Rayonier Advanced Materials Inc.

and a net secured leverage ratio of 2.9 times Covenant EBITDA. However, given these uncertain market conditions, we've lowered our full year guidance for adjusted EBITDA to a range of $175 to $185 million, and adjusted free cash flow between $5 million and $15 million. With that, I'll hand the call over to Marcus to discuss the financial details. Marcus?

Thank you, Delisle. Starting with our cellular specialty segment on slide five, quarterly net sales decreased by 5 million to 201 million. A 2% sales price increase was more than offset by a 2% decline in sales volume and an unfavorable sales mix. The decline in sales volumes resulted from accelerated customer purchases in the prior quarter and stronger prior year volumes ahead of the indefinite suspension. Operating income for the segment was $31 million, down $7 million compared to the same quarter last year due to higher input costs, mainly higher energy, and operating challenges. EBITDA margins reduced from 27% to 23% as a result of the above impacts. Turning to slide six, in cellulose commodities, net sales declined $19 million to $75 million. This decrease reflects the company's shift away from negative margin commodity grades, partially offset by a 2% increase in pricing. Operating results improved by 6 million year-over-year to a loss of 13 million, primarily due to reduced commodity losses partially offset by higher input costs and operational challenges. Slide 7 covers our new biomaterials segment. Net sales remain steady at 7 million, with growth from bioethanol sales partially offset by lower feedstock availability from the Tartas Cellulose Plant. Operating income was flat at $2 million, as increased shared and ancillary costs to support the segment's new operating structure were offset by lower maintenance expenses. EBITDA margins for the segment held steady at 29%. Our paperboard results are set out on slide 8, Net sales were down $4 million to $49 million, reflecting a 4% decrease in sales prices and a 3% decline in sales volumes due to increased European imports and weaker product mix. The segment recorded an operating loss of $2 million, declining $10 million due to volume and pricing impacts, higher purchase pulp costs and maintenance expenses, as well as the impact of to miscoming custodial site costs. Slide 9 summarizes our high-yield pulp segment, where net sales declined $3 million to $31 million. Sales prices and volumes decreased by 7% and 4%, respectively, as a result of continued market oversupply, notably in China, and shipment timing challenges to customers in India. Operating losses increased to $7 million, driven by lower market pricing, reduced volumes, and to miscoming custodial site costs. Turning to slide 10, the company's consolidated operating income reflects several key drivers impacting the year-over-year performance. Lower pricing in paperboard and high-yield pulp segments were offset by modest price improvements in CS, which came in below due to weaker product mix. We also realized lower sales volumes as we continued to reduce our exposure to non-fluff commodity markets. Costs increased during the quarter. driven by operational challenges at our plants and higher input costs. Corporate costs reflect the $12 million non-cash environmental reserve charge and foreign exchange impacts stemming from a weaker U.S. dollar. Lastly, slide 11 sets out our capital structure and liquidity profile. Our financial position remains strong despite our first quarter performance that fell short of expectations. We ended the quarter with solid liquidity of $272 million, which reflects $130 million in cash, $131 million available under our ABL facility, and $11 million under our French factoring facility. Net secured debt was reduced to $624 million, resulting in a net secured leverage ratio of 2.9 times Covenant EBITDA. Our continued discipline around cash flow, working capital management and strategic capital allocation will ensure we remain in compliance with our debt covenants based on our guidance and as we navigate the uncertainty of the tariffs. We remain focused on maximizing free cash flow generation and maintaining financial flexibility to support the company's strategic initiatives and deliver long-term shareholder value. With that, I will turn the call back to Dilal.

All right. Thank you, Marcus. Let's turn to slide 12. As I mentioned earlier, our immediate focus is on tariff mitigation actions. As mentioned earlier, we have organized these initiatives into three key areas, customer advocacy, market diversification, and operational adjustments. I'll expand further on these mitigation strategies on the following slide. But we remain committed to our key strategic initiatives. Progress for some of these initiatives will likely be paused this year. For example, debt reduction in 2025 will likely be minimal due to the cash flow uncertainty caused by the tariff situation. Also, in the cellulose commodities segment, we will likely increase the production of non-slough commodities in the short term to keep the plants operating at capacity while we work to mitigate the impact of the tariffs. Conversely, we plan to continue to pursue high-return but low-risk strategic investments that will improve operational efficiencies. We also believe that the change in the macroeconomic climate doesn't affect the investment thesis of our biomaterials growth strategy, given that the investments in commerce will be US-centric. So we will continue to execute our biomaterials strategy. The strategy's key projects will continue to advance, and we expect to make final investment decisions on several projects in the second half of this year. Moving to slide 13, currently within our cellulose commodities segment, only our fluff pulp sales to China are directly subject to tariffs. In addition, though, we expect some indirect secondary impact from a few U.S. cellulose specialty customers that are also facing high tariffs into China. To address this challenge, we are actively diversifying our sales channels into non-tariff affected markets, taking immediate steps to gradually shift production toward other commodity grades and engaging in ongoing dialogues with customers to mitigate disruptions. We remain closely attuned to the evolving trade landscape and will continue to proactively take steps to further protect our market position. Board products are USMCA compliant, thus currently avoid tariffs. We are proactively working to reduce our exposure to potential future tariffs. For example, we are taking advantage of the current buy Canada sentiment to increase our Canadian market share. And the Canadian government is positioned to impose retaliatory tariffs on US paper board products if needed. On slide 14, we outline our updated financial guidance and cash flow drivers for 2025. As already noted, our adjusted EBITDA guidance is now in the range of $175 to $185 million, which is roughly a $45 million reduction from the midpoint of our earlier guidance. The primary drivers of this lower EBITDA guidance include the following. We now assume a $20 million reduction in adjusted EBITDA from tariff-related impacts, specifically the estimated direct impact on cellulose commodities and secondarily to our CS customers. We also lowered the adjusted EBITDA guidance by $15 million to reflect our first quarter production problems, which we believe are largely behind us as the scheduled maintenance outages for all the HPC plants were completed in March and April. The new guidance also includes a $12 million non-cash environmental charge and corporate expenses. However, most of the actual cash spent for this charge will not occur before 2028. We are forecasting unfavorable foreign exchange adjustment of $5 million due to the weakened U.S. dollar versus both the Canadian dollar and euro, and we are forecasting input prices to remain largely in line with our prior guidance. Finally, some CS orders were canceled or delayed in April after the initial tariffs were announced. Though we expect that most of these orders will be rebooked, this revenue and accompanying EBITDA will likely be recognized in the second half of the year. Consequently, the second quarter results will be lower than a straight linear extrapolation. Adjusted free cash flow guide is expected to be in the range of $5 to $15 million. Cash interest expense is projected to be approximately $93 million, which is $12 million higher than normal due to the timing of interest payments related to our recent debt refinancing. Maintenance capital expenditure remains at $85 million, primarily driven by the extended plan maintenance outages at our HPC facilities, which, as noted, are largely behind us. The positive $10 million under environmental and other reflected non-cash environmental reserve charge discussed earlier. Working capital is expected to contribute an additional $5 million. And lastly, we have reduced our expected cash outflows related to the France deferred energy payments to $5 million due to timing. On slide 15, we summarized the 2025 market outlook across each of our business segments in greater detail. In cellular specialties, we anticipate a mid-single-digit percentage price increase versus 2024, driven by our ongoing value-over-volume strategy. We believe that Ether's demand will improve and other CS sales volumes will remain robust. However, asset volumes face ongoing stocking pressures, and as I've noted, we acknowledge that asset demand could present additional near-term risk as customers leverage the tariff-related pause in orders during April to accelerate the achievement of their stocking objective. Although this could intensify near-term volume impacts, we believe that such actions would expedite the destocking process, creating a healthier market balance sooner. As a result, we now anticipate Cellular Specialty EBITDA to be in the range of $237 to $245 million. In cellulose commodities, fluff demand remains generally strong, although we anticipate earnings pressure due to the significant Chinese tariff. These impacts will be offset by diversifying our sales channels into non-tariff-affected markets and shifting production to alternate commodity grades. Taking these factors into account, we project cellulose commodity EBITDA to be approximately a negative $5 million for the year. Our biomaterial business is anticipated to deliver modest but positive EBITDA growth, driven by contributions from our France bioethanol and powder lignosulfonate facilities and ongoing strategic investments. We expect biomaterials 2025 EBITDA to be in the range of $8 to $10 million. And paperboard volumes are expected to modestly improve, benefiting from improved market access within North America. However, prices remain under pressure, due to competitive market dynamics, including the startup of new capacity. As a result, we expect paperboard EBITDA to be approximately $25 million for 2025. Turning to high-yield pulp, persistent oversupply continues to create challenging market conditions. In response, we plan to idle one of our high-yield pulp production lines for 11 weeks starting in early June. We anticipate this segment's EBITDA to be approximately a negative $20 million this year. Corporate costs are expected to increase year over year, primarily driven by the non-cash environmental reserve charge in foreign exchange headwinds, partially offset by reduced costs following the completion of our ERP implementation. Overall, we now expect corporate expenses of $70 million for 2025. Lastly, on slide 16, We are targeting a net secured leverage ratio of approximately 3.1 times Covenant EBITDA for year-end 2025, which is well within our debt covenants and remains within striking distance of our long-term objective of less than 2.5 times. Despite the current market uncertainties, we are confident that we will achieve our longer-term EBITDA target of $325 million because the growth and value drivers of our strategy remain intact. Our highly bespoke products in a supply-constrained market allow us to execute our value-over-volume CS strategy. Investment in low-risk but high-return cost reduction projects will increase profit margins and improve our long-term competitive advantage. Our exposure to the non-fluff commodities market will decrease as key cellulose specialties and uses grow. And we continue to strongly believe that the biomaterial strategy is independent of the current tariff risk and thus remains a valuable growth opportunity for IAM. With that, operator, please open the call to questions.