Rayonier Advanced Materials NYSE: RYAM has pushed its target for concluding a strategic review into the first quarter of 2027, after U.S. tariffs prompted the company to idle production at its Témiscaming site in Canada and complicated discussions with interested parties.
President and CEO Dan Krawczyk said on the company’s third-quarter 2026 earnings call that the review had been expected to conclude in the fourth quarter. He said a sale remains a key alternative and that no outcome has been decided.
The delay came as Rayonier Advanced Materials reported higher third-quarter sales and adjusted earnings, driven by its High Purity Cellulose business. The company also outlined plans to increase production of higher-value Cellulose Specialties products and reduce losses on certain commodity grades.
Tariff-related idling delays review
Krawczyk said a 50% U.S. tariff on Canadian paperboard, effective August 22, changed the economics of the Témiscaming site, which historically shipped about 70% of its paperboard production to the U.S. The company idled Paperboard & High Yield Pulp production there on October 3; essential site services remain in operation.
Rayonier Advanced Materials incurred $2 million in tariff-related costs in the third quarter and estimates that carrying costs while the site is idle will total $2 million to $3 million per month. The company is evaluating strategic options for Témiscaming.
Interested parties have visited the company’s plants and are continuing their diligence, Krawczyk said. He added that they need to understand the site’s ongoing costs, available options and implications for the rest of the business.
“Témiscaming does not need to be resolved in order to move forward with the strategic review,” Krawczyk said, although he added that the implications must be quantified and a plan presented to interested parties. He also acknowledged that a management team had expressed interest in a potential management buyout, while declining to comment specifically on interested parties.
Specialty mix drives earnings improvement
Third-quarter net sales rose 2% from the second quarter and 8% from a year earlier to $383 million. Adjusted EBITDA increased to $52 million from $40 million sequentially and $42 million in the prior-year quarter.
The company reported a $229 million loss from continuing operations, including $221 million in noncash impairments primarily related to Témiscaming. Excluding noncash impairments in both periods, the loss narrowed to $8 million from $20 million in the second quarter, Chief Financial Officer Marcus Moeltner said.
High Purity Cellulose sales rose to $313 million, up $12 million sequentially, while segment adjusted EBITDA increased by $16 million to $73 million. Moeltner attributed the improvement to higher Cellulose Specialties pricing, favorable product mix and increased shipments, along with shipment timing and energy credits.
Total cellulose shipments rose 4% sequentially to 218,000 metric tons. Moeltner said third-quarter segment results exceeded expectations, though they continued to include losses on commodity grades.
Paperboard & High Yield Pulp sales fell to $70 million from $75 million in the second quarter. The segment posted an adjusted EBITDA loss of $9 million, compared with a $10 million loss in the preceding quarter.
Shift toward Cellulose Specialties
Krawczyk said the company’s Cellulose Specialties franchise has pricing power, but losses from lower-priced commodity products have obscured its performance. Third-quarter specialty pricing was $2,227 per metric ton, compared with $825 for commodity cellulose, he said.
The company is working to grow specialty volumes, allocate more capacity to those products and improve mill operations. Krawczyk said Rayonier Advanced Materials is competitive in some commodity areas, such as fluff, but faces a structural disadvantage in areas including viscose and paper pulp.
He said the company had not announced a strategic facility action and would not speculate on one, though not all assets fit its specialty-focused strategy. He also said pricing decisions would be made by customer and market, with a more measured approach potentially appropriate in some markets after the company tested demand responses to pricing this year.
Moeltner said Cellulose Specialties volumes are expected to exit 2026 at or near a run rate of 100,000 metric tons per quarter. Full-year volumes are still expected to be below the prior year as some customers manage inventories and ordering patterns, though second-half volumes should improve from the first half.
Cash generation remains a priority
The company ended the quarter with $143 million of liquidity. Cash provided by operating activities was $29 million in the quarter, bringing the year-to-date total to $66 million. Year-to-date adjusted free cash flow was positive $2 million, compared with negative $8 million through the first half.
Krawczyk said the company is working toward positive free cash flow for 2026, subject to tariff-related cash impacts and Témiscaming carrying costs. He said second-half expectations for High Purity Cellulose remain consistent with the previous outlook, while the idled site adds pressure on the broader business and cash generation.
About Rayonier Advanced Materials (NYSE:RYAM)
Rayonier Advanced Materials Inc NYSE: RYAM is a specialty materials company that manufactures cellulose-based products for industrial and consumer applications. Its portfolio includes high-purity cellulose, cellulose specialties, and other engineered materials used in products such as acetate tow for cigarette filters, pharmaceutical and food-grade excipients, coatings, films, plastics, and other specialty applications.
The company also produces performance fibers and related cellulose products for markets including textiles, nonwovens, and industrial materials.
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