Rayonier Advanced Materials Offers Opportunity As Pricing Improves

Stock Market


Rayonier Advanced Materials (NYSE:RYAM) produces high-end paper products and is seeing strong pricing that may cause Q4 2022 results to be strong. This should lead to strong EBITDA in 2023, following very back-end loaded EBITDA in 2022. The risks are declining volumes

Metric Value ($, M) Notes
EBITDA 171 Guidance less gas cost price spike
Interest 64 4x Q3 interest
Tax 0 Tax losses should result no meaningful tax
Capex 150 High end of guidance
Resulting Equity FCF -43M Sum of the above

Business Line Q1 Q2 Q3 Q4 Calendar 2022
High Purity Cellulose 16 7 53 ?
Paperboard 10 10 15 ?
High yield pulp 0 -2 6 ?
Corporate costs -6 -18 -6 ?
Total 20 -3 68 86 171

Metric Value ($, M) Notes
EBITDA 320 Assume Q4 strength (est. $86M EBITDA) broadly persists into 2023 at a run rate of $80M
Interest 73 Est. $725M of debt at 10% interest rate
Tax 30 Relatively low tax rate given prior losses
Capex 140 Setting capex equal to depreciation (note they argue maintenance capital is ~$110M)
Resulting Equity FCF 77 Sum of the above

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