RAYONIER ADVANCED MATERIALS INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following analysis of our financial condition and results of operations should be read in conjunction with our Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q and with our 2024 Form 10-K and information contained in subsequent Forms 8-K and other reports filed with the SEC. Forward-Looking Statements Certain statements in this Quarterly Report on Form 10-Q regarding anticipated financial, business, legal or other outcomes, including business and market conditions, outlook and other similar statements relating to future events, developments or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “could,” “expect,” “estimate,” “target,” “believe,” “intend,” “plan,” “forecast,” “anticipate,” “project,” “guidance” and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. Forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to various risks and uncertainties. T he risk factors contained in Item 1A—Risk Factors of our 2024 Form 10-K, among others, could cause actual results or events to differ materially from our historical experience and those expressed in forward-looking statements made in this report. Forward-looking statements are only as of the date of the filing of this Quarterly Report on Form 10-Q, and we undertake no duty to update forward-looking statements except as required by law. You are advised to review any disclosures that we have made or may make in our filings and other submissions to the SEC, including those on Forms 10-K, 10-Q, 8-K and other reports. Business Overview We are a global leader 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. Building upon nearly 100 years of experience in cellulose chemistry, we provide some of the highest quality high-purity cellulose pulp products that make up the essential building blocks for our customers’ products while providing exceptional service and value. Our specialized assets also produce bioelectricity, biomaterials, including biofuels, lignin and tall oil soap, and commodity fluff, viscose and paper pulp. Additionally, we produce a unique, lightweight multi-ply paperboard product and a bulky, high-yield pulp product. Our paperboard is used for production in the commercial printing, lottery ticket and high-end packaging sectors. Our high-yield pulp is used by paperboard producers as well as in traditional printing, writing and specialty paper manufacturing. New Segment Structure In the first quarter of 2025, we reorganized our High Purity Cellulose operating segment as a result of changes in our internal operating model, significant developments in our Biomaterials strategy and a successful launch of an enterprise reporting system that significantly enhances our financial reporting and costing capabilities. Specifically, we 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, we now operate 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. Business Outlook In October 2023, we announced that we were exploring the potential sale of our Paperboard and High-Yield Pulp assets at our Temiscaming site. Given the current global trade uncertainty, the sale process is effectively on hold. We continue to focus on operating these businesses and remain committed to pursuing a sale at a fair price when timing and value align. 19 Table of Contents The following market assessment represents our current outlook for our operating segments’ future performance. Cellulose Specialties Average sales prices for Cellulose Specialties in 2025 are expected to increase by a mid single-digit percentage compared to 2024. Sales volumes are expected to decline by a similar percentage, primarily due to the absence of 2024 bridge volumes following the indefinite suspension of the Temiscaming plant, as well as second-order tariff impacts and accelerated acetate destocking. Demand trends vary across product lines: acetate demand remains soft due to elevated inventories and ongoing destocking in China, with added risk that customers may use the tariff-related pause in orders to further reduce stock levels. Ethers volumes are expected to improve, while other specialty grades are anticipated to remain strong given reduced global supply. We remain cautious about further supply chain adjustments by certain Cellulose Specialties customers in response to tariffs. Raw material input and logistics costs are projected to be moderately higher in 2025. Operational challenges experienced in the first quarter are believed to have been resolved through planned maintenance outages completed at all three cellulose plants in March and April. Cellulose Commodities While overall fluff demand is expected to remain resilient, our fluff products are subject to a 125 percent import tariff into China. These retaliatory tariffs are expected to create a dislocation of supply relative to demand and we anticipate a loss of market share in China as a result. Raw material input and logistics costs are projected to be moderately higher in 2025. Biomaterials We are evaluating investments in new green energy and renewable products to provide both increased end-market diversity and incremental profitability. We intend to proceed only with those projects that are expected to meet our investment hurdles: a minimum 30 percent return on equity and a less than two-year payback period for RYAM equity. In the fourth quarter of 2024, we secured green capital of €67 million, which allows us to advance the biomaterials strategy and further progress towards our future goal of generating over $70 million of EBITDA from our Biomaterials business, inclusive of the projects below: • Our bioethanol facility in France is operational since the first quarter of 2024. • We re-started our lignosulfonate powder plant in France in the fourth quarter of 2024. • We continue to pursue an investment in a bioethanol facility in Fernandina Beach, Florida, similar to our bioethanol facility in France. While the City of Fernandina Beach recently denied the site plan application for this project, we believe the City erred in making its determination and we are pursuing all available legal remedies. In expectation of a favorable outcome, we continue to advance engineering plans and explore potential commercial agreements, driving toward a final investment decision anticipated in 2025 based on current legal timelines. • We are evaluating investments in crude tall oil facilities in Jesup, Georgia and Tartas and a prebiotics facility at our Jesup plant, and are currently working on permitting, engineering and commercial agreements on these new facilities ahead of making final investment decisions later this year. • We are a partner in AGE, a start-up entity that aims to utilize renewable forestry waste and other biomass generally discarded as waste to generate green electricity for the State of Georgia from a new facility to be constructed adjacent to our Jesup plant. Although the project remains in the development phase, AGE is actively evaluating the construction and financing requirements for the new facility, with a final investment decision expected in the third quarter of 2025. Paperboard Paperboard volumes are expected to increase in 2025, supported by improved certainty around zero-tariff access to the U.S. market due to USMCA compliance, reduced supply from European competitors impacted by tariffs and growing interest from the domestic Canadian market. However, prices are projected to decline year over year. Costs are expected to rise due to higher purchased pulp costs, greater allocation of custodial site costs at the Temiscaming facility and tariff mitigation efforts. High-Yield Pulp High-Yield Pulp prices and volumes are expected to decline in 2025 due to continued oversupply in the Chinese market. Costs are projected to increase as a result of higher allocation of custodial site costs at the Temiscaming facility. 20 Table of Contents Corporate Corporate costs in 2025 are expected to be higher year over year due to the $12 million non-cash environmental reserves charges recorded in the first quarter and potential foreign exchange headwinds stemming from a weaker U.S. dollar relative to the Canadian dollar and euro. These impacts are partially offset by lower spending following the completion of our ERP implementation. Results of Operations Three Months Ended (in millions, except percentages) March 29, 2025 March 30, 2024 Net sales $ 356 $ 388 Cost of sales (332) (351) Gross margin 24 37 Selling, general and administrative expense (23) (21) Foreign exchange gain (loss) (1) 3 Indefinite suspension charges — — Other operating (expense), net (15) (2) Operating income (loss) (15) 17 Interest expense (24) (21) Components of pension and OPEB, excluding service costs 1 1 Other income, net 1 1 Loss before income tax (37) (2) Income tax benefit 5 — Equity in loss of equity method investment — — Net loss (32) (2) Net income attributable to redeemable noncontrolling interest — — Net loss attributable to RYAM $ (32) $ (2) Gross margin % 6.7 % 9.5 % Operating margin % (4.2) % 4.4 % Effective tax rate 15.0 % 29.7 % Net Sales Three Months Ended (in millions) March 29, 2025 March 30, 2024 Cellulose Specialties $ 201 $ 206 Cellulose Commodities 75 94 Biomaterials 7 7 Paperboard 49 53 High-Yield Pulp 31 34 Eliminations (7) (6) Net sales $ 356 $ 388 Net sales for the quarter ended March 29, 2025 decreased $32 million, or 8 percent, compared to the prior year quarter driven by lower sales prices in Paperboard and High-Yield Pulp and lower sales volumes across all segments, partially offset by higher sales prices in Cellulose Specialties and Cellulose Commodities. See Operating Results by Segment below for further discussion. 21 Table of Contents Operating Income (Loss) Three Months Ended (in millions) March 29, 2025 March 30, 2024 Cellulose Specialties $ 31 $ 38 Cellulose Commodities (13) (19) Biomaterials 2 2 Paperboard (2) 8 High-Yield Pulp (7) (1) Corporate (26) (11) Operating income (loss) $ (15) $ 17 Operating results for the quarter ended March 29, 2025 declined $32 million, or 188 percent, compared to the prior year quarter driven primarily by the decrease in net sales, higher key input costs, operational challenges at our plants in the current quarter, unfavorable foreign exchange rates and current quarter non-cash environmental reserves charges of $12 million. See Operating Results by Segment below for further discussion. Non-Operating Income & Expense Interest expense for the quarter ended March 29, 2025 increased $3 million compared to the prior year quarter driven primarily by an increase in the average effective interest rate on debt, partially offset by a decrease in the average outstanding principal balance. Total debt decreased $43 million from March 30, 2024 to March 29, 2025. Unfavorable foreign exchange rates during the quarter ended March 29, 2025 compared to favorable rates in the prior year quarter resulted in a net unfavorable impact of $1 million. Income Taxes The effective tax rate for the quarter ended March 29, 2025 was a benefit of 15 percent. This rate 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 quarter ended March 30, 2024 was a benefit of 30 percent. This rate differed from the federal statutory rate of 21 percent primarily due to the release of certain tax reserves, partially offset by return-to-accrual adjustments, excess deficit on vested stock compensation and changes in the valuation allowance on disallowed interest deductions. Operating Results by Segment Cellulose Specialties Three Months Ended (in millions, unless otherwise stated) March 29, 2025 March 30, 2024 Net sales $ 201 $ 206 Operating income $ 31 $ 38 Average sales prices ($ per MT) $ 1,750 $ 1,724 Sales volumes (thousands of MTs) 111 113 22 Table of Contents Net Sales Three Months Ended March 30, 2024 Changes Attributable to: Three Months Ended March 29, 2025 (in millions) Price Volume/Mix/Other Net sales $ 206 $ 3 $ (8) $ 201 Net sales of our Cellulose Specialties segment for the quarter ended March 29, 2025 decreased $5 million, or 2 percent, compared to the prior year quarter driven by a 2 percent decrease in sales volumes that was in line with expectations and primarily due to strong sales in the prior year quarter ahead of the indefinite suspension of Temiscaming cellulose operations. Partially offsetting the sales volume decrease was a 2 percent increase in sales prices that was lower than our guidance of mid single-digits primarily due to the timing of orders and an unfavorable sales mix. Operating Income Three Months Ended March 30, 2024 Gross Margin Changes Attributable to: Three Months Ended March 29, 2025 (in millions, except percentages) Sales Price Sales Volume/Mix/Other (a) Cost SG&A and other Operating income $ 38 $ 3 $ (6) $ (3) $ (1) $ 31 Operating margin % 18.4 % 1.2 % (2.2) % (1.5) % (0.5) % 15.4 % (a) Computed based on contribution margin. Operating income of our Cellulose Specialties segment for the quarter ended March 29, 2025 decreased $7 million, or 18 percent, compared to the prior year quarter driven by the lower sales, higher key input costs and operational challenges at the plants in the current quarter, partially offset by the absence of prior year operating losses from cellulose operations due to the indefinite suspension of operations at the Temiscaming site in July 2024. Cellulose Commodities Three Months Ended (in millions, unless otherwise stated) March 29, 2025 March 30, 2024 Net sales $ 75 $ 94 Operating loss $ (13) $ (19) Average sales prices ($ per MT) $ 863 $ 842 Sales volumes (thousands of MTs) 84 106 Net Sales Three Months Ended March 30, 2024 Changes Attributable to: Three Months Ended March 29, 2025 (in millions) Price Volume/Mix/Other Net sales $ 94 $ — $ (19) $ 75 Net sales of our Cellulose Commodities segment for the quarter ended March 29, 2025 decreased $19 million, or 20 percent, compared to the prior year quarter. Sales volumes decreased 21 percent driven primarily by lower non-fluff commodity sales, partially offset by a 2 percent increase in sales prices due to stronger demand for fluff. Operating Loss Three Months Ended March 30, 2024 Gross Margin Changes Attributable to: Three Months Ended March 29, 2025 (in millions, except percentages) Sales Price Sales Volume/Mix/Other (a) Cost SG&A and other Operating loss $ (19) $ — $ (11) $ 18 $ (1) $ (13) Operating margin % (20.2) % — % (19.8) % 24.0 % (1.3) % (17.3) % (a) Computed based on contribution margin. 23 Table of Contents Operating loss of our Cellulose Commodities segment for the quarter ended March 29, 2025 improved $6 million, or 32 percent, compared to the prior year quarter driven by lower commodity losses, partially offset by higher key input costs and operational challenges at the cellulose plants. Biomaterials Three Months Ended (in millions) March 29, 2025 March 30, 2024 Net sales $ 7 $ 7 Operating income $ 2 $ 2 Net Sales Net sales of our Biomaterials segment for the quarter ended March 29, 2025 were flat compared to the prior year quarter. Increased sales from the April 2024 startup of the France bioethanol facility were offset by lower production in the current quarter due to operational challenges and the planned maintenance shutdown of the Tartas cellulose plant, which limited raw material supply due to the bioethanol facility’s reliance on the Tartas cellulose plant for feedstock. Operating Income Operating income of our Biomaterials segment for the quarter ended March 29, 2025 was flat compared to the prior year quarter. Higher shared and ancillary service costs under the business’s newly-established cost structure were offset by lower production costs as a result of the current quarter shutdown and reduced feedstock availability. Paperboard Three Months Ended (in millions, unless otherwise stated) March 29, 2025 March 30, 2024 Net sales $ 49 $ 53 Operating income (loss) $ (2) $ 8 Average sales prices ($ per MT) $ 1,321 $ 1,382 Sales volumes (thousands of MTs) 37 38 Net Sales Three Months Ended March 30, 2024 Changes Attributable to: Three Months Ended March 29, 2025 (in millions) Price Volume/Mix Net sales $ 53 $ (2) $ (2) $ 49 Net sales of our Paperboard segment for the quarter ended March 29, 2025 decreased $4 million, or 8 percent, compared to the prior year quarter. Sales prices and volumes decreased 4 percent and 3 percent, respectively, driven by mix and continued competitive activity from European imports. Operating Income (Loss) Three Months Ended March 30, 2024 Gross Margin Changes Attributable to: Three Months Ended March 29, 2025 (in millions, except percentages) Sales Price Sales Volume/Mix (a) Cost SG&A and other Operating income (loss) $ 8 $ (2) $ (1) $ (6) $ (1) $ (2) Operating margin % 15.1 % (3.3) % (1.6) % (12.2) % (2.1) % (4.1) % (a) Computed based on contribution margin. Operating results of our Paperboard segment for the quarter ended March 29, 2025 declined $10 million, or 125 percent, compared to the prior year quarter driven by the lower sales prices and volumes, higher maintenance and purchased pulp costs and the impact of Temiscaming net custodial site costs. 24 Table of Contents High-Yield Pulp Three Months Ended (in millions, unless otherwise stated) March 29, 2025 March 30, 2024 Net sales $ 31 $ 34 Operating loss $ (7) $ (1) Average sales prices ($ per MT) (a) $ 518 $ 559 Sales volumes (thousands of MTs) (a) 48 50 (a) External sales only. During each of the quarters ended March 29, 2025 and March 30, 2024, the High-Yield Pulp segment sold 16,000 MTs of high-yield pulp to the Paperboard segment for $7 million. Net Sales Three Months Ended March 30, 2024 Changes Attributable to: Three Months Ended March 29, 2025 (in millions) Price Volume/Mix Net sales $ 34 $ (2) $ (1) $ 31 Net sales of our High-Yield Pulp segment for the quarter ended March 29, 2025 decreased $3 million, or 9 percent, compared to the prior year quarter. Sales prices and volumes decreased 7 percent and 4 percent, respectively, driven by lower demand, continued oversupply in China and the timing of shipments, primarily related to shipping challenges to customers in India. Operating Loss Three Months Ended March 30, 2024 Gross Margin Changes Attributable to: Three Months Ended March 29, 2025 (in millions, except percentages) Sales Price Sales Volume/Mix (a) Cost SG&A and other Operating loss $ (1) $ (2) $ — $ (4) $ — $ (7) Operating margin % (2.9) % (6.4) % (0.3) % (13.0) % — % (22.6) % (a) Computed based on contribution margin. Operating loss of our High-Yield Pulp segment for the quarter ended March 29, 2025 increased $6 million, or 600 percent, compared to the prior year quarter driven by the lower sales prices and volumes and the impact of Temiscaming net custodial site costs. Corporate Three Months Ended (in millions) March 29, 2025 March 30, 2024 Operating loss $ (26) $ (11) The Corporate operating loss for the quarter ended March 29, 2025 increased $15 million, or 136 percent, compared to the prior year quarter driven by current quarter non-cash environmental reserves charges of $12 million and unfavorable foreign exchange rates in the current quarter compared to favorable rates in the prior year quarter. The environmental reserves charges are associated with recent developments at the Port Angeles, Washington, and Augusta, Georgia, remediation sites. The cash impact associated with the Augusta remediation site is expected in early 2027; the cash impact for the Port Angeles remediation site is not expected to begin before 2028, with outflows in the following three to five years. 25 Table of Contents Liquidity and Capital Resources Overview Cash flows from operations, primarily driven by operating results, have historically been our primary source of liquidity and capital resources. As operating cash flows can be negatively impacted by fluctuations in market prices for our commodity products and changes in demand for our products, we maintain a key focus on cash, managing working capital closely and optimizing the timing and level of our capital expenditures. We believe our future cash flows from operations, availability under our ABL Credit Facility and our ability to access the capital markets, if necessary or desirable, will be adequate to fund our operations and anticipated long-term funding requirements, including capital expenditures, defined benefit plan contributions and repayment of debt maturities. Our Board of Directors suspended our quarterly common stock dividend in September 2019. No dividends have been declared since. The declaration and payment of future common stock dividends, if any, will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements and other factors that the Board of Directors deems relevant. In addition, our debt facilities place limitations on the declaration and payment of future dividends. In January 2018, our Board of Directors authorized a $100 million common stock share buyback program. We have not repurchased shares under this program since 2018 and do not expect to utilize any of the remaining $60 million in unused authorization in the future. Our liquidity and capital resources are summarized below: (in millions, except ratios) March 29, 2025 December 31, 2024 Cash and cash equivalents $ 130 $ 125 Availability under the ABL Credit Facility (a)(b) $ 131 $ 141 Total debt (b) $ 736 $ 730 Stockholders’ equity $ 688 $ 714 Total capitalization (total debt plus stockholders’ equity) $ 1,424 $ 1,444 Debt to capital ratio 52 % 51 % (a) Amounts available under the ABL Credit Facility fluctuate based on eligible accounts receivable and inventory levels. At March 29, 2025, we had $158 million of gross availability and net available borrowings of $131 million after taking into account outstanding letters of credit of $27 million. In addition to the availability under the ABL Credit Facility, we have $11 million available under our accounts receivable factoring line of credit in France. (b) See Note 7—Debt and Finance Leases to our Financial Statements for further information. As of March 29, 2025, we were in compliance with all financial and other covenants under our debt agreements. Other Sources of Cash SWEN Investment In November 2024, we secured €30 million to be provided by SWEN in return for a 20 percent preferred equity interest in BioNova. We received €15 million from SWEN in 2024 and we expect to receive the additional €15 million in late 2025. BioNova Term Loan In November 2024, we entered into a credit agreement that authorizes up to €37 million in seven- and eight-year secured term loan tranches. As of March 29, 2025, no amounts were outstanding on the BioNova Term Loan. We anticipate drawing on the term loans beginning in 2026. 26 Table of Contents Cash Requirements Contractual Commitments Our principal contractual commitments include standby letters of credit, surety bonds, guarantees, purchase obligations and leases. We utilize arrangements such as standby letters of credit and surety bonds to provide credit support for certain suppliers and vendors in case of their default on critical obligations, collateral for certain of our self-insurance programs and guarantees for the completion of our remediation of environmental liabilities. As part of our ongoing operations, we also periodically issue guarantees to third parties. Our primary purchase obligation payments relate to natural gas, electricity and wood chips purchase contracts. There have been no material changes outside the ordinary course of business to the purchase obligations presented in our 2024 Form 10-K during the three months ended March 29, 2025. See Note 17—Commitments and Contingencies to our Financial Statements for further information. Cash Flows Three Months Ended (in millions) March 29, 2025 March 30, 2024 Cash flows provided by (used in): Operating activities $ 40 $ 12 Investing activities (38) (33) Financing activities (1) 1 Cash provided by operating activities increased $28 million compared to the prior year period primarily due to net cash inflows from working capital in the current year compared to net outflows in the prior year and lower interest paid on long-term debt due to the timing of payments. Cash used in investing activities increased $5 million compared to the prior year period due to higher strategic and custodial capital spend. Cash used in financing activities increased $2 million compared to the prior year period due to net repayments of long-term debt in the current period compared to net borrowings in the prior year and higher repurchases of common stock to satisfy tax withholding requirements. These outflows were partially offset by net borrowings of short-term financing in the current period compared to net repayments in the prior year and prior year payment of debt issuance costs. Performance and Liquidity Indicators The discussion below is presented to enhance the reader’s understanding of our operating performance, liquidity and ability to generate cash and satisfy rating agency and creditor requirements. This information includes the non-GAAP financial measures of EBITDA, adjusted EBITDA and adjusted free cash flows. These measures are not defined by GAAP, and our discussion of them is not intended to conflict with or change any of our GAAP disclosures provided in this report. We believe these non-GAAP financial measures provide useful information to our Board of Directors, management and investors regarding our financial condition and results of operations. Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses, to determine management incentive compensation and for budgeting, forecasting and planning purposes. Our management considers these non-GAAP financial measures, in addition to operating income, to be important in estimating our enterprise and stockholder values and for making strategic and operating decisions. In addition, analysts, investors and creditors use these non-GAAP financial measures when analyzing our operating performance, financial condition and cash-generating ability. We use EBITDA and adjusted EBITDA as performance measures and adjusted free cash flow as a liquidity measure. We do not consider non-GAAP financial measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they may exclude significant expense and income items that are required by GAAP to be recognized in our Financial Statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. To compensate for these limitations, reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures are provided below. Non-GAAP financial measures are not necessarily indicative of results that may be generated in future periods and should not be relied upon, in whole or part, in evaluating our financial condition, results of operations or future prospects. 27 Table of Contents EBITDA and Adjusted EBITDA EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for items that management believes are not representative of our core operations. Net income (loss) is reconciled to EBITDA and Adjusted EBITDA by segment, as follows: (in millions) Cellulose Specialties Cellulose Commodities Biomaterials Paperboard High-Yield Pulp Corporate Total Three Months Ended March 29, 2025 Net income (loss) $ 31 $ (12) $ 1 $ (1) $ (7) $ (44) $ (32) Net income attributable to redeemable noncontrolling interest — — — — — — — Net income (loss) attributable to RYAM 31 (12) 1 (1) (7) (44) (32) Depreciation and amortization 15 10 1 5 1 (1) 31 Interest expense, net — — — — — 23 23 Income tax expense — — — — — (5) (5) EBITDA attributable to RYAM 46 (2) 2 4 (6) (27) 17 Indefinite suspension charges — — — — — — — Adjusted EBITDA attributable to RYAM $ 46 $ (2) $ 2 $ 4 $ (6) $ (27) $ 17 Three Months Ended March 30, 2024 Net income (loss) $ 38 $ (19) $ 2 $ 8 $ (1) $ (30) $ (2) Net income attributable to redeemable noncontrolling interest — — — — — — — Net income (loss) attributable to RYAM 38 (19) 2 8 (1) (30) (2) Depreciation and amortization 17 12 — 4 1 — 34 Interest expense, net — — — — — 20 20 Income tax benefit — — — — — — — EBITDA and Adjusted EBITDA attributable to RYAM $ 55 $ (7) $ 2 $ 12 $ — $ (10) $ 52 EBITDA for the quarter ended March 29, 2025 decreased $35 million compared to the prior year quarter primarily driven by a decrease in net sales, higher key input costs, operational challenges at our plants in the current quarter, unfavorable foreign exchange rates and current quarter non-cash environmental reserves charges of $12 million. See Results of Operations above for additional discussion of the changes in our operating results. Adjusted Free Cash Flow Adjusted free cash flow is defined as cash provided by operating activities adjusted for capital expenditures, net of proceeds from the sale of assets and excluding strategic capital expenditures deemed discretionary by management. Adjusted free cash flow is a non-GAAP financial measure of cash generated during a period that is available for debt reduction, strategic capital expenditures, acquisitions and repurchases of our common stock. Adjusted free cash flow is not necessarily indicative of the adjusted free cash flow that may be generated in future periods. 28 Table of Contents Cash provided by operating activities is reconciled to adjusted free cash flow as follows: Three Months Ended (in millions) March 29, 2025 March 30, 2024 Cash provided by operating activities $ 40 $ 12 Capital expenditures, net (a) (30) (28) Adjusted free cash flow $ 10 $ (16) (a) Net of proceeds from the sale of assets and excluding strategic capital expenditures. Strategic capital expenditures for the three months ended March 29, 2025 and March 30, 2024 were $8 million and $5 million, respectively. Adjusted free cash flow increased $26 million compared to the prior year period primarily due to improved working capital and lower interest payments, partially offset by higher capital expenditures. See Liquidity and Capital Resources—Cash Flows above for additional discussion of our operating cash flows and capital expenditures.