Good morning and welcome to the RYAM Fourth Quarter and Full Year 2022 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. Thank you, Mr. Walsh. You may begin.

Thank you, and good morning, everyone. Welcome again to RYAM’s fourth quarter and full year 2022 earnings conference call and webcast. Joining me on today’s call are De Lyle Bloomquist, our President and Chief Executive Officer; and Marcus Moeltner, our Chief Financial Officer and Senior Vice President of Finance. Our earnings release and presentation materials were issued last evening and are available on our new website at ryam.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 lists some of the factors that may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on Slides 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 financial 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 comparable GAAP financial measures are included on Slides 18 through 27 of our presentation. I’d now turn the call over to De Lyle.

Thank you, Mickey, and good morning. I will start today with financial highlights for 2022 before turning the call over to Marcus to provide additional details on each of our businesses. After Marcus' update, I will provide an outlook and guidance for 2023 before opening up the call for questions. Let's start by turning to slide five. We finished 2022 with positive momentum on revenue and EBITDA. Revenues increased $309 million or 22% from the prior year to $1.7 billion, driven by strong demand and prices across all of our products, including cellular specialties, which represent half of our revenue and a significant majority of our EBITDA. Adjusted EBITDA for the year increased $50 million or 39% to $177 million as price increases realized more than offset extraordinary cost inflation. The increases from the prior year were led by our high purity cellulose segment, which delivered $150 million of adjusted EBITDA, up $11 million or nearly 8% from the prior year. Paperboard delivered a solid $53 million of EBITDA, up $25 million or 89%, driven by strong demand for sustainable packaging and higher prices. High yield pulp contributed an additional $19 million of EBITDA as we took advantage of high prices in the fourth quarter to capture significant value for this segment. Corporate expenses improved $5 million from last year to $45 million for the full year, driven by a change in the valuation of the GreenFirst shares and favorable currency impact, which were partially offset by higher variable compensation. Now I'd like to ask Marcus to take us through the financial details for 2022 before I provide an outlook for 2023.

Thank you, De Lyle. Starting with the high purity cellulose segment on slide six, sales for the year increased $245 million or 22% to $1.3 billion, driven by a 19% increase in sales prices for both CS and non-CS products. Sales volumes increased 4% to 918,000 metric tons, driven by improved reliability and logistics. As expected, sales volumes in the fourth quarter of 2022 were 11% higher compared to the same period in 2021, driven by a greater mix of commodity products, which led to a 5% lower average selling price in the current quarter compared to the third quarter of 2022. Net sales for the year included $115 million of biomaterial sales, primarily from biomass energy and lignin. Overall, EBITDA for the segment improved $11 million to $150 million, driven by higher prices and sales volumes, partially offset by the impact of significant cost inflation. Turning to slide seven. Paperboard segment sales grew $42 million, driven by a 27% increase in sales prices, partially offset by a 6% decline in sales volumes. EBITDA for this segment grew 89% or $25 million to $53 million as higher sales prices more than offset increased costs for purchased pulp, chemicals, logistics, and the impact of lower sales volumes. The slight decline in sales price in the fourth quarter from the third quarter was driven by a weaker sales mix. Turning to the high yield pulp segment on slide eight. Sales increased by $24 million from the prior year driven by a 25% increase in sales prices, partially offset by a 3% decline in sales volumes. Sales volumes for the year were impacted by logistics and timing. However, as sales prices rose in the fourth quarter amid strong demand, we were able to increase volumes to deliver a strong quarter to finish the year. Overall, EBITDA for the segment improved $9 million to $19 million for the year, including $13 million in the fourth quarter. Turning to slide nine. On a consolidated basis, 2022 operating income improved $36 million from 2021 to $26 million. Sales price improvements across each segment and volume improvements in HPC driven by strong demand for CS more than offset $258 million of higher costs driven by persistent inflation throughout the year. SG&A and other expenses increased $12 million, primarily driven by higher severance and variable stock compensation, partially offset by favorable FX rates. Turning to slide 10. Net debt declined $41 in the quarter to $707 million as we continue to repay debt. The company reduced gross debt by $73 million in 2022 while still preserving solid liquidity. Liquidity ended the year at $301 million, including $152 million of cash. In addition to debt repayments, capital allocation in 2022 focused on increased maintenance CapEx to improve reliability after investments were reduced through the pandemic years. We also invested $34 million on strategic capital, primarily focused on high return projects, which will provide immediate benefits to the business. Net debt-to-EBITDA ended the year at four times, an improvement of nearly 1.5 turns from 2021. With lower debt and improving credit metrics, we continue to monitor capital markets and are prepared to opportunistically refinance our 5.5% senior unsecured notes, which mature in June of 2024. With that, I'd like to turn the call back over to De Lyle.

Thank you, Marcus. Turning to Slide 11. Our top priority for 2023 is to opportunistically refinance our senior notes, which mature in June 2024. As Marcus noted, our leverage declined to 4 times at the end of 2022 and we expect it to further decline to 3.5 times by the end of the first quarter. This will position us well to refinance our debt on more attractive terms than we saw earlier this year. Building on the momentum experienced in 2022, we will continue growing our EBITDA in 2023 through two key areas. First, we have started to realize the benefits from our investments to improve reliability, including increased sales and lower unit fixed costs. Currently, we are experiencing some pockets of softness in demand and as a market leader, we are matching our production to meet market demand. While this may temporarily impact sales volumes, the improvement in reliability will allow us to better control our cost. Second, we are capturing a higher value for our products. As a result of our negotiations, our 2023 cellulose specialties prices are expected to increase by a high single digits percentage versus 2022 levels, inclusive of the cost surcharge. We also continue to capture value for our fluff and paperboard businesses as demand for sustainable solutions in these markets remains high. The new capacity that came into the viscose market in 2021 and 2022 impacted viscose pricing modestly in the fourth quarter of 2022. But given our minimal exposure to this market, we have not experienced a significant impact. The improved EBITDA for 2023 was converted to significantly improved free cash flow, which we forecast will be between $30 million and $60 million. Capital allocation of this free cash flow will be prioritized towards debt reduction and investments in high return strategic capital projects, which I will discuss in detail shortly. Our free cash flow guidance assumes a $45 million benefit from working capital in 2023, which we intend to capture by achieving specific targets for inventory, receivable and payables. We also assume 2023 total CapEx to be in the range of $140 million to $145 million. This includes $15 million to $20 million of catch-up maintenance capital, which was deferred during the pandemic, and $30 million to $35 million of discretionary strategic capital net of financing. On slide 12, we graphically depict how our $200 million to $215 million of adjusted EBITDA guidance converts to free cash flow and supports our capital allocation decisions to either repay debt and/or invest in attractive strategic projects. Our capital allocation decisions will be based on available cash, debt repayment commitments and specific project returns. On Page 13, we summarize our key financial objectives and criteria for strategic projects. Our long-term net leverage target remains at 2.5 times EBITDA, which we plan to attain by growing EBITDA and repaying debt. We also expect to allocate capital into attractive and high return strategic projects. We have three main criteria that we use to vet strategic projects. First, the payback period should be less than three years. Second, the return on equity needs to exceed 20%, though this hurdle rate may be increased depending on the risk associated with the project. To increase the strategic project's ROE, we will look for low cost financing options, including low cost loans and grants. Finally, we review each project for the impact it would have on our sustainability commitments, including improving the safety for our employees and the impact to our planning, specifically lowering our greenhouse gas emissions. For 2023, our strategic capital investments will be focused on four key areas. We have previously discussed the Tartas Bioethanol project. This is an investment in a world-class fermentation plant that will be initially purposed to produce second-generation bioethanol, which will be sold to a large petrochemical company under a multiyear take-or-pay contract. This Red II certified bioethanol will be used in automobiles to reduce greenhouse gas emissions and substitute for traditional ethanol produced from food sources such as corn. The total investment for this project is $39 million, with $28 million financed by low-cost green loans and $4 million of grants. The bulk of the spending will be in 2023. The total cash investment from RYAM for this project from 2022 through 2024 is expected to be $7 million and will provide an annual EBITDA benefit of $9 million to $11 million starting in early 2024. This project has already broken ground and is expected to be completed early next year. The second large project will be debottlenecking Jesup fluff production and finishing capabilities. $10 million of the $14 million investment was made last year, with the remainder being made in 2023. This investment will provide a $7 million annualized benefit to the company starting later this year. We're also focusing investments on production automation and other high investment return projects. This includes a number of smaller investments totaling between $6 million to $11 million that will provide very high returns on investment and expected $5 million to $7 million in annualized EBITDA. Lastly, we will continue investing in our business processes and data infrastructure to increase corporate efficiencies and effectiveness. In 2022, we started the process to get all of the facilities in key processes onto a common ERP platform. Next, I will provide an outlook on each of our businesses. Turning to Page 14. As a result of our negotiations, our 2023 cellulose specialty prices are expected to increase by high single-digit percentages versus 2022. 2023 demand for our high purity business is currently forecasted to be mixed. We are seeing strength in acetate, casing, filtration and nitrocellulose, while there's softness for construction ethers, food additives in MCC and tire cord. Fluff demand remains resilient. While fluff prices have fallen off their peak levels experienced in the fourth quarter of 2022, pricing has been slower to decline than the more commoditized pulp markets. Viscose demand started the year soft but there are signs of improvement since the end of the Chinese New Year. Our customers, which are the viscose staple fiber producers, have increased their operating rates back to the 80% range, which is up from 50% at the end of 2022. Cost deflation in our high purity segment has slowed, but our input prices are expected to remain at elevated levels for the near term. As I noted, high purity business will realize some uplift in 2023 and future EBITDA from the investment in strategic projects. Our biomaterials business will benefit from our strategic investments that are focused on the increasing demand for sustainable products starting with our investment in the fermentation plan at Tartas that will initially produce RED II certified bioethanol starting in 2024. As demand for sustainable products continues to grow, we will increase our capabilities to meet this global demand. In paperboard, prices are expected to increase from 2022 levels driven by strong demand for packaging and commercial print products. Volumes are expected to increase as a result of improved productivity and logistics, while costs are expected to improve as pulp prices decline. In high yield pulp, prices are expected to decline as the global economy slows. Sales volumes are expected to improve with improved logistics and productivity. A reopening of the Chinese economy may provide a catalyst for improved pricing later this year. Corporate expenses are expected to be higher than 2022 due to expenses associated with the ERP implementation and FX benefits that are not expected to repeat in 2023. Overall, we expect to deliver $200 million to $215 million of EBITDA in 2023, an increase of 13% to 21% over the prior year. On Slide 15, we highlight the key sensitivities that can impact our EBITDA guidance. EBITDA is highly leveraged to our cellular specialty prices. However, these prices are mostly negotiated on an annual basis. In addition, we successfully negotiated pricing flexibility in our cellulose specialty contracts and in the event of renewed cost inflation. Thus, we believe that pricing and cost risk in our cellular specialty business should have little impact on the 2023 guidance. Pricing changes on non-cellular specialty products have a smaller impact on EBITDA for the same 1% change in price. Paperboard products are sold under a mix of fixed prices and variable index pricing with approximately two-thirds fixed for the year, thus providing further stability for the 2023 guidance. We believe our diverse exposure to end markets and strong linkage to the sustainability megatrends such as paperboard to renewable packaging and fluff with the growing global middle class and aging populations, coupled with our annual contracted business help insulate us from the impact of a possible recession. We also have opportunities to improve margins with improved productivity and sales volumes, which we would realize as we maintain our market share when demand growth resumes. Turning to slide 16. Our outlook for 2023 reflects improved EBITDA margins to the 11% to 12% range, as we capture both the improved value for our products and drive operational efficiencies and reliability. Debt will continue to decline as we generate free cash flow and optimize our balance sheet. As a result, we expect net leverage to decline to approximately 3.5 times in 2023 and keep us on track toward our goal of 2.5 times over the next three to five years. And with that, operator, please open the call to questions.

Thank you. Our first question is from Roger Spitz with Bank of America. Please go ahead with your questions.

Thank you and good morning. So I wanted to start by asking, could you elaborate on the potential headwinds in Q1 2023? You mentioned in the prepared remarks that there are some pockets of softer demand, and I thought maybe you could delve into that a little more. Also, what do you expect the cadence of the working capital inflow over the year, particularly in Q1?

Hi, Roger, this is De Lyle. To address your question on demand first, I'll start with what's going on in Europe, which is really affecting our demand for our construction ethers and possibly a bit of our food additives business on the MCC side. As everyone is aware, the macroeconomic conditions in Europe aren't great, though we do expect them to improve through the year. We are seeing higher interest rates in Europe, which have impacted the construction market and, therefore, our demand for our construction ethers. We also noted that a couple of customers that buy our ether-grade products are correcting their working capital as they may have overbought in 2022. This correction should be relatively short-term, and we anticipate demand to normalize again, likely in the second half of this year. Regarding softness in other areas, could you help me identify those?

Yes. Areas of softness, we had a little bit in tire cord—

Yes. Tire cord, obviously, is tied to the automobile industry, which continues to be slightly affected by the access to chips, but also due to increased interest rates, which are beginning to dampen the demand for automobiles. That's something we are a bit concerned about. Otherwise, many of the other businesses we serve seem to be holding up at what I would describe as very resilient demand levels. The second question was regarding working capital. I gather your question was about how that will calendarize throughout the year, correct, Roger?

That's right, particularly in Q1, as Q1 is usually an outflow for most businesses. So it's both particularly in Q1, but also how does the cadence go to getting that $45 million?

Good morning, Roger, it's Marcus. As you mentioned, the $45 million that we set out as an objective, certainly Q1 is a use of working capital for us. As we progress through Q1 and then into the balance of the year, we should start to realize that benefit. Over 50% of that target is inventory-related, balanced across accounts receivable and accounts payable. As we execute through the year, we should begin to harvest that working capital and achieve that benefit.

Thank you. I will get back in the queue.

Thank you. The next question comes from Paul Quinn with RBC Capital Markets. Please proceed with your question.

Just trying to understand, it sounds like your cellulose specialty prices are expected to be up high single digits. However, on the commodity side, I'm trying to understand your guidance on fluff pulp—do you expect fluff pulp to stay in and viscose price weakening? Could you give us a little more color on what you're seeing in that market?

Hi, Paul, this is De Lyle. Regarding fluff pricing, we are assuming they will generally align with the indices available. However, we're noticing that they are declining slower than expected. In fact, we've seen a couple of competitors announce some recent price increases. So, we think we may actually be reaching a trough here relatively soon. As for viscose pricing, we have seen a slight uptick in pricing for softwood going into the viscose market recently. What we're forecasting is per the indices, but we are observing that with the increase in capacity utilization in China, there may be some upside potential with respect to viscose pricing. But for now, the forecast and guidance we've provided are based on published indices.

Okay. You mentioned higher corporate costs in 2023; was that $45 million in 2022? Are we talking in the $50 million to $55 million range?

Yes, that's correct, Paul. That's about the right range. Again, the increase in spending is tied to the ERP implementation and the fact that we do not anticipate any increase in FX benefit this year.

Okay. Earlier this year, you attempted to re-buy the senior unsecured notes and didn't conclude that deal. Can you give us more color on that process and the timing of when you expect to try that again?

Well, in January, the market conditions just weren't conducive for us to execute a deal that we felt was indicative of a fairly strong business. Looking forward, we believe time is on our side. We expect our financial metrics to improve over time, so we are being patient. We want to get past at least the Q1 earnings because we think that will confirm the guidance we've just given you. At that point, we hope to evaluate the markets and possibly enter.

On the debottlenecking project, you adjusted to potentially get more volume on the fluff line. What volume increase do you think you're going to achieve through that process? And what's involved?

That's a great question. While I’m not an engineer, I believe the increase is around 40,000 to 50,000 tons of additional capacity that we will gain from that investment. It primarily involved adding more dryer cans to enhance line speed while also ensuring enough drying capacity to meet the required product specifications. Additionally, with the increased capability of the line, we've had to improve our finishing line to ensure proper packaging for our customers.

All right. Thanks very much. That's all I had. Good luck.

Our next question is a follow-up from the line of Roger Spitz with Bank of America. Please proceed with your question.

Thank you very much. A few others. Can you provide more guidance on the High-Yield Pulp segment in 2023? Does that reverse back to the levels of the last few years? How should we think about that?

That's a great question, Roger. We're seeing pricing decline right now, but we expect to see some offset on the volumes in 2023, given the increased productivity we anticipate after the investments we made last year. Overall, for high purity EBITDA, we expect it to be about the same as we experienced in 2022 versus 2023, even though we see lower pricing; it should be offset by the increased productivity and the higher sales volumes later this year.

Got it. Just to clarify, I was asking about High-Yield Pulp, and I think you were answering that, but you mentioned high purity.

I apologize; I meant high yield. Yes, high yield pulp should operate at levels comparable to what we saw in 2022, around that $15 million to $16 million mark.

And Roger, as you're tracking the market, consider that high yield will likely reverse compared to last year; it will be stronger in the first half but is expected to see pricing come off over time.

Got it. In the press release, you talked about the strength in acetate CS. Now, are you looking at filter tow there, or are you referring to the specialty acetate CS, covering the non-filter tow demand?

So Roger, just to clarify, are we seeing strength in acetate in both tow and other applications?

Right, which areas in acetate CS did the press release refer to when discussing strength in 2023 in acetate?

Yes. We are seeing growth in both tow and plastics. In tow, we have significant growth in heat-not-burn applications where products sold outside the United States require double the amount of tow compared to traditional cigarettes, which has largely mitigated the decline in smoking in developed markets. Demand for tow applications or for plastics in China has remained steady.

Great. Lastly, I want to talk about the three to five-year target EBITDA margins going to 13% to 15%. You laid out several projects on Slide 13, and I assume that's one component of that. Is that the main component of the increase in the EBITDA margin, or are there other factors such as pricing, volumes, or cost savings that you are also targeting to achieve those EBITDA margins?

I want to utilize all the levers, Roger. Yes, the strategic projects are an important component, and we see substantial value through increased efficiency and productivity, which will require capital. We also aim to capture additional value for our products and get pricing to a level that will allow us to reinvest in new capacity as demand expands. Additionally, we are focusing on better logistics efficiencies and potentially seeing cost deflation in the near future.

Got it. Thank you very much.

Thank you. At this time, we've reached the end of our question-and-answer session. I'll turn the floor back to De Lyle Bloomquist for closing remarks.

Well, again, thank you all for your time today. I'm very proud of the accomplishments that we have made and very confident that we will continue to execute on our initiatives to improve the profitability of the business, reduce our debt, and improve our leverage. I look forward to our next update in the next few months. If you have any questions or anything that we can help you with, please feel free to reach out to us.