Good morning. And welcome to the Rayonier Advanced Materials Fourth Quarter and Full Year 2021 Earnings Conference Call. During today’s presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Mickey Walsh, Treasurer and Vice President of Investor Relations for Rayonier Advanced Materials. Thank you. Mr. Walsh, you may begin.

Thank you, Operator, and good morning, everyone. Welcome again to Rayonier Advanced Materials fourth quarter and full year 2021 earnings conference call and webcast. Joining me on today’s call are Vito Consiglio, our President and Chief Executive Officer; Paul Boynton, our Vice Chair; and Marcus Moeltner, our Chief Financial Officer and Senior Vice President of Finance. Our earnings release and presentation materials were issued last evening and are available on our website at rayonieram.com. I’d 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 list some of the factors, which may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on slides two and three of our presentation material. Today’s presentation will also reference certain non-GAAP financial measures, as noted on slide four of our presentation. 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 slides 18 through 23 of our presentation. I’ll now like to turn the call over to Paul for some introductory remarks.

Hey. Thanks, Mickey, and good morning, everyone. As you know, I stepped down as President CEO of the company January 1 and assumed the role of Vice Chair of the Board. With the completion of our portfolio optimization in 2021, which included the sale of our lumber and newsprint assets, the company was able to reposition itself with a stronger balance sheet and four biorefinery assets well aligned towards the accelerating demand for sustainable bio-based product solutions. This alignment, coupled with strong demand for our industry-leading cellulose specialties products, creates an ideal time for leadership transition. As I shared my retirement plans with the RYAM Board of Directors some time ago, the Board was able to undertake a deliberate and thoughtful search for the company’s next leader. We were fortunate to find Vito Consiglio, a seasoned industry executive with extensive global industrial experience and a proven track record of achieving commercial and operational excellence over a 30-year career, working for specialty material companies such as Rohm and Haas, Danaher and Ashland. Prior to joining RYAM, Vito’s most recently served as an advisor to private equity on deals within the chemicals industry. And prior to that, he was Chief Commercial Officer at Ashland, a valued customer of Rayonier Advanced Materials. And even though I’ll step out from the Board in May, I’ll remain advisor to Vito for the balance of the calendar year to ensure a smooth transition. And of course, I will also remain a large shareholder with continued interest in the value growth of RYAM. I’m excited for our future. Vito has a strong vision for the company and I’m confident he’s the right person to lead us into our BioFuture. So, with that, I’m excited to introduce to you our President and CEO, Vito Consiglio.

Thank you, Paul, and good morning, everyone. I am delighted to be joining you today on my first investor call as President and CEO of Rayonier Advanced Materials. I want to begin with an overview of what attracted me to RYAM and how it aligns well with the strength of the company. Turning into slide five. As a former customer, while the Chief Commercial Officer at Ashland, I experienced firsthand the superior products and technical acumen that Rayonier Advanced Materials provides to the industry. As CEO for the past two months, my appreciation for this has only increased through my time meeting with customers, employees and visiting our R&D and manufacturing facilities. We also have an unparalleled security of supply, anchored by four strategic manufacturing facilities that provide the broadest product portfolio to a wide diversity of end markets. In North America and Europe, we have the capability to make cellulose specialties on five separate and unique operating lines, creating a significant competitive advantage. Rayonier Advanced Materials backbone is built upon its deep knowledge of cellulose chemistry, including bio-based solutions, which we call our BioFuture. The interest in these types of natural non-petroleum-based products has never been higher. This coming year, we will launch a nano cellulose product to replace microbeads in silica in the Personal Care industry through our investment in Anomera. We’re meeting customer demand for natural-based sustainable solutions that do not harm the environment. As we recently announced, we will be making a significant investment into a second-generation bioethanol plant in Tartas, France, to meet the growing demand for non-food-based bioethanol to support cleaner vehicle emissions in line with the European Union’s mandate. These investments add to our existing sustainable products including, TemSilk, which is used to make Lyocell textiles and Kallima Paperboard, which meets the demand for greener consumer packaging applications. We have other strategic initiatives we are working on and we will work and share these details with you at the appropriate time. Leveraging our biorefinery model is the future of Rayonier Advanced Materials. Throughout our 95-year history, the company has consistently developed world-class cellulose specialty products. We also produce and sell approximately $100 million of non cellulose products, including bioenergy and lignosulfonates. We plan to accelerate investment in our assets to further maximize the capabilities of these unique biorefineries and we have a great ESG story. Our products are made from renewable forests, manufactured responsibly in our biorefineries and used in sustainable industries, often as a substitute for petroleum-based products. Finally, the company is in an improved financial situation with ample liquidity. The strategic sale completed last year of our forest products and newsprint assets enable us to focus investment on our remaining core businesses. Rayonier Advanced Materials is well positioned to capitalize on the growing consumer demand for sustainable and renewable products. And as we say, renewable to remarkable is reality. Now I’ll ask Marcus to take us through the financial and strategic highlights for the year. Marcus?

Thank you, Vito, and good morning, everyone. Today, I would like to start by reviewing some of the financial and strategic highlights for the year. Starting on slide six, revenue grew 5% to just over $1.4 billion, while EBITDA for continuing operations improved by $28 million from prior year to $128 million. The EBITDA gains were driven by strong momentum for commodity prices, including fluff, viscose and High Yield Pulps, as well as solid demand for cellulose specialties and Paperboard. With the sale of the lumber and newsprint assets completed earlier in 2021, we further improved our credit profile and provided capital to reinvest back into our assets. We reduced debt by over $155 million in the year and grew our cash balances by nearly $160 million. This cash provides the company with flexibility to further repay debt and invest in our core business. Another key strategic accomplishment was securing double-digit CS price increases, along with volume improvements for 2022, which will help offset cost inflation and grow the High Purity Cellulose segment. Turning to slide seven, High Purity Cellulose sales increased $40 million or 4% to $1.1 billion, driven by a 13% increase in sales prices, offset by a 9% decline in sales volumes. As expected, CA prices were down slightly as per annual negotiated contracts, while we captured significantly higher prices for commodity products. Volume declines were primarily impacted by lower productivity, along with the buildup of finished goods inventory ahead of the upcoming planned maintenance outages. Volumes also declined as we drove toward a more favorable mix shift with strong demand for CS. In addition, continued supply chain constraints impacted volumes. Overall, EBITDA for the segment improved $18 million to $$139 million, driven by the stronger sales, harshly offset by higher costs. Costs were impacted by inflation…

Thank you, Marcus. Turning to slide 13, our EBITDA margins are unacceptable and we cannot continue to operate at this level. The higher costs that we are incurring must be recovered and the initiatives that we undertake must drive profitable growth. We expect to generate EBITDA margins at a much higher level than the current conditions have allowed. Given our specialized asset base, unique product offering, security of supply and technical leadership, the company aims to improve its cost position and generate meaningfully higher EBITDA margins. To achieve this, we have developed a plan focused on five key areas, which I’ve outlined on slide 14. For over 95 years, RYAM has been a sustainable company, yet opportunity remains for us to make this a competitive advantage. Last week alone, we published our 2021 ESG Report, detailing the benefits of our company and established a 40% reduction target to greenhouse gases by the end of the decade. This combined with our recent announcements including the ongoing investment into bioethanol G2 plant at our Tartas facility demonstrate the importance of this key priority. Additionally, I also want to make sure that we have a workforce that represents the communities that we operate in, and is open and inclusive of all ideas and people. We need to ensure that we are getting fair value for our products and services. As a prior customer of RYAM, I know the value that we bring to the market. We need to ensure that our customers recognize this. As you saw on the prior slide, we are increasing prices on CS products to help mitigate inflationary cost pressures and improve margins. Additionally, since joining in January, I’ve had the opportunity to meet with some of our key customers and I will continue to engage in an ongoing…

Thank you. Our first question is from John Babcock with Bank of America. Please go ahead.

Good morning and thanks for taking my questions. Actually, I just wanted to ask, just kind of following up from some of the last comments that you guys made. I was worried if you could provide a little bit more color on what opportunities you see from an operational standpoint to improve the way that RYAM is performing and then on top of that also, the extent to what you see opportunities to further improve RYAM’s position in the market and grow from here? Thanks.

Yeah. Good morning, John. It’s Marcus. We mentioned during our last call that our real focus is on improving the reliability of our assets. And we’ve got a strong commitment to allocate a higher level of custodial capital to our operations. And certainly, running reliably is really our best lever to improve the cost structure of our assets. To your second question, right, obviously, in this inflationary environment pursuing other self-help avenues to help mitigate inflation is important. As Vito has mentioned, we’ve got Joshua on the team. Vito brings a new perspective. We’re actually looking at our commercial agreements and making sure we’re getting fair value for our products. So just ensuring the value proposition that we bring to our customers is being fairly viewed by our customers. So that dialogue is important.

Okay. Thanks for that. And then, I did want one point of clarity, one of your customers looks like it’s starting to shift some of its acetate into more of a growth area, which looks like it’s going to head into athleisure. And I was just wondering the extent to which you can comment whether or not that new product will entail the use of acetate or not and also, if so, what -- whether or not, RYAM’s acetate fits into that opportunity?

Yeah. Certainly, John, there’s a couple avenues people are pursuing to get into garments. We’ve mentioned Lyocell before, but you’re right, the acetate material is making it into textiles to support a sustainable product in that area. So, certainly, we’ve heard of those inroads, and certainly, given our operating footprint would be well positioned to pursue that kind of growth. And we’ve also, as you know, have opportunities in plastics for acetate as well.

Okay. Thanks for that. And then, next just on the cellulose specialties market in the double-digit increases that you guys announced for the year. Might you be able to provide some color on the magnitude of what you mean by double digits? And also, how much was pricing up for the volumes that are -- that weren’t contracted, having -- because I understand at least a portion of your contracts had pricing negotiations for multiyear period and I guess I was curious for the volume that didn’t have that multiyear kind of extension?

Yeah. So, if I stepped back to our original press release in October, right? We have indicated a range of 15% to 30% on open contracts. And then during our last conference call, we guided that on the majority. So at that time, we had indicate, for your modeling kind of take a composite of those reference points. So, certainly, that’s where we’re ending up with the outcome where we’re seeing double-digit increase.

All right. Great. Thanks. And then just last question, before I turn it over, I was wondering if you might be able to talk about the price cost relationship for your different segments over the balance of the year, in part just, given kind of the dynamics in pricing, including the lag effect on pulp and also with CS pricing falling in towards the not until the kind of end of the first quarter, I want to get a sense overall in terms of how you’re thinking about price cost over the first quarter and to the extent that you can comment over the balance of the year?

Okay. And John, you’re looking for that by segment, is that you are indicating?

Yeah. If possible, I mean, obviously, an overview would be useful, but if you could by -- do by segment, that would be great?

Yeah. So, again, we are seeing continued inflation on our key material inputs. So think of wood, chemicals and energy. And energy is the one that in my view and through my lens is accelerating, given what we’re seeing on gas pricing. It’s been a colder winter gas pricing is -- has come up. We’re obviously partially hedged, but there’s still that exposure and energy in Europe, given what’s happening with the destabilization of the energy markets in Europe. And then the last area where we’re seeing inflationary pressures is in the supply chain. So we’re seeing that, think of that across our segments. If I break it down a bit by the other segments, in High Yield, certainly, there’s the logistics challenge. And as we mentioned, pricing was down this quarter, right? But you’re seeing announced increases in the marketplace, as the -- there’s been capacity that’s been deferred in South America. So that’s helping these price increases come across. Paperboard really strong demand, so price increases in the future has been announced by a lot of the major competition and there you’re going to see the impact of pulp as well, right? And lastly, there’s that inflation in our core business, but you probably picked this up from our comments, the demand and the market outlook for our CS products is very positive. But, again, it’s the supply chain, getting it through the supply chain and any spillover volume that we had from last year would mitigate to one -- to some degree as well.

Okay. Thank you. I will get back on the queue.

Thank you. Our next question is from Paul Quinn with RBC Capital Markets. Please go ahead.

Yeah. Thanks. Good morning, guys. Just maybe start with the CS double-digit price increase. If I take the midpoint of that prior range of 15% to 30% and say that’s 22.5%, and say, half or majority of them are open and you got the midpoint? Are we looking kind of like a 12%, 13% price move?

Yeah. Paul, it’s Marcus. That math that you’ve just laid out resonates?

Okay. And then in terms of sales volumes being up, what time -- what -- what’s the metric on that?

So we’re seeing, if you look at volume absolute time sold, given the strong market dynamics across all our end use markets, that’s what we’re speaking to the CS volumes.

Okay. So is that -- do you expect that to be a 5%, do you expect that to be up 10%, what’s the quantity?

Again, we prefer to be, given the challenges in the supply chain, that’s really the wildcard here, but we’re seeing strong pull-through from the customer side.

Yeah. Paul, this is Vito. We probably are going to get that granular on this call. But I tell you, I want to compliment the team for the -- on the progress they’ve made. It’s been a very difficult year. There’s great upside here. So we’re working. We’re continuing to work through the cycle of contracts and that’s a primary focus for us. But from the commodity side, the pricing is quite dynamic there and mutation follows. Some of the transactions are on spot and in nature, our contracts that are in place, they’re going to lag a little bit, we get some work to do there. But I applaud the team for the efforts that they’re making. And this environment we’ve had great success in passing through the inflationary costs. So that’s a big plus for us moving forward.

Okay. Then maybe we could talk about just how that sales volume is going to come in in terms of the cap -- the maintenance capital or maintenance projects in especially heavy maintenance in first half, so is it going to be like a 40% volume in the first half, 60% in the back half or how can you help us sort of model that in?

Yeah. Paul definitely given the outage in the first quarter expect lower volumes, which is going to draw down that overall average, right, for the two -- for the first half.

Yeah. We’re going to need 40, 45, 55?

But certainly Q1 is a challenge right for everybody on the logistic side.

We’re going to need a couple of quarters to see this through?

Okay. And then catch over and pay for it. I mean, typically the way this segment moves with High Yield Pulp is one goes up, one goes down and this quarter both went down. Just trying to understand that Paperboard, because that you’re selling some of the High Yield into Paperboard. What else -- how much craft or NBSK are using in that in -- to make that product and/or another way and another one question would be how much High Yield is going into that Paperboard.

So, well, we purchase around 80,000 tons of craft both hardwood and softwood. And as you know, regionally North American pricing for craft was ahead of China, given the flooding issues in D.C. and some other curtailments and leading of shutdowns. So that’s why you see that that disparity between the cost of pulp going to Paperboards and High Yield being down, because of mainly China for sales there.

Okay. So you’re purchasing 80,000 tons of craft and then you’re consuming about 100,000 tons of the High Yield from actually?

No. No.

Into the Paperboard.

No. In the range of 65,000 tons to 70,000 tons of High Yield.

Okay. That’s really helpful. And then just lastly on CapEx, if I take a look at your sort of base CapEx over the last five years, it’s somewhere around $70 million, you’re guiding to $100 million to $110 million. What are the extra projects that you’re doing?

Yeah. So as we call out the recovery boiler in Jesup, right? So that’s a retooling of the boiler. And as you know, those are done every 20 odd years. So that’s a big item. And in Temiscaming, we’re focused on addressing the larger pieces of equipment in that mill to drive reliability. As you know, the focus in the past and 10 back days was the number 10 boiler. So we’re deploying capital in the other areas to drive reliability.

Okay. And Jesup is Q1, Fernandina Beach and Temiscaming area in Q2 those payments?

So, Fernandina Beach kind of straddles the two quarters, starts in March and April.

Yeah.

Right. And then Temiscaming is May.

And Tartas is?

Right. October.

Paul, as we noted earlier, these are the most extensive shutdowns and reparations work that we’ve done in quite some time. And we look forward to coming out of this in a good position. But these are pretty extensive and it’s the work that needed to be done and will drive us to, I think, step change in the future here.

Yeah. No. I agree with that and I think that helped the reliability, which has been pretty shaky. Just G2 economics, you get a $20 million investment, which -- what are the returns on that?

Yeah. We haven’t shared those yet. Obviously, we’re early in that project, but it’s an exciting one, Paul, and we’ll share those details when we get closer to launch. But it is a high return capital project meeting our strategic deployment hurdle rates.

Yeah.

It puts us in an extraordinary position moving forward and we’re doing the right thing for the environment.

Okay. Upfront if you are going to have , just Anomera, you’ve got a, I think, you’ve got a 44% ownership, do you have an option to buy a majority position or what’s the expectation in the future for that?

No. You’re right on the ownership level and that’s a good level right now, as we move forward and build that business plan out, right? The small manufacturing facility is on the site and they’re making great advances there.

Okay.

Tremendous opportunities on the work that they’re doing, as we mentioned, in the Personal Care industry and we’re looking forward to upcoming product launches here, with the items that they’re working on. There’s a tremendous need right now from consumers demanding these naturally based products and we’re in a really good position there.

And Paul, your question Anomera, it’s the 44 is the voting interest and then, actually, the economic interest is around 48.

All right. That’s all I have. Thanks.

Yeah. Thank you.

Thank you. Our next question is from Paretosh Misra with Berenberg. Please go ahead.

Thank you, and good morning, guys. So, first of all, on inflation, I am just wondering if you could provide some more color as to how much total inflation across all your segments you saw last year and your maybe best guess or your expectation for 2022?

Good morning, Paretosh. It’s Marcus. For 21, as we guided during our last conference call, it’s been confirmed, we’re in the high single-digit range for inflation and it’s across our key manufacturing inputs being wood, chemicals, energy and freight. And through our lens and our business planning, we’re seeing around the same outcome based on our planning right now for the upcoming year.

Thanks for that, Marcus. And then regarding the bioethanol production plants in France, what’s the next step for it? Is there any CapEx that you’re spending on that -- for that project as well this year?

Yeah. So, Paretosh, we had said, we allocated around $40 million in total strategic and close to half would be allocated to that strategic project. So we…

Okay.

We are working on the engineering and all of that.

Got it. Got it. And then, I think, just on the CS business, you had a $4 million favorable impact related to sales emission allowances in Q4. Can you talk about that? Is that something that could recur next year or this year as well or is more like a one-time?

Yeah. Paretosh, we have access to those in France through our production footprint at Tartas. So, yes, that is a reoccurring matter. Again, the important item to note there is, the pricing of those carbon credits are tied to what’s going on in energy pricing in Europe as well. So think of it as an offset, right?

Got it. Got it. And -- got it. Thank you. And then maybe just the last one, besides CapEx, maybe if you could just walk through the other potential uses of cash for 2022?

Well, cash -- certainly the focus is the custodial capital and then the strategic capital and covering our other fixed charges being interest. And I think for your modeling, it’s important to note that we’ve got some further tax coming in just over $20 million and we mentioned the GreenFirst shares. And then, obviously, we had built inventories to support these outages. We’re very focused on our cash conversion cycle and improving our working capital.

Yeah. Thanks. And Paul, all the best for the next phase for your career and life, and Vito, again, congratulations to you on your new role. Thank you, guys.

Thanks, Paretosh.

Thanks, Paretosh.

And it’s Marcus here, just to end, again, a lot of questions on the inflationary environment. I just wanted to emphasize that the inflation that we’re seeing in Q1 and Q2 is at a higher rate. But we’re very fortunate to see a stronger year based on the outlook on volumes. But energy is certainly a common theme and the front-end loaded maintenance outages.

And I guess, what I would add to that Marcus is, when we talk about our timing and the fundamental challenges that we’ll see, it’s going to be unlike prior years in terms of seasonality. So it’s important here that we’re improving and investing to improve our reliability, which we’re doing that in the first quarter and the second quarter, fourth quarter, which is going to cost us in terms of the Q1 and Q2, but we’re going to see huge dividends pay-off on that work as we get into Q3 and Q4. And we’re extremely excited about the future, where we’re going and the work that’s part of that process. So we look forward to talking to you about that.

Thank you.

Okay. I would like to thank you again for your time today. While there are challenges, the opportunities to drive sustainable value creates an excitement in me and throughout the entire Rayonier Advanced Materials team. I look forward to keeping you updated on our results. Thanks so much.

Thank you. This concludes today’s conference. You may now disconnect your lines. Thank you for your participation.