Q4 2021 Sylvamo Corp Earnings Call
Speaker 1: Good morning, and thank you for standing by. Welcome to today's Silvamo's fourth quarter 2021 Investor Earnings Day conference call.
Good morning, and thank you for standing by welcome to today's <unk> fourth quarter, 2021 Investor earnings Conference call.
Speaker 1: 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.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be the opportunity to ask questions.
To ask a question. Please press star one on your telephone keypad.
To withdraw your question press the pound key.
Now like to turn today's conference over to Hans Bjorkman, Vice President Investor Relations. Please go ahead Sir.
Speaker 2: Thanks, Angie. Good morning and thank you for joining our call today.
Thanks, Angie good morning, and thank you for joining our call today.
Speaker 2: Our speakers this morning are Jean-Michel Ribeiras, Chairman and Chief Executive Officer, and John Simms, Senior Vice President and Chief Financial Officer.
Our speakers. This morning are John Michel Ruby Earth, Chairman, and Chief Executive Officer, and Johnson, Senior Vice President and Chief Financial Officer.
Speaker 2: Slides two and three contain important information, including certain legal disclaimers.
Slides, two and three contain important information.
<unk> certain legal disclaimers for example, during this call we will make forward looking statements that are subject to risks and uncertainties.
Speaker 2: For example, during this call, we will make forward-looking statements that are subject to risks and uncertainty.
Speaker 2: We will also present certain non-US GAAP financial information. Reconciliations of those figures to US GAAP financial measures are available in the appendix.
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.
Speaker 2: 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.
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 John Michelle Thanks, and good morning, and thank you for joining our call.
I'm on slide four which demonstrates significant improvement you know food yourselves and earnings.
Speaker 3: 2021 net sales increased 16% to $3.5 billion, adjusted a bit that improved by nearly 60% to $594 million. This represents a margin of 17% or 460 basis points higher than our 2020 adjusted a bit that margin.
<unk> thousand 21, 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.
Speaker 3: Our adjusting earnings per share has improved by over 70% to $6.94.
Adjusting earnings per share improved by over 70% to $6 at 94 cents.
Speaker 3: We remain committed to generating cash and have positive momentum heading into 2022.
We remain committed to generating cash and have positive momentum heading into 2022.
Speaker 3: Let's turn to slide 5 to review our fourth quadrupter form.
Let's turn to slide five to review our fourth quarter performance.
Yeah.
Speaker 3: We are executing our three-point strategy of commercial excellence, operational excellence, and financial discipline, which resulted in a 17.5% adjusted Bida margin in the fourth quarter.
We are executing our three pronged strategy of commercial excellence.
<unk> excellence and financial discipline, which resulted in a 17, 5% adjusted EBITDA margin in the fourth quarter.
Speaker 3: Global demand for encoded free sheets continue to strengthen as schools and offices gradually reopen. Our volumes remain strong and we run at full capacity in all three regions.
Global demand for uncoated free sheet continued to strengthen our school and office is gradually reopen.
Volumes remained strong and we ran at capacity in all three regions.
Speaker 3: We also continue to realize the benefit of prior price increase
We also continue to realize the benefit of prior price increases.
Speaker 3: allowing price and mix to outpace increasing input costs.
I mean price and mix to outpace increased input cost.
Speaker 3: I'm extremely proud of how our teams navigated through input cost and transportation challenges and worked to take care of our customers.
Extremely proud of our teams navigated through input costs and transportation challenges and work to take care of our customers.
Speaker 3: We operated well in a challenging supply chain environment and executed two large and comprehensive maintenance orgies at our SIA and Istobel mills, safely and efficiently.
We operated well in a challenging supply chain environment and executed two large and comprehensive methods <unk> out of a science and seven mills safely and efficiently.
Speaker 3: 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 $180 million. All in all, a strong performance by our team.
Implemented this strategy generated free cash flow up $162 million.
Enabling us to pay down 124 million in debt and to increase our cash position by $48 million to $180 million.
All in all a strong performance by our team.
Speaker 3: Slide six highlights our performance in the fourth quarter, our first standalone quarter.
Slide six highlights our performance in the fourth quarter.
First standalone quarter.
Speaker 3: Fourth quarter net sales increased 7% sequentially to $972 million.
Fourth quarter net sales increased 7% sequentially to $972 million.
Speaker 3: We generated an adjusted update of 170 million and a 17.5% margin during the heaviest maintenance audit quarter of the year.
We generated an adjusted EBITDA of $170 million and a 17, 5% margin during the easiest maintenance outage quarter of the year.
Speaker 3: However, if we had normalized maintenance audit expenses, our adjusted EBITDA margin would have been 19.2% for the quarter.
Oh, Hey, there if we had normalized maintenance outage expenses.
Adjusted EBITDA margin would have been 19, 2% for the quarter.
Speaker 3: We also generated adjusting operating earnings of $1.71 per share.
We also generated adjusted operating earnings of $1 71 per share.
Speaker 3: Let's turn to slide seven to discuss our commercial excellence essence
Let's turn to slide seven to discuss our commercial excellence efforts.
Yeah.
Speaker 3: Our commercial excellence strategy is designed to help our customers succeed.
Our commercial excellence strategy is designed to help our customers succeed.
Speaker 3: We want to be recognized by our customers as the suppliers they value the most.
We want to be recognized by our customers as the suppliers of value the most.
Speaker 3: Here are a few examples where we are winning incremental businesses, which is improving our mix and profitability.
Here are few examples where we are winning incremental businesses, which is improving our mix and profitability.
Speaker 3: In Latin America, we are leveraging innovation to increase our position in other end-use segments, such as thermal paper used for research.
In Latin America, we are leveraging innovation to increase our position in other end use segments such as thermal paper useful received this.
Speaker 3: This is a profitable and strategic segment with growth potential.
This is a profitable and strategic segment with growth potential.
Speaker 3: In North America, we are creating value for our customers with Silvermo Shop, which allows 24x7 access to critical information to help them run their businesses better and allows them to interface via computers, tablets and mobile phones.
In North America, we are creating value for our customers. We just see the bandwidth shop, which you lose 24 seven access to critical information to help them run their businesses better and they lose them to interface via computers.
Tablets and mobile phones.
Speaker 3: In Europe , we are leveraging our global footprint to expand sales of premium products in strategic channels, which provides better product mix for our customers while optimizing our global trade.
In Europe , we are leveraging our global footprint to expand sales of premium products in strategic channels, which provides better product mix for our customer.
Optimizing our global trade flows.
Speaker 3: Global and coated free sheet 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.
Global Uncoated freesheet demand continues to recover.
From the initial impact of Covid pandemic, allowing us to improve our mix as our commercial teams maximize opportunities across geographic segments and Shannon.
Speaker 3: Let's turn to slide eight to look at the 2021 growth by region.
Let's turn to slide eight to look at the 2021 gross by region.
Speaker 3: Year over year, global encoded free sheet industry demand increased by 3% in 2021.
Yes, global uncoated freesheet industry demand increased by 3% in 2021.
Speaker 3: And especially in our region, demand was up, nearly 6% in Europe , more than 13% in Latin America, more than 4% in North America.
And especially you know region demand was up nearly 6% in Europe more than 13% in Latin America more than 4% in North America.
Speaker 3: We still see potential for 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 office.
We still see potential for incremental copy paper demand recovery, which was only up one 3% globally. Since many office workers in North America, and Europe are still not returned to the offices.
Speaker 3: And in Latin America, we understand that students would be going back to school.
And in Latin America, we understand that students would be going back to school this year.
Speaker 3: In 2021, we outperform industry growth rates in our region by 530 basis points.
In 2021, we perform industry growth rates, you know regions by 530 basis points.
Speaker 3: Our 2021 unquoted free shipments were up 12% versus 2020.
Our 2021 uncoated freesheet shipments.
At 12% versus 2020.
Speaker 3: I'll now turn the call over to John , who will discuss our fourth quarter performance in more detail. Thank you, Zell Masell.
I'll now turn the call over to John who will discuss our fourth quarter performance in more detail.
Thank you Jill Michele I'm.
I'm on slide nine.
Speaker 4: We generated $170 million in adjusted EBITDA in the fourth quarter, well ahead of our outlook of $140 to $150 million.
We generated $170 million and adjusted EBITDA in the fourth quarter, well ahead of our outlook of $140 million to $150 million.
Speaker 4: We improved price and mix by 41 million, which was greater than our outlook because prices rose faster and at a greater rate in North America than what we had projected.
We improved price and mix by $41 million, which was greater than their outlook because prices rose faster and at a greater rate than North America.
What we had projected.
Speaker 4: Volume improved by 14 million due to strong seasonal demand in Latin America. In all regions we had more...
Volume improved by 14 million due to strong seasonal demand in Latin America.
In all regions, we had more orders than we could ship.
Speaker 4: Operations and costs were solid and improved by $2 million. This does include a favorable $10 million LIFO adjustment in North America, as well as a favorable $7 million in overhead benefits and environmental credits in Europe , which we had not included in our outlook.
Operations and costs were solid and improved by $2 million.
This does include a favorable 10 million LIFO adjustment in North America as.
As well as a favorable $7 million and overhead benefits and environmental credits in Europe , which we had not included in our outlook.
Speaker 4: As Jean-Michel mentioned, we successfully conducted two significant planned maintenance outages in Europe and in North America and spent $24 million more on outages than we did in the third quarter.
As Michel mentioned, we successfully conducted two significant planned maintenance outages in Europe and in North America, and spent $24 million more on outages than we did in the third quarter.
Speaker 4: Input in transportation costs increased by 39 million with rising costs for fiber, energy, chemicals, and transportation.
Input and transportation costs increased by $39 million with rising costs for fiber energy chemicals and transportation across all regions.
Speaker 4: Our strong performance in this corridor is a reflection of our talented and engaged regional teams. We worked hard to meet customer needs and managed through significant global supply chain and pandemic challenges.
Our strong performance in this quarter is a reflection of our talented and engaged regional teams, who worked hard to meet customer needs and manage through significant global supply chain and pandemic challenges.
Let's take a look at our regional results on slide 10.
Speaker 4: Each of our regions performed well in the quarter, demonstrating the strength of our low-cost positions and our iconic brand.
Each of our regions performed well in the quarter, demonstrating the strength of our low cost positions and our iconic brands.
Speaker 4: Nearly two-thirds of our earnings were outside of North America.
Nearly two thirds of our earnings were outside of North America.
Speaker 4: Europe earned $27 million with a 9% EBITDA margin. Latin America earned $81 million with a 35% margin.
Europe earned $27 million with a 9% EBITDA margin Latin America earned $81 million with a 35% margin.
Speaker 4: And North America earned 62 percent, 62 million with a 13 percent margin.
And North America earned 62% $62 million with a 13% margin.
Speaker 4: We conduct an extensive 10-year maintenance outage at our SIOT mill and a cold mill outage in East River, which is reflected in our European and North America EBITDA margin.
We conducted an extensive 10 year maintenance outage at our <unk> mill and a cold mill outage in eastover, which is reflected in our European and North America EBITDA margins.
Speaker 4: If we had normalized the maintenance outages, expenses over a year, Europe EBITDA margins would have been 12% and North America would have been 15%.
If we had normalized the maintenance outages expenses every year Europe EBITDA margins would have been 12% and North America would have been 15%.
Speaker 4: Our strong earnings and margins reflect the realization of pricing.
Our strong earnings and margins, reflecting realization of price increases.
Speaker 4: Vaughn improved in Europe and Latin America and remained strong in North America.
Volume improved in Europe , and Latin America, and remains strong in North America.
Speaker 4: Our commercial teams focused on strengthening our customer value propositions and their successful efforts are reflected in this report.
Our commercial teams focused on strengthening our customer value propositions.
And their successful efforts are reflected in these results.
Speaker 4: The appendix contains additional details on our regional performance.
The appendix contains additional details on our regional performance.
Speaker 4: Let's turn to slide 11 to discuss uncoded free sheet industry conditions.
So, let's turn to slide 11 to discuss uncoated freesheet industry conditions around the world.
Speaker 4: Global uncoded free sheet industry conditions continue to improve in the fourth quarter as they did throughout 2021 and remain quite favorable as we enter 2022.
Global Uncoated freesheet industry conditions continued to improve in the fourth quarter as they did throughout 2021 and remain quite favorable as we enter 2022.
Speaker 4: Uncut if we see demand continues to improve in all three regions.
Uncoated freesheet demand continues to improve in all three regions.
Speaker 4: While industry supply is shrinking in Europe and North America as competitors have shut down machines and converted capacity.
While industry supply is shrinking in Europe , and North America as competitors have shut down machines and converting capacity.
Speaker 4: Input and transportation costs remain elevated and we expect costs for fiber, chemicals and transportation continue to increase.
Input and transportation costs remain elevated and we expect cost for fiber chemicals and transportation to continue to increase.
Speaker 4: However, our selling prices increase in the fourth quarter and will continue to increase in the first quarter as realized price increases throughout the quarter.
However, our selling prices increase in the fourth quarter and we will continue to increase in the first quarter as realized power price increases throughout the quarter.
Speaker 4: Let's move to slide 12 and review our first quarter outline.
Let's move to slide 12, and review our first quarter outlook.
Speaker 4: In the first quarter, we expect to deliver an adjusted EBITDA of $180 to $190 million and adjusted operating earnings per share of $1.70 to $1.90.
And the first quarter, we expect to deliver an adjusted EBITDA of $180 million to $190 million and adjusted operating earnings per share of $1 70 to $1 90.
Speaker 4: We project price and mix to improve by $35 to $40 million, as we continue to realize price increases already communicated to our customers in all regions.
We project price and mix improved by $35 million to $40 million as we continued to realize price increases already communicated to our customers in all regions.
Speaker 4: We expect volume to decrease by 13 to 18 million, reflecting seasonally weaker volume in Latin America and Eastern Europe .
We expect volume to decrease by $13 million to $18 million, reflecting seasonally weaker volume in Latin America and eastern Europe .
Speaker 4: Typically the fourth quarter is our seasonally strongest quarter and the first quarter is our seasonally weakest for shipments.
Typically the fourth quarter is our seasonally strongest quarter in the first quarter is our seasonally weakest for shipment.
Speaker 4: We expect operations and costs to improve by 18 to 20 million.
We expect operations and cost improved by $18 million to $20 million.
Speaker 4: Fourth quarter results included seven million in favorable adjustments in Europe and a 10 million favorable LIFO adjustment in North America that won't repeat in the first quarter.
Fourth quarter results included $7 million of favorable adjustments in Europe , and a 10 million favorable LIFO adjustment in North America.
Repeat in the first quarter.
Speaker 4: We expect input and transportation costs to increase by 18 to 23 million, which is about half the improvement in the
We expect input and transportation cost increased by $18 million to $23 million.
Which is about half the improvement in price and mix.
Speaker 4: These increases will be driven by higher costs for fiber, chemicals, and transportation.
These increases will be driven by higher costs for fiber chemicals and transportation.
Speaker 4: And we project maintenance outage expense to decrease by $31 million as we conduct fewer outages.
And we protect maintenance outage expenses decreased by $31 million.
As we conduct fewer outages this quarter.
Speaker 4: Let's turn to slide 13 for some additional 2022 guidance.
Let's turn to slide 13 for some additional 2020 guidance.
Speaker 4: So we have revised some of our 2022 selected financial guidance.
So we have revised some of our 2022 selected financial guidance.
Speaker 4: We increased the outlook for capital spending by $18 million to fund high return and short payback cost reduction projects.
We increased the outlook for capital spending by $18 million two with fund to fund high return and short payback cost reduction projects.
Speaker 4: For example, we'll fund a wood yard productivity project in Brazil that will cost less than $3 million.
For example, we will fund the woodyard productivity project in Brazil that will cost less than $3 million.
Speaker 4: but provide an expected internal rate of return of nearly 50%.
But provided an expected internal rate of return of nearly 50%.
Speaker 4: We'll also fund a project at our Easter room to upgrade the stock pump that will cost a little more than a million and offer an expected IRR of nearly 40%
We will also fund a project at our eastern with mill to upgrade the stock pump that will cost a little more than a million and offer an expected IRR of nearly 40%.
Speaker 4: We have many other high return projects to further improve our low cost assets and we look to fund these in the future.
We have many other high return projects to further improve our low cost assets.
And we look to fund these in the future.
Speaker 4: We have also updated our guidance on a projected income tax rate.
We have also updated our guidance on our projected income tax rate.
Speaker 4: US tax regulations have changed in January , and we may no longer be able to claim the foreign tax credits for Brazilian earnings.
U S tax regulations have changed in January we made and we may no longer be able to claim the foreign tax credits for our Brazilian earnings. We expect this change to increase our 2022 tax rate.
Speaker 4: We expect this change to increase our 2022 tax rate to 32 to 34%. That would all-
To 32% to 34%.
I would also like to update you on the <unk> project.
Speaker 4: In December , our board of directors approved $15 million in capital spending for engineering work.
In December our board of directors improved $15 million and capital spending for engineering work for.
Speaker 4: for the proposed new recovery boiler, which will replace the two recovery boilers that are approaching end of life at our Sylvetta Gores Mill.
The proposed new recovery boiler, which will replace the two recovery boilers that are approaching end of life at our <unk> mill.
Speaker 4: We expect that this new recovery boiler to reduce costs and improve reliability and increase production at this very low cost Russian mill. Let's turn to slide 14.
We expect that this new recovery boiler to reduce cost and improve reliability and increase production at this very low cost Washington mill.
Let's turn to slide 14 to discuss free cash flow.
Speaker 4: We remain focused on generating cash. We generated strong free cash flow in the fourth quarter, 162 million, and we expect to drive strong cash flow in 2022.
We remain focused on generating cash we generated strong free cash flow in the fourth quarter of 162 million and we expect to drive strong cash flow in 2021 2022.
Speaker 4: We intend to use cash generated from earnings, including some of the $180 million cash on hand, at the beginning of the year to fund $178 million of capital spending.
We intend to use cash generated from earnings, including some of the 180 million cash on hand at the beginning of the year to fund the $178 million of capital spending.
Speaker 4: $77 million one-time Georgetown and Riverdale inventory payments to international paper.
The 77 million onetime Georgetown Riverdale inventory payments to international paper.
Speaker 4: and $72 million of one-time and transition costs. We also intend to
And $72 million of one time and transition cost.
We also intend to continue debt reduction.
Speaker 4: We are doing all of this to position the company to begin returning cash to share owners later this year.
We're doing all of this to position the company to begin returning cash to shareowners later this year.
Speaker 4: I will conclude my comments on slide 15 with a review of our current debt structure.
I will conclude my comments on slide 15, with a review of our current debt structure.
Speaker 4: We launched the Varma with just over $1.5 billion in gross debt.
We launched the former with just over $1 5 billion in gross debt.
Speaker 4: We ended the third quarter at 2.8 times gross debt to adjusted EBITDA.
We ended the third quarter at two eight times gross debt to adjusted EBITDA.
Speaker 4: And we ended the fourth quarter at 2.4 times growth debt to adjusted EBITDA.
And we ended the fourth quarter at two four times gross debt to adjusted EBITDA.
Speaker 4: As we mentioned earlier, we paid down debt by $124 million in the quarter, in the fourth quarter, and we increased our cash position by $48 million.
As we mentioned earlier, we paid down debt by $124 million in the quarter and the fourth quarter and we increased our cash position by $48 million.
Speaker 4: We also swapped $400 million of the floating rate debt for fixed rates.
We also swapped $400 million of the floating rate debt for fixed rate.
Speaker 4: As you can see from the table, we don't have any significant debt maturities until 2027. So with that...
As you can see from the table, we don't have any significant debt maturities until 2027.
So with that I'll turn it back over to use themselves.
Speaker 3: Thanks John . I'm on slide 16. We are pleased with our performance in our first quarter as a standalone company.
Thanks, John I'm on Slide 16, we are pleased with our performance in our first quarter as a Standalone company.
Speaker 3: We are taking advantage of opportunities to enhance value for employees, customers and share owners.
We are taking advantage of opportunities to enhance value for employees customers and shareowners.
Speaker 3: Our major opportunity is capital allocation. We are now able to use the cash we generate to reinvest in our assets and return cash to share owners. For Stefan ours, he
Our merger with <unk> capital allocation, we are now able to use the cash we generate to reinvest in our assets and return cash to shareowners.
<unk> is another opportunity we are able to serve the best interest of our customers globally and concentrate on being the supplier that customers value. The most.
Speaker 3: We are now able to serve the best interests of our customers globally and concentrate on being the supplier that customers value the most. We are also working to simplify
We are also working to simplify our strategy and tactics.
Speaker 3: We will create long-term value through our talented teams, the world's most iconic paper brands, and low-cost mills in attractive locations.
We will create long term value saw a talented teams the world music any paper brands and low cost medicine in attractive locations.
Speaker 3: Most importantly, we are building the Sylvano culture, one that is more agile, faster to act, and with a more entrepreneurial spirit across our team.
Most importantly, we are building the <unk> tier.
One that is more agile faster to act and with a more entrepreneurial spirit across our teams.
Speaker 3: As we have just become an independent company, our strategy will continue to further evolve, with a commitment to increase value for all of our stakeholders. I'll wrap up our prepared remarks.
As we have just become an independent company our strategy will continue to further evolve with a commitment to increase value for all of our stakeholders.
To wrap up our prepared remarks on slide 17.
Speaker 3: We are well positioned for continued success. Our commercial and operational excellence strategy and tactics will enable us to generate strong earnings and significant free cash flow.
We are well positioned for continued success, our commercial and operational excellence strategy and tactics will enable us to generate strong earnings and significant free cash flow.
Speaker 3: We will execute our plans and will increase capital spendings to strengthen our low-cost position.
We will execute our plans and will increase capital spending to strengthen our low cost positions we.
Speaker 3: We will continue to strengthen our balance sheet and prepare to begin returning cash to shareholders. In the near future, we plan to initiate discussions with our Board of Directors.
We will continue to strengthen our balance sheet and prepare to begin returning cash to shareowners in the near future. We plan to initiate discussions with our board of directors.
Speaker 3: I could not be prouder of our employees performed throughout 2021.
I could not be prouder.
<unk> performed throughout 2021.
Speaker 3: We appreciate their commitment to working safely and taking care of customers.
We appreciate their commitment to working safely and taking care of customers.
Speaker 3: We are passionate about our employees, our customers, and our shareholders.
We are passionate about our employees our customers and our shareowners.
Speaker 3: SILVAMO is off to a great start. We are committed to uncoated free sheet and are confident in our ability to drive strong results in 2022. With that, I will turn the.
<unk> is off to a great start.
We're committed to and could you appreciate.
I am confident in our ability to drive strong results in 2022.
With that I will turn the call back to Ed.
Speaker 2: Thanks, Jean-Michel, and thank you, John . Okay, Angie, with that, we're ready to take the questions.
Thanks, John Michelle and thank you John Okay, Angie with that we're ready to take the questions.
Speaker 1: To ask a question, please press star 1 on your telephone keypad. Again, that's star 1 to ask an audio question.
To ask a question. Please press star one on your telephone keypad again, Thats star one to ask an audio question.
Speaker 1: Your first question comes from the line of George Staphos with Bank of America. Please state your question.
Your first question comes from the line of George Staphos with Bank of America. Please state your question.
Speaker 5: Hi, everyone. Good morning. Thanks for all the details. Congratulations on finishing the year. Guys, I'll start with three quick questions and I'll turn it over. First of all, relative to where you were and what you were thinking about in terms of your markets and end markets,
Hi, everyone. Good morning, Thanks for all the details congratulations on finishing the year.
Guys I'll start with three quick questions and I'll turn it over first of all relative to where you were and what your risk.
Thinking about in terms of your markets and end market at the analyst day.
Speaker 5: at the Analysts' Day, what is the outlook for 2022? And I guess more importantly, the post-COVID world, whatever that's going to look like, how does that compare more positively and more negatively in terms of consumption and markets and the like?
What is the outlook for 'twenty two and.
I guess more importantly, the post COVID-19 world whenever that's going to look like how does that compare more positively and more negatively in terms of consumption and markets and the like.
Speaker 5: A related question, Jean-Michel, I thought you said something about in Europe you're finding opportunities to leverage the supply chain or your access to the global supply chain. Can you comment a bit more, if I heard that correctly, on what you meant? And then lastly, on guidance.
Related question, John Michel I thought you said something about in Europe , you're finding opportunities to leverage the supply chain or your access to the global.
Supply chain can you comment a bit more I heard that correctly and what you meant and then lastly on guidance.
Speaker 5: Can you remind us what is embedded in your guidance as far as price increases? And are there any price increases that you've announced that would not be in guidance as of yet? Thank you.
Can you remind us what is embedded in your guidance as far as price increases and are there any price increases that you've announced that would not be in guidance as of yet. Thank you.
Speaker 3: Good morning, John , George, and thank you for joining. I will start with the two first questions, and John will take the third one. In terms of demand, both things, you've seen that 2021 was better than our forecast initially. I mean, I remind the number. Eastern Europe was 6.8% growth. North America was 4.2% growth. Western Europe was 5.5%. And Europe was 5.9% in total.
Good morning, John George and thank you for joining I would start with the two first question and Joe will take the third one in terms of demand boost.
<unk> seen that.
2021 was better than our forecast initially I mean, I remind the number eastern Europe was six 8% growth in North America was four 2% growth Western Europe was five five.
And Europe was $5 nine in total.
Speaker 3: So clearly, we had even more momentum in 2021 than we expected. This, despite the fact that there was not in 21 return to school or return to the office. It was very slow, which explains why the cut-size global demand was only 1.3%.
So clearly we had even more momentum in 2021 than we expected. This despite the fact that.
There was not in 'twenty. One returned to school are returned to the office. It was very slow which explains why the cut size global demand was only one 3%.
Speaker 3: So I'd say I'm quite bullish for 2022. And if you're asking me, compared to our original forecast, we clearly see some upside. I think the market is going to continue to grow, both in the graphics sector, where worldwide the demand is very strong, and on the cut size rebound, which we're starting to see the effect.
So I'd say I'm quite bullish for 2022, and if you're asking me compared to our original forecast, we clearly see some upside I think the market is going to continue to grow.
Both in the graphics web worldwide. The demand is very strong and on the cut size rebound, which we're starting to see the effect despite.
Speaker 3: despite the pandemic. So I'm quite positive and you were asking me if it was more than original.
The pandemic, so I'm quite positive on you asking me if it was more than the original.
Speaker 3: Yes, it's more than original both in 21 as we already have the number and for sure in 22
Yes, it's more than original boost in 'twenty, one as we already have the number and for sure in 'twenty two.
Speaker 5: Yeah, Jean-Michel, I don't want to be a hog here in terms of Q&A, but just the statistics, yes, we had seen them. You know, I guess the question is really, you know, why? What do you think if you're more positive and we're seeing more positive statistics, why is that happening? And then what are you doing in Europe to leverage the supply chain and the pricing question in terms of guidance?
Yes, Shawn Michelle I don't want to be a hog here in terms of Q&A, but just.
Statistics, Yes, we had seen them I guess the question is really why.
Why what do you think if you are more positive and we're seeing more posit statistics why is that happening and then what are you doing in Europe to leverage the supply chain and on the pricing question in terms of guidance. Thank you.
Speaker 3: So the why is, I think, they have more and more demand in uncoated fish.
No.
Why is I think they have more and more demand in uncoated freesheet one of the things which has surprised US is for example, the direct marketing the old commercial aspect, which impact offset.
Speaker 3: One of the things which has surprised us is, for example, the direct marketing, the old commercial aspect which impact offset. This demand, I don't have the latest number, but I remember Q3 number on direct mailing. Direct mailing from the USPS number, for example, in North America was up more than 40%.
This demand.
I don't have the latest number but I remember Q3 number on <unk>.
Direct mailing due bank, meaning from the USPS numbers for example in North America was up more than 40%.
Speaker 3: So you have an activity on the economy, even with a pandemic or post-pandemic, which is very favorable to the use of our product. And then I think the back to school, back to the office is another one which is going to be very positive for us.
So you have an activity on the economy.
Even with the pandemic of spend they make which is very favorable to the use of our product and then I think the back to school back to the office is another one which is going to be very positive for us.
Speaker 3: So there are also some specific things like coated free sheet shifting to uncoated free sheet. We've seen that in quite a few of our customers.
So that also some <unk>.
Specific things snack coated freesheet shifting to uncoated freesheet, we've seen that in quite a few of our customers. So I think the fact.
Speaker 3: So I think the fact that uncoated free sheet is sustainable, is affordable, functional, it creates a long-term demand and short-term, we're seeing it. The coated free sheet is not negligible. A lot of work which used to be on coated free sheet has switched to uncoated free sheet and has created incremental demand we had not planned. So.
And could depreciate is sustainable is it fairly broad functional.
It creates a long term demand and short term, we're seeing at the <unk>.
I appreciate is not an English about a lot of work we choose to be on coated freesheet as switch to uncoated freesheet and has created incremental demand we had not planned so.
Speaker 3: few examples, but I think there are multiple examples. On the global Europe supply chain, there are different options which we have. First of all, if you look today, all regions combined.
That's <unk>.
A few examples but I think they are moved to put exempt but on the global Europe supply chain.
There are different options, which we have first of all if.
If you look today.
All regions combined.
<unk> export.
Speaker 3: to what I would call non-strategic regions, about 8% to 10% of what we produce.
What I will call non strategic regions about 8% to 10% of what we produce we've.
Speaker 3: We've got an opportunity, an example is Europe from Russia, for example, to make sure we align with the strategic long-term customers. And thanks to the demand, thanks to the partnership and work of our commercial team.
We've got an opportunity an exempt studies Europe from Russia for example to make sure we are aligned with the strategy long term customers.
And thanks to the demand thanks to the partnership and work of our commercial team. We are now concentrating our commercial efforts.
Speaker 3: We are now concentrating our commercial efforts towards having those global customers serve from multiple regions and optimize both for them and for us what we do as a company.
Having these global customers from multiple region and optimize boost for them and for US what we do is export so the supply chain for example, Russia to Europe , While Latin America to Europe is just examples.
Speaker 3: So the supply chain, for example, Russia to Europe , or Latin America to Europe is just example, is quite optimized.
It's quite to optimize and.
Speaker 3: helping our global customers to be better served.
Out being our global customers to be better.
Speaker 3: lose our opportunities, you know, from one region mix to another regional mix, we sometimes have $50 to $80 difference, so it's very significant.
New solid opportunities.
One region mix to another region on mix, we sometimes that 50 to $80 difference. So it is very significative. So this 10% optimization, we can see bottom line. It's clearly very important so maybe Dan answer your second question.
Speaker 3: So this 10% optimization, we can see bottom line, it's clearly very important. So maybe that answers your second question. I will turn it to John for the guidance on your question on pricing and what is included or not on 2020.
Will.
Turning to John for the guidance on your question on pricing and what is included or not on 2022, yes. Thanks. So much.
Speaker 4: Yeah, thanks so much George to answer your question. So if you recall in the third quarter review, we said that there were price increases that we announced to our customers in the fourth quarter that were going to be realized in the middle of the fourth quarter and then carry over to first quarter. So those are certainly into our outlook. But we've also announced
To answer your questions. If you recall in the third.
Third quarter.
We view, we said that there were price increases that we had announced to our customers.
In the fourth quarter.
We're going to be realized in the middle of the fourth quarter and carry over into the first quarter. So those are certainly into our outlook, but we've also announced price increases to our customers in all our regions Europe .
Speaker 4: price increases to our customers in all our regions, Europe , Latin America, and...
Latin America and <unk>.
Speaker 4: in North America in the first quarter, and some of that realization will occur in the first quarter, but most of it will start to really start to realize in the second quarter. But there is a little bit of that that is in the outlook for this quarter.
In North America in the first quarter.
And some of that realization will occur in the first quarter, but most of it will start to really start to realize in the second quarter, but there is a little bit of that that is in the outlook for this this quarter.
Thank you very much.
Speaker 1: If you would like to ask a question, please press star 1 on your telephone keypad.
Okay, we'd like to ask a question. Please press star one on your telephone keypad.
Okay.
Speaker 2: Hey, George, this is Hans. If you've got any further follow-up questions, feel free to go ahead and ask.
Hey, George this is Hans if you've got any further follow up questions feel free to go ahead and ask.
George Your line is open.
Speaker 5: Oh, hi guys. Okay. Thanks for that.
Oh, hi, guys, okay. Thanks for that.
<unk>.
I guess.
Speaker 5: My other two questions, and again, don't want to be a hog here, what effect, and maybe this is related to your earlier comment, Jean-Michel, on supply chain in Europe , are the finish strikes having on you, both your customers and your opportunities in the market? And you know, in the quarter, Europe trailed sequentially on input cost relative pricing that was put into place. Do you expect that will be the case in the first quarter?
My other two questions and again don't want to be a hog here.
What effect and maybe this is related to your earlier comments around Michelle on our supply chain in Europe are the Finnish strikes having on you.
Both your customers and your opportunities in the market.
And.
In the quarter Europe trailed sequentially on input costs relative pricing that was put into place.
You expect that will be the case in the first quarter.
Speaker 3: So I'll start with the finish. The finish track has a major impact, especially on pulp. It's not a big impact on uncoated free sheet. It's very light. So it's not really impacting our demand as of now. We can say we've got incremental demand because of it. It's very small. It's mostly a big pulp impact.
So I'll start with the finish.
Finished track I has a major impact, especially on bulk it's not a big impact on uncoated freesheet, it's very light. So it's not really impacting our demand as of now we can say, we've got incremental demand because of it it's very small it's mostly a big pulp impact.
Speaker 3: In terms of your second question, which was mostly a...
In term of your second question, which was most of the year.
I'm sorry.
Speaker 5: So inflation in Europe was ahead of pricing sequentially, will that be the case in 1Q?
And so inflation in Europe , Oh, yes pricing sequentially.
<unk> will definitely get some <unk>.
Speaker 3: So we, in one cue, we ask, you know, the biggest issue we have is energy cost in Europe , especially gas cost price in France.
So we in <unk>.
The biggest issue we have is energy costs in Europe , especially gas cost strikes in France.
Speaker 3: And there was a peak in December . So the peak, usually you see it in our cost one month after. So that impact January . But then we have more, I would say, back to average high numbers in February and March.
And there was a peak in December .
So the peak usually you see it in our cost one months. After so that impact January but then we have a more I would say back to average high numbers in.
February and March and we have some significant price increases which have been announced to our customers. So we expect Q1 <unk>.
Speaker 3: And we have some significant price increase which have been announced to our customers. So we expect Q1 price and mix to be better.
Price and mix too.
To be better than.
Speaker 3: Our input costs, even if the input costs are high, we have.
Our input cost even if the input costs are high we have.
Speaker 3: good momentum on our price increase, which we've already announced.
Good.
Momentum on our price increase from which we've already announced so the net would be positive for us.
Speaker 5: Shemisha, one last one on the finish strike, so I'll let you go, so.
One last one on feet on the Finnish strikes I'll, let you go so.
Speaker 5: Certainly that's constraining pulp supply, constraining raising, I guess, relative to what would happen to all else equal pulp pricing. I recognize you don't sell a lot of market pulp.
Certainly that's been training pulp supply is constraining, our raising I guess.
Relative to what would happen and all else equal pulp pricing I recognize you don't sell a lot of market pulp, but potentially some of your competitors are not as integrated as you. So can you talk if at all about how that could affect you and your competitive positioning.
Speaker 5: but potentially some of your competitors are not as integrated as you.
Speaker 5: So can you talk, if at all, about how that could affect you and your competitive positioning on free sheet in Europe ? Thanks, and I'll turn it over. Yeah, I think specific to Europe , there are two factors which are very important in our competitiveness. There's a very high cost.
On freesheet in Europe , Thanks, and I'll turn it over I think specific to Europe down two factors, which are very important in our competitiveness.
It's a very high cost of gas, we use gas between 80% self sufficient in terms of energy.
Speaker 3: We use gas, but we're 80% self-sufficient in terms of energy in our milk. So we don't use only gas. We are a lot of biomass. That gives us a big advantage versus a lot of European competitors. And pulp price, as you mentioned, we sell some pulp price. But I think the fact that we integrate it is a major advantage.
So we don't choose only gas we are a lot of biomass that gives us a big advantage versus a lot of European competitors.
And bulk price as you mentioned, we sell some both price, but I think the fact that we integrated is a major advantage. So if you look our cask of which is usually good than where we are first second quartile. We are definitely even more advantage right now with high gas price and high bulk.
Speaker 3: So if you look at our cost curve, which is usually good, and where we are first, second quartile, we are definitely even more advantaged right now with high gas price and high pulp price. So it's helping us.
So it is helping us.
Leverage our low cost mills.
Speaker 4: And George, just, John , just the other thing to consider, too, is two-thirds of our capacities in Russia where the gas price isn't really impacted, impacting us there.
And George This is John just the other thing to consider too two thirds of our capacities and Russell would've guessed place isn't really impacted.
That's right.
Good point, Thank you John I will turn it over.
Okay.
Andrew do we have any more questions in the queue.
Speaker 1: Your next question comes from the line of Jonathan Luck with Eagle Capital. Please state your question. Hey guys, it's Jonathan.
Next question comes from the line of Jonathan Bock with Eagle Capital. Please state your question.
Hey, guys, it's Jonathan what's great.
Great quarter.
Speaker 2: I would love to just hear a little bit more, perhaps, about what you're seeing on the competitive environment. I know, obviously, in Canada, there was one...
I would love to just hear a little bit more perhaps about.
What youre seeing on the competitive environment I know, obviously in Canada. There was one time that was shut down but if you could just expand regionally what you're seeing in Europe , what youre seeing in Latin America and also in North America competitive that'd be great. Thank you.
So.
Speaker 3: me take it region per region. In Europe , as you know, there's been some both integrated and non-integrated capacity which have shut down in 21, which would see the full effect in 22. So we're seeing less supply in uncoated free sheet on a significant basis.
Let me.
Let me take each region for region in Europe as you know there's been some booth integrated and non integrated capacity, which have shut down in 'twenty, one which would see the full effect in 'twenty two.
So we're seeing less supply in coated freesheet.
On a significant basis.
Speaker 3: I would say in Latin America it's mostly stable, there's been one announcement of a small machine going down, so it might impact a little bit the supply, but not huge.
I would say in Latin America, it's mostly stable there's been one announcement of a small machine going down so it might impact a little bit the supply but not huge.
Speaker 3: And North America, net, with one, as you know, restart from one of our competitors, it's still down in terms of capacity. So when we look at the supply-demand right now and...
North America net net.
One as you knew a restock from one of our competitors, it's still down in terms of capacity. So when we look at the supply demand when I know and.
Speaker 3: It's favorable, and when we look at the demand specifically that Sylvain will get from our customers, it's very strong right now.
It's favorable and when we look at the demand specifically that CGM will get from our customers is very strong right now.
Speaker 3: But you have the import side, which, as you know, is very low right now because the freight cost.
But you have the impulse side, which as you know is very low right now because the frac cost.
Speaker 3: is making it almost prohibitive from Asian, for example, to go either to Latin America or to North America. So we're in a very favorable position all around the world right now.
He's making it almost prohibitive from Asia and for example to go either to Latin America to North America. So.
We are in a very favorable position all of them all around the world right now.
That's terrific.
Speaker 2: So given the favorable environment, are you able to perhaps sign a longer-term contract or sign more strategic deals? How do you see that?
Given the favorable environment are you able to perhaps sign a longer term contract or signed more strategic deals.
How do you see that playing out for survival.
Speaker 3: So we've always been on long-term contracts with our customers. Sometimes they're not formal contracts, but they work like formal contracts. You know, most of our customers have 10 years plus experience with us.
So we've always been on long term contracts with our customers sometimes in that formal contracts, but they work like formal contracts.
Most of our customers have 10 years plus experience with us.
Speaker 3: We have the opportunity to reinforce our position to the strategic customers which are aligned with our long-term strategic views. So it is very positive for SILVAMO, I feel very good about it, we are up to a great start. And I think another thing is our customers recognize we're here for the long term, we're going to be their strategic partner.
We have the opportunity to reinforce our position to the strategy customers, which are aligned with our long term strategy view. So it is very positive for seed venmo.
I feel very good about it we are up to a great start and I think another thing is <unk>.
Customers recognized we here for the long term, we're going to be desk tragic button there.
Speaker 3: and that we are committed to uncoated fishing. I think that's creating a very positive dynamic also.
And that we are committed to uncoated freesheet, I think thats, creating a very positive dynamic also.
Terrific. Thank you so much.
Speaker 1: Your next question comes from the line of Paul Quinn with RBC Capital Markets.
Your next question comes from the line of Paul Quinn with RBC capital markets.
Yes, thanks, very much morning, guys.
Speaker 6: Morning, Paul. Morning, Paul. Hey, strong quarter, even including the one-offs, but sorry to get on the line late, but a busy morning here for me, but just if you could give me a summary of where we're sitting on price increases in 22 by region, that would be most helpful.
Good morning, Paul Good morning, Paul.
Drawing a strong quarter, even our even including the one offs but.
Sorry, sorry to get on the line late but a busy morning here for me, but.
Just say if you can give me a summary of where we're sitting on price increases in 2002 by region that would be that would be most helpful.
So Paul I'll take that.
Speaker 4: Where we are right now, as I mentioned earlier on the call, is that we have price increases that we announced to our customers in the fourth quarter, and that was in North America, Russia, and also prices that we had announced even back in the third and second quarter in Russia that we were realizing and starting to fully realize.
Where we are right now as I mentioned earlier on the call is that we have price increases that we announced to our customers in the fourth quarter and that was in North America.
Russell.
And also places that we had announced even back in the third and second quarter in Russia that we were realizing in starting to fully realize.
Speaker 4: In the fourth quarter, but we're really going to see that in the first quarter, and that's really what's really driving our outlook in terms of the sequential quarter improvement.
In the fourth quarter, but we're really going to see that in the first quarter.
And that's really what's really driving our outlook in terms of the sequential quarter improvement, but we've also announced additional price increases to our customers and we're in the process of implementing those.
Speaker 4: But we've also announced additional price increases to our customers. And we're in the process of implementing them.
Speaker 4: And that's in all regions, so Europe , Russia, Brazil, or Latin America rather, and also North America.
And that's in all regions, So Europe , Russia.
Brazil, or Latin America weather and also North America.
Speaker 5: Okay, and those recent price increase announcements, we're all in 22 this year.
Okay, and those recent price increase announcements, where all in 22 this year.
Yes.
Speaker 5: And a typical lag between price increase and implementation, is that like a six-month lag? Well, it varies. We could see six months in Europe , for example, on some of the contracts and stuff like that. We actually will see, you know, it'll be anywhere from 30 to 90 days, generally, depending upon the price.
And a typical lag between price increase and implementation is that is that like a six month lag.
It varies.
So we could see six months in Europe for example, and some of the contracts and stuff like that.
We actually will see it will be anywhere from 30 to 90 days generally depending upon the region.
Yeah.
Speaker 5: All right. And just lastly, is there any material change in the supply-demand relationship in any of your key markets?
Alright.
And just lastly is there any material change in the supply demand.
A relationship that they need to your key markets.
Speaker 3: I would say no material. It's some of the closure of 2021, we will feel the biggest impact in 2022. So that's maybe the changes that you will.
I would say no material needs.
Some of the closure of 2021, we would feel the biggest impact in 2022. So that's maybe the change that you would see Ah theres been some discussions from some of our competitors.
Speaker 3: There's been some discussions from some of our competitors on potential closing or incremental or potential change.
Potential closing incremental potential change.
Speaker 3: in from anchorage fishing to other grades, but nothing very recent at all.
In from uncoated freesheet to other grades.
But nothing very recent announcements well jump.
Speaker 4: Well, there was the restart of the one machine in North America, which was...
Was the restarted the one machine yeah in North America, which was it bodes well, but also there was a shutdown announced shutdown in North America almost balance each other out.
Speaker 7: it was well aware of, but also there was a shutdown, announced shutdown, in North America that almost balances each other.
Speaker 5: Right. Okay. And maybe a bonus question, just because I got you. I guess a debt pay down is kind of the key for you this year. Where do you expect to get on that by the end of the year?
Right, Okay, and maybe a bonus question just because I got you.
I guess debt pay down is kind of the key.
The key for you this year.
Where do you expect to get on that.
By the end of the year.
Speaker 4: Well, our outlook is to generate significant cash flow, so we will certainly be continuing to pay down debt. But also, as we mentioned, we think we're going to be well-positioned to begin talking to the board about returning cash to shareholders.
Well as we can.
Our outlook as it generates significant cash flows. So we will certainly be continuing to pay down debt, but alcohol. As we mentioned, we think we'll be well positioned to begin talking to the board about returning cash to chew on here this year.
Okay. That's helpful. Thanks, Scott.
Thank you.
Speaker 1: Your next question comes from the line of Douglas Duffy with D.C. Capital. Please state your question.
Your next question comes from the line of Douglas <unk> with D. C capital. Please state your question.
Speaker 2: Well, good morning. Thank you. Terrific results and a nice presentation. Could you provide some context in having a major facility in Russia these days from a
Hello. Good morning, Thank you terrific results and a nice presentation could.
Could you provide some context and are having a major facility in Russia. These days.
You know from a commercial standpoint on.
Speaker 2: You know, certainly a lot of talks about stringent sanctions if things change at the Ukrainian border and how you think about that, you know, with major...
There's been certainly a lot of talks about stringent sanctions if things change, but you were crazy and border and how you think about that you know what the major customer base in Europe .
Speaker 3: Hi Douglas. Thanks for joining today. Yeah of course. Let me. Our Russian asset is very important. And to be clear we've been there a very long time. You know we've been there more than 20 years and we've gone through different crises with different sanctions and.
Hi, Douglas Thanks for joining today, yes votes.
Let me our Russian assets is very important then and to be clear.
We've been there very long time, you know we've been more than 20 years, and we've gone through different crisis with different sanctions and so we have a very strong contingency plan in place.
Speaker 3: So we have a very strong contingency plan in place where we're looking at all the cases and including the worst-case scenario. I want to first start by saying we hope diplomacy will win. We care about our people in Russia a lot, as well we care about ourselves and our Ukrainian friends.
We're looking at all the cases and including the worst case scenario I wanted to first start by saying, we hope diplomacy will win.
But our people in Russia, a lot as well we care about our sales office in our Ukrainian friends.
We are prepared.
Speaker 3: with a very strong contingency plan, which we update almost on a daily basis right now. It's difficult to know what could happen. As you know, we're on the side of low risk of a major invasion.
With a very strong contingency plan, which we.
<unk> almost on daily basis, right now it's difficult to.
To know what could happen as you know we are on the side of low risk of a major invasion then.
Speaker 3: We don't know, we're not experts on that. But we've been able to manage in the past, do some...
We don't know we're not expert on that.
But.
We've been able to manage in the past dues.
Speaker 3: challenging sometimes countries' relations, and we feel we will be manageable for us. We've got good contingency plans in place.
Challenging sometimes.
Countries relations.
And we feel we would be manageable.
For us.
We've got a good contingency plans in place.
Thank you very much.
Thank you.
Speaker 1: You do have a follow-up question from the line of George Stappos with Bank of America.
You do have a follow up question from the line of George Staphos with Bank of America.
Speaker 5: Hey guys, thanks for taking the follow-on. I know it's late. I'll try to be quick. So first of all, you know, if costs were up $193 million in 2021, John , if you did kind of the pencil on paper, what is the current annualized run rate on inflation for 2022, you know, coming out of 4Q or whatever run rate you want to use in terms of input cost inflation for each of your key products or key inputs, I should say. Secondly, a ticky-tack question, we can take this offline.
Hey, guys. Thanks for taking the follow ons I know, it's late I'll try to be quick so first of all if.
Costs were up $193 million in 'twenty, one John if you did kind of a pencil on paper what is the current annualized run rate on inflation for 'twenty two.
Coming out of <unk> or whatever run rate you want to use in terms of input cost inflation for each of your key products or key inputs I should say secondly.
<unk> tack question, we can take this offline.
Speaker 5: EBITDA declined sequentially about $7 million from 3Q, if I did my math right, but the operating profit was more $14 million. What causes that difference? And then, recognizing you're going to talk to the board about this, still a lot of water flow under the bridge, can you give us a bit of an understanding in terms of what type of value return, either size it or, you know, application types, you're thinking about at this juncture? Thanks, and good luck in the quarter.
EBITDA declined sequentially about $7 million from <unk>.
Math right, but the operating profit was more 14 million what causes that difference and then recognizing youre going to talk to the board about this still a lot of water flow under the bridge can you.
Give us a bit of a.
And understanding in terms of what type of value return either size it or.
Application types Youre thinking about at this juncture, thanks, and good luck in the quarter.
Speaker 4: And George, thank you. And to your first question about what we're seeing in terms of input cost, certainly.
And towards.
And the <unk> to your first questions about what we're seeing in terms of input costs certainly.
Speaker 4: We're still starting to continue to see some increases in costs and Particularly in chemicals. We also have some wood costs and wood, but it is flowing. We're seeing a rate of increase
Yeah, we're still starting to continue to see some increases in costs and.
Particularly in chemicals, we also.
Wood costs and wood, but it is slowing we're seeing a way to have increases.
Speaker 4: Starting to slow in this quarter, so as you mentioned, we had $193 million increase cost in last year, and year-over-year average, we're going to still be higher than last year, but the rate that you're going to see in terms of the increase...
You know starting to slow in this quarter. So as you mentioned, we had $193 million.
Increased costs and last year and you know you have your average we're going to still be.
Higher than the last year, but the way that you're going to see in terms of the increase.
Speaker 4: is going to be, I would say, significantly less than the 193 that we saw last year.
It's going to be.
I would say significantly less than the 193 that we saw last year.
Speaker 4: On your question on earnings per share, a drop that was really, you know, you've got to remember that third quarter was based on the carve-out financials of IP, we're still with IP. So the big difference in that really is taxes and interest.
On your question on the earnings per share a job that was William.
Remember that.
Third quarter was based on the carve out financials of IP, we're still with I D.
The big difference in that it really is taxes and interests.
That we incurred.
Speaker 4: And, excuse me, I don't remember the third question, what was the third question? Yeah, actually, I was looking at EBITDA versus EBIT, but if you don't have the answer on that one, we can take it offline. And the other question was just, at this juncture, recognizing it's really, really early, what are you thinking about in terms of either dimensionalizing the value return or how you would deliver it to shareholders? And that was it. Thanks, guys. Good luck in the quarter.
And I don't remember the third question what was the third question.
Actually I was looking at EBITDA versus EBIT, but if you don't have the answer on that one we can take it offline and the other question was just at this juncture recognizing it's really really early what are you thinking about in terms of either dimensionalize and value return or how you would how you would deliver it to.
To shareholders.
And that was it thanks guys. Good luck in the quarter.
Speaker 3: Yeah, we are looking at different options of returning cash to our shareholders.
Yeah, we are.
Looking at different options of returning cash to our shareowners.
Speaker 3: Of course, we're going to continue, as we mentioned, to reduce debt, and we're going to talk to our board, and we're going to recommend with them the different options we have, being dividend or share buybacks, those would probably be the two major tools we would look like in terms of returning cash to shareholders.
Of course, we're going to continue as we mentioned to reduce debt and we're going to talk to our board and we are going to recommend us with them.
Options, we have being a dividend to our Oh.
Our share buyback.
Would probably be the two major tools, we would look like in terms of returning cash to shareholders.
Yes.
Speaker 4: And George, we'll follow up with you on the eBid question you had.
And George.
We'll follow up with you on that.
The EBIT EBITDA question.
Perfect. Thank you.
Speaker 1: At this time there are no further questions. I would now like to turn the conference back to Hans Bjorkman for any additional or closing remarks.
At this time there are no further questions I would now like to turn the conference back to Hans Bjorkman for any additional or closing remarks.
Speaker 8: We just want to thank everyone for joining us today and we truly appreciate your interest in Silvamo and we look forward to our continued conversations. Have a great day and a great rest of your weekend. Bye-bye.
We just want to thank everyone for joining us today and we truly appreciate your interest in survival and we look forward to our continued conversations have a great day and a great rest of your weekend Bye bye.
Speaker 1: Thank you for participating in today's SILVANA's fourth quarter 2021 Earnings Investor Conference call. You may now disconnect your lines at this time.
Thank you for participating in today's <unk> fourth quarter 2021 earnings Investor Conference call. You May now disconnect your lines at this time.
Speaker 9: © BF-WATCH TV 2021
Yeah.
Okay.
Okay.
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