Sylvamo Corporation

Good morning. Thank you for standing by. Welcome to Silvano's first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. As a reminder, this conference is being recorded. I will now turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

Thanks, Samantha. Good morning, and thank you for joining our first quarter 2026 earnings call. Our speakers this morning are John Sims, Chief Executive Officer, and Don Devlin, 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-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 John.

Thank you, Hans, and good morning, everyone. I'm glad that you're joining our call. I'm on slide four. Today I'd like to begin with a few important macro developments that have occurred since our fourth quarter call in February, which have led us to change our operating strategy to achieve our plans this year. First, the U.S. Supreme Court invalidated IEPA tariffs, and the U.S. government responded to this by placing 10% tariffs on all trading partners. Europe had previously been at 15%, while Brazil was at 50%. This change benefits Avamo, and late in the first quarter, we began to bring product into the U.S. from our Brazilian operations while ramping down imports from our European operations. Second, the Middle East conflict has resulted in higher energy, logistics, and input costs. Across our regions, we're looking to reduce costs and taking commercial actions to help offset these impacts. Let's move to slide five. Our first quarter highlights include implementing the previously communicated uncoded free sheet price increases to our customers across all our regions. We had a difficult first quarter operationally. Reliability issues, particularly in Europe and Brazil, negatively impacted us by almost $9 million relative to the fourth quarter. And we expect some additional costs in the second quarter. The root cause of these issues have been identified and fixed or will be corrected, and the annual outages will be taking this quarter. The one exception is that our numeral mill, where it issued with a debarking drum, will not be corrected until the fourth quarter. We took an important step in achieving our vision by launching our lean transformation journey in our Latin American business. along with our Moji Wasu mill. I was in Brazil last week and was very encouraged by the energy and commitment the teams have in learning and executing the lean transformation. Lastly, yesterday we completed the refinancing of our 2027 debt to extend our maturity profile, which sustains flexibility and maintains our strong financial position. Let's move to the next slide. Slide 6 shows our first quarter key financial metrics. As a reminder from our last call, 2026 is the transition year as we work through some short-term capacity constraints due to the termination of the Riverdale Supply Agreement at the end of April and the extended outage at Eastover later this year as we execute our strategic investments there. Our first quarter result came in as expected, except for the operational issues I mentioned. We built inventory, which resulted in lower sales volume, and we also incurred the incremental cost due to sourcing and converting. We earned an adjusted EBITDA of 29 million with a margin of 4%. Adjusted operating earnings were negative 53 cents per share. As anticipated, free cash flow was impacted by lower earnings, the unfavorable impacts of our inventory build, and the timing of payments. Keep in mind that our free cash flow is heavily weighted to the second half of the year. In the last few years, we generated the vast majority of our free cash flow in the second half, and we expect to do so again this year. Now I'll turn it over to Don to review our performance in more detail.