Slide 1: Second Quarter 2023 Earnings
1 Second Quarter 2023 Earnings August 9, 2023 © 2023 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: 2Q23 Earnings Summary
2Q23 Earnings Summary 4 Adjusted Adjusted Cash Returned Free Cash Flow Operating EPS EBITDA to Shareowners $1.14 $124 million $33 million $41 million Favorable vs. Outlook Unfavorable vs. Outlook • Price & Mix • Volume • Operations and Other Costs • Input and Transportation Costs © 2023 Sylvamo Corp
Slide 5: 2Q23 Key Financial Metrics
2Q23 Key Financial Metrics 5 Net Sales Adjusted EBITDA Free Cash Flow Adjusted Operating and Margin Earnings per Share $941 $208 $912 $919 $189 $39 $2.51 $33 $2.02 $124 $1.14 $2 21% 22% 14% 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 All figures are $ million, except adjusted operati
Slide 6: Adjusted EBITDA in line with our outlook
Adjusted EBITDA in line with our outlook 6 2Q23 vs. 1Q23 $ Million 2Q23 Outlook ($45) - ($50) $10 - $15 ($10) - ($15) ($59) $15 - $20 $115 - $125 (May 9, 2023) 250 $208 ($38) 200 ($2) ($10) ($58) 150 Includes $15 million of $24 $124 unabsorbed fixed costs from economic downtime 100 50 22% 14% 0 1Q23
Slide 7: Channel inventory corrections and declines in printing reduced paper demand
Channel inventory corrections and declines in printing reduced paper demand 7 Year-over-Year Demand by Grade Europe North America Latin America -14% -6% 2% Uncoated Freesheet -22% -17% -7% -23% -17% 7% Uncoated Mechanical -28% -32% 15% -30% -9% -13% Coated Freesheet -38% -31% -26% -27% -16% 0% Coate
Slide 8: European UFS demand over last years is similar to historical long-term trend
European UFS demand over last 4 years is similar to historical long-term trend 8 2.0 1.8 Million Tons by Quarter Imports Surge 1.6 1.4 1.2 COVID Inventory Corrections Trough 1.0 & Printing Decline 0.8 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Europe excludes Rus
Slide 9: North American UFS demand over last years is similar to historical long-term trend
North American UFS demand over last 4 years is similar to historical long-term trend 9 2.2 2.0 Imports Surge Million Tons by Quarter 1.8 1.6 1.4 COVID Inventory Corrections 1.2 Trough & Printing Decline 1.0 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Source: Pulp
Slide 10: Latin American UFS demand over last years is slightly better than historical long-term trend
Latin American UFS demand over last 4 years is slightly better than historical long-term trend 10 1.2 1.0 Million Tons by Quarter 0.8 Inventory Corrections 0.6 & Seasonality COVID 0.4 Trough 0.2 0.0 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Source: Pulp and Pape
Slide 11: Key Takeaways of 1H23 European & North American UFS Demand Declines
Key Takeaways of 1H23 European & North American UFS Demand Declines 11 • 2022 import surges • Already back to normal levels • Channel inventory corrections • Should be completed in 2H23 • Reduced advertising in U.S. • Economy continues to grow • Slowing economic growth in Europe • Expected to contin
Slide 12: 3Q23 Adjusted EBITDA Outlook: $130 - $150 Million
3Q23 Adjusted EBITDA Outlook: $130 - $150 Million 12 3Q23 vs. 2Q23 $ Million Decreasing: ($60) - ($65) Price and Mix Primarily paper price decreases in Europe and realization of prior price decreases for pulp Improving: $15 - $20 Volume Seasonally stronger in Latin America and North America Increasi
Slide 13: Revised 2023 Annual Outlook
Revised 2023 Annual Outlook 13 Cash Returns to Adjusted EBITDA Free Cash Flow Shareowners Revised $560 - $600 million $220 - $250 million $125 million Prior $720 - $770 million $250 - $280 million $125 million • Lower Volume and higher unabsorbed • Lower Adjusted EBITDA • No change fixed costs due t
Slide 14: Allocating Free Cash Flow to drive shareowner value
Allocating Free Cash Flow to drive shareowner value 14 Free Cash Flow $220 - $250 million 40% increase vs. 2022 Maintain strong financial position Return $125 million to shareowners 1.2x Net Debt-to-Adjusted EBITDA ~50% of Free Cash Flow $60 Million Incremental Escrow Deposit Opportunistic Dividends
Slide 15: Maximizing 2H23 Earnings and Free Cash Flow
Maximizing 2H23 Earnings and Free Cash Flow 15 • Remain the supplier of choice • Continue to manage production to meet our customers’ demand • Reduce operating costs, selling and administrative expenses and working capital © 2023 Sylvamo Corporation. All rights reserved.
Slide 16: Confident in our ability to create shareowner value through the cycle
Confident in our ability to create shareowner value through the cycle 16 Return $125 million Reinvest in our business to Maintain a strong in cash to shareowners exit the downturn in an even financial position in 2023 stronger competitive position © 2023 Sylvamo Corporation. All rights reserved.
Slide 17: Appendix
17 Appendix © 2023 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 © 2023 Sylvamo Corporation. All rights reserved.
Slide 19: 2Q23 Free Cash Flow vs. 1Q23
2Q23 Free Cash Flow vs. 1Q23 19 $ Million 1Q23 2Q23 Variance Adjusted EBITDA $208 $124 ($84) Cash Taxes ($8) ($55) ($47) Cash Interest ($9) ($13) ($4) Cash Special Items ($9) - $9 Other Changes in Working Capital ($119) $21 $140 Cash from Continuing Operations $63 $77 $14 Capital Spending ($61) ($44
Slide 20: 2Q23 Free Cash Flow vs. 2Q22
2Q23 Free Cash Flow vs. 2Q22 20 $ Million 2Q22 2Q23 Variance Adjusted EBITDA $189 $124 ($65) Cash Taxes ($57) ($55) $2 Cash Interest ($25) ($13) $12 Cash Special Items ($16) - $16 Other Changes in Working Capital ($15) $21 $36 Cash from Continuing Operations $76 $77 $1 Capital Spending ($37) ($44) (
Slide 21: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 21 2023 $ Million 2Q22 1Q23 2Q23 Outlook Cash from Continuing Operations $76 $63 $77 $435 - $480 Cash Invested in Capital Projects ($37) ($61) ($44) ($215) - ($230) Free Cash Flow $39 $2 $33 $220 - $250 Free cash flow is a non-GAAP measure and the most directly comparab
Slide 22: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 22 $ Million 2Q22 1Q23 2Q23 3Q23 2023 Net Income (Loss) ($59) $97 $49 Outlook Outlook Less: Discontinued operations, net of tax (143) - - Net Income from Continuing Operations $84 $97 $49 $47 - $61 $226 - $250 Depreciation, Amortization, Cost of Timber Harve
Slide 23: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 23 $ Million 2Q22 1Q23 2Q23 Adjusted EBITDA Europe 22 31 (3) Latin America 79 63 67 North America 88 114 60 Total Business Segment Adjusted EBITDA $189 $208 $124 Net Sales (excluding Inter-segment Sales eliminations) Europe 135 230(a) 210 Latin America 249 2
Slide 24: Adjusted Operating Earnings per Share Reconciliation
Adjusted Operating Earnings per Share Reconciliation 24 $ Million 2Q22 1Q23 2Q23 3Q23 Net Income (Loss) $(59) $97 $49 Outlook Less: Discontinued operations, net of tax (143) - - Net Income from Continuing Operations $84 $97 $49 $47 - $61 Special Items Expense (Income) 6 11 - 5 Adjusted Operating Ear
Slide 25: 2Q23 vs. 2Q22 Adjusted EBITDA
2Q23 vs. 2Q22 Adjusted EBITDA 25 $ Million $43 ($46) $189 ($31) ($34) ($4) $7 $124 21% 14% 2Q22 Price & Mix Volume Operations Maintenance Input and Nymolla 2Q23 and Costs Outages Transportation Earnings Costs © 2023 Sylvamo Corporation. All rights reserved.
Slide 26: Europe Adjusted EBITDA
Europe Adjusted EBITDA 26 2Q23 vs. 1Q23 $31 ($16) $0 ($1) ($20) 13% ($3) $3 (1%) Input and 1Q23 Price & Mix Volume Operations Maintenance 2Q23 Transportation and Costs Outages $ Million Costs 2Q23 vs. 2Q22 $22 ($1) ($6) ($2) ($20) 16% ($3) $7 ($3) (1%) Input and 2Q22 Price & Mix Volume Operations Ma
Slide 27: Latin America Adjusted EBITDA
Latin America Adjusted EBITDA 27 2Q23 vs. 1Q23 $63 ($9) $10 $5 ($5) $3 $67 28% 27% 1Q23 Price & Mix Volume Operations Maintenance Input and 2Q23 and Costs Outages Transportation $ Million Costs 2Q23 vs. 2Q22 $15 ($5) ($4) ($5) $79 ($14) 9% $67 19% 32% 27% 2Q22 Price & Mix Volume Operations Maintenan
Slide 28: North America Adjusted EBITDA
North America Adjusted EBITDA 28 2Q23 vs. 1Q23 $114 ($13) ($12) ($14) ($33) $18 $60 23% 13% 1Q23 Price & Mix Volume Operations Maintenance Input and 2Q23 and Costs Outages Transportation $ Million Costs 2Q23 vs. 2Q22 $28 ($35) $88 ($25) 9% 19% ($9) $13 $60 16% 13% 2Q22 Price & Mix Volume Operations
Slide 29: 2Q23 Price & Mix vs. Input Costs
2Q23 Price & Mix vs. Input Costs 29 Change of Price & Mix 2Q23 vs. 1Q23 Input Costs vs. Input Costs Change By Region $ Million $ Million 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Europe Latin America North America $18 5 $43 2 ($38) $3 $24 1 $3 9 4 1 ($4) 4 3 2 Price & Mix Input Costs Price & Mix Input Costs (2) (
Slide 30: Quarterly Business Segment Operating Results
Quarterly Business Segment Operating Results 30 Sales D&A Adjusted EBITDA $ Million 2Q22 1Q23 2Q23 2Q23 2Q22 1Q23 2Q23 Europe $135 $230(a) $210 $7 $22 $31 ($3) Latin America $249 $222 $250 $17 $79 $63 $67 North America $549 $505 $474 $10 $88 $114 $60 Segment Total $933 $957 $934 $34 $189 $208 $124 (
Slide 31: Sales Volume
Sales Volume 31 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 151(a) 207 341 699 1Q23 Market Pulp 36 31 24 91 Total 790 Uncoated Papers 145 244 324 713 2Q23 Market Pulp 33 32 18 83 Total 796 (a) Includes adjustment to eliminate intra-segment sales in Europe Sales volume i
Slide 32: Economic Downtime
Economic Downtime 32 000 Short Tons 1Q23 2Q23 1H23 Europe 27 39 66 Latin America - - - North America 29 84 113 Total 56 123 179 © 2023 Sylvamo Corporation. All rights reserved.
Slide 33: Capacity by Grade
Capacity by Grade 33 000 Short Tons Uncoated Papers Market Pulp Total Saillat 265 130 395 Nymolla 500 - 500 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 34: Outlook for Total Maintenance Outage Costs
Outlook for Total Maintenance Outage Costs 34 3Q23 4Q23 2023 $ Million 1Q23 2Q23 Outlook Outlook Outlook Europe - $20 $2 $5 $27 Latin America - $5 - $4 $9 North America - $33 $2 $19 $54 Total - $58 $4 $28 $90 Total maintenance outage costs (shown for Sylvamo mills only) include direct maintenance ou
Slide 35: 1.4x Gross Debt-to-Adjusted EBITDA as of June 30, 2023
1.4x Gross Debt-to-Adjusted EBITDA as of June 30, 2023 35 Gross Debt $ Million $1,520 $1,397 $1,026 $1,024 Initial Gross Debt Dec 21 Dec 22 June 23 at Spinoff Bonds Term Loan F Term Loan B Term Loan A Revolver AR Securitization 1.2x Net Debt-to-Adjusted EBITDA as of June 30, 2023 © 2023 Sylvamo Corp
Slide 36: No significant debt maturities until 2027
No significant debt maturities until 2027 36 Debt Maturity Profile $ Million as of June 2023 $412 $233 $156 $76 $90 $21 $41 2023 2024 2025 2026 2027 2028 2029 Term Loan F AR Securitization Revolver Term Loan A Notes © 2023 Sylvamo Corporation. All rights reserved.
Slide 37: Selected Guidance
Selected Guidance 37 2021 2022 2023 $ Million Actual Actual Outlook Total Maintenance Outage Costs $81 $73 $90 Maintenance, Regulatory & Reforestation $70 $143 $180 - $190 Capital Spending High-return Projects - $6 $35 - $40 Total $70 $149 $215 - $230 Depreciation & Amortization $126 $125 $145 Inter
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 © 2023 Sylvamo Corporation. All rights reserved.