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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>2H25 EBITDA guidance reflective of more normalized performance.</li><li>While non-recurring headwinds, such as tariff- related order pattern disruptions, operational challenges, labor strikes, and adverse weather, reduced 1H25 EBITDA by close to $60 million, 2H25 EBITDA guidance of $105-115 million implies a return to more normal operations and profitability levels as RYAM works to improve costs and drive higher volumes and prices.</li><li>Robust pipeline of cost saving and efficiency projects. RYAM has launched a targeted capital deployment of $24 million to drive $30 million in annual cost savings in its core cellulose specialties (CS) business in 2026, with additional projects envisioned for 2027 and beyond, as the company continues to optimize its operations and streamline costs, positioning itself to fully benefit from the market recovery and take advantage of incremental growth opportunities.</li></ul>

2H25 EBITDA guidance reflective of more normalized performance.While non-recurring headwinds, such as tariff- related order pattern disruptions, operational challenges, labor strikes, and adverse weather, reduced 1H25 EBITDA by close to $60 million, 2H25 EBITDA guidance of $105-115 million implies a return to more normal operations and profitability levels as RYAM works to improve costs and drive higher volumes and prices.Robust pipeline of cost saving and efficiency projects. RYAM has launched a targeted capital deployment of $24 million to drive $30 million in annual cost savings in its core cellulose specialties (CS) business in 2026, with additional projects envisioned for 2027 and beyond, as the company continues to optimize its operations and streamline costs, positioning itself to fully benefit from the market recovery and take advantage of incremental growth opportunities.

Rayonier Advanced Materials, Inc.: Having Weathered 1H25 Crosswinds...

<ul><li>1Q25 one-time headwinds obscure improving business fundamentals.</li><li>Unusual weather, plant-level operating challenges ahead of planned maintenance outages, and the impact of customer pre-buying in 4Q25 affected 1Q25 results, but are not likely to continue, suggesting sequential improvement in 2Q25 and more so in 2H25.</li><li>New reporting structure highlights specialty-type margins. </li></ul>

1Q25 one-time headwinds obscure improving business fundamentals.Unusual weather, plant-level operating challenges ahead of planned maintenance outages, and the impact of customer pre-buying in 4Q25 affected 1Q25 results, but are not likely to continue, suggesting sequential improvement in 2Q25 and more so in 2H25.New reporting structure highlights specialty-type margins. 

RYAM US: Specialty Margins Shine Under New Reporting Structure Despite Period Headwinds

<ul><li>Tough start to the year. RYAM reported 1Q25 results that included revenue of $356 million (down 8% Y/Y and below our $363 million estimate) and EBITDA of $17 million (well below the year-ago result of $52 million and our $48 million estimate).</li><li>A non-cash environmental charge of $12 million and an FX hit of ($5) million, combined with weather, higher maintenance-related operating costs, and lower volumes, more than offset modestly higher prices in Cellulose Specialties and Cellulose Commodities and benefits from prior cost reduction efforts.</li><li>New reporting structure highlights progress toward specialty. RYAM changed the way it reports results of its High Purity Cellulose division, splitting the division into three segments beginning in 1Q25 (Cellulose Specialties [CS], Cellulose Commodities [CC], and Biomaterials), highlighting the profitable nature of its CS (23% EBITDA margin in 1Q25) and Biomaterials (29% EBITDA margin in 1Q25) businesses and continuing deemphasis of CC sales.</li></ul>

Tough start to the year. RYAM reported 1Q25 results that included revenue of $356 million (down 8% Y/Y and below our $363 million estimate) and EBITDA of $17 million (well below the year-ago result of $52 million and our $48 million estimate).A non-cash environmental charge of $12 million and an FX hit of ($5) million, combined with weather, higher maintenance-related operating costs, and lower volumes, more than offset modestly higher prices in Cellulose Specialties and Cellulose Commodities and benefits from prior cost reduction efforts.New reporting structure highlights progress toward specialty. RYAM changed the way it reports results of its High Purity Cellulose division, splitting the division into three segments beginning in 1Q25 (Cellulose Specialties [CS], Cellulose Commodities [CC], and Biomaterials), highlighting the profitable nature of its CS (23% EBITDA margin in 1Q25) and Biomaterials (29% EBITDA margin in 1Q25) businesses and continuing deemphasis of CC sales.

Rayonier Advanced Materials, Inc: While Disappointing, 1Q25 May Be the Low Point for the Year

<ul><li>Strong 4Q24 caps off a year of continuous improvement. RYAM reported 4Q24 results that included record EBITDA of $62 million in its HPC division despite lower revenue on reduced sales of commodity products.</li><li>For the year, the company delivered $222 million in EBITDA and 13.4% EBITDA margin, up significantly from 2023 EBITDA of $139 million and 8.3% EBITDA margin, reflecting the positive outcome of management’s decision to reduce exposure to commodity markets and invest in growth of specialty businesses, especially in Biomaterials.</li><li>The strong results came despite still soft acetates demand and only modest growth in ethers, as margins benefited from cost optimization investments that resulted in lower unit production costs and optimized efficiencies.</li></ul>

Strong 4Q24 caps off a year of continuous improvement. RYAM reported 4Q24 results that included record EBITDA of $62 million in its HPC division despite lower revenue on reduced sales of commodity products.For the year, the company delivered $222 million in EBITDA and 13.4% EBITDA margin, up significantly from 2023 EBITDA of $139 million and 8.3% EBITDA margin, reflecting the positive outcome of management’s decision to reduce exposure to commodity markets and invest in growth of specialty businesses, especially in Biomaterials.The strong results came despite still soft acetates demand and only modest growth in ethers, as margins benefited from cost optimization investments that resulted in lower unit production costs and optimized efficiencies.

Rayonier Advanced Materials, Inc. - Strong 4Q24 Bodes Well for 2025...

<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

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.: Having Weathered 1H25 Crosswinds...

While non-recurring headwinds, such as tariff- related order pattern disruptions, operational challenges, labor strikes, and adverse weather,...

Water Tower Research

RYAM US: Specialty Margins Shine Under New Reporting Structure Despite Period Headwinds

1Q25 one-time headwinds obscure improving business fundamentals. Unusual weather, plant-level operating challenges ahead of planned maintenance...

Water Tower Research

Rayonier Advanced Materials, Inc: While Disappointing, 1Q25 May Be the Low Point for the Year

RYAM reported 1Q25 results that included revenue of $356 million (down 8% Y/Y and below our $363 million estimate) and EBITDA of $17 million

Water Tower Research

Rayonier Advanced Materials, Inc. - Strong 4Q24 Bodes Well for 2025...

RYAM reported 4Q24 results that included record EBITDA of $62 million in its HPC division despite lower revenue on reduced sales of commodity...

Water Tower Research

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

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