Sylvamo Q1 2024 Earnings – Net Income Down to $43M

Sylvamo (NYSE: SLVM) has released its first quarter 2024 earnings, revealing a net income of $43 million ($1.02 per diluted share) compared to $49 million ($1.16 per diluted share) in the fourth quarter. Adjusted operating earnings for the first quarter were $45 million ($1.07 per diluted share), down from $49 million ($1.16 per diluted share) in the previous quarter.

The company's adjusted EBITDA for the first quarter was $118 million (13% margin) compared to $117 million (12% margin) in the fourth quarter. However, cash provided by operating activities decreased significantly to $27 million from $167 million, and free cash flow dropped to $(33) million from $104 million in the previous quarter.

In terms of commercial and operational highlights, price and mix remained stable, but volume decreased by $12 million due to expected seasonally weaker industry demand in Latin America. Operations and other costs improved by $19 million, primarily due to lower economic downtime, while planned maintenance outage expenses decreased by $3 million. However, input and transportation costs increased by $9 million, driven primarily by transportation costs in North America.

Looking ahead to the second quarter, Sylvamo anticipates adjusted EBITDA of $145 million to $160 million. Key expectations include an increase in price and mix by $15 million to $20 million, a projected volume increase of $5 million to $10 million, and an improvement in operations and other costs by $5 million to $10 million. However, total planned maintenance outage expenses are expected to increase by $3 million.

Chairman and Chief Executive Officer Jean-Michel Ribiéras highlighted the company's progress with Project Horizon, a structural cost reduction program, and stated that Sylvamo is well positioned to capitalize on opportunities in 2024. The company also repurchased $20 million of shares, including $15 million in April, and has $130 million remaining on its $150 million share repurchase authorization from September 2023.

Sylvamo has repurchased $170 million in shares since the spinoff, resulting in a 35% return on investment based on a $65.00 share price. The company also declared a second quarter dividend of $0.30 per share and remains committed to generating long-term shareholder value through capital allocation, debt reduction, and reinvestment in the business. Sylvamo has identified a pipeline of more than $200 million of high-return capital projects to drive future earnings and cash flows.

Today the company's shares have moved -2.7% to a price of $64.44. For the full picture, make sure to review Sylvamo's 8-K report.

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