Sylvamo Corporation (NYSE:SLVM) Q3 2023 Earnings Conference Call November 9, 2023 10:00 AM ET

Company Participants

Hans Bjorkman - VP, IR

Jean-Michel Ribiéras - Chairman and CEO

John Sims - SVP and CFO

Conference Call Participants

George Staphos - Bank of America

Matthew McKellar - RBC Capital Markets

Operator

Good morning. Thanks for standing by. Welcome to Sylvamo's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, your conference is being recorded.

I would now like to turn the call over to Hans Bjorkman, Vice President, Investor Relations. Sir, the floor is yours.

Hans Bjorkman

Thanks, Greg. Good morning, and thank you for joining our call today.

Our speakers this morning are Jean-Michel Ribiéras, Chairman and Chief Executive Officer; and John Sims, Senior Vice President and Chief Financial Officer.

Slides 2 and 3 contain important information, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties. We will also present certain non-U.S. GAAP financial information. Reconciliations of those figures to U.S. GAAP financial measures are available in the appendix. Our website also contains copies of the third quarter 2023 earnings press release as well as today's presentation.

With that, I'll turn the call over to Jean-Michel.

Jean-Michel Ribiéras

Thanks, Hans. Good morning, and thank you for joining our call.

Let's turn to Slide 4, please. In the third quarter, we achieved $158 million in adjusted EBITDA and generated strong free cash flow of $150 million -- $155 million. We achieved adjusted operating earnings of $1.70 per share.

Price and mix, operation and input transportation costs were all favorable to the outlook we provided in our second quarter call. Our third quarter volume was short of our expectations reflecting ongoing China inventory destocking and weaker-than-expected demand.

We strengthened our financial position in the third quarter with net debt of $796 million another 1.2x net debt to adjusted EBITDA ratio. We also deposited $60 million in escrow to remove cash return needs related to the Brazil tax dispute in our credit agreement while returning $24 million in cash to shareholders in the quarter. Slide 5 compares our third quarter key financial metrics versus prior periods.

In the third quarter, our earnings were better than our outlook, and we took measures to maximize free cash flow, including selling and administrative cost reduction, shrinking working capital and adjusting the timing of capital spending. I'm proud of our teams collaborated to take care of our customer needs while executing significant economic downtime safely and as efficiently as possible.