Good morning. Thank you for standing by. Welcome to Sylvamo's First Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, you will have an opportunity to ask questions. As a reminder, your conference is being recorded. I'd now like to turn the call over to Hans Bjorkman, Vice President, Investor Relations.

Thanks, Sarah. Good morning, and thank you for joining our first quarter 2025 earnings call. Our speakers this morning are Jean-Michel Ribiéras, Chairman and Chief Executive Officer; and John Sims, Senior Vice President and Chief Operating 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 earnings release as well as today's presentation. With that, I'd like to turn the call over to Jean-Michel.

Thanks, Hans. Good morning, and thank you for joining our call. I'll start on Slide 4, highlighting some news we announced a few weeks ago. After over three decades of working in the paper and packaging industry, I have decided to retire at the end of the year. Serving as the Chairman and CEO of Sylvamo for the past four years has been one of the greatest highlights of my career. I'm pleased that John Sims will become the next CEO of Sylvamo. John was elected Chief Operating Officer effective May 1 and will lead our commercial and operational functions. Following my retirement, John will assume the role of the CEO on January 1, 2026. As you know, John has served as the CFO of Sylvamo since the spin-off and has been instrumental in our work to build the world's paper company and drive our company's strong performance. Don Devlin was named Senior Vice President and Chief Financial Officer, effective May 1, and is with us here for today's call. You'll hear more from Don in future earnings calls. He joins us from International Paper after 27 years with the Company. Don has extensive international leadership experience with a track record of building teams, developing strategic plans, and delivering results in diverse and challenging environments. He served in a variety of leadership roles, including Finance Director for European Papers, Chairman and CEO of IP's uncoated freesheet business in India, and most recently, Vice President, Finance and Strategy for IP, Industrial Packaging. I'm excited to have both John and Don in their new leadership roles to drive the Company forward for future success. Slide 5 shows our first quarter highlights. First, we successfully completed a heavy planned maintenance outage quarter in Europe and North America. Also, while these outages were executed well, we ran into some separate non-outage-related operational challenges, primarily in North America. John will talk more about the financial impact in a few slides. We also began implementing the previously communicated uncoated freesheet price increases to customers in Brazil and North America. Lastly, we returned nearly $40 million in cash to shareholders. We distributed $18 million via the first quarter dividend. And as of today, we have repurchased $20 million in shares this year. Let's move to the next slide. Slide 6 shows our first quarter key financial metrics. We earned adjusted EBITDA of $90 million with a margin of 11%. In addition to having almost $30 million of planned maintenance outage costs, the first quarter is our weakest demand quarter every year in Latin America. We generated adjusted operating earnings of $0.68 per share. As expected, free cash flow was lower than the fourth quarter due to the timing of year-end payments, a one-time cash benefit in the fourth quarter from the monetization of working capital related to the closure of IP’s Georgetown mill, and the payment of annual incentive compensation in the first quarter. Keep in mind that our free cash flow is heavily weighted to the second half of the year. In the last two years, we generated almost 90% of our free cash flow in the second half. Now John will review our performance in more detail.

Thank you, Jean-Michel, and good morning, everyone. I also want to thank Don, who's sitting right next to me. We're in a transition of moving the CFO role quickly over to him and look forward to working together in the future. Slide 7 contains our first quarter earnings bridge versus the fourth quarter. The $90 million of adjusted EBITDA was in line with our outlook of $85 million to $105 million. As Jean-Michel mentioned, we had some operational issues in North America, which impacted us by roughly $5 million to $10 million. Half from lower sales volume and half from operations and other costs. This also includes less volume from IP's Riverdale mill than was planned. Price and mix were unfavorable by $10 million, driven by the expected seasonally unfavorable mix in Latin America, lower pulp prices, and paper price decreases in Europe and in our export regions. These were partially offset by paper price increase realizations in North America and Brazil. Volume decreased by $30 million, driven by the seasonally weakest demand quarter in Latin America, lower North America volume from IP's Georgetown mill exit, and the operational challenges in North America. Operations and other costs were unfavorable by $12 million, primarily driven by unfavorable foreign exchange plus the North America operational challenges we mentioned earlier. Planned maintenance outage costs increased by $9 million as we executed major outages at our Saillat and Eastover mills. Input and transportation costs increased by $6 million, primarily driven by seasonally higher energy prices and the longer-than-expected extreme cold weather across the United States in the first quarter. Let's move to Slide 8. We expect to deliver second quarter adjusted EBITDA of $75 million to $95 million. We project price and mix to be favorable by $5 million to $10 million. This is primarily due to a favorable mix in Latin America and North America. We expect volume to be stable. Volume would have been sequentially higher as we have the orders, but we anticipate being unable to fill them all during the quarter due to low inventory levels in North America as a result of our operational issues. In addition, we expect to get less volume from IP's Riverdale mill in the quarter. Therefore, some of our orders may get pushed into the third quarter. Operations and other costs are projected to be favorable by $10 million to $15 million due to better operations and seasonally lower operating costs in North America and Europe. We expect input and transportation costs to improve by $5 million to $10 million, primarily due to energy. Planned maintenance outages are projected to increase by $36 million as we execute the heaviest outage quarter of the year across all three regions. Let's go to Slide 9. This slide illustrates the planned maintenance outage scheduled for the full year. We spent $27 million in the first quarter and expect to spend $63 million in the second quarter. By midyear, we'll have spent over 80% of the total annual planned maintenance outage cost. Unlike last year, we had no major planned maintenance outages in Europe. This year, we have outages in both mills in the first half of the year. Let's move to Slide 10. I'll now shift to talk about overall uncoated freesheet conditions across our regions. In Europe, demand is down 7% year-over-year through the first quarter, while imports appear stable. As a reminder, industry supply was reduced by 7% after two uncoated freesheet machines closed late last year. In Latin America, demand is up 3% year-over-year through the first quarter with most of the increase in Brazil, largely due to strong demand in the publishing segment. In North America, apparent demand is down about 1% year-over-year through the first quarter, driven by higher imports. This brings imports to almost 15% of overall North America supply, which is on the higher end of historical ranges. We still believe that real demand will be down about 3% to 4% this year. As another reminder, domestic industry supply was reduced by 10% after a few machines, including IP's Georgetown mill, closed in the second half of last year. We have strong order books across our regions, and all of our mills are running full. We have more demand than we can supply right now due to our commercial team's success combined with the supply issues we've been dealing with in North America. Consequently, going forward, we're going to take advantage of our global footprint to improve our mix and serve our customers in North America. As a result, we expect to have less exports to non-core markets. We are not going to give year guidance with all the uncertainty. However, we do expect a significantly better adjusted EBITDA performance in the second half. This is due to lower planned maintenance outage expenses, improved commercial results, and better operations. Tariff uncertainty aside, we expect 2025 Latin America and North America combined full year adjusted EBITDA to be slightly better than 2024. Europe's 2025 performance will be significantly worse than 2024 due to the $39 million of planned maintenance outage this year and worse market conditions as we're seeing signs of the pulp market weakening. Let's go to Slide 11. I want to take some time to discuss our European business. As we look back on the Nymolla mill acquisition, the mill generated about $70 million of free cash flow before overhead allocations in its first two years as part of Sylvamo. We exceeded over $20 million annual run-rate synergy target by $5 million. The pulp mill modernization project exceeded its projected benefits as well. Unfortunately, compared to 2022, last year, the mill experienced a $41 million increase in wood costs and a cumulative $63 million over the last two years. This increase in wood costs is due to the war with Russia and Belarus stopping the export of wood fiber, reducing overall wood supply to the region. Additionally, high demand from the energy sector in the Nordics increased overall wood demand. Stepping back and looking at our entire European business, our earnings performance is below our expectations. In addition to numerous escalating wood costs, high input costs and challenging industry conditions have impacted demand and pricing. We're not satisfied with our performance and have installed a new Senior Vice President and General Manager effective May 1 to lead our talented team, further develop our strong customer relationships, and improve our performance. We are focusing on reducing costs across the region. We'll be improving our product mix by upgrading some capabilities at Saillat. We are working to reduce wood costs and are targeting best-in-class efficiency at the Nymolla mill. I'll now turn the call back over to Jean-Michel.

Thanks, John. I'm now on Slide 12. We understand that one of the main risks in today's environment is a global economic slowdown due to the current tariff situation, which could impact uncoated freesheet demand. Some shifts in uncoated freesheet and pulp trade flows are already starting to materialize. We also anticipate a higher risk of inflation on our raw materials, transportation, and capital spending. While this represents possible challenges, this risk currently appears manageable. Our global sourcing teams are already working on mitigation strategies as well as alternative sourcing options for some raw materials and optimizing modes of transportation. Regarding our major capital spending plans for the year the business cases for these projects include the possibility of higher costs, which are not expected to be material at this point. Let's move to Slide 13. Although there is a lot of uncertainty around the tariff and the impact on the economy, we are well positioned to manage through this environment. Over 90% of our raw materials are sourced locally with very little coming from China. Regarding our shipments, the majority stay within their respective region. In Europe and North America, more than 90% of our shipments stay within their respective region. Latin America, 80% of our shipments remain in the region. Although we explore about 20% of our products from Latin America, we are well-positioned as our Brazilian mills are some of the world's most competitive and low-cost uncoated freesheet facilities. Lastly, I want to remind everyone that even though imports tend to rise and fall for a variety of reasons, historically imports represent less than 15% of uncoated freesheet industry supply in each of our three regions. Let's move to Slide 14. I will take this opportunity to remind everyone of all the work we did to deleverage our balance sheet over the past three years. After launching, we closed approximately $1.4 million net debt and have a leverage ratio of 2.6x. We have reduced our debt by about half, and our leverage ratio is now 1.1x. We have no major maturity until 2027. Plus, we have availability on our revolver of $400 million. Our strong balance sheet, available cash on hand, plus the liability on our revolver provides us with the ability to take care of our customers, run our business, and invest in our future. Our capital allocation strategy is to maintain a strong financial position. We invest in our business to improve our competitive advantages and return cash to shareholders. Our position of financial strength allows us to navigate this uncertain environment without changing our thoughtful long-term approach to capital allocation. It allows us to serve customers by navigating economic headwinds. It also enables us to invest in our business even during times of uncertainty, and it preserves the flexibility to return cash to shareholders. We will continue to evaluate opportunities to repurchase shares at attractive prices with $62 million available on our current share repurchase authorization. I'll conclude my remarks on Slide 16. All of the work we have done to strengthen our financial position in the past few years is providing us with flexibility. Our financial strength and regional businesses have us well-positioned to navigate the current tariff uncertainty. We are reinvesting in our business through a great pipeline of high-return capital projects, which will enable us to grow our earnings and cash flow in the coming years. Sylvamo is creating shareholder value through strong cash generation and disciplined capital allocation. And we are in the process of executing a seamless CEO and CFO succession plan as we prepare for my retirement at the end of the year. We are confident in our future and motivated by the opportunities that lie ahead. With that, I'll turn the call back to Hans.

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

Your first question comes from George Staphos with Bank of America.

Jean-Michel, John, and Don, congratulations. Yes, and all the best in the next chapters. And Jean-Michel, thanks for all the help, obviously, and you're not retiring yet, but thanks for all the help with our research for everybody on this call since you're in public. I guess the question I had, I didn't really follow what the operational issues were. If you could give us a bit more detail in terms of what happened. And then I know you're not guiding on third quarter, but you mentioned you won't be in a position to recover some of the orders in 2Q. It sounds like some of that might be pushed into 3Q. Is there a way for you to size what that benefit might be as you recapture some of those orders particularly as regards seasonality, Brazil typically picks up in the third quarter as well.

Yes, George, and thank you. The issues we had were after multiple reliability issues, both at our Ticonderoga mill and our Eastover mill. A majority of that is behind us. We do have one issue at Eastover that is in our outlook for the second quarter. And we think we're going to have that resolved. The impact of the Riverdale volume does not show up in the operations, but it's certainly showing up in the volume. In fact, they have been having some runability issues themselves, and it really started in the fourth quarter, continued into the first, and is also continuing into the second quarter. That in itself accounts for almost 30% of what they should be supplying us that we haven't been getting. So you can see how that builds up. In the first quarter, we estimated the impact of all these issues to be roughly about $10 million. I would say that the Riverdale conditions are also continuing into the second quarter, and some of that is included in our outlook. But if you're trying to estimate what the improvement might look like in the third quarter, it's something a little below $10 million. That will show up in both operations and volume.

Okay. And the related question I had there was just in general, can you remind us then seasonally what goes well, third quarter versus 2Q? As we recall, LATAM volumes pick up. Is there a way to size that for us? I know you're not guiding on 3Q, but as we're trying to build out our bridges or refine them.

Yes, George, the best thing I would do is look at what we've done historically. We break it down by region, and we don't see much difference in that.

Your next question comes from Matthew McKellar of RBC Capital Markets.

Jean-Michel, congratulations on your upcoming retirement and congratulations also to John and Don for their appointments.

Thanks, Matt.

Thank you, Matt.

I'd like to start by asking just around the changes at Saillat and Nymolla. Could you tell us just a bit more about what the upgrades to your capabilities at Saillat entail and the market opportunity that's leading you to reposition your product mix, whether that's entirely serving demand in North America or if there's anything else going on there? And then at Nymolla, what levers do you have to reduce your wood costs and improve efficiency? And as we think about putting this all together, how should we consider how financially meaningful these changes could be and over what time line?

Matt, to answer your first question, in Saillat we've invested in a new and revised winder. This is going to give us the capability to sell roles in Saillat in interesting segments, more specialty rolls segments in Europe. We are in quite a different position. In Nymolla, we sell 50% of our business in rolls and are very successful, while 50% is in cut-size. In Saillat today, we sell 90% in cut-size and only roughly 10% in rolls. This upgrade is going to give us a capability to sell many more rolls and enter into the specialty segment. On Nymolla, we have great opportunities in operations. We don't run the Nymolla mill at the same bench or cost performance that we run the other mills. We've done some capital investments as well as in personnel, and we're continuing to do that. That gives us several cost opportunities to improve Nymolla. In Saillat, it's mostly a mix issue plus optimizing our fixed costs.

Yes, and I'll just add to that, Matthew. You asked about the levers we have in reducing wood costs. So when we purchased the Nymolla mill, it was an agreement that we would continue to source the wood from a company that's owned by a store. One of the options we have is to go directly to the landowners, which cuts out some of the costs associated with that. The other opportunity we have is actually importing lower-cost wood. Additionally, there are operational improvements where we can increase our yield and reduce the consumption of wood going forward. Those are some of the levers we're pulling. In terms of the financial impact we're targeting, we aim for at least a 10% reduction.

I think, Matt, you also asked a question about European profitability in general. As we've mentioned, we are clearly not satisfied. We are expecting a significant improvement in 2026 and are now building programs to return to a cost of capital in 2027. That's the plan we have as of today.

That's helpful. Last one for me. There is a comment that some shifts in uncoated freesheet and pulp trade flows are already starting to materialize. Could you elaborate on what you're seeing and how that's affecting you by markets?

Yes, I'll take that one. This is difficult to assess due to the impact of tariffs. Some of the most impactful effects for us could be the secondary effects of the negotiations that are ongoing. An example of this is increased imports into the U.S. Some of that we believe could be due to pre-buying or getting ahead of the tariffs in North America. We've also seen in Europe that pulp prices decreased almost EUR 40 a tonne on BEK coming out of Brazil, primarily driven by the significant decrease in pulp demand in China, which is subsequently affecting Europe. These are some of the impacts we've been observing as a result of the tariff situation in the U.S.

Your next question comes from Daniel Harriman with Sidoti.

I echo the congratulations given by Matt and George. I had a question about your capital spending for the balance of the year. If we look at what you spent in the first quarter, that run rate won't get you to your guidance of $220 million to $240 million for the year. So I'm curious how we should think about that over the last three quarters, understanding that you don't guide to cash flow but just trying to get a sense of what we should be looking for the last nine months.

Daniel, we haven't changed the revision on full year capital. Whereas most of our outages are in the first half of the year, the second half will be somewhat influenced by the large capital projects we have associated with Eastover, both the speed-up and the new sheeter. So the full year guidance will still be $220 million to $240 million.

Daniel, I would add something. When you look at free cash flow, we've had what I would call issues over the last year and the one before that, as we tend to have very strong second halves of the year cash flow. Our last two years saw 90% of our cash flow generated in the last two quarters. We expect this year to follow the same pattern. I know this can complicate your modeling, but historically speaking, you've seen this in our appendix slides, and we anticipate a similar significant cash flow increase in the second half of the year.

The next question is a follow-up from George Staphos with Bank of America.

John, Jean-Michel, Don, you mentioned on one of the slides that you think the North American demand is down 1%, but that reflects imports. I guess, two parts: do you think imports are going into inventory right now and pre-buying; and when you made that comment, it means that will be an overhang for a while? And then I think you said overall you think demand is 3% to 4% on an underlying basis. Is that your expectation for industry shipments for the remainder of the year? And how would those figures align with the demand versus shipments in 3Q, 4Q, etc.?

Yes. The comment there was the apparent demand, which is calculated as domestic shipments plus imports and exports. That's reported as down 1%, but we believe that underlying demand is really down 3% to 4%. You made a good point because imports count as soon as they hit the port. There was a large surge of imports particularly in January in the first quarter, making demand look stronger than it actually is. Yes, they are in inventory, and that will probably be consumed going forward. If you review the numbers from February, import figures were a bit lower than January. So we believe some of this results from the timing of the imports coming in that made first quarter demand appear stronger than it actually is.

Very good. Another question I had, and I'll turn it over. The operational issues, thank you for going through those earlier, do they affect at all the progress on Eastover with your bigger projects? And if you can just give us a quick update on how that's going.

No, they do not. Just to be frank with you. They did not impact that. In fact, those projects are going well from a timing perspective. So we're still seeing startup next year on that. It's on schedule, on time. No impact there.

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

All right. Thank you, everybody, for joining our call today. We appreciate your interest in Sylvamo, and we look forward to continued conversations in the coming weeks. Thank you very much.

Thank you, everybody.

Once again, we would like to thank you for participating in Sylvamo's First Quarter 2025 Earnings Call. You may now disconnect.