Sylvamo (NYSE: SLVM), a leading global paper company, has announced its financial results for the first quarter of 2024. Here’s a breakdown of the key highlights comparing the first quarter to the fourth quarter:
Financial Highlights:
- Net income amounted to $43 million ($1.02 per diluted share) compared to $49 million ($1.16 per diluted share) in the fourth quarter.
- Adjusted operating earnings stood at $45 million ($1.07 per diluted share) compared to $49 million ($1.16 per diluted share) in the previous quarter.
- Adjusted EBITDA reached $118 million (13% margin) compared to $117 million (12% margin) in the fourth quarter.
- Cash provided by operating activities amounted to $27 million compared to $167 million in the fourth quarter.
- Free cash flow was $(33) million compared to $104 million in the fourth quarter.
Commercial and Operational Highlights:
- Price and mix remained stable.
- Volume decreased by $12 million due to anticipated seasonally weaker industry demand in Latin America.
- Operations and other costs improved by $19 million primarily due to lower economic downtime.
- Planned maintenance outage expenses decreased by $3 million.
- Input and transportation costs increased by $9 million, primarily driven by transportation costs in North America.
Second Quarter Outlook:
- Sylvamo anticipates adjusted EBITDA in the range of $145 million to $160 million.
- Price and mix are expected to increase by $15 million to $20 million, reflecting previous price adjustments across all regions and a more favorable mix in Latin America.
- Volume is projected to increase by $5 million to $10 million, driven by 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.
- Input and transportation costs are projected to remain stable to improving, up to $5 million.
- Total planned maintenance outage expenses are expected to increase by $3 million.
Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribiéras:
- Ribiéras noted an improvement in uncoated freesheet conditions in the first quarter, resulting in strengthened order books and less economic downtime.
- Price and mix performed better than anticipated while input costs stabilized.
- The positive momentum is expected to continue in 2024, positioning the company to capitalize on future opportunities.
- Sylvamo is progressing well with Project Horizon, a structural cost reduction program aimed at streamlining overhead, manufacturing, and supply chain costs.
Capital Allocation and Financial Position:
- The company repurchased $20 million of shares in the first quarter, including $15 million in April, with $130 million remaining on its $150 million share repurchase authorization from September 2023.
- Sylvamo’s board of directors declared a second-quarter dividend of $0.30 per share, paid on April 29.
- Since the spinoff, Sylvamo has repurchased $170 million in shares, representing 8% of its initial shares outstanding, resulting in a 35% return on investment based on a $65.00 share price.
- The company maintains a strong financial position to operate and invest throughout industry cycles, having significantly reduced gross debt.
Select Financial Measures:
- Net sales for the first quarter of 2024 amounted to $905 million, compared to $964 million in the fourth quarter of 2023 and $941 million in the first quarter of 2023.
Segment Information:
- Net sales by business segment for the first quarter of 2024:
- Europe: $207 million
- Latin America: $216 million
- North America: $490 million
- Operating profit by business segment for the first quarter of 2024:
- Europe: $(4) million
- Latin America: $14 million
- North America: $62 million
Effective Tax Rate:
- The reported effective tax rate for the first quarter of 2024 was 28%, compared to 27% for the fourth quarter of 2023.
- Excluding net special items, the effective tax rate for the first quarter of 2024 was also 28%.
Effects of Net Special Items:
- Net special items in the first quarter of 2024 amounted to a net after-tax charge of $2 million ($0.05 per diluted share), compared with no net special items in the fourth quarter of 2023.
Earnings Webcast:
- Sylvamo will host an audio webcast at 10 a.m. EST / 9 a.m. CDT for interested parties to listen in.
- Replay options will be available on the company’s investor relations website and by phone.
For further details, interested parties can visit investors.sylvamo.com.
