Sylvamo Corp (SLVM) 2024 Q2 法說會逐字稿

Good morning. Thank you for standing by, and welcome to Sylvamo's second-quarter 2024 earnings call. (Operator Instructions) As a reminder, your conference is being recorded.

早安.感謝您的耐心等待，歡迎參加 Sylvamo 的 2024 年第二季財報電話會議。（操作員說明）謹此提醒，您的會議正在錄製中。

I'd now like to turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

我現在想將電話轉給投資者關係副總裁漢斯·比約克曼 (Hans Bjorkman)。先生，地板是你的了。

Thanks, Colin. Good morning and thank you for joining our Sylvamo Corporation second-quarter 2024 earnings call. Our speakers this morning are Jean-Michel Ribieras, Chairman and Chief Executive Officer; and John Sims, 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.

謝謝，科林。早安，感謝您參加我們的 Sylvamo Corporation 2024 年第二季財報電話會議。今天上午的演講者是董事長兼執行長 Jean-Michel Ribieras；以及資深副總裁兼財務長約翰·西姆斯 (John Sims)。投影片 2 和 3 包含重要訊息，包括某些法律免責聲明。例如，在本次電話會議中，我們將做出具有風險和不確定性的前瞻性陳述。

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

我們也將提供某些非美國公認會計準則財務資訊。附錄中也提供了這些數據與美國公認會計準則財務指標的對帳。我們的網站包含收益發布以及今天的簡報的副本。

With that, I'll turn the call over to you, Jean-Michel.

這樣，我就把電話轉給你，讓-米歇爾。

Thanks, Hans. Good morning, and thank you for joining our call. I'll begin with our sustainability highlights on Slide 4. Our first and greatest responsibility is to ensure the safety and well-being of our team members. We do this by putting people before paper always.

謝謝，漢斯。早安，感謝您加入我們的通話。我將從幻燈片 4 上的可持續​​發展亮點開始。我們的首要也是最大的責任是確保團隊成員的安全和福祉。為此，我們始終將人置於紙張之上。

We're also committed to operating as a sustainable cooperation that creates profits for our shareowners, while protecting the environment and improving the lives of those with whom we interact. Continuing Sylvamo commitment for transparent reporting, in the second quarter, we published our sustainability report in a new streamlined format. We also expanded the sustainability up on sylvamo.com to communicate sustainable news, regional content, certification and more. I encourage you to visit our website and learn about our sustainability efforts. Let's go to Slide 5.

我們也致力於以可持續的合作方式運營，為我們的股東創造利潤，同時保護環境並改善與我們互動的人們的生活。延續西爾瓦莫對透明報告的承諾，我們在第二季以新的簡化格式發布了永續發展報告。我們還在 sylvamo.com 上擴展了永續發展，以傳播永續新聞、區域內容、認證等。我鼓勵您訪問我們的網站並了解我們的永續發展努力。讓我們看投影片 5。

Now let me go into some highlights of the quarter. We experienced improved uncoated freesheet and pulp conditions. Our mill system ran well as we successfully completed our heaviest planned maintenance of this quarter. We now have almost 75% of our planned maintenance outage for the year behind us. We generated strong cash flow.

現在讓我談談本季的一些亮點。我們經歷了改善的無塗層自由紙和紙漿條件。我們的工廠系統運作良好，並成功完成了本季最繁重的計畫維護。現在，我們已經完成了今年計劃維護停電的近 75%。我們產生了強勁的現金流。

And in May, we announced a 50% increase to our quarterly dividend from $0.30 to $0.45 per share, that paid out at the end of July. Let's move to the next slide. Slide 6 shows our key financial metrics. We earned adjusted EBITDA of $164 million, with a margin of 18%. Free cash flow generation was $62 million, and we generated adjusted operating earnings of $1.98 per share.

5 月份，我們宣布將季度股息從每股 0.30 美元增加到 0.45 美元，增加 50%，並於 7 月底支付。讓我們轉到下一張投影片。幻燈片 6 顯示了我們的關鍵財務指標。我們的調整後 EBITDA 為 1.64 億美元，利潤率為 18%。自由現金流量為 6,200 萬美元，調整後的營運收益為每股 1.98 美元。

I'm proud of our team delivered impressive results by taking care of our customers and successfully executing several planned maintenance outages across our system. Now John will review our performance in more detail.

我為我們的團隊透過照顧客戶並成功執行整個系統的幾次計劃維護中斷而取得了令人印象深刻的成果感到自豪。現在約翰將更詳細地回顧我們的表現。

Thank you, Jean-Michel, and good morning, everyone. I'm on Slide 7. Over the first half of the year, uncoated freesheet conditions improved from last year. Looking at industry demand across our regions, Europe was up 14%, North America was up 3%, however, Latin America decreased 1%, but this was influenced by a significant drop in Argentina. Industry operating rates improved in North America when a supplier permanently converted approximately 4% of uncoated freesheet capacity to pulp at the end of June.

謝謝你，讓-米歇爾，大家早安。我在投影片 7 上。今年上半年，無塗裝免費紙張狀況較去年有所改善。從各地區的產業需求來看，歐洲成長了14%，北美成長了3%，但拉丁美洲下降了1%，但這是受到阿根廷大幅下降的影響。6 月底，一家供應商將約 4% 的無塗層免費紙產能永久轉換為紙漿，北美地區的行業開工率有所改善。

A European competitor announced in May, they would close the machine in Germany by the end of the year. This closure will reduce European supply by about 5%. Pulp and paper prices have moved up across our regions over the first half of the year as well. Excluding pulp, we also saw the stabilization of most input costs, although at a high level. Let's move to the next slide.

一家歐洲競爭對手在五月宣布，他們將在年底前關閉德國的機器。此次關閉將使歐洲供應量減少約 5%。今年上半年，我們地區的紙漿和紙張價格也有所上漲。除紙漿外，我們還看到大多數投入成本趨於穩定，儘管處於較高水平。讓我們轉到下一張投影片。

Slide 8 contains our second-quarter earnings bridge. The $164 million of adjusted EBITDA was better than our outlook of $145 million to $160 million. Price and mix improved by $26 million reflecting the implementation of pulp and paper price increases previously communicated in all regions as well as better mix in Latin America. Volume increased by $8 million, primarily driven by seasonally stronger demand in Latin America. Operations and other costs improved by $10 million, primarily reflecting a solid operation and seasonally lower costs in Europe and North America.

第 8 張投影片包含我們第二季的收益橋樑。1.64 億美元的調整後 EBITDA 好於我們預期的 1.45 億至 1.6 億美元。價格和產品組合改善了 2600 萬美元，反映出先前在所有地區傳達的紙漿和紙張價格上漲的實施以及拉丁美洲的更好的組合。銷量增加了 800 萬美元，主要是由於拉丁美洲季節性需求強勁所致。營運和其他成本減少了 1000 萬美元，主要反映了歐洲和北美的穩健營運以及季節性成本下降。

Planned maintenance outages costs increased by $4 million and input and transportation costs decreased by $6 million. So let's move to Slide 9. We expect to deliver third-quarter adjusted EBITDA of $170 million and $185 million. We project price and mix to be slightly unfavorable primarily due to mix. We expect volume to improve by $10 million to $15 million, driven by Latin America and North America.

計畫維護停電成本增加了 400 萬美元，投入和運輸成本減少了 600 萬美元。讓我們轉到投影片 9。我們預計第三季調整後 EBITDA 分別為 1.7 億美元和 1.85 億美元。我們預計價格和組合將略微不利，主要是由於組合。在拉丁美洲和北美的推動下，我們預計銷量將增加 1,000 萬至 1,500 萬美元。

Operations and other costs are projected to increase by $10 million to $15 million, primarily driven by higher unabsorbed fixed costs from economic downtime in North America, and Europe, as we continue to manage our production to our customers' demand. We expect input and transportation costs to increase by $5 million to $10 million due to unfavorable fiber in Latin America and energy in North America.

營運和其他成本預計將增加 1,000 萬美元至 1,500 萬美元，這主要是由於北美和歐洲經濟停頓導致未吸收固定成本增加，因為我們繼續根據客戶需求管理生產。由於拉丁美洲的纖維和北美的能源不利，我們預計投入和運輸成本將增加 500 萬至 1,000 萬美元。

Planned maintenance outages are projected to improve by $28 million as we have no major planned outages this quarter. We're making good progress on Project Horizon, our program to streamline overhead, manufacturing and supply chain costs. We're on track to achieve our year-end run rate target of $110 million in savings.

由於本季沒有重大計畫停電，計畫內維護停電預計將減少 2,800 萬美元。我們在「地平線計畫」方面取得了良好進展，該計畫旨在簡化管理費用、製造和供應鏈成本。我們預計將實現節省 1.1 億美元的年終運行率目標。

Let's go to Slide 10. We are focused on uncoated freesheet. And we will continue to create long-term value through our talented team, iconic brand and low-cost mills in favorable locations. Our capital allocation strategy is to maintain a strong financial position, reinvest in our business to improve our competitive advantages and continue to return substantial cash to shareowners. Let's look at the next few slides and talk through each of these uses of cash. Last week, we announced the refinancing of our long-term debt to extend our maturity profile.

讓我們看投影片 10。我們專注於無塗層免費紙張。我們將繼續透過我們的才華橫溢的團隊、標誌性品牌和位於有利地點的低成本工廠創造長期價值。我們的資本配置策略是保持強勁的財務狀況，對我們的業務進行再投資以提高我們的競爭優勢，並繼續向股東返還大量現金。讓我們來看看接下來的幾張投影片並逐一討論現金的用途。上週，我們宣布對長期債務進行再融資，以延長我們的期限。

Details are in the 8-K we filed on August 1 and also included in the appendix. Here on Slide 11, you can see the before and after picture of our maturity profile after we redeem all outstanding 7% notes on September 1. Our strong balance sheet provides us the flexibility to address macro conditions, downside risk and to invest in high-return opportunities throughout the cycle. Let's move to Slide 12. We will continue to return substantial cash to shareowners via dividends and share repurchases.

詳細資訊請見我們於 8 月 1 日提交的 8-K，也包含在附錄中。在投影片 11 上，您可以看到我們在 9 月 1 日贖回所有未償還 7% 票據後到期情況的前後對比圖。我們強大的資產負債表使我們能夠靈活地應對宏觀狀況、下行風險，並在整個週期中投資於高回報機會。讓我們轉到投影片 12。我們將繼續透過股利和股票回購向股東返還大量現金。

As this graph shows, we initiated a dividend within the first year of our spin-off after paying down significant debt and strengthening our financial position. In 2023, we more than doubled our regular dividend and then raised it again to $0.30 per share in the fourth quarter. We also issued a special dividend of $0.30 per share. This year, we raised a regular dividend by 50% to $0.45 per share. Thus far in 2024, we have distributed $43 million via the three quarterly dividends and have repurchased $30 million in shares.

如圖所示，在償還大量債務並加強我們的財務狀況後，我們在分拆後的第一年就開始派發股息。2023 年，我們將定期股息增加了一倍多，然後在第四季度再次將其提高至每股 0.30 美元。我們還派發了每股 0.30 美元的特別股息。今年，我們將定期股息提高了 50%，達到每股 0.45 美元。2024 年到目前為止，我們已透過三個季度股利分配了 4,300 萬美元，並回購了 3,000 萬美元的股票。

Let's move to Slide 13. We continue to invest in high-return projects to strengthen our business while increasing earnings and cash flow. On this slide, you can see how we have ramped up our spending in maintenance, reforestation and high-return capital projects since our spin-off. At the time of our spin-off, we had line of sight on at least $100 million of high-return projects, about $70 billion of which we have funded by -- will have funded by the end of this year. We have now identified and starting to develop another $200 million of high-return capital projects to invest in the coming years.

讓我們轉到投影片 13。我們繼續投資高回報項目，以加強我們的業務，同時增加收益和現金流。在這張投影片上，您可以看到自分拆以來我們如何增加在維護、重新造林和高回報資本項目方面的支出。在我們分拆時，我們已經關注了至少 1 億美元的高回報項目，其中我們已經資助了約 700 億美元，並將在今年年底之前資助這些項目。我們現已確定並開始開發另外 2 億美元的高回報資本項目，以便在未來幾年進行投資。

These projects of varying sizes are largely focused on our flagship mill, providing us with opportunities to grow our earnings and cash flow. We expect such investments to generate well above cost of capital return. With that, Jean-Michel, I'll turn it back over to you.

這些不同規模的項目主要集中在我們的旗艦工廠，為我們提供了增加收入和現金流的機會。我們預期此類投資將產生遠高於資本成本的回報。有了這個，讓-米歇爾，我會把它交還給你。

Thanks, John. I'll conclude my comments on Slide 14. Sylvamo is a cash flow story, and we continue to deliver against our investment thesis. We will leverage our strengths to drive high returns on invested capital, generate free cash flow and use that cash to increase shareowner value. Financial discipline is a key component of our strategy.

謝謝，約翰。我將結束對幻燈片 14 的評論。Sylvamo 是一個現金流故事，我們將繼續兌現我們的投資理念。我們將利用我們的優勢來推動投資資本的高回報，產生自由現金流，並利用這些現金來增加股東價值。財務紀律是我們策略的重要組成部分。

As John discussed, we have refinanced our long-term debt to extend our maturity profile. We are committed to return at least 40% of our free cash to shareowners this year. We are reducing our cost structure and have a great pipeline of high-return capital projects, which will enable us to grow earnings and cash flow in the coming years. We are confident in our future and motivated by the opportunities that lie ahead. With that, I'll turn the call back to Hans.

正如約翰所討論的，我們已經為長期債務進行了再融資，以延長我們的期限。我們承諾今年將至少 40% 的自由現金回饋給股東。我們正在降低成本結構，並擁有大量高回報資本項目，這將使我們能夠在未來幾年增加收入和現金流。我們對未來充滿信心，並受到前方機會的激勵。說完，我會把電話轉回給漢斯。

Thanks, Jean-Michel, and thank you, John. Okay, Colin, we're ready to take questions.

謝謝讓·米歇爾，謝謝約翰。好的，科林，我們準備好回答問題了。

(Operator Instructions) Cole Hathorn, Jefferies.

（操作員說明）Cole Hathorn，Jefferies。

Good morning. Thanks for taking my question. Two from my side. The first one is on wood costs. You called out a bit of cost inflation in Latin America. But in the Nordics, we've seen higher wood cost structurally. I'm just wondering what you're seeing in your other markets within Europe in your French mill.

早安.感謝您提出我的問題。我這邊有兩個。第一個是木材成本。您指出了拉丁美洲的一些成本通膨。但在北歐，我們看到結構性木材成本更高。我只是想知道您在歐洲其他市場的法國工廠中看到了什麼。

Are you seeing a more stable wood basket? And just any color you can talk about on wood cost because I think that gives you a relative advantage versus some of the others. And then sticking with Europe, we've seen some changes in market structure with various paper distributors having financial issues and going bankrupt. Is that a positive or a negative for still Sylvamo going forward from here, effectively, are you able to cut out the middleman in that? Love your thoughts there.

您是否看到更穩定的木籃？您可以談論木材成本的任何顏色，因為我認為這會給您帶來相對於其他一些顏色的優勢。然後在歐洲，我們看到市場結構發生了一些變化，各種紙張分銷商出現財務問題並破產。這對西爾瓦莫從這裡繼續前進來說是積極還是消極，有效地，你能消除中間人嗎？喜歡你那裡的想法。

So let me -- and thanks for joining the call. Let me start by the wood cost. The wood cost increase in Brazil, started by Brazil, is due to all the non -- the wood rebuy. First, we got two to three years, we need to buy more wood because when we got Sylvamo, there have been years where the investment in the forestry was not sufficient. So we made up for this investment, and we've cut out.

那麼請讓我——感謝您參加這次電話會議。讓我從木材成本開始。由巴西發起的巴西木材成本上漲是由於所有非木材重新購買造成的。首先，我們有兩到三年的時間，我們需要購買更多的木材，因為當我們得到西爾瓦莫時，有幾年對林業的投資不足。所以我們彌補了這筆投資，然後我們就退出了。

So not only we need to buy a little bit more pulp, but in -- wood, sorry. And on top of that, it's a little bit more expensive. In Europe, we've seen, as you mentioned, the wood cost of Scandinavia increased. There is some of the whole wood demand increase, which has impact and Russia and Belarus stop exporting woodchips, which has reduced the other whole wood supply in Scandinavia. So increase in Sweden, some increase in Brazil, which will make up for it.

因此，我們不僅需要購買更多的紙漿，而且還需要購買木材，抱歉。最重要的是，它的價格有點貴。在歐洲，正如您所提到的，我們看到斯堪的納維亞半島的木材成本增加了。部分整木需求增加，受到影響，俄羅斯和白俄羅斯停止出口木片，這減少了斯堪的納維亞其他整木供應。因此，瑞典的增加，巴西的一些增加，這將彌補這一點。

Saillat is roughly stable, and the US is roughly stable on a high level. So that's on the wood side. But I agree with you, we have an advantage with our forestry in Brazil, and we have very good wood cost in the US. In the merchant side in Europe, I would say it's neutral to us.

賽拉特大致穩定，美國大致穩定在高位。所以這是在木頭方面。但我同意你的觀點，我們在巴西的林業有優勢，而且我們在美國的木材成本非常好。在歐洲的商人方面，我想說這對我們來說是中立的。

We have great partners in Europe, and we're glad to have these customers. We're ready if there is some more changes in the merchant area or in the channels. If it has to be more direct, we would be, but I would call it neutral for us, one way or another.

我們在歐洲擁有優秀的合作夥伴，我們很高興能擁有這些客戶。如果商家區域或通路有更多變化，我們已經做好準備。如果必須更直接，我們會這樣做，但我認為這對我們來說是中立的，無論如何。

And then if I could have a follow-up, which is just around the demand trends. We saw a lot of restocking across various end markets and graphic paper in general, including office paper saw some restocking. Where do you see we are from an underlying demand perspective? Do you have any good visibility or items to call out on the demand trends by region in North America, Europe and LatAm?

然後我是否可以跟進需求趨勢。我們看到各個終端市場和印刷用紙（包括辦公用紙）都有大量補貨。從潛在需求的角度來看，您認為我們處於什麼位置？對於北美、歐洲和拉丁美洲各地區的需求趨勢，您有什麼好的知名度或項目可以指出嗎？

Cole, this is John. I'll talk a little bit about demand. So we have seen restocking in the first half, and we talked about that, that's what drove some of the improvement. You look at by region, looking at the industry, where we are year-to-date, we're up about 3% in North America, 14% in Europe, and LatAm was relatively flat. Again, there was an issue around Argentina.

科爾，這是​​約翰。我會談談需求。所以我們在上半年看到了補貨，我們也談到了這一點，這就是推動一些改善的原因。按地區、產業來看，今年迄今為止，我們在北美成長了約 3%，在歐洲成長了 14%，而拉丁美洲則相對持平。阿根廷又出現了一個問題。

Going forward, we expect that the demand will be positive for the full year, and this is actually consistent with forecast we're seeing from other industry experts. Some of that is driven not because of the restocking, but because of the weak comp to second half. So I would characterize our demand now, and particularly in North America and Western Europe, is relatively stable. But from a comp perspective, easy comp perspective, it's going to be a positive relative to last year. So we're looking at probably Europe around 7% full year, LatAm round up 3% full year and North America around 5%.

展望未來，我們預計全年需求將為正值，這實際上與我們從其他行業專家那裡看到的預測一致。其中一些原因不是因為補貨，而是因為下半年的比較疲軟。因此，我認為我們現在的需求，特別是在北美和西歐，相對穩定。但從比較的角度來看，簡單的比較角度來看，相對於去年來說，這將是正面的。因此，我們預計歐洲全年成長約 7%，拉丁美洲全年成長 3%，北美成長約 5%。

And on the long trend, I think you talked about that also, we see returning in Europe and North America to long-term trends, which is slight decrease.

關於長期趨勢，我想你也談到了這一點，我們看到歐洲和北美回歸長期趨勢，略有下降。

Thank you.

謝謝。

Matthew McKellar, RBC Capital Markets.

馬修·麥凱勒，加拿大皇家銀行資本市場部。

Hi, good morning. Thanks for taking my questions. I'd like to first just follow on Cole's question around fiber costs in Latin America. Could you maybe just give a little bit more color around what's happening with fiber costs? And what your expectations are in terms of what happens with cost of purchase in Latin America over the next few quarters?

嗨，早安。感謝您回答我的問題。我想先回答科爾關於拉丁美洲光纖成本的問題。您能否就光纖成本的變化提供更多資訊？您對未來幾季拉丁美洲的採購成本有何預期？

Yes, Matt, thanks. This is John Sims. So what we've seen and just drove, what we talked about in terms of valuation of our land in Brazil, we've seen increased cost of fiber in Brazil. And that's -- we expect that to continue, maybe at the inflation rate. But when you compare -- and when I talk about increased market price, that wood that we're not actually harvesting and growing, but when we have to go to the market, it's about 3x the cost of our own wood.

是的，馬特，謝謝。這是約翰·西姆斯。因此，我們所看到的和剛剛駕駛的，我們談到的巴西土地估值，我們看到巴西的光纖成本增加。我們預計這種情況將持續下去，也許會以通貨膨脹率的速度增長。但當你比較時——當我談到市場價格上漲時，我們實際上並沒有收穫和種植木材，但當我們必須去市場時，它的成本大約是我們自己的木材成本的 3 倍。

And so that's what's driving some of the cost increases we've seen down in Brazil, is what Jean-Michel talked about. Right now, our self-sufficiency is lower than what we had been historically. We're probably supplying about 70% of our needs. We'd like to be around 85%. This is why we're reinvesting and increased our investments in our own plantations.

讓-米歇爾談到，這就是我們在巴西看到的成本上漲的原因。目前，我們的自給自足程度低於歷史水準。我們可能滿足了大約 70% 的需求。我們希望達到 85% 左右。這就是我們對自己的種植園進行再投資和增加投資的原因。

But when you reach out for higher -- for market wood, those prices are higher. We're also reaching out the further distances, so you have to pay the additional freight. So that's some of the things that are impacting us in Latin America.

但當你尋求更高的市場木材時，價格就會更高。我們的運輸距離也比較遠，因此您需要支付額外的運費。這就是影響我們拉丁美洲的一些事情。

But as we said, this is why we're reinvesting or increasing our investments in reforestation. And finally, I think your question is the trend. We expect that to increase, continue to increase the cost of fiber down in Latin America.

但正如我們所說，這就是我們對重新造林進行再投資或增加投資的原因。最後，我認為你的問題是趨勢。我們預計拉丁美洲的纖維羽絨成本將持續增加。

Okay. Great. That's helpful. Maybe next, you called out price mix and somewhat unfavorable for the sequential progression into Q3, mostly on mix. Could you provide just a bit more color there? Is that more export mix in paper sales? Is there maybe also an assumption around what happens if pulp prices in there? Any color would be helpful.

好的。偉大的。這很有幫助。也許接下來，您會指出價格組合，並且對第三季的連續進展有些不利，主要是在組合上。你能提供更多一點的顏色嗎？紙張銷售中的出口組合是否更多？如果紙漿價格在那裡，是否也可能會發生什麼情況？任何顏色都會有幫助。

Thank you. Matt, we can't really talk about future pricing, but that variance that we said is predominantly all mix, and it is more export mix, particularly in North America. And where is that going, that's going to Mexico. You may be aware that Mexico implemented tariffs for the next two years on countries that don't have a trade agreement. So that gives an advantage to companies like us that are based in the US, and we're taking advantage of that. So we're exporting more to Mexico and that's what's accounting for the mix change.

謝謝。馬特，我們不能真正談論未來的定價，但我們所說的差異主要是所有混合，而且更多是出口混合，特別是在北美。那要去哪裡，要去墨西哥。您可能知道，墨西哥將在未來兩年內對沒有簽訂貿易協定的國家徵收關稅。因此，這為像我們這樣總部位於美國的公司提供了優勢，我們正在利用這一優勢。因此，我們向墨西哥出口了更多產品，這就是結構變化的原因。

Yes. Great. Thanks for the help. I'll turn it back and get into queue.

是的。偉大的。感謝您的協助。我會把它轉回來並進入隊列。

Thank you.

謝謝。

George Staphos, Bank of America.

喬治‧斯塔福斯，美國銀行。

Hi, everyone. Good morning. Thanks for the details. Can you hear me okay?

大家好。早安.感謝您提供詳細資訊。你聽得到我說話嗎？

Yes, George. Hi, thanks for joining.

是的，喬治。您好，感謝您的加入。

Hey, Jean-Michel. Hi, John. So two questions to start and I'll go back in queue. Can you give us a little bit more detail on the projects that are in the pipeline now, relative to what you have been working on and what the return differential might be? Or are they basically all still above cost of capital, presumably they're all above cost of capital and the same spread? So any color on how this latest pipeline varies with what's been in the pipeline in terms of processes, approaches and return thresholds? That's question one.

嘿，讓-米歇爾。嗨，約翰。首先有兩個問題，我將回到隊列中。您能否為我們提供更多關於目前正在籌備的項目的詳細信息，相對於您一直在做的項目以及回報差異可能是多少？或者它們基本上仍然高於資本成本，大概它們都高於資本成本且利差相同？那麼，這條最新的管道在流程、方法和回報閾值方面與管道中的內容有何不同？這是問題一。

Question two, on the dividend. Congratulations on raising the dividend with another sizable increase. How did you think about raising it to the degree you did on the regular side as opposed to maybe raising a lesser amount and then doing a special dividend? What gave you the comfort to raise it, the full 50%?

問題二，關於股利。恭喜您再次大幅增加股利。您如何考慮將其提高到常規股息的程度，而不是籌集較少的金額然後發放特別股息？是什麼讓您安心提高了全額 50%？

So I'll take maybe the first one and John will take the second question. But we could both answer it, I guess. So yes, we still have a very high threshold of capital investment return. So all the projects we're looking at is a strict minimum of 20% return. So this is why it's very attractive.

所以我可能會回答第一個問題，約翰會回答第二個問題。但我想我們都可以回答這個問題。所以是的，我們的資本投資回報門檻仍然很高。因此，我們關注的所有項目的回報率都嚴格限制在 20% 的最低水平。這就是它非常有吸引力的原因。

Those projects have on different sides. Some are very small, and some are larger. We are selling them, they are in the pipeline, and we're working with our Board to plan for the coming years on this investment. But they're very attractive and incremental on both cash and earnings to Sylvamo.

這些項目有不同的面向。有些非常小，有些則較大。我們正在出售它們，它們正在醞釀中，我們正在與董事會合作，規劃未來幾年的這項投資。但它們對西爾瓦莫來說非常有吸引力，並且可以增加現金和收益。

And George, to your second question goes back to our capital allocation strategy, first and foremost, and our priority is to have a strong balance sheet; second is to reinvest back in the business where we can grow our earnings and cash flow. And then the third is returning cash to shareholders. And core to that is a dividend. A dividend that we have believed and have confidence that we can sustain forever, if you will. And a dividend that doesn't restrict us from a strategic flexibility perspective.

喬治，你的第二個問題回到我們的資本配置策略，首先也是最重要的，我們的首要任務是擁有強大的資產負債表；其次是對能夠增加收入和現金流的業務進行再投資。第三是向股東返還現金。其核心是股息。如果您願意的話，我們相信並有信心能夠永遠維持這种红利。從策略靈活性的角度來看，這种红利不會限制我們。

So we had a lot of confidence in terms of increasing the dividend and mostly driven by what your first question pertains to, we believe there is opportunities for us to increase earnings and cash flow in this business through smart reinvestments in high-return projects going forward, which we're executing right now. And because we have a good line of sight on that and because of our, we believe, competitive advantages we have and in the markets that we operate and -- give us a lot of confidence to be able to sustain dividend that we put forward.

因此，我們對增加股息充滿信心，主要是受到您的第一個問題的推動，我們相信我們有機會透過對未來高回報項目的明智再投資來增加這項業務的收益和現金流，我們現在正在執行。因為我們對此有良好的視野，並且因為我們相信我們在我們經營的市場中擁有的競爭優勢，所以我們有很大的信心能夠維持我們提出的股息。

John, maybe if I could sort of do a quick tag on the turnover. Maybe I'm reading between the lines incorrectly. But does that suggest any next dividend increases maybe are more of the special side as you return once again to -- I mean your balance sheet is in great shape as we sit here at the moment, as you develop the next pipeline and increase presumably the cash generation of the business through reinvestment. Would that be the right way to think about the cadence and staging?

約翰，也許我可以對營業額做一個快速標記。也許我讀錯了字裡行間。但這是否表明，當您再次返回時，任何下一次股息增加可能都更加特殊——我的意思是，當您開發下一個管道並增加大概時，您的資產負債表狀況良好，因為我們現在坐在這裡。這是考慮節奏和舞台的正確方法嗎？

Yes. I wouldn't want to fore settle that. I think we will -- we review that and we think about that as we view our strategic plans with the Board. And I think that we believe that we can sustainably increase the dividend that we'll do that, or we think that there may be better uses for cash, such as buying back shares or reinvesting back in the business. We may do that prior to a special dividend or in the case like we did last year, we may issue a special dividend.

是的。我不想預先解決這個問題。我認為我們會——我們會審查這一點，並在與董事會一起審視我們的策略計劃時考慮這一點。我認為我們相信我們可以持續增加股息，或者我們認為現金可能有更好的用途，例如回購股票或重新投資於業務。我們可能會在特別股息之前這樣做，或者像我們去年一樣，我們可能會發放特別股息。

Thank you so much

太感謝了

Matthew McKellar, RBC Capital Markets.

馬修·麥凱勒，加拿大皇家銀行資本市場部。

Thank you. As we get closer to the fall election, what are you seeing in terms of impacts to uncoated freesheet demand as far as you can discern?

謝謝。隨著秋季選舉的臨近，據您所知，您認為對無塗層免費紙張需求的影響如何？

So the balance is always an opportunity for us, but it's not a big volume. So it's something we have largely the capacity, between us and our competition in North America, to supply. So it's an opportunity, but it's nothing very significant. It's a few silent tones, not a big deal.

所以平衡對我們來說始終是個機會，但數量並不大。因此，我們和我們在北美的競爭對手之間基本上有能力提供這種產品。所以這是一個機會，但不是什麼重要的事情。就是幾聲無聲的聲音，沒什麼大不了的。

Okay. Thank you,

好的。謝謝你，

Matthew, we've seen election impact on uncoated freesheet demand. I mean it used to be a pretty significant driver, but that's become less and less.

馬修，我們已經看到選舉對無塗層免費紙張需求的影響。我的意思是它曾經是一個非常重要的驅動因素，但現在變得越來越少。

Okay. Fair enough. Next maybe just shifting to imports. It looks like they continue to tick higher in North America. Can you just maybe provide some updated perspective here. Are imports more of a concern as it relates to how you're thinking about the market landscape today versus how you're maybe thinking about the market at the start of the year?

好的。很公平。接下來可能只是轉向進口。北美地區的股價似乎繼續走高。您能否在這裡提供一些最新的觀點？進口是否更值得關注，因為它關係到您如何看待當今的市場格局，而不是您對年初市場的看法？

So let me maybe give-back the story. Imports in North America, since 2018, have varied between 8% to 13%. And they really vary depending on (inaudible) freight rates, wood market, foreign exchange. So we have been in the same range since early '23 and even this year. So I think we should always be on the 10%, 13%, something like that range.

那麼就讓我來回顧一下這個故事吧。自 2018 年以來，北美的進口量變化在 8% 至 13% 之間。它們確實會根據（聽不清楚）運費、木材市場、外匯而改變。因此，自 23 年初甚至今年以來，我們一直處於同一範圍內。所以我認為我們應該始終保持在 10%、13% 之類的範圍內。

And I don't read more than that. And I think some of the importers to the US have been gone due to freight, some have been gone to local market opportunity to sell spot. If you look at it, it's interesting because where the imports come in North America, it changes also through the years. It's not always the same region because it's very opportunistic kind of. So I still see it opportunistic and on that range that we have today. Nothing significantly change.

我不會讀更多的書。我認為一些到美國的進口商已經因為運費而消失了，一些已經去了當地市場出售現貨的機會。如果你看一下，你會發現很有趣，因為北美的進口來源多年來也改變了。它並不總是同一個地區，因為它是非常機會主義的。所以我仍然認為這是機會主義的，而且在我們今天的範圍內。沒有什麼顯著變化。

Okay. That's helpful. And if I could just sneak one more in. I was a little bit surprised to see some economic downtime in the European pulp system in Q2. Can you just provide maybe a little color on what happened there?

好的。這很有幫助。如果我能再偷偷溜進去一次就好了。我對第二季度歐洲紙漿系統出現一些經濟停機感到有點驚訝。您能否提供一些有關那裡發生的事情的資訊？

What's that again? I'm sorry.

那又是什麼？對不起。

I'll answer that question. So yes, we had an economic downtime, both in Europe and North America. And that's just a matter of us matching our capacity to customer demand. And you -- look in the outlook, we're expecting a little bit more in the third quarter than we had in the second quarter.

我來回答這個問題。所以，是的，我們在歐洲和北美都經歷了經濟停滯。這只是我們將我們的能力與客戶需求相匹配的問題。展望未來，我們對第三季的預期比第二季高一些。

But in the second quarter, we had significant outages. So although volumes are up, we're still matching our supply to our customers' demand. And we're being careful not to build unnecessary inventories.

但在第二季度，我們出現了嚴重的停電情況。因此，儘管銷售量有所增加，但我們仍在將供應與客戶的需求相匹配。我們非常小心，不要建立不必要的庫存。

Okay. And just to confirm, that's true of the pulp side as well, where it looks like you had a couple of thousand tons of economic downtime in Europe and recognizing its fairly small volumes, but just wanting to confirm.

好的。需要確認的是，紙漿方面也是如此，看起來歐洲有數千噸的經濟停工，並且認識到其數量相當小，但只是想確認一下。

I'm sorry, I misunderstood your question. You were asking about the pulp. And that was really driven just by some constraints that we had in balancing our -- the pulp production with our paper production and nothing more than that. There was plenty of demand for pulp in the second quarter. It's just a matter of a misbalance, if you say, in our ability to move pulp that we produced to the pulp dryer, we didn't do it.

抱歉，我誤解了你的問題。你問的是紙漿。這實際上是由我們在平衡紙漿生產和紙張生產時所面臨的一些限制所驅動的，僅此而已。第二季紙漿需求充足。如果你說，我們有能力將生產的紙漿轉移到紙漿乾燥機，那麼這只是一個不平衡的問題，我們沒有這樣做。

Okay. Thanks very much.

好的。非常感謝。

We can tell how we want in pulp in Europe. We have no issue at all.

我們可以知道我們對歐洲紙漿的需求。我們完全沒有問題。

Thanks very much.

非常感謝。

George Staphos, Bank of America.

喬治‧斯塔福斯，美國銀行。

Thanks so much. So gentlemen, I want to return back to the project line of questioning. Can you talk to the regions that are more likely to see some of this capital, number one. I know it's going to be in all three regions. I know it's going to be a mixture, but if there's any way that you could maybe give us some view on where it might be a bit more weighted relative to the size of the business? Secondly, can you talk to the degree to which some of the investments will be moving Sylvamo further down on the cost curve, and that's a presumption?

非常感謝。先生們，我想回到專案的提問方向。您能否與更有可能看到這些資本的地區談談，第一。我知道這將在所有三個地區進行。我知道這將是一個混合體，但是您是否可以向我們提供一些關於相對於業務規模而言它可能更重要的觀點？其次，您能否談談某些投資將在多大程度上使西爾瓦莫的成本曲線進一步下降，這是一個假設？

If that's true, what do you do with that benefit? Again, you have a really strong position in the market from a balance sheet standpoint. How are you leveraging that for the longer term competitively?

如果這是真的，你會用這個好處做什麼？同樣，從資產負債表的角度來看，您在市場上擁有非常強大的地位。您如何利用這一點來實現長期競爭？

So let me answer the first question. We -- as we mentioned, we intend to invest essentially in our flagship mills. So we intend to invest in our lowest mills, which is mostly in North America, Eastover, as you know, and in Brazil, Luis Antonio, and in Europe, Nymolla. So those are the low-cost mills. This is where we intend to continue to invest with high returns.

那麼讓我來回答第一個問題。正如我們所提到的，我們打算主要投資於我們的旗艦工廠。因此，我們打算投資最低的工廠，主要位於北美的伊斯特弗（Eastover），如您所知，巴西的路易斯·安東尼奧（Luis Antonio）和歐洲的尼莫拉（Nymolla）。這些都是低成本工廠。這是我們打算繼續投資並獲得高回報的領域。

In terms of the cash, as we said, we want to continue to give back cash to our shareholders. We have a policy right now of 40% of our free cash flow. If we had more cash, we could give back. We could also -- which is a good thing, even if we have a low debt right now, we could also reduce a little bit more our debt. So we have plenty of opportunity of cash reuser.

就現金而言，正如我們所說，我們希望繼續向股東返還現金。我們現在的政策是自由現金流的 40%。如果我們有更多現金，我們可以回饋。我們也可以——這是一件好事，即使我們現在的債務很低，我們也可以減少一點債務。所以我們有很多現金重用的機會。

Jean-Michel, I guess, what I was asking if you can hear me, are some of these projects designed to put you in an even better position versus your peers in the market from a cost cutting standpoint or not really?

讓米歇爾，我想，如果你能聽到我的話，我想問的是，從削減成本的角度來看，其中一些項目是否旨在讓你比市場上的同行處於更好的位置？

Completely. Most of them are cost oriented or cost impact. So they are really on that direction. We have the low cost and we want to be even lower cost.

完全地。其中大多數是成本導向或成本影響。所以他們確實朝著這個方向發展。我們的成本很低，而且我們希望成本更低。

Thank you so much.

太感謝了。

(Operator Instructions)

（操作員說明）

Just maybe to finish the discussion with George. Let me give you one example of a project we just did. So that gives you -- that was our Eastover mill. We increased our woodchip capacity to boost the supply of low-cost wood. This was a $1.2 million investment.

也許只是為了結束與喬治的討論。讓我舉一個我們剛剛完成的專案的例子。這就是我們的伊斯特沃工廠。我們增加了木片產能，以增加低成本木材的供應。這是一項 120 萬美元的投資。

We forecasted to sell $0.5 million, and actually, we're saving about $1 million on a yearly basis, 35%, and it's purely cost. So that's one example of cost project we have.

我們預計銷售額為 50 萬美元，實際上，我們每年節省約 100 萬美元，即 35%，而且這純粹是成本。這就是我們成本項目的一個例子。

George Staphos.

喬治·斯塔福斯。

Thank you. Last question from me, gentlemen. So we spend a lot of time on cost and capital and the like and rightly so. What are your customers asking you for now relative to, say, six months and a year ago? How has it changed? How are you leveraging whatever commercial requests are coming in to appropriately profitably at a high return, all that, maintain and grow your presence in the market with your best customers? How are you turning that into commercial margin?

謝謝。先生們，我的最後一個問題。因此，我們在成本和資本等方面花費了大量時間，這是正確的。與六個月前和一年前相比，您的客戶現在向您提出什麼要求？怎麼變了？您如何利用出現的任何商業請求，以適當的方式獲利並獲得高回報，從而維持並擴大您在市場上與最佳客戶的關係？您如何將其轉化為商業利潤？

I'm trying to make sure I understand well, your question, George. I think we have been --

我正在努力確保我很好地理解了你的問題，喬治。我想我們已經--

What are your customers asking you for differently now, Jean-Michel, that might have been the case six months ago or a year ago? And how are you turning that, whether it's service, whether it's SKUs, whether it's whatever -- online ordering, I mean that's an old one. How are you brining them to higher revenue per ton?

讓-米歇爾，您的客戶現在對您提出的要求有何不同，六個月前或一年前可能是這樣？你如何改變這一點，無論是服務，還是 SKU，無論是在線訂購，我的意思是這是一個舊的。如何讓他們獲得更高的每噸收入？

So demand of customers is actually a little bit different in the regions. If you're in Europe, there is more and more demand around sustainability. And the key customers, they want to be aligned with the sustainable company, which we are very well positioned, especially in Europe.

所以不同地區的客戶需求其實是有一點不同的。如果您身在歐洲，您會發現對永續發展的需求越來越大。關鍵客戶希望與永續發展的公司保持一致，我們在這方面處於非常有利的地位，尤其是在歐洲。

In Brazil, it is more continuing to develop our brands and supporting the importance of the brands because they are our partner, a lot of the merchants in Brazil on (inaudible) side are exclusive because they are very common to the brand. In the US, I would say it's more and more around service.

在巴西，更多的是繼續發展我們的品牌並支持品牌的重要性，因為他們是我們的合作夥伴，巴西（聽不清楚）方面的許多商家都是獨家的，因為他們對品牌來說非常常見。在美國，我想說它越來越圍繞著服務。

How can we optimize the service and having capacity worldwide and including strong capacity in the US, allow us to bring this unique service and integrations of supply chain. (inaudible) the trend if it's what you are asking for.

我們如何優化服務並在全球範圍內擁有強大的能力，包括在美國的強大能力，使我們能夠帶來這種獨特的服務和供應鏈整合。 （聽不清楚）趨勢，如果這是您所要求的。

Yes, that's exactly it. Thank you.

是的，就是這樣。謝謝。

I'll now turn the call back over to Hans Bjorkman for closing comments.

現在我將把電話轉回漢斯·比約克曼以徵求結束意見。

All right. Thank you, Colin. Jean-Michel, any closing comments?

好的。謝謝你，科林。Jean-Michel，有什麼結束語嗎？

So first of all, thanks for joining our call and your questions, we really appreciate it. Let me remind you that core to our strategy is managing a strong financial position, reinvesting in our business to increase our competitive advantages and returning cash to shareholders. When -- confidence in our ability to generate strong earnings and cash flow throughout the cycle. So again, thank you, and have a good day.

首先，感謝您加入我們的電話會議並提出您的問題，我們非常感謝。讓我提醒您，我們策略的核心是管理強大的財務狀況、對我們的業務進行再投資以提高我們的競爭優勢並向股東返還現金。當—對我們在整個週期中產生強勁收益和現金流的能力充滿信心。再次感謝您，祝您有美好的一天。

Thank you.

謝謝。

Once again, we would like to thank you for participating in Sylvamo's second-quarter 2024 earnings call. You may now disconnect.

我們再次感謝您參加 Sylvamo 的 2024 年第二季財報電話會議。您現在可以斷開連線。