RAYONIER ADVANCED MATERIALS INC. 10-Q

Item 2. 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 2023 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 a variety of risks and uncertainties. T he risk factors contained in Item 1A—Risk Factors of our 2023 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 its 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 We are 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. Building upon more than 95 years of experience in cellulose chemistry, we provide some of the highest quality high-purity cellulose pulp products that make up the essential building blocks for our customers’ products while providing exceptional service and value. Our specialized assets are also used to produce biofuels, bioelectricity and other biomaterials such as bioethanol and tall oils. We also produce a unique, lightweight multi-ply paperboard product and a bulky, high-yield pulp product. Our paperboard is used for production in the commercial printing, lottery ticket and high-end packaging sectors. Our high-yield pulp is used by paperboard producers, as well as in traditional printing, writing and specialty paper manufacturing. We operate in three business segments: High Purity Cellulose, Paperboard and High-Yield Pulp. Recent Business Developments • In May 2024, we announced the sale of our refund rights, including interest, related to softwood lumber duties paid from 2017 through 2021 for $39 million. See Note 1—Basis of Presentation to our Financial Statements for further information. • In April 2024, we announced the suspension of operations at our Temiscaming High Purity Cellulose plant, effective July 2, 2024, for an indefinite period. See Note 1—Basis of Presentation to our Financial Statements for further information. • In January 2024, we amended our 2027 Term Loan agreement to increase the maximum consolidated secured net leverage ratio that we must maintain in the fourth quarter of 2023 and through fiscal year 2024. In addition, should we exceed the maximum ratio established by the original agreement during this period, we will incur a fee of 0.25% of the principal balance outstanding at the end of the applicable quarter. See Note 6—Debt and Finance Leases to our Financial Statements for further information. 17 Table of Contents 2024 Outlook In October 2023, we announced that we are exploring the potential sale of our Paperboard and High-Yield Pulp assets located at our Temiscaming site. The potential sale is consistent with our commitment to align our portfolio with our long-term growth strategy and provide flexibility to pay down debt, reduce leverage and minimize earnings volatility. The sales process is progressing, albeit slower than originally anticipated, as buyers work through the complexity of carving out these assets from existing operations and consider the impact of the indefinite suspension of the Temiscaming High Purity Cellulose plant. While the suspension and asset sale decisions affecting the Temiscaming site have been approached and carried out independently, we believe the suspension will bring clarity to the asset sale diligence process by validating that these assets can be efficiently run separately. The indefinite suspension of operations at the Temiscaming High Purity Cellulose plant, announced on April 29, 2024, is anticipated to mitigate the plant’s ongoing operating losses and high capital needs and improve our consolidated free cash flow. We realized an $18 million Adjusted EBITDA loss from these operations in 2023 and invested an average of $15 million in capital expenditures over the past three years; however, any future operational loss reductions will be partially offset by stranded costs. In connection with the suspension of operations, we expect to incur one-time operating charges in 2024 of approximately $30 million, including mothball, severance and other employee costs. Further, we also expect to incur non-cash charges in 2024 related to impairments. Overall, we expect that for 2024, the indefinite suspension of the Temiscaming High Purity Cellulose plant will be marginally positive to Adjusted EBITDA and will increase free cash flow by $15 million to $20 million as lower capital expenditures and benefits from the monetization of working capital are expected to more than offset the one-time and other cash costs associated with the suspension of operations. On May 6, 2024, we announced the sale of our refund rights, including interest, related to softwood lumber duties paid from 2017 through 2021 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. The following market assessment represents our current outlook of our business segments’ future performance. High Purity Cellulose Average sales prices for cellulose specialties in 2024 are expected to increase by a low single-digit percentage as compared to average sales prices in 2023 as the Company prioritizes value over volume. Sales volumes for cellulose specialties are expected to be comparable to 2023 driven by increased volumes from the closure of a competitor’s plant and a modest increase in ethers sales, offset by a one-time favorable impact from a change in customer contract terms in the prior year quarter and customer destocking in the acetate markets. Demand for RYAM commodity products remains stable as prices are expected to be flat to 2023, despite a difficult comparison to the first quarter of 2023. Commodity sales volumes are expected to decline in 2024 as we suspend operations at our Temiscaming High Purity Cellulose plant for the second half of 2024. Costs are expected to be lower in 2024 driven by lower key input and logistics costs, improved productivity and the indefinite suspension of operations at the Temiscaming High Purity Cellulose plant. Our bioethanol facility in Tartas, France became operational in the first quarter of 2024 and is expected to deliver $3 million to $4 million of EBITDA in 2024, growing to $8 million to $10 million beginning in 2025. EBITDA is expected to decrease in the second quarter of 2024 compared to the first quarter of 2024 due to the annual planned maintenance outage at Jesup, but stronger than the second quarter of 2023. Paperboard Paperboard prices in 2024 are expected to remain relatively stable compared to the first quarter of 2024, while sales volumes are expected to improve due to improved customer demand. Raw material prices are expected to increase as purchased pulp prices are forecast to increase from the first quarter 2024 levels. Overall, EBITDA is expected to increase sequentially. High-Yield Pulp High-Yield Pulp prices are expected to improve slightly in the second quarter and increase further in the second half of 2024, while sales volumes are expected to remain stable sequentially and then increase in the second half of 2024. Overall, we expect to generate positive EBITDA from this segment in the coming quarter. Corporate Corporate costs are expected to be flat or increase slightly in 2024 as we continue our ERP implementation. The project will enhance our operating and reporting systems and is expected to drive additional improvements and efficiencies beginning in 2025. 18 Table of Contents Biomaterials Strategy We continue to invest in new products to provide both increased end market diversity and incremental profitability. These new products will target the growing green energy and products markets. The successful shipment of our first production of 2G bioethanol from our Tartas, France bioethanol facility is a significant milestone towards our goal of generating $42 million of annual EBITDA from these new products by 2027. Recent achievements include receiving conditional GRAS regulatory approval for a prebiotics product and moving forward with plans for a bioethanol facility in Fernandina Beach. We are also advancing various other projects and are in the process of securing green capital to support these efforts. Updates on the progress of these initiatives will be provided throughout the year. Results of Operations Three Months Ended (in millions, except percentages) March 30, 2024 April 1, 2023 Net sales $ 388 $ 467 Cost of sales (351) (430) Gross margin 37 37 Selling, general and administrative expense (21) (19) Foreign exchange gain 3 — Other operating expense, net (2) (1) Operating income 17 17 Interest expense (21) (15) Components of pension and OPEB, excluding service costs 1 (2) Other income, net 1 — Loss before income taxes (2) — Income tax benefit — 3 Equity in loss of equity method investment — (1) Net income (loss) $ (2) $ 2 Gross margin % 9.5 % 7.9 % Operating margin % 4.4 % 3.6 % Effective tax rate 29.7 % 783.6 % Net Sales Three Months Ended (in millions) March 30, 2024 April 1, 2023 High Purity Cellulose $ 307 $ 374 Paperboard 53 59 High-Yield Pulp 34 42 Eliminations (6) (8) Net sales $ 388 $ 467 Net sales for the quarter ended March 30, 2024 decreased $79 million, or 17 percent, compared to the prior year quarter driven by lower sales prices in commodity products, Paperboard and High-Yield Pulp and lower sales volumes in cellulose specialties and commodity products, partially offset by higher sales prices in cellulose specialties and higher sales volumes in High-Yield Pulp. See Operating Results by Segment below for further discussion. 19 Table of Contents Operating Income Three Months Ended (in millions) March 30, 2024 April 1, 2023 High Purity Cellulose $ 21 $ 13 Paperboard 8 10 High-Yield Pulp (1) 7 Corporate (11) (13) Operating income $ 17 $ 17 Operating income for the quarter ended March 30, 2024 was flat compared to the prior year quarter as lower key input and logistics costs and a decrease in Corporate expense items were offset by the decrease in net sales across all segments. See Operating Results by Segment below for further discussion. Non-Operating Income & Expense Interest expense increased $6 million durin g the quarter ended March 30, 2024 compared to the prior year quarter driven by an increase in the average effective interest rate on debt, partially offset by a decrease in the average outstanding balance of debt. Total debt decreased $67 million from April 1, 2023 to March 30, 2024. Included in non-operating other income in the quarter ended March 30, 2024 was a $1 million impact from favorable foreign exchange rates in the current quarter. Included in non-operating expense in the quarter ended April 1, 2023 was a $2 million pension settlement loss. Income Taxes The effective tax benefit rate for the quarter ended March 30, 2024 was 30 percent. The 2024 effective tax rate 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 quarter 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. Operating Results by Segment High Purity Cellulose Three Months Ended (in millions, unless otherwise stated) March 30, 2024 April 1, 2023 Net sales $ 307 $ 374 Operating income $ 21 $ 13 Average sales prices ($ per MT) $ 1,299 $ 1,322 Sales volumes (thousands of MTs) 219 265 20 Table of Contents Net Sales Three Months Ended April 1, 2023 Changes Attributable to: Three Months Ended March 30, 2024 (in millions) Price Volume/Mix/Other Cellulose specialties $ 227 $ 4 $ (37) $ 194 Commodity products 124 (18) (16) 90 Other sales (a) 23 — — 23 Net sales $ 374 $ (14) $ (53) $ 307 (a) Included sales of bioelectricity, lignosulfonates and other by-products to third parties. Net sales of our High Purity Cellulose segment for the quarter decreased $67 million compared to the prior year quarter. Included in each of the current and prior year quarters were $23 million of other sales primarily from bio-based energy and lignosulfonates. Despite a 2 percent increase in cellulose specialties prices, total sales prices decreased 2 percent due to an 11 percent decrease in commodity prices. Total sales volumes decreased 17 percent driven by 16 percent and 18 percent decreases in cellulose specialties and commodity volumes, respectively. Increased cellulose specialties sales volumes resulting from the closure of a competitor’s plant in late 2023 and an uptick in ethers sales were more than offset by customer destocking in acetate products and the one-time favorable impact from a change in customer contract terms in the prior year quarter. The decrease in commodity sales volumes was primarily driven by lower production in favor of cellulose specialties production as we built inventory ahead of Jesup’s second quarter planned maintenance outage. Operating Income Three Months Ended April 1, 2023 Gross Margin Changes Attributable to: Three Months Ended March 30, 2024 (in millions, except percentages) Sales Price Sales Volume/Mix/Other (a) Cost SG&A and other Operating income $ 13 $ (14) $ (32) $ 55 $ (1) $ 21 Operating margin % 3.5 % (3.8) % (10.5) % 17.9 % (0.3) % 6.8 % (a) Computed based on contribution margin. Operating income of our High Purity Cellulose segment for the quarter increased $8 million compared to the prior year quarter driven by the higher cellulose specialties sales prices, decreased key input and logistics costs and improved productivity, partially offset by the lower cellulose specialties sales volumes, lower commodity sales prices and volumes and $7 million of energy cost benefits in the prior year quarter from sales of excess emission allowances that did not repeat in the current quarter. Paperboard Three Months Ended (in millions, unless otherwise stated) March 30, 2024 April 1, 2023 Net sales $ 53 $ 59 Operating income $ 8 $ 10 Average sales prices ($ per MT) $ 1,382 $ 1,568 Sales volumes (thousands of MTs) 38 38 Net Sales Three Months Ended April 1, 2023 Changes Attributable to: Three Months Ended March 30, 2024 (in millions) Price Volume/Mix Net sales $ 59 $ (7) $ 1 $ 53 Net sales of our Paperboard segment for the quarter decreased $6 million compared to the prior year quarter driven by a 12 percent decrease in sales prices due to market-driven demand declines and mix, partially offset by a slight increase in sales volumes. 21 Table of Contents Operating Income Three Months Ended April 1, 2023 Gross Margin Changes Attributable to: Three Months Ended March 30, 2024 (in millions, except percentages) Sales Price Sales Volume/Mix (a) Cost SG&A and other Operating income $ 10 $ (7) $ — $ 5 $ — $ 8 Operating margin % 16.9 % (11.2) % — % 9.4 % — % 15.1 % (a) Computed based on contribution margin. Operating income of our Paperboard segment for the quarter decreased $2 million compared to the prior year quarter driven by the lower sales prices, partially offset by lower purchased pulp costs. High-Yield Pulp Three Months Ended (in millions, unless otherwise stated) March 30, 2024 April 1, 2023 Net sales $ 34 $ 42 Operating income (loss) $ (1) $ 7 Average sales prices ($ per MT) (a) $ 559 $ 769 Sales volumes (thousands of MTs) (a) 50 43 (a) External sales only. During the quarters ended March 30, 2024 and April 1, 2023, the High-Yield Pulp segment sold 16,000 MTs and 17,000 MTs of high-yield pulp to the Paperboard segment for $7 million and $8 million, respectively. Net Sales Three Months Ended April 1, 2023 Changes Attributable to: Three Months Ended March 30, 2024 (in millions) Price Volume/Mix Net sales $ 42 $ (12) $ 4 $ 34 Net sales of our High-Yield Pulp segment for the quarter decreased $8 million compared to the prior year quarter driven by a 27 percent decrease in sales prices due to market supply dynamics in China, partially offset by a 16 percent increase in sales volumes. Operating Income (Loss) Three Months Ended April 1, 2023 Gross Margin Changes Attributable to: Three Months Ended March 30, 2024 (in millions, except percentages) Sales Price Sales Volume/Mix (a) Cost SG&A and other Operating income (loss) $ 7 $ (12) $ 2 $ 2 $ — $ (1) Operating margin % 16.7 % (33.3) % 7.8 % 5.9 % — % (2.9) % (a) Computed based on contribution margin. Operating results of our High-Yield Pulp segment for the quarter declined $8 million compared to the prior year quarter driven by the lower sales prices, partially offset by the higher sales volumes and lower logistics costs. Corporate Three Months Ended (in millions) March 30, 2024 April 1, 2023 Operating loss $ (11) $ (13) 22 Table of Contents The Corporate operating loss for the quarter decreased $2 million compared to the prior year quarter driven by more favorable foreign exchange rates in the current quarter, partially offset by higher discounting and financing fees in the current 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 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 will be 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 did not repurchase any shares under this program during the three months ended March 30, 2024 and April 1, 2023, and do not expect to utilize any of the remaining $60 million in unused authorization in the future. Our non-guarantor subsidiaries had assets of $450 million, liabilities of $400 million, year-to-date revenue of $56 million and a trailing twelve month ABL Credit Facility and Term Loan covenant EBITDA for continuing operations of $15 million as of March 30, 2024. Our liquidity and capital resources are summarized below: (in millions, except ratios) March 30, 2024 December 31, 2023 Cash and cash equivalents $ 55 $ 76 Availability under the ABL Credit Facility (a)(b) 131 118 Total debt (b) 779 777 Stockholders’ equity 742 747 Total capitalization (total debt plus stockholders’ equity) 1,521 1,524 Debt to capital ratio 51 % 51 % (a) Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At March 30, 2024, we had $164 million of gross availability and net available borrowings of $131 million after taking into account outstanding letters of credit of $33 million. In addition to the availability under the ABL Credit Facility, we have $13 million available under our accounts receivable factoring line of credit in France. (b) See Note 6—Debt and Finance Leases to our Financial Statements for further information. 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, steam energy and wood chips purchase contracts. There have been no material changes to our contractual commitments outside the ordinary course of business during the three months ended March 30, 2024. See Note 15—Commitments and Contingencies to our Financial Statements for further information. 23 Table of Contents Debt In January 2024, we amended the 2027 Term Loan to increase the maximum consolidated secured net leverage ratio that we must maintain beginning in the fourth quarter of 2023 and through our 2024 fiscal year. The amendment provides us with the operational flexibility to execute our strategic initiatives in 2024. Should we exceed the maximum ratio established by the original agreement in any of these quarters, we will incur a fee of 0.25% of the principal balance outstanding at the end of the applicable quarter. As of March 30, 2024 we were in compliance with all financial and other customary covenants under our 2027 Term Loan and other credit agreements. See Note 6—Debt and Finance Leases to our Financial Statements for further information. Cash Flows Three Months Ended (in millions) March 30, 2024 April 1, 2023 Cash flows provided by (used in): Operating activities $ 12 $ 51 Investing activities (33) (21) Financing activities 1 (14) Cash provided by operating activities decreased $39 million primarily due to net cash outflows from working capital in the current year compared to net inflows in the prior year and higher payments of interest on long-term debt, partially offset by higher payments in the prior year on deferred energy liabilities associated with our Tartas facility operations and the receipt of net tax refunds in the current year compared to net tax payments in the prior year. Cash used in investing activities increased $12 million due to higher capital spending. Cash used in financing activities decreased $15 million primarily due to net borrowings of long-term debt in the current year compared to net repayments in the prior year and a decrease in repurchases of common stock to satisfy tax withholding requirements related to the issuance of stock under our incentive stock plans, partially offset by debt issuance costs paid in the current year. 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 flows. 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 flows 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. 24 Table of Contents 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: (in millions) High Purity Cellulose Paperboard High-Yield Pulp Corporate Total Three Months Ended March 30, 2024 Net income (loss) $ 21 $ 8 $ (1) $ (30) $ (2) Depreciation and amortization 29 4 1 — 34 Interest expense, net — — — 20 20 Income tax benefit — — — — — EBITDA and Adjusted EBITDA $ 50 $ 12 $ — $ (10) $ 52 Three Months Ended April 1, 2023 Net income (loss) $ 13 $ 10 $ 7 $ (28) $ 2 Depreciation and amortization 31 3 1 — 35 Interest expense, net — — — 15 15 Income tax benefit — — — (3) (3) EBITDA 44 13 8 (16) 49 Pension settlement loss — — — 2 2 Adjusted EBITDA $ 44 $ 13 $ 8 $ (14) $ 51 EBITDA for the quarter ended March 30, 2024 increased $3 million compared to the prior year quarter driven by lower key input and logistics costs, improved productivity and a decrease in Corporate expense items, partially offset by the decrease in net sales across all segments. See Results of Operations above for additional discussion of the changes in our operating results. Adjusted Free Cash Flow Adjusted free cash flow is defined as cash provided by operating activities adjusted for capital expenditures, net of proceeds from the sale of assets and excluding strategic capital expenditures deemed discretionary by management. Adjusted free cash flow is a non-GAAP financial measure of cash generated during a period, which is available for debt reduction, strategic capital expenditures, acquisitions and repurchases of our common stock. Adjusted free cash flow is not necessarily indicative of the adjusted free cash flow that may be generated in future periods. Cash provided by operating activities is reconciled to adjusted free cash flow as follows: Three Months Ended (in millions) March 30, 2024 April 1, 2023 Cash provided by operating activities $ 12 $ 51 Capital expenditures, net (a) (28) (15) Adjusted free cash flow $ (16) $ 36 (a) Net of proceeds from the sale of assets and excluding strategic capital expenditures. Strategic capital expenditures for the three months ended March 30, 2024 and April 1, 2023 were $5 million and $6 million, respectively. Adjusted free cash flow decreased primarily due to changes in working capital and higher capital expenditures. See Liquidity and Capital Resources—Cash Flows above for additional discussion of our operating cash flows. 25 Table of Contents