syl-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 10-Q

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

______________________________

Commission File Number 001-40718

________________

SYLVAMO CORPORATION

(Exact Name of Registrant as Specified in its Charter)

________________


Delaware			86-2596371
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)


6077 Primacy Parkway Memphis, Tennessee			38119
(Address of Principal Executive Offices)			(Zip Code)

901-519-8000

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	SLVM	New York Stock Exchange

________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of November 8, 2024 was 41,008,332.

INDEX


		PAGE NO.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations - Three Months and Nine Months Ended September 30, 2024 and 2023	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months and Nine Months Ended September 30, 2024 and 2023	2
	Condensed Consolidated Balance Sheets - September 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024 and 2023	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	26
Item 6.	Exhibits	27
Signatures		28

ITEM 1. FINANCIAL STATEMENTS

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
NET SALES	$	965	$	897	$	2,803	$	2,757
COSTS AND EXPENSES
Cost of products sold (exclusive of depreciation, amortization and cost of timber harvested shown separately below)	700		665		2,100		2,055
Selling and administrative expenses	74		89		230		248
Depreciation, amortization and cost of timber harvested	39		36		115		105
Taxes other than payroll and income taxes	6		7		21		19
Interest (income) expense, net	14		9		32		28
INCOME BEFORE INCOME TAXES	132		91		305		302
Income tax provision	37		33		84		98
NET INCOME	$	95	$	58	$	221	$	204
EARNINGS PER SHARE
Basic	$	2.32	$	1.39	$	5.37	$	4.83
Diluted	$	2.27	$	1.37	$	5.26	$	4.77

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In millions)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
NET INCOME	$	95	$	58	$	221	$	204
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Defined benefit pension and postretirement adjustments:
Amortization of pension and postretirement loss (less taxes of $0, $0, $0 and $0)	1		—		1		—
Change in cumulative foreign currency translation adjustment	37		(46)		(99)		40
Net gains/losses on cash flow hedging derivatives:
Net gains (losses) arising during the period (less taxes of $2, $0, $4 and $9)	(8)		3		(8)		21
Reclassification adjustment for (gains) losses included in net earnings (less taxes of $1, $3, $3 and $9)	(4)		(7)		(9)		(21)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES	26		(50)		(115)		40
COMPREHENSIVE INCOME (LOSS)	$	121	$	8	$	106	$	244

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)


	September 30, 2024		December 31, 2023
	(unaudited)
ASSETS
Current Assets
Cash and temporary investments	$	248	$	220
Restricted cash	60		60
Accounts and notes receivable, net	439		428
Contract assets	34		27
Inventories	421		404
Other current assets	27		54
Total Current Assets	1,229		1,193
Plants, Properties and Equipment, net	970		1,002
Forestlands	361		364
Goodwill	125		139
Right of Use Assets	60		58
Deferred Charges and Other Assets	116		116
TOTAL ASSETS	$	2,861	$	2,872
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	381	$	421
Notes payable and current maturities of long-term debt	43		28
Accrued payroll and benefits	76		63
Other current liabilities	214		183
Total Current Liabilities	714		695
Long-Term Debt	883		931
Deferred Income Taxes	164		189
Other Liabilities	163		156
Commitments and Contingent Liabilities (Note 12)
Equity
Common stock $1 par value, 200.0 shares authorized, 44.9 shares and 44.5 shares issued and 41.0 shares and 41.2 shares outstanding at September 30, 2024 and December 31, 2023, respectively	45		45
Paid-in capital	65		48
Retained earnings	2,393		2,222
Accumulated other comprehensive loss	(1,371)		(1,256)
	1,132		1,059
Less: Common stock held in treasury, at cost, 3.9 shares and 3.3 shares at September 30, 2024 and December 31, 2023, respectively	(195)		(158)
Total Equity	937		901
TOTAL LIABILITIES AND EQUITY	$	2,861	$	2,872

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Nine Months Ended September 30,
	2024		2023
OPERATING ACTIVITIES
Net income	$	221	$	204
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization, and cost of timber harvested	115		105
Deferred income tax provision (benefit), net	(4)		4
Stock-based compensation	17		21
Changes in operating assets and liabilities and other:
Accounts and notes receivable	(28)		99
Inventories	(21)		(46)
Accounts payable and accrued liabilities	16		(122)
Other	(11)		72
CASH PROVIDED BY OPERATING ACTIVITIES	305		337
INVESTMENT ACTIVITIES
Invested in capital projects	(157)		(147)
Acquisition of business, net of cash acquired	—		(167)
CASH PROVIDED BY (USED FOR) INVESTMENT ACTIVITIES	(157)		(314)
FINANCING ACTIVITIES
Dividends paid	(43)		(32)
Issuance of debt	250		443
Reduction of debt	(285)		(482)
Repurchases of common stock	(30)		(53)
Other	(6)		(7)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(114)		(131)
Effect of Exchange Rate Changes on Cash	(6)		2
Change in Cash, Temporary Investments and Restricted Cash	28		(106)
Cash, Temporary Investments and Restricted Cash
Beginning of the period	280		360
End of the period	$	308	$	254

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023 (the "Annual Report" or “2023 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.

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 2023 Form 10-K. There have been no material changes to the significant accounting policies for the nine months ended September 30, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

Income Taxes

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires a public entity to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and this guidance should be applied prospectively but there is the option to apply it retrospectively. The Company plans to adopt the provisions of this guidance in conjunction with our Form 10-K for the annual period ending December 31, 2025.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This guidance requires a public entity to disclose for each reportable segment, on an interim and annual basis, the significant expense categories and amounts that are regularly provided to the chief operating decision-maker (“CODM”) and included in each reported measure of a segment’s profit or loss. Additionally, it requires a public entity to disclose the title and position of the individual or the name of the group or committee identified as the CODM. This guidance is effective for fiscal years beginning after December 31, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the guidance should be applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The Company plans to adopt the provisions of this guidance in conjunction with our Form 10-K for the period ending December 31, 2024.

NOTE 3 REVENUE RECOGNITION

External Net Sales by Product

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


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2024		2023		2024		2023
Europe
Uncoated Papers	$	168	$	162	$	534	$	558
Market Pulp	25		22		71		66
Europe	193		184		605		624
Latin America
Uncoated Papers	223		225		639		626
Market Pulp	17		12		44		52
Latin America	240		237		683		678
North America
Uncoated Papers	510		464		1,455		1,413
Market Pulp	22		12		60		42
North America	532		476		1,515		1,455
Total	$	965	$	897	$	2,803	$	2,757

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 $1 million and $8 million are included in “Other current liabilities” as of September 30, 2024 and December 31, 2023, 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, 2024 and 2023 is provided below:


Three Months Ended September 30, 2024
In millions	Shares	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Common Stock Held In Treasury, At Cost		Total Equity
Balance, June 30, 2024	45	$	45	$	60	$	2,317	$	(1,397)	$	(195)	$	830
Stock-based employee compensation	—	—		5		—		—		—		5
Share repurchases	—	—		—		—		—		—		—
Dividends ($0.45 per share)	—	—		—		(19)		—		—		(19)
Comprehensive income (loss)	—	—		—		95		26		—		121
Balance, September 30, 2024	45	$	45	$	65	$	2,393	$	(1,371)	$	(195)	$	937


Nine Months Ended September 30, 2024
In millions	Shares	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Common Stock Held In Treasury, At Cost		Total Equity
Balance, December 31, 2023	45	$	45	$	48	$	2,222	$	(1,256)	$	(158)	$	901
Stock-based employee compensation	—	—		17		—		—		(7)		10
Share repurchases	—	—		—		—		—		(30)		(30)
Dividends ($1.20 per share)	—	—		—		(50)		—		—		(50)
Comprehensive income (loss)	—	—		—		221		(115)		—		106
Balance, September 30, 2024	45	$	45	$	65	$	2,393	$	(1,371)	$	(195)	$	937

Three Months Ended September 30, 2023

In millions

Common Stock

Paid-In Capital

Retained Earnings

Accumulated

Other Comprehensive
Loss

Common Stock Held In Treasury, At Cost

Total Equity

Balance, June 30, 2023