Sylvamo Corporation

Good morning and thank you for standing by. Welcome to Salvamo's first quarter 2022 earnings call. All lines have been placed on mute to prevent background noise. After the speaker's remarks, you will have an opportunity to ask questions. To ask a question, press star 1 on your telephone keypad. To withdraw a question, press the pound key. I'd now like to turn today's conference over to Hans Bjorkman, Vice President, Investor Relations.

Thanks, Faith. Good morning and thank you for joining our call today. Our speakers this morning are Jean-Michel Rivieres, Chairman and Chief Executive Officer, and John Simms, 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. It is important to note that all earnings and figures include our Svedogorsk mill and Russian business, unless otherwise noted. We will also present certain non-U.S. GAAP financial information. Reconciliations of those figures to U.S. GAAP financial measures are also available in the appendix. Our website contains copies of the first quarter 2022 earnings press release, as well as today's presentation. With that, I will now turn the call over to Jean-Michel.

Jean- Thanks, Hans. Good morning, and thank you for joining our call. I'll begin my comments on slide four. Before we discuss our first quarter results, allow me to share some thoughts on 2022. We are well positioned to continue to create value this year. Given all the moving parts in our business, I want to share guidance on our full year 2022 key metrics. We expect to generate strong results despite input cost inflation, supply chain challenges, and the impact of Russia's invasion of Ukraine. In fact, we're on a path to achieve pre-pandemic EBITDA levels in 2022, even if we exclude our Russian business for the full year. We expect to generate $725 to $775 million in adjusted EBITDA and $160 to $180 million in free cash flow this year if we exclude our Russian business for the full year. Slide five provides an update on Russia business. Our path forward in Russia is driven by our primary value to always do the right things in the right ways for the right reasons. We will not operate in an environment that is inconsistent with our values. We have made the decision to exit Russia and will do so in an orderly manner. That said, we are not implementing a full suspension of operations primarily because we want to maintain full control of our assets as we work to exit Russia. We are conducting a process to sell our Russian business and have received a significant number of non-binding offers. We are working to reach an agreement and plan to complete this process promptly, including obtaining approval from our board, as well as the required government approvals to execute the transaction. Please keep in mind that the situation in Russia changes frequently, and we will provide public updates as appropriate. In the meantime, we continue to comply with all regulations and sanctions. I'm now on slide six. We continue to execute our three-pronged strategy of commercial excellence, operational excellence, and financial discipline. which resulted in a 19.1% adjusted EBITDA margin in the first quarter. Global demand for uncoated fruitsheets continues to strengthen in Latin America and North America as schools and offices 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 resulted in price and mix outpacing input cost inflation. We operated well in a challenging supply chain environment. I'm proud of our teams navigating through continued input costs and transportation challenges and work to take care of each other as well as our customers. Implementing this strategy generated free cash flow of $73 million, enabling us to pay down $33 million in debt and to increase our cash balance by $49 million. All in all, another strong performance by our team in dynamic industry conditions. Slide seven highlights our key performance metrics for the quarter. First quarter, net sales were $977 million, reflecting seasonally slow volume in Eastern Europe and Latin America. We generated and adjusted EBITDA of $187 million. As usual, our first quarter was a light maintenance outage quarter. If we had normalized maintenance outage expenses, our adjusted EBITDA margin would have been 18% for the quarter. We generated $73 million in free cash flow and adjusted operating earnings of $1.97 per share. Okay, John, would you discuss our first quarter performance in more detail?