What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 219 added, 147 removed, 470 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net sales $ 401,103 $ 368,670 $ 1,207,804 $ 1,220,844

3 unchanged sentences

Foreign exchange gain (loss) ( 1,828 ) 624 1,641 ( 1,510 )

Asset impairment (Note 2) ( 25,169 ) — ( 25,169 ) —

Indefinite suspension charges (Note 2) ( 7,825 ) — ( 14,451 ) —

3 unchanged sentences

Components of pension and OPEB, excluding service costs (Note 14) 783 501 1,900 ( 834 )

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

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

Other income (expense), net ( 173 ) 3,281 1,748 6,894

Loss from continuing operations before income tax ( 36,669 ) ( 31,673 ) ( 30,484 ) ( 50,191 )

Income tax benefit (Note 15) 4,595 5,392 5,916 11,227

Equity in loss of equity method investment ( 524 ) ( 259 ) ( 1,427 ) ( 1,591 )

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 )

Loss from continuing operations ( 32,598 ) ( 26,540 ) ( 25,995 ) ( 40,555 )

Income from discontinued operations, net of tax (Note 3) — 1,440 3,217 312

Net loss $ ( 32,598 ) $ ( 25,100 ) $ ( 22,778 ) $ ( 40,243 )

Basic and Diluted earnings per common share (Note 12)

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 )

Loss from continuing operations $ ( 0.49 ) $ ( 0.41 ) $ ( 0.40 ) $ ( 0.62 )

Income from discontinued operations — 0.02 0.05 —

Net loss $ ( 0.49 ) $ ( 0.39 ) $ ( 0.35 ) $ ( 0.62 )

See Notes to Consolidated Financial Statements.

Rayonier Advanced Materials Inc.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

(in thousands)

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 )

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net loss $ ( 32,598 ) $ ( 25,100 ) $ ( 22,778 ) $ ( 40,243 )

Other comprehensive income (loss), net of tax (Note 11):

3 unchanged sentences

Total other comprehensive income (loss) 8,575 ( 5,230 ) 4,615 ( 3,391 )

Comprehensive income (loss) $ 11,884 $ ( 19,051 ) $ 5,860 $ ( 13,304 )

Comprehensive loss $ ( 24,023 ) $ ( 30,330 ) $ ( 18,163 ) $ ( 43,634 )

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share and par value amounts)

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Current assets

38 unchanged sentences

Shares Par Value

Three months ended June 29, 2024

Balance at March 30, 2024

Three months ended September 28, 2024

Balance at June 29, 2024

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

Net income — — — 11,390 — 11,390

Net loss — — — ( 32,598 ) — ( 32,598 )

Other comprehensive income, net of tax — — — — 8,575 8,575

3 unchanged sentences

( 2,711 ) — ( 18 ) — — ( 18 )

Balance at June 29, 2024

Balance at September 28, 2024

65,896,001 $ 659 $ 423,545 $ 349,810 $ ( 41,302 ) $ 732,712

Three months ended July 1, 2023

Balance at April 1, 2023

Three months ended September 30, 2023

Balance at July 1, 2023

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

1 unchanged sentence

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

Issuance of common stock under incentive stock plans 266,321 3 ( 3 ) — — —

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

Repurchase of common stock (a)

( 29,251 ) — ( 254 ) — — ( 254 )

Balance at July 1, 2023

Balance at September 30, 2023

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

Six months ended June 29, 2024

Nine months ended September 28, 2024

Balance at December 31, 2023

65,393,014 $ 654 $ 419,122 $ 372,588 $ ( 45,917 ) $ 746,447

Net income — — — 9,820 — 9,820

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

Net loss — — — ( 22,778 ) — ( 22,778 )

Other comprehensive income, net of tax — — — — 4,615 4,615

Issuance of common stock under incentive stock plans 630,453 6 ( 6 ) — — —

2 unchanged sentences

( 127,466 ) ( 1 ) ( 660 ) — — ( 661 )

Balance at June 29, 2024

Balance at September 28, 2024

65,896,001 $ 659 $ 423,545 $ 349,810 $ ( 41,302 ) $ 732,712

Six months ended July 1, 2023

Nine months ended September 30, 2023

Balance at December 31, 2022

1 unchanged sentence

Net loss — — — ( 40,243 ) — ( 40,243 )

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

Other comprehensive loss, net of tax — — — — ( 3,391 ) ( 3,391 )

Issuance of common stock under incentive stock plans 1,966,815 20 ( 20 ) — — —

2 unchanged sentences

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

Balance at July 1, 2023

Balance at September 30, 2023

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

4 unchanged sentences

(in thousands)

Six Months Ended

June 29, 2024 July 1, 2023

Nine Months Ended

September 28, 2024 September 30, 2023

Operating activities

Net income (loss) $ 9,820 $ ( 15,143 )

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

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

Net loss $ ( 22,778 ) $ ( 40,243 )

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

Income from discontinued operations ( 3,217 ) ( 312 )

Depreciation and amortization 101,988 104,073

Asset impairment 25,169 —

Stock-based compensation expense 5,089 5,361

6 unchanged sentences

Accounts receivable 617 42,865

Income tax receivable 19,723 ( 3,742 )

Inventories ( 26,485 ) 22,301

Accounts payable ( 9,309 ) 5,545

Accrued liabilities 4,721 ( 27,981 )

Accrued and other current liabilities 8,391 ( 31,732 )

Duty refund rights 40,111 ( 1,946 )

13 unchanged sentences

Cash used in financing activities ( 9,978 ) ( 111,772 )

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

Net increase (decrease) in cash and cash equivalents 59,047 ( 125,251 )

Net effect of foreign exchange on cash and cash equivalents 1,276 575

24 unchanged sentences

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.

Altamaha Green Energy Joint Venture

The Company is involved with AGE, under a preliminary joint venture agreement with Beasley Green Power, LLC.

AGE aims to construct a biomass boiler and turbine to produce and sell green electricity to Georgia Power Company.

AGE is not engaged in any other operating activities and since formation it has only been focused on developing feasibility studies for this project and handling related administrative matters.

AGE expenses to date have been shared evenly by RYAM and Beasley and have not been material for the Company for any of the periods presented.

The amounts expensed by the Company have been recorded as general and administrative expenses.

Once the project evolves from the development stage and the current joint venture agreement between the Company and Beasley is amended to reflect the appropriate terms, the Company will evaluate the accounting and disclosure implications.

Accounting Pronouncements

5 unchanged sentences

Subsequent Events

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.

Debt Issuance and Redemption

In October 2024, the Company raised $ 700 million in aggregate principal amount of secured term loan financing and received net proceeds of $ 683 million after original issue discount, which will be used in the fourth quarter, together with cash on hand, to redeem the respective $ 453 million and $ 246 million outstanding principal balances of the 2026 Notes and 2027 Term Loan and pay estimated fees and expenses related to the transaction of approximately $ 30 million.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

The 2029 Term Loan matures in October 2029, bears interest at an annual rate equal to three-month Term SOFR plus an initial spread of 7 percent and requires quarterly principal payments of $ 1.75 million.

The initial spread may fluctuate by one half percent based on the Company’s net secured leverage ratio.

If net secured leverage is below 2.5 times covenant EBITDA, the spread decreases to 6.5 percent.

If net secured leverage exceeds 3.5 times covenant EBITDA, the spread increases to 7.5 percent.

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 premium.

For the first 18 months, prepayment of the loan is subject to a make-whole premium.

For the following six months, prepayment is subject to a 2 percent premium.

In the third year, prepayment is subject to a 1 percent premium.

After 3 years, the loan is prepayable at par .

The Company will also have the ability to make prepayment using the proceeds from the sale of its Paperboard and High-Yield Pulp businesses at a 2 percent premium during the first year, a 1 percent premium in year two, and par in year three.

The Company will be required to maintain a consolidated net secured leverage ratio, based on covenant EBITDA, as follows:

• 5.00 to 1.00 for the fourth quarter of 2024 through fiscal year 2025;

• 4.75 to 1.00 for fiscal year 2026;

• 4.50 to 1.00 for each fiscal year thereafter.

The agreement governing the 2029 Term Loan contains various other customary covenants that limit the ability of the Company and its restricted subsidiaries, as defined by the term loan agreement, to take certain specified actions, subject to certain exceptions, including:

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

Additionally, the 2029 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 conjunction with the above refinancing, the Company secured commitments for a five-year $ 175 million ABL credit facility.

The facility is initially priced at Term SOFR plus a spread of 2 percent.

The Company expects to record a net loss on debt extinguishment in the fourth quarter of approximately $ 19 million related to these transactions, driven by the write off of deferred financing costs of the 2026 Notes, 2027 Term Loan and ABL Credit Facility.

Jesup Plant Fire

In October 2024, an isolated fire occurred at the Company’s Jesup plant during planned maintenance activity.

There were no injuries to employees or contractors and no risk to the surrounding community.

The plant’s C line operations resumed within two days and the A and B lines’ operations resu med within a two-week period.

While the Company continues to assess the financial impact of the incident, the unfavorable impact to EBITDA in 2024 is expected to approximate $ 10 million, with an additional required $ 3 million of maintenance capital .

Additional capital expenditures will be required over the next couple of years to complete repairs.

The Company carries insurance for property and business interruption loss with a $ 15 million combined deductible.

Indefinite Suspension of Operations

4 unchanged sentences

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

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

In connection with the suspension of operations, the Company has incurred total one-time operating charges of $ 14 million.

Potential remaining one-time charges to be incurred in the fourth quarter are estimated at $ 2 million to $ 3 million.

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

Rayonier Advanced Materials Inc.

1 unchanged sentence

(in thousands unless otherwise stated)

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:

In the third quarter of 2024, in conjunction with the indefinite suspension of operations, the Company recognized a non-cash asset impairment of $ 25 million, as it was determined that the Temiscaming High Purity Cellulose plant’s net carrying value exceeded its estimated fair value.

Determining the fair value of an asset group is judgmental in nature and involves the use of significant estimates and assumptions.

The Company determined the fair value of the Temiscaming High Purity Cellulose plant asset group using discounted cash flows under the income approach, which required the use of key assumptions and significant estimates.

See Note 10—Fair Value Measurements for further information on the fair value measurement of the Temiscaming plant asset group.

The following table presents the accrued liability balance activity related to the suspension during the nine months ended September 28, 2024:

Mothballing Costs Severance and Other Employee Costs Total

3 unchanged sentences

Payments ( 2,968 ) ( 160 ) ( 3,128 )

Balance at June 29, 2024

Balance at September 28, 2024

$ 488 $ 5,316 $ 5,804

(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.

(a) Excludes non-cash items.

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

Three Months Ended September 28, 2024

Nine Months Ended September 28, 2024

Mothballing costs $ 3,036 $ 3,456

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.

Severance and other employee costs — 6,206

Loss on asset disposal 995 995

Other suspension costs 3,794 3,794

Indefinite suspension charges (a)

$ 7,825 $ 14,451

(a) Includes non-cash charges of (i) a $ 2 million write-off of deferred shutdown costs, (ii) $ 2 million for potential contract penalties, (iii) a loss on asset disposal of $ 1 million and (iv) a $ 1 million loss on pension curtailment charges associated with early retirements driven by the suspension of operations.

See Note 14—Employee Benefit Plans for further information regarding the loss on pension curtailment charges.

The above costs incurred were charged to the High Purity Cellulose segment in “indefinite suspension charges” in the consolidated statements of operations.

Discontinued Operations

2 unchanged sentences

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.

In June 2024, the Company executed on the sale of these refund 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.

Also during the nine months ended September 28, 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.

During the quarter and nine months ended September 30, 2023, the USDOC completed its administrative review of duties applied to Canada softwood lumber exports to the U.S.

during 2021 and reduced rates applicable to the Company, for which the Company recorded a pre-tax gain of $ 2 million.

Also 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.

Rayonier Advanced Materials Inc.

1 unchanged sentence

(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

Income from discontinued operations was comprised of the following:

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

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

Selling, general and administrative and other operating income, net — 1,957 5,267 424

Operating income — 1,957 4,377 424

Income from discontinued operations before income tax — 1,957 4,377 424

Income tax expense — ( 517 ) ( 1,160 ) ( 112 )

Income from discontinued operations, net of tax $ — $ 1,440 $ 3,217 $ 312

Accounts Receivable, Net

Accounts receivable, net included the following:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Accounts receivable, trade $ 173,462 $ 166,137

5 unchanged sentences

Inventory included the following:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Finished goods $ 184,340 $ 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 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.

As of September 28, 2024, the Company’s leases have remaining lease terms of less than one year to 12.1 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.

5 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Operating lease cost $ 2,412 $ 1,858 $ 6,050 $ 5,464

3 unchanged sentences

Total lease cost $ 2,540 $ 1,986 $ 6,436 $ 5,850

Balance Sheet Location June 29, 2024 December 31, 2023

Balance Sheet Location September 28, 2024 December 31, 2023

Operating leases (a)

6 unchanged sentences

(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

Nine Months Ended

September 28, 2024 September 30, 2023

Operating cash flows - cash paid for amounts included in the measurement of operating lease liabilities $ 6,071 $ 5,182

Operating lease ROU assets obtained in exchange for lease liabilities 18,163 5,650

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

Finance lease cash flows were immaterial during each of the nine months ended September 28, 2024 and September 30, 2023.

September 28, 2024 December 31, 2023

Operating leases

7 unchanged sentences

(in thousands unless otherwise stated)

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

Operating lease maturities as of September 28, 2024 were as follows:

Remainder of 2024 $ 2,536

5 unchanged sentences

Accrued and other current liabilities included the following:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Accrued customer incentives $ 43,258 $ 30,036

7 unchanged sentences

Accrued and other current liabilities $ 161,511 $ 154,488

(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.

(a) Included at September 28, 2024 and December 31, 2023 was $ 4 million and $ 19 million (CAD $ 5 million and $ 25 million), respectively, associated with funds received in 2021 for CEWS.

In the second quarter of 2024, the Company recognized in income $ 15 million of the $ 19 million accrued at December 31, 2023, including $ 10 million in “other operating income (expense), net” and $ 5 million in “income from discontinued operations, net of tax.” 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 September 28, 2024 and December 31, 2023 were $ 18 million and $ 13 million, respectively, of energy-related payables associated with Tartas facility operations.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Debt and Finance Leases

Debt and finance leases included the following:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

ABL Credit Facility due December 2025:

$ 135 million net availability, bearing interest of 7.44 % ( 5.44 % adjusted SOFR plus 2.00 % margin) at June 29, 2024

$ 135 million net availability, bearing interest of 6.94 % ( 4.94 % adjusted SOFR plus 2.00 % margin) at September 28, 2024

Term Loan due July 2027:

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

bearing interest of 12.59 % ( 4.59 % three-month Term SOFR plus 8.00 % margin) at September 28, 2024

246,250 250,000

13 unchanged sentences

(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.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

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 January 2024, the Company amended the 2027 Term Loan to increase the maximum consolidated net secured 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.

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

The Company is required to maintain various financial covenants, including a consolidated net secured 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;

2 unchanged sentences

• 4.50 to 1.00 for each fiscal quarter thereafter.

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.

In September 2024, the Company repurchased $ 12 million principal of its 2026 Notes through open-market transactions for $ 12 million cash and recorded an immaterial gain on extinguishment to “other income (expense), net” in the consolidated statements of operations.

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

In August 2023, the Company fully redeemed its 2024 Notes through open-market transactions and recorded a loss on extinguishment of $ 1 million to “other income (expense), net” in the consolidated statements of operations.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

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

As of September 28, 2024, the Company was in compliance with all covenants under its debt agreements.

As of September 28, 2024, the Company’s debt principal payments, excluding finance lease obligations, were due as follows:

Remainder of 2024 (a)

Thereafter 26,198

Total debt principal payments $ 788,073

(a) Includes $ 3 million of the $ 246 million outstanding principal balance of the 2027 Term Loan.

The 2027 Term Loan and 2026 Notes will be fully redeemed with the proceeds of the 2029 Term Loan in the fourth quarter of 2024.

The 2029 Term Loan will mature in October 2029.

See Note 1—Basis of Presentation for further information regarding the 2029 Term Loan issuance and the refinancing of the 2026 Notes and 2027 Term Loan.

(b) Includes $ 5 million principal of the 2027 Term Loan.

(c) Includes the $ 453 million outstanding principal balance of the 2026 Notes and $ 5 million principal of the 2027 Term Loan.

(d) Includes the remaining $ 234 million principal balance of the 2027 Term Loan.

Environmental Liabilities

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

The Company’s environmental liabilities balance changed as follows during the nine months ended September 28, 2024:

Balance at December 31, 2023

2 unchanged sentences

Foreign currency adjustments ( 35 )

Balance at June 29, 2024

Balance at September 28, 2024

current portion ( 9,832 )

Non-current environmental liabilities $ 160,488

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 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.

Based on information available as of September 28, 2024, the Company estimates this exposure could range up to approximately $ 87 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.

2 unchanged sentences

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.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

Fair Value Measurements

Assets Measured at Fair Value on a Nonrecurring Basis

Asset Impairment

In the third quarter of 2024, the Company recorded a $ 25 million non-cash impairment related to the Temiscaming High Purity Cellulose plant asset group.

The fair value of the Temiscaming High Purity Cellulose plant assets was determined using discounted cash flows under the income approach from the perspective of a market participant assuming the highest and best use of the asset group.

Discounted cash flows were estimated using key assumptions regarding production levels, price levels, profit margins, capital expenditures and discount rate, which are Level 3 measurements.

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

Financial Instruments

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

1 unchanged sentence

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:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Carrying amount of fixed rate debt (a)

6 unchanged sentences

Accumulated Other Comprehensive Loss

Six Months Ended

June 29, 2024 July 1, 2023

Nine Months Ended

September 28, 2024 September 30, 2023

Unrecognized components of employee benefit plans, net of tax

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See Note 14—Employee Benefit Plans for further information.

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

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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 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 )

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Loss from continuing operations $ ( 32,598 ) $ ( 26,540 ) $ ( 25,995 ) $ ( 40,555 )

Income from discontinued operations — 1,440 3,217 312

Net loss available for common stockholders $ ( 32,598 ) $ ( 25,100 ) $ ( 22,778 ) $ ( 40,243 )

Weighted average shares used for determining basic earnings per share of common stock 65,892,750 65,343,418 65,686,397 65,024,654

4 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Stock options — 46,798 — 46,798

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Stock-based compensation expense was as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Stock-based compensation expense

$ 3,090 $ 2,116 $ 7,500 $ 5,286

(a) Included equity award expense of $ 2 million during each of the quarters ended September 28, 2024 and September 30, 2023, and $ 5 million during each of the nine months ended September 28, 2024 and September 30, 2023.

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.

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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.

Performance below threshold for either metric would result in zero payout for that metric.

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.

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

Outstanding at June 29, 2024

Outstanding at September 28, 2024

— $ — 1,801,059 $ 5.12 1,618,632 $ 6.06

5 unchanged sentences

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

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.

During the nine months ended September 28, 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.

1 unchanged sentence

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.

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 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.

2 unchanged sentences

Three Months Ended Three Months Ended

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

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Service cost $ 1,440 $ 1,223 $ 138 $ 293

3 unchanged sentences

Amortization of gain ( 11 ) ( 123 ) ( 185 ) ( 54 )

Curtailment 736 — — —

Net periodic benefit cost $ 619 $ 448 $ 176 $ 567

3 unchanged sentences

Pension Postretirement

Six Months Ended Six Months Ended

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

Nine Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Service cost $ 4,504 $ 3,664 $ 414 $ 879

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The Company’s effective tax rates were as follows:

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Loss from continuing operations before income tax

$ ( 36,669 ) $ ( 31,673 ) $ ( 30,484 ) $ ( 50,191 )

Effective tax rate 12.5 % 17.0 % 19.4 % 22.4 %

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.

The effective tax rates for the quarter and nine months ended September 28, 2024 differed from the federal statutory rate of 21 percent primarily due to changes in the valuation allowance on disallowed interest deductions, the release of certain tax reserves, different statutory tax rates in foreign jurisdictions, U.S.

tax credits, excess deficit on vested stock compensation and return-to-accrual adjustments.

The effective tax rates for the quarter and nine months ended September 30, 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.

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.

Deferred Taxes

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

As of September 28, 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.

The asset decreased $ 1 million as a result of a tax expense recognized in the current year.

In strict compliance with the American Institute of Certified Public Accountants’ Technical Questions and Answers 3300.01-02, which asserts that certain material evidence regarding the realizability of disallowed U.S.

interest deductions should be ignored when assessing the need for a valuation allowance, the Company has not recognized a valuation allowance on this portion of the net DTA generated from disallowed interest.

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(in thousands unless otherwise stated)

The Company operates in the following business segments:

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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 Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

High Purity Cellulose

8 unchanged sentences

Net sales $ 401,103 $ 368,670 $ 1,207,804 $ 1,220,844

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

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

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

High Purity Cellulose $ ( 5,688 ) $ ( 5,547 ) $ 45,215 $ 6,965

4 unchanged sentences

Identifiable assets by segment were as follows:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

High Purity Cellulose $ 1,501,493 $ 1,510,076

5 unchanged sentences

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

Rayonier Advanced Materials Inc.

Notes to Consolidated Financial Statements (Unaudited)

(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 during the six months ended June 29, 2024.

The Company had no material changes to the purchase obligations presented in its 2023 Form 10-K during the nine months ended September 28, 2024.

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

3 unchanged sentences

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

5 unchanged sentences

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 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.

As of September 28, 2024, the Company had net exposure of $ 37 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 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.

The Company had surety bonds of $ 89 million as of September 28, 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 June 29, 2024.

The Company’s proportion of the LTF financing agreement guarantee was $ 28 million at September 28, 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 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.

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.

In April 2024, collective bargaining agreements covering approximately 225 unionized employees at the Fernandina plant expired.

The employees continued to work under the terms of the expired contracts until negotiations concluded in the third quarter of 2024 and final agreements with the union were reached.

As of September 28, 2024, all of the Company’s collective bargaining agreements covering its unionized employees were current.

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