Sylvamo Corp

NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments that are necessary for the fair presentation of Sylvamo Corporation’s ("Sylvamo's", "the Company’s" or "our") financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first nine months of the year may not necessarily be indicative of full year results due to factors such as the Company’s planned maintenance outage schedule at its mills. All intercompany transactions have been eliminated. You should read these condensed consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the "Annual Report" or “2025 Form 10-K”), which have previously been filed with the Securities and Exchange Commission. These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States that require the use of management’s estimates. Actual results could differ from management’s estimates.

Divestiture of Europe Business Segment

During the third quarter of 2026, management committed to a plan to sell the Company’s Europe business segment. As a result, all current and historical operating results of the Europe business segment are presented as “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and the notes to the condensed consolidated financial statements. All historical assets and liabilities of the Europe business segment are classified as current and long-term assets and liabilities held for sale in the accompanying condensed consolidated balance sheet. We recorded a pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. See Note 7 Divestiture and Impairment of Business for further details.

Our operations in Europe include two integrated paper mills in the region, one in Saillat, France and one in Nymölla, Sweden. Operations related to these mills represented approximately 23% of our net sales for the nine months ended September 30, 2026 and 17% of our long-lived assets as of September 30, 2026.

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are described in Note 2 Significant Accounting Policies to the audited consolidated financial statements included in our 2025 Form 10-K and updated in our June 30, 2026 10-Q. There have been no material changes to the significant accounting policies for the nine months ended September 30, 2026, with the exception of the below policy that was added.

A discontinued operation may include a component or a group of components of the Company's operations. A disposal of a component or a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the component or group of components is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spin-off). For any component classified as held for sale or disposed of by sale or other than by sale, qualifying for presentation as a discontinued operation, the Company reports the results of operations of the discontinued operations (including any gain or loss recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation), less applicable income taxes (benefit), as a separate component in the consolidated statements of operations for current and all prior periods presented. The Company also reports assets and liabilities associated with discontinued operations as separate line items on the consolidated balance sheets for prior periods. See Note 7 Divestiture and Impairment of Business for further details.

Recently Issued Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This guidance requires disaggregated disclosure of certain income statement captions for public business entities into specified categories within the footnotes to the financial statements. Additional disclosures are required in tabular format for each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil-and gas-producing activities or other types of depletion expenses. This update does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the provisions of this guidance.

NOTE 3 REVENUE RECOGNITION

External Net Sales by Product

External net sales by major products were as follows by business segment:

Revenue Contract Balances

A contract asset is created when the Company recognizes revenue on its customized products for which we have an enforceable right to payment.

A contract liability is created when customers prepay for goods prior to the Company transferring those goods to the customer. The contract liability is reduced when control of the goods is transferred to the customer, satisfying our performance obligation. Contract liabilities of $2 million and $2 million are included in “Other current liabilities” as of September 30, 2026 and December 31, 2025, respectively.

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the difference between the price and quantity at comparable points in time for goods for which we have an unconditional right to payment or receive pre-payment from the customer, respectively.

NOTE 4 EQUITY

A summary of changes in equity for the three and nine months ended September 30, 2026 and 2025 is provided below:

NOTE 5 OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in Accumulated Other Comprehensive Income (Loss) (“AOCI”), net of taxes, reported in the condensed consolidated financial statements:

NOTE 6 EARNINGS PER SHARE

Basic earnings per share from continuing operations is computed by dividing net income from continuing operations by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share from continuing operations is computed by dividing net income from continuing operations by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potentially dilutive shares of common stock been issued. The dilutive effect of restricted stock units is reflected in diluted earnings per share by applying the treasury stock method. Basic and dilutive earnings per share from discontinued operations are computed under the same approach utilizing the same weighted-average number of shares of common stock outstanding during the period and dilutive shares.

There are no adjustments required to be made to net income from continuing operations for purposes of computing basic and diluted earnings from continuing operations per share.

Basic and diluted earnings from continuing operations per share are calculated as follows:

(a) Common stock related to service-based restricted stock units and performance-based restricted stock units were outstanding but excluded from the computation of diluted earnings (loss) per share because their effect would be anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

NOTE 7 DIVESTITURE AND IMPAIRMENT OF BUSINESS

Europe Business Segment

During the third quarter of 2026, management committed to a plan to sell the Company’s Europe business segment. The divestiture of the business under this plan is expected to occur by the end of the first quarter of 2027. As a result, all current and historical operating results of the Europe business segment are presented as “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and the notes to the condensed consolidated financial statements. All historical assets and liabilities of the Europe business segment are classified as current and long-term assets and liabilities held for sale in the accompanying condensed consolidated balance sheet.

The following summarizes the major classes of line items comprising Income (Loss) Before Income Taxes reconciled to “Discontinued Operations, net of taxes”, related to the Europe business segment for all periods presented in the condensed consolidated of operations.

The following summarizes the major classes of assets and liabilities of the Europe business segment operations reconciled to the accompanying condensed consolidated balance sheets, with all amounts as of September 30, 2026 being presented as current assets or liabilities held for sale.

The following summarizes the total cash used for operating activities from discontinued operations, net and total cash used for investing activities from discontinued operations, net and included in the consolidated statement of cash flows:

(a) Includes cash invested in capital projects of $12 million and $26 million for the nine months ended September 30, 2026 and 2025, respectively.

During the third quarter of 2026, as a result of management’s commitment to a plan to sell the Company’s Europe business segment, a determination was made that the carrying value of the Europe business segment exceeded its estimated fair value. The fair value of the Europe business segment was estimated based on a probability-weighted average approach of potential cash flows from various alternatives with respect to the business. This estimated fair value was calculated using information available as of the impairment evaluation date of September 30, 2026 and could change materially in future periods. As a result, in the third quarter of 2026, we recorded a pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. These amounts are included in “Impairment of business” within the summarized income statement for our Europe business segment included in this footnote and is included in “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and are reflected in the valuation allowance to adjust net assets to estimated fair value, less costs to dispose in current liabilities held for sale.

On November 6, 2026, the Company announced that it is entering into a put option agreement (“Option Agreement”) with Midas Atlantic Partners, in partnership with The Najafi Companies, for a binding offer to acquire the Company’s Europe business (the “Offer”). The Offer is for the business to be transferred to Midas Atlantic Partners with an agreed level of working capital and cash in exchange for the right to receive 20% of future distributions of the business. The Offer binds the buyer, but not the Company.

NOTE 8 SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

Temporary Investments

Temporary investments with an original maturity of three months or less and money market funds with greater than three-month maturities but with the right to redeem without notice are treated as cash equivalents and are stated at cost. Temporary investments totaled $79 million and $62 million at September 30, 2026 and December 31, 2025, respectively.

Accounts and Notes Receivable, Net

Accounts and notes receivable, net, by classification were:

The allowance for expected credit losses was $17 million and $14 million at September 30, 2026 and December 31, 2025, respectively. Based on the Company’s accounting estimates and the facts and circumstances available as of the reporting date, we believe our allowance for expected credit losses is adequate.

Inventories

Plants, Properties and Equipment, Net

Accumulated depreciation was $3.2 billion and $3.1 billion at September 30, 2026 and December 31, 2025, respectively. Depreciation expense was $27 million and $28 million for the three months and $79 million and $79 million for the nine months ended September 30, 2026 and 2025, respectively.

Additions to plants, property and equipment included within “Accounts payable” were $12 million and $15 million at September 30, 2026 and December 31, 2025, respectively.

Forestlands

Depletion expense, recorded within “Depreciation, amortization and cost of timber harvested”, was $9 million and $11 million for the three months and $25 million and $29 million for the nine months ended September 30, 2026 and 2025, respectively.

Accounts Payable

The Company maintains supplier finance agreements with third-party financial institutions. These agreements allow the Company’s participating suppliers to sell their receivables to such third-party financial institutions to receive payment earlier than the negotiated commercial terms between the supplier and the Company. Such sales are at the sole discretion of the supplier, and on terms and conditions that are negotiated between the supplier and the respective financial institution. The terms and conditions of the supplier invoice, including payment terms and amounts due, are not impacted by a supplier’s participation in the program. Pursuant to the supplier finance agreements, the Company has agreed to pay financial institutions on the original due date of the applicable invoice. There are no guarantees associated with these programs. The Company's outstanding obligations to financial institutions related to supplier financing programs were $11 million and $3 million as of September 30, 2026 and December 31, 2025, respectively.

Interest payments of $41 million and $37 million were made during the nine months ended September 30, 2026 and 2025, respectively.

Amounts related to interest were as follows:

(a) Interest expense for the nine months ended September 30, 2026 includes $2 million of debt extinguishment cost related to the repayment of Term Loan F.

Asset Retirement Obligations

As of September 30, 2026 and December 31, 2025, we have recorded liabilities of $29 million and $28 million, respectively, related to asset retirement obligations. These amounts are included in “Other liabilities.” For asset retirement obligations which are conditional upon future events, we cannot reasonably estimate the current fair value of those potential obligations due to the uncertainty as to the timing or amounts that may be incurred.

NOTE 9 LEASES

The Company leases various real estate, including certain operating facilities, warehouses, office space and land. The Company also leases material handling equipment, vehicles and certain other equipment. The Company’s leases have remaining lease terms of up to 15 years. Total lease cost was $13 million and $13 million for the three months and $40 million and $39 million for the nine months ended September 30, 2026 and 2025, respectively.

Supplemental Balance Sheet Information Related to Leases

(a)Finance leases are recorded net of accumulated amortization of $14 million and $13 million as of September 30, 2026 and December 31, 2025, respectively.

NOTE 10 GOODWILL

The following table presents changes in the goodwill balance as allocated to each business segment for the nine months ended September 30, 2026:

NOTE 11 INCOME TAXES

An income tax (benefit) provision of $(14) million and $2 million was recorded for the three and nine months ended September 30, 2026, respectively, and the reported effective income tax rate was (20)% and 2%, respectively. The effective income tax rate for these periods was primarily driven by a tax benefit related to our investment in our European subsidiaries of $36 million which was partially offset by a $15 million valuation allowance on certain foreign deferred tax assets due to an internal merger. An income tax provision of $34 million and $48 million was recorded for the three and nine months ended September 30, 2025, respectively, and the reported effective income tax rate was 32% and 23%, respectively.

The Brazilian Federal Revenue Service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by International Paper do Brasil Ltda., now named Sylvamo do Brasil Ltda. (“Sylvamo Brasil”), a wholly-owned subsidiary of the Company (the “Brazil Tax Dispute”). Sylvamo Brasil received assessments for the tax years 2007-2015 totaling approximately $113 million in tax, and $327 million in interest, penalties and fees as of September 30, 2026 (adjusted for variation in currency exchange rates). International Paper challenged and is managing the litigation of this matter pursuant to the Tax Matters Agreement between us and International Paper. After a previous favorable ruling challenging the basis for these assessments, Sylvamo Brasil received other subsequent unfavorable decisions from the Brazilian Administrative Council of Tax Appeals. These decisions are being appealed. The appeal involves several separate cases. In October 2024, at the first level of appeal in the Brazilian federal court system, the court ruled in favor of Sylvamo Brasil in cases covering approximately two thirds of the disputed amounts. The Brazilian tax authorities have appealed the favorable ruling. One third of the disputed amounts was under challenge at the Brazilian administrative court level and was not part of the ruling. In November 2025, the administrative court upheld the assessments for the remaining one third of the disputed amounts. In January 2026, Sylvamo Brasil’s challenge of the administrative ruling was filed in the Brazilian federal court system. This tax litigation matter may take many years to resolve. The Company believes that the transaction underlying these assessments was appropriately evaluated, and that the Company’s tax position would be sustained, based on Brazilian tax law.

Pursuant to the terms of the Tax Matters Agreement, International Paper will pay 60%, and Sylvamo will pay 40% on up to $300 million of any assessment related to this matter, and International Paper will pay all amounts of the assessment over $300 million. Also in connection with this agreement, all decisions concerning the conduct of the litigation related to this matter, including settlement strategy, pursuit and abandonment, will continue to be made by International Paper, which is vigorously defending Sylvamo Brasil’s historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015.

NOTE 12 COMMITMENTS AND CONTINGENT LIABILITIES

Environmental and Legal Proceedings

The Company is subject to environmental and legal proceedings in the countries in which we operate. Accruals for contingent liabilities, such as environmental remediation costs, are recorded in the consolidated financial statements when it is probable that a liability has been incurred or an asset impaired and the amount of the loss can be reasonably estimated. The Company has estimated some probable liability associated with environmental remediation matters that isimmaterial in the aggregate as of September 30, 2026.

Legacy Basins Environmental Matter (Brazil)

At the Company’s Mogi Guaçu mill, there are legacy basin areas that were formerly lagoons used for treatment of mill wastewater from pulp and paper manufacturing. In coordination with and in response to a request by the Environmental Company of the State of São Paulo (“CETESB”), which is the state environmental regulatory authority, there was continuous regulatory monitoring and sampling of the former basins, which began prior to their closure in 2006, both to assess for contamination and evaluate whether additional remediation is needed beyond the basins’ ongoing natural vegetation growth. This monitoring and sampling detected metal contamination, with the main constituent of potential environmental impact being mercury. The Company presented CETESB with proposals for studies and other actions to further assess the scope and type of contamination and the possible need for an additional remediation approach.

In October 2022, CETESB requested that the Company expand its efforts to include providing CETESB with a proposed pilot intervention (remediation) plan for a portion of the former basins. The purpose of the pilot intervention plan was to facilitate determination of the appropriate actions to take for the basins generally, guided by the results of the pilot intervention plan in the subset portion of the basins. The Company submitted a proposed pilot intervention plan to CETESB in late 2023, and CETESB approved its pre-intervention stages and certain additional measures that the Company later submitted. The requirement to conduct the pilot intervention plan was thereafter suspended, as agreed by CETESB, and the Company continued to conduct environmental testing and analysis and engage with CETESB in review of the results and establishing next steps.

On June 15, 2026, an agreement between the Company and CETESB was approved by the State Court of São Paulo, concluding a proceeding initiated by the Company to clarify or close various requirements imposed on the Company by CETESB with respect to the basins’ site (the “CETESB Agreement”). The CETESB agreement is a favorable result for the Company, because it establishes that the type of remediation needed at the site will depend upon the site’s future use to be proposed by the Company. Pursuant to the CETESB Agreement, by March 2027 (subject to extension), the Company must provide CETESB with a plan for potential future use of the site and proposed monitoring, management and, potentially, remediation, appropriate to such use.

As of September 30, 2026, the Company has recorded animmaterial liability, mainly for fees that it expects to incur for third-party assistance with preparing the Company’s plan contemplated by the CETESB Agreement. The Company is unable to estimate its ultimate potential liability, which may be material and will depend primarily upon the Company’s proposed use for the site in such plan, the monitoring and remediation determined to be appropriate to such use, the timeframe for implementing the plan, and CETESB’s approval of the plan, including any requirements that CETESB may impose as a condition to its approval. CETESB’s approval will depend upon CETESB’s assessment of the plan, including supporting third-party consultant information to be developed and included in the plan.

Suzano Pulp Supply VAT Matter (Brazil)

Suzano S.A. (“Suzano”) and the Company are in arbitration over a dispute related to Suzano’s decision to invoice Brazilian VAT, starting January 2026, on pulp sold to the Company under a supply agreement entered into in 2006 (“Supply Agreement”), pursuant to which Suzano supplies pulp to the Company’s Três Lagoas, Brazil mill. VAT was not invoiced on sales under the agreement prior to 2026, and the parties disagree on whether invoicing VAT is allowed under the Supply Agreement.

On October 14, 2026, the tribunal overseeing the arbitration granted the Company interim relief preventing Suzano from invoicing VAT under the Supply Agreement until it issues a further decision on such relief, overriding a previous court decision that would have allowed Suzano to invoice VAT while the arbitration is ongoing. If Suzano were to prevail in the arbitration, the VAT potentially invoiced could total $15 to $20 million annually, although Suzano’s ability to invoice VAT would expire in 2032 due to a change in Brazil’s VAT law.

The dispute process and related arbitration in Brazil is in early stages, and the Company intends to vigorously defend its position that the VAT should not be invoiced. As of September 30, 2026, the Company has not recorded any liability for this matter.

Taxes Other Than Payroll Taxes

See Note 11 Income Taxes for a discussion of a goodwill amortization tax matter in Brazil.

During the first quarter of 2024, the State of Sao Paulo issued a tax assessment to Sylvamo Brasil for approximately $63 million (adjusted for variation in currency exchange rates) regarding unpaid VAT arising from intercompany transactions. This assessment includes $20 million in tax and $43 million in interest and penalties. The Company is challenging this assessment. As of September 30, 2026, no reserve has been recorded by the Company because the risk of loss is not probable.

Since 2012, the Company has been involved in a dispute with Brazilian tax authorities concerning VAT credits taken in 2009 and 2010 related to imported materials used in the Company’s operations. The potential liability of $27 million includes $6 million of tax and $21 million of interest, legal fees and penalties (adjusted for variation in currency exchange rates). Also, since 2016, the Company has been involved in a similar, separate dispute concerning VAT credits taken in 2011 through 2013. The potential liability for this matter is $19 million which includes $4 million of tax and $15 million of interest, legal fees and penalties (adjusted for variation in currency exchange rates). Although initially not material, the potential liability for these disputes has become material over time due to variations in currency exchange rates and the accumulation of interest. The Company is vigorously defending both cases in Brazilian courts. If the Company fails to prevail in either case, it could set a precedent for the other case. As of September 30, 2026, no reserve has been recorded by the Company because the risk of loss in both cases is not probable.

We have other open tax matters awaiting resolution in Brazil, which are at various stages of review in various administrative and judicial proceedings. We routinely assess these tax matters for materiality and probability of loss or gain, and appropriate amounts have been recorded in our financial statements for any open items where the risk of loss is deemed probable. We currently do not consider any of these other tax matters to be material individually. However, it is reasonably possible that settlement of any of these matters concurrently could result in a material loss or that over time a matter could become material, for example, if interest were accruing on the amount at issue for a significant period of time. Also, future exchange rate fluctuations could be unfavorable to the U.S. dollar and significant enough to cause an open matter to become material. The expected timing for resolution of these open matters ranges fromone year toten years.

General

The Company is involved in various other inquiries, administrative proceedings and litigation relating to environmental and safety matters, taxes (including VAT), personal injury, product liability, labor and employment, contracts, sales of property and other matters, some of which allege substantial monetary damages. Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the Company will not ultimately incur charges in excess of presently recorded liabilities. The Company believes that loss contingencies arising from pending matters, including the matters described herein, will not have a material effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending or threatened legal matters, some of which are beyond the Company's control, and the large or indeterminate damages sought in some of these matters, a future adverse ruling, settlement, unfavorable development, or increase in accruals with respect to these matters, could result in future charges that could be material to the Company's results of operations or cash flows in any particular reporting period.

NOTE 13 LONG-TERM DEBT

Long-term debt is summarized in the following table:

(a) As of September 30, 2026 and December 31, 2025, amounts are presented net of an aggregate total of $3 million and $4 million, respectively, in unamortized debt issuance costs across the term loans.

Revolving Credit Facility

In addition to the debt noted above, the Company has the ability to access a cash flow-based revolving credit facility (“Revolving Credit Facility”) with a total borrowing capacity of $400 million, which matures in 2029. As of September 30, 2026 and December 31, 2025, the Company had $100 million and $67 million of outstanding borrowings on the Revolving Credit Facility, respectively, and an available borrowing capacity of $300 million and $333 million, respectively. Any outstanding balance on the Revolving Credit Facility is recorded within “Notes payable and current maturities of long-term debt” in the condensed consolidated balance sheet.

Securitization Program

Sylvamo North America LLC, a wholly owned subsidiary of the Company, maintains a $110 million accounts receivable finance facility (the “Securitization Program”), maturing in 2029. The Company sells substantially all of its North American accounts receivable balances to Sylvamo Receivables, LLC, a special purpose entity, which pledges the receivables as collateral for the Securitization Program. The borrowing availability under this facility is limited by the balance of eligible receivables within the program. The average interest rate for the quarter ended September 30, 2026 was 4.54%, and the average interest rate for the year ended December 31, 2025 was 5.28%.

Term Loans

In May 2026, as a result of debt refinancing, the Company entered into a new senior secured term loan facility which provided an aggregate principal amount of $357 million (“Term Loan F-3”) maturing in 2032. A portion of the proceeds from Term Loan F-3 were used to fully repay the outstanding principal balance of Term Loan F of $257 million, effectively extending the maturity date of the loan. The remaining proceeds were used to repay $100 million of the amount outstanding under the

Revolving Credit Facility. The refinancing resulted in debt extinguishment costs of $2 million recorded within "Interest expense, net”.

Interest Rates

The interest rates applicable to the Term Loan F-3, Term Loan F-2, Term Loan A and Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to SOFR plus a fixed percentage of 2.18%,2.28%,1.85% and 1.85%, respectively, payable monthly, with a SOFR floor of 0.00%. The obligations under the Term Loan F-3, Term Loan F-2, Term Loan A, and Revolving Credit Facility are secured by substantially all the tangible and intangible assets of Sylvamo and its subsidiaries, subject to certain exceptions, and are guaranteed by Sylvamo and certain subsidiaries.

Patronage Credits

We are receiving interest patronage credits under the Term Loan F-3, Term Loan F-2, and Term Loan F. Patronage distributions, which are made primarily in cash but also in equity in the lenders, are generally received in the first quarter of the year following that in which they were earned. Expected patronage credits are accrued in accounts and notes receivable as a reduction to interest expense in the period earned. After giving effect to expected patronage distributions of 90 basis points, of which 75 basis points is expected as a cash rebate, the effective net interest rate on the Term Loan F-3 was approximately 5.18% as of September 30, 2026, the effective net interest rate on the Term Loan F-2 was approximately 5.28% and 5.07% as of September 30, 2026 and December 31, 2025, respectively, and the effective net interest rate on the Term Loan F was 4.67% as of December 31, 2025.

Interest Rate Swaps

In connection with some of the Company’s loans, we are a party to interest rate swaps with various counterparties. These interest rate swaps are designated as cash flow hedges utilized to manage interest rate risk by allowing the Company to exchange the difference in the variable rates on the term loans determined in reference to SOFR and the related fixed interest rate per notional amount. Fair value assets and liabilities related to interest rate swaps are recorded within “Deferred charges and other assets” and “Other liabilities,” respectively.

(a) The total notional amounts of Term Loan F-2 and Term Loan A amortize quarterly until maturity.

Other Financing Arrangements

During the first quarter of 2026, the Company entered into a sale‑leaseback arrangement for certain land and warehouse assets which was accounted for as a financing transaction. Accordingly, the proceeds received of $11 million were recorded as a financing obligation, and the assets will continue to be recognized within “Plants, properties, and equipment, net”. No gain or loss was recognized in connection with the transaction.

As part of the arrangement, the counterparty is currently expanding the existing warehouse and will lease the expanded premises to the Company. Capital expenditures incurred by the counterparty to fund the expansion will be recognized within “Plants, properties and equipment, net” with an offsetting increase to the financing obligation. Non-cash additions to property, plant and equipment and the non-cash increase in long-term debt related to this arrangement were $21 million for the nine months ended September 30, 2026.

Debt Covenants

The Company is subject to certain covenants limiting, among other things, the ability of most of its subsidiaries to: (a) incur additional indebtedness or issue certain preferred shares; (b) pay dividends on or make distributions in respect of the Company’s or its subsidiaries’ capital stock or make investments or other restricted payments; (c) create restrictions on the ability of the Company’s restricted subsidiaries to pay dividends to the Company or make certain other intercompany transfers; (d) sell certain assets; (e) create liens; (f) consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets; and (g) enter into certain transactions with its affiliates. The Company is currently subject to a maximum consolidated total leverage ratio of 3.75 to 1.00.

Our ability to make restricted payments under the credit agreement is governed by the provisions of our debt agreements in effect as if the Brazil Tax Dispute is settled, provided we maintain $275 million of available liquidity at the time we make restricted payments.

As of September 30, 2026, we were in compliance with our debt covenants.

NOTE 14 PENSION AND POSTRETIREMENT BENEFIT PLANS

Defined Benefit Plans

The Company sponsors and maintains pension plans for the benefit of certain of the Company’s employees. The service and non-service cost components of net periodic pension expense for these employees is recorded within “Cost of products sold” and “Selling and administrative expenses”. The assets and liabilities related to plans sponsored by the Company are reflected in “Deferred charges and other assets” and “Other liabilities”, respectively.

Net periodic pension expense (benefit) for all pension plans sponsored by the Company for the nine months ended September 30, 2026 and September 30, 2025 wasimmaterial.

The Company’s funding policy for the pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that the Company may determine to be appropriate considering the funded status of the plans, tax deductibility, cash flow generated by the Company, and other factors. The Company continually reassesses the amount and timing of any discretionary contributions. Generally, the non-U.S. pension plans are funded using the projected benefit as a target, except in certain countries where funding of benefit plans is not required.

NOTE 15 INCENTIVE PLANS

The Company has adopted the Sylvamo 2021 Incentive Compensation Plan, which includes shares under its long-term incentive plan (“LTIP”) that grants certain employees, consultants, or non-employee directors of the Company different forms of awards, including time-based and performance-based restricted stock units. As of September 30, 2026,1,882,416 shares remain available for future grants.

Total stock-based compensation cost recognized by the Company was as follows:

As of September 30, 2026, $17 million of compensation cost, net of estimated forfeitures, related to all stock-based compensation arrangements for Company employees had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.5 years.

NOTE 16 FINANCIAL INFORMATION BY BUSINESS SEGMENT

The Company’stwo business segments, Latin America and North America, are organized by geography. These segments are consistent with the internal structure used to manage these businesses. Each of our segments derive their revenue from the manufacture and sale of paper and pulp products. As discussed in Note 7 Divestiture and Impairment of Business, the Company’s Europe business segment has been classified as discontinued operations and as a result is no longer reported as a business segment of the Company for any periods presented. Prior period results for our Latin America and North America business segments have been recast to reflect the reallocation of certain corporate costs which were previously allocated to our Europe business segment.

Business segment operating profits are used by the Company’s management to measure the earnings performance of its businesses. Management believes that business segment operating profit provides investors and analysts useful insights into our operating performance. Business Segment Operating Profit (Loss) (non-GAAP) is net income (loss) from continuing operations (GAAP) plus the sum of income taxes, net interest expense, the impact of foreign exchange on anintercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items.

The Company’s chief operating decision maker is the President and Chief Executive Officer. The chief operating decision maker uses business segment operating profit to allocate resources (primarily capital spending) for each segment predominantly during the annual strategic planning, budgeting and forecasting processes. The chief operating decision maker also considers actual performance variances in business segment operating profits on a monthly basis to assess the performance of the segments.

Sales by business segment are determined using a management approach and include inter-segment sales to our business segments in continuing operations and discontinued operations (which are eliminated in consolidation). Inter-segment sales to our discontinued operations were $4 million and $7 million for the three months and $17 million and $23 million for the nine months ended September 30, 2026 and 2025, respectively.

Information By Business Segment

Net Sales and Business Segment Operating Profit

Three Months Ended September 30, 2026:

(b) Unallocated gain related to the foreign exchange on an intercompany note receivable from our Brazilian subsidiary, which is recorded within “Cost of products sold”.

Nine Months Ended September 30, 2026:

(b) Unallocated gain related to the foreign exchange on an intercompany note receivable from our Brazilian subsidiary, which is recorded within “Cost of products sold”.

Three Months Ended September 30, 2025:

Nine Months Ended September 30, 2025:

Effects of Net Special Items Expense (Income)

Assets

(a) Includes corporate assets and assets of businesses held for sale.

Capital Spending