RAYONIER ADVANCED MATERIALS INC. 10-Q

Item 1. Financial Statements Rayonier Advanced Materials Inc. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts) Three Months Ended March 29, 2025 March 30, 2024 Net sales $ 355,967 $ 387,656 Cost of sales ( 331,913 ) ( 350,895 ) Gross margin 24,054 36,761 Selling, general and administrative expense ( 23,259 ) ( 21,075 ) Foreign exchange gain (loss) ( 1,108 ) 2,911 Indefinite suspension charges (Note 2) ( 405 ) — Environmental remediation expense ( 13,147 ) ( 634 ) Other operating expense, net ( 1,228 ) ( 888 ) Operating income (loss) ( 15,093 ) 17,075 Interest expense ( 23,603 ) ( 20,855 ) Components of pension and OPEB, excluding service costs (Note 14) 632 920 Other income, net 892 1,270 Loss before income tax ( 37,172 ) ( 1,590 ) Income tax benefit (Note 15) 5,592 472 Equity in loss of equity method investment ( 372 ) ( 452 ) Net loss ( 31,952 ) ( 1,570 ) Net income attributable to redeemable noncontrolling interest (Note 10) 18 — Net loss attributable to RYAM $ ( 31,970 ) $ ( 1,570 ) Basic and Diluted earnings per common share (Note 12) Net loss per common share $ ( 0.49 ) $ ( 0.02 ) See Notes to Condensed Consolidated Financial Statements. 1 Table of Contents Rayonier Advanced Materials Inc. Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (in thousands) Three Months Ended March 29, 2025 March 30, 2024 Net loss $ ( 31,952 ) $ ( 1,570 ) Other comprehensive income (loss), net of tax (Note 11): Foreign currency translation adjustment 7,678 ( 4,481 ) Unrealized gain on derivative instruments 32 41 Net loss on employee benefit plans ( 100 ) ( 14 ) Total other comprehensive income (loss) 7,610 ( 4,454 ) Comprehensive loss ( 24,342 ) ( 6,024 ) Comprehensive income attributable to redeemable noncontrolling interest 426 — Comprehensive loss attributable to RYAM $ ( 24,768 ) $ ( 6,024 ) See Notes to Condensed Consolidated Financial Statements. 2 Table of Contents Rayonier Advanced Materials Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and par value amounts) March 29, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 129,860 $ 125,222 Accounts receivable, net (Note 3) 167,116 213,972 Inventory (Note 4) 212,037 208,003 Income tax receivable 145 2,637 Prepaid and other current assets 63,344 51,127 Total current assets 572,502 600,961 Property, plant and equipment (net of accumulated depreciation of $ 1,919,174 and $ 1,891,599 , respectively) 1,030,744 1,018,583 Deferred tax assets 354,562 349,500 Intangible assets, net 8,652 10,404 Other assets 151,071 150,209 Total assets $ 2,117,531 $ 2,129,657 Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity Current liabilities Accounts payable $ 199,848 $ 196,249 Accrued and other current liabilities (Note 6) 166,190 170,785 Debt due within one year (Note 7) 29,022 23,379 Current environmental liabilities (Note 8) 9,747 9,749 Total current liabilities 404,807 400,162 Long-term debt (Note 7) 707,011 706,444 Non-current environmental liabilities (Note 8) 171,885 160,466 Pension and other postretirement benefits (Note 14) 76,173 77,239 Deferred tax liabilities 13,248 13,685 Other liabilities 44,986 47,273 Commitments and contingencies (Note 17) Redeemable noncontrolling interest (Note 10) 11,337 10,503 Stockholders’ Equity Common stock: 140,000,000 shares authorized at $ 0.01 par value, 66,754,665 and 65,966,881 issued and outstanding, respectively 668 660 Additional paid-in capital 424,262 425,303 Retained earnings 301,213 333,591 Accumulated other comprehensive loss (Note 11) ( 38,059 ) ( 45,669 ) Total stockholders’ equity 688,084 713,885 Total liabilities, redeemable noncontrolling interest and stockholders’ equity $ 2,117,531 $ 2,129,657 See Notes to Condensed Consolidated Financial Statements. 3 Table of Contents Rayonier Advanced Materials Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (in thousands, except share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Par Value Three months ended March 29, 2025 Balance at December 31, 2024 65,966,881 $ 660 $ 425,303 $ 333,591 $ ( 45,669 ) 713,885 Net loss attributable to RYAM — — — ( 31,970 ) — ( 31,970 ) Other comprehensive income, net of tax — — — — 7,610 7,610 Issuance of common stock under incentive stock plans 1,163,210 12 ( 12 ) — — — Stock-based compensation — — 1,805 — — 1,805 Repurchase of common stock (a) ( 375,426 ) ( 4 ) ( 2,834 ) — — ( 2,838 ) Redeemable noncontrolling interest adjustment to redemption value — — — ( 408 ) — ( 408 ) Balance at March 29, 2025 66,754,665 $ 668 $ 424,262 $ 301,213 $ ( 38,059 ) $ 688,084 Three months ended March 30, 2024 Balance at December 31, 2023 65,393,014 $ 654 $ 419,122 $ 372,588 $ ( 45,917 ) $ 746,447 Net loss attributable to RYAM — — — ( 1,570 ) — ( 1,570 ) Other comprehensive loss, net of tax — — — — ( 4,454 ) ( 4,454 ) Issuance of common stock under incentive stock plans 243,533 2 ( 2 ) — — — Stock-based compensation — — 1,780 — — 1,780 Repurchase of common stock (a) ( 81,710 ) ( 1 ) ( 452 ) — — ( 453 ) Balance at March 30, 2024 65,554,837 $ 655 $ 420,448 $ 371,018 $ ( 50,371 ) $ 741,750 (a) Repurchased to satisfy tax withholding requirements related to the issuance of stock under the Company’s incentive stock plans. See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents Rayonier Advanced Materials Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three Months Ended March 29, 2025 March 30, 2024 Operating activities Net loss $ ( 31,952 ) $ ( 1,570 ) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 31,251 33,283 Stock-based compensation expense 1,805 1,780 Deferred income tax benefit ( 6,016 ) 47 Increase in environmental liabilities 13,021 653 Change in fair value of put option liability 494 — Net periodic benefit cost of pension and other postretirement plans 648 755 Unrealized (gain) loss on foreign currency 730 ( 1,899 ) Other 1,514 2,362 Changes in operating assets and liabilities: Accounts receivable 47,744 12,792 Inventory ( 3,222 ) ( 21,231 ) Accounts payable 5,857 ( 14,320 ) Accrued and other current liabilities ( 6,531 ) ( 12,476 ) Other ( 13,777 ) 13,353 Contributions to pension and other postretirement plans ( 1,950 ) ( 2,264 ) Cash provided by operating activities 39,616 11,265 Investing activities Capital expenditures, net of proceeds ( 37,510 ) ( 32,561 ) Cash used in investing activities ( 37,510 ) ( 32,561 ) Financing activities Borrowings of long-term debt — 132,825 Repayments of long-term debt ( 1,658 ) ( 127,861 ) Short-term financing, net 3,778 ( 1,709 ) Debt issuance costs — ( 1,875 ) Repurchase of common stock ( 2,838 ) ( 453 ) Cash provided by (used in) financing activities ( 718 ) 927 Net increase (decrease) in cash and cash equivalents 1,388 ( 20,369 ) Net effect of foreign exchange on cash and cash equivalents 3,250 ( 791 ) Balance, beginning of period 125,222 75,768 Balance, end of period $ 129,860 $ 54,608 Supplemental cash flow information: Interest paid $ ( 877 ) $ ( 34,036 ) Income taxes refunded, net 2,119 1,587 Capital assets purchased on account 38,542 23,495 See Notes to Condensed Consolidated Financial Statements. 5 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) 1. Nature of Operations and Basis of Presentation Nature of Operations RYAM is a global leader in the production of cellulose specialties, a natural polymer used in the manufacturing of various specialty chemical products, including liquid crystal displays, filters, textiles and performance additives for pharmaceutical, food and other industrial applications. The Company’s specialized assets also produce bioelectricity, biomaterials, including biofuels, lignin and tall oil soap, and commodity fluff, viscose and paper pulp. Additionally, RYAM produces a unique, lightweight multi-ply paperboard product and a bulky, high-yield pulp product. The Company’s paperboard is used for production in the commercial printing, lottery ticket and high-end packaging sectors. The Company’s high-yield pulp is used by paperboard producers as well as in traditional printing, writing and specialty paper manufacturing. Basis of Presentation The Financial Statements and notes thereto have been prepared in accordance with GAAP for interim financial information and in accordance with the rules and regulations of the SEC. In the opinion of management, the accompanying Financial Statements and notes reflect all adjustments, including all normal recurring adjustments, necessary for a fair statement of the results of operations, financial position and cash flows for the periods presented. The December 31, 2024 consolidated balance sheet was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. These statements and notes should be read in conjunction with the consolidated financial statements and supplementary data included in the Company’s 2024 Form 10-K. New Segment Structure In the first quarter of 2025, the Company reorganized its High Purity Cellulose operating segment as a result of changes in its internal operating model, significant developments in its Biomaterials strategy and a successful launch of an enterprise reporting system that significantly enhances the Company’s financial reporting and costing capabilities. Specifically, the Company determined, in light of these new developments and capabilities, that the performance and outlook of the High Purity Cellulose business will be better managed as three separate businesses: Cellulose Specialties, Cellulose Commodities and a new Biomaterials business. No changes were made to the composition of the Paperboard and High-Yield Pulp operating segments. As a result of this reorganization, the Company now operates in five operating segments: Cellulose Specialties, Cellulose Commodities, Biomaterials, Paperboard and High-Yield Pulp. Prior period segment results have been recast to align with this new segment reporting structure. See Note 16—Segments for further information. Recent Accounting Developments Accounting Standards Updates Implemented In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires enhanced annual income tax disclosures, primarily through changes to the rate reconciliation and income taxes paid information. The Company is adopting ASU 2023-09 for the fiscal year ending December 31, 2025 on a prospective basis. The adoption of this ASU has no impact on the Company’s interim Financial Statements and related disclosures. In August 2023, the FASB issued ASU 2023-05 “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which provides specific guidance on how a joint venture, upon formation, should recognize and initially measure assets contributed and liabilities assumed. The Company adopted ASU 2023-05 on January 1, 2025 and it will be applied on a prospective basis to all joint ventures with a formation date on or after January 1, 2025. The adoption of this ASU had no impact to the Company’s Financial Statements. 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. 6 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) 2. Indefinite Suspension of Operations In July 2024, the Company indefinitely suspended operations at its Temiscaming cellulose plant. The Temiscaming paperboard and high-yield pulp plants that support the Company’s Paperboard and High-Yield Pulp operating segments will continue to operate at full capacity while remaining part of an ongoing sales process. The Temiscaming cellulose plant was idled in a safe and environmentally sound manner, and the Company will assess, on at least an annual basis, the possibility of restarting the Temiscaming cellulose plant. Indefinite suspension of operations activities began in July 2024 and were mostly completed in the prior year. Since the start of the indefinite suspension in 2024, the Company has incurred total one-time operating charges of $ 17 million, including $ 6 million of mothballing costs, $ 6 million of severance and other employee costs and $ 5 million of other costs. While most cash costs associated with the indefinite suspension of operations were paid in the third and fourth quarters of 2024, severance and other indefinite suspension costs are expected to be paid over a period of time. Remaining one-time charges to be incurred are not expected to be material. The following table presents the accrued liability balance activity and one-time charges incurred related to the indefinite suspension during the three months ended March 29, 2025: Mothballing Costs Severance and Other Employee Costs Total Balance at December 31, 2024 $ 977 $ 5,010 $ 5,987 Charges incurred 490 ( 85 ) 405 Payments ( 1,407 ) ( 2,176 ) ( 3,583 ) Balance at March 29, 2025 $ 60 $ 2,749 $ 2,809 Charges incurred during the period were recorded to the Cellulose Commodities segment in “indefinite suspension charges” in the condensed consolidated statements of operations. 3. Accounts Receivable, Net Accounts receivable, net included the following: March 29, 2025 December 31, 2024 Accounts receivable, trade $ 148,303 $ 191,091 Accounts receivable, other (a) 19,759 23,938 Allowance for credit loss ( 946 ) ( 1,057 ) Accounts receivable, net $ 167,116 $ 213,972 (a) Consists primarily of value-added/consumption taxes, grants receivable and accrued billings due from government agencies. 4. Inventory Inventory included the following: March 29, 2025 December 31, 2024 Finished goods $ 158,788 $ 156,407 Work-in-progress 4,366 5,034 Raw materials 43,280 40,234 Manufacturing and maintenance supplies 5,603 6,328 Inventory $ 212,037 $ 208,003 7 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) 5. Leases The Company’s operating and finance leases are primarily for corporate offices, warehouse space, rail cars and equipment. As of March 29, 2025, the Company’s leases have remaining lease terms of less than one year to 11.6 years, with standard renewal and termination options available at the Company’s discretion. Certain equipment leases have purchase options at the end of the lease term, which are not included in the ROU assets, as it is not reasonably certain that the Company will exercise such options. Short-term leases with an initial term of 12 months or less are not recorded in the condensed consolidated balance sheets. The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants. The Company uses its incremental borrowing rate to determine the present value of lease payments unless the lease provides an implicit or explicit interest rate. Financial and other information related to the Company’s operating and finance leases follow: Three Months Ended March 29, 2025 March 30, 2024 Operating lease cost $ 2,532 $ 1,710 Finance lease cost Amortization of ROU assets 113 106 Interest 16 23 Total lease cost $ 2,661 $ 1,839 Balance Sheet Location March 29, 2025 December 31, 2024 Operating leases ROU assets Other assets $ 29,867 $ 31,112 Lease liabilities, current Accrued and other current liabilities 7,942 7,604 Lease liabilities, non-current Other liabilities 22,565 24,035 Finance leases ROU assets Property, plant and equipment, net $ 616 $ 709 Lease liabilities Long-term debt 808 921 Three Months Ended March 29, 2025 March 30, 2024 Operating cash flows - cash paid for amounts included in the measurement of operating lease liabilities $ 2,500 $ 1,675 Operating lease ROU assets obtained in exchange for lease liabilities 198 1,194 Finance lease cash flows were immaterial during each of the three months ended March 29, 2025 and March 30, 2024. March 29, 2025 December 31, 2024 Operating leases Weighted average remaining lease term (in years) 4.4 4.6 Weighted average discount rate 8.3 % 8.2 % Finance leases Weighted average remaining lease term (in years) 1.7 1.8 Weighted average discount rate 7.0 % 7.0 % 8 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) Operating lease maturities as of March 29, 2025 were as follows: Remainder of 2025 $ 7,587 2026 9,373 2027 7,893 2028 6,291 2029 2,284 Thereafter 3,269 Total minimum lease payments 36,697 Less: imputed interest ( 6,190 ) Present value of future minimum lease payments $ 30,507 6. Accrued and Other Current Liabilities Accrued and other current liabilities included the following: March 29, 2025 December 31, 2024 Accrued customer incentives $ 41,512 $ 52,153 Accrued payroll and benefits 27,136 19,465 Accrued interest 32,956 12,674 Accrued income taxes 4,568 4,445 Accrued property and other taxes 4,914 6,265 Deferred revenue (a) 8,405 11,128 Other current liabilities (b) 46,699 64,655 Accrued and other current liabilities $ 166,190 $ 170,785 (a) Included at both March 29, 2025 and December 31, 2024 was $ 3 million (CAD 5 million) associated with funds received in 2021 for CEWS. The Company will recognize this amount in income at the time there is sufficient evidence that it will not be required to repay such amounts, which is the earlier of the conclusion of the final outstanding audit and the expiration of the statute of limitations in July 2025. (b) Included at March 29, 2025 and December 31, 2024 were $ 18 million and $ 17 million, respectively, of energy-related payables associated with Tartas facility operations. 7. Debt and Finance Leases Debt and finance leases included the following: March 29, 2025 December 31, 2024 ABL Credit Facility due November 2029: $ 131 million net availability, bearing interest of 6.42 % ( 4.42 % adjusted SOFR plus 2.00 % margin) at March 29, 2025 $ — $ — 2029 Term Loan due October 2029: bearing interest of 11.52 % ( 4.52 % three-month Term SOFR plus 7.00 % margin) at March 29, 2025 700,000 700,000 5.50 % CAD-based term loan due April 2028 20,244 21,184 BioNova debt (a) 21,538 21,120 Other loans (b) 33,197 32,536 Short-term factoring facility 6,764 2,304 Finance lease obligations 808 921 Total principal payments due 782,551 778,065 Less: unamortized premium, discount and issuance costs ( 46,518 ) ( 48,242 ) Total debt 736,033 729,823 Less: debt due within one year ( 29,022 ) ( 23,379 ) Long-term debt $ 707,011 $ 706,444 (a) Consists of green loans associated with the France bioethanol plant, part of the net assets contributed by the Company to its new subsidiary, BioNova. (b) Consist of loans for energy projects in France. 9 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) As of March 29, 2025, there were no borrowings outstanding under the BioNova Term Loan. Covenants and Debt Maturity As of March 29, 2025, the Company was in compliance with all covenants under its debt agreements and the Company’s debt principal payments, excluding finance lease obligations, were due as follows: Remainder of 2025 $ 25,603 2026 21,100 2027 19,694 2028 17,994 2029 680,374 Thereafter 16,978 Total debt principal payments $ 781,743 8. Environmental Liabilities The Company’s environmental liabilities balance changed as follows during the three months ended March 29, 2025: Balance at December 31, 2024 $ 170,215 Increase in liabilities 13,020 Payments ( 1,553 ) Foreign currency adjustments ( 50 ) Balance at March 29, 2025 181,632 Less: current portion ( 9,747 ) Non-current environmental liabilities $ 171,885 Port Angeles, Washington The Company operated a pulp mill at this site from 1930 until 1997. Since 2000, the Company has been evaluating remediation of the pulp mill site and adjacent marine areas (a portion of Port Angeles harbor) pursuant to an agreed order with the Washington DOE under the Washington MTCA. During this period, the Company has performed several voluntary interim soil cleanup actions. As the next step in collaboration with the Washington DOE, the parties are negotiating a consent order that will formalize approved remedial actions, which include more stringent cleanup standards and an expanded scope. Consequently, in the first quarter of 2025, the Company increased its estimated remediation liability and recorded an expense of $ 10 million. The associated cash expenditures are not expected to commence before 2028, with outflows anticipated over the subsequent three to five years . Augusta, Georgia The Company operated this site as a wood treatment plant from 1928 to 1988. This site operates under a 10 -year RCRA hazardous waste facility permit managed by the Georgia EPD. The most recent permit was issued in 2015, and it must be renewed. In connection with the Company’s submittal of its permit renewal application, Georgia EPD notified the Company that a revised corrective action plan for the site would be required to capture results of a decade long extended investigation performed pursuant to the current permit. The revised corrective action plan is being drafted. It expands the remedial areas for the site and includes an additional off-site area, which were both identified through the investigative studies. To reflect the additional remedial activities in these expanded areas, in the first quarter of 2025, the Company increased the estimated remediation liability and recorded an expense of $ 2 million. The cash impact associated with this charge is expected in early 2027. 10 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) Other In addition to the estimated liabilities for the above remediation sites, the Company is subject to the risk of reasonably possible additional liabilities in excess of the established liabilities due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations; changes in governmental agency personnel, direction, philosophy or enforcement policies; developments in remediation technologies; increases in the cost of remediation, operation, maintenance and monitoring of its environmental liability sites; changes in the volume, nature or extent of contamination to be remediated or monitoring to be undertaken; the outcome of negotiations with governmental agencies or non-governmental parties; and changes in accounting rules or interpretations. Based on information available as of March 29, 2025, the Company estimates this exposure could range up to approximately $ 77 million. However, 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. This estimate excludes liabilities that would otherwise be considered reasonably possible but for the fact that they are not currently estimable, primarily due to the factors discussed above. Subject to the previous paragraph, the Company believes its estimates of liabilities are sufficient for probable costs expected to be incurred over the next 20 years with respect to its environmental liabilities. However, no 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. 9. Fair Value Measurements Liabilities Measured at Fair Value on a Recurring Basis Redeemable Noncontrolling Interest - Put Option In November 2024, BioNova issued 111,111 preferred shares to SWEN in return for a redeemable noncontrolling interest of approximately 14 percent. The preferred shares contain an embedded put option that was determined should be bifurcated and recognized separately at fair value, with subsequent changes in fair value recorded in earnings. SWEN’s put option was initially measured at a fair value of $ 4 million and will be remeasured at the end of each reporting period. The fair value of the put option is estimated using a Monte Carlo simulation model, which is a Level 3 measurement, with changes in fair value recorded in “other income, net” in the condensed consolidated statements of operations. The SWEN put option’s liability balance and activity was as follows: Financial Statement Line Item Balance at December 31, 2024 Other liabilities $ 4,196 Fair value measurement adjustment Other income, net 494 Foreign currency translation adjustment Foreign currency translation adjustment 165 Balance at March 29, 2025 Other liabilities $ 4,855 There is inherent uncertainty of the fair value measurement of Level 3 securities due to the use of unobservable inputs, including timing and amounts of expected cash flows. A material change in the unobservable inputs used may result in a higher or lower fair value measurement. K ey inputs into the Monte Carlo simulation model used to determine the fair value of the SWEN put option at the fair value measurement date were as follows: March 29, 2025 December 31, 2024 Free cash flow to equity volatility (a) 51.0 % 52.0 % Risk-free interest rate Term structure of U.S. Treasury and Euro Government Bond securities Term structure of U.S. Treasury and Euro Government Bond securities Weighted average cost of capital 11.6 % 12.1 % (a) Based on a peer group of companies in a similar or the same industry. 11 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) Financial Instruments The carrying amounts of the Company’s cash and cash equivalents, receivables and payables approximate fair value due to the short-term nature of those instruments. The carrying amount of borrowings outstanding under the ABL Credit Facility, 2029 Term Loan and short-term factoring facility approximate fair value due to their variable interest rates and no significant changes in the Company's credit risk. 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 29, 2025 December 31, 2024 Carrying amount of fixed rate debt (a) $ 75,247 $ 75,142 Fair value of fixed rate debt $ 76,188 $ 75,272 (a) Excludes finance lease obligations. 10. Redeemable Noncontrolling Interest In November 2024, the Company and one of its subsidiaries entered into a shareholder agreement with SWEN, pursuant to which SWEN will fund up to € 30 million in exchange for up to 222,222 preferred shares, representing an expected 20 percent total noncontrolling equity interest in BioNova. Of this commitment, € 15 million was funded at the closing of the shareholder agreement in exchange for 111,111 preferred shares, which currently represents an equity interest in BioNova of approximately 14 percent. Subsequent funding is contingent on the achievement of project milestones expected during 2025. The value of SWEN’s redeemable noncontrolling interest is reflected in temporary equity and is accreted to its estimated redemption value at each period end using the interest method. The redeemable noncontrolling interest balance changed as follows during the three months ended March 29, 2025: Redeemable Noncontrolling Interest Balance at December 31, 2024 $ 10,503 Adjustment to redemption value 408 Net income attributable to redeemable noncontrolling interest 18 Comprehensive income adjustments: Foreign currency translation adjustment on redemption value 408 Balance at March 29, 2025 $ 11,337 12 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) 11. Accumulated Other Comprehensive Loss Three Months Ended March 29, 2025 March 30, 2024 Unrecognized components of employee benefit plans, net of tax Balance, beginning of period $ ( 21,060 ) $ ( 33,537 ) Reclassifications to earnings (a) Amortization of gain ( 186 ) ( 196 ) Amortization of prior service cost 60 181 Income tax on reclassifications 26 1 Net comprehensive loss on employee benefit plans, net of tax ( 100 ) ( 14 ) Balance, end of period ( 21,160 ) ( 33,551 ) Unrealized loss on derivative instruments, net of tax Balance, beginning of period ( 222 ) ( 373 ) Reclassifications to earnings - foreign currency exchange contracts (b) 36 47 Income tax on reclassifications ( 4 ) ( 6 ) Net comprehensive gain on derivative instruments, net of tax 32 41 Balance, end of period ( 190 ) ( 332 ) Foreign currency translation Balance, beginning of period ( 24,387 ) ( 12,007 ) Foreign currency translation adjustment, net of tax (c) 7,678 ( 4,481 ) Balance, end of period ( 16,709 ) ( 16,488 ) Accumulated other comprehensive loss, end of period $ ( 38,059 ) $ ( 50,371 ) (a) The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic benefit cost. 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. (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. 12. Earnings Per Common Share Basic earnings per share is calculated by dividing net income available for common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is calculated by dividing net income available for common stockholders by the weighted average number of shares of common stock outstanding, adjusted for the potentially dilutive effect of outstanding performance-based stock and restricted stock. 13 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) 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 29, 2025 March 30, 2024 Net loss $ ( 31,952 ) $ ( 1,570 ) Net income attributable to redeemable noncontrolling interest 18 — Net loss attributable to RYAM ( 31,970 ) ( 1,570 ) Less: Redeemable noncontrolling interest adjustment to redemption value ( 408 ) — Net loss attributable to RYAM common stockholders $ ( 32,378 ) $ ( 1,570 ) Weighted average shares used for determining earnings per share of common stock - basic and diluted 66,216,983 65,447,454 Anti-dilutive instruments excluded from the computation of diluted earnings per share included (not in thousands): Three Months Ended March 29, 2025 March 30, 2024 Performance and restricted stock 2,847,462 3,635,379 13. Incentive Stock Plans Incentive stock plan compensation expense was as follows: Three Months Ended March 29, 2025 March 30, 2024 Stock plan compensation expense $ 2,161 $ 2,091 (a) Included equity award expense of $ 2 million during each of the quarters ended March 29, 2025 and March 30, 2024. The Company made new grants of restricted stock units, performance-based stock units and performance-based cash awards during the first quarter of 2025. The 2025 restricted stock unit awards cliff vest after three years . The 2025 performance-based awards cliff vest after three years and are based equally on TSR relative to peers and three-year cumulative adjusted EBITDA. Participants can earn between 0 percent and 200 percent of the target award for each of the TSR and adjusted EBITDA metrics. Performance below the 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. In March 2025, the performance-based awards granted in 2022 were settled with an issuance of 654,995 shares of common stock for the stock unit awards, including incremental shares of 165,061 , and cash of $ 2 million for the cash awards. The following table summarizes the 2025 activity of the Company’s incentive stock awards: Restricted Stock Units Performance-Based Stock Units Awards Weighted Average Grant Date Fair Value Awards Weighted Average Grant Date Fair Value Outstanding at December 31, 2024 1,766,219 $ 5.11 1,575,297 $ 5.93 Granted 385,623 $ 7.70 527,094 $ 9.81 Forfeited ( 31,744 ) $ 4.44 ( 211,817 ) $ 2.83 Exercised or settled ( 508,215 ) $ 5.31 ( 654,995 ) $ 6.92 Outstanding at March 29, 2025 1,611,883 $ 5.68 1,235,579 $ 7.59 14 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) 14. Employee Benefit Plans Defined Benefit Plans The Company has defined benefit pension and other long-term and postretirement benefit plans covering certain union and non-union employees, primarily in the U.S. and Canada. The defined benefit pension plans are closed to new participants. The liabilities for these plans are calculated using actuarial estimates and management assumptions. These estimates are based on historical information and certain assumptions about future events. The following table presents the components of net periodic benefit costs of these plans: Pension Postretirement Three Months Ended Three Months Ended March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024 Service cost $ 1,170 $ 1,537 $ 110 $ 138 Interest cost 6,829 6,923 237 248 Expected return on plan assets ( 7,572 ) ( 8,076 ) — — Amortization of prior service cost (credit) 103 205 ( 43 ) ( 24 ) Amortization of gain 57 ( 11 ) ( 243 ) ( 185 ) Net periodic benefit cost $ 587 $ 578 $ 61 $ 177 Service cost is included in “cost of sales” or “selling, general and administrative expense” in the condensed 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 condensed consolidated statements of operations. 15. Income Taxes Effective Tax Rate The Company utilized the discrete effective rate method for the three months ended March 29, 2025. The discrete method is applied when the application of the estimated AETR is impractical because it is not possible to reliably estimate the AETR. The discrete method treats the year-to-date period as if it was the annual period and calculates the income tax expense or benefit on a discrete basis, rather than forecasting the full year AETR and applying it against current period book earnings. The Company believes the use of the discrete method represents the best estimate of its AETR in the current period. The Company’s effective tax rates were as follows: Three Months Ended March 29, 2025 March 30, 2024 Loss before income tax $ ( 37,172 ) $ ( 1,590 ) Effective tax rate 15.0 % 29.7 % The effective tax rate for the three months ended March 29, 2025 differed from the federal statutory rate of 21 percent primarily due to changes in the valuation allowance on disallowed interest deductions, different statutory tax rates in foreign jurisdictions, U.S. tax credits and nondeductible executive compensation. 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. 15 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) Deferred Taxes As of March 29, 2025 and December 31, 2024, the Company’s net DTA included $ 16 million and $ 15 million, respectively, of disallowed U.S. interest deductions that the Company does not believe will be realized. This asset increased $ 1 million as a result of a tax benefit 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. 16. Segments As discussed in Note 1—Nature of Operations and Basis of Presentation, beginning in the first quarter of 2025, the Company reorganized its segment structure and now operates in five operating segments: Cellulose Specialties, Cellulose Commodities, Biomaterials, Paperboard and High-Yield Pulp. Corporate consists primarily of senior management, accounting, information systems, human resources, treasury, tax and legal administrative functions that provide support services to the operating business units. Prior period segment results have been recast to align with this new segment reporting structure. The Company uses operating income (loss) as a measure of profitability to evaluate segment performance. Intersegment sales consist primarily of High-Yield Pulp sales to Paperboard, which are eliminated in consolidation. Additionally, there are intersegment sales of chemicals, sugars and energy from the cellulose plants to Biomaterials, also eliminated in consolidation. Intersegment sales prices are at rates that approximate market for the respective operating area. Net sales, significant operating expenses, operating income (loss) and other financial information by segment were as follows: Three Months Ended March 29, 2025 Cellulose Specialties Cellulose Commodities Biomaterials Paperboard High-Yield Pulp Corporate (a) and Eliminations Total Net sales $ 201,108 $ 75,055 $ 6,921 $ 49,193 $ 31,489 $ ( 7,799 ) $ 355,967 Cost of sales Key input costs (wood, chemicals, energy) 76,966 38,443 1,136 35,624 19,709 ( 8,269 ) 163,609 Freight 9,288 6,330 528 4,848 6,256 — 27,250 Depreciation and amortization 14,693 9,600 481 3,499 575 5 28,853 Fixed and other general costs (b) 64,626 30,257 1,658 3,523 11,480 657 112,201 Total cost of sales 165,573 84,630 3,803 47,494 38,020 ( 7,607 ) 331,913 Selling, general and administrative expense 4,019 2,385 1,360 2,878 614 12,003 23,259 Indefinite suspension charges — 405 — — — — 405 Other operating expense, net (c) 240 360 14 471 — 14,398 15,483 Operating income (loss) $ 31,276 $ ( 12,725 ) $ 1,744 $ ( 1,650 ) $ ( 7,145 ) $ ( 26,593 ) $ ( 15,093 ) Total depreciation and amortization $ 14,852 $ 9,750 $ 481 $ 5,252 $ 575 $ 341 $ 31,251 16 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) Three Months Ended March 30, 2024 Cellulose Specialties Cellulose Commodities Biomaterials Paperboard High-Yield Pulp Corporate (a) and Eliminations Total Net sales $ 206,359 $ 94,266 $ 6,787 $ 52,960 $ 34,326 $ ( 7,042 ) $ 387,656 Cost of sales Key input costs (wood, chemicals, energy) 87,190 50,418 1,097 27,113 18,759 ( 6,594 ) 177,983 Freight 9,783 7,438 877 4,605 6,017 — 28,720 Depreciation and amortization 17,048 11,506 94 1,406 582 — 30,636 Fixed and other general costs (b) 51,475 41,748 2,731 9,509 8,831 ( 738 ) 113,556 Total cost of sales 165,496 111,110 4,799 42,633 34,189 ( 7,332 ) 350,895 Selling, general and administrative expense 2,663 2,285 279 2,418 808 12,622 21,075 Other operating (income) expense, net (c) 52 8 ( 21 ) — — ( 1,428 ) ( 1,389 ) Operating income (loss) $ 38,148 $ ( 19,137 ) $ 1,730 $ 7,909 $ ( 671 ) $ ( 10,904 ) $ 17,075 Total depreciation and amortization $ 17,260 $ 11,694 $ 94 $ 3,230 $ 556 $ 449 $ 33,283 (a) Includes ERP and certain lease expense shared across operating segments. (b) Includes salaries, wages and benefits, maintenance costs and other costs of sales. (c) Primarily includes foreign exchange gain (loss), environmental remediation expense, gain (loss) on disposal of property, plant and equipment and income (loss) from equity method investments. Due to their integrated nature, certain operating and production assets are jointly utilized across the Cellulose Specialties and Cellulose Commodities segments. These assets are essential for the production processes of both types of products and are not directly attributable to either segment. As such, direct allocation to a specific segment is not feasible or prudent and they are considered shared assets. The Company allocates related fixed, maintenance and other costs based on a rational and consistent approach that reflects the segments’ contribution, usage and economic benefit derived from the shared assets in the production process, which varies from period to period between specialties and commodities products. Identifiable assets by segment were as follows: March 29, 2025 December 31, 2024 Cellulose Specialties $ 182,785 $ 214,659 Cellulose Commodities 174,358 187,996 Biomaterials 82,919 78,006 Paperboard 91,170 93,600 High-Yield Pulp 46,811 49,798 Shared/Corporate (a) 1,539,488 1,505,597 Total assets $ 2,117,531 $ 2,129,657 (a) At March 29, 2025 and December 31, 2024, includes $ 1.1 billion and $ 1.0 billion, respectively, of assets shared by Cellulose Specialties and Cellulose Commodities. Corporate includes ERP and certain other operating and lease assets shared across segments. Capital additions by segment were as follows: Three Months Ended March 29, 2025 March 30, 2024 Cellulose Specialties $ — $ — Cellulose Commodities 413 2,687 Biomaterials 587 6,375 Paperboard 1,280 269 High-Yield Pulp 965 613 Shared/Corporate (a) 31,600 11,128 Total capital additions (b) $ 34,845 $ 21,072 (a) Includes $ 30 million and $ 8 million of asset additions during the three months ended March 29, 2025 and March 30, 2024, respectively, that are shared by Cellulose Specialties and Cellulose Commodities. Corporate includes capital additions for ERP and certain other operational assets shared across segments. 17 Table of Contents Rayonier Advanced Materials Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (in thousands unless otherwise stated) (b) Amounts exclude the impact of changes in capital assets purchased on account and government grants. 17. Commitments and Contingencies Commitments The Company had no material changes outside the ordinary course of business to the purchase obligations presented in its 2024 Form 10-K during the three months ended March 29, 2025. The Company’s purchase obligations primarily consist of commitments for the purchase of natural gas, electricity and wood chips. The Company leases certain buildings, machinery and equipment under various operating and finance leases. See Note 5—Leases for further information. Litigation and Contingencies The Company is engaged in various legal and regulatory actions and proceedings and has been named as a defendant in various lawsuits and claims arising in the ordinary course of business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its business, the Company has, in certain cases, retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance, business interruption and general liability. These other lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows. Guarantees and Other The Company provides financial guarantees as required by creditors, insurance programs and various governmental agencies. As of March 29, 2025, the Company had net exposure of $ 29 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; the Company would only be liable upon its default on the related payment obligations. The standby letters of credit have various expiration dates and are expected to be renewed as required. The Company had surety bonds of $ 92 million as of March 29, 2025, 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. LTF is a venture in which the Company owns 45 percent, and its partner, Borregaard ASA, owns 55 percent. 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 $ 25 million at March 29, 2025. The Company has not recorded any liabilities for these financial guarantees in its condensed 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 29, 2025, all of the Company’s collective bargaining agreements covering its unionized employees were current. 18 Table of Contents