MEMPHIS, Tenn. - Sylvamo (NYSE: SLVM), the world’s paper company, is releasing third quarter 2024 earnings.
Financial Highlights – Third Quarter vs. Second Quarter
- Net income of $95 million ($2.27 per diluted share) vs. $83 million ($1.98 per diluted share)
- Adjusted operating earnings 1 of $102 million ($2.44 per diluted share) vs. $83 million ($1.98 per diluted share)
- Adjusted EBITDA 2 of $193 million (20% margin) vs. $164 million (18% margin)
- Cash provided by operating activities of $163 million vs. $115 million
- Free cash flow 3 of $119 million vs. $62 million
Commercial and Operational Highlights – Third Quarter vs. Second Quarter
- Price and mix decreased by $4 million due to mix in North America
- Volume improved by $10 million due to higher shipments in North America
- Operations and other costs increased slightly by $1 million
- Planned maintenance outage expenses decreased by $28 million due to no major annual outages
- Input and transportation costs increased by $4 million, primarily driven by higher fiber costs in Latin America
Fourth Quarter Outlook
- Adjusted EBITDA of $150 million to $165 million
- Compared to the third quarter:
- Price and mix are expected to be unfavorable $20 million to $25 million due to pulp and paper price decreases in Europe, higher export mix in Latin America and customer mix in North America
- Volume is projected to improve by $15 million to $20 million, with seasonally stronger volume in Latin America
- Operations and other costs are expected to increase up to $5 million due to an $8 million operating expense for a planned ten-year turbine generator maintenance event at our Eastover, South Carolina, mill, which is partially offset by better fixed cost absorption from less economic downtime in North America
- Input and transportation costs are projected to increase by $5 million to $10 million, mainly due to transportation and seasonally higher energy
- Total planned maintenance outage expenses are expected to increase by $17 million
Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribiéras
We delivered strong earnings with a 20% adjusted EBITDA margin and outstanding free cash flow in the third quarter, driven by solid operational performance, good commercial execution and stable input costs. The quarter also had no planned maintenance outages.
On Oct. 31, we announced we are mutually terminating a supply agreement for uncoated freesheet, bristols and specialty papers from International Paper’s Georgetown, South Carolina, mill, effective Dec. 31, 2024. We will continue to optimize our North America region by leveraging strategic initiatives to simplify the business, unlock efficiencies and drive earnings growth.
We have seen encouraging increases in industry demand across our regions and expect recent capacity reduction announcements to lead to more favorable supply and demand balance trends in 2025. We are confident in our strategy to grow earnings and cash flow by continuing to invest in high-return projects in our mills and processes.
We continue to allocate capital to generate long-term shareowner value. So far this year, we repurchased $30 million of our shares and have $120 million remaining on our $150 million share repurchase authorization from September 2023. Our board of directors declared a $0.45 per share dividend in the fourth quarter, which we paid Oct. 17. As of today, we have distributed $62 million through four quarterly dividends in 2024. We are committed to return at least 40% of our free cash flow to shareowners this year through share repurchases and dividends.
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 exceed our $110 million run rate savings goal by up to $10 million by the end of 2024.
Source: Sylvamo
