Sylvamo Quarterly Results Exceed Outlook, Generates Strong Free Cash Flow

1 Adjusted Operating Earnings (non-GAAP) are net income (GAAP), net of tax and 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 combined operating results. The Company believes that using this information, along with net income, provides for a more complete analysis of the results of operations. Net income 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 Condensed Consolidated Statement of Operations and related notes included later in this release.

2 Adjusted EBITDA (non-GAAP) is net income (GAAP), net of tax, plus the sum of income taxes, net interest expense (income), depreciation, amortization and cost of timber harvested, stock-based compensation, and, when applicable for the periods reported, net special items. Management uses this measure in managing the operating performance of our business and believes that Adjusted EBITDA and Adjusted EBITDA Margin provide investors and analysts meaningful insights into our operating performance and Adjusted EBITDA is a relevant metric for the third-party debt. The Company believes that using this information, along with net income, provides for a more complete analysis of the results of its operations. Net income 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 Condensed Consolidated Statement of Operations and related notes included later in this release.

3 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.

Includes pre-tax loss of $2 million ($1 million after taxes) for legal fees related to the Brazil Tax Dispute for the three and nine months ended September 30, 2024. Also includes pre-tax loss of $1 million ($1 million after taxes) and $2 million ($2 million after taxes) for certain severance costs related to our salaried workforce for the three and nine months ended September 30, 2024, respectively. Finally, includes pre-tax loss of $2 million ($1 million after taxes) for the nine months ended September 30, 2024, for integration costs related to the Nymölla acquisition.

Includes pre-tax loss of $1 million ($1 million after taxes) for the three and nine months ended September 30, 2024, related to forest fires in Brazil.

Includes pre-tax loss of $5 million ($4 million after taxes) for the three and nine months ended September 30, 2024, related to debt extinguishment costs.

Includes pre-tax gain of $1 million ($1 million after taxes) for the nine months ended September 30, 2024, to adjust the recognition of a foreign value-added tax refund in Brazil. Also includes pre-tax loss of $1 million ($1 million after taxes) for the nine months ended September 30, 2024, for other charges.

Includes pre-tax gain of $1 million ($1 million after taxes) to adjust the recognition of a foreign value-added tax refund in Brazil.

Includes pre-tax loss of $1 million ($1 million after taxes) for certain severance costs related to our salaried workforce.

Includes pre-tax loss of $3 million ($2 million after taxes) for the three and nine months ended September 30, 2023, for certain severance costs related to our salaried workforce and incremental expense of $9 million ($7 million after taxes) for the nine months ended September 30, 2023, related to the impact of the step-up of acquired Nymölla inventory sold during the first quarter.

Includes a pre-tax loss of $10 million ($8 million after taxes) for the three months and nine months ended September 30, 2023, for certain severance costs related to our salaried workforce. Also includes pre-tax loss of $3 million ($2 million after taxes) for the three months ended September 30, 2023, and a pre-tax loss of $8 million ($6 million after taxes) for the nine months ended September 30, 2023, for transaction costs related to the Nymölla acquisition. Finally, includes a pre-tax loss of $4 million ($3 million after taxes) for the nine months ended September 30, 2023 for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement.

Includes a $2 million tax expense for the three and nine months ended September 30, 2023 related to the write-off of certain deferred tax assets.

Includes $9 million ($6 million after taxes) of interest income related to tax settlements and a pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs for the nine months ended September 30, 2023.

Includes pre-tax loss of $2 million ($1 million after taxes) for legal fees related to the Brazil Tax Dispute for the three and nine months ended September 30, 2024 and a pre-tax loss of $1 million ($1 million after taxes) for the three and nine months ended September 30, 2024, related to forest fires in Brazil. Also includes pre-tax loss of $1 million ($1 million after taxes) and $2 million ($2 million after taxes) for certain severance costs related to our salaried workforce for the three and nine months ended September 30, 2024, respectively. Finally, includes pre-tax loss of $2 million ($1 million after taxes) for integration costs related to the Nymölla acquisition, a pre-tax gain of $1 million ($1 million after taxes) to adjust the recognition of a foreign value-added tax refund in Brazil and a pre-tax loss of $1 million ($1 million after taxes) for other charges, all for the nine months ended September 30, 2024.

Includes pre-tax loss of $1 million ($1 million after taxes) for certain severance costs related to our salaried workforce. Also includes pre-tax gain of $1 million ($1 million after taxes) to adjust the recognition of a foreign value-added tax refund in Brazil.

Includes pre-tax loss of $13 million ($10 million after taxes) for the three months and nine months ended September 30, 2023 for certain severance costs related to our salaried workforce. Also includes a pre-tax loss of $3 million ($2 million after taxes) for the three months ended September 30, 2023, and a pre-tax loss of $8 million ($6 million after taxes) for the nine months ended September 30, 2023, for transaction costs related to the Nymölla acquisition. Finally, includes a pre-tax loss of $4 million ($3 million after taxes) for professional and legal fees related to negotiations resulting in a shareholder cooperation agreement and incremental expense of $9 million ($7 million after taxes) related to the impact of the step-up of acquired Nymölla inventory sold during the first quarter for the nine months ended September 30, 2023.

Includes $9 million ($6 million after taxes) of interest income related to tax settlements and a pre-tax loss of $5 million ($4 million after taxes) related to debt extinguishment costs for the nine months ended September 30, 2023.

As set forth in the chart above, business segment operating profit is defined as income before income taxes, but excluding net interest expense (income) and net special items. Business segment operating profit 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.

The non-GAAP financial measures presented in this release have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the Company’s presentation of non-GAAP measures in this release may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as Sylvamo.

Management believes certain non-U.S. GAAP financial measures, when used in conjunction with information presented in accordance with U.S. GAAP, can facilitate a better understanding of the impact of various factors and trends on the Company’s financial condition and results of operations. Management also uses these non-U.S. GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance.