Sylvamo Q3 2024 Earnings Report

Sylvamo EPS Results

• Actual EPS: $2.44
• Consensus EPS: $2.18
• Beat/Miss: Beat by +$0.26
• One Year Ago EPS: $1.70

Sylvamo Revenue Results

• Actual Revenue: $965.00 million
• Expected Revenue: $960.47 million
• Beat/Miss: Beat by +$4.53 million
• YoY Revenue Growth: +7.60%

Sylvamo Announcement Details

• Quarter: Q3 2024
• Date: 11/12/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 12, 2024
• Conference Call Time: 10:00AM ET

Sylvamo (NYSE:SLVM), 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. These papers are used in everyday applications such as home and office printers, copiers and digital presses, as well as in more specialized contexts like label and packaging solutions. Sylvamo emphasizes sustainability throughout its manufacturing process, incorporating recycled fiber and responsible forestry practices to support its customers’ environmental goals.

Sylvamo operates eight manufacturing facilities across North and Latin America, with mills located in the United States, Mexico and Brazil. The company’s geographic reach extends through an integrated sales and distribution network that serves customers in over 70 countries. By maintaining a flexible supply chain and strategic partnerships with regional distributors, Sylvamo is able to deliver its paper products efficiently to commercial printers, office supply wholesalers and end-user customers on a global scale.

At the helm of Sylvamo is Chief Executive Officer Joseph D. Pyne, who brings more than 30 years of experience in the paper and packaging industry. Under his leadership, the company has focused on operational excellence, customer collaboration and product innovation. Sylvamo’s executive team combines deep familiarity with the uncoated freesheet market and a commitment to long-term sustainable growth, guiding the company as it seeks to enhance value for both customers and shareholders.

Sylvamo Q3 2024 Earnings Call Transcript

Key Takeaways

• Strong Q3 performance with CAD 193 million adjusted EBITDA at a 20% margin, CAD 119 million free cash flow, and adjusted EPS of $2.44.
• Project Horizon cost‐reduction program is on track to exceed its €110 million run-rate savings goal by up to €10 million, reinforcing a low-cost production strategy.
• Termination of the Georgetown supply agreement will cut ~150 K tonnes, translating into an estimated $40 million earnings headwind, partially offset by retaining 100 K tonnes of higher-margin products.
• Industry capacity reductions—roughly 10% uncoated freesheet capacity decline in North America and 7% in Europe—are expected to improve market balance and long-term pricing.
• Brazilian tax dispute ruling favored Savama on two-thirds of the goodwill claim, potentially eliminating a $60 million escrow requirement upon final resolution.

Presentation

[Operator]

Good morning. Thank you for standing by. Welcome to Sylvamo's third quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, you will have an opportunity to ask questions. To ask a question, press star one on your telephone keypad. To withdraw a question, press star one again. As a reminder, your conference is being recorded. I'd now like to turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

[Hans Bjorkman, VP of Investor Relations at Sylvamo]

Thanks, Audra. Good morning, and thank you for joining our third quarter 2024 earnings call. Our speakers this morning are Jean-Michel Ribiéras, Chairman and Chief Executive Officer, and John Sims, Senior Vice President and Chief Financial Officer. Slides two and three 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'll 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 Jean-Michel.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Thanks, Hans. Good morning, and thank you for joining our call. I'll begin on slide four. We had a really strong third quarter. Our teams executed very well, delivering strong commercial and operational performance. Our mill system ran well, and we continue to see relatively stable input costs. We continue to make good progress with Project Horizon, our cost reduction program to streamline overhead manufacturing and supply chain costs. We are on target to exceed our $110 million year-end run rate saving goal by up to $10 million. Lastly, these combined performances by our teams resulted in very strong earnings and outstanding cash flow in the quarter. Let's move to the next slide. Slide five shows our key financial metrics. We earned adjusted EBITDA of $193 million with a margin of 20%. Free cash flow generation was $119 million, and we generated adjusted operating earnings of $2.44 per share.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

I'm proud of how our teams delivered impressive results while taking care of our customers. More importantly, I'm proud of our team's commitment to putting people before paper to ensure everyone returns home safe at the end of each day. We are focused on building a resilient safety culture by involving every team member in our efforts to proactively eliminate risk and create a safer environment for everyone every day. Now, John, we'll review our performance in more detail.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Thank you, Jean-Michel, and good morning, everyone. Slide six contains our third quarter earnings bridge versus the second quarter. The $193 million of adjusted EBITDA was better than our outlook of $170-$185 million and almost $30 million higher than the prior quarter. Price and mix was unfavorable by $4 million and driven by North America mix. Volume increased by $10 million, driven by North America. Operations and other costs were stable and better than projected, reflecting solid operations across our mill system. Planned maintenance outages cost decreased by $28 million as we had no major planned outages in the quarter. Input and transportation costs increased by $4 million as negative fiber costs in Latin America more than offset positives in energy and transportation in North America. I'd also like to commend our teams for their very strong all-around performance that resulted in a 20% margin.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Let's move to slide seven. We expect to deliver fourth quarter Adjusted EBITDA of $150 million-$165 million. We project price and mix to be unfavorable by $20 million-$25 million. This is due to pulp and paper price decreases in Europe, higher export mix in Latin America, and customer mix effect in North America. We expect volume to improve by $15 million-$20 million, mainly due to stronger volume in Latin America. Operations and other costs are projected to increase slightly due to an $8 million operating expense for a planned 10-year turbine generator maintenance event at our Eastover mill. This will be partially offset by better fixed cost absorption from less economic downtime in North America. We expect input and transportation costs to increase by $5 million-$10 million, mostly due to transportation and seasonally higher energy.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Planned maintenance outages are projected to increase by 17 million as we have a planned outage at Eastover this quarter. Let's go to slide eight. An important part of our strategy is to be a low-cost producer. This time last year, we initiated Project Horizon, a cost reduction program to streamline overhead manufacturing and supply chain costs. As Jean-Michel mentioned earlier, before inflation, we're on target to exceed our 110 million year-end run rate savings goal by up to 10 million. This will continue to be a focus for us moving forward, and we will provide more details in our next earnings call when we wrap up 2024. Let's move to slide nine. As was announced two weeks ago, Sylvamo and International Paper have agreed to mutually terminate the Georgetown supply agreement in December.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

International Paper has also announced that the Georgetown mill will cease production by the end of the year. We have plans to support customers through this transition as they find alternative suppliers. Of the approximately 250,000 tons we expect Georgetown to supply us this year, we will exit about 150,000 tons. This will have roughly a negative 400. I'm sorry, a $40 million earnings impact, assuming 2024 margins, i.e., no change in operating costs, prices, input costs, etc. We retained about 100,000 tons of the most profitable products. These products have largely been qualified and transitioned to our Ticonderoga and Eastover mills, which will reduce economic downtime in our North America business. The combination of optimizing our mix of products, segments, and customers while leveraging efficiencies from a simplified footprint will help us mitigate the loss of volume.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

As a result of the Georgetown closure, our North America business will become leaner and more productive. Also, we are continuing to focus on strategic initiatives to simplify the business, unlock efficiencies, and drive earnings growth. Let's move to slide 10. With the Georgetown mill closing by the end of December, in addition to the capacity reductions announced earlier this year, North America's uncoated freesheet capacity will be reduced by approximately 10%. On this slide, you can see the effect of these capacity reductions. The left-hand side shows the supply positions as of the end of the first half of the year, and on the right-hand side, you have the view after all announced capacity reductions have been removed.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Consistent with our strategy and our investment thesis, we are committed to the uncoated freesheet business and are very well positioned to help our customers win in their respective areas. Let's go to slide 11. Uncoated freesheet industry conditions are improving in Europe and North America, as seen on this slide. Next year, European demand is estimated to decline 2%. However, supply is expected to drop by 7% after two uncoated freesheet closures later this year. Latin America demand and supply are both expected to be stable in 2025. Lastly, North America demand is estimated to decline 3%. However, supply is expected to drop by 10%. As industry conditions evolve, we are well positioned to serve our customers for the long run through our talented teams, iconic brands, and our low-cost global footprint. I'll conclude my comments on slide 12.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

I want to wrap up with some encouraging news as it relates to the Brazil goodwill tax dispute. Last month, a Brazilian federal regional court ruled in our favor on a court case covering two-thirds of the disputed amount. As a result of this, we are currently discussing with our lenders the possibility of eliminating the $60 million escrow requirement that we funded in 2023. The Brazilian tax authorities will appeal the court ruling, and it could be several years before there is a final resolution on this matter. As of now, that's all we have to report on this. We will keep you posted on any material changes as we progress, and there is also more detail in the appendix. I'll now turn the call back over to Jean-Michel.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Thanks, John. I'll conclude my comments on slide 13. Sylvamo is a cash flow story, and we are creating shareholder value through strong cash generation and disciplined capital allocation. I continue to be impressed with our teams as we work to take care of our customer needs and remain the supplier of choice. We generated outstanding free cash flow in the third quarter. We're reducing our cost structure and are reinvesting in our business through a great pipeline of high-return capital projects, which will enable us to grow earnings and cash flow in the coming years. We are simplifying our North America business to become leaner and more agile to drive earnings growth. We are committing to return at least 40% of our cash flow to shareholders this year. Looking forward, we are encouraged by the uncoated freesheet conditions across our regions.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

We're confident in our future and motivated by the opportunities that lie ahead. With that, I'll turn the call back to Hans.

[Hans Bjorkman, VP of Investor Relations at Sylvamo]

Thanks, Jean-Michel, and thank you, John. Okay, Audra, we're ready to take the questions.

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw a question, press star one again. We do ask that you limit yourself to one question and one follow-up question. Thank you. We'll take our first question from Daniel Harriman at Sidoti & Company.

[Daniel Harriman, Equity Research Analyst at Sidoti & Company]

Hey, good morning, guys. Thanks for taking my call. With the upcoming closure of Georgetown and then the announced strategy changes at IP, to the extent that you can, could you provide any comment or ideas about how the capacity reduction has any impact on how you think about the Riverdale agreement that you have going forward with the company?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Yes. So hi, Daniel. Thanks for joining the call. Since we started the spinoff of IP and started Sylvamo, we've been preparing for that. So we know it will happen. We have no information on when. We've not been notified of anything, but we're prepared. The one thing which is important to understand with Riverdale, which is different than Georgetown, is Riverdale grades are grades we produce in all our other mills. So if Riverdale was going to go down, we believe that the mix improvement we will realize at current margins will essentially mitigate any potential negative impact to our earnings. So Riverdale, for us, we're ready, we're prepared, and if it was to happen, we'll probably be a break-even with the benefits we would have from it.

[Daniel Harriman, Equity Research Analyst at Sidoti & Company]

Perfect. Thank you. And then with the 100,000 tons that you are retaining of that business, has that all been transitioned over to your existing footprint, or is that still ongoing?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Yeah, it's all been transferred. It's ready.

[Daniel Harriman, Equity Research Analyst at Sidoti & Company]

Okay. Thanks, guys.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Thank you.

[Operator]

We'll move next to George Staphos at Bank of America.

[George Staphos, Managing Director at Bank of America]

Hi, everyone. Good morning. Thanks for the details. Congratulations on a very strong quarter, guys. My two questions to start: can you talk about what offset you may have from tightening the footprint, etc., that would help to offset the, if you will, the gross impact from Georgetown and those 100,000 tons? So said differently, of the 40 million currently, based on current operating margins or margins, what do you think the net would be, all else equal, in 2025, given all the other things that you're working on? That's question number one. Question number two, Sylvamo has been a cash flow story since it's been to its credit, and you've certainly been very singular in executing your strategy here and elsewhere.

[George Staphos, Managing Director at Bank of America]

When we look at free cash flow for the fourth quarter, based on where EBITDA is, based on CapEx and interest expense, and then tax-affecting that, we're coming up with something around $65 million-$75 million for free cash flow. Could you talk to that? I don't know if there's a comment in the slides around that in terms of whether that's a reasonably good estimate or other things that we should be thinking about. Thank you.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yeah, George. It's John Sims. Thanks for joining the call. On your first question.

[George Staphos, Managing Director at Bank of America]

Morning, John.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Good morning. Going to be careful. We're not going to project anything in terms of pricing and impact that we have next year. Certainly, as we put out, the capacity closure, if you will, of the Georgetown mill, it's going to be a net positive for the industry. On top of that, with the other closures that have occurred. Again, the $40 million impact we have is based on 2024 margins, not projecting 2025 margins. Of course, there's other things other than the impact of pricing that could impact that cost and other things like that. I also want to mention, though, we talked about Project Horizon. We are slightly exceeding our target of $110 million. We're now projecting a $120 million run rate. Now, that reminds you, that is before inflation. We estimated about $50 million of inflation this year. We're running ahead of that.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

So we think that also we did Horizon in anticipation of Georgetown. And so that also helps us mitigate the impact of the Georgetown.

[George Staphos, Managing Director at Bank of America]

John, I understand. I guess maybe what I'm saying is, could you help us with the reduced economic downtime, the improved mix, and streamlining SKUs? Holding everything else constant, we understand why you need to do that. Does that add back $5 million, $10 million, or too hard to say, or it's modest enough that we should just think about $40 million? And then my other question was.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Oh, I got it.

[George Staphos, Managing Director at Bank of America]

Thanks.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yeah, I understand your question now. Yeah, that's factored into the $40 million net impact.

[George Staphos, Managing Director at Bank of America]

I see. Okay.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

So yes, it factors in the reduction of the simplification of the business and reduction of lack of order downtime.

[George Staphos, Managing Director at Bank of America]

Okay, and on free cash flow for the fourth quarter?

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yes, free cash flow for the fourth quarter, I think you said estimate about $65 million, and I would say that that's approximately, I mean, that's not out of the realm of possibility, yes.

[George Staphos, Managing Director at Bank of America]

Okay. Thanks so much. I'll turn it over.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Go ahead.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Thank you.

[George Staphos, Managing Director at Bank of America]

I'm sorry.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

No, I'm just saying we don't usually give an outlook on cash flow. That's why I'm a little bit hesitant. But I don't see anything that's wrong with your estimate.

[George Staphos, Managing Director at Bank of America]

Thank you.

[Operator]

As a reminder, if you would like to ask a question, please press star one. We'll go next to Matthew McKellar at RBC Capital Markets.

[Matthew McKellar, VP at RBC Capital Markets]

Hi, good morning. Thanks for taking my questions. I'd like to ask about planned maintenance in Europe in 2025, which you've communicated, I think, will be in the $30 million-$40 million range across Saillat and Nymölla. Could you first maybe just remind us of where those outages will fall in the year? And then I'd assume Europe is the largest moving part year-over-year, but how do you expect your total maintenance outage cost in 2025 to compare to the $73 million guiding to in 2024?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

So hi, Matt. Jean-Michel speaking. Thanks for joining the call. We will deliver a more precise estimate in our next earnings. But directionally, the thing is our European mills are mostly on a 24-month cycle, which means one year you have outage costs and the other year we don't have outage costs. That's probably the biggest change with this year. Then there will be some small ones here and there. And that's $40 million impact because we are on the year with outages at both mills, Saillat and Nymölla, sorry, next year. So I don't have the exact number, but I would say when we finish the budget, we'll call them to you. But directionally, you take what we've done historically and you had the $40 million, and that would be good. Post-outage, by the way, will be on the first half of the year, the two European outages.

[Matthew McKellar, VP at RBC Capital Markets]

Okay. Thanks very much for the help there. Next, I'd like to ask about the implementation of the European Union Deforestation Regulation, which has been pushed out a year. But what is your view on how its eventual implementation will affect the European uncoated freesheet markets and maybe imports into Europe in particular?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

I think it's always the same things. The intention of the EUDR is a good one. We are very in favor of controlling the wood and making sure we use appropriate wood. We know deforestation. We do that all the time and have always done it. Specifics of the rules still need clarification. We've got some improvement in understanding what Europe is expecting. I think that's why it's been moved. It's not because people don't want to do it. It's because we need to be clear on how the law will impact some of the things we do every day, which we don't know how it's going to be treated. Considering potential imports in Europe, I think it's a little bit early to say because it will depend on the details of the ruling. But it could have an impact, which would be positive for us being a European producer.

[Matthew McKellar, VP at RBC Capital Markets]

Great. Thanks very much and if I get to sneak one last one in on capital allocation, could you share any updated perspective on how you may be evaluating resumption of share repurchases here with where the shares are today versus how you potentially think about a special dividend?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

We haven't changed our strategy in terms of capital allocation. We maintain a strong balance sheet. We have a strong dividend, which is the foundation of our cash return. And as long as we find the repurchase share price attractive, we will share back. And on special occasions, it could be we do one time, but I would say we've got still a lot of opportunities on repurchasing share. So we're looking at it like we look at other elements. But we're committed to our 40% for this year, return back to shareholders.

[Matthew McKellar, VP at RBC Capital Markets]

Okay. Thanks very much. I'll turn it back.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Thanks, Matt.

[Operator]

We'll take a follow-up from George Staphos at Bank of America.

[George Staphos, Managing Director at Bank of America]

Hi. Thank you very much. So as we look at your fourth quarter bridge versus third quarter, and thanks for doing that work for us, are there any things that we should particularly consider as continuing into the first half of 2025 on that waterfall, particularly on slide seven, this price mix stay unfavorable, recognizing that sequential, not year on year? But nonetheless, do we have to worry about a little bit of pressure into the first half of the year based on what you can see right now? And then secondly, we've been seeing generally pulp prices heading lower. Certainly, you have some effect in terms of merchant sales of your pulp, but what's that doing to the cost curve and how the markets are developing on paper, particularly in Europe? Thank you, guys.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yeah, let me, George. I'll take that. So if you look at the pricing mix, certainly the pulp price and the European pricing as a result, because that has a strong correlation between the two, we expect that to continue. And that'll be offset somewhat by some things from a mixed perspective. Remember also that the first quarter is typically our lowest volume in LatAm, and then it increases throughout the year. So we're going to go from a very strong quarter, typically we have for LatAm volume, into seasonally a little bit slower going into the first quarter. I think from operations and costs, both the fourth quarter and the first quarter were burdened but with a little bit more operating costs due to colder temperatures in the northern hemisphere, being offset somewhat by the warmer temperatures in LatAm.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

I do want to call your attention, and we called this out, that burdening our ops and this outlook is a turbine generator outage. That's a 50-day outage. It shows up in ops. It's a 10-year inspection that we have. And so what it means is that while that turbine generator is being inspected, we're purchasing energy that we normally would be making. And that's about a negative $8 million impact that won't repeat into the first quarter.

[George Staphos, Managing Director at Bank of America]

Okay. And John, maybe if I can just sneak one in to use a phrase. So overall, again, you've given us the guide for the fourth quarter. Should Latin America be up given the uptick in volume, or will the mix effect with exports be an offset? Said differently, if LatAm is flat to up, then North America and Europe are holding more of the burden. Would that be fair? Or how would you have us think about that? Thank you.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yes. Latin America in the fourth quarter is up in volume. The mix is, let's say, slightly negative, and that meaning because of Brazil. So Brazil demand is slightly down, where the rest of the LatAm is up. So that's having a little bit of offsetting effect in the fourth quarter outlook. So we're seeing a negative mix impact in LatAm, but that's showing up in a positive volume, which you can see in our outlook because of the seasonally stronger LatAm.

[George Staphos, Managing Director at Bank of America]

Okay. Thank you.

[Operator]

We'll take a follow-up from Daniel Harriman at Sidoti & Company.

[Daniel Harriman, Equity Research Analyst at Sidoti & Company]

Hey, guys. Thanks again. Just a quick one. How should we think about economic downtime in Europe moving forward? Obviously, it was up both in Europe and North America in 3Q, which, based on comments in the second quarter call, was not unexpected. But North America is going to benefit from reduced capacity from Georgetown. But should we expect the same in Europe as capacity leaves the system in 2025?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Yes. Hi, Daniel. Jean-Michel. As we've showed to you before, there is reduction in capacity in Europe also. In total, there are two machines which are shutting down, which effect will be by the year end. So we expect for both North America and Europe to have stronger capacity reduction versus demand decrease. So net should be good for volume. And if we have better volume, we have less LO in those two regions.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yeah, Daniel, if you recall from our statements around the fourth quarter outlook, we actually talked about less lack of order downtime in our operations and other costs, and that's across the board, both North America and Europe, so we're already seeing less lack of order downtime in the European system.

[Daniel Harriman, Equity Research Analyst at Sidoti & Company]

Great. Thanks so much, guys, and best of luck in the quarter.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Thank you.

[Operator]

As a final reminder to ask a question, press star one. We'll go back to George Staphos at Bank of America.

[George Staphos, Managing Director at Bank of America]

Hi, guys. I know no guarantees in this certainly, but my last question, if you're looking at demand both from North America and Europe that are, however you pitched it, flat to up, should shipments be comparable with your demand outlook? Or do you expect shipments might track above or below? And if so, what would be the reasons that you see at this juncture? Thank you.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

I think we expect about the same number.

[George Staphos, Managing Director at Bank of America]

Okay. And forgive me, I misspoke. You're looking for demand to be down a little bit in Europe and in North America.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yes, that's what we're just looking for.

[George Staphos, Managing Director at Bank of America]

Either way, shipment should be the same. What's that?

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Yeah.

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yeah. I just want to make sure. You're talking about the 2025 comments we made?

[George Staphos, Managing Director at Bank of America]

Correct. I'm on slide 11 with demand down, call it two and three in Europe and North America. You expect shipment should be comparable from what you can see right now?

[John Sims, Senior VP and CFO at Sylvamo Corporation]

Yes.

[George Staphos, Managing Director at Bank of America]

Okay. Thank you, guys.

[Operator]

That concludes the question and answer session. I'll now turn the call back over to Hans Bjorkman for closing comments.

[Hans Bjorkman, VP of Investor Relations at Sylvamo]

Thanks, Audra. Before we wrap up the call, I'll turn it back over to Jean-Michel for some closing thoughts.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

Thanks, everybody, for joining our call. Yeah, as we said, a good quarter. We intend to continue to maintain a strong financial position. We intend to continue to return cash to shareholders. And one thing which we've talked a lot and maybe not progressed as fast as we wanted up to now, but it's going to accelerate, is reinvesting in our business to increase our competitive advantages. As we've told you before, we have a pipeline of greater than $200 million of high-return projects. As we are preparing our budget for next year, we're looking at some high-return projects that are nearing finalization of engineering work and even preparation for board approval. So we expect to be able to invest and ultimately get the increased returns from those projects relatively soon for some of those $200 million.

[Jean-Michel Ribiéras, Chairman and CEO at Sylvamo]

So lastly, we're confident in our ability to generate strong earnings and cash flows through the cycle. So we're looking at the upcoming. Quite positive. Thank you to all of you for joining today.

[Operator]

Once again, we'd like to thank you for your participation in Sylvamo's third quarter 2024 earnings call. You may now disconnect.

Participants

Executives

• Hans Bjorkman, VP of Investor Relations
• Jean-Michel Ribiéras, Chairman and CEO
• John Sims, Senior VP and CFO

Analysts

• Matthew McKellar, VP at RBC Capital Markets
• George Staphos, Managing Director at Bank of America
• Daniel Harriman, Equity Research Analyst at Sidoti & Company