Rayonier Advanced Materials Inc. (NYSE:RYAM) Q4 2016 Earnings Conference Call - Final Transcript

Jan 31, 2017 • 10:00 am ET


Rayonier Advanced Materials Inc. (NYSE:RYAM) Q4 2016 Earnings Conference Call - Final Transcript


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Greetings and welcome to Rayonier Advanced Materials Fourth Quarter 2016 Teleconference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Mickey Walsh, Treasurer and Vice President of Investor Relations. Thank you. You may begin.

Mickey Walsh

Thank you, Audry, and welcome to Rayonier Advanced Materials 2016 fourth quarter earnings call and webcast. Joining me on today's call are Paul Boynton, our Chairman, President and Chief Executive Officer; and Frank Ruperto, our Chief Financial Officer. Our earnings release and presentation materials were issued yesterday afternoon and are available on our website at rayonieram.com. (Forward-Looking Cautionary Statements)

Today's presentation will also reference certain non-GAAP financial measures as noted on slide three of our presentation material. We believe non-GAAP financial measures provide useful information for management and investors, but non-GAAP measures should not be considered an alternative to GAAP measures. A reconciliation of these measures to their most directly comparable GAAP financial measures are included on Pages 14 through 18 of our presentation.

At this time, I would like to turn the call over to Paul for his opening remarks.

Paul Boynton

Hey. Thank you, Mickey, and good morning, everyone. A year ago when we addressed you on our fourth quarter call, we faced a $68 million negative impact to EBITDA from price and volume for 2016. At that time, we challenged the organization to take $40 million of cost out of the business. I am pleased to report that each and every employee responded as we exceeded our own expectations and delivered $50 million against the significant initiative.

These cost improvements mitigated the majority of the price and volume impact and allowed us to deliver $226 million of EBITDA well above beginning your guidance of $175 million to $190 million. Additionally, we generated $143 million of adjusted free cash flow exceeding our goal for the year by over $50 million. Again, these financial results are the testament to the hard work and persistence of our employees.

In 2016, we also took a significant step in strengthening our balance sheet and improving our financial flexibility by issuing $173 million of equity. The combination of a strong balance sheet and improving cost structure provides a solid foundation to fund future growth initiatives and drive stockholder value. Shortly, I will share additional comments on our strategy and the conditions of the market which we operate.

Let me now turn over to Frank to review our 2016 financial results as well as provide guidance for 2017. Frank?

Frank Ruperto

Thank you, Paul. Now let's look at slide four to review our financial highlights for the fourth quarter and full-year. Sales for the quarter totaled $231 million, 5% below fourth quarter 2015. Full-year 2016 sales were $869 million or 8% lower than the prior year. The full-year sales decline was primarily driven by a 7% decline in CS prices and a