Overview

• Global paper producer's Q1 net sales rose, beating analyst expectations

• Adjusted EBITDA for Q1 missed analyst expectations

• Company posted net loss and negative free cash flow amid higher costs and inventory build

Outlook

• Sylvamo expects most 2026 free cash flow to be generated in the second half of the yr

• Company anticipates ongoing cost pressures from energy, chemicals and freight in coming quarters

• Sylvamo projects potential annual free cash flow of over $300 mln as investments materialize

Result Drivers

• CAPACITY CONSTRAINTS - Lower sales volumes and incremental costs driven by end of Riverdale supply agreement and upcoming Eastover mill outage, per CEO John Sims

• HIGHER OPERATING COSTS - Increased energy, chemical, diesel and ocean freight costs, as well as higher operating and input costs, weighed on results

• PRICE INCREASES - Company began implementing uncoated freesheet paper price increases, with some benefit realized in North America and Latin America

Company press release: ID:nBw1tWWr2a

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Sales	Beat	$755 mln	$741.10 mln (4 Analysts)
Q1 Net Income		-$3 mln
Q1 Adjusted EBITDA	Miss	$29 mln	$37.35 mln (4 Analysts)
Q1 Free Cash Flow		-$59 mln
Q1 Segment Operating Profit		-$15 mln

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the paper products peer group is "buy"

• Wall Street's median 12-month price target for Sylvamo Corp is $56.50, about 29.3% above its May 7 closing price of $43.70

• The stock recently traded at 12 times the next 12-month earnings vs. a P/E of 9 three months ago

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