Sylvamo Corporation · NYSE:SLVM
Sylvamo — Q2 2024 Earnings Presentation
41 slides from Sylvamo's earnings presentation, Aug 9, 2024
Slide 1: Second Quarter 2024 Earnings
1 Second Quarter 2024 Earnings August 9, 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: 2023 Sustainability Highlights
2023 Sustainability Highlights 4 85% of mill energy generated from $4.1 Million globally invested to support renewable, carbon-neutral environmental and social initiatives biomass residuals 75% reduction in serious injuries All Sylvamo mills are certified to the FSC® and PEFC Chain of Custody standa
Slide 5: 2Q24 Highlights
2Q24 Highlights 5 • Improved Uncoated Freesheet conditions • Successfully completed heaviest planned maintenance outage quarter • Strong cash generation • Announced 50% increase to quarterly dividend © 2024 Sylvamo Corporation. All rights reserved.
Slide 6: 2Q24 Key Financial Metrics
2Q24 Key Financial Metrics 6 Adjusted EBITDA Free Cash Flow Adjusted Operating and Margin Earnings per Share $164 $1.98 $62 $124 $118 $1.14 $1.07 $33 13% 13% 18% 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 ($33) Adjusted EBITDA and Free Cash Flow figures are in $ millions © 2024 Sylvamo Corporation
Slide 7: 1H24 Uncoated Freesheet industry conditions
1H24 Uncoated Freesheet industry conditions 7 • Improved demand and supply conditions • Favorable pulp and paper prices • Stable input costs © 2024 Sylvamo Corporation. All rights reserved.
Slide 8: 2Q24 Adjusted EBITDA better than our Outlook
2Q24 Adjusted EBITDA better than our Outlook 8 2Q24 vs. 1Q24 $ Million 2Q24 Outlook $15 - $20 $5 - $10 $5 - $10 ($3) $0 - $5 $145 - $160 (May 10, 2024) $10 ($4) $6 $164 $8 $26 $118 13% 18% 1Q24 Price & Mix Volume Operations and Maintenance Input and 2Q24 Other Costs Outages Transportation Costs © 20
Slide 9: 3Q24 Adjusted EBITDA Outlook: $170 - $185 Million
3Q24 Adjusted EBITDA Outlook: $170 - $185 Million 9 3Q24 vs. 2Q24 $ Million Price and Mix Stable to Unfavorable: $0 - ($5) Slightly unfavorable mix Volume Favorable: $10 - $15 Stronger in Latin America and North America Operations and Primarily higher unabsorbed fixed costs from Unfavorable: ($10) -
Slide 10: Allocating cash to drive long-term shareowner value
Allocating cash to drive long-term shareowner value 10 Maintain Strong Financial Position Reinvest in Return Cash to our Business Shareowners © 2024 Sylvamo Corporation. All rights reserved.
Slide 11: Refinanced our long-term debt to extend our maturity profile
Refinanced our long-term debt to extend our maturity profile 11 June 30, 2024 Proforma September 1, 20241 2029 2025 10% 11% 2031 26% 2028 $913 $918 2027 28% 50% million million 2027 2029 51% 24% 1Reflects refinancing and September 1, 2024 notes call. Terms, conditions and credit spreads are generall
Slide 12: Dividends are the foundation of substantial cash returns to shareowners
Dividends are the foundation of substantial cash returns to shareowners 12 Initiated and raised our quarterly dividend three times since the spinoff $0.45 $0.30 $0.30 $0.30 $0.30 $0.25 $0.25 $0.25 $0.11 $0.11 Reducing debt was the top priority at the time of the spinoff 4Q21 4Q21 1Q22 2Q22 3Q22 4Q22
Slide 13: Investing in high-return projects to increase earnings and cash flows
Investing in high-return projects to increase earnings and cash flows 13 Continuing to develop > $200 million pipeline with returns > 20% IRR Capital Spending $ Million $210 $210 - $220 $33 $30 - $35 $149 $6 $22 4Q21 2022 2023 2024 Outlook Maintenance, Regulatory and Brazil Reforestation High-return
Slide 14: Confident in our future and motivated by opportunities that lie ahead
Confident in our future and motivated by opportunities that lie ahead 14 Creating shareowner value through cash generation and disciplined capital allocation • Refinancing long-term debt to further strengthen our financial position • Returning substantial cash to shareowners • Reinvesting in our bus
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 $73 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 18: 1.4x Net Debt-to-Adjusted EBITDA - June 30, 2024
1.4x Net Debt-to-Adjusted EBITDA - June 30, 2024 18 Gross Debt $ Million $1,520 $1,397 $1,026 $950 $940 $913 Initial Gross Dec 21 Dec 22 Dec 23 Mar 24 Jun 24 Debt at Spinoff Notes Term Loan F Term Loan B Term Loan A Revolver AR Securitization 1.6x Gross Debt-to-Adjusted EBITDA as of June 30, 2024 Ne
Slide 19: Refinanced our long-term debt on July 31, 2024
Refinanced our long-term debt on July 31, 2024 to extend our debt maturity profile 19 • Reduced from $261 to $225 million Term Loan A • Extended maturity from 2028 to 2029 • Reduced from $462 to $358 million Term Loan F • No change to maturity in 2027 • New farm credit loan at $235 million Term Loan
Slide 20: Debt maturity profile comparison before and after refinancing
Debt maturity profile comparison before and after refinancing 20 June 30, 2024 $ Million $412 $229 $128 $90 $13 … $41 $0 $0 2024 2025 2026 2027 2028 2029 Term Loan F AR Securitization Term Loan A Notes Proforma September 1, 2024 $ Million $422 $189 $162 $12 $49 $49 $23 $12 2024 2025 2026 2027 2028 2
Slide 21: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 21 $ Million 2Q23 1Q24 2Q24 Cash Provided by Operating Activities $77 $27 $115 Cash Invested in Capital Projects ($44) ($60) ($53) Free Cash Flow $33 ($33) $62 Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operati
Slide 22: 2Q24 vs. 1Q24 Free Cash Flow
2Q24 vs. 1Q24 Free Cash Flow 22 $ Million 1Q24 2Q24 Variance Adjusted EBITDA $118 $164 $46 Cash Taxes $(13) $(27) ($14) Cash Interest $(11) $(11) - Cash Special Items $(2) $(4) ($2) Other Changes in Working Capital $(65) $(7) $58 Cash Provided by Operating Activities $27 $115 $88 Capital Spending $(
Slide 23: 2Q24 vs. 2Q23 Free Cash Flow
2Q24 vs. 2Q23 Free Cash Flow 23 $ Million 2Q23 2Q24 Variance Adjusted EBITDA $124 $164 $40 Cash Taxes $(55) $(27) $28 Cash Interest $(13) $(11) $2 Cash Special Items - $(4) ($4) Other Changes in Working Capital $21 $(7) ($28) Cash Provided by Operating Activities $77 $115 $38 Capital Spending $(44)
Slide 24: Free Cash Flow by Quarter - Since Spinoff
Free Cash Flow by Quarter - Since Spinoff 24 $ Million $155 $109 $114 $104 $84 $62 1Q 2Q $39 $32 $33 3Q 4Q $2 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 ($33) © 2024 Sylvamo Corporation. All rights reserved.
Slide 25: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 25 3Q24 $ Million 2Q23 1Q24 2Q24 Outlook Net Income (Loss) $49 $43 $83 $84 - $94 Depreciation, Amortization, Cost of Timber Harvested 34 39 37 37 Interest (Income) Expense, Net 12 9 9 10 Income Tax Provision 21 17 30 33 - 38 Adjustments Equity-based Compensa
Slide 26: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation 26 $ Million 2Q23 1Q24 2Q24 Adjusted EBITDA Europe (3) 5 17 Latin America 67 34 55 North America 60 79 92 Total Business Segment Adjusted EBITDA $124 $118 $164 Net Sales (excluding Inter-segment Sales eliminations) Europe 210 207 206 Latin America 250 216 24
Slide 27: Adjusted Operating Earnings per Share Reconciliation
Adjusted Operating Earnings per Share Reconciliation 27 $ Million 2Q23 1Q24 2Q24 Net Income (Loss) $49 $43 $83 Special Items Expense (Income) - 2 - Adjusted Operating Earnings $49 $45 $83 Adjusted Operating Earnings per Share $1.14 $1.07 $1.98 Adjusted Operating Earnings is a non-GAAP measure presen
Slide 28: Capacity by Grade
Capacity by Grade 28 000 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 29: 2Q24 Sales Volume
2Q24 Sales Volume 29 Latin North 000 Short Tons Europe Sylvamo America America Uncoated Papers 162 259 347 768 Market Pulp 34 34 28 96 Total 864 Sales volume includes revenue recognition © 2024 Sylvamo Corporation. All rights reserved.
Slide 30: 2024 Economic Downtime
2024 Economic Downtime 30 000 Short Tons 1Q24 2Q24 YTD Europe - 13 13 Latin America - - - Paper North America 11 10 21 Total 11 23 34 Europe - 2 2 Latin America - - - Pulp North America - - - Total - 2 2 © 2024 Sylvamo Corporation. All rights reserved.
Slide 31: 2023 - 2024 Economic Downtime
2023 - 2024 Economic Downtime 31 Thousand tons 185 150 61 27 98 23 56 123 124 75 25 11 2 23 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 UFS Pulp © 2024 Sylvamo Corporation. All rights reserved.
Slide 32: Total Maintenance Outage Costs - 2024 Outlook
Total Maintenance Outage Costs - 2024 Outlook 32 1Q24 2Q24 3Q24 4Q24 2024 $ Million Actual Actual Outlook Outlook Outlook Europe - - $1 - $1 Latin America $11 $7 - - $18 North America $14 $22 - $18 $54 Total $25 $29 $1 $18 $73 Total maintenance outage costs (shown for Sylvamo mills only) include dir
Slide 33: >70% of 2024 planned maintenance outage costs completed in 1H24
>70% of 2024 planned maintenance outage costs completed in 1H24 33 $ Million $73 74% $29 $25 $18 $1 1Q24 Actual 2Q24 Actual 3Q24 Outlook 4Q24 Outlook 2024 Outlook Europe Latin America North America Total maintenance outage costs (shown for Sylvamo mills only) include direct maintenance outage expens
Slide 34: Quarterly Business Segment Operating Results
Quarterly Business Segment Operating Results 34 Sales D&A Adjusted EBITDA $ Million 2Q23 1Q24 2Q24 2Q24 2Q23 1Q24 2Q24 Europe $210 $207 $206 $8 ($3) $5 $17 Latin America $250 $216 $245 $17 $67 $34 $55 North America $474 $490 $493 $12 $60 $79 $92 Segment Total $934 $913 $944 $37 $124 $118 $164 Sum of
Slide 35: 2Q24 vs. 2Q23 Adjusted EBITDA
2Q24 vs. 2Q23 Adjusted EBITDA 35 $ Million $18 $164 $29 $124 ($48) $21 $20 13% 18% 2Q23 Price & Mix Volume Operations Maintenance Input and 2Q24 and Costs Outages Transportation Costs © 2024 Sylvamo Corporation. All rights reserved.
Slide 36: Europe Adjusted EBITDA
Europe Adjusted EBITDA 36 2Q24 vs. 1Q24 $3 $0 $2 $17 $7 $0 $5 2% 8% 1Q24 Price & Mix Volume Operations Maintenance Input and 2Q24 and Costs Outages Transportation Costs $ Million 2Q24 vs. 2Q23 $8 $17 $20 ($3) ($18) 8% (1%) $7 $3 2Q23 Price & Mix Volume Operations Maintenance Input and 2Q24 and Costs
Slide 37: Latin America Adjusted EBITDA
Latin America Adjusted EBITDA 37 2Q24 vs. 1Q24 $7 $1 $4 ($3) $55 $12 $34 16% 22% 1Q24 Price & Mix Volume Operations Maintenance Input and 2Q24 and Costs Outages Transportation $ Million Costs 2Q24 vs. 2Q23 $67 ($18) 9% 19% $6 ($7) ($2) $9 $55 27% 22% 2Q23 Price & Mix Volume Operations Maintenance In
Slide 38: North America Adjusted EBITDA
North America Adjusted EBITDA 38 2Q24 vs. 1Q24 $7 $1 $6 ($8) $7 $92 $79 16% 19% 1Q24 Price & Mix Volume Operations Maintenance Input and 2Q24 and Costs Outages Transportation $ Million Costs 2Q24 vs. 2Q23 $11 $1 9% $92 19% $21 $60 ($12) $11 13% 19% 2Q23 Price & Mix Volume Operations Maintenance Inpu
Slide 39: 2Q24 Price & Mix vs. Input Costs
2Q24 Price & Mix vs. Input Costs 39 Change of Price & Mix 2Q24 vs. 1Q24 Input Costs vs. Input Costs Change By Region $ Million $ Million 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Europe Latin America North America $2 ($3) $7 4 3 1 2 ($48) 1 1 (1) $26 (5) $18 $6 Price & Mix Input Costs Price & Mix Input Costs Fibe
Slide 40: Executing on our Investment Thesis
Executing on our Investment Thesis 40 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 41: Building a better future for people, the planet and our company
41 Building a better future for people, the planet and our company © 2024 Sylvamo Corporation. All rights reserved.