Sylvamo Corp

Full-year 2023 net income from continuing operations was $253 million ($5.93 per diluted share) compared with $336 million ($7.57 per diluted share) for 2022. Net sales increased to $3.7 billion in the current year compared with $3.6 billion in 2022. Cash from continuing operations was $504 million in the current year compared to $418 million in the prior year. Adjusted EBITDA was $607 million in 2023, which represents a decrease of $114 million from the prior year adjusted EBITDA of $721 million. Additionally, our 2023 adjusted EBITDA margin was 16.3% compared to 19.9% in the prior year and free cash flow was $294 million compared to $269 million last year.

Comparing our performance in 2023 to 2022, price and mix were flat while lower volume coupled with higher operations and costs more than offset favorable input costs. Demand for uncoated freesheet was weaker than expected in the current year which resulted lower volume in all three regions and significantly higher unabsorbed fixed costs due to economic manufacturing downtime in Europe and North America. In a tough market, we created value for shareholders by managing what we could control. We repaid $76 million in debt, generated $294 million in free cash flow and returned $127 million in cash to shareholders. Additionally, we completed the acquisition of our uncoated freesheet mill in Nymölla, Sweden in January of 2023. This strategic bolt-on acquisition has the capacity to produce approximately 500,000 short tons of uncoated freesheet, produces 85% of its energy needs from carbon-neutral, renewable biomass residuals and includes iconic brands like Multicopy.

Looking ahead to 2024, we remain committed to generating strong adjusted EBITDA and free cash flow and we are confident in our ability to continue to create value for our customers and shareholders. Returning cash to shareholders remains a key component of our capital allocation strategy and we expect to return at least 40% of free cash flow to shareholders in 2024.

Acquisition of Nymölla

On January 2, 2023, the Company completed the previously announced acquisition of Stora Enso’s uncoated freesheet paper mill in Nymölla, Sweden. Sylvamo accounted for the acquisition under ASC 805, “Business Combinations” and the Nymölla mill’s results of operations are included in Sylvamo’s consolidated financial statements from the date of acquisition. See Note 7 Acquisitions to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Divestiture of Russian Operations

During the second quarter of 2022, management committed to a plan to sell the Company’s Russian operations (which were sold on October 2, 2022). As a result, all historical operating results of the Company’s Russian operations have been classified as “Discontinued operations, net of taxes” in the consolidated and combined statements of operations and the notes to the consolidated financial statements. In October 2022, the Company completed the sale of its Russian operations to Pulp Invest Limited Liability Company, a company incorporated in the Russian Federation. See Note 8 Divestiture and Impairment of Business to our financial statements included elsewhere in this Annual Report on Form 10-K for further details.