Sign in

You're signed outSign in or to get full access.

SC

Sylvamo Corp (SLVM)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 came in line with internal outlook but below Street: net sales $0.794B, diluted EPS $0.37, adjusted EBITDA $82M (10.3% margin). EPS, revenue, and EBITDA were modest misses vs S&P Global consensus, largely due to FX (-$13M), heavy outages (+$39M), and North America volume shortfalls ; EPS/Revenue/EBITDA consensus shown below*.
  • Management guided a strong H2 recovery: Q3 adjusted EBITDA $145–$165M, no planned outages (–$66M q/q), better volumes (+$15–$20M), and continued operational improvements; price/mix headwinds expected in Europe (–$15–$20M) .
  • Regional mix: North America improved on costs and mix (OP $66M), Europe weakened on outages/FX/volume (OP –$38M), Latin America soft on outages/FX (+$2M OP) .
  • Capital allocation remains supportive: $38M returned in Q2 via dividends and buybacks; $42M remained on the 2023 program at Q2, and a new $150M repurchase authorization was approved Sep. 15, 2025, alongside continuing $0.45 quarterly dividends .
  • Near-term stock catalysts: execution on Q3 EBITDA ramp, tariff-driven import normalization improving NA operating rates, and Europe stabilization steps; watch price/mix pressure in Europe and FX volatility .

What Went Well and What Went Wrong

What Went Well

  • Operational performance improved across mills; operations and other costs were favorable by $23M despite $13M FX headwinds, and input/transport costs improved by $5M (energy) .
  • North America operating profit rose to $66M on lower operating/input costs, favorable mix, and less economic downtime; adjusted EBITDA margin held ~10% overall .
  • Strong H2 setup: 85% of annual outages completed by Q2, Q3 guide $145–$165M adjusted EBITDA with no outages and seasonal volume uplift in NA/LatAm .
  • Quote: “We delivered second quarter earnings in line with our outlook… positioned for a stronger performance in the second half of the year” — Jean‑Michel Ribiéras .

What Went Wrong

  • Europe weakened: OP –$38M q/q due to higher outages, unfavorable FX, and lower volumes (price/mix only partially offset); price/mix pressure expected to continue in Q3 .
  • Volume shortfalls in North America, including less supply from IP’s Riverdale mill (about 80% of plan over three quarters) and operational challenges contributed to the revenue/EPS miss .
  • Imports and price dynamics: heavy import flows (up ~40% in H1) and a competitor’s inventory clearance muted realization of announced price increases; FX impact was –$13M .

Financial Results

Quarterly actuals vs prior periods:

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$970 $821 $794
Diluted EPS ($USD)$1.94 $0.65 $0.37
Adjusted EBITDA ($USD Millions)$157 $90 $82
Adjusted EBITDA Margin (%)16.2% 11.0% 10.3%

Q2 actual vs S&P Global consensus*:

MetricQ2 2025 ActualQ2 2025 Consensus*Surprise ($)Surprise (%)
Diluted EPS ($USD)$0.37 $0.4067*–$0.0367–9.0%
Net Sales ($USD)$794,000,000 $826,073,540*–$32,073,540–3.9%
EBITDA ($USD)$82,000,000 (Adj.) $85,743,340*–$3,743,340–4.4%

Notes: S&P Global “EBITDA” actual shows $75M, while company reports adjusted EBITDA $82M; differences reflect non‑GAAP vs S&P standard definitions* .

Sequential and YoY comparison:

MetricQ1 2025 → Q2 2025 ΔQ2 2024 → Q2 2025 Δ
Net Sales ($USD Millions)–$27 →–$139 →
Diluted EPS ($USD)–$0.28 →–$1.61 →
Adjusted EBITDA ($USD Millions)–$8 →–$82 →
Adjusted EBITDA Margin (pp)–0.7 →–7.3 →

Segment breakdown:

SegmentQ2 2024 Net Sales ($MM)Q1 2025 Net Sales ($MM)Q2 2025 Net Sales ($MM)
Europe$206 $190 $181
Latin America$245 $199 $207
North America$493 $438 $419
Inter-segment$(11) $(6) $(13)
Total Net Sales$933 $821 $794
SegmentQ2 2024 OP ($MM)Q1 2025 OP ($MM)Q2 2025 OP ($MM)
Europe$8 $(24) $(38)
Latin America$37 $26 $2
North America$77 $42 $66
Total Segment OP$122 $44 $30

KPIs:

KPIQ2 2024Q1 2025Q2 2025
Cash Provided by Operating Activities ($MM)$115 $23 $64
Free Cash Flow ($MM)$62 $(25) $(2)
Cash Invested in Capital Projects ($MM)$(53) $(48) $(66)
Effective Tax Rate (Reported)—18% 25%
Effective Tax Rate (Excl. Special Items)—20% 28%
Adjusted Operating EPS ($USD)$1.98 $0.68 $0.37

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($MM)Q3 2025N/A$145–$165 New guide; implies strong H2 ramp
Price/Mix impact ($MM)Q3 vs Q2+$5 to +$10 (Q2 guide) –$15 to –$20 (Europe price/pulp) Lowered
Volume impact ($MM)Q3 vs Q2$(5) to +$5 (Q2 guide) +$15 to +$20 (seasonality NA/LatAm) Raised
Operations & other costs ($MM)Q3 vs Q2+$10 to +$15 (Q2 guide) Up to +$5 Lowered
Input & transportation ($MM)Q3 vs Q2+$5 to +$10 (Q2 guide) $(5) to +$5 (stable) Lowered
Planned maintenance outages ($MM)Q3 vs Q2+$36 (Q2 guide) –$66; none planned Lowered materially
Dividend ($/share)Q3 2025$0.45 (Q2 declared/paid Jul 29) $0.45 (ongoing) Maintained
Share Repurchase AuthorizationPost-Q2$42M remaining (Sep 2023 program) New $150M authorization (Sep 15) Increased capacity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Tariffs/macroTariff uncertainty; imports elevated; NA demand down ~3–4%; Europe cost curve higher post‑Ukraine Imports up ~40% H1; expect NA imports to decline as tariffs apply; pricing pressure in OLA/Europe Mixed: NA normalization positive, Europe/OLA pressured
Supply chain/importsHeavy Jan imports inflating apparent demand; domestic closures reduced supply Elevated imports muted price realization; competitor inventory clearance hurt pricing Improving if imports abate; watch near term
Europe pricing/pulpStabilizing entering 2025; cost curve elevated; operating rates mid‑80s Pulp down; paper/pulp price pressure; outages/FX/volume hurt OP (–$38M) Weaker near term
NA operational performanceSome Q1 operational issues; recovery expected Q2/Q3 Costs/mix favorable; OP +$24M q/q to $66M; volume still below plan due to Riverdale/IP Improving
LatAm demand/mixSeasonal ramp through year; Brazil textbook orders supportive H2 seasonality lifts volumes; Q2 outages/FX pressured OP to $2M Near-term soft; H2 stronger
FX and creditsFX headwind Q1; no FCF guidance FX –$13M impact; green energy credits ~$8M recurring FX volatile; credits helpful
Capital projects (Eastover)$145M projects (machine speed-up + sheeter); woodyard outsourcing avoid ~$75M capex; >$50M adj. EBITDA annual benefit On track; IRR >30%; engineering/orders in progress; startup 2026 Executing to plan
Share repurchase/dividendOpportunistic buybacks; $0.45 dividends ongoing $38M returned in Q2; $42M remaining at Q2; new $150M program in Sep Incrementally positive

Management Commentary

  • CEO: “With 85% of our full year planned maintenance outages behind us, we are positioned for a stronger performance in the second half… seasonally stronger demand in North America and Latin America as well as improved operational performance.”
  • CFO: “$82M of adjusted EBITDA was in line with our outlook… excluding the $13M FX headwinds, we would have been at the high end.”
  • COO: “Once completed, these [Eastover] combined investments should create incremental adjusted EBITDA of more than $50M per year… IRR >30%.”
  • CFO on Q3: “We expect a significantly better adjusted EBITDA performance in the second half… much lower planned maintenance outage expenses, improving volumes and better operations.”

Q&A Highlights

  • LatAm/NA outlook: Seasonal strength and no outages set up Q3; combined NA+LatAm earnings could be slightly below 2024 given OLA pricing weakness tied to tariffs .
  • Europe stabilization: Focus on cost position, mix improvement (Saillat), wood cost reduction and operational efficiency at Nymölla; market pulp weakness is pressuring pricing .
  • Imports and pricing: Realization of announced price increases was “much less than expected” due to import surge and competitor inventory clearance; expect NA imports to decline with tariffs .
  • Green energy credits: ~$8M in Q2 and recurring through the year, aiding “other costs” favorability .
  • Buybacks: Strong balance sheet supports opportunistic repurchases; ~$$42M remained at Q2; later increased with new $150M authorization .

Estimates Context

  • Q2 2025 vs S&P Global consensus*: EPS $0.37 vs $0.4067 (miss ~$0.04), Revenue $794M vs $826.1M (miss ~$$32M), EBITDA $82M (Adj.) vs $85.7M (miss ~$3.7M). S&P Global “actual” EBITDA prints $75M reflecting non‑GAAP differences; company’s Adjusted EBITDA of $82M ties to debt metrics and internal guidance .
  • Implications: Street likely pulls down near‑term Europe price/mix expectations and acknowledges FX sensitivity; H2 EBITDA ramp should prompt higher Q3 revision confidence, contingent on import normalization and outage relief .

Guidance Changes

See table above; key points:

  • Raised EBITDA trajectory for Q3 with no outages and seasonal volumes;
  • Lowered price/mix expectations due to Europe pulp/paper price pressure;
  • Maintained dividend cadence; expanded repurchase authorization post‑Q2 .

Key Takeaways for Investors

  • H2 setup is favorable: no outages in Q3 (–$66M vs Q2), seasonal volume tailwinds, and ongoing operational gains position SLVM to deliver $145–$165M Q3 adjusted EBITDA; this is the near-term catalyst .
  • Watch Europe: price/mix headwinds from lower pulp and soft demand will weigh Q3; execution on European cost and mix actions is critical to margin defense .
  • NA normalization: Expect import declines with tariffs and improved operating rates; supports price discipline and margin recapture after a soft realization in H1 .
  • FX remains a swing factor (–$13M in Q2); green energy credits (~$8M) are a partial offset; net cost actions continue to help .
  • Capital program is compelling: Eastover projects on schedule for 2026, >$50M annual adjusted EBITDA uplift at >30% IRR; provides medium‑term earnings power .
  • Capital returns resilient: $0.45 quarterly dividend and the new $150M buyback authorization provide downside support and optionality .
  • Trading lens: Near‑term upside depends on delivering the Q3 EBITDA ramp and signs of Europe stabilization; risks include price/mix pressure in Europe and FX volatility; monitor tariff-related import trends in NA/OLA .

—
*Values retrieved from S&P Global.