Sylvamo Q1 2025 Earnings Report

Sylvamo EPS Results

• Actual EPS: $0.68
• Consensus EPS: $0.70
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $1.07

Sylvamo Revenue Results

• Actual Revenue: $821.00 million
• Expected Revenue: $819.61 million
• Beat/Miss: Beat by +$1.39 million
• YoY Revenue Growth: -9.30%

Sylvamo Announcement Details

• Quarter: Q1 2025
• Date: 5/9/2025
• Time: Before Market Opens
• Conference Call Date: Friday, May 9, 2025
• Conference Call Time: 10:00AM ET

Sylvamo (NYSE:SLVM) (NYSE: SLVM) is a global producer of uncoated paper products. The company manufactures paper used for printing, writing, copying, office applications, and other commercial and industrial purposes. Its portfolio includes cut-size office paper, offset and publishing papers, and specialty paper products sold under brands such as Hammermill, Springhill, and Williamsburg.

Headquartered in Memphis, Tennessee, Sylvamo serves customers through operations and sales networks in North America, Latin America, and Europe. Its products are distributed to retailers, merchants, businesses, publishers, printers, and other commercial customers in markets around the world.

Sylvamo became an independent publicly traded company in October 2021 after being spun off from International Paper. The company focuses on producing paper, managing forest resources and manufacturing operations, and developing products for business, education, publishing, and everyday consumer use.

Sylvamo Q1 2025 Earnings Call Transcript

Key Takeaways

• Our CEO succession plan sets John Sims as CEO on January 1, 2026, with Tom Devlin now CFO, ensuring a seamless transition after Jean Michel Rivieres retires at year-end.
• First-quarter adjusted EBITDA of $90 million (11% margin) met guidance but was burdened by ~$30 million of planned maintenance outages and typical Latin America seasonality, with free cash flow weighted to the second half.
• North American operational issues—including reliability setbacks at Ticonderoga and Eastover and lower Riverdale mill volumes—cost ~$10 million in Q1 EBITDA and may defer some order fulfillment into Q3.
• Implemented uncoated freesheet price increases in Brazil and North America, with Q2 price and mix expected to contribute an additional $5–10 million to EBITDA.
• Balance sheet strength is robust: net debt halved since spin-off (leverage 1.1×), $400 million revolver available, and $62 million remaining share repurchase authorization.

Presentation

[Moderator]

Good morning. Thank you for standing by. Welcome to Sylvamo's First Quarter 2025 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, please press star one on your telephone keypad. To withdraw a question, simply 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, Sarah. Good morning, and thank you for joining our first quarter 2025 earnings call. Our speakers this morning are Jean-Michel Ribiéras, Chairman and Chief Executive Officer, and John Sims, Senior Vice President and Chief Operating 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 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 Jean-Michel.

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

Thanks, Hans. Good morning, and thank you for joining our call. I'll start on slide four, highlighting some news we announced a few weeks ago. After over three decades of working in the paper and packaging industry, I've decided to retire at the end of the year. Serving as the Chairman and CEO of Sylvamo for the past four years has been one of the greatest highlights of my career. I'm pleased that John Sims will become the next CEO of Sylvamo. John was elected Chief Operating Officer effective May 1 and will lead our commercial and operational functions. Following my retirement, John will assume the role of the CEO on January 1st, 2026. As you know, John has served as the CFO of Sylvamo, since the spinoff, and has been instrumental in our work to build the world's paper company and drive our company's strong performance.

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

Don Devlin was named Senior Vice President and Chief Financial Officer effective May 1, and he's with us here for today's call. You'll hear more from Don in future earnings calls. John joined us from International Paper after 27 years with the company. Don has extensive international leadership experience with a track record of building teams, developing strategic plans, and delivering results in diverse and challenging environments. He served in a variety of leadership roles, including Finance Director for European Papers, Chairman and CEO of IP's uncoated freesheet business in India, and most recently, Vice President of Finance and Strategy for IP Industrial Packaging. I'm excited to have both John and Don in their new leadership roles to drive the company forward for future success. Slide five shows our first quarter highlights. First, we successfully completed a heavy plant maintenance outage quarter in Europe and North America.

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

Also, these outages were executed well. We ran into some separate non-outage-related operational challenges, primarily in North America. John will talk more about the financial impact in a few slides. We also began implementing the previously communicated uncoated freesheet price increases to customers in Brazil and North America. Lastly, we returned nearly $40 million in cash to shareholders. We distributed $18 million via the first quarter dividend, and as of today, we have repurchased $20 million in shares this year. Let's move to the next slide. Slide six shows our first quarter key financial metrics. We earned adjusted EBITDA of $90 million with a margin of 11%. In addition to having almost $30 million of plant maintenance outages cost, the first quarter is our weakest demand quarter every year in Latin America. We generated adjusted operating earnings of $0.68 per share.

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

As expected, free cash flow was lower than the fourth quarter due to the timing of year-end payments, one-time cash benefit in the fourth quarter from the monetization of working capital related to the closure of IP Georgetown Mills, and the payment of annual incentive compensation in the first quarter. Keep in mind that our free cash flow is heavily weighted to the second half of the year. The last two years, we generated almost 90% of our free cash flow in the second half. Now, John, we'll review our performance in more detail.

[John Sims, SVP and COO at Sylvamo]

Thank you, Jean-Michel, and good morning, everyone. I also want to thank Don, who's sitting right next to me. We're in a transition of moving the CFO role quickly over to him, and I look forward to working in the future with Don. Slide seven contains our first quarter earnings bridge versus the fourth quarter.

[John Sims, SVP and COO at Sylvamo]

The $90 million of adjusted EBITDA was in line with our outlook of $85 million - $105 million. As Jean-Michel mentioned, we had some operational issues in North America, which impacted us by roughly $10 million, half from lower sales volume and half from operations and other costs. This also includes less volume from IP Riverdale Mill than was planned. Pricing mix was unfavorable by $10 million, driven by the expected seasonally unfavorable mix in Latin America, lower pulp prices, and paper price decreases in Europe and in our export regions. These were partially offset by paper price increase realizations in North America and Brazil. Volume decreased by $30 million, driven by the seasonally weakest demand quarter in Latin America, lower North America volume from IP's Georgetown Mill exit, and the operational challenges in North America.

[John Sims, SVP and COO at Sylvamo]

Operations and other costs were unfavorable by $12 million, primarily driven by unfavorable effects plus the North America operational challenges we mentioned earlier. Plant maintenance outage costs increased by $9 million as we executed major outages at our Saillat and Eastover Mills. Input and transportation costs increased by $6 million, primarily driven by seasonally higher energy prices and the longer-than-expected extreme cold weather across the United States in the first quarter. Let's move to slide eight. We expect to deliver second quarter adjusted EBITDA of $75 million - $95 million. We project price and mix to be favorable by $5 million - $10 million. This is primarily due to favorable mix in Latin America and North America. We expect volume to be stable. Volume would have been sequentially higher as we have the orders, but anticipate being unable to fill them all during the quarter.

[John Sims, SVP and COO at Sylvamo]

This is due to low inventory levels in North America as a result of our operational issues. In addition, we expect to get less volume from IP's Riverdale Mill in the quarter. Therefore, some of our orders may get pushed into the third quarter. Operations and other costs are projected to be favorable by $10 million - $15 million due to better operations and seasonally lower operating costs in North America and Europe. We expect input and transportation costs to improve by $5 million - $10 million, primarily due to energy. Plant maintenance outages are projected to increase by $36 million as we execute the heaviest outage quarter of the year across all three regions. Let's go to slide nine. This slide illustrates the plant maintenance outage schedule for the full year. We spent $27 million in the first quarter and expect to spend $63 million in the second quarter.

[John Sims, SVP and COO at Sylvamo]

By mid-year, we'll have spent over 80% of the total annual plant maintenance outage costs. Unlike last year, we had no major plant maintenance outages in Europe. This year, we have outages in both mills in the first half of the year. Let's move to slide ten. I'll now shift to talk about overall uncoated freesheet conditions across our region. In Europe, demand is down 7% year-over-year through the first quarter, while imports appear stable. As a reminder, industry supply was reduced by 7% after two uncoated freesheet machines closed late last year. In Latin America, demand is up 3% year-over-year through the first quarter, with most of the increase in Brazil, largely due to strong demand in the publishing segment. In North America, apparent demand is down about 1% year-over-year through the first quarter, driven by higher imports.

[John Sims, SVP and COO at Sylvamo]

This brings imports to almost 15% of overall North America supply, which is on the higher end of historical ranges. We still believe that real demand will be down about 3% - 4% this year. As another reminder, domestic industry supply was reduced by 10% after a few machines, including IP's Georgetown Mill, closed in the second half of last year. We have strong order books across our region, and all of our mills are running full. We have more demand than we can supply right now due to our commercial team's success, combined with the supply issues we've been dealing with in North America. Consequently, going forward, we're going to take advantage of our global footprint to improve our mix and serve our customers in North America. As a result, we expect to have less exports to non-core markets.

[John Sims, SVP and COO at Sylvamo]

We are not going to give a full-year guidance with all the uncertainty. However, we do expect a slightly better adjusted EBITDA performance in the second half. This is due to lower plant maintenance outage expenses, improved commercial results, and better operations. Tariff uncertainty aside, we expect 2025 Latin America and North America combined full-year adjusted EBITDA to be slightly better than 2024. Europe's 2025 performance will be significantly worse than 2024 due to the $39 million of plant maintenance outage this year and worse market conditions as we're seeing signs of the pulp market weakening. Let's go to slide 11. I want to take some time to discuss our European business. As we look back on the Nymölla Mill acquisition, the mill generated about $70 million of free cash flow before overhead allocations in its first two years as part of Sylvamo.

[John Sims, SVP and COO at Sylvamo]

We exceeded over $20 million run rate synergy target by $5 million. The pulp mill modernization project exceeded its projected benefits as well. Unfortunately, compared to 2022, last year, the mill experienced a $41 million increase in wood costs and a cumulative $63 million over the last two years. This increase in wood costs is due to the war with Russia, with Russia and Belarus stopping the export of wood fiber, reducing overall wood supply to the region. Additionally, high demand from the energy sector in the Nordics increased overall wood demand. Stepping back and looking at our entire European business, our earnings performance is below our expectations. In addition to Nymölla's escalated wood costs, high input costs, and challenging industry conditions have impacted demand and pricing.

[John Sims, SVP and COO at Sylvamo]

We're not satisfied with our performance and have installed a new Senior Vice President and General Manager effective May 1 to lead our talented team, further develop our strong customer relationship, and improve our performance. We are focusing on reducing costs across the region. We'll be improving our product mix by upgrading some capabilities at Saillat. We are working to reduce wood costs and are targeting best-in-class efficiency at the Nymölla Mill. I'll now turn the call back over to Jean-Michel.

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

Thanks, John. I'm new on slide 12. We understand that one of the main risks in today's environment is a global economic slowdown due to the current tariff situation, which could impact uncoated freesheet demand. Some shift in uncoated freesheet and pulp trade flows are already starting to materialize. We also anticipate higher risk of inflation on our raw materials, transportation, and capital spending. While these represent possible challenges, these risks currently appear manageable. Our global sourcing teams are already working on mitigation strategies as well as alternative sourcing options for some raw materials, plus optimizing modes of transportation. Regarding our major capital spending plans for the year, the business cases for this project include the possibility of higher costs, which are not expected to be material at this point. Let's move to slide 13.

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

Although there is a lot of uncertainty around the tariff and the impact on the economy, we are well-positioned to manage through this environment. Over 90% of our raw materials are sourced locally, with very little coming from China. Regarding our shipments, the majority stay within their respective regions. In Europe and North America, more than 90% of our shipments stay within their respective regions. In Latin America, 80% of our shipments remain in the region. Although we export about 20% of our products from Latin America, we are well-positioned as our Brazilian mills are some of the world's most competitive and low-cost uncoated freesheet facilities. Lastly, I want to remind everyone that even though imports tend to rise and fall for a variety of reasons, imports historically represent less than 15% of uncoated freesheet industry supply in each of our three regions. Let's move to slide 14.

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

I will take this opportunity to remind everyone of all the work we did to deleverage our balance sheet over the past three years. After launching with close to $1.4 billion net debt and a leverage ratio of 2.6x, we have reduced our debt by about half, and our leverage ratio is now 1.1x. We have no major maturities until 2027, plus we have availability on a revolver of $400 million. Our strong balance sheet, available cash on hand, plus the availability on our revolver provides us with the ability to take care of our customers, run our business, and invest in our future. Our capital allocation strategy is to maintain a strong financial position. We invest in our business to improve our competitive advantages and return cash to shareholders.

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

Our position of financial strength allows us to navigate this uncertain environment without changing our thoughtful long-term approach to capital allocation. It allows us to serve customers while navigating economic headwinds. It also enables us to invest in our business even during times of uncertainty, and it preserves the flexibility to return cash to shareholders. We will continue to evaluate opportunities to repurchase shares at attractive prices, with the $62 million available on our current share repurchase authorization. I'll conclude my remarks on slide 16. All of the work we have done to strengthen our financial position the past few years is providing us with flexibility. Our financial strengths and regional businesses have us well-positioned to navigate the current tariff uncertainty. We are reinvesting in our business through a great pipeline of high-return capital projects, which will enable us to grow our earnings and cash flow in the coming years.

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

Sylvamo is creating shareholder value through strong cash generation and disciplined capital allocation. We are in the process of executing a seamless CEO and CFO succession plan as we prepare for my retirement at the end of the year. We are 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, Sarah, we're ready to take questions.

[Moderator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We do ask that you limit yourself to one question and one follow-up question. Thank you. Your first question comes from George Staphos with Bank of America. Your line is open.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Hi, everyone. Good morning. Thanks for the details. Jean-Michel, John, and Don, congratulations. Yeah, and all the best in the next chapters. Jean-Michel, thanks for all the help, obviously. You're not retiring yet, but thanks for all the help with our research for everybody on this call since you've been public. I guess the question I had, I didn't really follow what the operational issues were. If you could give us a bit more detail in terms of what happened. I know you're not counting on third quarter, but you mentioned you won't be in a position to recover some of the orders in 2Q. It sounds like some of that might be pushed into 3Q. Is there a way for you to size what that benefit might be as you recapture some of those orders, particularly as regards seasonality?

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Brazil typically picks up in the third quarter as well. Thank you.

[John Sims, SVP and COO at Sylvamo]

Yeah, George, and thank you. The issues we had with actually the multiple reliability issues, both at our Ticonderoga mill and our Eastover mill, the majority of that is behind us. We do have one issue that's intermittent, so it makes it hard to troubleshoot on one paper machine at Eastover. That actually is in our outlook in the second quarter, and we think we're going to have that resolved. We should have that resolved by this quarter. The other thing I'll make a point about is the impact of the Riverdale volume because that doesn't show up in the operations, but it's certainly showing up in the volume. I mean, in fact, they've obviously been having some runnability issues themselves, and it really started in the fourth quarter, translated into when it continued into the first, and it's also continuing into the second quarter.

[John Sims, SVP and COO at Sylvamo]

That in itself has been about almost 30% of what they should be supplying us we haven't been getting. You can see it actually kind of builds up. In the first quarter, we said the impact of all these issues was roughly about $10 million. I would say that the Riverdale conditions also are continuing into the second quarter, and some of that is in our outlook. If you're trying to get to a number of what would the improvement be in the third quarter, something a little bit less than $10 million.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Okay. Thank you.

[John Sims, SVP and COO at Sylvamo]

That's the, George, that's the thought. That'll show up in both ops and volume.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Okay. The related question that I had there was just in general, can you remind us then seasonally what goes well, third quarter versus 2Q? As I recall, LATAM volumes pick up. Is there a way to size that for us? I know you're not guiding on 3Q, but as we're trying to build out our bridges or refine them. Thank you.

[John Sims, SVP and COO at Sylvamo]

Yeah, George, the best thing I would do is look at what we've done historically. We break it down by region, and we don't see much difference in that.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Okay. Thank you, John.

[John Sims, SVP and COO at Sylvamo]

Thank you, George.

[Moderator]

Once again, if you have a question, it is star one on your telephone keypad. Your next question comes from Matthew McKellar of RBC Capital Markets. Your line is open.

[Matthew McKellar, Research Analyst at RBC Capital Markets]

Hi, good morning. Jean-Michel, congratulations on your upcoming retirement, and congratulations also to John and Don for their appointments.

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

Hi, Matt.

[John Sims, SVP and COO at Sylvamo]

Thank you, Matt.

[Matthew McKellar, Research Analyst at RBC Capital Markets]

I'd like to start by asking just around the changes at Saillat and Nymölla. Could you tell us maybe just a bit more about what the upgrades to your capabilities at Saillat entail and the market opportunity that's leading you to reposition your product mix, maybe whether that's entirely serving demand in North America or if there's anything else going on there? At Nymölla, what levers do you have to reduce your wood costs and improve efficiency? As we kind of think about putting this all together, how do you have us think about how financially meaningful these changes could be and over what timeline? Thanks.

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

Hey, Matt. In Saillat, to answer your first question, we've invested in a new and revised winder. This is giving us the capability to sell rolls in Saillat in interesting segments, more specialty roll segments in Europe. We are in quite a different position. I don't know if you've got that in mind. In Nymölla, we sell 50% of our business in rolls, and we are very successful, and 50% in cut-size. In Saillat today, we sell 90% in cut-size and only roughly 10% of rolls. This is going to give us the capability to sell much more rolls and enter into the specialty segment. I hope I'm answering your first question. On Europe, in general, in Nymölla, we have great opportunities in operations. We don't run Nymölla mills at the same benchmark or OEER, if you want cost performance, that we run the other mills.

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

We've done some investment in capital, but also in people, and we're continuing to do that. That gives you quite a lot of cost opportunities to improve Nymölla. In Saillat, it's mostly mix and also looking at our fixed costs mostly.

[John Sims, SVP and COO at Sylvamo]

Yeah, I'll just add to that. Matthew, you asked about the levers that we have in reducing the wood costs. When we purchased the Nymölla mill, there was an agreement that we would continue to source the wood from a company that's owned by Stora. One of the options we have is to go there directly, right to the landowners, which cuts out some of the cost around that. The other opportunities we have is actually importing in lower-cost wood. Then there's operational improvements where we increase the yield and reduce the consumption of wood going forward.

[John Sims, SVP and COO at Sylvamo]

Those are some of the levers that we're pulling. In terms of the levers, how much and what we're targeting for is we're looking at and targeting at least a 10% reduction.

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

I think, Matt, you asked also a question on Europe profitability in general. As we mentioned, we're clearly not satisfied. We are clearly expecting a significant improvement in 2026 and now building programs to be back to cost of capital in 2027. That is the plan we have as of today.

[Matthew McKellar, Research Analyst at RBC Capital Markets]

That's helpful. Thank you for all the detail. Last one for me. There was a comment that some shifts in uncoated freesheet and pulp trade flows are already starting to materialize. Could you just elaborate on what you're seeing and kind of how that's affecting you by market? Thanks.

[John Sims, SVP and COO at Sylvamo]

Yeah, I'll take that one. This is what makes it difficult around trying to assess the impact of tariffs because some of it is probably the most impactful to us could potentially be the secondary effects of the negotiations that are ongoing. I'll give you some examples that we've seen. We talked about increased imports into the U.S. Some of that we believe could be due to pre-buying or getting ahead of the tariffs in North America as an example. We also have seen in Europe, just reported this month by Fastmarkets we see, that pulp prices decreased almost EUR 40 a ton on BEK coming out of Brazil. That's really driven because of this significant decrease in pulp demand in China. That's coming over to Europe.

[John Sims, SVP and COO at Sylvamo]

That's some of the impacts that we're seeing as a result of this tariff situation here in the U.S.

[Matthew McKellar, Research Analyst at RBC Capital Markets]

Thanks, Jean-Michel. I'll turn it back.

[Moderator]

Your next question comes from Daniel Harriman with Sidoti. Your line is open.

[Daniel Harriman, Research Equity Analyst at Sidoti]

Thank you. Good morning, guys. I echo the congratulations given by Matt and George. I had a question about your capital spending for the balance of the year. If we look at what you spend in the first quarter, that run rate will not get you to your guidance of $220 million - $240 million for the year. I am just curious how we should think about that over the last three quarters, understanding that you do not guide to cash flow, but just trying to get a sense of what we should be looking for the last nine months.

[John Sims, SVP and COO at Sylvamo]

Yeah, Daniel, we haven't changed our revision on full-year capital. Whereas most of our outings are in the first half of the year, the second half will be somewhat influenced by the large capital projects we have associated with Eastover, both the speed-up and the new sheeter. The full-year guidance will still be $220 million-$240 million.

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

Hi, Daniel, Jean-Michel. I would just maybe add something in your comment. I think when you look at free cash flow, and we've had the, I would call it the issue last year and the one before, we are very strongly second half of the year cash flow. Our two last years were 90% of our cash flow the last two quarters of the year. We expect about the same this year. I know sometimes in your modeling, it's a little bit difficult to do, but this is what we've seen historically speaking. You've got it in our appendix slide, and we expect about the same thing this year. A very significant increase in cash flow for the second half of the year.

[Daniel Harriman, Research Equity Analyst at Sidoti]

Okay. Thank you, guys, so much.

[John Sims, SVP and COO at Sylvamo]

Thank you.

[Moderator]

The next question is a follow-up from George Staphos with Bank of America. Your line is open.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Thanks. John, Jean-Michel, Don, you mentioned on one of the slides that you think the North American demand is down 1%, but that is, I guess, if you will, higher than underlying demand because it reflects imports. I guess two parts, imports you think are going into inventory right now and pre-buying, putting that comment together with another one you just made, that will be, I guess, something that has to be absorbed and be an overhang for a little while. I think you said overall you think demand is 3% - 4% on an underlying basis. Is that what your expectation will be for industry shipments over the rest of the year? How would those figures map? When do you think they should ultimately align demand versus shipments, 3Q, 4Q, and the like? I'll turn it over there.

[John Sims, SVP and COO at Sylvamo]

Yeah. The comment there was the apparent demand. We call out the word apparent because it's calculated when it looks at domestic shipments plus imports minus exports. That's being reported as down 1%, but we believe that underlying demand is really down 3% - 4% to the point you made, George, because you count the imports as soon as it hits the ports. Typically, that, and there was a large surge of imports, particularly in January in the first quarter. We think that has made demand look stronger than it actually is. Yes, it's in inventory, and that will probably be consumed going forward. If you look at the numbers, and it's only, I think it's reported, but February numbers, import numbers were a little bit more, I guess, not full, but they were lower than January.

[John Sims, SVP and COO at Sylvamo]

We think some of this is due to just the timing of the imports coming in, which the first quarter demand maybe looks stronger than what we actually see.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

When do you think—go ahead, John. I'm sorry.

[John Sims, SVP and COO at Sylvamo]

No, that was Jean-Michel. Sorry.

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

I just wanted to reintegrate. When we look in terms of demand, especially for Sylvamo, I'm talking, our order flow, not only because we've had some issues in the mills, but in general, the demand we're seeing with our customers is strong. We have food.

[John Sims, SVP and COO at Sylvamo]

Yeah, I think you were asking about domestic shipments, George. So my comment on this was that there were some capacities that closed last year. Domestic, just that in itself would lower domestic shipments. There was a mill that was recently announced that may be shutting down at the end of this year. We would expect domestic shipments to be down just because of the capacity closures. As Jean-Michel said, operating rates are in the mid low 90s domestically.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Very good. Another question I had, and I'll turn it over, actually. The operational issues, thank you for going through those earlier. Do they affect at all the progress on Eastover with your bigger projects? If you can just give us a quick update on how that's going. Thank you.

[John Sims, SVP and COO at Sylvamo]

No, they do not. Just to be frank with you, they did not impact that. Actually, those projects are going well from a timing perspective. We are still seeing startup next year on that. It is on schedule, on time. No impact there.

[George Staphos, Managing Director and Senior Equity Analyst at Bank of America]

Okay. Thank you, John.

[Moderator]

Again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. I'll now turn the call back over to Hans Bjorkman for closing comments.

[Hans Bjorkman, VP of Investor Relations at Sylvamo]

All right. Thank you, everybody, for joining our call today. We appreciate your interest in Sylvamo, and we look forward to continued conversations in the coming weeks. Thank you very much.

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

Thank you, everybody.

[Moderator]

Once again, we would like to thank you for participating in Sylvamo's First Quarter 2025 Earnings call. You may now disconnect.

Participants

Executives

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

Analysts

• Moderator
• George Staphos, Managing Director and Senior Equity Analyst at Bank of America
• Matthew McKellar, Research Analyst at RBC Capital Markets
• Daniel Harriman, Research Equity Analyst at Sidoti