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Water Tower Research

Research from Water Tower Research

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

<div><ul><li>1Q26 results modestly ahead of expectations despite weak Y/Y comparisons.</li><li> RYAM reported 1Q26 adjusted EBITDA of $8MM, above the near-zero outlook implied on the 4Q25 call, as stronger-than-expected HPC performance and lower corporate costs partially offset weakness in Paperboard &amp; HYP.</li><li>CS pricing increased 17% Y/Y, although lower specialty volumes, acetate destocking, softer ethers demand, and weaker commodity mix pressured overall profitability.</li></ul></div>

1Q26 results modestly ahead of expectations despite weak Y/Y comparisons. RYAM reported 1Q26 adjusted EBITDA of $8MM, above the near-zero outlook implied on the 4Q25 call, as stronger-than-expected HPC performance and lower corporate costs partially offset weakness in Paperboard &amp; HYP.CS pricing increased 17% Y/Y, although lower specialty volumes, acetate destocking, softer ethers demand, and weaker commodity mix pressured overall profitability.

RYAM: Sequential Recovery Building as Pricing, Mix, and Cash Flow Begin to Improve

<ul><li>CEO announces plans to retire. On December 10, 2025, RYAM announced that CEO and President De Lyle Bloomquist will retire as soon as a new CEO is hired and will leave the company’s Board of Directors prior to the Board’s Annual Meeting, which is scheduled for May 2026. </li><li>Bloomquist came out of retirement to take an active management (CEO) role at RYAM in May 2022 and has been instrumental in shaping the company’s strategy of pivoting it away from its commodity cellulosics business toward specialty cellulosics applications and emphasizing value over volume.</li><li>Under his leadership, the company embarked on its biomaterials strategy of expanding its product offering beyond cellulosics into higher-value, faster-growing opportunities in bioethanol, prebiotics, and tall oil production and successfully created the BioNova JV to fund the initiative and accelerate infrastructure buildout and go-to-market strategy for Biomaterials’ Portfolio 1 slate of products.</li></ul>

CEO announces plans to retire. On December 10, 2025, RYAM announced that CEO and President De Lyle Bloomquist will retire as soon as a new CEO is hired and will leave the company’s Board of Directors prior to the Board’s Annual Meeting, which is scheduled for May 2026. Bloomquist came out of retirement to take an active management (CEO) role at RYAM in May 2022 and has been instrumental in shaping the company’s strategy of pivoting it away from its commodity cellulosics business toward specialty cellulosics applications and emphasizing value over volume.Under his leadership, the company embarked on its biomaterials strategy of expanding its product offering beyond cellulosics into higher-value, faster-growing opportunities in bioethanol, prebiotics, and tall oil production and successfully created the BioNova JV to fund the initiative and accelerate infrastructure buildout and go-to-market strategy for Biomaterials’ Portfolio 1 slate of products.

RYAM: CEO Change Could Bring Strategy Refinement

<ul><li>3Q25 results underscored resilience amid soft markets. RYAM reported revenue of $353 million and adjusted EBITDA of $42 million, modestly below expectations but reflecting operational improvement.</li><li>The loss from continuing operations narrowed sharply to $4 million from $33 million in 3Q24.</li><li>Management reiterated that 2025 represents the trough year as temporary headwinds subside and pricing resets gain traction.</li></ul>

3Q25 results underscored resilience amid soft markets. RYAM reported revenue of $353 million and adjusted EBITDA of $42 million, modestly below expectations but reflecting operational improvement.The loss from continuing operations narrowed sharply to $4 million from $33 million in 3Q24.Management reiterated that 2025 represents the trough year as temporary headwinds subside and pricing resets gain traction.

RYAM: Softness in Non-Core Segments Drives Lower Guidance, Even as Specialties Business Improves

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

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)

RYAM: Sequential Recovery Building as Pricing, Mix, and Cash Flow Begin to Improve

CS pricing increased 17% Y/Y, although lower specialty volumes, acetate destocking, softer ethers demand, and weaker commodity mix pressured...

Water Tower Research

RYAM: CEO Change Could Bring Strategy Refinement

On December 10, 2025, RYAM announced that CEO and President De Lyle Bloomquist will retire as soon as a new CEO is hired...

Water Tower Research

RYAM: Softness in Non-Core Segments Drives Lower Guidance, Even as Specialties Business Improves

RYAM reported revenue of $353 million and adjusted EBITDA of $42 million, modestly below expectations but reflecting operational improvement.

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

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