MEMPHIS, Tenn. (News release) -- Sylvamo, the world's paper company, is releasing first quarter 2025 earnings.

Financial Highlights - First Quarter vs. Fourth Quarter

• Net income of $27 million ($0.65 per diluted share) vs. $81 million ($1.94 per diluted share)
• Adjusted operating earnings¹ of $28 million ($0.68 per diluted share) vs. $82 million ($1.96 per diluted share)
• Adjusted EBITDA² of $90 million (11% margin) vs. $157 million (16% margin)
• Cash provided by operating activities of $23 million vs. $164 million
• Free cash flow³ of $(25) million vs. $100 million

Commercial and Operational Highlights - First Quarter vs. Fourth Quarter

• Price and mix was unfavorable by $10 million, driven by paper price decreases in Europe and in our Brazilian export regions, as well as seasonally unfavorable mix in Latin America
• Volume decreased by $30 million due to the seasonally weakest demand quarter in Latin America, lower volume from our exit of the supply agreement with International Paper's Georgetown, South Carolina, mill and operational challenges in North America
• Operations and other costs increased by $12 million, driven by unfavorable foreign currency exchange rates and operational challenges in North America
• Planned maintenance outage expenses rose by $9 million
• Input and transportation costs increased by $6 million, primarily driven by seasonally higher energy prices and longer than expected extreme cold weather across the United States in the first quarter

Second Quarter Outlook

• Adjusted EBITDA of $75 million to $95 million
• Compared to the first quarter:
  • Price and mix are expected to improve by $5 million to $10 million due to favorable mix in Latin America and North America
  • Volume is projected to remain stable in the range of $(5) million to $5 million
  • Operations and other costs are expected to improve by $10 million to $15 million primarily due to improving manufacturing operations and seasonally lower operating costs in Europe and North America
  • Input and transportation costs are projected to improve by $5 million to $10 million due to energy
  • Total planned maintenance outage expenses are expected to increase by $36 million
• We expect quarterly earnings to significantly improve in the second half of the year as we benefit from lower planned maintenance outage expenses, improved commercial results and better operations.

Management Summary from Chairman and Chief Executive Officer Jean-Michel Ribiéras

In the first quarter, we completed a heavy planned maintenance outage schedule in Europe and North America. The second quarter will be our heaviest outage quarter of the year, and by mid-year, we will have spent over 80% of the total annual planned maintenance outage costs.

We returned nearly $40 million in cash to shareowners in the first quarter. We distributed $18 million via the first quarter dividend and repurchased $20 million in shares. We will continue evaluating opportunities to repurchase shares at attractive prices with $62 million remaining on our $150 million share repurchase authorization from September 2023. Our board of directors also declared a second quarter dividend of $0.45 per share, which we paid April 29.

We understand one of the main risks in today's environment is a global economic slowdown due to the current tariff situation, which could impact uncoated freesheet demand. Some shifts in uncoated freesheet and pulp trade flows are already starting to materialize. We also anticipate higher risks of inflation on our raw materials, transportation and capital spending. While these present possible challenges, these risks appear manageable because we are primarily sourcing and shipping locally, and have a very strong balance sheet.

Over 90% of our raw materials are sourced locally, with very little coming from China. In Europe and North America, more than 90% of our shipments stay within their respective region. In Latin America, 80% of our shipments remain in the region. Although we export about 20% of our products from Latin America, we are well positioned as our Brazilian mills are some of the world's most competitive and low-cost uncoated freesheet facilities.

We currently have a 1.1x leverage ratio with no major maturities until 2027. Our strong balance sheet, available cash on hand and the availability of our $400 million revolver allow us to run our business, take care of customers and invest in our future.

On April 16, we announced a senior leadership transition plan. After more than three decades of working in the paper and packaging industry, I have decided to retire at the end of the year. Serving as Sylvamo's chairman and CEO has been one of the greatest highlights of my career.

John Sims, who served as Sylvamo's first senior vice president and chief financial officer, will become our next CEO Jan. 1, 2026. John has 31 years of extensive experience leading printing papers and packaging businesses in Europe and North America. He has been instrumental in our work to build the world's paper company and drive our company's strong performance. On May 1, he became our chief operating officer. As COO, Sims will lead commercial and operational functions, while I lead corporate functions for the remainder of the year. I know he will continue to amplify Sylvamo's success well into the future.

Don Devlin became our new senior vice president and CFO May 1. He joins us from International Paper after 27 years with the company. He served in a variety of leadership roles, including finance director for European Papers, chairman and CEO of IP's uncoated freesheet business in India and, most recently, vice president, finance and strategy for Industrial Packaging.

Finally, I want to remind you Sylvamo is a cash flow story and will remain so. We will continue leveraging our strengths to drive high returns on invested capital and generate free cash flow. We use that cash to maintain a strong financial position, reinvest in our business and return cash to shareowners. Our position of financial strength allows us to navigate this uncertain environment without changing our thoughtful, long-term approach to capital allocation. We are confident in our future and motivated by the opportunities that lie ahead.