Good morning and thank you for standing by. Welcome to Sylvamo's First Quarter 2022 Earnings Call. All lines have been placed on mute to prevent background noise. After the speaker’s remarks you will have an opportunity to ask questions. [Operator Instructions] I'd now like to turn today's conference over to Hans Bjorkman, Vice President Investor Relations.

Thanks, Faith. 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 3 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. It is important to note that all earnings and figures include our Svetogorsk mill and Russian business, unless otherwise noted. We will also present certain non-US GAAP financial information. Reconciliations of those figures to US GAAP financial measures are also available in the appendix. Our website contains copies of the first quarter 2022 earnings press release as well as today's presentation. With that I will now turn the call over to Jean-Michel. Jean-Michel Ribiéras: Thanks, Hans. Good morning and thank you for joining our call. I'll begin my comments on Slide 4. Before we discuss our first quarter results, allow me to share some thoughts on 2022. We are well positioned to continue to create value this year. Given all the moving parts in our business, I want to share guidance on our full year 2022 key metrics. We expect to generate strong results, despite input cost inflation, supply chain challenges and the impact of Russia's invasion of Ukraine. In fact, we're on a path to achieve pre-pandemic EBITDA levels in 2022, even if we exclude our Russian business for the full year. We expect to generate $725 million to $775 million in adjusted EBITDA and $160 million to $180 million in free cash flow this year, if we exclude our Russian business for the full year. Slide 5 provides an update on Russian business. Our path forward in Russia is driven by our primary value to always…

Thanks Jean-Michel and good morning, everyone. Let's turn to slide 8. In the first quarter, we generated $187 million in adjusted EBITDA. This amount includes our Russian business, which contributed $34 million of adjusted EBITDA. We improved price and mix by $53 million, as price increase realizations in Europe and North America exceeded our forecast. As expected volume decreased by $17 million, due to slower seasonal demand in Eastern Europe and Latin America. Our order backlog remained strong, everywhere outside of Russia. Operations and costs increased by $22 million. These higher costs reflect the absence of a favorable fourth quarter LIFO adjustment in North America, and an unfavorable foreign exchange charge in Latin America. However, overall our operations ran well. As Jean-Michel mentioned, we successfully conducted planned maintenance outages at our Eastover and Três Lagoas mills and spent $26 million less on outages, than in the fourth quarter. Input and transportation costs increased by $24 million, with rising costs for chemicals due to energy impact along with higher fiber and distribution costs. I want to recognize and thank our regional teams, who worked hard to offset the impact of input cost inflation, especially our Saillat mill team for acting quickly to reduce the impact of record high European natural gas prices. Let's look at our regional results on slide 9. Each region performed well, demonstrating the strength of our talented team, low-cost mills and iconic brands. Our commercial teams deserve credit for their contributions to these results. They remain focused on strengthening our customer value propositions, and ensuring that we remain the supplier of choice. Strong regional performances reflect continued price increase realizations. Our volumes remain strong in all regions and we continue to outperform industry shipments. Operations were good in all regions and we started to see some improvement…

Thank you, Jean-Michel and thank you, John. Okay Faith, we're now ready to take the questions.

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

Thanks very much. Hi, everybody. Good morning. Thanks for all the details. Congratulations on the progress so far obviously in a very challenging environment. I wanted to ask to start more of a nitty-gritty question. So -- and kind of bridge from adjusted EBITDA to cash from operations and using kind of the midpoint of guidance. So if I remember correctly, you have a midpoint of about $750 million, you're targeting ex-Russia. Tax I think you said it's roughly about $128 million interested about $67 million recognizing I think those are the book number that we'll use in this tax. You mentioned that Georgetown Riverdale and the onetime transition costs are another $135 million. And so that would get you to basically like $420 million and we have to get to cash from operation of $345 million. Should we assume the rest is just working capital, or is there something else that I'm missing either in the gap or in my calculation to begin? And I had a couple of follow-ons. Thanks, guys.

George, you got to take into account the capital spending?

Well, I'm going to cash from operations. So I'm not -- I don't need cap, yes.

Yes. So it's working capital.

Okay. Very good. And then the next thing I wanted to check in on you said Saillat did a great job of -- this isn't me paraphrasing this is in your wording. But avoiding as best as possible the energy cost increases can you talk to without showing hands proprietary what you did what they did to accomplish that -- and recovery gives you the rest of this year.

So a couple of things I want to draw your attention to around Saillat is it's -- but most of it it's an integrated mill.

Yes, sorry.

And for the most part -- we produce own energy from biofuels. So we don't use a lot of gas, but just about 15% of that we do consume of gas. And there was significant increases in Europe due to the of course the Russia situation Ukrainian situation. And what the Saillat team did they developed a sophisticated model so that they could adjust different energy supplies as well as consumption to mitigate how much gas they absolutely burned in their operations. And that just caused a significant saving. The other thing that I want to point out about Saillat we kind of alluded to it in our comments is one of the significant increases that we're seeing in Europe is carbon gas tax that the EU had. It's been ranging from €60 to €80, but our Saillat mill is actually a net seller of credit. So we actually have credit and so we were able to use that to offset some of the energy costs.

But on that -- and that's great John but that's not a new development, or were you able to generate more credits this quarter which then also helped to offset the pressure?

Yes, George, that's not new development. It's more of the model that they used and implemented in the first quarter in terms of flexing their gas consumption and also knowing where to conserve their energy consumption.

Okay. Last one for me and I'll turn it over. One you mentioned that the bottlenecks are starting to improve on transportation. Can you comment to that? And in relation to -- I think you said you expect higher earnings in Europe over the rest of the year in each quarter. Was that a -- do you expect sequentially improving earnings each quarter or year-on-year earnings to improve in Europe in each of the quarters? Thanks, guys. Jean-Michel Ribiéras: Hi, George, it's Jean-Michel. Thanks for joining the call. In the US especially some improvement in the truck business not in the input cost but we're seeing quite some improvement in terms of availability of truck. We haven't seen it yet on rail but it is significant in trucks. We really – it's more fluid. Considering our earnings of Saillat I would say we expect both year-over-year improvement and we expect every quarter this year to get better.

That's great, Jean-Michel. Thank you. I’ll turn over. Jean-Michel Ribiéras : Thank you.

Our next question comes from Paul Quinn of RBC Capital. Your line is open.

Yeah. Thanks so much. Good morning, guys. Just given the positive demand environment right now and the significant cost pressure are you or anybody else in the industry anticipating further price increase in 2022? Jean-Michel Ribiéras : We don't comment on future prices. But we can't make comments on future prices. But we are realizing in second quarter price increase that, we've announced all around the globe with the exception of Russia. So, we still have more realization in the second quarter as you can see in our outlook to come.

Okay. But nobody else has announced the price increase in say Latin America or for Europe that we don't have great exposure too right? Jean-Michel Ribiéras: I cannot comment on our competitors. I apologize.

Okay. And then the process to sell the mill in Russia, do you expect that to be done in Q2? Jean-Michel Ribiéras: So there's two parts of the process. One is to find an agreement with a potential buyer and that we think could happen in Q2. Then you have the process to get it authorized through the Russian government, and that's a more complex process which the timing could be longer than that.

Okay. And then – just lastly on the transition services agreement with IP, what is the ongoing cost of that after the I guess the $57 million onetime and transition services? What do we expect to – after that is paid, what's the ongoing amount?

Well the TSA agreement should end in October. That's what the target date is for us to exit that and it's about $8 million a quarter.

That's all I had. Best of luck, guys. Thanks.

Thank you.

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

Thanks very much. Two for me. Can you talk a bit more about what you're doing on commercial excellence? How much is left in the tank so to speak use whatever cliche or metaphor you want to use third inning eighth inning half full half empty, particularly as regards to Europe. And are you finding your bottom slicing at all in terms of your customers and SKUs given how tight the market is, or is it truly around some of the products that you said you're rolling out new premium? Well, you're not rolling them out you won new premium notebook pads and things like that. If you could give us some color there that would be great. Jean-Michel Ribiéras: So it's all and the above, if I may say George. We are seeing a lot of improvement, but we still have a lot of opportunities. And we're seeing it in different categories. You mentioned SKUs rationalization that's one of them. We're seeing it in product mix. We're seeing in new products innovation. We're also seeing in terms of business rules with the customers. So we've got a large range of initiatives, which we've started to implement and we're continuing. So, I would say we probably have done 40% of the potential still quite some to come.

Okay. Thanks for that percentage there. Just a quick one back to what Saillat was doing. What was the benefit from model in the first quarter if you can talk to how it helped you sort of avoid some of these costs, if you can share it and you might choose not to? I understand. And then can you talk a little bit about -- you expect if I read your release and heard you correctly to grow 10% better than the industry in North America. Did I hear you correctly or see that correctly? And how are you developing your benchmark which I think you said is for up 1.6% for the industry and again correct anything that I misphrased there? Thanks guys. Jean-Michel Ribiéras: So, on the Saillat mill, I can give you an ID. Our normal gas consumption was about 15% and we've gone down to 10% -- about 9% exactly. So as you can see, this metric is significant. In North America, our improvement was 10% versus the market in Q1. So we are winning with -- I will call the winning customers and well aligned.

Okay. What did you think the industry -- go ahead. I'm sorry about that. Jean-Michel Ribiéras: I want to recall the industry number, if you give me a few seconds. In North America, it was 2% for first quarter. If you take all the regions, it was 1.5% I'm talking about our regions.

Understood. Thanks, Jean-Michel. I’ll turn it over.

Our next question comes from Jonathan Luft from Eagle Capital Partners. Your line is open.

Hey guys. Thanks for taking my question and great results. The first question I'd love to ask you guys is with some of the new products, particularly in Latin America and some notebook and stuff, can you talk about why you're winning that business? Are people shutting down capacity, or do you have a better product like what's happening there? Jean-Michel Ribiéras: Good morning, Jon, and thanks for joining the call. I would say, it's a mix of what you said. I mean some people are exiting and we're taking the opportunity to develop new products and replace this exit. The other one is segments where we were not present up to now and we've developed the products to fit those segments. And also, I will say, we've been managing -- not perfectly because nobody can manage perfectly what's going on with supply chain and everything, but we've maintained a level of services, you were talking specifically in Latin America. Importantly to our customers, we try to be reliable. And I think our customers see we are long term going to be the world paper company. And I think, our customers like to be aligned with a long-term player in this area. So, I think all those things make the difference why we're winning some new contracts on new businesses.

That's terrific. And given your comments about the cost advantage you mentioned in Europe, can you maybe talk about what you're seeing in capacity in both North America and in Europe? Are people adding capacity given the profitability or are people taking some capacity out? What are you seeing there? Jean-Michel Ribiéras : Recently we've seen in both in the last two years in North America and in Europe quite a lot of capacity sometimes shut down, but a lot also move to packaging. So from uncoated freesheet to packaging, we have seen no new capacity of uncoated freesheet just dumped or restarted in one paper machine this year. But net-net still a decrease both in North America and Europe quite a lot.

And Jonathan, this is John. We've said this before, but we're also seeing very tight markets and other paper markets particularly like in the coated freesheet, which has caused customers to move to uncoated freesheet, because of lack of supply of coated freesheets, which has increased demand for our products. So it's not only is uncoated freesheet been shut down or converted, but also coated freesheet and other paper markets that's having an impact. And we're seeing that across all our regions.

Okay. That's good to know.

And I guess another impact too Jonathan to point out is that the Russian situation. The Russia did export -- we did. We exported out of Russia into Europe, but then of course that's all stopped. So that supply went away because of the Russia situation.

Okay. Got you. And just one last question from me which is can you maybe talk about inventories and your situation? I mean given your growth relative to the industry are you building inventories or where are inventories relative to historical norms? Jean-Michel Ribiéras : Our inventories are between normal to low depending on the regions.

Okay. Jean-Michel Ribiéras : But certainly not building.

Yes. All right. Well, great results and I’ll turn it over. Thank you so much. Jean-Michel Ribiéras : Thank you.

[Operator Instructions] We have a follow-up question from George Staphos from Bank of America. Your line is open.

Hi. Thanks guys. Last couple from me. And recognizing again you might not be able to share too much here nonetheless we wanted to ask. First Jean-Michel can you talk to the type of interested party in Svetogorsk mill. Are you finding interest more from local market purchasers or local investors in the business or is it really dispersed between Russian and non-Russian potential buyers? And then just last question I had for you is, can you talk at all about how the value return discussions the priorities may have changed, can you remind us again how you would think about value return as you obviously delever and what your preference is for increasing buyback versus dividend overtime? Thanks guys and good luck in the quarter. Jean-Michel Ribiéras: So -- just to make sure I answer it correctly. We are in the middle of the process. The process in Russia is a bit complex. So being in the middle of the process you will understand. I don't want to comment on that too. We'll update...

Understood. Jean-Michel Ribiéras: Everybody when we can. Our priorities have not changed. We have the same strategy long term which is too deliberate. I mean we think we can -- with the uncertainty everybody getting a little bit nervous with what might happen with the economy, we want to accelerate a little bit and continue our debt reduction. That's our priority number one. Once we've done that, we want to invest and continue to invest in our high-return projects. We have some high-return projects. We've mentioned before, we're seeing this really high return short term. So, everything especially around cost savings. We actually probably would like to be able to do more than we can because it takes time to do all of these projects. And then we are talking and have started the discussion to talk with our Board about returning cash to shareholders through buybacks or dividends. So that has not been decided yet, but that's the next step. So, priority to debt repayment high-return projects and looking at options and talking with our board form the next steps in buyback or dividend.

Thank you very much.

Thank you. I'll now turn the call back over to Hans Bjorkman for closing comments.

Thanks again everyone for joining us today. We truly appreciate your interest in Sylvamo. And we look forward to continued conversations in the coming days, weeks and months ahead. Have a great day and a great week.

Thank you for participating in Sylvamo's First Quarter 2022 Earnings Call. You may now disconnect.