Sylvamo Corporation

Good morning and thank you for standing by. Welcome to today's Sylvano's Quarter 2021 Investor Earnings Day conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be the opportunity to ask questions. To ask a question, please press star 1 on your telephone keypad. To withdraw your question, press the pound key. I'd now like to turn today's conference over to Hans Bjorkman, Vice President, Investor Relations. Please go ahead, sir.

Thanks, Angie. Good morning, and thank you for joining our call today. Our speakers this morning are Jean-Michel Rivieras, Chairman and Chief Executive Officer, and John Sims, Senior Vice President and Chief Financial Officer. Slides two and three 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-US GAAP financial information. Reconciliations of those figures to US GAAP financial measures are available in the appendix. Our website also contains copies of the fourth quarter 2021 earnings press release, as well as today's presentation. With that, I will now turn the call over to Jean-Michel.

Thanks, Hans. Good morning, and thank you for joining our call. I'm on slide 4, which demonstrates significant improvement in our full-year sales and earnings. 2021 net sales increased 16% to $3.5 billion and adjusted EBITDA improved by nearly 60% to $594 million. This represents a margin of 17% or 460 basis points higher than our 2020 adjusted EBITDA margin. Our adjusting earnings per share has improved by over 70% to $6.94. We remain committed to generating cash and have positive momentum heading into 2022. Let's turn to slide five to review our fourth quarter performance. We are executing our three-pronged strategy of commercial excellence, operational excellence, and financial discipline. which resulted in a 17.5% adjusted EBITDA margin in the fourth quarter. Global demand for uncoated free sheets continue to strengthen as coolant offices gradually reopen. Our volumes remain strong and we run at full capacity in all three regions. We also continue to realize the benefit of prior price increases, allowing price and mix to uppace increased input costs. I'm extremely proud of how our teams navigated through input costs and transportation challenges and worked to take care of our customers. We operated well in a challenging supply chain environment and executed two large and comprehensive maintenance outages at our sire and disturbance mills safely and efficiently. Implementing this strategy generated free cash flow of $162 million enabling us to pay down $124 million in debt and to increase our cash position by $48 million to $118 million. All in all, a strong performance by our team. Slide six highlights our performance in the fourth quarter, our first standalone quarter. Fourth quarter net sales increased 7% sequentially to $972 million. we generated and adjusted EBITDA of $170 million and a 17.5% margin during the heaviest outage quarter of the year. However, if we had normalized maintenance outage expenses, our adjusted EBITDA margin would have been 19.2% for the quarter. We also generated adjusted operating earnings of $1.71 per share. Let's turn to slide 7 to discuss our commercial excellence efforts. Our commercial excellence strategy is designed to help our customers succeed. We want to be recognized by our customers as the suppliers they value the most. Here are a few examples where we are winning incremental businesses, which is improving our mix and profitability. In Latin America, we are leveraging innovation to increase our position in other end-use segments, such as thermal paper used for receipt. This is a profitable and strategic segment with growth potential. In North America, we are creating value for our customers with Sigvamo Shop, which allows 24-7 access to critical information to help them run their business better and allows them to interface via computers tablets, and mobile phones. In Europe, we are leveraging our global footprint to expand sales of premium product in strategic channels, which provides better product mix for our customer while optimizing our global trade flows. Global and quoted free ship demand continues to recover from the initial impact of COVID pandemic, allowing us to improve our mix as our commercial teams maximize opportunities across geography, segments, and channels. Let's turn to slide eight to look at the 2021 growth by region. Year-over-year global encoded free sheet industry demand increased by in 2021. And especially in our region, it was up nearly 6% in Europe, more than 13% in Latin America, more than 4% in North America. we still see incremental copy paper demand recovery, which was only up 1.3% globally, since many office workers in North America and Europe have still not returned to their offices. And in Latin America, we understand that students will be going back to school this year. In 2021, we outperformed industry growth rates in our region by 530 basis points. Our 2021 encoded free sheet shipments were up 12% versus 2020. I now turn the call over to John, who will discuss our fourth quarter performance in more detail. Thank you, Jean-Michel.