CorpRaider Posted November 12, 2014 Share Posted November 12, 2014 The head of NA ops was cashiered...like immediately, FWIW. Link to comment Share on other sites More sharing options...
merkhet Posted November 14, 2014 Share Posted November 14, 2014 http://www.dataroma.com/m/holdings.php?m=abc Looks like Abrams picked up a position last quarter. Link to comment Share on other sites More sharing options...
Guest roark33 Posted November 14, 2014 Share Posted November 14, 2014 This Abrams position is old, he filed a 13G on August 8 and has not added to his 2.5m shares since that date (otherwise there would have been an 13G/A). Link to comment Share on other sites More sharing options...
merkhet Posted November 14, 2014 Share Posted November 14, 2014 August 8th is last quarter, no? EDIT: Oh, I see -- it was mentioned in this thread already previously. My bad, I missed that. Link to comment Share on other sites More sharing options...
Chalk bag Posted November 21, 2014 Share Posted November 21, 2014 Per BAML: Yesterday (20th November), Canadian specialty cellulose producer Tembec, the leading global producer of ethers, mentioned on its 4Q earnings call that it expects hi-alpha dissolving pulp pricing to be down again next year (prices are expected to be down 7-8% this year). While this does not come as a surprise, Tembec noted that it expects acetate prices to be weaker than ethers given increased acetate supply. This is important for RYAM as the company is the largest producer of acetate dissolving pulp (used in acetate tow) with 81% of its cellulose specialties production derived from acetate. Link to comment Share on other sites More sharing options...
AzCactus Posted December 3, 2014 Share Posted December 3, 2014 Good article on seeking alpha (see below)---this company appears to have a large moat and lots of FCF. Is anyone waiting for a certain price to be reached or potentially averaging down at this point? http://seekingalpha.com/article/2707425-rayonier-advanced-management-still-extremely-attractive Link to comment Share on other sites More sharing options...
rogermunibond Posted December 3, 2014 Share Posted December 3, 2014 All true. There are some growth concerns related to smoking regs in China and crackdown on gift giving etc. Forecast for China was cut to zero for 2015. There's all the fear that Satori and other Brazilian DP producers are undercutting them. Link to comment Share on other sites More sharing options...
Rainforesthiker Posted December 7, 2014 Share Posted December 7, 2014 So, my preliminary read here is that RYN has been over-paying their dividend by both over-harvesting and selling peripheral acres to generate cash. This is typical, IMHO, in retail yield products, but when it can't be sustained anymore, the bottom really falls out of the stocks. To what extent does this affect RYAM? Certainly it changes my view of the CEO's motivation for the spin-out. But the operations are unaffected? Do any lawsuits make it back to RYAM? TIA I had one personal experience with Rayonier (RYN) about 6 years ago. A real estate broker in WA alerted me to some riverfront property that Rayonier was selling, at what I thought was a very good price (I was able to negotiate an even lower price). They needed a quick sale before the end of the year so they could "make their numbers". Rayonier even put a clause in the contract putting in a large penalty if I was not able to close by X date, as they needed this "income" to fall within that year. As a value investor, this struck me as not the type of company or CEO that I wanted to hitch my wagon to - someone who would sell land at a discount to its value merely because the company felt the need for quick end of year income to juice their reported income for the year. Link to comment Share on other sites More sharing options...
sys Posted December 7, 2014 Share Posted December 7, 2014 I had one personal experience with Rayonier (RYN) about 6 years ago. A real estate broker in WA alerted me to some riverfront property that Rayonier was selling, at what I thought was a very good price (I was able to negotiate an even lower price). They needed a quick sale before the end of the year so they could "make their numbers". Rayonier even put a clause in the contract putting in a large penalty if I was not able to close by X date, as they needed this "income" to fall within that year. As a value investor, this struck me as not the type of company or CEO that I wanted to hitch my wagon to - someone who would sell land at a discount to its value merely because the company felt the need for quick end of year income to juice their reported income for the year. that is very interesting to read. thank you for sharing it. Link to comment Share on other sites More sharing options...
ccap Posted December 22, 2014 Share Posted December 22, 2014 I have been digging into RYAM. It looks cheap if you make steady-state assumptions, but I have some concerns that nobody here has mentioned. It will take more than 4 years for the market to absorb all of the new capacity that has been added. Sateri is Chinese. As Sateri's quality comes up, I suspect the Chinese will shift to Sateri. This would drop RYAM sales by 20%. China is already putting a 20% tariff on lower grade cellulose. I see e-cigs as a big risk. Their growth is staggering. E-cigs will eat into the global specialty cellulose market since they don't have a filter. I'm a PhD chemist, and cellulose chemistry does not come across as rocket surgery to me. Furthermore, these guys only spend $3M/yr on R&D. I don't think it would be as hard to break into this industry as management claims. Any thoughts? Any reason these risks seem off base? Link to comment Share on other sites More sharing options...
bigbluffzinc Posted January 29, 2015 Share Posted January 29, 2015 I have been digging into RYAM. It looks cheap if you make steady-state assumptions, but I have some concerns that nobody here has mentioned. It will take more than 4 years for the market to absorb all of the new capacity that has been added. Sateri is Chinese. As Sateri's quality comes up, I suspect the Chinese will shift to Sateri. This would drop RYAM sales by 20%. China is already putting a 20% tariff on lower grade cellulose. I see e-cigs as a big risk. Their growth is staggering. E-cigs will eat into the global specialty cellulose market since they don't have a filter. I'm a PhD chemist, and cellulose chemistry does not come across as rocket surgery to me. Furthermore, these guys only spend $3M/yr on R&D. I don't think it would be as hard to break into this industry as management claims. Any thoughts? Any reason these risks seem off base? I still need to do more research on the idea but some general thoughts.. Shouldn't pricing still improve gradually as the new supply is absorbed? So shouldn't this still represent a trough in pricing? Shouldn't the same be true about Sateri? I agree that gradually some business will shift away, but first Sateri needs to catch up, and then gradually some business will shift. It seems overly conservative to assume a 20% drop in sales. Does the shift to higher grade mitigate this at all? I'd suspect e-cig's taking of market share to taper out in the long term for a few reasons. The first being that older smokers will be unlikely to make the transition. And the second being that a lot of the younger smokers I associate with use them to smoke indoors but still smoke regular cigarettes outdoors. This could be a sample size issue but it seems a reasonable generalization. You'd know better than me with respect to barriers to entry, I would just point to the same market dynamics that have been mentioned elsewhere. (The lack of new players in the industry over a prolonged period) The final thing that stands out to me is the valuation and the margins of safety that I think exist in the price. After accounting for the 7% drop in 2015 selling prices vs 2014 and perpetuating it the return seems modest but bearable and cash flows seem intact. I don't expect debt with its long term maturities on the back of stable cash flows (albeit recently declining) to present a high probability of permanent capital loss. The upside exists in the absorption of new supply and rationalization of pricing. The recent quarterly loss seems likely to account for the recent law suit that was brought forward (more funds dedicated to environment) and genuinely seem 1-off. Management to me seems to have made a mistake in overestimating how much of the supply they were bringing on would be absorbed, but time may prove that move prudent. (I think) Additionally the other management concerns seem mitigated due to the strength of the shareholder base pre & post spin-off & the fact that this CEO was the CEO of RYN. Management has been using the free cash flow to pay down debt and I agree with that capital allocation decision. The price today represents a significant discount to the price paid by David Abrams/Prem Watsa without significant long term business impairment in my view. It's an extremely low single digit multiple of normalized free cash flow given the debt the business can carry if pricing normalizes and RYAM's new supply is accounted for. It's not an incredible but still fine FCF yield under present conditions. To me it seems like downside risk is limited and upside is attractive. Thoughts? Link to comment Share on other sites More sharing options...
kab60 Posted February 1, 2015 Share Posted February 1, 2015 No position, but chairman/CEO and CFO just bought shares worth 270k around 17 dollar/share Link to comment Share on other sites More sharing options...
kab60 Posted February 1, 2015 Share Posted February 1, 2015 Quoto from CEO on last quarter call: "There is no question in my mind that this company will remain the market leader in the near-term and the decided winner when the markets come back. We believe that there is significant value in our shares for those interested in the long-term investment. Our churn valuation is well below the replacement cost of our assets and the earnings capacity of our company has been shown to be far higher than the near-term results on which we're being valued today" Seems like most of his comp. is based on share performance. Anyone here been adding? Link to comment Share on other sites More sharing options...
yadayada Posted February 1, 2015 Share Posted February 1, 2015 Kind of a big red flag he is saying that the shares are a good investment. And then buying such a small amount really. What will FCF be in 2015 and 2016? Is their moat really that good? Link to comment Share on other sites More sharing options...
kab60 Posted February 2, 2015 Share Posted February 2, 2015 It seems like they've had each of their 10 biggest customers for +20 years and that few competitors have entered the business. Not sure if that is a "moat". Their volumes are up but prices down, so obviously they can't dictate prices (which would be bad for relationsship with customers anyway, according to management). Capex this year should be around $80m but then fall to around $15-20m in the following years from what I gathered from the last transcript. Ebitda this year should decline about $70m to $200-220m, so maybe around $100m FCF? They initiated a cost cutting initiative of $40m in annual savings (which should come into effect from 2016 I believe). They've got quiet a bit of debt, but also retired $50m in 2nd half of 2014. EV/Ebitda around 8,5 in FY2015 it seems, not sure what comps are trading or what "taking-private" multiples are. Link to comment Share on other sites More sharing options...
yadayada Posted February 2, 2015 Share Posted February 2, 2015 The capex thing is really interesting, and they were doing 200m$+ in the past years, and yet they now switched to full specialty mode? It could be that when things turn up, and the new capacity is absorbed, and they move somewhat away from cigarettes, they will generate 200-300m$ in FCF? And with their huge capex spending behind them, they will generate more FCF then earnings in the next few years? I guess it will get worse before it gets better. And with a bit of luck you can still buy in cheap when it is already getting better. Without having to gamble that it wont get a lot worse. Link to comment Share on other sites More sharing options...
FCharlie Posted February 2, 2015 Share Posted February 2, 2015 It seems like they've had each of their 10 biggest customers for +20 years and that few competitors have entered the business. Not sure if that is a "moat". Their volumes are up but prices down, so obviously they can't dictate prices (which would be bad for relationsship with customers anyway, according to management). Capex this year should be around $80m but then fall to around $15-20m in the following years from what I gathered from the last transcript. Ebitda this year should decline about $70m to $200-220m, so maybe around $100m FCF? They initiated a cost cutting initiative of $40m in annual savings (which should come into effect from 2016 I believe). They've got quiet a bit of debt, but also retired $50m in 2nd half of 2014. EV/Ebitda around 8,5 in FY2015 it seems, not sure what comps are trading or what "taking-private" multiples are. I don't believe Capex will fall to $15-20 million... I believe it will fall *BY* $15-20 million From the most recent CC: Chip A. Dillon - Vertical Research Partners Okay. And then I guess the last question is you mentioned the $75 million to $80 million in CapEx this year with boiler MACT. What do you think that should be or how should we think about like 2016, 2017, 2018? Obviously things can change, but directionally would that start to come down in 2016 and sort of what would kind of a run rate be for you, once you take out boiler MACT? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy Yes, we think it would be relatively consistent, taking out boiler MACT. I mean we're going to have a real focus on the critical CapEx needs of the business and the high return projects. So we're going to be effectively managing that with a very sharp eye as we move forward here. Chip A. Dillon - Vertical Research Partners But does that mean - how much of that $75 million to $80 million is boiler MACT that would eventually go away? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy We said $15 million to $20 million and we’ll probably have some of that, we will have a big chunk of that next year as well. Chip A. Dillon - Vertical Research Partners Okay. So really starts to trail off in - $15 million to $20 million total for the two years, so therefore may go down like $8 million to $10 million in 2017? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy No, no it’s 15 to 20 this year and its something of that order of magnitude maybe a little less than in 2016. Chip A. Dillon - Vertical Research Partners And then it drops off.? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy And then it pretty much goes away. Chip A. Dillon - Vertical Research Partners Okay, very helpful. Thanks. Link to comment Share on other sites More sharing options...
kab60 Posted February 2, 2015 Share Posted February 2, 2015 It seems like they've had each of their 10 biggest customers for +20 years and that few competitors have entered the business. Not sure if that is a "moat". Their volumes are up but prices down, so obviously they can't dictate prices (which would be bad for relationsship with customers anyway, according to management). Capex this year should be around $80m but then fall to around $15-20m in the following years from what I gathered from the last transcript. Ebitda this year should decline about $70m to $200-220m, so maybe around $100m FCF? They initiated a cost cutting initiative of $40m in annual savings (which should come into effect from 2016 I believe). They've got quiet a bit of debt, but also retired $50m in 2nd half of 2014. EV/Ebitda around 8,5 in FY2015 it seems, not sure what comps are trading or what "taking-private" multiples are. I don't believe Capex will fall to $15-20 million... I believe it will fall *BY* $15-20 million From the most recent CC: Chip A. Dillon - Vertical Research Partners Okay. And then I guess the last question is you mentioned the $75 million to $80 million in CapEx this year with boiler MACT. What do you think that should be or how should we think about like 2016, 2017, 2018? Obviously things can change, but directionally would that start to come down in 2016 and sort of what would kind of a run rate be for you, once you take out boiler MACT? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy Yes, we think it would be relatively consistent, taking out boiler MACT. I mean we're going to have a real focus on the critical CapEx needs of the business and the high return projects. So we're going to be effectively managing that with a very sharp eye as we move forward here. Chip A. Dillon - Vertical Research Partners But does that mean - how much of that $75 million to $80 million is boiler MACT that would eventually go away? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy We said $15 million to $20 million and we’ll probably have some of that, we will have a big chunk of that next year as well. Chip A. Dillon - Vertical Research Partners Okay. So really starts to trail off in - $15 million to $20 million total for the two years, so therefore may go down like $8 million to $10 million in 2017? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy No, no it’s 15 to 20 this year and its something of that order of magnitude maybe a little less than in 2016. Chip A. Dillon - Vertical Research Partners And then it drops off.? Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy And then it pretty much goes away. Chip A. Dillon - Vertical Research Partners Okay, very helpful. Thanks. My mistake, I think you might be right, but to be honest I'm not really sure what management is saying. Frank A. Ruperto - Chief Financial Officer and Senior Vice President of Finance and Strategy And then it pretty much goes away. - What goes away?! Boiler Capex of $15-20m? How do you interpret it? (I might write IR to clear it up) $85M capex this year, $65-70m next year and the following? Any idea what maintenance capex is at? "I mean we're going to have a real focus on the critical CapEx needs of the business and the high return projects." Not really sure I like the last part. If they spent almost $400m on upgrades for higher margin products they can't sell (CS production facilities used for commodity production) I suppose I'd prefer that they'd delever. No position. Link to comment Share on other sites More sharing options...
Txvestor Posted February 2, 2015 Share Posted February 2, 2015 Management has lost credibility. They are not planning nor executing well. Worse yet, they has been no insider buying inspite of a 50% slide in the stock price in a relatively short period. Suggests to me that the internals are deteriorating at a rate worthy of the stock price decline. Link to comment Share on other sites More sharing options...
kab60 Posted February 2, 2015 Share Posted February 2, 2015 Management has lost credibility. They are not planning nor executing well. Worse yet, they has been no insider buying inspite of a 50% slide in the stock price in a relatively short period. Suggests to me that the internals are deteriorating at a rate worthy of the stock price decline. Not saying it's a whole lot, but CEO and CFO bought shares worth $270,000 at the end of january 2015. Link to comment Share on other sites More sharing options...
yadayada Posted February 2, 2015 Share Posted February 2, 2015 Didnt they say that the stock was good value? That is really not done. And the small insider buying makes you think it is just promotional. Link to comment Share on other sites More sharing options...
kab60 Posted February 2, 2015 Share Posted February 2, 2015 Didnt they say that the stock was good value? That is really not done. And the small insider buying makes you think it is just promotional. Maybe you're right, I'm not really sure, but part of me tends to believe you are; on the other hand (or maybe because of it), comp. is very much related to the stock, so they're already very exposed. If it was a bad investment at this level, I suppose $270,000 is still a meaningful amount or what? Still, I think the company valuation starts to look interesting - that said, I'm not sure what kind of earnings to expect post 2015, so it's somewhat difficult to come up with a decent price range. Anyone still invested? If so, why? Link to comment Share on other sites More sharing options...
bigbluffzinc Posted February 2, 2015 Share Posted February 2, 2015 My opinion as to managements motivation for purchasing shares would be speculation, but the fact that they've purchased shares at all is to me a net positive. I don't have a profound insight that clarifies the concerns that have been raised, but I expected 2015 cash flows to be about what was mentioned in this thread, $100M. That doesn't create a wildly attractive valuation, but I don't see that much downside from there. Maybe I've misunderstood the comments but is someone suggesting cash flow will be negative or fall significantly below $100M? I also see a high probability of high switching costs/barriers to entry based on the lack of entrants. I'm not a chemist nor am I an industry expert (disclaimer), but the lack of entrants into the industry and the logic behind high switching costs due to consumer preference made sense. I also think management brought on too much production too quickly, but I don't see production continuing to pour on and I see CAPEX falling with the build out completed. Over time I expect prices to rationalize as the new supply is absorbed. The upside if that happens seems significant with free cash flow being $150-$200m before bringing on the new production. Maybe I'm missing something but it seems like there's a reasonably high probability that the latter scenario materializes & produces a multi-bagger type return, and in the event it doesn't your left with a meager return. (Not a disaster) I don't see anything that strongly indicates the fundamentals are deteriorating as fast as the share price. Management overestimated how quickly supply would be absorbed, and the business lacks pricing power in an oversupplied environment. Supply still seems to be controlled by the players with market share and if anything this should serve as a deterrent for any player to bring on a ton of new supply going forward. I don't see anything that strongly suggests time won't be a remedy here... *Additionally, I think it's worth noting that with Prem Watsa and David Abrams purchasing shares at roughly $30+, the value of the business would have had to have declined 50%+ in about 6 months for this price to be in line with intrinsic value. I'm not saying they were right or wrong at $30+, only that they would have to be wrong by a considerable margin at this price. Link to comment Share on other sites More sharing options...
kab60 Posted February 2, 2015 Share Posted February 2, 2015 Can you elaborate on what you mean by capacity 'being absorbed'? I've seen it multiple times in this thread; is it simply that demand increases while supply stays steady - and why is that a reasonable assumption? Link to comment Share on other sites More sharing options...
bigbluffzinc Posted February 2, 2015 Share Posted February 2, 2015 Yeah tbh a lot of it is an amalgamation of things I've read and I couldn't find it briefly in hard data form. Here is one of the secondary sources citing 1-3% growth in demand. http://analysisreport.morningstar.com/stock/research?t=RYAM®ion=usa&culture=en-US&productcode=MLE Link to comment Share on other sites More sharing options...
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