Strategic Execution and Operational Context – Management characterizes 2026 as a transition year, marked by short-term capacity constraints due to the Riverdale supply agreement termination and strategic investments at the Eastover mill. – Operational performance was hindered by…
liability issues in Europe and Brazil, resulting in a $9 million negative impact, though root causes have been identified for correction during upcoming annual outages. – The company launched a multi-year lean transformation journey starting in Latin America to institutionalize a continuous improvement culture and achieve industry-leading cost effectiveness. – North American results were impacted by a deliberate inventory build and sourcing mix shifts to prepare for the Eastover mill’s extended maintenance outage in the fourth quarter. – Price realization improved across North America and Latin America, while European prices bottomed out in the first quarter with increases expected to materialize in the second quarter. – Strategic footprint adjustments include redirecting Brazil imports from the Middle East and Africa to the U.S. to optimize margins under current tariff structures. – Management successfully refinanced 2027 debt to extend the maturity profile to 2032 and extended the accounts receivable securitization facility to 2029, sustaining financial flexibility during a period of high capital reinvestment. Outlook and Strategic Targets – Management expects 2026 to be a year of two halves, with the second half benefiting from improved pricing, better geographic mix, and the roll-off of transition costs. – The company maintains a long-term target of generating over $300 million in annual free cash flow and 15% returns on invested capital as capital spending normalizes post-2026. – Strategic investments at the Eastover mill, including a paper machine speed-up and new sheeter, are on track to deliver a $50 million earnings benefit, with significant realization starting in 2027. – Input