Rayonier Advanced Materials sees strong demand for pulp and paper in Q2

Kristina Urquhart
August 07, 2018
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August 7, 2018 - Florida's Rayonier Advanced Materials Inc. has reported a second-quarter 2018 net income of $54 million, or $0.83 per diluted common share compared to $5 million, or $0.03 per diluted common share in the second quarter of 2017.

The company's second-quarter 2018 adjusted net income was $39 million, or $0.60 per diluted common share, compared to $9 million, or $0.11 per diluted common share, in the second quarter of 2017. Second quarter 2018 adjusted net income and diluted earnings per share are adjusted for a gain on bargain purchase associated with the acquisition of Tembec Inc. Adjusted net income and diluted earnings per common share amounts for second quarter 2017 are adjusted for transaction costs and an unrealized gain on a derivative instrument both associated with the acquisition of Tembec.

“With strong demand in our pulp and forest products segments and improved performance in our manufacturing operations, we delivered solid earnings for the quarter, underscoring the earnings potential of the new portfolio,” said Paul Boynton, chairman, president and chief executive officer. “We remain committed to a disciplined and balanced capital allocation program as evidenced by our investment of $23 million in strategic capital projects, debt reduction of $12 million and $29 million of capital returned to shareholders through dividends and common stock repurchases through the first half of the year.”

Pulp

Operating income for the three and six month periods ended June 30, 2018 increased over the comparable 2017 periods by $26 million and $49 million, respectively, driven by the Tembec acquisition.

On a combined basis, operating income for the three and six month periods ended June 30, 2018 increased $16 million and $34 million, respectively, primarily due to improved high-yield pulp prices of 29 and 32 percent, respectively.

Paper

Operating income for the three and six month periods ended June 30, 2018 increased over the comparable 2017 periods by $7 million and $10 million, respectively, driven by the Tembec acquisition.

On a combined basis, operating income for the three and six month periods ended June 30, 2018 decreased $5 million and $13 million, respectively, primarily due to higher pulp costs in paperboard, which benefits our Pulp segment, duties imposed on U.S. shipments of newsprint and increased amortization and depreciation related to the purchase accounting associated with the acquisition of Tembec. These benefits were offset in part by higher newsprint sales prices and volumes and higher paperboard sales prices.

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