What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 220 added, 129 removed, 397 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net sales $ 419,045 $ 385,413 $ 806,701 $ 852,174

3 unchanged sentences

Foreign exchange gain (loss) 558 ( 1,461 ) 3,469 ( 2,134 )

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

Operating income 17,075 16,594

Indefinite suspension charges (Note 2) ( 6,626 ) — ( 6,626 ) —

Other operating income (expense), net 7,765 ( 1,627 ) 6,243 ( 2,305 )

Operating income (loss) 28,197 ( 6,456 ) 45,272 10,138

Interest expense ( 21,270 ) ( 15,438 ) ( 42,125 ) ( 30,934 )

1 unchanged sentence

Other income, net 651 3,307 1,921 3,613

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

Income (loss) from continuing operations before income tax 7,775 ( 18,188 ) 6,185 ( 18,518 )

Income tax benefit (Note 15) 849 3,249 1,321 5,835

Equity in loss of equity method investment ( 451 ) ( 683 ) ( 903 ) ( 1,332 )

Income (loss) from continuing operations 8,173 ( 15,622 ) 6,603 ( 14,015 )

Income (loss) from discontinued operations, net of tax (Note 3) 3,217 ( 1,128 ) 3,217 ( 1,128 )

Net income (loss) $ 11,390 $ ( 16,750 ) $ 9,820 $ ( 15,143 )

Basic and Diluted earnings per common share (Note 12)

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

Income (loss) from continuing operations $ 0.12 $ ( 0.24 ) $ 0.10 $ ( 0.22 )

Income (loss) from discontinued operations 0.05 ( 0.02 ) 0.05 ( 0.02 )

Net income (loss) $ 0.17 $ ( 0.26 ) $ 0.15 $ ( 0.24 )

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net income (loss) $ 11,390 $ ( 16,750 ) $ 9,820 $ ( 15,143 )

2 unchanged sentences

Unrealized gain on derivative instruments 39 48 80 103

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

Net gain (loss) on employee benefit plans 2,462 ( 2,240 ) 2,448 ( 2,367 )

Total other comprehensive income (loss) 494 ( 2,301 ) ( 3,960 ) 1,839

4 unchanged sentences

(in thousands, except share and par value amounts)

March 30, 2024 December 31, 2023

June 29, 2024 December 31, 2023

Current assets

38 unchanged sentences

Shares Par Value

Three months ended March 30, 2024

Balance at December 31, 2023

Three months ended June 29, 2024

Balance at March 30, 2024

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

Net income — — — 11,390 — 11,390

Other comprehensive income, net of tax — — — — 494 494

Issuance of common stock under incentive stock plans 378,301 4 ( 4 ) — — —

Stock-based compensation — — 1,690 — — 1,690

Repurchase of common stock (a)

( 43,045 ) — ( 190 ) — — ( 190 )

Balance at June 29, 2024

65,890,093 $ 659 $ 421,944 $ 382,408 $ ( 49,877 ) $ 755,134

Three months ended July 1, 2023

Balance at April 1, 2023

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

Net loss — — — ( 16,750 ) — ( 16,750 )

4 unchanged sentences

( 29,251 ) — ( 254 ) — — ( 254 )

Balance at March 30, 2024

Balance at July 1, 2023

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

Three months ended April 1, 2023

Six months ended June 29, 2024

Balance at December 31, 2023

1 unchanged sentence

Net income — — — 9,820 — 9,820

Other comprehensive loss, net of tax — — — — ( 3,960 ) ( 3,960 )

Issuance of common stock under incentive stock plans 621,834 6 ( 6 ) — — —

Stock-based compensation — — 3,470 — — 3,470

Repurchase of common stock (a)

( 124,755 ) ( 1 ) ( 642 ) — — ( 643 )

Balance at June 29, 2024

65,890,093 $ 659 $ 421,944 $ 382,408 $ ( 49,877 ) $ 755,134

Six months ended July 1, 2023

Balance at December 31, 2022

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

Net loss — — — ( 15,143 ) — ( 15,143 )

Other comprehensive income, net of tax — — — — 1,839 1,839

3 unchanged sentences

( 644,158 ) ( 6 ) ( 5,357 ) — — ( 5,363 )

Balance at April 1, 2023

Balance at July 1, 2023

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

4 unchanged sentences

(in thousands)

Three Months Ended

March 30, 2024 April 1, 2023

Six Months Ended

June 29, 2024 July 1, 2023

Operating activities

1 unchanged sentence

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

(Income) loss from discontinued operations ( 3,217 ) 1,128

Depreciation and amortization 66,794 67,689

Stock-based compensation expense 3,470 3,371

Deferred income tax benefit ( 955 ) ( 2,312 )

Net periodic benefit cost of pension and other postretirement plans 2,223 2,045

Unrealized (gain) loss on foreign currency ( 2,669 ) 1,669

(Gain) loss on disposal of property, plant and equipment 1,637 ( 1,376 )

Other 6,128 2,927

4 unchanged sentences

Accrued liabilities 4,721 ( 27,981 )

Duty refund rights 40,111 ( 2,072 )

Other 89 ( 25,368 )

11 unchanged sentences

Repurchase of common stock ( 643 ) ( 5,363 )

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

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

Cash used in financing activities ( 1,107 ) ( 25,638 )

Net increase in cash and cash equivalents 39,731 3,899

Net effect of foreign exchange on cash and cash equivalents ( 1,353 ) 1,158

16 unchanged sentences

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 historical results for those operations, and any subsequent directly associated impacts, as discontinued operations.

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

See Note 3—Discontinued Operations for further information on the sale.

Recent Accounting Developments

10 unchanged sentences

Subsequent Events

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.

Events and transactions subsequent to the consolidated balance sheets date have been evaluated for potential recognition and disclosure through the date of issuance of these consolidated financial statements.

No subsequent events were identified.

Indefinite Suspension of Operations

As previously announced, the Company began its indefinite suspension of operations at its Temiscaming High Purity Cellulose plant in July 2024.

The suspension 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 sales process.

The suspension of operations timeline allows 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)

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.

In connection with the suspension of operations, the Company expects to incur, all in 2024, total charges in the range of $ 25 million to $ 30 million, including mothballing costs of $ 5 million to $ 10 million and severance and other employee costs of $ 15 million to $ 20 million.

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 suspension costs are expected to be paid over a period of time.

Non-cash asset impairment charges are expected in the third quarter of 2024, the amounts of which are currently being assessed.

The suspension of operations began on July 16, 2024 and is expected to conclude in the fourth quarter of 2024.

The following table presents the accrued liability balance activity related to the suspension during the six months ended June 29, 2024:

Mothballing Costs Severance and Other Employee Costs Total

Balance at December 31, 2023

Charges incurred (a)

420 5,476 5,896

Payments ( 420 ) — ( 420 )

Balance at June 29, 2024

$ — $ 5,476 $ 5,476

(a) Excludes non-cash items, including a $ 1 million loss on pension curtailment charges associated with early retirements driven by the indefinite suspension of operations.

See Note 14—Employee Benefit Plans for further information.

The following table presents total suspension charges incurred by cost type:

Three and Six Months Ended June 29, 2024

Severance and other employee costs $ 6,206

Mothballing costs 420

Indefinite suspension charges $ 6,626

The mothballing and severance and other employee costs incurred were charged to the High Purity Cellulose segment in “indefinite suspension charges” in the consolidated statements of operations.

Discontinued Operations

In August 2021, the Company completed the sale of its lumber and newsprint facilities and certain related assets located in Canada.

As part of the sale of the lumber assets, the Company retained all refund rights and obligations, including interest, 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 2021, and as of December 31, 2023, the Company had a $ 40 million long-term receivable related to USDOC administrative reviews completed to date.

In June 2024, the Company executed on the sale of these rights (inclusive of the receivable), 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.

The Company recorded a $ 1 million loss on the sale, included in pre-tax income from discontinued operations.

During the quarter and six months ended June 29, 2024, the Company recognized $ 5 million in pre-tax income from discontinued operations related to CEWS benefit claims deferred since 2021.

See Note 7—Accrued and Other Current Liabilities for further information.

During the quarter and six months ended July 1, 2023, the Company incurred $ 2 million related to the settlement of a claim pursuant to the representations and warranties in the asset purchase agreement.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Income (loss) from discontinued operations was comprised of the following:

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Loss on sale of duty refund rights $ ( 890 ) $ — $ ( 890 ) $ —

Selling, general and administrative and other operating income (expense) 5,267 ( 1,533 ) 5,267 ( 1,533 )

Operating income (loss) 4,377 ( 1,533 ) 4,377 ( 1,533 )

Income (loss) from discontinued operations before income taxes 4,377 ( 1,533 ) 4,377 ( 1,533 )

Income tax (expense) benefit ( 1,160 ) 405 ( 1,160 ) 405

Income (loss) from discontinued operations, net of taxes $ 3,217 $ ( 1,128 ) $ 3,217 $ ( 1,128 )

Accounts Receivable, Net

Accounts receivable, net included the following:

March 30, 2024 December 31, 2023

June 29, 2024 December 31, 2023

Accounts receivable, trade $ 182,525 $ 166,137

5 unchanged sentences

Inventory included the following:

March 30, 2024 December 31, 2023

June 29, 2024 December 31, 2023

Finished goods $ 167,039 $ 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 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.

As of June 29, 2024, the Company’s leases have remaining lease terms of less than one year to 12.3 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

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Operating lease cost $ 2,136 $ 1,791 $ 3,802 $ 3,485

3 unchanged sentences

Total lease cost $ 2,265 $ 1,920 $ 4,060 $ 3,743

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

Balance Sheet Location June 29, 2024 December 31, 2023

Operating leases (a)

ROU assets Other assets $ 32,634 $ 17,475

4 unchanged sentences

Lease liabilities Long-term debt 1,142 1,355

Three Months Ended

March 30, 2024 April 1, 2023

(a) During the second quarter of 2024, the Company recorded an ROU asset and corresponding lease liability of $ 14 million related to a new warehouse lease agreement in Canada.

Six Months Ended

June 29, 2024 July 1, 2023

Operating cash flows - cash paid for amounts included in the measurement of operating lease liabilities $ 3,799 $ 1,701

Operating lease ROU assets obtained in exchange for lease liabilities 18,092 1,946

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

Finance lease cash flows were immaterial during each of the six months ended June 29, 2024 and July 1, 2023.

June 29, 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:

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Operating lease maturities as of June 29, 2024 were as follows:

Remainder of 2024 $ 4,795

3 unchanged sentences

Present value of future minimum lease payments $ 34,178

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Accrued and Other Current Liabilities

Accrued and other current liabilities included the following:

March 30, 2024 December 31, 2023

June 29, 2024 December 31, 2023

Accrued customer incentives $ 39,667 $ 30,036

4 unchanged sentences

Deferred revenue (a)

23,781 24,061

Other current liabilities (b)

1 unchanged sentence

Accrued and other current liabilities $ 155,764 $ 154,488

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

(a) Included at June 29, 2024 and December 31, 2023 was CAD $ 5 million and $ 25 million, respectively (USD $ 4 million and $ 19 million, respectively), associated with funds received in 2021 for CEWS.

In the second quarter of 2024, the Company recognized in income $ 15 million of this amount, including $ 10 million in “other operating income (expense), net” and $ 5 million in “income (loss) from discontinued operations, net of taxes.” The remaining amount will be recognized at the earlier of the conclusion of the final outstanding audit and the expiration of the statute of limitations in July 2025.

(b) Included at June 29, 2024 and December 31, 2023 were $ 17 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:

March 30, 2024 December 31, 2023

June 29, 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

$ 135 million net availability, bearing interest of 7.44 % ( 5.44 % adjusted SOFR plus 2.00 % margin) at June 29, 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

bearing interest of 13.32 % ( 5.32 % three-month Term SOFR plus 8.00 % margin) at June 29, 2024

247,500 250,000

12 unchanged sentences

Long-term debt $ 752,751 $ 752,174

(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.

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

Rayonier Advanced Materials Inc.

1 unchanged sentence

(in thousands unless otherwise stated)

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

3 unchanged sentences

• 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:

In April 2023, the Company repurchased $ 10 million of its 2026 Notes through open-market transactions and recorded a gain on extinguishment of $ 1 million to “other income, net” in the consolidated statements of operations.

Covenants and Debt Maturity

As of June 29, 2024, the Company was in compliance with all covenants under its debt agreements.

As of June 29, 2024, the Company’s debt principal payments, excluding finance lease obligations, were due as follows:

Remainder of 2024 $ 15,905

2 unchanged sentences

Environmental Liabilities

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

The Company’s environmental liabilities balance changed as follows during the six months ended June 29, 2024:

Balance at December 31, 2023

2 unchanged sentences

Foreign currency adjustments ( 207 )

Balance at March 30, 2024

Balance at June 29, 2024

current portion ( 9,825 )

Non-current environmental liabilities $ 159,971

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 liabilities due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations;

5 unchanged sentences

and changes in accounting rules or interpretations.

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.

Based on information available as of June 29, 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.

5 unchanged sentences

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.

Notes to Consolidated Financial Statements (Unaudited)

(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

June 29, 2024 December 31, 2023

Carrying amount of fixed rate debt (a)

2 unchanged sentences

(a) Excludes finance lease obligations.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Accumulated Other Comprehensive Loss

Three Months Ended

March 30, 2024 April 1, 2023

Six Months Ended

June 29, 2024 July 1, 2023

Unrecognized components of employee benefit plans, net of tax

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

Other comprehensive income (loss) before reclassifications 3,371 ( 3,034 )

Income tax on other comprehensive gain (loss) ( 901 ) 804

Reclassifications to earnings (a)

2 unchanged sentences

Income tax on reclassifications 10 45

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

Net comprehensive income (loss) on employee benefit plans, net of tax 2,448 ( 2,367 )

Balance, end of period ( 31,089 ) ( 46,061 )

13 unchanged sentences

See Note 14—Employee Benefit Plans for further information.

(b) Reclassifications of foreign currency exchange contracts are recorded in “cost of sales,” “other operating expense, net” or “other income, net,” as appropriate.

(b) Reclassifications of foreign currency exchange contracts are recorded in “cost of sales,” “other operating income (expense), net” or “other income, net,” as appropriate.

(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.

4 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

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Income (loss) from continuing operations $ 8,173 $ ( 15,622 ) $ 6,603 $ ( 14,015 )

Income (loss) from discontinued operations 3,217 ( 1,128 ) 3,217 ( 1,128 )

Net income (loss) available for common stockholders $ 11,390 $ ( 16,750 ) $ 9,820 $ ( 15,143 )

Shares used for determining basic earnings per share of common stock 65,447,454 64,504,200

Weighted average shares used for determining basic earnings per share of common stock 65,716,362 65,226,344 65,582,651 64,865,272

Dilutive effect of:

1 unchanged sentence

Performance and restricted stock 3,073,949 — 2,423,674 —

Shares used for determining diluted earnings per share of common stock 65,447,454 66,596,653

Weighted average shares used for determining diluted earnings per share of common stock 68,790,311 65,226,344 68,006,328 64,865,272

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

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Stock options — 46,882 1,497 46,882

3 unchanged sentences

Stock-based compensation expense was as follows:

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Stock-based compensation expense

$ 1,690 $ 1,893 $ 3,470 $ 3,371

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

The 2024 restricted stock unit awards cliff vest after three years , except for director awards, which vest after one year .

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.

3 unchanged sentences

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.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

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 March 30, 2024

Outstanding at June 29, 2024

— $ — 1,834,925 $ 5.10 1,631,576 $ 6.11

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 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.

During the quarter and six months ended June 29, 2024, the Company recorded a $ 1 million loss on pension curtailment charges associated with early retirements driven by the indefinite suspension of operations at the Temiscaming High Purity Cellulose plant.

The loss on curtailment was recognized in “indefinite suspension charges” in the Company’s consolidated statements of operations.

Additionally, the Company decreased its pension liability by $ 3 million.

See Note 2—Indefinite Suspension of Operations for further information.

During the six months ended July 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:

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

Pension Postretirement

Three Months Ended Three Months Ended

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

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Service cost $ 1,527 $ 1,224 $ 138 $ 299

3 unchanged sentences

Amortization of gain ( 11 ) ( 124 ) ( 184 ) ( 54 )

Curtailment 736 — — —

Net periodic benefit cost $ 1,292 $ 556 $ 176 $ 568

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Pension Postretirement

Six Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Service cost $ 3,064 $ 2,441 $ 276 $ 586

Interest cost 13,812 14,382 495 705

Expected return on plan assets ( 16,128 ) ( 15,887 ) — —

Amortization of prior service cost (credit) 408 221 ( 49 ) ( 49 )

Amortization of gain ( 22 ) ( 246 ) ( 369 ) ( 108 )

Pension settlement loss — 2,317 — —

Curtailment 736 — — —

Net periodic benefit cost $ 1,870 $ 3,228 $ 353 $ 1,134

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 are included in “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) loss 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

March 30, 2024 April 1, 2023

Loss before income taxes

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Income (loss) from continuing operations before income taxes

$ 7,775 $ ( 18,188 ) $ 6,185 $ ( 18,518 )

Effective tax rate ( 10.9 ) % 17.9 % ( 21.4 ) % 31.5 %

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)

The effective tax rates for the quarter and six months ended June 29, 2024 differed from the federal statutory rate of 21 percent primarily due to the release of certain tax reserves, return-to-accrual adjustments, excess deficit on vested stock compensation and changes in the valuation allowance on disallowed interest deductions.

The effective tax rates for the quarter and six months ended July 1, 2023 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 and an excess tax benefit on vested stock compensation.

Deferred Taxes

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.

As of both June 29, 2024 and December 31, 2023, the Company’s net DTA included $ 15 million 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

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

High Purity Cellulose

10 unchanged sentences

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

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

High Purity Cellulose $ 30,162 $ ( 422 ) $ 50,903 $ 12,512

4 unchanged sentences

Identifiable assets by segment were as follows:

March 30, 2024 December 31, 2023

June 29, 2024 December 31, 2023

High Purity Cellulose $ 1,535,111 $ 1,510,076

1 unchanged sentence

High-Yield Pulp 48,310 43,811

Corporate 499,546 523,009

Corporate (a)

510,457 523,009

Total assets $ 2,196,972 $ 2,182,700

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

(a) Includes ERP and certain lease assets shared across segments.

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 had no material changes to the purchase obligations presented in its 2023 Form 10-K during the six months ended June 29, 2024.

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

The Company remains subject to purchase obligations under the 20-year wood chip and residual fiber supply agreement with GreenFirst, under which total required purchase volumes of wood chips and residual fiber are dependent on sawmill production.

In connection with the indefinite suspension of operations at the Temiscaming High Purity Cellulose plant, GreenFirst and the Company have agreed that the Company will purchase the required volumes at market value and sell them to third parties at the same amount for an expected neutral impact.

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

See Note 6—Leases for further information.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Litigation and Contingencies

3 unchanged sentences

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

As part of the sale of its lumber assets in 2021, the Company retained all refund rights and obligations to softwood duties generated or incurred through the closing date of the sale.

As of December 31, 2023 , the Company had a $ 40 million long-term receivable associated with USDOC determinations of the revised duty rates for 2017 through 2021.

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.

3 unchanged sentences

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

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.

As of June 29, 2024, the Company had net exposure of $ 33 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 $ 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.

The Company had surety bonds of $ 89 million as of June 29, 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 $ 30 million at March 30, 2024.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

The Company’s proportion of the LTF financing agreement guarantee was $ 29 million at June 29, 2024.

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 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.

As of June 29, 2024, collective bargaining agreements covering approximately 225 unionized employees were expired at the Fernandina plant.

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

2 unchanged sentences

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