Sylvamo Delivers Results In Line with Outlook, Well Positioned with Strong Balance Sheet

Sylvamo, the world’s paper company, is releasing first quarter 2025 earnings.

Financial Highlights – First Quarter vs. Fourth Quarter

Net income of $27 million ($0.65 per diluted share) vs. $81 million ($1.94 per diluted share)
Adjusted operating earnings¹of $28 million ($0.68 per diluted share) vs. $82 million ($1.96 per diluted share)
Adjusted EBITDA²of $90 million (11% margin) vs. $157 million (16% margin)
Cash provided by operating activities of $23 million vs. $164 million
Free cash flow³of $(25) million vs. $100 million

Commercial and Operational Highlights – First Quarter vs. Fourth Quarter

Price and mix was unfavorable by $10 million, driven by paper price decreases in Europe and in our Brazilian export regions, as well as seasonally unfavorable mix in Latin America
Volume decreased by $30 million due to the seasonally weakest demand quarter in Latin America, lower volume from our exit of the supply agreement with International Paper’s Georgetown, South Carolina, mill and operational challenges in North America
Operations and other costs increased by $12 million, driven by unfavorable foreign currency exchange rates and operational challenges in North America
Planned maintenance outage expenses rose by $9 million
Input and transportation costs increased by $6 million, primarily driven by seasonally higher energy prices and longer than expected extreme cold weather across the United States in the first quarter

Second Quarter Outlook

Adjusted EBITDA of $75 million to $95 million
Compared to the first quarter:
- Price and mix are expected to improve by $5 million to $10 million due to favorable mix in Latin America and North America
- Volume is projected to remain stable in the range of $(5) million to $5 million
- Operations and other costs are expected to improve by $10 million to $15 million primarily due to improving manufacturing operations and seasonally lower operating costs in Europe and North America
- Input and transportation costs are projected to improve by $5 million to $10 million due to energy
- Total planned maintenance outage expenses are expected to increase by $36 million
We expect quarterly earnings to significantly improve in the second half of the year as we benefit from lower planned maintenance outage expenses, improved commercial results and better operations.

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

In the first quarter, we completed a heavy planned maintenance outage schedule in Europe and North America. The second quarter will be our heaviest outage quarter of the year, and by mid-year, we will have spent over 80% of the total annual planned maintenance outage costs.

We returned nearly $40 million in cash to shareowners in the first quarter. We distributed $18 million via the first quarter dividend and repurchased $20 million in shares. We will continue evaluating opportunities to repurchase shares at attractive prices with $62 million remaining on our $150 million share repurchase authorization from September 2023. Our board of directors also declared a second quarter dividend of $0.45 per share, which we paid April 29.

We understand one of the main risks in today’s environment is a global economic slowdown due to the current tariff situation, which could impact uncoated freesheet demand. Some shifts in uncoated freesheet and pulp trade flows are already starting to materialize. We also anticipate higher risks of inflation on our raw materials, transportation and capital spending. While these present possible challenges, these risks appear manageable because we are primarily sourcing and shipping locally, and have a very strong balance sheet.

Over 90% of our raw materials are sourced locally, with very little coming from China. In Europe and North America, more than 90% of our shipments stay within their respective region. In Latin America, 80% of our shipments remain in the region. Although we export about 20% of our products from Latin America, we are well positioned as our Brazilian mills are some of the world’s most competitive and low-cost uncoated freesheet facilities.

We currently have a 1.1x leverage ratio with no major maturities until 2027. Our strong balance sheet, available cash on hand and the availability of our $400 million revolver allow us to run our business, take care of customers and invest in our future.

On April 16, we announced a senior leadership transition plan. After more than three decades of working in the paper and packaging industry, I have decided to retire at the end of the year. Serving as Sylvamo’s chairman and CEO has been one of the greatest highlights of my career.

John Sims, who served as Sylvamo’s first senior vice president and chief financial officer, will become our next CEO Jan. 1, 2026. John has 31 years of extensive experience leading printing papers and packaging businesses in Europe and North America. He has been instrumental in our work to build the world’s paper company and drive our company’s strong performance. On May 1, he became our chief operating officer. As COO, Sims will lead commercial and operational functions, while I lead corporate functions for the remainder of the year. I know he will continue to amplify Sylvamo’s success well into the future.

Don Devlin became our new senior vice president and CFO May 1. He joins us from International Paper after 27 years with the company. He served in a variety of leadership roles, including finance director for European Papers, chairman and CEO of IP’s uncoated freesheet business in India and, most recently, vice president, finance and strategy for Industrial Packaging.

Finally, I want to remind you Sylvamo is a cash flow story and will remain so. We will continue leveraging our strengths to drive high returns on invested capital and generate free cash flow. We use that cash to maintain a strong financial position, reinvest in our business and return cash to shareowners. Our position of financial strength allows us to navigate this uncertain environment without changing our thoughtful, long-term approach to capital allocation. We are confident in our future and motivated by the opportunities that lie ahead.

¹ Adjusted Operating Earnings (non-GAAP) are net income (GAAP), net of tax and net special items. Management uses this measure to focus on ongoing operations and believes it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. The Company believes that using this information, along with net income, provides for a more complete analysis of the results of operations. Net income is the most directly comparable GAAP measure. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Consolidated Statement of Operations and related notes included later in this release.

² Adjusted EBITDA (non-GAAP) is net income (GAAP), net of tax, plus the sum of income taxes, net interest expense (income), depreciation, amortization and cost of timber harvested, stock-based compensation, and, when applicable for the periods reported, net special items. Management uses this measure in managing the operating performance of our business and believes that Adjusted EBITDA and Adjusted EBITDA Margin provide investors and analysts meaningful insights into our operating performance and Adjusted EBITDA is a relevant metric for the third-party debt. The Company believes that using this information, along with net income, provides for a more complete analysis of the results of its operations. Net income is the most directly comparable GAAP measure. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Consolidated Statement of Operations and related notes included later in this release.

³ Free Cash Flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operating activities. Management utilizes this measure in connection with managing our business and believes that Free Cash Flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet and service debt, and return cash to shareowners. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow also enables investors to perform meaningful comparisons between past and present periods.

Operating profits in the first quarter of 2025:

Europe – $(24) million compared with $3 million in the fourth quarter of 2024. Earnings were lower due to higher operating and input costs, higher planned maintenance outages and unfavorable price and mix which more than offset higher volumes and lower unabsorbed costs due to economic downtime.

Latin America – $26 million compared with $50 million in the fourth quarter of 2024. Earnings were lower due to lower volumes, unfavorable price and mix, higher operating costs and higher planned maintenance outages, partially offset by lower input costs.

North America – $42 million compared with $56 million in the fourth quarter of 2024. Earnings were lower due to lower volumes and higher operating and input costs which more than offset favorable price and mix, lower planned maintenance outages and lower unabsorbed costs due to economic downtime.

Effective Tax Rate

The reported effective tax rate for the first quarter of 2025 was 18%, compared to 19% for the fourth quarter of 2024. The lower rate for the first quarter was primarily driven by a higher stock-based compensation windfall, which resulted in a discrete tax benefit recognized during the quarter. The low rate in the fourth quarter was due to the mix of earnings in our regions, favorable return to accruals and the purchase of tax credits.

Excluding net special items, the effective tax rate for the first quarter of 2025 was 20%, compared with 19% for the fourth quarter of 2024.

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 2025 amounted to a net after-tax charge of $1 million ($0.03 per diluted share), compared with a net after-tax charge of $1 million ($0.02 per diluted share) in the fourth quarter of 2024.

For full results click here.

About Sylvamo

Sylvamo Corporation (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 2023 were $3.7 billion. For more information, please visit Sylvamo.com.

Contact:

Hans Bjorkman – Investor Relations – hans.bjorkman@sylvamo.com – (901) 519-8030

Source: Sylvamo Corporation

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