Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

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<li>Our bullish outlook (since early-November 2023) remains intact. Few things are more bullish than indexes (SPX, NDX) breaking out to all-time highs following a major correction we had in 2022</li>
<li>Last week (5/21/24) we discussed how it is a very bullish sign that there have been three upside gaps in May on the S&amp;P 500, with all gaps left unfilled.</li>
<li>Important short-term gap supports we are watching on SPX include 5250-5263, 5127-5142, and 5073-5101; so far 5250-5263 support has held. Also downgrading Industrials (XLI) to market weight</li>
</ul>


Our bullish outlook (since early-November 2023) remains intact. Few things are more bullish than indexes (SPX, NDX) breaking out to all-time highs following a major correction we had in 2022
Last week (5/21/24) we discussed how it is a very bullish sign that there have been three upside gaps in May on the S&amp;P 500, with all gaps left unfilled.
Important short-term gap supports we are watching on SPX include 5250-5263, 5127-5142, and 5073-5101; so far 5250-5263 support has held. Also downgrading Industrials (XLI) to market weight


Downgrading Manufacturing (XLI) To Market Weight; Shift to Overweight Growth; 5250-5263 SPX Holding

Research from Water Tower Research, Water Tower Research

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.

Equity Research Firm

Equity Bottom-Up

Rayonier Advanced Materials / Equity Bottom-Up

<ul><li>1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of ($0.19).</li><li>While sales of $388 million fell short of our estimate of $402 million and consensus of $430 million, tight cost controls, lower raw material and transportation costs, and improved operating efficiencies drove EBITDA of $52 million versus our estimate of $39 million and consensus of $49 million.</li><li><p>EBITDA guidance maintained, FCF guidance increased. With market fundamentals stabilizing and most of customer inventory work-downs winding down, management reiterated its EBITDA guidance of $180-200 million and raised its FCF guidance for the year from $20- 40 million to $80-100 million on a higher working capital benefit and $39 million in cash to be realized from the sale of softwood duty refund rights to OCP Lumber LLC.</p></li></ul>

1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of ($0.19).While sales of $388 million fell short of our estimate of $402 million and consensus of $430 million, tight cost controls, lower raw material and transportation costs, and improved operating efficiencies drove EBITDA of $52 million versus our estimate of $39 million and consensus of $49 million.EBITDA guidance maintained, FCF guidance increased. With market fundamentals stabilizing and most of customer inventory work-downs winding down, management reiterated its EBITDA guidance of $180-200 million and raised its FCF guidance for the year from $20- 40 million to $80-100 million on a higher working capital benefit and $39 million in cash to be realized from the sale of softwood duty refund rights to OCP Lumber LLC.

Rayonier Advanced Materials, Inc. - Solid Start to the Year and Progress on Asset Transformation

<ul><li>Light at the end of the tunnel? As RYAM prepares to release its 1Q24 results next Wednesday, it appears that fundamentals are improving across several of its markets, with pulp prices continuing to recover from mid-2023 lows and demand from construction markets stabilizing in the wake of customer inventory drawdowns that reduced RYAM’s opportunities to sell into the market in 2023.</li><li>1Q24 comps likely to struggle, but outlook may improve. Management’s guidance for 1Q24 issued at the 4Q23 report indicated flat Q/Q performance, with modest improvement in prices offset by lower operating rates and residual effects of an inventory correction at the customer level.</li><li>With 1Q23 being RYAM’s strongest quarter last year, revenue and profit may therefore continue to show negative Y/Y comps.</li></ul>

Light at the end of the tunnel? As RYAM prepares to release its 1Q24 results next Wednesday, it appears that fundamentals are improving across several of its markets, with pulp prices continuing to recover from mid-2023 lows and demand from construction markets stabilizing in the wake of customer inventory drawdowns that reduced RYAM’s opportunities to sell into the market in 2023.1Q24 comps likely to struggle, but outlook may improve. Management’s guidance for 1Q24 issued at the 4Q23 report indicated flat Q/Q performance, with modest improvement in prices offset by lower operating rates and residual effects of an inventory correction at the customer level.With 1Q23 being RYAM’s strongest quarter last year, revenue and profit may therefore continue to show negative Y/Y comps.

Rayonier Advanced Materials, Inc. - Market Fundamentals Improving, Albeit Slowly

<ul><li>4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.</li><li>However, adjusted EBITDA of $37 million fell well short of Street expectations and our $48 million forecast on weaker-than-expected paperboard demand and lower-than-anticipated pulp prices.</li><li>Right-sized inventory suggests modest growth. With customer channel destocking largely completed in 4Q23, RYAM’s businesses should see a more stable demand environment throughout 2024 and, combined with modest share-driven volume growth and lower input costs, improved gross and EBITDA margins.</li></ul>

4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.However, adjusted EBITDA of $37 million fell well short of Street expectations and our $48 million forecast on weaker-than-expected paperboard demand and lower-than-anticipated pulp prices.Right-sized inventory suggests modest growth. With customer channel destocking largely completed in 4Q23, RYAM’s businesses should see a more stable demand environment throughout 2024 and, combined with modest share-driven volume growth and lower input costs, improved gross and EBITDA margins.

Rayonier Advanced Materials, Inc. - 2024 Looks Like a Recovery Year with Potential Asset Sale Kicker

Thematic (Sector/Industry)

<ul><li>We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.</li><li>Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.</li><li>WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.</li></ul>

We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.

Water Tower Hour Recap -  2023 Review and 2024 Outlook

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)

Downgrading Manufacturing (XLI) To Market Weight; Shift to Overweight Growth; 5250-5263 SPX Holding

Downgrading Manufacturing $XLI to Market Weight; Shift to Overweight Growth $IWF; Three May $SPX Upside Gaps Unfilled = Bullish; Expect supports at...

Vermilion Research

Rayonier Advanced Materials, Inc. - Solid Start to the Year and Progress on Asset Transformation

1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of...

Water Tower Research

Rayonier Advanced Materials, Inc. - Market Fundamentals Improving, Albeit Slowly

Light at the end of the tunnel? As RYAM prepares to release its 1Q24 results next Wednesday, it appears that fundamentals are improving across...

Water Tower Research

Rayonier Advanced Materials, Inc. - 2024 Looks Like a Recovery Year with Potential Asset Sale Kicker

4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.

Water Tower Research

Water Tower Hour Recap - 2023 Review and 2024 Outlook

WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the...

Water Tower Research

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