SLVM

Image source: The Motley Fool. Friday, Aug. 7, 2026, at 10 a.m. ET Vice President of Investor Relations-Hans Bjorkman Chief Executive Officer-John Sims Senior Vice President and Chief Financial Officer-Donald Devlin Operator: Thank you. Good morning. Thank you for standing by. Welcome to Sylvamo's Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, your conference is being recorded. I'd now like to turn the call over to Hans Bjorkman, Vice President of Investor Relations. Sir, the floor is yours. Hans Bjorkman: Thank you, Lucas. Good morning and thank you for joining our call. Our speakers this morning are John Sims, Chief Executive Officer, and Donald Devlin, Senior Vice President and Chief Financial Officer. Slides 2 and 3 contain important information, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties. We will also present certain non-U.S. GAAP financial information. Reconciliations of those figures to U.S. GAAP financial measures are available in the appendix. Our website also contains copies of the earnings release as well as today's presentation. With that, I'd like to turn the call over to John. John Sims: Thank you, Hans, and good morning, everyone. I'm glad that you're on the call and so you know, I'm on Slide 4, that's where I'm starting. Our second quarter highlights include continuing to implement the previously communicated uncoated freesheet price increases to our customers across all our regions. We also advanced our lean transformation journey to embed continuous improvement into how we run the business, so performance improvement becomes employee-driven, systematic, and self-sustaining. We kicked off our lean efforts in our Latin America business and have value stream mapping underway at our Mogi Guaçu and Três Lagoas mills to identify waste and unlock cost savings across end-to-end processes. In North America, we introduced lean at our Ticonderoga, New York, mill and our cut-size sheet plant in Sumter, South Carolina, and across corporate functions. Lastly, we continue to make very good progress on our strategic investments at our Eastover mill, which we will discuss in more detail later on this call. Let's move to the next slide. Slide 5 shows our second quarter key financial metrics. 2026 is a transition year to work through the termination of the Riverdale supply agreement and the extended outage at Eastover. Adjusted EBITDA more than doubled sequentially to $60 million with a margin of 7%. Adjusted operating earnings were $0.03 per share. Free cash flow was -$23 million, a $36 million improvement sequentially. And as in prior years, the majority of our free cash flow will be generated in the second half of this year. Now I'll turn it over to Don to review our performance in more detail, Don. Donald Devlin: Thank you, John, and good morning, everyone. Slide 6 contains our second quarter earnings bridge versus the first quarter. In the second quarter, we earned $60 million of adjusted EBITDA compared to $29 million in the prior quarter. Price and mix were favorable by $32 million, reflecting the implementation of paper price increases in all regions, better mix in the Americas, as well as the implementation of pulp price increases in Europe. Volume increased by $3 million driven by seasonally stronger demand in Latin America. Operations and costs were favorable by $22 million, largely driven by green energy credits in Europe and lower overhead. Planned maintenance outage costs were unfavorable by $24 million due to scheduled outages in all regions. Input and transportation costs were unfavorable by $2 million as energy costs were stable while purchased wood in Latin America and transportation costs in North America were higher. These were partially offset by the non-repeat of a one-time charge of $10 million from International Paper's Riverdale mill due to high natural gas costs in the first quarter. Let's move to Slide 7 to walk through the industry conditions. European industry supply and demand remains challenging. Pulp prices improved throughout the first half and now seem stable. We continue realizing paper price increases, and we communicated another paper price increase effective mid-June as costs continue to increase and margins are at unacceptable levels. We expect the realization to occur through the third quarter. In Latin America, we expect seasonally higher demand through the second half. This should positively impact our volume and geographic mix. We continue realizing paper price increases to our export customers across other Latin American countries as well as the Middle East and Africa region, and should continue to see additional realization through the third quarter. In North America, industry supply and demand dynamics have improved as 7% of the annual uncoated freesheet industry supply was removed with International Paper's Riverdale mill paper machine conversion. In the second quarter, we saw imports into North America increasing compared to the previous quarter, a reaction to the 10% global tariff window. We also continue realizing paper price increases and expect to see additional realization through the third quarter. We expect the Middle East conflict to continue pressuring energy, chemicals, and transportation costs across our regions as we go through the year. Let's move to Slide 8. As we move through the second half of the year, we expect better earnings across most of our key drivers. This slide provides some perspective to how we see the second half of the year as compared to the first half. Price and mix should have a significant improvement with the price realization we've seen across all our regions and will continue into the third and fourth quarters. In addition, our mix in both Latin America and North America should be significantly better in the second half. Overall, we expect to have a $75 million to $85 million benefit from better price and mix compared to the first half. Volume should have positive momentum given stronger seasonality in Latin America, which will be partially offset by less volume in North America due to the loss of the Riverdale volume and the extended outage at Eastover in the fourth quarter. Operations and other costs are also expected to be much better in the second half. Operational issues we had in the first half are now behind us with the exception of the debarking drum at Nymölla. Planned maintenance outages will be unfavorable by approximately $5 million as we execute our heaviest planned outage quarter and take the extended downtime at our Eastover mill to complete the paper machine investments. Input and transportation costs are expected to be favorable with lower fiber costs in Latin America and Europe more than offsetting unfavorable energy, chemicals, and transportation due to the Middle East conflict across all regions. In total, we expect a much better earnings performance for the last six months of the year. I'll now turn it back to John to talk about our strategic investments at Eastover and our long-term focus. John? John Sims: Thank you, Don. I'll pick back up on Slide 9. Our Eastover strategic investments, including our woodyard modernization and paper machine optimization and new sheeter, continue to make good progress. Starting with the woodyard, the hardwood line has been performing extremely well since May, and we're seeing improved reliability and chip quality. The woodyard softwood line start-up remains on schedule for the first quarter next year. The paper machine speed-up project remains on schedule, on budget, and will be completed during our fourth quarter maintenance outage. This will result in 60,000 additional tons of uncoated freesheet capacity annually, which will start to ramp up early next year. The benefits include reducing costs, improving our mix and efficiency, while enhancing service for our customers. So to Slide 10. Also within our Eastover strategic investment, the new sheeter project continues to make good progress. The sheeter passed equipment acceptance testing in June, arrived in the U.S. a few weeks ago, and the teams are preparing for the installation. We expect $50 million of annual benefits from the paper machine speed-up and the new sheeter. We estimate roughly $30 million to $40 million of that in 2027. Lastly, we completed a sale-leaseback transaction with a third party for our existing sheet plant to expand the attached warehouse by 300,000 square feet. The third party is investing the capital to expand the facility and will lease it back to us. The project will reduce supply chain costs, improve service to our customers, while providing additional flexibility. We expect this expansion to be completed in the first quarter of 2027 and contribute upwards of $5 million in savings per year. These four projects will generate $55 million of benefit per year. These strategic investments are high-return projects which will generate incremental earnings and cash flow for the long run. Let's move to Slide 11. In my letter to shareholders in January, I described the areas that define our success: safety and well-being, employee engagement, customer centricity, operational excellence, cost leadership, and sustainability. Let's go to Slide 12 to discuss these in more detail. As we aim to achieve world-class performance in the areas that matter to Sylvamo, we have set clear goals for each one. Today I want to share with you what we are working toward and how we will measure our progress to achieve these by 2030. Safety and well-being is our most important responsibility. Our goal is to have a resilient safety culture in which serious injuries are eliminated. To eliminate serious injuries, it will be because our employees truly care and are aligned on relentlessly pursuing excellence. On employee engagement, we have nearly achieved world-class engagement with an employee Net Promoter Score of 46. Our focus is to be greater than 50, while we strengthen the capability and readiness of our teams and tap into their talents to help us achieve world-class performance. On customer centricity, we are setting a new standard for customer experience and loyalty. We will measure it through our customer net promoter score and through our perfect order performance, delivering complete, on time, and without defects. We are targeting a 20-point improvement in Net Promoter Score and higher than 90% on the perfect order. On operational excellence, we are targeting improving overall machine efficiency by 400 basis points. This is a measure of how well our assets run. On cost leadership, we challenge ourselves to set an aggressive goal in order to drive margin improvement despite the significant inflationary cost pressures. Our goal is to achieve 3x to 5x our 2022 through 2025 average annual cash cost improvement rate. This will be enabled by our lean and digital transformation efforts. Lastly, on sustainability, we'll continue to operate responsibly to protect our uplifting communities and improve the planet every year. Underpinning all six are our talented team, lean management, and digital transformation. I'll conclude my remarks on Slide 13. As you are aware, it has been a very dynamic year where we've been adapting and executing the initiatives that are under our control. We are focused on generating strong, sustainable results and long-term value by making disciplined, data-driven decisions that strengthen Sylvamo for decades to come. We will do this by diligently executing our flagship growth strategy, adhering to our disciplined capital allocation, institutionalizing lean continuous improvement. As industry conditions turn, capital spending normalizes, and the benefits from our investments begin to materialize, we have the potential to generate annually over $300 million of free cash flow and greater than 15% return on invested capital. So with that, I'll turn the call back to you, Hans. Hans Bjorkman: Thanks, John, and thank you, Don. Okay, Lucas, we're ready to take the questions. Operator: We will now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Daniel Harriman with Sidoti. Daniel Harriman: In North America, margin was up at 15% versus 10% in the first quarter. And I'm curious if you could add more color on what drove this improvement and how much was price and mix versus maybe lower sourcing costs from bringing new products in from Brazil rather than Europe. And then leverage finished the quarter at 2.2x with most of the free cash flow for the year expected in the back half. Can you give us a better idea of how much of the first half working capital build reverses and where you expect to end the year on leverage? Donald Devlin: Yes, Daniel, I'll take your second question first. This is Don, and good morning. So the working capital build will unwind by the end of the year mostly. And as we talked about in an earlier call, that's due to the Eastover machine speed-up project building inventory through what was first quarter, second quarter, and we'll start to draw down fourth quarter, it should be pulled out. And your first question back to North America, the margin improvement from first to second quarter, it was largely price and mix. And yes, price and mix and lower operations costs and a bit of lower input costs. But the key driver is price and mix for North America going into Q2 from Q1. John Sims: Just to give a little bit more color, Daniel, on the working capital. North America is where we built the biggest inventory. It's about 50,000 tons that we expect to draw down in the second half. We will draw down in the second half. Operator: Your next question comes from the line of Matthew McKellar with RBC Capital Markets. Matthew, please go ahead. Matthew McKellar: It sounds like you're expecting lower North American volumes in the second half of the year, if I've understood your comments on Slide 8 correctly. Is that sales volumes or production? I ask what the bogey might be for North American volumes at this point? Donald Devlin: Yes, Matthew, thanks for the question. So on North America's volume, it will be both because both lower production and lower sales. And, you know, we have Riverdale's gone, that's not our production, but the supply from Riverdale is gone, but that'll impact sales in the second half. And of course, we've got the Eastover outage which is now longer than we thought. We originally planned for 45 days. It'll be a bit longer than that. So that'll reduce production as well for North America. And a bit of that flows through sales and volumes will be lower for those two main reasons. John Sims: And one other point to add, Don, is that during this bear situation, with the IEEPA going away, we were able to take advantage of that and move on some volume from our Brazilian operations. But now with the new tariffs that are in effect, it's not economical. So we're actually bringing in less volume from Europe and Brazil than we expected. And so there'll be a little bit less than that. Donald Devlin: I think your second question relative to North American volume as well. If you think about the impact of Riverdale going away, so that supply is gone, and I think we go from what was about a little less than 100,000 tons this year. So that goes away. It was 90,000, I think, through April, and we won't have that in '27. But yet we'll have the speed-up from Eastover. And the plan from the speed-up was a total of 60. We won't get all of that next year as we'll be ramping up once we come out of the project in the fourth quarter. But eventually those two things will be a net 40 down. Matthew McKellar: Okay, so if I think about the Q4 '25 presentation where we talked about 1.17 million tons in North American sales, I think it was. The variance is primarily a longer outage at Eastover and then less volumes coming in from Latin America and Europe than you'd anticipated? John Sims: That's right. We also got slightly less tons from Riverdale, which we already experienced. So that, but Riverdale, I think in that slide, we were assuming 100,000 tons before they converted, and they delivered about 90,000. But that impact's already been felt. Matthew McKellar: Okay, got it. Next, it sounds like you have pricing as a tailwind across each segment into Q3. Could you maybe spend a minute just running through what price is currently announced and pending in the markets? Maybe talk about how price should trend sequentially by region, either on average or as we exit Q3 in comparison to where you were in Q2? Donald Devlin: Yes. So Matthew, I'll start with how we see the price in the second half. So we said $75 million to $85 million incremental, which is both mix and price. I'd say 70% of that is price. And the majority of that is North America and then Northern Europe as well, which we will see some flow through. And your second question -- can you repeat your second question? Matthew McKellar: Yes, it was kind of tied together. It was, I mean, what is announced depending on the markets and then, you know, how pricing trends sequentially by region from Q2 into Q3? however you'd like to express that. John Sims: Yes, so I think we have a third price increase that's going through in Europe. So that's being implemented right now. We're actually seeing that in the month of July. So we'll see that flow through. And LATAM, we're seeing in the OLA markets and MEA. And that's being realized in the third quarter, we're seeing that now. And the same thing with the second price increase that we had in North America, that's being mostly implemented in the third quarter. So most of these price, you know, the 75 to 85 that Don talked about, a lot of that pricing is, we're seeing that flow through in the third quarter. Then that'll carry that, you know, we'd be relatively flat and carry into the fourth quarter. Matthew McKellar: Okay, perfect. Last for me. On Slide 8 again here, under input and transportation costs, it sounds like lower fiber costs will only partially be offset by higher energy, chemicals, and transportation costs. It sounds like that benefit is specific to Europe and Latin America. Could you help us understand what's happening with fiber costs and how they're favorable in the back half? Donald Devlin: Yes, Matthew, and I'll start with Europe. So, you know, we've had a deliberate effort, especially at our Nymölla mill to reduce fiber costs there. And I think a lot of what we're seeing in the second half and into the fourth quarter is the benefits of that. Both market decreases and actions we've taken. So we'll see that benefit second half in Europe. And in Latin America, we had some higher costs in Q2 related to some of our outside wood purchases. They were, I would say, unusual, and we don't expect those to occur again in the second half. So we'll be normalized in Latin America. As you know, most of our Latin American fiber is our own make, own produce. John Sims: Just to be maybe a little bit more specific. We've seen a decrease of about 20% since its peak in the fourth quarter last year, but it takes six months or so for it to start to impact our operations, and that's why we're seeing it in the third quarter. Operator: Your next question comes from the line of Mike Roxland with Truist Securities. Mike, please go ahead. Michael Roxland: I think about 18 months ago, I guess you hired a new head of EU. And then you also, that was subsequently followed by a mention of a decision on the EU strategic review. So that really implies then a timeline that you'll have a decision made regarding the EU and what's happening with your European operations around end of year. So just, can you give us an update to where that process ends? What the different options are in terms of, do you think you're going to continue to put money into those two assets, or are you continuing to look at shutting them or selling them? Because from our understanding, the cash cost of actually closing the asset seems to be manageable and would roughly imply a two-year payback and probably would be the most accretive option for shareholders. So any color you have on European operations and your plan there? John Sims: Yes, Mike, I think you characterized it correctly in that we said that we were not happy with the performance with our European operations, but this time last year we made a significant management change because we wanted to see an accelerated performance. And I have to say that we made a great change. We're seeing accelerated performance. We're focusing on our strategy there, which is mix improvements when enabled by the investments we made at our Saillat mill. We're actually ahead of plan there. We're also looking at implementing significant cost reductions that we're seeing at Saillat and Nymölla, increased productivity and also efficiency, and then we just talked about the wood cost. They align that with our strategy. It's being executed and being executed much better and well. But as we said, the conditions are difficult in Europe, and we're looking at the long term, are we satisfied with where we think we can get? And we probably would be looking at somewhere in 2027 if we're not satisfied with the outlook that we've got, that we may pursue other options. And those other options are just about essentially everything that you named. It's not like we're starting, I mean, we've been looking at that, and probably in 2027 we'll make the call. Michael Roxland: Got it. Okay, so a little bit longer than the 18 months that you initially outlined. Do you think it's going to be early 2027 in terms of making a determination? And then just one quick thing, John, in terms of the cost reductions that you've achieved there, what are you ultimately targeting? Like you've achieved a certain amount already, what are your targets in terms of improving the overall cost structure of Europe? John Sims: Well, I mean, when we look at what we're targeting, we probably need somewhere between $50 million or so we can be where we are. And it's not just cost reduction, it's mix improvement, it's other things that go into that to get us significantly above cash positive on a mid-cycle basis, greater than cost of capital returns. And yes, I don't want to lock myself down into -- because we're making and looking at -- our focus is on Europe. We understand that the issue. So I don't want to lock down the timeline. Things could be sooner, things could be later. You know, it depends on how things play out, but I don't really want to commit to a certain date. Michael Roxland: Totally understand. Two quick questions, and then I'll just turn it over. You guys mentioned $75 million to $85 million from better price mix in the second half over the first half. Any way to help quantify the benefit from better volumes, better opt-in costs, better input costs? Any way to just quantify that in the second half versus the first half? And then the second question, the poison pill ends in November. What's your plan regarding the poison pill? I mean, and if you have a great good relationship with your largest shareholder and they're interested in purchasing more shares, why stop them? Donald Devlin: So, Mike, relative to the second half quantifying volume, so we wanted to give analysts and investors a sense of the $75 million to $85 million on price and mix because one, it's big, two, we're confident prices are in place and we'll see that carry through. We're confident on the planned maintenance outages. That's something that we typically execute well. On the volume and ops and other costs inputs, there's more uncertainty. We are leaning in, we're confident in our forecast, but we chose not to provide specific guidance there. John Sims: And to your other question about the shareholder rights plan. The plan remains in place. The board hasn't made a decision yet on what we're going to do in terms of when it does expire at the end of November. That'll be something we'll address with the board when we meet in September. Operator: Your next question comes from the line of George Staphos with Bank of America Securities Inc., George, please go ahead. George Staphos: I'll ask two questions, and then I'll come back in queue. First of all, we appreciate you actually providing the pricing guidance that is helpful. John, Don, if I heard you correctly, most of that hits in 3Q, it incorporates what you have in the market, and there's not so much of a tail into fourth quarter. Did I correctly summarize that? Or what would you do to modify add correct to what I just relayed? And again, thanks for the pricing guide on that. We asked for that last quarter. Donald Devlin: Yes, so George, thanks for the question. So it'll flow a little more evenly. The way John described those price increases is right, depending on how it flows through the quarter for each of the regions, but we will in 3Q versus 4Q relative to price and mix, it's probably slightly more in Q4 than Q3. George Staphos: Would you be at a full run rate, recognizing it's not the full year, but would you be at a full run rate on what you have in the market as you're exiting fourth quarter? Would that be roughly what you'd be contemplating there? Donald Devlin: Es. Yes. Yes, we would. So North America definitely be at the run rate by fourth quarter, end of fourth quarter. LATAM as well, and Europe, that would be the expectation. George Staphos: Okay, my second question. We noticed the tax rate moved up a little bit. In terms of your guide, that can be a lot of different things. It's probably mix. But could you help us understand why the effective rate moved up a couple points? I'll come back. Donald Devlin: Yes, George, that is mainly due to a Brazil valuation allowance that we took on a deferred tax asset in our Brazil export entity. And the reason we did that, it was related to the VAT rules are changing in the future, and we merged two entities to really take advantage of $30 million of VAT tax credits we have in that entity. And it came at the expense of this valuation allowance for deferred tax assets. So $30 million in VAT credits and it was approximately $9 million for this expense. John Sims: Okay, but we would have stranded -- I was going to say, we would have stranded that $30 million of tax credits had we not made that move this year before the law changes. George Staphos: Okay, but it implies no change in terms of mix or for that matter your ongoing profitability based on what you were at last quarter? Donald Devlin: That's correct, George, yes. Operator: [Operator Instructions] Your next question comes from the line of Matthew McKellar with RBC Capital Markets. Matthew, please go ahead. Matthew McKellar: Just one more for me. I thought Slide 12 was pretty interesting. So I think about the more kind of operational focus items there, operational excellence, cost leadership, and maybe to some degree customer centricity. How much of that, I guess, do you need to get right to get to your $300 million free cash target? John Sims: It's a good question because we think about it in terms of the -- to achieve what we want to do. We want to be there across all these metrics, but in terms of the $300 million, probably the most important area for us is two. One is the cost leadership. We need to increase the rate at which we can and the level that we can reduce cost given these high inflationary environments we've had across all regions and input costs. And additionally, I think it's important with our customer centricity. I mean, it's very important that given our strategy, where the flagship growth strategy is and where we want to run our assets at the -- full capability, we need to make sure that our customers, we have intense customer loyalty as the market continues to decline. And so it's very important that the customers that we build and serve our customers to a level that's well above their expectations. Operator: Your next question comes from the line of George Staphos with Bank of America Securities. George, please go ahead. George Staphos: Two quick ones. Number one, guys, I remember last quarter the update relative to the earnings impact from the footprint alignment related to Eastover. There was effectively a $20 million add back for the view that you'd be bringing in some tons, I remember mostly from Brazil, to help on your volume and it would be a bit more economical. Obviously with tariffs changing again, maybe that situation has changed and I think you implied it or commented to it in one of the earlier questions. Can you update us on where that stands? And then there was a comment in the slide about Eastover and the softwood line. I was just curious, how are you using softwood in the mix out there? I'll come back. Donald Devlin: So George, I'll take that first question. So based on the tariff changes, we will not be able to bring in as much product from Brazil as we anticipated last quarter. So it looks like we'll be back near that $85 million estimate that we provided back in February from our Q4 call. So when we said $20 million, it's essentially gone away from Brazil rather.So back to the $85 million that we originally estimated. John Sims: Yes, George, and to your question about the softwood, we really have two lines in terms of our wood fiber that we supply the mill, both hardwood and softwood. And generally we put about 30% to 40% softwood in the products, and mostly that's in the converting grades, which need strength, envelope grades and stuff. George Staphos: Yeah, I forgot about you had some grades used for converting. I will turn it over. I'll come back. Operator: Your next question comes from the line of Mike Roxland with Truist Securities. Mike, please go ahead. Michael Roxland: Just two quick ones. First, can you talk about the impact on the U.S. market from additional Canadian tariffs? I think the U.S. imports around 7% of supply from Canada. And so I'm just wondering what the new tariffs, if and when they're implemented, would mean for additional tightness in the U.S. market. Second question, just wanted to find out from you, your most profitable Brazil mill is not backward integrated. The Mogi mill is backward integrated and losing money. So can you remind me why it's important to be backward integrated into pulp in Brazil? And what I would also notice, there was an article recently that a domestic U.S. mill has decided to rely on market pulp to produce paper and discontinue the use of internal pulp and that's actually improved their return profile. So any color you have on why the integration is necessary in Brazil? John Sims: Yes, Mike, when you think about the process to produce paper, overall integrated mill. Not only are you fully integrated, are you using wood to produce the fiber, but you also use that process of reclaiming the chemicals. So you end up producing your energy, both electricity and steam, from the process of cooking the wood. And when you add that together collectively, typically a much lower cost way to produce the products that we make, uncoated freesheet, if you have a good source of wood. Given the competitive situation where you actually may have high cost wood and relatively low cost energy potentially, that may make sense, but where you have low cost wood, it's going to make more sense to be fully integrated. Três Lagoas is a non-integrated mill, but it has a unique position being attached to a pulp mill. So unlike buying market pulp and then having to repulp that and put it back into your processes, we get them directly from the pulp mill, from the Suzano mill. We get that in a wet slurry, so no transportation costs, no repulping yet. And also we have an agreement with the Suzano mill to provide steam and energy at very attractive rates. So yes, that makes that situation down there pretty good. It may not be the highest margin business we own, but it certainly is the highest cash generation business because also you don't have the capital cost on the back end of the mill. Donald Devlin: I would add, John, and for Mike, for your benefit. So, Luiz Antonio is actually our lowest cost mill, even compared to Três Lagoas. And John's comment around on a cash basis is important because you've got a lot less equipment at Três Lagoas, but Luiz Antonio fully integrated using fiber is our lowest cost. John Sims: You asked about the impact on the Canadian tariff, and that was the tariff that was applied was on a very narrow product line of uncoated freesheet. And as you mentioned, it's imported or exported or comes into the U.S. at a very small volume. So the impact of that on the North America market is minuscule from the tariff perspective. Operator: Your next question comes from the line of George Staphos with Bank of America Securities Incorporated. George, please go ahead. George Staphos: Last two from me, one on Europe and one on the bridge into third quarter. So for Europe guys, can you, I think you're answering it to Matt and I might've missed it, but have you quantified what benefits you're getting from improved fiber in Nymölla or -- with a reasonable time period, like in the next quarter or two, annualized what kind of benefit on fiber you expect to get in Nymölla? Relatedly, what are you seeing in the pulp markets in Europe right now and what it's doing to the cost curve, especially for the non-integrated guys. So, that's question one broadly. Question two, if we think about what you reported for 2Q, you did $60 million. Again, thank you for the pricing guide. Let's say you get half of that $75 million to $85 million, let's call it $40 million of the midpoint of $80 million, right? You have maintenance which comes down $40 million, I believe, 2Q to 3Q, again correct me if I'm wrong. So that's an $80 million, should we assume that the Brazilian tons that are not coming in, that negative $20 million offsets, you know, whatever volume and ops benefit you'd get. So basically we're looking at an $80 million benefit, 3Q versus 2Q, you know, what other good guys might help you add to that total? Donald Devlin: Okay, it's a lot packed in there, George. Yes, yes, I appreciate that. So on Europe, let's talk about fiber. So relative to pulp, what we're seeing with pulp are pulp prices coming up, but probably to a stable point. And relative to the non-integrated players, today there are fewer non-integrated players in Europe than there were some years ago. And I think what you traditionally saw where when pulp went up it helped to put paper prices up, we're not seeing that as much anymore. Operating rates are still low. Pulp has come up somewhat, and we've gotten some traction on price, but I think there's less relationship there. And, pulp is up EUR 112 a ton, sorry, say July year-to-date and prices are not up that much. George Staphos: Okay. Relatedly, Nymölla and then the bridge to 3Q? John Sims: I think George, we're not going to, what I said is that wood costs have come down about 20%. But we're going to see the impact of that, like we're starting to just start to see the impact of that in the third quarter, and that'll carry through the rest of the year. George Staphos: And the bridge... John Sims: The bridge. Donald Devlin: Yes, back to your, you're looking for more specifics on each of these, the buckets, if you will, for second half. George Staphos: Yeah, I gave you two round numbers to work. John Sims: Yes, and when I look at numbers at a very quick level, I mean, directionally, I would say you're in the ballpark, we would think. And of course there's some uncertainty around the input costs with the war, but generally that's right. The other thing too is, and maybe we need to talk about this in the volume and stuff. So we shipped the volume when the IEEPA tariff went away, we shipped, we made a change and moved from instead of importing in from our European operations, we imported in from Brazil. We've had to stop that due to the recent tariff implications, but there was volume that was shipped into Brazil and not sold, right? Will be sold in the second half, I'm sorry, to the U.S. And roughly, that means that you know the earnings for Brazil understated, and we're going to see the impact of that in the second half in the mix. And it's roughly $9 million to $10 million. And that's not all going to hit the third quarter that will -- as we sell it, it will be third and fourth quarter. Operator: Thank you very much. We have reached the end of the Q&A session. I will now turn the call back over to John Sims for closing remarks. John, please go ahead. John Sims: Again, thank you for being on the call and thank you for the questions. We said and I said that '25 and '26 would be low points in our free cash flow generation, and I would say that the first and second quarter were probably the nadir of that. But this is a transition year, 2026. And it is going to be a tale of two halves, which we've talked about during this call. This year, we're executing our most significant investments at our Eastover mill, and we'll drive a lot of value in the years to come. We've also launched our lean transformation, focused on exceeding our customers' expectations and driving improvement and accelerating that across all our operations. We are focused on the long-term value creation and will generate strong, sustainable results by diligently executing our flagship growth strategy, adhering to the disciplined capital allocation principles, becoming more customer-centric, and institutionalizing lean management principles. We have a lot of confidence that we believe that as industry concerns, particularly in Europe and on the OLA markets, our capital spending normalizes and the benefits from our investments begin to materialize. We have the potential to generate annually greater than $300 million in cash flow, greater than 15% -- greater than 15% returns on invested capital. So thank you for being on the call. Hans Bjorkman: Thanks everybody. Have a great day and a great weekend. Bye-bye. Operator: Once again, we would like to thank you for participating in Sylvamo's Second Quarter 2026 Earnings Call. You may now disconnect. Before you buy stock in Sylvamo, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sylvamo wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,943!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,382,819!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 14, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Sylvamo (SLVM) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Sylvamo Corporation? Here are five stocks we like better. Second-quarter performance improved: Adjusted EBITDA rose to $60 million from $29 million in the first quarter, driven by paper price increases, favorable product mix and lower operating costs. Free cash flow improved sequentially but remained negative at $23 million. Pricing is expected to drive the second half: Sylvamo projects a $75 million-$85 million price-and-mix benefit versus the first half, with roughly 70% coming from pricing, primarily in North America and Europe. However, Riverdale’s closure and an extended Eastover outage are expected to reduce North American volumes. Eastover investments support future growth: Projects including a paper-machine speed-up, new sheeter and warehouse expansion are expected to add about $55 million in annual benefits, including 60,000 tons of additional annual capacity and more than $5 million in warehouse savings. Sylvamo (NYSE:SLVM) reported second-quarter adjusted EBITDA of $60 million, more than double the $29 million recorded in the first quarter, as the company implemented uncoated freesheet paper price increases across its regions. Adjusted operating earnings were $0.03 per share, while free cash flow was negative $23 million, an improvement of $36 million sequentially. Chief Executive Officer John Sims characterized 2026 as a transition year as the company manages the termination of its Riverdale supply agreement and an extended outage at its Eastover, South Carolina, mill. He said Sylvamo expects most of its annual free cash flow to be generated in the second half. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Chief Financial Officer Don Devlin said favorable price and mix contributed $32 million to adjusted EBITDA versus the first quarter, reflecting paper price increases in all regions, improved mix in the Americas and pulp price increases in Europe. Higher Latin American seasonal demand added $3 million from volume. Operations and costs improved by $22 million, largely because of green energy credits in Europe and lower overhead. Those benefits were partly offset by $24 million of scheduled maintenance outage costs across all regions and $2 million of higher input and transportation costs. The company also benefited from the non-repeat of a $10 million first-quarter charge from International Paper’s Riverdale mill related to high natural-gas costs. → No Hangover: Revisiting Microsoft One Week After Earnings North American margins rose to 15% in the second quarter from 10% in the first quarter, with Devlin attributing the improvement primarily to price and mix, lower operating costs and modestly lower input costs. For the second half, Sylvamo expects price and mix to provide a $75 million to $85 million benefit compared with the first half. Devlin said roughly 70% of that improvement is expected to come from pricing, with the majority generated in North America and Europe. Management said pricing benefits should flow through both the third and fourth quarters, with a slightly larger contribution anticipated in the fourth quarter. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High In Europe, management said industry supply-demand conditions remain challenging, though pulp prices improved through the first half and appear to have stabilized. Sylvamo is implementing another European paper price increase announced for mid-June, with realization expected through the third quarter as costs continue to rise and margins remain at what Devlin described as unacceptable levels. The company expects higher seasonal demand in Latin America during the second half, supporting volume and geographic mix. It is also continuing to realize price increases in other Latin American export markets, the Middle East and Africa. In North America, Sylvamo said industry dynamics have improved after International Paper’s Riverdale paper-machine conversion removed 7% of annual uncoated freesheet industry supply. However, the company saw imports rise in the second quarter in response to a 10% global tariff window. Management expects North American sales and production volumes to decline in the second half because Riverdale supply is no longer available and Eastover’s planned outage will be longer than originally expected. The company also expects to import less product from Brazil and Europe because of tariff changes. Devlin said the company is returning to an estimated $85 million impact from the Riverdale footprint alignment, as a previously anticipated $20 million benefit from Brazilian imports has effectively been eliminated. Sylvamo expects lower fiber costs in Europe and normalized wood costs in Latin America to more than offset higher energy, chemical and transportation costs associated with the Middle East conflict. Sims said wood costs at the Nymölla mill in Sweden have declined about 20% from their fourth-quarter 2025 peak, with benefits beginning to appear in the third quarter. Sims said strategic projects at Eastover remain on track. The mill’s hardwood wood-yard line has operated since May with improved reliability and chip quality, while the softwood line is scheduled to start in the first quarter of 2027. The Eastover paper-machine speed-up project remains on schedule and budget for completion during the fourth-quarter maintenance outage. It is expected to add 60,000 tons of annual uncoated freesheet capacity, with production ramping early next year. A new sheeter passed equipment acceptance testing in June and has arrived in the U.S. Sylvamo expects the speed-up project and sheeter to produce $50 million in annual benefits, including an estimated $30 million to $40 million in 2027. The company also completed a sale-leaseback transaction to expand an attached warehouse by 300,000 square feet. That expansion is expected to be completed in the first quarter of 2027 and generate more than $5 million in annual savings. Eastover paper-machine speed-up: 60,000 additional annual tons of capacity. Paper-machine speed-up and new sheeter: $50 million in expected annual benefits. Warehouse expansion: More than $5 million in expected annual savings. Total expected benefit from the four Eastover-related projects: $55 million annually. Sylvamo is advancing a lean transformation program across its operations, beginning with value-stream mapping at its Mogi Guaçu and Três Lagoas mills in Latin America and expanding to its Ticonderoga mill, Sumter sheet plant and corporate functions in North America. The company set 2030 goals that include eliminating serious injuries, increasing employee net promoter score above 50, improving customer net promoter score by 20 points, exceeding 90% perfect-order performance, and raising overall equipment effectiveness by 400 basis points. It also aims to achieve annual cash-cost improvement at three to five times its 2022-2025 average rate. On Europe, Sims said management has made progress through improved execution, mix initiatives and cost-reduction efforts at the Saillat and Nymölla mills. Still, he said the company could consider other options in 2027 if it is not satisfied with the long-term outlook. He did not commit to a specific timeline. Sims said Sylvamo believes it has the potential to generate more than $300 million in annual free cash flow and achieve return on invested capital above 15% as industry conditions improve, capital spending normalizes and investment benefits materialize. Sylvamo Corporation, trading on the New York Stock Exchange under the ticker SLVM, is a leading global producer of uncoated freesheet paper. The company was established in October 2021 through a spin-off from International Paper, creating an independent entity focused exclusively on the development, manufacturing and marketing of high-quality uncoated paper products. Headquartered in Memphis, Tennessee, Sylvamo draws on decades of industry experience inherited from its predecessor, positioning itself to meet evolving customer needs in paper-based communications and packaging applications. The company’s core product portfolio includes office and digital print papers, direct mail and marketing materials, catalog and commercial printing papers, and a range of specialty and value-added grades. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Sylvamo Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized 2026 as a transition year, specifically citing the termination of the Riverdale supply agreement and extended maintenance at the Eastover mill as temporary headwinds. Performance improvement is being driven by a 'lean transformation' journey, utilizing value stream mapping in Latin America and North America to institutionalize employee-driven cost savings. Price realization improved sequentially as management successfully implemented uncoated freesheet price increases across all global regions to offset inflationary pressures. The North American market dynamic shifted following the removal of 7% of industry supply due to a competitor's machine conversion, though this was partially offset by a temporary surge in imports. European operations remain under strategic review due to 'unacceptable' margin levels, with management focusing on mix improvements and productivity while monitoring long-term viability. Operational results in the second quarter were bolstered by green energy credits in Europe and lower overhead, despite unfavorable maintenance outage timing. Management expects a significant earnings inflection in the second half of 2026, projecting a $75 million to $85 million benefit from price and mix improvements compared to the first half. The Eastover mill strategic investments, including a paper machine speed-up and new sheeter, are expected to deliver $50 million in annual benefits, with $30 million to $40 million realized in 2027. Free cash flow generation is heavily weighted toward the second half of the year, supported by a planned 50,000-ton inventory drawdown in North America. Long-term 2030 goals include improving machine efficiency by 400 basis points and achieving a cash cost improvement rate 3x to 5x higher than the 2022-2025 average. Future earnings remain sensitive to the Middle East conflict, which management expects will continue to pressure energy, chemical, and transportation costs. A $9 million valuation allowance was taken on a Brazil deferred tax asset to facilitate the merger of entities and capture $30 million in VAT tax credits before regulatory changes. New global tariffs have rendered importing volume from Brazil and Europe to North America less economical, leading management to reduce expected import volumes. The Eastover maintenance outage in the fourth quarter is now expected to exceed the original 45-day estimate, impacting near-term production volumes. A sale-leaseback transaction for the Eastover sheet plant expansion will add 300,000 square feet of warehouse space, targeted to save $5 million annually starting in 2027. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management attributed the margin expansion to 15% primarily to price and mix improvements rather than sourcing shifts. Working capital builds from the first half are expected to mostly unwind by year-end as Eastover project inventory is utilized. Management extended the evaluation period for European assets, stating a final determination on potential sales or closures will likely occur in 2027. Current focus is on achieving a $50 million improvement through mix and cost reductions to reach mid-cycle cash positive status. The $20 million benefit previously expected from importing Brazilian tons has effectively vanished due to new tariff implementations. Management noted that recent Canadian tariffs apply to a very narrow product line and are expected to have a 'miniscule' impact on the broader market. Management defended the integration model, noting that while the non-integrated Três Lagoas mill is a high cash generator, the fully integrated Luiz Antonio mill remains their lowest-cost facility. The Três Lagoas mill benefits from a unique 'wet slurry' pulp delivery system from a partner mill, eliminating drying and transportation costs.

This article first appeared on GuruFocus. Adjusted EBITDA: More than doubled sequentially to $60 million, with a margin of 7%. Adjusted Operating Earnings: $0.03 per share. Free Cash Flow: Negative $23 million, a $36 million improvement sequentially. Price and Mix: Favorable by $32 million, reflecting paper price increases in all regions and better mix in the Americas and Europe. Volume: Increased by $3 million, driven by seasonally stronger demand in Latin America. Operations and Costs: Favorable by $22 million, largely due to green energy credits in Europe and lower overhead. Planned Maintenance Outage Costs: Unfavorable by $24 million due to scheduled outages in all regions. Input and Transportation Costs: Unfavorable by $2 million, with higher purchased wood in Latin America and transportation costs in North America, partially offset by the non-repeat of a one-time $10 million charge from International Paper's Riverdale Mill. Warning! GuruFocus has detected 8 Warning Signs with ONL. Is SLVM fairly valued? Test your thesis with our free DCF calculator. Release Date: August 07, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Adjusted EBITDA more than doubled sequentially to $60 million, with a margin of 7%. Price and mix improved by $32 million in Q2, driven by price increases across all regions. Expect $75-85 million benefit from better price and mix in the second half of 2026. Strategic investments at Eastover mill are on schedule and budget, expected to generate $55 million in annual benefits. Lean transformation initiatives are underway, aiming to drive cost savings and operational improvements. Free cash flow was negative $23 million in Q2, with most cash flow expected in the second half. Planned maintenance outage costs were unfavorable by $24 million due to scheduled outages in all regions. North American volumes are expected to decline in the second half due to the loss of Riverdale supply and extended Eastover outage. Tariff changes have made importing product from Brazil uneconomical, reducing volume and earnings benefits. European industry supply and demand remains challenging, with margins at unacceptable levels and ongoing cost pressures. Q: Can you provide more color on the drivers behind the North American margin improvement from 10% in Q1 to 15% in Q2, and where do you expect leverage to end the year given the working capital build?A: Don Devlin (CFO): The North American margin improvement was largely driven by price and mix, along with lower operations and input costs. The working capital build, primarily a 50,000-ton inventory increase in North America for the Eastover project, will unwind by the end of the year, with the drawdown occurring in the second half. Q: You mentioned lower North American volumes in the second half. Is that sales or production, and what are the main drivers?A: Don Devlin (CFO): It's both lower production and sales. The loss of Riverdale supply and a longer-than-planned extended outage at Eastover will reduce production and sales. John Sims (CEO) added that due to new tariffs, it's no longer economical to import volume from Brazil and Europe, so we'll bring in less than previously expected. Q: Can you quantify the $75 to $85 million price and mix benefit for the second half, and how will pricing trend sequentially by region?A: Don Devlin (CFO): About 70% of the $75 to $85 million benefit is price, with the majority coming from North America and Europe. John Sims (CEO) noted that a third price increase is being implemented in Europe, and price increases are being realized in Latin America and North America, with most of the flow-through occurring in Q3 and carrying into Q4. Q: Can you provide an update on the European strategic review, including the timeline for a decision and the options being considered?A: John Sims (CEO): We made significant management changes in Europe and are seeing accelerated performance through mix improvement, cost reductions, and lower wood costs. However, conditions remain difficult. We will likely make a decision in 2027 on whether to continue, and if not satisfied with the outlook, we may pursue other options, including shutting or selling assets. We need roughly $50 million in improvements to get to significantly above cash positive on a mid-cycle basis. Q: Can you help quantify the benefits from better volumes, operations costs, and input costs in the second half versus the first half?A: Don Devlin (CFO): We provided the $75 to $85 million price and mix guidance because we are confident in it. We are also confident in planned maintenance outages. However, there is more uncertainty around volume, operations, and input costs, so we chose not to provide specific guidance on those items. Q: Regarding the poison pill that expires in November, what is the plan?A: John Sims (CEO): The shareholder rights plan remains in place. The board has not made a decision yet, but we will address it when we meet in September. Q: You mentioned the $75 to $85 million price and mix benefit. Will you be at a full run rate on pricing by the fourth quarter?A: Don Devlin (CFO): Yes, we will be at a full run rate by the fourth quarter. North America will definitely be at run rate, and we expect the same for Latin America and Europe. Q: Why did the effective tax rate move up a couple of points?A: Don Devlin (CFO): The increase is mainly due to a Brazil valuation allowance taken on a deferred tax asset in our Brazil export entity. This was related to changing VAT rules, and we merged two entities to take advantage of $30 million in VAT tax credits, which came at the expense of a $9 million valuation allowance expense. John Sims (CEO) added that we would have stranded the $30 million tax credit if we hadn't made this move. Q: How much of the operational focus items, like operational excellence and cost leadership, do you need to get right to achieve the $300 million free cash flow target?A: John Sims (CEO): To achieve the $300 million target, the most important areas are cost leadership and customer centricity. We need to increase the rate and level at which we reduce costs despite high inflationary pressures, and we need intense customer loyalty as the market continues to decline. Q: Can you update us on the earnings impact from the footprint alignment related to Eastover, given the tariff changes?A: Don Devlin (CFO): Due to tariff changes, we will not be able to bring in as much product from Brazil as anticipated last quarter. We will be back near the $85 million estimate provided in February, and the $20 million add-back from Brazil has essentially gone away. Q: Can you talk about the impact of additional Canadian tariffs on the U.S. market, and why is it important to be backward integrated into pulp in Brazil?A: John Sims (CEO): The Canadian tariff was applied to a very narrow product line with small import volume, so the impact on the North American market is minimal. Regarding backward integration, the process of producing paper on an integrated mill allows you to reclaim chemicals and produce your own energy, which is typically a much lower cost way to produce products. Where you have low-cost wood, it makes more sense to be fully integrated. Don Devlin (CFO) added that Luisa Antonio is our lowest cost mill, even compared to Tres Lagos, because it is fully integrated and fiber is the smallest cost. Q: Can you quantify the benefit from improved fiber costs at Nymolla, and what are you seeing in the European pulp markets?A: Don Devlin (CFO): We have seen wood costs decrease about 20% since their peak, and we are starting to see the impact in Q3, which will carry through the rest of the year. Pulp prices are coming up but stabilizing. There are fewer non-integrated players in Europe now, and the traditional relationship where higher pulp prices led to higher paper prices is not as strong. John Sims (CEO) added that we are not going to quantify the exact benefit, but the impact is starting to be seen in Q3. Q: Can you provide more specifics on the bridge into Q3, assuming $40 million of the price and mix benefit and lower maintenance costs?A: John Sims ( For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Sylvamo Corporation (SLVM) came out with quarterly earnings of $0.03 per share, beating the Zacks Consensus Estimate of a loss of $0.14 per share. This compares to earnings of $0.37 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +121.43%. A quarter ago, it was expected that this company would post a loss of $0.25 per share when it actually produced a loss of $0.53, delivering a surprise of -112%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Sylvamo, which belongs to the Zacks Paper and Related Products industry, posted revenues of $806 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.75%. This compares to year-ago revenues of $794 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Sylvamo shares have lost about 21.5% since the beginning of the year versus the S&P 500's gain of 12.6%. While Sylvamo has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Sylvamo was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.55 on $873 million in revenues for the coming quarter and $1.99 on $3.32 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Paper and Related Products is currently in the bottom 8% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Suzano S.A. Sponsored ADR (SUZ), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 12. This company is expected to post quarterly earnings of $0.06 per share in its upcoming report, which represents a year-over-year change of -91.6%. The consensus EPS estimate for the quarter has been revised 284.6% higher over the last 30 days to the current level. Suzano S.A. Sponsored ADR's revenues are expected to be $2.32 billion, down 1.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sylvamo Corporation (SLVM) : Free Stock Analysis Report Suzano S.A. Sponsored ADR (SUZ) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

MEMPHIS, Tenn., August 07, 2026--(BUSINESS WIRE)--Sylvamo (NYSE: SLVM), the world’s paper company, is releasing second quarter earnings. The company will host an audio webcast at 10 a.m. EDT at investors.sylvamo.com. Management Summary from Chief Executive Officer John Sims Our second quarter highlights include implementing uncoated freesheet price increases with our customers across all regions. We’re advancing our lean transformation journey to embed continuous improvement into how we run the business, so performance improvement becomes employee-driven, systematic and self-sustaining. Our teams also continue to make good progress on our high-return strategic investments at our Eastover, South Carolina, mill. 2026 is a transition year as we adjust our North America footprint while working through the termination of the Riverdale supply agreement with International Paper (NYSE: IP), changing tariffs and the extended outage to complete our strategic investments at our Eastover mill. Our commercial and supply chain teams have done an outstanding job to ensure our customers are well served. Our strategic investments at Eastover continue to progress: The woodyard modernization project is going well, with the hardwood line yielding improved reliability and chip quality since its startup in May. The softwood operation remains on schedule for the first quarter of 2027. The paper machine optimization project remains on schedule, on budget and is expected to be completed during a planned maintenance outage in the fourth quarter, which will add an additional 60,000 short tons of uncoated freesheet capacity annually. The new cutsize sheeter passed equipment acceptance testing in June, arrived in the U.S. a few weeks ago and teams are preparing for installation. We are expanding warehouse capacity at our existing sheeting plant through a sale-leaseback transaction with a third party. The project will reduce supply chain costs, improve service to our customers and provide additional flexibility. We expect this project to be completed in the first quarter of 2027. In the second quarter, Sylvamo generated a net loss of $11 million and adjusted EBITDA* of $60 million. Cash from continuing operations was $38 million, and free cash flow* was negative $23 million. In the last few years, we generated most of our free cash flow in the second half, and we expect to do so again this year. Overall, we expect a much better earnings performance for the last six months of the year as price and mix, volume and operations should be better compared to the first half. Our board of directors declared a $0.45 dividend for the third quarter, which we paid July 28. -Regional Business Conditions In Europe, pulp prices improved throughout the first half of the year and seem stable. We continue to realize previously communicated price increases and announced another price increase effective in mid-June, which we expect to realize through the third quarter. In Latin America, we expect seasonally higher demand through the second half of the year, positively impacting volume and geographic mix. We continue to realize previously communicated price increases to export customers across other Latin American countries as well as customers in the Middle East and Africa. Realization of these increases should continue through the third quarter. In North America, industry supply and demand dynamics improved as roughly 7% of the annual uncoated freesheet industry supply was removed with the Riverdale paper machine conversion. In the second quarter, we saw imports into North America increase compared to the previous quarter, a reaction to the 10% global tariff window. We also continue to realize previously communicated paper price increases and expect to see additional realization through the third quarter. We expect the Middle East conflict to continue pressuring energy, chemical and transportation costs across our regions as we go through the year. -Looking Ahead We continue to execute in the six areas I outlined in my letter to shareowners earlier this year that define how Sylvamo will be legendary for the way we relentlessly pursue and achieve world-class excellence. These areas are safety and well-being, employee engagement, customer centricity, operational excellence, cost leadership and sustainability, all of which support our long-term value creation strategy for shareowners. We will make disciplined, data-driven decisions that position us for sustainable success and strengthen Sylvamo for decades to come. As industry conditions turn, our capital spending normalizes and the benefits from our investments begin to materialize, we have the potential to generate annually: > $300 million in free cash flow > 15% return on invested capital Earnings Webcast The company will host an audio webcast at 10 a.m. EDT at investors.sylvamo.com. To participate in Q&A, use the analyst registration to receive a unique passcode. Replays will be available at investors.sylvamo.com for one year. About Sylvamo Sylvamo Corporation (NYSE: SLVM) is the world's paper company with mills in Europe, Latin America and North America. Our vision is to be the employer, supplier and investment of choice. We transform renewable resources into papers that people depend on for education, communication and entertainment. Headquartered in Memphis, Tennessee, we employ more than 6,500 colleagues. Net sales for 2025 were $3.4 billion. For more information, please visit Sylvamo.com. Segment Information Sylvamo uses business segment operating profit (loss) to measure the earnings performance of its businesses, see definition within "Non-GAAP Financial Measures". Second quarter 2026 sales by business segment and operating profit (loss) by business segment compared with the first quarter of 2026 and the second quarter of 2025 are as follows: Operating profits in the second quarter of 2026: Europe - $(20) million compared with $(44) million in the first quarter of 2026. Losses were lower due to higher sales price and mix and lower operating and input costs which were partially offset by higher planned maintenance outages. Latin America - $(16) million compared with $4 million in the first quarter of 2026. Earnings were lower due to higher planned maintenance outages and higher input costs which were partially offset by higher sales price and mix and higher volumes. North America - $50 million compared with $25 million in the first quarter of 2026. Earnings were higher due to higher sales price and mix and lower operating and input costs which were slightly offset higher planned maintenance outages. Effective Tax Rate The reported effective tax rate for the second quarter of 2026 was 1200%, compared to 50% for the first quarter of 2026. The higher rate for the second quarter was primarily driven by a $12 million valuation allowance on certain foreign deferred tax assets which will not expected to be realized due to a planned internal merger. The effective operational tax rate for the second quarter of 2026 was 80%, compared with 13% for the first quarter of 2026. The effective operational tax rate is a non-GAAP financial measure and is calculated by adjusting the income tax provision (benefit) and rate to exclude the tax effect at the applicable statutory rate of net special items and the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary. Management believes that this presentation provides useful information to investors by providing a more meaningful comparison of the income tax rate between past and present periods. Effects of Net Special Items Net special items in the second quarter of 2026 amounted to a net after-tax charge of $13 million ($0.34 per diluted share), compared with a net after-tax charge of $1 million ($0.03 per diluted share) in the first quarter of 2026. Non-GAAP Financial Measures Adjusted Operating Earnings (Loss) (non-GAAP) are net income (loss) (GAAP) plus the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items. Management uses this measure to focus on ongoing operations and believes it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. The Company believes that using this information, along with net income (loss), provides for a more complete analysis of the results of operations. Net income (loss) is the most directly comparable GAAP measure. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Consolidated Statement of Operations and related notes included later in this release. Adjusted EBITDA (non-GAAP) is net income (loss) (GAAP) plus the sum of income taxes, net interest expense, depreciation, amortization and cost of timber harvested, stock-based compensation, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items. Management uses these measures in managing the operating performance of our business and believes that adjusted EBITDA along with adjusted EBITDA margin provide investors and analysts meaningful insights into our operating performance and is a relevant metric for the third-party debt. Adjusted EBITDA is reconciled to net income (loss), the most directly comparable GAAP measure. Adjusted EBITDA margin (adjusted EBITDA divided by net sales) is reconciled to net income (loss) margin (net income (loss) divided by net sales), the most directly comparable GAAP measure. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Consolidated Statement of Operations and related notes included later in this release. Business Segment Operating Profit (Loss) (non-GAAP) is net income (loss) (GAAP) plus the sum of income taxes, net interest expense, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items. We believe that business segment operating profit (loss) is an important indicator of operating performance as it is a measure reported to our management for purposes of making decisions about allocating resources to our business segments and assessing the performance of our business segments. For more information regarding net special items, see the information under the heading Effects of Net Special Items and the Consolidated Statement of Operations and related notes included later in this release. Free Cash Flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operating activities. Management utilizes this measure in connection with managing our business and believes that Free Cash Flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet and service debt, and return cash to shareowners. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow also enables investors to perform meaningful comparisons between past and present periods. Forward-Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including the information under the heading "Management Summary from Chief Executive Officer John Sims." Any or all forward-looking statements may turn out to be incorrect, and our actual actions and results could differ materially from what they express or imply, because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control. These risks, uncertainties, and other factors include those disclosed in the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended Dec. 31, 2025, filed with the U.S. Securities and Exchange Commission (SEC) and in our subsequent filings with the SEC, available on our website, Sylvamo.com. These forward-looking statements reflect our current expectations, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260807770314/en/ Contacts Investor Contact: Hans Bjorkman, 901-519-8030, [email protected] Media Contact: Adam Ghassemi, 901-519-8115, [email protected]

Koppers (KOP) came out with quarterly earnings of $1.37 per share, beating the Zacks Consensus Estimate of $1.12 per share. This compares to earnings of $1.48 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +22.32%. A quarter ago, it was expected that this maker of chemicals, carbon compounds and wood treatment products would post earnings of $0.44 per share when it actually produced earnings of $0.57, delivering a surprise of +29.55%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Koppers, which belongs to the Zacks Chemical - Diversified industry, posted revenues of $520.1 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.77%. This compares to year-ago revenues of $504.8 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Koppers shares have added about 88.4% since the beginning of the year versus the S&P 500's gain of 12.8%. While Koppers has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Koppers was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.35 on $503.1 million in revenues for the coming quarter and $4.13 on $1.93 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Chemical - Diversified is currently in the top 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Basic Materials sector, Sylvamo Corporation (SLVM), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 7. This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of -137.8%. The consensus EPS estimate for the quarter has been revised 0.6% lower over the last 30 days to the current level. Sylvamo Corporation's revenues are expected to be $800 million, up 0.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Koppers Holdings Inc. (KOP) : Free Stock Analysis Report Sylvamo Corporation (SLVM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market expects Sylvamo Corporation (SLVM) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 7, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of -137.8%. Revenues are expected to be $800 million, up 0.8% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.64% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Sylvamo, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #5. So, this combination makes it difficult to conclusively predict that Sylvamo will beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Sylvamo would post a loss of$0.25 per share when it actually produced a loss of -$0.53, delivering a surprise of -112.00%. Over the last four quarters, the company has beaten consensus EPS estimates just once. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Sylvamo doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sylvamo Corporation (SLVM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research