Rayonier Advanced Materials Inc. (NYSE:RYAM) (the “Company”) announced today that its facility at Jesup, Georgia has been impacted by a force majeure declared by its natural gas provider, Southern Natural Gas Company, L.L.C., due to an unscheduled outage of the Elba Express Pipeline’s Hartwell Compressor Station (the “SNG Force Majeure Event”, or “Event”). Southern Natural Gas Company’s notice of this Event can be found at:
https://pipeline2.kindermorgan.com/Notices/NoticeDetail.aspx?code=SNG¬c_nbr=707612
Southern Natural Gas Company has asserted that, during the period of the SNG Force Majeure Event, which commenced on December 24, 2022, RYAM’s Jesup facility will be subject to a financial penalty for each MMBtu of natural gas consumed in excess of a contractually allocated amount. Based on this and other current assumptions, the Company expects the Event could reduce EBITDA by approximately $775,000 to $900,000 per day. Accordingly, if the SNG Force Majeure Event were to continue through the end of 2022, the Company estimates that its aggregate EBITDA would be approximately $6 to $7 million lower than it otherwise would have been without the financial penalty. The Company’s facility at Fernandina Beach, Florida is not affected by the SNG Force Majeure Event.
Prior to the SNG Force Majeure Event, the Company had expected that it would be able to achieve its guidance issued on November 1, 2022, that the Company’s full-year Adjusted EBITDA is expected to exceed $175 million, but the SNG Force Majeure Event may cause the Company’s full-year Adjusted EBITDA to be below that amount. The Company expects to meet its Net Debt guidance of $725 million or better.
The Company has implemented various cold weather operating actions to protect its assets and ensure safe operations, including leveraging alternative energy sources, such as pulping liquor and biomass, to minimize the Company’s reliance on natural gas during the cold weather period. While the Company has been primarily focused on taking all necessary action to keep its facilities operating during the Event, it is reserving all rights to more fully examine, and potentially contest, the validity of the financial penalty.
Despite the SNG Force Majeure Event, RYAM does not currently intend to initiate its own force majeure under its customer and supplier contracts. The Company’s multiple reliable production facilities across multiple geographies have enabled it to adapt production to meet customer orders. If the Event were to worsen or continue beyond the end of 2022, however, the Company could reassess this determination and the need for additional mitigating actions to address customer or financial impacts.
About RYAM
RYAM is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly found in filters, food, pharmaceuticals and other industrial applications. The Company also manufactures products for paper and packaging markets. With manufacturing operations in the U.S., Canada and France, RYAM employs just over 2,500 people and generated $1.4 billion of revenues in 2021. More information is available at www.RYAMglobal.com.
Forward-Looking Statements
Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to RYAMs’ future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance,” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. All statements made in this earnings release are made only as of the date set forth at the beginning of this release. The Company undertakes no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this release. The Company has not filed its Form 10-Q for the quarter ended September 24, 2022. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates, that are identified prior to the time the Company files its Form 10-Q.
These forward-looking statements are also affected by the risk factors and forward-looking statements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 26, 2022 and June 25, 2022, and those set forth from time to time in the Company’s filings with the Securities and Exchange Commission, which are available at www.RYAMglobal.com. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
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