RYAM Provides Update on a Fire at its Jesup Plant

Rhea-AI Summary

Rayonier Advanced Materials Inc. (NYSE: RYAM) reported an isolated fire at its Jesup, Georgia facility on October 11. The fire was quickly contained with no injuries or community risk. The company is investigating the cause. While the plant's C line has resumed operations, the A and B lines will remain offline until approximately October 28 for repairs, primarily focusing on instrumentation and electrical cabling systems.

The Jesup plant, RYAM's largest facility, has a production capacity of 330,000 metric tons of cellulose specialties (A and B lines) and 270,000 metric tons of fluff pulp (C line). RYAM is working with affected customers to address potential impacts. The estimated EBITDA impact is expected to be $15 to $20 million, subject to potential insurance recovery. Further updates will be provided during the third quarter earnings call in early November.

Positive

• Swift containment of fire with no injuries or community risk
• C line operations have resumed
• Company working closely with affected customers to address potential impacts

Negative

• A and B lines offline until approximately October 28
• Estimated EBITDA impact of $15 to $20 million
• Potential disruption to cellulose specialties production (330,000 metric tons capacity affected)

Insights

Financial Analyst

The fire at RYAM's Jesup plant is a significant event with notable financial implications. The estimated EBITDA impact of $15 to $20 million is substantial, representing approximately 2.5-3.4% of the company's market cap. This could materially affect Q4 earnings and potentially spill over into Q1 2024.

The disruption to the A and B lines, which produce higher-value cellulose specialties, is particularly concerning. With a combined capacity of 330,000 metric tons annually, even a short outage could impact revenues. The planned restart on October 28 suggests about 17 days of lost production, potentially translating to ~15,000 tons of lost output.

Investors should closely monitor customer reactions and any potential market share losses. The company's ability to mitigate the financial impact through insurance recovery will be crucial. This incident underscores the operational risks inherent in the industry and may prompt a reassessment of RYAM's risk profile and valuation multiples.

Industrial Safety Expert

The fire at RYAM's Jesup plant highlights both strengths and weaknesses in the company's safety protocols. On the positive side, the swift containment without injuries demonstrates effective emergency response procedures. This quick action likely prevented a more catastrophic event and showcases good coordination with local firefighters.

However, the occurrence of the fire during planned maintenance raises questions about the adequacy of safety measures during non-standard operations. Maintenance periods often present heightened risks due to altered processes and the presence of contractors who may be less familiar with the facility.

The focus on repairing instrumentation and electrical cabling suggests a possible electrical origin for the fire, which is common in industrial settings. RYAM's thorough investigation, in collaboration with experts and authorities, is important for preventing future incidents. Investors should look for any resulting changes in maintenance procedures or capital expenditures for safety upgrades in future reports.

JACKSONVILLE, Fla.--(BUSINESS WIRE)-- Rayonier Advanced Materials Inc. (NYSE: RYAM) ("RYAM"), a leader in High Purity Cellulose, reported that an isolated fire occurred at its Jesup, Georgia facility on October 11 at approximately 6 p.m. during planned maintenance activity. Thanks to the swift action of internal emergency response teams and local firefighters, the fire was quickly contained with no injuries to employees or contractors and no risk to the surrounding community. The Company is thoroughly investigating the event’s causes in close collaboration with relevant experts and authorities.

The Jesup plant is the Company’s largest facility, with a production capacity of 330,000 metric tons of cellulose specialties (A and B lines) and an additional 270,000 metric tons of fluff pulp (C line). While the plant’s C line operations have resumed, the A and B lines will remain offline for repairs with a target start date the week of October 28. The majority of the repairs will be focused on instrumentation and electrical cabling systems in the isolated area near the fire. The Company is working closely with affected customers to address potential impacts during the outage.

While the Company continues to assess the financial cost of the incident, the EBITDA impact is currently expected to be in the range of $15 to $20 million, subject to any potential insurance recovery. The Company will provide further updates on its third quarter earnings call in early November.

About RYAM

RYAM is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly used in the production of 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 generated $1.6 billion of revenue in 2023. More information is available at www.RYAM.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 Rayonier Advanced Materials’ or future or expected 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," "anticipate," and other similar language. However, the absence of these or similar words or expressions does not mean that 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 that these expectations will be attained. It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.

Other important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements that may have been made in this document are described or will be described in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Rayonier Advanced Materials assumes no obligation to update these statements except as is required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241014926904/en/

Media

Ryan Houck

904-357-9134



Investors

Mickey Walsh

904-357-9162

Source: Rayonier Advanced Materials Inc.

FAQ

What happened at Rayonier Advanced Materials' Jesup plant on October 11, 2023?

An isolated fire occurred at RYAM's Jesup, Georgia facility during planned maintenance activity. The fire was quickly contained with no injuries or community risk.

How will the fire impact RYAM's production at the Jesup plant?

The C line has resumed operations, but the A and B lines will remain offline until approximately October 28 for repairs, affecting 330,000 metric tons of cellulose specialties production capacity.

What is the estimated financial impact of the fire incident on RYAM?

The estimated EBITDA impact is expected to be in the range of $15 to $20 million, subject to potential insurance recovery.

When will RYAM provide further updates on the Jesup plant fire incident?

RYAM will provide further updates during its third quarter earnings call in early November.