Sylvamo 2024 Earnings Per Share Increases 21%, Adjusted Operating Earnings Per Share Up 14% as Company Generates Strong Cash Flow

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

Financial Highlights – 2024 Full Year vs. 2023 Full Year

Net income of $302 million ($7.18 per diluted share) vs. $253 million ($5.93 per diluted share)
Adjusted operating earnings¹of $312 million ($7.42 per diluted share) vs. $278 million ($6.51 per diluted share)
Adjusted EBITDA²of $632 million (17% margin) vs. $607 million (16% margin)
Cash provided by operating activities of $469 million vs. $504 million
Free cash flow³of $248 million vs. $294 million

Additional Highlights – 2024 Full Year

Achieved 23% return on invested capital⁴
Reinvested $221 million in capital expenditures
Paid $154 million in debt, ending the year with $591 million in net debt
Paid dividends totaling $62 million
Repurchased approximately $68 million of our common stock, resulting in 40.6 million shares outstanding as of Dec. 31

Financial Highlights – Fourth Quarter vs. Third Quarter

Net income of $81 million ($1.94 per diluted share) vs. $95 million ($2.27 per diluted share)
Adjusted operating earnings of $82 million ($1.96 per diluted share) vs. $102 million ($2.44 per diluted share)
Adjusted EBITDA of $157 million (16% margin) vs. $193 million (20% margin)
Cash provided by operating activities of $164 million vs. $163 million
Free cash flow of $100 million vs. $119 million

Commercial and Operational Highlights – Fourth Quarter vs. Third Quarter

Price and mix was unfavorable by $18 million driven by pulp and paper price decreases in Europe (40% of the variance) and mix in North America (30% of the variance)
Volume improved by $6 million due to seasonality in Latin America
Operations and other costs improved by $2 million
Planned maintenance outage expenses increased by $17 million
Input and transportation costs increased by $9 million, primarily driven by higher transportation and seasonally higher energy prices

First Quarter Outlook

Adjusted EBITDA of $85 million to $105 million
Compared to the fourth quarter:
- Price and mix are expected to decrease by $10 million to $15 million due to paper price decreases in Europe and in our Brazilian export regions, as well as seasonally unfavorable mix in Latin America. These decreases are projected to be partially offset by the realization of paper price increases communicated to customers in North America and Brazil in the fourth quarter.
- Volume is projected to decrease by $20 million to $25 million, driven by the seasonally weakest demand quarter in Latin America and lower volume in North America from the Georgetown mill exit
- Operations and other costs are expected to be stable to increasing up to $5 million
- Input and transportation costs are projected to increase by $5 million to $10 million primarily due to seasonally higher energy prices in North America
- Total planned maintenance outage expenses are expected to increase by $15 million
We expect quarterly earnings to improve throughout the year as we benefit from seasonally stronger volume and realize the price increases we are currently implementing. We also have less maintenance outage expenses in the second half of the year, with about 80% of our planned maintenance outages in the first half of the year.

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

In 2024, we earned $632 million in adjusted EBITDA, a 17% margin, and generated $248 million of free cash flow. We returned $130 million in cash to shareowners, representing 52% of free cash flow, exceeding our 40% commitment.

We have $82 million remaining on our $150 million share repurchase authorization from September 2023. Our board of directors also declared a first quarter dividend of $0.45 per share, which we paid Jan. 24th.

Our strong cash flow and $60 million received from escrow allowed us to pay down $154 million in debt in 2024, ending the year with $591 million in net debt.

Our structural cost reduction program, Project Horizon, made significant progress streamlining manufacturing, supply chain and overhead costs throughout 2024. Before inflation, we exceeded our $110 million year end run rate savings goal by $34 million, achieving $144 million in run rate savings.

On Dec. 31, we mutually terminated a supply agreement for uncoated freesheet, bristols and specialty papers from International Paper’s Georgetown, South Carolina, mill. We will continue to optimize by leveraging strategic initiatives to simplify the business, unlock efficiencies and drive earnings growth.

In 2024, we invested $221 million in our low-cost assets. We will continue executing our strategy by focusing on uncoated freesheet and investing to strengthen our competitive advantages, which will grow earnings and cash flow.

We plan to invest approximately $145 million in high-return capital projects to reduce costs and significantly enhance the capabilities of our most competitive mill in North America, located in Eastover, South Carolina. These investments will occur over the next three years, starting this year, with most of the capital spending in 2026. They will improve our uncoated freesheet mix and processes from the woodyard to our finished products.

Once completed, the combined projects should have an internal rate of return greater than 30% and increase adjusted EBITDA by more than $50 million annually, resulting in additional cash flow.

We plan to invest approximately $100 million to speed up one of our paper machines by the end of 2026, modernizing it to the same world class level as the mill’s other machine. The investment will allow us to produce approximately 60,000 additional short tons of uncoated freesheet annually.
We also plan to invest roughly $45 million for a new replacement sheeter. The state-of-the-art cutsize sheeter will be online by late 2026, lowering costs and adding flexibility to service customers.

We are also entering a 20-year partnership to outsource our Eastover woodyard operations. The external provider will invest capital to install, operate and maintain the woodyard. This will enable more efficient, reliable, cost-effective wood processing and additional flexibility. It will also allow us to avoid approximately $75 million in capital spending over the next five years.

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.

⁴Return on Invested Capital (“ROIC”) is a non-GAAP measure presented as a supplemental measure of our performance. Management believes that ROIC is useful because it measures how effectively and efficiently we use the capital invested in our business. ROIC = Adjusted Operating Earnings Before Interest / Average Invested Capital. Invested Capital = Equity plus total debt minus cash and temporary investments. The Average Invested Capital is calculated as a simple average for the two most recent fiscal years.

Operating profits in the fourth quarter of 2024:

Europe – $3 million compared with $3 million in the third quarter of 2024. Earnings were flat due to lower operating costs, lower unabsorbed costs from economic downtime and lower planned maintenance outages which offset unfavorable price and mix and higher input costs.

Latin America – $50 million compared with $49 million in the third quarter of 2024. Earnings were slightly higher due to higher volumes which offset higher operating costs, unfavorable price and mix and higher input costs.

North America – $56 million compared with $98 million in the third quarter of 2024. Earnings were lower due to higher planned maintenance outages, unfavorable price and mix, lower volumes and higher operating and input costs partially offset by lower unabsorbed costs due to economic downtime.

Effective Tax Rate

The reported effective tax rate for the fourth quarter of 2024 was 19%, compared to 28% for the third quarter of 2024. The lower rate for 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 fourth quarter of 2024 was 19%, compared with 28% for the third 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 fourth quarter of 2024 amounted to a net after-tax charge of $1 million ($0.02 per diluted share), compared with a net after-tax charge of $7 million ($0.17 per diluted share) in the third 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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