Sylvamo Corp

Reconciliation of Net Income from Continuing Operations to Business Segment Operating Profit

Management provides business segment operating profit, a non-GAAP financial measure, to supplement our GAAP financial information, and it should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Management believes that business segment operating profit provides investors and analysts useful insights into our operating performance. Business segment operating profit is reconciled to net income from continuing operations, the most directly comparable GAAP measure.

(a)Business Segment Operating Profit (non-GAAP) is net income from continuing operations (GAAP) plus the sum of income taxes, net interest expense, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items.

(b) See Note 16 Financial Information by Business Segment for effects of net special items expense (income).

Overview

The following tables present sales, excluding inter-segment eliminations, and operating profit (loss), which is the Company’s measure of business segment profitability, for each of the Company’s segments. See Note 16 Financial Information by Business Segment for more information on the Company’s segments.

Latin America

Our Latin America business segment sales increased $30 million compared to the same period in 2025, primarily due to higher volumes ($19 million), higher sales price and mix ($3 million) and favorable foreign exchange ($8 million).

Operating profit for Latin America was $11 million lower than the same period in 2025, primarily due to higher operating ($8 million) and input costs ($10 million), primarily for purchased fiber and distribution costs, which were partially offset by higher sales price and mix ($3 million) and higher volumes ($4 million).

Our Latin America business segment sales increased $30 million compared to the same period in 2025, primarily due to higher volumes ($6 million) and favorable foreign exchange ($29 million) which were partially offset by lower sales price and mix ($5 million).

Operating profit for Latin America was $51 million lower than the same period in 2025, primarily due to higher operating ($24 million) and input costs ($19 million), primarily for purchased fiber and distribution costs, lower sales price and mix ($5 million) and higher planned maintenance outages ($3 million).

North America

Our North America business segment sales decreased $36 million compared to the same period in 2025, primarily due to lower volumes ($57 million), primarily driven by the termination of the Riverdale supply agreement, which were partially offset by higher sales price and mix ($21 million).

Operating profit for North America was $15 million lower than the same period in 2025, primarily due to lower volumes ($20 million), higher operating costs ($3 million) and higher input costs ($13 million), primarily for distribution costs which were partially offset by higher sales price and mix ($21 million).

Our North America business segment sales decreased $92 million compared to the same period in 2025, primarily due to lower volumes ($114 million), primarily driven by the termination of the Riverdale supply agreement, partially offset by higher sales price and mix ($22 million).

Operating profit for North America was $46 million lower than the same period in 2025, primarily due to higher input costs ($37 million), primarily due to higher energy, chemicals and distribution costs, and lower volumes ($38 million) which were partially offset by higher sales price and mix ($22 million), lower operating costs ($3 million), lower unabsorbed costs due to economic downtime ($3 million) and lower planned maintenance outages ($1 million).

OTHER NON-GAAP MEASURES

Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA

Management provides adjusted EBITDA and adjusted EBITDA margin, non-GAAP financial measures, to supplement our GAAP financial information, and they should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Management uses these measures in managing the operating performance of our business and believes that adjusted EBITDA along with adjusted EBITDA margin provide investors and analysts meaningful insights into our operating performance and is a relevant metric for the third-party debt. Adjusted EBITDA is reconciled to net income (loss) from continuing operations, the most directly comparable GAAP measure. Adjusted EBITDA margin (adjusted EBITDA divided by net sales) is reconciled to net income (loss) from continuing operations margin (net income (loss) from continuing operations divided by net sales), the most directly comparable GAAP measure.

(a) Adjusted EBITDA (non-GAAP) is net income (loss) from continuing operations (GAAP) plus the sum of income taxes, net interest expense, depreciation, amortization and cost of timber harvested, stock-based compensation, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items.

(b) See Note 16 Financial Information by Business Segment for effects of net special items expense (income).

Reconciliation of Cash Provided by Operating Activities from Continuing Operations to Free Cash Flow

Management provides free cash flow, a non-GAAP financial measure, to supplement our GAAP financial information, and it should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Management believes that free cash flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet and service debt, and return cash to shareowners. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. By adjusting for certain items that are not indicative of the Company’s ongoing performance, free cash flow also enables investors to perform meaningful comparisons between past and present periods. Free cash flow is reconciled to cash provided by operating activities from continuing operations, the most directly comparable GAAP measure.

The non-GAAP financial measures presented in this Form 10-Q (business segment operating profit, adjusted EBITDA, adjusted EBITDA margin and free cash flow) have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies utilize identical calculations, the Company’s presentation of non-GAAP measures in this Form 10-Q may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as the Company.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our ability to fund the Company’s cash needs depends on our ongoing ability to generate cash from operations and obtain financing on acceptable terms. Based upon our history of generating strong operating cash flow, we believe we will be able to meet our short-term liquidity needs. We believe we will meet known or reasonably likely future cash requirements through the combination of cash flows from operating activities, available cash balances and available borrowings through the issuance of third-party debt, as needed.

A major factor in our liquidity and capital resource planning is our generation of operating cash flow, which is highly sensitive to changes in the pricing and demand for our products. While changes in key operating cash costs, such as raw materials, energy, mill outages and distribution expenses do have an effect on operating cash generation, we believe that our focus on commercial and operational excellence, as well as our ability to manage costs and working capital, will provide sufficient cash flow generation to meet our operational and capital spending needs.

The terms of the agreements governing our debt contain customary limitations as well as other provisions. These provisions may also restrict our business and, in the event we cannot meet the terms of those provisions, may adversely impact our financial condition, results of operations or cash flows.

Operating Activities

Cash provided by operating activities from continuing operations totaled $141 million for the nine months ended September 30, 2026, compared with cash provided by operating activities from continuing operations of $240 million for the nine months ended September 30, 2025. The decrease in cash provided by operating activities from continuing operations in 2026 relates primarily to lower net income and timing of cash flows related to working capital.

Cash used for working capital components (accounts and notes receivable, inventories, accounts payable and accrued liabilities, and other) was $50 million for the nine months ended September 30, 2026, compared with cash used for working capital components of $40 million for the nine months ended September 30, 2025. The nine months ended September 30, 2026 working capital components primarily reflect $54 million of cash provided by our accounts and notes receivable, offset by $92 million, $1 million and $11 million of cash used for our inventories, accounts payable and accrued liabilities and other operating activities, respectively. The nine months ended September 30, 2025 working capital components primarily reflect $76 million of cash provided by our accounts and notes receivable, offset by $19 million, $51 million and $46 million of cash used for our inventories, accounts payable and accrued liabilities, and other operating activities, respectively.

Investment Activities

The total cash used for investing activities from continuing operations for the nine months ended September 30, 2026 increased from the nine months ended September 30, 2025, due to increased capital spending in the current year.

The following table shows capital spending by business segment:

Capital spending primarily consists of purchases of machinery and equipment related to our global mill operations and reforestation and timber purchase costs in Latin America.

Financing Activities

Cash provided by financing activities from continuing operations for the nine months ended September 30, 2026 primarily reflects the payments of $37 million, $9 million, $8 million, $213 million, and $4 million on our outstanding principal debt balances for the AR Securitization, Term Loan F-2, Term Loan A, Revolving Credit Facility, and Term Loan F-3, respectively. These amounts are primarily offset by draws on our AR Securitization and Revolving Credit Facility of $48 million and $246 million, respectively, as well as a receipt of $11 million from other financing arrangements. Additionally, a payment of $257 million was made to settle the Term Loan F, which was funded by the issuance of Term Loan F-3 for $357 million. During the nine months ended September 30, 2026 the Company also paid $54 million in dividends and repurchased no shares pursuant to our share repurchase program. Cash used for financing activities from continuing operations for the nine months ended September 30, 2025 primarily reflects the payments of $29 million, $8 million, $9 million, and $16 million on our outstanding principal debt balances for the AR Securitization, Term Loan A, Term Loan F-2, and Revolving Credit Facility, respectively. These amounts are primarily offset by draws on our AR Securitization and Revolving Credit Facility of $41 million and $23 million, respectively. During the nine months ended September 30, 2025 the Company also paid $55 million in dividends and repurchased $82 million of our shares pursuant to our share repurchase program.

Contractual Obligations

Our 2025 Form 10-K included disclosures of our contractual obligations and commitments as of December 31, 2025. We continue to make the contractually required payments, and, therefore, the 2025 obligations and commitments described in our 2025 Form 10-K have been reduced by the required payments.

Capital Expenditures

For the nine months ended September 30, 2026, we have invested approximately $156 million, or 8.5% of net sales, in total capital expenditures. Over that period, we spent approximately $99 million, or 5.4% of net sales, in maintenance, regulatory and reforestation capital expenditures, and approximately $57 million, or 3.1% of net sales, in high-return capital projects. Our annual maintenance, regulatory and reforestation capital expenditures are expected to be in the range of approximately $140 to $165 million per year (before inflation) for the next several years, which we believe will be sufficient to maintain our operations and productivity. In addition, we expect to spend approximately $105 million on high-return projects in 2026.

PILLAR TWO DIRECTIVE

The Organization for Economic Co-operation and Development (“OECD”) Pillar Two Model Rules established a minimum global effective tax rate of 15% on country-by-country profits of large multinational companies. European Union member states along with many other countries have adopted or expect to adopt the OECD Pillar Two Model effective January 1, 2024, or thereafter. The OECD and other countries continue to publish guidelines and legislation that include transition and safe harbor rules. We continue to monitor new legislative changes and assess the global impact of the Pillar Two Model Rules. Based on our initial assessment, Pillar Two should not have a material impact to the Company’s income tax provision.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires the Company to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require subjective judgments about matters that are inherently uncertain.

Accounting policies whose application may have a significant effect on the reported results of operations and financial position of the Company, and that can require judgments by management that affect their application, include the accounting for impairment or disposal of long-lived assets and goodwill and income taxes.

The Company has included in the 2025 Form 10-K a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and require management’s judgments. The Company has not made any changes in these critical accounting policies during the first nine months of 2026.