Rayonier Advanced Materials (NYSE:RYAM) reported a robust second quarter, marked by increased sales and adjusted EBITDA, as the company’s comprehensive strategic review moves closer to a resolution. Management anticipates communicating a clear path forward during the fourth quarter of 2026, according to the recent earnings call.
Dan Krawczyk, in his inaugural earnings call as president and chief executive officer, emphasized the board’s mandate to maximize shareholder value while maintaining operational performance throughout the review process. Krawczyk stated, “The comprehensive review of strategic alternatives remains a top priority for RYAM,” adding that “It’s active, it’s progressing with urgency and discipline,” as the company evaluates a full range of strategic and financial alternatives. He noted constructive engagement from interested parties and reiterated the expectation for a clear communication in Q4.
Second-Quarter Financial Performance
Chief Financial Officer Marcus Moeltner detailed the company’s improved sequential performance. Second-quarter net sales reached $376 million, representing an 18% sequential increase and an 11% rise from the prior-year quarter. The company reported a loss from continuing operations of $33 million, a significant improvement from the $81 million loss recorded in the first quarter. This Q2 loss included a $13 million non-cash asset impairment charge related to High-Yield Pulp.
Adjusted EBITDA, a non-GAAP measure, saw a substantial increase to $40 million, up from $8 million in the first quarter and $28 million in the prior-year period. This year-over-year improvement was primarily driven by a $12 million enhancement in High Purity Cellulose adjusted EBITDA and an $8 million improvement in corporate and other expenses, partially offset by weaker results in the Paperboard and High-Yield Pulp segments.
Segmental Highlights: High Purity Cellulose Drives Gains
The High Purity Cellulose segment was a key contributor to the improved results. Sales in this segment rose to $301 million, an increase of $38 million sequentially and $29 million year over year. Adjusted EBITDA for High Purity Cellulose climbed to $57 million, compared with $24 million in the first quarter and $45 million in the prior-year period.
Within High Purity Cellulose, Cellulose Specialties pricing saw an 8% sequential increase and a notable 21% rise year over year, while sales volumes improved by 19% from the first quarter. Moeltner noted that year-over-year volumes remained lower due to the company’s continued value-based pricing efforts. Cellulose Commodities pricing improved 6% sequentially but remained 11% below the prior-year level, though volumes nearly doubled from a year earlier as operating rates improved and production shifted towards commodity grades. The CFO attributed the segment’s EBITDA improvement to higher Cellulose Specialties pricing, improved operating rates, and lower wood and fixed costs, partially offset by lower Cellulose Specialties volumes, a higher commodity mix, and inflation.
Paperboard and High-Yield Pulp Face Headwinds
Conversely, the Paperboard and High-Yield Pulp segment continued to face pressure. While sales increased to $75 million both sequentially and year over year, the segment’s adjusted EBITDA loss widened to negative $10 million, compared with negative $5 million in the first quarter and negative $2 million a year earlier. Moeltner explained that higher volumes were more than offset by lower pricing, planned maintenance, and market-related downtime.
In Paperboard, pricing increased 3% from the first quarter, and volumes improved 11%, with tighter market conditions supporting a firmer pricing outlook, though pricing remained below the prior-year quarter. High-Yield Pulp volumes nearly doubled sequentially and rose 29% from a year earlier, primarily due to shipment timing, but pricing remained under pressure. Krawczyk indicated that a return to improved performance in this business would depend substantially on commercial execution, including the rollout of higher-value freezer board, oil- and grease-resistant grades, high-yield wrappers, and rolled softwood high-yield pulp for absorbent applications.
Liquidity, Cash Flow, and Refinancing Efforts
RYAM concluded the second quarter with $145 million of total liquidity, comprising $57 million of cash, $76 million of availability under its North American asset-based lending facility, and $12 million under its France factoring facility. Adjusted net debt stood at $755 million, with net secured debt at $726 million. The company reported a net secured leverage of 4.2 times covenant EBITDA, well within its 4.75 times covenant test, maintaining compliance with all debt covenants.
Year-to-date operating cash flow was $37 million, resulting in adjusted free cash flow of negative $8 million, which marked a $57 million improvement from negative $65 million in the prior-year period. Management reiterated its expectation to generate positive free cash flow for the full-year 2026. Moeltner projected Cellulose Specialties volumes to improve by approximately 10% to 15% in the second half compared with the first half, while maintaining favorable pricing and mix. He also highlighted the importance of working-capital management, discretionary spending, commodity pricing, and improved Paperboard and High-Yield Pulp performance for achieving the cash-flow target. The company’s operating performance, capital-market conditions, and the outcome of the strategic review will influence potential refinancing alternatives, with Krawczyk aiming for a stronger earnings run rate and greater financial flexibility entering 2027.
Trade Developments and Specialty Opportunities
Krawczyk also addressed recent trade developments, noting the U.S. Trade Representative’s final Section 301 actions, which include an aggregate 37.5% tariff on Brazilian dissolving wood pulp imports and a 12.5% tariff on Norwegian dissolving wood pulp imports. Preliminary antidumping and countervailing duties on imports from Brazil and Norway remain active, with final determinations expected later this year. While the ultimate impact will depend on downstream trade programs and other regulatory mechanisms, Krawczyk suggested sustained actions could create fairer competitive conditions for qualified U.S. suppliers. The company is also monitoring tariffs on certain Canadian-origin products, which could materially affect the economics of its Paperboard and High-Yield Pulp business, with approximately 75% of its paperboard volume sold into the United States. RYAM is actively engaging with policymakers and customers on commercial and operational responses.
Furthermore, Krawczyk highlighted RYAM’s unique position as the sole remaining U.S. supplier of dissolving wood pulp for nitrocellulose applications, crucial for defense and industrial markets. The company is seeking to qualify additional grades across its facilities to provide supply flexibility for U.S. and NATO-related supply chains.
As Rayonier Advanced Materials progresses through its strategic review, the company’s focus on operational improvements, financial flexibility, and leveraging its unique market positions, particularly in high-purity cellulose and specialty applications, will be critical in shaping its future trajectory and maximizing shareholder value.
