Sylvamo — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales from continuing operations were $645 million, down from $662 million in the third quarter of 2025 and up from $614 million in the second quarter of 2026.
• Net income from continuing operations was $85 million ($2.13 per diluted share), a 13% margin, compared to $71 million in the third quarter of 2025 and $2 million in the second quarter of 2026.
• Adjusted operating earnings were $53 million ($1.33 per diluted share), compared to $72 million in the third quarter of 2025 and $14 million in the second quarter of 2026.
• Adjusted EBITDA was $128 million, representing a 20% margin, compared to $158 million (24% margin) in the third quarter of 2025 and $66 million (11% margin) in the second quarter of 2026.
• Cash provided by operating activities from continuing operations was $70 million, compared to $114 million in the third quarter of 2025 and $42 million in the second quarter of 2026.
• Free cash flow was $16 million, compared to $64 million in the third quarter of 2025 and a negative $16 million in the second quarter of 2026.
• Business segment operating profit was $87 million, compared to $113 million in the third quarter of 2025 and $28 million in the second quarter of 2026.
• Latin America segment operating profit was $22 million, compared to a loss of $18 million in the second quarter of 2026 and $33 million in the third quarter of 2025.
• North America segment operating profit was $65 million, compared to $46 million in the second quarter of 2026 and $80 million in the third quarter of 2025.
• Total assets were $2,951 million as of September 30, 2026, compared to $2,761 million as of December 31, 2025.
• Long-term debt was $861 million as of September 30, 2026, compared to $758 million as of December 31, 2025.
• Cash and temporary investments were $93 million as of September 30, 2026, compared to $86 million as of December 31, 2025.
• Discontinued operations (Europe) reported a net loss of $284 million in the third quarter of 2026, primarily driven by a noncash impairment charge.

Guidance and Future Outlook:

• Sylvamo intends to allocate capital wisely, focus on long-term value creation, and communicate transparently.
• The company will continue to invest in low-risk, high-return projects in uncoated freesheet.
• Management plans to maintain a strong balance sheet and return cash to shareowners.
• The proposed sale of the Europe business is expected to make Sylvamo a more focused company concentrated in Latin America and North America.
• The new state-of-the-art sheeter at the Eastover mill is expected to start up early in the third quarter of 2027.
• The woodyard softwood line and warehouse expansion at the sheeting plant are on track to start up in the first quarter of 2027.

Business Segments and Product Lines:

• The Europe business, including uncoated freesheet paper mills in Saillat, France, and Nymolla, Sweden, as well as forestry and supporting operations, is reported as discontinued operations.
• Net sales from European operations (discontinued) were $178 million in the third quarter of 2026.
• Latin America sales were $258 million in the third quarter of 2026, up from $228 million in the third quarter of 2025 and $219 million in the second quarter of 2026.
• North America sales were $414 million in the third quarter of 2026, down from $450 million in the third quarter of 2025 and up slightly from $411 million in the second quarter of 2026.
• The paper machine optimization project at the Eastover mill is on schedule and within budget, adding 60,000 short tons of uncoated freesheet capacity annually.
• Sylvamo decided to keep three existing cutsize sheeters operational and add a new sheeter, adding approximately 200,000 short tons of cutsize converting capacity.
• Price and mix improved by $25 million in the third quarter of 2026, primarily from previously communicated paper price increases.
• Volume was relatively flat in the third quarter of 2026.
• Operations and other costs were favorable by $6 million due to improved operational performance.
• Planned maintenance outage costs were $38 million lower than expected.
• Input and transportation costs were unfavorable by $6 million, primarily due to higher transportation costs.

Market and Competitive Landscape:

• In Latin America, demand is seasonally stronger in the second half of the year.
• In September, Colombia canceled antidumping duties on uncoated freesheet imports from Brazil, restoring access to a market previously served by Sylvamo.
• In North America, the industry supply and demand balance remains healthy, and paper price increases are mostly implemented with customers.
• Imports continue to increase year over year in both Latin America and North America.
• Supply chain pressures are driving higher input and transportation costs, including higher fuel costs affecting ocean transportation and elevated diesel prices affecting trucking in the U.S.
• Input costs, including chemicals, energy, and fiber, continue to be impacted by persistently high oil prices.

Risks and Challenges:

• Forward-looking statements involve known and unknown risks, uncertainties, and factors beyond the company's control, as detailed in the Annual Report on Form 10-K for the year ended December 31, 2025.
• Actual actions and results could differ materially from expectations due to these risks.
• The company undertakes no obligation to publicly update forward-looking statements.

Management Commentary and Tone:

• CEO John Sims stated the proposed transaction with Midas Atlantic Partners and The Najafi Companies represents an important strategic step to create an owner experienced in corporate carve-outs.
• Management believes the transaction will position Sylvamo as a more focused company with greater ability to invest and strengthen performance.
• The long-term strategy remains focused on uncoated freesheet, investing to strengthen competitive advantages, and leveraging strengths to generate high returns on invested capital.
• Management expressed confidence that the proposed focus will make the company stronger and better position it to create sustainable value for employees, customers, and investors.
• Management noted that the lean transformation is improving performance across mills.

Other Key Points:

• Sylvamo entered into a put option agreement with Midas Atlantic Partners, in partnership with The Najafi Companies, for a binding offer to acquire the Europe business.
• The company declared a dividend of $0.45 per share, paid on October 16.
• Net special items related to continuing operations resulted in a net after-tax benefit of $33 million ($0.83 per diluted share) in the third quarter of 2026.
• The reported effective tax rate from continuing operations was (20)% in the third quarter of 2026, driven by a $36 million tax benefit related to the investment in European subsidiaries.
• Assets held for sale were $502 million as of September 30, 2026, compared to $289 million as of December 31, 2025.
• Liabilities held for sale were $454 million as of September 30, 2026, compared to $171 million as of December 31, 2025.
• The company employs more than 6,500 colleagues and is headquartered in Memphis, Tennessee.