Rayonier Advanced Materials (RYAM) Tops Q1 EPS by 21c; Boosts Outlook

Rayonier Advanced Materials (NYSE: RYAM) reported Q1 EPS of $0.36, $0.21 better than the analyst estimate of $0.15. Revenue for the quarter came in at $218 million versus the consensus estimate of $208.12 million.

utlook

Over the last seven months, the Company renegotiated cellulose specialties contracts with its three largest customers through 2018 and 2019. For 2016, the Company expects cellulose specialties prices to decline 6 to 7 percent and cellulose specialties sales volumes to decline 4 to 5 percent compared to 2015. Based on contractual commitments for the majority of the Company’s acetate volume, 2017 acetate pricing is expected to be approximately 2 percent below 2016.

Cellulose specialties markets continue to face a combination of industry oversupply and weaker end-market demand which could impact the Company’s prices and volumes in the future. In response to these market pressures, the Company began a three-year transformation initiative to significantly improve its cost structure and enhance cash flows. The transformation initiative is targeting cost savings of $75 to $90 million over the three year period from 2016 through 2018. In addition, through its innovation initiative, the Company is working to enhance the value of its products for customers and engineer new products to extend its market reach. It expects to derive 20 percent of our revenues from new products within a decade.

As a result of solid traction on its 2016 transformation cost savings and benign inflationary pressure, the Company is raising its 2016 guidance for pro forma EBITDA by $10 million to $185 to $200 million and adjusted free cash flow guidance to $85 to $95 million.

For earnings history and earnings-related data on Rayonier Advanced Materials (RYAM) click here.

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