Rayonier Advanced Materials Inc.

Good morning and welcome to the Rainier Advanced Materials third quarter 2020 earnings conference call. During today's presentation, all parties will be in a 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 Rainier Advanced Materials. Thank you, Mr. Walsh. You may begin.

Thank you, Operator, and good morning, everyone. Welcome again to Rainier Advanced Materials' third quarter 2020 earnings conference call and webcast. Joining me on today's call are Paul Boynton, our President and Chief Executive Officer, Marcus Moeltner, our Chief Financial Officer and Senior Vice President of Finance, and Frank Ruperto, our Executive Vice President of High Purity and High Yield Cellulose Businesses. Our earnings release and presentation materials were issued last evening and are available on our website at rainieram.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 slide 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 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 are included on slides 15 through 19 of our presentation. I'd now like to turn the call over to Paul.

Thanks, Mickey, and good morning, everyone. I'm pleased with our strong third quarter results, and I'm also proud of the way that we've been able to maintain safe and reliable operations across the company while accomplishing these results. In markets where we've seen robust recovery, such as lumber, we increased productivity to capture incremental value. While in markets where we've experienced continued demand weakness, such as newsprint, we flexed our production to reduce costs. Financially, we've seen the benefit of these actions. Overall, as laid out on page five, we delivered $55 million of adjusted EBITDA for the quarter compared to $36 million last year. Our ongoing efforts to reduce costs along with actions taken in response to COVID-19 helped drive a 200% increase to gross margins and solid cash flows. We saw significant cost improvements in our high purity cellulose segment driven by increased productivity and reliability and lower cost of inputs. These benefits were offset by lower CS volumes as expected and continued weakness in commodity viscose and fluff pulp prices. Forrest Products' lumber prices were a significant contributor to the positive quarterly results. To take advantage of the strong lumber pricing, the operations increased productivity by running extra or extended shifts for part of the quarter, and we'll see this volume upside in our fourth quarter sales. Paperboard remained a stable positive contributor to EBITDA, benefiting from lower input pulp costs. And while we saw ongoing weakness in our pulp and newsprint segment, we continue to optimize operations in our newsprint facility and minimize losses for the segment. Also, we continue to focus on lowering CapEx and working capital to drive liquidity. In total, as a result of our efforts, we generated $34 million of free cash flow through the end of September. Now I'm going to ask Marcus to go into more detail on our quarter results, and then afterwards I'll provide an update on our key objectives for the year before opening up the call for questions. Marcus?