Sylvamo Delivers Q2 EBITDA Growth, Enhances Resilience with Improved Balance Sheet and High-Return Investments

Sylvamo reported Q2 2025 results with adjusted EBITDA of $82 million on a 10% margin, returning nearly $40 million in cash to shareholders despite negative free cash flow and heavy maintenance costs. The company has reduced its debt by half, with a net debt to adjusted EBITDA of 1.3 times, and plans to invest $145 million in its Eastover, South Carolina mill from 2025 to 2027. The project is expected to create incremental adjusted EBITDA of over $50 million per year, resulting in additional cash flows and an internal rate of return of greater than 30%.

Sylvamo Corporation, a leading player in the global paper industry, released its financial results for the second quarter of 2025. The company, headquartered in Memphis, Tennessee, reported an adjusted EBITDA of $82 million, representing a 10% margin. Despite facing significant headwinds, Sylvamo managed to return nearly $40 million in cash to shareholders through dividends and share repurchases.

Key financial highlights include a net income of $15 million, or $0.37 per diluted share, compared to $27 million, or $0.65 per diluted share, in the first quarter of 2025. Adjusted operating earnings were $15 million, down from $28 million in the previous quarter. Cash provided by operating activities significantly improved to $64 million from $23 million in the prior quarter, while free cash flow was $(2) million, an improvement from $(25) million.

Operational challenges such as a $13 million unfavorable foreign exchange impact and the heaviest planned maintenance outage quarter in over five years were mitigated by favorable price and mix effects, particularly in North America and Latin America, contributing $12 million. However, volume decreased by $9 million, mainly in North America. Operations and other costs were favorable by $23 million, driven by improved operations.

Sylvamo's strategic initiatives include a $145 million investment in its Eastover, South Carolina mill from 2025 to 2027. This project is expected to generate incremental adjusted EBITDA of over $50 million per year, resulting in additional cash flows and an internal rate of return of greater than 30%. The company has also reduced its debt by half, with a net debt to adjusted EBITDA of 1.3 times.

Looking ahead to the third quarter, Sylvamo expects adjusted EBITDA to range between $145 million and $165 million. The company anticipates a decrease in price and mix by $15 million to $20 million due to paper and pulp prices in Europe, but expects volume to improve by $15 million to $20 million, primarily due to seasonality in Latin America and North America. Operations and other costs are expected to be favorable by up to $5 million, with input and transportation costs projected to be stable. Planned maintenance outage expenses will decrease by $66 million, with no outages planned for the quarter.

Sylvamo's financial performance demonstrates resilience in the face of industry challenges, with a strong focus on operational efficiency and strategic investments. The company's ability to return cash to shareholders while investing in high-return projects positions it well for future growth.

References:
[1] https://www.tradingview.com/news/tradingview:934e4d9650c69:0-sylvamo-corporation-q2-2025-financial-results/
[2] https://www.mitrade.com/insights/news/live-news/article-8-1025107-20250808