Sylvamo Corporation (NYSE:SLVM) Q4 2022 Earnings Call Transcript

Ed Brucker: Hey, thanks for taking my question, and congrats on the good quarter. My first one was just on some of your comments right at start on what seems like some outperformance in shipments in the quarter versus peers. Just want to get your thoughts on, is that taking share within the market? Or, I guess, just more details on what you’re doing to kind of be the go-to uncoated freesheet provider?

Jean-Michel Ribieras: Yes, that — hi, Ed, thanks for joining the call. We’ve been a long-term partner in this business. And Sylvamo, especially, with its focus to uncoated freesheet, is very well aligned with the key winning customers worldwide. This is true in North America, but this is true in Europe and Latin America also. So, as a result, we usually grew more than the market, our volume. And this is not new. It’s been happening for multiple years. But we can see it very well today where it’s a very good fit with our customers, they’re very aligned with us, and we’re growing. And we’re growing on long-term partnership and with brands, with a complete offering, with the best partners in the channels, and that makes a difference. So, we want to continue to win in this market. We think we have the right — the key player.

Ed Brucker: Got it. My next question, just on M&A. The Swedish mill sounds like a pretty good acquisition. It seems like just in the space, the consolidation could be a way to control what seems to be a declining uncoated freesheet market just in general and control capacity there. So, just want to get your thoughts on more M&A, if you’re looking at other another acquisitions in the size you’d be willing to do that, primarily in the context of your restrictions that you do have on share repurchases and the excess cash you’ll likely have in 2023 with the $300 million free cash flow?

Jean-Michel Ribieras: So, Ed, M&A is not our priority. We are satisfied with our core mills and what we have today. It will be purely opportunistic. But returning more of cash is clearly our priority. So, this is more what we’re going to spend our time than looking M&A. Nymolla was a unique, very opportunistic, great opportunity. And we’re going to continue allocating our capital more to a strong financial position. The return, as I said, to cash to shareholders and great reinvestment in our business, that’s going to be our priority.

Ed Brucker: Got it.

John Sims: Yes. And I’ll just — this is John. I’ll just add that the Nymolla was while it was a great opportunity for us, core to our strategy is a focus on uncoated freesheet, which also is one of the reasons why we tend to outperform the market, because customers know that we’re in it for the long run. But we want assets that are low cost, that have a competitive advantage in the marketplace, so that we can continue to serve the uncoated freesheet, possibly generate a lot of cash for a long time. And that’s where the Nymolla mill just really fit right into the wheelhouse that we were looking for. There’s not a lot of opportunities for that, but that’s what we mean by opportunistic is kind of fit with our strategy. It’s got to be a low-cost, strong asset, and that’s where the Nymolla mill is.

Operator: We have another question from George Staphos with BofA Securities. Please begin.