Sylvamo Corporation · NYSE:SLVM
Sylvamo — Q1 2024 Earnings Presentation
39 slides from Sylvamo's earnings presentation, May 10, 2024
Slide 1: First Quarter 2024 Earnings
1 First Quarter 2024 Earnings May 10, 2024 © 2024 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. Forward-looking statements forecast or state expectations concerning future events. These statements often can be identified by the fact that
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: 1Q24 Highlights
1Q24 Highlights 4 • Uncoated Freesheet conditions improving • Mill system ran near full capacity with healthy order books • Project Horizon on track to meet $110 million year-end run rate savings target • Returned substantial cash to shareowners © 2024 Sylvamo Corporation. All rights reserved.
Slide 5: 1Q24 Key Financial Metrics
1Q24 Key Financial Metrics 5 Adjusted EBITDA Free Cash Flow Adjusted Operating and Margin Earnings per Share $208 $104 $2.51 $117 $118 $1.16 $1.07 22% 12% 13% $2 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 ($33) Adjusted EBITDA and Free Cash Flow figures are in $ millions © 2024 Sylvamo Corporation
Slide 6: 1Q24 Adjusted EBITDA in line with our Outlook
1Q24 Adjusted EBITDA in line with our Outlook 6 1Q24 vs. 4Q23 $ Million 1Q24 Outlook ($5) - ($10) ($10) - ($15) $20 - $25 $3 ($5) - ($10) $105 - $125 (February 15, 2024) $19 $3 ($9) $117 $0 ($12) $118 Seasonally weakest demand quarter in Latin America 12% 13% 4Q23 Price & Mix Volume Operations and M
Slide 7: Significant decrease in economic downtime reflects improving conditions
Significant decrease in economic downtime reflects improving conditions 7 Thousand tons 185 150 61 27 98 23 56 123 124 75 11 1Q23 2Q23 3Q23 4Q23 1Q24 UFS Pulp © 2024 Sylvamo Corporation. All rights reserved.
Slide 8: Uncoated Freesheet conditions continue to improve
Uncoated Freesheet conditions continue to improve 8 • Stronger order books vs. 2023 • Implemented pulp and paper price increases in all regions • Input costs stabilizing © 2024 Sylvamo Corporation. All rights reserved.
Slide 9: 2Q24 Adjusted EBITDA Outlook: $145 - $160 Million
2Q24 Adjusted EBITDA Outlook: $145 - $160 Million 9 2Q24 vs. 1Q24 $ Million Price increase realizations in all regions and better mix in Price and Mix Favorable: $15 - $20 Latin America Volume Favorable: $5 - $10 Seasonally stronger in Latin America Operations and Favorable: $5 - $10 Primarily lower
Slide 10: On target to meet $110 million in Project Horizon cost reductions
On target to meet $110 million in Project Horizon cost reductions 10 Streamlining our organization and reducing costs to become a leaner, stronger company Manufacturing & $110 million Selling & Supply Chain 2024 Year-end Run Rate Administrative Targeted Savings1 $80 million $30 million ¹Before infla
Slide 11: Majority of planned maintenance outage costs will be completed in 1H24
Majority of planned maintenance outage costs will be completed in 1H24 11 $ Million $72 74% $28 $25 $18 $1 1Q24 2Q24 3Q24 4Q24 2024 Europe Latin America North America Total maintenance outage costs in $ millions (shown for Sylvamo mills only) include direct maintenance outage costs plus unabsorbed f
Slide 12: Allocating cash to drive long-term shareowner value
Allocating cash to drive long-term shareowner value 12 Maintain Strong Financial Position Reinvest in Return Cash to our Business Shareowners © 2024 Sylvamo Corporation. All rights reserved.
Slide 13: Maintain a strong financial position to operate and invest throughout the cycle
Maintain a strong financial position to operate and invest throughout the cycle 13 Gross Debt $ Million $1,520 $940 Initial Gross Debt at Spinoff Mar 2024 Oct 1, 2021 1.5x Net Debt-to-Adjusted EBITDA as of March 31, 2024 Net debt reflects quarter-end cash balance of $149 million, which excludes $60
Slide 14: Repurchased 8% of our initial shares with a 35% return
Repurchased 8% of our initial shares with a 35% return 14 Repurchased 3.5 million shares at a weighted average price of $49.16 since 4Q22 $70 $60 $50 $40 $30 $20 2022 2023 2024 YTD $10 $80 million at $70 million at $20 million at average of $51.39 average of $44.47 average of $60.81 $0 Oct-21 Jan-22
Slide 15: Invest in high-return projects to increase earnings and cash flow
Invest in high-return projects to increase earnings and cash flow 15 > $200 million pipeline of high-return projects Average Annual High-Return Investment After-Tax Rationale Cost Savings Start-Up Capital Project $ Million IRR $ Million Eastover Increase supply of low-cost $1.3 ~$0.5 35% 1Q24 Increa
Slide 16: Confident in our future and motivated by opportunities that lie ahead
Confident in our future and motivated by opportunities that lie ahead 16 Improving from Cycle-Bottom • Continued improvement in Uncoated Freesheet conditions • Mill system running near full capacity • Favorable Price & Mix trends Disciplined Capital Allocation • Healthy financial position provides f
Slide 17: Appendix
17 Appendix © 2024 Sylvamo Corporation. All rights reserved.
Slide 18: Contacts
Contacts 18 Hans Bjorkman Vice President, Investor Relations Investor Relations +1-901-519-8030 hans.bjorkman@sylvamo.com Adam Ghassemi Senior Manager, Corporate Communications Media +1-901-519-8115 adam.ghassemi@sylvamo.com © 2024 Sylvamo Corporation. All rights reserved.
Slide 19: Selected Annual Financial Guidance
Selected Annual Financial Guidance 19 2023 2024 $ Million Actual Outlook Total Maintenance Outage Costs $89 $72 Maintenance & Regulatory $143 $125 - $130 Brazil Reforestation $34 $55 Capital Spending High-return Projects $33 $30 - $35 Total $210 $210 - $220 Depreciation & Amortization $143 $159 Net
Slide 20: 1.5x Net Debt-to-Adjusted EBITDA - March 31, 2024
1.5x Net Debt-to-Adjusted EBITDA - March 31, 2024 20 Gross Debt $ Million $1,520 $1,397 $1,026 $950 $940 Initial Gross Debt at Dec 21 Dec 22 Dec 23 Mar 24 Spinoff Bonds Term Loan F Term Loan B Term Loan A Revolver AR Securitization 1.8x Gross Debt-to-Adjusted EBITDA as of March 31, 2024 Net debt ref
Slide 21: No significant debt maturities until 2027
No significant debt maturities until 2027 21 Debt Maturity Profile $ Million as of March 2024 $412 $229 $149 $90 $20 … $41 2024 2025 2026 2027 2028 2029 Term Loan F AR Securitization Term Loan A Bonds © 2024 Sylvamo Corporation. All rights reserved.
Slide 22: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 22 $ Million 1Q23 4Q23 1Q24 Cash Provided by Operating Activities $63 $167 $27 Cash Invested in Capital Projects ($61) ($63) ($60) Free Cash Flow $2 $104 ($33) Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operati
Slide 23: 1Q24 vs. 4Q23 Free Cash Flow
1Q24 vs. 4Q23 Free Cash Flow 23 $ Million 4Q23 1Q24 Variance Adjusted EBITDA $117 $118 $1 Cash Taxes $(29) $(13) $16 Cash Interest $(14) $(11) $3 Cash Special Items $(9) $(2) $7 Other Changes in Working Capital $102 $(65) $(167) Cash Provided by Operating Activities $167 $27 $(140) Capital Spending
Slide 24: 1Q24 vs. 1Q23 Free Cash Flow
1Q24 vs. 1Q23 Free Cash Flow 24 $ Million 1Q23 1Q24 Variance Adjusted EBITDA $208 $118 $(90) Cash Taxes $(8) $(13) $(5) Cash Interest $(9) $(11) $(2) Cash Special Items $(9) $(2) $7 Other Changes in Working Capital $(119) $(65) $54 Cash Provided by Operating Activities $63 $27 $(36) Capital Spending
Slide 25: Free Cash Flow by Quarter - Since Spinoff
Free Cash Flow by Quarter - Since Spinoff 25 $ Million $155 $109 $114 $104 $84 1Q 2Q $39 $32 $33 3Q 4Q $2 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 ($33) © 2024 Sylvamo Corporation. All rights reserved.
Slide 26: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 26 2Q24 $ Million 1Q23 4Q23 1Q24 Outlook Net Income (Loss) $97 $49 $43 $62 - $72 Depreciation, Amortization, Cost of Timber Harvested 35 38 39 38 Interest (Income) Expense, Net 7 6 9 10 Income Tax Provision 44 18 17 27 - 32 Adjustments Equity-based Compensat
Slide 27: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 27 $ Million 1Q23 4Q23 1Q24 Adjusted EBITDA Europe 31 (16) 5 Latin America 63 67 34 North America 114 66 79 Total Business Segment Adjusted EBITDA $208 $117 $118 Net Sales (excluding Inter-segment Sales eliminations) Europe 230 197 207 Latin America 222 288
Slide 28: Adjusted Operating Earnings per Share Reconciliation
Adjusted Operating Earnings per Share Reconciliation 28 $ Million 1Q23 4Q23 1Q24 Net Income (Loss) $97 $49 $43 Special Items Expense (Income) 11 - 2 Adjusted Operating Earnings $108 $49 $45 Adjusted Operating Earnings per Share $2.51 $1.16 $1.07 Adjusted Operating Earnings is a non-GAAP measure pres
Slide 29: Capacity by Grade
Capacity by Grade 29 000 Short Tons Uncoated Papers Market Pulp Total Nymolla 500 - 500 Saillat 265 130 395 Europe 765 130 895 Luis Antonio 385 130 515 Mogi Guacu 460 35 495 Tres Lagoas 260 - 260 Latin America 1,105 165 1,270 Eastover 700 115 815 Ticonderoga 275 - 275 North America 975 115 1,090 Syl
Slide 30: 1Q24 Sales Volume
1Q24 Sales Volume 30 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 175 233 347 755 Market Pulp 34 30 34 98 Total 853 Sales volume includes revenue recognition © 2024 Sylvamo Corporation. All rights reserved.
Slide 31: Total Maintenance Outage Costs - 2024 Outlook
Total Maintenance Outage Costs - 2024 Outlook 31 1Q24 2Q24 3Q24 4Q24 2024 $ Million Actual Outlook Outlook Outlook Outlook Europe - $1 $1 - $2 Latin America $11 $6 - - $17 North America $14 $21 - $18 $53 Total $25 $28 $1 $18 $72 Total maintenance outage costs (shown for Sylvamo mills only) include d
Slide 32: Quarterly Business Segment Operating Results
Quarterly Business Segment Operating Results 32 Sales D&A Adjusted EBITDA $ Million 1Q23 4Q23 1Q24 1Q24 1Q23 4Q23 1Q24 Europe $230 $197 $207 $8 $31 ($16) $5 Latin America $222 $288 $216 $18 $63 $67 $34 North America $505 $496 $490 $13 $114 $66 $79 Segment Total $957 $981 $913 $39 $208 $117 $118 Sum
Slide 33: 1Q24 vs. 1Q23 Adjusted EBITDA
1Q24 vs. 1Q23 Adjusted EBITDA 33 $ Million $208 ($115) $17 ($17) $50 $118 ($25) 22% 13% 1Q23 Price & Mix Volume Operations Maintenance Input and 1Q24 and Costs Outages Transportation Costs © 2024 Sylvamo Corporation. All rights reserved.
Slide 34: Europe Adjusted EBITDA
Europe Adjusted EBITDA 34 1Q24 vs. 4Q23 $6 ($2) $5 ($16) $11 2% $5 $1 (8%) 4Q23 Price & Mix Volume Operations Maintenance Input and 1Q24 and Costs Outages Transportation Costs $ Million 1Q24 vs. 1Q23 $31 ($46) $8 $5 13% $5 $0 2% $7 1Q23 Price & Mix Volume Operations Maintenance Input and 1Q24 and Co
Slide 35: Latin America Adjusted EBITDA
Latin America Adjusted EBITDA 35 1Q24 vs. 4Q23 $67 ($2) ($16) ($7) ($7) ($1) $34 23% 16% 4Q23 Price & Mix Volume Operations Maintenance Input and 1Q24 and Costs Outages Transportation $ Million Costs 1Q24 vs. 1Q23 9% $63 ($34) 19% $5 ($11) $22 $34 ($11) 28% 16% 1Q23 Price & Mix Volume Operations Mai
Slide 36: North America Adjusted EBITDA
North America Adjusted EBITDA 36 1Q24 vs. 4Q23 $15 $4 ($6) $79 $66 ($3) $3 13% 16% 4Q23 Price & Mix Volume Operations Maintenance Input and 1Q24 and Costs Outages Transportation $ Million Costs 1Q24 vs. 1Q23 $114 ($35) 9% 19% $5 ($11) $20 $79 ($14) 23% 16% 1Q23 Price & Mix Volume Operations Maintena
Slide 37: 1Q24 Price & Mix vs. Input Costs
1Q24 Price & Mix vs. Input Costs 37 Change of Price & Mix 1Q24 vs. 4Q23 Input Costs vs. Input Costs Change By Region $ Million $ Million 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Europe Latin America North America ($115) ($2) ($1) ($6) 1 1 $50 (1) (1) (1) (2) (1) ($9) (5) $0 Price & Mix Input Costs Price & Mix In
Slide 38: Executing on our Investment Thesis
Executing on our Investment Thesis 38 The World’s Paper Company A Simple, Focused Plan We are the world’s paper company, the: We focus on uncoated freesheet and will create long-term • Employer of Choice value through: • Supplier of Choice • Talented teams • Investment of Choice • Iconic brands We b
Slide 39: Building a better future for people, the planet and our company
39 Building a better future for people, the planet and our company © 2024 Sylvamo Corporation. All rights reserved.