Sylvamo First Quarter Results Meet Expectations

Sylvamo, the world’s paper company, is releasing first quarter 2024 earnings.

Financial Highlights – First Quarter vs. Fourth Quarter

• Net income of $43 million ($1.02 per diluted share) vs. $49 million ($1.16 per diluted share)
• Adjusted operating earnings¹ of $45 million ($1.07 per diluted share) vs. $49 million ($1.16 per diluted share)
• Adjusted EBITDA² of $118 million (13% margin) vs. $117 million (12% margin)
• Cash provided by operating activities of $27 million vs. $167 million
• Free cash flow³ of $(33) million vs. $104 million

Commercial and Operational Highlights – First Quarter vs. Fourth Quarter

• Price and mix were stable
• Volume decreased by $12 million due to expected seasonally weaker industry demand in Latin America
• Operations and other costs improved by $19 million due primarily to lower economic downtime
• Planned maintenance outage expenses decreased by $3 million
• Input and transportation costs increased by $9 million, driven primarily by transportation costs in North America

Second Quarter Outlook

• Adjusted EBITDA of $145 million to $160 million
• Compared to the first quarter:
  • Price and mix are expected to increase by $15 million to $20 million, primarily reflecting prior price increases across all regions and a better mix in Latin America
  • Volume is projected to increase by $5 million to $10 million, with seasonally stronger demand in Latin America and continued momentum in Europe and North America
  • Operations and other costs are expected to improve by $5 million to $10 million due primarily to lower costs in Europe and North America
  • Input and transportation costs are projected to be stable to improving up to $5 million due to better transportation and energy costs in North America partially offset by unfavorable fiber costs in Latin America
  • Total planned maintenance outage expenses are expected to increase by $3 million

Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribiéras

As uncoated freesheet conditions improved in the first quarter, we experienced strengthening order books, resulting in less economic downtime. Price and mix were better than expected while input costs stabilized. That momentum is expected to continue in 2024, and we are well positioned to capitalize on the opportunities that lie ahead.

We are making good progress with Project Horizon, our structural cost reduction program to streamline overhead, manufacturing and supply chain costs. Before inflation, we are on target to meet run rate savings of $110 million by the end of 2024.

This year, we repurchased $20 million of shares, including $15 million in April, and have $130 million remaining on our $150 million share repurchase authorization from September 2023. Our board of directors declared a second quarter dividend of $0.30 per share, which we paid April 29.

Since the spinoff, we have repurchased $170 million in shares or 8% of our initial shares outstanding. This use of cash resulted in a 35% return on investment based on a $65.00 share price.

We continue to allocate capital to generate long-term shareowner value. Since our inception, we have reduced gross debt significantly and will maintain a strong financial position to operate and invest throughout industry cycles. We remain committed to reinvesting in our business. We have identified a pipeline of more than $200 million of high-return capital projects, which will allow us to grow our earnings and cash flows as we invest in these projects in the future. We also plan to continue returning substantial amounts of cash to shareowners through dividends and share repurchases at attractive prices.

Operating profits in the first quarter of 2024

Europe – $(4) million compared with $(23) million in the fourth quarter of 2023. Earnings were higher due to higher price and mix, slightly higher volumes, lower planned maintenance outages, lower operating costs and lower economic downtime.

Latin America – $14 million compared with $48 million in the fourth quarter of 2023. Earnings were lower due to lower volumes, lower price and mix, higher operating and input costs and higher planned maintenance outages.

North America – $62 million compared with $52 million in the fourth quarter of 2023. Earnings were higher as higher volumes, lower economic downtime and lower planned maintenance outages more than offset lower price and mix and lower operating and input costs.

Effective Tax Rate

The reported effective tax rate for the first quarter of 2024 was 28%, compared to 27% for the fourth quarter of 2023. The higher rate for the first quarter was due to the mix of earnings in our regions.

Excluding net special items, the effective tax rate for the first quarter of 2024 was 28%, compared with 27% for the fourth quarter of 2023.

The effective tax rate excluding net special items is a non-GAAP financial measure and is calculated by adjusting the income tax provision and rate to exclude the tax effect at the applicable statutory rate of net special items. Management believes that this presentation provides useful information to investors by providing a more meaningful comparison of the income tax rate between past and present periods.

Effects of Net Special Items

Net special items in the first quarter of 2024 amounted to a net after-tax charge of $2 million ($0.05 per diluted share), compared with a net after-tax charge of $0 million ($0.00 per diluted share) in the fourth quarter of 2023.

For full results click here.

About Sylvamo

Sylvamo (NYSE: SLVM) is the world’s paper company with mills in Europe, Latin America and North America. Our vision is to be the employer, supplier and investment of choice. We transform renewable resources into papers that people depend on for education, communication and entertainment. Headquartered in Memphis, Tennessee, we employ more than 6,500 colleagues. Net sales for 2022 were $3.6 billion. For more information, please visit Sylvamo.com.

Contact:

Adam Ghassemi – adam.ghassemi@sylvamo.com – (901) 519-8115

Source: Sylvamo Corporation