Sylvamo Releases Third-Quarter Results with Strong Earnings and Cash Flow

Message from the Chairman and Chief Executive Officer
“We delivered strong earnings and significant cash in the quarter,” said Jean-Michel Ribiéras. “As we launch Sylvamo, we have good momentum for the fourth quarter and 2022. Our third-quarter adjusted EBITDA margin was 19.5%, reflecting strong performances by all three regions and lower maintenance outage costs. We project fourth-quarter adjusted EBITDA in the range of $140 to $150 million and adjusted operating earnings per share of $1.20 to $1.40. In the near term, we are focused on generating strong free cash flow, reducing debt and positioning Sylvamo for long-term value creation.”

Third-Quarter Highlights
- Third-quarter net income of $92 million ($2.09 per pro forma share) compared with $115 million ($2.61 per pro forma share) in the second quarter of 2021 and $51 million ($1.16 per pro forma share) in the third quarter of 2020
- Third-quarter adjusted operating earnings (non-GAAP) of $100 million ($2.27 per pro forma share) compared with $68 million ($1.54 per pro forma share) in the second quarter of 2021 and $51 million ($1.16 per pro forma share) in the third quarter of 2020
- Third-quarter adjusted EBITDA3 (non-GAAP) of $177 million compared with $124 million in the second quarter of 2021 and $104 million in the third quarter of 2020

Third-Quarter Commercial and Operational Highlights
- Price and mix improved by $30 million versus the prior quarter and volume improved by $12 million
- Operations improved by $10 million and total planned maintenance outage expenses declined by $27 million versus the second quarter
- Input costs increased by $26 million, reflecting higher costs for wood, energy, chemicals, packaging and distribution
- Adjusted EBITDA margins for Europe, Latin America and North America were 19%, 30% and 15%, respectively

Fourth-Quarter Outlook
- Price and mix are expected to improve by $30 to $35 million compared to the third quarter, reflecting continued realization of prior price increases
- Volume is expected to improve by $10 to $15 million, reflecting continued strong demand in Europe and North America and seasonally stronger demand in Latin America
- Operations are expected to increase by $15 million, reflecting seasonally higher costs in Europe and North America
- Input costs and distribution are projected to increase by $35 to $40 million as prices for wood, energy, chemicals and other key inputs continue to increase
- Total maintenance outage expenses are projected to increase by $24 million, primarily the impact of a 10-year cold mill outage at our Saillat mill and an extended cold mill outage at our Eastover mill
- We also project $8 million in costs related to transition service agreements in the quarter and $4 million of one-time costs
- Our gross debt-to-adjusted EBITDA ratio declined to 2.8x at the end of the third quarter, and we repaid $30 million of outstanding debt on Oct. 29