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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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Equity Bottom-Up

Rayonier Advanced Materials / Equity Bottom-Up

<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