Q1 2026 Sylvamo Corp Earnings Call

May 8, 2026

Speaker #2: Good morning. Thank you for standing by. Welcome to Sylvamo's first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise.

Operator 2: Good morning. Thank you for standing by. Welcome to Sylvamo's Q1 2026 earnings call. All lines have been placed on mute to prevent any background noise. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. As a reminder, this conference is being recorded. I will now turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

Operator: Good morning. Thank you for standing by. Welcome to Sylvamo's Q1 2026 Earnings call. All lines have been placed on mute to prevent any background noise. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. As a reminder, this conference is being recorded. I will now turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

Speaker #2: After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #2: To withdraw your question, press star 1 again. As a reminder, this conference is being recorded. I will now turn the call over to Hans Bjorkman, Vice President Investor Relations.

Speaker #2: Sir, the floor is yours.

Speaker #3: Thanks, Samantha. Good morning, and thank you for joining our first quarter 2026 earnings call. Our speakers this morning are John Sims, Chief Executive Officer; and Don Devlin, Senior Vice President and Chief Financial Officer.

Hans Bjorkman: Thanks, Samantha. Good morning, thank you for joining our Q1 2026 earnings call. Our speakers this morning are John Sims, Chief Executive Officer, and Don Devlin, Senior Vice President and Chief Financial Officer. Slides 2 and 3 contain important information, including certain legal disclaimers. For example, during this call we will make forward-looking statements that are subject to risks and uncertainties. We will also present certain non-US GAAP financial information. Reconciliations of those figures to US GAAP financial measures are available in the appendix. Our website also contains copies of the earnings release as well as today's presentation. With that, I'd like to turn the call over to John.

Hans Bjorkman: Thanks, Samantha. Good morning, thank you for joining our Q1 2026 earnings call. Our speakers this morning are John Sims, Chief Executive Officer, and Don Devlin, Senior Vice President and Chief Financial Officer. Slides two and three contain important information, including certain legal disclaimers. For example, during this call we will make forward-looking statements that are subject to risks and uncertainties. We will also present certain non-US GAAP financial information. Reconciliations of those figures to US GAAP financial measures are available in the appendix. Our website also contains copies of the earnings release as well as today's presentation. With that, I'd like to turn the call over to John.

Speaker #3: Slides 2 and 3 contain important information, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties.

Speaker #3: We will also present certain non-US GAAP financial information. Reconciliations of those figures to US GAAP financial measures are available in the appendix. Our website also contains copies of the earnings release as well as today's presentation.

Speaker #3: With that, I'd like to turn the call over to John.

Speaker #4: Thank you, Hans, and good morning, everyone. I'm glad that you're joining our call. I'm on slide 4. Today, I'd like to begin with a few important macro developments that have occurred since our fourth quarter call in February, which have led us to change our operating strategy to achieve our plans this year.

John V. Sims: Thank you, Hans. Good morning, everyone. I'm glad that you're joining our call. I'm on slide 4. Today, I'd like to begin with a few important macro developments that have occurred since our Q4 call in February, which have led us to change our operating strategy to achieve our plans this year. First, the US Supreme Court invalidated the IEEPA tariff, and the US government responded to this by placing 10% tariff on all trading partners. Europe had previously been at 15%, while Brazil was at 50%. This change benefits Sylvamo, and late in Q1 we began to bring product into the US from our Brazilian operations while ramping down imports from our European operations. Second, the Middle East conflict has resulted in higher energy, logistics, and input costs.

John Sims: Thank you, Hans. Good morning, everyone. I'm glad that you're joining our call. I'm on slide four. Today, I'd like to begin with a few important macro developments that have occurred since our Q4 call in February, which have led us to change our operating strategy to achieve our plans this year. First, the US Supreme Court invalidated the IEEPA tariff, and the US government responded to this by placing 10% tariff on all trading partners. Europe had previously been at 15%, while Brazil was at 50%. This change benefits Sylvamo, and late in Q1 we began to bring product into the US from our Brazilian operations while ramping down imports from our European operations. Second, the Middle East conflict has resulted in higher energy, logistics, and input costs.

Speaker #4: First, the US Supreme Court invalidated AIPA tariffs and the US government responded to this by placing 10% tariffs on all trading partners. Europe had previously been at 15%, while Brazil was at 50%.

Speaker #4: This change benefits Sylvamo, and late in the first quarter, we began to bring product into the US from our Brazilian operations, while ramping down imports from our European operations.

Speaker #4: Second, the Middle East conflict has resulted in higher energy, logistics, and input costs. Across our regions, we're looking to reduce costs and take commercial actions to help offset these impacts.

John V. Sims: Across our regions, we are looking to reduce costs and taking commercial actions to help offset these impacts. Let's move to slide 5. Our Q1 highlights include implementing the previously communicated uncoated freesheet price increases to our customers across all our regions. We had a difficult Q1 operationally. The liability issues, particularly in Europe and Brazil, negatively impacted us by almost -$9 million relative to the Q4. We expect some additional costs in the Q2. The root cause of these issues have been identified and fixed or will be corrected. The annual outages will be taking this quarter. The one exception is at our Nymölla mill, where an issue with a debarking drum will not be corrected until the Q4.

John Sims: Across our regions, we are looking to reduce costs and taking commercial actions to help offset these impacts. Let's move to slide five. Our Q1 highlights include implementing the previously communicated uncoated freesheet price increases to our customers across all our regions. We had a difficult Q1 operationally. The liability issues, particularly in Europe and Brazil, negatively impacted us by almost -$9 million relative to the Q4. We expect some additional costs in the Q2. The root cause of these issues have been identified and fixed or will be corrected. The annual outages will be taking this quarter. The one exception is at our Nymölla mill, where an issue with a debarking drum will not be corrected until the Q4.

Speaker #4: Let's move to slide 5. Our first quarter highlights include implementing the previously communicated uncoded free sheet price increases to our customers across all our regions.

Speaker #4: We had a difficult first quarter operationally. The liability issues, particularly in Europe and Brazil, negatively impacted us by almost 9 million dollars relative to the fourth quarter.

Speaker #4: And we expect some additional costs in the second quarter. The root cause of these issues has been identified and fixed, or will be corrected, and the annual outages will be taken this quarter.

Speaker #4: The one exception is that our numeral mill, where an issue with a parking drum will not be corrected until the fourth quarter. We look at an important we took an important step in achieving our vision by launching our lean transformation journey in our Latin American business, along with our Moji Wasu mill.

John V. Sims: We took an important step in achieving our vision by launching our lean transformation journey in our Latin American business, along with our Mogi Guaçu mill. I was in Brazil last week and was very encouraged by the energy and commitment the teams have in learning and executing the lean transformation. Lastly, yesterday we completed the refinancing of our 2027 debt to extend our maturity profile, which sustains flexibility and maintains our strong financial position. Let's move to the next slide. Slide 6 shows our Q1 key financial metrics. As a reminder from our last call, 2026 is a transition year as we work through some short-term capacity constraints due to the termination of the Riverdale supply agreement at the end of April and the extended outage at Eastover later this year as we execute our strategic investments there.

John Sims: We took an important step in achieving our vision by launching our lean transformation journey in our Latin American business, along with our Mogi Guaçu mill. I was in Brazil last week and was very encouraged by the energy and commitment the teams have in learning and executing the lean transformation. Lastly, yesterday we completed the refinancing of our 2027 debt to extend our maturity profile, which sustains flexibility and maintains our strong financial position. Let's move to the next slide. Slide 6 shows our Q1 key financial metrics. As a reminder from our last call, 2026 is a transition year as we work through some short-term capacity constraints due to the termination of the Riverdale supply agreement at the end of April and the extended outage at Eastover later this year as we execute our strategic investments there.

Speaker #4: I was in Brazil last week and was very encouraged by the energy and commitment the teams have in learning and executing the lean transformation.

Speaker #4: Lastly, yesterday, we completed the refinancing of our 2027 debt to extend our maturity profile, which sustains flexibility and maintains our strong financial position. Let's move to the next slide.

Speaker #4: Slide 6 shows our first quarter key financial metrics. As a reminder from our last call, 2026 is a transition year as we've worked through some short-term capacity constraints due to the termination of the Riverdale Supply Agreement at the end of April and the extended outage at Eastover later this year as we execute our strategic investments there.

Speaker #4: Our first quarter results came in as expected, except for the operational issues I mentioned. We built inventory, which resulted in lower sales volume and we also incurred the incremental costs due to sourcing and converting.

John V. Sims: Our first quarter results came in as expected, except for the operational issues I mentioned. We built inventory, which resulted in lower sales volume, and we also incurred the incremental cost due to sourcing and converting. We earned an adjusted EBITDA of $29 million with a margin of 4%. Adjusted operating earnings were -$0.53 per share. As anticipated, free cash flow was impacted by lower earnings, the unfavorable impacts of our inventory build, and the timing of payments. Keep in mind that our free cash flow is heavily weighted to the H2 of the year. In the last few years, we generated the vast majority of our free cash flow in the H2, and we expect to do so again this year. Now I'll turn it over to John to review our performance in more detail.

John Sims: Our first quarter results came in as expected, except for the operational issues I mentioned. We built inventory, which resulted in lower sales volume, and we also incurred the incremental cost due to sourcing and converting. We earned an adjusted EBITDA of $29 million with a margin of 4%. Adjusted operating earnings were -$0.53 per share. As anticipated, free cash flow was impacted by lower earnings, the unfavorable impacts of our inventory build, and the timing of payments. Keep in mind that our free cash flow is heavily weighted to the H2 of the year. In the last few years, we generated the vast majority of our free cash flow in the H2, and we expect to do so again this year. Now I'll turn it over to John to review our performance in more detail.

Speaker #4: We earned an adjusted EBITDA of 29 million with a margin of 4%. Adjusted operating earnings were negative 53 cents per share. As anticipated, free cash flow was impacted by lower earnings, the unfavorable impacts of our inventory build, and the timing of payments.

Speaker #4: Keep in mind that our free cash flow is heavily weighted to the second half of the year. In the last few years, we generated a vast majority of our free cash flow in the second half and we expect to do so again this year.

Speaker #4: Now I'll turn it over to Don to review our performance in more detail.

Speaker #5: Thank you, John, and good morning, everyone. Slide 7 contains our first quarter earnings, bridge versus the fourth quarter. As John mentioned, the quarter played out largely as we expected, with the exception of operations and other costs which I'll cover shortly.

Don Devlin: Thank you, John, and good morning, everyone. Slide 7 contains our Q1 earnings bridge versus Q4. As John mentioned, the quarter played out largely as we expected, with the exception of operations and other costs, which I'll cover shortly. In Q1, we earned $29 million of adjusted EBITDA compared to $125 million in the prior quarter. Price and mix were unfavorable by $13 million. Overall mix was $17 million unfavorable, which more than offset the price improvements we saw in the quarter. About half of the mix was due to seasonably weaker mix in Latin America, which is normal for Q1, and the other half was driven by unfavorable North American customer and sourcing mix. On the favorable side, paper prices improved in North America and Latin America as Q1 increases were implemented.

Speaker #5: In the first quarter, we earned 29 million of adjusted EBITDA compared to 125 million in the prior quarter. Price and mix were unfavorable by 13 million.

Speaker #5: Overall, mix was 17 million unfavorable, which more than offset the price improvements we saw in the quarter. About half of the mix was due to seasonably weaker mix in Latin America which is normal for Q1, and the other half was driven by unfavorable North American customer and sourcing mix.

Speaker #5: On the favorable side, paper prices improved in North America and Latin America as Q1 increases were implemented. Paper prices in Europe bottomed out in the quarter, and previously communicated price increases are expected to be realized in Q2.

Don Devlin: Paper prices in Europe bottomed out in Q1. Previously communicated price increases are expected to realize in Q2. Volume decreased by 36 million due to normal Latin America seasonality and the anticipated inventory build in North America as we prepare for the end of the Riverdale Mill supply agreement and the extended Eastover Mill outage in Q4. Operations and other costs were unfavorable by $29 million, with about half due to non-repeat of favorable Q4 items from year-end LIFO accounting in North America and green energy in Europe. The other half was related to $9 million in manufacturing costs across our regions that John described earlier, as well as $3 million in FX. Planned maintenance outage costs were flat.

Speaker #5: Volume decreased by $36 million, due to normal Latin America seasonality and the anticipated inventory build in North America as we prepared for the end of the Riverdale Mill supply agreement and the extended Eastover Mill outage in the fourth quarter.

Speaker #5: Operations and other costs were unfavorable by 29 million. With about half due to non-repeat of favorable fourth quarter items, from year-end LIFO accounting in North America and green energy in Europe.

Speaker #5: The other half was related to 9 million in manufacturing costs across our regions that John described earlier, as well as 3 million in FX.

Speaker #5: Planned maintenance outage costs were flat. Input and transportation costs were unfavorable by 18 million primarily due to energy in North America, highly impacted by one-time charge of 10 million dollars from International Papers Riverdale mill due to the exceptionally high natural gas cost from the winter storm.

Don Devlin: Input and transportation costs were unfavorable by $18 million, primarily due to energy in North America, highly impacted by a one-time charge of $10 million from International Paper's Riverdale Mill due to the exceptionally high natural gas cost from the winter storm. Let's move to slide 8. European industry supply and demand remains challenging. Pulp prices improved throughout Q1, and we are realizing the previously communicated paper price increases in April. We have communicated a 2nd paper price increase effective in May and expect the realization to occur through Q2 and Q3. In Latin America, we moved from the seasonally strongest demand in Q4 to the seasonally weakest Q1, now expect demand to increase each quarter throughout the year. This should positively impact our volume and geographic mix as the year progresses.

Speaker #5: Let's move to slide 8. European industry supply and demand remains challenging. But pulp prices improved throughout the first quarter and we are realizing the previously communicated paper price increases in April.

Speaker #5: We have communicated a second paper price increase effective in May and expect the realization to occur through the second and third quarters. In Latin America, we moved from the seasonally strongest demand in the fourth quarter to the seasonally weakest first quarter.

Speaker #5: But now expect demand to increase each quarter throughout the year. This should positively impact our volume and geographic mix as the year progresses. We are realizing the previously communicated paper price increases to our customers in Brazil and to our export customers across other Latin American countries.

Don Devlin: We are realizing the previously communicated paper price increases to our customers in Brazil and to our export customers across other Latin American countries, as well as the Middle East and Africa region, and should continue to see additional realization throughout Q2. In North America, industry supply and demand dynamics have improved as 7% of annual uncoated freesheet industry supply was removed with the Riverdale Mill conversion. After peaking in June of last year, imports into North America have declined significantly throughout H2 of last year and into Q1. We also began realizing the previously communicated paper price increases to our customers and expect to see additional realization through Q2. We expect the Middle East conflict to continue pressuring costs across our regions as we go through the year.

Speaker #5: As well as the Middle East and Africa region. And should continue to see additional realization throughout the second quarter. In North America, industry supply and demand dynamics have improved as 7% of annual uncoated free sheet industry supply was removed with the Riverdale mill conversion.

Speaker #5: After peaking in June of last year, imports into North America have declined significantly throughout the second half of last year and into the first quarter.

Speaker #5: We also began realizing the previously communicated paper price increases to our customers and expect to see additional realization through the second quarter. We expect the Middle East conflict to continue pressuring costs across our regions as we go through the year.

Speaker #5: We are already seeing increase in energy chemicals, diesel, and ocean freight in the second quarter. Let's move to slide 9. As John mentioned earlier, the changes in US tariffs had led us to bring in product from our Brazil operations while ramping down imports from our Europe operations.

Don Devlin: We are already seeing increases in energy, chemicals, diesel, and ocean freight in Q2. Let's move to slide 9. As John mentioned earlier, the changes in US tariffs had led us to bring in product from our Brazil operations while ramping down imports from our Europe operations. Last quarter, we provided you with an estimate of the adjusted EBITDA impacts of the North American footprint transition, which we indicated was about -$85 million for the full-year. Assuming that tariffs remain at the current levels, we now estimate total full-year impact to be around -$65 million, which is $20 million improvement from our prior estimate and will be realized mostly in H2. This improvement is the result of the mix improvement by redirecting our Brazil imports from the Middle East and Africa to the US.

Speaker #5: Last quarter, we provided you with an estimate of the adjusted EBITDA impacts of the North American footprint transition, which we indicated was about 85 million negative for the full year.

Speaker #5: Assuming that tariffs remain at the current levels, we now estimate total full-year impact to be around 65 million negative. Which is 20 million dollar improvement from our prior estimate and will be realized mostly in the second half.

Speaker #5: This improvement is the result of the mix improvement by redirecting our Brazil imports from the Middle East and Africa to the US. We will stay close to the situation and be prepared to go back to our prior plans should the tariffs increase in the second half.

Don Devlin: We will stay close to the situation and be prepared to go back to our prior plans should the tariffs increase in the H2. Let's move to slide 10. Our capital allocation philosophy remains unchanged. We will deploy every dollar with the goal of improving. Oh. Let me go back. Excuse me. We're on slide 10. This slide is to remind everyone of our planned maintenance outage schedule for the full year by region and by quarter. We will have an increase of $20 million in the Q2 versus the Q1 as we have more outages in Latin America. 2026 is also different than past few years where we have more than 80% of the total cost in the H1. This year, we have more than 50% of the total cost in the Q4 as we complete the investments in Eastover.

Speaker #5: Let's move to slide 10. Our capital allocation philosophy remains unchanged. We will deploy every dollar with the goal of improving let me go back.

Speaker #5: Excuse me. We're on slide 10. This slide is to remind everyone of our planned maintenance outage schedule for the full year, by region and by quarter.

Speaker #5: We will have an increase of 20 million in the second quarter versus the first quarter as we have more outages in Latin America. 2026 is also different than past few years, where we have more than 80% of the total costs in the first half.

Speaker #5: This year, we have more than 50% of the total costs in the fourth quarter as we complete the investments in Eastover. Now let's move to slide 11.

Don Devlin: Let's move to slide 11. Our capital allocation philosophy remains unchanged. We will deploy every dollar with the goal of improving our competitive position and delivering the best possible shareholder returns over time. We plan to maintain a strong financial position, reinvest in our business, and return cash to shareholders. The refinancing of our long-term debt allows us to navigate this uncertain environment without changing our thoughtful long-term approach to capital allocation. With a strong financial position, we can navigate the geopolitical and economic challenges and focus on improving customer experience, continue reinvesting in low risk, high return projects, as well as execute through the end of the Riverdale supply and the Eastover Mill outage later this year. These investments and improvements will help to grow earnings and cash flow in the future. Let's move to slide 12. Yesterday, we refinanced 2027 debt to extend our maturity profile.

Speaker #5: Our capital allocation philosophy remains unchanged. We will deploy every dollar with the goal of improving our competitive position and delivering the best possible shareholder returns over time.

Speaker #5: We plan to maintain a strong financial position, reinvest in our business, and return cash to shareholders. The refinancing of our long-term debt allows us to navigate this uncertain environment without changing our thoughtful long-term approach to capital allocation.

Speaker #5: With a strong financial position, we can navigate the geopolitical and economic challenges and focus on improving customer experience, continue reinvesting in low-risk, high-return projects, as well as execute through the end of the Riverdale supply and the Eastover mill outage later this year.

Speaker #5: These investments and improvements will help to grow earnings and cash flow in the future. Let's move to slide 12. Yesterday, we refinanced 2027 debt to extend our maturity profile.

Speaker #5: We refinanced our term loan F, which matured in 2027, with a new term loan F3 that matures in 2032. We also extended our accounts receivable securitization facility out to 2029.

Don Devlin: We refinanced our Term Loan F that matured in 2027 with a new Term Loan F3 that matures in 2032. We also extended our accounts receivable securitization facility out to 2029. Here on slide 12, you can see the before and the after picture of our maturity profile. This move provides flexibility and allows us to maintain our focus on taking care of our customers and improving our business while we navigate these external challenges. Further details are in the appendix and will be included in our 10-Q that will be filed later today. I'll now turn the call back to John.

Speaker #5: And here on slide 12, you can see the before and after picture of our maturity profile. This move provides flexibility and allows us to maintain our focus on taking care of our customers and improving our business while we navigate these external challenges.

Speaker #5: Further details are in the appendix and will be included in our 10-Q that will be filed later today. I'll now turn the call back to John.

Speaker #5: Thank you, Don. I'll pick back up on slide 13. Last quarter, I shared our vision that Sylvamo will be legendary. Legendary for the way we relentlessly pursue and achieve world-class excellence in all that we do.

John V. Sims: Thank you, Don. I'll pick back up on slide 13. Last quarter, I shared our vision that Sylvamo will be legendary. Legendary for the way we relentlessly pursue and achieve world-class excellence in all that we do. Consistently performing at world-class levels will create substantial lasting value for our employees, customers, and shareholders, and will enable us to be the employer, supplier, and investment of choice. Let's move to slide 14. As we strive to achieve world-class standards in the areas that define our success, we are establishing an employee-driven continuous improvement culture by transforming the company to a lean-driven mindset. By incorporating a lean mindset and best practices into our everyday efforts across all functions, we expect significant improvement in the following areas. Customer centricity.

John Sims: Thank you, Don. I'll pick back up on slide 13. Last quarter, I shared our vision that Sylvamo will be legendary. Legendary for the way we relentlessly pursue and achieve world-class excellence in all that we do. Consistently performing at world-class levels will create substantial lasting value for our employees, customers, and shareholders, and will enable us to be the employer, supplier, and investment of choice. Let's move to slide 14. As we strive to achieve world-class standards in the areas that define our success, we are establishing an employee-driven continuous improvement culture by transforming the company to a lean-driven mindset. By incorporating a lean mindset and best practices into our everyday efforts across all functions, we expect significant improvement in the following areas. Customer centricity.

Speaker #5: Consistently performing at world-class levels will create substantial lasting value for our employees, customers, and shareholders, and will enable us to be the employers' supplier and investment of choice.

Speaker #5: Let's move to slide 14. As we strive to achieve world-class standards in the areas that define our success, we are establishing an employee-driven, continuous improvement culture by transforming the company to a lean-driven mindset by incorporating a lean mindset and best practices into our everyday efforts across all functions.

Speaker #5: We expect significant improvement in the following areas: customer centricity, lean transformation will help to enable a new standard of customer experience and loyalty, where we strive to be truly outstanding and this is critical to our strategy.

John V. Sims: Lean transformation will help to enable a new standard of customer experience and loyalty, where we strive to be truly outstanding, and this is critical to our strategy. Operational excellence lean transformation will also help to enable best-in-class levels of efficiency, reliability, and performance in our mills and supply chains, ensuring that our operations consistently deliver to the highest standards. Cost leadership, the impact that lean transformation will have on our customer centricity and operational excellence to combine to enable us to attain industry-leading cost effectiveness through an employee-driven continuous improvement culture, strengthening our competitive position and ensuring sustainable results. Now let's go to slide 15. Lean is a long-term company-wide strategic transformation, not a short-term change program. Over the next 3 years, our objective is to embed continuous improvement into how we run the business so performance improvement becomes systematic and self-sustaining.

John Sims: Lean transformation will help to enable a new standard of customer experience and loyalty, where we strive to be truly outstanding, and this is critical to our strategy. Operational excellence lean transformation will also help to enable best-in-class levels of efficiency, reliability, and performance in our mills and supply chains, ensuring that our operations consistently deliver to the highest standards. Cost leadership, the impact that lean transformation will have on our customer centricity and operational excellence to combine to enable us to attain industry-leading cost effectiveness through an employee-driven continuous improvement culture, strengthening our competitive position and ensuring sustainable results. Now let's go to slide 15. Lean is a long-term company-wide strategic transformation, not a short-term change program. Over the next 3 years, our objective is to embed continuous improvement into how we run the business so performance improvement becomes systematic and self-sustaining.

Speaker #5: Operational excellence and lean transformation will also help to enable best-in-class levels of efficiency, reliability, and performance in our mills and supply chains, ensuring that our operations consistently deliver to the highest standards.

Speaker #5: Cost leadership, the impact that lean transformation will have on our customer centricity and operational excellence should combine to enable us to attain industry-leading cost-effectiveness through an employee-driven, continuous improvement culture strengthening our competitive position and ensuring sustainable results.

Speaker #5: Now let's go to slide 15. Lean is a long-term company-wide strategic transformation not a short-term change program. Over the next three years, our objective is to embed continuous improvement into how we run the business so performance improvement becomes systematic and self-sustaining.

Speaker #5: Our lean transformation is focused on maximizing customer value by eliminating waste and improving performance and engaging every employee starting with a structured hands-on rollout supported by expert partners.

John V. Sims: Our lean transformation is focused on maximizing customer value by eliminating waste, improving performance, and engaging every employee, starting with a structured hands-on rollout supported by expert partners. We kicked off our efforts in our Latin American business and have value-stream mapping underway at our Mogi Guaçu mill to identify waste and unlock cost savings across end-to-end processes. We will also be conducting kaizen improvement events, driving employee engagement, and building a culture of continuous improvement from the ground up. Later this month, we'll kick off our lean efforts in our North America business and across our corporate functions at our world headquarters. We'll then roll out lean at our Ticonderoga mill later in Q2. We'll continue expanding across all regions, businesses, and locations, targeting efficiency improvements and margin gains.

John Sims: Our lean transformation is focused on maximizing customer value by eliminating waste, improving performance, and engaging every employee, starting with a structured hands-on rollout supported by expert partners. We kicked off our efforts in our Latin American business and have value-stream mapping underway at our Mogi Guaçu mill to identify waste and unlock cost savings across end-to-end processes. We will also be conducting kaizen improvement events, driving employee engagement, and building a culture of continuous improvement from the ground up. Later this month, we'll kick off our lean efforts in our North America business and across our corporate functions at our world headquarters. We'll then roll out lean at our Ticonderoga mill later in Q2. We'll continue expanding across all regions, businesses, and locations, targeting efficiency improvements and margin gains.

Speaker #5: We kicked off our efforts in our Latin American business and have value stream mapping underway at our merger Watson Mill to identify waste and unlock cost savings across end-to-end processes.

Speaker #5: We will also be conducting Kaizen improvement events driving employee engagement and building a culture of continuous improvement from the ground up. Later this month, we'll kick off our lean efforts in North America business and across our corporate functions at our world headquarters.

Speaker #5: We'll then roll out lean at our Ticonderoga Mill later in the second quarter. We'll continue expanding across all regions' businesses and locations targeting efficiency improvements and margin gains.

Speaker #5: Let's go to slide 16 where I'll provide an update on our investments at our Eastover Mill. Our high-return strategic investments at our Eastover Mill are on track and making solid progress.

John V. Sims: Let's go to slide 16, where I'll provide an update on our investments at our Eastover Mill. Our high return strategic investments at our Eastover Mill are on track and making solid progress. The paper machine optimization project will add 60,000 tons of uncoated freesheet, reduce costs, and improve our mix and efficiency. This project is on schedule with the bulk of the work to be completed in Q4 during a 45-day planned maintenance outage. The brand-new state-of-the-art sheeter is also on schedule and will start to be installed in Q3 and will be ramping up in Q4. The woodyard modernization project is on track. The hardwood line is operating as of 1 May, and we're already seeing significantly improved chip quality and expect to see better yield going forward.

John Sims: Let's go to slide 16, where I'll provide an update on our investments at our Eastover Mill. Our high return strategic investments at our Eastover Mill are on track and making solid progress. The paper machine optimization project will add 60,000 tons of uncoated freesheet, reduce costs, and improve our mix and efficiency. This project is on schedule with the bulk of the work to be completed in Q4 during a 45-day planned maintenance outage. The brand-new state-of-the-art sheeter is also on schedule and will start to be installed in Q3 and will be ramping up in Q4. The woodyard modernization project is on track. The hardwood line is operating as of 1 May, and we're already seeing significantly improved chip quality and expect to see better yield going forward.

Speaker #5: The paper machine optimization project will add 60,000 tons of uncoated free sheet reduce costs and improve our mix and efficiency. This project is on schedule with the bulk of the work to be completed in the fourth quarter during a 45-day planned maintenance outage.

Speaker #5: The brand new state-of-the-art sheater is also on schedule and will start to be installed in the third quarter and will be ramping up in the fourth quarter.

Speaker #5: The woodyard modernization project is on track. The hardwood line is operating as of May 1, and we're already seeing significantly improved chip quality and expect to see better yield going forward.

Speaker #5: We plan to start up the softwood operation in the first quarter of 2027. These are high-return projects that will generate incremental earnings and cash flow for the long term.

John V. Sims: We plan to start up the softwood operation in Q1 2027. These are high return projects that will generate incremental earnings and cash flow for the long term. Now I'll conclude my remarks on slide 17. As I stated in my CEO letter to shareowners earlier this year, 2025 and 2026 will be low points in our free cash flow generation as we weather the cyclical industry downturns, particularly in Europe, and complete these investments at our Eastover Mill. We are focused on long-term value creation by making disciplined, data-driven decisions that position the company for sustainable success and strengthen Sylvamo for decades to come. We will generate strong and sustainable results by diligently executing our flagship growth strategy, adhering to our disciplined capital allocation principles, becoming more customer-centric, institutionalizing lean continuous improvement in principles, and digitally transforming our business operations.

John Sims: We plan to start up the softwood operation in Q1 2027. These are high return projects that will generate incremental earnings and cash flow for the long term. Now I'll conclude my remarks on slide 17. As I stated in my CEO letter to shareowners earlier this year, 2025 and 2026 will be low points in our free cash flow generation as we weather the cyclical industry downturns, particularly in Europe, and complete these investments at our Eastover Mill. We are focused on long-term value creation by making disciplined, data-driven decisions that position the company for sustainable success and strengthen Sylvamo for decades to come. We will generate strong and sustainable results by diligently executing our flagship growth strategy, adhering to our disciplined capital allocation principles, becoming more customer-centric, institutionalizing lean continuous improvement in principles, and digitally transforming our business operations.

Speaker #5: Now I'll conclude my remarks on slide 17. As I stated in my CEO letter to shareholders earlier this year, 2025 and '26 will be low points in our free cash flow generation as we weather the cyclical industry downturns, particularly in Europe, and complete these investments at our Eastover Mill.

Speaker #5: We are focused on long-term value creation by making disciplined, data-driven decisions that position the company for sustainable success and strengthen Sylvamo for decades to come.

Speaker #5: We will generate strong and sustainable results by diligently executing our flagship growth strategy adhering to our disciplined capital allocation principles becoming more customer-centric institutionalizing lean continuous improvement and principles and digitally transforming our business operations.

Speaker #5: As industry conditions turn, our capital spending normalizes the benefits from our investments begin to materialize. We have the potential to generate annually greater than $300 million of free cash flow and greater than 15% returns on invested capital.

John V. Sims: As industry conditions turn, our capital spending normalizes, the benefits from our investments begin to materialize, we have the potential to generate annually greater than $300 million of free cash flow and greater than 15% returns on invested capital. With that, I'll turn it back over to Hans. Hans?

John Sims: As industry conditions turn, our capital spending normalizes, the benefits from our investments begin to materialize, we have the potential to generate annually greater than $300 million of free cash flow and greater than 15% returns on invested capital. With that, I'll turn it back over to Hans. Hans?

Speaker #5: So with that, I'll turn it back over to Hans. Hans.

Speaker #6: Thanks, John, and thank you, Don. Okay, Samantha, we're ready for questions.

Hans Bjorkman: Thanks, John, and thank you, Don. Okay, Samantha, we're ready for questions.

Speaker #1: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand.

Operator 2: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of George Staphos with Bank of America Securities. George, your line is open. Please go ahead.

Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of George Staphos with Bank of America Securities. George, your line is open. Please go ahead.

Speaker #1: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: If you are muted locally, please remember to unmute your device. Your first question comes from the line of George Staffos with Bank of America Securities.

Speaker #1: George, your line is open. Please go ahead.

Speaker #6: Hi, thanks very much, everybody. Appreciate the detail. I'll ask a couple of questions and come back into queue, but I do have a bunch to go through.

George Staphos: Hi. Thanks very much, everybody. Appreciate the detail. I'll ask a couple of questions and come back into queue, but I do have a bunch to go through. I guess, first of all, John, the company talks about operational excellence, being legendary in terms of service and the like, and I recognize you're still early in that journey. That said, what was going on with operations reliability in that $9 million number that you called out, particularly in Latam? As I recall, and correct me if I'm wrong, I thought Latam was expected to be better operationally or at least not as much of an issue as Europe in this quarter. That's question number 1. Question number 2: you called out or pointed to some mixed factors in North America in the Q1. What was behind that?

Speaker #6: I guess, first of all, John, the company talks about operational excellence being legendary in terms of service and the like. And I recognize you're still early in that journey.

Speaker #6: That said, what was going on with operations reliability in that $9 million number that you called out, particularly in LATTAM as I recall, and correct me if I'm wrong, I thought LATTAM was expected to be better operationally, or at least not as much of an issue as Europe in this quarter.

Speaker #6: So that's question number one. Question number two, you called out or pointed to some mixed factors in North America in the first quarter. What was behind that?

Speaker #6: And related to price, not expecting you to talk about future price increases forward-looking or whatever, but for the pricing that is in the markets right now in the publications, if we hold that, what price benefit do you get in two Q versus one Q sequentially or for the year?

George Staphos: Related to price, not expecting you to talk about future price increases, forward-looking or whatever, but for the pricing that is in the markets right now in the publications, if we hold that, what price benefits you get in Q2 versus Q1 sequentially or for the year? Thank you.

Speaker #6: Thank you.

Speaker #5: Yeah, George, thank you. I thank you for joining the call and your question. So I anticipated the questions on the reliability issues. And yes, I mean, I guess key to our performance, if we're going to delight the customer, increase customer loyalty, reliability, and operational efficiencies, is critical that that's why we're implementing the lean process.

John V. Sims: Yeah. George, thank you. Thank you for joining the call and your questions. I anticipated the questions on the reliability issues. Yes, I mean, I guess key to our performance if we're gonna delight the customer, increase customer loyalty, reliability, and operational efficiency is critical. You know, that's why we're implementing the lean process, but also we are strengthening and have been focusing on mill reliability process and systems. You know, the biggest focus we've got there is ensuring that we're investing to maintain the equipment and also we're putting in the right processes and also training and development of our workforce. Those are all critical aspects to being, you know, world-class in that performance, and we're clearly not there. I mean, this is what this indicates.

John Sims: Yeah. George, thank you. Thank you for joining the call and your questions. I anticipated the questions on the reliability issues. Yes, I mean, I guess key to our performance if we're gonna delight the customer, increase customer loyalty, reliability, and operational efficiency is critical. You know, that's why we're implementing the lean process, but also we are strengthening and have been focusing on mill reliability process and systems. You know, the biggest focus we've got there is ensuring that we're investing to maintain the equipment and also we're putting in the right processes and also training and development of our workforce. Those are all critical aspects to being, you know, world-class in that performance, and we're clearly not there. I mean, this is what this indicates.

Speaker #5: But also we are strengthening and have been focusing on mill reliability process and systems and biggest focus we've got there is ensuring that we're investing to maintain the equipment and also we're putting in the right processes and also training and development of our workforce.

Speaker #5: And those are all critical aspects to being world-class in that performance. And we're clearly not there. I mean, this is what this indicates. The issues that we've had is we've got work to do around our reliability as it pertains to the particular items we had. Both Moji and Luis Antonio had issues in the power plant, and also in the digesters that needed to be fixed actually in the annual outage.

John V. Sims: The issues that we've had is we've got work to do around our reliability. You know, I, like, as it pertains to the particular items we had, both Mogi Guaçu and Luiz Antônio had issues in the power plant and also in the digesters that needed to be fixed actually in the annual outage. Mogi Guaçu is right now down going through its annual outage. The issues that we had in Q1, we actually continued to see that in the first month of this quarter, and now we're planning on fixing that. Luiz Antônio's outage is not until June, we are continuing to struggle some there with, you know, with that mill and its performance. That's driving higher increased operating costs, use of chemicals and whatnot that's impacting us.

John Sims: The issues that we've had is we've got work to do around our reliability. You know, I, like, as it pertains to the particular items we had, both Mogi Guaçu and Luiz Antônio had issues in the power plant and also in the digesters that needed to be fixed actually in the annual outage. Mogi Guaçu is right now down going through its annual outage. The issues that we had in Q1, we actually continued to see that in the first month of this quarter, and now we're planning on fixing that. Luiz Antônio's outage is not until June, we are continuing to struggle some there with, you know, with that mill and its performance. That's driving higher increased operating costs, use of chemicals and whatnot that's impacting us.

Speaker #5: So Moji is right now down going through its annual outage. So the issues that we had in the first quarter, we actually continued to see that in the first month of this quarter and now we're planning on fixing that.

Speaker #5: Luis Antonio's outage is not until June, so we are continuing to struggle from there. With that mill and its performance, that's driving higher increased operating costs, use of chemicals, and whatnot.

Speaker #5: That's impacting us. If you look at Europe, the biggest issue we had was SIOT. There was a turbine generator that's operated by a third party that tripped.

John V. Sims: You know, if you look at Europe, the biggest issue we had was Saillat. There was a turbine generator that's operated by a third party that tripped. You know, the issues we had in Europe also occurred in area when it was a cold winter and probably the worst timing we could have. This issue knocked the Saillat mill offline for a couple days until we could get back up and running. In Nymölla, we also had boiler issues at the beginning of the year.

John Sims: You know, if you look at Europe, the biggest issue we had was Saillat. There was a turbine generator that's operated by a third party that tripped. You know, the issues we had in Europe also occurred in area when it was a cold winter and probably the worst timing we could have. This issue knocked the Saillat mill offline for a couple days until we could get back up and running. In Nymölla, we also had boiler issues at the beginning of the year.

Speaker #5: And the issues we had in Europe also occurred in area when it was a cold winter. And probably the worst time in the week it had.

Speaker #5: But this knocked out this issue knocked the SIOT mill offline for a couple of days until we could get back up and running. And then Numila, we also had boiler issues in the beginning of the year.

John V. Sims: As I mentioned, I think in the prepared remarks, that we have 2 debarking drums in Nymölla. 1 of the debarking drums, due to mechanical failure, is offline and we won't be able to fix that until Q4 this year. Your second question?

Speaker #5: And then as I mentioned, I think in the paired remarks that we have two debarking drums in Numila, but one of the debarking drums due to mechanical failure is offline.

John Sims: As I mentioned, I think in the prepared remarks, that we have 2 debarking drums in Nymölla. 1 of the debarking drums, due to mechanical failure, is offline and we won't be able to fix that until Q4 this year. Your second question?

Speaker #5: It won't be we won't be able to fix that until the fourth quarter of this year.

Speaker #6: Your second question. So, just before we go there—so, you described what happened. But I guess my question would be, following up, why?

George Staphos: Again just before we go there.

John V. Sims: Oh, go ahead.

John Sims: Oh, go ahead.

George Staphos: You described what happened. I guess my question would be following up why? Like, why did the issues come up at Mogi Guaçu and Luiz Antônio? Why didn't you necessarily, not you, but the team, sort of determine what was happening and prevent it from occurring? The same thing in Nymölla, especially with the boiler and the debarking.

Speaker #6: So why did the issues come up at Moji and Luis Antonio? Why didn't you necessarily not you, but the team sort of determine what was happening and prevent it from occurring?

Speaker #6: And the same thing in Numila, especially with the boiler and the debarking.

Speaker #5: Yeah, so the terms of the why would be different for each of these, whether it's mechanical failure or an operating area. We do a detailed root cause failure analysis on any of these significant events.

John V. Sims: Yeah. In terms of the why would be different for each of these, whether it's, you know, mechanical failure or an operating area. You know, we do a detailed root cause failure analysis on any of these significant events. Those have been done here. We put a lot of effort into ensuring that we correct and also communicate what we learned across those failures. In all those cases, you know, we think that, except for the one in Saillat, because that was out of our control, that was a third-party operator area.

John Sims: Yeah. In terms of the why would be different for each of these, whether it's, you know, mechanical failure or an operating area. You know, we do a detailed root cause failure analysis on any of these significant events. Those have been done here. We put a lot of effort into ensuring that we correct and also communicate what we learned across those failures. In all those cases, you know, we think that, except for the one in Saillat, because that was out of our control, that was a third-party operator area.

Speaker #5: And those have been done here. And then we put a lot of effort into ensuring that we correct and also communicate what we've learned across those failures.

Speaker #5: But in all those cases, we think that except for the one in SIOT, because that was out of our control, that was a third-party operator area, every one point to an area where we've got to either improve our reliability process systems and identifying those areas that could fail and making sure that we're taking corrective actions before that occurs.

John V. Sims: Everyone points to, you know, an area where we've got to, either, improve our reliability process systems, identifying those areas that could, that could fail, and making sure that we're taking corrective actions before that occurs, or training, and improving the quality of our workforce so that the right operating decisions are made. That's all what we're working on, George.

John Sims: Everyone points to, you know, an area where we've got to, either, improve our reliability process systems, identifying those areas that could, that could fail, and making sure that we're taking corrective actions before that occurs, or training, and improving the quality of our workforce so that the right operating decisions are made. That's all what we're working on, George.

Speaker #5: Or training and improving the quality of our workforce so that the right operating decisions are made. And that's all what we're working on, George.

Speaker #6: Okay. Appreciate that. And.

George Staphos: Appreciate that. On the pricing and mix.

Don Devlin: John, I can take the.

Speaker #5: John, I can take a second. Yeah, George, this is John. I'll take that mixed question. So George, Q1, a couple of big things in mix in Q1.

George Staphos: Thanks, John.

Don Devlin: Yeah, George.

George Staphos: John.

Don Devlin: This is John. I'll take that next question. George, Q1, a couple of big things in mix in Q1. In Latin America, it's seasonally weaker for us. What's happened typically is there's less domestic Brazil volume, which is our most profitable, and more export as a percentage of the mix. That we expect that. It's normal for the quarter. In Brazil, what typically happens is it gets stronger as the year goes on, all the way through the Q4. In North America, it's a little different situation. As we prepare for the Riverdale and Eastover, you know, the Eastover outage later in the year and the Riverdale supply agreement going away, we are, you know, we're using third-party sheeting. We're buying some volume from third parties, buying paper.

Speaker #5: So in Latin America, it's seasonally weaker. For us in what's happened typically is there's less domestic Brazil volume, which is our most profitable. And more export as a percentage of the mix.

Speaker #5: And so that has a we expect that. It's normal for the quarter in Brazil what typically happens is it gets stronger as the year goes on all the way through the fourth quarter.

Speaker #5: And in North America, it's a little different situation. We are as we prepare for the Riverdale and Eastover the Eastover outage later in the year and the Riverdale supply agreement going away.

Speaker #5: We are we're using third-party sheeting. We're buying some volume from third parties buying paper. And we're doing this so that we have the inventory to serve our customers and really preserve our customers as we ramp up Eastover later in the year.

Don Devlin: We're doing this so that we have the inventory to serve our customers and really preserve our customers, as we ramp up Eastover later in the year. It's a cost that shows up in mix because the margins on that either externally sourced or converted paper is a bit lower. Those are the two main reasons. Really we cited this, the North American piece as a one-time in our February call that we wouldn't expect to have next year as we-

Speaker #5: And so it's a cost that shows up in mix because the margins on that either externally sourced or converted paper is a bit lower.

Speaker #5: So those are the two main reasons. And really, we cited this as a one the North American piece as a one-time in our February call that we wouldn't expect to have next year as we ramp up Eastover and the sheeting operations in Sumter.

George Staphos: Okay

Don Devlin: ramp up Eastover and the sheeting operations in Sumter.

Speaker #6: Okay. And on the pricing, impact?

George Staphos: Okay. On the pricing.

John V. Sims: Two-

John Sims: Two-

George Staphos: -impact?

Speaker #5: Okay, yeah. So the make sure I understand your third question was around the pricing, the pricing realization.

John V. Sims: Okay. Yeah. Make sure I understand, your third question was around the pricing, the pricing realization.

John Sims: Okay. Yeah. Make sure I understand, your third question was around the pricing, the pricing realization.

Speaker #6: Yeah, if we just hold at where the publications are right now, what would it mean for benefit if any price-wise to Q versus 1Q or rest of year versus 1Q?

George Staphos: Yeah.

John V. Sims: So-

John Sims: So-

George Staphos: hold at where the publications are right now, what would it mean for benefit, if any, price-wise, Q2 versus Q1 or rest of year versus Q1? However you want to discuss it. Thank you.

Speaker #6: However you want to discuss it. Thank you.

John V. Sims: Okay. Sure, George. You know, we announced increases across all the regions, so I think it's best if we just go around the regions to talk about what we saw and what we're in the process of realizing from what we've announced to our customers. In North America, we communicated a price increase of 5% to 8% range to our customers. We're realizing that increase within that range. We start to see that in March, and it's gonna go through the bulk of it. We'll see that in Q2 coming through. In Brazil, we announced a 5% increase on cut-size for January, and we realized about two-thirds of that in Q1.

John Sims: Okay. Sure, George. You know, we announced increases across all the regions, so I think it's best if we just go around the regions to talk about what we saw and what we're in the process of realizing from what we've announced to our customers. In North America, we communicated a price increase of 5% to 8% range to our customers. We're realizing that increase within that range. We start to see that in March, and it's gonna go through the bulk of it. We'll see that in Q2 coming through. In Brazil, we announced a 5% increase on cut-size for January, and we realized about two-thirds of that in Q1.

Speaker #5: Okay. Sure, George. So we announced increases across all the regions. So I think it's best if we just go around the regions and talk about what we saw and what we're in the process of realizing from what we've announced to our customers.

Speaker #5: So in North America, we communicated a price increase of 5% to 8% to arrange to our customers. We're realizing that increase within that range.

Speaker #5: We began to start to see that in March. And it's going to go through the bulk of it. We'll see that in the second quarter.

Speaker #5: Coming through. In Brazil, we announced a 5% increase on cut size for January. And we realized about two-thirds of that in the first quarter.

Speaker #5: And the other Latamo markets, we communicated about a 7% increase for Q1. And we realized about one-third of that in the first quarter. And that's about all we're going to get from that one.

John V. Sims: In the other LatAm markets, we communicated about a 7% increase for Q1, and we realized about one third of that in the Q1. That's about all we're gonna get from that one, but we did announce a second increase of 7% to customers for the Q2. We'll start to realize that in May. In Middle East and Africa, we export those from both, mostly from Brazil, but also some from our European operations. We implemented a 4% increase in the Q1, and we realized that in the Q1, and we're implementing a second increase for the Q2, which we should start realizing in May. In Europe, we communicated a 4% increase to our customers in the Q1.

John Sims: In the other LatAm markets, we communicated about a 7% increase for Q1, and we realized about one third of that in the Q1. That's about all we're gonna get from that one, but we did announce a second increase of 7% to customers for the Q2. We'll start to realize that in May. In Middle East and Africa, we export those from both, mostly from Brazil, but also some from our European operations. We implemented a 4% increase in the Q1, and we realized that in the Q1, and we're implementing a second increase for the Q2, which we should start realizing in May. In Europe, we communicated a 4% increase to our customers in the Q1.

Speaker #5: But we did announce a second increase, a 7%, that customers for the second quarter will start to realize that in May. In Middle East and Africa, and we export this from both mostly from Brazil, but also some from our European operations.

Speaker #5: We implemented a 4% increase in the first quarter. And we realized that in the first quarter. And we're implementing a second increase for the second quarter which we should start realizing in May.

Speaker #5: And in Europe, we communicated a 4% increase to our customers in the first quarter. And in Europe, we actually saw prices go down in the first part, January.

John V. Sims: In Europe, we actually saw prices go down in the first part, January, and then we started to see realize this 4% increase, and we'll get about half of it through April. That's probably about all we're gonna get from that first increase. However, we communicated the second increase of 8% effective in May, and we expect to start realizing that in Q2.

John Sims: In Europe, we actually saw prices go down in the first part, January, and then we started to see realize this 4% increase, and we'll get about half of it through April. That's probably about all we're gonna get from that first increase. However, we communicated the second increase of 8% effective in May, and we expect to start realizing that in Q2.

Speaker #5: And then we started to see realize this 4% increase and we'll get about half of it through April. And that's probably about all we're going to get from that first increase.

Speaker #5: However, we communicated the second increase of 8% effective in May. And we expect to start realizing that in the second quarter.

Speaker #6: Okay. You'd rather not go, and you'd rather not give us a dollar number for Q2 versus Q1 at this juncture, given all of that.

George Staphos: Okay.

Operator 2: Your next-

Operator: Your next-

George Staphos: You'd rather not give us a dollar number for Q2 versus Q1 at this juncture, given all of that?

Speaker #5: That's right. Yep.

John V. Sims: That's right. Yep.

John Sims: That's right. Yep.

Speaker #6: Okay. Thank you.

George Staphos: Okay. Thank you.

Speaker #1: Your next question comes from the line of Matthew McKeller with RBC Capital Markets. Matthew, your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Matthew McKellar with RBC Capital Markets. Matthew, your line is open. Please go ahead.

Operator: Your next question comes from the line of Matthew McKellar with RBC Capital Markets. Matthew, your line is open. Please go ahead.

Speaker #7: Good morning. Thanks for taking my questions. A couple just on costs. Could you speak to the input and transportation cost pressures you're seeing compared to where you were at the start of the year?

Matthew McKellar: Good morning. Thanks for taking my questions. A couple just on costs. Could you speak to the input and transportation cost pressures you're seeing? Compared to where you were at the start of the year, what does that incremental headwind look like on an unmitigated basis, and what amount do you expect to be able to mitigate in some way? Just circling back on Nymölla debarker, what's the ongoing cost impact there until you can address that in Q4? Is that just a cost issue or are there constraints on production as well? Thank you.

Speaker #7: What does that incremental headwind look like on an unmitigated basis? And what amount do you expect to be able to mitigate in some way?

Speaker #7: And then, just circling back on Nima's debarker, what's the ongoing cost impact there until you can address that in Q4? And is that just a cost issue, or are there constraints on production as well?

Speaker #7: Thank you.

Speaker #5: Hey, thank you, Matt. This is Don. I'll take those questions. So relative to costs and input and transportation, what so the cost in Q1 was relatively small.

Don Devlin: Hey, thank you, Matt. This is Don. I'll take those questions. Relative to cost and input and transportation, the cost in Q1 was relatively small, but as we look forward, and for Q2 in particular, we think it'll be about $15 million, and that's across things like chemicals, energy, and distribution. It's split fairly evenly across our region, so roughly $5 million per region. For Nymölla, this debarking drum issue occurred in March. We're incurring about $1 million to 2 million a quarter of additional cost. The plan is to do the repair in September. In Q4, we should see improved costs.

Speaker #5: But as we look forward, and for Q2 in particular, we think it will be about $15 million. And that's across things like chemicals, energy, and distribution.

Speaker #5: And it's split fairly evenly across our regions, so roughly $5 million per region. And for Numila, this debarking drum issue occurred in March.

Speaker #5: We're incurring about a million to two million dollars a quarter of additional cost. And the plan is to do the repair in September. And so the fourth quarter, we should see improved costs and really what we're doing is we have no impact of production as we're sourcing external chips.

Don Devlin: Really what we're doing is we have no impact to production as we're sourcing external chips, and that's the incremental cost.

Speaker #5: And that's the incremental cost.

Speaker #7: Okay. Thanks. And maybe this is a follow-up there. The 15 million dollars you called out, is that essentially the sequential impact that we should expect quarter on quarter?

Matthew McKellar: Okay. Thanks. Maybe just as a follow-up there, the $15 million you called out, is that essentially the sequential impact that we should expect quarter-on-quarter? Would you describe, I guess, the run rate cost impact any differently, based on current costs? Thank you.

Speaker #7: Would you describe, I guess, the run rate cost impact any differently? Based on current costs, thank you.

Don Devlin: It would be roughly that amount sequentially in Q2, yes.

Speaker #5: It would be roughly that amount sequentially in Q2, yes.

Don Devlin: It would be roughly that amount sequentially in Q2, yes.

Speaker #2: And Matt, yeah, just to be these are costs that are due to the land war, the situation, harvest. So how that plays out going forward, it's seeing by his guess.

John V. Sims: Matt, yeah, just to be clear, these are costs that are due to the, you know, the Iran war situation obviously. How that plays out, you know, going forward, it's, you know, anybody's guess. That's what we see at least centrally for Q2.

John Sims: Matt, yeah, just to be clear, these are costs that are due to the, you know, the Iran war situation obviously. How that plays out, you know, going forward, it's, you know, anybody's guess. That's what we see at least centrally for Q2.

Speaker #2: But that's what we see at least essentially for the first quarter or second quarter.

Speaker #5: Yeah. And Matt, we had less than two million, one to two million of what we would call war-related inflation in Q1. So it's 15 versus 1, call it.

Don Devlin: Yeah. Matt, we had less than 2 million, 1 to 2 million of what we would call war-related inflation in Q1. It's 15 versus 1, call it, roughly incremental.

Speaker #5: Roughly incremental.

Matthew McKellar: Okay. Okay, fair enough. One more from me, and I'll jump back in the queue. Pretty high-level question. You've talked about, you know, having the potential to generate $300 million of annual free cash flow. When we think about your investments and expansion at Eastover, investment in Lat Am fiber supply, lean transformation, and now prices inflecting in all regions, particularly maybe in North America where conditions seem quite tight, what else still needs to change in the markets or at Sylvamo specifically to drive you to that $300 million level in 2027, at least on a run rate basis, particularly if we strip out some of the remaining $15 million or so of Eastover spend, I think you said, trickles into next year and maybe any ramp-up of your investments as well? Thanks.

Speaker #7: Okay. Okay. Fair enough. And then one more from me, and I'll jump back in the queue. Pretty high-level question. You've talked about having the potential to generate 300 million dollars of annual free cash flow.

Speaker #7: When we think about your investments and expansion at Eastover, investment in Latam fiber supply, lean transformation, and now prices inflecting in all regions, particularly maybe in North America where conditions seem quite tight, what else still needs to change in the markets or at Silvamo specifically to drive you to that 300 million dollar level in 2027, at least on a run rate basis?

Speaker #7: Particularly if we strip out some of the remaining 15 million dollars or so of Eastover spend, I think you said trickles into next year.

Speaker #7: And maybe any ramp-up of your investments as well. Thanks.

Speaker #5: Yeah, so Matt's done. I think you captured most of the big items—so certainly the Eastover investments and what we're doing there, the better mix in Latin America, shifting exports from VIA to the US, improving mid-cycle margins, particularly in Europe, but also down in Brazil and the OLA markets.

John V. Sims: Yeah. Matthew, it's Don Devlin. Yeah, I think you captured, you know, most of the big items. Certainly the Eastover investments and what we're doing there. The better mix in Latin America from, you know, shifting exports from MEA to US. Improving mid-cycle margins, particularly in Europe, but also down in Brazil and the OLA markets, the other LatAm markets, improvement there. Lower cost and improved productivity, which we're going to be driving through the lean transformations, the work that we're doing increasing reliability, and workforce planning and training. Lower wood costs, particularly in Europe, and that's really driven by Nymölla because we're seeing those decreases right now, coming through.

John Sims: Yeah. Matthew, it's Don Devlin. Yeah, I think you captured, you know, most of the big items. Certainly the Eastover investments and what we're doing there. The better mix in Latin America from, you know, shifting exports from MEA to US. Improving mid-cycle margins, particularly in Europe, but also down in Brazil and the OLA markets, the other LatAm markets, improvement there. Lower cost and improved productivity, which we're going to be driving through the lean transformations, the work that we're doing increasing reliability, and workforce planning and training. Lower wood costs, particularly in Europe, and that's really driven by Nymölla because we're seeing those decreases right now, coming through.

Speaker #5: The other Latam markets. Improvement there. Lower costs and improved productivity, which we're going to be driving through the lean transformations. The work that we're doing increasing reliability.

Speaker #5: And workforce planning and training. Lower wood costs, particularly in Europe, and that's really driven by Nymölla, because we're seeing those decreases right now coming through.

Speaker #5: We've talked about it, but we'll provide probably more detail around what we're doing with digital transformation as it pertains really to our mill system as well as on the commercial area.

John V. Sims: We've talked about it, but we'll provide probably more detail around what we're doing with digital transformation as it pertains really to our mill system as well as on the commercial area. We haven't really explained a lot of that, but we intend to do that in, you know, future earnings calls. Capital spending will normalize. You know, this is after the investment at Eastover, you know, we'll see capital spending come back to normal level.

John Sims: We've talked about it, but we'll provide probably more detail around what we're doing with digital transformation as it pertains really to our mill system as well as on the commercial area. We haven't really explained a lot of that, but we intend to do that in, you know, future earnings calls. Capital spending will normalize. You know, this is after the investment at Eastover, you know, we'll see capital spending come back to normal level.

Speaker #5: We haven't really explained a lot of that, but we intend to do that in future earning calls. And then capital spending will normalize. We this is after these investment at Eastover.

Speaker #5: We'll see capital spending come back to normal level.

Speaker #7: Okay. So, I mean, is it fair to say it's kind of continued execution of some of the programs within your control, and then markets getting a little better in other LatAm and European regions?

Matthew McKellar: Okay. I mean, is it fair to say it's kind of continued execution of some of the programs within your control, and then markets getting a little better in other LATAM and European kind of regions?

Speaker #5: That's right. Yes. I think that's correct.

John V. Sims: That's right. Yes, I think that's correct.

John Sims: That's right. Yes, I think that's correct.

Speaker #7: Okay. Thanks. I'll turn it back. I'll get in the queue. Thank you.

Matthew McKellar: Okay. Thanks. I'll turn it back. I'll get in the queue. Thank you.

Speaker #1: Your next question comes from the line of Daniel Harriman with Sidoti. Daniel, your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Daniel Harriman with Sidoti. Daniel, your line is open. Please go ahead.

Operator: Your next question comes from the line of Daniel Harriman with Sidoti. Daniel, your line is open. Please go ahead.

Speaker #8: Hey, guys. Good morning. Thanks for taking my questions. I just wanted to follow up on Matt's last question. I think the 300 million cash flow target for '27 was came out prior to these price increases across all three of your regions.

Daniel Harriman: Hey, guys. Good morning. Thanks for taking my questions. I just wanted to follow up on Matt's last question. I think the $300 million cash flow target for 2027 came out prior to these price increases across all three of your regions. Just wanted to get a sense from you of where you see the stock's valuation right now and other uses of that cash. I know there hasn't been any share repurchases in the past 2 quarters. Not sure if that has to do with a leverage ratio you wanna get to prior to getting back into the market. Around tariff sensitivity. Based on the 10% tariff that's in place through July 2024, just curious how you're thinking about H2 if that tariff structure changes either way or gets worse.

Speaker #8: So I just wanted to get a sense from you of where you see the stock's valuation right now, and other uses of that cash.

Speaker #8: I know there hasn't been any share repurchases in the past two quarters. I'm not sure if that has to do with a leverage ratio you want to get to prior to getting back into the market.

Speaker #8: And then also, around tariff sensitivity, based on the 10% tariff that's in place through July '24, just curious how you're thinking about the second half, if that tariff structure changes either way or gets worse.

Speaker #8: Would you go back to importing from Europe, or are you exploring other opportunities as well? Thanks a lot.

Daniel Harriman: Would you go back to importing from Europe, or are you exploring other opportunities as well? Thanks a lot.

John V. Sims: Daniel, let me talk about your 300. If you remember even from my CEO letter and we based on that was expectations that we expected that the markets and margins, particularly in Europe, would normalize. It wasn't sustainable with where the margins are in Europe and also in the other LATAM markets. That was built into some of it, you know, when we think about the 300, achieving the $300 million of cash flow.

John Sims: Daniel, let me talk about your 300. If you remember even from my CEO letter and we based on that was expectations that we expected that the markets and margins, particularly in Europe, would normalize. It wasn't sustainable with where the margins are in Europe and also in the other LATAM markets. That was built into some of it, you know, when we think about the 300, achieving the $300 million of cash flow.

Speaker #2: Daniel, let me talk about your 300. So if you remember, even from my CEO letter, based on that was expectations that we expected that the market's margins, particularly in Europe, would normalize.

Speaker #2: It wasn't sustainable with where the margins are, in Europe and also in the other Latam markets. So that was built into some of the—when we're thinking about the $300 million, achieving the $300 million of cash flow.

Speaker #5: I would add to that, Daniel, that a large portion of the path to this 300 is Eastover. We pointed out in our previous earnings call in February the one-times that we're experiencing, but you'll also see the benefits of additional volume from Eastover, which is our lowest-cost mill.

Don Devlin: I would add to that, Daniel, that a large portion of the path to this $300 is Eastover. We pointed out in our previous earnings call in February the one times that we're experiencing. We'll also see the benefits of additional volume from Eastover, which is our lowest cost mill. A large portion of the $300 will be Eastover operating after the speed up in the new sheeter. That's a significant portion of the $300. Relative to we never said 2027. I think this $300 is a goal for us in the future, as the way John stated in his CEO letter.

Speaker #5: So a large portion of the 300 will be Eastover operating after the speed-up and the new sheater and its significant portion of the 300.

Speaker #5: And relative to we never said 2027. I think this 300 is a goal for us in the future as the way John stated in his CEO letter.

Speaker #2: Yeah. But within three to five years.

John V. Sims: Yeah, within three to five years.

John Sims: Yeah, within three to five years.

Don Devlin: Within three to five years. Relative to the stock, you know, where we see the stock value and, you know, if I step back and think about our cash situation for the year and our capital allocation strategy philosophy. You know, we look at 2026, we've got big commitments both in Eastover. You know, prior year, we returned last year 350% of our free cash flow to shareowners. We're managing cash levels, you know, as we focus on executing the Eastover footprint transition. We're making big strategic investments at Eastover. We wanna make sure we have a strong balance sheet through 2026.

Speaker #5: Within three to five years. Yeah. So relative to the stock, where we see the stock value and if I step back and think about our cash situation for the year and our capital allocations strategy philosophy, we look at 2026.

Speaker #5: We've got big commitments both in the Eastover prior year. We returned last year 350% of our free cash flow to shareholders. We're managing cash levels.

Speaker #5: As we focus on executing the Eastover footprint transition, we're making big strategic investments at Eastover. We want to make sure we have a strong balance sheet through 2026.

Speaker #5: I think our philosophy around share buybacks is the same, and it's that if we believe it's our intrinsic value, the shares trading less than our intrinsic value, then we will do buybacks.

Don Devlin: I think our philosophy around share buybacks is the same, and it's that if we believe it's our intrinsic value, the share is trading less than our intrinsic value, then we will do buybacks. I think 2026, we're being prudent to manage through a very uncertain year with tariff changes, with economic changes and the Middle East conflict impacts as well. I think we got to navigate 2026.

Speaker #5: I think 2026—we're being prudent to manage through a very uncertain year, with tariff changes, with economic changes, and the Middle East conflict impacts as well.

Speaker #5: And I think we've got to navigate 2026.

Speaker #2: But Daniel, let it be clear that we believe that our share price right now doesn't reflect the intrinsic value of the company. We believe it's undervalued.

John V. Sims: Daniel, let's be clear then. You know, we believe that our share price right now doesn't reflect the intrinsic value of the company. We believe it's undervalued. We're taking a very conservative approach to cash, you know, just because of the issues, not the issues, but the fact that, you know, we're in this transition period, so there's big use of cash in H1 of this year. We've got a war and uncertainty, so we're taking a conservative approach with our balance sheet. So we're deferring more to that than we are to, you know, taking opportunities to buy back our shares.

John Sims: Daniel, let's be clear then. You know, we believe that our share price right now doesn't reflect the intrinsic value of the company. We believe it's undervalued. We're taking a very conservative approach to cash, you know, just because of the issues, not the issues, but the fact that, you know, we're in this transition period, so there's big use of cash in H1 of this year. We've got a war and uncertainty, so we're taking a conservative approach with our balance sheet. So we're deferring more to that than we are to, you know, taking opportunities to buy back our shares.

Speaker #2: But we're taking a very conservative approach to cash. Just because of the issues, not the issues, but the fact that we're in this transition period, so there's big use of cash in the first half of this year.

Speaker #2: We've got a worried uncertainty. So we're taking a conservative approach with our balance sheet. And so we're deferring more to that than we are to taking an opportunity to buy back our shares.

Speaker #5: And I think to your last question, Daniel, today, relative to the tariffs—today, the paper products from Brazil are subject to a 10% tariff under Section 122.

Don Devlin: I think to your last question, Daniel, you know, relative to the tariffs, today the paper products from Brazil are subject to a 10% tariff under the Section 122, and it is consistent with the tariff applied to other countries. As of today, that expires in late July, 24 July. We expect the administration will apply new tariffs on Brazil, you know, before that expiration.

Speaker #5: And it's consistent with the tariff applied to other countries. But as of today, that expires late in July, July '24. We expect the administration will apply new tariffs on Brazil before that expiration of the Section 122 tariff.

John V. Sims: The Section 122 tariffs. It's difficult to predict what level the Brazil tariffs will be set. There was a Trump and Lula meeting yesterday, and the preliminary feedback is positive, but it still doesn't give an indication. I think that the way we're thinking about this is we have flexibility. At the 10% level, it makes a lot of sense for us, and we'll continue to do that. If it goes to a different rate, we'll have to reconsider what we're doing for the balance of the year after July. All right. Thanks again, guys. I'll get back in queue.

Don Devlin: The Section 122 tariffs. It's difficult to predict what level the Brazil tariffs will be set. There was a Trump and Lula meeting yesterday, and the preliminary feedback is positive, but it still doesn't give an indication. I think that the way we're thinking about this is we have flexibility. At the 10% level, it makes a lot of sense for us, and we'll continue to do that. If it goes to a different rate, we'll have to reconsider what we're doing for the balance of the year after July. All right. Thanks again, guys. I'll get back in queue.

Speaker #5: So, it's difficult to predict what level the Brazil tariffs will be set. There was a Trump and Lula meeting yesterday, and the preliminary feedback is positive, but it still doesn't give an indication. I think that the way we're thinking about this is, we have flexibility.

Speaker #5: After 10% level, it makes a lot of sense. For us, and we'll continue to do that. If it goes to a different rate, we'll have to reconsider what we're doing for the balance of the year after July.

Speaker #8: All right. Thanks again, guys. I'll get back in queue.

Speaker #1: Your next question comes from the line of Michael Roxlin with Truist Securities. Michael, your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Michael Roxland with Truist Securities. Michael, your line is open. Please go ahead.

Operator: Your next question comes from the line of Michael Roxland with Truist Securities. Michael, your line is open. Please go ahead.

Speaker #5: Yeah. Hi, guys. This is Nico Pacinio from Mike Roxlin. Thanks for taking the questions. First off, on Europe, I think you've mentioned in the past that business has been more of a bet on the future.

Niko Buccino: Yeah. Hi, guys. This is Niko Buccino from Michael Roxland. Thanks for taking the questions. First off, you know, on Europe, I think you've mentioned in the past that that business has been more of a bet on the future. I'm just wondering how you see the path to improving earnings there, your thoughts on the business, especially as your peers in the area are either contracting or reorganizing given the weaker supply-demand dynamics. How is that slated to be end the kind of lean transformation process?

Nico Buccino: Yeah. Hi, guys. This is Niko Buccino from Michael Roxland. Thanks for taking the questions. First off, you know, on Europe, I think you've mentioned in the past that that business has been more of a bet on the future. I'm just wondering how you see the path to improving earnings there, your thoughts on the business, especially as your peers in the area are either contracting or reorganizing given the weaker supply-demand dynamics. How is that slated to be end the kind of lean transformation process?

Speaker #5: And I'm just wondering how you see the path to improving earnings there. And your thoughts on the business, especially as your peers in the area are either contracting or reorganizing given the weaker supply-demand dynamics.

Speaker #5: And then how is the when is that slated to begin the kind of lean transformation process?

Speaker #2: So thank you for your question. But can you repeat your second one? I'm not sure. But what was your second question?

John V. Sims: Thank you for your question, but can you repeat your second one? I'm not sure. What was your second question?

John Sims: Thank you for your question, but can you repeat your second one? I'm not sure. What was your second question?

Speaker #5: Yeah. So when does that fall? And the lean transformation process that you're already doing in Latin America and are going to start doing in North America.

Niko Buccino: Yeah. The, you know, when does that fall and the lean transformation process that you're already doing in Latin America and are gonna start doing in North America in Q2?

Nico Buccino: Yeah. The, you know, when does that fall and the lean transformation process that you're already doing in Latin America and are gonna start doing in North America in Q2?

Speaker #5: Into queue.

Speaker #2: So let me address the first question about the Europe question. So yeah, it's a bet on the future because we believe that over time, the industry will continue to consolidate and become more hospitable to earning above-cost of capital returns.

John V. Sims: Let me address the first question about the Europe question. Yeah, it's a bet on the future because we believe that, you know, over time, the industry will continue to consolidate and become more hospitable to earning, you know, above cost of capital returns in Europe, as it does consolidate, as the market declines. That, of course, isn't right now the case. It's a market that is very fractured, and margins are low. What we are focusing on is what we can control, and it's really specific to each of our two of our facilities.

John Sims: Let me address the first question about the Europe question. Yeah, it's a bet on the future because we believe that, you know, over time, the industry will continue to consolidate and become more hospitable to earning, you know, above cost of capital returns in Europe, as it does consolidate, as the market declines. That, of course, isn't right now the case. It's a market that is very fractured, and margins are low. What we are focusing on is what we can control, and it's really specific to each of our two of our facilities.

Speaker #2: And Europe, as it does consolidate, as the market declines—and that, of course, isn’t right now the case. It’s a market that is very fractured, and margins are low.

Speaker #2: Where we are focusing on and what we can control and it's really specific to each of our two of our facilities. So in the SIOT, we've been focusing on significantly reducing fixed costs and also improving our mix of products.

John V. Sims: In Saillat, we've been focusing on significantly reducing fixed costs and also improving our mix of products, shifting more out of commodity, cut-size into more of the value-added roll business, which has higher margins, and also into other types of grades there. We're executing that, and that is going actually better than planned in terms of the mix improvement. At our Nymölla mill, it's about reducing our wood costs. When we purchased that mill, there was an agreement that the wood was gonna be supplied from a joint venture, Södra, and we have moved away from that, taking control of our own sourcing of our own wood. We've seen wood costs come down, and we're expecting that to continue to move.

John Sims: In Saillat, we've been focusing on significantly reducing fixed costs and also improving our mix of products, shifting more out of commodity, cut-size into more of the value-added roll business, which has higher margins, and also into other types of grades there. We're executing that, and that is going actually better than planned in terms of the mix improvement. At our Nymölla mill, it's about reducing our wood costs. When we purchased that mill, there was an agreement that the wood was gonna be supplied from a joint venture, Södra, and we have moved away from that, taking control of our own sourcing of our own wood. We've seen wood costs come down, and we're expecting that to continue to move.

Speaker #2: Shifting more out of commodity cut size into more of the value-added role business, which is has higher margins. And also into other type of grades there.

Speaker #2: And we're executing that, and that is actually going better than planned in terms of the mix improvement. At our Nuvola mill, it's about reducing our wood costs.

Speaker #2: We've purchased that mill. There was an agreement that the wood was going to be supplied from a joint venture, Södra. And we have moved away from that, taking control of our own sourcing of our own wood.

Speaker #2: We've seen wood costs come down. And we're expecting that to continue to move. We're also increasing the yield and working on consuming less wood.

John V. Sims: We're also increasing the yield and working on, you know, consuming less wood. We've also exported in cheaper wood from the local sources. We've put a lot of efforts into reducing our wood costs there and also improving our operational efficiencies at our Nymölla mill. We believe that these moves with the increasing pricing and margins there will improve the business going forward. I think your second question was around the lean transformation. We expect the lean transformation to be a 3-year process, but we expect to get, you know, immediate and significant results in the areas that we start to implement that. You know, we started at the Mogi Guaçu mill here just recently.

John Sims: We're also increasing the yield and working on, you know, consuming less wood. We've also exported in cheaper wood from the local sources. We've put a lot of efforts into reducing our wood costs there and also improving our operational efficiencies at our Nymölla mill. We believe that these moves with the increasing pricing and margins there will improve the business going forward. I think your second question was around the lean transformation. We expect the lean transformation to be a 3-year process, but we expect to get, you know, immediate and significant results in the areas that we start to implement that. You know, we started at the Mogi Guaçu mill here just recently.

Speaker #2: We've also exported in cheaper wood from the local sources. Put a lot of efforts into reducing our wood costs there and also improving our operational efficiencies.

Speaker #2: At our Nuvola mill, we believe that these moves with the increasing pricing and margins there will improve the business going forward. And I think your question there, second question was around the lean transformation.

Speaker #2: And where we started this is we expect the lean transformation to be a three-year process, but we expect to get immediate and significant reports results.

Speaker #2: And the areas that we start to implement that, we started at the Moji Wasu mill here target improvements of in certain areas that it's around almost a 50% improvement in certain areas.

John V. Sims: We've already got target improvements of in certain areas that it's, you know, around almost a 50% improvement in certain areas. As I shared with you in the presentation, we're rolling that out here and gonna be in North America at the corporate areas. We'll be going back to Brazil, you know, next year, early next year, we'll be in Europe as well as at the Eastover mill. I'm not sure if that answers your question, but on the lean transformation.

John Sims: We've already got target improvements of in certain areas that it's, you know, around almost a 50% improvement in certain areas. As I shared with you in the presentation, we're rolling that out here and gonna be in North America at the corporate areas. We'll be going back to Brazil, you know, next year, early next year, we'll be in Europe as well as at the Eastover mill. I'm not sure if that answers your question, but on the lean transformation.

Speaker #2: But as I shared with you in the presentation, we're rolling that out here and going to be in North America at the corporate areas.

Speaker #2: We'll be going back to Brazil, and then next year—early next year—we'll be in Europe as well as at the Eastover. I'm not sure if that answers your question, but from a lean transformation.

Speaker #5: Yeah. No, that's helpful. Thank you. I appreciate it. I'd say two additional follow-ons. One is on the mix issue in North America in the first quarter.

Niko Buccino: Yeah. No, that's helpful. Thank you. I appreciate it. I just had two additional follow-ons. One is on the mix issue in North America in Q1. Given that's related to the kind of the Eastover Q4 downtime and the Riverdale conversion, should that change quarter-to-quarter, like Q1 to Q2? I apologize if I missed that earlier. The second one is if you can comment how your relationship is with your large shareholder.

Nico Buccino: Yeah. No, that's helpful. Thank you. I appreciate it. I just had two additional follow-ons. One is on the mix issue in North America in Q1. Given that's related to the kind of the Eastover Q4 downtime and the Riverdale conversion, should that change quarter-to-quarter, like Q1 to Q2? I apologize if I missed that earlier. The second one is if you can comment how your relationship is with your large shareholder.

Speaker #5: Given that that's related to the Eastover, Q4, downtime, and the Riverdale conversion, should that change quarter to quarter, like Q1 to Q2? And I apologize if I missed that earlier.

Speaker #5: And then the second one is if you can comment how your relationship is with your large shareholder.

Speaker #3: Yeah. Nico, I will take the first question relative to the mix. We do expect that to continue into Q2. And so what we're doing is we're making sure we have the inventory to enable us to serve customers as we get through as the Riverdale supply agreement goes away and as I said, the Eastover speed up in sheater installation in Q4.

John V. Sims: Yeah, Niko, I will take the first question relative to the mix. We do expect that to continue into Q2. What we're doing is we're making sure we have the inventory to enable us to serve customers as we get through, as the Riverdale supply agreement goes away.

Don Devlin: Yeah, Niko, I will take the first question relative to the mix. We do expect that to continue into Q2. What we're doing is we're making sure we have the inventory to enable us to serve customers as we get through, as the Riverdale supply agreement goes away.

Don Devlin: Said the Eastover, speed up in sheeter installation in Q4. We're preparing to get through that big outage, which is 45 days at Eastover. We'll build more inventory in Q2. It'll look similar.

Speaker #3: So, we're preparing to get through that big outage, which is 45 days at Eastover. So, we'll build more inventory in Q2. It'll look similar.

Speaker #2: And then I think your second question was around our large shareholder—actually, happy to take that. Actually, in the first quarter, I did meet with them.

John V. Sims: I think your second question was around our largest shareholder. Really happy to take that. Actually, in Q1, I did meet with them. I'll share with you that they expressed to us they continue to support our strategy and have confidence in the management change. They were very supportive of my CEO letter. They thought we were, you know, spot on in terms of what we're focusing on. The long-term value creation targets of greater than $300 billion of free cash flow and a 15% return on invested capital. Yeah, I would characterize the relationship with Atlas as very positive, and they continue to be very supportive of our strategy. In fact, we continue to meet almost a quarterly basis.

John Sims: I think your second question was around our largest shareholder. Really happy to take that. Actually, in Q1, I did meet with them. I'll share with you that they expressed to us they continue to support our strategy and have confidence in the management change. They were very supportive of my CEO letter. They thought we were, you know, spot on in terms of what we're focusing on. The long-term value creation targets of greater than $300 billion of free cash flow and a 15% return on invested capital. Yeah, I would characterize the relationship with Atlas as very positive, and they continue to be very supportive of our strategy. In fact, we continue to meet almost a quarterly basis.

Speaker #2: And I'll share with you that they expressed to us they continue to support our strategy and have confidence in the management change. They were very supportive of my CEO letter.

Speaker #2: They thought we were spot on in terms of what we're focusing on. And the long-term value creation targets of greater than $300 billion of free cash flow and the 15% return on invested capital.

Speaker #2: So I would characterize the relationship with Atlas as very positive and they continue to be very supportive of our strategy. And in fact, we continue to meet on a almost a quarterly basis and expect to meet this quarter.

John V. Sims: Expect to meet this quarter, where we continue to get their feedback, guidance, and, you know, on the company, and we do appreciate their feedback. Got it. Thank you very much. I'll turn it over.

John Sims: Expect to meet this quarter, where we continue to get their feedback, guidance, and, you know, on the company, and we do appreciate their feedback.

Speaker #2: Where we continue to get their feedback, guidance, and on the company. And we do appreciate their feedback.

Speaker #5: Got it. Thank you very much. I'll turn it over.

Nico Buccino: Got it. Thank you very much. I'll turn it over.

Speaker #1: As a reminder, if you would like to ask a question, please press *1 to raise your hand, and to withdraw your question, press *1 again.

Operator 2: As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Our next question comes from George Staphos with Bank of America Securities. George, your line is open. Please go ahead.

Operator: As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Our next question comes from George Staphos with Bank of America Securities. George, your line is open. Please go ahead.

Speaker #1: Our next question comes from George Staffos with Bank of America Securities. George, your line is open. Please go ahead.

Speaker #5: Hey, thanks very much. Hi, guys. A few follow-ons. So first of all, Eastover, are you still on track for $50 million? Should we expect that in 2027?

George Staphos: Hey, thanks very much. Hi, guys. A few follow-ons. First of all, Eastover, are you still on track for $50 million? Should we expect that in 2027? How is that going in terms of the value generation from that?

Speaker #5: How is that going? In terms of the value generation from that?

Speaker #2: Yeah, so George, thanks for asking the question on the Eastover. Yeah, everything is on track, as we just said. So, everything is moving on schedule.

John V. Sims: Yeah. George, thanks for asking the question on Eastover. Yeah, everything is on track, as we've said. Everything is moving on schedule within the budget that we planned from the capital spending. We're expecting installation, you know, in Q4. As we said, the sheeter is actually gonna be landing here shortly, and we'll start to install that and start to ramp up in the training of the crew and getting that ready to operate by the time that Eastover is ramped up. You know, we do have a ramp-up schedule. The $50 million, we still are 100% behind that number.

John Sims: Yeah. George, thanks for asking the question on Eastover. Yeah, everything is on track, as we've said. Everything is moving on schedule within the budget that we planned from the capital spending. We're expecting installation, you know, in Q4. As we said, the sheeter is actually gonna be landing here shortly, and we'll start to install that and start to ramp up in the training of the crew and getting that ready to operate by the time that Eastover is ramped up. You know, we do have a ramp-up schedule. The $50 million, we still are 100% behind that number.

Speaker #2: Within the budget that we planned from the capital spending. And we're expecting installation in the fourth quarter. And as we said, the sheaters are actually going to be landing here shortly.

Speaker #2: And we'll start to install that and start to ramp up and the training of the crew and getting that ready. To operate by the time the Eastover is ramped up.

Speaker #2: And so, we do have a ramp-up schedule. So the $50 million—we still are 100% behind that number. You won't see the full $50 million in the first year because there will be a ramp-up period.

John V. Sims: It will ramp. You won't see the full 50 in the 1st year because there will be a ramp-up period, but we'll see a significant portion of that in 2027.

John Sims: It will ramp. You won't see the full 50 in the 1st year because there will be a ramp-up period, but we'll see a significant portion of that in 2027.

Speaker #2: But we'll see a significant portion of that in 2027.

Speaker #3: And George, as.

Don Devlin: George,

Speaker #5: $40 million? Would that be significant as you see it, John? Sorry about that, John.

George Staphos: $40 million, you know, would that be significant as you see it, John? Sorry about that, Don.

Speaker #2: Yes. Yeah, that's actually right. Yeah.

John V. Sims: Yeah. Yeah, that's probably directionally right.

John Sims: Yeah. Yeah, that's probably directionally right.

George Staphos: Yep. Okay.

Speaker #5: Okay.

Speaker #3: Yeah. And just to add to that, George, the reminder of the one-time go away. So you have the ramp-up of the benefits and then the one-time cost go away.

Don Devlin: Just to add to that, George, the reminder of the one-times go away. You have the ramp-up of the benefits, and then the one-time costs go away. Eastover improvement next year is significant.

Speaker #3: So Eastover improvement next year is significant.

Speaker #5: Okay. So.

George Staphos: Okay.

Speaker #3: The one-times that we refer to in here.

Don Devlin: The one-times that we refer to in here.

Speaker #5: Yes. The 85, which is now 65, if I'm. Correctly reframing. Okay. Great. Reminding. Okay. Perfect. Second question. So with lean programs, right, my time covering the sector usually you put in lean programs when things are relatively smooth, right?

George Staphos: yes. The 85, which is now 65.

Don Devlin: Yes

George Staphos: correctly reframing. Okay, great. reminding. Okay, perfect. Second question. With lean programs, right? My time covering this, the sector, usually you put in lean programs when things are relatively smooth, right? It's continuous improvement. At, you know, at Sylvamo right now, I know you're working on this, but you've got a lot of individual fires you're trying to put out. You've got the digester and power issues in South America. You've got debarking issues. You're trying to bring up Eastover. Why are you putting in a lean program now? Wouldn't it be better to wait?

Speaker #5: It's continuous improvement. At Sylvamo right now, I know you're working on this, but you've got a lot of individual fires you're trying to put out.

Speaker #5: You've got the digester and power issues in South America. You've got debarking issues. You're trying to bring up Eastover. Why are you putting in a lean program now?

Speaker #5: Wouldn't it be better to wait?

Speaker #2: Well, that's a good.

John V. Sims: Well, that's a good.

John Sims: Well, that's a good.

George Staphos: until everything is established, then you can do continuous improvement on a baseline?

Speaker #5: Everything is established, and then you can do continuous improvement on a baseline?

Speaker #2: And George, I think the way to we think about it is that first of all, we're going to have reliability issues. We want to minimize that as much as we can.

John V. Sims: George, I think the way that, you know, we think about it is that, you know, we're gonna have reliability issues. We wanna minimize that as much as we can. We believe that right now where we are with our operations and our facilities, we certainly can fully implement the lean management system going forward. We have a very engaged, highly engaged crew and team. We believe there's a lot more opportunity to really tap into the talent of those teams. That's what lean does because it's an employee-driven continuous improvement. When I talk about, you know, being legendary in pursuing world-class excellence, we need every employee to be able to help us do that. That's why we're implementing the lean.

John Sims: George, I think the way that, you know, we think about it is that, you know, we're gonna have reliability issues. We wanna minimize that as much as we can. We believe that right now where we are with our operations and our facilities, we certainly can fully implement the lean management system going forward. We have a very engaged, highly engaged crew and team. We believe there's a lot more opportunity to really tap into the talent of those teams. That's what lean does because it's an employee-driven continuous improvement. When I talk about, you know, being legendary in pursuing world-class excellence, we need every employee to be able to help us do that. That's why we're implementing the lean.

Speaker #2: But we believe that, right now, where we are with our operations and our facilities, we certainly can fully implement the lean management system going forward.

Speaker #2: We have a very engaged, highly engaged crew and team. We believe there's a lot more opportunity to really tap into the talent of those teams.

Speaker #2: And that's what Lean does, because it's an employee-driven continuous improvement. When I talk about being legendary in pursuing world-class excellence, we need every employee to be able to help us do that.

Speaker #2: And that's why we're implementing Lean—it's the best mechanism, we think, from a cultural perspective to really tap into the talents, and we do have a very talented team.

John V. Sims: It's the best mechanism, we think, from a cultural perspective, to really tap into the talents. We do have a very talented team. I think that's one of our strengths.

John Sims: It's the best mechanism, we think, from a cultural perspective, to really tap into the talents. We do have a very talented team. I think that's one of our strengths.

Speaker #2: I think that's one of our strengths.

Speaker #5: Yeah, John, no doubt about that.

Don Devlin: Yeah, John, no doubt about that.

Speaker #2: We would think it's a, yeah—yeah, we think it would be a miss for us not to tap into it now to wait, and generally, we believe that we're not in a crisis mode, right?

John V. Sims: we would think it's a myth, George. the Yeah. Yeah.

John Sims: we would think it's a myth, George. the Yeah.

Don Devlin: Yeah. No, go ahead.

Don Devlin: No, go ahead.

John V. Sims: would be a myth for us not to tap into it now, to wait. You know, generally, we believe that, you know, we're not in a crisis mode, right? It's, we have the issues that hit us really hard in Q1, but it's not a systemic issue that we would wanna wait to implement our lean journey.

John Sims: would be a myth for us not to tap into it now, to wait. You know, generally, we believe that, you know, we're not in a crisis mode, right? It's, we have the issues that hit us really hard in Q1, but it's not a systemic issue that we would wanna wait to implement our lean journey.

Speaker #2: It's we have an issue that hit us really hard in the first quarter. But it's not systemic issue that we would want to wait to implement our lean journey.

Speaker #5: Okay. Appreciate that. What incremental benefit should we get out of lean? You've had other cost reduction programs. What do you get next year incremental from lean to the bottom line at Sylvamo?

George Staphos: Okay. Appreciate that. What incremental benefit should we get out of lean? You've had other cost reduction programs. What do you get next year incremental from lean to the bottom line at Sylvamo, and what do you think you get on an ongoing basis?

Speaker #5: And what do you think you get on an ongoing basis?

Speaker #2: Well, we think that we could achieve probably double the improvement rate that we have been achieving. But that's when we fully implement it. So we're looking at three to five years.

John V. Sims: Well, we think that we could achieve probably double the improvement rate that we have been achieving, but that's when we fully implement it, so we're looking at three to five years. As we ramp it up, we think we can double the improvement rate. Which, you know, George, we need to do. I mean, what we've been faced with is, not just us, but across the industry and across the industrial sectors-

John Sims: Well, we think that we could achieve probably double the improvement rate that we have been achieving, but that's when we fully implement it, so we're looking at three to five years. As we ramp it up, we think we can double the improvement rate. Which, you know, George, we need to do. I mean, what we've been faced with is, not just us, but across the industry and across the industrial sectors-

Speaker #2: So as we ramp it up, we think we can double the improvement rate. Which, George, we need to do. I mean, what we've been faced with is it's not just us, but across the industry and across the industrial sectors.

George Staphos: Yeah. No

Don Devlin: Yeah. No

John V. Sims: is increased rates of inflation and costs that's making, you know, the previous rates of improvements is not at the levels that it needs to be to sustain margins.

John Sims: is increased rates of inflation and costs that's making, you know, the previous rates of improvements is not at the levels that it needs to be to sustain margins.

Speaker #2: Is increased rates of inflation and costs. That's making the previous rates of improvements is not at the levels that it needs to be to sustain margins.

Speaker #5: Yeah, John, I appreciate that. And we applaud that you're taking care of the house, no matter the environment. But I was just trying to get a sense of what's behind the program, what benefit.

George Staphos: Yeah. John, I appreciate that. We applaud that you're taking care of the house, no matter the environment. Was just trying to get a sense of, you know, what's behind the program, what benefit. I know you said you're gonna get 2x the improvement, but what does that mean in terms of dollars? Kinda my last question on this round, I appreciate your taking all these questions. Does it get to a point, and when Europe just becomes, I don't know how to say it, but too much of a drag relative to the performance you're seeing elsewhere in your operations, and you need to think even more significantly about its place in the portfolio.

Speaker #5: And I know you said you're going to get 2X the improvement, but what does that mean in terms of dollars? And then kind of my last question on this round, and I appreciate your taking all these questions.

Speaker #5: Does it get to a point—and when—Europe just becomes, I don't know how to say it, but too much of a drag relative to the performance you're seeing elsewhere in your operations?

Speaker #5: And you need to think even more significantly about its place in the portfolio. So, how much benefit from lean, dollar-wise? And when does Europe become too big of a drag?

George Staphos: How much benefit from lean dollar-wise, and when does Europe become too big of a drag? Thank you, guys. Good luck in the quarter.

Speaker #5: Thank you, guys. Good luck in the quarter.

Speaker #2: George, from a dollar-wise standpoint, your question on the lean—we really haven't talked about and publicly disclosed what our improvement levels are from a year-over-year perspective and what our targets are.

John V. Sims: George, from a dollar-wise to your question on the lean, you know, we really haven't really talked about and publicly disclosed what our improvement levels are from a year-over-year and what our targets are. I'm hesitant to do that going forward. In terms of Europe, you know, we always, and we have to, we continuously evaluate our whole portfolio as part of our capital allocation strategy and philosophy when we look at it. I think I talked about in the last call, and I'll say we're looking at all options. We have to. We're looking at can we operate differently? How fast can we accelerate the improvements? Are there things that we can do differently?

John Sims: George, from a dollar-wise to your question on the lean, you know, we really haven't really talked about and publicly disclosed what our improvement levels are from a year-over-year and what our targets are. I'm hesitant to do that going forward. In terms of Europe, you know, we always, and we have to, we continuously evaluate our whole portfolio as part of our capital allocation strategy and philosophy when we look at it. I think I talked about in the last call, and I'll say we're looking at all options. We have to. We're looking at can we operate differently? How fast can we accelerate the improvements? Are there things that we can do differently?

Speaker #2: I'm hesitant to do that going forward. In terms of Europe, I think you the we always and we have to. We continuously evaluate our whole portfolio as part of our capital allocation strategy and philosophy.

Speaker #2: And when we look at it is we I think I talked about in the last call and also we're looking at all options. We have to.

Speaker #2: We're looking at, can we operate differently? How fast can we accelerate the improvements? Are there things that we can do differently? And I think the question you raised is something we will always—we've got to continue to do.

John V. Sims: You know, I think the question you raised is, you know, something we will always, you know, we gotta continue to do, and that's, you know, look at the portfolio, and is it the right to be in Europe? Ultimately, you know, we wanna drive value for our shareholders. I can tell you right now, as we sit today, we believe that we have the right strategy that we're pursuing in Europe, and we think we've got the right leadership team. We're committed to our customers there, which we have very strong customers and relationships with. We, you know, our strategy right now is to continue to improve the performance of that business.

John Sims: You know, I think the question you raised is, you know, something we will always, you know, we gotta continue to do, and that's, you know, look at the portfolio, and is it the right to be in Europe? Ultimately, you know, we wanna drive value for our shareholders. I can tell you right now, as we sit today, we believe that we have the right strategy that we're pursuing in Europe, and we think we've got the right leadership team. We're committed to our customers there, which we have very strong customers and relationships with. We, you know, our strategy right now is to continue to improve the performance of that business.

Speaker #2: And that's look at the portfolio and does it make sense and are we the is it the right to be in Europe? Because ultimately, we want to drive value for our shareholders.

Speaker #2: But I can tell you right now, as we sit today, we believe that we have the right strategy that we're pursuing in Europe. And we think we've got the right leadership team.

Speaker #2: We're committed to our customers there, which—we have very strong customers and relationships with. So, our strategy right now is to continue to improve the performance of that business.

Speaker #1: Your next question?

Operator 2: Your next question.

Operator: Your next question.

Speaker #5: Thank you.

Speaker #1: Comes from the line of Matthew McKeller with RBC Capital Markets. Matthew, your line is open. Please go ahead.

John V. Sims: Thank you.

George Staphos: Thank you.

Operator 2: comes from the line of Matthew McKellar with RBC Capital Markets. Matthew, your line is open. Please go ahead.

Operator: comes from the line of Matthew McKellar with RBC Capital Markets. Matthew, your line is open. Please go ahead.

Speaker #3: Hi, thanks. Just one follow-up. Please—without tariffs—how have things evolved, and assuming, I guess, they don't change in magnitude from here? So whatever happens after Section 122 looks something like the 10% level.

Matthew McKellar: Hi. Thanks. Just one follow-up, please. With how tariffs have evolved, and assuming, I guess, they don't change in magnitude from here, so whatever happens after Section 122, something like the 10% level, would you expect to continue to supply some amount of Latin American paper into North American markets even after the Eastover expansion ramps up? Maybe just relatedly, what's your sense of how imports into the US might be evolving more broadly, just at an industry level, with the tariffs resetting lower? Thank you.

Speaker #3: Would you expect to continue to supply some amount of Latin American paper in the North American markets even after the eastover expansion ramps up?

Speaker #3: And maybe just relatedly, what's your sense of how imports into the U.S. might be evolving more broadly, just at an industry level, with tariffs resetting lower?

Speaker #3: Thank you.

Speaker #5: Yeah. Matthew, I'll take the first part of your question. Relative to so we relative to the Brazil imports. So we do if the tariffs are in the right range for us and 10% is it works.

Don Devlin: Yeah, Matthew, I'll take the first part of your question, relative to the Brazil imports. If the tariffs are in the right range for us, and 10% is, it works, we'll continue to import from Brazil into North America. It's part of the supply plan, even after the Eastover speed up. It'll be part of the plan. It makes more sense for us if you think about low margins of Brazil exporting into Middle East and Africa versus bringing it to North America. We have a pretty wide range on what makes sense from a tariff standpoint. We'll continue to import.

Speaker #5: We'll continue to import from Brazil into North America. It's part of the supply plan even after the Eastover speed-up, so it'll be part of the plan.

Speaker #5: And it makes more sense for us if you think about the low margins of Brazil exporting into the Middle East and Africa versus bringing it to North America.

Speaker #5: And we have a pretty wide range on what makes sense from a tariff standpoint. So we'll continue to import.

Speaker #2: And Matthew, I think you asked, what is the import situation in North America with the trend? Was that your second question?

John V. Sims: Matthew, Did you ask, what is the import situation in North America with the trend? Was that your second question?

John Sims: Matthew, Did you ask, what is the import situation in North America with the trend? Was that your second question?

Matthew McKellar: Yes. That's right. Just at an industry level.

Speaker #3: Yes, that's right. Just at an industry level, and post the AIPA tariffs coming off. Thanks.

John V. Sims: Okay

John Sims: Okay

Matthew McKellar: Post the IPIF tariffs coming off. Thanks.

Speaker #2: Okay, yeah. So, we did see imports increase in the beginning part of the year—I think up to around 16% of demand—but we've seen a steady decrease of imports coming into North America.

John V. Sims: Okay. Yeah, we did see imports increase in the beginning part of the year, I think up to around 16% of demand, but we've seen a steady decrease of imports coming into North America. They're, you know, it's roughly dropped down to the lower end of what's, you know, been typical, the lower end of the range, around 10% of total demand. Some of that is driven because of the tariffs. The other is, you know, some of it is impacted by the Iran war. It's increasing freight costs, but also, you know, there was a mill that exported to the US from that area that's not operating as a result of the war.

John Sims: Okay. Yeah, we did see imports increase in the beginning part of the year, I think up to around 16% of demand, but we've seen a steady decrease of imports coming into North America. They're, you know, it's roughly dropped down to the lower end of what's, you know, been typical, the lower end of the range, around 10% of total demand. Some of that is driven because of the tariffs. The other is, you know, some of it is impacted by the Iran war. It's increasing freight costs, but also, you know, there was a mill that exported to the US from that area that's not operating as a result of the war.

Speaker #2: And it's roughly dropped down to the lower end of what's been typical, the lower end of the range around 10%. Total demand. And some of that is driven because of the tariffs.

Speaker #2: The other is, some of it is impacted by the Tehran war. So it's increasing freight costs, but also there was a mill that exported to the US from that area.

Speaker #2: That's not operating because of the result of the war.

Speaker #3: Okay. So even over the past month or so, there doesn't seem to be any kind of inflection in import activity that you're aware of, despite, I guess, those tariffs moving lower.

Matthew McKellar: Okay. Even over the past month or so, there doesn't seem to be any kind of inflection in import activity that you're aware of, despite, I guess, those tariffs moving forward, and you kind of attribute that to the war in Iran and maybe transportation costs downstream of that?

Speaker #3: And you kind of attribute that to the war in Iran and maybe transportation costs? Downstream of that?

Speaker #2: That's right. So that's right. We've actually seen imports continue to decrease. And we expect that to happen. There's a mill also in Finland that was exporting a lot of volume.

John V. Sims: That's right. We've actually seen imports continue to decrease, and we expect that to happen. There's a mill also in Finland that was exporting not a lot of volume, I think 30,000 tons annually to the US, and that mill has been indefinitely idled as of November last year. There's some little bit things like that also have decreased the imports.

John Sims: That's right. We've actually seen imports continue to decrease, and we expect that to happen. There's a mill also in Finland that was exporting not a lot of volume, I think 30,000 tons annually to the US, and that mill has been indefinitely idled as of November last year. There's some little bit things like that also have decreased the imports.

Speaker #2: I think it's around 30,000 or so tons annually to the US, and that mill has been indefinitely idled as of November last year. So there are some little things like that that have also decreased the imports.

Speaker #3: Okay, thanks very much. I'll turn it back.

Matthew McKellar: Okay. Thanks very much. I'll throw it back.

Speaker #1: We have reached the end of our Q&A session. Thank you. I'll now turn the call back over to Hans Bjorkman for closing comments.

Operator 2: We have reached the end of our Q&A session. Thank you. I will now turn the call back over to Hans Bjorkman for closing comments.

Operator: We have reached the end of our Q&A session. Thank you. I will now turn the call back over to Hans Bjorkman for closing comments.

Speaker #5: All right. I'll let John do a quick wrap-up here, and then we'll let you get on to the rest of your day.

Hans Bjorkman: All right. I'll let John do a quick wrap up here, and then we'll let you get on to the rest of your day.

Speaker #2: Yeah. Thanks, Hans. And again, thank you for joining the call. As I said, 25 2025 and '26 will be low points in our free cash flow generation as 2026 is a transition year for us.

John V. Sims: Yeah. Thanks, Hans. Again, thank you for joining the call. You know, as I said, 25, 2025 and 2026 will be low points in our free cash flow generation as 2026 is a transition year for us. It also will be a year of two halves. You know, in H1, we'll be impacted by the transition costs plus input costs, while H2 should see improved pricing and margins and mix improvements across all our regions. This will be a year where we're executing our most significant investments in our Eastover Mill that will drive a lot of value in the years to come. We have launched our lean transformation and focusing on exceeding our customers' expectations and driving improvement across our operations.

John Sims: Yeah. Thanks, Hans. Again, thank you for joining the call. You know, as I said, 25, 2025 and 2026 will be low points in our free cash flow generation as 2026 is a transition year for us. It also will be a year of two halves. You know, in H1, we'll be impacted by the transition costs plus input costs, while H2 should see improved pricing and margins and mix improvements across all our regions. This will be a year where we're executing our most significant investments in our Eastover Mill that will drive a lot of value in the years to come. We have launched our lean transformation and focusing on exceeding our customers' expectations and driving improvement across our operations.

Speaker #2: And it'll also be a year or two halves. In the first half, we'll be impacted by the transition costs plus input costs. While the second half should see improved pricing and margins and mixed improvements across all our regions.

Speaker #2: This will be a year where we're executing our most significant investments in our Eastover mill that will drive a lot of value in the years to come.

Speaker #2: We have launched our lane transformation and focusing on exceeding our customers' expectations and driving improvement across our operations. We are focused on long-term value creation, and it will generate strong and sustainable results.

John V. Sims: You know, we are focused on long-term value creation that will generate strong and sustainable results by executing our flagship growth strategy and disciplined capital allocations. As I said, you know, as industry conditions turn, our capital spending normalizes and the benefits from our investments begin to materialize. We believe we have the potential to generate greater than $300 million of free cash flow and greater than 15% return on invested capital. Again, thank you for joining, and I hope everybody has a good day. Bye.

John Sims: You know, we are focused on long-term value creation that will generate strong and sustainable results by executing our flagship growth strategy and disciplined capital allocations. As I said, you know, as industry conditions turn, our capital spending normalizes and the benefits from our investments begin to materialize. We believe we have the potential to generate greater than $300 million of free cash flow and greater than 15% return on invested capital. Again, thank you for joining, and I hope everybody has a good day. Bye.

Speaker #2: By executing our flagship growth strategy and disciplined capital allocations, and as I said, as industry conditions turn, our capital spending normalizes and the benefits from our investments begin to materialize, we believe we have the potential to generate greater than $300 million in free cash flow and greater than 15% return on invested capital.

Speaker #2: So again, thank you for joining, and I hope everybody has a good day. Bye.

Speaker #5: Thank you.

Hans Bjorkman: Thank you.

Speaker #1: Thank you for participating in Sylvamo's first quarter 2026 earnings call. You may now disconnect.

Operator 2: Thank you for participating in Sylvamo's Q1 2026 earnings call. You may now disconnect. This event has now concluded. Access the Sylvamo North America, LLC, IR website for more information. This line will now disconnect.

Operator: Thank you for participating in Sylvamo's Q1 2026 earnings call. You may now disconnect. This event has now concluded. Access the Sylvamo North America, LLC, IR website for more information. This line will now disconnect.