RAYONIER ADVANCED MATERIALS INC.RYAM
RAYONIER ADVANCED MATERIALS INC. Fair Value Disclosure
13. Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy prioritizes the inputs used to measure fair value as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flows methodologies and similar techniques that use significant unobservable inputs.
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 is 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 consolidated statements of operations. The SWEN put option’s liability balance and activity during the year ended December 31, 2025 were as follows:
| Financial Statement Line Item | Year Ended December 31, 2025 | ||||||||||
Balance at December 31, 2024 | Other liabilities | $ | 4,196 | ||||||||
| Initial valuation adjustment | Other liabilities | 2,486 | |||||||||
| Fair value measurement adjustment | 2,841 | ||||||||||
| Foreign currency translation adjustment | 560 | ||||||||||
Balance at December 31, 2025 | Other liabilities | $ | 10,083 | ||||||||
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:
| December 31 | |||||||||||
| 2025 | 2024 | ||||||||||
Free cash flow to equity volatility(a) | 54.0 | % | 52.0 | % | |||||||
| Weighted average cost of capital | 13.3 | % | 12.1 | % | |||||||
| Risk-free interest rate | Term structure of U.S. Treasury and Euro Government Bond securities | Term structure of U.S. Treasury and Euro Government Bond securities | |||||||||
(a)Based on a peer group of companies in the same or a similar industry.
See Note 12—Derivative Instruments and Note 14—Redeemable Noncontrolling Interest for further information on the SWEN put option.
Assets Measured at Fair Value on a Nonrecurring Basis
Asset Impairment
In the third quarter of 2024, the Company recorded a $25 million non-cash impairment related to the Temiscaming cellulose plant asset group. The fair value of the Temiscaming cellulose plant assets was determined using discounted cash flows under the income approach from the perspective of a market participant assuming the highest and best use of the asset group. Discounted cash flows were estimated using key assumptions regarding production levels, price levels, profit margins, capital expenditures and discount rate, which are Level 3 measurements. See Note 3—Indefinite Suspension of Operations and Note 7—Property, Plant and Equipment, Net for further information on this impairment.
In the fourth quarter of 2023, the Company recorded a $62 million non-cash impairment related to the Temiscaming plant asset group. The fair value of the Temiscaming plant assets was determined using discounted cash flows under the income approach from the perspective of a market participant assuming the highest and best use of the asset group. Discounted cash flows were estimated using key assumptions regarding production levels, price levels, profit margins, capital expenditures and discount rate, which are Level 3 measurements. See Note 7—Property, Plant and Equipment, Net for further information on this impairment.
Financial Instruments
The carrying amounts of the Company’s cash, 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:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Carrying amount of fixed rate debt(a) | $ | 71,679 | $ | 75,142 | |||||||
| Fair value of fixed rate debt | $ | 73,426 | $ | 75,272 | |||||||
(a)Excludes finance lease obligations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.