Sylvamo — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales from continuing operations were $645 million, compared to $614 million in the second quarter of 2026 and $662 million in the third quarter of 2025.
• Net income from continuing operations was $85 million ($2.13 per diluted share), representing a 13% margin, compared to $2 million in the second quarter of 2026 and $71 million in the third quarter of 2025.
• Adjusted operating earnings from continuing operations were $53 million ($1.33 per diluted share), compared to $14 million in the second quarter of 2026 and $72 million in the third quarter of 2025.
• Adjusted EBITDA from continuing operations was $128 million, a 20% margin, compared to $66 million (11% margin) in the second quarter of 2026 and $158 million (24% margin) in the third quarter of 2025.
• Cash provided by operating activities from continuing operations was $70 million, compared to $42 million in the second quarter of 2026 and $114 million in the third quarter of 2025.
• Free cash flow from continuing operations was $16 million, compared to $(16) million in the second quarter of 2026 and $64 million in the third quarter of 2025.
• Net sales from discontinued European operations were $178 million in the third quarter of 2026.
• Discontinued operations reported a $284 million loss, primarily driven by a noncash impairment charge.
• Business segment operating profit was $87 million, compared to $28 million in the second quarter of 2026 and $113 million in the third quarter of 2025.
• 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.
• Net special items related to continuing operations provided a net after-tax benefit of $33 million ($0.83 per diluted share), compared to a net after-tax charge of $13 million in the second quarter of 2026.
• The reported effective tax rate from continuing operations was (20)%, driven by a $36 million tax benefit related to investments in European subsidiaries, compared to 88% in the second quarter of 2026.

Guidance and Future Outlook

• Sylvamo plans to allocate capital wisely, focusing on long-term value creation and maintaining a strong balance sheet.
• The company intends to continue investing in low-risk, high-return projects in uncoated freesheet.
• Management expects to 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.
• Eastover strategic investments are progressing, with the paper machine optimization project on schedule and within budget.
• The new state-of-the-art sheeter at Eastover is expected to add approximately 200,000 short tons of cutsize converting capacity, with startup expected early in the third quarter of 2027.
• The woodyard softwood line and warehouse expansion at the Eastover sheeting plant are on track to start up in the first quarter of 2027.
• The paper machine optimization project will add an additional 60,000 short tons of uncoated freesheet capacity annually.

Business Segments and Product Lines

• Latin America sales were $258 million, up from $219 million in the second quarter of 2026 and $228 million in the third quarter of 2025.
• North America sales were $414 million, up from $411 million in the second quarter of 2026 but down from $450 million in the third quarter of 2025.
• Price and mix improvements contributed $25 million, primarily from previously communicated paper price increases.
• Volume was relatively flat compared to the second 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 the previous quarter.
• Input and transportation costs were unfavorable by $6 million, primarily due to higher transportation costs.
• The company is focusing on uncoated freesheet as its core investment thesis.

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 market access.
• In North America, 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.
• Lower supply availability and higher fuel costs have affected ocean transportation.
• Elevated diesel prices and reduced driver availability have increased trucking costs in the U.S.
• Input costs, including chemicals, energy, and fiber, continue to be impacted by persistently high oil prices.

Risks and Challenges

• Higher input and transportation costs due to supply chain pressures, high oil prices, and fuel costs.
• Reduced driver availability and elevated diesel prices impacting trucking costs.
• The potential transaction for the Europe business involves risks associated with corporate carve-outs and positioning businesses for long-term success.
• Forward-looking statements involve known and unknown risks, uncertainties, and factors beyond the company's control, including those disclosed in the Annual Report on Form 10-K.

Management Commentary and Tone

• CEO John Sims stated that the proposed transaction with Midas Atlantic Partners and The Najafi Companies represents an important strategic step to create a more focused company.
• Management believes the transaction will allow Sylvamo to strengthen performance and pursue world-class excellence.
• The long-term strategy remains unchanged: focusing on uncoated freesheet, investing to strengthen competitive advantages, and leveraging strengths to generate high returns on invested capital.
• Management expressed confidence that the focus will make the company stronger and better position it to create sustainable value for employees, customers, and investors.
• The company reported that its lean transformation is improving performance across its 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, including uncoated freesheet paper mills in Saillat, France, and Nymolla, Sweden, as well as forestry and supporting operations.
• The Europe business is now reported as discontinued operations, and prior periods have been recast.
• Corporate costs of approximately $6 million to $7 million per quarter previously allocated to European operations are now included in continuing operations.
• A dividend of $0.45 per share was declared and paid on October 16.
• Assets held for sale increased to $502 million at September 30, 2026, from $289 million at December 31, 2025.
• Liabilities held for sale increased to $454 million at September 30, 2026, from $171 million at December 31, 2025.
• Long-term debt increased to $861 million at September 30, 2026, from $758 million at December 31, 2025.
• Cash and temporary investments were $93 million at September 30, 2026, compared to $86 million at December 31, 2025.
• Net special items included a $3 million pre-tax charge for professional and legal fees related to the plan to sell the Europe business for the three months ended September 30, 2026.
• Net special items included a $1 million pre-tax charge related to the termination of the Georgetown mill offtake agreement for the three months ended September 30, 2026.
• The impairment of the Europe business segment resulted in a pre-tax charge of $342 million, and a pre-tax gain of $67 million was recorded to reserve for expected cumulative foreign currency translation gains.