Greetings, and welcome to the Rayonier Advanced Materials' Third Quarter 2017 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mickey Walsh, Treasurer and Vice President of Investor Relations for Rayonier Advanced Materials. Thank you. You may begin.

Thank you, Melissa, and good morning, everyone. Welcome again to Rayonier Advanced Materials 2017 third quarter earnings call and webcast. Joining me on today's call are Paul Boynton, our Chairman, President and Chief Executive Officer; and Frank Ruperto, our Chief Financial Officer and Senior Vice President of Finance and Strategy. Our earnings release and presentation materials were issued yesterday afternoon and are available on our website at rayonieram.com. I would like to remind you that in today's presentation, we will include forward-looking statements made pursuant to the Safe Harbor provisions of federal securities laws. Our earnings release as well as our filings with the SEC with some of the factors which may cause actual results to differ materially from the forward-looking statements we may make. There are also referenced on Slide 2 of our presentation material. Today's presentation will also reference certain non-GAAP financial measures, as noted on Slide 3 of our presentation material. We believe non-GAAP financial measures provide useful information for management and investors but non-GAAP measures should not be considered an alternative to GAAP measures. A reconciliation of these measures to their most directly comparable GAAP financial measures are included on Pages 13 through 17 of our presentation. At this time, I would like to turn the call over to Paul for his opening remarks.

Thanks, Mickey, and good morning, everyone. I am going to start off today's call highlighting recent key activities before turning it over to Frank to review our financial results. Afterward, I will provide an update on our strategic initiatives including the Tembec acquisition and provide current outlook on our business. Yesterday afternoon we reported third quarter earnings which was significantly impacted by hurricane that shut down both of our manufacturing facilities for over a week in early September. We were able to start of effectively but the loss production headed adverse impact on the quarter and will continue to pressure the fourth quarter as certain cellular specialties sales shifted into next year and commodity volumes were loss permanently. As you can imagine it's rare that we purposely discontinue manufacturing activities but mandatory evacuation in Northeast Florida and parts of Georgia made it impossible for us to run during the storm. As a result we implemented an orderly shutdown of our operations to protect our assets ahead of the storm and also to allow our employees to take the necessary personal steps to safeguard themselves and their families. Thankfully our employees and families prevailed safely and our sites had virtually no impact. In addition to the hurricane, we received further news in October that one of our large customers had an operational incidence that will cause them to reduce their demand for cellulose specialty products in the fourth quarter of 2017 which we expect to impact our revenues by an estimated $15 million to $30 million. We are working closely with this customer to support them through their process upset and to mitigate the impact on both companies. Absent these two events we were on track to deliver on the high-end of our original guidance. However as a result we now expect pro forma EBITDA for 2017 to be approximately $180 million and adjusted free cash flow to be $80 million to 85 million. We continue to make excellent progress on our four pillars of strategic growth. Our cost transformation initiative is on target to deliver our forecasted $30 million of cost improvements for the year and our steady pace of cash generation provides financial flexibility to make investments into our other strategic pillars. Specifically within our acquisition pillar, we have significantly advanced towards closing our purchase of Tembec. We have nearly all the approvals and consents required that the final items expected to be received in the coming weeks and anticipated closing shortly thereafter. Later I'll provide an outlook on our current markets and additional information on our pending acquisition but first let me go ahead and turn it over to Frank to review our financials.

Thank you, Paul. Let's look at Slide 4 to review our financial highlights for the third quarter. Sales for the quarter totaled $210 million up 1% from third quarter 2016. The increase was primarily driven by higher commodity sales volumes offset by a 2% decline in CS prices and slightly lower CS volumes. As a reminder the third quarter of 2016 included the planned maintenance outages of Fernandina facility which occurs probably every 18 months. Sales for the nine months were $612 million 4% below prior year period driven by 5% lower CS prices slightly lower CS volumes and a 7% decline in commodity volumes. Operating income for the third quarter 2017 was $18 million excluding $5 million of acquisition related expenses pro forma operating income for the quarter was $23 million compared to $41 million in the third quarter 2016. Year-to-date operating income was $57 million for 2017 while pro forma operating income was $70 million for the first nine months. Our quarter and year-to-date variance analysis for pro forma operating income and the relevant price and volume statistics are provided on slides five and six. As shown on slide five, price improvements added 1 million to the quarter primarily driven by higher commodity sales prices while pricing negatively impacted year-to-date operating income by $13 million. Volumes and sales mix had no impact on the third quarter results and a negative 6 million impact on the nine months. As you can see on slide six for the nine month period CS volumes were down 4000 tons due to the timing of revenue recognition while commodity volumes decreased 12,000 tons from the prior year primarily due to a greater percentage of viscose products and discrete production issues at our facilities. For the full-year we expect CS volumes to be down…

Thanks. Turning to our outlook Slide 11 we continue to see positive signs in most of our end markets ethers, filtration and tire cord market segments are strong and should provide for continued growth opportunities. With the acquisition of Tembec and its strong position in ethers we should benefit from greater diversification into the segment. Commodity markets also remain solid as viscose pricing has strengthened off of midyear lows and absorbent materials’ pricing has settled well above expectations given the new capacity announcements. In acetate due to the combination of excess capacity, flat demand growth in acetate tow end markets and continued pressure from tobacco companies on the tow supply chain this segment remains very competitive. The challenges of the current quarter highlight the need for the company to grow and diversify its business so that one event to one market won't have such a large impact on our overall financial performance. The acquisition of Tembec allows us to participate in attractive markets such as ethers where we see higher demand growth provides a broad base of assets on which to apply our cost transformation processes to lower operating costs and significantly diversifies our business both within and outside of cellulose specialties. The acquisition is progressing nicely and we remain on track to close in the fourth quarter and while there will be many visible changes including putting the entire new company under the name Rayonier Advanced Materials and aligning the leadership across the organization much of the pre close work has been to ensure that customers are fully supported and production processes remain seamless through closing. Separately integration planning teams have been aggressively working to identify synergies and the best ideas from the combined company are servicing. Over the past few months I have gotten to know many of the Tembec's exceptional employees and I am anxious to realize the abundant opportunities the combination will bring. We look forward to closing and integrating Tembec is quickly and effectively as possible. We expect to provide a further update on the acquisition after the closing on our next earnings call in February. With that, I'd like to open up the call for questions.

[Operator Instructions] Our first question comes from the line of John Babcock with Bank of America/Merrill Lynch. Please proceed with your question.

Just wanted to start out with the production issues that you talked about I was wondering if you could provide a little color there since I was a little bit ambiguous?

Yes, we've had some production issues through the quarter. There is not one single one or one single areas just a variety of small ones that affected our production. We’ve always like to think these are behind us but we continue to work on them we don't have those in the future.

Is there any way to quantify the impact of this?

We look at it from time to time, I would say it it's a small portion of the increase in cost that you see in the nine-month and quarterly period somewhere between $5 million and $7 million.

And that’s not included like in any hurricane impact?

No.

Then the next question I had was with regards to the volume declines that you now expect for the year, I was wondering if you could talk about what's driving those I mean particularly obviously you mentioned like the factors from the hurricanes and then the customer issues et cetera but I don’t if you could kind of break those down as well?

Yes, we haven’t broken that out separately what I would tell you is that we’ve announced that we've got $15 million to $30 million revenue impact from the customer issues so I think you can look at some of our pricing for that - for our overall CS business and that will give you a relatively good gauge of where that number is. I think we did say $3 million EBITDA impact from hurricane Irma timing of revenue issues and then obviously some of the production issues will force some of the sales out of the end of the year as well and then a customer impact as well. So those are the key drivers of that change in volumes and if you look at it CS volumes for the year will be down roughly 5% so that means Q4 volumes will be around 100,000 tons and commodity volumes will be down roughly 9% so full year commodity will be closer to 225 to 230 versus the 250ish we had originally said at the beginning of the year.

And then the next question I just want to ask is I guess a little bit more forward-looking while that I guess intent, but I was wondering could you talk about some of your contracts and often if you have any big expertise, coming up you know I realized you have kind of four big customers but I also wondering if you have any others and below that that you may have to kind negotiate with this year?

John we're constantly renewing updating contracts throughout the year and particularly at year end. So there is quite a variety right now, but I am sure the team is - I know the team is working on. You mentioned the three big ones that we report out there, Eastman, and CFC and Daicel and you can see that those currently run out into the future Daicel through 2018 and CFC and Eastman through 2019. So, we’re always working on updating changing and modifying basically either on customer interest or our interest and so those are ongoing, but there is nothing else that I can add any color to that you don't already know.

And the last question I had before I turn it over. I just want to get a sense or rather, verify that I am thinking about this correctly, but with change in mix it’s sounds like the pricing is going to be a little more fairer because of reduction that stay volumes, with the customer issues there. As we think to next year does that make you know comps a little bit more difficult for say, I mean next year should we think that you could see further decline in CS pricing because of that?

I think we’ll give guidance on next year's at our February call John. Just to clarify those certainly, we’re losing CS and the pressure of the customer issues on CS. And so that hurts our mix and so therefore is a negative impact to our CS pricing, so our overall pricing. So, yes I think the flavor you’re looking for is going to have just wait towards the next call.

And John I would just add that we see CS pricing is down 2% for this quarter if you remember it was down much more in the first previous quarters and we said that mix would improve as the year went on and that's what you're seeing in this quarter.

Helped by the acetate reduction rate?

No, I would not say that. Which is the overall, we had a lot of lower end CS mix in the first six months of the year and in this we had more higher-end CS mix.

And so the customers issues because I mean that's primarily is going to be an acetate side so the reduction of acetate volume there doesn't have a significant impact there that would kind you’re under getting out there?

I wouldn’t read that in, I wouldn’t read anything into the acetate mix. We look at the overall CS mix and so it’s hard to break it all in part.

Overall John we've guided that pricing and some of your specialties have gone 4% in 2017. So I think that’s not a real issue you should kind of focusing on and we are right on track for that.

Our next question comes from line of from Roger Spitz with Bank of America/Merrill Lynch. Please proceed with your question.

How much commodity volume did you lose going from fluff to viscose or what was the sales impact and was just a switchover issue always hit more due to the fact that when you produce viscose, the capacity of the facility is just lower than when you're producing fluff?

Roger, it's the ladder right, so when run our viscose, we have to rerun that slower than we would have absorb material product, so when you switch over you get fewer tons out. We are this year we’re actually running higher levels of viscose than fluff than we did in 2016 that’s why it’s more profitable move for us. And so, despite the fact I commented earlier that, it actually fluff prices were above what we thought they were going to be, it's still in our interest to run the majority of our commodity volumes with viscose and even though we get less viscose out the door.

Do you expect any Q1 2018 impact either from hurricane Irma and/or the large customer outage, it sounds like the customer is saying that these operations that use your CS or backup in running already or perhaps they are just running down the inventory you already had on hand of your CS?

So, first of all from hurricane Irma we said we may lose a little bit out of the years of the small amount, Frank has just mentioned that being in the neighborhood of $3 million. With regard to the customer impact, we think that is contained in the fourth quarter. So, and so that’s we are living, we think we are back to normal January 1.

Our next question comes from the line of Chip Dillon with Vertical Research Partners. Please proceed with your questions.

This is Salvator Tiano filing in for Chip. Just a couple of questions on the volume front, so I think at least from our front we are expecting given that you had some direct cost as well from the hurricane impact. Of the 12 million EBITDA need to little bit more weighted towards the third quarter than it was. It seems Q4 will have the majority. So can you describe, little bit, how did when doubled that breakdown, it looks like low sales perhaps inventory went down that didn’t happen.

I can give you a quick breakdown Salvator. We said it's roughly $12 million in total between both the production issues and the loss sales. $3 million of EBITDA associated with loss sales volume. We had roughly $5 million of costs in the quarter so that's really not producing and absorbing the fixed cost right to the P&L. And then the remainder is the higher cost inventory that's built because of the shutdown and startup.

Our next question comes from the line of Steve Chercover with D. A. Davidson. Please proceed with your question.

So, first of all not suggested your relationship with your large customer acrimonious, but you're working hard to accommodate their operational disruption and I'm wondering if it could make things more harmonious and could there be some goodwill therefore for our negotiations going forward?

Steve as you know we had a public dispute a couple years back, we had a long past out, we’ve got great relationship there, they are good solid customer and we'll try to be the best suppliers they have. So we’re always looking to further our interest with them and we hope that being flexible and working with them we earn that right to go forward, but no, it’s a good relationship Steve and we’re proud to have it.

And then with respect to the - there is a merger we’ll talk about Tembec in a moment but there is couple of significant acetate tow producers that are getting married or hitched whatever you want to call it, and I believe one was a former customer and the other player I'm not so sure if there are current customers, so any comment on how that might impact you?

Look there are a couple of folks who are combining out there. Obviously, you’re referring to Celanese and Blackstone which is solid business. Both have been great customers ours in the past, we don't usually refer to anybody who we know after - report out as far as exactly where they stand today. But if we look at that as an opportunity, I would say we are underrepresented in that new combined company in terms of our share and so we look forward to participating with them in growth as we go forward.

And then finally it is fair to say that some of Tembec's businesses specifically lumber and maybe their market pulp are stronger today than when you first announced the deal?

I would say that's very true, obviously we don’t give an update on their business until we close. But if you look at the market they participate in, lumbers very strong right now, high yield pulp is strong and even some areas are little more challenge such as newsprint is actually in a positive way. So their business is stronger than when we looked at it at in the beginning of the year. So, yes we’re pleased to see that and we’re excited to have that on board.

Last one from me, just what is the status of LignoTech, forgive me if I should know but I want starting up?

No, thanks for asking. It's right on track. We have communicated that it will start-up in midyear 2018. So right now the projects are right on cost and right on the timing, so we're excited to have that on board and move forward with it.

Our next question comes from the line of Paul Quinn with RBC Capital Markets. Please proceed with your question.

Just a couple of questions especially on the outlook here. Were you talking about acetate excess capacity I'm just trying to understand where you see that excess capacity in the marketplace is that - that's not excess capacity from you yourself but from others and maybe you could help me understand where those others lie?

Well I think just the bottom line, it remains attractive and attractive segment for the industry and therefore there are folks who like to have a greater position in that. What makes it again - whether that’s trading up current production from one area to another area or its capacitated maybe they don't have the run rates that they wish they had. So it just makes a very attractive market for most of us continue to move into. And given the dynamics we referenced there which is our customers having a lot of pressure on them and this interesting opportunity for other players to come into it, this just makes a very competitive sales position. And we continue to see that it's been that way here for a few years. Paul we talked about a lot of the other issues have been kind of worked away out of the system particularly the buildup of inventory in China that seems to have all that stabilize so that's very positive. We think the actual demand out there is flat at best so it's not a growing market but we don't see it dramatically changing negatively either. So there's some positive stability out there as well, but it just remains attractive and therefore we’re going to continue to see folks trying to move into it, and it’s just what it is.

Then if I could flip over the cloudy side and maybe give us your sort bounce back I guess your outlook has bounce back from this goes from Q2 lows and where do you that market going in near-term and then I was also surprised by your comment that you saw the absorbent as study where I'm seeing almost monthly price increases on the plus side?

First of all this goes smart, we think long-term represents an attractive market for us right. We think of a really nice commodity product that we can sell into that market. We see it growing along with the rayon textile market continues to grow at 5% to 7%, 8% a year. We see supply constraints in that segment from some of the traditional cotton linter producers particularly in China. There is a lot of environmental pressures on the supply side there. So we view that as an overall attractive market for us. And actually for I am glad you lined up because we actually have a new product platform that we are now moving into the market starting this quarter it's a product platform we call [indiscernible] and essentially it’s the same high quality product of fiber that we make today for the market but in a much lower cost position. So that would be positive EBITDA for us going forward. So it’s an interesting market segment from a commodity perspective. Yes, you see absorb materials I referenced above expectations something our expectations. You remember back we had some capacity announcements into that segment last year and beginning of this year and so we thought it would come under pressure as did most of the folks who track the market out there. And if they - far more resilient than as you mentioned even upward than we anticipated. So we call it steady yes it could be up including announcements this week by other. So yes it remains a good market as well so both commodity markets for us are looking in a positive direction.

And just lastly, we expect Tembec to have a monster quarter and as to whether they can report hood on it but any ideas how you’re going to report in the next quarter there are sales specialties, I mean they do some commodity as well are you going to merge that in your commodities and leave to say your specialty is the same so we’re going to have a mix of acetate and ethers plus others within that CS bucket?

You should anticipate that we will effectively take our specialty cellulose and put it into there spec, so category that's the current thinking it could change but that’s the current thinking.

[Operator Instructions] Our next question comes from the line of Dan Jacome with Sidoti and Company. Please proceed with your question.

Just two really small question on Tembec, I think you already answer this on with Steve’s question but for the sawmill of Tembec your feeling hasn't changed at all in May. I know when you announced the transaction you sounded pretty positive on Tembec far more, I just want confirm that that is still the case?

Yes absolutely. We've made a commitment to run all their assets and those facilities are producing really positive cash. And so we think they've also got some opportunity for investment in them to making even more productive. So we look forward to having those as part of our portfolio. Can you run those going forward. Obviously again as we move forward we’re going to have a whole portfolio of businesses and we’ll always continue as any company were to look at them. But going forward this is our plan to run everything of course.

I can't remember are those some those are going to require any step up in CapEx as I think they were making I don’t follow Tembec but I think they were making their own growth kind of discretionary CapEx for the sawmill, just remind us as much you can how much CapEx you’re going to be inheriting from this company as you mean the deal does close and how much it may be maintenance or it’s all going to be maintenance CapEx going forward that you bring on?

Yes, they've looked historically I'd say roughly Canadian $40 million of maintenance CapEx across their broad business line. With some of the improvement projects and the cash flow generation we have in the combine entity. I think we will look for more strategic projects to invest and significantly enhance the competitive position of assets and that includes our mills, as well as the sawmill. So across the board we’ll have to look at each and every one and say where is the best place to deploy our capital, but we don't see a dearth of opportunities, we think there is going to be plenty of opportunities to invest and improve the profitability and competitive position of all the assets.

Last one, and you don’t have to answer this if you can but if this deal closes and it does reduce the volatility of your overall platform, would the board be amenable if you maybe something more steady on the common stock dividend or as you get closer to the transaction closing I guess I am asking has the board may be looked at things of that nature for longer-term maybe in 2018?

Yes, we look at asset allocation, cash flow allocation all the time. Every time we talk as a management team and obviously with our board. I think our focus is in the near-term on taking advantage of these high return projects that we can find to boost cash flow and then deleveraging the business, those are two key priorities from that. As we move down the road, we’ll look more fundamentally but we said a number of times what we like to do is get the leverage down and then if we find another opportunity like Tembec, we'd like to take advantage of that sometime in the future.

Thank you. Mr. Boynton there are no further questions. I'd like to turn the floor back to you for any final remarks.

Great, thanks Melissa. And thanks everyone for joining us today. We look forward to updating you on our progress in a timely manner as we move forward. Have a great day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.