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Date
Wednesday, May 6, 2026 at 9:00 a.m. ET
Call participants
- Chief Financial Officer and Interim CEO Office Member — Marcus J. Moeltner
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Takeaways
- Strategic review -- A formal review of strategic alternatives was initiated, including a potential sale of part or all of the company, with Morgan Stanley engaged as financial adviser.
- Adjusted EBITDA -- $8 million, with High Purity Cellulose contributing $24 million, while Paperboard and High-Yield Pulp reported negative $5 million.
- Average CS (Cellulose Specialties) sales price -- Increased by 17% year over year, with lower volumes and a higher commodity mix offsetting gains.
- Total liquidity -- $160 million, consisting of $68 million in cash, $88 million in ABL availability, and $4 million from the French factoring line.
- Adjusted free cash flow -- $12 million generated, despite first quarter challenges.
- New product commercialization -- Management targets approximately 10,000 metric tons in both freezer board and oil-and-grease-resistant paperboard sales in 2026, and about 20,000 metric tons in softwood high-yield pulp for absorbent end markets.
- Fluff market strategy -- Company increased mix toward fluff in Q2, in response to strengthened pricing; management disclosed further pricing announcements pending, with net increases of $55 in China and $120 in North America and Europe.
- Trade actions -- Company is actively advancing antidumping (AD) and countervailing duty (CVD) trade processes in support of U.S. domestic markets.
- Inflation and logistics -- Higher oil and diesel prices, as well as surcharges on freight and increased costs for chemicals, have prompted the company to pursue supplier negotiations and targeted commercial recovery measures.
- Dynamic asset allocation -- Company leveraged production flexibility in Q1 by shifting commodity pulp output, with asset nimbleness also enabling swift volume pivots as market conditions evolve.
- CS volume outlook -- CS volumes in Q2 projected to be 15%-20% higher sequentially versus Q1’s base of just over 70,000 tons.
- Fire impact -- Isolated facility fire in the quarter caused an estimated $5 million impact with “de minimis” effect on acetate production; the operational focus during restart aided paper pulp output during the outage.
Summary
The interim management team of Rayonier Advanced Materials (RYAM +5.71%) emphasized execution of operational priorities during a transition period marked by a formal review of strategic alternatives, including potentially transformative transactions. Adjusted free cash flow was positive in the quarter, and leadership initiatives in Cellulose Specialties demonstrated measurable progress, notably through higher realized pricing. The company outlined specific pipeline commercialization milestones and operational strategies, underpinned by ongoing trade action advances and dynamic capacity shifts, to drive improvement through 2026 while laying the groundwork for 2027.
- The interim CEO office highlighted over 60 years of combined institutional knowledge while the permanent CEO search continues.
- Management stated, “we have secured the majority of our 2026 CS volume at pricing that is meaningfully higher than 2025,” referencing ongoing contract negotiations and progress made to date.
- CS supply-demand in core markets is “above 90%” capacity utilization, according to Marcus J. Moeltner, suggesting a constructive backdrop for disciplined pricing actions.
- Commodity market mix is set to evolve further through the year as pricing supports increased allocation toward fluff and absorbent applications; additional value creation is expected from product launches centered at the Témiscaming facility in the second half of 2026.
- Management noted targeted inflation mitigation strategies in chemicals and logistics costs, with ongoing discussions and commercial actions to recover input cost increases.
Industry glossary
- CS (Cellulose Specialties): High-value cellulose products used in demanding end markets, such as LCDs, filters, and specialty plastics, requiring tight quality and technical controls.
- AD (Antidumping) and CVD (Countervailing Duties): Trade remedies to address unfair pricing or subsidization from foreign producers entering the U.S. market.
- ABL (Asset-Based Loan): Revolving credit facility secured by company assets, providing liquidity based on the value of eligible collateral.
- Fluff: A form of absorbent cellulose pulp used in hygiene products and other nonwoven applications.
- Témiscaming: Company facility in Quebec, Canada, referenced as a growth platform for new paperboard and high-yield pulp products.
Full Conference Call Transcript
Marcus J. Moeltner: Thanks, Daniel. Good morning, everyone, and thank you for joining us. Before I turn to the quarter, I want to begin on Slide 4 and address the announcements we made on April 20, 2026. As disclosed, a formal review of strategic alternatives to maximize shareholder value has been initiated, and the company has engaged Morgan Stanley as financial adviser in connection with that review. At the same time, an interim office of the CEO has been established to provide continuity during the transition and the search for a permanent CEO is underway.
Importantly, the members of the interim office of the CEO bring more than 60 years of combined experience at Rayonier Advanced Materials Inc. and Témiscaming, which provides continuity and deep knowledge of the business. We remain focused on safety, reliable operations, serving our customers, executing our 2026 priorities, and improving value across the portfolio. That has not changed. With that in mind, the strategic review is appropriately broad. The alternatives under evaluation include, but are not limited to, continued execution of our stand-alone strategic plan; a strategic investment or partnership that strengthens the business; a merger or other business combination; and the sale of part or all of the company.
They may also include capital structure actions designed to improve financial flexibility, including potential debt refinancing or restructuring, covenant relief, or other collaboration with our lenders. Any path under consideration ultimately needs to be evaluated against the same core objective: what best strengthens the company, improves financial flexibility, and maximizes shareholder value. As we said in the press release, we have not set a timetable for completion of the review and we do not intend to provide updates unless and until disclosure is appropriate or required. So today, my focus is where it should be: on execution, on the operating path forward, and on the actions that improve value under any outcome. Turning to Slide 5, the message is straightforward.
Our 2026 priorities are unchanged. We have four operating priorities for the year. First, deliver positive free cash flow. Second, assert our leadership in CS. Third, drive year-over-year EBITDA improvement across every business. And lastly, exit 2026 with momentum. These priorities reflect both where we are today and what must happen next. We entered 2026 with negative free cash flow and elevated debt. So our task this year is clear: strengthen the earnings profile of the business, improve cash generation, and build momentum quarter by quarter. The first quarter was an early step in that process.
I will cover the detailed results on the next slide, but at a high level, the quarter was broadly consistent with the operating plan we laid out in March as pricing, mix, and commercial actions to strengthen our leadership in CS continued to come together. Let us turn to Slide 6 and the first quarter results. Adjusted EBITDA in the quarter was $8 million. High Purity Cellulose generated $24 million of adjusted EBITDA, and we achieved a 17% increase in average CS sales price year over year, while CS volumes were lower and commodity mix was higher.
Paperboard and High Yield Pulp were a negative $5 million, reflecting continued pressure from new third-party supply in paperboard and continued domestic oversupply of high yield pulp in Asia. Corporate and other costs were $11 million for the quarter, with favorable foreign exchange rates compared to the prior-year quarter providing some offset. Importantly, we ended the quarter with total liquidity of $160 million, comprising $68 million of cash on hand, $88 million of availability under the ABL, and $4 million available under our factoring line in France. The quarter came in broadly in line to slightly ahead of the expectation embedded in our prior outlook.
Although still below the level required to achieve our full-year objectives, that outcome reflects continued execution of the commercial and operating initiatives required to strengthen our leadership in CS as the near-term benefit from those actions is building. The free cash flow bridge also makes an important point. Even with a weak first quarter, we generated $12 million of adjusted free cash flow. This reinforces that positive free cash flow in 2026 will come from a combination of better operating performance, improved mix, commercialization of new offerings, disciplined capital allocation, and balance sheet actions as needed. Turning to Slide 7, our new product pipeline reflects how we are advancing growth through focused innovation and value-added products across the portfolio.
What is important here is that these opportunities are not dependent on any single product or end market. They are spread across multiple businesses and, in many cases, leverage assets, technical capabilities, and commercial positions we already have in place. The initiatives highlighted in green on the slide are the ones I want to focus on today because they represent the most tangible near-term progress. In paperboard, we continue to gain traction in both freezer board and oil-and-grease-resistant board, and we are targeting approximately 10 thousand metric tons of annual sales in 2026 in each of these markets as commercialization and customer qualifications continue to advance.
In high yield pulp, we see a path to approximately 20 thousand metric tons of annual sales in 2026 for softwood high yield pulp rolls as we move into higher-value, absorbent end markets, while the wrapper product provides a near-term opportunity to support internal cost reduction and create a path to future external sales. In cellulose commodities, odor control fluff remains one of our more differentiated growth and margin-accretive opportunities in the pipeline, which I will come back to on the next slide. The broader point is that this pipeline supports both near-term earnings improvement and longer-term portfolio value creation.
The slide that follows highlights a few representative examples of how the value is being developed through targeted product innovation, sharper commercial focus, and a more dynamic operating approach. So turning to Slide 8, this slide brings together three representative examples of how we are working to create value through more focused commercial execution, differentiated product development, and a more dynamic operating approach. First, in nitration grade cellulose, what we have learned is that customers in qualification-intensive energetic applications are buying certainty, technical support, and disciplined specification control, not simply material that meets a basic spec.
Rayonier Advanced Materials Inc. is well positioned here because we are the only supplier with a multisite sulfate and sulfite production footprint across North America and Europe. Our actions are focused on the highest-priority conversion and qualification opportunities, and on continuing to strengthen customer support, qualification continuity, and supply assurance in the applications where reliability matters most. Second, odor control fluff is a different type of opportunity, but it reflects the same discipline. Adult incontinence is the fastest-growing fluff segment, and there is a clear unmet need for immediate odor control. Our product offers a differentiated urine-activated solution that can be used as a drop-in replacement in existing products. The commercial approach here is also deliberate.
We are targeting brands directly in order to pull the solution through the value chain. Third, dynamic asset allocation is the internal discipline that connects strategy to day-to-day execution. What we have found is that there are still barriers and bottlenecks that can be removed to raise production and improve mix, and that we have more flexibility than we have historically used to allocate capacity across our grade portfolio to maximize value. A good current example of this is in the fluff market, where pricing has strengthened. As those market conditions have improved, we have further prioritized volumes into fluff and other attractive softwood pulp markets to take advantage of that pricing environment.
The broader point across all three examples is the same: we are becoming more targeted in how we deploy technical, commercial, and operating resources, and that is an important part of how we intend to improve the earnings quality of the business going forward. Let us turn to Slide 9 and the 2026 outlook. The core message on this slide is that 2026 remains a transition year, but one in which we are building leadership momentum and laying the foundation for a stronger 2027 and beyond. The first quarter came in broadly in line to slightly ahead of the near-zero EBITDA level we had anticipated, as the benefit of our CS leadership initiative is building.
So while the year still depends on sequential improvement from here, the underlying direction of the plan remains intact. The items on the right side of the slide reinforce that point. In the first quarter, average CS sales price increased 17% as our leadership actions continued to build. We are also advancing trade actions to support fair competition in Rayonier Advanced Materials Inc.’s U.S. domestic markets. Across the CS value chain, we expect inventory conditions to become more favorable as we move into 2027, while CS supply-demand conditions remain tight and continue to support disciplined pricing actions.
We also expect to benefit from improving commodity pricing as supply and trade dynamics continue to normalize, with pricing currently forecasted to increase sequentially over the balance of 2026. Beyond the market backdrop, we continue to take actions within the business to improve the earnings and cash flow profile. That includes ongoing inflation mitigation work across the enterprise and continued progress on new product and grade-specific leadership initiatives that are expected to contribute incremental value in 2026 and beyond. Taken together, these actions are intended to build a stronger earnings base and improve cash generation over time. That said, our priorities for 2026 are unchanged.
We continue to target positive free cash flow, assert our leadership in CS, drive year-over-year EBITDA improvement across every business, and exit the year with stronger momentum. We also remain focused on safer operations, strengthening our organization, and executing with greater precision and speed. In closing, I have confidence in the plan we are executing and in the team that is advancing it. Regardless of which plan is ultimately chosen, execution remains the anchor under any outcome. The initiatives we discussed today are the right initiatives for the company. They strengthen our financial position, improve our commercial posture, increase operating discipline, and enhance the strategic value of our assets.
The best way we can support the strategic review is to execute the initiatives in front of us, improve our earnings and free cash flow quarter by quarter, and continue building a stronger company. If we do that well, we will reinforce the business under any scenario and position Rayonier Advanced Materials Inc. for a stronger 2027 and beyond. We will now open the call for questions.
Operator: At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad. If your question has been answered and you would like to remove yourself from the queue, press star followed by the number one. Your first question is from the line of Daniel Herriman with Sidoti.
Daniel Herriman: Thank you. Good morning, Mark. I will start with a couple and then get back into the queue. Marcus, heading into 2026, it was very clear that CS volumes would be under pressure as you continue to push price, and obviously Q1 results were consistent with that. Can you provide us with an update regarding where you stand on those pricing conversations today and when you expect to have that fully placed? I believe you had maybe between 12–15% still to go. And then with the breakdown on the CS volume decline, the release calls out elevated acetate inventories and also soft ethers demand.
I was hoping to get an idea of how much of the volume weakness is market-driven versus self-imposed by those higher prices, and if that at all changes your confidence in the back half of the recovery. Thanks so much.
Marcus J. Moeltner: Good morning, Daniel. Thanks for your questions. As an update to the negotiations and asserting our leadership strategy, we have secured the majority of our 2026 CS volume at pricing that is meaningfully higher than 2025. A good reference point is the evidence we shared with the 17% increase in Q1. This really reflects deliberate commercial actions we have taken to manage pricing and improve our mix, and better align value with the value our products bring to the applications. In our industry, Hawkins Wright publishes capacity and demand figures, and anything above 88% is really balanced. We are above 90%, so we are still in the backdrop of a very constructive market.
Our discussions are well advanced, and we continue to make progress. On acetate and ethers markets, we continue to advance our discussions with the acetate customer base in the backdrop of an end-use market that does have elevated inventories, but it is improving. In ethers, that is the market where you see weakness from European construction, and there is also the impact of competing products from China that make their way into that end-use market. Overall, consistent with our last message, in the back half of the year we will continue to complete these negotiations.
Daniel Herriman: That is really helpful. Thanks so much, Marcus.
Operator: As a reminder, to ask a question, press star followed by the number one on your telephone keypad. Your next question is from the line of Matthew McKellar with RBC Capital.
Matthew McKellar: Hi. Good morning. Thanks for taking my questions. First for me, you disclosed on April 20, 2026 that you are engaged in a formal process to explore strategic alternatives. There is some language in the presentation suggesting you do not have a specific timeline, but to help us get a sense of timing, can you help us understand when you formally began this process and, more broadly, what you think is driving interest in Rayonier Advanced Materials Inc. at this point in time? What do you think public markets have underappreciated about your business? Thanks.
Marcus J. Moeltner: Good morning, Matt. Thanks for your question. As I mentioned in my prepared comments, engaging Morgan Stanley was a decision made given interest expressed by third parties. It is a very broad mandate that could involve numerous permutations of corporate development activities with the real focus to maximize shareholder value. There is also a piece related to continuing to address the balance sheet of the company and to look to optimize the capital structure. The process has the overarching objective to maximize shareholder value, because I truly believe there is value within Rayonier Advanced Materials Inc. that is not recognized by the marketplace.
We have a unique offering, and you are seeing that offering reinforced in the current backdrop of what is going on in the world, where you have pressure on oil-based products and our cellulose-based products are well positioned in any environment to be perceived as having high value.
Matthew McKellar: Great. Thanks for that perspective. Maybe next for me, can you provide a bit more color on the conditions you are seeing in the fluff market right now and how those conditions might be different than your expectations going into the year? With that, can you talk about your mix in the commodities business—what your mix of fluff looked like in Q1 compared to the past couple of quarters—and whether you would expect mix to evolve much through the balance of the year compared to Q1?
Marcus J. Moeltner: Thanks, Matt. Higher fluff pricing is a positive backdrop to our business right now, and it aligns well with the dynamic asset allocation strategy I referenced in my comments. Given what we are seeing in the fluff space, there is definitely upward pricing movement. We are seeing the ability to pivot and drive our mix toward more fluff production. If I contrast Q1 versus Q2, we certainly had a higher mix of paper pulp in Q1 versus where we will be this quarter, given that we are going to drive pricing and volumes to fluff.
We are picking up that there are some further pricing announcements pending here—in the range of a net $55 increase in China and $120 in North America and Europe. I think there is a lot of positive momentum in fluff. Additionally, as we advance the commercialization of the softwood roll product in Témiscaming, we will have products across the continuum of fluff grades and can position our product made out of Témiscaming out of high yield to get further value there as well and drive improved mix. I am really excited about that project as well.
Operator: Your next question is from the line of Dmitry Silversteyn with Water Tower Research.
Dmitry Silversteyn: Good morning, Marcus. Thank you for taking my call. Quick question. There was a development at the end of last year in the antidumping case concerning Brazilian and Norwegian imports. The ruling was positive for you in the sense that there was some damage assessed, but the amount of remedy was a little disappointing. Can you talk about what other things we can look forward to in terms of that trade dispute? And then as a follow-up, you mentioned in your press release that your shipping costs have gone up, particularly to China. Is it in any way related to the geopolitical conflict going on in the Middle East now?
Or, asked differently, are there any impacts on your logistics and shipping costs as a result of that conflict?
Marcus J. Moeltner: Good morning, Dmitry. Thanks for your questions. On trade, we feel positive about the direction and where things are headed across the tariff-related workstreams we have, including AD and CVD. As you know, Rayonier Advanced Materials Inc. is the sole remaining U.S. producer of high purity dissolving wood pulp, and we think the importance of a reliable domestic supply is paramount. It is particularly important for critical infrastructure and certain defense-related applications, and it is continuing to be better understood. It is early days, but we are optimistic on the direction this is taking and like the trajectory we are on in those discussions.
On inflationary pressures on logistics, like everybody, we are seeing the impact of higher oil pricing and diesel costs, and there are surcharges coming through on freight. We are certainly focused on that. It is creating pressure as well on some chemicals—think of the sulfur and ammonia families—but we are actively managing this through supplier negotiations. We have targeted commercial recovery actions that we are pursuing, and, where appropriate, we continue to pursue cost discipline to mitigate these impacts. Thanks again for your questions.
Dmitry Silversteyn: Thank you, Marcus. Just a quick follow-up. You mentioned in your presentation several new businesses or business lines that are gaining traction in the first quarter and second quarter, some by the end of the year. If we were looking at relative performance versus your expectations within your guidance, which of those products do you think will have the greatest impact on your results—provided successful commercialization and share gains—for 2026? And which should we think about as more impactful for 2027 and beyond?
Marcus J. Moeltner: Thanks again, Dmitry. Looking at our new product pipeline, several of those products are Témiscaming-centric—think of freezer board and oil-and-grease-resistant board. Those will help us drive better mix across our paperboard portfolio, and those will have impacts in the second half of 2026. As well, as we advance the commercialization of the roll product—the fluff product—at Témiscaming, that is another value-adder for the second half. We see all those products produced in Témiscaming as providing a nice benefit for Rayonier Advanced Materials Inc. for the balance of the year. Longer term, as I mentioned, odor control fluff is a real differentiator and a strong prospect. I can see that adding considerable value to our fluff portfolio going forward.
We are really excited about all those products, but think of Témiscaming as having a nice impact from these activities.
Operator: As a reminder, to ask a question, press star followed by the number one on your telephone keypad. You do have a follow-up from the line of Matthew McKellar with RBC Capital.
Matthew McKellar: Hi. Thanks. Just one follow-up for me. Referencing Slide 8 and the dynamic asset allocation comments you have made, can you give us any more detail around how you have achieved this greater flexibility to increase production and allocate capacity across grades? And then can you share any perspective around how we should think about the sequential change in CS shipments into Q2, and whether the fire you addressed will have any impact to acetate volumes in the quarter?
Marcus J. Moeltner: Thanks again, Matt. Examples of execution in leveraging this dynamic asset allocation strategy include being more nimble and quicker to respond to market changes, because our production lines are quite flexible. It is about leveraging that capability and putting it into action to adapt quickly. We had to do that in Q1—adapting be-line to making a mix of commodity paper pulp to keep the lines running—and as that is now filled with acetate, you can see how we have put that into action. Another example is as fluff markets have improved, driving that mix higher. We have that same capability at Tartas, where we can pivot between ethers-type grades and make a fluff product.
It is being mindful of our asset capabilities and putting that into action in real time. On volumes sequentially, CS volumes will be higher from the base. We just did over 70 thousand tons of CS; we could be upwards of 15–20% higher on those volumes. We will also drive better fluff pricing, and that mix should be greater given that we will make less paper pulp. Lastly, on the fire, as we mentioned, this was a very isolated and contained event. Relative to the previous fire, it had a minor impact, in the range of $5 million.
As far as production, we were more focused on paper pulp as we started up from the outage, so the impact on acetate is de minimis.
Operator: At this time, there are no further audio questions. I will now hand the call back over to the presenters for any closing remarks.
Marcus J. Moeltner: Thank you for your time today and for your continued interest in Rayonier Advanced Materials Inc. We really appreciate the support and engagement of our shareholders and other stakeholders. Our focus remains on disciplined execution, open communication, and continuing to build value in the business. We look forward to updating you further on our progress next quarter. Thank you again.
Operator: This concludes today's presentation. Thank you for joining. You may now disconnect your lines.
