Sylvamo Q2 Earnings Call Highlights

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.

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.

North American margins rose to 15% in the second quarter from 10% in the first quarter, with the improvement primarily attributed 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. 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.

In Europe, 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 were 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, industry dynamics have improved after International Pape.