Sylvamo — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the second quarter of 2026 were $806 million, compared to $794 million in the second quarter of 2025 and $755 million in the first quarter of 2026.
• Net loss for the second quarter was $11 million, compared to a net income of $15 million in the second quarter of 2025 and a net loss of $3 million in the first quarter of 2026.
• Adjusted EBITDA for the second quarter was $60 million, down from $82 million in the second quarter of 2025 and up from $29 million in the first quarter of 2026.
• Cash provided by operating activities was $38 million in the second quarter, compared to $64 million in the second quarter of 2025 and $(10) million in the first quarter of 2026.
• Free cash flow was negative $23 million in the second quarter, compared to negative $2 million in the second quarter of 2025 and negative $59 million in the first quarter of 2026.
• Business segment operating profit was $14 million in the second quarter, compared to $30 million in the second quarter of 2025 and a loss of $15 million in the first quarter of 2026.
• Adjusted operating earnings were $1 million in the second quarter, compared to $15 million in the second quarter of 2025 and a loss of $21 million in the first quarter of 2026.
• Net sales for the six months ended June 30, 2026, were $1,561 million, compared to $1,615 million for the same period in 2025.
• Net loss for the six months ended June 30, 2026, was $14 million, compared to net income of $42 million in the same period in 2025.
• Adjusted EBITDA for the six months ended June 30, 2026, was $89 million, compared to $172 million in the same period in 2025.
• Free cash flow for the six months ended June 30, 2026, was negative $82 million, compared to negative $27 million in the same period in 2025.
• Cash provided by operating activities for the six months ended June 30, 2026, was $28 million, compared to $87 million in the same period in 2025.
• Total debt (notes payable and current maturities plus long-term debt) was $964 million as of June 30, 2026, compared to $853 million as of December 31, 2025.
• Cash and temporary investments were $123 million as of June 30, 2026, compared to $135 million as of December 31, 2025.

Guidance and Future Outlook

• Management expects a much better earnings performance for the last six months of 2026 compared to the first half, driven by price, mix, volume, and operations.
• Sylvamo expects to generate more than $300 million in free cash flow annually and achieve a return on invested capital greater than 15% once capital spending normalizes and investment benefits materialize.
• The company anticipates realizing previously communicated price increases through the third quarter in Europe, Latin America, and North America.
• Management expects to generate most of its free cash flow in the second half of the year.

Business Segments and Product Lines

• Europe: Sales were $197 million in Q2 2026 (up from $181 million in Q2 2025). Operating loss was $20 million, an improvement from a $44 million loss in Q1 2026 and a $38 million loss in Q2 2025. Losses were lower due to higher sales price and mix and lower operating/input costs, partially offset by higher planned maintenance outages.
• Latin America: Sales were $219 million in Q2 2026 (up from $207 million in Q2 2025). Operating loss was $16 million, compared to a $4 million profit in Q1 2026 and a $2 million profit in Q2 2025. Earnings were lower due to higher planned maintenance outages and input costs, partially offset by higher sales price, mix, and volumes.
• North America: Sales were $411 million in Q2 2026 (down from $419 million in Q2 2025). Operating profit was $50 million, up from $25 million in Q1 2026 and down from $66 million in Q2 2025. Earnings were higher due to higher sales price and mix and lower operating/input costs, slightly offset by higher planned maintenance outages.
• Eastover Mill Investments: The woodyard modernization project's hardwood line is yielding improved reliability and chip quality since startup in May; the softwood operation is scheduled for Q1 2027. The paper machine optimization project is on schedule and budget, expected to complete in Q4 2026, adding 60,000 short tons of annual uncoated freesheet capacity.
• New Equipment: A new cutsize sheeter passed equipment acceptance testing in June and is being prepared for installation.
• Warehouse Expansion: A sale-leaseback transaction to expand warehouse capacity at the existing sheeting plant is expected to be completed in Q1 2027, aiming to reduce supply chain costs and improve service.
• Price Increases: The company implemented uncoated freesheet price increases across all regions and announced another effective mid-June in Europe.

Market and Competitive Landscape

• In North America, industry supply and demand dynamics improved as roughly 7% of annual uncoated freesheet industry supply was removed due to the Riverdale paper machine conversion.
• Imports into North America increased in the second quarter compared to the previous quarter, a reaction to the 10% global tariff window.
• Pulp prices in Europe improved throughout the first half of the year and appear stable.
• Latin America is expected to see seasonally higher demand through the second half of the year, positively impacting volume and geographic mix.
• Sylvamo continues to realize price increases to export customers in Latin America, the Middle East, and Africa.

Risks and Challenges

• 2026 is a transition year involving adjustments to the North America footprint, termination of the Riverdale supply agreement with International Paper, changing tariffs, and an extended outage at the Eastover mill.
• The Middle East conflict is expected to continue pressuring energy, chemical, and transportation costs across all regions.
• Higher planned maintenance outages impacted operating results in Europe, Latin America, and North America during the second quarter.
• Higher input costs negatively impacted Latin America's earnings in the second quarter.

Management Commentary and Tone

• CEO John Sims stated that the commercial and supply chain teams did an "outstanding job" ensuring customers were well served during the transition year.
• Management described the second quarter highlights as implementing price increases, advancing a lean transformation journey to make performance improvement employee-driven, and making progress on high-return strategic investments.
• The company is executing on six areas to be legendary: safety and well-being, employee engagement, customer centricity, operational excellence, cost leadership, and sustainability.
• Management emphasized making disciplined, data-driven decisions to position the company for sustainable success.

Other Key Points

• The board of directors declared a $0.45 dividend for the third quarter, paid on July 28.
• Net special items in the second quarter amounted to a net after-tax charge of $13 million ($0.34 per diluted share), compared to a $1 million charge in the first quarter of 2026.
• The reported effective tax rate for the second quarter was 1200%, driven by a $12 million valuation allowance on certain foreign deferred tax assets due to a planned internal merger.
• The effective operational tax rate for the second quarter was 80%, compared to 13% in the first quarter of 2026.
• Sylvamo employs more than 6,500 colleagues and reported net sales of $3.4 billion for 2025.