Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Statements
On November 4, 2019, Rayonier Advanced Materials Inc. (the "Company") announced that it completed the previously announced sale of the Matane, Quebec pulp mill (the "Matane Mill") and related assets to Sappi, a global diversified wood fiber company. Beginning in the third quarter of 2019, the historical financial results of the Matane Mill, for periods prior to the sale, will be reflected in the Company's consolidated financial statements as discontinued operations.
The following unaudited pro forma financial statements are based on the historical financial statements of the Company and have been prepared to reflect the sale of the Matane Mill. The unaudited Pro Forma Condensed Consolidated Statement of Income (Loss) for the six months ended June 29, 2019 and the years ended December 31, 2018 and 2017 are presented as if the sale occurred on November 17, 2017, the date of acquisition of the Matane Mill by the Company. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 29, 2019 gives effect to the sale as if it occurred on June 29, 2019.
These statements are intended for information purposes only, the information is not intended to represent or be indicative of what the Company's results of operations or financial position would have been had the sale occurred on the dates indicated. The unaudited pro forma condensed consolidated financial statements should be read with the Company's historical financial statements, which are included in the Company’s latest annual report on Form 10-K and quarterly report on Form 10-Q. The unaudited pro forma financial statements should not be considered representative of the Company's future results or financial position.
The information in the "Historical" columns of the unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) and Pro Forma Condensed Consolidated Balance Sheet was derived from the Company's historical financial statements for the periods presented and does not include any adjustments for the sale of the Matane Mill.
The information in the "Matane Sale" columns of the unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) and Pro Forma Condensed Consolidated Balance Sheet reflects the revenues, expenses, assets and liabilities attributable to the Matane Mill. The Company is required to use $100 million of the net proceeds from the sale of Matane to repay debt under its current loan agreements. As such, interest expense of $2.4 million, $4.5 million and $0.5 million for the 2019, 2018 and 2017 periods, respectively, has been allocated to discontinued operations using the weighted-average interest rates in effect for each period presented based on the proportionate amounts required to be repaid.
The information in the “Other Pro Forma Adjustments” columns of the unaudited Pro Forma Condensed Consolidated Balance Sheet reflects the pro forma adjustments which are further described in Note 1.
Exhibit 99.2
Rayonier Advanced Materials Inc.
Pro Forma Condensed Consolidated Statement of Income (Loss)
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Six Months Ended June 29, 2019
Historical | Matane Sale | Pro Forma | |||||||||
Net Sales | $ | 970,597 | $ | (79,304 | ) | $ | 891,293 | ||||
Cost of Sales | (927,955 | ) | 62,295 | (865,660 | ) | ||||||
Gross Margin | 42,642 | (17,009 | ) | 25,633 | |||||||
Selling, general and administrative expenses | (49,464 | ) | 854 | (48,610 | ) | ||||||
Duties | (11,520 | ) | — | (11,520 | ) | ||||||
Other operating income (expense), net | (8,422 | ) | — | (8,422 | ) | ||||||
Operating Income (Loss) | (26,764 | ) | (16,155 | ) | (42,919 | ) | |||||
Interest expense | (30,374 | ) | 2,351 | (28,023 | ) | ||||||
Interest income and other, net | (99 | ) | 5 | (94 | ) | ||||||
Other components of pension and OPEB, excluding service costs | 2,643 | (175 | ) | 2,468 | |||||||
Income (Loss) Before Income Taxes | (54,594 | ) | (13,974 | ) | (68,568 | ) | |||||
Income tax (expense) benefit | 17,627 | 3,680 | 21,307 | ||||||||
Net Income (Loss) Attributable to the Company | (36,967 | ) | (10,294 | ) | (47,261 | ) | |||||
Mandatory convertible stock dividends | (6,805 | ) | — | (6,805 | ) | ||||||
Net Income (Loss) Available to the Company's Common Stockholders | $ | (43,772 | ) | $ | (10,294 | ) | $ | (54,066 | ) | ||
Earnings Per Share of Common Stock | |||||||||||
Basic earnings (loss) per share | $ | (0.89 | ) | $ | (1.10 | ) | |||||
Diluted earnings (loss) per share | $ | (0.89 | ) | $ | (1.10 | ) | |||||
Shares used for determining basic earnings per share of common stock | 49,282,418 | 49,282,418 | |||||||||
Shares used for determining diluted earnings per share of common stock | 49,282,418 | 49,282,418 |
Exhibit 99.2
Rayonier Advanced Materials Inc.
Pro Forma Condensed Consolidated Statement of Income (Loss)
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Year Ended December 31, 2018
Historical | Matane Sale | Pro Forma | |||||||||
Net Sales | $ | 2,134,413 | $ | (177,419 | ) | $ | 1,956,994 | ||||
Cost of Sales | (1,790,244 | ) | 124,397 | (1,665,847 | ) | ||||||
Gross Margin | 344,169 | (53,022 | ) | 291,147 | |||||||
Selling, general and administrative expenses | (108,184 | ) | 3,196 | (104,988 | ) | ||||||
Duties | (25,921 | ) | — | (25,921 | ) | ||||||
Other operating expense, net | (12,422 | ) | — | (12,422 | ) | ||||||
Operating Income | 197,642 | (49,826 | ) | 147,816 | |||||||
Interest expense | (60,408 | ) | 4,474 | (55,934 | ) | ||||||
Interest income and other, net | 5,017 | 11 | 5,028 | ||||||||
Other components of net periodic benefit income (expense) | 8,723 | (377 | ) | 8,346 | |||||||
Gain on bargain purchase | 20,449 | — | 20,449 | ||||||||
Gain on debt extinguishment | 786 | — | 786 | ||||||||
Income Before Income Taxes | 172,209 | (45,718 | ) | 126,491 | |||||||
Income tax expense | (43,793 | ) | 16,754 | (27,039 | ) | ||||||
Net Income Attributable to the Company | 128,416 | (28,964 | ) | 99,452 | |||||||
Mandatory convertible stock dividends | (13,800 | ) | — | (13,800 | ) | ||||||
Net Income Available to the Company's Common Stockholders | $ | 114,616 | $ | (28,964 | ) | $ | 85,652 | ||||
Earnings Per Share of Common Stock | |||||||||||
Basic earnings per share | $ | 2.27 | $ | 1.69 | |||||||
Diluted earnings per share | $ | 1.96 | $ | 1.52 | |||||||
Shares used for determining basic earnings per share of common stock | 50,602,480 | 50,602,480 | |||||||||
Shares used for determining diluted earnings per share of common stock | 65,397,259 | 65,397,259 |
Exhibit 99.2
Rayonier Advanced Materials Inc.
Pro Forma Condensed Consolidated Statement of Income (Loss)
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Year Ended December 31, 2017
Historical | Matane Sale | Pro Forma | |||||||||
Net Sales | $ | 961,333 | $ | (20,917 | ) | $ | 940,416 | ||||
Cost of Sales | (818,281 | ) | 18,618 | (799,663 | ) | ||||||
Gross Margin | 143,052 | (2,299 | ) | 140,753 | |||||||
Selling, general and administrative expenses | (79,387 | ) | (173 | ) | (79,560 | ) | |||||
Duties | (939 | ) | — | (939 | ) | ||||||
Other operating expense, net | (1,274 | ) | — | (1,274 | ) | ||||||
Operating Income | 61,452 | (2,472 | ) | 58,980 | |||||||
Interest expense | (40,447 | ) | 480 | (39,967 | ) | ||||||
Interest income and other, net | 2,350 | 2 | 2,352 | ||||||||
Other components of net periodic benefit income (expense) | (2,995 | ) | (45 | ) | (3,040 | ) | |||||
Gain on bargain purchase | 316,555 | — | 316,555 | ||||||||
Gain on derivative instrument | 7,780 | — | 7,780 | ||||||||
Income Before Income Taxes | 344,695 | (2,035 | ) | 342,660 | |||||||
Income tax expense | (19,731 | ) | 498 | (19,233 | ) | ||||||
Net Income Attributable to the Company | 324,964 | (1,537 | ) | 323,427 | |||||||
Mandatory convertible stock dividends | (13,800 | ) | — | (13,800 | ) | ||||||
Net Income Available to the Company's Common Stockholders | $ | 311,164 | $ | (1,537 | ) | $ | 309,627 | ||||
Earnings Per Share of Common Stock | |||||||||||
Basic earnings per share | $ | 7.17 | $ | 7.13 | |||||||
Diluted earnings per share | $ | 5.81 | $ | 5.79 | |||||||
Shares used for determining basic earnings per share of common stock | 43,416,868 | 43,416,868 | |||||||||
Shares used for determining diluted earnings per share of common stock | 55,902,452 | 55,902,452 |
Exhibit 99.2
Rayonier Advanced Materials Inc.
Pro Forma Condensed Consolidated Balance Sheet
(Unaudited)
(Dollars in thousands)
As of June 29, 2019
Historical | Matane Sale | Pro Forma Adjustments (Note 1) | Pro Forma | ||||||||||||||
Assets | |||||||||||||||||
Current Assets | |||||||||||||||||
Cash and cash equivalents | $ | 90,104 | $ | — | $ | 50,000 | (a) | $ | 140,104 | ||||||||
Accounts receivable, net | 180,014 | (17,807 | ) | — | 162,207 | ||||||||||||
Inventory | 298,902 | (14,695 | ) | — | 284,207 | ||||||||||||
Prepaid and other current assets | 90,623 | (2,991 | ) | — | 87,632 | ||||||||||||
Total current assets | 659,643 | (35,493 | ) | 50,000 | 674,150 | ||||||||||||
Property, Plant and Equipment, net | 1,370,307 | (18,003 | ) | — | 1,352,304 | ||||||||||||
Deferred Tax Assets | 420,105 | (31,486 | ) | — | 388,619 | ||||||||||||
Intangible Assets, net | 48,955 | — | — | 48,955 | |||||||||||||
Other Assets | 151,500 | (2,571 | ) | — | 148,929 | ||||||||||||
Total Assets | $ | 2,650,510 | $ | (87,553 | ) | $ | 50,000 | $ | 2,612,957 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||
Current Liabilities | |||||||||||||||||
Accounts payable | $ | 182,458 | $ | (9,234 | ) | $ | — | $ | 173,224 | ||||||||
Accrued and other current liabilities | 114,686 | (3,350 | ) | — | 111,336 | ||||||||||||
Current maturities of long-term debt | 21,633 | — | — | 21,633 | |||||||||||||
Current liabilities for disposed operations | 11,483 | — | — | 11,483 | |||||||||||||
Total current liabilities | 330,260 | (12,584 | ) | — | 317,676 | ||||||||||||
Long-Term Debt | 1,215,059 | — | (99,472 | ) | (b) | 1,115,587 | |||||||||||
Long-Term Liabilities for Disposed Operations | 149,360 | — | — | 149,360 | |||||||||||||
Pension and Other Postretirement Benefits | 238,387 | (5,425 | ) | — | 232,962 | ||||||||||||
Deferred Tax Liabilities | 26,071 | — | — | 26,071 | |||||||||||||
Other Non-Current Liabilities | 24,807 | (327 | ) | — | 24,480 | ||||||||||||
Commitments and Contingencies | |||||||||||||||||
Stockholders’ Equity | |||||||||||||||||
Preferred stock | 17 | — | — | 17 | |||||||||||||
Common stock | 498 | — | — | 498 | |||||||||||||
Additional paid-in capital | 397,115 | — | — | 397,115 | |||||||||||||
Retained earnings | 411,306 | (69,217 | ) | 149,472 | (a), (b) | 491,561 | |||||||||||
Accumulated other comprehensive income (loss) | (142,370 | ) | — | — | (142,370 | ) | |||||||||||
Total Stockholders’ Equity | 666,566 | (69,217 | ) | 149,472 | 746,821 | ||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 2,650,510 | $ | (87,553 | ) | $ | 50,000 | $ | 2,612,957 |
Note 1 — Pro forma adjustments
(a) | The Company's estimated net proceeds from the sale, which excludes fees, expenses, working capital adjustments and other costs related to the sale, were approximately $150 million. The Company is required use $100 million of the net proceeds to repay debt under its current loan agreements with the remaining $50 million added to cash. |
(b) | The Company is required to use $100 million of the net proceeds to repay debt under its current loan agreements. As a result of the repayment of the loan, approximately $528 thousand of deferred loan costs will be written off to interest expense. |