The World's Paper Company We assume no obligation to update any forward-looking statements made in this presentation to reflect subsequent events, circumstances or actual outcomes. • Adjusted EBITDA and Adjusted EBITDA Margin Achieved our key objectives in 1Q23 4 DRIVING AMBITIOUS CORPORATE CLIMATE ACTION © 2023 Sylvamo Corporation. All rights reserved. © 2023 Sylvamo Corporation. All rights reserved. 7 $17 $208 Costs 1Q23 Maintenance Outages • No planned outages in the first quarter UFS Industry Conditions ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited Q1 2023 financial statements and management's operational analysis [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Contains the unaudited condensed consolidated financial statements for the three months ended March 31, 2023 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Reports a significant year-over-year increase in net sales and net income for the first quarter of 2023 Q1 2023 vs Q1 2022 Statement of Operations Highlights | Metric | Q1 2023 (in millions) | Q1 2022 (in millions) | YoY Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $959 | $821 | +16.8% | | **Income from Continuing Operations Before Income Taxes** | $141 | $81 | +74.1% | | **Net Income from Continuing Operations** | $97 | $55 | +76.4% | | **Net Income (Loss)** | $97 | $26 | +273.1% | | **Diluted EPS from Continuing Operations** | $2.25 | $1.25 | +80.0% | | **Diluted Net EPS (Loss)** | $2.25 | $0.59 | +281.4% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Shows an increase in total assets and equity as of March 31, 2023, compared to year-end 2022 Balance Sheet Summary | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and temporary investments | $191 | $360 | | Inventories | $506 | $364 | | Total Current Assets | $1,209 | $1,243 | | Total Assets | $2,798 | $2,710 | | Long-Term Debt | $954 | $1,003 | | Total Liabilities | $2,008 | $2,032 | | Total Equity | $790 | $678 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Details cash flows from operations, investing, and financing, highlighting a major acquisition's impact Cash Flow Summary (Three Months Ended March 31) | Metric (in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $63 | $92 | | Cash Provided by (Used for) Investment Activities | $(228) | $(19) | | Cash Provided by (Used for) Financing Activities | $(8) | $(39) | | **Change in Cash and Temporary Investments** | **$(169)** | **$3** | - The acquisition of a business for **$167 million** was the primary driver of the significant increase in cash used for investment activities in Q1 2023[20](index=20&type=chunk) [Note 7: Acquisitions](index=10&type=section&id=Note%207%20Acquisitions) Details the acquisition of the Nymölla mill in Sweden, including its financial contribution in Q1 2023 - The company acquired the Nymölla mill in Sweden for **€157 million (approx. $167 million)** on January 2, 2023[38](index=38&type=chunk) - The acquired business contributed **$100 million in Net Sales** and **$8 million in Income from continuing operations before income taxes** in Q1 2023[41](index=41&type=chunk) - The preliminary purchase price allocation assigned **$118 million to Plants, properties and equipment**, **$67 million to Inventory**, and **$63 million to Accounts receivable**[40](index=40&type=chunk) [Note 8: Divestiture and Impairment of Business](index=12&type=section&id=Note%208%20Divestiture%20and%20Impairment%20of%20Business) Outlines the completion of the Russian operations sale and its presentation as discontinued operations - The sale of Russian operations was completed in October 2022 for **$420 million**, with net cash proceeds of **$385 million**[47](index=47&type=chunk) - For Q1 2022, discontinued operations from the Russian business resulted in a **net loss of $29 million**, which included a **$68 million pre-tax impairment charge** on fixed assets[46](index=46&type=chunk)[49](index=49&type=chunk) [Note 17: Financial Information by Business Segment](index=20&type=section&id=Note%2017%20Financial%20Information%20by%20Business%20Segment) Provides a breakdown of net sales and operating profit by the Europe, Latin America, and North America segments Net Sales by Business Segment (Three Months Ended March 31) | Segment (in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Europe | $248 | $117 | | Latin America | $222 | $215 | | North America | $505 | $508 | | **Total Net Sales** | **$959** | **$821** | Business Segment Operating Profit (Three Months Ended March 31) | Segment (in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Europe | $23 | $2 | | Latin America | $46 | $39 | | North America | $97 | $62 | | **Total Operating Profit** | **$166** | **$103** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Q1 2023 financial results, segment performance, liquidity, and provides an outlook for Q2 2023 Q1 2023 Key Performance Metrics | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Income from Continuing Operations | $97 million | $55 million | | Diluted EPS from Continuing Operations | $2.25 | $1.25 | | Net Sales | $959 million | $821 million | | Adjusted EBITDA | $208 million | $146 million | | Adjusted EBITDA Margin | 22% | 18% | | Free Cash Flow | $2 million | $32 million | - Performance in Q1 2023 was driven by **price and mix improvements** that outpaced higher input and transportation costs across all regions[101](index=101&type=chunk) - The company repurchased **$360 million of its outstanding notes** to eliminate a covenant limiting shareholder returns, replacing the debt with a new term loan and short-term debt[101](index=101&type=chunk) - For Q2 2023, the company expects **unfavorable price/mix** due to pulp and European paper price decreases, but **improved volume**[102](index=102&type=chunk) [Business Segment Results](index=22&type=section&id=Business%20Segment%20Results) Details the performance drivers for each geographic segment, highlighting sales and profit growth in Q1 2023 - **Europe:** Net sales increased by **$131 million**, with **$100 million from the Nymölla acquisition**[111](index=111&type=chunk)[112](index=112&type=chunk) - **Latin America:** Operating profit grew by **$7 million** as the benefit of increased sales prices and favorable mix ($34 million) outweighed lower volumes and higher input costs[114](index=114&type=chunk) - **North America:** Operating profit increased by **$35 million**, primarily due to strong pricing and mix ($70 million) and lower outage costs ($8 million)[116](index=116&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses cash generation, capital expenditures, and significant financing activities during the first quarter - Cash from continuing operations was **$63 million for Q1 2023**, compared to $48 million for Q1 2022[125](index=125&type=chunk) - Capital spending in Q1 2023 was **$61 million**, a significant increase from $16 million in Q1 2022[128](index=128&type=chunk) - Financing activities included issuing a new **$300 million Term Loan A** and drawing on the Revolving Credit Facility to fund a **$360 million tender offer** for existing senior notes[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Confirms no material changes in market risk exposure since the previous fiscal year-end - There have been **no material changes** in the Company's exposure to market risk since December 31, 2022[141](index=141&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls, excluding the recently acquired Nymölla mill - The CEO and CFO concluded that disclosure controls and procedures were **effective as of March 31, 2023**[142](index=142&type=chunk) - The evaluation of internal control over financial reporting **excluded the Nymölla mill**, which was acquired in January 2023[143](index=143&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity repurchases, and filed exhibits [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) States no material legal proceedings are ongoing, referencing notes on specific tax and environmental matters - The company is not involved in any legal proceedings that are expected to have a **material adverse effect** on its financial condition or results of operations[146](index=146&type=chunk) - Reference is made to Note 12 for details on the **Brazil Tax Dispute** and Note 13 for **environmental matters**[146](index=146&type=chunk)[147](index=147&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Indicates no material changes to risk factors disclosed in the 2022 Annual Report on Form 10-K - There have been **no material changes** to the risk factors described in the 2022 Form 10-K[148](index=148&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=31&type=section&id=Item%202.%20Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) Details the company's share repurchase activities during the first quarter of 2023 Share Repurchases in Q1 2023 | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Program | | :--- | :--- | :--- | :--- | | Jan 2023 | 201,985 | $49.53 | 201,896 | | Feb 2023 | 489 | $47.53 | — | | Mar 2023 | 87,691 | $49.33 | — | | **Total** | **290,165** | | **201,896** | - The company repurchased **$10 million of shares** during the three months ended March 31, 2023, under its **$150 million Repurchase Program**[150](index=150&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including governance and financial documents

Operations and Acquisitions - Sylvamo Corporation's Russian operations, which accounted for approximately 15% of total net sales and 10% of long-lived assets in 2021, were sold on October 2, 2022, as part of a strategic shift away from the Russian markets[13]. - In January 2023, Sylvamo completed the acquisition of Stora Enso's uncoated freesheet paper mill in Nymölla, Sweden, for €150 million (approximately $160 million), with a production capacity of about 500,000 short tons[14]. - The company operates in three primary regions: Europe, Latin America, and North America, with five of its seven mills located outside the U.S.[72]. - The company sold its Russian operations in 2022, which may impact its regional performance[72]. - The company acquired a paper mill in Nymölla, Sweden in January 2023, but may not achieve the expected benefits from this strategic acquisition[123]. Financial Performance - Net sales for the year ended December 31, 2022, were $3,628 million, an increase of 28.3% compared to $2,828 million in 2021[294]. - Income from continuing operations before income taxes was $467 million, up from $328 million in 2021, representing a 42.5% increase[294]. - Net income from continuing operations was $336 million, compared to $227 million in 2021, reflecting a 47.9% growth[294]. - Basic earnings per share from continuing operations increased to $7.65 in 2022 from $5.16 in 2021, a rise of 48.3%[294]. - Total assets as of December 31, 2022, were $2,710 million, up from $2,597 million in 2021, indicating a 4.3% increase[298]. - Total current assets increased to $1,243 million in 2022 from $1,108 million in 2021, a growth of 12.2%[298]. - Long-term debt decreased to $1,003 million in 2022 from $1,357 million in 2021, a reduction of 26.1%[298]. - Comprehensive income for 2022 was $206 million, compared to $153 million in 2021, showing a 34.6% increase[296]. - The company reported a net loss from discontinued operations of $218 million in 2022, compared to a gain of $104 million in 2021[294]. - Cash provided by operating activities from continuing operations was $418 million in 2022, slightly down from $423 million in 2021[299]. - Cash provided by investment activities from continuing operations rose to $185 million in 2022, compared to $113 million in 2021[299]. - The company invested $149 million in capital projects during 2022, an increase from $69 million in 2021[299]. - The company reported a cash inflow of $324 million from the disposal of business in 2022[299]. - Total cash and temporary investments at the end of the period reached $360 million, up from $159 million at the beginning of the period[299]. - The company reduced its debt by $450 million in 2022, compared to a reduction of $129 million in 2021[299]. - Dividends paid amounted to $10 million in 2022, with no dividends paid in 2021[299]. - The effect of exchange rate changes on cash resulted in a gain of $32 million in 2022[299]. - Cash provided by financing activities from continuing operations was a net outflow of $469 million in 2022, compared to a net outflow of $588 million in 2021[299]. Sustainability and Environmental Initiatives - The company aims to reduce its Scope 1, 2, and 3 greenhouse gas emissions by 35% by 2030, using 2019 as a baseline, and has already reduced absolute Scope 1 and 2 emissions by 38%, equating to 850,000 tons of CO2 since 2010[57]. - The company generated over 78% of the energy used in its mills from carbon-neutral biomass residuals in 2022, significantly minimizing fossil fuel usage[56]. - The company plans to conserve, enhance, or restore 250,000 acres of ecologically significant forestland globally by 2030[53]. - The company is committed to sourcing 100% of its fiber from sustainably managed forests and has established partnerships with major environmental organizations to promote responsible forest management[54]. - The company has implemented rigorous sustainable practices at its Saillat mill, which is 85% energy self-sufficient and has received EU Ecolabel certification[56]. - The company aims to reduce its water usage by 25% by 2030 compared to a 2019 baseline[57]. - The company is actively monitoring proposed climate change legislation and regulations that could affect its operations and financial condition[45]. - The company has a dedicated sustainability team led by the Chief Sustainability Officer, responsible for developing and implementing ESG strategies[59]. - In 2022, the company spent approximately $7 million on capital projects to control environmental releases and ensure waste management, with expected expenditures of $2 million in 2023 and $4 million in 2024 for similar projects[42]. - The company is subject to evolving environmental regulations, including the EU Emissions Trading System, which may materially impact its operations in the future[43]. Workforce and Diversity - The company employs over 6,500 people globally, with 25% in Europe, 48% in Latin America, and 27% in North America[15]. - Sylvamo aims for 30% overall women representation, 35% women in leadership positions, and 25% minority representation in North America by 2030[24]. - The company has established two employee inclusion networks, "Women in Operations" and "Women in Leadership," to support its diversity goals[24]. - The company is committed to fostering an inclusive workplace and has implemented various initiatives to promote employee engagement and professional development[26]. Risks and Challenges - The company is subject to various risks, including economic conditions, climate change, and public health crises, which could adversely affect financial performance[79]. - The company’s profitability is affected by the cyclical nature of the paper industry, leading to fluctuations in product prices and demand[69]. - The global demand for uncoated freesheet (UFS) paper decreased at a 2.2% CAGR from 2017 to 2021, with a notable 10.2% decline in 2020 due to the COVID-19 pandemic[88]. - The paper industry is cyclical, with fluctuations in prices and demand impacting sales volumes and profit margins, driven by macroeconomic conditions and industry capacity[89]. - The company faces competitive pressures from consolidation within the paper industry, potentially leading to competitors with greater resources and scale[92]. - Material disruptions at manufacturing facilities could adversely affect the company's ability to meet customer demand and reduce sales[93]. - The company incurs substantial capital expenditures for compliance with environmental laws, which may increase fixed costs and negatively impact profitability[97]. - Compliance with evolving environmental regulations may require significant expenditures and could limit operational capabilities[101]. - The company is subject to extensive data privacy laws, including GDPR and CCPA, which impose operational requirements and potential penalties for non-compliance[104]. - Cybersecurity risks remain a concern, as breaches could lead to operational disruptions and significant remediation costs[96]. - The company faces risks associated with labor shortages due to an aging workforce and competitive labor market conditions, which could increase labor costs[116]. - The company may experience disruptions in operations and increased labor costs due to labor disputes, as a portion of the workforce is represented by unions[122]. - Future increases in raw material and energy costs are not within the company's control and may further affect production costs[81]. - Supply chain disruptions in 2022 included labor shortages and shipping capacity constraints, which could materially affect business operations[87]. - The availability of mature, quality virgin wood fiber in Brazil was inadequate, leading to higher procurement costs from third-party sources, adversely affecting EBITDA[82]. - Increased energy costs at the Saillat mill were partly due to the discontinuation of natural gas supply from Russia, contributing to inflationary pressures[83]. Compliance and Governance - The company is subject to significant compliance-related costs and obligations as a public company, including those under the Sarbanes-Oxley Act[134]. - The company must maintain effective internal control over financial reporting, with full compliance required starting with the year ended December 31, 2022[135]. - The company is restricted from taking certain actions that could jeopardize the tax-free status of its separation from International Paper until October 1, 2023[140]. - The company is currently subject to tax audits in the United States, Brazil, and other jurisdictions, which may result in previously unrecorded tax expenses or higher future tax expenses[106]. - Changes to U.S. tax rules in 2022 included an increase in the corporate alternative minimum tax and an excise tax on stock buybacks, which could affect the company's financial condition in the future[109]. - The company is subject to indemnification obligations that could materially affect its financial condition and results of operations[146]. - The company has limitations under its credit agreement regarding dividends and share repurchases until the Brazil Tax Dispute is resolved, which could impact stock price[108]. - The company has a Moody's long-term family rating of Ba2 and an S&P issuer rating of BB, indicating a different credit profile than its former parent company, International Paper[133]. - The company has a limited trading history since its common stock began trading on the NYSE on October 1, 2021, which may lead to volatility in its stock price[159]. - The company has been subject to increased activity by activist shareholders, which could lead to substantial costs and management distraction[167]. - Anti-takeover provisions in the company's certificate of incorporation may discourage or delay a change of control, potentially affecting the trading price of its common stock[168]. - The company’s bylaws could make it difficult for shareholders to replace or remove management, which may not align with shareholder interests[169]. - The company designates the Court of Chancery of the State of Delaware as the exclusive forum for certain shareholder litigation, potentially limiting shareholders' options[170]. - The independent auditors, Deloitte & Touche LLP, expressed an unqualified opinion on the effectiveness of the company's internal control over financial reporting[276]. - The company's internal control over financial reporting was assessed as effective as of December 31, 2022, based on COSO criteria[269]. Debt and Financial Obligations - The company has an outstanding debt of approximately $1 billion as of December 31, 2022, which includes a $450 million revolving credit facility, a $450 million term loan "B" facility, and a $520 million term loan "F" facility[152]. - The company has granted stock-based equity awards, which may dilute shareholders' ownership[164]. - A significant write-down of goodwill or other intangible assets could adversely affect the company's financial condition and results of operations[119]. - The company has a special payment obligation of $1.5 billion to International Paper, which could be subject to legal challenges[149]. - A payment of $100 million to International Paper is required if any portion of the Brazil eucalyptus forest plantations is transferred, which could affect the attractiveness of such transactions[124]. - The company relies on commercial agreements with International Paper for a substantial amount of its production in the U.S., which could adversely affect its business if these agreements are lost[128]. - The company is required to pay fixed costs under offtake agreements regardless of order levels, which may adversely impact its financial condition[130]. - The company may face challenges in generating sufficient cash flows to service its indebtedness, which could lead to liquidity problems[154]. - The company faces potential conflicts of interest due to the equity ownership and former positions of its executive officers with International Paper[145].

Sylvamo Corporation (NYSE:SLVM) Q4 2022 Earnings Conference Call February 10, 2023 10:00 AM ET Company Participants Hans Bjorkman - Vice President, Investor Relations Jean-Michel Ribieras - Chairman and Chief Executive Officer John Sims - Senior Vice President and Chief Financial Officer Conference Call Participants George Staphos - BoA Securities Paul Quinn - RBC Capital Markets Ed Brucker - Barclays Operator Good morning. Thank you for standing by. Welcome to Sylvamo's Fourth Quarter 2022 Earnings Call. A ...

Financial Performance - Sylvamo's Net sales in 2022 reached $3628 million, a 28% increase compared to $2828 million in 2021[10] - Adjusted EBITDA for 2022 was $721 million, a 62% increase from $445 million in 2021[10] - Adjusted Operating Earnings per Share increased by 72% from $457 in 2021 to $784 in 2022[10] - Free Cash Flow in 2022 was $269 million, a 24% decrease compared to $354 million in 2021[10] - The company achieved a Return on Invested Capital (ROIC) of 30% in 2022[9] Q4 2022 Results - Net Sales for Q4 2022 were $927 million, compared to $778 million in Q4 2021[12] - Adjusted EBITDA for Q4 2022 was $170 million, representing 183% of net sales, compared to $123 million in Q4 2021, which was 158% of net sales[13,40] - Adjusted Operating Earnings per Share for Q4 2022 was $197, compared to $095 in Q4 2021[14] - Free Cash Flow for Q4 2022 was $84 million, compared to $109 million in Q4 2021[13] 2023 Outlook - The company anticipates an Adjusted EBITDA between $760 million and $840 million for 2023[32] - Free Cash Flow is projected to be between $300 million and $330 million for 2023[32] - Capital spending for 2023 is estimated to be between $210 million and $235 million[29] - Q1 2023 Adjusted EBITDA is expected to be between $200 million and $215 million[23]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Sylvamo Corporation's unaudited condensed consolidated and combined financial statements for the three and nine months ended September 30, 2022 and 2021, including statements of operations, comprehensive income (loss), balance sheets, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated and Combined Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20and%20Combined%20Statements%20of%20Operations) This section details the company's net sales, income from continuing operations, and net income (loss) for the specified periods Net Sales and Net Income (Loss) from Continuing Operations | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Sales | $968 | $731 | $2,701 | $2,050 | | Net Income from Continuing Operations | $109 | $59 | $248 | $198 | | Net Income (Loss) | $57 | $92 | $24 | $269 | Basic and Diluted Earnings (Loss) Per Share | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS from Continuing Operations | $2.47 | $1.34 | $5.62 | $4.50 | | Diluted EPS from Continuing Operations | $2.44 | $1.34 | $5.58 | $4.50 | | Basic Net Earnings (Loss) | $1.29 | $2.09 | $0.54 | $6.10 | | Diluted Net Earnings (Loss) | $1.28 | $2.09 | $0.54 | $6.10 | [Condensed Consolidated and Combined Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20and%20Combined%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's net income (loss) and other comprehensive income (loss) components, leading to total comprehensive income (loss) Comprehensive Income (Loss) | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Income (Loss) | $57 | $92 | $24 | $269 | | Total Other Comprehensive Income (Loss), Net of Taxes | $(52) | $(104) | $48 | $(117) | | Comprehensive Income (Loss) | $5 | $(12) | $72 | $152 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Key Balance Sheet Items | Metric | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :-------------------------- | :---------------------- | :---------------------- | | Total Current Assets | $1,409 | $1,108 | | Total Assets | $2,797 | $2,597 | | Total Current Liabilities | $1,029 | $758 | | Long-Term Debt | $1,200 | $1,357 | | Total Equity | $258 | $182 | [Condensed Consolidated and Combined Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20and%20Combined%20Statements%20of%20Cash%20Flows) This section outlines the cash flows from operating, investing, and financing activities for the reporting periods Cash Flow Summary | Metric | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Cash Provided by Operating Activities | $296 | $379 | | Cash Provided by (Used for) Investment Activities | $(96) | $140 | | Cash Provided by (Used for) Financing Activities | $(182) | $(386) | | Change in Cash and Temporary Investments | $4 | $54 | | Cash and Temporary Investments, End of Period | $163 | $124 | [Notes to Condensed Consolidated and Combined Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20and%20Combined%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed financial statements [NOTE 1 BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%20BASIS%20OF%20PRESENTATION) This note describes the foundational principles and significant events impacting the preparation of the financial statements - Sylvamo Corporation completed its spin-off from International Paper on **October 1, 2021**, becoming an independent public company trading on the NYSE under 'SLVM'[23](index=23&type=chunk) - Financial statements reflect combined historical results prior to spin-off and consolidated results post-spin-off, prepared in U.S. GAAP[23](index=23&type=chunk) - International Paper sold its remaining shares of Sylvamo stock on **September 12, 2022**, ceasing to be a related party[30](index=30&type=chunk) - The Company committed to sell its Russian operations in **Q2 2022**, presenting them as 'Discontinued operations, net of taxes'[32](index=32&type=chunk) - The sale of Russian operations was completed in **October 2022** for **$420 million** (**$390 million** cash proceeds after fees)[34](index=34&type=chunk) [NOTE 2 SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note discusses the key accounting principles applied and any recent accounting standard updates - No material changes to significant accounting policies for the nine months ended September 30, 2022[35](index=35&type=chunk) - The company plans to apply ASU 2020-04 (Reference Rate Reform) for contract modifications due to changes in reference rates, not expecting a material impact[36](index=36&type=chunk)[37](index=37&type=chunk) [NOTE 3 REVENUE RECOGNITION](index=10&type=section&id=NOTE%203%20REVENUE%20RECOGNITION) This note details the company's external net sales broken down by product and business segment External Net Sales by Product and Segment | Segment | Product | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------ | :-------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Europe | Uncoated Papers | $103 | $62 | $305 | $184 | | | Market Pulp | $27 | $18 | $77 | $61 | | Latin America | Uncoated Papers | $249 | $187 | $673 | $520 | | | Market Pulp | — | $13 | — | $37 | | North America | Uncoated Papers | $569 | $429 | $1,582 | $1,194 | | | Market Pulp | $20 | $22 | $64 | $54 | | **Total** | | **$968** | **$731** | **$2,701** | **$2,050** | [NOTE 4 EQUITY](index=11&type=section&id=NOTE%204%20EQUITY) This note summarizes changes in total equity and outlines the company's shareholder rights agreement Changes in Total Equity | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Balance, June 30, 2022 / Dec 31, 2021 | $252 | $182 | | Stock-based employee compensation | $6 | $16 | | Dividends | $(5) | $(10) | | Comprehensive income (loss) | $5 | $72 | | Balance, September 30, 2022 | $258 | $258 | - The Board adopted a Rights Agreement on **April 22, 2022**, issuing one preferred share purchase right for each common share[43](index=43&type=chunk) - Rights become exercisable if any person acquires **10% or more** of outstanding common shares (**20%** for passive investors)[43](index=43&type=chunk) - The Rights Agreement is designed to discourage potential acquisition proposals and expires on **April 21, 2023**, unless earlier redeemed or terminated[43](index=43&type=chunk)[45](index=45&type=chunk) [NOTE 5 OTHER COMPREHENSIVE INCOME](index=12&type=section&id=NOTE%205%20OTHER%20COMPREHENSIVE%20INCOME) This note presents the components of accumulated other comprehensive income (loss) Accumulated Other Comprehensive Income (Loss) (AOCI) | AOCI Component | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :-------------------------------------------- | :---------------------- | :---------------------- | | Defined Benefit Pension and Postretirement Adjustments | $(81) | $(80) | | Change in Cumulative Foreign Currency Translation Adjustments | $(1,698) | $(1,719) | | Net Gains and Losses on Cash Flow Hedging Derivatives | $26 | $(2) | | **Total AOCI at End of Period** | **$(1,753)** | **$(1,801)** | [NOTE 6 EARNINGS PER SHARE](index=12&type=section&id=NOTE%206%20EARNINGS%20PER%20SHARE) This note provides the calculation of basic and diluted earnings per share from continuing operations Earnings Per Share from Continuing Operations | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income from continuing operations (Millions) | $109 | $59 | $248 | $198 | | Weighted average common shares outstanding (Millions) | 44.1 | 43.9 | 44.1 | 43.9 | | Effect of dilutive securities (Millions) | 0.5 | — | 0.4 | — | | Weighted average common shares outstanding - assuming dilution (Millions) | 44.6 | 43.9 | 44.5 | 43.9 | | Basic EPS from continuing operations | $2.47 | $1.34 | $5.62 | $4.50 | | Diluted EPS from continuing operations | $2.44 | $1.34 | $5.58 | $4.50 | [NOTE 7 ACQUISITIONS](index=13&type=section&id=NOTE%207%20ACQUISITIONS) This note details the company's agreement to acquire a paper mill in Sweden - In **September 2022**, the Company agreed to acquire Stora Enso's uncoated freesheet paper mill in Nymolla, Sweden, for **€150 million** (approximately **$150 million**)[51](index=51&type=chunk) - The acquisition is expected to close no later than **Q1 2023**, subject to regulatory approvals[51](index=51&type=chunk) - The mill has a capacity of approximately **500,000 short tons** of uncoated freesheet and produces **85%** of its energy from carbon-neutral, renewable biomass residuals[51](index=51&type=chunk) [NOTE 8 DIVESTITURE AND IMPAIRMENT OF BUSINESS](index=13&type=section&id=NOTE%208%20DIVESTITURE%20AND%20IMPAIRMENT%20OF%20BUSINESS) This note discusses the sale of Russian operations and related impairment charges - The Company committed to sell its Russian operations in **Q2 2022**, classifying them as 'Discontinued operations, net of taxes'[52](index=52&type=chunk) - The sale of Russian operations was completed in **October 2022** for **$420 million**, resulting in approximately **$390 million** cash proceeds after fees[53](index=53&type=chunk) Income (Loss) Before Income Taxes from Russian Operations (Discontinued) | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Sales | $205 | $177 | $518 | $480 | | Impairment of business | $78 | — | $302 | — | | Income (Loss) Before Income Taxes | $(44) | $42 | $(221) | $89 | | Discontinued Operations, Net of Taxes | $(52) | $33 | $(224) | $71 | - Impairment charges related to Russian operations: **$68 million** pre-tax (**$57 million** after taxes) in **Q1 2022** for fixed assets, and **$156 million** (**$156 million** after taxes) in **Q2 2022** and **$78 million** (**$78 million** after taxes) in **Q3 2022** for cumulative foreign currency translation loss[56](index=56&type=chunk) [NOTE 9 SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION](index=15&type=section&id=NOTE%209%20SUPPLEMENTARY%20FINANCIAL%20STATEMENT%20INFORMATION) This note provides additional details on accounts receivable, inventories, and interest expense Accounts and Notes Receivable, Net | Category | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :---------------------- | :---------------------- | :---------------------- | | Trade | $458 | $391 | | Notes and other | $24 | $11 | | **Total** | **$482** | **$402** | | Allowance for expected credit losses | $20 | $19 | Inventories | Category | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :---------------------- | :---------------------- | :---------------------- | | Raw materials | $35 | $37 | | Finished paper and pulp products | $215 | $164 | | Operating supplies | $74 | $69 | | Other | $14 | $9 | | **Total** | **$338** | **$279** | Interest (Income) Expense, Net | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :---------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Interest expense | $21 | $12 | $59 | $13 | | Interest income | $(2) | $(2) | $(5) | $(32) | | Capitalized interest cost | $(1) | — | $(2) | — | | **Total** | **$18** | **$10** | **$52** | **$(19)** | [NOTE 10 LEASES](index=16&type=section&id=NOTE%2010%20LEASES) This note outlines the company's lease costs, assets, and liabilities - Total lease cost was **$15 million** for the three months and **$45 million** for the nine months ended September 30, 2022, compared to **$11 million** and **$28 million** for the same periods in 2021, respectively[63](index=63&type=chunk) Lease Assets and Liabilities | Category | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :---------------------- | :---------------------- | :---------------------- | | Operating lease assets | $39 | $40 | | Finance lease assets | $24 | $27 | | Total leased assets | $63 | $67 | | Current Operating Liabilities | $14 | $15 | | Current Finance Liabilities | $2 | $3 | | Noncurrent Operating Liabilities | $30 | $25 | | Noncurrent Finance Liabilities | $15 | $17 | | Total lease liabilities | $61 | $60 | [NOTE 11 GOODWILL AND OTHER INTANGIBLES](index=18&type=section&id=NOTE%2011%20GOODWILL%20AND%20OTHER%20INTANGIBLES) This note presents the carrying amounts of goodwill and identifiable intangible assets by segment Goodwill by Business Segment | Segment | Dec 31, 2021 (Millions) | Sep 30, 2022 (Millions) | | :------------ | :---------------------- | :---------------------- | | Europe | $10 | $9 | | Latin America | $112 | $115 | | North America | — | — | | **Total** | **$122** | **$124** | Identifiable Intangible Assets (Net) | Category | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :---------------------------- | :---------------------- | :---------------------- | | Customer relationships and lists | $7 | $8 | | Software | $1 | $1 | | Other | — | — | | **Total** | **$8** | **$9** | [NOTE 12 INCOME TAXES](index=18&type=section&id=NOTE%2012%20INCOME%20TAXES) This note details the income tax provision, effective tax rate, and a significant Brazil tax dispute Income Tax Provision and Effective Tax Rate | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Income tax provision | $38 | $19 | $97 | $73 | | Effective income tax rate | 26% | 24% | 28% | 27% | - The Company is involved in a Brazil Tax Dispute regarding the deductibility of goodwill amortization from a **2007** acquisition, with assessments totaling approximately **$109 million** in tax and **$346 million** in interest, penalties, and fees as of September 30, 2022[69](index=69&type=chunk) - Under a tax matters agreement, International Paper will pay **60%** and Sylvamo **40%** on up to **$300 million** of any assessment, with International Paper covering amounts over **$300 million**[71](index=71&type=chunk) [NOTE 13 COMMITMENTS AND CONTINGENT LIABILITIES](index=19&type=section&id=NOTE%2013%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) This note discusses environmental remediation liabilities and other legal proceedings - As of September 30, 2022, the Company recorded an estimated probable liability of **$21 million** for environmental remediation matters, entirely related to its former Russian operations[72](index=72&type=chunk) - Upon the sale of Russian operations on **October 6, 2022**, all associated environmental liabilities transferred with the business, and Sylvamo retained no liability[72](index=72&type=chunk) - The Company is involved in various other legal proceedings, including environmental, tax, and personal injury matters, but believes loss contingencies will not materially affect its financial position or liquidity[78](index=78&type=chunk) [NOTE 14 LONG-TERM DEBT](index=20&type=section&id=NOTE%2014%20LONG-TERM%20DEBT) This note summarizes the company's long-term debt, credit facilities, and compliance with covenants Long-Term Debt Summary | Debt Type | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | | :------------------------ | :---------------------- | :---------------------- | | Term Loan F - due 2027 | $503 | $512 | | Term Loan B - due 2028 | $265 | $401 | | 7.00% Senior Notes - due 2029 | $443 | $443 | | Other | $18 | $20 | | Less: current portion | $(29) | $(19) | | **Total** | **$1,200** | **$1,357** | - The Company has a **$450 million** Revolving Credit Facility with no outstanding borrowings as of September 30, 2022[83](index=83&type=chunk) - Subsequent to September 30, 2022, the Company repaid the remaining outstanding balance of Term Loan B[89](index=89&type=chunk) - The Company established a **$120 million** accounts receivable finance facility (Securitization Program) on September 30, 2022, with no outstanding borrowings[86](index=86&type=chunk) - The Company is in compliance with its debt covenants as of September 30, 2022, which include a minimum consolidated interest charge coverage ratio and a maximum consolidated total leverage ratio[88](index=88&type=chunk) [NOTE 15 PENSION AND POSTRETIREMENT BENEFIT PLANS](index=22&type=section&id=NOTE%2015%20PENSION%20AND%20POSTRETIREMENT%20BENEFIT%20PLANS) This note explains the company's pension plans and related expenses post-spin-off - Following the spin-off, Sylvamo established and sponsored its own pension plans, with assets and obligations transferred from International Paper's plans[94](index=94&type=chunk) - Net periodic pension expense for all company-sponsored plans for the nine months ended September 30, 2022, was immaterial[94](index=94&type=chunk) [NOTE 16 INCENTIVE PLANS](index=23&type=section&id=NOTE%2016%20INCENTIVE%20PLANS) This note describes the company's stock-based incentive compensation plan and related expenses - Sylvamo adopted the Sylvamo 2021 Incentive Compensation Plan post-spin-off, granting time-based and performance-based restricted stock units[97](index=97&type=chunk) - As of September 30, 2022, **3,199,605 shares** remain available for future grants under the LTIP[97](index=97&type=chunk) Total Stock-Based Compensation Expense | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Total stock-based compensation expense | $5 | $3 | $16 | $10 | [NOTE 17 FINANCIAL INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHIC AREA](index=23&type=section&id=NOTE%2017%20FINANCIAL%20INFORMATION%20BY%20BUSINESS%20SEGMENT%20AND%20GEOGRAPHIC%20AREA) This note provides a breakdown of net sales and operating profit by business segment - The Company operates in three business segments: Europe, Latin America, and North America, differentiated by common product and customer basis[99](index=99&type=chunk) Net Sales by Business Segment | Segment | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Europe | $130 | $85 | $382 | $263 | | Latin America | $270 | $200 | $734 | $557 | | North America | $589 | $447 | $1,646 | $1,255 | | Intersegment Sales | $(21) | $(1) | $(61) | $(25) | | **Net Sales** | **$968** | **$731** | **$2,701** | **$2,050** | Business Segment Operating Profit | Segment | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Europe | $19 | $(1) | $38 | $(5) | | Latin America | $58 | $44 | $156 | $131 | | North America | $98 | $52 | $226 | $91 | | **Total Business Segment Operating Profit** | **$175** | **$95** | **$420** | **$217** | [NOTE 18 RELATED PARTY TRANSACTIONS](index=24&type=section&id=NOTE%2018%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions with International Paper before it ceased being a related party - International Paper ceased being a related party on **September 12, 2022**, after selling its remaining Sylvamo stock[105](index=105&type=chunk) Net Transfers from Parent (International Paper) | Category | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | General financing activities | — | $(522) | — | $(601) | | Corporate allocations | — | $32 | — | $112 | | Stock-based compensation | — | $3 | — | $10 | | **Total net transfers from Parent** | **—** | **$(487)** | **—** | **$(479)** | - The Company incurred **$21 million** in expenses under the Transition Services Agreement for the nine months ended September 30, 2022, and ceased receiving services as of **October 31, 2022**[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Sylvamo's financial performance and condition, highlighting strong Q3 2022 earnings and cash flow from continuing operations, driven by price and mix gains, and discusses the impact of the Russian operations divestiture, the Nymolla mill acquisition, debt repayment, and an increased dividend, while outlining expectations for Q4 2022 [THE SPIN-OFF](index=26&type=section&id=THE%20SPIN-OFF) This section provides context on Sylvamo Corporation's establishment as an independent public company following its spin-off - Sylvamo Corporation became an independent public company on **October 1, 2021**, after spinning off from International Paper[114](index=114&type=chunk) - Financial statements reflect combined historical results prior to the spin-off and consolidated results post-spin-off, prepared in U.S. GAAP[114](index=114&type=chunk) [EXECUTIVE SUMMARY](index=26&type=section&id=EXECUTIVE%20SUMMARY) This section highlights key financial results for Q3 2022, strategic actions, and future outlook - **Q3 2022** net income from continuing operations was **$109 million** (**$2.44** per diluted share), and cash from continuing operations was **$146 million**[115](index=115&type=chunk) - Adjusted EBITDA for **Q3 2022** was **$216 million**, with a margin of **22.3%**, showing improvement from the prior quarter due to price and mix gains outpacing cost inflation[115](index=115&type=chunk)[116](index=116&type=chunk) - The Company announced an agreement to acquire an uncoated freesheet mill in Nymolla, Sweden, for **€150 million**, expected to close by **Q1 2023**[116](index=116&type=chunk) - Subsequent to Q3, the sale of Russian operations was completed for **$390 million** cash proceeds, Term Loan B was repaid, and the quarterly dividend was increased to **$0.25** per share[117](index=117&type=chunk) [Divestiture of Russian Operations](index=28&type=section&id=Divestiture%20of%20Russian%20Operations) This section details the sale of Russian operations, including the sale price and related impairment charges - Management committed to selling Russian operations in **Q2 2022**, which were previously part of the Europe business segment[119](index=119&type=chunk) - The sale was completed in **October 2022** for **$420 million**, yielding approximately **$390 million** in cash after foreign currency and transaction fees[121](index=121&type=chunk) - Impairment charges related to Russian operations totaled **$68 million** pre-tax in **Q1 2022** for fixed assets, and **$156 million** and **$78 million** pre-tax in **Q2** and **Q3 2022**, respectively, for cumulative foreign currency translation loss[119](index=119&type=chunk) [RESULTS OF OPERATIONS](index=28&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's net sales, expenses, and net income from continuing operations for the reporting periods Net Sales and Net Income from Continuing Operations | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Sales | $968 | $731 | $2,701 | $2,050 | | Net Income from Continuing Operations | $109 | $59 | $248 | $198 | - Net sales increased by **$237 million** (3 months) and **$651 million** (9 months) primarily due to higher average sales prices, offsetting increased input and operating costs[123](index=123&type=chunk)[129](index=129&type=chunk) - Selling and administrative expenses increased by **$34 million** (3 months) and **$85 million** (9 months) due to increased net sales activity and costs related to the transition service agreement and spin-off[125](index=125&type=chunk)[131](index=131&type=chunk) - Interest (income) expense, net, increased significantly due to long-term debt incurred post-spin-off, with **$18 million** net expense for 3 months and **$52 million** for 9 months ended Sep 30, 2022[126](index=126&type=chunk)[132](index=132&type=chunk) - Income tax provision and effective tax rate for continuing operations increased due to the mix of earnings in different regions[127](index=127&type=chunk)[133](index=133&type=chunk) [BUSINESS SEGMENT RESULTS](index=31&type=section&id=BUSINESS%20SEGMENT%20RESULTS) This section provides a detailed breakdown of operating profit and performance across the company's geographic business segments Business Segment Operating Profit | Segment | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Europe | $19 | $(1) | $38 | $(5) | | Latin America | $58 | $44 | $156 | $131 | | North America | $98 | $52 | $226 | $91 | | **Total Business Segment Operating Profit** | **$175** | **$95** | **$420** | **$217** | - Europe's operating profit increased by **$20 million** (3 months) and **$43 million** (9 months) due to higher sales prices and favorable product mix, despite increased input and operating costs[142](index=142&type=chunk)[144](index=144&type=chunk) - Latin America's operating profit increased by **$14 million** (3 months) and **$25 million** (9 months), driven by increased sales prices and favorable product mix, offsetting higher operating and input costs[147](index=147&type=chunk)[149](index=149&type=chunk) - North America's operating profit increased by **$46 million** (3 months) and **$135 million** (9 months), primarily due to increased sales prices and volume, partially offset by higher operating and input costs[153](index=153&type=chunk)[155](index=155&type=chunk) [Non-GAAP Financial Measures](index=35&type=section&id=Non-GAAP%20Financial%20Measures) This section presents key non-GAAP financial metrics such as Adjusted EBITDA and Free Cash Flow Adjusted EBITDA and Margin | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Jun 30, 2022 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Adjusted EBITDA | $216 | $189 | $551 | $322 | | Adjusted EBITDA Margin | 22.3% | 20.7% | 20.4% | 15.7% | Free Cash Flow | Metric | 3 Months Ended Sep 30, 2022 (Millions) | 3 Months Ended Sep 30, 2021 (Millions) | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Cash provided by operating activities from continuing operations | $146 | $137 | $276 | $292 | | Cash invested in capital projects | $(32) | $(20) | $(91) | $(47) | | **Free Cash Flow** | **$114** | **$117** | **$185** | **$245** | [LIQUIDITY AND CAPITAL RESOURCES](index=36&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to meet its financial obligations, cash flow, and capital expenditure plans - The Company expects to meet short-term and future cash requirements through operating cash flows, available cash balances, and third-party debt, relying on commercial and operational excellence to manage costs[163](index=163&type=chunk)[164](index=164&type=chunk) - Cash provided by operating activities from continuing operations decreased to **$276 million** for the nine months ended September 30, 2022, from **$292 million** in the prior year, primarily due to changes in working capital[166](index=166&type=chunk) - Cash used for working capital components was **$86 million** for the nine months ended September 30, 2022, compared to **$3 million** in the prior year, mainly reflecting cash used for accounts receivable and inventories[167](index=167&type=chunk) Capital Spending by Business Segment | Segment | 9 Months Ended Sep 30, 2022 (Millions) | 9 Months Ended Sep 30, 2021 (Millions) | | :------------ | :------------------------------------- | :------------------------------------- | | Europe | $4 | $4 | | Latin America | $45 | $26 | | North America | $20 | $17 | | Corporate | $22 | — | | **Total** | **$91** | **$47** | - Cash used for financing activities for the nine months ended September 30, 2022, primarily reflects **$175 million** in debt principal payments, contrasting with the prior year's **$1.52 billion** special payment to International Paper[171](index=171&type=chunk) - The Board declared a quarterly dividend of **$0.1125** per share for **Q3 2022** and approved a share repurchase program of up to **$150 million**, though no shares were repurchased in **Q3 2022**[172](index=172&type=chunk)[173](index=173&type=chunk) - Annual maintenance, regulatory, and reforestation capital expenditures are expected to be **$140-$170 million** for the next several years, with an additional **$10 million** for high-return projects in 2022[176](index=176&type=chunk) [CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES](index=38&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20SIGNIFICANT%20ACCOUNTING%20ESTIMATES) This section highlights accounting policies requiring significant management judgment and estimates - No changes were made to critical accounting policies during the first nine months of 2022[179](index=179&type=chunk) - Key accounting policies requiring significant management judgment include impairment or disposal of long-lived assets and goodwill, and income taxes[178](index=178&type=chunk) [FORWARD-LOOKING STATEMENTS](index=39&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines statements about future events and performance, along with associated risks and uncertainties - The report contains forward-looking statements regarding future events, performance, the Nymolla mill acquisition, and capital expenditures[180](index=180&type=chunk) - Actual results may differ materially due to various risks, including economic and political conditions (e.g., war in Ukraine), inflation, supply chain issues, regulatory approvals, and climate change[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the Company's exposure to market risk since December 31, 2021, referring to the 2021 Form 10-K for detailed disclosures - No material changes in the Company's exposure to market risk since December 31, 2021[183](index=183&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2022, concluding they were effective, and no material changes in internal control over financial reporting occurred during Q3 2022 - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2022[184](index=184&type=chunk) - No material changes in internal control over financial reporting occurred during the third quarter of 2022[185](index=185&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information beyond the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal proceedings, including environmental and tax matters, but does not anticipate any individually or in aggregate to have a material adverse effect on its financial condition or results of operations, and environmental matters related to former Russian operations have been transferred with the sale - Sylvamo is not involved in any legal proceedings expected to result in a material adverse effect on its financial condition or results of operations[188](index=188&type=chunk) - Environmental matters on former Russian property, with an estimated **$21 million** liability as of September 30, 2022, transferred with the sale of Russian operations[72](index=72&type=chunk)[189](index=189&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the 2021 Form 10-K, specifically highlighting that the Rights Agreement adopted on April 22, 2022, could make it more difficult for a third party to acquire control of the Company, potentially affecting common stock price - The Rights Agreement, adopted **April 22, 2022**, could discourage acquisition proposals and delay or prevent a change in control, potentially impacting the common stock price[190](index=190&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) On November 9, 2022, the Company amended its Credit Agreement, revising restricted payment limits tied to the Brazil Tax Dispute, increasing dividend and repurchase capacities under certain leverage ratios, allowing for the repurchase of up to $150 million of 2029 Senior Notes, and introducing conditions to eliminate restricted payment limitations by depositing funds for the Brazil Tax Dispute settlement, while also establishing ESG metrics for credit facility rates - The Credit Agreement was amended on **November 9, 2022**, to revise restricted payment limits, which were previously impacted by the Brazil Tax Dispute[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - The revised limits allow for increased annual restricted payments: **$60 million** if the pro forma consolidated total leverage ratio is below **2.50:1.00** (but >= **2.00:1.00**), and **$90 million** if below **2.00:1.00**[194](index=194&type=chunk) - A new exception permits the Company to repurchase or redeem up to **$150 million** of the 2029 Senior Notes prior to the Brazil Tax Dispute resolution[195](index=195&type=chunk) - Limitations on restricted payments can be eliminated if the Company deposits **$120 million** (or **$60 million** with **$225 million** liquidity) into a controlled account for the Brazil Tax Dispute settlement[196](index=196&type=chunk) - The amendment also introduced environmental, social, and governance (ESG) metrics that will influence the fee on unused commitments and the applicable rate for Revolving Credit Facility borrowings[197](index=197&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements related to the sale of Russian operations, corporate governance documents, the Rights Agreement, receivables financing agreements, and the recent Amendment No. 1 to the Credit Agreement - Key exhibits include the Agreement for the Sale and Purchase of Ordinary Shares of NPAO Sylvamo Corporation Rus, the Rights Agreement, and Amendment No. 1 to the Credit Agreement[199](index=199&type=chunk)

Sylvamo Corporation (NYSE:SLVM) Q3 2022 Earnings Conference Call November 10, 2022 11:00 AM ET Company Participants Hans Bjorkman - Vice President-Investor Relations Jean-Michel Ribiéras - Chairman & Chief Executive Officer John Sims - Senior Vice President & Chief Financial Officer Conference Call Participants Ed Brucker - Barclays Paul Quinn - RBC Capital Markets Operator Good morning and thank you for standing by. Welcome to Sylvamo's Third Quarter 2022 Earnings Call. All lines have been placed on mute t ...

1 Third Quarter 2022 Earnings Review November 10, 2022 © 2022 Sylvamo Corporation. All rights reserved. The World's Paper Company Cautionary statement concerning forward 2 -looking statements This presentation contains information that includes or is based upon forward-looking statements. Forward-looking statements forecast or state expectations concerning future events. These statements often can be identified by the fact that they do not relate strictly to historical or current facts. They typically use w ...

Financial Data and Key Metrics Changes - Adjusted EBITDA grew to $189 million, a 29% improvement quarter-over-quarter, with a margin of 20.7%, reflecting a 290 basis point increase [6][12][14] - Adjusted earnings per share increased by 51% quarter-over-quarter to $2.02 [7][12] - Free cash flow generated was $39 million, up 22% quarter-over-quarter [7][12] - Net sales reached $912 million, an 11% increase quarter-over-quarter [12] Business Line Data and Key Metrics Changes - Demand for uncoated freesheet strengthened in Latin America and North America, with volumes remaining strong and full capacity in all regions [8][9] - Year-to-date branding sales in Europe increased by almost 10% compared to last year [11] - In Brazil, cut size sales returned to pre-pandemic levels [11] Market Data and Key Metrics Changes - North America industry demand growth was 2%, while Latin America saw a 16% increase [21] - Western Europe experienced a 2.7% decline in industry demand in the first half of the year [21] - Industry inventory levels are below historical levels across all regions due to tight supply conditions [20] Company Strategy and Development Direction - The company is focused on a three-prong strategy of commercial excellence, operational excellence, and financial discipline [8] - Plans to strengthen the balance sheet by targeting gross debt of $1 billion, with $225 million repaid since the spin-off [26][27] - A share repurchase program of up to $150 million has been authorized [31] Management's Comments on Operating Environment and Future Outlook - The company is increasing its full-year adjusted EBITDA guidance from $725 million to $775 million to a new range of $740 million to $780 million [36] - Free cash flow guidance has also been raised from $160 million to $180 million to a new range of $170 million to $180 million [36] - Management expressed confidence in achieving pre-pandemic earnings levels in 2022 [36] Other Important Information - The Russian operations have been transitioned to discontinued operations, and all figures exclude the Russian business [3][4] - The company is navigating supply chain challenges effectively, with price/mix improvements outpacing cost inflation [11][12] Q&A Session Summary Question: Price increases in North America and Latin America - Management did not comment directly on pricing but acknowledged media reports on price trends in North America [43] Question: Guidance clarification - Management confirmed that the guidance increase was based on figures excluding Russia, with an upgrade of about $10 million at the midpoint [46] Question: Wood cost trends in Europe - Wood costs are increasing across all regions, primarily driven by transportation costs, with no significant pressures noted in the Saillat mill in France [51] Question: Energy situation in Europe - The company is well-positioned with its Saillat mill, producing most of its energy needs, with gas demand representing only 10% of total energy needs [60] Question: Competitive environment and capacity changes - No major changes in capacity have been observed, with operating rates remaining high across all regions [62]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to ______________________________ Commission File Number 001-40718 ________________ SYLVAMO CORPORATION (Exact Name of Registrant as Specified in its Charte ...