Rayonier Advanced Materials reports Q3 operations income of $29M
By P&PC Staff/Rayonier Advanced Materials
By P&PC Staff/Rayonier Advanced Materials
Rayonier Advanced Materials Inc. has reported its third quarter 2020 results, citing income from continuing operations of $29 million or $0.45 per diluted share, compared to a loss from continuing operations of $14 million or $0.29 per diluted share for the same prior-year quarter.
Year-to-date net loss from continuing operations for the nine months ended September 26, 2020 was $9 million, or $0.14 per diluted common share, compared to a net loss of $62 million, or $1.36 per diluted common share for the same prior-year period.
The decrease in the diluted loss per share was due to the significant improvements in forest products as well as from the conversion of the company’s preferred stock into approximately 13 million shares of common stock in August of 2019.
“Driven by strong lumber prices, better reliability in high-purity cellulose and an ongoing focus of reducing costs, third-quarter results were positive,” says Paul Boynton, president and chief executive officer of Rayonier Advanced Materials, in a statement.
“Despite the challenges brought on by COVID-19, the organization capitalized on near-term opportunities and is starting to see signs of an economic recovery in viscose and high-yield pulp markets.”
Operating results for the three- and nine-month periods ended September 26, 2020 were up $1 million and down $1 million, respectively, to the comparable prior year periods.
Higher commodity product sales volumes and lower costs, primarily driven by lower wood and chemical prices, were offset by a decrease of nine per cent and 14 per cent in cellulose specialties sales volumes for the three- and nine-month periods, respectively.
Additionally, improved productivity and higher cellulose specialties sales prices provided benefits to the current three and nine-month periods.
Sales volumes for the current nine-month period remain below original expectations primarily due to COVID-19 related demand weakness. Commodity product sales prices decreased 19 per cent and 24 per cent for the three- and nine-month periods, respectively, driven by COVID-19 and China trade dispute–related demand impacts on the larger commodity pulp and textile markets.
Compared to the second quarter of 2020, operating income improved $1 million due to improved costs and higher sales prices partially offset by lower commodity volumes.
The operating results for the three and nine months ended September 26, 2020 improved $30 million and $47 million, respectively, when compared to the same prior-year periods.
The improvements were primarily due to increases in lumber prices of 62 per cent and 25 per cent, respectively, and lower costs driven by the curtailments of production earlier in the year.
Sales volumes during the three months ended September 26, 2020 increased seven per cent from strong demand and increased productivity.
Sales volumes for the nine months ended September 26, 2020 were lower than in the prior year as a result of market downtime taken in the first half of the year due to lower demand driven by the COVID-19 pandemic.
The company incurred $20 million and $16 million of duties in the nine months ended September 26, 2020 and September 28, 2019, respectively.
Compared to the second quarter of 2020, the operating results improved by $29 million. The improvement was driven by a 51 per cent increase in lumber prices partially offset by higher lumber duties driven by the higher prices and higher labour costs incurred during the period.
Operating income improved $1 million and $14 million for the three and nine months ended September 26, 2020, respectively, when compared to the same prior-year periods primarily due to lower raw material pulp prices.
Compared to the second quarter of 2020, operating income declined $3 million primarily due to sales mix, lower pricing and higher manufacturing costs driven by lower production, partially offset higher sales volumes.
Pulp and newsprint
Operating income for the three and nine months ended September 26, 2020 declined $2 million and $21 million, respectively, when compared to the same prior-year periods.
The decline was primarily driven by lower newsprint sales prices and volumes during both the three- and nine-month periods ended September 26, 2020 compared to the same prior-year periods.
Additionally, pulp prices were lower for the current nine-months period compared to prior-year period. These declines in pulp and newsprint were due to weak demand and market-related downtime resulting from the COVID-19 pandemic. Pulp sales volumes increased during the three and nine months ended September 26, 2020 compared to the same prior-year periods.
The operating loss was similar to the second quarter of 2020, with lower newsprint and pulp sales volumes offset by lower transportation costs due to the lower volumes.
Read the full Q3 financial report from Rayonier Advanced Materials, including outlook, here.