RAYONIER ADVANCED MATERIALS INC.

1. Nature of Operations and Basis of Presentation

Nature of Operations

RYAM is a global leader in the production of cellulose specialties, a natural polymer used in the manufacturing of various specialty chemical products, including liquid crystal displays, filters, textiles and performance additives for pharmaceutical, food and other industrial applications. The Company’s specialized assets also produce bioelectricity, biomaterials, including biofuels, lignin and tall oil soap, and commodity fluff, viscose and paper pulp.

Additionally, RYAM produces a unique, lightweight multi-ply paperboard product and a bulky, high-yield pulp product. The Company’s paperboard is used for production in the commercial printing, lottery ticket and high-end packaging sectors. The Company’s high-yield pulp is used by paperboard producers as well as in traditional printing, writing and specialty paper manufacturing.

Basis of Presentation

The Financial Statements and notes thereto have been prepared in accordance with GAAP for interim financial information and in accordance with the rules and regulations of the SEC. In the opinion of management, the Financial Statements and notes reflect all adjustments, including all normal recurring adjustments, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The December 31, 2024 consolidated balance sheet was derived from audited annual financial statements but does not contain all the footnote disclosures from the audited annual financial statements. These Financial Statements and notes should be read in conjunction with the consolidated financial statements and supplementary data included in the Company’s 2024 Form 10-K.

As a result of the sale of its lumber and newsprint assets in August 2021, the Company presents the historical results for those operations, and any subsequent directly associated impacts, as discontinued operations. Unless otherwise stated, information in these notes to condensed consolidated financial statements relates to continuing operations. See Note 3—Discontinued Operations for further information on the sale.

New Segment Structure

In the first quarter of 2025, the Company reorganized its High Purity Cellulose operating segment as a result of changes in its internal operating model, significant developments in its Biomaterials strategy and a successful launch of an enterprise reporting system that significantly enhances the Company’s financial reporting and costing capabilities. Specifically, the Company determined, in light of these new developments and capabilities, that the performance and outlook of the High Purity Cellulose business will be better managed as three separate businesses: Cellulose Specialties, Cellulose Commodities and a new Biomaterials business. No changes were made to the composition of the Paperboard and High-Yield Pulp operating segments. As a result of this reorganization, the Company now operates infive operating segments: Cellulose Specialties, Biomaterials, Cellulose Commodities, Paperboard and High-Yield Pulp. Prior period segment results have been recast to align with this new segment reporting structure. See Note 17—Segments for further information.

Recent Accounting Developments

Accounting Standards Updates Implemented

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires enhanced annual income tax disclosures, primarily through changes to the rate reconciliation and income taxes paid information. The Company is adopting ASU 2023-09 for the fiscal year ending December 31, 2025 on a prospective basis. The adoption of this ASU has no impact on the Company’s interim Financial Statements and related disclosures.

In August 2023, the FASB issued ASU 2023-05 “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which provides specific guidance on how a joint venture, upon formation, should recognize and initially measure assets contributed and liabilities assumed. The Company adopted ASU 2023-05 on January 1, 2025 and it will be applied on a prospective basis to all joint ventures with a formation date on or after January 1, 2025. The adoption of this ASU had no impact to the Company’s Financial Statements.

Subsequent Events

On July 4, 2025, the United States enacted tax reform legislation resulting in significant modifications to existing law. The most significant impacts to the Company are changes to IRC §163(j) interest deductibility, immediate expensing of capital spend in the U.S., immediate deductions of R&D expenditures and foreign tax regime changes. The Company is currently evaluating the impact of this new legislation on its consolidated financial statements.

2. Indefinite Suspension of Operations

In July 2024, the Company indefinitely suspended operations at its Temiscaming cellulose plant. The Temiscaming paperboard and high-yield pulp plants that support the Company’s Paperboard and High-Yield Pulp operating segments continue to operate at full capacity. The Temiscaming cellulose plant was idled in a safe and environmentally sound manner, and the Company will assess, on at least an annual basis, the possibility of restarting the Temiscaming cellulose plant.

Indefinite suspension of operations activities began in July 2024 and were mostly completed in the prior year. Since the start of the indefinite suspension in 2024, the Company has incurred total one-time operating charges of $17 million, including $6 million of mothballing costs, $6 million of severance and other employee costs and $5 million of other costs. While most cash costs associated with the indefinite suspension of operations were paid in the third and fourth quarters of 2024, severance and other indefinite suspension costs are expected to be paid over a period of time. Remaining one-time charges to be incurred are not expected to be material.

The following table presents the accrued liability balance activity related to the indefinite suspension during the six months ended June 28, 2025:

The following table presents total indefinite suspension charges incurred by cost type:

(a)Included a $1 million loss on pension curtailment charges during the quarter and six months ended June 29, 2024 associated with early retirements driven by the indefinite suspension of operations. See Note 15—Employee Benefit Plans for further information.

Charges incurred during the periods presented were recorded to the Cellulose Commodities segment in “indefinite suspension charges” in the condensed consolidated statements of operations.

3. Discontinued Operations

In August 2021, the Company completed the sale of its lumber and newsprint facilities and certain related assets located in Canada. As part of the sale of the lumber assets, the Company retained all refund rights and obligations, including interest, to softwood lumber duties generated or incurred through the closing date of the sale. In June 2024, the Company sold these refund rights, including all accrued interest, for $39 million, with the opportunity for additional sale proceeds in the future contingent upon the timing and terms of the ultimate outcome of the trade dispute between the USDOC and Canada. The Company recorded a pre-tax loss of $1 million on the sale.

During the quarters ended June 28, 2025 and June 29, 2024, the Company recognized $4 million and $5 million of pre-tax income related to CEWS benefit claims deferred since 2021. See Note 7—Accrued and Other Current Liabilities for further information.

Income from discontinued operations was comprised of the following:

4. Accounts Receivable, Net

Accounts receivable, net included the following:

(a)Consists primarily of value-added/consumption taxes, grants receivable and accrued billings due from government agencies.

5. Inventory

Inventory included the following:

6. Leases

The Company’s operating and finance leases are primarily for corporate offices, warehouse space, rail cars and equipment. As of June 28, 2025, the Company’s leases have remaining lease terms of less than one year to 11.4 years, with standard renewal and termination options available at the Company’s discretion. Certain equipment leases have purchase options at the end of the lease term that are not included in the ROU assets, as it is not reasonably certain that the Company will exercise such options. Short-term leases with an initial term of 12 months or less are not recorded in the condensed consolidated balance sheets. The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants. The Company uses its incremental borrowing rate to determine the present value of lease payments unless the lease provides an implicit or explicit interest rate.

Financial and other information related to the Company’s operating and finance leases follow:

(a)During the six months ended June 29, 2024, the Company recorded an ROU asset and corresponding lease liability of $14 million related to a new warehouse lease agreement in Canada.

Finance lease cash flows were immaterial during each of the six months ended June 28, 2025 and June 29, 2024.

Operating lease maturities as of June 28, 2025 were as follows:

7. Accrued and Other Current Liabilities

Accrued and other current liabilities included the following:

(a)Included at December 31, 2024 was $3 million (CAD $5 million) associated with funds received in 2021 for CEWS. In the second quarter of 2025, the Company recognized this amount in “income from discontinued operations, net of taxes” in the condensed consolidated statements of operations.

(b)Included at June 28, 2025 and December 31, 2024 were $19 million and $17 million, respectively, of energy-related payables associated with Tartas facility operations.

8. Debt and Finance Leases

Debt and finance leases included the following:

(a)Consists of green loans associated with the France bioethanol plant, part of the net assets contributed by the Company to its subsidiary, BioNova.

(b)Consist of loans for energy projects in France.

As of June 28, 2025, there were no borrowings outstanding under the BioNova Term Loan.

Covenants and Debt Maturity

As of June 28, 2025, the Company was in compliance with all covenants under its debt agreements and the Company’s debt principal payments, excluding finance lease obligations, were due as follows:

9. Environmental Liabilities

The Company’s environmental liabilities balance changed as follows during the six months ended June 28, 2025:

Port Angeles, Washington

The Company operated a pulp mill at this site from 1930 until 1997. Since 2000, the Company has been evaluating remediation of the pulp mill site and adjacent marine areas (a portion of Port Angeles harbor) pursuant to an agreed order with the Washington DOE under the Washington MTCA. During this period, the Company has performed several voluntary interim soil cleanup actions. As the next step in collaboration with the Washington DOE, the parties are negotiating a consent order that will formalize approved remedial actions, which include more stringent cleanup standards and an expanded scope. Consequently, in the first quarter of 2025, the Company increased its estimated remediation liability and recorded an expense of $10 million. The associated cash expenditures are not expected to commence before 2028, with outflows anticipated over the subsequent three tofive years.

Augusta, Georgia

The Company operated this site as a wood treatment plant from 1928 to 1988. This site operates under a 10-year RCRA hazardous waste facility permit managed by the Georgia EPD. The most recent permit was issued in 2015, and it must be renewed. In connection with the Company’s submittal of its permit renewal application, Georgia EPD notified the Company that a revised corrective action plan for the site would be required to capture results of a decade long extended investigation performed pursuant to the current permit. The revised corrective action plan is being drafted. It expands the remedial areas for the site and includes an additional off-site area, which were both identified through the investigative studies. To reflect the additional remedial activities in these expanded areas, in the first quarter of 2025, the Company increased the estimated remediation liability and recorded an expense of $2 million. The cash impact associated with this charge is expected in early 2027.

Other

In addition to the estimated liabilities for the above remediation sites, the Company is subject to the risk of reasonably possible additional liabilities in excess of the established liabilities due to potential changes in circumstances and future events, including, without limitation, changes to current laws and regulations; changes in governmental agency personnel, direction, philosophy or enforcement policies; developments in remediation technologies; increases in the cost of remediation, operation, maintenance and monitoring of its environmental liability sites; changes in the volume, nature or extent of contamination to be remediated or monitoring to be undertaken; the outcome of negotiations with governmental agencies or non-governmental parties; and changes in accounting rules or interpretations. Based on information available as of June 28, 2025, the Company estimates this exposure could range up to approximately $77 million. However, no assurances can be given that this amount will not be exceeded given the factors described above. These potential additional costs are attributable to several sites and other applicable liabilities. This estimate excludes liabilities that would otherwise be considered reasonably possible but for the fact that they are not currently estimable, primarily due to the factors discussed above.

Subject to the previous paragraph, the Company believes its estimates of liabilities are sufficient for probable costs expected to be incurred over the next 20 years with respect to its environmental liabilities. However, no assurance is given that these estimates will be sufficient for the reasons described above and additional liabilities could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

10. Fair Value Measurements

Liabilities Measured at Fair Value on a Recurring Basis

Redeemable Noncontrolling Interest - Put Option

In November 2024, BioNova issued 111,111 preferred shares to SWEN in return for a redeemable noncontrolling interest of approximately 14 percent. The preferred shares contain an embedded put option that was determined should be bifurcated and recognized separately at fair value, with subsequent changes in fair value recorded in earnings.

SWEN’s put option was initially measured at a fair value of $4 million and will be remeasured at the end of each reporting period. The fair value of the put option is estimated using a Monte Carlo simulation model, which is a Level 3 measurement, with changes in fair value recorded in “other income, net” in the condensed consolidated statements of operations. The SWEN put option’s liability balance and activity during the three and six months ended June 28, 2025 were as follows:

There is inherent uncertainty of the fair value measurement of Level 3 securities due to the use of unobservable inputs, including timing and amount of expected cash flows. A material change in the unobservable inputs used may result in a higher or lower fair value measurement. Key inputs into the Monte Carlo simulation model used to determine the fair value of the SWEN put option at the fair value measurement date were as follows:

(a)Based on a peer group of companies in the same or a similar industry.

See Note 11—Redeemable Noncontrolling Interest for further information on the put option.

Financial Instruments

The carrying amounts of the Company’s cash and cash equivalents, receivables and payables approximate fair value due to the short-term nature of those instruments. The carrying amount of borrowings outstanding under the ABL Credit Facility, 2029 Term Loan and short-term factoring facility approximate fair value due to their variable interest rates and no significant changes in the Company's credit risk.

The fair value of the Company’s fixed rate debt is estimated using quoted market prices for debt with similar terms and maturities, which are Level 2 inputs, and was as follows:

(a)Excludes finance lease obligations.

11. Redeemable Noncontrolling Interest

In November 2024, the Company and one of its subsidiaries entered into a shareholder agreement with SWEN, pursuant to which SWEN will fund up to €30 million in exchange for up to 222,222 preferred shares, representing an expected 20 percent total noncontrolling equity interest in BioNova. Of this commitment, €15 million was funded at the closing of the shareholder agreement in exchange for 111,111 preferred shares, which currently represents an equity interest in BioNova of approximately 14 percent. Subsequent funding is contingent on the achievement of certain project milestones.

The value of SWEN’s redeemable noncontrolling interest is reflected in temporary equity and is accreted to its estimated redemption value at each period end using the interest method. The redeemable noncontrolling interest balance and activity during the quarter and six months ended June 28, 2025 were as follows:

Results attributable to RYAM, after attribution to the redeemable noncontrolling interest, were as follows:

12. Accumulated Other Comprehensive Loss

(a)The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic benefit cost. See Note 15—Employee Benefit Plans for further information.

(b)Reclassifications of foreign currency exchange contracts are recorded in “cost of sales,” “other operating income (expense), net” or “other income (expense), net,” as appropriate.

(c)Foreign currency translation is net of tax effects of $0 for all periods presented, as the French operations are taxed on the foreign functional currency, not the translated reporting currency.

13. Earnings Per Common Share

Basic earnings per share is calculated by dividing net income available for common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is calculated by dividing net income available for common stockholders by the weighted average number of shares of common stock outstanding, adjusted for the potentially dilutive effect of outstanding performance-based stock and restricted stock.

The following table provides the inputs to the calculations of basic and diluted earnings per common share (share amounts not in thousands):

Anti-dilutive instruments excluded from the computation of diluted earnings per share included (not in thousands):

14. Incentive Stock Plans

Incentive stock plan compensation expense was as follows:

(a)Included equity award expense of $1 million and $2 million during the quarters ended June 28, 2025 and June 29, 2024, respectively, and $3 million during each of the six months ended June 28, 2025 and June 29, 2024.

The Company made new grants of restricted stock units, performance-based stock units and performance-based cash awards during the first and second quarters of 2025. The 2025 restricted stock unit awards cliff vest after three years, except for director awards, which vest afterone year. The 2025 performance-based awards cliff vest after three years and are based equally on TSR relative to peers and three-year cumulative adjusted EBITDA. Participants can earn between 0 percent and 200 percent of the target award for each of the TSR and adjusted EBITDA metrics. Performance below the threshold for either metric would result inzero payout for that metric. The performance-based cash award is paid in cash and is classified as a liability and remeasured to fair value at the end of each reporting period until settlement.

In March 2025, the performance-based awards granted in 2022 were settled with an issuance of 654,995 shares of common stock for the stock unit awards, including incremental shares of 165,061, and cash of $2 million for the cash awards.

The following table summarizes the 2025 activity of the Company’s incentive stock awards (not in thousands):

15. Employee Benefit Plans

Defined Benefit Plans

The Company has defined benefit pension and other long-term and postretirement benefit plans covering certain union and non-union employees, primarily in the U.S. and Canada. The defined benefit pension plans are closed to new participants. The liabilities for these plans are calculated using actuarial estimates and management assumptions. These estimates are based on historical information and certain assumptions about future events.

During the quarter and six months ended June 29, 2024, the Company recorded a $1 million loss on pension curtailment charges associated with early retirements driven by the indefinite suspension of operations at the Temiscaming High Purity Cellulose plant. The loss on curtailment was recognized in “indefinite suspension charges” in the Company’s condensed consolidated statements of operations. Additionally, the Company decreased its pension liability by $3 million. See Note 2—Indefinite Suspension of Operations for further information.

The following tables present the components of net periodic benefit costs of these plans:

Service cost is included in “cost of sales” or “selling, general and administrative expense” in the condensed consolidated statements of operations, as appropriate. Interest cost, expected return on plan assets, amortization of prior service cost (credit) and amortization of gain (loss) are included in “components of pension and OPEB, excluding service costs” in the condensed consolidated statements of operations.

16. Income Taxes

Effective Tax Rate

The Company’s effective tax rates were as follows:

The effective tax rates for the quarter and six months ended June 28, 2025 differed from the federal statutory rate of 21 percent primarily due to the full write-off of the Company’s Canadian DTAs. See Deferred Taxes below. Also driving the differences were different statutory tax rates in foreign jurisdictions, valuation allowances on nondeductible U.S. interest expense, U.S. tax credits and nondeductible executive compensation.

The effective tax rates for the quarter and six months ended June 29, 2024 differed from the federal statutory rate of 21 percent primarily due to the release of certain tax reserves, return-to-accrual adjustments, excess deficit on vested stock compensation and changes in the valuation allowance on disallowed interest deductions.

Deferred Taxes

The Company assesses the realizability of its DTAs to determine if a valuation allowance is required based on the consideration of all available evidence using a “more-likely-than-not” standard, with significant weight being given to evidence that can be objectively verified. Since the Company operates in multiple jurisdictions, it assesses the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering local earnings and effects of local tax law.

As of December 31, 2024, the Company evaluated realizability of its significant Canadian DTAs using the framework of ASC 740 and concluded that a valuation allowance was not required. The Company acknowledged, however, that difficult market conditions could result in the materialization of a cumulative three-year loss, which would constitute significant negative evidence under ASC 740 and likely necessitate a valuation allowance.

As of June 28, 2025, the Company now expects to incur a cumulative adjusted pre-tax loss in Canada over the three most recent fiscal years ending in 2025. As a result of the significant weight of this negative evidence under ASC 740, the Company believes it is more likely than not that its Canadian DTAs will not be fully realizable and have therefore provided for a full valuation allowance against these assets. This results in a current quarter tax expense to write off the previously recognized net DTA of $337 million and current quarter Canadian pretax losses providing zero tax benefit on the financial statements. Barring positive evidence that changes this conclusion, future Canadian earnings will not result in tax expense or benefits on the Company’s financial statements. The valuation allowance does not impact the Company’s legal right to use the deferred tax assets against cash taxes and future recognition will continue to be evaluated as market conditions evolve.

As of June 28, 2025 and December 31, 2024, the Company’s net DTA included $13 million and $15 million, respectively, of disallowed U.S. interest deductions that the Company does not believe will be realized. The decrease in this asset was a result of a $2 million tax expense recognized in the current year. In strict compliance with the American Institute of Certified Public Accountants’ Technical Questions and Answers 3300.01-02, which asserts that certain material evidence regarding the realizability of disallowed U.S. interest deductions should be ignored when assessing the need for a valuation allowance, the Company hasnot recognized a valuation allowance on this portion of the net DTA generated from disallowed interest.

17. Segments

As discussed in Note 1—Nature of Operations and Basis of Presentation, beginning in the first quarter of 2025, the Company reorganized its segment structure and now operates infive operating segments: Cellulose Specialties, Cellulose Commodities, Biomaterials, Paperboard and High-Yield Pulp. Corporate consists primarily of senior management, accounting, information systems, human resources, treasury, tax and legal administrative functions that provide support services to the operating business units. Prior period segment results have been recast to align with this new segment reporting structure.

The Company uses operating income (loss) as a measure of profitability to evaluate segment performance. Intersegment sales consist primarily of High-Yield Pulp sales to Paperboard, which are eliminated in consolidation. Additionally, there are intersegment sales of chemicals, sugars and energy from the cellulose plants to Biomaterials, also eliminated in consolidation. Intersegment sales prices are at rates that approximate market for the respective operating area.

Net sales, significant operating expenses, operating income (loss) and other financial information by segment were as follows:

(a)Includes ERP and certain lease expense shared across operating segments.

(b)Includes salaries, wages and benefits, maintenance costs and other costs of sales.

(c)Primarily includes foreign exchange gain (loss), environmental remediation expense, gain (loss) on disposal of property, plant and equipment and income (loss) from equity method investments.

Due to their integrated nature, certain operating and production assets are jointly utilized across the Cellulose Specialties and Cellulose Commodities segments. These assets are essential for the production processes of both types of products and are not directly attributable to either segment. As such, direct allocation to a specific segment is not feasible or prudent and they are considered shared assets. The Company allocates related fixed, maintenance and other costs based on a rational and consistent approach that reflects the segments’ contribution, usage and economic benefit derived from the shared assets in the production process, which varies from period to period between specialties and commodities products.

Identifiable assets by segment were as follows:

(a)At June 28, 2025 and December 31, 2024, included $1.1 billion and $1.0 billion, respectively, of assets shared by Cellulose Specialties and Cellulose Commodities. Corporate includes ERP and certain other operating and lease assets shared across segments.

Capital additions by segment were as follows:

(a)Includes $54 million and $36 million of asset additions during the six months ended June 28, 2025 and June 29, 2024, respectively, that are shared by Cellulose Specialties and Cellulose Commodities. Corporate includes capital additions for ERP and certain other operational assets shared across segments.

(b)Amounts exclude the impact of changes in capital assets purchased on account and government grants.

18. Commitments and Contingencies

Commitments

The Company had no material changes outside the ordinary course of business to the purchase obligations presented in its 2024 Form 10-K during the six months ended June 28, 2025. The Company’s purchase obligations primarily consist of commitments for the purchase of natural gas, electricity and wood chips.

The Company leases certain buildings, machinery and equipment under various operating and finance leases. See Note 6—Leases for further information.

Litigation and Contingencies

The Company is engaged in various legal and regulatory actions and proceedings and has been named as a defendant in various lawsuits and claims arising in the ordinary course of business. While the Company has procured reasonable and customary insurance covering risks normally occurring in connection with its business, the Company has, in certain cases, retained some risk through the operation of self-insurance, primarily in the areas of workers’ compensation, property insurance, business interruption and general liability. These other lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Guarantees and Other

The Company provides financial guarantees as required by creditors, insurance programs and various governmental agencies. As of June 28, 2025, the Company had net exposure of $28 million from various standby letters of credit, primarily for financial assurance relating to environmental remediation, credit support for natural gas and electricity purchases and guarantees related to foreign retirement plan obligations. These standby letters of credit represent a contingent liability; the Company would only be liable upon its default on the related payment obligations. The standby letters of credit have various expiration dates and are expected to be renewed as required.

The Company had surety bonds of $92 million as of June 28, 2025, primarily to comply with financial assurance requirements relating to environmental remediation and post-closure care, to provide collateral for the Company’s workers’ compensation program and to guarantee taxes and duties for products shipped internationally. These surety bonds expire at various dates and are expected to be renewed annually as required.

LTF is a venture in which the Company owns 45 percent, and its partner, Borregaard ASA, owns 55 percent. The Company is a guarantor of LTF’s financing agreements and, in the event of default, expects it would only be liable for its proportional share of any repayment under the agreements. The Company’s proportion of the LTF financing agreement guarantee was $26 million at June 28, 2025.

The Company has not recorded any liabilities for these financial guarantees in its condensed consolidated balance sheets because the Company has recorded the underlying liability associated with the guarantee, the guarantee is dependent on the Company’s own performance and, therefore, is not subject to the measurement requirements or the Company has calculated the estimated fair value of the guarantee and determined it to be immaterial based upon the current facts and circumstances that would trigger a payment obligation.

It is not possible to determine the maximum potential amount of liability under these potential obligations due to the unique set of facts and circumstances likely to be involved with each provision.

On June 30, 2025, collective bargaining agreements covering approximately 640 unionized employees at the Jesup plant expired. The employees continued to work under the terms of the expired contracts during negotiations and on July 18, 2025, new contracts, effective through June 30, 2029, were ratified. All of the Company’s other collective bargaining agreements were current as of June 28, 2025.