Sylvamo Corp

NYSE:SLVM

Earnings Call Analysis

Sylvamo Increases Dividend and Provides Positive Financial Outlook

Sylvamo experienced improved conditions in uncoated freesheet and pulp. The company increased its quarterly dividend by 50%, from $0.30 to $0.45 per share. Financially, Sylvamo reported an adjusted EBITDA of $164 million, surpassing its outlook of $145-$160 million. Free cash flow generation was $62 million, and adjusted operating earnings were $1.98 per share. The company projects third-quarter adjusted EBITDA between $170-$185 million. Sylvamo's focus on high-return projects and cost reductions is expected to grow earnings and cash flow in the future, with a commitment to returning at least 40% of free cash flow to shareholders this year.

A Solid Quarter Amidst Challenges

In the second quarter of 2024, Sylvamo Corporation delivered strong financial results characterized by robust cash flow and a significant improvement in operations. The company reported an adjusted EBITDA of $164 million with an 18% margin, surpassing prior forecasts of $145 million to $160 million. This result reflects a well-managed balance between production and customer demand, despite a backdrop of fluctuating market conditions across regions.

Improvements in Key Sectors

Demand in the uncoated freesheet sector showed promising recovery, especially across Europe, where it surged by 14%. North America saw a modest increase of 3%, while Latin America held steady with a slight decline of 1%, impacted mainly by difficulties in Argentina. The company executed several planned maintenance outages, leaving them well-positioned to optimize operations moving forward. Notably, pulp and paper prices rose across all regions, supporting the overall revenue growth.

Strategic Investments and Cost Management

Sylvamo is steadfastly focused on capital allocation towards high-return projects, including major investments in its flagship mills located in North America and Brazil. The company anticipates achieving a minimum 20% return on these projects, indicating a robust approach to future growth. In tandem, Sylvamo aims to effectively lower their cost structure through initiatives such as Project Horizon, targeting a savings run rate of $110 million by year-end.

Strong Commitment to Shareholders

The corporate leadership announced a substantial 50% increase in the quarterly dividend, raising it from $0.30 to $0.45 per share, reflecting a dedication to returning cash to shareholders. The current policy targets returning at least 40% of free cash flow, emphasizing Sylvamo's healthy financial position. In 2024, the company has already distributed $43 million through dividends and repurchased $30 million in shares, signaling strong shareholder value focus.

Looking Ahead: Promising Guidance

For the upcoming third quarter, Sylvamo projects an adjusted EBITDA range of $170 million to $185 million, supported by anticipated volume increases primarily from the Latin American and North American markets. There are expectations for a positive yet cautious outlook, as the company prepares for rising operational costs due to higher input prices. This forward guidance reflects confidence amid challenging market dynamics, sustaining a balanced outlook on revenue growth.

Regional Variances and Market Positioning

Across its geographical regions, Sylvamo is strategically adapting to market demand. In Europe, sustainability remains a key driver, while in Brazil, the focus is on brand partnerships and enhancing customer relations. In the U.S., the emphasis is on service optimization and improving supply chain efficiencies. Market dynamics may shift, but Sylvamo is positioned to leverage its strengths in operations, brand, and pricing strategy effectively.

Conclusion: A Resilient and Growth-Oriented Strategy

Sylvamo Corporation demonstrates a resilient approach to navigating market challenges, as illustrated by its strong financial results, commitment to shareholder returns, and strategic investments in growth. As the company looks to the future, it remains focused on driving higher returns on invested capital and achieving operational excellence. This combination of factors highlights Sylvamo's potential to continue generating strong earnings and cash flow moving forward, ensuring long-term value for investors.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning. Thank you for standing by. Welcome to Sylvamo's Second Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, your conference is being recorded.

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

[Hans Bjorkman, executive]

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

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

[Jean-Michel Ribiéras, executive]

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. We're also committed to operating as a sustainable cooperation that creates profits for our shareowners, while protecting the environment and improving the likes 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. 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. 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. I'm proud of our [indiscernible] delivered aggressive results while taking care of our customers and successfully executing several planned maintenance outages across our system.

Now John will review our performance in more detail.

[John Sims, executive]

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. 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. 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. 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. 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. 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.

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. 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. 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 3 quarterly dividends and have repurchased $30 million in shares.

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. These projects are 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.

[Jean-Michel Ribiéras, executive]

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 shareholder value. Financial discipline is a key component of our strategy.

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.

[Hans Bjorkman, executive]

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

[Operator]

[Operator Instructions] Our first question is from Cole Hathorn with Jefferies.

[Cole Hathorn, analyst]

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? Are you seeing kind of 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 kind of cut out the middleman in that? Love your thoughts there.

[Jean-Michel Ribiéras, executive]

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 [indiscernible] the wood we buy. First, we got 2 to 3 years, we need to buy more word 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. So not only we need to buy a little bit more price, 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. Saillat is roughly stable and the U.S. 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 U.S. In the merchant side in Europe, I would say it's neutral to us. 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.

[Cole Hathorn, analyst]

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 [indiscernible] 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?

[John Sims, executive]

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 [indiscernible] 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.

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%.

[Jean-Michel Ribiéras, executive]

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.

[Operator]

Our next question is from the line of Matthew McKellar with RBC Capital Markets.

[Matthew McKellar, analyst]

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?

[John Sims, executive]

Yes, Matt, thanks. This is John Sims. So what we've seen and just kind of 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. 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. 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. 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.

[Matthew McKellar, analyst]

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.

[John Sims, executive]

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 2 years on countries that don't have a trade agreement, so that gives an advantage to companies like us that are based in the U.S., and we're taking advantage of that. So we're exporting more to Mexico and that's what's accounting for the mix change.

[Operator]

Next, we'll go to the line of George Staphos with Bank of America.

[George Staphos, analyst]

Thanks for the details. Can you hear me okay?

[Jean-Michel Ribiéras, executive]

Yes, George. Thanks for joining.

[George Staphos, analyst]

So 2 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.

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%?

[Jean-Michel Ribiéras, executive]

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. Those projects have on different sides. Some are very small and some are larger. We are [ standing ] them then 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.

[John Sims, executive]

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.

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.

[George Staphos, analyst]

John, maybe if I could sort of do a quick tag [indiscernible] on 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?

[John Sims, executive]

Yes. I wouldn't want to foresettle that. I think we will -- we review that and we think about that as we view our [indiscernible] 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.

[Operator]

And we'll go back to the line of Matthew McKellar with RBC Capital Markets.

[Matthew McKellar, analyst]

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?

[Jean-Michel Ribiéras, executive]

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.

[John Sims, executive]

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.

[Matthew McKellar, analyst]

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?

[Jean-Michel Ribiéras, executive]

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 [indiscernible] 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. And I don't read more than that. And I think some of the importers to the U.S. have been done due to freight. Some have been done to local market opportunity to [indiscernible].

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.

[Matthew McKellar, analyst]

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?

[Jean-Michel Ribiéras, executive]

[indiscernible] that again? I'm sorry.

[John Sims, executive]

[indiscernible] 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. So -- and you -- look in the outlook, we're expecting a little bit more in the third quarter than we had in the second quarter. 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.

[Matthew McKellar, analyst]

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 it's fairly small volumes, but just wanting to confirm?

[John Sims, executive]

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. So that's what that was.

[Jean-Michel Ribiéras, executive]

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

[Operator]

And we'll go back to the line of George Staphos with Bank of America.

[George Staphos, analyst]

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 3 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? 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?

[Jean-Michel Ribiéras, executive]

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.

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 ].

[George Staphos, analyst]

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? And...

[Jean-Michel Ribiéras, executive]

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

[Operator]

[Operator Instructions]

[Jean-Michel Ribiéras, executive]

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. 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.

[Operator]

And we'll go back to the line of George Staphos.

[George Staphos, analyst]

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, 6 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?

[Jean-Michel Ribiéras, executive]

I'm trying to make sure I understand what your question, George. I think we've been...

[George Staphos, analyst]

What are your customers asking you for differently now, Jean-Michel, that might have been the case 6 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 [indiscernible] higher revenue per ton?

[Jean-Michel Ribiéras, executive]

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.

In Brazil, it is more continuing to develop our brands and supporting the importance of the brands because they are a partner, a lot of the merchants in Brazil on [indiscernible] side are exclusive because they are very common to the brand.

In the U.S., I would say it's more and more around service. How can we optimize the service and having capacity worldwide and including strong capacity in the U.S., allow us to bring this unique service and integrations of supply chain. [indiscernible] the trend if it's what you are asking for.

[Operator]

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

[Hans Bjorkman, executive]

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

[Jean-Michel Ribiéras, executive]

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.

[John Sims, executive]

Thank you.

[Operator]

Once again, we would like to thank you for participating in Sylvamo's Second Quarter 2024 Earnings Call. You may now disconnect.