Document
NEWS RELEASE
Sylvamo 2024 Earnings Per Share Increases 21%, Adjusted Operating Earnings Per Share Up 14% as Company Generates Strong Cash Flow
MEMPHIS, Tenn. – Feb. 12, 2025 – Sylvamo (NYSE: SLVM), 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 earnings1 of $312 million ($7.42 per diluted share) vs. $278 million ($6.51 per diluted share)
•Adjusted EBITDA2 of $632 million (17% margin) vs. $607 million (16% margin)
•Cash provided by operating activities of $469 million vs. $504 million
•Free cash flow3 of $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.
4 Return 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.
Select Financial Measures
| | | | | | | | | | | | | | | | | |
| (In millions) | Fourth Quarter 2024 | | Third Quarter 2024 | | Fourth Quarter 2023 |
| Net Sales | $ | 970 | | | $ | 965 | | | $ | 964 | |
| Net Income | 81 | | | 95 | | | 49 | |
| Business Segment Operating Profit | 109 | | | 150 | | | 77 | |
| Adjusted Operating Earnings | 82 | | | 102 | | | 49 | |
Adjusted EBITDA | 157 | | | 193 | | | 117 | |
| Cash Provided By Operating Activities | 164 | | | 163 | | | 167 | |
Free Cash Flow | 100 | | | 119 | | | 104 | |
Segment Information
Sylvamo uses business segment operating profit to measure the earnings performance of its businesses and is calculated as set forth in footnote (g) under the "Sales and Earnings by Business Segment" table (page 8). Fourth quarter 2024 net sales by business segment and operating profit by business segment compared with the third quarter of 2024 and the fourth quarter of 2023 are as follows:
Business Segment Results
| | | | | | | | | | | | | | | | | |
| (In millions) | Fourth Quarter 2024 | | Third Quarter 2024 | | Fourth Quarter 2023 |
| Net Sales by Business Segment | | | | | |
| Europe | $ | 194 | | | $ | 194 | | | $ | 197 | |
| Latin America | 266 | | | 247 | | | 288 | |
| North America | 514 | | | 532 | | | 496 | |
| Inter-segment Sales | (4) | | | (8) | | | (17) | |
| Net Sales | $ | 970 | | | $ | 965 | | | $ | 964 | |
| Operating Profit by Business Segment | | | | | |
| Europe | $ | 3 | | | $ | 3 | | | $ | (23) | |
| Latin America | 50 | | | 49 | | | 48 | |
| North America | 56 | | | 98 | | | 52 | |
| Business Segment Operating Profit | $ | 109 | | | $ | 150 | | | $ | 77 | |
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.
Earnings Webcast
The company will host an audio webcast at 10 a.m. EST / 9 a.m. CST. All interested parties are invited to listen at investors.sylvamo.com.
Parties who wish to participate should call 800-715-9871 (U.S.) or +1-646-307-1963 (international) and use access code 2859530. Participants should call in no later than 9:45 a.m. EST / 8:45 a.m. CST.
Replays are available at investors.sylvamo.com for one year and by phone for one week. To listen by phone, call 800-770-2030 (U.S.) or +1-609-800-9909 (international) and use access code 2859530.
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 2024 were $3.8 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 "First 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, 2023, 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.
SYLVAMO CORPORATION
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Net Sales | $ | 970 | | | $ | 964 | | | $ | 965 | | | $ | 3,773 | | | $ | 3,721 | | |
| Costs and Expenses | | | | | | | | | | |
| Cost of products sold | 733 | | | 762 | | (h) | 700 | | | 2,833 | | (c) | 2,809 | | (h) |
| Selling and administrative expenses | 81 | | (a) | 87 | | (i) | 74 | | (e) | 311 | | (a) | 343 | | (i) |
| Depreciation, amortization and cost of timber harvested | 44 | | (b) | 38 | | | 39 | | (f) | 159 | | (b) | 143 | | |
| Taxes other than payroll and income taxes | 5 | | | 4 | | | 6 | | | 26 | | | 23 | | |
| Interest expense (income), net | 7 | | | 6 | | (j) | 14 | | (g) | 39 | | (d) | 34 | | (j) |
| Income Before Income Taxes | 100 | | | 67 | | | 132 | | | 405 | | | 369 | | |
| Income tax provision | 19 | | | 18 | | | 37 | | | 103 | | | 116 | | (k) |
| Net Income | $ | 81 | | | $ | 49 | | | $ | 95 | | | $ | 302 | | | $ | 253 | | |
| Earnings Per Share | | | | | | | | | | |
| Basic | $ | 1.98 | | | $ | 1.18 | | | $ | 2.32 | | | $ | 7.35 | | | $ | 6.02 | | |
| Diluted | $ | 1.94 | | | $ | 1.16 | | | $ | 2.27 | | | $ | 7.18 | | | $ | 5.93 | | |
| Average Shares of Common Stock Outstanding - Diluted | 42 | | 42 | | 42 | | 42 | | 42 | |
The accompanying notes are an integral part of this consolidated statement of operations.
Three Months and Twelve Months Ended December 31, 2024
(a) Includes a pre-tax loss of $1 million ($0 million after taxes) and $3 million ($2 million after taxes) for certain severance costs related to our salaried workforce for the three and twelve months ended December 31, 2024, respectively, and a pre-tax gain of $1 million ($0 million after taxes) for the three and twelve months ended December 31, 2024 for other items. Also includes pre-tax loss of $2 million ($1 million after taxes) for the twelve months ended December 31, 2024, for integration costs related to the Nymölla acquisition, and a pre-tax loss of $2 million ($1 million after taxes) for legal fees related to the Brazil Tax Dispute for the twelve months ended December 31, 2024.
(b) Includes pre-tax loss of $2 million ($1 million after taxes) and $3 million ($2 million after taxes) for the three and twelve months ended December 31, 2024, respectively, related to forest fires in Brazil.
(c) Includes pre-tax gain of $1 million ($1 million after taxes) for the twelve months ended December 31, 2024, to adjust the recognition of a foreign value-added tax refund in Brazil. Also includes pre-tax loss of $1 million ($1 million after taxes) for the twelve months ended December 31, 2024, for other charges.
(d) Includes pre-tax loss of $5 million ($4 million after taxes) for the twelve months ended December 31, 2024, related to debt extinguishment costs.
Three Months Ended September 30, 2024
(e) Includes pre-tax loss of $2 million ($1 million after taxes) for legal fees related to the Brazil Tax Dispute. Also includes pre-tax loss of $1 million ($1 million after taxes) for certain severance costs related to our salaried workforce.
(f) Includes pre-tax loss of $1 million ($1 million after taxes) related to forest fires in Brazil.
(g) Includes pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs.
Three Months and Twelve Months Ended December 31, 2023
(h) Includes a pre-tax gain of $5 million ($4 million after taxes) for the three months and twelve months ended December 31, 2023, to adjust the recognition of a foreign value-added tax refund in Brazil, a pre-tax loss of $3 million ($2 million after taxes) for the twelve months ended December 31, 2023, for certain severance costs related to our salaried workforce and incremental expense of $9 million ($7 million after taxes) for the twelve months ended December 31, 2023, related to the impact of the step-up of acquired Nymölla inventory sold during the first quarter.
(i) Includes a pre-tax loss of $10 million ($8 million after taxes) for the twelve months ended December 31, 2023, for certain severance costs related to our salaried workforce. Also includes pre-tax loss of $9 million ($7 million after taxes) for the three months ended December 31, 2023, and a pre-tax loss of $17 million ($13 million after taxes) for the twelve months ended December 31, 2023, for transaction and integration costs related to the Nymölla acquisition. Finally, includes a pre-tax loss of $4 million ($3 million after taxes) for the twelve months ended December 31, 2023 for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement.
(j) Includes a pretax gain of $4 million ($4 million after taxes) for the three months and twelve months ended December 31, 2023, to adjust interest income associated with the recognition of a foreign value-added tax refund in Brazil. Also 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 for the twelve months ended December 31, 2023.
(k) Includes a $2 million tax expense for the twelve months ended December 31, 2023 related to a change in valuation allowances for certain deferred tax assets.
SYLVAMO CORPORATION
Reconciliation of Net Income to Adjusted Operating Earnings
Preliminary and Unaudited
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Net Income | $ | 81 | | | $ | 49 | | | $ | 95 | | | $ | 302 | | | $ | 253 | | |
| Add back: Net special items expense (income) | 1 | | | — | | | 7 | | | 10 | | | 25 | | |
| Adjusted Operating Earnings | $ | 82 | | | $ | 49 | | | $ | 102 | | | $ | 312 | | | $ | 278 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Diluted Earnings Per Common Share as Reported | $ | 1.94 | | | $ | 1.16 | | | $ | 2.27 | | | $ | 7.18 | | | $ | 5.93 | | |
| Add back: Net special items expense (income) | 0.02 | | | — | | | 0.17 | | | 0.24 | | | 0.58 | | |
| Adjusted Operating Earnings Per Share | $ | 1.96 | | | $ | 1.16 | | | $ | 2.44 | | | $ | 7.42 | | | $ | 6.51 | | |
SYLVAMO CORPORATION
Sales and Earnings by Business Segment
Preliminary and Unaudited
(In millions)
Net Sales by Business Segment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Europe | $ | 194 | | | $ | 197 | | | $ | 194 | | | $ | 801 | | | $ | 821 | | |
| Latin America | 266 | | | 288 | | | 247 | | | 974 | | | 1,006 | | |
| North America | 514 | | | 496 | | | 532 | | | 2,029 | | | 1,951 | | |
| Inter-segment Sales | (4) | | | (17) | | | (8) | | | (31) | | | (57) | | |
| Net Sales | $ | 970 | | | $ | 964 | | | $ | 965 | | | $ | 3,773 | | | $ | 3,721 | | |
Operating Profit by Business Segment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Europe | $ | 3 | | | $ | (23) | | | $ | 3 | | | $ | 10 | | | $ | (25) | | |
| Latin America | 50 | | | 48 | | | 49 | | | 150 | | | 197 | | |
| North America | 56 | | | 52 | | | 98 | | | 293 | | | 269 | | |
| Business Segment Operating Profit | $ | 109 | | | $ | 77 | | | $ | 150 | | | $ | 453 | | | $ | 441 | | |
| | | | | | | | | | |
| Income Before Income Taxes | $ | 100 | | | $ | 67 | | | $ | 132 | | | $ | 405 | | | $ | 369 | | |
| Interest expense (income), net | 7 | | | 6 | | (e) | 14 | | (c) | 39 | | (b) | 34 | | (e) |
| Net special items expense (income) | 2 | | (a) | 4 | | (f) | 4 | | (d) | 9 | | (a) | 38 | | (f) |
| Business Segment Operating Profit (g) | $ | 109 | | | $ | 77 | | | $ | 150 | | | $ | 453 | | | $ | 441 | | |
Three and Twelve Months Ended December 31, 2024
(a) Includes pre-tax loss of $2 million ($1 million after taxes) and $3 million ($2 million after taxes) for the three and twelve months ended December 31, 2024, respectively, related to forest fires in Brazil, a pre-tax loss of $1 million ($0 million after taxes) and $3 million ($2 million after taxes) for certain severance costs related to our salaried workforce for the three and twelve months ended December 31, 2024, respectively, and a pre-tax gain of $1 million ($0 million after taxes) for the three and twelve months ended December 31, 2024 for other items. Also includes pre-tax loss of $2 million ($1 million after taxes) for the twelve months ended December 31, 2024, for integration costs related to the Nymölla acquisition, a pre-tax loss of $2 million ($1 million after taxes) for legal fees related to the Brazil Tax Dispute for the twelve months ended December 31, 2024, a pre-tax gain of $1 million ($1 million after taxes) to adjust the recognition of a foreign value-added tax refund in Brazil for the twelve months ended December 31, 2024 and a pre-tax loss of $1 million ($1 million after taxes) for other charges for the twelve months ended December 31, 2024.
(b) Includes pre-tax loss of $5 million ($4 million after taxes) for the twelve months ended December 31, 2024, related to debt extinguishment costs.
Three Months Ended September 30, 2024
(c) Includes pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs.
(d) Includes pre-tax loss of $2 million ($1 million after taxes) for legal fees related to the Brazil Tax Dispute, a pre-tax loss of $1 million ($1 million after taxes) related to forest fires in Brazil and a pre-tax loss of $1 million ($1 million after taxes) for certain severance costs related to our salaried workforce.
Three Months and Twelve Months Ended December 31, 2023
(e) Includes a pretax gain of $4 million ($4 million after taxes) for the three months and twelve months ended December 31, 2023, to adjust interest income associated with the recognition of a foreign value-added tax refund in Brazil. Also 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 for the twelve months ended December 31, 2023.
(f) Includes a pre-tax gain of $5 million ($4 million after taxes) for the three months and twelve months ended December 31, 2023, to adjust the recognition of a foreign value-added tax refund in Brazil and a pre-tax loss of $9 million ($7 million after taxes) for the three months ended December 31, 2023, and a pre-tax
loss of $17 million ($13 million after taxes) for the twelve months ended December 31, 2023, for transaction and integration costs related to the Nymölla acquisition. Also includes pre-tax loss of $13 million ($10 million after taxes) for the twelve months ended December 31, 2023, for certain severance costs related to our salaried workforce. Finally, includes 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 for the twelve months ended December 31, 2023.
(g) As set forth in the chart above, business segment operating profit is defined as income 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.
Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin
Preliminary and Unaudited
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Net Income | $ | 81 | | | $ | 49 | | | $ | 95 | | | $ | 302 | | | $ | 253 | | |
| Adjustments: | | | | | | | | | | |
| Income tax provision | 19 | | | 18 | | | 37 | | | 103 | | | 116 | | |
| Interest expense (income), net | 7 | | | 6 | | | 14 | | | 39 | | | 34 | | |
| Depreciation, amortization and cost of timber harvested | 44 | | | 38 | | | 39 | | | 159 | | | 143 | | |
| Stock-based compensation | 6 | | | 2 | | | 5 | | | 23 | | | 23 | | |
| Net special items expense (income) | — | | | 4 | | | 3 | | | 6 | | | 38 | | |
| Adjusted EBITDA | $ | 157 | | | $ | 117 | | | $ | 193 | | | $ | 632 | | | $ | 607 | | |
| Net Sales | $ | 970 | | | $ | 964 | | | $ | 965 | | | $ | 3,773 | | | $ | 3,721 | | |
| Adjusted EBITDA Margin | 16.2% | | 12.1% | | 20.0% | | 16.8% | | 16.3% | |
Adjusted EBITDA and Adjusted EBITDA Margin by Business Segment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Adjusted EBITDA | | | | | | | | | | |
| Europe | $ | 14 | | | $ | (16) | | | $ | 11 | | | $ | 47 | | | $ | 7 | | |
| Latin America | 70 | | | 67 | | | 69 | | | 228 | | | 271 | | |
| North America | 73 | | | 66 | | | 113 | | | 357 | | | 329 | | |
| Total Business Segment Adjusted EBITDA | $ | 157 | | | $ | 117 | | | $ | 193 | | | $ | 632 | | | $ | 607 | | |
| Net Sales (excluding inter-segment sales eliminations) | | | | | | | | | | |
| Europe | $ | 194 | | | $ | 197 | | | $ | 194 | | | $ | 801 | | | $ | 821 | | |
| Latin America | 266 | | | 288 | | | 247 | | | 974 | | | 1,006 | | |
| North America | 514 | | | 496 | | | 532 | | | 2,029 | | | 1,951 | | |
| Total Business Segment Net Sales | $ | 974 | | | $ | 981 | | | $ | 973 | | | $ | 3,804 | | | $ | 3,778 | | |
| Adjusted EBITDA Margin | | | | | | | | | | |
| Europe | 7% | | (8)% | | 6% | | 6% | | 1% | |
| Latin America | 26% | | 23% | | 28% | | 23% | | 27% | |
| North America | 14% | | 13% | | 21% | | 18% | | 17% | |
SYLVAMO CORPORATION
Consolidated Balance Sheet
Preliminary and Unaudited
(In millions)
| | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Assets | | | |
| Current Assets | | | |
| Cash and temporary investments | $ | 205 | | | $ | 220 | |
| Restricted cash | — | | | 60 | |
| Accounts and notes receivable, net | 429 | | | 428 | |
| Contract assets | 26 | | | 27 | |
| Inventories | 361 | | | 404 | |
| Other current assets | 42 | | | 54 | |
| Total Current Assets | 1,063 | | | 1,193 | |
| Plants, Properties and Equipment, Net | 944 | | | 1,002 | |
| Forestlands | 319 | | | 364 | |
| Goodwill | 111 | | | 139 | |
| Right of Use Assets | 58 | | | 58 | |
| Deferred Charges and Other Assets | 109 | | | 116 | |
| Total Assets | $ | 2,604 | | | $ | 2,872 | |
| Liabilities and Equity | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 375 | | | $ | 421 | |
| Notes payable and current maturities of long-term debt | 22 | | | 28 | |
| Accrued payroll and benefits | 79 | | | 63 | |
| Other current liabilities | 206 | | | 183 | |
| Total Current Liabilities | 682 | | | 695 | |
| Long-Term Debt | 782 | | | 931 | |
| Deferred Income Taxes | 152 | | | 189 | |
| Other Liabilities | 141 | | | 156 | |
| Equity | | | |
Common stock, $1.00 par value, 200.0 shares authorized, 44.9 shares and 44.5 shares issued and 40.6 shares and 41.2 shares outstanding at December 31, 2024 and 2023, respectively | 45 | | | 45 | |
| Paid-In Capital | 71 | | | 48 | |
| Retained Earnings | 2,455 | | | 2,222 | |
| Accumulated Other Comprehensive Loss | (1,490) | | | (1,256) | |
| 1,081 | | | 1,059 | |
Less: Common stock held in treasury, at cost, 4.3 shares and 3.3 shares at December 31, 2024 and December 31, 2023, respectively | (234) | | | (158) | |
| Total Equity | 847 | | | 901 | |
| Total Liabilities and Equity | $ | 2,604 | | | $ | 2,872 | |
SYLVAMO CORPORATION
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In millions)
| | | | | | | | | | | |
| Twelve Months Ended
December 31, |
| 2024 | | 2023 |
| Operating Activities | | | |
| Net income | $ | 302 | | | $ | 253 | |
| Depreciation, amortization, and cost of timber harvested | 159 | | | 143 | |
| Deferred income tax provision (benefit), net | (7) | | | — | |
| Stock-based compensation | 23 | | | 23 | |
| Changes in operating assets and liabilities and other | | | |
| Accounts and notes receivable | (47) | | | 104 | |
| Inventories | 25 | | | 6 | |
| Accounts payable and accrued liabilities | 42 | | | (73) | |
| Other | (28) | | | 48 | |
| Cash Provided By Operating Activities | 469 | | | 504 | |
| Investing Activities | | | |
| Invested in capital projects | (221) | | | (210) | |
| Acquisition of business, net of cash acquired | — | | | (167) | |
| Cash Provided By (Used for) Investing Activities | (221) | | | (377) | |
| Financing Activities | | | |
| Dividends paid | (62) | | | (57) | |
| Issuance of debt | 250 | | | 446 | |
| Reduction of debt | (407) | | | (526) | |
| Repurchases of common stock | (69) | | | (70) | |
| Other | (22) | | | (12) | |
| Cash Provided By (Used for) Financing Activities | (310) | | | (219) | |
| Effect of Exchange Rate Changes on Cash | (13) | | | 12 | |
| Change in Cash, Temporary Investments and Restricted Cash | (75) | | | (80) | |
| Cash, Temporary Investments and Restricted Cash | | | |
| Beginning of the period | 280 | | | 360 | |
| End of the period | $ | 205 | | | $ | 280 | |
SYLVAMO CORPORATION
Reconciliation of Cash Provided by Operations to Free Cash Flow
Preliminary and Unaudited
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Three Months Ended September 30, 2024 | | Twelve Months Ended December 31, | |
| 2024 | | 2023 | | | 2024 | | 2023 | |
| Cash Provided By Operating Activities | $ | 164 | | | $ | 167 | | | $ | 163 | | | $ | 469 | | | $ | 504 | | |
| Adjustments: | | | | | | | | | | |
| Cash invested in capital projects | (64) | | | (63) | | | (44) | | | (221) | | | (210) | | |
| Free Cash Flow | $ | 100 | | | $ | 104 | | | $ | 119 | | | $ | 248 | | | $ | 294 | | |
SYLVAMO CORPORATION
Reconciliation of Return on Invested Capital
Preliminary and Unaudited
(In millions)
| | | | | | | | | | | |
| 2024 | | 2023 |
| Net Income | $ | 302 | | | |
| Net special items expense (income) | 10 | | | |
| Interest expense (income), net | 39 | | | |
| Adjusted Operating Earnings Before Interest | $ | 351 | | | |
| Total equity | $ | 847 | | | $ | 901 | |
| Add: Long-term debt | 782 | | | 931 | |
| Add: Notes payable and current maturities of long-term debt | 22 | | | 28 | |
| Less: Cash, temporary investments and restricted cash | (205) | | | (280) | |
| Total Invested Capital | $ | 1,446 | | | $ | 1,580 | |
| Average Invested Capital | $1,513 |
| Return on Invested Capital for the Twelve Months Ended December 31, 2024 | 23% |
SYLVAMO CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - First Quarter 2025 Outlook
Estimates
(In millions)
| | | | | |
| Three Months Ended March 31, 2025 |
|
| Net Income | $20 - $34 |
| Adjustments: | |
| Income tax provision | 8 - 14 |
| Interest expense (income), net | 8 | |
| Depreciation, amortization and cost of timber harvested | 43 | |
| Stock-based compensation | 6 | |
| Adjusted EBITDA | $85 - $105 |
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.