Good morning, and thank you for standing by. Welcome to today's Sylvamo Third Quarter 2021 Earnings Review Conference Call. [Operator Instructions] I'd now like to turn today's conference over to Hans Bjorkman, Vice President, Investor Relations. Please go ahead, sir.

Thanks, Angie. Good morning, and thank you for joining our call today. Our speakers this morning are Jean-Michel Ribiéras, Chairman and Chief Executive Officer; and John Sims, Senior Vice President and Chief Financial Officer. Slides 2 and 3 contain important information, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties, including the impact of COVID-19. We will also present certain non-U.S. GAAP financial information. Reconciliations of those figures to U.S. GAAP financial measures are available in the appendix. Our website also contains copies of the third quarter 2021 earnings press release as well as today's presentation. I will now turn the call over to Jean-Michel. Jean-Michel Ribiéras: Thanks, Hans. Good morning, everyone, and thank you for joining us today. I'm on Slide 4. Our vision is to be the world's paper company, the employer, supplier and investment of choice. We are a new corporation with roots that go back more than 120 years. We are committed to transforming renewable resources into paper that people depend on for education, communication and entertainment. Moving to Slide 5. As we discussed on Investor Day, while we have a strong North American business, we generate more than 70% of our profit in Europe and Latin America. Over the last 12 months, we generated sales of $3.3 billion and $535 million in adjusted EBITDA. As of the end of the third quarter, our gross debt adjusted EBITDA ratio was 2.8. On a net debt basis, we ended the quarter with a ratio of 2.6x adjusted EBITDA. Slide 6 show how we built momentum for the October 1 launch. Third quarter net sales increased 8% to $908 million. We delivered adjusted EBITDA of $177 million and an adjusted EBITDA margin of 19.5%, above the high end of our target range of 15% to 18%. Adjusted operating earnings were $2.27 per share. We remain focused on generating cash and strengthening our balance sheet. Let's turn to Slide 7 to review our third quarter results in greater detail. As we continue to realize the benefit of prior price increases, price and mix outpaced increasing input cost. Global demand for uncoated free sheet continued to gain momentum as schools and offices reopened. Our volumes remain strong, and we continue to run full in all 3 regions. We tend to avoid conducting planned maintenance outages during the harvest months of the year, so the third quarter was a low maintenance outage quarter. However, if we had normalized maintenance outage expenses, our third quarter adjusted EBITDA margin would still have been a strong 17.6%. Our customer value proposition has strengthened as our channel partners and customers value a supplier committed to the uncoated free sheet segment. Strong commercial and operational performances during the spin-off period drove our above-target financial results. Now John Sims will provide more detail about our third quarter performance. John?

Thank you, Jean-Michel, and good morning, everyone. It certainly is exciting to be part of Sylvamo's first earnings call. On a daily basis, we all hear and read about increasing input costs and supply chain bottlenecks and Sylvamo was not immune to those challenges. Our input costs have increased by $26 million in the third quarter. However, our price and mix improvement outpaced increased input costs by $4 million. Year-to-date, our improvement in price and mix was $23 million more than input cost inflation. An important takeaway from this slide is the advantage we have in our global footprint. As you can see on a per ton basis, increasing cost impacted our regions differently. I want to point out that $3 million of the increase in fiber cost that you see in Latin America is related to the pulp we purchase for our nonintegrated Três Lagoas mill. 70% of this increase is naturally hedged by our pulp sales in Latin America. So if you take that into account, you'll see that our Latin America cost on a per ton basis would be similar to Europe. So most of the cost impact that we're seeing globally is in our North America business. Moving to Slide 9. Global uncoated free sheet demand continues to recover from the impact of COVID pandemic, and we continue to run full and improve our mix as our commercial teams maximize opportunities across geographies, segments and channels. Let's talk a little bit about global demand. Third quarter year-to-date global uncoated free sheet demand was up 5.3%. Industry demand in Latin America was up 11%. And in Eastern Europe, demand was up nearly 8%. In Western Europe and North America, demand was up 3.5%. So the recovery of copy paper demand continues to lag other uncoated free sheet…

Thanks, Jean-Michel, and thank you, John. Okay. Angie, with that, we're ready to take questions.

[Operator Instructions] Your first question comes from the line of George Staphos with Bank of America.

This is actually John Babcock on the line for George. I guess just first question. Can you talk about how demand trends have held up so far in 4Q across your different markets. It sounds like overall it was pretty strong in 3Q. And then also if you could talk about what impact you're seeing from the supply chain, particularly in North America, that would be helpful. Jean-Michel Ribiéras: John, thank you for joining our call. First of all, I will answer the question around demand. Demand continues to be really strong globally. As I mentioned, we are full everywhere and the trend continues to be very good. And we even have some region like Latin America which are kind of getting out of the pandemic. So you have back to school which are starting, return to office which should start soon and have even started in some regions of Brazil. So we expect to have a continued strong demand in the fourth quarter. Concerning supply chain, we've been, like everybody, I mean, who is not today on transportation, on supply chain issues, impacted with what's going on. In the U.S., I would say, for us, it's mostly truck. We are looking at mode shift to more rail and looking at different options and have good partners, but truck is where we've put a lot of attention. In Latin America, I would say it's mostly from Brazil vessels for exports. It's difficult to get export. And if you miss one, getting a new one is really very difficult. So making sure we comply with the planning, timing of vessels is essential. In Europe, we had some issues in third quarter, a little bit in rail in Russia, but it's been taken care. It's managed by the government. And they actually did a good job to put it back to a smoother relation. And we have some truck in some specific regions of Europe like U.K. I think everybody has seen that on media. So North America, a lot specific to truck, Latin America vessels, Europe mostly trucks also.

Got you. And then moving on, I guess, like my next question before I turn it over. On maintenance, it seems like that's going to be up a decent bit in 4Q. I thought you mentioned some projects at Saillat, correct me if I'm wrong there. And then also, how should we think directionally about maintenance in 2022?

John, this is John Sims. If you think, for the fourth quarter, we have 2 major outages, extended outages, both at Saillat and the Eastover mill. So those are, the Saillat mill is actually a 21-day outage. It's a 10-year outage that we have to do every 10 years. And Eastover was cold outage. So that will drive up the cost of those outages. We do provide guidance in the appendix back there in terms of what 2022. We estimate that to be $62 million for the outage expense, so slightly less than what we did this year.

[Operator Instructions] Your next question comes from the line of Ross Haberman with RLH Investment.

Could you talk about the capital expenditures you're going to use on your European plants? I think I saw something from your original deck that you needed to upgrade. I think it's your Russian operation. Could you address that in, I guess, for '22?

Yes, Ross, we did discuss that also in our Form 10 and Investor Day. So we have 2 recovery boilers that are reaching their end of life at our Svetogorsk mill in Russia. And we've been looking at options either to rebuild those 2 boilers or to replace them. We haven't made a final determination on that. We'll be bringing that to our Board of Directors. But we put in our projections, if you will, and we talked about at Investor Day the higher capital option, which is to rebuild the recovery boiler, which we estimate is somewhere around $220 million. This is a lower capital but less operationally impacting option because if you rebuild it, you have to shut the mill down and so you lose the production of that. But when you install a new one, you don't lose that. You don't have that impact. So next year, we have $15 million in our capital spend that's around the engineering of the recovery boiler. And then we're projecting that we'll have in 2023 approximately $75 million and related to the Svetogorsk boiler. And in 2024, we'll have $100 million. And then we install it and complete it with $30 million in 2025.

So if you do go the new route, how much cash flow will that take off, operating cash flow will that take out of your number in '22 and '23 if you go with the new boiler route?

So if we go the new boiler route, we will not impact the production at our Svetogorsk mill. So from an operating cash flow, we'll be able to continue to run that mill and that won't be impacted.

[Operator Instructions] We do have a follow-up question from the line of George Staphos with Bank of America.

I did want to ask, actually, can you just remind us what price hikes you have in the market? And then also, how much is left to be realized from the hikes that you've announced?

John, so we have price increases actually in all regions. And we've had some price increases that we announced since the investor to our customers, we announced since the investor meeting. So we have price increases that we'll be going through in Russia, Europe and Latin America and export markets and in North America. So you saw that we project that we have $30 million to $35 million in terms of price and mix in the fourth quarter. And how you can think about that, there will be further implementation and realization of those price increases in the first quarter because essentially that $30 million to $35 million probably represents about 0.5 month of implementation of those price increases.

Okay. And then can you also just remind us how mix tends to shift across the regions. So is it more of a positive impact or a negative impact across different regions?

Yes. From a mix perspective, we're always looking for opportunities to improve the mix. And then particularly in the demand environment that we have today, there is a lot of opportunity to do that. And so when you think about mix, we have the flexibility or the ability to improve our mix from a product perspective. We also have it from a customer perspective domestically in each of our regions and also export-wise. And that means taking the opportunity to be able to export to the markets that we generate the most, the profits in. And so when you think about mix, we're trying to pull those levers in all our markets.

Okay. Is there a seasonal impact, though, to mix, at least from what I remember, maybe I'm completely wrong here, but that's really what I was getting at. Jean-Michel Ribiéras: You're correct, John. There is a small regional impact. But because we have the 3 regions, it's a little bit different. But usually the first quarter is, especially in Latin America and in Russia, the lowest one because of the holidays and the vacations. And then you have the third quarter which is average. So we do have some seasoning, but because we have the third region, they kind of balance each other.

Okay. And then just a last question. Just on cash flow, are there any notable items we should be mindful of in the fourth quarter here, whether it's working capital or otherwise?

No. We did share with you that what we got the TSA expense that will show up in the fourth quarter, which we hadn't had previously, of course, because of the spin and also we have some onetime items.

Your next question comes from the line of Brian Lalli.

It's Brian Lalli from PGIM. If I could maybe just follow on, on John's question there, not to get too far ahead of ourselves with 2022 guidance, et cetera. But if you were to sum up all of the price actions you've taken relative to the inflation that you're dealing with, is there an amount for 2021 that you'd say you're still not fully caught up on yet? And obviously, all things being equal, which isn't fair, you'd say 2022 has additional tailwinds from the pricing you've already enacted. I'm just curious kind of what that number might be as we move into next year.

Yes. I think if you looked at a full year basis because we still have some of these price increases that we're implementing in the fourth quarter and we've had some significant cost increases. And some of these, I think that may not go forward, right? So we think that the gas prices in Europe as more gas has been coming in from Russia and hopefully the wind will blow stronger in Europe that we may definitely see some of the gas prices back off. And like I mentioned earlier, the wood cost in North America, we expect that it's elevated now because of weather, but that will come off. But in general, I think that when you look at our price increases relative to cost increases, we're just staying ahead of it by the time we exit the year. However, when you look at the first quarter, because of prices that we have already announced to our customers and feel very strong, confident that these will be implemented, we're going to see the benefit of that in the first quarter. It's in the first quarter that we'll start to really show that we're outpacing the cost inflation.

Is there a number that we should be thinking about on that, John? I'm just curious, again, to your point, the run rate as we exit the year maybe isn't as high as you think you'll get to, again, with the prices that you've announced and feel confident in with your customers. Just so we size it up correctly in our model is what I'm getting here.

I'm not going to give you the numbers right now for projections for 2022. We don't give forward-looking in terms of price details. So I think...

Okay. No. That's fine. Again, I wanted to ask the question, not a big deal. And then I guess my second one would just be, again, the Brazil tax liability, I'm just curious if there's any update on that? I know there's some limitations around restricted payments and stuff until you get that figured out. So I figured I'd just see if there was an update on that front as you talk about shareholder returns.

Yes. Brian, it's a good question. In terms of the, yes, there's still a bill pending in the Brazilian legislation about a potential tax amnesty program, but that still hasn't worked its way through yet. And just to remind everybody on the call that it's really International Paper's decision. They control the decision of whether they want to pursue that amnesty or not, but it still hasn't worked through. So it doesn't appear that it kind of comes through in November. There's a lot going on in terms of the Brazilian government right now. It may come out in December or maybe some time in next year if we don't get any further update.

At this time, there are no further questions. I would now like to turn the floor back to Mr. Bjorkman for any additional or closing remarks.

Thank you for joining us today. We do greatly appreciate your interest in Sylvamo, and we look forward to the continued conversations in the months and quarters to come. Have a great rest of your day and a great week.

Thank you for participating in today's conference call, you may now disconnect your lines at this time.