Sylvamo (SLVM) Q4 2023 earnings summary

Executive summary

• FY2023 Adjusted EBITDA was $607 million at a 16% margin; Free Cash Flow was $294 million, and $127 million was returned to shareowners.

• 4Q23 Adjusted EBITDA was $117 million at a 12% margin, below 4Q22 and 3Q23; lower input and transportation costs partly supported results.

• Uncoated freesheet market conditions were significantly less favorable than expected; customer service and investment initiatives continued.

Financial highlights

• FY2023 net sales were $3.721 billion versus $3.628 billion in 2022; net income from continuing operations was $253 million versus $336 million.

• FY2023 Adjusted EBITDA was $607 million versus $721 million in 2022; Adjusted Operating EPS was $6.51 versus $7.84.

• 4Q23 net sales were $964 million, up 7.5% QoQ and versus $927 million in 4Q22; net income from continuing operations was $49 million versus $88 million in 4Q22.

• 4Q23 Adjusted EBITDA was $117 million versus $158 million in 4Q22; Adjusted Operating EPS was $1.16 versus $1.97 in 4Q22 and $1.70 in 3Q23.

• FY2023 cash from continuing operations was $504 million and Free Cash Flow was $294 million versus $269 million in 2022; 4Q23 Free Cash Flow was $104 million versus $155 million in 3Q23.

Outlook and guidance

• 1Q24 Adjusted EBITDA guidance is $105 million-$125 million; sequential price and mix are expected to decrease $5 million-$10 million and volume $10 million-$15 million.

• 1Q24 operations and other costs are expected to improve $20 million-$25 million; input and transportation costs are projected to increase $5 million-$10 million, while maintenance outage expenses are expected to decrease $3 million.

• 2024 capital spending outlook is $210 million-$220 million, including $125 million-$130 million for maintenance and regulatory, $35 million for Brazil reforestation, and $30 million-$35 million for high-return projects.

• 2024 maintenance outage costs are projected at $71 million; depreciation and amortization at $161 million, net interest expense at $37 million, and income tax rate excluding special items at 30%-31%.

• Project Horizon targets at least $110 million in annual run-rate savings before inflation by end-2024; Nymölla synergies target a $20 million annual run rate by end-2024.