Exhibit 99.1
NEWS RELEASE
Sylvamo Quarterly Results Meet Guidance
Slower Demand Recovery Drives Revised Annual Outlook,
Company Remains Committed to $125 Million in Cash Returns
MEMPHIS, Tenn. – August 9, 2023 – Sylvamo (NYSE: SLVM), the world’s paper company, is releasing second quarter 2023 earnings.
Financial Highlights – Second Quarter vs. First Quarter
•Net income from continuing operations of $49 million ($1.14 per diluted share) vs. $97 million ($2.25 per diluted share)
•Adjusted operating earnings1 (non-GAAP) of $49 million ($1.14 per diluted share) vs. $108 million ($2.51 per diluted share)
•Adjusted EBITDA2 (non-GAAP) of $124 million (13.5% margin) vs. $208 million (22.1% margin)
•Cash provided by operating activities from continuing operations of $77 million vs. $63 million
•Free cash flow3 (non-GAAP) of $33 million vs. $2 million
Commercial and Operational Highlights – Second Quarter vs. First Quarter
•Price and mix decreased by $38 million due primarily to lower paper prices in Europe, less favorable mix in Latin America and North America and lower global pulp prices
•Volume decreased by $2 million due to lower paper demand in North America and continued channel inventory corrections in Europe and North America, which more than offset seasonally stronger demand in Latin America
•Operations and other costs increased by $10 million, primarily driven by $15 million in higher unabsorbed fixed costs from increased economic downtime
•Planned maintenance outage expenses increased by $58 million, in line with guidance, during the heaviest outage quarter of the year
•Input costs improved by $24 million, driven by favorable energy, chemical and transportation costs
Third Quarter Outlook
•Adjusted EBITDA of $130 million to $150 million
•Compared to the second quarter:
•Price and mix are expected to decrease by $60 million to $65 million
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•Volume is projected to improve by $15 million to $20 million, with seasonally stronger volume in Latin America and North America
•Operations and other costs are expected to increase by $5 million to $10 million, mainly due to unabsorbed fixed costs while matching paper production with Sylvamo customer demand
•Input and transportation costs are projected to improve by $15 million to $20 million, with favorable trends in fiber and chemicals
•Total planned maintenance outage expenses are expected to decrease by $54 million
Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribiéras
We achieved our second quarter earnings per share and adjusted EBITDA objectives. We delivered these results while facing challenging market conditions and during our heaviest planned maintenance outage quarter.
Our sales volumes were similar to the first quarter. The expected seasonal increase in volume did not materialize due to continued inventory corrections in Europe and North America, decreased demand due to Europe’s slowing economies and economic uncertainty in North America. Consequently, during the second quarter in Europe and North America, we took approximately 120,000 tons of economic downtime, roughly double the first quarter level. We also conducted extensive annual maintenance outages, which we executed safely and efficiently.
With respect to paper demand, we believe that our customers have completed the majority of their inventory corrections. We are now seeing very early indications that global advertising may be starting to rebound and we would expect demand in Europe and North America to begin to improve.
In the second quarter, we returned $41 million of cash to shareowners through dividends and share repurchases for a total of $61 million in cash returns in the first half of 2023. Our board of directors declared a quarterly dividend of $0.25 per share for the third quarter, which we paid July 6. We remain committed to returning a total of $125 million in cash to shareowners this year.
We now project adjusted EBITDA of $560 million to $600 million (formerly $720 million to $770 million) for 2023, reflecting lower paper demand and inventory channel corrections in Europe and North America, updated views on pulp and paper price and mix as well as higher unabsorbed fixed costs. These more than offset favorable input, transportation and operation cost trends. We continue to focus on free cash flow generation and now project free cash flow of $220 million to $250 million (formerly $250 million to $280 million.)
We will continue implementing our three-pronged strategy of commercial excellence, operational excellence and financial discipline. We expect to reduce costs and working capital to maximize earnings and free cash flow in the second half of the year. We will also continue to reinvest in our company to exit the downturn in an even stronger competitive position.
1 Adjusted Operating Earnings (non-GAAP) are net income (loss) (GAAP) excluding discontinued operations, 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 combined operating results. The Company believes that using this information, along with net income (loss), provides for a more complete analysis of the results of operations. Net income (loss) 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 Condensed Consolidated Statement of Operations and related notes included later in this release.
2 Adjusted EBITDA (non-GAAP) is net income (loss) (GAAP) excluding discontinued operations, net of tax, plus the sum of income taxes, net interest expense (income), depreciation, amortization and cost of timber harvested, transition service agreement expense, 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 (loss), provides for a more complete analysis of the results of its operations. Net income (loss) 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 Condensed 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 from continuing operations. 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.
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Select Financial Measures
| (In millions) | Second Quarter 2023 | First Quarter 2023 | Second Quarter 2022 | ||||||||||||||
| Net Sales | $ | 919 | $ | 941 | * | $ | 912 | ||||||||||
| Net Income from Continuing Operations | 49 | 97 | 84 | ||||||||||||||
| Net Income | 49 | 97 | (59) | ||||||||||||||
| Business Segment Operating Profit | 82 | 166 | 142 | ||||||||||||||
| Adjusted Operating Earnings | 49 | 108 | 90 | ||||||||||||||
| Adjusted EBITDA | 124 | 208 | 189 | ||||||||||||||
| Cash Provided By Operating Activities From Continuing Operations | 77 | 63 | 76 | ||||||||||||||
Free Cash Flow | 33 | 2 | 39 | ||||||||||||||
*Includes adjustment to eliminate intra-segment sales in Europe
Segment Information
Sylvamo uses business segment operating profit to measure the earnings performance of its businesses and is calculated as set forth in footnote (f) under the "Sales and Earnings by Business Segment" table (page 8). Second quarter 2023 net sales by business segment and operating profit by business segment compared with the first quarter of 2023 and the second quarter of 2023 are as follows:
Business Segment Results
| (In millions) | Second Quarter 2023 | First Quarter 2023 | Second Quarter 2022 | ||||||||||||||
| Net Sales by Business Segment | |||||||||||||||||
| Europe | $ | 210 | $ | 230 | * | $ | 135 | ||||||||||
| Latin America | 250 | 222 | 249 | ||||||||||||||
| North America | 474 | 505 | 549 | ||||||||||||||
| Inter-segment Sales | (15) | (16) | (21) | ||||||||||||||
| Net Sales | $ | 919 | $ | 941 | $ | 912 | |||||||||||
| Operating Profit by Business Segment | |||||||||||||||||
| Europe | $ | (11) | $ | 23 | $ | 17 | |||||||||||
| Latin America | 48 | 46 | 59 | ||||||||||||||
| North America | 45 | 97 | 66 | ||||||||||||||
| Business Segment Operating Profit | $ | 82 | $ | 166 | $ | 142 | |||||||||||
*Includes adjustment to eliminate intra-segment sales in Europe
Operating profits in the second quarter of 2023:
Europe - $(11) million compared with $23 million in the first quarter of 2023. Earnings were lower as lower operating and input costs were more than offset by lower price and mix, higher planned maintenance outages, higher unabsorbed costs due to economic downtime and lower operating profit contributed by Nymolla.
Latin America - $48 million compared with $46 million in the first quarter of 2023. Earnings were slightly higher as higher volumes and lower operating and input costs more than offset lower price and mix and higher planned maintenance outages.
North America - $45 million compared with $97 million in the first quarter of 2023. Earnings were lower as lower input costs were more than offset by lower price and mix, lower volumes, higher planned maintenance outages and higher unabsorbed costs due to economic downtime.
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Effective Tax Rate
The reported effective tax rate for continuing operations for the second quarter of 2023 was 30%, compared to 31% for the first quarter of 2023. The lower rate for the second quarter was due to the mix of earnings in our regions.
Excluding net special items, the effective tax rate for the second quarter of 2023 was 30%, compared with 30% for the first 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 from continuing operations and rate to exclude the tax effect 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 related to continuing operations in the second quarter of 2023 amounted to a net after-tax charge of $0 million ($0.00 per diluted share) compared with net after-tax income of $11 million ($0.26 per diluted share) in the first quarter of 2023.
Earnings Webcast
The company will host an audio webcast at 10 a.m. EDT / 9 a.m. CDT. All interested parties are invited to listen at investors.sylvamo.com.
Parties who wish to participate should call +1-877-336-4440 (U.S.) or +1-409-207-6984 (international) and use access code 763504. Participants should call in no later than 9:45 a.m. EDT / 8:45 a.m. CDT.
Replays are available at investors.sylvamo.com for one year and by phone for 90 days, beginning at approximately 2 p.m. EDT / 1 p.m. CDT the day of the call. To listen to the replay by phone, call +1-866-207-1041 (U.S.) or +1-402-970-0847 (international) and use access code 3453720.
Investor Contact: Hans Bjorkman, 901-519-8030, hans.bjorkman@sylvamo.com
Media Contact: Adam Ghassemi, 901-519-8115, adam.ghassemi@sylvamo.com
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 2022 were $3.6 billion. For more information, please visit Sylvamo.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including the information under the headings "Third Quarter Outlook" and "Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribiéras." Any or all forward-looking statements may turn out to be incorrect, and our actual actions and results could differ materially from what they express or imply, because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control. These risks, uncertainties, and other factors include those disclosed in the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended Dec. 31, 2022, filed with the U.S. Securities and Exchange Commission (SEC) and in our subsequent filings with the SEC, available on our website, Sylvamo.com. These forward-looking statements reflect our current expectations, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
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SYLVAMO CORPORATION
Condensed Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
| Net Sales | $ | 919 | $ | 912 | $ | 941 | * | $ | 1,860 | $ | 1,733 | |||||||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||||||||
| Cost of products sold | 721 | 659 | (g) | 670 | *(d) | 1,390 | (a) | 1,279 | (g) | |||||||||||||||||||||||
| Selling and administrative expenses | 76 | 81 | (h) | 82 | (e) | 159 | (b) | 147 | (h) | |||||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | 34 | 32 | 35 | 69 | 63 | |||||||||||||||||||||||||||
| Taxes other than payroll and income taxes | 6 | 6 | 6 | 12 | 12 | |||||||||||||||||||||||||||
| Interest expense (income), net | 12 | 17 | 7 | (f) | 19 | (c) | 34 | |||||||||||||||||||||||||
| Income From Continuing Operations Before Income Taxes | 70 | 117 | 141 | 211 | 198 | |||||||||||||||||||||||||||
| Income tax provision | 21 | 33 | 44 | 65 | 59 | |||||||||||||||||||||||||||
| Net Income From Continuing Operations | 49 | 84 | 97 | 146 | 139 | |||||||||||||||||||||||||||
| Discontinued operations, net of tax | — | (143) | (i) | — | — | (172) | (j) | |||||||||||||||||||||||||
| Net Income (Loss) | $ | 49 | $ | (59) | $ | 97 | $ | 146 | $ | (33) | ||||||||||||||||||||||
| Basic Earnings Per Share | ||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 1.16 | $ | 1.90 | $ | 2.28 | $ | 3.44 | $ | 3.15 | ||||||||||||||||||||||
| Discontinued operations, net of taxes | — | (3.24) | — | — | (3.90) | |||||||||||||||||||||||||||
| Net earnings (loss) | $ | 1.16 | $ | (1.34) | $ | 2.28 | $ | 3.44 | $ | (0.75) | ||||||||||||||||||||||
| Diluted Earnings Per Share | ||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 1.14 | $ | 1.89 | $ | 2.25 | $ | 3.40 | $ | 3.13 | ||||||||||||||||||||||
| Discontinued operations, net of taxes | — | (3.22) | — | — | (3.87) | |||||||||||||||||||||||||||
| Net earnings (loss) | $ | 1.14 | $ | (1.33) | $ | 2.25 | $ | 3.40 | $ | (0.74) | ||||||||||||||||||||||
| Average Shares of Common Stock Outstanding - Diluted | 43 | 44 | 43 | 43 | 44 | |||||||||||||||||||||||||||
The accompanying notes are an integral part of this condensed consolidated statement of operations.
*Includes adjustment to eliminate intra-segment sales in Europe
Six Months Ended June 30, 2023
(a) Includes incremental expense of $9 million ($7 million after taxes) related to the impact of the step-up of acquired Nymölla inventory sold during the first quarter.
(b) Includes a pre-tax loss of $4 million ($3 million after taxes) for transaction costs related to the Nymölla acquisition and a pre-tax loss of $4 million ($3 million after taxes) for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement.
(c) Includes $9 million ($6 million after taxes) of interest income related to tax settlements and a pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs.
Three Months Ended March 31, 2023
(d) Includes incremental expense of $9 million ($7 million after taxes) related to the impact of the step-up of acquired Nymölla inventory sold during the quarter.
(e) Includes a pre-tax loss of $4 million ($3 million after taxes) for transaction costs related to the Nymölla acquisition and pre-tax loss of $4 million ($3 million after taxes) for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement.
(f) Includes $9 million ($6 million after taxes) of interest income related to tax settlements and a pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs.
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Three Months and Six Months Ended June 30, 2022
(g) Includes pre-tax gain of $1 million ($1 million after taxes) for the three months ended June 30, 2022, and a pre-tax loss of $1 million ($1 million after taxes) for the six months ended June 30, 2022, for one-time costs associated with the spin-off.
(h) Includes pre-tax loss of $9 million ($7 million after taxes) for the three months ended June 30, 2022, and a pre-tax loss of $12 million ($9 million after taxes) for the six months ended June 30, 2022, for one-time costs associated with the spin-off.
(i) Includes a pre-tax charge of $156 million ($156 million after taxes) to reserve for the elimination of the cumulative foreign currency translation loss related to our Russian operations.
(j) Includes a pre-tax charge of $156 million ($156 million after taxes) to reserve for the elimination of the cumulative foreign currency translation loss related to our Russian operations and a pre-tax charge of $68 million ($57 million after taxes) related to the impairment of our Russian fixed assets.
6
SYLVAMO CORPORATION
Reconciliation of Net Income to Adjusted Operating Earnings
Preliminary and Unaudited
(In millions, except per share amounts)
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
| Net Income (Loss) | $ | 49 | $ | (59) | $ | 97 | $ | 146 | $ | (33) | |||||||||||||||||||
| Less: Discontinued operations, net of tax | — | (143) | — | — | (172) | ||||||||||||||||||||||||
| Net income From Continuing Operations | 49 | 84 | 97 | 146 | 139 | ||||||||||||||||||||||||
| Add back: Net special items expense (income) | — | 6 | 11 | 11 | 10 | ||||||||||||||||||||||||
| Adjusted Operating Earnings | $ | 49 | $ | 90 | $ | 108 | $ | 157 | $ | 149 | |||||||||||||||||||
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
| Diluted Earnings (Loss) Per Common Share as Reported | $ | 1.14 | $ | (1.33) | $ | 2.25 | $ | 3.40 | $ | (0.74) | |||||||||||||||||||
| Less: Discontinued operations, net of tax | — | (3.22) | — | — | (3.87) | ||||||||||||||||||||||||
| Continuing Operations | 1.14 | 1.89 | 2.25 | 3.40 | 3.13 | ||||||||||||||||||||||||
| Add back: Net special items expense (income) | — | 0.13 | 0.26 | 0.25 | 0.23 | ||||||||||||||||||||||||
| Adjusted Operating Earnings Per Share | $ | 1.14 | $ | 2.02 | $ | 2.51 | $ | 3.65 | $ | 3.36 | |||||||||||||||||||
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SYLVAMO CORPORATION
Sales and Earnings by Business Segment
Preliminary and Unaudited
(In millions)
Net Sales by Business Segment
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
| Europe | $ | 210 | $ | 135 | $ | 230 | * | $ | 440 | $ | 252 | |||||||||||||||||||||
| Latin America | 250 | 249 | 222 | 472 | 464 | |||||||||||||||||||||||||||
| North America | 474 | 549 | 505 | 979 | 1,057 | |||||||||||||||||||||||||||
| Inter-segment Sales | (15) | (21) | (16) | (31) | (40) | |||||||||||||||||||||||||||
| Net Sales | $ | 919 | $ | 912 | $ | 941 | $ | 1,860 | $ | 1,733 | ||||||||||||||||||||||
*Includes adjustment to eliminate intra-segment sales in Europe
Operating Profit by Business Segment
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
| Europe | $ | (11) | $ | 17 | $ | 23 | $ | 12 | $ | 19 | ||||||||||||||||||||||
| Latin America | 48 | 59 | 46 | 94 | 98 | |||||||||||||||||||||||||||
| North America | 45 | 66 | 97 | 142 | 128 | |||||||||||||||||||||||||||
| Business Segment Operating Profit | $ | 82 | $ | 142 | $ | 166 | $ | 248 | $ | 245 | ||||||||||||||||||||||
| Income from Continuing Operations Before Income Taxes | $ | 70 | $ | 117 | $ | 141 | $ | 211 | $ | 198 | ||||||||||||||||||||||
| Interest expense (income), net | 12 | 17 | 7 | (c) | 19 | (a) | 34 | |||||||||||||||||||||||||
| Net special items expense (income) | — | 8 | (e) | 18 | (d) | 18 | (b) | 13 | (e) | |||||||||||||||||||||||
| Business Segment Operating Profit (f) | $ | 82 | $ | 142 | $ | 166 | $ | 248 | $ | 245 | ||||||||||||||||||||||
Six Months Ended June 30, 2023
(a) Includes $9 million ($6 million after taxes) of interest income related to tax settlements and a pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs.
(b) Includes a pre-tax loss of $4 million ($3 million after taxes) for transaction costs related to the Nymölla acquisition, a pre-tax loss of $4 million ($3 million after taxes) for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement and incremental expense of $9 million ($7 million after taxes) related to the impact of the step-up of acquired Nymölla inventory sold during the first quarter.
Three Months Ended March 31, 2023
(c) Includes $9 million ($6 million after taxes) of interest income related to tax settlements and a pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs.
(d) Includes a pre-tax loss of $4 million ($3 million after taxes) for transaction costs related to the Nymölla acquisition, a pre-tax loss of $4 million ($3 million after taxes) for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement and incremental expense of $9 million ($7 million after taxes) related to the impact of the step-up of acquired Nymölla inventory sold during the quarter.
Three Months Ended and Six Months Ended June 30, 2022
(e) Includes pre-tax loss of $8 million ($6 million after taxes) for the three months ended June 30, 2022, and a pre-tax loss of $13 million ($10 million after taxes) for the six months ended June 30, 2022, for one-time costs associated with the spin-off.
(f) As set forth in the chart above, business segment operating profit is defined as income from continuing operations before income taxes, but excluding net interest expense (income) and net special items. Business segment operating profit is a measure reported to our management for purposes of making decisions about allocating resources to our business segments and assessing the performance of our business segments.
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Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin
Preliminary and Unaudited
(In millions)
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
| Net Income (Loss) | $ | 49 | $ | (59) | $ | 97 | $ | 146 | $ | (33) | |||||||||||||||||||
| Less: Discontinued operations, net of tax | — | (143) | — | — | (172) | ||||||||||||||||||||||||
| Net Income From Continuing Operations | 49 | 84 | 97 | 146 | 139 | ||||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Income tax provision | 21 | 33 | 44 | 65 | 59 | ||||||||||||||||||||||||
| Interest expense (income), net | 12 | 17 | 7 | 19 | 34 | ||||||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | 34 | 32 | 35 | 69 | 63 | ||||||||||||||||||||||||
| Stock-based compensation | 8 | 7 | 7 | 15 | 11 | ||||||||||||||||||||||||
| Transition service agreement expense | — | 8 | — | — | 16 | ||||||||||||||||||||||||
| Net special items expense (income) | — | 8 | 18 | 18 | 13 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 124 | $ | 189 | $ | 208 | $ | 332 | $ | 335 | |||||||||||||||||||
| Net Sales | $ | 919 | $ | 912 | $ | 941 | * | $ | 1,860 | $ | 1,733 | ||||||||||||||||||
| Adjusted EBITDA Margin | 13.5% | 20.7% | 22.1% | 17.8% | 19.3% | ||||||||||||||||||||||||
*Includes adjustment to eliminate intra-segment sales in Europe
Adjusted EBITDA and Adjusted EBITDA Margin by Business Segment
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||||||
| Europe | $ | (3) | $ | 22 | $ | 31 | $ | 28 | $ | 30 | |||||||||||||||||||
| Latin America | 67 | 79 | 63 | 130 | 135 | ||||||||||||||||||||||||
| North America | 60 | 88 | 114 | 174 | 170 | ||||||||||||||||||||||||
| Total Business Segment Adjusted EBITDA | $ | 124 | $ | 189 | $ | 208 | $ | 332 | $ | 335 | |||||||||||||||||||
| Net Sales (excluding discontinued operations and inter-segment sales eliminations) | |||||||||||||||||||||||||||||
| Europe | $ | 210 | $ | 135 | $ | 230 | * | $ | 440 | $ | 252 | ||||||||||||||||||
| Latin America | 250 | 249 | 222 | 472 | 464 | ||||||||||||||||||||||||
| North America | 474 | 549 | 505 | 979 | 1,057 | ||||||||||||||||||||||||
| Total Business Segment Net Sales | $ | 934 | $ | 933 | $ | 957 | $ | 1,891 | $ | 1,773 | |||||||||||||||||||
| Adjusted EBITDA Margin | |||||||||||||||||||||||||||||
| Europe | (1)% | 16% | 13% | 6% | 12% | ||||||||||||||||||||||||
| Latin America | 27% | 32% | 28% | 28% | 29% | ||||||||||||||||||||||||
| North America | 13% | 16% | 23% | 18% | 16% | ||||||||||||||||||||||||
*Includes adjustment to eliminate intra-segment sales in Europe
9
SYLVAMO CORPORATION
Condensed Consolidated Balance Sheet
Preliminary and Unaudited
(In millions)
| June 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and temporary investments | $ | 164 | $ | 360 | |||||||
| Accounts and notes receivable, net | 440 | 450 | |||||||||
| Contract assets | 32 | 30 | |||||||||
| Inventories | 486 | 364 | |||||||||
| Other current assets | 39 | 39 | |||||||||
| Total Current Assets | 1,161 | 1,243 | |||||||||
| Plants, Properties and Equipment, Net | 960 | 817 | |||||||||
| Forestlands | 360 | 322 | |||||||||
| Goodwill | 140 | 128 | |||||||||
| Right of Use Assets | 43 | 35 | |||||||||
| Deferred Charges and Other Assets | 159 | 165 | |||||||||
| Total Assets | $ | 2,823 | $ | 2,710 | |||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 391 | $ | 453 | |||||||
| Notes payable and current maturities of long-term debt | 79 | 29 | |||||||||
| Accrued payroll and benefits | 50 | 81 | |||||||||
| Other current liabilities | 147 | 165 | |||||||||
| Total Current Liabilities | 667 | 728 | |||||||||
| Long-Term Debt | 954 | 1,003 | |||||||||
| Deferred Income Taxes | 212 | 183 | |||||||||
| Other Liabilities | 128 | 118 | |||||||||
| Equity | |||||||||||
| Common stock, $1 par value, 200.0 shares authorized, 44.5 shares and 44.2 shares issued and 41.9 shares and 42.6 shares outstanding at June 30, 2023 and December 31, 2022, respectively | 45 | 44 | |||||||||
| Paid-In Capital | 39 | 25 | |||||||||
| Retained Earnings | 2,153 | 2,029 | |||||||||
| Accumulated Other Comprehensive Loss | (1,248) | (1,338) | |||||||||
| 989 | 760 | ||||||||||
| Less: Common stock held in treasury, at cost, 2.6 shares and 1.6 shares at June 30, 2023 and December 31, 2022, respectively | (127) | (82) | |||||||||
| Total Equity | 862 | 678 | |||||||||
| Total Liabilities and Equity | $ | 2,823 | $ | 2,710 | |||||||
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Condensed Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In millions)
| Six Months Ended June 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Operating Activities | |||||||||||
| Net income from continuing operations | $ | 146 | $ | 139 | |||||||
| Depreciation, amortization, and cost of timber harvested | 69 | 63 | |||||||||
| Deferred income tax provision (benefit), net | 4 | 2 | |||||||||
| Stock-based compensation | 15 | 11 | |||||||||
| Changes in operating assets and liabilities and other | |||||||||||
| Accounts and notes receivable | 91 | (58) | |||||||||
| Inventories | (60) | (33) | |||||||||
| Accounts payable and accrued liabilities | (147) | (31) | |||||||||
| Other | 22 | 37 | |||||||||
| Cash Provided By Operating Activities from Continuing Operations | 140 | 130 | |||||||||
| Cash Provided By Operating Activities from Discontinued Operations, net | — | 45 | |||||||||
| Cash Provided By Operating Activities | 140 | 175 | |||||||||
| Investment Activities | |||||||||||
| Invested in capital projects | (105) | (59) | |||||||||
| Acquisition of business | (167) | — | |||||||||
| Cash Provided By (Used for) Investment Activities from Continuing Operations | (272) | (59) | |||||||||
| Cash Provided By (Used for) Investment Activities from Discontinued Operations, net | — | (5) | |||||||||
| Cash Provided By (Used for) Investment Activities | (272) | (64) | |||||||||
| Financing Activities | |||||||||||
| Dividends paid | (21) | — | |||||||||
| Issuance of debt | 437 | — | |||||||||
| Reduction of debt | (443) | (86) | |||||||||
| Repurchases of common stock | (40) | — | |||||||||
| Other | (6) | (6) | |||||||||
| Cash Provided By (Used for) Financing Activities from Continuing Operations | (73) | (92) | |||||||||
| Cash Provided By (Used for) Financing Activities from Discontinued Operations, net | — | — | |||||||||
| Cash Provided By (Used for) Financing Activities | (73) | (92) | |||||||||
| Effect of Exchange Rate Changes on Cash | 9 | 42 | |||||||||
| Change in Cash Included in Assets Held for Sale | — | 63 | |||||||||
| Change in Cash and Temporary Investments | (196) | (2) | |||||||||
| Cash and Temporary Investments | |||||||||||
| Beginning of the period | 360 | 159 | |||||||||
| End of the period | $ | 164 | $ | 157 | |||||||
11
SYLVAMO CORPORATION
Reconciliation of Cash Provided by Operations to Free Cash Flow
Preliminary and Unaudited
(In millions)
Three Months Ended June 30, | Three Months Ended March 31, 2023 | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
| Cash Provided By Operating Activities From Continuing Operations | $ | 77 | $ | 76 | $ | 63 | $ | 140 | $ | 130 | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Cash invested in capital projects | (44) | (37) | (61) | (105) | (59) | ||||||||||||||||||||||||
| Free Cash Flow | $ | 33 | $ | 39 | $ | 2 | $ | 35 | $ | 71 | |||||||||||||||||||
Reconciliation of Net Income From Continuing Operations to Adjusted EBITDA - 2023 Outlook
Estimates
(In millions)
Three Months Ended September 30, 2023 | Twelve Months Ended December 31, 2023 | ||||||||||
| Net Income From Continuing Operations | $47 - $61 | $226 - $250 | |||||||||
| Adjustments: | |||||||||||
| Income tax provision | 19 - 25 | 94 - 105 | |||||||||
| Interest expense (income), net | 12 | 43 | |||||||||
| Depreciation, amortization and cost of timber harvested | 38 | 145 | |||||||||
| Stock-based compensation | 7 | 28 | |||||||||
| Net Special items expense | 7 | 24 - 29 | |||||||||
| Adjusted EBITDA | $130 - $150 | $560 - $600 | |||||||||
Reconciliation of Cash Provided by Operations to Free Cash Flow - 2023 Outlook
Estimates
(In millions)
Twelve Months Ended December 31, 2023 | |||||
| Cash Provided By Operating Activities From Continuing Operations | $435 - $480 | ||||
| Adjustments: | |||||
| Cash invested in capital projects | (215 - 230) | ||||
| Free Cash Flow | $220 - $250 | ||||
The non-GAAP financial measures presented in this release have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the Company’s presentation of non-GAAP measures in this release may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as Sylvamo.
Management believes certain non-U.S. GAAP financial measures, when used in conjunction with information presented in accordance with U.S. GAAP, can facilitate a better understanding of the impact of various factors and trends on the Company’s financial condition and results of operations. Management also uses these non-U.S. GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance.
12