Sylvamo Corporation · NYSE:SLVM
Sylvamo — Q4 2021 Earnings Presentation
38 slides from Sylvamo's earnings presentation, Feb 11, 2022
Slide 1: Fourth Quarter 2021 Earnings Review
1 Fourth Quarter 2021 Earnings Review February 11, 2022 © 2021 Sylvamo Corporation. All rights reserved.
Slide 2: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements 2 This presentation contains information that includes or is based upon 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. Forward-looking statem
Slide 3: Statement relating to non-U.S. financial GAAP measures
Statement relating to non-U.S. financial GAAP measures 3 While Sylvamo reports its financial results in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), during the course of this presentation, certain non-U.S. GAAP financial measures are presented. Managem
Slide 4: Gaining momentum throughout 2021
Gaining momentum throughout 2021 4 Net Sales Adjusted EBITDA Adjusted Operating $ Million $ Million Earnings per Share +16% +59% +71% $3,502 $6.94 $594 $3,009 19.5% $373 $4.05 14.6% 17.0% 14.1% 12.4% 2020 2021 2020 2021 2020 2021 © 2021 Sylvamo Corporation. All rights reserved.
Slide 5: Solid 4Q21 performances generated 17.5% Adjusted EBITDA Margin
Solid 4Q21 performances generated 17.5% Adjusted EBITDA Margin 5 Commercial • Strong order book - running at full capacity Excellence • Price & Mix exceeded Input Cost increases Operational • Good execution in challenging supply chain environments Excellence • Safe and efficient annual outages at Ea
Slide 6: Strong 4Q21 results in first standalone quarter
Strong 4Q21 results in first standalone quarter 6 Net Sales Adjusted EBITDA Adjusted Operating $ Million $ Million Earnings per Share $972 $908 $177 $170 $2.27 $796 $1.57 $1.71 19.5% $112 14.6% 14.1% 14.1% 19.5% 17.5% 4Q20 3Q21 4Q21 4Q20 3Q21 4Q21 4Q20 3Q21 4Q21 © 2021 Sylvamo Corporation. All right
Slide 7: Benefiting from Commercial Excellence and low-cost operations
Benefiting from Commercial Excellence and low-cost operations 7 Innovation to Expand Ease of Leveraging End-use Applications Doing Business Global Footprint © 2021 Sylvamo Corporation. All rights reserved.
Slide 8: Global uncoated freesheet demand continues to recover
Global uncoated freesheet demand continues to recover 8 2021 UFS Industry Demand Growth Europe 5.9% Latin America 13.7% North America 4.2% Global 3.2% Our 2021 UFS shipments were up 12% vs. 2020 Source: Pulp and Paper Products Council © 2021 Sylvamo Corporation. All rights reserved.
Slide 9: Commercial and operational performances drove strong earnings
Commercial and operational performances drove strong earnings 9 4Q21 vs. 3Q21 Adjusted EBITDA $ Million 300 $14 $2 ($24) $41 250 ($39) $177 $170 200 150 19.5% 17.5% 100 50 0 3Q21 Price & Mix Volume Operations Maintenance Input and 4Q21 and Costs Outages Transportation Costs © 2021 Sylvamo Corporatio
Slide 10: Strong regional performances
Strong regional performances 10 4Q21 Adjusted EBITDA Region 4Q21 vs. 3Q21 Highlights $ Million Margin • Realization of prior price increases in all regions Europe $27 9% • Improving volumes in Europe and Latin America and continued strong volume in North America • Good operations Latin America $81 3
Slide 11: Favorable UFS industry momentum moving into 2022
Favorable UFS industry momentum moving into 2022 11 Favorable Supply & Demand • Strong demand in all regions • Public announcements indicate net capacity reductions in Western Europe and North America Unfavorable Input Costs • Expect continued cost increases for fiber, chemicals and transportation F
Slide 12: 1Q22 Adjusted EBITDA Outlook: $180 - $190 Million
1Q22 Adjusted EBITDA Outlook: $180 - $190 Million 12 1Q22 vs. 4Q21 Changes (Estimates in $ Million) Improving: $35 - $40 Price & Mix Continued price increase realizations in all regions Decreasing: ($13) - ($18) Volume Seasonally weaker demand in Latin America and Eastern Europe Increasing: ($18) -
Slide 13: Selected Guidance
Selected Guidance 13 2021 2022 $ Million Actual Outlook Direct Maintenance Outage Costs $69 $61 Maintenance, Regulatory & Reforestation $76 $145 Cost Reduction - $18 Capital Spending Svetogorsk Recovery Boiler Engineering - $15 Total $76 $178 Depreciation & Amortization $143 $137 Interest Expense $1
Slide 14: Driving strong Free Cash Flow and allocating cash to drive shareowner value
Driving strong Free Cash Flow and allocating cash to drive shareowner value 14 Free Cash Flow 2022 Uses of Cash $ Million $162 • $178 million in capital spending, including cost reduction • $77 million in one-time GT and RD inventory payments $135 • $72 million in one-time and transition services co
Slide 15: Strengthening our balance sheet
Strengthening our balance sheet 15 Year-end 2021 Debt $ Million Maturity 4Q21 Revolving Credit Facility $20 2026 • Repaid $124 million of debt Secured Farm Credit Term Loan F $517 2027 • Increased cash by $48 million • Swapped $400 million of Secured Term Loan B $410 2028 floating rate debt to fixed
Slide 16: Opportunities to enhance value
Opportunities to enhance value 16 Capital Allocation Reinvest in our assets and return cash to shareowners Focus Serving the interests of our customers Simplify Clear strategy and tactics, more agile © 2021 Sylvamo Corporation. All rights reserved.
Slide 17: 2022 Key Objectives
2022 Key Objectives 17 • Win with key customers Commercial • Focus on attractive segments Excellence • Drive iconic brands • Injury-free operations Operational • Run well and service customers well Excellence • Invest capital to strengthen low-cost positions • Drive Free Cash Flow and increase Adjus
Slide 18: Appendix
18 Appendix © 2021 Sylvamo Corporation. All rights reserved.
Slide 19: Contacts
Contacts 19 Hans Bjorkman Vice President, Investor Relations Investor Relations +1-901-419-3525 hans.bjorkman@sylvamo.com Adam Ghassemi Senior Manager, Corporate Communications Media +1-901-419-4436 adam.ghassemi@sylvamo.com © 2021 Sylvamo Corporation. All rights reserved.
Slide 20: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 20 $ Million 3Q21 4Q21 FY20 FY21 Cash Provided by Operations $157 $184 $359 $549 Cash Invested in Capital Projects ($22) ($22) ($75) ($76) Free Cash Flow $135 $162 $284 $473 Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provi
Slide 21: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 21 1Q22 $ Million 2020 2021 4Q20 3Q21 4Q21 Outlook Net Income $170 $331 $65 $92 $62 $65 - $73 Depreciation, Amortization, Cost of Timber Harvested 154 143 37 37 35 37 Interest (Income) Expense, Net (4) (2) (1) 10 17 18 Income Tax Provision (Benefit) 28 129 3
Slide 22: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 22 $ Million 2020 2021 4Q20 3Q21 4Q21 Adjusted EBITDA $373 $594 $112 $177 $170 Europe 115 132 24 49 27 Latin America 150 255 54 59 81 North America 108 207 34 69 62 Total Business Segment Adjusted EBITDA $373 $594 $112 $177 $170 Net Sales (excluding Corporat
Slide 23: Adjusted Operating Earnings per Share Reconciliation
Adjusted Operating Earnings per Share Reconciliation 23 1Q22 $ Million 2020 2021 4Q20 3Q21 4Q21 Outlook Net Income $170 $331 $65 $92 $62 $65 - $73 Special Items Expense (Income) 8 (26) 4 8 13 10 Adjusted Operating Earnings 178 305 69 100 75 75 - 83 Adjusted Operating Earnings per Share $4.05 $6.94 $
Slide 24: 4Q21 vs. 4Q20 Adjusted EBITDA
4Q21 vs. 4Q20 Adjusted EBITDA 24 $ Million 350 $50 ($25) 300 ($89) $13 $109 250 $170 200 150 $112 100 14.1% 17.5% 50 0 4Q20 Price & Mix Volume Operations Maintenance Input Costs 4Q21 Outages © 2021 Sylvamo Corporation. All rights reserved.
Slide 25: Europe Adjusted EBITDA
Europe Adjusted EBITDA 25 4Q21 vs. 3Q21 70 $3 $4 ($21) $5 $49 60 ($12) 50 40 $27 30 19% 20 9% 10 0 3Q21 Price & Mix Volume Operations Maintenance Input Costs 4Q21 Outages $ Million 4Q21 vs. 4Q20 $12 ($17) 70 $2 60 $25 ($19) 9% 50 19% 40 $24 $27 30 20 10% 9% 10 Maintenance 0 4Q20 Price & Mix Volume O
Slide 26: Latin America Adjusted EBITDA
Latin America Adjusted EBITDA 26 4Q21 vs. 3Q21 100 $11 ($2) $7 ($9) $81 90 $14 80 $59 70 60 50 35% 40 30% 30 20 10 0 3Q21 Price & Mix Volume Operations Maintenance Input Costs 4Q21 Outages $ Million 4Q21 vs. 4Q20 $5 $0 ($23) 120 $46 $0 100 $81 9% 80 19% $54 60 40 27% 35% 20 Maintenance 0 4Q20 Price
Slide 27: North America Adjusted EBITDA
North America Adjusted EBITDA 27 4Q21 vs. 3Q21 120 $22 ($0) $0 ($10) 100 ($18) $69 $62 80 60 40 15% 13% 20 0 3Q21 Price & Mix Volume Operations Maintenance Input Costs 4Q21 $ Million Outages 4Q21 vs. 4Q20 140 $35 ($8) ($47) 120 $11 9% 100 $38 19% $62 80 60 $34 40 13% 9% 20 Maintenance 0 4Q20 Price &
Slide 28: 2021 vs. 2020 Adjusted EBITDA
2021 vs. 2020 Adjusted EBITDA 28 $ Million 900 $144 ($15) ($193) 800 $64 700 $221 $594 600 500 $373 400 300 12.4% 17.0% 200 100 0 2020 Price & Mix Volume Operations Maintenance Input Costs 2021 Outages © 2021 Sylvamo Corporation. All rights reserved.
Slide 29: 4Q21 Shipments
4Q21 Shipments 29 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 238 301 377 916 Market Pulp 67 36 19 122 Coated Board & Other 35 - - 35 Total 1,073 © 2021 Sylvamo Corporation. All rights reserved.
Slide 30: Strong commercial performances
Strong commercial performances 30 2021 vs. 2020 4Q21 vs. 4Q20 Sylvamo UFS Shipments Sylvamo UFS Shipments +6% +12% +11% +14% North America North America +22% 5.9% +0% Latin America Latin America +3% +2% Europe Europe 2020 2021 4Q20 4Q21 Shipments in tons © 2021 Sylvamo Corporation. All rights reserv
Slide 31: Price & Mix outpaced Input Costs in 4Q21
Price & Mix outpaced Input Costs in 4Q21 31 Change of Price & Mix 4Q21 vs. 3Q21 Input Costs vs. Input Costs Change By Region ($ Million) ($ Million) +$20 Europe Latin America North America $109 (3) (4) (6) $89 (3) (7) +$2 (2) (6) (2) ($9) $41 $39 ($12) (2) (1) (3) 4Q21 vs 3Q21 4Q21 vs 4Q20 ($18) Pri
Slide 32: Price & Mix outpaced Input Costs in 2021
Price & Mix outpaced Input Costs in 2021 32 Change of Price & Mix 2021 vs. 2020 Input Costs vs. Input Costs Change By Region ($ Million) ($ Million) +$28 Europe Latin America North America (2) $221 (17) (2) (23) (32) $193 (5) (12) (2) ($28) (15) (27) (8) (2) (12) (5) ($60) (29) ($105) 2021 vs 2020 P
Slide 33: Direct Maintenance Outage Costs - 2021
Direct Maintenance Outage Costs - 2021 33 $ Million 1Q21 2Q21 3Q21 4Q21 2021 Europe $1 $7 $1 $16 $25 Latin America - - $5 - $5 North America - $21 $1 $17 $39 Total $1 $28 $7 $33 $69 Direct maintenance outage costs include only the direct labor & material costs. Total maintenance outage expenses incl
Slide 34: Direct Maintenance Outage Costs - 2022 Outlook
Direct Maintenance Outage Costs - 2022 Outlook 34 2022 $ Million 1Q22 2Q22 3Q22 4Q22 Outlook Europe - $9 - - $9 Latin America - - $6 - $6 North America $7 $18 $4 $18 $46 Total $7 $27 $10 $18 $61 Direct maintenance outage costs include only the direct labor & material costs. Total maintenance outage
Slide 35: Quarterly Business Segment Operating Results
Quarterly Business Segment Operating Results 35 Sales D&A Adjusted EBITDA $ Million 4Q20 3Q21 4Q21 4Q21 4Q20 3Q21 4Q21 Europe $239 $262 $297 $9 $24 $49 $27 Latin America $198 $200 $229 $15 $54 $59 $81 North America $376 $447 $463 $12 $34 $69 $62 Segment Total $813 $909 $989 $35 $112 $177 $170 Sum of
Slide 36: Annual Business Segment Operating Results
Annual Business Segment Operating Results 36 Sales Adjusted EBITDA $ Million 2020 2021 2020 2021 Europe $921 $1,040 $115 $132 Latin America $632 $786 $150 $255 North America $1,490 $1,718 $108 $207 Segment Total $3,043 $3,544 $373 $594 Sum of Business Segment net sales will not tie with consolidated
Slide 37: 2021 Delivered Cost of Goods Sold
2021 Delivered Cost of Goods Sold 37 Distribution 16% Fiber 22% Depreciation 5% $2.2 Woo Labor 13% Billion d Chemicals 14% Energy Fixed 9% 16% Packaging 5% © 2021 Sylvamo Corporation. All rights reserved.
Slide 38: Creating the future of paper
38 Creating the future of paper © 2021 Sylvamo Corporation. All rights reserved.