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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Rayonier Advanced Materials / Equity Bottom-Up

<ul><li>2024 results look to exceed expectations.</li><li>Earlier this month, RYAM previewed its 2024 annual results that appear to exceed current Street and our estimates for revenue, EBITDA, and free cash flow generation, as the company benefited from improving supply/demand trends in the cellulosics industry, a better mix, and strong shipments as 2024 came to a close, underscoring its improved portfolio and value over volume strategy helped by market conditions.</li><li>2025 preview implies continued improvement. While management will provide formal guidance for 2025 during its 4Q24 earnings call, which should take place in early March 2025, the company expects its cellulose specialties business to see mid- single-digit Y/Y price improvement partially offset by similar levels of decline in volume, as it continues to pursue its mix- enhancing strategy, in line with our current expectations.</li></ul>

2024 results look to exceed expectations.Earlier this month, RYAM previewed its 2024 annual results that appear to exceed current Street and our estimates for revenue, EBITDA, and free cash flow generation, as the company benefited from improving supply/demand trends in the cellulosics industry, a better mix, and strong shipments as 2024 came to a close, underscoring its improved portfolio and value over volume strategy helped by market conditions.2025 preview implies continued improvement. While management will provide formal guidance for 2025 during its 4Q24 earnings call, which should take place in early March 2025, the company expects its cellulose specialties business to see mid- single-digit Y/Y price improvement partially offset by similar levels of decline in volume, as it continues to pursue its mix- enhancing strategy, in line with our current expectations.

Rayonier Advanced Materials, Inc. - Improving Fundamentals Bolstered by BioNova Optionality

Thematic (Sector/Industry)

<ul><li>Balancing act. As the ag industry is preparing for the planting season, an early look at 2025 expectations by Farm Journal’s Ag Economists’ Monthly Monitor offers a mixed bag.</li><li>On one hand, after a two-year decline, net and cash farm income are expected to increase Y/Y in 2025.</li><li>On the other hand, the increase will be mostly due to an increase in government payments. </li></ul>

Balancing act. As the ag industry is preparing for the planting season, an early look at 2025 expectations by Farm Journal’s Ag Economists’ Monthly Monitor offers a mixed bag.On one hand, after a two-year decline, net and cash farm income are expected to increase Y/Y in 2025.On the other hand, the increase will be mostly due to an increase in government payments. 

Mat-Chem Notes - Tariff Concerns Proliferate as Geopolitics Remain Center Stage

<ul><li>WTR-CMI in 2024. Last year was difficult for specialty chemicals and materials stocks, with our WTR-CMI Index posting a rather modest 5% gain for the year, affected by &gt;40% Y/Y declines in lithium stocks.</li><li>The index’s performance was well off the pace of the Russell 2000 and S&amp;P 500, which posted returns of 10.8% and 24%, respectively, driven by the extraordinary gains of the “magnificent seven” tech and media stocks.</li><li>On a positive note, RYAM’s stock price nearly doubled during the year, driven by an <span style="font-size: var(--content-font-size);">improving pricing environment, better sales mix, and cost </span>containment efforts, as well as the ramp-up of the company’s Biomaterials business. </li></ul>

WTR-CMI in 2024. Last year was difficult for specialty chemicals and materials stocks, with our WTR-CMI Index posting a rather modest 5% gain for the year, affected by &gt;40% Y/Y declines in lithium stocks.The index’s performance was well off the pace of the Russell 2000 and S&amp;P 500, which posted returns of 10.8% and 24%, respectively, driven by the extraordinary gains of the “magnificent seven” tech and media stocks.On a positive note, RYAM’s stock price nearly doubled during the year, driven by an improving pricing environment, better sales mix, and cost containment efforts, as well as the ramp-up of the company’s Biomaterials business. 

Mat-Chem Notes - Looking Ahead by Looking Back at 2024

<ul><li>Elections have consequences. The November 2024 elections in the US have ushered in not just a change in political landscape for the country and the makeup of the federal government but are likely to result in material changes to government policies and priorities for 2025 and beyond.</li><li>These include international trade, the federal regulatory environment, and tax policies that can affect consumer sentiment, company strategies when it comes to capital deployment, and end market dynamics.</li><li>While specifics could emerge in the coming months, we expect modest inflationary pressures from expected tariffs on imported goods to be largely offset by more constructive energy policies, tax incentives, and a reduced federal regulatory burden, along with a reduced federal government role in economic decision-making to lead to an improvement in economic growth in 2025.</li></ul>

Elections have consequences. The November 2024 elections in the US have ushered in not just a change in political landscape for the country and the makeup of the federal government but are likely to result in material changes to government policies and priorities for 2025 and beyond.These include international trade, the federal regulatory environment, and tax policies that can affect consumer sentiment, company strategies when it comes to capital deployment, and end market dynamics.While specifics could emerge in the coming months, we expect modest inflationary pressures from expected tariffs on imported goods to be largely offset by more constructive energy policies, tax incentives, and a reduced federal regulatory burden, along with a reduced federal government role in economic decision-making to lead to an improvement in economic growth in 2025.

The US Elections' Impact on 2025 Outlook - November 13, 2024

<ul><li>Strong 3Q24 beat and 2024 EBITDA guidance reiterated.</li><li>RYAM delivered 3Q24 revenue of $401MM, slightly above our $398MM estimate, with EBITDA of $51MM slightly below our $52MM estimate, with both measures exceeding Street expectations.</li><li>More importantly, despite the Jesup fire that shut down production of two specialty cellulose lines for 10 days in October, management reiterated its $205-215MM EBITDA guidance for the year, commenting during the earnings call that prior to the fire, it was considering raising its annual guidance given the strong 3Q24 performance.</li></ul>

Strong 3Q24 beat and 2024 EBITDA guidance reiterated.RYAM delivered 3Q24 revenue of $401MM, slightly above our $398MM estimate, with EBITDA of $51MM slightly below our $52MM estimate, with both measures exceeding Street expectations.More importantly, despite the Jesup fire that shut down production of two specialty cellulose lines for 10 days in October, management reiterated its $205-215MM EBITDA guidance for the year, commenting during the earnings call that prior to the fire, it was considering raising its annual guidance given the strong 3Q24 performance.

RYAM: Strong 3Q24 Results and Debt Refinancing Set the Stage for Solid 2025

United States

Rayonier Advanced Materials Inc operates as a performance fibers business. The company produces specialty cellulose fibers using proprietary cellulose chemistry knowledge and manufacturing processes.

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Rayonier Advanced Materials (RYAM US)

Rayonier Advanced Materials, Inc. - Improving Fundamentals Bolstered by BioNova Optionality

Earlier this month, RYAM previewed its 2024 annual results that appear to exceed current Street and our estimates for revenue, EBITDA, and free...

Water Tower Research

Mat-Chem Notes - Tariff Concerns Proliferate as Geopolitics Remain Center Stage

Balancing act. As the ag industry is preparing for the planting season, an early look at 2025 expectations by Farm Journal’s Ag Economists’ Monthly...

Water Tower Research

Mat-Chem Notes - Looking Ahead by Looking Back at 2024

Last year was difficult for specialty chemicals and materials stocks, with our WTR-CMI Index posting a rather modest 5% gain for the year, affected...

Water Tower Research

The US Elections' Impact on 2025 Outlook - November 13, 2024

While specifics could emerge in the coming months, we expect modest inflationary pressures from expected tariffs on imported goods to be largely...

Water Tower Research

RYAM: Strong 3Q24 Results and Debt Refinancing Set the Stage for Solid 2025

RYAM delivered 3Q24 revenue of $401MM, slightly above our $398MM estimate, with EBITDA of $51MM slightly below our $52MM estimate

Water Tower Research

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