May 9, 2023 - Sylvamo today reported first quarter 2023 earnings.
"We generated $208 million in adjusted EBITDA, which was consistent with our outlook of $205 million to $215 million, and achieved a 22% adjusted EBITDA margin," said Jean-Michel Ribiéras, Chairman and Chief Executive Officer of Sylvamo. "We maintained a strong balance sheet and repurchased 80% of our outstanding notes to eliminate restrictive covenants in the notes agreement. These steps enabled us to continue on the path to returning more cash to shareowners."
Commercial and Operational Highlights - First Quarter vs. Fourth Quarter
Adjusted EBITDA, including $17 million from the newly-acquired Nymolla mill, increased by $38 million, which was in line with our guidance.
Compared to the fourth quarter, excluding Nymolla:
Second Quarter Outlook
We expect adjusted EBITDA to be $115 million to $125 million.
Compared to the first quarter:
We now project 2023 adjusted EBITDA of $720 million to $770 million, which reflects the impacts of previously announced pulp price decreases, updated views on pulp and paper prices and volume, continued channel inventory corrections and more favorable input and transportation cost trends. We also now project free cash flow of $250 million to $280 million.
The integration of our new mill in Sweden is proceeding well. We expect Nymolla to continue strengthening our performance while enabling us to serve customers across Europe and around the world more effectively.
We maintained a strong balance sheet, achieving a net debt-to-adjusted EBITDA ratio of 1.1x and improved our financial flexibility by increasing our ability to return more cash to shareowners. We repurchased $360 million of our 2029 notes, which eliminated restrictive covenants related to the notes. We replaced the notes with Term Loan A and short-term debt.
We returned $21 million of cash to shareowners in the first quarter. Returning more cash to shareowners remains a priority.
We announced a cooperation agreement with our largest shareowner, Atlas Holdings, in February. Our board added two independent directors and terminated the shareholder rights plan adopted in April 2022. Our board also declared a quarterly dividend of $0.25 per share for the second quarter, which we paid on April 27.
Our 2030 goals demonstrate our commitment to produce paper in the most responsible and sustainable ways. In April, we received formal approval of our greenhouse gas emissions targets from the Science Based Target initiative (SBTi). We expect to reduce our 2030 Scope 1, 2 and 3 greenhouse gas emissions by 35% from a 2019 baseline and define a pathway to net zero emissions.
Sylvamo will achieve its vision to be the world's paper company - the employer, supplier and investment of choice - by implementing our three-pronged strategy of commercial excellence, operational excellence and financial discipline.
Operating profits in the first quarter of 2023:
Europe - $23 million compared with $12 million in the fourth quarter of 2022. Earnings were higher as the $16 million of operating profit contributed by Nymolla and lower operating and input costs more than offset lower volumes.
Latin America - $46 million compared with $56 million in the fourth quarter of 2022. Earnings were lower as lower operating costs and planned maintenance outage costs were more than offset by lower volumes.
North America - $97 million compared with $65 million in the fourth quarter of 2022. Earnings were higher as lower operating and input costs, and lower planned maintenance outages more than offset lower volumes.
Headquartered in Memphis, Tennessee, Sylvamo (NYSE: SLVM) is the world's paper company with mills in Europe, Latin America and North America. Sylvamo transforms renewable resources into papers that people depend on for education, communication and entertainment.
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