Sylvamo Corporation (SLVM) Q1 2023 Earnings Report, Transcript and Summary

Good morning. Thank you for standing by. Welcome to Sylvamo's First Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, your conference is being recorded. I would now like to turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

Thanks, Greg. Good morning, and thank you for joining our call today. Our speakers this morning are Jean-Michel Ribieras, 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. 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 first quarter earnings press release as well as today's presentation. With that, I'll turn the call over to you, Jean-Michel.

Thanks, Hans. Good morning, and thank you for joining our call. I'll begin my comments on Slide 4. Our first quarter results were strong and in line with our expectation. Adjusted operating earnings per share were $2.51 and we achieved $208 million in adjusted EBITDA with a 22% margin. We maintained a strong financial position with net debt at 1.1x adjusted EBITDA. Price and mix as well as input transportation costs were favorable to our outlook. Our volume reflected continued inventory destocking and the worse than expected seasonal demand slowdown in Latin America. Our recently acquired Nymolla mill posted a strong quarter. The ramp up of cost savings from the recent port mill modernization are on schedule. We are also pleased with our progress on other operational and commercial synergies. We returned $21 million in dividends and share repurchases to share owners in the first quarter. I am now on Slide 5. We remain committed to operating as a sustainable corporation that creates profits for its shareowners while protecting the environment and improving the life of those with whom we interact. With that in mind, since the spinoff, we've been pursuing the formal approval of our 2030 goals for greenhouse gas emissions. We are pleased to announce that we received formal approval of our 2030 emission reduction goals from the science-based target initiative. SBTI acknowledge that our commitment to reduce our absolute Scope 1, 2 and 3 emissions by about 28% is consistent with a well below 2-degree scenario. As the slide shows, our own goal is even more ambitious. We are committed to a 35% reduction in total greenhouse gas emissions related to our 2019 baseline. Slide 6 highlights our key performance metrics for the first quarter. We achieved sales of $959 million, up 3% versus the fourth quarter. We generated adjusted EBITDA of $208 million, up more than 20% versus the fourth quarter. As expected, free cash flow was lower than the fourth quarter, reflecting an increase in mill inventories in preparation for our second quarter planned maintenance outages and the payment of annual incentive compensation. And we posted adjusted operating earnings of $2.51 per share, an 87% increase over the last year's first quarter. The strong performances demonstrate our ability to continue to deliver on our investment thesis. Now John will discuss our first quarter performance in more detail. John?

Thank you, Jean-Michel. Good morning, everyone, and thank you for joining our call. Let's turn to Slide 7 to review our first quarter adjusted EBITDA bridge. As Jean-Michel mentioned, we posted a solid quarter, generating $208 million in EBITDA, up $38 million versus the fourth quarter and in line with our guidance. Our EBITDA margin was strong also at 22%, 400 basis points better than the fourth quarter. Price and mix decreased by $8 million, driven by lower market pulp prices in all regions, which accounted for the majority of the decrease. In Europe, we reduced our paper prices as we rolled back Saillat energy surcharge announced in the fourth quarter. Paper price and mix was stable in the Americas. Volume decreased by $34 million. In addition to the normal seasonal slowdown in Latin America, orders for the Brazilian government textbook program were delayed beyond the first quarter. Volumes in Europe and North America continue to be impacted by channel inventory corrections, particularly in the commercial printing segment. Operations and costs improved by $18 million, primarily due to lower accruals for the annual incentive compensation and favorable foreign exchange in Brazil. The ops and cost improvements occurred despite taking about 60,000 tons of lack of order downtime in response to our customers' inventory adjustment. About half of the lack of order downtime was taken in Europe and the other half in North America. We did not conduct any planned maintenance outages in the first quarter, which resulted in a $31 million favorable variance. Input and transportation costs improved by $14 million, reflecting favorable energy and distribution cost trends. And lastly, our Newland mill added $17 million of adjusted EBITDA and is performing very well since we closed on the acquisition at the beginning of the year. Let's move to Slide 8 and talk about the uncoated freesheet industry conditions. In the first quarter, significant inventory destocking continued in all regions, resulting in lower shipments in Europe and North America. We expect inventory corrections to continue in the second quarter and be completed in the third quarter. With respect to demand, the first quarter is always the seasonally weakest quarter in Latin America. Demand was also adversely impacted by delay in the annual Brazilian government textbook program. This was a material shift since the Education segment accounts for about one-third of Brazil uncoated freesheet demand. These orders have started in the second quarter. The cut size segment, which accounts for about 40% of the uncoated freesheet market in North America has been the most resilient segment of uncoated freesheet over the last few quarters as demand has increased with more workers returning to the office. The cut size segment didn't see an increase in inventories in North America, so there's no need to destock. As we expected, uncoated freesheet imports receded to more normal levels after peaking last October. We anticipate second quarter imports to return to normal levels, driven by the adequate domestic supply and the reopening of the Chinese economy. In the first quarter, two competitors has announced permanent uncoated freesheet capacity shutdown. In North America, a 240,000 ton in North America was shut down in North Carolina was shut down. And in Europe, a machine in Austria will be shut down as well. We expect these capacity reductions to favorably impact operating rates. And in North America, we have already secured more than 60,000 incremental tons on an annual basis. Let's go to Slide 9 to look at imports into Europe and North America. Driven by domestic supply shortages in the first half of 2022 and lower Chinese demand due to the COVID lockdown, Indonesian exports were diverted from China into our regions and increased steadily until peaking in October of 2022. As we mentioned last quarter, we expected that imports had already peaked and would return to more normal levels. And as you can see from the chart, imports have dropped by about half in Europe and two-thirds in North America are back to normal levels. Moving to Slide 10, let's discuss our second quarter outlook. We expect to deliver an adjusted EBITDA of $115 million to $125 million, which reflects a $59 million increase in planned maintenance outage expense this quarter. We project price and mix decreased by $45 million to $50 million, reflecting the realization of prior price decreases for pulp in all regions and paper in Europe as well as less favorable product mix. Keep in mind that pulp accounts for 10% of our sales on average 100,000 tons per quarter. We expect volume to improve by $10 million to $15 million, reflecting seasonally stronger volume in Latin America. We project operations and costs to increase by $10 million to $15 million due to unabsorbed fit costs as we continue to match supply to our customers' needs. We expect input and transportation costs to improve by $15 million to $20 million, largely on favorable trends in cost for natural gas, chemicals and transportation. Our adjusted operating earnings should be about $0.90 to $1.10 per share, including about $1 per share of higher planned outage expense. Slide 11 shows our planned maintenance outage schedule for the quarter, with 2/3 of the total annual cost scheduled for the second quarter. During this quarter, we'll conduct outages in all three regions. After this quarter's remaining planned outage expenses will largely occur in the fourth quarter. I'm on Slide 12, which shows again our capital allocation framework and how we think about allocating cash to drive shareowner value. As we maintain our much stronger financial position with about $1 billion of gross debt, we are putting a greater emphasis on returning cash to shareholders and reinvesting in our business to grow our earnings and generate cash. We remain a cash flow story. We leverage our strengths to drive high returns on invested capital and generate free cash flow. And we use that cash to increase shareholder value by maintaining our strong financial position, returning more cash to shareholders and reinvesting in our business. Let's flip to Slide 13 to review what we have done to enable us to increase the limits on cash returns to shareholders. In March, we repurchased $360 million of our outstanding notes in order to eliminate the covenant that limited cash returns to $90 million per year. We replaced these notes with a new $300 million term loan A and short-term debt. This also allowed us to reduce our interest expense on $300 million of debt from 7% to 6%, and we locked this rate in by executing 5-year interest rate swaps. The last step to increasing the limits on cash returns is to address the credit agreement covenant that restricts annual cash returns to $90 million. When we approach that limit later this year, we expect the deposit $60 million into an SAC account and maintain $225 million in liquidity. These actions will enable us to return more than $90 million, returning more cash to our shareowners remains a priority. I will wrap up my comments on Slide 14. We are also reinvesting in our assets to strengthen our business. This year, we plan to invest $175 million to $190 million of nondiscretionary capital. We are committed to ensuring safe operations in compliance with all laws and regulations, and we need to ensure reliable operations to remain the supplier of choice to our customers. In order to remain an investment of choice, we need to maintain our low-cost position and ensure availability of low-cost fiber in Brazil. We also expect to invest $35 million to $45 million in cost reduction and strategic capital at our flagship mills to improve our low-cost position and ensure the long-term [indiscernible] mills. This slide shows two examples of attractive cost reduction projects, one in Eastover to reduce chemical consumption and one at Luis Antonio to increase energy efficiency. Both projects are forecast to generate internal rate of returns over 20%. So with that, Jean-Michel, I will turn it back to you.

Thanks, John. I'm now on Slide 15. We have revised our full year outlook. We now project adjusted EBITDA of $720 million to $770 million and free cash flow of $250 million to $280 million. These new projections reflect the impact of previously announced pulp price decreases. Our updated views on second half pulp and paper pricing and volume and favorable implement transportation costs. Sylvamo remains a cash flow story. Our revised outlook indicates continued strong free cash flow of about $6 to $7 per share, which will allow us to return more cash to share owners. Slide 16, please. We remain confident in our ability to create shareowner value and remain committed to our investment thesis. We will continue to leverage our strengths to drive high returns on invested capital and generate cash, and we reduce that cash to maximize shareowner value. Our three-pronged strategy of commercial excellence, operational excellence and financial discipline will enable us to continue creating long-term value for shareowners. We are grateful for our talented and engaged colleagues and their dedication to working safely, delivering on customer commitments and creating value for our shareowners. We are also grateful for our customers. Without their continued support and partnership, we cannot succeed. With that, I'll turn the call back to Hans.

Thanks, Jean-Michel, and thank you, John. Okay. Greg, we are now ready to take questions.

Okay. [Operator Instructions] Your first question comes from the line of George Staphos from Bank of America. Please go ahead.

Congratulations on the progress. Thanks for all the details. My two questions. One is going to be on the value return and then also just on the outlook. So in terms of the value return and the $60 million in escrow and the $225 million liquidity. John, did you say you will do that, or you can do that? I just want to make sure that we are clear on expectations over the course of the year, what your intention is there. And then on the pricing impact in your outlook, you were very explicit in saying that you had reflected in your 2Q guidance, the effect of pulp pricing across all regions, paper in Europe. There was no explicit mention of pricing elsewhere in other regions. You then said that you have incorporated your views on paper pricing in the second half, recognizing that pricing discussion is obviously very challenging at times on an open mic conversation. What do you want us to take away about your paper pricing expectations, the timing of which across the other region or across all the regions? Thanks guys.

Hey, George. Good morning and thank you for your question. In terms of the value question you had, under our top priority we had going into this year was increased cash returns to our shareowners. We returned $90 million last year, and we intend to substantially increase that this year. To be able to do that, we do have to address the bank covenants now that we've gotten mid or, let's say, we've eliminated the bond. So as we approach $90 million, the intent would be to put $60 million into a net co so that we can return more going forward, okay? I think your second question was around pricing. Let me give you some color around the outlook. So as we talk about and look at our first quarter pricing, we did roll back energy surcharge in Europe, and that was really just associated with the CIO mill volume because, of course, we didn't have the new [indiscernible] mill last October. We did increase prices in Brazil in the first quarter. And then prices in the Americas, the price mix was constant. It was flat going in. Our outlook, the $720 million to $770 million that we revise outlook does incorporate what we've seen already and would expect in terms of both pulp prices and paper prices across the region. And that's all I can really say about that.

Yes, just -- hi, George. Thanks for joining the call.

Hi, Jean-Michel.

What I would just add, without [indiscernible] on projections is, your question was towards Americas and North America, like LATAM, we have not seen any price decrease up to know our prices are flat.

Okay. I will turn it over and come back. Thank you.

Thank you.

Thank you, George.

[Operator Instructions] And we will go back to the line of George Staphos. Please go ahead.

Hey, guys. So related to that question, can you remind us, how much of your volume is impacted by the pricing that we might see in the published indices, again, specifically within North America and then related across the other regions if there is volume? And if so, roughly how much is tied to indices. The second question for this turn. You did -- from our vantage point, a bit better than expected in overall blended realizations in Europe yet for what it's worth, and it's our model, it's not your model. Results were a little bit off on our forecast in Europe. So were there some operating costs that clipped you there. And similarly, in North America, you operated very well from what we can see. Any call outs there beyond what you've already shared in the waterfall.

So just one thing on indexes. We have no prices linked to index. We are not like market pulp big guys. Our pulp customers are mostly small, medium regional customers, no index and our paper price have no index relation. So we -- that doesn't impact us. The second question was on European cost. I think there was two things. One is we had some unabsorbed fixed cost because we took as we mentioned, some economical downtime in Europe. So that's impacting our costs. That was probably some of the costs about it. And John, anything else? I think that was the main reason.

No, the only other thing we had is we had a couple of reliability is [indiscernible] the [indiscernible]. Nothing really major, but that did impact us.

Thank you. I will turn it over.

Your next question comes from the line of Paul Quinn from RBC Capital Markets. Please go ahead.

Yes. Thanks very much. Good morning, guys. Just on the 60,000 tons [indiscernible] order downtime, what's your level of confidence that this destocking is going to end at the end of Q2 here and that your back half of the year should be full on.

Good morning, Paul. Actually, we believe that destocking will not end in the second quarter. It will continue into the third quarter, both in North America and in Europe. And this is what we are seeing from our customers, how we are really confident that it will be completed by the end of the third quarter. So we are seeing and expect the second half of our outlook is stronger than the first half because we do expect increased volumes across all the regions. One is driven by the destocking is going to work its way through by the third quarter. In North America, we picked up additional tons from the mill that shut down in North Carolina, which is 60,000 tons. In Brazil, it's seasonally always stronger in the second half. But on top of that, this book -- the government book issue was a significant issue. And it's not unusual for when there's a change in government for them not to release the school book publishing contract. They were a little late on that, but that's actually -- we started seeing orders in the second quarter, but we actually see the bulk of that in the third quarter, which will make our Brazilian shipments stronger, even seasonally stronger than what we've seen in the past.

Okay. And then just maybe as a follow-up to that. How do you determine between destocking and sort of [indiscernible]?

Yes. Hi, Paul. Thanks for joining the call. It's always a key question. The way I would mention it is, it's difficult to separate it. We do attribute from our customers and what we see on the end use information that helps us. What we can say is coming from our customers, most of them are still talking about some destocking going on, but clearly less than it was in the first quarter. From the end use, probably the only thing we have is the commercial printing -- and commercial printing, I would say, especially also the marketing budget of big companies with the uncertainty of the economy have a tendency to be reduced on advertising, and that reduction of advertising budget is impacting direct mill. So from the end-use segment, the only trend we can see is the direct mill. The rest of it, we are not seeing something significant we are mostly seeing destocking.

And Paul, let me add to that. I think there is -- because sometimes in the reported industry statistics can be confusing. When you look at how significant demand decline that was reported in the fourth quarter. One thing to understand like when the pulp and paper and products councils, for example, the calculation of demand, it is apparent demand. And what they use to calculate that is domestic shipments minus exports plus imports. And so in North America and also in Europe, imports can have a significant impact on this apparent demand. So because imports increased significantly in the fourth quarter, demand was somewhat inflated in terms of reported numbers. And because the exports receded in the first half, the demand decline numbers looked pretty severe. But if you look at the 6 months, the last 6 months essentially averages to you get in North America, for example, demand was down 3% for uncoated freesheet. And that's how we are kind of looking at it. So one of it is, you got to look at kind of through the noise. And we have seen, we believe some demand decline is driven from the economy, the slowing of the economy, particularly you see it and envelopes. And we've seen that in lower spending on direct mail. But for example, as I talked about cut size being resilient. If you look at the past 6 months, cuts actually up 2%, and that's because more people returning back to the offices. So I hope that adds a little bit more color to the demand situation.

Yes. I know that’s a -- it’s a great point to add. Thanks very much, John. Maybe I will just [indiscernible] next question here. Just the maintenance variant really caught a sort of by surprise sort of big Q2 and Q4 spend. Do you anticipate that sort of same sort of pattern in '24 as well?

So there are two things into that, and we tried to outlook it when we give our numbers, but main outages are due to regulatory obligations and sometimes to timing with the weather. So in some mills, you don't want to do it when you're close to risk overcame season or a strong cold season when you are [indiscernible]. So you have also Saillat, which is maybe a little bit troubling because we are not on a 12-month outage rotation at Saillat. We are on a 12-month -- 18 months, sorry, 18-month rotation, which means you have 2 years with about $20 million negative impact, and you get a year with 0 in maintenance. Last year, we had 0. This year, we have an annual outage, which is 20, and we do it according to regulatory. But we usually always have strong seasons, which are second and fourth quarter when you look at the history of outage, as I mentioned, due to regulatory and weather.

All right. Thanks very much. Best luck.

Thank you.

Thank you, Paul.

Your next question comes from the line of Jonathon Luft from Eagle Capital Partners. Please go ahead.

Hey, guys. Thanks for taking my question. I was hoping you could flesh out a little bit the capacity closures and what you're seeing and how you were able to take some of that share? Was it competitively build? Was it something that the customers came to you? So that's my first question.

Yes. Jonathon, thanks for your question, and thanks for joining the call. We were -- well, we are working with actually existing customers for a lot of these orders in terms of moving some of that business that they had sourced with the mill that was closing back to us. We wanted to be -- we want to be selective. We want to make sure that we've got attractive business. And so our sales teams target those particular businesses that were attractive to us.

Great. And the closure in Europe that you mentioned, did that happen yet, or is that to come? And is there a similar opportunity to take some volume there?

The short answer is no, it has not happened yet, and they have yet to announce exactly when that would -- the timing of that shutdown.

Okay.

But we do expect that, like anything, there's opportunity there to pick up business, yes, Jonathon. We target that.

Thanks. And just my last question, just on the guidance. And looking at Slide 15 and talking about the second half, you talked about favorable input and transportation costs. And I was hoping you could flesh that out. Are those related to items that might have annual contracts? Is it something that maybe will benefit you going into '24? Or is it really spot contracts that you're seeing lower? Just what's going on there?

Well, Jonathon, it's really kind of a mix. Most of it is driven by spot prices in terms of like fuel, right. Fuel surcharges for our freight and we are seeing it also in terms of energy as you can see gas coming down. And so that will move maybe with somewhat of a lag, sometimes. In fact we really haven’t seen yet is chemical costs going down, but we expect that in a future, that go down because that also is driven by the energy markets and -- so that’s a little bit delay, but we are seeing -- we expect to see that in the second half. Yes, all those costs for the most part will carry on into -- hopefully into the next year. Now having said all that, costs are still extremely high compared to where they were a couple of years ago. But also that’s supportive of pricing.

Okay. Thank you very much. I will turn it over.

Next, we'll go back to the line of George Staphos. Please go ahead.

Hi, guys. A couple of questions here. First of all, having owned Nymolla for a couple of months now, what are your learnings with it. You said you had some reliability issues. You said it wasn't significant, but what was behind that as well. So kind of what you've learned with Nymolla? What was in reliability? Kind of what's the horizon opportunity there? That would be sort of a multipart question number one. And then just as we think about, again, destocking consumption and the like, are you seeing better trends or worse trends depending on whether we're talking about retail versus commercial print versus distribution. My sense is probably your big box retail customers are doing okay in terms of demand because you said cut size, there's not really any destocking to go through. So if you could give us some additional one, affirm that or correct that, but to give us some color there. And then last, I took three here. The coated paper markets have been perhaps even more challenged based on the operating metrics. Are you seeing any effect? Obviously, we really wouldn't hit you that much in cut size, but are you seeing any effect of that coated paper in your commercial print markets and uncoated freesheet or is there something that you've embedded in your second half guidance for that potential risk? And if not, why not?

Well, I'll take the first one and maybe tag team also I'll take the second question, maybe your third question, too. But let me just say, from a Nymolla perspective, we've been very pleased with the performance that very happy with the asset, with the people that we have. So this issue that I talked about in terms of the reliability is not atypical. I mean we have that in our other mills that will crop up over time. This just happened to be -- impact our energy consumption and increased our costs. But that issue is behind us. And the mill is performing very well. And we said in our presentation that the pulp mill upgrades that were completed prior to the acquisition, we're seeing those benefits now that the ramp up curve is actually going better-than-expected. So all in all, we are very pleased with the performance of the Nymolla mill and I really believe that's just going to be a great asset, great business for us in Europe.

Yes, concerning destocking, as you mentioned it, you're correct. We are seeing it much more in the commercial printing, which impact merchants, then we are seeing it on the retail and cut size. Cut size has been more resilient, as John mentioned it. So we are seeing differences. And by the way, we are seeing some -- our customers which are telling us, it is going much better. They've done the biggest destocking they needed to. So that's why we plan to continue to have some in Q2, maybe less than Q1 and I think by third quarter, it would be gone. Effecting coated paper, it's very, very small. We sometimes see it on some of our high-end products from Ticonderoga, but it is not significative to us.

Thanks, Jean-Michel. Thanks, John. Good luck in the quarter.

Thank you.

Thank you.

[Operator Instructions] And you have a question from the line of David Steinhardt from Contrarian Capital. Please go ahead.

Hey, guys. Can you talk about the new additional directors that came on through the co-option agreement with Atlas. How they have impacted the Board, how they might have been helpful so far? And any thoughts that you might have about the company as you approach your important 2-year anniversary?

Yes. Thanks for the question and thanks for joining the call. First of all, let me tell you, it's a good experience. As we expected, we have two experienced persons. So in our April Board meeting, we will come to these two new directors. The timing was perfect in [indiscernible] when we conduct our strategic reviews with the Board. All the sessions were productive. I'll bring our new director to see. As I mentioned, they bring unique experience and talented and they are aligned with our objective of creating value for shareowners. So I would say, all in all, good experience, nothing special.

Got it. And any thoughts around that you might have about the business as you approach your 2-year anniversary?

I'm not sure I understand the question. I'm sorry. If anything, I would just say, Sylvamo is doing well. I mean we expect, again, a year of 760 -- $720 million to $770 million, strong free cash flow. So 2 great years. 2022 was a good year and expect another good year in '23.

Yes, just to add to that, David, I mean, we really believe that the uncoated freesheet markets that we operate in, provide attractive conditions that allow us to leverage our competitive advantages to generate high returns on invested capital. And we believe we can generate first quartile total shareholder returns. We feel very positive about that even in light of maybe some challenging economic clouds that are rolling in. But we believe that we will continue to generate high returns on invested capital, and we're generating over 25% returns on invested capital today, and we believe that there's more to be done, and we can increase our earnings and our cash flow going forward.

Thank you.

And next, we will go back to the line of George Staphos. Please go ahead.

Hi, guys. One last question for you. The working capital is a touch more negative than what we are looking for. One of the things that we saw was payables were down, and I'm just guessing that as you've been trying to work working capital down, you also haven't needed as much in the way of chemicals and other inputs that would go into production. But just wanted to ascertain if that was it and if there's anything else other than obviously, the destocking in that working capital line. So what was the accounts payable and working capital and now turn it over and have a good quarter. Thank you.

Thanks, George, and thanks for your question. Yes, we -- our free cash flow in the second -- first quarter was as expected. The key things that were driving that, as you rightly said, is that payables were down. One of that was the incentive plans that we paid and that was a big contributor to that. The other thing was the increase in inventories that drew our working capital, and that was in preparation getting prepared for this significant outage quarter that we had right now. So that was the key factors that drove the working capital change in the first quarter.

Okay. So nothing beyond that in terms of payables, and I appreciate it guys. Thank you.

Thank you. Thank you for question.

And at this time, there are no further questions. I'd now like to turn the call back to Hans Bjorkman for any closing comments.

Thanks, Greg. Before I wrap up the call, Jean-Michel, any closing thoughts?

Thanks, Hans. First of all, thanks, everybody, for joining our call. I think it's important to say this year, we remain confident in our ability to generate very strong EBITDA between $720 million to $770 million, free cash flow of $250 million to $280 million. Just to put it in perspective, that represents an adjusted EBITDA of more than 18% and a return on invested capital above 25%. So we are expecting good numbers, and that will allow us to achieve one of our main goal, which is to return more than 90 million to shareholders. We will do that dividend and share repurchases in '23, and that remains one of our priority. With that, thank you for joining the call.

Thanks for joining the call. We appreciate your interest in Sylvamo, and we look forward to continued conversations in the coming weeks and the months ahead. Thank you very much. Have a great day.

Once again, we would like to thank you for participating in Sylvamo's first quarter 2023 earnings call. You may now disconnect.