Good morning and thank you for standing by. Welcome to Sylvamo’s Second Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, we will have an opportunity for questions. I would now like to turn the call over to Hans Bjorkman, Vice President of Investor Relations. Sir, the floor is yours.

Thanks, Tory. Good morning and thank you for joining our call today. Our speakers this morning are Jean-Michel Ribiéras. 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. 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 second quarter 2022 earnings press release as well as today's presentation. On Slide 4, we want to provide a brief update on our Russian business. As communicated in our first quarter earnings call, we made the decision to exit Russia and began conducting a process to sell our Russian business. In the second quarter, we have transitioned the Russian operations into discontinued operations. It is important to note now that our Russian operations are reported in discontinued ops, all earnings and figures for current and prior periods as well as our outlook in this presentation exclude our Russian business, unless otherwise noted. The process to sell the business continues, and we will provide an update on any material developments when appropriate. Please keep in mind that the situation in Russia is complex and continues to change frequently. In the meantime, we will continue to comply with all regulations and sanctions. 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 5. I'm very pleased to share our second quarter highlights. We continue to have good results with another quarter of excellent commercial and operational execution. Quarter-over-quarter, we had a 290 basis point improvement in our margins, and we grew our adjusted EBITDA to…

Thanks, Jean-Michel. Good morning, everyone. Let's turn to Slide 9. As Jean-Michel mentioned, we generated $189 million in adjusted EBITDA with a margin of 20.7%. Again, this was a 290 basis point improvement over the first quarter as our gains in pricing, commercial excellence and operational excellence are outpacing cost inflation. We improved price and mix by $73 million as price realizations exceeded our forecast, and we have benefited from several mix optimization initiatives. Volumes increased by $2 million, with stronger seasonal demand in Latin America as back-to-school book publishing was strong. Our order backlog remained strong in all regions. Operations and costs also improved by $2 million. Overall, our operations ran well. We successfully conducted planned maintenance outages at our Eastover and Ticonderoga mill and spent $17 million more on outages than in the first quarter. The input and transportation costs increased by $16 million with the rising cost of chemicals, energy, fiber and distribution. Let's take a look at our regional results on Slide 10. Each region continues to perform very well, demonstrating the strength and resilience of our talented teams, our low-cost mills, iconic brands as well as favorable industry conditions. We continue to win with customers and increase our positions in key segments. For example, in Brazil, we are expanding our presence in high-margin food retail channel. And in North America, we are growing on-demand book publishing. We remain focused on earning the right to be our customers’ supplier of choice. Our volumes remain strong in all regions, and we continue to outperform industry shipments. Our commercial performance reflects our compelling customer value proposition as well as continued price increase realizations. Operations were good in all regions, while executing two large annual outages in North America. Supply chain costs remain under pressure. However, we’re seeing truck…

Thanks, Jean-Michel, and thank you, John. Okay, Tony, we’re now ready to take questions.

Thank you. Thank you. Our first question will come from the line of Paul Quinn with RBC Capital Markets. Please go ahead.

Yes. Thanks, guys. Good morning. Just a question on price increases. I’ve seen a number of competitors in North America introduce September price increases in the marketplace. Just wondering if you follow suit? And what’s the status in Latin America? Jean-Michel Ribiéras: I think we don’t comment on pricing, but there’s been some press or media or specialists, which have informed our price trends. So I think it’s public for North America.

Okay. Then just maybe just a bonus question here. Just on guidance, I think I made this wrong last quarter, but essentially, you’ve moved up guidance about $10 million on the midpoint, right? But I was assuming that Q1 has reported 1.87 was in your guidance as opposed to the 1.43 that ex-Russia, right? Jean-Michel Ribiéras: Yes. This is all ex-Russia. And you’re correct. We’ve upgraded especially at the midpoint by about $10 million a bit more.

All right. That’s all I had. Thanks. Jean-Michel Ribiéras: Thanks, Pau.

Thank you. Thank you. I’ll now turn the call back over to Hans Bjorkman for closing comments. One moment, we do have a last moment question that just come in. And that’s from Cole Hathorn with Jefferies. Please go ahead.

Good morning. Thanks for taking my question. I just like to follow-up on the wood cost trends that you’re seeing by region, particularly interested in hearing what you’re seeing in the European markets for wood costs? Some of your competitors are calling out wood cost inflation. And then following up on that, like to hear a little bit more about the office paper demand trends that you’re seeing in Europe relative to North America. Are you seeing any divergence from your customer base in the strength of those office paper order books? Thank you.

Yes. Cole, it’s John Sims. On the wood cost, we’re seeing wood cost increase across all our regions, but mostly that’s driven by transportation costs due to diesel. Although diesel is going down, it’s lag because mostly it’s indexed to that. And particular to Europe, our sources of wood is from Saillat mills in France. And we actually have a wood harvesting operation there. We’re not seeing the pressures that you see in other places, particularly like you’re seeing in Poland and other places that’s being impacted either because of the Russian ban on wood to the Nordic and some other things that are going there. So we’re not seeing that type – that increase other than transportation cost in Europe, in Saillat. In terms of your question around on printed freesheet demand in Europe, it is, as we mentioned the demand – in Western Europe on printed freesheet is down, it’s down 2.5%. And as we also mentioned on the call, we believe that the conditions – despite conditions are so tight there that you have a lot of stockouts in shelves and we’ve reported that some of availability of paper is not there. We think that that is impacting demand. How much, we don’t really have a view on that. But we do think that that is impacting it. The most significant demand decline though we’re seeing is in Eastern Europe. And that’s mostly driven because of the Ukrainian situation. I believe that’s been reported almost down 10%, but that really doesn’t impact us from Saillat, which our shipments there is predominantly Western Europe.

Thank you. If you permit one follow-up. Given your regional producing in France, I imagine you don’t have any water level or drought issues. Are you seeing any water level issues impacting some of – potentially some of your competitors’ production for the market? any color you give on that would be helpful? Jean-Michel Ribiéras: Yes. We don’t know about competition on drought. There is, as you know, in France, some drought, also it might not be as bad as some other countries of Europe. There is lot of people making attention and government has given instruction on water. So we’re not too affected right now, but we are paying attention to that. The one thing which we are paying more attention, which has not impacting us directly yet, but could, is the fire – the wood fire, the forestry fire. As you know, especially one – big one in the Southwest of France. There’s been a lot this summer and that has created some disruptions. So far, we’ve been able to mange it, but it has created some disruption on the wood side.

Thank you. Jean-Michel Ribiéras: Thank you.

Thank you. And we do have a question from the line of Jonathan Luft with Eagle Capital Partners. Please go ahead.

Hey guys. Thanks for taking my question. The first question I have is maybe just talking about Europe and the energy situation. Can you just walk us through your exposure there?

Yes. Jonathan, this is John here. We’re well positioned if you will, with our Saillat mill because we’re integrated mill and produce most of our energy needs. We do have some demand for gas there, but it really represents almost 10% of our energy needs.

Perfect. And now that Russia is part of the discontinued operations. Can you maybe talk to us a little bit about what the business would’ve looked like without Russia if we went back to 2019, 2020 pre-pandemic? And how the business, the guidance this year and how it relates to ex-Russia?

Yes, Jonathan, I think and we mentioned it, our earnings even without Russia is approaching or actually better than almost in pre-pandemic levels even back in 2019 where we had – we actually had another machine, we had at Riverdale 15 machine that was producing, where with today we are projecting to produce more earnings and of higher EBITDA margins than we did back then. So if you think about what Russia contributed in terms of EBITDA margin during that timeframe pre-pandemic with north of $120 million to $125 million.

Okay. That’s very helpful. And then just a last question from me is, if you could talk about the competitive environment, given that margins are pretty attractive now, pricing is up. Are you seeing people trying turn on machines or sell some incremental capacity into the market? What are you seeing there? Jean-Michel Ribiéras: We’re not seeing any major changes. And I think if you are in a non-integrated position in Europe with the energy, wood and chemical price and the bulk price I know your position remains difficult, I will say probably. And there’s no change in capacities in the other main regions. So we’re not saying anything significantly right now, operating rates remains very high in every regions we operate.

All right. Well, thank you so much. Jean-Michel Ribiéras: Thank you.

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

Thank you, Tony and thank you everyone for joining us today. We do appreciate your interest in Sylvamo, and we look forward to continuing the conversations in the coming days, weeks and months ahead. Have a great day. Thank you.

Once again, we’d like to thank you for participating in Sylvamo’s second quarter 2022 earnings call. You may now disconnect.