☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
RYAM
|
The New York Stock Exchange
|
Large accelerated filer
|
o
|
|
Accelerated filer
|
x
|
Non-accelerated filer
|
o
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
Item
|
|
|
Page
|
|
|
Part I — Financial Information
|
|
1.
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
2.
|
|
||
3.
|
|
||
4.
|
|
||
|
|
Part II — Other Information
|
|
1.
|
|
||
1A.
|
|
||
2.
|
|
||
6.
|
|
||
|
|
Part I.
|
Financial Information
|
Item 1.
|
Financial Statements
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Net Sales
|
$
|
409,808
|
|
|
$
|
441,060
|
|
Cost of Sales
|
(399,347
|
)
|
|
(433,441
|
)
|
||
Gross Margin
|
10,461
|
|
|
7,619
|
|
||
|
|
|
|
||||
Selling, general and administrative expenses
|
(20,247
|
)
|
|
(28,144
|
)
|
||
Duties
|
(6,451
|
)
|
|
(4,517
|
)
|
||
Foreign exchange gains (losses)
|
5,797
|
|
|
(888
|
)
|
||
Other operating income (expense), net
|
(1,568
|
)
|
|
(1,669
|
)
|
||
Operating Income (Loss)
|
(12,008
|
)
|
|
(27,599
|
)
|
||
Interest expense
|
(15,225
|
)
|
|
(13,602
|
)
|
||
Interest income and other, net
|
423
|
|
|
650
|
|
||
Other components of pension and OPEB, excluding service costs
|
353
|
|
|
1,378
|
|
||
Income (Loss) From Continuing Operations Before Income Taxes
|
(26,457
|
)
|
|
(39,173
|
)
|
||
Income tax benefit (expense) (Note 16)
|
1,622
|
|
|
11,186
|
|
||
Income (Loss) from Continuing Operations
|
(24,835
|
)
|
|
(27,987
|
)
|
||
Income from discontinued operations, net of taxes (Note 2)
|
708
|
|
|
5,937
|
|
||
Net Income (Loss) Attributable to the Company
|
(24,127
|
)
|
|
(22,050
|
)
|
||
Mandatory convertible preferred stock dividends
|
—
|
|
|
(3,365
|
)
|
||
Net Income (Loss) Available to Common Stockholders
|
$
|
(24,127
|
)
|
|
$
|
(25,415
|
)
|
|
|
|
|
||||
Basic Earnings Per Common Share (Note 13)
|
|
|
|
||||
Income (loss) from continuing operations
|
$
|
(0.39
|
)
|
|
$
|
(0.64
|
)
|
Income from discontinued operations
|
0.01
|
|
|
0.12
|
|
||
Net income (loss) per common share-basic
|
$
|
(0.38
|
)
|
|
$
|
(0.52
|
)
|
Diluted Earnings Per Common Share (Note 13)
|
|
|
|
||||
Income (loss) from continuing operations
|
$
|
(0.39
|
)
|
|
$
|
(0.64
|
)
|
Income from discontinued operations
|
0.01
|
|
|
0.12
|
|
||
Net income (loss) per common share-diluted
|
$
|
(0.38
|
)
|
|
$
|
(0.52
|
)
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Net Income (Loss)
|
$
|
(24,127
|
)
|
|
$
|
(22,050
|
)
|
Other Comprehensive Income (Loss), net of tax (Note 11):
|
|
|
|
||||
Foreign currency translation adjustments
|
(6,471
|
)
|
|
(5,352
|
)
|
||
Unrealized gain (loss) on derivative instruments
|
(20,660
|
)
|
|
7,872
|
|
||
Net gain from pension and postretirement plans
|
6,573
|
|
|
1,891
|
|
||
Total other comprehensive income (loss)
|
(20,558
|
)
|
|
4,411
|
|
||
Comprehensive Income (Loss)
|
$
|
(44,685
|
)
|
|
$
|
(17,639
|
)
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
(24,127
|
)
|
|
$
|
(22,050
|
)
|
Loss (income) from discontinued operations
|
(708
|
)
|
|
(5,937
|
)
|
||
Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37,842
|
|
|
35,723
|
|
||
Stock-based incentive compensation expense
|
1,943
|
|
|
3,931
|
|
||
Deferred income tax expense (benefit)
|
17,381
|
|
|
(9,572
|
)
|
||
Net periodic benefit cost of pension and other postretirement plans
|
2,677
|
|
|
1,557
|
|
||
Unrealized loss (gain) on derivative instruments
|
6,792
|
|
|
(4,489
|
)
|
||
Unrealized loss (gain) from foreign currency
|
(11,368
|
)
|
|
6,116
|
|
||
Other
|
275
|
|
|
27
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(10,686
|
)
|
|
22,688
|
|
||
Inventories
|
(24,924
|
)
|
|
(26,264
|
)
|
||
Accounts payable
|
(1,518
|
)
|
|
(19,115
|
)
|
||
Accrued liabilities
|
20,707
|
|
|
(2,689
|
)
|
||
All other operating activities
|
(25,292
|
)
|
|
(8,368
|
)
|
||
Contributions to pension and other postretirement plans
|
(1,944
|
)
|
|
(2,290
|
)
|
||
Cash Provided by (Used for) Operating Activities-continuing operations
|
(12,950
|
)
|
|
(30,732
|
)
|
||
Cash Provided by (Used for) Operating Activities-discontinued operations
|
204
|
|
|
3,858
|
|
||
Cash Provided by (Used for) Operating Activities
|
(12,746
|
)
|
|
(26,874
|
)
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(12,582
|
)
|
|
(30,752
|
)
|
||
Cash Used for Investing Activities-continuing operations
|
(12,582
|
)
|
|
(30,752
|
)
|
||
Cash Used for Investing Activities-discontinued operations
|
—
|
|
|
(626
|
)
|
||
Cash Used for Investing Activities
|
(12,582
|
)
|
|
(31,378
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
||||
Borrowings on revolving credit and other facilities
|
7,592
|
|
|
38,000
|
|
||
Repayments of revolving credit and other facilities
|
—
|
|
|
(3,000
|
)
|
||
Repayment of debt
|
(1,786
|
)
|
|
(2,340
|
)
|
||
Dividends paid on common stock
|
—
|
|
|
(5,095
|
)
|
||
Dividends paid on preferred stock
|
—
|
|
|
(3,450
|
)
|
||
Common stock repurchased
|
(438
|
)
|
|
(5,810
|
)
|
||
Cash Provided by (Used for) Financing Activities-continuing operations
|
5,368
|
|
|
18,305
|
|
||
Cash Provided by (Used for) Financing Activities-discontinued operations
|
—
|
|
|
—
|
|
||
Cash Provided by (Used for) Financing Activities
|
5,368
|
|
|
18,305
|
|
||
|
|
|
|
||||
Cash and Cash Equivalents
|
|
|
|
||||
Change in cash and cash equivalents
|
(19,960
|
)
|
|
(39,947
|
)
|
||
Net effect of foreign exchange on cash and cash equivalents
|
(1,393
|
)
|
|
(1,028
|
)
|
||
Balance, beginning of year
|
64,025
|
|
|
108,966
|
|
||
Balance, end of period
|
$
|
42,672
|
|
|
$
|
67,991
|
|
•
|
In response to the COVID-19 pandemic and its impact on its forest products and newsprint markets, the Company curtailed production at some of its lumber mills and its newsprint mill starting the last week of March 2020.
|
•
|
On March 30, 2020, Investment Quebec (“IQ”), a holder of the Canadian dollar fixed rate term loans secured by certain assets of the Temiscaming mill, granted its customers a 6-month deferral on principal payments. See Note 7 —Debt and Finance Leases for additional information.
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Revenues
|
$
|
—
|
|
|
$
|
41,720
|
|
Cost of sales
|
—
|
|
|
(32,163
|
)
|
||
Gross margin
|
—
|
|
|
9,557
|
|
||
Selling, general and administrative expenses and other
|
—
|
|
|
(427
|
)
|
||
Operating income (loss)
|
—
|
|
|
9,130
|
|
||
Interest expense (a)
|
—
|
|
|
(1,172
|
)
|
||
Other non-operating income
|
—
|
|
|
89
|
|
||
Income from discontinued operations, before income taxes
|
—
|
|
|
8,047
|
|
||
Income tax expense
|
—
|
|
|
(2,110
|
)
|
||
Income from discontinued operations, net of taxes
|
$
|
—
|
|
|
$
|
5,937
|
|
Adjustment to gain from sale of discontinued operations,
net of income tax of $248
|
708
|
|
|
—
|
|
||
Income from Discontinued Operations
|
$
|
708
|
|
|
$
|
5,937
|
|
(a)
|
The Company was required to pay $100 million of debt from proceeds received from the sale of Matane in November 2019. As such, interest expense has been allocated to discontinued operations using the weighted-average interest rates in effect for each period presented based on the proportionate amounts required to be repaid.
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Depreciation and amortization
|
$
|
—
|
|
|
$
|
635
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
626
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Accounts receivable, trade
|
$
|
153,754
|
|
|
$
|
142,181
|
|
Accounts receivable, other (a)
|
37,412
|
|
|
40,082
|
|
||
Allowance for doubtful accounts
|
(683
|
)
|
|
(605
|
)
|
||
Total accounts receivable, net
|
$
|
190,483
|
|
|
$
|
181,658
|
|
(a)
|
Accounts receivable, other consists primarily of value added/consumption taxes, grants receivable and accrued billings due from government agencies.
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Finished goods
|
$
|
157,742
|
|
|
$
|
150,259
|
|
Work-in-progress
|
18,080
|
|
|
17,065
|
|
||
Raw materials
|
88,673
|
|
|
73,385
|
|
||
Manufacturing and maintenance supplies
|
10,951
|
|
|
10,471
|
|
||
Total inventory
|
$
|
275,446
|
|
|
$
|
251,180
|
|
|
|
Three Months Ended
|
||||||
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Operating Leases
|
|
|
|
|
||||
Operating lease expense
|
|
$
|
1,804
|
|
|
$
|
1,465
|
|
Finance Leases
|
|
|
|
|
||||
Amortization of ROU assets
|
|
80
|
|
|
129
|
|
||
Interest
|
|
49
|
|
|
54
|
|
||
Total
|
|
$
|
1,933
|
|
|
$
|
1,648
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Accrued customer incentives and prepayments
|
$
|
34,755
|
|
|
$
|
31,696
|
|
Accrued payroll and benefits
|
26,990
|
|
|
23,593
|
|
||
Accrued interest
|
9,758
|
|
|
2,785
|
|
||
Derivative instruments
|
25,219
|
|
|
995
|
|
||
Accrued property and other taxes
|
6,198
|
|
|
5,643
|
|
||
Short-term factoring facility - France
|
5,812
|
|
|
—
|
|
||
Other current liabilities
|
37,293
|
|
|
37,466
|
|
||
Total accrued and other current liabilities
|
$
|
146,025
|
|
|
$
|
102,178
|
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
U.S. Revolver of $84 million maturing in November 2022, $34 million available, bearing interest at LIBOR plus 3.75% at March 28, 2020
|
|
$
|
—
|
|
|
$
|
—
|
|
Multi-currency Revolver of $126 million maturing in November 2022, $56 million available, bearing interest at LIBOR plus 3.75% at March 28, 2020
|
|
—
|
|
|
—
|
|
||
Term A-1 Loan Facility borrowings maturing through November 2022 bearing interest at LIBOR plus 3.75%, interest rate of 4.67% at March 28, 2020
|
|
133,283
|
|
|
133,283
|
|
||
Term A-2 Loan Facility borrowings maturing through November 2024 bearing interest at LIBOR plus 3.40% (after consideration of 0.60% patronage benefit), interest rate of 4.32% at March 28, 2020
|
|
365,592
|
|
|
365,592
|
|
||
Senior Notes due 2024 at a fixed interest rate of 5.50%
|
|
495,647
|
|
|
495,647
|
|
||
Canadian dollar, fixed interest rate term loans with rates ranging from 5.50% to 6.86% and maturity dates ranging from September 2020 through April 2028, secured by certain assets of the Temiscaming plant
|
|
74,785
|
|
|
83,122
|
|
||
Other loans
|
|
8,877
|
|
|
7,285
|
|
||
Finance lease obligation
|
|
2,738
|
|
|
2,818
|
|
||
Total debt principal payments due
|
|
1,080,922
|
|
|
1,087,747
|
|
||
Less: Debt premium, original issue discount and issuance costs, net
|
|
(5,519
|
)
|
|
(5,604
|
)
|
||
Total debt
|
|
1,075,403
|
|
|
1,082,143
|
|
||
Less: Current maturities of long-term debt
|
|
(11,982
|
)
|
|
(19,448
|
)
|
||
Long-term debt
|
|
$
|
1,063,421
|
|
|
$
|
1,062,695
|
|
|
Finance Lease Payments
|
|
|
Debt Principal Payments
|
||||
2020
|
$
|
386
|
|
|
|
$
|
10,408
|
|
2021
|
515
|
|
|
|
8,935
|
|
||
2022
|
515
|
|
|
|
158,906
|
|
||
2023
|
515
|
|
|
|
7,728
|
|
||
2024
|
515
|
|
|
|
868,871
|
|
||
Thereafter
|
988
|
|
|
|
23,336
|
|
||
Total principal payments
|
$
|
3,434
|
|
|
|
$
|
1,078,184
|
|
Less: Imputed interest
|
696
|
|
|
|
|
|||
Present value minimum finance lease payments
|
$
|
2,738
|
|
|
|
|
Balance, December 31, 2019
|
$
|
171,376
|
|
Increase in liabilities
|
45
|
|
|
Payments
|
(31
|
)
|
|
Foreign currency adjustments
|
(1,112
|
)
|
|
Balance, March 28, 2020
|
170,278
|
|
|
Less: Current portion
|
(11,200
|
)
|
|
Long-term environmental liabilities
|
$
|
159,078
|
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Interest rate swaps (a)
|
|
$
|
200,000
|
|
|
$
|
200,000
|
|
Foreign exchange forward contracts (b)
|
|
$
|
368,833
|
|
|
$
|
343,665
|
|
Foreign exchange forward contracts (c)
|
|
$
|
89,092
|
|
|
$
|
83,126
|
|
|
|
Balance Sheet Location
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current assets
|
|
$
|
—
|
|
|
$
|
4,857
|
|
Foreign exchange forward contracts
|
|
Other assets
|
|
—
|
|
|
5
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current assets
|
|
—
|
|
|
246
|
|
||
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Other current liabilities
|
|
(2,276
|
)
|
|
(639
|
)
|
||
Foreign exchange forward contracts
|
|
Other current liabilities
|
|
(22,435
|
)
|
|
(340
|
)
|
||
Foreign exchange forward contracts
|
|
Other non-current liabilities
|
|
(5,989
|
)
|
|
(759
|
)
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current liabilities
|
|
(508
|
)
|
|
(16
|
)
|
||
Total derivatives
|
|
|
|
$
|
(31,208
|
)
|
|
$
|
3,354
|
|
|
|
Three Months Ended March 28, 2020
|
|
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Gain (Loss) Recognized in OCI on Derivative
|
|
Gain (Loss) Reclassified from AOCI into Income
|
|
Location on Statement of Income
|
||||
Interest rate swaps
|
|
$
|
(1,757
|
)
|
|
$
|
(120
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
|
$
|
(26,532
|
)
|
|
$
|
(1,361
|
)
|
|
Other operating expense, net
|
Foreign exchange forward contracts
|
|
$
|
(394
|
)
|
|
$
|
394
|
|
|
Cost of sales
|
Foreign exchange forward contracts
|
|
$
|
(6,902
|
)
|
|
$
|
(6,732
|
)
|
|
Interest income and other, net
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended March 30, 2019
|
|
|
||||||
|
|
Gain (Loss) Recognized in OCI on Derivative
|
|
Gain (Loss) Reclassified from AOCI into Income
|
|
Location on Statement of Income
|
||||
Interest rate swaps
|
|
$
|
(702
|
)
|
|
$
|
280
|
|
|
Interest expense
|
Foreign exchange forward contracts
|
|
$
|
2,220
|
|
|
$
|
64
|
|
|
Other operating expense, net
|
Foreign exchange forward contracts
|
|
$
|
4,429
|
|
|
$
|
(4,429
|
)
|
|
Cost of sales
|
Foreign exchange forward contracts
|
|
$
|
2,359
|
|
|
$
|
1,799
|
|
|
Interest income and other, net
|
|
|
|
|
|
||||||
|
|
|
|
Three Months Ended
|
||||||
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain (Loss) Recognized in Income on Derivative
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Foreign exchange forward contracts
|
|
Other operating income (expense), net
|
|
$
|
(721
|
)
|
|
$
|
(326
|
)
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Interest rate cash flow hedges
|
|
$
|
(1,775
|
)
|
|
$
|
(499
|
)
|
Foreign exchange cash flow hedges
|
|
$
|
(17,595
|
)
|
|
$
|
1,789
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||||||||||
Assets:
|
|
Level 1
|
|
Level 2
|
|
|
Level 1
|
|
Level 2
|
||||||||||||||
Cash and cash equivalents
|
$
|
42,672
|
|
|
$
|
42,672
|
|
|
$
|
—
|
|
|
$
|
64,025
|
|
|
$
|
64,025
|
|
|
$
|
—
|
|
Foreign currency forward contracts (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
5,108
|
|
|
—
|
|
|
5,108
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities (b):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps (a)
|
2,276
|
|
|
—
|
|
|
2,276
|
|
|
639
|
|
|
—
|
|
|
639
|
|
||||||
Foreign currency forward contracts (a)
|
28,932
|
|
|
—
|
|
|
28,932
|
|
|
1,115
|
|
|
—
|
|
|
1,115
|
|
||||||
Fixed-rate long-term debt
|
578,083
|
|
|
—
|
|
|
280,049
|
|
|
585,027
|
|
|
—
|
|
|
465,449
|
|
||||||
Variable-rate long-term debt
|
494,582
|
|
|
—
|
|
|
498,875
|
|
|
494,299
|
|
|
—
|
|
|
498,875
|
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Unrecognized components of employee benefit plans, net of tax:
|
|
|
|
|
|||
Balance, beginning of year
|
$
|
(126,638
|
)
|
|
$
|
(135,590
|
)
|
Other comprehensive gain (loss) before reclassifications
|
4,781
|
|
|
—
|
|
||
Income tax on other comprehensive loss
|
(1,238
|
)
|
|
—
|
|
||
Reclassifications to earnings: (a)
|
|
|
|
||||
Amortization of losses
|
3,393
|
|
|
2,611
|
|
||
Amortization of prior service costs
|
141
|
|
|
104
|
|
||
Income tax on reclassifications
|
(504
|
)
|
|
(629
|
)
|
||
Foreign currency adjustments
|
—
|
|
|
(195
|
)
|
||
Net comprehensive gain (loss) on employee benefit plans, net of tax
|
6,573
|
|
|
1,891
|
|
||
Balance, end of quarter
|
(120,065
|
)
|
|
(133,699
|
)
|
||
|
|
|
|
||||
Unrealized gain (loss) on derivative instruments, net of tax:
|
|
|
|
||||
Balance, beginning of year
|
1,290
|
|
|
(11,622
|
)
|
||
Other comprehensive gain (loss) before reclassifications
|
(35,585
|
)
|
|
8,306
|
|
||
Income tax on other comprehensive income
|
8,255
|
|
|
(1,885
|
)
|
||
Reclassifications to earnings: (b)
|
|
|
|
||||
Interest rate contracts
|
120
|
|
|
(280
|
)
|
||
Foreign exchange contracts
|
7,699
|
|
|
2,566
|
|
||
Income tax on reclassifications
|
(1,149
|
)
|
|
(835
|
)
|
||
Net comprehensive gain (loss) on derivative instruments, net of tax
|
(20,660
|
)
|
|
7,872
|
|
||
Balance, end of quarter
|
(19,370
|
)
|
|
(3,750
|
)
|
||
|
|
|
|
||||
Foreign currency translation adjustments:
|
|
|
|
||||
Balance, beginning of year
|
(13,879
|
)
|
|
(8,485
|
)
|
||
Foreign currency translation adjustment, net of tax of $0 and $0
|
(6,471
|
)
|
|
(5,352
|
)
|
||
Balance, end of quarter
|
(20,350
|
)
|
|
(13,837
|
)
|
||
|
|
|
|
||||
Accumulated other comprehensive income (loss), end of quarter
|
$
|
(159,785
|
)
|
|
$
|
(151,286
|
)
|
(a)
|
The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic benefit cost. See Note 15— Employee Benefit Plans for additional information.
|
(b)
|
Reclassifications of interest rate contracts are recorded in interest expense. Reclassifications of foreign currency exchange contracts are recorded in cost of sales, other operating income or non-operating income as appropriate. See Note 9 —Derivative Instruments for additional information.
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional Paid in Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
|
||||||||||||||||||||
For the three months ended March 28, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, December 31, 2019
|
63,136,129
|
|
|
$
|
632
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
399,020
|
|
|
$
|
422,373
|
|
|
$
|
(139,227
|
)
|
|
$
|
682,798
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,127
|
)
|
|
—
|
|
|
(24,127
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,558
|
)
|
|
(20,558
|
)
|
||||||
Issuance of common stock under incentive stock plans
|
290,689
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,943
|
|
|
—
|
|
|
—
|
|
|
1,943
|
|
||||||
Repurchase of common stock
|
(179,951
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(435
|
)
|
|
—
|
|
|
—
|
|
|
(438
|
)
|
||||||
Balance, March 28, 2020
|
63,246,867
|
|
|
$
|
632
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
400,525
|
|
|
$
|
398,246
|
|
|
$
|
(159,785
|
)
|
|
$
|
639,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
For the three months ended March 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, December 31, 2018
|
49,291,130
|
|
|
$
|
493
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
399,490
|
|
|
$
|
462,568
|
|
|
$
|
(155,697
|
)
|
|
$
|
706,871
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,050
|
)
|
|
—
|
|
|
(22,050
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,411
|
|
|
4,411
|
|
||||||
Issuance of common stock under incentive stock plans
|
928,601
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,931
|
|
|
—
|
|
|
—
|
|
|
3,931
|
|
||||||
Repurchase of common shares
|
(420,847
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(5,806
|
)
|
|
—
|
|
|
—
|
|
|
(5,810
|
)
|
||||||
Common stock dividends
($0.07 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,812
|
)
|
|
—
|
|
|
(3,812
|
)
|
||||||
Preferred stock dividends
($2.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,450
|
)
|
|
—
|
|
|
(3,450
|
)
|
||||||
Balance, March 30, 2019
|
49,798,884
|
|
|
$
|
498
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
397,606
|
|
|
$
|
433,256
|
|
|
$
|
(151,286
|
)
|
|
$
|
680,091
|
|
|
Three Months Ended
|
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
|
||||
Income (loss) from continuing operations
|
$
|
(24,835
|
)
|
|
$
|
(27,987
|
)
|
|
Preferred Stock dividends
|
—
|
|
|
(3,365
|
)
|
|
||
Income (loss) from continuing operations attributable to common stockholders
|
(24,835
|
)
|
|
(31,352
|
)
|
|
||
Income (loss) from discontinued operations
|
708
|
|
|
5,937
|
|
|
||
Net income (loss) available for common stockholders
|
$
|
(24,127
|
)
|
|
$
|
(25,415
|
)
|
|
|
|
|
|
|
||||
Shares used for determining basic earnings per share of common stock
|
62,982,735
|
|
|
48,986,272
|
|
|
||
Dilutive effect of:
|
|
|
|
|
||||
Stock options
|
—
|
|
|
—
|
|
|
||
Performance and restricted stock
|
—
|
|
|
—
|
|
|
||
Preferred stock
|
—
|
|
|
—
|
|
|
||
Shares used for determining diluted earnings per share of common stock
|
62,982,735
|
|
|
48,986,272
|
|
|
||
|
|
|
|
|
||||
Basic per share amounts
|
|
|
|
|
||||
Income (loss) from continuing operations
|
$
|
(0.39
|
)
|
|
$
|
(0.64
|
)
|
|
Income (loss) from discontinued operations
|
0.01
|
|
|
0.12
|
|
|
||
Net income (loss)
|
$
|
(0.38
|
)
|
|
$
|
(0.52
|
)
|
|
Diluted per share amounts
|
|
|
|
|
||||
Income (loss) from continuing operations
|
$
|
(0.39
|
)
|
|
$
|
(0.64
|
)
|
|
Income (loss) from discontinued operations
|
0.01
|
|
|
0.12
|
|
|
||
Net income (loss)
|
$
|
(0.38
|
)
|
|
$
|
(0.52
|
)
|
|
|
Three Months Ended
|
|
||||
|
March 28, 2020
|
|
March 30, 2019
|
|
||
Stock options
|
157,033
|
|
|
259,088
|
|
|
Performance and restricted stock
|
448,812
|
|
|
1,959,123
|
|
|
Preferred stock
|
—
|
|
|
13,078,089
|
|
|
Total anti-dilutive instruments
|
605,845
|
|
|
15,296,300
|
|
|
|
Stock Options
|
|
Restricted Stock and Stock Units
|
|
Performance-Based Stock Units
|
|||||||||||||||
|
Options
|
|
Weighted Average Exercise Price
|
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Outstanding at January 1, 2020
|
205,026
|
|
|
$
|
36.10
|
|
|
833,596
|
|
|
$
|
14.55
|
|
|
1,190,526
|
|
|
$
|
17.77
|
|
Granted
|
—
|
|
|
—
|
|
|
247,660
|
|
|
2.65
|
|
|
1,078,259
|
|
|
2.07
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
(30,146
|
)
|
|
16.11
|
|
|
(55,387
|
)
|
|
18.16
|
|
|||
Exercised or settled
|
—
|
|
|
—
|
|
|
(208,813
|
)
|
|
13.42
|
|
|
(403,927
|
)
|
|
15.68
|
|
|||
Expired or cancelled
|
(47,993
|
)
|
|
29.24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Outstanding at March 28, 2020
|
157,033
|
|
|
$
|
38.20
|
|
|
842,297
|
|
|
$
|
11.28
|
|
|
1,809,471
|
|
|
$
|
8.87
|
|
|
Pension
|
Postretirement
|
|||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
Components of Net Periodic Benefit Cost
|
March 28, 2020
|
|
March 30, 2019
|
|
March 28, 2020
|
|
March 30, 2019
|
||||||||
Service cost
|
$
|
2,667
|
|
|
$
|
2,469
|
|
|
$
|
363
|
|
|
$
|
466
|
|
Interest cost
|
6,340
|
|
|
9,389
|
|
|
318
|
|
|
361
|
|
||||
Expected return on plan assets
|
(10,545
|
)
|
|
(13,843
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
179
|
|
|
142
|
|
|
(38
|
)
|
|
(38
|
)
|
||||
Amortization of losses
|
3,427
|
|
|
2,591
|
|
|
(34
|
)
|
|
20
|
|
||||
Total net periodic benefit cost
|
$
|
2,068
|
|
|
$
|
748
|
|
|
$
|
609
|
|
|
$
|
809
|
|
|
Three Months Ended
|
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
|
||||
High Purity Cellulose
|
$
|
(4,858
|
)
|
|
$
|
(2,793
|
)
|
|
Forest Products
|
(1,311
|
)
|
|
(5,248
|
)
|
|
||
Paperboard
|
4,674
|
|
|
(2,383
|
)
|
|
||
Pulp & Newsprint
|
(5,876
|
)
|
|
1,910
|
|
|
||
Corporate
|
(4,637
|
)
|
|
(19,085
|
)
|
|
||
Total operating income (loss)
|
$
|
(12,008
|
)
|
|
$
|
(27,599
|
)
|
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
High Purity Cellulose
|
$
|
1,514,894
|
|
|
$
|
1,559,073
|
|
Forest Products
|
195,916
|
|
|
171,167
|
|
||
Paperboard
|
142,518
|
|
|
145,030
|
|
||
Pulp & Newsprint
|
103,579
|
|
|
102,959
|
|
||
Corporate
|
493,937
|
|
|
501,918
|
|
||
Total identifiable assets
|
$
|
2,450,844
|
|
|
$
|
2,480,147
|
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Cash paid (received) during the period:
|
|
|
|
||||
Interest
|
$
|
8,115
|
|
|
$
|
7,581
|
|
Income taxes
|
$
|
(390
|
)
|
|
$
|
90
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
The businesses we operate are highly competitive and many of them are cyclical, which may result in fluctuations in pricing and volume that can adversely impact our business, financial condition and results of operations.
|
•
|
Our ten largest customers represent approximately 33 percent of our 2019 sales, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on our business.
|
•
|
A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise adversely affect our business, financial condition and results of operation.
|
•
|
Changes in raw material and energy availability and prices could affect our business, financial condition and results of operations.
|
•
|
The availability of, and prices for, wood fiber could materially impact our business, results of operations and financial condition.
|
•
|
We are subject to risks associated with doing business outside of the United States.
|
•
|
Our operations require substantial capital.
|
•
|
Currency fluctuations may have a negative impact on our business, financial condition and results of operations.
|
•
|
Restrictions on trade through tariffs, countervailing and anti-dumping duties, quotas and other trade barriers, in the United States and internationally, especially with respect to China, Canada and as a result of “Brexit”, could adversely affect our ability to access certain markets and otherwise impact our results of operations.
|
•
|
We depend on third parties for transportation services and increases in costs and the availability of transportation could adversely affect our business.
|
•
|
Our business is subject to extensive environmental laws, regulations and permits that may restrict or adversely affect our financial results and how we conduct business.
|
•
|
The potential impacts of climate change and climate-related initiatives, remain uncertain at this time.
|
•
|
Our failure to maintain satisfactory labor relations could have a material adverse effect on our business.
|
•
|
We are dependent upon attracting and retaining key personnel, the loss of whom could adversely affect our business.
|
•
|
Failure to develop new products or discover new applications for our existing products, or our inability to protect the intellectual property underlying such new products or applications, could have a negative impact on our business.
|
•
|
The risk of loss of the Company’s intellectual property and sensitive business information, or disruption of its manufacturing operations, in each case due to cyberattacks or cybersecurity breaches, could adversely impact the Company.
|
•
|
We may need to make significant additional cash contributions to our retirement benefit plans if investment returns on pension assets are lower than expected or interest rates decline, and/or due to changes to regulatory, accounting and actuarial requirements.
|
•
|
Public health crises such as epidemics or pandemics, including the recent COVID-19 outbreak, could have a material adverse effect on our financial condition, liquidity or results of operations.
|
•
|
We have entered into an amendment (the “Amendment”) to our Senior Secured Credit Facilities (as amended by the Amendment, the “Credit Agreement”) to address the risk of potential non-compliance with certain covenants at the end of the third quarter of 2019. There can be no assurances that we will continue in full compliance with the amended covenants provided in the Credit Amendment through December 31, 2021, which is the date of covenant relief granted under the Amendment expires.
|
•
|
We have significant debt obligations that could adversely affect our business and our ability to meet our obligations.
|
•
|
The phase-out of the London Inter Bank Office Rate (“LIBOR”) as an interest rate benchmark could result in an increase to our borrowing costs.
|
•
|
Challenges in the commercial and credit environments may materially adversely affect our future access to capital.
|
•
|
We may need additional financing in the future to meet our capital needs or to make acquisitions, and such financing may not be available on favorable terms, if at all, and may be dilutive to existing stockholders.
|
•
|
Your percentage of ownership in the Company may be diluted in the future.
|
•
|
Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, could prevent or delay an acquisition of the Company, which could decrease the price of our common stock.
|
Financial Information
|
Three Months Ended
|
|
%
|
|
||||||
(in millions, except percentages)
|
March 28, 2020
|
|
March 30, 2019
|
|
Change
|
|
||||
Net Sales
|
$
|
410
|
|
|
$
|
441
|
|
|
(7)%
|
|
Cost of Sales
|
(399
|
)
|
|
(433
|
)
|
|
|
|
||
Gross Margin
|
11
|
|
|
8
|
|
|
38%
|
|
||
Selling, general and administrative expenses
|
(20
|
)
|
|
(28
|
)
|
|
|
|
||
Duties
|
(6
|
)
|
|
(5
|
)
|
|
|
|
||
Foreign exchange gains (losses)
|
6
|
|
|
(1
|
)
|
|
|
|
||
Other operating income (expense), net
|
(2
|
)
|
|
(2
|
)
|
|
|
|
||
Operating Income (Loss)
|
(12
|
)
|
|
(28
|
)
|
|
(57)%
|
|
||
Interest expense
|
(15
|
)
|
|
(13
|
)
|
|
|
|
||
Interest income and other, net
|
—
|
|
|
1
|
|
|
|
|
||
Net periodic pension and OPEB income (expense), excluding service costs
|
—
|
|
|
1
|
|
|
|
|
||
Income (Loss) From Continuing Operations Before Income Taxes
|
(27
|
)
|
|
(39
|
)
|
|
(31)%
|
|
||
Income tax benefit (expense)
|
2
|
|
|
11
|
|
|
|
|
||
Income (Loss) from Continuing Operations
|
$
|
(25
|
)
|
|
$
|
(28
|
)
|
|
(11)%
|
|
Income (loss) from discontinued operations, net of taxes
|
1
|
|
|
6
|
|
|
|
|
||
Net Income (Loss)
|
$
|
(24
|
)
|
|
$
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
||||
Gross Margin %
|
3
|
%
|
|
2
|
%
|
|
|
|
||
Operating Margin %
|
(3
|
)%
|
|
(6
|
)%
|
|
|
|
||
Effective Tax Rate %
|
6
|
%
|
|
29
|
%
|
|
|
|
|
Three Months Ended
|
|
||||||
Net sales (in millions)
|
March 28, 2020
|
|
March 30, 2019
|
|
||||
High Purity Cellulose
|
$
|
250
|
|
|
$
|
286
|
|
|
Forest Products
|
82
|
|
|
75
|
|
|
||
Paperboard
|
50
|
|
|
47
|
|
|
||
Pulp & Newsprint
|
47
|
|
|
51
|
|
|
||
Eliminations
|
(19
|
)
|
|
(18
|
)
|
|
||
Total net sales
|
$
|
410
|
|
|
$
|
441
|
|
|
|
Three Months Ended
|
|
||||||
Operating income (loss) (in millions)
|
March 28, 2020
|
|
March 30, 2019
|
|
||||
High Purity Cellulose
|
$
|
(5
|
)
|
|
$
|
(3
|
)
|
|
Forest Products
|
(1
|
)
|
|
(5
|
)
|
|
||
Paperboard
|
5
|
|
|
(2
|
)
|
|
||
Pulp & Newsprint
|
(6
|
)
|
|
2
|
|
|
||
Corporate
|
(5
|
)
|
|
(19
|
)
|
|
||
Total operating income (loss)
|
$
|
(12
|
)
|
|
$
|
(28
|
)
|
|
|
|
Three Months Ended
|
||||||
(in millions)
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Net Sales
|
|
$
|
250
|
|
|
$
|
286
|
|
Operating income (loss)
|
|
$
|
(5
|
)
|
|
$
|
(3
|
)
|
Average Sales Prices ($ per metric ton):
|
|
|
|
|
||||
Cellulose Specialties
|
|
$
|
1,306
|
|
|
$
|
1,284
|
|
Commodity Products
|
|
$
|
590
|
|
|
$
|
847
|
|
Sales Volumes (thousands of metric tons):
|
|
|
|
|
||||
Cellulose Specialties
|
|
123
|
|
|
150
|
|
||
Commodity Products
|
|
113
|
|
|
87
|
|
|
|
Three Months Ended
|
||||||
(in millions)
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Net Sales
|
|
$
|
82
|
|
|
$
|
75
|
|
Operating income (loss)
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
Average Sales Prices ($ per thousand board feet):
|
|
|
|
|
||||
Lumber
|
|
$
|
407
|
|
|
$
|
389
|
|
Sales Volumes (millions of board feet):
|
|
|
|
|
||||
Lumber
|
|
149
|
|
|
147
|
|
|
|
Three Months Ended
|
||||||
(in millions)
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Net Sales
|
|
$
|
50
|
|
|
$
|
47
|
|
Operating income
|
|
$
|
5
|
|
|
$
|
(3
|
)
|
Average Sales Prices ($ per metric tons) (a):
|
|
|
|
|
||||
Paperboard
|
|
$
|
1,107
|
|
|
$
|
1,102
|
|
Sales Volumes (in thousands of metric tons) (a):
|
|
|
|
|
||||
Paperboard
|
|
46
|
|
|
43
|
|
||
|
Three Months Ended
|
March 30, 2019
|
|
Changes Attributable to:
|
|
March 28, 2020
|
||||||||||
Net Sales
(in millions)
|
Price
|
|
Volume/Mix
|
|
|||||||||||
Paperboard
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
50
|
|
|
|
Three Months Ended
|
||||||
(in millions)
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Net Sales
|
|
$
|
47
|
|
|
$
|
51
|
|
Operating income (loss)
|
|
$
|
(6
|
)
|
|
$
|
2
|
|
Average Sales Prices ($ per metric ton):
|
|
|
|
|
||||
Pulp (a)
|
|
$
|
463
|
|
|
$
|
581
|
|
Newsprint
|
|
$
|
417
|
|
|
$
|
594
|
|
Sales Volumes (in metric tons):
|
|
|
|
|
||||
Pulp (a)
|
|
52
|
|
|
37
|
|
||
Newsprint
|
|
40
|
|
|
38
|
|
||
(a) Average sales prices and volumes for external sales only. For the three month period ended March 28, 2020 and March 30, 2019, the Pulp & Newsprint segment sold approximately 16,000 MT and 16,000 MT of high-yield pulp for $6 million and $7 million, respectively, to the Paperboard segment.
|
Three Months Ended
|
March 30, 2019
|
|
Changes Attributable to:
|
|
March 28, 2020
|
||||||||||
Net Sales
(in millions)
|
Price
|
|
Volume/Mix
|
|
|||||||||||
Pulp
|
$
|
28
|
|
|
$
|
(7
|
)
|
|
$
|
9
|
|
|
$
|
30
|
|
Newsprint
|
23
|
|
|
(7
|
)
|
|
1
|
|
|
17
|
|
||||
Total Net Sales
|
$
|
51
|
|
|
$
|
(14
|
)
|
|
$
|
10
|
|
|
$
|
47
|
|
|
|
Three Months Ended
|
||||||
Operating Income (Loss)
(in millions)
|
|
March 28, 2020
|
|
March 30, 2019
|
||||
Operating loss
|
|
$
|
(5
|
)
|
|
$
|
(19
|
)
|
|
March 28, 2020
|
|
December 31, 2019
|
||||
Cash and cash equivalents (a)
|
$
|
43
|
|
|
$
|
64
|
|
Availability under the Revolving Credit Facility (b)
|
90
|
|
|
87
|
|
||
Total debt (c)
|
1,075
|
|
|
1,082
|
|
||
Stockholders’ equity
|
640
|
|
|
683
|
|
||
Total capitalization (total debt plus equity)
|
$
|
1,715
|
|
|
$
|
1,765
|
|
Debt to capital ratio
|
63
|
%
|
|
61
|
%
|
(a)
|
Cash and cash equivalents consisted of cash, money market deposits and time deposits with original maturities of 90 days or less.
|
(b)
|
In addition to the $90 million available under the revolving credit facility, we have approximately $13 million available under an accounts receivable factoring line of credit in France. The amounts available under the revolving credit facility have been reduced by standby letters of credit of approximately $40 million and $33 million at March 28, 2020 and December 31, 2019, respectively. Additionally. we are required to maintain between $80 million and $90 million of availability on our revolving credit facility, therefore we show this as a reduction to availability.
|
(c)
|
See Note 7 — Debt and Finance Leases of our financial statements for additional information.
|
Cash Flows Provided by (Used for):
|
March 28, 2020
|
|
March 30, 2019
|
||||
Operating activities
|
$
|
(13
|
)
|
|
$
|
(27
|
)
|
Investing activities
|
$
|
(13
|
)
|
|
$
|
(31
|
)
|
Financing activities
|
$
|
5
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended
|
Forest Products
|
|
Paperboard
|
|
Pulp & Paper
|
|
High Purity Cellulose
|
|
Corporate & Other
|
|
Total
|
||||||||||||
March 28, 2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations
|
$
|
(1
|
)
|
|
$
|
5
|
|
|
$
|
(5
|
)
|
|
$
|
(5
|
)
|
|
$
|
(19
|
)
|
|
$
|
(25
|
)
|
Depreciation and amortization
|
2
|
|
|
4
|
|
|
1
|
|
|
30
|
|
|
—
|
|
|
38
|
|
||||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
EBITDA
|
$
|
1
|
|
|
$
|
9
|
|
|
$
|
(4
|
)
|
|
$
|
26
|
|
|
$
|
(5
|
)
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
March 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
(21
|
)
|
|
$
|
(28
|
)
|
Depreciation and amortization
|
2
|
|
|
4
|
|
|
1
|
|
|
29
|
|
|
—
|
|
|
36
|
|
||||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
||||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
||||||
EBITDA
|
$
|
(3
|
)
|
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
25
|
|
|
$
|
(19
|
)
|
|
$
|
10
|
|
|
Three Months Ended
|
||||||
Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation
|
March 28, 2020
|
|
March 30, 2019
|
||||
Cash provided by (used for) operating activities - continuing operations
|
$
|
(13
|
)
|
|
$
|
(31
|
)
|
Capital expenditures (a)
|
(10
|
)
|
|
(27
|
)
|
||
Adjusted Free Cash Flows
|
$
|
(23
|
)
|
|
$
|
(58
|
)
|
(a)
|
Capital expenditures exclude strategic capital expenditures which are deemed discretionary by management. Strategic expenditures for the first three months of 2020 were approximately $2 million. Strategic capital expenditures for the same period of 2019 were approximately $4 million.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Part II.
|
Other Information
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number of Shares Purchased (b)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
|
||||||
January 1 to February 1
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
60,294,000
|
|
February 2 to February 29
|
3,724
|
|
|
$
|
2.70
|
|
|
—
|
|
|
$
|
60,294,000
|
|
March 1 to March 28
|
176,227
|
|
|
$
|
2.48
|
|
|
—
|
|
|
$
|
60,294,000
|
|
Total
|
179,951
|
|
|
|
|
—
|
|
|
|
(a)
|
As of March 28, 2020, approximately $60 million of share repurchase authorization remains under the authorization declared by the Board of Directors on January 29, 2018.
|
(b)
|
Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials Incentive Stock Plan.
|
Item 6.
|
Exhibits
|
Agreement, dated March 6, 2020, by and between Rayonier Advanced Materials Inc., Pangaea Ventures, L.P. and Ortelius Advisors L.P.
|
|
Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on March 9, 2020
|
|
Form of Rayonier Advanced Materials Inc. Incentive Stock Plan Supplemental Terms Applicable to the 2020 Equity Award Grant*
|
|
Filed herewith
|
|
Description of Rayonier Advanced Materials Inc. 2020 Performance Share Award Program*
|
|
Filed herewith
|
|
Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Furnished herewith
|
|
101
|
The following financial information from our Quarterly Report on Form 10-Q for the three months ended March 28, 2020 formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three Months Ended March 28, 2020 and March 30, 2019; (ii) the Consolidated Balance Sheets as of March 28, 2020 and December 31, 2019; (iii) the Consolidated Statements of Cash Flows for the Three Months Ended March 28, 2020 and March 30, 2019; and (iv) the Notes to Consolidated Financial Statements
|
|
Filed herewith
|
104
|
Cover Page Interactive Data File - formatted as Inline XBRL and contained in Exhibit 101
|
|
|
|
|
Rayonier Advanced Materials Inc.
|
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ MARCUS J. MOELTNER
|
|
|
Marcus J. Moeltner
Chief Financial Officer and
Senior Vice President, Finance
(Duly Authorized Officer and Principal Financial Officer)
|
i.
|
in connection with the performance of your duties on behalf of the Company, committing an illegal act, including, but not limited to, embezzlement or misappropriation of Company funds, or willfully failing to comply with the policies and procedures of the Company as determined by the Committee;
|
ii.
|
except for actions taken on behalf of the Company, directly or indirectly, engaging in or assisting others in soliciting, persuading, hiring, recruiting, or attempting to solicit, persuade, hire or recruit, any person employed by or under contract with the Company (or who was employed by or under contract with the Company in the six-month period preceding the date of such prohibited contact); or
|
iii.
|
engaging in any business, services or activities whatsoever, whether as an employee, director, consultant, advisor, agent, partner, joint venturer, sole proprietor, investor or stockholder, for or on behalf of, a business or enterprise engaged in researching, developing, manufacturing, distributing, marketing and/or selling dissolving wood pulp, including specialty fibers used in chemical applications, anywhere in the world (the foregoing being referred to as the “Non-Competition Restriction”). You agree and understand the Company competes on a worldwide basis, having sales offices internationally that cover geographic areas all over the world, sells the majority of its volume outside the United States, and has multiple foreign competitors, and that this Non-Competition Restriction shall apply worldwide because, for all of these and other reasons, the disclosure of the Company’s Confidential Information would be competitively harmful to the Company. The Non-Competition Restriction shall not apply, in each case, (1) to the extent of your status as a mere stockholder holding less than one percent (1%) of the outstanding shares of any such entity whose shares are listed and posted for trading on a recognized public stock exchange, or (2) if waived in a writing signed by the Company’s General Counsel, which waiver shall be granted or denied in the Company’s sole and absolute discretion; provided, however, that, in the event your employment with the Company is involuntarily terminated for reasons other than cause (as determined by the Committee), approval of a request for a waiver made by you shall not be unreasonably withheld. The Company will provide a response to any such waiver request with fifteen (15) days of receipt. Such a waiver by the Company’s General
|
(i)
|
with respect to Award Shares received by you, in the case of shares of stock, (x) the return of all Award Shares received and continued to be held by you, less any Award Shares you have previously sold to pay taxes on such award, plus (y) if some or all of such Award Shares have been sold by you (exclusive of the amount sold to pay taxes on such reward), an amount equal to (a) the number of Award Shares you have sold (exclusive of the amount sold to pay taxes on such award) multiplied by the selling price per share (and, only in the case of the “buy and hold” exercise of an option awarded under the Plan, less the option strike price), plus (b) the Associated Return, and
|
(ii)
|
in the case of cash received by you as a result of the “cashless” exercise of options awarded under the Plan, an amount equal to the cash actually received by you before taxes in respect of the options exercised;
|
|
|
|
|
Payout Matrix (% of target)¹
|
|||
Relative Total Shareholder Return (TSR) ²
|
Max
|
75th
Percentile
|
|
75%
|
125%
|
150%
|
200%
|
Target
|
50th
Percentile
|
|
50%
|
100%
|
125%
|
150%
|
|
Thresh.
|
25th
Percentile
|
|
30%
|
50%
|
75%
|
125%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Absolute 3-Year Cumulative TSR
|
|||
|
|
|
|
25.0%
|
50.0%
|
100.0%
|
150.0%
|
|
|
|
|
Threshold
|
Target
|
Superior
|
Maximum
|
|
Threshold
|
Target
|
Maximum
|
Adjusted EBITDA Margin %
|
9.5%
|
11.5%
|
13.5%
|
Payout Range (% of target)1
|
30%
|
100%
|
200%
|
•
|
The performance payouts will be interpolated among the payout boxes based on final performance (absolute and relative TSR and EBITDA margin improvement) and final payout will be determined by the Compensation Committee and communicated separately.
|
•
|
Payment, if any, will be made in RYAM stock, and may be reduced, to the extent allowed under applicable regulations, by the number of shares of stock equal in value to the amount needed to cover associated tax liabilities whether sold on the market or reclaimed by the company to cover the cash taxes.
|
•
|
Dividend equivalents and interest if applicable, will be paid in cash on the number of RYAM shares of stock earned under the Program.
|
•
|
Dividend equivalents and interest will be calculated by taking the dividends paid on one share of RYAM stock during the performance period times the number of shares of stock awarded at the end of the period. Interest on such dividends will be earned at a rate equal to the prime rate as reported in the Wall Street Journal, adjusted and compounded annually; from the date such cash dividends were paid by the Company.
|
•
|
Total awards will be valued on March 1, 2022, following the end of the three-year performance period. Awards, including dividends and interest, will be distributed to participants as soon as practicable following the valuation dates.
|
•
|
Final awards will be prorated and distributed in cases of retirement, death, or disability in accordance with Plan provisions.
|
•
|
100% of the award value is granted in Performance Shares with a three-year measurement period.
|
•
|
50% of the award value is granted in Performance Shares with a three-year measurement period.
|
•
|
50% of the award value is granted in Restricted Stock Units with a three-year cliff vest.
|
•
|
30% of the award value is granted in Performance Shares with a three-year measurement period.
|
•
|
70% of the award value is granted in Restricted Stock Units with a three-year cliff vest.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Rayonier Advanced Materials Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ PAUL G. BOYNTON
|
|
Paul G. Boynton
Chairman, President and Chief Executive Officer
|
|
Rayonier Advanced Materials Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Rayonier Advanced Materials Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ MARCUS J. MOELTNER
|
|
Marcus J. Moeltner
Chief Financial Officer and
Senior Vice President, Finance
|
|
Rayonier Advanced Materials Inc.
|
1.
|
The quarterly report on Form 10-Q of Rayonier Advanced Materials Inc. (the "Company") for the period ended March 28, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ PAUL G. BOYNTON
|
|
/s/ MARCUS J. MOELTNER
|
Paul G. Boynton
|
|
Marcus J. Moeltner
|
Chairman, President and Chief Executive Officer
Rayonier Advanced Materials Inc.
|
|
Chief Financial Officer and
Senior Vice President, Finance
Rayonier Advanced Materials Inc.
|