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What changed in Sylvamo Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sylvamo Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+369 added−354 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-21)

Top changes in Sylvamo Corp's 2024 10-K

369 paragraphs added · 354 removed · 243 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

52 edited+6 added−56 removed56 unchanged
Biggest changeMoreover, we are required to pay certain fixed costs under the offtake agreements regardless of the level of orders received, and we will not be able to terminate the offtake agreements for Georgetown and Riverdale until January 1, 2025 and January 1, 2026, respectively, even if demand has decreased such that we are no longer able to sell the UFS and other products produced at those facilities.
Biggest changeThe expiration or termination of the Riverdale offtake agreement, or the inability of the Riverdale mill to produce our products at a reasonable cost to us or at all, could have an adverse effect on our business, financial condition, results of operations and cash flows if we are unable to acquire or sell the raw materials or finished products to third parties on at least similar terms, or at all. 25 Moreover, we are required to pay certain fixed costs under the Riverdale offtake agreement regardless of the level of orders received, and we will not be able to terminate the Riverdale offtake agreement until January 1, 2026, even if demand has decreased such that we are no longer able to sell the UFS and other products produced at the Riverdale facility.
If a significant write down is required, the charge could have a material adverse effect on our financial condition and results of operations. Failure to achieve expected investment returns on pension plan assets, as well as changes in interest rates or plan demographics, could adversely impact our cash flows, business, financial condition and results of operations.
If a significant write down is required, the charge could have a material adverse effect on our results of operations. 23 Failure to achieve expected investment returns on pension plan assets, as well as changes in interest rates or plan demographics, could adversely impact our business, financial condition, results of operations and cash flows.
Among the benefits we would expect from potential acquisitions and joint ventures are synergies, cost savings, growth opportunities and access to new markets (or a combination thereof), and in the case of divestitures, the realization of 22 proceeds from the sale of assets to purchasers who place higher strategic value on such assets than we do.
Among the benefits we would expect from potential acquisitions and joint ventures are synergies, cost savings, growth opportunities and access to new markets (or a combination thereof), and in the case of divestitures, the realization of proceeds from the sale of assets to purchasers who place higher strategic value on such assets than we do.
If the distribution of shares of Sylvamo and certain related transactions in connection with our separation from International Paper were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then International Paper, Sylvamo and International Paper’s shareholders may be subject to significant U.S. federal income taxes. International Paper received a private letter ruling from the U.S.
If the distribution of shares of Sylvamo and certain related transactions in connection with our separation from International Paper were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then International Paper, Sylvamo and International Paper’s shareholders may be subject to significant U.S. federal income tax. International Paper received a private letter ruling from the U.S.
Lenders or noteholders under the agreements governing our indebtedness could declare all outstanding principal and interest to be due and payable, and lenders could further terminate their commitments to loan money under our existing revolving credit facility or foreclose against the assets securing their borrowings, which could force us to file for bankruptcy protection and either restructure or liquidate.
Lenders under the agreements governing our indebtedness could declare all outstanding principal and interest to be due and payable, and lenders could further terminate their commitments to loan money under our existing revolving credit facility or foreclose against the assets securing their borrowings, which could force us to file for bankruptcy protection and either restructure or liquidate.
There is no guarantee that shares of our common stock will appreciate or even maintain their value. Shareholders’ percentage ownership in Sylvamo will be diluted by equity compensation and potential use of our shares as consideration for any future acquisitions, strategic investments or financing of ongoing operations.
There is no guarantee that shares of our common stock will appreciate or even maintain their value. 28 Shareholders’ percentage ownership in Sylvamo will be diluted by equity compensation and potential use of our shares as consideration for any future acquisitions, strategic investments or financing of ongoing operations.
In the event the lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. Risks Relating To Our Common Stock Future offerings of debt or equity securities ranking senior to our common stock could adversely affect the market price of our common stock.
In the event the lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. Risks Relating To Our Common Stock Future offerings of debt or equity securities ranking senior to our common stock could adversely affect the market price of our common stock.
These provisions, however, should not limit or eliminate our rights or any shareholder’s rights to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s fiduciary duty. These provisions do not alter a director’s liability under federal securities laws.
These provisions, however, should not limit or eliminate our rights or any shareholder’s rights to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s or officer’s fiduciary duty. These provisions do not alter a director’s or officer’s liability under federal securities laws.
For these purposes, a transfer includes any sale, pledge or transfer of any legal or beneficial interest in the Brazil lands, including any grant of an option or other right or interest or entry into any contract that would result in a reduction or diminution of Sylvamo’s economic ownership in the Brazil lands.
For these purposes, a transfer includes any sale, pledge or transfer of any legal or beneficial interest in the Brazil lands, including any grant of an option or other right or interest or entry into any contract that would result in a reduction or diminution of Sylvamo’s economic ownership in the 24 Brazil lands.
We may not achieve the expected benefits from strategic acquisitions, joint ventures, divestitures, capital investments and other corporate transactions that we may pursue. We may pursue strategic acquisitions, joint ventures, divestitures, capital investments and other corporate transactions, such as our acquisition in January 2023 of a paper mill in Nymölla, Sweden.
We may not achieve the expected benefits from strategic acquisitions, joint ventures, divestitures, capital investments and other corporate transactions that we may pursue. We may pursue strategic acquisitions, joint ventures, divestitures, capital investments and other corporate transactions, such as our acquisition in January 2023 of our paper mill in Nymölla, Sweden.
Our continued declaration and payment of quarterly dividends, continued repurchases of shares, and institution of any other return of cash to our shareholders, including payment of any special dividends, will nonetheless be at the discretion of our board of directors and will depend on many factors, including our earnings, financial condition and results of operations, capital requirements, level of indebtedness, covenants contained within agreements governing our indebtedness, contractual restrictions with respect to payment of dividends and the repurchase of shares, ability to obtain cash or other assets from our subsidiaries, restrictions imposed by applicable law, g eneral business conditions and other factors that our board of directors may deem relevant.
Our continued declaration and payment of quarterly dividends, continued repurchases of shares, and institution of any other return of cash to our shareholders, including payment of any special dividends, will nonetheless be at the discretion of our board of directors and will depend on many factors, including our earnings, financial condition and results of operations, capital requirements, level of indebtedness, covenants contained within our debt agreements, contractual restrictions with respect to payment of dividends and the repurchase of shares, ability to obtain cash or other assets from our subsidiaries, restrictions imposed by applicable law, g eneral business conditions and other factors that our board of directors may deem relevant.
For more information about the Brazil Tax Dispute and the terms of our indebtedness, see “ – Our business is subject to a wide variety of other laws, regulations and other government requirements that may change in significant ways, and the cost of compliance with such requirements could have a material adverse effect on our business, financial condition and results of operations,” and Note 14 Long-Term Debt and Note 12 Income Taxes to the Consolidated and Combined Financial Statements included in Item 8 in this Annual Report on Form 10-K.
For more information about the Brazil Tax Dispute and the terms of our indebtedness, see “ – Our business is subject to a wide variety of other laws, regulations and other government requirements that may change in significant ways, and the cost of compliance with such requirements could have a material adverse effect on our business, financial condition , results of operations and cash flows ,” and Note 14 Long-Term Debt and Note 12 Income Taxes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.
If we are unable to successfully or favorably renegotiate the terms of any of these agreements, or if we experience any extended interruption of operations at any of our facilities as a result of strikes or other work stoppages, this could have a material and adverse effect on our business, financial condition and results of operations.
If we are unable to successfully or favorably renegotiate the terms of any of these agreements, or if we experience any extended interruption of operations at any of our facilities as a result of strikes or other work stoppages, this could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
All of these factors drive up our cost of labor and, further, there is no guarantee that we will be able to attract and retain t he skilled employees needed to successfully operate our business in the future.
All of the se factors drive up our cost of labor and, further, there is no guarantee that we will be able to attract and retain t he skilled employees needed to successfully operate our business in the future.
We may not achieve the expected benefits associated with any such transactions in which we engage. Failure to achieve the expected benefits of a transaction could require us to record an impairment charge for goodwill, other intangible assets or fixed assets.
We may not achieve the expected benefits associated with any such transactions in which we engage. Failure to achieve the expected benefits of a transaction could require us to record an impairment charge for goodwill or fixed assets.
The principal effect of the limitation on liability provision is that a shareholder cannot prosecute an action for monetary damages against a director unless the shareholder is able to demonstrate a basis for liability for which indemnification is not available under the DGCL.
The principal effect of the limitation on liability provision is that a shareholder cannot prosecute an action for monetary damages against a director or officer unless the shareholder is able to demonstrate a basis for liability for which indemnification is not available under the DGCL.
We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
We may not be able to affect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
A failure to make scheduled payments on our debt, or a breach of any of the covenants under the agreements governing our indebtedness, if not waived by lenders or noteholders, as applicable, or to the extent applicable, cured within specified periods, would result in an event of default under those agreements.
A failure to make scheduled payments on our debt, or a breach of any of the covenants under the agreements governing our indebtedness, if not waived by the lenders, or, to the extent applicable, not cured within specified 27 periods, would result in an event of default under those agreements.
Satisfaction of indemnification obligations to International Paper could have a material adverse effect on our financial condition and results of operations.
Satisfaction of indemnification obligations to International Paper could have a material adverse effect on our financial condition, results of operations and cash flows.
Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business and results of operations.
Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.
There can be no assurance that the value of the pension plan assets, or the investment returns on those plan assets, will be sufficient to meet the future benefit obligations of such plans.
Th ere can be no assurance that the value of the pension plan assets, or the investment returns on those plan assets, will be sufficient to meet the future benefit obligations of such plans.
A portion of our workforce is represented by unions and operate under various collective bargaining agreements, including that some of our employees are represented by six unions in Brazil, three unions in France and four unions in Sweden (at our newly acquired Nymölla mill), and the hourly employees at our mill in Ticonderoga, New York, are represented by one union with two branches.
A portion of our workforce is represented by unions and operate under various collective bargaining agreements, including some of our employees that are represented by six unions in Brazil, three unions in France, four unions in Sweden, and a union with two branches representing the hourly employees at our mill in Ticonderoga, New York.
The inclusion of this provision in our certificate of incorporation could discourage or deter shareholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our shareholders. 29 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The inclusion of this limitation on liability in our certificate of incorporation could discourage or deter shareholders or management from bringing a lawsuit against directors or officers for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our shareholders. 30 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable to an action in which we assert the choice of forum, we could incur additional costs associated with resolving the action in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations. 28 Our certificate of incorporation limits the personal liability of our directors for breaches of fiduciary duty.
If a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable to an action in which we assert the choice of forum, we could incur additional costs associated with resolving the action in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful Our ability to make scheduled payments on or refinance our anticipated debt obligations will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control, including those discussed under “—Risks Related to Our Business.” We might not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
Our ability to make scheduled payments on or refinance our anticipated debt obligations will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control, including those discussed under “—Risks Related to Our Industry, the Products We Offer and Product Distribution .” We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
These provisions eliminate a director’s personal liability to the fullest extent permitted by the DGCL for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving: • any breach of the director’s duty of loyalty; • acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; • under Section 174 of the DGCL (unlawful dividends); or • any transaction from which the director derives an improper personal benefit.
These provisions eliminate a director’s or officer’s personal liability to the fullest extent permitted by the DGCL for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving: • any breach of the director’s or officer’s duty of loyalty; • acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; • any transaction from which the director or officer derives an improper personal benefit; • with respect to directors only, Section 174 of the DGCL (unlawful dividends); or • with respect to officers only, any action by or in the right of the Company.
Risks Related To Our Separation in October 2021 From International Paper And Short History As a Standalone Company We rely on certain commercial agreements with our former parent company, International Paper, whereby a substantial amount of our production in the United States is outsourced, and the loss of such agreements or the inability to recoup the fixed costs of such agreements, could have an adverse effect on our business, financial condition and results of operations.
Risks Related To Our Agreements with International Paper We rely on commercial agreements with our former parent company, International Paper, whereby a substantial amount of our production in the United States is outsourced, and the loss of such agreements or the inability to recoup the fixed costs of such agreements, could have an adverse effect on our business, financial condition, results of operations and cash flows.
Our level of debt and its maturity dates could have important consequences to our shareholders, including: • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, product development, acquisitions or other general corporate requirements; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, product development, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • increasing our effective tax rate; • exposing us to the risk of increased interest rates to the extent that our borrowings are at variable rates of interest or upon incurring new debt at maturity at new interest rates; • limiting our ability to deduct the full amount of the interest payments on any debt from our taxable income; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a competitive disadvantage compared to other, less leveraged competitors or competitors with comparable debt and more favorable terms; and • increasing our cost of borrowing. 25 We and our subsidiaries may incur significant additional indebtedness in the future.
Our strategy has included a reduction of our outstanding debt obligations, by nearly 48% since 2021, but nonetheless our debt is a risk that could have important consequences to our shareholders, including: • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, product development, acquisitions or other general corporate requirements; • requiring a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, product development, acquisitions, returning cash to shareowners and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • increasing our effective tax rate; • exposing us to the risk of increased interest rates to the extent that our borrowings are at variable rates of interest or upon incurring new debt at maturity at new interest rates; • limiting our ability to deduct the full amount of the interest payments on any debt from our taxable income; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a competitive disadvantage compared to other, less leveraged competitors or competitors with comparable debt and more favorable terms; and • increasing our cost of borrowing.
International Paper has had the right to terminate the offtake agreement related to the Georgetown mill since January 1, 2023, and the right to terminate the offtake agreement related to the Riverdale mill since January 1, 2024, in each case on six months’ notice, and termination of these agreements could significantly reduce our UFS production capacity in the United States.
International Paper has had the right to terminate the offtake agreement related to the Riverdale mill since January 1, 2024, on six months’ advance notice to us, and termination of such agreement could significantly reduce our UFS production capacity in the United States.
As of December 31, 2023, the aggregate principal amount of all of our outstanding debt was approximately $950 million .
As of December 31, 2024 , the aggregate principal amount of all of our outstanding debt was approximately $796 million .
As of February 16, 2024, we have 41.2 million shares of our common stock outstanding, of which approximate ly 6.3 million are subject to certain restrictions on transfer imposed by contract or the U.S. federal securities laws.
As of February 11, 2025, we have approximately 40.6 million shares of common stock outstanding, of which approximate ly 6.3 million are subject to certain restrictions on transfer imposed by contract or the U.S. federal securities laws.
As of December 31, 2023, we have repurchased $150 million of the total $300 million authorized thus far by our board of directors for repurchases of our common stock. Any repurcha ses in excess of the remaining amount authorized for repurchases would require further authorization by our board of directors.
As of December 31, 2024 , we have repurch ased $218 million of the total $300 million authorized thus far by our board of directors for repurchases of our common stock. Any repurchases in excess of the remaining amount authorized for repurchases would require further authorization by our board of directors.
The agreements governing our indebtedness contain restrictive covenants that limit our ability to conduct our business, including our ability to dispose of assets and the use of the proceeds from those dispositions, require that we use the proceeds from any future incurrence of debt or issuance of equity to repay existing indebtedness and limit our ability to incur additional indebtedness.
The agreements governing our indebtedness contain restrictive covenants that limit our ability to conduct our business, including certain limitations on our ability to dispose of assets and the use of the proceeds from those dispositions, certain requirements that we use the proceeds from future incurrences of debt or issuances of equity to repay existing indebtedness, and limit our ability to incur additional indebtedness.
Our ability to successfully operate our business and our future growth depends, to a significant degree, on the ability to continue to attract and retain senior management with strong leadership experience and relevant knowledge and skills.
Our ability to successfully operate our business and our future growth depends, to a significant degree, on the ability to continue to attract and retain senior management with strong leadership experience and relevant knowledge and skills. There is no guarantee that we will be able to continue to attract and retain strong senior management.
As a result, until these early termination dates, we will not be able to reduce or eliminate the costs associated with the offtake agreements, which may have an adverse effect on our business, financial condition and results of operations and cash flow.
As a result, until the January 1, 2026 early termination date, we will not be able unilaterally to reduce or eliminate the costs associated with the Riverdale offtake agreement, which may have an adverse effect on our business, financial condition, results of operations and cash flows.
Continued payment of dividends on, and repurchases of, our common stock are subject to the continued discretion of our board of directors and, consequently, shareholders’ ability to achieve a return on their investment could become limited to appreciation in the price of our common stock. 26 Since 2022, we have paid quarterly dividends and have been opportunistically repurchasing shares of our common stock.
Continued payment of dividends on, and repurchases of, our common stock are subject to the continued discretion of our board of directors and, consequently, shareholders’ ability to achieve a return on their investment could become limited to appreciation in the price of our common stock.
Changes in plan demographics, including an increase in the number of retirements or increases in life expectancy assumptions, may also increase the costs and funding requirements of the obligations related to the company’s pension plans. An increase in costs or funding requirements could adversely impact our cash flows, business, financial condition and results of operations.
Changes in plan demographics, including an increase in the number of retirements or increases in life expectancy assumptions, may also increase the costs and funding requirements of the obligations related to the company’s pension plans.
Additional contributions to enhance the funded status of the pension plans can be made at our discretion. As of December 31, 2023, the Sylvamo United Kingdom (“U.K.”) pension plan was fully funded, and the Sylvamo United States pension plan was 94% funded.
Additional contributions to enhance the funded status of the pension p lans can be made at our discretion. As of December 31, 2024, the Sylvamo U.K. pension plan was fully funded, and the Sylvamo United States pension plan was 96% funded.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our current or former directors, officers or shareholders.
These provisions could facilitate management entrenchment that could delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our shareholders. 29 Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our current or former directors, officers or shareholders.
Our certificate of incorporation contains provisions permitted under the DGCL relating to the liability of directors.
Our certificate of incorporation limits the personal liability of our directors and officers for breaches of fiduciary duty. Our certificate of incorporation contains provisions permitted under the DGCL relating to the liability of directors and officers.
Additionally, we could experience labor shortages if a public health crisis were to affect the supply of labor or ability of employees to work (see “—A public health crisis could have a material adverse effect on our business, financial condition and results of operations”) or if our relationships with our employees represented by unions were to deteriorate (see “—We could experience disruptions in operations and increased labor costs due to labor disputes”). 21 Loss of the services of any members of our senior management team or other key or skilled employees, significant attrition in our workforce, retirements as our workforce ages or the failure to attract and retain qualified persons to serve in management and other positions, could have a material adverse effect on our business and business prospects.
Additionally, we could experience labor shortages if a public health crisis were to affect the supply of labor or ability of employees to work (see “—A public health crisis could have a material adverse effect on our business, financial condition , results of operations and cash flows ” ) or if our relationships with our employees represented by unions were to deteriorate (see “—We could experience disruptions in operations and increased labor costs due to labor disputes” ).
Activist shareholder activity, or the mere presence of an activist shareholder among our investor base, could adversely impact the market price for our common stock or cause periods of significant price volatility. 27 Anti-takeover provisions in our certificate of incorporation and bylaws could discourage, delay or prevent a change of control of our company and could affect the trading price of our common stock.
Activist shareholder activity, or the mere presence of an activist shareholder among our investor base, could adversely impact the market price for our common stock or cause periods of significant price volatility.
Our training programs are tailored to accelerate training, but it is difficult to replace the number of years of experience our retiring operators and skilled workforce possessed. The situation is exacerbated by tight labor markets where our mills are located. Hybrid work options are also creating challenges to motivate and retain employees.
Our training programs are tailored to accelerate training, but it is difficult to replace the number of years of experience our retiring operators and skilled workforce possessed.
Each of these risks could have a material adverse effect on our financial condition and results of operations. Risks Relating To Our Indebtedness Our indebtedness could have a material adverse effect on our financial condition.
Each of these risks could have a material adverse effect on our financial condition and results of operations. Risks Relating To Our Indebtedness Our indebtedness could have a material adverse effect on our financial condition and cash flows. In 2024, we refinanced our indebtedness to extend its maturity profile and reduce the total amount of our debt facilities.
Such 23 rights have not been exercised as of the date of this Annual Report on Form 10-K. Also, we believe that the Georgetown and Riverdale mills, as paper mills, are subject to the same or similar economic, external, industry and operational risks that our own mills face (as described in these “Risk Factors”).
We believe that the Riverdale mill, as a paper mill, is subject to the same or similar economic, external, industry and operational risks that our own mills face (as described in these “Risk Factors”).
Item 1. Business – Environmental and Other Regulations . Our business is subject to a wide variety of other laws, regulations and other government requirements that may change in significant ways, and the cost of compliance with such requirements could have a material adverse effect on our business, financial condition and results of operations.
Additionally, interpretations of or changes in laws applicable to our United States or U.K. pension plan could cause us to have to increase funding of the plan; for example, see the disclosure concerning our U.K. pension plan in “ — Our business is subject to a wide variety of other laws, regulations and other government requirements that may change in significant ways, and the cost of compliance with such requirements could have a material adverse effect on our business, financial condition, results of operations and cash flows. ” An increase in costs or funding requirements could adversely impact our business, financial condition, results of operations and cash flows.
For example, we are party to offtake agreements related to International Paper’s Georgetown, South Carolina, and Riverdale, Alabama, mills, which provide us with UFS products important to our business.
For example, we entered into offtake agreements related to International Paper’s Georgetown, South Carolina, and Riverdale, Alabama, mills, to provide us with UFS products important to our business. As of December 31, 2024, we and International Paper, by mutual consent, have terminated the agreement pursuant to which the Georgetown mill supplied the Company with products.
Furthermore, the existence of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions could facilitate management entrenchment that could delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our shareholders.
Furthermore, the existence of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our common stock.
As of December 31, 2023, we have a $450 million cash flow-based revolving credit facility, a $269 million term loan “A” maturing in 2028, a $475 million term loan “F” maturing in 2027, $90 million of senior notes due 2029 that are outstanding, and a $120 million accounts receivable finance facility maturing in 2025.
As of December 31, 2024 , we have a $400 million cash flow-based revolving credit facility, a $219 million 26 Term Loan A maturing in 2029, a $257 million Term Loan F maturing in 2027, a $232 million Term Loan F-2 maturing in 2031, and a $110 million accounts receivable finance facility maturing in 2027.
Additionally, the agreements governing our indebtedness limit the amount of “restricted payments,” including dividends and share repurchases, that we are permitted to make while our indebtedness remains outstanding, and these limitations are greater until the Brazil Tax Dispute (as defined in this Annual Report on Form 10-K) is resolved, unless we meet certain liquidity conditions and/or deposit a certain level of funds into a controlled acco unt.
Among the covenants in our debt agreements, prior to the Brazil Tax Dispute (as defined this Form 10-K) being resolved, if we do not maintain the minimum level of liquidity specified in such agreements, or, if there are adverse rulings in the Brazil Tax Dispute and we do not maintain the specified minimum level of liquidity and deposit $60 million into escrow, then we would be limited in the amount of “restricted payments,” including dividends and share repurchases, that we may make while our indebtedness remains outstanding.
The market for labor at all levels of experience and seniority, including for people with the specialized technical and trade experience needed for manufacturing operations, was competitive in 2023 and remains competitive.
Although the labor market generally is not as tight as it was in recent years, the market remains tight for labor having the specialized technical and trade skills and experience needed for manufacturing operations at our mill locations.
The loss or reduction of business from our larger customers, or the renewal of business on less favorable terms, could have a material adverse effect on our business, financial condition and results of operations. Our business and business prospects could be materially adversely affected if we fail to attract and retain senior management and other key employees.
Item 1. Business - Environmental and Other Regulations - Environmental and Climate Change Regulation . Our business and business prospects could be materially adversely affected if we fail to attract and retain senior management and other key employees.
Removed
In addition to environmental laws and regulations, as discussed immediately above and in Item 1 Business – Environmental and Other Regulations , our operations are subject to regulation under a wide variety of other laws, regulations and government requirements in Europe, Latin America and North America, including those relating to health and safety, labor and employment, data privacy, taxes, competition, trade and health care.
Added
Loss of the services of any members of our senior management team or other key or skilled employees, significant attrition in our workforce, retirements as our workforce ages or the failure to attract and retain qualified persons to serve in management and other positions, could have a material adverse effect on our business and business prospects.
Removed
There can be no assurance that laws, regulations and government requirements will not be changed, applied or interpreted in ways that will require us to modify our operations and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs.
Added
The Georgetown mill supplied approximately 250,000 tons to the Company in 2024. After termination of the agreement, we will exit approximately 150,000 tons and, assuming 2024 margins, termination of this agreement is expected to negatively impact the Company’s earnings by $40 million. We retained and qualified approximately 100,000 tons of the most profitable products at our other North American mills.
Removed
For example, we are subject to complex and evolving U.S. and international privacy laws and regulations, including those pertaining to the handling of personal data, such as the EU General Data Protection Regulation (“GDPR”), Brazil’s Lei General de Proteção de Dados Pessoais (“LGPD”) and the California Consumer Privacy Act of 2018 (“CCPA”).
Added
Such right has not been exercised as of the date of this Annual Report on Form 10-K, but we are preparing for the possibility that the agreement may be terminated.
Removed
The GDPR, which applies with respect to all member states of the European Union, includes operational requirements for companies receiving or processing personal data of EU residents that are partially different from those that had previously been in place and imposes significant penalties for noncompliance. Brazil’s LGPD establishes rules for the collection, use, processing, storage and transfer of personal data.
Added
We and our subsidiaries may incur significant additional indebtedness in the future. If new indebtedness is added to our current indebtedness levels, these risks would increase. We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Removed
The LGPD gives Brazilian data subjects expanded rights to control their personal data and access to it, and includes requirements with respect to maintaining the security of personal data, limiting the processing of personal data, reporting data breaches and cross-border data transfers. Failure to comply with the LGPD could result in potentially severe financial penalties.
Added
Since 2022, we have paid quarterly dividends and have been opportunistically repurchasing shares of our common stock.
Removed
Application of penalties under the LGPD began on August 1, 2021. The LGPD may require additional compliance investment as well as additional changes to policies, procedures and operations. California’s CCPA, which went into effect on January 1, 2020, affords California residents and households expanded privacy protections.
Added
Anti-takeover provisions in our certificate of incorporation and bylaws could discourage, delay or prevent a change of control of our company and could affect the trading price of our common stock.
Removed
Moreover, governmental authorities around the world are considering, or are in the process of implementing, new data protection regulations. Many of these laws are subject to uncertain application, interpretation or enforcement standards that could result in claims, changes to our business practices, data processing and security systems, penalties, increased operating costs or other impacts on our business.
Removed
These laws also often provide for civil penalties for violations, as well as private rights of action for data breaches that may increase data breach litigation. Regulatory authorities could determine that our data handling practices fail to address all the requirements of certain new laws, which could subject us to penalties and litigation.
Removed
In addition, there is no assurance that our security controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures and practices we implement will prevent the improper disclosure of personal data.
Removed
Improper disclosure of personal data in violation of the GDPR, LGPD the CCPA or of other personal data protection laws could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines or criminal prosecution, all of which could have a material adverse effect on our business, financial condition and results of operations.
Removed
We are subject to tax laws in Europe, Latin America and North America that are subject to interpretation by taxing authorities, and we are subject to audit by taxing authorities. Additionally, administrative guidance can be incomplete or vary from legislative intent, and therefore the application of some tax law is uncertain.
Removed
While we believe the positions reported by Sylvamo comply with relevant tax laws and regulations, taxing authorities could interpret our application of certain laws and regulations differently. We are currently subject to tax audits in the United States, Brazil and other taxing jurisdictions around the world.
Removed
In some cases, International Paper appealed and we have continued to appeal, certain assessments by taxing authorities in the court system, particularly in Brazil. As such, tax controversy matters may result in previously unrecorded tax expenses, higher future tax expenses or the assessment of interest and penalties.
Removed
See Note 13 Commitments and Contingent Liabilities and Note 12 Income Taxes to the Consolidated and Combined Financial Statements included in Item 8 in this Annual Report on Form 10-K. 19 For exam ple, the Brazilian Federal Revenue Service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by International Paper do Brasil Ltda., now named Sylvamo do Brasil Ltda.
Removed
(“Sylvamo Brasil”), a wholly-owned subsidiary of Sylvamo (the “Brazil Tax Dispute”).
Removed
Sylvamo Brasil’s assessments for the tax years 2007-2015 total approximately $119 million in tax and $274 million in interest, penalties and fees (adjusted for variation in currency exchange rates and a recent law change pursuant to which the Brazil tax authority agreed to cancel a portion of the interest, penalties, and fees).
Removed
After a previous favorable ruling challenging the basis for these assessments, Sylvamo Brasil received other subsequent unfavorable decisions from the Brazilian Administrative Council of Tax Appeals. We are appealing this tax litigati on in the Brazilian federal courts.
Removed
The Brazilian government may enact a tax amnesty program that would allow Sylvamo Brasil to resolve the Brazil Tax Dispute for less than the assessed amount. There is no assurance that any such amnesty program will be enacted or that we will participate.
Removed
Pursuant to a tax matters agreement between Sylvamo and International Paper, Sylvamo’s payments for any such liability are capped at 40% of the first $300 million of any final settlement amount (up to $120 million).
Removed
All decisions concerning the conduct of t he litigation related to the Brazil Tax Dispute, including as to strategy, settlement, pursuit, abandonment and participation in any tax amnesty program, are and will continue to be made by International Paper. Sylvamo will thus have no control over any decision related to the ongoing litigation.
Removed
As legally required by the Brazilian federal court, Sylvamo Brasil has provided surety bonds in connection with the Brazil Tax Dispute. International Paper has agreed to indemnify the provider of the surety bonds during the pendency of the appeal in the Brazilian federal court.
Removed
If Sylvamo Brasil were unable to renew the surety bonds upon their expiration, or if Sylvamo Brasil were unable to provide additional surety bonds as and when required by the Brazilian federal court, Sylvamo Brasil could be required to post acceptable collateral in order to continue the litigation which additional collateral International Paper has agreed to provide on behalf of Sylvamo Brasil.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

100 edited+107 added−30 removed44 unchanged
Biggest changeAlthough it is not possible to identify all of these risks, uncertainties and other factors, the impact of the following factors, among others, on us or on our suppliers or customers, could cause our actual results to differ from those in the forward-looking statements: deterioration of global and regional economic and political conditions, including the impact of wars and other conflicts in Ukraine and the Middle East; physical, financial and reputational risks associated with climate change; public health crises that could have impacts similar to those experienced as a result of the COVID-19 pandemic; increased costs or reduced availability of the raw materials, energy, transportation (truck, rail and ocean) and labor needed to manufacture and deliver our products; reduced demand for our products due to industry-wide declines in demand for paper, the cyclical nature of the paper industry or competition from other businesses; a material disruption at any of our manufacturing facilities; information technology risks including potential cybersecurity breaches; extensive environmental laws and regulations, as well as tax and other laws, in the United States, Brazil and other jurisdictions to which we are subject, including our compliance costs and risk of violations and liability; our reliance on a small number of customers; a failure by us to attract and retain senior management and other key and skilled employees; loss of our commercial agreements with International Paper; our indebtedness having a material adverse effect on our financial condition, or our inability to generate sufficient cash to service our indebtedness; and the factors disclosed in Item 1A.
Biggest changeAlthough it is not possible to identify all of these risks, uncertainties and other factors, the impact of the following factors, among others, on us or on our suppliers or customers, could cause our actual results to differ from those in the forward-looking statements: deterioration of global and regional economic, civil and political conditions and trade relations; physical, financial and reputational risks associated with climate conditions and climate change, including adverse environmental events such as floods and fires; reduced demand for our products due to the cyclical nature of the paper industry, the industry-wide secular decline in paper demand, or competition from other businesses; increased costs or reduced availability of the raw materials, energy, transportation (truck, rail and ocean) and labor needed to manufacture and deliver our products; a material disruption at any of 9 our manufacturing facilities; information technology risks including potential cybersecurity breaches affecting us or third parties with which we do business; extensive environmental, tax and other laws and regulations in the Brazil, Europe, the United States and other jurisdictions to which we are subject, including our compliance costs and risk of liability and loss for violations; our reliance on a small number of customers; and the factors disclosed in Item 1A.
We support and use third-party certification of sustainable forest management through forest certification and chain-of-custody systems, and work to continue to meet our customer’s demand for certified-fiber products. Sylvamo follows these credible certification systems: Forest Stewardship Council ® (FSC ® ), the Sustainable Forestry Initiative ® (SFI ® ), and the Programme for the Endorsement of Forest Certification (PEFC).
We support and use third-party certification of sustainable forest management through forest certification and chain-of-custody systems, and we work to continue to meet our customer’s demand for certified-fiber products. Sylvamo follows these credible certification systems: Forest Stewardship Council ® (FSC ® ); the Sustainable Forestry Initiative ® (SFI ® ); and the Programme for the Endorsement of Forest Certification (PEFC).
Our sustainability targets are subject to assumptions, risks and uncertainties, many of which are outside our control. If we cannot meet these targets by 2030, or if they are perceived negatively, including the perception that they are not sufficiently robust or, conversely, are too costly, our reputation could be harmed.
Our sustainability targets are subject to assumptions, risks and uncertainties, many of which are outside of our control. If we cannot meet these targets by 2030, or if they are perceived negatively, including the perception that they are not sufficiently robust or, conversely, are too costly, our reputation could be harmed.
We are subject to highly complex tax laws in various countries in Europe, Latin America and North America, most notably in the countries where we have significant operations – Brazil, France, Sweden and the United States – that if violated, could result in significant fines, interest charges and costs associated with litigation.
We are subject to highly complex tax laws in various countries in Europe, Latin America and North America, most notably in the countries where we have significant operations – Brazil, France, Sweden and the United States – that if violated, could 6 result in significant fines, interest charges and costs associated with litigation.
We believe that operating in this manner creates healthy communities, enhances our competitive position with our customers, increases our desirability as an investment and helps engender employee pride in the Company, helping us achieve our vision to be the world’s paper company: the employer, supplier and investment of choice.
We believe that operating in this manner creates healthy communities, enhances our competitive position with our customers, increases our desirability as an investment and helps engender employee pride in the Company, thereby helping us achieve our vision to be the world’s paper company: the employer, supplier and investment of choice.
Compliance with regulations that implement new, more stringent requirements or new public policy could require significant expenditures on our part or even the curtailment of certain of our manufacturing operations. 17 We have incurred, and expect that we will continue to incur, significant costs complying with applicable environmental laws and regulations.
Compliance with regulations that implement new, more stringent requirements or new public policy could require significant expenditures on our part or even the curtailment of certain of our manufacturing operations. We have incurred, and expect that we will continue to incur, significant costs complying with applicable environmental laws and regulations.
The market price of virgin wood fiber varies based upon demand, availability, source, and the costs of labor and the fuels used in harvesting and transporting the fiber. The cost and availability of wood fiber can also be affected by weather, climate variations, natural disasters, general logging conditions, geography, human activity and regulatory activity.
The market price of virgin wood fiber varies based upon demand, availability, source, and 15 the costs of labor and the fuels used in harvesting and transporting the fiber. The cost and availability of wood fiber can also be affected by weather, climate variations, natural disasters, general logging conditions, geography, human activity and regulatory activity.
The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report that we filed with or furnished to the SEC. 9 ITEM 1A.
The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report that we filed with or furnished to the SEC. 10 ITEM 1A.
Our profitability with respect to our products depends on managing our cost structure, particularly wood fiber, chemicals, transportation and energy costs, which represent the largest components of our operating costs and can fluctuate based upon factors beyond our control.
Our profitability with respect to our products depends on managing our cost structure, particularly wood fiber, chemicals, transportation and energy costs, which represent some of the largest components of our operating costs and can fluctuate based upon factors beyond our control.
As a result, prices for our paper products are driven by many factors outside of our control, and we have little influence over the timing and extent of price changes, which are often volatile.
As a result, prices for our products are driven by many factors outside of our control, and we have little influence over the timing and extent of price changes, which are often volatile.
The loss to us could be significant, including financial losses resulting from remediating damages to our systems, loss from our inability to operate or delays in our operations, lost sales, negative publicity, litigation and government penalties. As a result, such incidents could have a material adverse effect on our business, financial condition and results of operations.
The loss to us could be significant, including financial losses resulting from remediating damages to our systems, loss from our inability to operate or delays in our operations, lost sales, negative publicity, litigation and government penalties. As a result, such incidents could have a material adverse effect on our business, financial condition, results of operations and cash flows.
This secular decline in demand is due in large part to competing technologies and materials, including the increas ed use of e-mail and other electronic forms of communication, increased and permanent product substitution, including less print advertising, more electronic billing, more e- 14 commerce, fewer catalogs and a reduced volume of mail.
This secular decline in demand is due in large part to competing technologies and materials, including the increas ed use of e-mail and other electronic forms of communication, increased and permanent product substitution, including less print advertising, more electronic billing, more e- 16 commerce, fewer catalogs and a reduced volume of mail.
In addition, as the owner and operator of real property, we may be liable under environmental laws for investigation, cleanup, closure and other costs and damages resulting from the presence and release of hazardous substances on or from our properties or operations, including properties that we no longer own or operate.
In addition, as the owner and operator of real property, we could be liable under environmental laws for investigation, cleanup, closure and other costs and damages resulting from the presence and release of hazardous substances on or from our properties or operations, including properties that we no longer own or operate.
If any of our transportation providers fail to deliver our products to customers in a timely manner, it may result in additional costs to us in order to remedy the untimely delivery. Further, reduced availability of transportation causes inflationary pressure on the prices charged by our transportation providers, increasing our costs of production and delivery to customers.
If any of our transportation providers fail to deliver our products to customers in a timely manner, it could result in additional costs to us in order to remedy the untimely delivery. Further, reduced availability of transportation causes inflationary pressure on the prices charged by our transportation providers, increasing our costs of production and delivery to customers.
A material disruption at our corporate headquarters or one of our manufacturing facilities, or involving any of our machines within such facilities, could prevent us from meeting customer demand and reduce our sales, which could have a material adverse effect on our business, financial condition and results of operations.
A material disruption at our corporate headquarters or one of our manufacturing facilities, or involving any of our machines within such facilities, could prevent us from meeting customer demand and reduce our sales, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Although in 2023 we did not experience any significant breaches of our information technology systems from cybersecurity attacks, we cannot be certain that the security measures we maintain to protect our information technology systems are able to prevent, contain or detect cyber-attacks, cyber terrorism or security breaches from known or future cyber-attacks.
Although in 2024 we did not experience any significant breaches of our information technology systems from cybersecurity attacks, we cannot be certain that the security measures we maintain to protect our information technology systems are able to prevent, contain or detect cyber-attacks, cyber terrorism or security breaches from known or future cyber-attacks.
There can be no assurance that future environmental permits will be granted or that we will be able to maintain and renew existing permits, and the failure to do so could have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that future environmental permits will be granted or that we will be able to maintain and renew existing permits, and the failure to do so could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Any sustained increase in the prices of raw materials and energy required for our manufacturing operations without any corresponding increase in product pricing would reduce our operating margins and could have a material adverse effect on our business, financial condition and results of operations.
Any sustained increase in the prices of raw materials and energy required for our manufacturing operations without any corresponding increase in our product pricing would reduce our operating margins and could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If any of these providers fail to deliver materials to us in a timely manner, we may experience delays in our ability to manufacture our products and be unable to meet customer demand.
If any of these providers fail to deliver materials to us in a timely manner, we could experience delays in our ability to manufacture our products and be unable to meet customer demand.
If any of our transportation providers were to cease operations or cease doing business with us, we may be unable to replace them at a reasonable cost.
If any of our transportation providers were to cease operations or cease doing business with us, we could be unable to replace them at a reasonable cost.
In Brazil, our business is subject to various tax proceedings, including those discussed in Note 13 Commitments and Contingent Liabilities and Note 12 Income Taxes to the Consolidated and Combined Financial Statements included in Item 8 of this Annual Report on Form 10-K.
In Brazil, our business is subject to various tax proceedings, including those discussed in Note 13 Commitments and Contingent Liabilities and Note 12 Income Taxes to the Consolidated Financial Statements included in Item 8 in this Annual Report on 10-K.
Risks Relating to Our Operations Material disruptions at one of our manufacturing facilities could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to Our Operations Material disruptions at one of our manufacturing facilities could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Any of our manufacturing 15 facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including: • fires, floods, earthquakes, hurricanes or other catastrophes; • the effect of a drought, reduced rainfall or a flood on its water supply; • the effect of severe weather conditions on equipment and facilities; • disruption in the supply of raw materials, including wood fiber, or other manufacturing inputs; • information system disruptions or failures due to any number of causes, including cyber-attacks; • domestic and international laws and regulations applicable to our business and our business partners around the world; • unscheduled maintenance outages; • prolonged power failures; • an equipment failure or damage to any of our paper-making equipment; • a chemical spill or release of pollutants or hazardous substances; • explosion of or damage to a boiler or other equipment; • damage or disruptions caused by third parties operating on or adjacent to one of our manufacturing facilities; • disruptions in the transportation infrastructure, including roads, bridges, railroad tracks and tunnels; • a widespread outbreak of an illness or any other communicable disease, such as the COVID-19 pandemic or any other public health crisis; • failure of our third-party service providers and business partners to satisfactorily fulfill their commitments and responsibilities in a timely manner and in accordance with agreed upon terms; • labor difficulties; and • other operational problems.
Any of our manufacturing facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including: • fires, floods, earthquakes, hurricanes or other catastrophes; • the effect of a drought, reduced rainfall or a flood on any of our mills’ water supply; • the effect of severe weather conditions on equipment and facilities; • disruption in the supply of raw materials, including wood fiber, or other manufacturing inputs; • information system disruptions or failures due to any number of causes, including cyber-attacks on us or third parties with which we do business; • domestic and international laws and regulations applicable to our business and our business partners around the world; • unscheduled maintenance outages; • prolonged power failures; • an equipment failure or damage to any of our paper-making equipment; • a chemical spill or release of pollutants or hazardous substances; • explosion of or damage to a boiler or other equipment; • damage or disruptions caused by third parties operating on or adjacent to one of our manufacturing facilities; • disruptions in the transportation infrastructure, including roads, bridges, railroad tracks and tunnels; 17 • a widespread outbreak of an illness or any other communicable disease, such as a viral pandemic or other public health crisis; • failure of our third-party service providers and business partners to satisfactorily fulfill their commitments and responsibilities in a timely manner and in accordance with agreed upon terms; • labor difficulties; and • other operational problems.
The discovery of additional contamination or the imposition of additional cleanup obligations at our or third-party sites may result in significant additional costs. Any material liability we incur could preclude us from making capital expenditures that would otherwise benefit our business and have a material adverse effect on our business, financial condition and results of operations.
The discovery of additional contamination or the imposition of additional cleanup obligations at our or third-party sites may result in significant additional costs. Any material liability we incur could preclude us from making capital expenditures that would otherwise benefit our business and have a material adverse effect on our business, financial conditions, results of operations and cash flows.
Risk Factors – “Our business is subject to a wide variety of other laws, regulations and other government requirements that may change in significant ways, and the cost of compliance with such requirements could have a material adverse effect on our business, financial condition and results of operations.” SUSTAINABILITY MATTERS Sylvamo remains committed to operating responsibly and sustainably, and incorporates this into our strategies and everyday processes as we seek to seize opportunities, address risks and create long-t erm value for our shareholders.
Risk Factors – “Our business is subject to a wide variety of other laws, regulations and other government requirements that may change in significant ways, and the cost of compliance with such requirements could have a material adverse effect on our business, financial condition , results of operation s and cash flow s.” SUSTAINABILITY Sylvamo remains committed to operating responsibly and sustainably, and incorporates this into our strategies and everyday processes as we seek to seize opportunities, address risks and create long-t erm value for our shareholders.
Environmental laws and regulations continue to evolve, and we may become subject to increasingly stringent environmental standards in the future, particularly under air quality and water quality laws and standards, including those intended to address climate change, including climate change-related regulatory risk, discussed at “— We are subject to physical, financial and reputational risks associated with climate change, including the impact of global, regional and local weather conditions, the availability of wood fiber, water and fuel, and the impact of increasing regulatory and investor focus on climate change” and Item 1 .
Environmental laws and regulations continue to evolve, and we could become subject to increasingly stringent environmental standards in the future, particularly under air quality and water quality laws and standards, including those intended to address climate change discussed at “ — We are subject to physical, financial and reputational risks associated with climate change, including the impact of global, regional and local weather conditions, the availability of wood fiber, water and fuel, and the impact of increasing regulatory and investor focus on climate change ” and Item 1.
RISK FACTORS Sylvamo faces risks in the normal course of business and through global, regional and local events. In addition to the risks and uncertainties discussed elsewhere in this Annual Report on Form 10-K, including in Item 1. B usiness , Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations , and Item 1 C .
RISK FACTORS Sylvamo faces risks in the normal course of business and through global, regional and local events. In addition to the risks and uncertainties discussed elsewhere in this Annual Report on Form 10-K, including in Item 1. Business , Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations , and Item 1C.
If the prices or demand for our paper products decline, or if wood fiber, chemicals, transportation or energy costs increase, or both, our business, financial condition and results of operations could be materially adversely affected.
If the prices or demand for our paper or pulp products decline, or if wood fiber, chemicals, transportation or energy costs increase, or both, our business, financial condition, results of operations and cash flows could be materially adversely affected.
The secular decline in demand historically has had a material adverse effect on our business, financial condition and results of operations. As the use of these alternatives continue to grow, demand for paper products is likely to decline further, which could have a further material adverse effect on our business, financial condition and results of operations.
The secular decline in demand historically has had a material adverse effect on our business, financial condition, results of operations and cash flows. As the use of non-paper alternatives continue to grow, demand for paper products is likely to decline further, which could have a further material adverse effect on our business, financial condition, results of operations and cash flows.
Business - Sustainability Matters - Climate Change and Regulation of GHG ’ s . We anticipate continued or increased regulatory activity at the local, state, federal and international levels regarding environmental matters and environmental public policies that have an impact on our manufacturing operations.
Business - Sustainability - Climate Change and Re duction of GHG s . We anticipate continued or increased regulatory activity at the local, state, federal and international levels regarding environmental matters and environmental public policies that have an impact on our manufacturing operations.
Our environmental expenditures include, among others, those related to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. See Note 13 Co mmitments and Contingent Liabilities to the Consolidated and Combined Financial Statements included in Item 8 in this Annual Report on Form 10-K for additional information on environmental matters.
Our environmental expenditures include, among others, those related to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. See Note 13 Commitments and Contingent Liabilities to the Consolidated Financial Statements included in Item 8 in this Annual Report on 10-K for additional information on environmental matters.
For example, a global resurgence of severe COVID infection or another public health crisis could reduce demand for our paper as a result of school and business closures and increased remote work among the general public, disrupt operations at our mills due to employee attrition, illness, quarantines, government actions or other restrictions, and cause labor shortages, supply chain disruptions and inflation that constrain our operations and increase our costs to operate.
For example, a public health crisis could reduce demand for our paper as a result of school and business closures and increased remote work among the general public, disrupt operations at our mills due to employee attrition, illness, quarantines, government actions or other restrictions, and cause labor shortages, supply chain disruptions and inflation that constrain our operations and increase our costs to operate.
Because carbon dioxide and methane trap higher amounts of heat in the atmosphere than many other atmospheric gasses and remain in the atmosphere for years, we believe that it is prudent to reduce those emissions.
The GHGs carbon dioxide and methane trap higher amounts of heat in the atmosphere than many other atmospheric gasses and remain in the atmosphere for years; therefore, we believe it is prudent to reduce those emissions.
The global demand for uncoated freesheet (“UFS”) decreased at 2.5% CAGR from 2017 to 2023 (which includes the COVID-19 pandemic’s atypical impact in 2020 of a 10.2% decline year-over-year), bas ed on third party RISI industry data reporting as of December 2023.
The global demand for uncoated freesheet (“UFS”) decreased at 2.4% CAGR from 2019 to 2024 (which includes the COVID-19 pandemic’s atypical impact in 2020 of a 10.2% decline year-over-year), bas ed on third party RISI industry data reporting as of December 2024.
Consolidation could result in the emergence of competitors with greater resources and scale than ours, which could adversely impact our competitive position, financial conditions and results of operations.
Consolidation could result in the emergence of competitors with greater resources and scale than ours, which could adversely impact our competitive position.
We operate in three primary regions, each of which contributes significantly to our financial performance: Europe, Latin America and North America. Five of the seven mills that we own are located outside the United States: three in Brazil, one in France and one in Sweden (acquired in January 2023). We sold our Russian operations in 2022.
We operate in three primary regions, each of which contributes significantly to our financial performance: Europe, Latin America and North America. Five of the seven mills that we own are located outside the United States: three in Brazil, one in France and one in Sweden.
The principal risks and uncertainties affecting our business include the following: • global and regional economic and political conditions; • physical, financial and reputational risks associated with climate change; • public health crises that could have impacts similar to those experienced as a result of the COVID-19 pandemic; • increases in the cost or availability of raw materials and energy needed to manufacture our products; • reduced truck, rail and ocean freight availability; • industry-wide decline in demand for paper and related products; • the cyclical nature of the paper industry, resulting in fluctuations in paper product prices and demand; • competition from other businesses and consolidation within the paper industry; • material disruptions at one or more of our manufacturing facilities; • information technology risks, including risk of cybersecurity breaches; • extensive laws, regulations and government requirements, including those related to the environment and climate change, including costs of compliance and any liabilities under such laws; • our reliance on a small number of significant customers; • our failure to attract and retain senior management and other key employees; • a significant write-down of our goodwill or other intangible assets; • failure to achieve expected investment returns on pension plan assets or other factors affecting the plans’ funded level; • labor disputes; • inability to achieve expected benefits from strategic corporate actions; • inability to protect our intellectual property and other proprietary rights; 10 • the loss of commercial agreements with International Paper; • our short history as a standalone public company; • the failure of the transactions in connection with our spin-off from International Paper to qualify for non-recognition treatment for U.S. federal income tax purposes; • the satisfaction of indemnification obligations between us and International Paper; • federal and state fraudulent transfer laws and New York and Delaware corporate law which may permit a court to void the transactions that separated us from International Paper; • our indebtedness having a material adverse effect on our financial condition, or our inability to generate sufficient cash to service our indebtedness; • future offerings of debt or equity securities senior to our common stock, depressing its price; • if we do not continue to declare dividends, repurchase shares of our common stock or otherwise return capital to shareholders, shareholders must rely on appreciation in our stock’s value for investment returns; • future issuances of equity, diluting our outstanding common stock; • a shareholder’s sale of a substantial number of shares of our common stock, causing its price to decline; • actions of activist shareholders that cause us to incur costs and adversely affect our stock price; and • provisions in our certificate of incorporation and bylaws that could hinder a change in control of our company, cause a reduction in the price of our stock and limit the forum for actions against, and the liability of, our directors and officers.
The principal risks and uncertainties affecting our business include the following: • global and regional economic and political conditions and trade relations; • physical, financial and reputational risks associated with climate conditions and climate change; • a public health crisis; • the fluctuating and cyclical nature of paper and pulp supply and demand that periodically results in declines in prices for paper and pulp; • changes in the cost or availability of raw materials and energy needed to manufacture our products; • reduced truck, rail and ocean freight availability; • industry-wide decline in demand for paper and related products; • competition from other businesses and consolidation within the paper industry; • material disruptions at one or more of our manufacturing facilities; • information technology risks, including risk of cybersecurity breaches; • extensive laws, regulations and government requirements, including those related to the environment and climate change, including costs of compliance and any liabilities under such laws; • our reliance on a small number of significant customers; • the significant capital needed for our operations; • our failure to attract and retain senior management and other key employees; • a significant write-down of our goodwill or other intangible assets; • failure to achieve expected investment returns on pension plan assets or regulatory or other factors affecting the plans’ funded level; • labor disputes; 11 • inability to achieve expected benefits from strategic corporate actions; • inability to protect our intellectual property and other proprietary rights; • loss of commercial agreements with International Paper; • failure of transactions in connection with our spin-off from International Paper to qualify for non-recognition treatment for U.S. federal income tax purposes; • satisfaction of indemnification obligations between us and International Paper; • our indebtedness having a material adverse effect on our financial condition, or our inability to generate sufficient cash to service our indebtedness; • future offerings of debt or equity securities senior to our common stock, depressing its price; • if we do not continue to declare dividends, repurchase shares of our common stock or otherwise return capital to shareholders, shareholders must rely on appreciation in our stock’s value for investment returns; • future issuances of equity, diluting our outstanding common stock; • a shareholder’s sale of a substantial number of shares of our common stock, causing its price to decline; • actions of activist shareholders that cause us to incur costs and adversely affect our stock price; and • provisions in our certificate of incorporation and bylaws that could hinder a change in control of our company, cause a reduction in the price of our stock and limit the forum for actions against, and the liability of, our directors and officers.
Additional discussion of environmental regulatory risk is included in – “ We are subject to extensive environmental laws and regulations, and could incur substantial costs as a result of compliance with, violations of or liabilities under these laws and regulations ” and Item 1. Business – Environmental and Other Regulations .
Additional discussion of our environmental regulatory risk is included in – “We are subject to extensive environmental laws and regulations, and could incur substantial costs as a result of compliance with, violations of or liabilities under these laws and regulations” and Item 1.
Risk Factors – “ We are subject to information technology risks, including risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information as well as breaches in the technology used to manage operations and other business processes .” Our operations around the world are subject to anti-corruption laws and regulations, such as the U.S.
Risk Factors – “We are subject to information technology risks, including risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information , breaches in the technology used to manage operations and other business processes , and the increasing use of a rtificial i ntelligence .” Our operations around the world are subject to anti-corruption laws and regulations, such as the U.S.
The amount and timing of environmental 18 expenditures is difficult to predict, and, in some cases, liability may be imposed without regard to contribution or to whether we knew of, or caused, the release of hazardous substances. For information about risks related to climate-change, environmental laws, regulations and governmental requirements, see
The amount and timing of environmental expenditures is difficult to predict, and, in some cases, liability may be imposed without regard to contribution or to whether we knew of, or caused, a release of hazardous substances. For more information about risks related to environmental laws, regulations and governmental requirements, see Item 1. Business – Environmental and Other Regulations .
We operate in a competitive environment in Europe, Latin America and North America. Product innovations, manufacturing and operating efficiencies, and marketing, distribution and pricing strategies pursued or achieved by competitors could have a material adverse effect on our business, financial condition and results of operations. In addition, there has been a trend toward consolidation in the paper industry.
Product innovations, manufacturing and operating efficiencies, and marketing, distribution and pricing strategies pursued or achieved by competitors could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, there has been a trend toward consolidation in the paper industry.
RISKS RELATING TO OUR BUSINESS Risks Relating to Economic Conditions and Other External Factors Our operations and performance depend significantly on global and regional economic and political conditions, and adverse economic or political conditions can materially adversely affect our business, financial condition, results of operations and cash flows.
RISKS RELATING TO OUR BUSINESS Risks Relating to Economic and Political Conditions and Other External Factors Our operations and performance depend significantly on global and regional economic, civil and political conditions and stable trade relations; and adverse economic, civil or political conditions, or deterioration in trade relations, could materially adversely affect our business, financial condition, results of operations and cash flows.
Sylvamo seeks to reduce its GHG emissions, by working to reduce our Scope 1, 2 and 3 emissions as noted 7 above, and advancing a lower-carbon economy by designing 100% reusable, recyclable or compostable papers that people depend on for education, communication and entertainment.
We seek to reduce our GHG emissions by working to reduce our Scope 1, 2 and 3 emissions, and by advancing a lower-carbon economy by designing 100% reusable, recyclable or compostable papers that people depend on for education, communication and entertainment.
We are subject to physical, financial and reputational risks associated with climate change, including the impact of global, regional and local weather conditions, the availability of wood fiber, water and fuel, and the impact of increasing regulatory and investor focus on climate change. Climate change has the potential to cause disruptions to our business, financial condition and results of operations.
We are subject to physical, financial and reputational risks associated with climate conditions and climate change, including the impact of global, regional and local weather conditions, the availability of wood fiber, water and fuel, and the impact of increasing regulatory and investor focus on climate change.
Also, third parties with which we do business are potential sources of cybersecurity risks. For example, we outsource certain information technology functions that allow access to our information technology systems, which could lead to a compromise of our systems or the introduction of vulnerable or malicious code, resulting in security breaches adversely affecting us or our customers.
For example, we outsource certain information technology functions that allow access to our information technology systems, which could lead to a compromise of our systems or the introduction of vulnerable or malicious code, resulting in security breaches adversely affecting us or our customers.
In 2023, we spent approximately $1.9 million on capital projects in the aggregate for our mills in the three regions where we operate to control environmental releases into the air and water and to assure environmentally sound management and disposal of waste. We expect to spend approximately $4.8 million in 2024 and $9.5 million in 2025 on regulatory projects.
In 2024 we spent approximately $2.5 million and over the course of 2025 and 2026, we expect to spend $14-$15 million on capital projects in the aggregate for our mills in the three regions where we operate to control environmental releases into the air and water and to assure environmentally sound management and disposal of waste.
As regulators and investors have been increasingly focused on climate change and other sustainability issues, we have been, or may, become subject to new disclosure frameworks and regulations.
If and as regulators increase their focus on climate change and other sustainability issues, we have been, or may become, subject to new disclosure frameworks and regulations.
Sustainable Sourcing and Forest Management Sylvamo recognizes the environmental, social and economic values of forested landscapes. We seek to play an active role in preventing deforestation and forest degradation , promoting and increasing the use of responsibly managed forests, and meeting market demand for sustainably certified products, through our efforts described below.
We seek to play an active role in preventing deforestation and forest degradation , promoting and increasing the use of responsibly managed forests, and meeting market demand for sustainably certified products, through our efforts described below.
A public health crisis could have a material adverse effect on our business, financial condition and results of operations.
Business – Environmental and Other Regulations. 14 A public health crisis could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If a public health crisis were to result in the imposition of governmental restrictions on the general public or on business activities to prevent viral spread, or were to cause widespread illness among our or our customers’ or suppliers’ employees – such as occurred during the COVID-19 pandemic – it could, in turn, have a material adverse effect on our business, financial condition and results of operations.
If a public health crisis were to curtail business activities or result in the imposition of governmental restrictions on the general public or on business activities, or were to cause widespread illness among our or our customers’ or suppliers’ employees, it could, in turn, have a material adverse effect on our business, financial condition, results of operations and cash flows.
Any future inflation in the costs of raw materials and energy is not within our 13 control and could increase our costs of production. Any future shortages are also not within our control and could increase our costs and slow or stop our production.
Future inflation in the costs of and decreases in the availability of raw materials and energy is not within our control and could increase our costs of production and slow or stop our production.
Towards this goal, in 2023 we continued to invest in reforestation in the Atlantic Forest region of Brazil through joint efforts with international and local organizations.
Towards this goal, in 2024 we continued investing in reforestation in the Atlantic Forest region of Brazil and the Appalachians of the United States, through joint efforts with international and local organizations.
Risks Relating to Our Industry, the Products We Offer and Product Distribution Changes in the cost or availability of raw materials and energy used to manufacture our products could have a material adverse effect on our business, financial condition and results of operations.
See “—Changes in the cost or availability of raw materials and energy used to manufacture our products could have a material adverse effect on our business, financial condition , results of operations and cash flows .” Changes in the cost or availability of raw materials and energy used to manufacture our products could have a material adverse effect on our business, financial condition, results of operations and cash flows.
They typically use words such as “anticipate,” “assume,” “could,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “will” and other words and terms of similar meaning, or they are tied to future periods in connection with discussions of the Company’s performance.
They typically use words such as “anticipate,” “assume,” “could,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “will” and other words and terms of similar meaning, or they are tied to future periods in connection with discussions of the Company’s performance. Some examples of forward-looking statements include those relating to our business and operating outlook, future obligations and anticipated expenditures.
We make these policies available on our website and provide more information about them in our 2022 ESG Report. Our operations strive to incorporate responsible forest stewardship to ensure healthy and productive forest ecosystems for generations to come.
We make these policies available on our website. 7 Our operations strive to incorporate responsible forest stewardship to ensure healthy and productive forest ecosystems for generations to come.
Any of the circumstances described in this paragraph may result in lost sales, increased supply chain costs and damage to our reputation, and have a material adverse effect on our business, financial condition and results of operations. In 2023, we did not experience significant supply chain disruptions, and freight rates normalized.
Any of the circumstances described in this paragraph could result in lost sales, increased supply chain costs and damage to our reputation, and have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are assessing our climate-related risks and determining the best strategies to address any identified risks. As a result of any or all of these climate-related risks, climate change could, directly or indirectly, have a material adverse effect on our business, financial condition and results of operations.
The impact of events resulting from any one or more of these climate-related risks could, directly or indirectly, have a material adverse effect on our business, financial condition, results of operations and cash flows. We are assessing our climate-related risks and determining the best strategies to address identified risks and increase our business’s climate resilience.
Most of our paper products are commodities that are available from other producers. While brand recognition impacts the demand for products, because commodity products have few other distinguishing qualities from producer to producer, competition for these products is significantly based on price, which is determined by supply relative to demand.
While brand recognition and service levels impact the demand for products, because commodity products have few other distinguishing qualities from producer to producer, competition for these products is significantly based on price, which is determined by supply relative to demand.
Forward-looking statements are based on current expectations and the current economic environment. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors that are difficult to predict.
They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors that are difficult to predict.
The transition to a lower-carbon economy could increase the price of energy needed to manufacture our products, the transportation components of our input costs and costs of delivering products. • Unpredictable weather patterns or extended periods of severe weather also may result in supply chain disruptions, increased material costs and delays or stoppage of operations. • Our ability to mitigate the adverse physical impacts of climate change depends in part upon our disaster preparedness and response and business continuity planning, but we cannot guarantee that our disaster preparedness and business continuity planning would adequately mitigate such impacts. 12 • The introduction of a carbon tax or government mandates to reduce GHG emissions, and more stringent or complex environmental and other permitting requirements, could result in costs to meet such requirements and other additional costs of compliance. • There is no assurance that we can recover, through increased prices, any increased costs to us of fiber, energy, other materials, manufacturing stoppages or delays, regulatory compliance, or any other factor related to climate change, and if we were to pass these costs on to customers, it may reduce demand for our products. • There has been an increased focus, including from investors, customers, regulators and other stakeholders regarding climate change, which have resulted or may result in more prescriptive reporting requirements with respect to climate change-related topics, including, recently, reporting requirements adopted in California and the European Union and reporting requirements proposed by the SEC, as well as increased expectation and pressure to voluntarily disclose such topics, all of which increase compliance costs. • We have established and publicly disclosed targets related to certain sustainability matters, including our 2030 goal to reduce Scope 1, 2 and 3 GHG emissions.
They also could impact our customers and result in decreased demand for our products by affected customers. • Our ability to mitigate the adverse physical impacts of severe weather events and other natural disasters depends in part upon our disaster preparedness and response and business continuity planning, but we cannot guarantee that our disaster preparedness and business continuity planning would adequately mitigate such impacts. • The introduction of a carbon tax or government mandates to reduce GHG emissions, and more stringent or complex environmental and other permitting requirements, could result in costs to meet such requirements and other additional costs of compliance. • There is no assurance that we can recover, through increased prices, any increased costs to us of fiber, energy, other materials, manufacturing stoppages or delays, regulatory compliance, or any other factor related to climate conditions or climate change, and if we were to pass these costs on to customers, it could reduce demand for our products. • There has been an increased focus, including from investors, customers, regulators and other stakeholders regarding climate change, which has resulted or could result in more prescriptive reporting requirements with respect to climate change-related topics and increased expectations and pressure to voluntarily disclose such topics, all of which increase compliance costs.
Our business operations rely upon secure information technology systems for data capture, processing, storage and reporting. Despite careful security and controls design, implementation, updating and independent third-party verification, our information technology systems could become subject to employee error or malfeasance, cyber-attacks, geopolitical events, natural disasters, failures or impairments of telecommunications networks or other catastrophic events.
Despite careful security and controls design, implementation, updating and independent third-party verification, our information technology systems could become subject to employee error or malfeasance, cyber-attacks, geopolitical events, natural disasters, failures or impairments of telecommunications networks or other catastrophic events. Also, third parties with which we do business are potential sources of cybersecurity risks.
The overall levels of demand for the paper products that we manufacture, and consequently our sales and profitability, reflect fluctuations in levels of end-user demand, which depend in part on general macroeconomic conditions, competition, including from electronic substitution, and other factors described above in “—The industry-wide decline in demand for paper and related products could have a material adverse effect on our business, financial condition and results of operations.” Industry supply of paper products is also subject to fluctuation, as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or entire mills or convert them to different products to offset a decline in demand.
Risk Factors in “ —The industry-wide decline in demand for paper and related products could have a material adverse effect on our business, financial condition , results of operations and cash flows .” Industry supply of paper and pulp products is also subject to fluctuation, as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or entire mills or convert them to different products to offset a decline in demand.
Deterioration of business conditions, economic conditions or geopolitical events in any one of the regions where we operate could have a material adverse effect on our business, financial condition and results of operations.
Deterioration of economic, civil or political conditions, either globally or in a region where we operate, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We cannot predict whether these geopolitical conflicts will cause future increases in the costs of raw materials and energy for our mills, particularly our mills in Sweden and France.
We cannot predict whether these geopolitical conflicts will cause future increases in the costs of raw materials and energy for our mills, particularly our mills in Sweden and France. If we were to experience increases in our operating costs for any of the reasons described above, we might be unable to pass on the increases to customers.
Some examples of forward-looking statements include those relating to our business and operating outlook, future obligations and anticipated expenditures. 8 Forward-looking statements are not guarantees of future performance. Any or all forward-looking statements may turn out to be incorrect, and actual results could differ materially from those expressed or implied in forward-looking statements.
Forward-looking statements are not guarantees of future performance. Any or all forward-looking statements may turn out to be incorrect, and actual results could differ materially from those expressed or implied in forward-looking statements. Forward-looking statements are based on current expectations and the current economic environment.
Historically , economic and market shifts, fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in prices, sales volume and margins for our paper products. The length and magnitude of industry cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions and levels of industry capacity.
The paper and pulp industry, including the demand for our products, is cyclical. Historically , economic and market shifts, fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in prices, sales volume and margins for our products.
We plan to report on sustainability initiatives and our progress for 2023 in our 2023 ESG Report to be published in 2024.
In the 2023 Sustainability Performance Review, we highlight and report on our key initiatives for achieving that goal. We plan to report on our initiatives for 2024 in our 2024 Sustainability Performance Review, to be published in 2025.
We cannot guarantee that we will achieve the goals described in the ESG Report and in this Annual Report on Form 10-K, including our 2030 goals, and our ability to achieve them is subject to risks and uncertainties both known and unknown, including various risks noted in Item 1A. Risk Factors and elsewhere herein.
Our ability to achieve them is subject to risks and uncertainties both known and unknown, including various risks noted in Item 1A. Risk Factors and elsewhere in this Annual Report on Form 10-K. Sustainable Sourcing and Forest Management Sylvamo recognizes the environmental, social and economic values of forested landscapes.
For example, at our Mogi Guaçu mill in Brazil, we are working with environmental regulators to determine the work necessary to address historic contamination on areas that we own near the mill.
For example, at our Mogi Guaçu mill in Brazil, we are working with environmental regulators to determine the work necessary to address historic contamination on areas that we own near the mill. See Note 13 Commitments and Contingent Liabilities t o the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K for additional information.
See “—Changes in the cost or availability of raw materials and energy used to manufacture our products could have a material adverse effect on our business, financial condition and results of operations.” Competition from other businesses and consolidation within the paper industry could have a material adverse effect on our competitive position, financial condition and results of operations.
Thus, any one or more of these events could significantly increase the costs to manufacture our products and potentially delay or interrupt our manufacturing operations (see “ – Changes in the cost or availability of raw materials and energy used to manufacture our products could have a material adverse effect on our business, financial condition and results of operations” ).
Risk Factors – “ We are subject to physical, financial and reputational risks associated with climate change, including global, regional and local weather conditions, as well as the potential impact of increasing regulatory and investor focus on climate change.” Management and Board Oversight Sylvamo has a dedicated sustainability team of employees led by our Chief Sustainability Officer (“CSO”).
Risk Factors – “We are subject to physical, financial and reputational risks associated with climate conditions and climate change, including global, regional and local weather conditions, the availability of wood fiber, water and fu e l , and the impact of increasing regulatory and investor focus on climate change.” Management and Board Oversight We have a steering team for sustainability matters consisting of a cross functional group of employees and commercial leaders.
The EU ETS may in the future have a material impact on us depending on, among other factors, how the Paris Agreement's no n-binding commitments or allocation of and market prices for GHG credits under existing rules evolve over the coming years.
The Paris Agreement and EU ETS may have a material impact on us depending on, among other factors, how binding the GHG emissions reduction commitments made by Paris Agreement member countries are, how market prices for GHG emissions credits evolve under applicable rules over the coming years, and the extent to which our mills are subject to requirements of member countries imposed in connection with the Paris Agreement.
Our efforts to accomplish this goal in 2023 included an intensive water engineering study at one of our mills to identify water saving projects. We intend to update our progress reducing water usage at least annually on our Company website or in our ESG Reports. Climate Change and Reduction of GHG Emissions Sylvamo recognizes that the climate is changing.
We intend to update our progress reducing water usage at least annually on our Company website or in our Sustainability Performance Reviews. Climate Change and Reduction of GHGs Sylvamo recognizes that the climate is changing.
Increases in global average temperatures caused by increased concentrations of carbon dioxide and other GHGs in the atmosphere could cause significant changes in weather patterns, including changes to precipitation patterns and growing seasons.
Climate conditions, including those that may be associated with climate change, have the potential to disrupt our business and cause us financial loss. Increases in global average temperatures, which can be caused by increased concentrations of carbon dioxide and other GHGs in the atmosphere, could significantly change weather patterns, including precipitation patterns and growing seasons.
The paper industry is cyclical. Fluctuations in the prices of, and the demand for, our paper products could result in lower sales volumes and smaller profit margins. The paper industry is cyclical.
Risks Relating to Our Industry, the Products We Offer and Product Distribution Demand for and prices of paper and pulp products fluctuate and are cyclical, and fluctuations or cycles that result in decreased demand and lower prices could cause us to have lower sales volumes and smaller profit margins.
These types of events could have multiple adverse impacts on our business, including, without limitation: • Severe weather events or other natural disasters, which may be caused by climate change, occurring at any of our locations could cause heavy damage to or destruction of one or more of our valuable assets; for example, one of our mills or our Brazilian forestland. • The productivity of forests, the frequency and severity of wildfires, heavy rain or drought, the distribution and abundance of species, and the spread of disease or insect epidemics, may adversely affect timber production and harvesting, including on the forestlands that we own or manage in Brazil which have been producing yields of mature virgin fiber that are not optimal (see “ – Changes in the cost or availability of raw materials and energ y used to manufacture our products could have a material adverse effect on our business, financial condition and results of operations,”) thus reducing the availability to us of, or reducing the density and quality of, the virgin fiber upon which we rely to manufacture our products.
Changes in weather patterns, severe weather events and other natural disasters pose significant risks for our operations and the operations of our suppliers and customers, including, without limitation, that hurricanes, tornados, hail, fire, extreme precipitation, flooding, snow, ice storms, extreme heatwaves and drought could cause heavy damage to or destruction of our valuable assets and have multiple adverse impacts on our business: • Decreased productivity of forests, increased frequency and severity of wildfires, heavy rain or drought, inadequate distribution and abundance of tree species, and the spread of disease or insect epidemics in forestlands, could adversely affect timber production and harvesting , thereby reducing the availability to us of, or reducing the density and quality of, the virgin fiber upon which we rely to manufacture our products.
For example, carbon sequestration regulations limiting the availability of forestlands for harvest could increase our cost of wood fiber and potentially create shortages having an impact on our operations. In Europe, there is a heightened level of sensitivity in the pricing and availability of raw materials and energy from the geopolitical conflicts in Europe, the Middle East and Red Sea.
The EUDR could decrease the volume of wood supplied in the European Union and increase prices there for wood generally. Also in Europe, there is a heightened level of sensitivity in the pricing and availability of raw materials and energy from the geopolitical conflicts in Europe, the Middle East and the Red Sea.
We cannot predict whether these events would occur or if they would cause us to experience disruptions in our supply chain, increases in our transportation costs or difficulty supplying our customers. The industry-wide decline in demand for paper and related products could have a material adverse effect on our business, financial condition and results of operations.
Although such events in 2024 caused increases in our costs, it did not have a material adverse effect on our business, financial condition, results of operations or cash flows. The industry-wide decline in demand for paper and related products could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The European Union’s Deforestation Regulation (the “EUDR”), which generally becomes effective on December 30, 2024, will require companies trading in wood, cattle, cocoa, coffee, oil palm, rubber and soya, as well as products derived from these commodities such as paper, to conduct extensive diligence on the value chain to ensure the goods do not result from recent deforestation, forest degradation or breaches of local laws in order to sell such products in the European Union market.
In particular, the EUDR in the European Union, to become effective on December 30, 2025, will prevent companies trading in certain goods and products derived from such goods, such as paper, from selling those products in Europe unless they conduct extensive diligence on the value chain to ensu re that the products do not result from recent deforestation, forest degradation or breaches of local laws.
Such reporting will apply not only to local operations in the EU, but under certain circumstances, to entire global companies that have EU operations. The CSRD will not apply to us in calendar year 2024, but 5 we will need to comply with it in the future and are assessing our obligations under the CSRD.
Such reporting will apply not only to local operations in the EU, but under certain circumstances, to entire global companies that have EU operations. The CSRD will require us to begin reporting for European operations in 2026 and for the entire Company globally in 2029, with the option to voluntarily commence reporting for the entire Company earlier than 2029.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+1 added−3 removed25 unchanged
Biggest changeWe address the cybersecurity threat risk posed by employees and third parties with access to our IT systems, including that we integrate cybersecurity risk management into the culture of our organization by: maintaining policies addressing various aspects of security necessary to protect our IT assets and data; requiring cybersecurity awareness and training programs for persons with access to our IT systems to build their cybersecurity skills and knowledge; consistent messaging to our employees (including from our top leadership) of the importance of managing cybersecurity risk, participating in our cybersecurity training and following our cybersecurity policies; and routinely testing responses by our employees to mock efforts to breach our cybersecurity protections.
Biggest changeWe address the cybersecurity threat risk posed by employees and third parties with access to our IT systems, including that we integrate cybersecurity risk management into the culture of our organization by: maintaining policies addressing various aspects of security necessary to protect our IT assets and data; requiring cybersecurity awareness and training programs for persons with access to our IT systems to build their cybersecurity skills and knowledge; consistent messaging to our employees (including from our top leadership) of the importance of managing cybersecurity risk, participating in our cybersecurity training and following our cybersecurity policies; routinely testing responses by our employees to mock efforts to breach our cybersecurity protections; and policies and procedures to follow in the event a cyber breach were to occur at the Company, including in response to the breach and to evaluate the level and materiality of the breach. 31 We partner with and build relationships with third parties who have access to our IT systems to support an overall ecosystem around cybersecurity that we believe helps reduce third party cybersecurity risk affecting our level of cybersecurity risk.
The board periodically reviews our processes for assessing and addressing key strategic, operational, compliance and risk management matters concerning cybersecurity, and as part of such assessment receives briefings on such matters from our Chief Information Security Officer (“CISO”). These 31 briefings include reports on the threat landscape, our strategies, efforts and investments to address threats, and updates on incidents.
The board periodically reviews our processes for assessing and addressing key strategic, operational, compliance and risk management matters concerning cybersecurity, and as part of such assessment receives briefings on such matters from our Chief Information Security Officer (“CISO”). These briefings include reports on the threat landscape, our strategies, efforts and investments to address threats, and updates on incidents.
GOVERNANCE Our board of directors has overall responsibility for risk management oversight, with its committees assisting the board in performing this function based on their respective areas of expertise. Our board oversees cybersecurity matters and risk, and the Audit Committee also oversees risk that includes cybersecurity risk.
GOVERNANCE Our board of directors has overall responsibility for risk management oversight, with its committees assisting the board in performing this function based on their respective areas of expertise. Our board oversees cybersecurity matters and risk, and 32 the Audit Committee also oversees risk that includes cybersecurity risk.
Our CISO has approximately 20 years of experience in the cybersecurity industry. She is responsible for developing, coordinating and overseeing our cybersecurity strategy, policy, program and solutions, and for providing cybersecurity guidance to key management and internal company oversight bodies.
Our CISO has approximately 21 years of experience in the cybersecurity industry. She is responsible for developing, coordinating and overseeing our cybersecurity strategy, policy, program and solutions, and for providing cybersecurity guidance to key management and internal company oversight bodies.
We have experienced cybersecurity incidents in the past that were not material, but future incidents could have a material impact on our business strategy, results of operations, financial condition and reputation.
We have experienced cybersecurity incidents in the past that were not material, but future incidents could have a material impact on our business strategy, results of operations, financial condition, cash flows and reputation.
As part of our continuing efforts to assess and enhance our readiness and responsiveness, we conduct periodic mock practice scenarios in which participants at various levels of the Company, including members of senior management and IT technical personnel, play out responses to various cybersecurity breach scenarios.
As part of our continuing efforts to assess and enhance our readiness and responsiveness, we conduct periodic mock practice scenarios in which participants at various levels of the Company — including employees responsible for responsive actions in the event of a breach, IT technical personnel and members of senior management — play out responses to various cybersecurity breach scenarios.
There is no guarantee that our cybersecurity program will be sufficient to prevent or mitigate the risk of a cyberattack or the potentially serious reputational, operational, legal or financial impacts that may result.
While we have a cybersecurity program designed to protect and preserve the integrity of our information systems, there is no guarantee that our cybersecurity program will be sufficient to prevent or mitigate the risk of a cyberattack or the potentially serious reputational, operational, legal or financial impacts that may result.
See “We are subject to information technology risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information as well as breaches in the technology used to manage operations and other business processes” in Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
See “We are subject to information technology risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information , breaches in the technology used to manage operations and other business processes , and the increasing use of a r tific i al i ntelligence ” in Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
We 30 assess cybersecurity risk from our suppliers and service providers and have in place oversight processes to identify and manage such risks. Those processes are cross-functional and form part of our enterprise risk management program, and they are supported by our security, compliance and sourcing organizations.
Our processes to protect against third party cybersecurity risk are cross-functional and form part of our enterprise risk management program, and they are supported by our security, compliance and sourcing organizations.
Removed
We partner with and build relationships with third parties who have access to our IT systems to support an overall ecosystem around cybersecurity that we believe helps reduce third party cybersecurity risk affecting our level of cybersecurity risk.
Added
We assess cybersecurity risk from our suppliers and service providers and have in place oversight processes to identify and manage such risks, including that we have systems that constantly monitor each third party with access to our systems and that allow such third parties to see and resolve their risks while we continue to monitor.
Removed
While we have a cybersecurity program designed to protect and preserve the integrity of our information systems, we also maintain cybersecurity insurance to manage potential liabilities resulting from specific cyberattacks.
Removed
Also, there is no guarantee that our cyberattack insurance coverage limits will fully cover any future claims or that such insurance proceeds will be paid to us in a timely manner.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur paper manufacturing operations are further supported by 10-year offtake agreements with International Paper (subject to their earlier termination) for paper production at the North American Riverdale, Alabama, and Georgetown, South Carolina mills for 495,000 short tons of uncoated freesheet and 160,000 short tons of uncoated bristols, a heavier weight paper grade used in products such as file folders.
Biggest changeOur paper manufacturing operations are further supported by an offtake agreement with International Paper (subject to their earlier termination) for paper production at the North American Riverdale, Alabama, mill for 350,000 short tons of uncoated freesheet.
A listing of our production facilities by segment, the vast majority of which we own, can be found in Appendix I hereto, which is incorporated herein by reference. CAPITAL INVESTMENTS AND DISPOSITIONS Capital spending primarily consists of purchases of machinery and equipment related to our global mill operations.
A listing of our production facilities by segment, the vast majority of which we own, can be found in Appendix I hereto, which is incorporated herein by reference. 33 CAPITAL INVESTMENTS AND DISPOSITIONS Capital spending primarily consists of purchases of machinery and equipment related to our global mill operations.
ITEM 2. PROPERTIES FORESTLANDS As of December 31, 2023, the Company owned or managed approximately 250,000 acres of forestlands in Brazil. All owned lands in Brazil are independently third-party certified for sustainable forestry under the Brazilian National Forest Certification Program (“CERFLOR”) and the Forest Stewardship Council (“FSC”).
ITEM 2. PROPERTIES FORESTLANDS As of December 31, 2024, the Company owned or managed approximately 250,000 acres of forestlands in Brazil. All owned lands in Brazil are independently third-party certified for sustainable forestry under the Brazilian National Forest Certification Program (“CERFLOR”) and the Forest Stewardship Council (“FSC”).
A discussion about the level of planned investments for 2024 is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 32
A discussion about the level of planned investments for 2025 is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As of December 31, 2023, a third party estimated the fair value of our owned forestlands at 4.8 billion reais (approximately $1 billion). MILLS AND PLANTS Our portfolio of properties spans three continents and includes six vertically-integrated mills and one non-integrated mill with an aggregate annual paper and pulp production capacity of 3.3 million short tons.
MILLS AND PLANTS Our portfolio of properties spans three continents and includes six vertically-integrated mills and one non-integrated mill with an aggregate annual paper and pulp production capacity of 3.3 million short tons.
Added
As of December 31, 2023, a third party estimated the fair value of our owned forestlands at 4.8 billion reais (approximately $800 million adjusted for variation in currency exchange rates).

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe environmental matters set forth in Note 13 Commitments and Contingent Liabilities are disclosed in accordance with such requirement and incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 33 PART II.
Biggest changeThe environmental matters set forth in Note 13 Commitments and Contingent Liabilities to the Consolidated Financial Statements included in Item 8 in this Annual Report on 10-K are disclosed in accordance with such requirement and incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 34 PART II.
See Note 12 Income Taxes and Note 13 Commitments and Contingent Liabilities of the Notes to our Consolidated and Combined Financial Statements included elsewhere in this Annual Report on Form 10-K, which notes are incorporated into this Item 3, Legal Proceedings, by reference.
See Note 12 Income Taxes and Note 13 Commitments and Contingent Liabilities of the Notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which notes are incorporated into this Item 3, Legal Proceedings, by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThey increased the quarterly dividend to $0.30 per share beginning with the dividend payable for our fourth quarter of 2023. The Board also approved a special dividend of $0.30 per share, approximately $12 million, to be paid in the fourth quarter.
Biggest changeThey increased the quarterly dividend to $0.45 per share beginning with the dividend payable for our second and continuing though the fourth quarter of 2024.
In the third quarter of 2023, the Board authorized an additional $150 million for the Repurchase Program, bringing the total program capacity to $300 million, of which $150 million remains available for repurchases.
In the third quarter of 2023, the Board authorized an additional $150 million for the Repurchase Program, bringing the total program capacity to $300 million, of which $82 million remains available for repurchases.
The performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act nor shall such information be incorporated by reference into any other filings under the Exchange Act or the Securities Act. Return on $100 Investment at December 31, 2023 1.
The performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act nor shall such information be incorporated by reference into any other filings under the Exchange Act or the Securities Act. Return on $100 Investment at December 31, 2024 1.
The Peer Group represents all companies within the Materials sector of the S&P SmallCap 600 Index. 2. Returns are calculated in $USD. ITEM 6 . RESERVED 35
The Peer Group represents all companies within the Materials sector of the S&P SmallCap 600 Index. 2. Returns are calculated in $USD. ITEM 6 . RESERVED 36
The graph portrays total return, October 1, 2021 - December 31, 2023, assuming reinvestment of dividends.
The graph portrays total return, October 1, 2021 - December 31, 2024, assuming reinvestment of dividends.
The Company repurchased $70 million of shares during the year ended December 31, 2023. 34 PERFORMANCE GRAPH The following performance graph compares a $100 investment in Company stock on October 1, 2021 with a $100 investment in our Peer Group and the S&P SmallCap 600 Index also made at market close on October 1, 2021.
The Company repurchased $68 million of shares during the year ended December 31, 2024. 35 PERFORMANCE GRAPH The following performance graph compares a $100 investment in Company stock on October 1, 2021 with a $100 investment in our Peer Group and the S&P SmallCap 600 Index also made at market close on October 1, 2021.
This number does not include an indeterminate number of “street” holders whose shares of common stock of the Company are held of record by banks, brokers and other financial institutions. Our Board of Directors approved a quarterly cash dividend of $0.25 per share of the Company’s common stock payable for our first through third quarters of 2023.
This number does not include an indeterminate number of “street” holders whose shares of common stock of the Company are held of record by banks, brokers and other financial institutions. Our Board of Directors approved a quarterly cash dividend of $0.30 per share of the Company’s common stock payable for our first quarter of 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY The Company’s common stock is traded on the New York Stock Exchange (NYSE: SLVM). As of February 16, 2024, there were approximately 5,300 record holders of common stock of the Company.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY The Company’s common stock is traded on the New York Stock Exchange (NYSE: SLVM). As of February 14, 2025, there were approximately 5,010 record holders of common stock of the Company.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Period Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares (or Units) Purchased as Part of the Publicly Announced Program Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) October 1, 2023 - October 31, 2023 1,078 $ 43.94 — $ 167 November 1, 2023 - November 30, 2023 178,089 $ 48.18 176,258 $ 158 December 1, 2023 - December 31, 2023 165,175 $ 51.38 164,922 $ 150 Total 344,342 341,180 (a) 3,162 shares were acquired from employees from share withholdings under the Company’s long term incentive compensation program.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Period Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares (or Units) Purchased as Part of the Publicly Announced Program Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) October 1, 2024 - October 31, 2024 956 $ 85.85 — $ 120 November 1, 2024 - November 30, 2024 398,601 $ 87.98 397,767 $ 85 December 1, 2024 - December 31, 2024 32,306 $ 79.67 31,844 $ 82 Total 431,863 429,611 (a) 2,252 shares were acquired from employees from share withholdings under the Company’s long term incentive compensation program.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 47 Report of Management on Financial Statements, Internal Control Over Financial Reporting and Internal Control Environment and Board of Directors Oversight 47 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 49 Consolidated and Combined Statements of Operations 53 Consolidated and Combined Statements of Comprehensive Income (Loss) 54 Consolidated Balance Sheet s 55 Consolidated and Combined Statements of Cash Flows 56 Consolidated and Combined Statements of Changes in Equity 57 i Notes to Consolidated and Combined Financial Statements 58
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 47 Report of Management on Financial Statements, Internal Control Over Financial Reporting and Internal Control Environment and Board of Directors Oversight 47 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 49 Consolidated Statements of Operations 52 Consolidated Statements of Comprehensive Income (Loss) 53 Consolidated Balance Sheets 54 Consolidated Statements of Cash Flows 55 Consolidated Statements of Changes in Equity 56 i Notes to Consolidated Financial Statements 57
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 36 Executive Summary 36 Results of Operations 37 Description of Business Segments 37 Business Segments Results 38 Non-GAAP Financial Measures 40 Liquidity and Capital Resources 41 Critical Accounting Policies and Significant Accounting Estimates 43 Recent Accounting Developments 45 Foreign Currency Effects 45 Market Risk 45 ITEM 7A.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 37 Executive Summary 37 Results of Operations 38 Description of Business Segments 38 Business Segments Results 39 Non-GAAP Financial Measures 41 Liquidity and Capital Resources 42 Pillar Two Directive 44 Critical Accounting Policies and Significant Accounting Estimates 44 Recent Accounting Developments 45 Foreign Currency Effects 45 Market Risk 46 ITEM 7A.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating profit for Latin America for the year ended December 31, 2023 was $15 million lower than the same period in 2022, primarily driven by decreased sales price and mix ($7 million), lower volumes ($15 million) and higher input costs, primarily for energy, wood and distribution ($12 million) which more than offset lower operating costs ($9 million) and lower planned maintenance outages ($10 million). 39 North America In millions for the years ended December 31 2023 2022 Net Sales $ 1,951 $ 2,173 Operating Profit (Loss) $ 269 $ 291 For the year ended December 31, 2023, our North America segment net sales decreased $222 million, compared to the same period in 2022, primarily driven by lower volumes ($268 million) which more than offset higher sales price and mix ($45 million).
Biggest changeOperating profit for Latin America for the year ended December 31, 2024 was $47 million lower than the same period in 2023, primarily driven by the impact of lower sales price and mix ($34 million), higher operating costs ($18 million) and higher planned maintenance outages ($9 million) which more than offset higher volumes ($9 million) and lower input costs, primarily for chemicals and pulp ($5 million). 40 North America In millions for the years ended December 31 2024 2023 Sales $ 2,029 $ 1,951 Operating Profit (Loss) $ 293 $ 269 For the year ended December 31, 2024, our North America segment sales increased $78 million, compared to the same period in 2023, primarily driven by higher volumes ($145 million) which more than offset lower sales price and mix ($68 million).
The currencies that have the most impact on our continuing operations are the Euro and the Brazilian real. MARKET RISK We use financial instruments, including fixed and variable rate debt. We do not use financial instruments for trading purposes. Additionally, various derivative contracts are used to hedge exposures to interest rate and foreign currency risks.
The currencies that have the most impact on our continuing operations are the Euro and the Brazilian real. 45 MARKET RISK We use financial instruments, including fixed and variable rate debt. We do not use financial instruments for trading purposes. Additionally, various derivative contracts are used to hedge exposures to interest rate and foreign currency risks.
Financing Activities Cash used in financing activities from continuing operations for the year ended December 31, 2023 primarily reflects the payments of $70 million, $36 million, $26 million and $31 million on our outstanding principal debt balances for the Revolving Credit Facility, AR Securitization, Term Loan F and Term Loan A, respectively.
Cash used for financing activities from continuing operations for the year ended December 31, 2023 primarily reflects the payments of $70 million, $36 million, $26 million, and $31 million on our outstanding principal debt balances for the Revolving Credit Facility, AR Securitization, Term Loan F, and Term Loan A, respectively.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated and combined financial statements and related notes included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
In addition to historical consolidated and combined financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those stated and implied in any forward-looking statements.
In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those stated and implied in any forward-looking statements.
Under this method, we determine deferred tax balances on the basis of the differences between the financial statement and tax bases of 43 assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
Under this method, we determine deferred tax balances on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
For more information about our term loans, Revolving Credit Facility, and Securitization Program see Note 14 Long-Term Debt to our consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K.
For more information about our term loans, Revolving Credit Facility, and Securitization Program see Note 14 Long-Term Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
See Note 17 Financial Information by Business Segment and Geographic Area to our consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K for more information on the Company’s segments.
See Note 17 Financial Information by Business Segment and Geographic Area to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information on the Company’s segments.
The following summary describes the products and services offered in each of the segments as of December 31, 2023: Europe Our Europe segment produces a broad portfolio of uncoated freesheet papers for numerous uses and applications, and market pulp. We operate two integrated mills in the region, one in Saillat, France and one in Nymölla, Sweden.
The following summary describes the products and services offered in each of the segments as of December 31, 2024: Europe Our Europe segment produces a broad portfolio of uncoated freesheet papers for numerous uses and applications, and market pulp. We operate two integrated mills in the region, one in Saillat, France and one in Nymölla, Sweden.
Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under the headings “Risk Factors” and “Forward-Looking Statements.” The following generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under the headings “Risk Factors” and “Forward-Looking Statements.” The following generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Accounting policies whose application may have a significant effect on the reported results of operations and financial position of the Company, and that can require judgments by management that affect their application, include the accounting for impairment or disposal of long-lived assets and goodwill, income taxes, commitments and contingencies and business combinations.
Accounting policies whose application may have a significant effect on the reported results of operations and financial position of the Company, and that can require judgments by management that affect their application, include the accounting for impairment or disposal of long-lived assets and goodwill, income taxes and commitments and contingencies.
(b) We define Adjusted EBITDA (non-GAAP) as net income (GAAP) excluding discontinued operations, net of taxes plus the sum of income taxes, net interest expense (income), depreciation, amortization and cost of timber harvested, transition service agreement expense, stock-based compensation, and, when applicable for the periods reported, special items.
(b) We define Adjusted EBITDA (non-GAAP) as net income (GAAP) excluding discontinued operations, net of taxes 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, special items.
The results of the qualitative assessment indicated that it is not more likely than not that the fair values of its Brazil reporting unit was less than its carrying value.
The results of the qualitative assessment indicated that it is not more likely than not that the fair values of its France reporting unit was less than its carrying value.
Consumer Behavior Factors that impact the demand for our products include general macroeconomic conditions, consumer preferences, movements in currency exchange rates, consumer spending, commercial printing and advertising activity, adoption of electronic mediums, white-collar employment and the shift to a hybrid work models, and increased remote schooling.
Consumer Behavior Factors that impact the demand for our products include general macroeconomic conditions, consumer preferences, movements in currency exchange rates, consumer spending, commercial printing and advertising activity, adoption of electronic mediums, and white-collar employment and the shift to hybrid work models.
Based on the amounts outstanding, a 100-basis point increase in market interest rates would result in a change to annual interest expense of approximately $4 million, including the impact of the swaps, at December 31, 2023.
Based on the amounts outstanding, a 100-basis point increase in market interest rates would result in a change to annual interest expense of approximately $4 million at December 31, 2023 .
We address these risks on a limited basis by entering into cross-currency interest rate swaps or foreign exchange contracts. At December 31, 2023 and 2022 the net fair value of financial instruments with exposure to foreign currency risk was approximately a $6 million asset and a $5 million asset, respectively.
We address these risks on a limited basis by entering into cross-currency interest rate swaps or foreign exchange contracts. At December 31, 2024 and 2023 the net fair value of financial instruments with exposure to foreign currency risk was approximately a $14 million liability and a $6 million asset, respectively.
Cash provided for working capital components (accounts and notes receivable, inventories, accounts payable and accrued liabilities, and other) was $85 million for the year ended December 31, 2023, compared with cash used by working capital components of $56 million for the year ended December 31, 2022.
Cash used for working capital components (accounts and notes receivable, inventories, accounts payable and accrued liabilities, and other) was $8 million for the year ended December 31, 2024, compared with cash provided by working capital components of $85 million for the year ended December 31, 2023.
The potential loss in fair value for such financial instruments from a 10% adverse change in quoted foreign currency exchange rates would have been approximately $12 million and $18 million at December 31, 2023 and 2022, respectively. 45
The potential loss in fair value for such financial instruments from a 10% adverse change in quoted foreign currency exchange rates would have been approximately $14 million and $12 million at December 31, 2024 and 2023, respectively.
Discussion of historical items in 2021, and year-to-year comparisons between 2022 and 2021, can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 22, 2023, under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation s .
Discussion of historical items in 2022, and year-to-year comparisons between 2023 and 2022, can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 21, 2024, under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .
As a percentage of depreciation, amortization and cost of timber harvested, capital spending totaled 147% and 119% for the years ended December 31, 2023 and 2022, respectively.
As a percentage of depreciation, amortization and cost of timber harvested, capital spending totaled 139% and 147% for the years ended December 31, 2024 and 2023, respectively.
The Company performed its annual testing of goodwill impairment by applying the qualitative assessment to its Brazil reporting unit as of October 1, 2023. For the current year evaluation, the Company assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting unit under the qualitative assessment for the reporting units listed above.
The Company performed its annual testing of goodwill impairment by applying the qualitative assessment to its France reporting unit as of October 1, 2024. For the current year evaluation, the Company assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting unit under the qualitative assessment.
Operating Activities Cash provided by operating activities from continuing operations totaled $504 million for the year ended December 31, 2023, compared with cash provided by operating activities from continuing operations of $418 million for the year ended December 31, 2022.
Operating Activities Cash provided by operating activities from continuing operations totaled $469 million for the year ended December 31, 2024, compared with cash provided by operating activities from continuing operations of $504 million for the year ended December 31, 2023.
Interest Rate Risk Sylvamo is subject to interest rate risk in connection with the issuance of debt. Our exposure to interest rate risk arises primarily from changes in SOFR and LIBOR prior to our adoption of SOFR.
Interest Rate Risk Sylvamo is subject to interest rate risk in connection with the issuance of debt. Our exposure to interest rate risk arises primarily from changes in SOFR.
The Company calculated the estimated fair value of the France reporting unit using a probability-weighted approach based on discounted future cash flows, market multiples and transaction multiples. As a result, the Company concluded that the fair value of the France reporting unit was not reduced below carrying value and no goodwill impairment charge was recorded.
The Company calculated the estimated fair value of the Brazil reporting unit using a probability-weighted approach based on discounted future cash flows, market multiples and transaction multiples. As a result, the Company concluded that the fair value of the Brazil reporting unit was substantially in excess of carrying value and no goodwill impairment charge was recorded.
RESULTS OF OPERATIONS When reading our financial statements and the information included in this Annual Report on Form 10-K, it should be considered that we have experienced, and continue to experience, several material trends and uncertainties that have affected our financial condition and results of operations and that could affect future performance.
See Note 8 Divestiture and Impairment of Business to our financial statements included elsewhere in this Annual Report on Form 10-K for further details. 37 RESULTS OF OPERATIONS When reading our financial statements and the information included in this Annual Report on Form 10-K, it should be considered that we have experienced, and continue to experience, several material trends and uncertainties that have affected our financial condition and results of operations and that could affect future performance.
Based on the amounts outstanding, a 100-basis point increase in market interest rates would result in a change to annual interest expense of approximately $6 million at December 31, 2022.
Based on the amounts outstanding, a 100-basis point increase in market interest rates would result in a change to annual interest expense, including the impact of the swaps, of approximately $1 million at December 31, 2024.
The following table presents a comparison of income from continuing operations before income taxes to business segment operating profit: In millions for the years ended December 31 2023 2022 Income From Continuing Operations Before Income Taxes $ 369 $ 467 Interest expense (income), net 34 69 Other special items, net (b) 38 17 Business Segment Operating Profit (a) $ 441 $ 553 Europe $ (25) $ 50 Latin America 197 212 North America 269 291 Business Segment Operating Profit (a) $ 441 $ 553 (a) We define business segment operating profit as our income from continuing operations before income taxes calculated in accordance with GAAP, excluding net interest expense (income) and net special items.
The following table presents a comparison of income from continuing operations before income taxes to business segment operating profit: In millions for the years ended December 31 2024 2023 Income From Continuing Operations Before Income Taxes $ 405 $ 369 Interest expense (income), net 39 34 Other special items, net (b) 9 38 Business Segment Operating Profit (a) $ 453 $ 441 Europe $ 10 $ (25) Latin America 150 197 North America 293 269 Business Segment Operating Profit (a) $ 453 $ 441 (a) We define business segment operating profit as our income from continuing operations before income taxes calculated in accordance with GAAP, excluding net interest expense (income) and net special items.
GAAP requires the Company to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require subjective judgments about matters that are inherently uncertain.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES The preparation of financial statements in conformity with U.S. GAAP requires the Company to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require subjective judgments about matters that are inherently uncertain.
Net special items in the periods presented primarily include foreign VAT interest and refunds, transaction and integration costs related to the Nymölla acquisition, professional and legal fees related to negotiations resulting in a shareholder cooperation agreement, the impact of the step-up of acquired Nymölla inventory sold during the first quarter of 2023, certain severance costs related to our salaried workforce, one-time costs incurred in the prior year associated with the spin-off and foreign exchange hedging gains. 38 The following tables present Net sales and Operating profit (loss), which is the Company’s measure of segment profitability, for each of the Company’s segments.
Net special items in the periods presented primarily include legal fees related to the Brazil Tax Dispute, a loss related to forest fires in Brazil, foreign VAT refunds, transaction and integration costs related to the Nymölla acquisition, professional and legal fees related to negotiations resulting in a shareholder cooperation agreement, the impact of the step-up of acquired Nymölla inventory sold during the first quarter of 2023 and certain severance costs related to our salaried workforce. 39 The following tables present Sales and Operating profit (loss), which is the Company’s measure of segment profitability, for each of the Company’s segments.
Net special items in the periods presented primarily include foreign VAT interest and refunds, transaction and integration costs related to the Nymölla acquisition, professional and legal fees related to negotiations resulting in a shareholder cooperation agreement, the impact of the step-up of acquired Nymölla inventory sold during the first quarter of 2023, certain severance costs related to our salaried workforce, one-time costs incurred in the prior year associated with the spin-off and foreign exchange hedging gains.
Net special items in the periods presented primarily include legal fees related to the Brazil Tax Dispute, foreign VAT refunds, transaction and integration costs related to the Nymölla acquisition, professional and legal fees related to negotiations resulting in a shareholder cooperation agreement, the impact of the step-up of acquired Nymölla inventory sold during the first quarter of 2023 and certain severance costs related to our salaried workforce.
In addition, the Company considered whether there were any events or circumstances outside of the annual evaluation that would reduce the fair value of its reporting units below their carrying amounts and necessitate a goodwill impairment evaluation.
In addition, the Company considered whether there were any events or circumstances outside of the annual evaluation that would reduce the fair value of its reporting units below their carrying amounts and necessitate a goodwill impairment evaluation. In consideration of all relevant factors, there were no indicators that would require goodwill impairment subsequent to October 1, 2024.
Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
No goodwill impairment charges were recorded in 2024, 2023 or 2022. 44 Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
At December 31, 2023, contractual obligations for future payments of debt maturities (including finance lease liabilities disclosed in Note 10 Leases ) by calendar year were as follows: 2024 - $28 million, 2025 - $155 million; 2026 - $43 million; 2027 - $414 million; 2028 - $231 million; thereafter - $99 million.
At December 31, 2024, contractual obligations for future payments of debt maturities (including finance lease liabilities disclosed in Note 10 Leases ) by calendar year were as follows: 2025 - $22 million; 2026 - $25 million; 2027 - $370 million; 2028 - $25 million; 2029 - $191 million; thereafter - $180 million.
Capital Expenditures For the year ended December 31, 2023, we have invested approximately $210 million, or 5.6% of net sales in total capital expenditures. Of that amount, we spent approximately $177 million, or 4.8% of net sales, on maintenance, regulatory and reforestation capital expenditures, and approximately $33 million, or 0.9% of net sales, on high-return capital projects.
Capital Expenditures For the year ended December 31, 2024, we have invested approximately $221 million, or 5.9% of net sales in total capital expenditures. Of that amount, we spent approximately $195 million, or 5.2% of net sales, on maintenance, regulatory and reforestation capital expenditures, and approximately $27 million, or 0.7% of net sales, on high-return capital projects.
The following are reconciliations of cash provided by operating activities from continuing operations to free cash flow: In millions for the years ended December 31 2023 2022 Cash provided by operating activities from continuing operations $ 504 $ 418 Adjustments: Cash invested in capital projects (210) (149) Free Cash Flow $ 294 $ 269 The non-GAAP financial measures presented in this Annual Report on Form 10-K as referenced above 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.
By adjusting for certain items that are not indicative of the Company’s ongoing performance, free cash flow also enables investors to perform meaningful comparisons between past and present periods. 41 The following are reconciliations of cash provided by operating activities from continuing operations to free cash flow: In millions for the years ended December 31 2024 2023 Cash provided by operating activities from continuing operations $ 469 $ 504 Adjustments: Cash invested in capital projects (221) (210) Free Cash Flow $ 248 $ 294 The non-GAAP financial measures presented in this Annual Report on Form 10-K as referenced above 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.
The increase in cash provided by operating activities from continuing operations in 2023 relates primarily to changes in working capital, partially offset by lower income.
The decrease in cash provided by operating activities from continuing operations in 2024 relates primarily to changes in working capital which was partially offset by higher net income.
Operating profit for North America for the year ended December 31, 2023 was $22 million lower than the same period in 2023 as increased sales price and mix ($45 million), lower input costs, primarily for energy and distribution ($81 million), lower operating costs ($19 million) and lower planned maintenance outages ($3 million) were more than offset by lower volume ($87 million) and higher unabsorbed costs due to economic downtime ($83 million).
Operating profit for North America for the year ended December 31, 2024 was $24 million higher than the same period in 2023 as higher volume ($45 million), lower unabsorbed costs due to economic downtime ($56 million) and lower input costs, primarily for chemicals, wood and distribution ($20 million), more than offset lower sales price and mix ($68 million), higher operating costs ($28 million) and slightly higher planned maintenance outages ($1 million).
Purchase obligations for commercial commitments include inventory obligations to purchase raw materials, including starch, electricity, fuel oil, corrugated boxes, wood and Precipitated Calcium Carbonate (“PCC”). Our total estimated commercial commitments include $342 million in 2024, $209 million in 2025 and average $110 million annually from 2026 to 2028, with $115 million thereafter.
Our total estimated finance lease obligations total $2 million in 2025, an average of $2 million from 2025 to 2029 and $7 million thereafter. Purchase obligations for commercial commitments include inventory obligations to purchase raw materials, including starch, electricity, fuel oil, corrugated boxes, wood and Precipitated Calcium Carbonate (“PCC”).
Latin America In millions for the years ended December 31 2023 2022 Net Sales $ 1,006 $ 1,023 Operating Profit (Loss) $ 197 $ 212 For the year ended December 31, 2023, our Latin America segment net sales decreased $17 million compared to the same period in 2022, primarily driven by lower volumes ($19 million) and lower sales price and mix ($7 million) offset by favorable foreign exchange impacts.
Latin America In millions for the years ended December 31 2024 2023 Sales $ 974 $ 1,006 Operating Profit (Loss) $ 150 $ 197 For the year ended December 31, 2024, our Latin America segment sales decreased $32 million compared to the same period in 2023, primarily driven by lower sales price and mix ($35 million) and significant unfavorable foreign exchange impacts which were partially offset by higher volumes ($39 million).
As a result, all historical operating results of the Company’s Russian operations have been classified as “Discontinued operations, net of taxes” in the consolidated and combined statements of operations and the notes to the consolidated financial statements.
As a result, all historical operating results of the Company’s Russian operations have been classified as “Discontinued operations, net of taxes” in the consolidated statements of operations and the notes to the consolidated financial statements. In October 2022, the Company completed the sale of its Russian operations to Pulp Invest Limited Liability Company, a company incorporated in the Russian Federation.
In millions for the years ended December 31, 2023 2022 Net Income $ 253 $ 118 Less: Discontinued operations, net of taxes — (218) Net Income From Continuing Operations 253 336 Income tax provision 116 131 Interest expense (income), net 34 69 Depreciation, amortization and cost of timber harvested 143 125 Stock-based compensation 23 20 Transition service agreement expense — 23 Net special items expense (income) (a) 38 17 Adjusted EBITDA (b) $ 607 $ 721 Net Sales $ 3,721 $ 3,628 Adjusted EBITDA Margin 16.3 % 19.9 % (a) Net special items represent income or expenses that are incurred periodically, rather than on a regular basis.
In millions for the years ended December 31, 2024 2023 Net Income $ 302 $ 253 Income tax provision 103 116 Interest expense (income), net 39 34 Depreciation, amortization and cost of timber harvested 159 143 Stock-based compensation 23 23 Net special items expense (income) (a) 6 38 Adjusted EBITDA (b) $ 632 $ 607 Net Sales $ 3,773 $ 3,721 Adjusted EBITDA Margin 16.8 % 16.3 % (a) Net special items represent income or expenses that are incurred periodically, rather than on a regular basis.
Cash used in financing activities from continuing operations for the year ended December 31, 2022, primarily reflects the payments of $20 million, $410 million and $16 million on our outstanding principal balances for the Revolving Credit Facility, Term Loan B and Term Loan F, respectively.
Financing Activities Cash used for financing activities from continuing operations for the year ended December 31, 2024 primarily reflects the payments of $218 million, $49 million, $35 million, $10 million, and $3 million on our outstanding principal debt balances for Term Loan F, Term Loan A, the AR Securitization, Revolving Credit Facility, and Term Loan F-2, respectively.
Europe operating profit for the year ended December 31, 2023 was $75 million lower than the same period in 2022 as the impact of lower sales price and mix ($39 million), higher planned maintenance outages ($22 million), higher unabsorbed costs due to economic downtime ($25 million), higher operating costs ($10 million) and lower volumes ($6 million) more than offset lower input costs, primarily for energy ($7 million) and operating profit contributed by Nymölla ($20 million).
Europe operating profit for the year ended December 31, 2024 was $35 million higher than the same period in 2023 as lower planned maintenance outages ($26 million), lower unabsorbed costs due to economic downtime ($27 million), lower operating costs ($11 million), lower input costs ($16 million), primarily for chemicals, and higher volumes ($13 million) more than offset the impact of lower sales price and mix ($58 million).
North America The North American paper business manufactures uncoated freesheet papers at its mills in Eastover, South Carolina and Ticonderoga, New York and has offtake agreements to purchase the uncoated papers produced by International Paper’s Riverdale and Georgetown mills in Selma, Alabama and Georgetown, South Carolina.
Latin America operations combine sustainable forestry practices, operational excellence, strong brands and global distribution network. 38 North America The North American paper business manufactures uncoated freesheet papers at its mills in Eastover, South Carolina and Ticonderoga, New York and has an offtake agreement to purchase the uncoated papers produced by International Paper’s Riverdale mill in Selma, Alabama.
The Company also performed its annual testing of goodwill impairment by applying the quantitative goodwill impairment test to its France reporting unit due to changes in market conditions and the reporting unit's outlook since the previous quantitative goodwill impairment test.
The Company also performed its annual testing of goodwill impairment by applying the quantitative goodwill impairment test to its Brazil reporting unit due to the length of time lapsed since the previous quantitative goodwill impairment test.
Sylvamo accounted for the acquisition under ASC 805, “Business Combinations” and the Nymölla mill’s results of operations are included in Sylvamo’s consolidated financial statements from the date of acquisition.
Sylvamo accounted for the acquisition under ASC 805, “Business Combinations” and the Nymölla mill’s results of operations are included in Sylvamo’s consolidated financial statements from the date of acquisition. See Note 7 Acquisitions to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
DESCRIPTION OF BUSINESS SEGMENTS The Company’s reportable business segments, Europe, Latin America and North America, are consistent with the internal structure used to manage these businesses.
DESCRIPTION OF BUSINESS SEGMENTS The Company’s reportable business segments, Europe, Latin America and North America, are organized by geography and are consistent with the internal structure used to manage these businesses. Each of our segments derive their revenue from the manufacture and sale of paper and pulp products.
Europe In millions for the years ended December 31 2023 2022 Net Sales $ 821 $ 501 Operating Profit (Loss) $ (25) $ 50 For the year ended December 31, 2023, our Europe segment net sales increased $320 million compared to the same period in 2022, primarily due to net sales contributed by Nymölla ($405 million) which more than offset lower sales price and mix ($39 million), lower volumes ($34 million) and unfavorable foreign exchange impacts.
Europe In millions for the years ended December 31 2024 2023 Sales $ 801 $ 821 Operating Profit (Loss) $ 10 $ (25) For the year ended December 31, 2024, our Europe segment sales decreased $20 million compared to the same period in 2023, primarily due to lower sales price and mix ($58 million) which more than offset higher volumes ($39 million).
As of December 31, 2022, Sylvamo had floating rate debt of $576 million comprised of Term Loan F and amounts drawn on the Securitization Program. At December 31, 2022, the applicable one-month LIBOR rate was 4.38%.
As of December 31, 2024, Sylvamo had floating rate debt of $796 million comprised of Term Loan F, Term Loan F-2, Term Loan A and amounts drawn on the Securitization Program , which is partially offset by $652 million of interest rate swaps. At December 31, 2024, the applicable one-month SOFR rate was 4.36%.
In millions for the years ended December 31 2023 2022 Europe $ 31 $ 7 Latin America 112 76 North America 67 66 Total $ 210 $ 149 Capital spending primarily consists of purchases of machinery and equipment and reforestation related to our global mill operations.
The following table shows capital spending by business segment, which represents the most significant portion of our recurring investment activities. 42 In millions for the years ended December 31 2024 2023 Europe $ 27 $ 31 Latin America 140 112 North America 54 67 Total $ 221 $ 210 Capital spending primarily consists of purchases of machinery and equipment and reforestation related to our global mill operations.
Claims-based liabilities require review of recent and historical claims data. The Company utilizes its in-house legal and environmental experts to develop estimates and involves third-party specialists as needed to analyze its most complex contingent liabilities. Business Combinations The Company’s acquisitions of businesses are accounted for in accordance with ASC 805, "Business Combinations".
Claims-based liabilities require review of recent and historical claims data. The Company utilizes its in-house legal and environmental experts to develop estimates and involves third-party specialists as needed to analyze its most complex contingent liabilities. RECENT ACCOUNTING DEVELOPMENTS See Note 3 Recent Accounting Developments in Item 8. Financial Statements and Supplementary Data for a discussion of new accounting pronouncements.
Most real estate leases also require payment of related operating expenses such as taxes, insurance, utilities, and maintenance, which are not included in our estimated capital lease obligation. Our total estimated finance lease obligations total $3 million in 2024, an average of $2 million from 2025 to 2028 and $8 million thereafter.
Operating and financing leases represent minimum required lease payments during the noncancelable lease term. Most real estate leases also require payment of related operating expenses such as taxes, insurance, utilities, and maintenance, which are not included in our estimated capital lease obligation.
Working capital components for the year ended December 31, 2023 primarily reflect $104 million of cash provided by accounts and notes receivable, $31 million of cash provided by the unwinding of interest rate swaps, $17 million cash provided by other operating activities, and $6 million of cash provided by inventories.
Working capital components for the year ended December 31, 2024 primarily reflect $47 million of cash used for accounts and notes receivable and $28 million cash used for other operating activities. This activity was offset by $25 million of cash provided by inventories and $42 million of cash provided by accounts payable and accrued liabilities.
Cash from continuing operations was $504 million in the current year compared to $418 million in the prior year. Adjusted EBITDA was $607 million in 2023, which represents a decrease of $114 million from the prior year adjusted EBITDA of $721 million.
Net sales increased to $3.8 billion in the current year compared with $3.7 billion in 2023. Cash from continuing operations was $469 million in the current year compared to $504 million in the prior year. Adjusted EBITDA was $632 million in 2024, which represents an increase of $25 million from the prior year adjusted EBITDA of $607 million.
During the year ended December 31, 2023, the Company paid $57 million in dividends and paid $70 million to repurchase shares pursuant to the Repurchase Program.
During the year ended December 31, 2023, the Company also paid $57 million in dividends and paid $70 million to repurchase shares pursuant to our share repurchase program. Contractual Obligations Contractual obligations for future payments at December 31, 2024 primarily relate to lease commitments, raw material purchase obligations and principal debt payments.
See Note 7 Acquisitions to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. 36 Divestiture of Russian Operations During the second quarter of 2022, management committed to a plan to sell the Company’s Russian operations (which were sold on October 2, 2022).
Divestiture of Russian Operations During the second quarter of 2022, management committed to a plan to sell the Company’s Russian operations (which were sold on October 2, 2022).
These amounts are partially offset by the draw of $75 million on the accounts receivable securitization. During the year ended December 31, 2022, the Company paid $10 million in dividends and repurchased $80 million of our shares pursuant to the Repurchase Program.
These amounts are primarily offset by the issuance of Term Loan F-2, draws on our Revolving Credit Facility, and AR Securitization of $235 million, $10 million, and $6 million, respectively. During the year ended December 31, 2024, the Company also paid $62 million in dividends and paid $69 million to repurchase shares pursuant to our share repurchase program.
Investment Activities The total cash outflow from investing activities from continuing operations for the year ended December 31, 2023 increased from the year ended December 31, 2022, primarily due to increased capital spending and the Nymölla mill acquisition. 41 The following table shows capital spending by business segment, which represents the most significant portion of our recurring investment activities.
Investment Activities The total cash outflow from investing activities from continuing operations for the year ended December 31, 2024 decreased from the year ended December 31, 2023, primarily due to the purchase of the Nymölla mill which occurred in the prior year.
Tax attributes which were recognized under the separate return method but not conveyed to the Company were released through an adjustment to parent company investment effective on the spin-off date. While we believe that these judgments and estimates are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimates and amounts.
While we believe that these judgments and estimates are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimates and amounts.
The Nymölla mill has an excellent environmental footprint, which complements Sylvamo’s purpose to produce paper in the most responsible and sustainable ways.
The Nymölla mill has an excellent environmental footprint, which complements Sylvamo’s purpose to produce paper in the most responsible and sustainable ways. Latin America Our Latin American operations focus on uncoated freesheet paper and market pulp, supported by the management of approximately 250,000 acres of certified eucalyptus forestlands in Brazil.
Returning cash to shareholders remains a key component of our capital allocation strategy and we expect to return at least 40% of free cash flow to shareholders in 2024. Acquisition of Nymölla On January 2, 2023, the Company completed the previously announced acquisition of Stora Enso’s uncoated freesheet paper mill in Nymölla, Sweden.
We are confident in our ability to continue to create value for our customers and shareowners. Acquisition of Nymölla On January 2, 2023, the Company completed the previously announced acquisition of Stora Enso’s uncoated freesheet paper mill in Nymölla, Sweden.
The consolidated and combined financial statements have been prepared in United States (“U.S.”) dollars and in conformity with accounting principles generally accepted in the United States (‘‘U.S. GAAP’’).
The consolidated financial statements have been prepared in United States (“U.S.”) dollars and in conformity with accounting principles generally accepted in the United States (‘‘U.S. GAAP’’) and may not be indicative of the Company’s future performance. EXECUTIVE SUMMARY Full-year 2024 net income was $302 million ($7.18 per diluted share) compared with $253 million ($5.93 per diluted share) for 2023.
Additionally, our 2023 adjusted EBITDA margin was 16.3% compared to 19.9% in the prior year and free cash flow was $294 million compared to $269 million last year. Comparing our performance in 2023 to 2022, price and mix were flat while lower volume coupled with higher operations and costs more than offset favorable input costs.
Additionally, our 2024 adjusted EBITDA margin was 16.8% compared to 16.3% in the prior year and free cash flow was $248 million compared to $294 million last year. Comparing our performance in 2024 to 2023, higher volumes were driven by stronger demand for uncoated freesheet across all three of our regions.
It should not be inferred that the entire free cash flow amount is 40 available for discretionary expenditures. By adjusting for certain items that are not indicative of the Company’s ongoing performance, free cash flow also enables investors to perform meaningful comparisons between past and present periods.
It should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
Removed
The consolidated and combined financial statements may not be indicative of the Company’s future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had it operated as an independent company during all periods presented.
Added
Unabsorbed fixed costs due to economic manufacturing downtime in Europe and North America declined significantly in 2024. These factors, in addition to more favorable input costs and lower planned maintenance outages, were partially offset by lower price and mix and less favorable operations. We generated solid free cash flow again this year.
Removed
EXECUTIVE SUMMARY Full-year 2023 net income from continuing operations was $253 million ($5.93 per diluted share) compared with $336 million ($7.57 per diluted share) for 2022. Net sales increased to $3.7 billion in the current year compared with $3.6 billion in 2022.
Added
We generated $248 million in free cash flow, repaid $154 million in debt, and returned $130 million in cash to shareholders. Additionally, we reinvested $221 million across our manufacturing network and our Brazil forestlands to strengthen our low-cost position. We also accelerated the development of high-return capital project investments.
Removed
Demand for uncoated freesheet was weaker than expected in the current year which resulted lower volume in all three regions and significantly higher unabsorbed fixed costs due to economic manufacturing downtime in Europe and North America. In a tough market, we created value for shareholders by managing what we could control.
Added
Looking ahead to 2025, we remain committed to generating strong adjusted EBITDA and free cash flow while returning cash to shareowners. Our financial results for the three full years since spin-off have established a solid track record and are indicative of our ability to navigate industry conditions, geopolitical events and other uncertainty that we may face.
Removed
We repaid $76 million in debt, generated $294 million in free cash flow and returned $127 million in cash to shareholders. Additionally, we completed the acquisition of our uncoated freesheet mill in Nymölla, Sweden in January of 2023.
Added
With a total uncoated freesheet paper capacity exceeding 1.1 million short tons, our three mills in Brazil serve both regional and international markets, being a key supplier in Latin America and a solid global exporter, reaching customers in over 130 countries.
Removed
This strategic bolt-on acquisition has the capacity to produce approximately 500,000 short tons of uncoated freesheet, produces 85% of its energy needs from carbon-neutral, renewable biomass residuals and includes iconic brands like Multicopy.
Added
Our portfolio includes market-leading brands such as Chamex and Chamequinho copy papers, widely recognized by consumers and distribution channels for their superior quality. Additionally, Chambril offset papers are trusted by printers and converters for their versatility and reliability across various applications.
Removed
Looking ahead to 2024, we remain committed to generating strong adjusted EBITDA and free cash flow and we are confident in our ability to continue to create value for our customers and shareholders.
Added
Chambril is available in a wide range of basis weights and specifications to meet the demands of books, notebooks, inserts, leaflets, and industrial end-use requirements. All the products are primarily made from sustainably sourced eucalyptus, which is cultivated and harvested in less than seven years.
Removed
In October 2022, the Company completed the sale of its Russian operations to Pulp Invest Limited Liability Company, a company incorporated in the Russian Federation. See Note 8 Divestiture and Impairment of Business to our financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Added
Additionally, payments of $93 million were made to redeem, at a premium, the full value of our 7.00% Senior Notes and pay $5 million in debt issuance costs in connection with the debt refinancing in the third quarter of 2024.
Removed
Latin America Our Latin American operations focus on uncoated freesheet paper as well as market pulp through the ownership or management of approximately 250,000 acres of forestlands in Brazil and consists of three mills: two integrated mills in the State of São Paulo and one non-integrated mill in Mato Grosso do Sul.
Added
Our total estimated commercial commitments include $305 million in 2025, $168 million in 2026 and average $58 million annually from 2027 to 2029, with $109 million thereafter.

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