Sylvamo First Quarter Results Meet Expectations, Strong Second Quarter Outlook Reflects Improving Conditions

MEMPHIS - Sylvamo (NYSE: SLVM), the world's paper company, is releasing first quarter 2024 earnings.

Financial Highlights - First Quarter vs. Fourth Quarter

Net income of $43 million ($1.02 per diluted share) vs. $49 million ($1.16 per diluted share)

Adjusted operating earnings1 of $45 million ($1.07 per diluted share) vs. $49 million ($1.16 per diluted share)

Adjusted EBITDA2 of $118 million (13% margin) vs. $117 million (12% margin)

Cash provided by operating activities of $27 million vs. $167 million

Free cash flow3 of $(33) million vs. $104 million Commercial and Operational Highlights - First Quarter vs. Fourth Quarter

Price and mix were stable

Volume decreased by $12 million due to expected seasonally weaker industry demand in Latin America

Operations and other costs improved by $19 million due primarily to lower economic downtime

Planned maintenance outage expenses decreased by $3 million

Input and transportation costs increased by $9 million, driven primarily by transportation costs in North America

Second Quarter Outlook

Adjusted EBITDA of $145 million to $160 million

Compared to the first quarter:

Price and mix are expected to increase by $15 million to $20 million, primarily reflecting prior price increases across all regions and a better mix in Latin America

Volume is projected to increase by $5 million to $10 million, with seasonally stronger demand in Latin America and continued momentum in Europe and North America

Operations and other costs are expected to improve by $5 million to $10 million due primarily to lower costs in Europe and North America

Input and transportation costs are projected to be stable to improving up to $5 million due to better transportation and energy costs in North America partially offset by unfavorable fiber costs in Latin America

Total planned maintenance outage expenses are expected to increase by $3 million

Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribieras

As uncoated freesheet conditions improved in the first quarter, we experienced strengthening order books, resulting in less economic downtime. Price and mix were better than expected while input costs stabilized. That momentum is expected to continue in 2024, and we are well positioned to capitalize on the opportunities that lie ahead.

We are making good progress with Project Horizon, our structural cost reduction program to streamline overhead, manufacturing and supply chain costs. Before inflation, we are on target to meet run rate savings of $110 million by the end of 2024.

This year, we repurchased $20 million of shares, including $15 million in April, and have $130 million remaining on our $150 million share repurchase authorization from September 2023. Our board of directors declared a second quarter dividend of $0.30 per share, which we paid April 29.

Since the spinoff, we have repurchased $170 million in shares or 8% of our initial shares outstanding. This use of cash resulted in a 35% return on investment based on a $65.00 share price.

We continue to allocate capital to generate long-term shareowner value. Since our inception, we have reduced gross debt significantly and will maintain a strong financial position to operate and invest throughout industry cycles. We remain committed to reinvesting in our business. We have identified a pipeline of more than $200 million of high-return capital projects, which will allow us to grow our earnings and cash flows as we invest in these projects in the future. We also plan to continue returning substantial amounts of cash to shareowners through dividends and share repurchases at attractive prices.

Adjusted Operating Earnings (non-GAAP) are net income (GAAP), net of tax and net special items. Management uses this measure to focus on ongoing operations and believes it is useful to investors because it enables them to perform meaningful comparisons of past and present combined operating results. The Company believes that using this information, along with net income, provides for a more complete analysis of the results of operations. Net income is the most directly comparable GAAP measure. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Condensed Consolidated Statement of Operations and related notes included later in this release.

Adjusted EBITDA (non-GAAP) is net income (GAAP), net of tax, plus the sum of income taxes, net interest expense (income), depreciation, amortization and cost of timber harvested, stock-based compensation, and, when applicable for the periods reported, net special items. Management uses this measure in managing the operating performance of our business and believes that Adjusted EBITDA and Adjusted EBITDA Margin provide investors and analysts meaningful insights into our operating performance and Adjusted EBITDA is a relevant metric for the third-party debt. The Company believes that using this information, along with net income, provides for a more complete analysis of the results of its operations. Net income is the most directly comparable GAAP measure. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Condensed Consolidated Statement of Operations and related notes included later in this release.

Free Cash Flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operating activities. Management utilizes this measure in connection with managing our business and believes that Free Cash Flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet and service debt, and return cash to shareowners. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow also enables investors to perform meaningful comparisons between past and present periods.

About Sylvamo

Sylvamo Corporation (NYSE: SLVM) is the world's paper company with mills in Europe, Latin America and North America. Our vision is to be the employer, supplier and investment of choice. We transform renewable resources into papers that people depend on for education, communication and entertainment. Headquartered in Memphis, Tennessee, we employ more than 6,500 colleagues. Net sales for 2023 were $3.7 billion. For more information, please visit Sylvamo.com.

Forward-Looking Statements

This news release contains 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, including the information under the headings 'Second Quarter Outlook' and 'Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribieras.' Any or all forward-looking statements may turn out to be incorrect, and our actual actions and results could differ materially from what they express or imply, because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control. These risks, uncertainties, and other factors include those disclosed in the heading 'Risk Factors' in our Annual Report on Form 10-K for the year ended Dec. 31, 2023, filed with the U.S. Securities and Exchange Commission (SEC) and in our subsequent filings with the SEC, available on our website, Sylvamo.com. These forward-looking statements reflect our current expectations, and we undertake no obligation to publicly update any forward-looking statements, whether because of new information, future events or otherwise.

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