Sylvamo Delivers Strong Earnings, Free Cash Flow and Shareowner Returns in First Full Year

Sylvamo (NYSE: SLVM), the world’s paper company, is releasing fourth quarter 2022 earnings.

Financial Highlights – 2022 Full Year

• Net income from continuing operations of $336 million ($7.57 per diluted share)
• Adjusted operating earnings¹ (non-GAAP) of $348 million ($7.84 per diluted share)
• Adjusted EBITDA² (non-GAAP) of $721 million (20% margin)
• Cash provided by operating activities from continuing operations of $418 million
• Free cash flow³ (non-GAAP) of $269 million
• Board of directors initiated a quarterly dividend of $0.1125 per share, paid for in the third and fourth quarters for a total of $10 million
• Repurchased 1,556,835 shares of our common stock for approximately $80 million in the fourth quarter, resulting in 42.6 million shares outstanding as of Dec. 31

Message from the Chairman and Chief Executive Officer

“I’m proud of our team and the strong earnings and free cash flow they generated in our first full year of operations,” said Jean-Michel Ribiéras. “We managed supply chain, inflation and geopolitical challenges successfully while delivering outstanding results by implementing our three-pronged strategy of commercial excellence, operational excellence and financial discipline.”

Financial Highlights – Fourth Quarter vs. Third Quarter

• Net income from continuing operations of $88 million ($1.99 per diluted share) vs. $109 million ($2.44 per diluted share)
• Adjusted operating earnings of $87 million ($1.97 per diluted share) vs. $112 million ($2.51 per diluted share)
• Adjusted EBITDA of $170 million (18% margin) vs. $216 million (22% margin)
• Cash provided by operating activities from continuing operations of $142 million vs. $146 million
• Free cash flow of $84 million vs. $114 million

Commercial and Operational Highlights – Fourth Quarter vs. Third Quarter

• Price and mix improved by $31 million on the continued realization of prior price increases
• Volume declined by $20 million, primarily driven by channel inventory corrections and seasonality in North America
• Operations and costs increased by $42 million, driven by higher seasonal costs in Europe and North America, higher incentive compensation accruals, unfavorable foreign exchange in Latin America, and LIFO impacts
• Planned maintenance outage expenses increased by $21 million, reflecting our heaviest outage quarter of the year
• Input costs declined by $6 million with lower energy and distribution costs

Milestones Subsequent to the Fourth Quarter

• Closed an agreement to acquire an uncoated freesheet mill in Nymolla, Sweden, for 150 million euros (approximately $160 million), subject to final net working capital and net debt adjustments
• Repurchased 201,896 shares of our common stock for approximately $10 million in January 2023, resulting in 42.4 million shares outstanding as of Jan. 31

2023 Outlook – Full Year

• Adjusted EBITDA for the year, including Nymolla, is expected to be $760 million to $840 million
• Free cash flow is expected to be $300 million to $330 million

2023 Outlook – First Quarter vs. Fourth Quarter

• Adjusted EBITDA for the first quarter is expected to be $200 million to $215 million, which includes adjusted EBITDA for Nymolla of $15 million to $20 million
• Since Nymolla is not included in fourth quarter results, the following sequential changes do not reflect the impact of Nymolla
  • Price and mix are expected to decrease by $15 million to $20 million, primarily reflecting a seasonal mix shift in Latin America
  • Volume is expected to decrease by $5 million to $10 million, reflecting the seasonally weakest demand quarter in Latin America
  • Operations and costs are expected to improve by $10 million to $15 million as unfavorable items in fourth quarter 2022 will not recur
  • Input and transportation costs are expected to improve by $5 million to $10 million, primarily due to favorable trends in natural gas and transportation costs
  • Total maintenance outage expenses are expected to improve by $29 million

Management Summary

Sylvamo is a cash flow story. We leverage our strengths to drive high returns on invested capital and generate free cash flow. We use that cash to increase shareowner value by maintaining a strong financial position, returning cash to shareowners and reinvesting in our business.

In 2022, we reduced net debt by $371 million and achieved our gross debt target of $1 billion. We made a principle-based decision and divested our Russian business for $385 million in net proceeds and used most of the funds to repay long-term debt. We also returned $90 million in cash to shareowners through dividends and share repurchases. Our board of directors increased our first quarter 2023 dividend to $0.25 per share, which we paid Jan. 25.

On Jan. 2, we acquired an uncoated freesheet mill in Nymolla, Sweden, for an attractive price. The acquisition includes a recently completed $40 million pulp modernization project that increased the mill’s softwood pulping capacity by roughly 15% and will reduce the need for more expensive hardwood.

We would not have achieved this level of success without our customers, who value our commitment to uncoated freesheet and the promise of paper to educate, communicate and entertain. We are grateful for their continued support and partnerships.

Our talented and engaged colleagues are our greatest competitive advantage. Throughout 2022, they navigated supply chain, inflation and geopolitical challenges to deliver outstanding results. We remain committed to their safety, well-being and development. Building and fostering a culture of care and trust will help our team members work safely and do their best work every day. In turn, we will grow and succeed together, which will help us to realize our vision to be the employer, supplier and investment of choice.

Operating profits in the fourth quarter of 2022:

Europe – $12 million compared with $19 million in the third quarter of 2022. Earnings were lower as higher average sales prices were more than offset by lower volumes and higher operating costs.

Latin America – $56 million compared with $58 million in the third quarter of 2022. Earnings were slightly lower as higher average sales prices and higher volumes were offset by higher operating costs, higher maintenance outages and higher input costs.

North America – $65 million compared with $98 million in the third quarter of 2022. Earnings were lower as higher average sales prices and lower input costs were more than offset by lower volumes, higher operating costs and higher maintenance outages.

For the complete press release, 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 7,500 colleagues. Net sales for 2021 were $3.5 billion. For more information, please visit Sylvamo.com.

Contact:

Hans Bjorkman – Investor Contact – hans.bjorkman@sylvamo.com – (901) 419-3525

Source: Sylvamo Corporation