Rayonier Advanced Materials Inc. sees opportunity in competitor’s closure (Courtesy of the Jacksonville Daily Record) — Rayonier Advanced Materials Inc., or RYAM, held an investor day Oct. 10 at the New York Stock Exchange to highlight its operations.
However, a recent action by a competitor was the “top-of-mind issue” for the Jacksonville-based company, according to CEO De Lyle Bloomquist.
Atlanta-based Georgia-Pacific announced Sept. 18 it is closing its cellulose products mill in Perry, near Tallahassee.
“This in my mind is an inflection point for the industry,” Bloomquist said as he began his presentation to investors.
“It’s going to address about 50% of the excess capacity in the cellulose specialties business.”
High purity cellulose products are RYAM’s main business, producing $1.34 billion of its $1.72 billion in 2022 revenue.
RYAM has struggled with disappointing financial results since it split up with timber and real estate company Rayonier Inc. in 2014, and reduced capacity in the cellulose products industry will likely help pricing for RYAM’s products.
While RYAM officials addressed other issues at the investor meeting, “we think the most important takeaway from the day was the confirmation of the materiality of GP’s closure as it relates to CS industry supply-demand balance, and the readthrough to improving production mix and pricing for RYAM,” RBC Capital Markets analyst Paul Quinn said in a research report.
“RYAM is well positioned to pick up a good share of its business compared to competitors. Management noted that some of GP’s historical CS customers are already customers of RYAM, which we think helps put them on solid footing to win the business,” he said.
RYAM operates cellulose product plants in Fernandina Beach and Jesup, Georgia, and two plants in Canada and France.
The company also produces paperboard and high-yield pulp at the Canada plant and Bloomquist said it was looking at strategic options for those noncore assets.
RYAM then announced Oct. 13 it engaged a financial adviser to explore a sale of those assets. It would use the proceeds to help pay down debt.
Bloomquist, who was appointed CEO in May 2022, said debt reduction is a top priority. RYAM has reported losses from continuing operations for the last four full years and the losses continued in the first half of 2023.
“Q3 was another weak quarter, unfortunately,” Bloomquist said.
“We do believe Q4 will be much stronger,” he said.
“We do fully understand the near-term challenges that we have to face and we need to correct, but we do think it’s more than doable.”
Mill closure hurts Taylor County
An Oct. 16 story in the Tallahassee Democrat said the closing of the Georgia-Pacific mill will have a major economic impact on Taylor County and all of Florida.
The company said 525 people will lose their jobs when the mill closes in November.
Citing a report from the University of Florida Institute of Food and Agricultural Sciences, the Democrat story said the mill accounts for more than 12% of county employment with about 500 additional jobs, including loggers and truckers, affected.
The UF report said the total impact on Florida will be a loss of nearly 2,000 jobs and $9.9 million in state and local taxes, the newspaper said.
Photo courtesy of Asia Paper Markets