Sylvamo Corporation · NYSE:SLVM
Sylvamo — Q2 2022 Earnings Presentation
35 slides from Sylvamo's earnings presentation, Aug 11, 2022
Slide 1: Second Quarter 2022 Earnings Review
1 Second Quarter 2022 Earnings Review August 11, 2022 © 2022 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: Conducting process to sell our Russian operations
Conducting process to sell our Russian operations 4 It is important to note that our Russian operations are now in “discontinued operations” --- all earnings and figures for current & prior periods as well as our outlook in this presentation, now exclude our Russian business, unless otherwise noted
Slide 5: 2Q22 Highlights showing strong progress
2Q22 Highlights showing strong progress 5 • 20.7% Adjusted EBITDA Margin, +290bps vs. 1Q22 QoQ +29% Adjusted EBITDA • $189 million Adjusted EBITDA • Adjusted EPS of $2.02 +22% Free Cash • $39 million Free Cash Flow Flow • $48 million debt repaid +51% • Dividend declared and paid in July Adjusted EPS
Slide 6: Solid 2Q22 performance generated 20.7% Adjusted EBITDA Margin
Solid 2Q22 performance generated 20.7% Adjusted EBITDA Margin 6 Commercial • Outperformed industry demand with strong customer focus Excellence • Price / Mix continue to exceed Input Cost increases • Solid operations Operational • Executed well in light of supply chain and raw materials constraints
Slide 7: Strong 2Q22 results
Strong 2Q22 results 7 Net Sales Adjusted EBITDA Free Cash Flow Adjusted Operating $ Million $ Million $ Million Earnings per Share +11% +29% $96 +51% $912 $821 $2.02 $189 $695 $146 +22% $1.23 $1.34 $104 $39 $32 15.0% 17.8% 20.7% 2Q21* 1Q22 2Q22 2Q21* 1Q22 2Q22 2Q21* 1Q22 2Q22 2Q21* 1Q22 2Q22 *2Q21 f
Slide 8: Our 1H22 performance has created significant value
Our 1H22 performance has created significant value 8 Adjusted Adjusted Free Cash Debt EBITDA EBITDA Flow Repayment Margin $335 $71 $81 Million 19.3% Million Million Our strong 1H22 performance is a result of our focused strategy and continued outstanding execution by our teams © 2022 Sylvamo Corpora
Slide 9: Another well-executed quarter
Another well-executed quarter 9 2Q22 vs. 1Q22 Adjusted EBITDA $ Million 250 $73 $2 $2 ($17) ($16) $189 200 $146 150 100 50 17.8% 20.7% 0 1Q22 Price & Mix Volume Operations Maintenance Input and 2Q22 and Costs Outages Transportation Costs © 2022 Sylvamo Corporation. All rights reserved.
Slide 10: Regional performances exceeded expectations
Regional performances exceeded expectations 10 2Q22 Adjusted EBITDA Region 2Q22 vs. 1Q22 Highlights $ Million Margin Europe $22 16% • Realization of price increases • Outperformed industry shipments • Good operations and well executed annual Latin America $79 32% outages in Eastover and Ticonderoga
Slide 11: Positive industry momentum continues in all regions
Positive industry momentum continues in all regions 11 Favorable Supply & Demand • Healthy operating rates in all regions • Inventories below historical levels • North America & Latin America demand growth higher than expected Favorable Pricing Offsetting Input Costs • Improved pricing continues as
Slide 12: 3Q22 Adjusted EBITDA Outlook: $205 - $215 Million
3Q22 Adjusted EBITDA Outlook: $205 - $215 Million 12 3Q22 vs. 2Q22 Changes (Estimates in $ Million) Improving: $40 - $45 Price and Mix Continued price increase realizations in all regions Improving: $5 - $10 Volume Seasonally stronger in North America Increasing: ($5) - ($10) Operations and Costs Ot
Slide 13: Generating and allocating cash to create value
Generating and allocating cash to create value 13 Generate Cash Strengthen Invest in Return Cash to Balance Sheet High-Return Projects Shareowners © 2022 Sylvamo Corporation. All rights reserved.
Slide 14: Strengthening our Balance Sheet - $225 million of debt repaid
Strengthening our Balance Sheet - $225 million of debt repaid 14 Gross Debt $ (in Billions) $1.52 $1.49 Repaid $20 $1.39 million in July $1.36 $1.32 $1.295 $1.0B Target Initial Borrowing 3Q21 4Q21 1Q22 2Q22 July 22 Gross Debt-to-Adjusted EBITDA 3.3x 2.8x 2.4x 2.1x 1.8x Inc-Russia 2.2x Ex-Russia Net
Slide 15: Investing in high-return projects
Investing in high-return projects 15 • $100+ million of high-return capital projects in the development pipeline • 13 approved projects in execution phase over next 18 months, totaling $33 million of capital • Annual savings of approved projects estimated at $12 million Mill Category Sample of the A
Slide 16: Returning cash to shareowners
Returning cash to shareowners 16 • Reached initial 2.5x Gross Debt-to-Adjusted EBITDA target earlier than expected • Board approval in 2Q22 Dividend of $0.1125 per share paid in July Share repurchase program authorization for up to $150 million © 2022 Sylvamo Corporation. All rights reserved.
Slide 17: Well-positioned to create value beyond 2022
Well-positioned to create value beyond 2022 17 Debt Maturity Profile ($ Million) as of July 31st • Debt repayment remains a priority - $1 billion Gross Debt target 411 450 • Strong Balance Sheet to have 321 optionality to invest in our business and make it stronger • $128 million of spin related, ye
Slide 18: Confident in our 2022 Full Year Outlook
Confident in our 2022 Full Year Outlook 18 Raising 2022 Full Year Adjusted EBITDA to $740 - $780 million & Free Cash Flow to $170 - $190 million Favorable Industry Compelling Customer Excellent Commercial and Momentum Continues Value Proposition Operational Execution Price / Mix Continued Improving
Slide 19: Appendix
19 Appendix © 2022 Sylvamo Corporation. All rights reserved.
Slide 20: Contacts
Contacts 20 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 © 2022 Sylvamo Corporation. All rights reserved.
Slide 21: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 21 FY 2022 $ Million 2Q21 1Q22 2Q22 1H21 1H22 Outlook Cash from Continuing Operations $110 $54 $76 $155 $130 $345 - $365 Cash Invested in Capital Projects ($14) ($22) ($37) ($27) ($59) ($175) Free Cash Flow $96 $32 $39 $128 $71 $170 - $190 Free cash flow is a non-GAAP m
Slide 22: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 22 $ Million 2Q21 1Q22 2Q22 1H21 1H22 3Q22 FY 2022 Net Income (Loss) $115 $26 ($59) $177 ($33) Outlook Outlook Less: Discontinued operations, net of tax 14 (29) (143) 38 (172) Net Income From Continuing Operations $101 $55 $84 $139 $139 $88 - $95 $326 - $353
Slide 23: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 23 $ Million 2Q21 1Q22 2Q22 Adjusted EBITDA $104 $146 $189 Europe 8 8 22 Latin America 59 56 79 North America 37 82 88 Total Business Segment Adjusted EBITDA $104 $146 $189 Net Sales (excluding Inter-segment Sales) $709 $840 $933 Europe 94 117 135 Latin Amer
Slide 24: Adjusted Operating Earnings per Share Reconciliation
Adjusted Operating Earnings per Share Reconciliation 24 $ Million 2Q21 1Q22 2Q22 3Q22 Net Income (Loss) $115 $26 $(59) Outlook Less: Discontinued operations, net of tax 14 (29) (143) Net Income From Continuing Operations $101 $55 $84 $88 - $95 Special Items Expense (Income) (47) 4 6 11 Adjusted Oper
Slide 25: 2Q22 vs. 2Q21 Adjusted EBITDA
2Q22 vs. 2Q21 Adjusted EBITDA 25 $ Million 350 $188 $3 ($18) $2 ($89) 300 250 $189 200 150 $104 100 50 15.0% 20.7% 0 2Q21 Price & Mix Volume Operations Maintenance Input Costs 2Q22 Outages © 2022 Sylvamo Corporation. All rights reserved.
Slide 26: Europe Adjusted EBITDA
Europe Adjusted EBITDA 26 2Q22 vs. 1Q22 35 $20 ($1) ($1) $0 ($4) 30 $22 25 20 15 $8 10 7% 16% 5 0 1Q22 Price & Mix Volume Operations Maintenance Input Costs 2Q22 Outages $ Million 2Q22 vs. 2Q21 60 $38 $1 ($10) 50 $0 ($14) 9% 40 19% $22 30 20 $8 16% 10 9% Maintenance 0 2Q21 Price & Mix Volume Operati
Slide 27: Latin America Adjusted EBITDA
Latin America Adjusted EBITDA 27 2Q22 vs. 1Q22 100 $3 $3 $0 ($4) $79 $21 90 80 $56 70 60 50 40 30 26% 32% 20 10 0 1Q22 Price & Mix Volume Operations Maintenance Input Costs 2Q22 Outages $ Million 2Q22 vs. 2Q21 140 $53 $0 ($7) $0 ($26) 120 9% $79 100 19% $59 80 60 40 31% 32% 20 Maintenance 0 2Q21 Pri
Slide 28: North America Adjusted EBITDA
North America Adjusted EBITDA 28 2Q22 vs. 1Q22 140 $32 $0 ($1) ($17) 120 ($8) $82 $88 100 80 60 40 16% 16% 20 0 1Q22 Price & Mix Volume Operations Maintenance Input Costs 2Q22 $ Million Outages 2Q22 vs. 2Q21 160 $97 $2 ($1) $2 ($49) 140 9% 120 $88 19% 100 80 60 $37 40 9% 16% 20 Maintenance 0 2Q21 Pr
Slide 29: Quarterly Business Segment Operating Results
Quarterly Business Segment Operating Results 29 Sales D&A Adjusted EBITDA $ Million 2Q21 1Q22 2Q22 2Q22 2Q21 1Q22 2Q22 Europe $94 $117 $135 $4 $8 $8 $22 Latin America $189 $215 $249 $15 $59 $56 $79 North America $426 $508 $549 $13 $37 $82 $88 Segment Total $709 $840 $933 $32 $104 $146 $189 Sum of Bu
Slide 30: 2Q22 Shipments
2Q22 Shipments 30 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 69 260 395 724 Market Pulp 32 29 26 87 Total 811 © 2022 Sylvamo Corporation. All rights reserved.
Slide 31: Capacity by Grade
Capacity by Grade 31 000 Short Tons Uncoated Papers Market Pulp Total Saillat 265 130 395 Europe 265 130 395 Luis Antonio 385 130 515 Mogi Guacu 460 35 495 Tres Lagoas 260 - 260 Latin America 1,105 165 1,270 Eastover 700 115 815 Ticonderoga 275 - 275 North America 975 115 1,090 Sylvamo 2,345 410 2,7
Slide 32: Price & Mix continued to outpace Input Costs in 2Q22
Price & Mix continued to outpace Input Costs in 2Q22 32 Change of Price & Mix 2Q22 vs. 1Q22 Input Costs vs. Input Costs Change By Region ($ Million) ($ Million) +$99 Europe Latin America North America $188 1 (1) (2) (2) +$57 $89 (3) (1) (1) (3) $73 (1) ($4) (1) ($4) $16 (2) 2Q22 vs 1Q22 2Q22 vs 2Q21
Slide 33: Direct Maintenance Outage Costs - 2022 Outlook
Direct Maintenance Outage Costs - 2022 Outlook 33 FY 2022 $ Million 1Q22 2Q22 3Q22 4Q22 Outlook Europe - - - - - Latin America - - $6 $9 $15 North America $7 $17 $4 $18 $46 Total $7 $17 $10 $27 $61 Direct maintenance outage costs for Sylvamo only mills and include only the direct labor & material co
Slide 34: Selected Guidance
Selected Guidance 34 2022 2021 $ Million Outlook Actual (Revised) Direct Maintenance Outage Costs $62 $61 Maintenance, Regulatory & Reforestation $70 $155 Capital Spending High-return Projects - $20 Total $70 $175 Depreciation & Amortization $126 $129 Interest Expense $17 $67 Income Tax Rate 29% 30
Slide 35: Building a better future for people, the planet and our company
35 Building a better future for people, the planet and our company © 2022 Sylvamo Corporation. All rights reserved.