Sylvamo (NYSE:SLVM) executives used the company’s fourth-quarter 2025 earnings call to review results for the quarter and full year, provide added context on a major investment cycle centered on its Eastover mill, and discuss market conditions across Europe, Latin America and North America. Management also reiterated a long-term focus on capital allocation and said the company will no longer provide quarterly adjusted EBITDA outlook.
2025 results and fourth-quarter performance
CEO John Sims said Sylvamo generated a 12% return on invested capital in 2025 while operating in “challenging industry conditions.” For the full year, the company reported $448 million in adjusted EBITDA, representing a 13% margin, and $44 million in free cash flow. Adjusted operating earnings were $3.54 per share. Sylvamo ended the year with net debt to adjusted EBITDA of 1.6 times, which Sims described as a very strong financial position. The company returned $155 million of cash to shareholders during 2025 and reinvested $224 million across its manufacturing network and Brazil forest plans.
Quarter-to-quarter bridge: pricing headwinds and outage costs
CFO Don Devlin walked through the fourth-quarter adjusted EBITDA bridge versus the third quarter. Adjusted EBITDA declined to $125 million from $151 million in the prior quarter. Devlin attributed the change to several moving parts:
- Price and mix were unfavorable by $21 million, driven primarily by regional mix, lower paper prices in Europe, and lower prices in some Brazilian export markets.
- Volume was favorable by $18 million, largely due to Latin America and North America.
- Operations and other costs were unfavorable by $4 million, which Devlin said was primarily due to seasonally higher costs in Europe.
- Maintenance outage costs were unfavorable by $17 million due to a planned outage at the Eastover mill after having no planned outages in the prior quarter.
- Input and transportation costs were slightly unfavorable by $2 million.
Market conditions: Europe still difficult, pricing actions underway
Devlin said the European industry supply-demand environment “continues to be challenging,” though he noted signs of improvement as pulp prices began to rebound in the fourth quarter and continued improving into the first quarter. He added that European cut-size paper prices exited 2025 at €100 per ton below where the company exited 2024.
Management said it has communicated paper price increases to European customers, with expected realization beginning in the second quarter. Devlin also said wood costs in Southern Sweden are starting to ease, though he cautioned there is typically a three-to-six-month lag before the company sees relief in operations.
During Q&A, Sims said Sylvamo has been working to improve mix in Europe, pointing to an investment at the Saillat mill that was started up and implemented in the latter part of the fourth quarter. Sims said the investment allows the mill to produce and sell more roll business into the converting market versus commodity cut size, adding that order books are “full” for that segment.
Sims also said Europe’s downturn has been “one of the longest” the company has seen, and that pricing improvement is important to margin recovery. He said Sylvamo has been working to reduce costs, focusing on fixed costs at Saillat and improving operational performance at the Nymölla mill, where he said the company exceeded targets last year and has additional plans. However, he stressed that “we do need the market to improve.”
Asked about Nymölla’s role longer term, Sims said the mill remains a strategic fit because it is fully focused on uncoated freesheet and has an attractive mix serving both cut-size and printing and communication markets. He said wood costs have been a significant headwind and increased more than expected, but noted costs are “turning now,” with reductions expected to flow through more toward the second quarter due to lag effects. Sims added the company is evaluating “all options” to improve European performance and said leadership changes have been made in the region.
2026: a “transition year” in North America tied to Eastover investments
Devlin said 2026 will be a transition year for North America as the company manages short-term capacity constraints related to Riverdale supply agreement exits and the execution of Eastover investments. Capital spending is expected to be $245 million in 2026 as Sylvamo executes the majority of a $145 million investment at Eastover. Devlin said 2027 is expected to return to prior capital spending levels as the Eastover investments wind down, with the company prioritizing strategic projects with the fastest payback.
Management said the Eastover projects are expected to add 60,000 tons of uncoated freesheet, reduce costs, and improve mix and efficiency. Devlin said the paper machine optimization project is on schedule and will be completed during a 45-day planned maintenance outage in the fourth quarter, about 30 days longer than a typical outage. A new “state-of-the-art” sheeter is also on schedule and will be installed at the same time. The woodyard modernization project is on track, with a hardwood operation ramp planned for the second quarter, and softwood operation startup planned for the first quarter of 2027.
Devlin outlined expected impacts on North American sales volume and earnings in 2026, including reduced Riverdale supply and the impact of the extended outage. To bridge supply, Sylvamo plans to source about 80,000 tons from Europe, which Devlin said would have a negative adjusted EBITDA impact to the European business of about $20 million due to tariffs and freight. He said North American sales volume is expected to be lower by around 55,000 tons, with most of the decline occurring in the first quarter as the company builds inventory ahead of the fourth-quarter outage. Devlin said this would result in an approximate $20 million negative adjusted EBITDA impact in North America in the first quarter due to lower sales volume.
For the full year 2026, Devlin said North America would see an estimated negative $65 million adjusted EBITDA impact across three items: $20 million from lower sales volume, $20 million from external sourcing, conversion and freight, and $25 million from Eastover one-time outage costs. In addition, he said the company expects a $10 million charge in the first quarter from International Paper due to unusually high energy costs at the Riverdale mill following recent cold weather; he later confirmed this $10 million is in addition to the previously discussed $85 million of one-time costs tied to the transition, bringing the total one-time impact to $95 million. Devlin also said working capital timing over the year is expected to be a negative $25 million overall, related to inventory build and drawdown and settlement of payables for Riverdale tons purchased.
Capital allocation, guidance changes, and longer-term targets
Sims emphasized disciplined capital allocation and said the company is discontinuing quarterly adjusted EBITDA outlook, following its prior decision to stop providing full-year adjusted EBITDA and free cash flow guidance. He said the change is intended to align external communications with how Sylvamo manages the business and to attract and retain long-term shareholders, while continuing to provide detail and selected financial metrics.
In Q&A, management said Sylvamo paused share repurchases in the quarter, citing prudence given expected 2026 cash demands from capital intensity and an inventory build. Sims noted that dividends and share repurchases totaled $155 million in 2025, which he said was 350% of the year’s free cash flow.
Looking ahead, Sims said 2025 and 2026 are expected to be low points in free cash flow generation as the company navigates cyclical downturns—particularly in Europe—and completes Eastover investments. Over time, Sims said Sylvamo believes it has the potential to generate more than $300 million of annual free cash flow and more than 15% returns on invested capital as industry conditions turn, capital spending normalizes, and investment benefits materialize. The company also plans to hold an investor day later in the year to provide more detail on its strategy, capital allocation priorities, and progress, including initiatives tied to a lean transformation and digital transformation.
About Sylvamo (NYSE:SLVM)
Sylvamo Corporation, trading on the New York Stock Exchange under the ticker SLVM, is a leading global producer of uncoated freesheet paper. The company was established in October 2021 through a spin-off from International Paper, creating an independent entity focused exclusively on the development, manufacturing and marketing of high-quality uncoated paper products. Headquartered in Memphis, Tennessee, Sylvamo draws on decades of industry experience inherited from its predecessor, positioning itself to meet evolving customer needs in paper-based communications and packaging applications.
The company’s core product portfolio includes office and digital print papers, direct mail and marketing materials, catalog and commercial printing papers, and a range of specialty and value-added grades.
