Good morning, and thank you for joining us. Welcome to Sylvamo's Second Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. I will now hand it over to Hans Bjorkman, Vice President of Investor Relations. The floor is yours, sir.

Thank you, Gina. Good morning, and thank you for joining our second quarter 2025 earnings call. Our speakers this morning are Jean-Michel Ribiéras, Chairman and Chief Executive Officer; John Sims, Senior Vice President, Chief Operating Officer; and Don Devlin, 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 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 with our second quarter highlights. Our teams are committed to the success of our customers and are partnering with them to be a supplier of choice every day. Our operational performance improved during the second quarter and the challenges we faced in the first quarter are now largely behind us. We completed the largest planned maintenance outage quarter we've had in over 5 years. Lastly, we returned nearly $40 million in cash to shareholders. We distributed $18 million via the second quarter dividend, and we repurchased $20 million in shares in the quarter. Let's move to the next slide. Slide 5 shows our second quarter key financial metrics. We earned adjusted EBITDA of $82 million with a margin of 10%, in line with our expectations. This reflects having almost $70 million of planned maintenance outages in the quarter, which is the largest in recent history. We now have almost 85% of our planned maintenance outage for the year behind us. We generated adjusted operating earnings of $0.37 per share. Free cash flow was negative $2 million. The variance to the second quarter last year is due to lower adjusted EBITDA and slightly higher capital spending. Keep in mind that our free cash flow is heavily weighted to the second half of the year. In the last 2 years, we generated almost 90% of free cash flow in the second half. Now I will turn it over to Don to review our performance in more detail.

Thank you, Jean-Michel, and good morning, everyone. Slide 6 contains our second quarter earnings bridge versus the first quarter. The $82 million of adjusted EBITDA was in line with our outlook of $75 million to $95 million. Excluding the $13 million in FX headwinds in the quarter, we would have been at the high end of our outlook. Price and mix was favorable by $12 million, driven by better mix in North America and Latin America, with lower export sales from both regions. Volume decreased by $9 million, mostly in North America. About half is due to less volume from IP's Riverdale mill than planned. Over the last 3 quarters, they've only produced about 80% of their 27,000-ton-per-month plan, and we expected that to continue into the third quarter. The other half was partially due to our own operational challenges we experienced in the second quarter. Operations and other costs were favorable by $23 million, driven by $18 million in improved operational performance in North America and Europe. We continue to make progress in resolving the operational issues experienced in the first and second quarters. Other costs were also favorable by $18 million, primarily due to green energy credits in Europe, and lower overhead costs. This more than offset the unfavorable impact of $13 million from FX. Planned maintenance outage costs increased by $39 million, largely as expected as we conducted complex outages in 5 of our mills. Input and transportation costs were favorable by $5 million, primarily due to energy in North America. Let's move to Slide 7. Looking at industry conditions for the first half of 2025 versus the first half of 2024. In Europe, demand remained sluggish and is down 8% year-over-year. Industry capacity was reduced by 7% after 2 uncoated freesheet machines closed late last year. Paper prices stabilized in the second quarter but are under pressure entering the seasonally slower third quarter. Pulp prices in Europe significantly decreased in the first half of this year, contributing to uncoated freesheet pricing pressure. In Latin America, demand is down 2% year-over-year with demand down 6% in other Latin American countries. However, Brazil was up 6% due to strong publishing demand. Industry capacity across the region remains stable. In North America, reported apparent demand is stable year-over-year, driven by higher imports, which were up nearly 40%. Much of this increase in imports is in converting and printing roles. We believe that real demand will be down 3% to 4% this year. Industry supply was reduced by 10% after a few machines, including IP's Georgetown mill, closed in the second half of last year. In addition, Pixelle announced they will close their Chillicothe, Ohio mill in August. This will further reduce uncoated freesheet capacity in North America by approximately 6%. Let's go to Slide 8. We continue to monitor the U.S. tariff situation and the potential challenges and opportunities that may unfold. In the first half of the year, we saw some shifts in uncoated freesheet and trade flows. This is one of the main reasons why imports into the U.S. were up almost 40% through the first half. We're also keeping an eye on several cross-regional themes, for example, currency fluctuations with the U.S. dollar devaluation against many currencies. Regarding our major capital spending plans for the year, the business cases for these projects included the possibility of higher tariff costs, which are not expected to be material at this point. We're staying close to our customers to understand their needs and opportunities to help them be successful, and we are focused on what we can control, improving productivity, reliability, and leveraging our cost initiatives. Let's move to Slide 9. Looking ahead, we expect to deliver third quarter adjusted EBITDA of $145 million to $165 million. We project price and mix to be unfavorable by $15 million to $20 million. This is primarily due to paper and pulp prices in Europe. We expect volume to be favorable by $15 million to $20 million. This is primarily due to stronger seasonality in both Latin America and North America. Operations and other costs are projected to be favorable, up to $5 million due to improved operational performance. We expect input and transportation costs to be stable. Planned maintenance outages will improve by $66 million as we have no outages planned in the quarter. We expect significantly better adjusted EBITDA performance in the second half. This is due to much lower planned maintenance outage expenses, improving volumes, and better operations. Now I'll turn it over to John to talk about our capital allocation plans.

Thank you, Don, and good morning, everyone. I'll pick up on Slide 10. Our long-term capital allocation strategy drives shareholder value. We are focused on maintaining a strong financial position, reinvesting in our business, and returning cash to shareholders. This allows us to stay focused on our customers, helping them win through commercial excellence efforts. It enables reinvesting in our business, enhancing our reliability, productivity, and improving our service through operational excellence initiatives. And our healthy financial position preserves the flexibility to return cash to shareholders. We'll continue to evaluate opportunities to repurchase shares at attractive prices with the $42 million available on our current share repurchase authorization. Let's move to Slide 11. This slide shows how the deleveraging of our balance sheet has enhanced our financial position. We have reduced our debt by about half, including more than $150 million last year, which we did in anticipation of the potential uncertainties in 2025. Our net debt-to-adjusted EBITDA now stands at 1.3x. We have no major maturities due until 2027. Plus, we have almost $400 million available on our revolver. Our strong balance sheet and available cash on hand provides us with the ability to focus on our customers, run our business, and invest in our future throughout the cycle. Let's go to Slide 12. Our teams continue to develop our high-return project pipeline with returns greater than 20%. We're investing in high-return projects to generate earnings and cash flow. We want to take this opportunity to highlight our 2026 and 2027 capital spending outlook. The purple shaded bars on this chart show our high-return investments. The light purple is for our Eastover investments and the dark purple is for all other high-return projects. As disclosed on our fourth quarter 2024 earnings call back in February, we are investing $145 million in strategic projects at our flagship mill in Eastover, South Carolina. These investments will be spent from 2025 through 2027 with the majority of spending taking place next year. Overall capital spending is increasing in 2026, but then dropping back down to prior levels in 2027. This outlook should provide you with a good sense of our capital spending for the next few years, and we will continue to update you as we refine our plan. Let's go to Slide 13. We feel the importance of the strategic investments that our Eastover mill warrants a quick refresh of our exciting plans. We have 3 high-return projects that will reduce costs while improving efficiency and mix of the most competitive uncoated freesheet mill in North America. First, we are investing to optimize one of our two paper machines. The enhancements will allow us to reduce costs while improving our product mix across both paper machines. This investment should result in an incremental 60,000 tons of uncoated freesheet capacity. Second, we are replacing existing cut size sheet with a brand-new state-of-the-art sheeter. This will lower our sheeting cost by up to 15%, reduce waste by maximizing paper machine trim while providing incremental cut size capacity. This sheeter will allow us to provide improved reliability and additional flexibility to better service our customers. Detailed engineering work continues and many of the orders for the parts and equipment have already been placed. All plans are on track. Once completed, these combined investments are expected to create incremental adjusted EBITDA of more than $50 million per year, resulting in additional cash flows and an internal rate of return greater than 30%. Lastly, we are partnering with the price companies, an industry leader in wood yard operations to modernize our woodyard and improve our efficiency. This will result in more efficient, reliable, and cost-effective wood processing operations and allow us to avoid about $75 million in capital over the next 5 years. This woodyard modernization project is progressing as planned and remains on schedule to begin the startup in early 2026 and will be completed by the end of 2026. Let's go to Slide 14. Our strategy is to be simply focused on uncoated freesheet paper because we believe uncoated freesheet will be needed for a long time. Uncoated freesheet remains the largest and most resilient segment in the graphic paper space, and we view the uncoated freesheet industry landscape as an opportunity. We're investing to strengthen our competitive advantages to generate earnings and cash flow. We view these investments as high-return and low-risk as we are staying in our core product lines of uncoated freesheet and reinforcing our position as supplier of choice for our customers. We will leverage our strength to our talented teams, iconic brands, strategic channel partnerships, and low-cost mills that drive high returns on invested capital. I'll now turn it back over to Jean-Michel.

Thanks, John. I'll conclude my remarks on Slide 15. We create shareholder value by partnering with customers, so we remain the supplier of choice. We are maintaining a strong financial position to provide flexibility and reinvesting in our business through a great pipeline of high-return capital projects, enabling us to grow our earnings and cash flow. Sylvamo is creating shareholder value through strong cash generation and disciplined capital allocation, including share repurchases at prices well below our intrinsic value. We are progressing well with our CEO and CFO transitions with John and Don 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.

Thank you, Jean-Michel. John and Don. Okay. Regina, we're ready to take questions.

Our first question will come from George Staphos with Bank of America.

I guess the question I had for you, can you talk a little bit about what the outlook is for South America in the third quarter? To the extent that you can talk about EBITDA and how things are trending, that would be helpful. And the second question would be, I remember from last quarter, I seem to remember that you were expecting North and South America on a combined basis to be up in EBITDA versus 2024. Is that still the outlook and what are the puts and takes there?

For our outlook for the third quarter in Latin America, we expect to see continued improvement. First, we anticipate seasonally increasing shipments, which typically happens this time of year. Additionally, we have no outages to deal with, following two significant outages in the second quarter that are now resolved. In the second quarter, our shipments were slightly less than expected due to delays caused by those outages, which resulted in a loss of about 10,000 tons, but we are past that issue and moving forward. Regarding combined earnings, we do not provide a full-year outlook due to current market conditions and uncertainties related to tariffs. However, we believe that the combined earnings for North America and Latin America may be slightly lower than last year, mainly due to some weakening in pricing in other Latin American markets driven by tariffs and increased imports, along with weaker demand. Specifically, while Brazil's demand is strong and up 6%, the demand in other Latin American markets is generally down 6%, largely due to conditions in Mexico. We do not ship to Mexico because of the tariffs against Brazil, but it does affect the overall region.

Our next question will come from the line of Daniel Harriman with Sidoti.

First, I just wanted to start with Europe. And in the last quarter, you spent quite a bit of time talking about the changes that were made there. Obviously, the region continues to suffer from soft demand and lower pulp prices. And I'm just wondering if you could update us on what needs to happen either commercially or operationally to kind of stabilize performance there heading into 2026?

Yes, Daniel, Europe is facing challenging market conditions. This is largely influenced by the impact of tariffs, especially regarding market pulp, as well as weak demand in China. Market pulp prices increased in the first quarter but then fell significantly in the second quarter. Pulp pricing affects uncoated freesheet prices in Europe due to the substantial nonintegrated capacity in the region. We are witnessing weaknesses in both pulp and uncoated freesheet pricing. For stabilization, we definitely need improvements in market conditions, with rising pulp prices being a key part. Our main focus is on the areas we can control, particularly enhancing our competitive cost position. In Saillat, we are working on improving our product mix and reducing fixed costs at our New Mouland mill, along with cutting wood costs and optimizing our operations. These are our priorities, and we believe we have the right leadership and skilled teams dedicated to this effort.

Our next question comes from the line of Matthew McKellar with RBC Capital Markets.

You mentioned shifting trade flows in uncoated freesheet through the first half of the year. Can you maybe just give us a sense of what the latest is that you're seeing on that front and how trends through the past couple of months into August have looked in particular. What are you seeing by market?

Yes, Matthew. Compared to the first half of this year, we've experienced a notable increase in trade roles mainly entering North America. We believe this is in response to the tariff uncertainties, which has impacted the availability of supply in North America, particularly in roles.

Okay. And are you seeing any, I guess, changes in trends in Europe at this point?

We've seen some pressure also from importers trying to get into the European market. Where we see it is some which have anticipated to have new access to U.S. or difficult access with tariffs trying to go to other Latin America (OLA). John was mentioning to you, prices in OLA were under pressure, and partially is because some countries trying to import at very low prices to OLA, and we didn't have that before. So OLA is other Latin America to be sure, what I mean by OLA. So we've seen it, as we said, in North America, especially in the first half, and we're seeing it a lot in OLA and Middle East. Some of the traditional people who were used to sell to the U.S. will today try to find other avenues. This is where we go with the flows impact.

Okay. Next for you, zoom me out a bit here. What is your outlook for how uncoated freesheet demand in Latin America evolves over the next couple of years?

We believe that Latin America will likely be flat or slightly declining. Currently, Brazil is showing a year-to-date demand increase of 6%. However, other Latin American markets are experiencing decreases, primarily driven by issues in Mexico due to tariff uncertainties affecting the economy there. We are also noticing similar trends in a few other countries aside from Brazil. Overall, we anticipate that the long-term outlook for the entire Latin American market will remain flat to slightly down.

And if I could just sneak one last one in here. I recognize that Eastover spending will be ramping into '26. But how do you think about the opportunity to lead into share repurchases with where the share price is at particularly with the balance sheet in good shape in the second half of '25 likely to be stronger from a free cash perspective.

Yes. I think it's clear, we have a pretty strong balance sheet. So we have a lot of capacity to take advantage of repurchasing our shares when they are significantly undervalued. We have about $40 million still authorized from the Board of Directors. And so we think we have plenty of capacity to take advantage of repurchasing our shares.

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

Could you talk about the green energy credits that you received in 2Q? What was the amount? Are they nonrecurring? And then to the extent that you can comment, the fact you're seeing so much in the way of imports into North America, is that affecting any of your tactics, and for that matter, the behavior of producers in the region vis-a-vis their margin efforts? And then I guess relatedly, you're saying imports, I believe, into Europe as well from what I heard from Jean-Michel. I recognize it's slow, but is it changing behavior at all? And how are you contending with that?

George, this is Don. So your first question regarding the green credits in Q2, they were $8 million.

And this is recurring.

Okay. Got it. And your behavior and what's going on?

Well, with the import situation in the U.S., just our view with that, a lot of that in the first quarter was due to anticipation of the tariffs being implemented. Given where we stand today with the tariff, we're expecting imports to decrease into the U.S. because of the high level of tariffs that are being imposed, particularly on those countries where those imports will be coming into. So in general, we believe in North America that with the closure of the Chillicothe mill and the reduction in imports, operating rates are going to improve, probably to be in the mid-90s in the second half of the year. In terms of our tactics, no, I mean I think our strategy continues to be, as we said, to be focused on uncoated freesheet. We want to be the supplier of choice for our customers. We're continuously working to improve our cost position, our competitive advantages, and the value of our brands and what we provide to the customers. This is why it's so important for us, we believe, to debottleneck the Eastover mill so that we can produce more uncoated freesheet. The timing is going to look good on that, given where we think that the operating rates, where we think the import situation is going to be in the near term and also longer term.

I appreciate that. Have you seen looking at 2Q and to date 3Q, recognize you can't comment on a forward basis. Did the fact that you had more supply perhaps from imports change any of the competitive activity on pricing? Was there a little bit more intensity on pricing than you would have expected? I think from your waterfall, it's a little bit worse than you expected. So if you can talk a little bit about that across the regions.

Yes. I mean, I think the candid answer is we put a price increase announcement to our customers in the first part of this year, and we realized much less than what we expected. That was driven by the increase in imports and also the fact that with the announced closure of the Chillicothe, there was an effort by them to sell their inventory at very low prices, which impacted our ability to achieve the price increase that we would have expected. So yes, that did impact us in the short term.

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

Alright. Thank you. I'm going to let Jean-Michel do a quick wrap up.

So thank you, first of all, for joining our call. We understand we're facing some difficult industry conditions, but we've faced them before. So we have a very strong position financially and we think we can continue to perform very strongly through the cycles. We're committed to a long-term strategy of reinvesting in our business to increase our competitive advantages and returning cash to shareholders. We're in the process of executing a seamless CEO and CFO transition plan with John and Don, as we prepare for my retirement. Our long-term strategy investment thesis remains intact. So we're really confident in our ability to generate strong earnings and cash flow through the cycle. Thank you for joining again.

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