Sylvamo Q1 2023 Earnings Report
Key Takeaways
Sylvamo's first quarter 2023 earnings showed a net income from continuing operations of $97 million, or $2.25 per diluted share, and an adjusted EBITDA of $208 million, representing a 22% margin. The company repurchased 80% of its outstanding notes, eliminating restrictive covenants and enabling increased cash returns to shareholders.
Adjusted EBITDA was $208 million, consistent with the outlook of $205 million to $215 million, achieving a 22% adjusted EBITDA margin.
The company maintained a strong balance sheet and repurchased 80% of its outstanding notes to eliminate restrictive covenants.
Net income from continuing operations was $97 million ($2.25 per diluted share) compared to $88 million ($1.99 per diluted share) in the previous quarter.
Adjusted operating earnings were $108 million ($2.51 per diluted share) compared to $87 million ($1.97 per diluted share) in the previous quarter.
Sylvamo
Sylvamo
Sylvamo Revenue by Segment
Sylvamo Revenue by Geographic Location
Forward Guidance
Sylvamo projects 2023 adjusted EBITDA of $720 million to $770 million and free cash flow of $250 million to $280 million. Second quarter adjusted EBITDA is expected to be $115 million to $125 million.
Positive Outlook
- Seasonally stronger volume in Latin America is projected to improve volume by $10 million to $15 million compared to the first quarter.
- Input and transportation costs are projected to improve by $15 million to $20 million, with favorable trends in energy and chemicals compared to the first quarter.
- The integration of the new mill in Sweden is proceeding well and is expected to strengthen performance.
- Favorable trends in energy and chemical input costs are expected to improve financial performance.
- Channel inventory corrections are expected to continue, contributing to adjusted EBITDA.
Challenges Ahead
- Price and mix are expected to decrease by $45 million to $50 million compared to the first quarter, reflecting the realization of prior price decreases for pulp in all regions and paper in Europe as well as less favorable product mix.
- Operations and costs are expected to increase by $10 million to $15 million primarily due to unabsorbed fixed costs compared to the first quarter.
- Total planned maintenance outage expenses are expected to increase by $59 million compared to the first quarter, with two-thirds of 2023 planned maintenance outage costs scheduled for the second quarter.
- Pulp price decreases will impact adjusted EBITDA.
- Continued channel inventory corrections will impact adjusted EBITDA.
Revenue & Expenses
Visualization of income flow from segment revenue to net income