syl-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 10-Q

________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

______________________________

Commission File Number 001-40718

________________

SYLVAMO CORPORATION

(Exact Name of Registrant as Specified in its Charter)

________________


Delaware			86-2596371
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)


6077 Primacy Parkway Memphis, Tennessee			38119
(Address of Principal Executive Offices)			(Zip Code)

901-519-8000

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	SLVM	New York Stock Exchange

________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of May 2, 2025 was 40,722,728.

INDEX


		PAGE NO.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations - Three Months Ended March 31 , 202 5 and 202 4	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended March 31 , 202 5 and 20 24	2
	Condensed Consolidated Balance Sheets - March 3 1 , 202 5 and December 31, 20 24	3
	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31 , 202 5 and 202 4	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	24
Item 6.	Exhibits	25
Signatures		26

ITEM 1. FINANCIAL STATEMENTS

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended March 31,
	2025		2024
NET SALES	$	821	$	905
COSTS AND EXPENSES
Cost of products sold (exclusive of depreciation, amortization and cost of timber harvested shown separately below)	662		716
Selling and administrative expenses	73		74
Depreciation, amortization and cost of timber harvested	40		39
Taxes other than payroll and income taxes	4		7
Interest (income) expense, net	9		9
INCOME BEFORE INCOME TAXES	33		60
Income tax provision	6		17
NET INCOME	$	27	$	43
EARNINGS PER SHARE
Basic	$	0.66	$	1.04
Diluted	$	0.65	$	1.02

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In millions)


	Three Months Ended March 31,
	2025		2024
NET INCOME	$	27	$	43
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Defined benefit pension and postretirement adjustments:
Amortization of pension and postretirement loss (less taxes of $0 and $0)	—		—
Change in cumulative foreign currency translation adjustment	78		(38)
Net gains/losses on cash flow hedging derivatives:
Net gains (losses) arising during the period (less taxes of $3 and $1)	5		4
Reclassification adjustment for (gains) losses included in net earnings (less taxes of $1 and $1)	(3)		(3)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES	80		(37)
COMPREHENSIVE INCOME (LOSS)	$	107	$	6

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)


	March 31, 2025		December 31, 2024
	(unaudited)
ASSETS
Current Assets
Cash and temporary investments	$	154	$	205
Accounts and notes receivable, net	416		429
Contract assets	26		26
Inventories	372		361
Other current assets	43		42
Total Current Assets	1,011		1,063
Plants, Properties and Equipment, net	977		944
Forestlands	350		319
Goodwill	119		111
Right of Use Assets	59		58
Deferred Charges and Other Assets	113		109
TOTAL ASSETS	$	2,629	$	2,604
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	386	$	375
Notes payable and current maturities of long-term debt	23		22
Accrued payroll and benefits	52		79
Other current liabilities	155		206
Total Current Liabilities	616		682
Long-Term Debt	794		782
Deferred Income Taxes	162		152
Other Liabilities	149		141
Commitments and Contingent Liabilities (Note 11)
Equity
Common stock $1 par value, 200.0 shares authorized, 45.5 shares and 44.9 shares issued and 40.7 shares and 40.6 shares outstanding at March 31, 2025 and December 31, 2024, respectively	45		45
Paid-in capital	78		71
Retained earnings	2,463		2,455
Accumulated other comprehensive loss	(1,410)		(1,490)
	1,176		1,081
Less: Common stock held in treasury, at cost, 4.8 shares and 4.3 shares at March 31, 2025 and December 31, 2024, respectively	(268)		(234)
Total Equity	908		847
TOTAL LIABILITIES AND EQUITY	$	2,629	$	2,604

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Three Months Ended March 31,
	2025		2024
OPERATING ACTIVITIES
Net income	$	27	$	43
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization, and cost of timber harvested	40		39
Deferred income tax provision (benefit), net	—		2
Stock-based compensation	6		7
Changes in operating assets and liabilities and other:
Accounts and notes receivable	30		8
Inventories	4		(5)
Accounts payable and accrued liabilities	(63)		(45)
Other	(21)		(22)
CASH PROVIDED BY OPERATING ACTIVITIES	23		27
INVESTMENT ACTIVITIES
Invested in capital projects	(48)		(60)
CASH PROVIDED BY (USED FOR) INVESTMENT ACTIVITIES	(48)		(60)
FINANCING ACTIVITIES
Dividends paid	(18)		(12)
Issuance of debt	23		6
Reduction of debt	(11)		(17)
Repurchases of common stock	(20)		(5)
Other	(5)		(7)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(31)		(35)
Effect of Exchange Rate Changes on Cash	5		(3)
Change in Cash, Temporary Investments and Restricted Cash	(51)		(71)
Cash, Temporary Investments and Restricted Cash
Beginning of the period	205		280
End of the period	$	154	$	209

The accompanying notes are an integral part of these condensed consolidated financial statements.

SYLVAMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments that are necessary for the fair presentation of Sylvamo Corporation’s ("Sylvamo's", "the Company’s" or "our") financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first three months of the year may not necessarily be indicative of full year results due to factors such as the Company’s planned maintenance outage schedule at its mills. All intercompany transactions have been eliminated. You should read these condensed consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report" or “2024 Form 10-K”), which have previously been filed with the Securities and Exchange Commission. These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States that require the use of management’s estimates. Actual results could differ from management’s estimates.

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are described in Note 2 Significant Accounting Policies to the audited consolidated financial statements included in our 2024 Form 10-K. There have been no material changes to the significant accounting policies for the three months ended March 31, 2025.

Recently Issued Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This guidance requires disaggregated disclosure of certain income statement captions for public business entities into specified categories within the footnotes to the financial statements. Additional disclosures are required in tabular format for each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil-and gas-producing activities or other types of depletion expenses. This update does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the provisions of this guidance.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires a public entity to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and this guidance should be applied prospectively but there is the option to apply it retrospectively. The Company plans to adopt the provisions of this guidance in conjunction with our Form 10-K for the annual period ending December 31, 2025.

NOTE 3 REVENUE RECOGNITION

External Net Sales by Product

External net sales by major products were as follows by business segment:


	Three Months Ended March 31,
In millions	2025		2024
Europe
Uncoated Papers	$	170	$	186
Market Pulp	20		21
Europe	190		207
Latin America
Uncoated Papers	180		196
Market Pulp	13		12
Latin America	193		208
North America
Uncoated Papers	417		471
Market Pulp	21		19
North America	438		490
Total	$	821	$	905

Revenue Contract Balances

A contract asset is created when the Company recognizes revenue on its customized products for which we have an enforceable right to payment.

A contract liability is created when customers prepay for goods prior to the Company transferring those goods to the customer. The contract liability is reduced when control of the goods is transferred to the customer, satisfying our performance obligation. Contract liabilities of $3 million and $2 million are included in “Other current liabilities” as of March 31, 2025 and December 31, 2024, respectively.

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the difference between the price and quantity at comparable points in time for goods for which we have an unconditional right to payment or receive pre-payment from the customer, respectively.

NOTE 4 EQUITY

A summary of changes in equity for the three months ended March 31, 2025 and 2024 is provided below:


Three Months Ended March 31, 2025
In millions	Shares	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Common Stock Held In Treasury, At Cost		Total Equity
Balance, December 31, 2024	45	$	45	$	71	$	2,455	$	(1,490)	$	(234)	$	847
Stock-based employee compensation	—	—		7		—		—		(14)		(7)
Share repurchases	—	—		—		—		—		(20)		(20)
Dividends ($0.45 per share)	—	—		—		(19)		—		—		(19)
Comprehensive income (loss)	—	—		—		27		80		—		107
Balance, March 31, 2025	45	$	45	$	78	$	2,463	$	(1,410)	$	(268)	$	908


Three Months Ended March 31, 2024
In millions	Shares	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Common Stock Held In Treasury, At Cost		Total Equity
Balance, December 31, 2023	45	$	45	$	48	$	2,222	$	(1,256)	$	(158)	$	901
Stock-based employee compensation	—	—		6		—		—		(7)		(1)
Share repurchases	—	—		—		—		—		(5)		(5)
Dividends ($0.30 per share)	—	—		—		(12)		—		—		(12)
Comprehensive income (loss)	—	—		—		43		(37)		—		6
Balance, March 31, 2024	45	$	45	$	54	$	2,253	$	(1,293)	$	(170)	$	889

NOTE 5 OTHER COMPREHENSIVE INCOME

The following table presents the changes in Accumulated Other Comprehensive Income (Loss) (“AOCI”), net of taxes, reported in the condensed consolidated financial statements:


	Three Months Ended March 31,
In millions	2025		2024
Defined Benefit Pension and Postretirement Adjustments
Balance at beginning of period	$	(72)	$	(77)
Amounts reclassified from accumulated other comprehensive income	—		—
Balance at end of period	(72)		(77)
Change in Cumulative Foreign Currency Translation Adjustments
Balance at beginning of period	(1,420)		(1,197)
Other comprehensive income (loss) before reclassifications	78		(38)
Balance at end of period	(1,342)		(1,235)
Net Gains and Losses on Cash Flow Hedging Derivatives
Balance at beginning of period	2		18
Other comprehensive income (loss) before reclassifications	5		4
Amounts reclassified from accumulated other comprehensive income	(3)		(3)
Balance at end of period	4		19
Total Accumulated Other Comprehensive Income (Loss) at End of Period	$	(1,410)	$	(1,293)

NOTE 6 EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potentially dilutive shares of common stock been issued. The dilutive effect of restricted stock units is reflected in diluted earnings per share by applying the treasury stock method.

There are no adjustments required to be made to net income for purposes of computing basic and diluted earnings per share.

Basic and diluted earnings per share are calculated as follows:


	Three Months Ended March 31,
In millions, except per share amounts	2025		2024
Net income	$	27	$	43
Weighted average common shares outstanding	40.6		41.3
Effect of dilutive securities	0.9		0.8
Weighted average common shares outstanding - assuming dilution	41.5		42.1
Earnings per share - basic	$	0.66	$	1.04
Earnings per share - diluted	$	0.65	$	1.02
Anti-dilutive shares (a)	0.5		0.6

(a) Common stock related to service-based restricted stock units and performance-based restricted stock units were outstanding but excluded from the computation of diluted earnings per share because their effect would be anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

NOTE 7 SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

Temporary Investments

Temporary investments with an original maturity of three months or less and money market funds with greater than three-month maturities but with the right to redeem without notice are treated as cash equivalents and are stated at cost. Temporary investments totaled $66 million and $104 million at March 31, 2025 and December 31, 2024, respectively.

Accounts and Notes Receivable

Accounts and notes receivable, net, by classification were:


In millions	March 31, 2025		December 31, 2024
Accounts and notes receivable:
Trade	$	389	$	402
Notes and other	27		27
Total	$	416	$	429

The allowance for expected credit losses was $22 million and $21 million at March 31, 2025 and December 31, 2024, respectively. Based on the Company’s accounting estimates and the facts and circumstances available as of the reporting date, we believe our allowance for expected credit losses is adequate.

Inventories


In millions	March 31, 2025		December 31, 2024
Raw materials	$	57	$	56
Finished paper and pulp products	181		178
Operating supplies	111		107
Other	23		20
Total	$	372	$	361

Plants, Properties and Equipment, Net

Accumulated depreciation was $3.8 billion and $3.6 billion at March 31, 2025 and December 31, 2024, respectively. Depreciation expense was $33 million and $33 million for the three months ended March 31, 2025 and 2024, respectively.

Additions to plants, property and equipment included within accounts payable were $14 million and $12 million each at March 31, 2025 and December 31, 2024.

Forestlands

There were no additions to Forestlands included within accounts payable at March 31, 2025. Additions to Forestlands included within accounts payable were $10 million at December 31, 2024.

Interest

Interest payments of $12 million and $17 million were made during the three months ended March 31, 2025 and 2024, respectively.

Amounts related to interest were as follows:


	Three Months Ended March 31,
In millions	2025		2024
Interest expense	$	12	$	14
Interest income	(2)		(4)
Capitalized interest cost	(1)		(1)
Total	$	9	$	9

ASSET RETIREMENT OBLIGATIONS

As of March 31, 2025 and December 31, 2024, we have recorded liabilities of $28 million and $28 million, respectively, related to asset retirement obligations. These amounts are included in “Other liabilities.” For asset retirement obligations which are conditional upon future events, we cannot reasonably estimate the current fair value of those potential obligations due to the uncertainty as to the timing or amounts that may be incurred.

NOTE 8 LEASES

The Company leases various real estate, including certain operating facilities, warehouses, office space and land. The Company also leases material handling equipment, vehicles and certain other equipment. The Company’s leases have a remaining lease term of up to 15 years. Total lease cost was $15 million and $14 million for the three months ended March 31, 2025 and 2024, respectively.

Supplemental Balance Sheet Information Related to Leases


In millions	Classification	March 31, 2025		December 31, 2024
Assets
Operating lease assets	Right of use assets	$	59	$	58
Finance lease assets	Plants, properties, and equipment, net (a)	20		20
Total leased assets		$	79	$	78
Liabilities
Current
Operating	Other current liabilities	$	23	$	21
Finance	Notes payable and current maturities of long-term debt	2		2
Noncurrent
Operating	Other Liabilities	44		45
Finance	Long-term debt	12		12
Total lease liabilities		$	81	$	80

(a)Finance leases are recorded net of accumulated amortization of $19 million and $17 million as of March 31, 2025 and December 31, 2024, respectively.

NOTE 9 GOODWILL

The following table presents changes in the goodwill balance as allocated to each business segment for the three months ended March 31, 2025:


In millions	Europe		Latin America		North America		Total
Balance as of December 31, 2024
Goodwill	$	11	$	101	$	—	$	112
Accumulated impairment losses	(1)		—		—		(1)
	$	10	$	101	$	—	$	111
Currency translation and other	—		8		—		8
Balance as of March 31, 2025
Goodwill	11		109		—		120
Accumulated impairment losses	(1)		—		—		(1)
Total	$	10	$	109	$	—	$	119

NOTE 10 INCOME TAXES

An income tax provision of $6 million was recorded for the three months ended March 31, 2025, and the reported effective income tax rate was 18%. An income tax provision of $17 million was recorded for the three months ended March 31, 2024, and the reported effective income tax rate was 28%.

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. (“Sylvamo Brasil”), a wholly-owned

subsidiary of the Company (the “Brazil Tax Dispute”). Sylvamo Brasil received assessments for the tax years 2007-2015 totaling approximately $103 million in tax, and $260 million in interest, penalties and fees as of March 31, 2025 (adjusted for variation in currency exchange rates and a law change pursuant to which the Brazil tax authority agreed to cancel a portion of the interest, penalties, and fees). International Paper challenged and is managing the litigation of this matter pursuant to the Tax Matters Agreement between us and International Paper. 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. These decisions are being appealed. The appeal involves several separate cases. In October 2024, at the first level of appeal in the Brazilian federal court system, the court ruled in favor of Sylvamo Brasil in cases covering approximately two thirds of the disputed amounts. The remaining one third of the disputed amounts is still under challenge at the Brazilian administrative court level and was not part of the ruling. The Brazilian tax authorities have appealed the October 2024 ruling. This tax litigation matter may take many years to resolve. The Company believes that the transaction underlying these assessments was appropriately evaluated, and that the Company’s tax position would be sustained, based on Brazilian tax law.

Pursuant to the terms of the Tax Matters Agreement, International Paper will pay 60%, and Sylvamo will pay 40% on up to $300 million of any assessment related to this matter, and International Paper will pay all amounts of the assessment over $300 million. Also in connection with this agreement, all decisions concerning the conduct of the litigation related to this matter, including settlement strategy, pursuit and abandonment, will continue to be made by International Paper, which is vigorously defending Sylvamo Brasil’s historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015.

NOTE 11 COMMITMENTS AND CONTINGENT LIABILITIES

Environmental and Legal Proceedings

The Company is subject to environmental and legal proceedings in the countries in which we operate. Accruals for contingent liabilities, such as environmental remediation costs, are recorded in the consolidated financial statements when it is probable that a liability has been incurred or an asset impaired and the amount of the loss can be reasonably estimated. The Company has estimated some probable liability associated with environmental remediation matters that is immaterial in the aggregate as of March 31, 2025.

At the Company’s Mogi Guaçu mill, there are legacy basin areas that were formerly lagoons used for treatment of mill wastewater from pulp and paper manufacturing. In coordination with and in response to a request by the Environmental Company of the State of São Paulo (“CETESB”), which is the state environmental regulatory authority, there has been continuous regulatory monitoring and sampling of the former basins, which began prior to their closure in 2006, both to assess for contamination and evaluate whether additional remediation is needed beyond the basins’ ongoing natural vegetation growth. This monitoring and sampling detected metal contamination, with the main constituent of potential environmental impact being mercury. The Company has presented CETESB with proposals for studies and other actions to further assess the scope and type of contamination and the possible need for an additional remediation approach.

In October 2022, CETESB requested that the Company expand its efforts to include providing CETESB with a proposed pilot intervention (remediation) plan for a portion of the former basins. The purpose of the pilot intervention plan was to facilitate determination of the appropriate actions to take for the basins generally, guided by the results of the pilot intervention plan in the subset portion of the basins. The Company submitted a proposed pilot intervention plan to CETESB in late 2023, and CETESB approved its pre-intervention stages and certain additional measures that the Company later submitted. The requirement to conduct the pilot intervention plan is currently suspended, as agreed by CETESB. The Company continues to conduct environmental testing and analysis. The Company has submitted a formal request to CETESB to maintain the suspension of the pilot intervention plan and continue the ongoing environmental testing and analysis.

As of March 31, 2025, the Company has recorded an immaterial liability for the environmental testing and analysis and a third-party review of the results and risk. While this matter could in the future have a material impact on our results of operations and cash flows, the Company is unable to estimate its potential liability. The Company’s liability will depend upon what additional studies and what remediation, beyond vegetation of the basins, may be required by CETESB, which in turn will depend partly upon CETESB’s assessment of information from the Company’s environmental testing and analysis and the third-party review of the results and risk.

Taxes Other Than Payroll Taxes

See Note 1 0 Income Taxes for a discussion of a goodwill amortization tax matter in Brazil.

During the first quarter of 2024, the State of Sao Paulo issued a tax assessment to our Brazilian subsidiary for approximately $46 million (adjusted for variation in currency exchange rates) regarding unpaid VAT arising from intercompany transactions. This assessment includes $19 million in tax and $27 million in interest and penalties. As of March 31, 2025, no reserve has been recorded by the Company because the risk of loss is not probable.

We have other open tax matters awaiting resolution in Brazil, which are at various stages of review in various administrative and judicial proceedings. We routinely assess these tax matters for materiality and probability of loss or gain, and appropriate amounts have been recorded in our financial statements for any open items where the risk of loss is deemed probable. We currently do not consider any of these other tax matters to be material individually. However, it is reasonably possible that settlement of any of these matters concurrently could result in a material loss or that over time a matter could become material, for example, if interest were accruing on the amount at issue for a significant period of time. Also, future exchange rate fluctuations could be unfavorable to the U.S. dollar and significant enough to cause an open matter to become material. The expected timing for resolution of these open matters ranges from one year to ten years.

General

The Company is involved in various other inquiries, administrative proceedings and litigation relating to environmental and safety matters, taxes (including VAT), personal injury, product liability, labor and employment, contracts, sales of property and other matters, some of which allege substantial monetary damages. Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the Company will not ultimately incur charges in excess of presently recorded liabilities. The Company believes that loss contingencies arising from pending matters, including the matters described herein, will not have a material effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending or threatened legal matters, some of which are beyond the Company's control, and the large or indeterminate damages sought in some of these matters, a future adverse ruling, settlement, unfavorable development, or increase in accruals with respect to these matters, could result in future charges that could be material to the Company's results of operations or cash flows in any particular reporting period.

NOTE 12 LONG-TERM DEBT

Long-term debt is summarized in the following table:


In millions	March 31, 2025		December 31, 2024
Term Loan F - due 2027 (a)	$	255	$	255
Term Loan F-2 - due 2031 (b)	228		230
Term Loan A - due 2029 (c)	214		217
Securitization Program	105		88
Other	15		14
Less: current portion	(23)		(22)
Total	$	794	$	782

(a) As of March 31, 2025 and December 31, 2024, presented net of $2 million and $2 million in unamortized debt issuance costs, respectively.

(b) As of March 31, 2025 and December 31, 2024, presented net of $2 million and $2 million in unamortized debt issuance costs, respectively.

(c) As of March 31, 2025 and December 31, 2024, presented net of $2 million and $2 million in unamortized debt issuance costs, respectively.

Revolving Credit Facility

In addition to the debt noted above, the Company has the ability to access a cash flow-based revolving credit facility (“Revolving Credit Facility”) with a total borrowing capacity of $400 million, which matures in 2029. As of March 31, 2025 and December 31, 2024, the Company had no outstanding borrowings on the Revolving Credit Facility and an available borrowing capacity of $400 million. Any outstanding balance on the Revolving Credit Facility is recorded within “Notes payable and current maturities of long-term debt” in the condensed consolidated balance sheet.

Securitization Program

Sylvamo North America LLC, a wholly owned subsidiary of the Company, maintains a $110 million accounts receivable finance facility (the “Securitization Program”), maturing in 2027. The Company sells substantially all of its North American accounts receivable balances to Sylvamo Receivables, LLC, a special purpose entity, which pledges the receivables as collateral for the Securitization Program. The borrowing availability under this facility is limited by the balance of eligible receivables within the program. The average interest rate for the quarter ended March 31, 2025 was 5.34%, and the average interest rate for the year ended December 31, 2024 was 6.10%.

Term Loans

In the third quarter of 2024, as a result of debt refinancing, the Company entered into a new senior secured term loan facility which provided an aggregate principal amount of $235 million (“Term Loan F-2”) maturing in 2031. A portion of the proceeds from Term Loan F-2 were used to repay $104 million of Term Loan F and $36 million of Term Loan A. The Company used the remaining proceeds to redeem the $90 million outstanding principal of our 2029 Senior Notes and to pay related premiums and fees. Debt extinguishment costs for the refinancing include $3 million of premiums paid related to the 2029 Senior Notes redemption and $2 million of deferred financing costs which were written off. This cost was recorded within “Interest expense (income), net.” In connection with the debt refinancing, we incurred $5 million of debt issuance costs to be amortized over each instrument’s term until maturity.

Interest Rates

The interest rates applicable to the Term Loan F, Term Loan F-2, Term Loan A and Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to SOFR plus a fixed percentage of 1.85%, 2.25%, 1.85% and 1.85%, respectively, payable monthly, with a SOFR floor of 0.00%. The obligations under the Term Loan F, Term Loan F-2, Term Loan A, and Revolving Credit Facility are secured by substantially all the tangible and intangible assets of Sylvamo and its subsidiaries, subject to certain exceptions, and are guaranteed by Sylvamo and certain subsidiaries.

Patronage Credits

We are receiving interest patronage credits under the Term Loan F and Term Loan F-2. Patronage distributions, which are made primarily in cash but also in equity in the lenders, are generally received in the first quarter of the year following that in which they were earned. Expected patronage credits are accrued in accounts and notes receivable as a reduction to interest expense in the period earned. After giving effect to expected patronage distributions of 90 basis points, of which 75 basis points is expected as a cash rebate, the effective net interest rate on the Term Loan F was approximately 5.27% and 5.31% as of March 31, 2025 and December 31, 2024, respectively, and the effective net interest rate on the Term Loan F-2 was approximately 5.67% and 5.71% as of March 31, 2025 and December 31, 2024, respectively.

Interest Rate Swaps

In connection with some of the Company’s loans, we are a party to interest rate swaps with various counterparties. These interest rate swaps are designated as cash flow hedges utilized to manage interest rate risk by allowing the Company to exchange the difference in the variable rates on the term loans determined in reference to SOFR and the related fixed interest rate per notional amount. Fair value assets and liabilities related to interest rate swaps are recorded within “Deferred charges and other assets” and “Other liabilities,” respectively.


			March 31, 2025						December 31, 2024
(Dollars in millions)	Fixed Interest Rate	Maturity (a)	Notional Amount		Fair Value of Assets		Fair Value of Liabilities		Notional Amount		Fair Value of Assets		Fair Value of Liabilities
Interest rate swaps
Term Loan F	3.72% to 3.75%	2025	$	200	$	—	$	—	$	200	$	1	$	—
Term Loan F-2	3.80% to 3.82%	2029	229		—		2		232		2		—
Term Loan A	4.13% to 4.16%	2028	217		—		3		219		—		1

(a) The total notional amounts of Term Loan F-2 and Term Loan A amortize quarterly until maturity.

Debt Covenants

The Company is subject to certain covenants limiting, among other things, the ability of most of its subsidiaries to: (a) incur additional indebtedness or issue certain preferred shares; (b) pay dividends on or make distributions in respect of the Company’s or its subsidiaries’ capital stock or make investments or other restricted payments; (c) create restrictions on the ability of the Company’s restricted subsidiaries to pay dividends to the Company or make certain other intercompany transfers; (d) sell certain assets; (e) create liens; (f) consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets; and (g) enter into certain transactions with its affiliates. The Company is currently subject to a maximum consolidated total leverage ratio of 3.75 to 1.00.

Our ability to make restricted payments under the credit agreement is governed by the provisions of our debt agreements in effect as if the Brazil Tax Dispute is settled, provided we maintain $275 million of available liquidity at the time we make restricted payments.

As of March 31, 2025, we were in compliance with our debt covenants.

NOTE 13 PENSION AND POSTRETIREMENT BENEFIT PLANS

Defined Benefit Plans

The Company sponsors and maintains pension plans for the benefit of certain of the Company’s employees. The service and non-service cost components of net periodic pension expense for these employees is recorded within cost of products sold and selling and administrative expenses. The assets and liabilities related to plans sponsored by the Company are reflected in deferred charges and other assets and other liabilities, respectively.

Net periodic pension expense (benefit) for all pension plans sponsored by the Company for the three months ended March 31, 2025 and March 31, 2024 was immaterial.

The Company’s funding policy for the pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that the Company may determine to be appropriate considering the funded status of the plans, tax deductibility, cash flow generated by the Company, and other factors. The Company continually reassesses the amount and timing of any discretionary contributions. Generally, the non-U.S. pension plans are funded using the projected benefit as a target, except in certain countries where funding of benefit plans is not required.

NOTE 14 INCENTIVE PLANS

The Company has adopted the Sylvamo 2021 Incentive Compensation Plan, which includes shares under its long-term incentive plan (“LTIP”) that grants certain employees, consultants, or non-employee directors of the Company different forms of awards, including time-based and performance-based restricted stock units. As of March 31, 2025, 2,337,529 shares remain available for future grants.

Total stock-based compensation cost recognized by the Company was as follows:


	Three Months Ended March 31,
In millions	2025		2024
Total stock-based compensation expense (included in selling and administrative expense)	$	6	$	7

As of March 31, 2025, $29 million of compensation cost, net of estimated forfeitures, related to all stock-based compensation arrangements for Company employees had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.7 years.

NOTE 15 FINANCIAL INFORMATION BY BUSINESS SEGMENT

The Company’s business segments, Europe, Latin America and North America, are organized by geography. These segments 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.

Business segment operating profits are used by the Company’s management to measure the earnings performance of its businesses. Management believes that business segment operating profit provides investors and analysts useful insights into our operating performance. 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 business special items and net corporate special items.

The chief operating decision maker uses business segment operating profit to allocate resources (primarily capital spending) for each segment predominantly during the annual strategic planning, budgeting and forecasting processes. The chief operating decision maker also considers actual performance variances in business segment operating profits on a monthly basis to assess the performance of the segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer.

Sales by business segment are determined using a management approach and include intersegment sales (which are eliminated in consolidation).

Information By Business Segment

Net Sales and Business Segment Operating Profit

Three Months Ended March 31, 2025:


In millions	Europe		Latin America		North America		Total
Sales	$	190	$	199	$	438	$	827
Intersegment sales	—		(6)		—		(6)
Net sales	$	190	$	193	$	438	$	821
Less:
Cost of products sold and other	179		128		329		636
Maintenance outages	12		1		14		27
Economic downtime	—		—		3		3
Selling and administrative expenses	15		21		37		73
Depreciation, amortization and cost of timber harvested	8		18		14		40
Add:
Other special items, net (a)	—		1		1		2
Business Segment Operating Profit (Loss)	$	(24)	$	26	$	42	$	44
Income before income taxes							$	33
Interest (income) expense, net							9
Corporate special items, net (a)							—
Other special items, net (a)							2
Business Segment Operating Profit							$	44

(a) Net special items represent income or expenses that are incurred periodically, rather than on a regular basis. Net special items in the period presented primarily include charges related to the termination of the Georgetown mill offtake agreement and environmental reserves in Brazil.

Three Months Ended March 31, 2024:


In millions	Europe		Latin America		North America		Total
Sales	$	207	$	216	$	490	$	913
Intersegment sales	—		(8)		—		(8)
Net sales	$	207	$	208	$	490	$	905
Less:
Cost of products sold and other	193		145		356		694
Maintenance outages	—		11		14		25
Economic downtime	—		—		4		4
Selling and administrative expenses	11		21		41		73
Depreciation, amortization and cost of timber harvested	8		18		13		39
Add:
Other special items, net (a)	1		1		—		2
Business Segment Operating Profit (Loss)	$	(4)	$	14	$	62	$	72
Income before income taxes							$	60
Interest (income) expense, net							9
Corporate special items, net (a)							1
Other special items, net (a)							2
Business Segment Operating Profit							$	72

(a) Net special items in the period presented primarily include charges related to integration costs for the Nymölla acquisition and other charges.

Assets


In millions	March 31, 2025		December 31, 2024
Europe	$	351	$	324
Latin America	1,141

SEC Form 10-Q filed by Sylvamo Corporation