Rayonier's Q1 2025 Earnings Call: Unpacking Contradictions on Tariffs, CS Volumes, and Market Strategies

Tariff impact on CS volumes, high purity cellulose business expectations, impact of tariffs on CS sales, exposure to China and tariff impact, and viscose production strategy are the key contradictions discussed in Rayonier Advanced Materials' latest 2025Q1 earnings call.



First Quarter Financial Performance:
- Rayonier Advanced Materials Inc. reported an 8% decline in revenue and a 67% reduction in adjusted EBITDA for Q1 2025 compared to Q1 2024.
- The decline was primarily attributed to accelerated customer purchases into the previous quarter due to supply chain disruptions, operational setbacks, and increased energy prices.

Tariff Impact on Revenue:
- Approximately $85 million of Rayonier's annual revenue is affected by the 125% tariffs imposed by China on U.S. sourced cellulose commodities.
- The company is mitigating this risk through customer advocacy, market diversification, and operational adjustments.

Challenges in Cellulose Specialties:
- The Cellulose Specialties segment reported a 2% decline in sales volume, partially due to accelerated customer purchases and stronger prior year volumes ahead of the Temiscaming indefinite suspension.
- The segment experienced a reduced EBITDA margin, from 27% to 23%, primarily due to higher input costs and operational challenges.

Paperboard and High Yield Pulp Market Dynamics:
- Paperboard sales were down $4 million, with a 4% decrease in sales prices and a 3% decline in sales volumes, influenced by increased European imports and weaker product mix.
- High yield pulp sales declined by $3 million, with a 7% decrease in sales prices and a 4% reduction in volumes, due to market oversupply and shipment timing challenges.