Sylvamo Corporation · NYSE:SLVM
Sylvamo — Q4 2023 Earnings Presentation
47 slides from Sylvamo's earnings presentation, Feb 15, 2024
Slide 1: Fourth Quarter and Full Year 2023 Earnings
Fourth Quarter and Full Year 1 2023 Earnings February 15, 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: Continued to create value for shareowners in 2023
Continued to create value for shareowners in 2023 4 • Repaid $76 million in debt Improving our • Achieved net debt-to-adjusted EBITDA of 1.2x Financial Position • Deposited $60 million in escrow (to enable >$90 million cash returns) • Earned $607 million in Adjusted EBITDA (16% Margin) Delivering on
Slide 5: 2023 Key Financial Metrics
2023 Key Financial Metrics 5 Adjusted EBITDA Free Cash Flow Adjusted Operating and Margin Earnings per Share $721 $294 $7.84 $269 $607 $6.51 20% 16% 2022 2023 2022 2023 2022 2023 All figures are $ million, except adjusted operating earnings per share © 2024 Sylvamo Corporation. All rights reserved.
Slide 6: 4Q23 Key Financial Metrics
4Q23 Key Financial Metrics 6 Adjusted EBITDA Free Cash Flow Adjusted Operating and Margin Earnings per Share $170 $158 $155 $1.97 $1.70 $117 $104 $1.16 $84 18% 18% 12% 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 All figures are $ million, except adjusted operating earnings per share © 2024 Sylvamo
Slide 7: Adjusted EBITDA higher than our Outlook
Adjusted EBITDA higher than our Outlook 7 4Q23 vs. 3Q23 $ Million 4Q23 Outlook ($20) - ($25) $20 - $25 ($25) - ($30) ($25) ($5) – ($10) $90 - $110 (November 9, 2023) $158 ($25) $20 ($12) ($25) $1 $117 18% 12% 3Q23 Price & Mix Volume Operations and Maintenance Input and 4Q23 Other Costs Outages Trans
Slide 8: Current industry conditions showing signs of improvement
Current industry conditions showing signs of improvement 8 • Improving order books Europe • Low levels of UFS imports • Seasonally weaker demand in first quarter Latin America • Improving Brazil exports demand • Improving order books North America • Low levels of UFS imports © 2024 Sylvamo Corporati
Slide 9: 1Q24 Adjusted EBITDA Outlook
1Q24 Adjusted EBITDA Outlook: $105 - $125 Million 9 1Q24 vs. 4Q23 $ Million Price and Mix Unfavorable: ($5) - ($10) Primarily seasonal mix shift in Latin America Volume Unfavorable: ($10) - ($15) Seasonally weakest demand quarter in Latin America Operations and Favorable: $20 - $25 Lower unabsorbed
Slide 10: Reinvesting in our low-cost assets
Reinvesting in our low-cost assets 10 Capital Spending 2024 2023 $ Million Outlook Maintenance & Regulatory $143 $125 - $130 Brazil Reforestation $34 $35 Brazil Third-party Wood Supply Agreement1 - $20 High-return Projects $33 $30 - $35 Total $210 $210 - $220 1The total capital investment for the 20
Slide 11: Our Brazilian forestlands are a substantial and increasing competitive advantage
Our Brazilian forestlands are a substantial and increasing competitive advantage 11 Owned and Managed Wood Market Wood ~90,000 productive hectares • 2 - 3x cost premium vs. Owned Wood ~70,000 owned • Currently purchasing ~25% of our wood supply due ~20,000 partnerships to several factors: • Capacity
Slide 12: Our Brazilian forestlands serve as a repository of shareowner value
Our Brazilian forestlands serve as a repository of shareowner value 12 • Source of significant global competitive advantage • Given the increasing demand for land and wood in Brazil, our forestlands are an enduring repository of shareowner value In December 2023 a third party appraised our forestlan
Slide 13: We are a Cash Flow Story
We are a Cash Flow Story 13 Free Cash Flow and Cash Returns to Shareowners $ Million $294 • Generated $269 million in Free Cash Flow 2022 $269 • Returned $90 million to shareowners • Generated $294 million in Free Cash Flow $60 2023 • Returned $127 million to shareowners $13 $10 $44 43% $80 33% $70
Slide 14: Creating significant shareowner value since becoming an independent company
Creating significant shareowner value since becoming an independent company 14 • Reduced gross debt by $570 million (38%) to $950 million Improving our • Achieved net debt-to-adjusted EBITDA of 1.2x Financial Position • Reduced risk with Russian business divestiture • Earned $1.45 billion in Adjuste
Slide 15: Appendix
15 Appendix © 2024 Sylvamo Corporation. All rights reserved.
Slide 16: Contacts
Contacts 16 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 17: Selected Annual Financial Guidance
Selected Annual Financial Guidance 17 2023 2024 $ Million Actual Outlook Total Maintenance Outage Costs $89 $71 Maintenance & Regulatory $143 $125 - $130 Brazil Reforestation $34 $55 Capital Spending High-return Projects $33 $30 - $35 Total $210 $210 - $220 Depreciation & Amortization $143 $161 Net
Slide 18: 2023 Return on Invested Capital Reconciliation
2023 Return on Invested Capital Reconciliation 18 $ Million 2022 2023 Net Income From Continuing Operations $253 Special Items Expense (Income) 25 Interest (Income) Expense, Net 34 Adjusted Operating Earnings Before Interest $417 $312 Total Equity $678 $901 Add: Long-Term Debt 1,003 931 Add: Notes p
Slide 19: 1.2x Net Debt-to-Adjusted EBITDA
1.2x Net Debt-to-Adjusted EBITDA - December 31, 2023 19 Gross Debt $ Million $1,520 $1,397 $1,026 $950 Initial Gross Debt Dec 21 Dec 22 Dec 23 at Spinoff Bonds Term Loan F Term Loan B Term Loan A Revolver AR Securitization 1.6x Gross Debt-to-Adjusted EBITDA as of December 31, 2023 Net debt reflects
Slide 20: No significant debt maturities until 2027
No significant debt maturities until 2027 20 Debt Maturity Profile $ Million as of December 2023 $412 $229 $153 $90 $26 $41 2024 2025 2026 2027 2028 2029 Term Loan F AR Securitization Term Loan A Bonds © 2024 Sylvamo Corporation. All rights reserved.
Slide 21: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 21 $ Million 4Q22 3Q23 4Q23 2022 2023 Cash from Continuing Operations $142 $197 $167 $418 $504 Cash Invested in Capital Projects ($58) ($42) ($63) ($149) ($210) Free Cash Flow $84 $155 $104 $269 $294 Free cash flow is a non-GAAP measure and the most directly comparable
Slide 22: 4Q23 vs. 3Q23 Free Cash Flow
4Q23 vs. 3Q23 Free Cash Flow 22 $ Million 3Q23 4Q23 Variance Adjusted EBITDA $158 $117 ($41) Cash Taxes ($18) ($29) ($11) Cash Interest ($17) ($14) $3 Cash Special Items ($3) ($9) ($6) Other Changes in Working Capital $77¹ $102 $25 Cash from Continuing Operations $197 $167 ($30) Capital Spending ($4
Slide 23: 4Q23 vs. 4Q22 Free Cash Flow
4Q23 vs. 4Q22 Free Cash Flow 23 $ Million 4Q22 4Q23 Variance Adjusted EBITDA $170 $117 ($53) Cash Taxes ($26) ($29) ($3) Cash Interest ($11) ($14) ($3) Cash Special Items ($5) ($9) ($4) Other Changes in Working Capital $14 $102 $88 Cash from Continuing Operations $142 $167 $25 Capital Spending ($58)
Slide 24: Free Cash Flow Reconciliation - Since Spinoff
Free Cash Flow Reconciliation - Since Spinoff 24 Since $ Million 4Q21 2022 2023 Spinoff Cash from Continuing Operations $131 $418 $504 $1,053 Cash Invested in Capital Projects ($22) ($149) ($210) ($381) Free Cash Flow $109 $269 $294 $672 © 2024 Sylvamo Corporation. All rights reserved.
Slide 25: Free Cash Flow by Quarter - Since Spinoff
Free Cash Flow by Quarter - Since Spinoff 25 $ Million $155 $114 $109 $104 $84 1Q 2Q 3Q $39 $32 $33 4Q $2 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 © 2024 Sylvamo Corporation. All rights reserved.
Slide 26: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 26 $ Million 4Q22 3Q23 4Q23 2022 2023 1Q24 Net Income (Loss) $94 $58 $49 $118 $253 Outlook Less: Discontinued operations, net of tax 6 - - (218) - Net Income from Continuing Operations $88 $58 $49 $336 $253 $33 - $47 Depreciation, Amortization, Cost of Timbe
Slide 27: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 27 $ Million 4Q22 3Q23 4Q23 2022 2023 Adjusted EBITDA Europe 16 (5) (16) 70 7 Latin America 72 74 67 281 271 North America 82 89 66 370 329 Total Business Segment Adjusted EBITDA $170 $158 $117 $721 $607 Net Sales (excluding Inter-segment Sales eliminations)
Slide 28: Adjusted EBITDA Reconciliation - Since Spinoff
Adjusted EBITDA Reconciliation - Since Spinoff 28 Since $ Million 4Q21 2022 2023 Spinoff Net Income from Continuing Operations $29 $336 $253 $618 Depreciation, Amortization, Cost of Timber Harvested 31 125 143 299 Interest (Income) Expense, Net 18 69 34 121 Income Tax Provision 28 131 116 275 Adjust
Slide 29: Adjusted Operating Earnings per Share Reconciliation
Adjusted Operating Earnings per Share Reconciliation 29 $ Million 4Q22 3Q23 4Q23 2022 2023 Net Income (Loss) $94 $58 $49 $118 $253 Less: Discontinued operations, net of tax 6 - - (218) - Net Income from Continuing Operations $88 $58 $49 $336 $253 Special Items Expense (Income) (1) 14 - 12 25 Adjuste
Slide 30: 2023 Financial Highlights
2023 Financial Highlights 30 2023 1Q 2Q 3Q 4Q FY 2023 Net Sales (Million) $941 $919 $897 $964 $3,721 Adjusted EBITDA (Million) $208 $124 $158 $117 $607 Adjusted EBITDA Margin 22% 14% 18% 12% 16% Adjusted Operating EPS $2.51 $1.14 $1.70 $1.16 $6.51 Free Cash Flow (Million) $2 $33 $155 $104 $294 © 202
Slide 31: UFS industry estimated consumption better than demand data suggests
UFS industry estimated consumption better than demand data suggests 31 North America BUYING more than USING USING more 4% than BUYING 4% • Year-over-Year change % 0% -2% -6% Demand Estimated consumption -21% 2021 2022 3Q23 YTD Source: Pulp and Paper Products Council - N.A. Printing and Writing Outlo
Slide 32: Economic Downtime
Economic Downtime 32 000 Short Tons 1Q23 2Q23 3Q23 4Q23 2023 Europe 27 39 44 22 132 Latin America - - - - - Paper North America 29 84 80 53 246 Total 56 123 124 75 378 Europe - 19 46 21 86 Latin America - - - - - Pulp North America - 8 15 2 25 Total - 27 61 23 111 © 2024 Sylvamo Corporation. All rig
Slide 33: Capacity by Grade
Capacity by Grade 33 000 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 34: 4Q23 Sales Volume
4Q23 Sales Volume 34 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 164 310 351 825 Market Pulp 41 32 37 110 Total 935 Sales volume includes revenue recognition © 2024 Sylvamo Corporation. All rights reserved.
Slide 35: 2023 Sales Volume
2023 Sales Volume 35 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 596 1,012 1,344 2,952 Market Pulp 156 127 104 387 Total 3,339 Sales volume includes revenue recognition © 2024 Sylvamo Corporation. All rights reserved.
Slide 36: Total Maintenance Outage Costs - 2023
Total Maintenance Outage Costs - 2023 36 $ Million 1Q23 2Q23 3Q23 4Q23 2023 Europe - $20 $1 $6 $27 Latin America - $5 - $4 $9 North America - $33 $2 $18 $53 Total - $58 $3 $28 $89 Total maintenance outage costs (shown for Sylvamo mills only) include direct maintenance outage expense and related unab
Slide 37: Total Maintenance Outage Costs - 2024 Outlook
Total Maintenance Outage Costs - 2024 Outlook 37 2024 $ Million 1Q24 2Q24 3Q24 4Q24 Outlook Europe - $1 - $1 $2 Latin America $11 $6 - - $17 North America $14 $20 - $18 $52 Total $25 $27 - $19 $71 Total maintenance outage costs (shown for Sylvamo mills only) include direct maintenance outage expense
Slide 38: Quarterly Business Segment Operating Results
Quarterly Business Segment Operating Results 38 Sales D&A Adjusted EBITDA $ Million 4Q22 3Q23 4Q23 4Q23 4Q22 3Q23 4Q23 Europe $119 $184 $197 $8 $16 ($5) ($16) Latin America $289 $246 $288 $18 $72 $74 $67 North America $527 $476 $496 $12 $82 $89 $66 Segment Total $935 $906 $981 $38 $170 $158 $117 Sum
Slide 39: Annual Business Segment Operating Results
Annual Business Segment Operating Results 39 Sales Adjusted EBITDA $ Million 2022 2023 2022 2023 Europe $501 $821 $70 $7 Latin America $1,023 $1,006 $281 $271 North America $2,173 $1,951 $370 $329 Segment Total $3,697 $3,778 $721 $607 Sum of Business Segment net sales will not tie with consolidated
Slide 40: 4Q23 vs. 4Q22 Adjusted EBITDA
4Q23 vs. 4Q22 Adjusted EBITDA 40 $ Million $170 ($115) $63 ($8) $117 Includes $6 million of total annual outage costs $8 ($10) $9 18% 12% 4Q22 Price & Mix Volume Operations Maintenance Input and Nymolla 4Q23 and Costs Outages Transportation Earnings Costs © 2024 Sylvamo Corporation. All rights reser
Slide 41: Europe Adjusted EBITDA
Europe Adjusted EBITDA 41 4Q23 vs. 3Q23 ($5) ($16) ($5) $1 ($3) (3%) ($5) $1 (8%) 3Q23 Price & Mix Volume Operations Maintenance Input and 4Q23 and Costs Outages Transportation Costs $ Million 4Q23 vs. 4Q22 $16 ($34) Includes $6 million of total annual outage costs 13% ($16) $12 ($8) $3 ($5) (8%) $0
Slide 42: Latin America Adjusted EBITDA
Latin America Adjusted EBITDA 42 4Q23 vs. 3Q23 $74 ($13) $16 ($5) ($4) ($1) $67 30% 23% 3Q23 Price & Mix Volume Operations Maintenance Input and 4Q23 and Costs Outages Transportation $ Million Costs 4Q23 vs. 4Q22 $72 ($41) $15 9% $67 19% $7 $7 $7 25% 23% 4Q22 Price & Mix Volume Operations Maintenanc
Slide 43: North America Adjusted EBITDA
North America Adjusted EBITDA 43 4Q23 vs. 3Q23 $89 ($7) $3 ($4) ($16) $1 $66 19% 13% 3Q23 Price & Mix Volume Operations Maintenance Input and 4Q23 and Costs Outages Transportation $ Million Costs 4Q23 vs. 4Q22 9% 19% $82 ($40) $36 $66 ($2) ($12) $2 16% 13% 4Q22 Price & Mix Volume Operations Maintena
Slide 44: 4Q23 Price & Mix vs. Input Costs
4Q23 Price & Mix vs. Input Costs 44 Change of Price & Mix 4Q23 vs. 3Q23 Input Costs vs. Input Costs Change By Region $ Million $ Million 4Q23 vs. 3Q23 4Q23 vs. 4Q22 Europe Latin America North America ($115) $63 $1 ($1) $1 ($25) 3 1 1 $1 1 1 Price & Mix Input Costs Price & Mix Input Costs (1) (1) (2)
Slide 45: 2023 Delivered Cash Cost of Goods Sold
2023 Delivered Cash Cost of Goods Sold 45 Packaging Energy 5% 10% Fiber 24% Transportation 14% Woo d Chemicals 16% Labor 15% Fixed 16% © 2024 Sylvamo Corporation. All rights reserved.
Slide 46: Executing on our Investment Thesis
Executing on our Investment Thesis 46 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 47: Building a better future for people, the planet and our company
47 Building a better future for people, the planet and our company © 2024 Sylvamo Corporation. All rights reserved.