Sylvamo CEO Expects Free Cash Flow Below $300 Million in 2025

In his shareholder letter Sylvamo CEO John Sims stated: "We recognize the current headwinds in some of our markets, including cyclical industry downturns in Europe and certain Latin American countries outside Brazil. Europe is currently facing significant industry challenges that are impacting our financial results. We are focused on reducing our costs, optimizing our mix and improving our operational efficiency. We are also evaluating a range of other options to improve financial performance. Our operations in Brazil are an important strength for Sylvamo... In North America, our business remains resilient following the termination of the Georgetown, South Carolina, mill supply agreement with International Paper in late 2024. As previously announced, the supply agreement for the Riverdale, Alabama, mill will also end in the first half of 2026. Both agreements were expected to terminate, therefore neither was part of our long-term strategy. Together, these agreements accounted for approximately 700,000 tons of uncoated freesheet capacity. Sylvamo is well-positioned for long-term success in North America, supported by our world-class mill in Eastover, South Carolina, the lowest-cost mill in this region. As an example of our disciplined capital allocation, we are investing $145 million to reduce costs and significantly enhance the mill's capabilities, with an expected internal rate of return exceeding 30%... 2025 and 2026 will be low points in our free cash flow generation as we weather the cyclical industry downturns, particularly in Europe, and complete investments at our Eastover mill. As industry conditions turn, our capital spending normalizes and the benefits from our investments begin to materialize, we have the potential to generate annually: over $300 million of Free Cash Flow and over 15% Return on Invested Capital."