 million as of March 30, 2024, primarily to comply with financial assurance requirements relating to environmental remediation and post-closure care, to provide collateral for the Company’s workers’ compensation program and to guarantee taxes and duties for products shipped internationally.

These surety bonds expire at various dates and are expected to be renewed annually as required.

1 unchanged sentence

The Company is a guarantor of LTF’s financing agreements and, in the event of default, expects it would only be liable for its proportional share of any repayment under the agreements.

The Company’s proportion of the LTF financing agreement guarantee was $ 29 million at September 30, 2023.

The Company’s proportion of the LTF financing agreement guarantee was $ 30 million at March 30, 2024.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

The Company has not recorded any liabilities for these financial guarantees in its consolidated balance sheets, either because the Company has recorded the underlying liability associated with the guarantee or the guarantee is dependent on the Company’s own performance and, therefore, is not subject to the measurement requirements or because the Company has calculated the estimated fair value of the guarantee and determined it to be immaterial based upon the current facts and circumstances that would trigger a payment obligation.

It is not possible to determine the maximum potential amount of liability under these potential obligations due to the unique set of facts and circumstances likely to be involved with each provision.

As of December 31, 2022, a collective bargaining agreement covering approximately 575 unionized employees was expired.

The employees continued to work under the terms of the expired contract until negotiations concluded in the second quarter of 2023 and final agreement with the union was reached.

As of September 30, 2023, all of the Company’s collective bargaining agreements covering its unionized employees were current.

As of March 30, 2024, all of the Company’s collective bargaining agreements covering its unionized employees were current.

As of the filing of this report, collective bargaining agreements covering approximately 235 unionized employees were expired at the Fernandina plant.

The employees have continued to work under the terms of the expired contracts while negotiations continue.

While there can be no assurances, the Company expects to reach agreement with the unions.

However, a work stoppage could have a material adverse effect on the Company’s business, results of operations and financial condition.

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-Q

Item 1. Financial Statements