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

Jean-Michel Ribiéras, Chairman and Chief Executive Officer, Sylvamo

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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 Ribiéras

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.

Link to full report

Source: Sylvamo