SLVM - Earnings call transcript Q3 2021

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Operator

Good morning, and thank you for standing by. Welcome to today's Sylvamo Third Quarter 2021 Earnings Review Conference Call. [Operator Instructions] I'd now like to turn today's conference over to Hans Bjorkman, Vice President, Investor Relations. Please go ahead, sir.

Hans Bjorkman

Thanks, Angie. you our thank today. and morning, for call joining Good

Officer. Chairman are Executive Vice Our X Financial legal morning including Ribiéras, important President X and information, contain Chief Senior speakers this disclaimers. Sims, Jean-Michel Chief certain and John Officer; and Slides and

to COVID-XX. during subject call, that this including uncertainties, example, will make and For statements the forward-looking we are risks impact of

to available non-U.S. also financial information. appendix. figures present in those are measures certain GAAP U.S. will financial We of GAAP the Reconciliations

of third the I quarter copies to press contains as well presentation. earnings also today's release will website Our the Jean-Michel. call XXXX as turn now over

Jean-Michel Ribiéras

Hans. I'm and on Thanks, thank today. X. joining us everyone, morning, Slide you Good for

world's company, be vision supplier to Our the paper is and the employer, choice. investment of

corporation XXX roots more with back new years. go than that are We a

transforming depend We entertainment. paper resources renewable education, for are communication into committed on and that to people

Slide X. to Moving

in generate business, on XX% of As North strong we while profit American and a discussed we more than have Europe Investor Latin we Day, our America.

XX last sales and million months, generated the Over billion EBITDA. in of $XXX adjusted $X.X we

debt the gross third a we October the of show X with end the EBITDA. ratio launch. how a adjusted EBITDA debt Slide quarter, X.Xx of for ended quarter X.X. our built we basis, momentum ratio of net X was As On adjusted the

sheet. end focused and balance strengthening sales operating share. We target X% our Adjusted million margin cash $X.XX net on adjusted per an delivered to the of generating and $XXX to XX% increased of EBITDA high quarter XX.X%, adjusted were Third $XXX million. remain range our EBITDA We earnings XX%. of of above

third detail. turn to our quarter in results greater Slide Let's to X review

outpaced schools price cost. benefit price offices increases, increasing demand as reopened. uncoated momentum continued to to of realize for and the and As sheet we free input continue gain Global prior mix

so We the months X Our avoid in year, volumes was a low the of tend third outages quarter. during harvest to and regions. we run maintenance strong, all the maintenance remain outage planned to continue full quarter conducting

third quarter we XX.X%. However, if had still would margin normalized been strong EBITDA have adjusted expenses, our outage maintenance a

customer and period Our value and commercial during has to a sheet operational the Strong as partners channel our our the value performances customers uncoated above-target segment. financial spin-off supplier proposition drove free results. committed strengthened

Sims John more third will quarter John? our provide performance. Now about detail

John Sims

It those Thank you, morning, a call. Jean-Michel, chain On was first hear exciting input be supply and basis, Sylvamo all and increasing Sylvamo's challenges. we good part is everyone. of bottlenecks to certainly read and immune to daily about costs not and earnings

$XX quarter. Our in costs have third by million the increased input

outpaced million improvement However, and by than we in our from improvement mix this price mix $X million. more increased was global footprint. and our price the inflation. An $XX important our have takeaway cost input slide is input costs advantage in Year-to-date,

this you As Três increasing Latin $X of a can regions pulp by nonintegrated America. pulp sales is our we in impacted our in our for in to is the on see the of differently. cost basis, naturally per I out mill. purchase increase want fiber that million ton that see Lagoas to you XX% cost Latin related America increase point hedged

So per a if be ton on basis you into that you'll Latin to similar America our that take see account, Europe. would cost

impact our cost the of business. most America seeing So that in is we're North globally

the channels. our from geographies, run as mix free and improve continue and Global segments X. uncoated full Slide sheet teams continues maximize we impact pandemic, of to to COVID and demand opportunities Moving to recover commercial across our

bit about a talk little global demand. Let's

In and was up in nearly demand Eastern Europe, free up X.X%. America year-to-date demand XX%. North X%. global Europe Western quarter was Third demand uncoated was up was up X.X%. Latin sheet Industry in demand And America,

begin up supportive uncoated of of as free Latin XXXX. had rates people particularly have and the regions this last quarter. to global and the office uncoated closed recovery and be because office return continues in year, global Currently, significant number third open. not X.X% still America XX% to I schools out to shipments demand returned operate shipments sheet up copy because demand operating Europe, our paper This sheet were Year-to-date, offices operating to workers should recovery and quarter versus and the still of paper back XX% other still only be more schools was America. to lag versus point in. we the rates remain up were copy third in a in So our the in segments North free there's

rates So industry we're focus commercial and on our brand outperform team, continuing excellence. strong growth to due our to commercial

in Slide benefit quarter, as million we in good in to spin-off. volume. and $XXX million third mix prepared in exchange Brazil second $XXX a go quarter. in achieved and up adjusted $XX operations $XX million improvements XX. We improved in million the reflecting generated We EBITDA $XX for and price million, foreign the the by from Let's Operations

feel prepared We worked teams This As spent of chain we in Jean-Michel the the to supply customer to global was hard our costs and needs, conducted execute good challenges energy, spin-off. and chemicals and the fiber, than planned by maintenance during third mentioned, they third in in regional though, largely extremely and the quarter million manage increased distribution. performance about staff benefit, meet quarter. less offset outages fewer $XX $XX as million

committed Let's a turn We're differentiators excellence our gaining free who improving commercial and positions are We and to eager XX. as with of key expand operational uncoated to Slide mix Sylvamo. customers to excellence key business with new supplier sheet. regard their

working team third one in to new XX,XXX example, Accent landed for commercial customers. our partners America premium business of printing an in grades. increases new with from of And positions our segments. improves to business Opaque our our Opaque incremental tons North the commercial that deliver and We key Accent quarter, have mix land several is our value are that channel and and winning tirelessly customers best-in-class customers teams their

copy We to our America. paper, their Latin not previously paper in channels new also recently in Brazilian We that copy Chamex outlets copy added outlets. our sell retail branded into XX paper, did expanded market

leveraging are product we beyond expand applications. traditional end-use addition, that In development

position example, For Brazil, we're expanding our insert in medicine applications. in

Our best-in-class commitment completed demonstrated in operating third to extremely They very operational difficult cutover challenging the their successfully a chain during system operations an excellence quarter. team supply environment.

prior Let's and Europe X margins take on maintenance had America and Latin and second volume our Slide continued at regional the performed Each improving North price and America regions in look executed North our Strong America outages realization strong well. results increases, a quarter. and and well Latin volume the outages of in America. earnings in planned Europe reflected of no XX.

discussed cost As significant. we increases earlier, input were

supply that to back chains incremental more customers Although like fact, detail in have more in have performance. business customers The have on some their business appendix of to been shift them. if the to our we would And regional we provides us accommodate disrupted, shifted could us.

turn discuss So Slide our fourth to let's to the XX outlook for quarter.

deliver regions. realize million to $XXX continue EBITDA fourth and expect the as EBITDA. million in our that $XXX all in quarter. to Price $XX to communicated adjusted an to to million we to have price been mix million increases $XX That's of improve expected We customers by is

million, to transition improvements expect of in million energy the strong volume we and America reflecting We Europe are as frame. seasonally and costs to in use time volume high expected million. that's overall Operating $XX America by North $XX Latin to seasonally contributing into $XX increase colder

mill. and about Most And increases last input In return conduct is seeing X planned a Europe And Europe our chemicals. the driven normal expect particularly the versus around to wood, our speak distribution We We will $XX will of as increase driven year. primarily has replenish million. next I'll most $XX in Gas expect prices, increase we and extended in expenses that. we Maintenance almost America, our because to our and in we're million North costs we're energy, Eastover wood do bit up will little costs million is year. the to Saillat maintenance sometime outages low by that $XX area, by inventories this at of back in energy seeing low March This of particularly increase. where wood harvesting. outages were prices XXX% weather-related. and gas inventories

for for onetime adjusted appendix service Our contains not items. estimates include outlook in agreements. corporate the fourth XX quarter transition Slide costs EBITDA does

to Slide turn Let's flow. to XX discuss free cash

cash Jean-Michel focused free on As shareowner flow generating drive to we discussed, value. are

doesn't cash $XXX expect primarily is not free of we third generate flow generated reflect debt. the recognize have to for million debt we a interest Even in a not cash down my free generate the basis. on to $XXX we XXXX. in as cash maintenance, We will position return for regulatory our reduce in of for above we review can we begin cash $XXX annual maturity debt of repaid also bringing you to Slide the On see, XXXX quarter million future, equivalent that million than representative We at current quarter strong will flow free the comments is because allow which net of our year. we free our fund this structure. the outstanding Sylvamo credit -- will million cash million On Svetogorsk $X.X and flow XX engineering to revolving of does to gross X.Xx $XX Please flow profile. normalized It to that adjusted the regulatory expect the facility, enough our company in flow recovery balance cash ended sufficient just launched $XX we of gross expense. us million our spend reforestation, that of X.Xx $XX strong the flow to we strong spending plus and and balance it in forecasted be $XX XX, EBITDA, quarter, Investor projected with our boiler expect with And maintenance, and capital be the XXXX going capital expense to cash capital on October outstanding third to the showed spending, and interest we I which more that's with we'll billion the free over the include reforestation debt is favorable conclude to million. Day, third to debt shareowners. debt,

years, will debt million each of on average, the $XX X than Over less amortize next year.

to I'm that, going it you, over with to Jean-Michel. back So turn

Jean-Michel Ribiéras

Even XX. COVID-XX our the wrap with Slide and we are on the John. continued success. Thanks, up of disruptions, positioned for pandemic I'll uncertainty supply well continued chain comments

our to create cash will Our will debt position commercial and us improve value Board XXXX. We customers. drive John throughout during outlined proud more commitment operational I and of will the to our shareowner to our financial returning working results beginning and with The shareowners. strong employees continue of and performed appreciate about discipline couldn't have safely our be value shareowners. generation taking for business discussion their cash pandemic excellence how care by reducing to flow

about passionate that, are call our note. turn great and our We to and year in great I position Sylvamo We a a the to With the on our shareowners. is momentum employees, close paper deal to of have really Hans. off out will back customers like high start. a

Hans Bjorkman

John. Jean-Michel, Thanks, you, and thank

Okay. questions. Angie, we're ready with take to that,

Operator

first Staphos [Operator of Instructions] with the Bank Your George America. question of line from comes

John Babcock

just helpful. XQ This guess question. trends across held was could markets. chain, what I different be is so seeing if actually strong also you far John how particularly Babcock you're have pretty And in It demand in sounds it supply about that you like on impact then XQ. in up Can the talk line North George. for the about first would America, your from talk overall

Jean-Michel Ribiéras

you call. for joining our thank John,

I all, to question of be Demand globally. demand. around continues will strong the First answer really

to America mentioned, Latin continues some trend we full and very of pandemic. I everywhere have of region which be And the getting are even out the like we are good. kind As

of back to in school soon which started you and start starting, are to regions have return Brazil. So have should even office which some

it's what's supply we expect quarter. demand issues, everybody, on U.S., mean, continued with in In truck. who a have mostly transportation, like the we've strong Concerning I on. going would impacted us, to chain is for fourth on I chain, say, the been, today supply So not

at say get shift new options one miss at truck rail And I from different mode would really We very have vessels to of where we've good In you and if looking for a attention. lot It's but are a Brazil Latin difficult is is put to mostly export. one, getting difficult. it's looking and exports. more partners, America,

essential. but is we put third of it U.K. smoother making planning, actually relation. Europe issues job to comply by care. have had specific It's managed the In did regions And back government. the little we some quarter, vessels truck So a taken bit to sure we some And some like a a good of they in with it's rail been in timing in Europe, in Russia,

on media. has think everybody seen I that

So mostly to Europe specific North America also. vessels, America, truck, a lot trucks Latin

John Babcock

on, next like Got it I maintenance that's my guess, turn me you. projects also, maintenance, thought if about going correct like seems On I'm at you I then up I in then how wrong XQ. think some be over. directionally mentioned bit to moving And in question we it XXXX? And a before should there. Saillat, decent

John Sims

John Sims. is this John,

If you quarter, X and mill. Saillat think, outages, for we the Eastover outages, extended at fourth major have the both

actually So a was every those XX-year years. And we mill are, XX outage. It's a XX-day have Eastover outage is to outage. the Saillat cold that do

be terms to of what those $XX provide for this So XXXX. year. that outages. in slightly up less the appendix estimate in expense, back outage the million We the We of do that there so what did than we guidance will drive cost

Operator

Your RLH the from line of with Investment. Haberman next Instructions] question Ross comes [Operator

Ross Haberman

about capital needed plants? think use Could your I upgrade. expenditures that I to going deck you're you your on talk to you original something the from European saw

'XX? in, think you I guess, for Russian address it's I operation. your Could that

John Sims

Yes, Form in also Day. Ross, XX Investor we and discuss that our did

X Svetogorsk boilers options been have either to end that we've boilers at rebuild X their or reaching in And them. those of our at Russia. recovery are we So to replace life looking mill

capital don't This we to so you mill new We you in less which a to But recovery Day operationally you bringing the of when million. if a will, Investor a the $XXX around estimate option be impacting haven't that. it, Directors. we that. determination down install you lose Board rebuild talked which somewhere We'll capital put about you the projections, that. is made boiler, higher of option, if is final you on is to lower but But at because production one, the rebuild shut that and lose and have our we our

impact. You don't have that

we in we'll capital that have it And million. in and XXXX. of year, Svetogorsk our related to $XX million $XXX XXXX around that's next $XX the we boiler. engineering XXXX, then install So And have complete spend And projecting with we'll boiler. $XX have the million it the in recovery then in million we're approximately and

Ross Haberman

if take operating So go and of new 'XX your go cash new that how cash take number off, route, do the flow will much that 'XX you you with the flow route? out will in boiler if

John Sims

the new not route, go will production boiler Svetogorsk we mill. impact the if our So we at

that So from an and operating be cash flow, we'll be able to that continue to impacted. mill run won't

Operator

a George have do question from We line Bank Instructions] the [Operator with follow-up Staphos of America. of

John Babcock

announced? did have much the want what us to And you just the then how left that from be hikes also, ask, realized actually, price remind in to hikes I market? you you've can is

John Sims

in customers, John, to we meeting. all so our we that increases investor price have actually had regions. since we've price investor And the since we some the increases announced announced

Russia, and export and and going price Europe increases we'll Latin So through North America. markets in in be have we that America

realization and implementation the of implementation X.X essentially price million $XX further terms that, we quarter. project you $XX those price And million of to So have million quarter million increases probably how the $XX first will price that in in $XX be there mix because and increases. of to fourth represents that of month about you we think can saw those about in that

John Babcock

the can mix regions. you us then shift how And Okay. tends also remind to just across

impact it So regions? negative is impact different positive or across more of a a

John Sims

mix that. have in lot environment a then looking opportunities improve of there particularly today, opportunity always to mix. the demand to Yes. perspective, do that From a for we the we're And is

improve when flexibility or mix, our the so from perspective. ability mix the to product we have think a about you And

perspective a each markets have generate that able taking it the in. from regions also to our profits be also and to domestically opportunity export-wise. We And in of that customer means most, the the the we to export

markets. And so about to trying when think you all those our in levers we're mix, pull

John Babcock

though, remember, to impact, there here, what completely I'm wrong at what was really at. a from I getting Is that's least Okay. seasonal but maybe mix, I

Jean-Michel Ribiéras

X You're the average. a we in the bit because the America usually small a it's quarter impact. the of one Latin have is, correct, first especially regional then holidays you And and the Russia, and different. the John. little quarter There have in vacations. regions, third because which But is But lowest is

some we we kind seasoning, because other. have but do So region, the have they balance each third of

John Babcock

And Okay. a then just question. last

in capital whether on otherwise? the notable fourth it's be cash any we should Just here, mindful flow, of working are or there quarter items

John Sims

No. We you of that and onetime items. some what of also did with because previously, have the had in share up fourth the show we we got course, we will which expense TSA hadn't quarter, spin that the

Operator

next comes Your Brian the of question Lalli. line from

Brian Lalli

amount Brian you of up It's you're with, on, could XXXX I caught inflation maybe taken which all there far cetera. not things already up the next the on might you've enacted. sum you'd say guidance, And get equal, actions pricing XXXX on fair, relative not what being you're just I'm of curious Lalli were If ahead that from is for into year. isn't that there, of say move has that too additional all with number John's to dealing an tailwinds kind you'd XXXX the as we you've ourselves to follow be PGIM. fully et still just price obviously, question if yet? to from But

John Sims

Yes.

a because had fourth full increases think you cost basis that we at we've implementing increases. and I price quarter we're some in these have the still if year looked of significant some

from in in gas wood earlier, the America, may we our definitely increases expect it's off. Russia North Europe general, the forward, think these, back will come off. price in of some been elevated gas relative think in of right? some may stronger in that the when cost by prices look like not that you that So the that that And see think we time the and we're increases, as because exit prices just blow Europe the of now gas we coming it ahead wind But that at weather, of we go but I I year. staying cost has mentioned And will more I hopefully to

look strong, the see you to already very cost start It's going feel the of be we'll However, really when these quarter, quarter. first benefit because first that that outpacing we to prices that announced of have at our we're the implemented, in in and quarter customers that to first that the confident we're show will the inflation.

Brian Lalli

Is be there confident we the a I'm you'll customers. get and with exit announced you John? as that on prices run the thinking feel as number about should again, point, that, we curious, rate that again, with as isn't to to, year maybe you've just in the think high your your

here. Just in is our so we it getting what size correctly up I'm model

John Sims

to numbers forward-looking not I'm give the now don't of price for give in going for We you right terms XXXX. projections details.

think... I So

Brian Lalli

That's No. Brazil would I again, until some second then that you a that? fine. not And curious deal. payments be, just one I'm the Again, wanted question, just restricted tax Okay. limitations guess update there's I on liability, stuff and big know to the I out. there's get figured ask around my any if

an just I'd you figured that if there on I talk about So shareholder returns. update as see front was

John Sims

question. Yes. a Brian, it's good

want worked just through potential yet. And decision but everybody really program, the about still but whether it hasn't International worked control pending still to They on remind the the, not, its in a In amnesty to that through. that of or way legislation decision. the bill tax terms Brazilian that yes, of amnesty they pursue call a there's still Paper's it's hasn't

comes government lot year next of So through come maybe it on November. we or get terms time update. in doesn't now. in in that out appear a going Brazilian right December There's may the of It don't some it kind if any further in

Operator

any there would closing to like turn Mr. time, this At questions. the back or further Bjorkman additional I remarks. for are to now floor no

Hans Bjorkman

rest and interest Thank your you today. look great week. in we of a Have Sylvamo, greatly come. quarters to great a months the us appreciate do your day for to the joining continued forward We and in conversations and

Operator

call, lines Thank at conference participating you may in for disconnect today's you your this now time.

Sylvamo (SLVM) 13 Nov 212021 Q3 Earnings call transcript