Sylvamo (SLVM) Citi’s 2024 Basic Materials Conference summary

Strategic focus and market positioning

• Maintains a singular focus on uncoated freesheet, leveraging strengths, talented teams, iconic brands, and low-cost mills to drive high returns and shareholder value.

• Believes uncoated freesheet will remain essential and resilient across sectors and regions, with 55% of world graphic paper demand in 2023.

• Strategy centers on reinvesting retained earnings, operational excellence, and commercial agility post-spinoff.

• Simplifying North America business to become leaner and more agile for earnings growth.

• Commitment to being the employer, supplier, and investment of choice in the paper industry.

Financial discipline and capital allocation

• Debt reduction is central, with $120 million targeted for repayment by year-end, reducing gross debt by 47% since spinoff.

• Gross debt reduced by $720 million (almost 50%) since spinoff, improving flexibility for macro risks and investments.

• Liquidity includes $400 million available on revolver and increased requirements to $275 million.

• Capital allocation prioritizes reinvestment, strong balance sheet, sustainable dividend, and at least 40% of free cash flow returned to shareholders.

• Increasing high-return investment spending in 2025 to boost earnings and cash flows.

Operational initiatives and project investments

• High-return projects include digital transformation at Eastover mill, chip processing upgrades, and a new turbine generator in Brazil, delivering 35%-40% returns.

• Project Horizon exceeded its $110 million run rate target, achieving $120 million through supply chain and manufacturing efficiencies.

• Investments are considered low-risk due to deep knowledge of assets and markets.

• Flagship mills (Eastover, Luiz Antônio, Três Lagoas) are primary investment targets due to their low cost and high cash generation.

• Continued investment in sustainability and operational improvements to support future growth.