Rayonier Advanced Materials (NYSE: RYAM) reported Q3 EPS of $0.18, in-line with the analyst estimate of $0.18. Revenue for the quarter came in at $210 million versus the consensus estimate of $210.59 million.

Guidance and Outlook

The impact of Hurricane Irma and the operational disruption of a major customer’s production will have a significant negative impact on full year guidance, but its impact is expected to be limited to 2017. For the full year 2017, the Company now expects cellulose specialties sales prices and volumes to decline approximately 4 percent and 5 percent, respectively, from the previous year. The reductions in full year cellulose specialties sales volumes are driven by the negative impact from Hurricane Irma and the previously announced operational upset of a major customer. Additionally, commodity sales volumes are expected to decline 9 percent over last year. Commodity sales volumes were also impacted by Hurricane Irma and the planned shift in production from absorbent materials to commodity viscose, as well as production issues. As a result, the Company expects net income of approximately $25 million and pro forma EBITDA of approximately $180 million. Cash flow from operations and adjusted free cash flows are anticipated to be $121 to $126 million and $80 to $85 million, respectively. The Company anticipates capital expenditures of approximately $50 million plus strategic capital spending related to the investment in the LignoTech Florida project of $5 million.

Ethers and other cellulose specialties end-use demand continue to show strength and will provide opportunities for the Company to expand future sales in these faster growing end-uses. The acquisition of Tembec and its strong position in the ethers end-use, allows the Company to further diversify its portfolio of products. In acetate, excess capacity coupled with flat demand growth for acetate tow products is creating a very competitive sales environment. The Company believes its cost transformation efforts and the pending acquisition of Tembec, progress in market optimization and new products, position it well for future growth.

“The third quarter and the full year results are being negatively impacted by events outside our control. I am proud of each employee’s focus and effort during these challenging months to minimize the impact to our performance. Without these two significant disruptions, we would continue to be at the higher end of our original full year EBITDA outlook,” Boynton concluded. “We are a resilient company and focused on the future, which includes significant growth opportunities including the acquisition of Tembec, the completion of LignoTech Florida, the continued cost transformation of our business and the execution of our four pillars of growth.”

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