Rayonier Advanced Materials Inc (NYSE:RYAM) shares popped 35.20% higher to $13.79 on Tuesday after the company printed its earnings report, with investors focusing on upbeat forecasts for the year.
Rayonier Advanced Materials Inc (NYSE:RYAM) reported first quarter 2016 net income of $21 million or $0.49 diluted earnings per share. This is significantly higher compared to $11 million or $0.25 per share in the same quarter a year ago.
Rayonier Advanced Materials Inc (NYSE:RYAM) is primarily engaged in producing cellulose specialties, with its product lines including cellulose specialties and commodity products.
First quarter 2016 net sales were $218 million, representing a decrease of $3 million or a 2% drop from the $221 million in same quarter last year. This decline was driven by a drop in cellulose specialties sales prices and slightly lower cellulose specialties sales volumes, which were partially offset by increased sales volumes of commodity products.
The company continues to focus on cost-cutting measures in order to boost profits. “We remain steadfast in our strategy to permanently reduce our costs, invest in our assets and accelerate our innovation platform to drive value to shareholders. Our progress to date is encouraging and we are pleased to improve our full-year guidance,” stated Rayonier Advanced Materials Inc (NYSE:RYAM) CEO and President Paul Boynton.
In fact, the earnings report also indicated that management increased EBITDA and adjusted free cash flow guidance by $10 million to $185 million-$200 million and $85 million-$95 million, respectively.
In the past few months, Rayonier Advanced Materials Inc (NYSE:RYAM) renegotiated cellulose specialties contracts with its three largest customers through 2018 and 2019 while projecting small declines in prices and volumes for the year. Since specialties markets continue to face a combination of industry oversupply and weaker end-market demand, Rayonier Advanced Materials began a three-year transformation initiative to significantly improve its cost structure and enhance cash flows, targeting cost savings of $75 to $90 million from this year until 2018.
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