Daniel Harriman • Sidoti & Company, LLC

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John Sims (SVP & COO) described Europe's market conditions as difficult, influenced by tariff impacts and a significant decrease in market pulp prices. He stated that while market improvement is needed, Sylvamo is focusing on controllable factors like improving its competitive cost position, enhancing product mix, reducing fixed costs, and lowering wood costs to stabilize performance.

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John Sims, Senior Vice President and Chief Operating Officer, reaffirmed the full-year capital guidance of $220 million to $240 million, explaining that spending is weighted to the second half due to large projects at the Eastover mill. Chairman and CEO Jean-Michel Ribiéras added that free cash flow follows a similar pattern, with approximately 90% generated in the second half of the year historically.

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SVP & COO John Sims reaffirmed the full-year capital spending guidance of $220 million to $240 million, explaining that spending is weighted to the second half due to large projects at the Eastover mill. Chairman & CEO Jean-Michel Ribiéras added that free cash flow is also heavily back-end loaded, noting that in the last two years, almost 90% of free cash flow was generated in the second half, with a similar pattern expected this year.

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CFO John Sims explained that capital spending will be weighted more heavily to the first half of 2025, aligning with the schedule of planned maintenance outages. However, he noted that spending on the major Eastover project will be spread throughout the year and that the overall monthly spending pattern is projected to be similar to 2024. CEO Jean-Michel Ribiéras reiterated that the H1 concentration of outages is a significant factor for the year's earnings cadence.

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CEO Jean-Michel Ribiéras stated that Sylvamo is prepared for a potential Riverdale closure, anticipating a breakeven financial impact due to mix improvements. He confirmed the 100,000 tons of retained Georgetown business have been fully transitioned. Both Ribiéras and CFO John Sims noted that European capacity reductions are expected to decrease economic downtime, with improvements already factored into the Q4 outlook.

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Preston Wigner, Chairman, President & CEO, detailed that Q1 is a seasonally low quarter and that recent short crops have meant less carryover inventory. He explained that Universal manages the shift to an oversupply market through its non-speculative buying strategy, which is based on customer needs and mitigates inventory risk. Wigner emphasized that the company's diversified footprint and strong customer relationships allow it to navigate market shifts, reduce working capital, and lower per-kilo costs, making a balanced-to-oversupply market generally preferable.

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Preston Wigner, Chairman, President & CEO, explained that Q1 is a seasonally low quarter where carryover sales are significant, and small changes in mix can have a large impact. He stated that the company is moving from a period of undersupply to a more balanced or oversupplied market, which they view favorably. Wigner emphasized that Universal does not buy tobacco on a speculative basis, which mitigates inventory risk in an oversupply situation. He noted that their diversified global footprint, strong customer relationships, and experience in managing market shifts position them well to handle changing dynamics, reduce working capital, and lower per-kilo processing costs with larger volumes.

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President, CEO & Director Shruti Singhal explained that the paint protection films turnaround is progressing well, with quality and capacity issues resolved, a successful mid-tier strategy in Asia, and share gains in North America's premium segment. CFO Greg Weitzel confirmed the path to approximately $80 million in free cash flow for 2025, citing a strong Q2, lower one-time costs, and significant contributions expected from inventory and CapEx management in H2.

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CEO Shruti Singhal explained that the portfolio review is in its early stages but will evaluate each business line's contribution to the bottom line, competitive position, and margin profile to unlock value and strengthen the balance sheet. CFO Greg Weitzel added that cash flow is expected to see a significant sequential increase starting in Q2, driven by inventory reductions, lower capital spending, and improved sequential EBITDA, overcoming the typical seasonality seen in Q1.

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CEO Julie Schertell outlined plans to apply SAS's commercial discipline in demand generation, customer management, and cross-selling to the FAM segment. She affirmed the healthcare turnaround is sustainable and now a key growth platform. She also noted the films turnaround is underway, with progress expected in the latter half of 2025, and provided updates on capital projects, stating key growth investments are proceeding despite overall CapEx reductions.

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CEO Julie Schertell clarified that the divestitures of sites in the Netherlands and Massachusetts were part of a strategy to exit non-strategic, low-margin categories and reduce complexity, resulting in a net positive EBITDA impact. CFO Greg Weitzel explained the CapEx reduction from $60M to $50M was due to suppressed market conditions and would result in Q4 cash flow being positive, though lower than Q3.

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President and CEO De Lyle Bloomquist clarified that the $30 million EBITDA growth is driven by replacing lower-margin commodity volumes with higher-margin specialty products, assuming a 15,000-ton annual increase. Regarding capital allocation, he stated the primary focus is on high-return projects, followed by debt reduction of about 5% of principal annually. Shareholder returns are a lower priority given the rich pipeline of investment opportunities. CFO Marcus Moeltner added context on the AGE project investment.

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President and CEO De Lyle Bloomquist confirmed that while not officially announced, RYAM's guidance assumes CS products will not face tariffs, a belief supported by the resumption of customer orders that were paused in April. CFO Marcus Moeltner stated he feels good about the company's liquidity profile, which ended the quarter at $272 million, well above their target of keeping around $200 million available between cash and their ABL facility.

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President and CEO De Lyle Bloomquist explained that maintenance CapEx will be weighted towards the first half of 2025 due to planned outages, while strategic CapEx will be heavier in the second half. Regarding the asset sale, he noted that market uncertainty, particularly around new tariffs and existing oversupply, has caused potential buyers to remain on the sidelines, stalling the process.

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EVP & CFO Martin Bengtsson confirmed the stock repurchases were for anti-dilutive purposes and not a change in strategy. Chairman, President & CEO Ted Harris provided the HNH breakdown, noting that the segment's ~9% growth was balanced, with the nutrients business growing 8.8% and the food ingredients business growing 8.6%. He highlighted strong performance in K2, MSM, and minerals within nutrients, and encapsulated acidulants and 'good for you' formulations within the food business.

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Chairman, President and CEO Ted Harris explained that both sub-segments performed well, but the Food Ingredients business grew faster in the quarter, at approximately 5.5%. He noted this outpaced the general market. Harris also highlighted that the Nutrients business grew on top of a very strong prior-year quarter. He expressed confidence that both parts of the H&H segment will continue to contribute to growth moving forward.

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Carl Bengtsson, CFO, responded that he expects margins to remain healthy, supported by a favorable portfolio mix where the higher-margin ruminant and nutrients businesses are expected to grow faster. He identified potential tariffs as the biggest risk to margins. Regarding M&A, Bengtsson described the market as improving with increased deal flow, but not yet 'hot,' noting a pent-up demand for assets to come to market as performance stabilizes.

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CEO Ole Rosgaard identified agrochemical as the most exciting end market, followed by food & beverage, with pharma representing a significant long-term opportunity. CFO Lawrence Hilsheimer expressed comfort with the current leverage ratio, noting that the proceeds from the pending land sale will lower it significantly. He added that a return to normal industrial volumes would provide a substantial EBITDA lift of around $150 million, which would also rapidly decrease the leverage ratio.

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CEO Ole Rosgaard identified Polymer Solutions as the primary growth area due to its high margins and cash flow, but also noted planned investments in automation for the metals business and expansion in caps and closures. CFO Larry Hilsheimer added that the company remains opportunistic about downstream paper business acquisitions. Regarding leverage, Hilsheimer stated management is comfortable with the current level, expecting it to decrease rapidly with volume recovery, and affirmed that debt paydown is a top priority.

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